Roundup: Countercyclical provisions, consumer loans up 25%, Latam bank stocks

- Tuesday, October 11, 2011

Roundup: Countercyclical provisions, consumer loans up 25%, Latam bank stocks

Colombian financial watchdog Superfinanciera has announced the adoption of countercyclical provisions on unsecured consumer loans to protect against asset quality deterioration due to the uncertain global economic environment.

For these loans, the loss for delinquencies will increase to 75% from 65%, and the banks must now be fully provisioned within 90 days, the regulator said in a statement.

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Consumer loans in Colombia's financial system rose 25% in the year ending August, and there has been little or no increase in non-performing loans (NPLs), according to the central bank's new financial stability report.

The numbers are "not a tremendous surprise," given the consumer boom seen thus far in 2011, financial services firm Celfin said in a report.

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Latin American banking stocks appreciated an average of 0.3% in US dollar terms in the week ending October 7 compared to the previous week, according to a report by Raymond James (NYSE: RJF).

Argentine banks had the worst-performing stocks during this period, declining an average of 4.5%. On the flipside, small-cap Brazilian banks were the best-performing banking equities, increasing 3.7% week-on-week.

Brazil's Banrisul had the best-performing stock in the region, gaining 6.1% in the week, while Argentina's Banco Hipotecario saw the worst-performance, after tumbling 7.8%, the report said.