Best bank: Mercantil Banco
Panama had a solid 2023, with economic growth of 5%, but that belies the significant challenges that the country’s new president, José Raúl Mulino, will face. The closure of the country’s copper mine will add to the fiscal pressures that the increasing deficits from the country’s social pension system are creating. A drought has also affected the Panama Canal, a major revenue source for the government, and the economic outlook will likely get tougher from here.
The banks, however, can pivot to neighbouring countries, with Panama more a financial hub than a domestic market. Despite the quantity of banks registered in the country, the number of large banks active in the domestic retail market has been remarkably consistent for many years
That’s what makes Mercantil Banco’s growth such a standout story and the bank wins the award as the country’s best bank for the momentum it has created in the Panamanian banking industry.
Led by chief executive Ignacio Vollmer, Mercantil finalized the acquisition of Capital Bank and – supercharged by strong organic growth – has expanded significantly. The bank’s total client base rose by 10% in the year, with a skew towards larger corporate clients. Since 2020 total clients are up by a quarter – retail clients have grown 18% in these three years and corporate clients are up 66%. Part of this growth has been geographical, with investment in new physical branches in the country.
As well as integration efforts, Mercantil has also been adding to its digital services with new upgrades across a range of security, incentives and reporting functionality. In total, in 2023 the bank grew its total assets by 156%, loans by 143% and deposits by 113%. Revenues grew by 79% to $491 million.
Best international bank: Citi
Citi saw a significant expansion of its client portfolio last year and achieved 38% growth in franchise net income to $37.1 million.
The bank became the main transaction bank for Minera Panama, a Panamanian copper mining company. It improved its payment processes with CitiConnect for Files, automating its reconciliation process with an automated file report delivery system and introduced Citi Payment Outlier Detection for real-time alerts on unusual transactions.
Through the Citi Foundation, Citi supported programmes aimed at improving the country’s education system. It launched the Technoserve Crece Tu Empresa 8.0 programme, which addresses youth unemployment and provides training to enhance business skills for young people aged 15 to 25. The initiative positively affected 70 young people, funded by a Technoserve grant totaling $225,352.
Best digital bank: Mercantil Banco
Mercantil Banco revamped its mobile app last year, introducing new insurance options, the ability to send salary advances, direct access to the bank’s business banking platform and a better process for sending money.
Over 5,600 new accounts, with an overall balance of $87.6 million, were onboarded online.
The lender also developed Iqbot, an artificial intelligence-driven bot that automates international transfer notifications. Its robotic process automation programme was improved with the integration of business process management (BPM) technology, connecting various business areas.
In business banking, the bank incorporated BPM technology for corporate account opening.
By the end of the year, 25 bots had been implemented, leading to approximately 10,000 man-hours saved per year. These bots handled over 20 processes in units such as compliance, credit cards, credit risk and fraud monitoring.
Best bank for ESG: Banco General
Banco General reduced its environmental impact, promoted green initiatives and supported several important educational programmes in 2023.
Solar panels were installed in nine of its office branches, contributing to a total installed capacity of 1.6 megawatts by December 2023. This initiative is part of the bank’s goal to reduce its carbon footprint by 33% and achieve carbon neutrality by 2025.
Banco General also introduced a new green financing product to encourage companies to install solar panels. The bank aims to finance $105 million in the solar energy sector by 2025 through this initiative.
The bank’s philanthropic activity, primarily carried out through its foundation, Sus Buenos Vecinos, focuses on education. In 2023, the bank donated $8 million to social programmes and collaborated with over 114 non-profits. Its scholarship programme supported 221 graduates and 167 current students.
Best bank for corporate responsibility: Mercantil Banco
Mercantil Banco undertook various philanthropic activities across Panama last year.
It donated to the Fundación Amigos del Manglar, which provides cleaning products for children living near the beach of Veracruz. Over 30 children involved in beach clean-up activities benefited from this contribution.
The bank also extended its support to the Archdiocese of Panama, with employees making contributions as part of a campaign initiated by Da la Mano.
It also donated funds for the adaptation and implementation of a hybrid operating room at the Santo Tomás Hospital and donated gifts and arranged activities for the children of Fundación Unidos por la Niñez in Panama.
Best bank for corporates: Banco General
Banco General’s corporate loan portfolio, comprised of both local and regional corporate clients, increased 6.1% from $4.4 billion to $4.7 billion in 2023. It has a 13.3% market share domestically.
In 2023, Banco General continued its financing of geothermal energy company Termosolar Panama, in partnership with the Global Environment Facility, the United Nations Environment Programme and the National Secretariat of Energy and the Ministry of the Environment.
Termosolar Panama has deployed 430 square metres of solar water heaters at Hato Chami school and in three large hospitals, as well as hotels, factories, farms and homes.
