RPT-Fitch: 2014 banks outlook stable for Central America and Dominican Republic
Link to Fitch Ratings’ Report: 2014 Outlook: Central America and the DominicanRepublicSAN SALVADOR, December 16 (Fitch) The rating outlook for banks in CentralAmerica and Dominican Republic is stable, according to a new Fitch Ratingsreport.
‘The sector outlook is stable in all countries except Costa Rica, where it ispositive. Fitch anticipates that the Costa Rican banking sector will resume itsgrowth and profitability in 2014, after underperforming expectations in 2013 dueto government interventionist measures that constrained industry performance,’said Rene Medrano, Senior Director.
Banks will continue to finance their operations with domestic deposits, whichhave proven to be stable. In addition, the banks’ funding diversification andmaturity profile could continue to improve should the banks continue to raisefunds in both domestic and international capital markets, although lessfrequently than in 2013.
Most banking systems will continue to enjoy a strong and stable capitalposition, fuelled by steady accumulation of profits. The Guatemalan bankingsystem will keep lagging behind its regional peers, while capital ratios areexpected to continue narrowing in Panama over 2014.
Credit growth will remain stable across the region, except in Costa Rica and theDominican Republic where Fitch expects more dynamism compared to 2013. TheDominican Republic and Panama will exhibit the highest nominal growth rate inthe region, while El Salvador will continue as one of the lowest at less than 10percent. Asset quality will remain strong and the banks’ loss absorptioncapacity sufficient.
The Nicaraguan and Dominican banking systems will remain the most profitableacross the region, supported by comparatively high margins. Their return onassets (ROAA) is expected to remain slightly above 2 percent, while those of theother countries remain around 1.5 percent. The banks’ performance will continueto rely heavily on interest revenues.
For more information, a special report titled ’2014 Outlook: Central America andthe Dominican Republic’ is available on the Fitch Ratings web site atwww.fitchratings.com.
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