Introduction: Lower Optimism

The expectations for the financial sector in Latin America remain positive in 2015, although there is less optimism than in previous years. That's what the results of the BNamericas Financial Services survey indicate, in which 25 executives and industry experts from commercial banks, insurance agencies, ratings agencies and development banks throughout the region participated.

While more than half of respondents believe that the loan portfolio will expand during 2015, that percentage is clearly lower than in previous surveys. Regional GDP is not expected to grow much more than 2% this year (less than estimates 12 months ago for 2014), which together with the change in the international scenario given the falling prices of raw materials, the slowdown in the Chinese economy and the expected rise in interest rates in the United States, explains the lower level of optimism.

The cautious optimism hides marked differences between countries. While in Chile, Colombia, Peru and Mexico a favorable business environment for the financial industry is foreseen, expectations are quite the opposite in Argentina and Venezuela. In Brazil, meanwhile, the second term of President Dilma Rousseff begins with a moderately positive outlook, despite the low growth projected for the largest economy in the region this year.

Regarding profitability levels, most of those surveyed believe there will not be any abrupt changes compared with 2014, although nearly half of respondents anticipate tighter margins and higher funding costs - two factors identified as being among the main risks during the coming year.

Still, the principal concern for executives and analysts of the financial sector in the region is the local enforcement of regulations that took effect in recent months, or those that could be introduced in the short term in several countries in the region.

Among the opportunities, consolidation stands out, the potential for which is still significant in several markets.

Figure: Loan Growth

Figure: Corporate Loan Growth

Figure: Mortgage Loan Growth


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