The Brazilian, Colombian and Peruvian banking systems are well prepared to keep growing and withstand a scenario of reasonable stress in advanced economies, given their solid capital position, healthy asset quality and high profitability ratios, Franklin Santarelli, managing director at Fitch Ratings, told BNamericas.
At the agency's annual series of emerging market outlook conferences held last week, the analyst reviewed banking systems from 42 emerging markets.
The fact that the three countries' banking systems are among the most profitable of the sample, with pre-impairment ROAs of some 4%, means that they have ample room to build reserves if needed to cope with a more stressful scenario, he said.
Banks in these three countries are in an even better position than in 2008, Santarelli said, as their solid profit generation ability gives them more flexibility than peers from advanced economies, and as their capital bases are stronger given the volatility that the region is used to seeing in its economy.
And while rapid loan growth will always be a red flag for bank analysts, since credit is expanding at some 25% annually in the three countries, Santarelli said he does not expect a significant deterioration in asset quality indicators in the foreseeable future.