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Central American banking group G&T Continental is betting on microfinance to break into Panama's market.
Although Panama is renowned for its large financial sector, unequal distribution of income means large parts of the population remain excluded from the banking system.
"We believe Panama's market has space for microfinance and that this is an area poorly understood by the country's traditional financial players," G&T's head of regional expansion, Amador Carballido, told BNamericas. "That's been our bet."
Carballido added that while credit demand remains weak in most Central American countries, Panama's lending growth continues unabated.
"We're still being affected by low demand for credit in Guatemala, El Salvador and Costa Rica. The businesses are still being cautious there."
THE PANAMA GROWTH STORY
"Panama is an exception. Credit demand has been stable there, and the situation is very different from the rest of the region," he added.
Banking assets and lending in Panama have reached record highs this year, as the economy resumed its high growth trajectory after a moderate 2009, ratings agency PCR Ratings said in a report on the country's banking sector.
At the end of 1Q11, gross bank loans in the country reached US$45.3bn, up 21% year-on-year.
Guatemala-based G&T has been present in Panama for three years, and apart from its microfinance subsidiary BMF operates as an offshore bank in the country.
In 2010, BMF reported net income of 280,000 quetzals (US$36,200) in Panama, with an asset base of 19.4mn quetzals.
This net income represented less than 1% of the group's total. But Carballido said G&T will begin to develop its Panamanian operations in earnest after finishing with the development of its El Salvador subsidiary next year.
Like other banking segments in Panama, microcredit has grown strongly in recent years.
The total loan portfolio of local microfinance association REDPAMIF, of which G&T is a member, reached US$123mn at end-2010, up 55% since 2008. The non-performing loan ratio stood at 5.5% at the end of last year.