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Bolivia Best Bank: Banco Mercantil Santa Cruz

Nov 1, 2012

Bolivia¹s financial system has advanced steadily this past year. A healthy pickup in GDP growth ­ to 5.1% in 2011 from 4.1% in 2010 ­ has lifted the economy and allowed total assets in the system to increase by 16.4% in that time, while profits have grown 36%.

The scale of the market¹s largest bank, Banco Mercantil Santa Cruz has meant it has no peer in terms of strength and profitability.

³The country is going through a positive economic performance which is tied to the performance of the financial system,² Darko Zuazo BMSC¹s president, tells LatinFinance.

The bank has hit two important milestones, he says: its loan portfolio reached $1 billion in the first semester of 2011, and BMSC now has over $2 billion in assets.

The bank has $1.79 billion in deposits ­ a growth of 17.2% in the second half of 2011, easily maintaining its position as the largest in the country.

Profitability for BMSC on an ROE basis was 23.4% in 2011 year-end versus 26.8% as of the same period last year.

Its return on assets increased slightly to 1.53% as of year-end 2011, versus 1.31% at the end of 2010. The increase was in part thanks to a new cash processing area, which the bank says has reduced operating costs.

The bank has reduced its non-performing loans through its special operations division and decreased non-performing loan assets as a percentage of the loans from a NPL ratio of 6% in 2010 to 3.42%.

With its position well established, BMSC¹s main strategy is to continue to modernize its technology: this includes implementing the first self-service electronic platform in Bolivia, and new services for customers through ATMs and internet banking.

Its 2013 strategic plan includes increasing the number of branches and ATMs while leveraging technology to grow its assets and loan portfolio, Zuazo adds. The bank has also initiated operations of Empresa de Transporte de Valores, a new company that transports cash and valuables.

One channel for growth in Bolivian banking could be through the country¹s growing and profitable microfinance segment. BMSC would like to increase its presence in microfinance, although Zuazo says the bank does not expect a substantial expansion in this area in the short to medium term.

³There is talk there could be entities for sale, but it is not a buyer¹s market with only four to five known microfinance entities in the country,² says Zuazo. LF

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