Friday 19 August 2022

Costa Rica Slow Down in Dollar Loans

The Year-to-Year balance of home loans, in dollars dollar, was 4.6% in September 2017, compared to 14%, a year ago

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19 August 2022 - At The Banks - BCCR

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As of September of this year, the bank loan portfolio granted to the private sector registered a 5% Year-to-Year growth, well below the 13% registered in the same month in 2016.

The Year-to-Year balance of home loans, in dollars dollar, was 4.6% in September 2017, compared to 14%, a year ago

Changes in the rules followed by banks when granting loans in dollars, increases in interest rates and a brief but sharp devaluation suffered by the dollar exchange rate in May are among of the reasons behind the slow down in the growth of the dollars credit portfolio.

The reports that “…The balance of home loans, in dollars, went from a year-on-year growth of 14%, in September 2016, to 4.6% in the same month of this year, 2017. Private banks went from 14% to 8.6%, in that same period, and the state bank from 7.7% to a reduction of 8.3%.”

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Loans in dollars granted for other activities are also growing at a lower speed than a year ago .”… They went from a year-on-year growth of 13.2% in September 2016 to 5% in the same month of this year, 2017.”

“… Gerardo Corrales, a former banker and economist, cited regulatory measures as the main reason for the slowdown in dollar credit. ‘The authorities have implemented a series of measures to discourage credit in dollars to non-generators and this has made it more expensive to obtain a dollar loan for housing – where the greatest demand is customers who earn in colones.’ These measures include the maximum amount granted in each loan according to the appraisal, the maximum allowed level of leverage, higher capital requirements for each dollar lent to non-generators, and higher levels of estimates of uncollectibles, Corrales added.”

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