The Banker’s first Central American ranking sees continued growth, thanks to services sector expansion.

This year, for the first time, The Banker is publishing the Top 100 banks in Central America. The listing is dominated by Panama, with 30 banks represented, followed by Guatemala with 22, Costa Rica with 14, Honduras with 12 and El Salvador with nine.

Six of the top 10 come from Panama. Banco Nacional de Panama – something of an anomaly in the modern world, a central bank that also carries out commercial/retail and development banking through a branch network – heads the list. It is followed by Banco Latinoamericano de Exportaciones (BLADEX) which had a horrendous year in 2002, racking up a loss of $269m, reductions in Tier 1 capital of just under 45% and in assets of just over 50%. Early reports on 2003 earnings indicate a substantial recovery.

Banco General follows close behind in third place. The highest placed banks outside of Panama are Banco de Costa Rica at four, Banco Agricola from El Salvador at six and the two largest Dominican Republic banks, Banco Popular Dominicano and Banco de Reservas de la Republic Dominicana, at seven and nine, respectively.

Total Tier 1 capital for the 100 was $5176m, total assets were $57,136m and total pre-tax profit was $638m (it should be noted that in the accompanying country table a zero in the pre-tax profit column means that the bank made a profit or loss in the range between $-0.5m and $0.5m which is rounded up/down to zero).

Southern comparison

To put these aggregate figures into perspective, Banco do Brasil at year-end 2002 had Tier 1 capital of $2596m, total assets of $57,910m and pre-tax profits of $951m. Panama had the largest share of the aggregate Tier 1 capital and assets at 45.7% and 39.1% respectively but produced only 13.8% of total pre-tax profit reflecting the impact of the poor results of BLADEX. The most profitable countries from the banking perspective were the Dominican Republic ($156m) – somewhat surprising in view of the underlying problems in the economy – and Costa Rica ($141m).

For the purposes of this listing, we have included the Dominican Republic as part of Central America as it has much in common with the countries of the isthmus, in particular, language and economics.

The region covers approximately 550,000kmsq and has a population of some 47 million people. The countries of Central America rely heavily on agriculture (principal products being sugar, coffee, bananas and tobacco) some industry and, increasingly, services as major contributors to the domestic economies. In Panama, for example, the service sector now accounts for 75% of GDP. The region embraces some of the world’s poorest economies with estimates of the percentage of population living below the poverty line ranging from 20%(Costa Rica) to 75% (Guatemala).

The Dominican Republic, where 50% of the workforce is engaged in agricultural production that produces two-thirds of the country’s exports but only 25% of GDP, has a wide inequality of income with the poorest 50% receiving 20% of gross national income (GNI) while the richest 10% receive 40% of GNI. As The Banker went to press, the country was at severe risk of sovereign default with its reserves nearly exhausted and the peso had already collapsed. It is currently in default to its bilateral creditors and is in a 30-day grace period with its commercial creditors having missed a late January payment on its $600m bond due 2013.

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