Credit indicators continue to record declines

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Credit indicators continue to record declines

The Bank of the Republic warned that credit institutions’ key asset accounts (EC) They continue to record declinesThey are shrinking very slowly so far this year.

(Also read: Banco de la Repubblica sheds light on what’s to come on interest rates)

In the presentation of Financial Stability Report In the first half of 2024, Bank of the Republic Director of Financial Stability Carlos Andrés Guicasson said that the portfolio continued to record declines in all its modes, with high levels of portfolios with arrears of more than 30 days. Its history.

However, from the end of 2023, Excluding the microcredit system, the growth of the delayed portfolio has declined.

Gross profit of ECs has remained relatively stable over the past six months, suggesting a correction of the declining trend seen since mid-2022.
However, the profitability is at a low level compared to the average of the last five years.

(Also Read: Impact of Stagnant Inflation on Declining Rates)

The central bank official said ECs in Colombia have sufficient capital and liquidity to face various risks.

And, he warned, credit continued to exhibit negative real rates in line with macroeconomic adjustment. So far in 2024 it is shrinking very slowly Compared to the end of 2023.
But at the same time, the report indicates that the portfolio continues to record deteriorations and its Index of Default (ICM) remains at a high level, although it exhibits a slower growth rate from the end of 2023.

In the same way, credit institutions have a range of provisions that adequately cover portfolio deterioration.

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The Financial Stability Report notes that in the last six months, gross profit of ECs has remained relatively stable, 0.7% lower than the average of the last five years (1.4%).

Low profit is due to high cost of provisions and low interest income.
Likewise, credit institutions maintain adequate capital and liquidity levels above regulatory minimums.

Quisason pointed out “Household debt indicators have declined in line with lower portfolio growth and their financial burden is below the peak reached in 2022.”

Despite the slower growth rate of its past portfolio in the last six months, the quality of the consumer portfolio continued to deteriorate.

The private enterprise sector’s ICM showed continued decline in 2023 on the back of local economic adjustment and lower investment. Declines in business sectors stand out. Manufacturing and Construction and Small Enterprises.


Finance

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(See: Moody’s Warns Financial Risks Will Hurt Colombia’s Credit Profile)

The contraction of household debt contributed to the reduction of household debt indicators. The adjustment process is expected to continue in the first half of 2024The report said.

A correction in macroeconomic imbalances was accompanied by an improvement in annual gross household savings in the second half of 2023.

In the last six months, Average financial burden of households Access to new credits was below the maximum level reached in 2022. The consumer portfolio has deteriorated over the last six months, particularly in the discretionary investment segment.

(Also Read: Tight Inflation: Here’s What’s Happening To The World’s Cost Of Living)

Holman Rodríguez Martinez
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