RPT-Fitch: 2014 banks outlook stable for Central America and Dominican Republic

Mon Dec 16, 2013 12:55pm EST

Link to Fitch Ratings' Report: 2014 Outlook: Central America and the Dominican 
RepublicSAN SALVADOR, December 16 (Fitch) The rating outlook for banks in Central 
America and Dominican Republic is stable, according to a new Fitch Ratings 
report.

'The sector outlook is stable in all countries except Costa Rica, where it is 
positive. Fitch anticipates that the Costa Rican banking sector will resume its 
growth and profitability in 2014, after underperforming expectations in 2013 due
to government interventionist measures that constrained industry performance,' 
said Rene Medrano, Senior Director. 

Banks will continue to finance their operations with domestic deposits, which 
have proven to be stable. In addition, the banks' funding diversification and 
maturity profile could continue to improve should the banks continue to raise 
funds in both domestic and international capital markets, although less 
frequently than in 2013.

Most banking systems will continue to enjoy a strong and stable capital 
position, fuelled by steady accumulation of profits. The Guatemalan banking 
system will keep lagging behind its regional peers, while capital ratios are 
expected to continue narrowing in Panama over 2014.

Credit growth will remain stable across the region, except in Costa Rica and the
Dominican Republic where Fitch expects more dynamism compared to 2013. The 
Dominican Republic and Panama will exhibit the highest nominal growth rate in 
the region, while El Salvador will continue as one of the lowest at less than 10
percent. Asset quality will remain strong and the banks' loss absorption 
capacity sufficient.

The Nicaraguan and Dominican banking systems will remain the most profitable 
across the region, supported by comparatively high margins. Their return on 
assets (ROAA) is expected to remain slightly above 2 percent, while those of the
other countries remain around 1.5 percent. The banks' performance will continue 
to rely heavily on interest revenues.

For more information, a special report titled '2014 Outlook: Central America and
the Dominican Republic' is available on the Fitch Ratings web site at 
www.fitchratings.com.

Contacts:

Central America

Rene Medrano

+503 2516-6610

rene.medrano@fitchratings.com

Edgar Cartagena

+503 2516-6613

edgar.cartagena@fitchratings.com

Marcela Galicia

+503 2516-6616

marcela.galicia@fitchratings.com

Rolando Martinez

+503 2516-6619

rolando.martinez@fitchratings.com

Alvaro Castro 

+503 2516-6615

alvaro.castro@fitchratings.com

Luis Guerrero 

+503 2516-6618

luis.guerrero@fitchratings.com

Mario Hernandez

+503 2516-6614

mario.hernandez@fitchratings.com 

Carmen Matamoros

+503 2516-6612

carmen.matamoros@fitchratings.com

Dario Sanchez

+503 2516-6608

dario.sanchez@fitchratings.com

Luis Ayala 

+503 2516-6622

luis.ayala@fitchratings.com

Francesca Cedrola

+503 2516-6611

francesca.cedrola@fitchratings.com

Dominican Republic

Larisa Arteaga

+809 563-2481

larisa.artega@fitchratings.com

Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: 
elizabeth.fogerty@fitchratings.com.

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

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