This year has been a challenging one for banks in the Dominican Republic.
Despite some growth in retail, mortgage and consumer credit, the story for the country¹s lenders has been largely one of less growth and profitability.
The run up to presidential elections this year witnessed a fiscal expansion that has led to a deterioration of the country¹s fiscal accounts, according to Barclays. It estimates a fiscal deficit of 4.3% of GDP in 2012, likely to shrink to 3.0% of GDP next year.
Against this backdrop, the central bank was forced to take a conservative stance: interest rates have therefore been higher, leading to a decline in consumer lending. Banks are also investing more in government assets and directing fewer resources to lending. A 1% tax on banks¹ financial assets in effect from June 2011 to June 2013 has also made life difficult and challenged growth levels.
In this context, Banco Popular Dominicano the country¹s biggest private bank in terms of assets has maintained growth above the rest of the system.
Its size has served it well in a more challenging environment. Total asset levels rose 15% increase at year-end to $5.3 billion from its $4.6 billion in 2010. It also saw its net loan portfolio rise 16% from the year before to $3.3 billion.
³Compared with its peers, the bank has a wider deposit base, and that¹s the source of liquidity to grow,² says Larisa Arteaga, director at Fitch.
The bank¹s diversity, retail lending and deposits have all contributed to its maintaining a solid portfolio, she says. The bank¹s consumer loan portfolio, meanwhile, aside from credit cards, grew to $35 million, and it is the biggest mortgage lender in the country, with 25.4% of the market in 2011.
Banco Popular Dominicano has, in terms of asset volume, a 33% share in the banking market. Its total deposits grow about 14% to around $4.5 billion.
The bank has 28.2% of the market for commercial loans, which continues to grow. The bank says it is the largest issuer in the Dominican Republic of credit and debit cards.
Its prospects are boosted by a fiscal reform package unveiled this October by the new administration, which analysts say is likely to revive a flagging economy and, with any luck, create a better environment for the nation¹s banks. LF