Credit Portfolio Recovers in 2022

Thursday, 09 March 2023

The International Banking Center (CBI) is regaining its performance in 2022 in terms of assets, financial intermediation volume, and profitability, as emphasized by the Superintendent of Banks, Amauri A. Castillo, during the presentation of the December 2022 results.

This is underscored by the fact that assets that reached approximately USD 140 billion, of which USD 83.35 billion are attributed to credit. Additionally, the credit portfolio shows an increase of USD 8.89 billion, equivalent to 12%.

The event, titled “Panamanian Banking System: Engine for Economic Growth and Sustainability,” has become an iconic event hosted by the Superintendency of Banks, gaining special significance this year as the institution celebrates its 25th anniversary.

During the presentation, it was revealed that the loans with the greatest relevance to the balance sheet are domestic loans, accounting for 68% of total lending operations. Furthermore, foreign loans have experienced recent average growth of 24.7%, with corporate loans in countries such as Colombia, Costa Rica, Guatemala, and Brazil standing out.

Within the domestic portfolio, the household segment constitutes 53% of the total, with housing mortgages being one of the most significant segments, totaling USD 18.27 billion. These mortgages are focused on both preferential and non-preferential interest rates segments. Likewise, corporate loans exhibit recovery in the commercial, services, manufacturing, mining, and primary sectors, while the construction sector has seen a year-on-year decrease of 4%.

Corporate loans represent an important pillar driving the growth of companies and constitute 41% of the portfolio. The sectoral distribution is approached with caution, as funding for the corporate sector should surpass that for household loans, considering the impact on funding for the national productive sector.

New loans have experienced growth of over 30%, reaching USD 23.14 billion, which is USD 6.30 billion more compared to December 2021 when they totaled USD 16.84 billion. However, they have not year reached the levels recorded in 2019.

Regarding portfolio quality, CBI recorded an average delinquency rate of 3.9%. The domestic component recorded 5.3%, a performance considered appropriate from a recovery perspective, given the high default levels following the pandemic, which affected the country’s economic performance. Regulatory measures were implemented to safeguard financial stability, which helped prevent a potentially more complicated situation.

Superintendent Castillo indicated that “we are returning to normality, as evidenced by the balances converging to Rule 4-2013. It is reasonable for the default ratio to behave this way, with some productive sectors still maintaining default levels above 7%. In contrast, sectors like industry exhibit an incredibly positive performance of 1.53%, typical of the operational management of the sector.”

It was reported that the deposit portfolio maintained slight growth, despite a slight decrease in domestic deposits by 0.8%. This contrasts with what happened in 2020 and, to a lesser extent, in 2021 when there was an expansion of domestic loans. The decrease in 2022 was related to greater access to other funding sources (credits and issuances), reflected in a 27% increase in the volume of financial obligations.

CBI’s profitability indices were positive, with profits exceeding pre-pandemic levels by approximately 45%. This was underscored by efficient asset and liability management. However, sustaining the main sources of profitability over time will be a challenge, as interest rate hikes may exert pressure on the financial margin due to increased funding costs.

As of the end of 2022, the capital adequacy ratio of the National Banking System reached 15.34%, remaining in a strong and well-positioned state compared to minimum regulatory levels, as did the liquidity ratio, which stood at 57%. Both indicators are supported by appropriate risk management practices, maintaining CBI’s solid and resilient position.

Given the leadership of the Superintendency of Banks in promoting financial literacy in the country, this year’s event included the National Strategy for Financial Inclusion (NSFI) panel: Opportunities and Challenges for Panama, featuring international panelists.

The event was attended by government authorities, key figures from the financial and banking industries, regulatory and supervisory bodies, multilateral organizations, credit rating agencies, foreign representatives, the media, among others.

For further information on the results of this report, please visit our website at (Statistics).