Americas > South America > Colombia > Colombia remains a bright spot in Latin American banking

Colombia: Colombia remains a bright spot in Latin American banking

2015/04/04

Known for its financial solidity, sound regulations and attractive profit margins, Colombia remains a bright spot in Latin American banking, though the prospect of slower economic increase in 2015 coincides with calls for the scope of the financial services sector to be widened.

According to the Colombian Banking Association, Asobancaria, there are 33 commercial banks operating in the country, inclunding both local and foreign-owned lenders. Total registered profits for 2014 reached COP7.9trn ($3.1bn), with Banco de Bogotá leading the way (COP1.5trn, $577m), followed by Bancolombia (COP1.33trn, $511m), Occidente (COP1.2trn, $460m) and Davivienda (COP1trn, $385m). At the end of December, the total loan portfolio stood at COP329.6trn ($126.6bn), made up of commercial loans (59.8%), consumer loans (27.1%), mortgages (10.3%) and microcredit (2.8%).

Colombia’s banking industry is set to witness some structural changes in the coming months, following approval of the merger between Brazil’s Itaú Unibanco and Chile’s Corpbanca, which is likely to lead to the banks combining their Colombian units. At the same time, two finance houses and the microcredit association, Banco Mundo Mujer, are well en route to becoming commercial banks.

The banking sector as well presents opportunities for expansion in segments such as credit cards and mortgages. Its penetration and financial depth are far from the levels reached in developed nations, which means there is ample potential for organic increase.

As a result, the industry is expected to increase its focus on technology as a means of boosting financial inclusion. According to the World Bank, only 30% of the people has an account in a financial institution, and there are 16 bank branches per 100,000 people, as compared to the Latin American average of 20.

“Additional than 60% of consumers in Latin America are unbanked, meaning they live in a cash-only economy,” said Jason Oxman, CEO of the Electronic Transactions Association, quoted in an industry publication. Similarly, a high rate of mobile phone penetration in the region is offering opportunities in mobile banking (m-banking).

The Spanish bank BBVA found in early 2014 that additional than half of the banks operating in Colombia offered m-banking services. For the segment to grow, products will need to be developed that are cheaper, simple to use and readily available in remote areas, BBVA concluded.

Macroeconomic factors

However, economic headwinds may affect the performance of the sector this year. Lower oil prices have begun to weigh on Colombia’s economy, increasing the likelihood of tightening interest rates at home, as the central bank moves to keep inflation under control against a backdrop of currency depreciation.

Colombia’s GDP increase is expected to slip to between 3.5% and 4% in 2015 − below the recently revised government prediction of 4.2% − according to Santiago Castro, the chief of Asobancaria. Nonetheless, he remains upbeat about the industry’s prospects in the coming months. “Our simulations show that indicators of solvency and portfolio quality in our banks are not affected to the point of threatening the solid financial stability,” he said at an event in Cartagena before this year.

According to a Fitch Ratings statement in January, loan increase will decelerate in Latin America in 2015 due to slower economic increase. “For Colombia, the seasoning of previous fast loan increase and the burden of the recently acquired Central America operations will pressure non-performing loans (NPLs) on a consolidated basis, but these ratios will remain stronger than the Emerging Market median,” said Fitch.

Analysts at Business Monitor International estimate a slight weakening of the Colombian banking system’s strong loan and investment increase performance last year, which reached 14.4% and 12.8%, respectively.

An OECD survey of the Colombian economy, published in January, as well pointed to signs of a robust banking sector, noting strengths inclunding the country’s “solid” bank solvency and liquidity indicators and historically low levels of NPLs. However, according to the statement, domestic vulnerabilities still remain. These include high household deficit and the rapid increase in home prices, which have doubled since 2005.

The OECD as well noted that additional needs to be done to deepen Colombia’s financial services and improve access to finance via increased competition in the market. “Inducing additional competition in the banking system by avoiding excess concentration and enforcing anti-trust regulations could lower the cost of finance and improve access,” said the OECD statement.

Total credit as a proportion of GDP fell just short of 41% in 2013, according to the survey, up from a low of 20% in 2003, but still well below the OECD average of 150%. The statement as well noted that accessing credit was still a challenge for some of the country’s small and medium-sized enterprises. At the same time, profit margins remained somewhat high, which suggested that “efficiency and competition in Colombia’s banking system is relatively low”.

En Español

Colombia sigue destacando en la banca latinoamericana por su estabilidad financiera, sólidas regulaciones y atractivos márgenes de utilidades, aunque la posibilidad de un menor crecimiento económico en 2015 coincide con llamados para que se amplíe el alcance del sector de servicios financieros.

Según la Asociación Bancaria y de Entidades Financieras de Colombia, Asobancaria, 33 bancos operan en el país, incluyendo entidades locales y extrajeras. Las utilidades totalizaron 7,9 trillones de pesos colombianos en 2014 (USD 3,1 mil millones), encabezadas por Banco de Bogotá con 1,5 trillones de pesos (USD 577 millones). Le siguen Bancolombia (1,33 trillones de pesos, USD 511 millones), Occidente (1,2 trillones de pesos, USD 460 millones) y Davivienda (1 trillón de pesos, USD 385 millones). A fines de diciembre la cartera total de créditos totalizó 329,6 trillones de pesos (USD 126,6 mil millones), compuestos por créditos comerciales (59,8%), créditos de consumo (27,1%), hipotecas (10,3%) y microcréditos (2,8%).

La industria bancaria colombiana experimentará cambios estructurales en los próximos meses, tras aprobarse la fusión entre el brasileño Itaú Unibanco y el chileno Corpbanca, lo que probablemente los llevará a combinar sus filiales colombianas. Al mismo tiempo, dos entidades financieras y la asociación de microcrédito Banco Mundo Mujer están posicionados para convertirse en bancos comerciales.

El sector bancario también presenta oportunidades de expansión en segmentos como tarjetas de crédito e hipotecas. Su penetración y profundidad financiera están lejos de los niveles en países desarrollados, lo que significa que existe un gran potencial de crecimiento orgánico.

Como resultado, se espera que la industria se concentre más en la tecnología para impulsar la inclusión financiera. Según el Banco Mundial, solo 30% de la población posee una cuenta en una entidad financiera y hay 16 sucursales bancarias por cada 100.000 habitantes, frente al promedio latinoamericano de 20.

“Más de 60% de los consumidores en América Latina no están bancarizados, lo que significa que viven en una economía de dinero en efectivo,” dijo Jason Oxman, director ejecutivo de la Electronic Transactions Association, en una publicación de la industria. Asimismo, la alta tasa de penetración de la telefonía móvil en la región ofrece oportunidades en el segmento de la banca móvil (m-banking).

El español BBVA dijo a principios de 2014 que más de la mitad de los bancos que operan en Colombia ofrecen servicios de m-banking. Para que el segmento crezca, es necesario desarrollar productos más baratos, simples de usar y fácilmente accesibles en áreas alejadas, concluyó la entidad.

Factores macroeconómicos

Sin embargo, dificultades económicas podrían afectar los resultados del sector este año. Los menores precios del petróleo han comenzado a afectar la economía colombiana, elevando la probabilidad de un ajuste de tasas de interés, mientras el banco central toma medidas para controlar la inflación en un contexto de depreciación de la moneda.

El PIB de Colombia caería a entre 3,5% y 4% en 2015, por debajo de una proyección revisada del gobierno de 4,2%, según Santiago Castro, director de Asobancaria. Sin embargo, se muestra optimista sobre las perspectivas de la industria en los próximos meses. “Nuestras simulaciones muestran que los indicadores de solvencia y calidad de cartera en nuestros bancos no están afectados al punto de amenazar la estabilidad financiera”, dijo en un evento en Cartagena este año.

Según un informe de Fitch Ratings en enero, el crecimiento del crédito en América Latina caerá en 2015, debido a la desaceleración económica. “Para Colombia, la combinación del rápido crecimiento anterior de los créditos y la carga de la reciente adquisición de operaciones en América Central presionará la morosidad en una base consolidada, pero estos ratios se mantendrán más sólidos que la media de los mercados emergentes”, dijo Fitch. Analistas de Business Monitor International prevén un leve debilitamiento del sólido crecimiento de los créditos y activos del sistema bancario colombiano el año pasado, que llegó a 14,4% y 12,8% respectivamente.

Un estudio de la OCDE sobre la economía colombiana, publicado en enero, también apuntó a señales de robustez en el sector bancario, destacando fortalezas que incluyen los “sólidos” indicadores de solvencia y liquidez del país, como también niveles de créditos morosos históricamente bajos. Sin embargo, según el informe, aún existen debilidades locales. Estas incluyen un alto nivel de endeudamiento en los hogares y la rápida alza de los precios de las viviendas, que se han duplicado desde 2005.

La OCDE también destacó que se necesita hacer más para profundizar los servicios financieros de Colombia y mejorar el acceso al financiamiento con una mayor competencia en el mercado. “Introducir más competencia en el sistema bancario, evitando la excesiva concentración y aplicando regulaciones anti monopolio, podría reducir el costo del financiamiento y mejorar el acceso”, según el reporte de la OCDE.

El crédito total como proporción del PIB se ubicó justo por debajo de 41% en 2013, según el estudio, frente a un mínimo de 20% en 2003, pero muy inferior al promedio de 150% de la OCDE. El informe también destacó que acceder al crédito aún es difícil para algunas pequeñas y medianas empresas. Al mismo tiempo, los márgenes de utilidades siguen siendo relativamente altos, lo que sugirió que “la eficiencia y competencia en el sistema financiero colombiano son relativamente bajas”.

Related Articles
  • Netanyahu to pioneer new diplomatic grounds in Latin America

    2017/09/13 Defying doomsayers concerned about Israel losing diplomatic clout, Benjamin Netanyahu is headed to Bogota, Argentina, and Mexico -- part other Latin American nations. Prime Minister Benjamin Netanyahu is scheduled to depart for Latin America and the US on Sunday evening, marking the fifth time in some 15 months he will embark on ground-breaking trips to nations at no time before visited by a sitting Israeli prime minister.
  • Netanyahu’s Historic Latin American Tour to Highlight Israeli Tech Sector

    2017/09/10 Latin America is “hungry for Israeli technology,” a senior Foreign Ministry official said Tuesday ahead of Prime Minister Benjamin Netanyahu’s historic visit to the region next week. Deputy Director General at the Foreign Ministry’s Latin America and Caribbean Division, Modi Ephraim, said the visit will have historic significance, as it will be the initial by a sitting Israeli prime minister.
  • PM Netanyahu leaves on historic visit to Latin America

    2017/09/10 Israeli Prime Minister Binyamin Netanyahu will leave on Sunday evening for a working visit to Latin America. During his trip, Netanyahu will visit Argentina, Colombia and Mexico. This will be the initial visit by a sitting Israeli Prime Minister to Latin America. Paraguayan President Horacio Cartes will travel to Buenos Aires to meet Netanyahu. Netanyahu leaves for trip to Argentina, Mexico, and Columbia, then meets world leaders at UN General Assembly in New York. Accompanying Netanyahu is a delegation of Israeli businesspeople from the fields of agriculture, water, communications and energy. Members of the delegation will hold commercial meetings with their local counterparts. Eonomic events will as well be held in Argentina and Mexico, led by Netanyahu and the Argentine and Mexican heads of national.
  • UNWTO: International tourism – strongest half-year results since 2010

    2017/09/09 Destinations worldwide welcomed 598 million international tourists in the initial six months of 2017, some 36 million additional than in the same period of 2016. At 6%, increase was well above the trend of recent years, making the current January-June period the strongest half-year since 2010. Visitor numbers reported by destinations around the world reflect strong request for international travel in the initial half of 2017, according to the new UNWTO World Tourism Barometer. Worldwide, international tourist arrivals (overnight visitors) increased by 6% compared to the same six-month period last year, well above the sustained and consistent trend of 4% or higher increase since 2010. This represents the strongest half-year in seven years.
  • Odebrecht agrees to pay $220 million fine, aid Panama probe

    2017/08/02 Brazilian engineering company Odebrecht [ODBES.UL] agreed to pay $220 million in fines and will cooperate with investigators probing bribes of Panamanian officials, the Central American country's attorney general said on Tuesday. The fine included $100 million for using the banking system for illicit activities, said Panama's attorney general, Kenia Porcell.