Latin Finance - November/December 2009 - 47

2009 But in the meantime, focusing more on securities than loans has helped Oriental increase profitability, says Gladue. He explains that debt securities, which make up about 75% of the bank’s assets, had a $23 million gain in the second quarter of 2009, which helped increase return on equity to almost 60.0% in the second quarter of 2009 from 14.7% in the same quarter a year before. Return on assets, meanwhile, has increased to 3.0% from about 1.0% in the same period. Oriental’s securities portfolio consist mostly of fixed-rate mortgage-backed securities or notes, guaranteed or issued by FNMA, FHLMC, or GNMA and US agency senior debt obligations. Thanks to gains in securities, Gladue explains, revised 2009 and 2010 earnings per share estimates to $4.43 and $2.73 in July, up from March estimates of $2.87 and $2.46, respectively. He has a target price of $18.00 per share for the end of 2009 and a buy rating on the stock. Oriental, which trades on the NYSE, closed at $12.57 October 1. LF BMSC had ROA of 1.3% and ROE of 19.7%, as of March, according to Fitch. “The financial crisis has not affected Bolivia as much as other countries,” BMSC chairman, Emilio Unzueta tells LatinFinance. “BMSC’s position as the largest bank in Bolivia has not been compromised, and our strategy aims to enhance our competitive advantages and to keep gaining ground.” Due to liquidity in the financial system, he explains, the most competitive area will be loan portfolio growth. Service quality will also be important. As corporate lending makes up a large part of Bolivian banks’ business, Moody’s expects competition to remain tough and margins thin. Banks are looking to increase their presence in the retail and microfinance sectors, though the agency does not expect a substantial expansion of these areas in the short to medium-term. In retail, competition for new customers could come from microfinanciers rather than other banks. The largest microlender in Bolivia, Fondos Financieros Privados, has seen deposits grow at an average rate of 51.5% between 2006 and 2008, Best Bank – Banco Mercantil Santa Cruz though this is expected to slow in 2009. The two largest each claim assets of more than $300 million. “Microfinance is still an activity that is being pursued by financial anks operating in the smaller LatAm institutions with different objectives economies have hunkered down from ours,” says Unzueta, noting that during the crisis and the pecking order microfinance does not yet overlap has remained largely the same as a result. with large banks. He says there are In Bolivia, the dominant bank remains many institutions that work with Banco Mercantil Santa Cruz (BMSC). microfinance and achieve good results, BMSC claims $1.6 billion in assets, as and BMSC is looking for different ways of March, ahead of number two Banco to enhance coverage for small and Nacional’s $1.2 billion, according to medium size enterprises, as well as Moody’s. It holds 32% of Bolivian deposits individuals. and has made 28% of the country’s loans, Last year was the best for the agency adds. The bank spawned by Bolivian banks in a decade, when the 2006 merger of Banco Mercantil measured by profitability and asset and Banco Santa Cruz will likely only be quality, says Moody’s, which sees supplanted by another merger. more challenges going forward. Bolivian banks have suffered but The weakening domestic and global remained profitable during the downturn. operating environment – GDP is The system showed ROA and ROE of 1.6% expected to grow 2.1%, down from and 17.9%, respectively, as of March, 12.1% in 2008 – is likely to affect asset according to Moody’s – only a slight drop quality, profitability, and ultimately from the end of 2008 (1.9% and 20.3%). capitalization, it says.LF Trinidad & Tobago Best Bank – First Citizens ot every bank is able to say it benefitted from assisting the government bail out troubled financial entities, but Trinidad & Tobago’s First Citizens Bank can. By taking over two units from CL Financial – a conglomerate that ran into liquidity problems in early 2009 and was subsequently bailed out by the local government to avoid systemic risks – First Citizens automatically beefed up its assets by almost 9 billion Trinidadian dollars, Bailout Assistant N Bolivia Still on Top B Focused on growth: Manraj CFO Shiva Manraj tells LatinFinance. The units it took over are banking subsidiary Clico Investment Bank (CIB) and Caribbean Money Market Brokers (CMMB), which he describes as healthy despite their parent’s travails. Government owned First Citizens is T&T’s second largest bank, with 26.4 billion Trinidadian dollars in assets as of June, compared to 15.9 billion a year earlier. Republic Bank, the largest player in the country, has about 30.0 billion Trinidadian dollars in assets locally. Deposits also surged after taking over CIB and CMMB. In June, First Citizens’ deposits were about 14.2 billion Trinidadian dollars, compared to 9.9 billion a year before. November/December 2009 LatinFinance 47

Latin Finance - November/December 2009

Table of Contents for the Digital Edition of Latin Finance - November/December 2009