Latin Finance - November/December 2012 - 58

2012
Banking sector growth is expected to be mainly in the retail sector, where Banco General has been cautiously seeking to increase its market share. Expansion abroad – albeit organically – also remains a goal, says Fitch. Banco General operates in Mexico, Guatemala, El Salvador, Colombia and Costa Rica. But strategic acquisitions are also possible, the ratings agency says. The cost of credit should gradually increase as the bank enters riskier markets and promotes riskier products, says Fitch. But given the bank’s riskaverse culture, the dangers of such a move are likely to be limited – with the rewards, ultimately, significant. LF to $5.3 billion from its $4.6 billion in 2010. It also saw its net loan portfolio rise 16% from the year before to $3.3 billion. “Compared with its peers, the bank has a wider deposit base, and that’s the source of liquidity to grow,” says Larisa Arteaga, director at Fitch. The bank’s diversity, retail lending and deposits have all contributed to its maintaining a solid portfolio, she says. The bank’s consumer loan portfolio, meanwhile, aside from credit cards, grew to $35 million, and it is the biggest mortgage lender in the country, with 25.4% of the market in 2011. Banco Popular Dominicano has, in terms of asset volume, a 33% share in the banking market. Its total deposits grow ____________________________________ about 14% to around $4.5 billion. The bank has 28.2% of the market for commercial loans, which continues to grow. The bank says it is the largest issuer in the Dominican Republic of credit and Best bank: Banco Popular Dominicano debit cards. Its prospects are boosted by a fiscal ____________________________________ reform package unveiled this October by the new administration, which analysts his year has been a challenging one say is likely to revive a flagging economy for banks in the Dominican Republic. – and, with any luck, create a better Despite some growth in retail, mortgage environment for the nation’s banks. LF and consumer credit, the story for the country’s lenders has been largely one of ____________________________________ less growth and profitability. The run up to presidential elections this year witnessed a fiscal expansion that has led to a deterioration of the country’s Best bank: National Commercial Bank ____________________________________ fiscal accounts, according to Barclays. It estimates a fiscal deficit of 4.3% of GDP amaica’s economic woes have not made in 2012, likely to shrink to 3.0% of GDP life easy for its banks – and conditions next year. are not expected to improve soon. Against this backdrop, the central After struggling through a prolonged bank was forced to take a conservative stance: interest rates have therefore been recession, last year Jamaica’s real GDP grew by 1.5% and is forecast to grow by higher, leading to a decline in consumer just 0.5% this year, according to Fitch, lending. Banks are also investing more in government assets and directing fewer which expects an average growth rate of 1.0% for 2013-2014. resources to lending. A 1% tax on banks’ National Commercial Bank of financial assets in effect from June 2011 Jamaica, which had total assets of to June 2013 has also made life difficult J$379.4 billion ($4.23 billion) as of and challenged growth levels. mid-year – up by J$31.5 billion dollars In this context, Banco Popular from the year before – remains the Dominicano –the country’s biggest country’s largest player, rendering it best private bank in terms of assets –has equipped to handle any further economic maintained growth above the rest of deterioration. the system. Its size has served it well in NCB accounts for nearly a third of a more challenging environment. Total asset levels rose 15% increase at year-end the assets in the banking system. At the end of the first quarter, it held the largest market share in loans (38.1%) and deposits (38.4%) in the commercial banking industry, according to the central bank. It also has the largest branch network and capital base.

“Relative to other banks in similar markets, NCB’s income streams are much more diversified”
Theresa Paiz-Fredel says, Fitch

Dominican Republic

Jamaica

NCB has concentrated recently on developing its retail operations – particularly consumer credit and unsecured consumer loans, credit cards, mortgages and car loans. Small and medium-sized business (SME) lending is also growing, which is a positive sign for the bank, says Theresa Paiz-Fredel, an analyst at Fitch. The bank has grown in spite of the country’s poor economic activity. Loans were up by 18.4% compared to June last year, and non-performing loans stand at 7.1% of gross loans, as opposed to 7.3% the year before. Deposits were also up 13.3% from June 2011. NCB ranks top in loan share, deposits and equity, generally dominating its market ahead of much smaller banks, Paiz-Fredel says, noting that foreign banks’ presence has offered some competition, though not enough to knock NCB from its perch. As of March this year, NCB was the leader in terms of loan market share, at 38.1%, and deposits 38.4% on the commercial side, according to the bank. Its size means it does not need to rely on any one specific product area. “Relative to other banks in similar markets, NCB’s income streams are much

58 LatinFinance

November/December 2012

Latin Finance - November/December 2012

Table of Contents for the Digital Edition of Latin Finance - November/December 2012