The high capital levels, the wide-ranging liquidity, the increase in provision that banks have been applying to face a potential deterioration in the loan portfolio, coupled with the creation of a generic provision equivalent to 3% of the gross balance of the loan portfolio, established in Rule 9-2020, are the foundations that have allowed the financial system to maintain proper functioning and face the shock caused by the COVID-19 pandemic.
According to the Banking Activity Report for November, the market’s legal liquidity index registered around 64.0% for the National Banking System, after having marked around 56% in 1Q2020. While the most recent capital adequacy ratio on risk-weighted assets is 16.25%, including capital requirements for credit, market and operational risks in response to Basel III, which markedly exceeds the regulatory minimum of 8% required by the Banking Law.
On the other hand, the assets of the International Banking Center reached USD 130,448 million, which represents an [increase] of 1.1% compared to October 2020. At the same time, the performance shown by deposits taken and loan placements is positively observed.
Since March, when the pandemic was declared in the country, deposits grew by 12.09% manly driven by the performance of government deposits (that grew by 49.9%) and include the balance of issuances and loans managed by the government to face the COVID-19 crisis.
State-owned banks accounted for 64.9% of the total increase of domestic deposits, or 52.1% of total deposits. As for the customer deposits (that increased 5.3%). The greatest increase, since the beginning of the pandemic, in relative terms, has been in savings deposits (13.5% growth).
The deposits taken by the market, as of November 2020, recorded a total of USD 95,356.7 million, a USD 1,567.3 million increase compared to October. As for the domestic deposits there was an increase in November that totaled USD 61,458.1 million, a 1.24% increase compared to that of October 2020, but a [cumulative] increase of 9.8% as of November 2019. This increase in domestic deposits was explained by the increase in government deposits. On the other hand, foreign deposits showed an increase of USD 816.6 million totaling USD 33,898.7 million (2.5% more than that of October) and whose increase was the result of the positive performance of customer deposits.
The International Banking Center recorded net profits of USD 967 million, 42.1% less when compared to the same period of 2019. Operating income stood at USD 4,074 million. New loan disbursements have been reduced by 44.12%, which gives us a perspective of the business reduction. Banks created provisions to face credit risks for a total of USD 1,028 million, a 98.5% increase compared to that of November 2019. This caused the operating income to register a 9.8% year-on-year decrease.
The prudential regulations promoted by the Superintendency have contributed to banking being in a more robust financial condition compared to previous crises.
For further information on the results of this report, visit our website www.superbancos.gob.pa / Financial and Statistical or send an e-mail to erivera@superbancos.gob.pa, Director of Communications and Public Relations.
