Slower loan growth, slight asset quality drop for Latin American banks - DB

Friday, December 9, 2011

Banks in most Latin American countries experienced slower loan growth and a slight drop in asset quality in October, according to a report from Deutsche Bank (NYSE: DB).

Colombia had the fastest loan expansion rate at 22.8% year-on-year, driven by high growth in the consumer loan sector of 25.2%. But the expansion seems to have peaked in August, slowing in September and October, the report said.

Chile's loan growth slowed to 15.5% year-on-year in October, down from 16.5% in September, while in Mexico that rate also fell, to 13.7% year-on-year, down 0.9 percentage points in the same comparison.

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But Mexico has seen sustained consumer loan growth, which at 21.4% year-on-year in October is its highest level in almost four years, Deutsche Bank said.

Nonperforming loans (NPL) ratios increased in all countries except for Chile, where it remained at 2.5%. Mexico suffered the highest deterioration in asset quality during October, as public sector NPLs doubled to 1.8% from 0.9% in September.

The October data is largely in line with Deutsche Bank's expectations of slower loan expansion and gradual asset deterioration in the region moving into 2012, after two years of strong growth.