- Despite greater global risks, the financial conditions of the system’s institutions remain comfortable and with high liquidity.
- This analysis demonstrates that the Panamanian Banking System can face a hypothetical risk scenario.
The Superintendency of Banks of Panama (SBP) presented the Financial Stability Report, whose purpose is to explain the main risks and vulnerabilities that could affect the stability of the Panamanian economy. This would be the tenth anniversary of the publication, which has been nourished by the contribution of the various institutions that oversee this process in Panama, said Javier Motta, Director of Financial Studies of the institution.
As an introduction to the report presentation, the Superintendent of Banks, Amauri A. Castillo, explained that “in the last couple of months, several positive aspects of the financial system have preserved a remarkable degree of continuity and stability.”
Castillo pointed out that the analyses included in the report show that the group of banks continued to conduct their operations with adequate liquidity and solvency margins, well above the regulatory minimums, which occurs within a framework of greater performance in financial intermediation.
The Superintendent remarked that “the existence of some risks, both for financial entities and the SBP, among which stand out finishing recognizing the impairment of modified loans, maintaining the capitalization of profits to keep equity strength, and the continuity of the gradual elimination of temporary financial flexibilities to be concluded in 2022.”
During the report presentation, he indicated that, in addition to the challenges inherent to the system, there are other global risks to financial stability, including greater risk aversion associated with the recent Russian-Ukrainian conflict, as well as tighter financial conditions, as a result of a faster normalization of the Federal Reserve’s and other central banks’ monetary policy, which occurs in a juncture of significant inflationary pressures.
The Financial Stability Report is a document that seeks to disclose, on a semi-annual basis, the recent macroeconomic and financial events that could affect the stability of the Panamanian financial system and includes elements such as the evolution of the indebtedness of the main credit users, the
performance of the banking market, and the financial system’s ability to adequately adapt to negative economic situations.
It also focuses on the national and international economic environment, the structure of the Panamanian financial system, the annual performance of banks and banking access in Panama. In addition, the report identifies macro financial threats and sectoral vulnerabilities and analyzes sensitivity through banking stress tests to the loan portfolio, which suggests that, at present, the Panamanian banking system is not especially vulnerable to various macroeconomic and financial shocks.
It should be noted that, with this analysis, it is shown that the Panamanian Banking System can face a hypothetical risk scenario and reaffirms that banks comply, more than twice, with the regulatory liquidity requirements, which allows them to face short-and medium-term maturities.
For further information on the results of this report, please visit the following URL address: https://www.superbancos.gob.pa/superbancos/documentos/financiera_y_estadistica/estudios/IEF-2021_1.pdf (in Spanish).
