While Panama's banks held their lead as the biggest banks in Central America, Nicaragua steamed ahead in terms of return on capital and return on assets. 

HSBC remains the leader of The Banker’s Central American rankings with a Tier 1 capital up by 8.38% to $1.23bn in 2011, the last available financial year. However, its lead is reducing as the bank sold operations in Costa Rica, El Salvador and Honduras to Colombia’s Banco Davivienda in 2012 and, this February, its much larger business in Panama to Bancolombia, marking the international lender’s exit from Central America. 

Second place in the ranking is Panama’s Banco General, with $1.12bn in Tier 1 capital. All top five lenders, in fact, have retained their positions from the previous ranking, and all are based in Panama. With an estimated gross domestic product growth of 10% last year, according to the government, the highest in the whole of Latin America, it is no wonder that Panama’s banks remain the undisputed leaders in this ranking. Furthermore, they top every ratio table.

Country climbers

Of note is Banco Mercantil Panama, which sat at the very bottom of last year’s regional list and has now climbed to 73rd place. The bank has the largest return on assets in the region, at 15.52% – almost three times second best Citibank Nicaragua, with 5.75%. It is also the top scorer in terms of return on capital, with an 86.36% ratio. Considerations on the level of capital held by the local subsidiary of foreign-owned Mercantil may come in to play to explain the exorbitant ratio (the lender is part of Venezuela’s Mercantil Servicios Financieros). At the same time, and to give merit to the bank, the second highest scorer for return on capital is BAC Nicaragua – also a foreign-owned subsidiary – showing a high but distant 62.51% return on capital.

Further, Banco Mercantil Panama is the lender with the second largest Tier 1 capital improvement, at 158.68%, after BCP Panama and its 336.39% Tier 1 capital growth. The accolade for assets growth goes to Panama’s Uni Bank & Trust, which expanded assets by 255.17% in 2011, and is followed by another Panamanian lender, Privat Bank, with a 217.81% growth. 

Possibly the most interesting results are for pre-tax profits (PTP), where Panama claims five of the top 10 spots. BAC Panama, Banco General, Bancolombia Panama and HSBC Bank Panama are the top four banks and they closed 2012 with profits ranging from $172.53m to $299.03m. Unsurprisingly, the largest PTP pool is in Panama, with a total $1.6bn for last year. But it does not hold the highest aggregate return on capital ratio. This belongs to Nicaragua, with a 32.43% ratio, as well as the accolade for the highest aggregate return-on-assets figure, at 2.77%. Best aggregate capital-to-assets ratio is displayed by Central America’s smaller banking market, Belize, with 15.31%, followed by El Salvador’s 10.72% and Costa Rica’s 9.93%.

Costa Rica’s banking sector, Central America’s second largest, has a total of $2.75bn in Tier 1 capital and $27.73bn in aggregate assets. Three of its lenders feature in this Central American ranking’s top 10. In sixth place, Banco de Costa Rica displays a Tier 1 capital of $551.43m and $6.43bn in assets. At just half the asset size of Banco de Costa Rica, the country’s second largest bank, Banco Popular, closed 2012 with a Tier 1 capital not too far from the leader, at $529.54m. This has given the bank the eighth place in the regional list.

Foreign ownership

The presence of foreign banks in each market varies across Central America. In El Salvador, eight of the 11 lenders that made it in the regional list are foreign owned – the highest proportion among all countries. In Panama, the ratio is 22 to 41, while Guatemala’s banking sector is largely occupied by local players – only three out of the 10 ranked are foreign owned. In terms of profitability and size, aggregate PTP and assets for local banks for the whole of the region are similar to international peers. There are, however, differences between markets. Foreign-owned banks are performing significantly better in El Salvador (generating almost 97% of total PTP), while in Costa Rica, locally owned ones take almost 74% of total profits. In Panama, international lenders performed better and got a 60% split of total PTP.

Thanks to a series of cross-border acquisitions in the past few years, Colombian banks have steadily strengthened their presence in the region. In particular, Banco de Bogotá is to be found in all but one of Central America’s markets, while Banco Davivienda’s subsidiaries are present in four of the region’s seven countries. 


All fields are mandatory

The Banker is a service from the Financial Times. The Financial Times Ltd takes your privacy seriously.

Choose how you want us to contact you.

Invites and Offers from The Banker

Receive exclusive personalised event invitations, carefully curated offers and promotions from The Banker

For more information about how we use your data, please refer to our privacy and cookie policies.

Terms and conditions

Top 1000 2023

Request a demonstration to The Banker Database

Join our community

The Banker on Twitter