Central American bank penetration fails to make gains, says Fitch

Friday, September 30, 2011

Costa Rica was the only Central American country to increase financial penetration in the past four years, according to a new report by ratings agency Fitch.

Between December 2007 and December 2010, Costa Rica reported a 3.5% increase in its loans to GDP ratio.

The five other main Central American countries have all shown a decrease during the period. Panama led the contraction with a drop of some 10% in the loans-GDP ratio.

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Although Panama's loan portfolio grew 40% in 2007-10, the increase has not kept pace with the rapid expansion of the country's economy.

Costa Rica led the loan growth with a 55% cumulative loan book increase. Nicaragua's credit portfolio stagnated during the period, and El Salvador registered a 5% decline.

"Banks have strengthened their capitalization levels over the past few years," Fitch said. "El Salvador excelled at its capitalization, as did to a lesser extent Costa Rica and Guatemala. Although Panama is well capitalized, its solvency has not changed materially over the past four years."