SAN SALVADOR, El Salvador--(BUSINESS WIRE)--Link to Fitch Ratings' Report: 2014 Outlook: Central America and the
Dominican Republic
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=725825
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.
Additional information is available at 'www.fitchratings.com'.
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