Latin Finance - November/December 2010 - 63

involving banks of all sizes. Microﬁnance is growing, important and proﬁtable in Bolivia, but it is not a part of BMSC’s core business, he adds. The largest microﬁnanciers do not yet have the size to be competing for the same clients as BMSC. As with previous years, it remains the case that only a merger of Bolivia’s next largest banks could produce a worthy rival to BMSC. In the middle part of the decade, there was talk in Bolivia about foreign entrants that might challenge Bolivia’s largest banks. The credit crisis put an end to that discussion, and its lingering e ects seem to be keeping overseas pretenders out in the near term, Zuazo explains.

reserve requirements, banks have become more solid on the whole, Zuazo explains, with NPL ratios falling. “The government has been more positive than negative on balance,” the banker concludes. LF

TRINIDAD & TOBAGO
Best Bank – Republic Bank

Liquidity Rich T

Happier with the politics: Zuazo The bank will now focus on upgrading its technology, having installed its own ATM control mechanism in the past year, increasing e ciency and making its network, the nation’s largest, the bank says. It plans to increase the network by 20% in the next 12 months. Looking ahead, Zuazo counts inﬂationary pressure in the medium term as a signiﬁcant risk. The political environment is also tricky, though he notes some reassurance lately. “The government has managed macroeconomic factors relatively well,” says Zuazo, pointing to its interest rate decisions and monitoring of the currency. Thanks to regulations like stronger

rinidad & Tobago’s (T&T) Republic Bank has been able to grow its assets despite a weak economy and reduction in its loan portfolio. This has left the bank with ample liquidity, but not a lot of entities to lend to, says managing director David Dulal-Whiteway. Assets increased to 44.3 billion Trinidadian dollars ($7.0 billion) in the ﬁrst quarter of 2010, up from 42.4 billion Trinidadian dollars a year earlier, according to S&P. “There is no credit crunch here, but demand for credit is weak both in the retail and commercial sectors,” says Dulal-Whiteway. “Two or three years ago, before the global ﬁnancial crisis, our loan-to-deposits ratio was usually around 80%. Nowadays it is around 60%,” DulalWhiteway says. S&P considers this to be positive considering the di cult economic conditions in the country, whose GDP JPMorgan expects to see grow by 3.0% this year. GDP contracted about 4.0% in 2009. The bank’s deposits have been rising steadily. According to S&P, deposits increased 5.4% for the half-ﬁscal-year ended March 31, 2010, from ﬁscal yearend in September 2009. And the loan portfolio is increasing modestly. “Our loan portfolio, which is equally divided into commercial and retail credits, saw a 5% growth in mortgage loans [in the ﬁrst quarter of 2010 versus the corresponding quarter in 2009], which are part of our retail portfolio,” says Dulal-Whiteway. Still, even though the T&T economy is showing ﬂickers of growth, Dulal-

Ample liquidity, says Dulal-Whiteway Whiteway does not expect lending to grow substantially. “I expect our loan portfolio to grow under 5% [each year] in the next two years,” he says. S&P agrees. “Although the bank has been able to maintain its leading position in T&T, we don’t expect its loan portfolio to grow at the pace of the past three years, due to the slowdown in the Caribbean economies,” says S&P analyst Alfonso Novelo. According to the rating agency, the bank’s loan portfolio was growing at an average 15% since 2006, with the exception of 2009, when it contracted 7%. S&P has a BBB- rating with stable outlook for the bank. Dulal-Whiteway notes that the bank has been sticking to conservative practices when extending loans to clients. “We never got away from normal lending practices. Even in boom times, we never lent more than 80% of the [purchase amount].” The ﬂattish trend in Republic’s loan portfolio is better than what is seen throughout the T&T banking system. Republic says that in the ﬁrst quarter of 2010, private sector credit contracted by 2.6% compared to the ﬁrst quarter of 2009, following a 4.1% contraction in December 2009. “The slide of credit, together with high ﬁscal injections, continues to bolster high system liquidity and in so doing suppress interest rates,” a Republic Bank report reads. The basic prime lending rate

November/December 2010

LATINFINANCE 63

Latin Finance - November/December 2010

Table of Contents for the Digital Edition of Latin Finance - November/December 2010