LatinFinance - November/December 2013 - 50

The bank reported a 10.4% capital ratio
at mid-year, and while liquidity and
profitability declined, they remained in line
with systemic trends.
Banco de Guayaquil, meanwhile, has a
balance sheet of $3.5 billion. Almost half
of the bank's loans are to consumers, with
most of the rest made up of commercial
loans; the bank has a very small mortgage
book.
Despite having a market share of around
12%, its stronger financial metrics and
ability to outperform its competitors, makes
it LatinFinance's 2013 Bank of the Year
Ecuador.
Guayaquil's capital ratio is strong, at
13.08%. It kept bad loans in check, at 2.91%
of the total portfolio. (The banking system
as a whole registered a 3.4% bad loan rate,
while Pichincha's was nearly 4%.)
Similarly, Banco de Guayaquil's
profitability metrics were impressive. It
reported a return on equity of 10.5% and
a return on assets of 0.99%, in both cases
beating the system average.
Despite a difficult year for banks, better
times may be ahead.
The government is on an investment
push, hoping to draw foreign investors into
mining and oil, among other sectors. It is
also considering a return to the debt capital
markets. The country's trade minister,
Francisco Rivadeneira, who reiterated that
intention in an interview with LatinFinance
in October, said a sovereign bond issue
could come in 2014.
Fitch acknowledged an improved
economic outlook for the country in midOctober, when it lifted its sovereign rating
by one notch to B. The agency cited GDP
growth forecasts of 3.8% this year and
4.2% next, along with a recovery in oil
production, a stable financial sector, and
manageable fiscal metrics. LF

50 LATINFINANCE.COM - November/December 2013

MULTILATERAL DEVELOPMENT BANK
OF THE YEAR

CAF
With a focus on infrastructure, the multilateral lender
has expanded its loan book
and is prepared for greater
demand as markets turn
sour
It has been a busy year for CAF. The
multilateral - which last year rebranded as
the Development Bank of Latin America,
to reflect its pan-regional ownership and
scope - has worked hard to deepen its
global links; it has sold bonds in a range
of international jurisdictions; it has seen a
surge in its lending; and it has had its credit
ratings upgraded by three agencies.
All this happened during a period in
which Latin markets were, for the most
part, booming. Enrique García, CAF's
president, tells LatinFinance that the
importance of multilateral development
banks stretches beyond filling the gaps
when commercial lenders retreat during a
downturn.
"Institutions like CAF and the
multilateral banks are crucial to the
member countries when the situation is
difficult in the international markets," he
says. "We are the bankers that bring the
GARCÍA: "Infrastructure - energy, industry, roads, transport, telecommunications,
water and sewerage are crucial. We emphasize good quality planning and project
preparation"

umbrella when it's raining."
But when markets are good, the bank's
catalytic effect on economic development is
heightened through its expertise, capacity
to encourage solid policies and encourage
the pursuit of sound projects. Moreover,
ventures financed by multilaterals are
often seen, at least by financial markets, as
credible ones.
"We try to support not only with the
financing of projects, but by providing the
knowledge: to analyze sectors, to have case
studies on success stories in other parts of
the world to bring to the region, to train
people - and finally to be a link to the rest
of the world," says García.
Now, as the market financing
environment becomes increasingly
challenging as global liquidity tightens,
CAF's role as a lender is poised to grow
again.
"In bad times, of course, that [expertise]
continues to be important - but the flow
of funds becomes a very, very important
element," he says.
Lending growth
CAF increased its loan book by 11% in the
year to June 30, to $17 billion.
Among the loans it disbursed was a $300
million credit to Spain's Instituto de Crédito
Oficial (ICO). The credit was designed to
encourage business links between the
country and Latin America, with two-thirds
earmarked for loans for exports, imports
and investment, and the remainder to be
used for guarantees.
The bank also continued an impressive
international funding effort, intended to
maintain a broad base of investors and keep
borrowing costs down.
As well as dollar funding, CAF raised
money in Swiss francs in April. That came
after the bank debuted
in the offshore Chinese
renminbi market in
December 2012, selling
a 600 million yuan ($97
million) three-year bond.
And in August 2012 it signed
a 3.5-year loan, arranged by
Mizuho and Bank of Taiwan,
with participation from the
Export-Import Bank of the
Republic of China and the
Land Bank of Taiwan.
Upgrades by the three
major ratings agencies have
helped its debt market
activity. Moody's lifted the
Credit: Juan Manuel Herrera/OAS

DESPITE A DIFFICULT
YEAR FOR BANKS,
BETTER TIMES MAY BE
AHEAD. THE GOVERNMENT IS ON AN INVESTMENT PUSH, HOPING
TO DRAW FOREIGN
INVESTORS INTO MINING AND OIL, AMONG
OTHER SECTORS
http://www.LATINFINANCE.COM
LatinFinance - November/December 2013

Table of Contents for the Digital Edition of LatinFinance - November/December 2013
