Looks like the local banks are starting to see significant defaults on loans although according to the Multibank, they are not at levels to cause alarm. You would think otherwise based on the statistical data over the last year. I am impressed that $565 million represents only 2.5% of the total loans outstanding. That would indicate a total loan portfolio in excess of $20 billion.
La Prensa
The value of banks loans that have been classified as "delinquent"
rose almost $200 million from May 2008 to the same month in 2009,
according to a report from the Superintendency of Banks.
The bad loans totaled $565 million in May of this year, a 53 percent increase from the $370 million in May of last year. In May of 2008, the amount of loans in arrears was 1.7 percent of the total loan portfolio of the banking system, but that number has now increased to 2.5 percent.
Moreover, loans that are 3 months overdue now total $92 million, a 23 percent increase.
The delinquent accounts may be related to the economic slowdown in the country, job losses and high debt, said Mario De Diego, vice president of the Association of Banks. Another industry source, who preferred not to be named, said that the increases will probably force banks to be even more cautious in making loans.
For now, the figures are not a cause for alarm, "but we have to closely monitor these accounts and maintain a conservative credit policy," said Rafael Sánchez, manager of Multibank.
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