Latin American banks rebound but face challenges

The region has seen strong recovery post-pandemic, but obstacles to growth are forming in the shape of rising energy and food prices, inflation and impending political events.

by Barbara Pianese

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Last year was a period of recovery for Latin America and the Caribbean from the economic collapse caused by the Covid-19 pandemic. Regional gross domestic product (GDP) saw a 6.9% rebound in 2021, after most economies contracted in 2020.

As economic growth resumed, banks’ performance increased in tandem. Most banks in the region saw growth in Tier 1 capital and total assets, as well as a surge in pre-tax profits. The banks are well provisioned from 2020 and 2021, according to analysts.

Brazil numerically dominates the top 25 table, with eight banks. Its four biggest banks, Itaú Unibanco, Banco do Brasil, Banco Bradesco and Caixa Econômica Federal, maintain their positions as the largest lenders by Tier 1 capital in Latin America and the Caribbean. Mexico’s Banorte and Colombia’s Bancolombia follow, but are well behind.

Despite the regional rebound, risks are looming. Latin America entered 2022 in an environment of slower economic activity with growth projections revised downward following the Russian invasion of Ukraine.

Soaring global food and energy prices, and inflation across the region, are all adding up to create economic challenges. In 2022, average GDP growth for the six biggest countries in Latin America is expected to be 2%, according to S&P.

Undoubtedly, Latin America’s outlook in 2022 will also be shaped by upcoming political events, including presidential elections in Brazil later this year.

Latin America and Caribbean top 25 banks ($m)

Country rank	World rank	Bank	Country	Tier 1
1	75	Itau Unibanco Holding	Brazil	26,866
2	81	Banco do Brasil	Brazil	25,332
3	86	Banco Bradesco	Brazil	23,399
4	111	Caixa Economica Federal	Brazil	16,925
5	176	Grupo Financiero Banorte	Mexico	9,937
6	242	Bancolombia	Colombia	6,382
7	248	Banco BTG Pactual	Brazil	6,032
8	282	Banco de Chile	Chile	5,251
9	300	Banco de Credito e Inversiones (BCI)	Chile	4,993
10	312	Banco de Bogota	Colombia	4,720
11	347	Banco Inbursa	Mexico	3,971
12	354	BCP	Peru	3,795
13	362	Banco Davivienda	Colombia	3,728
14	382	Banco de la Nacion Argentina	Argentina	3,529
15	411	Banco Safra	Brazil	3,220
16	426	Banco General	Panama	3,029
17	473	Banco de Galicia	Argentina	2,615
18	475	Banco del Estado de Chile	Chile	2,583
19	523	Banco Macro	Argentina	2,135
20	588	Banco de la Republica	Uruguay	1,776
21	612	Banco del Bajio	Mexico	1,669
22	631	Interbank	Peru	1,569
23	672	Banco Inter	Brazil	1,426
24	685	Banco Provincia	Argentina	1,377
25	698	Banrisul	Brazil	1,320