When financial analysts argue about whether economies of scale exist in cross border retail banking, they simply need to point to BAC International Bank (BAC). Led by Rodolfo Tabash, the bank is a big player in all the regional markets and, while these are small individually, together they total more than 50 million people.
By developing a single platform in the region and sharing the technology and, in some cases, the back-office functions of subsidiary banks, BAC has created an efficient firm with a visible presence across central America. It is, therefore, not only capturing the growth in these individual economies, but the bank is also seeing growing business through intra-regional trade, which is finally beginning to increase at a material rate.
BAC’s whole business strategy relies on it being the biggest across the region, and on that basis the bank continues to succeed. The bank is present in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama, with only Belize not covered.
In all these markets, except for Nicaragua, the bank has double-digit market share in terms of assets, while it has more than half of its assets and deposits in the most important markets of Costa Rica and Panama.
Around 54% of its loan exposure is in the retail segment, with 46% of credit to corporates.
This scale is seen clearly in the numbers. The bank had $31 billion in assets; a loan portfolio of $21.7 billion and $23.2 billion in deposits as of December 2022. And it leverages that scale to generate the region’s highest profit, $462 million in 2022, at a return on equity of 16.8% and a return on assets of 1.6%.
In recent years, BAC’s strategy has been based on the rollout of its new digital infrastructure around the region. The bank now has 2.4 million active digital customers, representing 92% of its total customers, while 89% of all transactions are now completed through digital channels.
BAC’s strategy has been based on the rollout of its new digital infrastructure around the region. The bank now has 2.4 million active digital customers, representing 92% of its total
BAC is also leading the region in terms of sustainability, and doing so not only in terms of its credit practices but also through its own example.
The bank has joined the Net Zero Alliance and aims to become a net positive bank in terms of carbon, waste and water. To help achieve this, it is focusing on opportunities in the circular economy. BAC is also targeting the social elements of environmental, social and governance: more than 50% of its employees are now women.
