Banks from Latin America and the Caribbean have generally performed well in 2022, driven by strong net interest income from rising interest rates. The largest lenders mostly rely on stable and low-cost retail customer deposits for their funding, a dynamic that supports profitability.
Looking at the biggest 25 banks by Tier 1 capital, Brazil still dominates the ranking with seven entries, one less than last year despite two lenders leaving the group. Both Banrisul and Banco Inter do not make it into the top 25 table this year, despite the latter being the region’s highest mover in the 2022 ranking. Banco do Nordeste do Brasil joins the top 25, due to a 37.41% rise in Tier 1.
The country’s biggest banks – Itaú Unibanco, Banco do Brasil, Banco Bradesco and Caixa Econômica Federal – hold on to their positions as the region’s largest lenders and extend their lead on Mexico’s Grupo Financiero Banorte. Itaú now holds more than three times the Tier 1 capital of Banorte.
Brazil’s Banco BTG Pactual moves up one position in the table to sixth, overtaking Bancolombia. In addition, Banco Cooperativo Sicredi, Banco da Amazônia, Banco do Nordeste do Brasil and Bancoob are among the top 10 highest movers in the region.
Argentina’s Banco de la Nacion Argentina edges into the regional top 10, with a 57.03% jump in Tier 1 capital. Banco de Bogotá, on the other hand, leaves the top 10 and falls nine places to 19th, following the spin-off of its central American subsidiary BAC Holding International.
Looking at profitability metrics, the Dominican Republic’s Banreservas has the highest return on capital regionally for the second year running, followed by Mexico’s microfinance institution Banco Compartamos and then Banco de Costa Rica, which the country’s government is set to sell off.
New entrants in the Top 1000 ranking include three Brazilian banks: neobank Nubank, as well as co-operative financial institutions Banco Cooperativo Sicredi and Bancoob. Nubank has topped the regional highest movers’ table, with a 96.26% surge in Tier 1, to $916m. It jumps into the main Top 1000 ranking at 831st position. In addition to the Brazilian lenders, Bantrab of Guatemala joins the Top 1000 in 996th place.
The outlook for 2023 is mixed: growth in Latin America and the Caribbean is projected to slow to 1.6% this year after a 4% expansion in 2022, according to the International Monetary Fund. Credit growth might decelerate amid slower growth and lingering inflation, despite lenders in the region still having provisions and reserves accumulated during the Covid-19 pandemic.
