Central America Satellite

Image: Getty Images

The ranking shows the recovery of a majority of lenders after a bleak 2021. Barbara Pianese reports.

Central America has been facing a number of challenges lately, including volatility of commodity prices amid the region’s high reliance on fuel imports, as well as weaker growth from its trading partners, including the US. The population has also been affected by the ravages of a tropical storm that recently swept the region.

Despite this, the gross domestic product (GDP) of Central American countries has bounced back following a bleak 2021, in which Panama and Belize experienced contractions of 17.9% and 14.0%, respectively.

Conversely, in 2021 some countries experienced a double-digit GDP increase, including Panama, Honduras, Nicaragua and El Salvador. Meanwhile, the economies of Guatemala, Belize and Costa Rica expanded by more than 5%, according to World Bank data.

As a result, many banks in the region underwent strong recovery. Among the top 100 banks in the region, 71 increased their Tier 1 capital over the course of 2021, while pre-tax profits increased for 67 lenders over the same period. Four banks in Panama, including Banistmo, moved from loss to profit.

Banistmo also managed to enter the top 10 biggest lenders this year, jumping two positions to 10th. The move comes at the expense of Banco Nacional de Costa Rica, which lost 8.26% of its Tier 1 capital and dropped three positions to 13th.

Overall, Panama dominates with six banks in the top 10, with Banco General cementing itself as the biggest lender in Central America. Two Guatemalan banks – Banco Industrial and Banrural – also make the top 10, with the latter moving up two positions to sixth this year. Costa Rican lenders, Banco Popular and Banco de Costa Rica, are also members of this elite group.

Best-performing banks

The Banker has applied its best-performing bank methodology to the locally owned bank-holding companies in El Salvador, Guatemala, Honduras and Nicaragua.

In El Salvador, the state-owned Banco Hipotecario de El Salvador performed best after placing third last year. The lender achieved the highest ranking for the profitability and operational efficiency metrics. At the end of 2021, it reported a 137.9% jump in pre-tax profits, to $23m.

Guatemala’s G&T Continental comes first the country’s best-performing table thanks to its top scores in profitability and return on risk. The bank’s pre-tax profits increased in 2021 by 55.9%. According to according to Fitch Ratings, this is due to its loan book dynamism, reduced interest expenses and lower impairment charges.

In Honduras, Banco de los Trabajadores (Bantrab) has moved from fifth to first place in the best-performing table, thanks to its top scores in operational efficiency, soundness and leverage. Bantrab increased its capital asset ratio from 9.21% to 12.95%.

In Nicaragua, Banco Produzcamos remains on top for the third year in a row. The third-biggest lender in the country increased its pre-tax profits by 41.0% to $49m.

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