The Bank of the Republic warned that the main asset accounts of credit establishments (EC) they continue to register fallsalthough so far this year they are contracting more slowly.
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In the presentation of Financial Stability Report of the first half of 2024, Carlos Andrés Quicazán, director of Financial Stability of the Bank of the Republic, said that the portfolio continued to register deteriorations in all its modalities and the levels of portfolio with arrears greater than 30 days remain high with respect to its history.
However, from the end of 2023, The growth of the overdue portfolio has decreased, with the exception of the microcredit modality.
He added that the aggregate profitability of ECs remained relatively stable in the last six months, suggesting a correction of the decreasing trend observed since mid-2022.
However, profitability remains at low levels compared to the average of the last five years.
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The central bank official said that the ECs in Colombia have adequate levels of capital and liquidity to face the materialization of various risks.
Furthermore, he warned that, in line with the macroeconomic adjustment, credit continued to exhibit negative real rates, however, so far in 2024 it contracts more slowly compared to the end of 2023.
But at the same time, the report indicates that the portfolio continued to register deteriorations and its Quality Indicator for Defaults (ICM) is at high levels, although it exhibits a lower growth rate since the end of 2023.
In the same way, credit institutions have a level of provisions that appropriately covers portfolio deterioration.
The Financial Stability Report mentions that in the last six months, the aggregate profitability of ECs has remained relatively stable, around 0.7%, below the average of the last five years (1.4%).
The lower profitability is due to the higher expense for provisions and lower interest income.
Likewise, credit institutions maintain adequate capital and liquidity levels above the regulatory minimums.
Quicazán pointed out that “Household debt indicators decreased in line with the lower portfolio growth and their financial burden was below the maximum levels reached in 2022.”
The quality of the consumer portfolio continued to deteriorate, despite the slower growth rate of its past due portfolio during the last six months.
In a context of local economic adjustment and lower investment, the ICM of the private corporate sector continued to show deteriorations in 2023. The deteriorations in the commerce sectors stand out, manufacturing and construction, and small firms.
Finance
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The contraction of household credit contributed to the reduction of household debt indicators. It is expected that during the first half of 2024 the adjustment process will continueis stated in the report.
The adjustment of macroeconomic imbalances was accompanied by an improvement in annual gross household savings during the second half of 2023.
During the last six months, the average financial burden of households that accessed new credits was below the maximums reached in 2022. During the last six months the consumer portfolio has deteriorated, especially in the free investment segment.
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HOLMAN RODRÍGUEZ MARTÍNEZ
Briefcase
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