TEXT-Fitch: Central American bank profitability expected higher in 2013

Thu Dec 13, 2012 11:43am EST

Dec 13 - The 2013 outlook for banks in Central America and Dominican
Republic is stable, based on enhanced profitability, sound balance sheets, ample
liquidity and resilience to external risks, according to Fitch Ratings.

'Lower loan loss provisions, strong credit growth, asset rebalancing, and some
advances in efficiency will boost banks' profits during 2013,' says Rene
Medrano, Senior Director in Fitch's Financial Institutions Group. 'Fitch
anticipates double digit credit growth rates in the region throughout 2013, with
the exception of El Salvador and the Dominican Republic, where credit growth
will be slower. The broad availability of funds, together with the relatively
low levels of banking penetration, suggests that growth may be sustainable over
a longer time horizon.'

Competitive pressures are likely to rise as banks seek to increase the return on
their assets by optimizing their liquidity. An increase in South American
players and the regionalization of some local financial groups are expected to
boost loan supply. Banks' net interest margin will have limited room for
improvement as a result.

Credit quality metrics will continue to improve in some of the banking systems.
While banks in Panama will continue to exhibit notably low levels of past due
loans, Fitch foresees further deterioration in loans in the Dominican Republic
during 2013.

Banks in the region will continue boasting robust capital bases, contributing to
systemic stability. But Guatemalan banks will continue lagging their regional
peers despite the advances of previous years.

For more information, Fitch's special report titled '2013 Outlook: Central
America and the Dominican Republic' is available on the web site at
www.fitchratings.com.


Additional information is available at 'www.fitchcentroamerica.com' or
'www.fitchratings.com'

Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria', Aug. 16, 2011;
--'Central American Banking: Accelerating Growth', Nov. 15, 2012;
--'Central American Banks Withstand Financial Contagion Well-Positioned for
Growth', July 9, 2012;
--'Efficiency Across Central American Banking Systems (The Hidden Potential)',
March 7, 2012.

Applicable Criteria and Related Research: 2013 Outlook: Central America and the
Dominican Republic
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