Tuesday 7 February 2023

Credit Does Not Rebound, Even With Lower Rates

Interest rates in colones fell in the last year, but credit is still not revived The decline was mainly based on housing and consumer loans

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7 February 2023 - At The Banks - BCCR

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Although the Banco Central de Costa Rica (BCCR) – Central Bank –  has been reducing the monetary policy rate to boost the issuance of bank credit, the speed with which the portfolio of loans in colones (national currency) grows continues to decrease.

Housing loans have registered a greater reduction in interest rates.

Official data from the country’s financial system indicate that by October 2017 the portfolio of loans in colones grew to 14%, in the same month of 2018 the rate fell to 6% and by October 2019 the increase was just 4%.

This significant slowdown in the issuance of loans is reported despite the fact that during 2019 the Central Bank has lowered the Monetary Policy Rate six times, from 5.25% to 3.25%.

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Elfinancierocr.com reports that “… This year growth has dropped steadily since April, that is, has seven months to slow down the pace. While some portfolios show very slight improvement (industry and transport), portfolios associated with consumption do not. The balances of consumer loans, housing, trade, tourism, and construction, remain slow.”

Not everything is adverse to banks, because according to Juan Manuel Jiménez, manager of Banca Empresarial de Promerica (Promerica Business Banking), “… The slowdown in the supply of credit in the state banking segment has caused some customers to start a migration to private banking, generating this possibility of issuance and portfolio growth.”

Mutuals were part of the financial entities that reacted with a change in supply rates.

 

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Q Costa Rica
Reports by QCR staff

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