Latin America and Caribbean

The country’s bankers are frustrated: the system is sound, their banks are generally well run, and yet they are among the worst performers in Latin America. Something has to give. Some hope it will be the country’s attachment to the dollar.

Bankers say the battle to hit mandated lending targets has created a scramble for borrowers in Bolivia. That’s not the only concern they have about the activist attitude of the country’s government, though one important area – microfinance – is thriving.

The country’s biggest banks have kept profits up by keeping banking simple and benefiting from enviable net interest margins. But are they too conservative for their own – and the economy’s – good?

Bankers and investors are increasingly confident that the country’s next president will adopt a programme of fiscal reforms, even though no leading candidates are standing on that platform. Why? Because over the past decade, Brazil has become a ‘marketocracy’.

The outlook for both Credit Suisse and Brazil is better than it has been in years, and CEO José Olympio Pereira has his eyes firmly focused on the opportunities coming his way.

The country’s gradualist approach to adjusting its fiscal deficit was always balanced on a knife-edge. The markets were willing to finance the experiment because of their faith in the economic team. But a recent unforced error has made the path to success even more precarious.

Paraguay’s bright young things are trying to transform the country’s economy. A dogged commitment to macroeconomic stability means that a commodity slump and recessions in its two big neighbours have not derailed growth.

Low levels of credit penetration provide huge growth opportunity; other positive factors include sector consolidation and regulatory liberalization.

Pension reform in Brazil is going nowhere.

Many investors are misreading the risks in Mexico.

NYSE too strong a lure for tech companies; Latin America needs ‘IPO catch-up’.

Sharp reduction in Selic boosted 2017 profitability but is a challenge in 2018; ‘soft’ recovery in credit demand might not offset lower margins.

The political opponents of former president Lula look to have ruled him out of the next election, but this risks an even more volatile outcome.

M4 money supply growth could fuel inflation more than higher interest rates lower it, causing a predicament for central bank policy should inflation spike.

New tax laws complicate the government’s short-term fiscal challenge; credit negative for banks because of increased funding costs.

Brazilian Development Bank wants to finance more projects with a lower level of disbursements; local capital markets seen as better bet than banks to help BNDES step back.

Euromoney's recent coverage of the macroeconomic, FX, fixed income and equity market trends in Latin America's largest – and crisis-beset – economy.

Bigger footprint should drive revenues as well as earnings

Newly acquisitive Itaú's earnings have been remarkably resilient

Colombia will elect a new president in the first half of next year and, if the urgency to address the country’s financial position wasn’t already clear enough, the country’s December downgrade by Standard & Poor’s to one notch above junk throws the need for fiscal reform into sharp relief.

The region’s political highlight of 2017 went well.

GDP growth expected to drive acceleration in credit demand; Santander Chile’s CFO expects BBVA to sell to Scotia.

Lack of regional liquidity cited as reason for NY IPO listings; strong pipeline in Brazil being dominated by more traditional companies.

While growth forecasts for Brazil for 2018 are turning optimistic, a few – a surprisingly small number in fact – are warning about a growing downside risk for next year: a negative hit from a persistent drought.

The mood among bankers attending Felaban’s annual conference in November was conspicuously relaxed. Why relaxed? Well, business is good

Banco Supervielle is producing market-leading growth and has issued successful international equity and debt transactions, while other second-tier banks are ambitious and growing fast. But not everyone is tuned into the mid-tier banks’ aggressive growth potential.

Country predicted to be fastest-growing economy; political stability and renewed public investment should lead to demand for credit.

Macro-economic recovery and falling Selic paint positive outlook; credit growth frustrating the rosy outlook.

Just imagine if it all goes right in Brazil.

A change in the interest rate environment will require a fundamental shift in mind-set from the clients of Brazil’s private banks – are they ready for it and where should they look for returns?