Central American Awards for Excellence 2011: By country

Costa Rica

Best bank: Scotiabank

Scotiabank’s Costa Rican division increased its operating profits in the year to the end of March 2011 by 43.9% on the back of a 23.5% increase in revenues amid an otherwise slowly recovering economy. Scotiabank also grew total deposits by 23% to $1.3 billion, increased market share by the same percentage and rebuilt its tier 1 capital by 42.4%. The bank attributes its impressive results to credit discipline through the cycle and, although its non-performing loans ratio rose this year, it did so to a modest 2.46%.

The increase in deposits was in part due to last year’s implementation of a new line of business – wealth management – as part of the global repositioning of the Scotiabank group. A key part of this strategy has been to increase assets from high-net-worth individuals, grouping together the bank’s stock brokerage, investment-fund management company and private banking unit.

The bank’s total loans fell by 5% in the period, but in a contracting market Scotiabank increased its market share to 10.4% from 9.2%. In 2010 the bank introduced a new initiative to develop public-sector relationships, aimed at infrastructure and short- and medium-term government projects. By the end of the year, that initiative had resulted in more than $150 million of new loans. 

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El Salvador

Best bank: Banco Agrícola Comercial De El Salvador

Banks in El Salvador faced a challenge to manage high levels of liquidity in 2010. Loan portfolio balances within the financial system fell by 3% while deposits grew by 7%. Banco Agrícola Comercial de El Salvador, which retains the award for best bank in the country, met this challenge with aplomb (its total deposits rose by 0.7% while gross loans fell by 3.5%). The bank returned to growth in 2010: profits before tax rose 88.7%, net income by 69.9% and operating profit was up by 134% to $84 million. Return on equity reached 15.1%, up from 9.6% the previous year.

The bank increased its return on assets by 73% following improvements in its internal risk-management and a revamp of its product marketing. Banco Agrícola dominates the country with a 30.4% share of loans, 29.3% of deposits and 64.7% of net income and is set to capitalize on greater growth of more than 2.5% this year. 

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Like its neighbours, Guatemala has experienced slowing economic growth since 2008 on the back of sluggish exports to the US and Central American markets. GDP growth recovered in 2010 to 2.2% (from 0.6% in 2009). Within this context, Banco Industrial managed to grow its total assets by 15.9% (it now accounts for 27.4% of the country’s financial system), deposits by 15% and loans by 11.2%. The bank increased shareholder equity by 9.7%. Net profits at the bank increased by 18.6% to $78.9 million.

Banco Industrial is Guatemala’s leading corporate bank, private bank and Visa card issuer, it has the largest distribution network and collects more than 50% of all government taxes. It wins the award for best bank for its unmatched financial performance and its pivotal role within the national economy. 

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During 2010 and the first quarter of 2011 the Nicaraguan financial industry could be characterised by the toughness of its economic conditions. Credit growth has started moving very slowly through the financial system – only the three largest financial institutions were able to increase their loan portfolios.

Given this, Banco de la Producción wins the award for best bank in the country for the results it achieved on its core objectives: increasing total assets by 23.5%, which translates into a market share of 33.8%, and increasing total deposits by 31.2% to $1.1 billion (a 34.8% market share). The bank also grew loans by 7.2% to $554.8 million, consolidating its position as the largest bank in the country. 

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The fast-growing Panamanian economy (GDP grew by 7.5% in 2010 and is expected to grow at a similar pace this year) is creating a competitive environment for financial institutions. Banco General, the largest locally controlled private bank with a 20.1% market share of total loans, wins the award for best bank for achieving strong financial performance and maintaining a robust balance sheet with high liquidity levels. The bank’s net income was $199.9 million, an increase of 3.85% from 2009, despite an increase of 77.2% in tax levied on net income – income before tax increased by 11.7%.

Fitch recognised the bank’s increased strength in 2010 by upgrading it to BBB+, reflecting its solid franchise, market share, strengthened competitive position and strong deposit base. Fitch also said the upgrade reflected Banco General’s consistent strategy and dependable performance through the financial crisis, sound portfolio quality, adequate reserves and liquidity, and robust capital ratios. 

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