Private banks granted $5,102 million up to February 2023, which meant a growth of 14%. A year ago, loans grew at 21%. Restrictive public policies and high interest rates worldwide are behind the slowdown.
According to the figures of the Central Bank of Ecuador (ECB)between January and February 2023, the Total new loans granted by private banks was $5,102 million14% more than in the same period of the previous year.
At that time, that is, as of February 2022, there had been an annual growth of 21% in new loans, which reveals a slowdown compared to the growth rate registered a year ago (7 percentage points less).
In other words, although the banking system continues to lend, and reinforces its role as one of the supporters of the economic recovery after the pandemic, the warnings that the growth of financing is losing pace are confirmed.
“He increase in monetary policy interest rates that have been carried out by both developed economies and emerging countries to face international inflation has raised the cost of external financing for companies, as well as for private banks and cooperatives, also restricting the liquidity that could come from abroad. For this reason, it was warned that the delivery of new credits by private banks would slow down this year, “explains the Association of Private Banks (Asobanca)
If the high costs of international funding continue, and the restrictive public policy of maximum interest rate ceilings in the local market is not changed, the main victims will be the citizens, especially entrepreneurs and micro-entrepreneurs who need more financing for their businesses.
However, it is important to mention that the closure of two banks in the United States, and the problems of European banks such as Credit Suisse, do not directly affect Ecuadorian banks. This is because high levels of solvency and reserves are maintained; Furthermore, delinquency does not exceed 3%.
In the case of liquidity, although there is a reduction in the internal market, the banks register still high levels.
Productive credit continues to be the priority
Of the total credits placed between January and February 2023 by private banks, 72% of the new credits, or $3,686 million, were allocated to the productive sectors, while 28% or the equivalent of $1,416 million, went to consumption.
This means that 7 out of every 10 dollars of new credits have been allocated to productive sectors in which there are entrepreneurs, micro-entrepreneurs, SMEs, among others.
“The delivery of new productive loans reflects the commitment of private banks to support micro, small, medium and large companies in the country in their objective of obtaining financing that can be used for productive activities. Meanwhile, consumer loans are important for Ecuadorian households because they allow immediate access to liquidity, facilitating the purchase of goods and services in the productive sector,” Asobanca pointed out.
According to the ECB report, if the analysis is extended to the entire private financial system, the volume of new loans amounts to $6,826 million between January and February 2023. Private banks delivered 75% of the total; cooperatives 24%; and, the mutualists 1%. (JS)