Banks are part of the economic activity that contributes the most to the collection of taxes in Ecuador, according to the latest reports from the Tax Administration (SRI).

Of every $100 in taxes collected, $13 comes from banking activities.

“Banks promote economic dynamism with loans, but also with what they give in the form of taxes,” states the report of the Association of Private Banks of Ecuador (Assobanca).

The Semanal Analysis publication shows that between January and October 2023, the total collection reached $14.784 million.

Private and public banks in the country were cancelled $1,889 million in taxes, 12.8% of the total.

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The second activity that pays the most taxes is the sale of liquid fuels with 6% ($882 million), and in third place is the sale of new and used vehicles with 3.4% ($505 million).

Activities that paid the most taxes in 2023

1.- Banks 12.8%

2,. Sale of liquid fuels 6%

3.- Vehicles 3.4%

4.- Government 3.2%

5.- Trade 3%

6.- Non-ferrous minerals 2.6%

7.- Beer 2.3%

8.- Gas 2%

9.- Oil 1.8%

10.- Telecommunications 1.7%

11.- Oil services 1.5%

12.- Shrimp 1.3%

13.- Supermarkets 1.1%

14.- Spare parts 1.1%

15.- Savings and credit cooperatives 1.1%

16.- Soft drinks 1%

17.- Medicines 1%

18.- Housing construction 0.7%

19.- Health 0.7%

20.- Computers 0.7%

21.- Hardware store 0.7%

22.- Higher education 0.7%

23.- Restaurants 0.6%

24.- Personal services 0.6%

25.- Insurance 0.6%

“These findings show that banks are not the ones that make the most profit in the country, nor are they the most profitable, but they are the ones that pay the most taxes. They stimulate the economy in two ways: they stimulate economic dynamism through credit and they contribute to taxes that benefit all Ecuadorians,” says Asobanca.

“Ecuadorian banks are solid and solvent, they support the productive reactivation of the country and create more than 20 thousand jobs. They are not the most profitable entities in the country, nor is it the most profitable activity, but they are the ones who contribute the most taxes to the state. Putting more taxes on banks creates less credit, less credit for Ecuadorian companies and families, that is, the more taxes on banks, the more it affects economic activity, both in the production sector and in the consumption part, and therefore less tax collection,” said the executive president of Asobanco, Marco Rodríguez.

The loan portfolio reached 42,129 million in November 2023, a growth of 9.9% compared to the same month in 2022.

The monthly publication of the so-called The evolution of banking Asobanca shows that there is a slowdown in the growth of financing, but that it is maintained, which gives dynamics to the economy.

“There is a slowdown in the delivery of loans compared to previous years. For example, from November 2022, an annual growth of 15.9% was recorded, that is, there is a slowdown of six percentage points during the last year.”

Of this total amount, the commercial loan portfolio intended for small, medium and large companies reached 18,521 million dollars, which represents a growth of 5.5%.

“In this way, private banks support small, medium and large companies in the country with financing in order to increase their sales, stimulate employment and contribute to the economic development of the country through access to formal financing,” says Asobanc.

Business loans are followed by consumer loans, which reached 17.614 million, which represents an annual growth of 15.1%.

“Consumer credit is important for Ecuadorian households in this last phase of the year because it provides immediate access to liquidity, facilitates the purchase of goods and services in the manufacturing sector and finances their important health needs and other things they need.” They allow you to improve your quality of life,” the report said.

The next key segment for private banks is microloans, which amounted to $3.39 billion in November 2023, 10.6% more than in the same month last year.

“Entrepreneurships, which are mostly composed of independent workers and irregular incomes, require permanent financing. For this reason, this type of loan becomes vital.”

Of the total credit portfolio in November 2023, 58% (USD 24,515 million) was allocated to production loans (productive, small and medium enterprises, housing and microcredits), and 42% to consumer loans (USD 17,614 million).

The Banking Evolution Report reveals that deposits reached $44,946 million in November this year, representing an annual growth of 6.7% ($2,828 million more in deposits than in November 2022).

Of total bank deposits, 44% ($19.97 billion) refers to time deposits, which is an annual growth of 16%. While savings deposits reached 10,800 million dollars, and cash deposits reached 11,833 million dollars.

“The increase in deposits is proof of clients’ confidence in the banking system; Furthermore, due to their intermediary role, deposits are the main source of financing for financial entities for granting loans to Ecuadorian families and companies,” Asobanca points out.

In Ecuador, the dynamics in the provision of financing is affected by the existence of upper limits of interest rates that do not allow the determination of rates based on the risk of each client, do not reflect the market conditions in the current situation and, therefore, prevent the inclusion of more people in the formal financial system, according to Asobanca.