The private banks in the country continue their positive streak in terms of profits generate, resulting in more points. Between January and November of this year total 672.7 million dollars in profit, 11.8% more than in the same period in 2022 ($603.9 million).
The list is still leading Pichincha Bankthe largest in the country with 173.5 million dollars in profit, 26.3% more than in the same period in 2022.
It appears elsewhere Banco Guayaquil with 107.4 million dollarsaccording to the Datalab platform of the Association of Private Banks of Ecuador (Assobanca), which is based on data reported by the Bank Supervisory Board.
The former president of the Republic, Guillermo Lasso, made his fortune in Banco Guayaquil, of which he was the executive chairman until 2012.
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During his term, which ended on November 23, 2023 after his death by cross, Fidel Egas Grijalva, who was the main shareholder of Banco Pichincha, was among the active critics of the regime.
He Pacific is in third place with $106.4 million in profit. Its main shareholder is the state through the National Financial Corporation (CFN) and it cannot be sold despite the positive figures due to the uncompetitiveness of the national financial system, according to experts.
Guayaquil’s profits grew more (12.2%) through November this year compared to the same period in 2022. Pacific profits grew by 6.5%.
Produbanco, which has been part of the Promerica Group since 2014 – an international financial conglomerate present in 9 countries – remains in fourth place with $62 million, but records a decline (-17.3%) compared to the same period in 2022. That is, the rate growth has slowed down.
The amount of profit will always depend on the size of each bank’s business, and those in the first four places are considered the largest, which is why they are repeated in this ranking every year as the highest earners.
Ten banks that earned the most during 2023*
-in millions of dollars-
1.- Pichincha 173.5
2.- Guayaquil 107.4
3.- Pacific 106.5
4.- Produbanco 62
5.- Bolivarska 58
6.- Diners 57
7.- International 56
8.- Citibank 16
9.- Austria 14
10.- General Rumiñahui 13
*between January and November
Source: Supervisory Board of Banks
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The President of the Republic, Daniel Noboa, mentioned in the campaign that in the economic crisis, banks are making profits with losses in some sectors.
At a time when the presidential elections are approaching, since Noboa will remain in power until May 2025, this speech is also welcome, as the former President of the Republic Rafael Correa said last November on Xu (formerly Twitter): “Al Until the end of 2023. banking will easily exceed $1 billion in gross profit, massively concentrated in 6 banks. Record keeping. Meanwhile, poverty and migration are on the rise. This is the history of Ecuador. It is the history of Latin America. And their media makes us believe that this is “normal” and many applaud their own tragedy.”
“This vision is based on a conceptual error. Thinking that banking is a zero-sum game, where the bank gains by credit what citizens lose by getting credit. This vision ignores the fact that in any voluntary transaction both parties gain from the exchange. “That whoever receives the loan benefits from this transaction because this money enables them to meet their production and consumption goals,” the publication states. Weekly analysis November 2023
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Furthermore, gross profit is not the same as net profit. “Gross profit is that from which taxes have not yet been deducted.”
Marco Antonio Rodríguez, executive chairman of Asobanco, indicates that what is stated in this latest report “debunks the myth that private banks are the ones that generate the most profits in Ecuador“.
This analysis uses an indicator called ROE or return on equity, a concept that shows profit based on capital invested by shareholders.
The banks’ ROE, i.e. the percentage of profit on investment, in November of this year was 12.43 percent.
The Weekly Analysis publication shows that the return on equity recorded by private banks during 2022 was 11.5%.
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Alberto Acosta Burneo, economic analyst and editor of the publication Weekly analysisindicates that one sector should always be compared to another on the basis of invested capital.
“Winning a hundred dollars when you invest $500 is not the same as winning a hundred dollars when you invest $1,500. The assessment has to be based on the capital invested to see if this sector has done better or worse, then you have to look at the return on equity (ROE). If it is compared in absolute terms, it is incorrect.”
The ROE of banks in 2022 was slightly lower than the return on capital of the entire national economy (11.9%).
“Dollar values can be distorted by inflation and because they do not take into account the amount invested. The technically correct thing to compare between industries is to analyze profit in relation to invested capital (equity). This indicator is return on equity (ROE). A higher level of profitability shows health in economic activity, it is synonymous with good management, growth and job creation,” says Acosta.
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in the list of the most profitable sectors in the country, the first 5 are led by administrative and auxiliary services (35.3% ROE), mining and quarrying (24.7%), public administration, defense and social security (18.4%), telecommunications (15, 7 %) and professional and technical activities (13.8 %).
Banks are ranked 10th with an ROE of 11.5% in 2022.
The ten banks with the highest ROE are Citibank (21.51%), Guayaquil (18.20%), General Rumiñahui (14.6%), Bolivariano (14.41%), Visionfund Ecuador (14.23%), International ( 13.75%), Pacific (13.38%) ), Pichincha (12.69%), Produbanco (12.55%) and Loja (12.48%).
Report of Weekly analysis shows that “the 25 largest companies had a return on equity (ROE) 1.4 times higher than that of the banking system. The next 25 largest companies had an ROE 1.7 times higher than the banking system.”
Rodríguez claims that bank capitalization is continuous. “Eye 80% of the annual profit is not distributed among the shareholders, but is reinvested in each entity, which makes it possible to maintain the appropriate level of credit placements and strengthen the level of banks’ provisions. The reinvestment of profits also helps to improve innovation, digitalisation, cyber security and the creation of new financial services and products.”
“The profitability of banks is not only fundamental to the health of the system, but is also a source of credit growth. Profits are what make it possible to increase bank assets and thereby increase the supply of loans. Without asset growth, there is no credit expansion,” the report states. Weekly analysis.
The banking sector was the fifth to accumulate the most profits in absolute terms in 2022, below mining and quarrying ($1,560 million), trade ($1,556 million), finance and insurance excluding banks, cooperatives and mutuals ($1,556 million). 1,291 million) and production ($1,183 million).
The profit of 24 private banks together reached 664 million dollars in 2022, which means 2.9 times less than the profit of the 25 largest companies in the country ($1,953 million) and 1.2 times less than the profit of the other 25 companies ($812 million). according to data from the supervision of banks and companies; This year, the latter records only data for 2022, hence the comparison of last year’s data.
Historically, the higher ROE percentage for the private banking system in Ecuador was achieved in June 2006 at 31.42%.
In July 2008, when Correa was in power (2007-2017), it was 27.73%. And it fell to 19.09% in August 2011.
And in December 2019, before the pandemic, it was 13.9%.
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Source: Eluniverso
Alia is a professional author and journalist, working at 247 news agency. She writes on various topics from economy news to general interest pieces, providing readers with relevant and informative content. With years of experience, she brings a unique perspective and in-depth analysis to her work.
