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Honduras Lead Growth in Banking Industry in 2011, Expect the Same in 2012

Article Summary:

As the world continues with financial uncertainty especially in Europe and the United States, banking projections for Central America in general, and Honduras in particular, are optimistic. Last year alone, Honduran Bank Liquidez grew by almost 50%, and it is expected to continue this growth pattern in 2012. Elsewhere in the region, banking centers of Panama, Costa Rica and Guatemala are ones to watch in 2012 and are expected to show the the largest growth.

Photo Credit: El Financiero

Original Article Text From El Financiero via Google Translate :

Banking on Positive Expectations

As the world continues to uncertainty about the financial activity between Europe and the United States, projections for Central America in general, and Honduras, in particular, are optimistic.

 The Honduran banks closed 2011 with a 10% improvement in credit and deposits increased about 12%, figures unexpected if one takes into account the return to the exchange rate band system of local currency devaluation resulting in a slight against the dollar.

 “The system change caused a temporary reduction of deposits in dollars, but was revived and grew quiet all banking indicators,” the Central Bank’s president, Maria Elena Mondragon. 

Bank liquidity grew, something positive for the supply of credit for this year. Other good news for banks come from the regional financial analysts. William Chong Wong, Minister of Finance, expected to improve credit rating Honduras notes. “There are many macroeconomic and financial developments and hope to improve our position. 

Even firms such as Fitch Ratings give good marks for domestic banks and have projections of stability. ” The rating Ficth Ratings, in its preliminary projections for 2012, features two good news: “We will maintain the stability of the banking credit quality and is better positioned against the external uncertainty,” said Shelly Shetty, head of the Sovereign Group Latin America to Fitch Ratings. 

The banking systems of Central America and Dominican Republic will continue to strengthen its financial performance as the region continues to recover their rate of economic growth, estimated at about 4% by 2012 under the baseline scenario of Fitch. 

Rene Medrano, analyst firm says that further expansion of credit, combined with less need to establish provisions for bad loans would spur growth in bank profits. “There will be moderate growth in credit in 2012, led by locally owned banks,” he says. The Economist announced that it will be consumer credit that drives the portfolio, and this not only in Honduras but also in the region.

Fitch Ratings notes 3 countries for bank growth: Panama, Costa Rica and Guatemala.

In this section are considered personal loans, credit cards, loans for purchase of vehicles, and others. 

Regarding interest rates, he expects this to remain relatively low, as has happened so far. For this year, Fitch also expects the region’s banks to improve profitability and to come back to the pre-crisis levels of 2008.

 The first banking systems are most likely to exhibit higher growth are those whose countries have improved economic prospects. In this regard, I would highlight the growth of the banking systems in Panama, Costa Rica and Guatemala.

 For the International Monetary Fund (IMF), the outlook is stable. “We have an agreement with the IMF (stand by) and confirm the good numbers of private banks and hope to extend the agreement after review do at the end of this month,” the Central Bank’s president, Maria Elena Mondragon.

 In the opinion of Camilo Atala, president of Banco Ficohsa, the regional and local banking sector is robust.”I think the banks have grown reasonably well in relation to the economy, I think they are strong in capital, reserves and availability of credit to,” he adds.

 On the perception of Fitch Ratings and the IMF of the effects of the European banking crisis in Latin America, Atala says it’s too early to tell. “What will happen to Europe? What will happen to the euro, European banks and the impact it may cause the U.S. market, which is what we really impact us? “He asked. 

Directly, he explains, the European Central bank is very low, there is no presence of European banks in this region. “Nobody has a crystal ball to determine what will happen to Europe,” he says. For purposes of the global economy, Atala believes the United States has a slow recovery, but economic improvement. 

“To see the impact they may have, I think this will be the challenge of the 2012 global economy level, together with the Asian region where there is much potential for export to us,” he said. 

The banking sector could be a source of vulnerability, as the big Spanish banks have subsidiaries in several Latin American countries. However, he says Atala, anchoring itself through local deposits and minimal dependence on European arrays make these banks are less vulnerable to the problems of financing and the balance of the arrays.

 “We expect a year with better financial conditions remain good coffee prices and the agricultural sector, there is strong investment in telecommunications company America Movil (Claro) and expectation of increased public investment and capital have to respond, so we expect to maintain or improve levels of growth, “he said.

Link to Original Article:

From El Financiero

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