After the credit portfolio in the financial system had double-digit growth rates during 2022, after having overcome the difficult stage of the pandemic, so far this year the dynamism of this sector has begun to slow down amid an economic recession that crosses the country, revealed the Superintendency of Banking, Insurance and AFP (SBS).
As of September of this year, credit, without considering government programs, had an annual growth of only 3.3%, compared to the 10.7% recorded at the beginning of 2023.
“The system continues to grow, but at a slower rate,” summarized Jorge Mogrovejo, superintendent of Banking and Microfinance at the S.B.S.during the presentation of the Financial System Stability Report.
In detail, all credit portfolios have slowed down so far in 2023. The consumer portfolio stopped having annual growth from 22.4% in January to 11.5% in September. While that of mype went from an advance of 19.4% to 9.9%.
According to Mogrovejo, the trend for these two types of credit is that growth continues at a lower rate because the entities of the financial system are being prudent in their placements given the low dynamism of the national economy.
“The trend is that (consumer credit) continues to decline. The same thing happens with mypes, which were the two loans with the highest growth rates. The entities themselves are seeing that there is a climate in which it is not convenient to grow at the rates that were growing in a scenario that they believed was going to be better, like the one in the middle of last year,” explained the SBS official.
Meanwhile, housing mortgage credit expanded by 4.7%, after registering a rate of 7.9% at the beginning of this year.
Likewise, non-retail credit, requested by medium, large and corporate companies, had an annual drop of 2.5% due to lower loans, in a context of economic slowdown.
Impact of El Niño
The probability of default of retail debtors would be more affected if a strong Coastal El Niño materializes in the summer of 2023-2024, according to the SBS.
According to the institution’s projections, mypes debtors would be the most affected, as their ability to directly generate income would be reduced. While the consumer segment would be indirectly impacted, as economic activity as a whole would be deteriorated by this weather phenomenon.
Although corporate debtors and large companies have greater resistance to adverse shocks in the local and international economic context, they would not be immune to the impact of the FEN Costero on their income generation and payment capacity.
By geographical location, the northern coast of Peru would be the most affected by the impact on rainswhile the central and southern mountains would be the most affected by drought events, according to the SBS estimates.
Delinquency and default ratio increases
Internal and external shocks have caused the Peruvian economy to experience low growth rates, which in turn has been reflected in an increase in delinquencies and the increase in default ratios (RI) in recent months, explains the SBS.
Thus, it is identified that the value of the IR as of June 2023 was 4.20%, exceeding what was projected by the institution in the base scenario (4.0%) and approaching the estimated stress scenario (4.40%).
Likewise, in an adverse scenario, the mype and consumer portfolios would show the greatest deteriorations in credit quality, which would be particularly affected by the materialization of the FEN Costero.
Jorge Mogrovejo, superintendent of Banking and Microfinance of the SBS
“As of September of this year, the financial sector shows less dynamism in the growth of the credit portfolio, which is 3.3% annually. The system continues to grow, but at a slower rate.”
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