In a market that lives with little credit and is looking for more savings with attractive rates, corporate interest rates rise from 9.66% to 9.90%

The cap rate for corporate loans rose from 9.66% in August to 9.90% in September 2023, according to the latest publication from the Financial Policy and Regulatory Board.

Currently, thirteen existing credit segments have an upper limit, but since last June in eleven of them the upper limit is fixed or permanent (whatever happens in the economy, unless the Management makes a decision); while corporate and business are variable. This methodology is applied every month, which means that the upper limits of these two sub-segments will vary from month to month.

Increasing the corporate issuance ceiling helps provide more credit opportunities to higher-risk sectors. According to Alberto Acosta Burne, editor of the specialized publication Weekly analysisincreasing these caps creates the possibility of greater financial inclusion for this sector, since low rates have generated less credit for segments with higher risk, but which tend to be the ones that require it the most.

Meanwhile, Marco Rodríguez, Executive President of the Association of Banks of Ecuador (Assobanca), indicated that in a resolution of June 2023, the Financial Committee recognizes that the solution to this minor dynamism includes the search for a methodology that allows interest rate ceilings to be in line with the international and national economic context . That is why the decision warned that “if the system of maximum static or fixed interest rates were to be maintained for the specified sub-segments, this would become a limitation for the efficient allocation of prices when approving new loans”.

Rodríguez also felt that while it is good news that the Finance Committee authorities have recognized the problem with the negative effect of interest rate ceilings — less credit to productive sectors — and that they have recognized that a solution that includes a more flexible, unfortunately, new calculation methodology it does not solve the essence of the problem, the deepening of financial exclusion, which is why it is expected that the impact on greater delivery of credit will not be what the productive sector requires.

In addition to the change in this credit segment, there were variations in reference rates, which are average rates determined by the Central Bank based on market behavior. Acosta Burneo explained that the active reference rate and the passive reference rate have increased. The first increased from 9.29% to 9.49%, while the passive increased from 7.31% to 7.40%. These rates are not upper limits, but are set based on market behavior.

For the expert, what the behavior of rates reflects is that there is still a restrictive financial environment, where savings are scarce and there are difficulties in accessing external financing. On the one hand, there is no progress in savings for lending, and the Government itself is becoming a competitor in attracting financing since it has announced that it will ask banks for voluntary financing by purchasing bonds. So the benchmark rates are rising.

But, on the other hand, there is also a need to accumulate savings and, therefore, there are even promotions from various financial institutions that have better prices for savings accounts and other term options.

The topic of interest rates also opens up space for political use of the topic. Regarding the change in interest rates, on August 31, former president Rafael Correa wrote on his Twitter that “dollarization was supposed to lower interest rates, but these scoundrels continue to raise them because they have market and now political power.

On this topic, Acosta Burneo objected to Correa’s questioning and commented that although dollarization limits inflation and thus could control the price of money, another factor that affects is the reduced amount of savings. The problem is the limited flow of capital, and until international banking is opened, these problems will exist.

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