Central American Awards for Excellence 2012: By country

Costa Rica

Best bank: Banco de Costa Rica

In 2011 Costa Rica resumed its pre-crisis GDP growth rate of 4% and the outlook for the country is positive, albeit with exposure to falling commodity prices. Banco de Costa Rica took advantage of the benign economic environment to grow revenues by 13.9% and net income by 20.8% and now accounts for 16.2% of the country’s financial system. The bank’s return on equity began to recover, nudging up to 8.5% from 7.8% the year before.

Total assets grew by 9.52% and the bank now has a 20.3% market share. Total deposits grew by 7.2% (to a market share of 21.3%). The bank took advantage of returning business confidence to increase its loan portfolio by 19% without impairing loan quality: the non-performing loan ratio fell to 2% in 2011 from 2.4% the year before.

The bank’s retail and consumer segments also drove performance, with its credit card business growing by 18%, and the bank looks set to deliver on its objectives to grow both its market share of consumer and corporate banking in the coming year.

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El Salvador

Best bank: Banco Agrícola Comercial De El Salvador

Despite modest global GDP growth in 2011, Banco Agrícola Comercial de El Salvador achieved the strongest growth in its history, with net income up 45.8% to $110.4 million. The bank had forecast sluggish growth opportunities during the past 12 months and instead focused on improving efficiencies (in the past year 78% of customer transactions were made through electronic channels) and reducing costs. The strategy paid off, with the bank posting a cost-income ratio of 38.7% and a return on equity of 21%.

The bank focused on asset quality while maintaining its market dominance in loans (29.5% market share) and reported a lower non-performing loan ratio of 2.7%, and NPL coverage of 159.8%. At the same time the bank achieved a 28% share of deposits.

At the end of 2011 the bank had total assets of $3.58 billion, with a return on assets of 3.1%.

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Guatemala’s economy bounced back to growth last year, with an increase in GDP of 3.8%. The country’s largest bank, Banco Industrial, took full advantage, growing its total assets by 22.9% (to $1.2 billion), total loans by 21.3% ($543 million) and total deposits by 12% ($478.3 million). Banco Industrial grew faster across the board than any of its competitors and still achieved return on average equity ratio of 20.2% and a return on average assets of 1.6%. The bank has an NPL ratio of 0.7%, less than half the financial system’s average of 1.6%, a clear demonstration of its ability to grow rapidly while maintaining a focus on quality.

Perhaps because it enjoys such a dominant position in its domestic market, the bank launched operations in El Salvador in July 2011.

Banco Industrial is the only bank in Guatemala rated by the three main rating agencies; in December 2011 Standard & Poor’s upgraded the bank to BB, reflecting Banco Industrial’s “strong market position, broad customer base and diversified business activities”.

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During 2011 the Nicaraguan economy grew by 4.7% and the country’s financial system, which had been affected by recent economic slowdowns, grew total assets by 9.4%, total credit by 13.4% and total deposits by 11%.

In this context of a financial rebound, Banco De La Producción (Banpro) grew net income by 72.3%. The bank’s return on equity increased from 11.9% in 2010 to 19.5% in 2011 and return on assets increased from 0.95% to 1.52%. Tier 1 capital increased 15.6% from $104.2 million to $120.4 million. Earnings per share grew by 83.1% to $16.10.

The performance extended Banpro’s market leadership in terms of deposits, growing by 14% to achieve a 35.8% market share (the second-largest bank accounts for 25%). Total assets grew 10.9% to hit 34.3% of the financial system. NPLs remained low at 1.1% and the bank had NPL coverage of 120%.

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In a highly competitive environment (GDP grew by 10.6%) Banco General, Panama’s leading privately held bank, achieved a record financial performance and maintained a robust balance sheet, with strong liquidity levels (the bank maintained primary liquidity levels of 27% of total deposits and financings) consisting of high quality dollar-denominated fixed-income investments.

The bank has a leading market share of retail deposits (25.9%) and increased total assets by 12.8% to $9.5 billion, mainly because of an increase of 10.7% in the loan portfolio (to 66.2% of total assets).

The bank grew net income 18.1% on the back of a 4.6% rise in revenues. Return on equity reached 20.8%, up 8.3% from the year before. Banco General holds a total equity to assets ratio of 12.8% and tier 1 capital to risk-weighted assets of 19.5%. Both Fitch and Standard & Poor’s rate Banco General as investment grade, with ratings of BBB+ and BBB- respectively, enabling the bank to lower the cost and diversify the sources of its funding.

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