Dec 14 - Low credit penetration, relatively sound asset quality and funding
ratios, adequate capitalization, and economic growth should mitigate risks from
continued moderate loan growth across the Andean region in 2013, according to
'Andean banks remain well-positioned to face the challenging external
environment and volatile international financial markets,' says Theresa Paiz
Fredel, Senior Director. 'Andean banks remain predominately deposit funded and
have a limited reliance on international capital markets, trends that will
continue in 2013.'
A favorable economic environment, expansion into new markets, a sound deposit
base and access to capital markets support a stable outlook for the Colombian
bank sector in 2013. Although large Colombian banks have strong financial
profiles, vulnerable smaller players remain challenged by sub-par capital
The 2013 outlook for the Ecuadorian banking sector is also stable despite a weak
operating environment and regulatory uncertainty. While recent regulatory
changes will pressure profitability, Fitch expects profitability to sufficiently
underpin capital growth in 2013.
The Peruvian banking sector's stable 2013 outlook is due to strong fundamentals
and the system's expected resilience to the potential risks of rapid loan
The Venezuelan banking sector has a negative outlook for 2013 in line with that
of the sovereign. Despite the system's improving financial performance in 2012,
Fitch expects a challenging economic environment next year, which combined with
structurally weak efficiency and potential asset quality deterioration, will
make it difficult to sustain high profitability.
For more information, a special report titled '2013 Outlook: Andean Banks' is
available in both English and Spanish on the Fitch Ratings web site at
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: 2013 Outlook: Andean Banks