Best bank: Banco Itaú Paraguay
Paraguay continues to prove that a raft of business-friendly economic policies can pay off in Latin America, with the small landlocked country enjoying GDP growth of 4.5%. Part of that bump was due to the recovery from the previous year’s drought, but economists are confident of another year of growth above 3% in 2024.
The financial system is also well run and solid, and Banco Itaú Paraguay, led by chief executive José Luis Britez, continues to power ahead to a degree that should allay fears that its parent could be tempted to sell the business after it disposed of its bank in Argentina. Despite not being the biggest Paraguayan bank – it ranks as third in terms of total loans and assets and has the second most deposits in the sector – the bank generates significantly more net income than any other. It also has the highest market capitalization and the best financial and operating margins.
In 2023 Itaú launched PIK, a new payment product aimed at small business and entrepreneurs, which enables them to charge clients with either debit or credit cards – as well as QR codes. The strategy is to eliminate the need for cash payments and enable growing companies to manage sales efficiently and safely. The bank then tries to convert the PIK account into a broader banking relationship. To date nearly 5,000 small enterprises have adopted PIK and the bank is seeking to optimize the conversion of these.
More broadly, Itaú’s digital suite of products and services was also refined during 2023. The bank launched new saving accounts with lower minimum requirements, aiming to capture unbanked Paraguayans, as well moving customer support via the app and phone to a 24-hour service.
Customer outreach was also supported by a revamp of the bank’s physical branch network – extended hours and free onsite access to internet services have been part of the bank’s drive for efficiency. At the end of 2023 the bank’s efficiency ratio hit 39.3%, well below the system’s average of 44.9%, and the bank was increasingly profitable. Return on equity strengthened to 28.0% from 25.4%, while return on assets reached an impressive 3.9%, up from 3.2% in 2022.
