Loans to the private sector recorded a total of USD 54.15 billion, as of February 2021, which represents a decrease of USD 31 million (-0.1%) compared to that of January, due to the underperformance of the loans to the private sector (that shrunk in USD 30 million), according to the data from the Banking Activity Report of the Superintendency of Banks of Panama (SBP).
This responds to demand conditions and it is the result of the macroeconomic environment the country is facing due to the pandemic.
The report also notes, in general, that interest rates have experienced slight downward fluctuations in most types of loans. When compared to the rest of the region, the rates in the Panamanian market are low and have little volatility.
The liquidity of the banking system reached 63.4%, as indicated in previous reports, in terms of legal liquidity, most banks have levels higher than those recorded before the beginning of the pandemic, which responds to the comprehensive strategy to protect the quality of assets, create provisions and expand liquidity.
While the most recent capital adequacy ratio on risk-weighted assets reached to 15.9%, which markedly exceeds the regulatory minimum of 8% required by the Banking Law.
The results of these indicators show that, despite the current economic juncture, to date the fundamentals of the banking system as a whole show strength.
The high capital levels, the sufficient liquidity, the increase in provisions that banks have been making to face a potential impairment of the loan portfolio, together with the creation of generic provisions equivalent to 3% of the gross total of the modified loan portfolio provided by the SBP through Rule 9-2020, have allowed the financial system to maintain an adequate functioning and face the shocks triggered by the pandemic.
Banking in Panama has maintain broad liquidity levels since before the pandemic, which has been an important factor in coping with the effects in a complex environment as the one that has occurred since March 2020.
This is because banks increased their liquidity reserves, as a result of the implementation of the Rule on the Liquidity Coverage Ratio (LCR). The LCR and high-quality liquid assets (HQLA) requirements are especially relevant given the absence of a central bank and deposit insurance, which is why this provision has remained in force in the context of the COVID-19 contingency.
The assets of the International Banking Center (IBC) totaled USD 130.44 billion, which represents a decrease of USD 565 million (-0.4%) compared to January.
The deposits taken by the IBC amounted to USD 95.93 billion, a USD 521 million decrease (-0.5%) due to the shrinkage of state deposits, which significantly boosted total bank deposits once the pandemic began.
For further information on the results of this report, visit our website www.superbancos.gob.pa / Financial & Statistical.
