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DatabankOctober 26 2021

Allowances for loan losses jump at Costa Rican banks

Banco de Costa Rica, the second-largest bank by assets, increased allowances for loan losses by 28% year-on-year in 2020.
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Allowances for loan losses at leading Costa Rican banks rose last year as the Central American nation grappled with the impact of the Covid-19 pandemic. The country’s economy shank 4.5% in 2020, contributing to a fiscal deficit at 8.7% of gross domestic product, according to the World Bank.

Banco Nacional de Costa Rica, the largest bank in the country by assets, has increased its year-on-year loan-loss provisions by 22.5%, from $206.7m in 2019 to $253.3m in 2020, according to The Banker Database.

At Banco de Costa Rica, the second-largest bank by assets, allowances for loan losses jumped 28.2% year-on-year, from $170.5m in 2019 to $218.6m in 2020.

Meanwhile, at the third-largest bank, Banco Popular y de Desarrollo Comunal, allowances for loan losses increased 16.2% year-on-year to $188.1m in 2020; and at Banco de America Central (BAC) San Jose, the fourth-largest by assets, allowances for loan losses rose 12.5% year-on-year to $259.8m.

Loan-loss provisions at the country’s banks have been on an upward trajectory over the past five years — for example, rising about 222.7% at BAC San Jose between 2016 and 2020 — as the government continued to battle a growing fiscal crisis, with spending outstripping the country’s income. In January, a three-year $1.75bn loan was agreed with the International Monetary Fund to bolster the country’s response to the pandemic and fiscal reform plans.

Trends identified using The Banker Database, an online database providing comprehensive financial data and insight for 4000 of the world's leading banks in 190 countries. Contact us. 

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