Caja de Ahorros, among the least efficient banks

Actualizado 2016/08/17 10:58:17

Redacción/ PanamaAmerica

The Caja de Ahorros (CA) of Panama has come out as one of the least efficient banks, as evidenced though its financial statements at the first half of this year 2016.

The Caja de Ahorros (CA) of Panama has come out as one of the least efficient banks, as evidenced though its financial statements at the first half of this year 2016.

At June of this year, profits of this entity fell in 65%, compared with the first half of 2015, going from 12.9 million balboas last year to 4.5 million balboas in the same period of this year, representing a decrease of 8.4 million balboas, according to the Superintendence of Banks of Panama (SBP).

Similarly, the net profit of the CA at June of this year was 1 million balboas up, i.e. some 5.1 million balboas less than in the same period in 2015 when it stood at 6.1 million balboas, according to the SBP.

With these low results, CA has gone from position #9 at the end of 2013 to position #36 in the profit ranking per bank of the Panamanian Banking Centre, elaborated by the SBP, which reflects low levels of profitability that the current Administration of CA is experiencing, which lies well below that of other banks in the industry.

According to experts, this profit decrease in the entity is due to a slower growth in the credit portfolio of this bank, which grew at June of this year in only 8%, when, in the same period of last year it was 14%.

The above has occurred, while costs of operations have increased, in average, in 2 million balboas per year, from March 2014, situation that is impacting the profitability of this bank making it one of the least efficient (86%) of the banking industry, topped by other entities such as the Banco General (50%), BAC (30%), Banistmo (67%), Multibank (56%), etc.

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Another fact that may have affected the CA is the performance of its productive assets, which have been falling going from 2.92% at March 2014, then 2.33% in the same period of last year and 2.24% in 2016.

Also this institution has registered a decline in the performance of home mortgage interest rates (from 6.27% at March 31, 2015 to 5.82% in the same period in 2016), which is a concern to be taken care of since worldwide interest rates show a trend to the rise.

The above is a situation which will make the CA raise its short-term deposit rates and will result in a net interest margin becoming even lower.

This decrease in the profits of the bank may affect the contributions this institution makes to the State, which have steadily been decreasing since 2013 when they were for 20 million balboas, while in 2014 they were for 10 million balboas and last year these were only about 6 million balboas.

This entity was also evaluated by the Authority of Transparency and Access to Information (Antai) in its assessment of transparency corresponding to June 2015, and ending up in position number 68 out of a total of 96 public institutions.

For Economist Juan Jované, this situation evidences a current administrative problem.

He added that if resources within this institution were falling it would be understood that it made less profitability, but indeed it does have incomes that are not enough to cover the increases that have been taking place in their operating expenses.

"I would not like to think that what they are doing is damaging the institution with the purpose of justifying its privatization which, in my view, could be part of the problem."

He added that if the interest rates at the international level finally rises, this institution is going to be in a situation worse than the current one and is going to raise its lending rate, what will ultimately jeopardize its ability to sells its products in the local market.

Olmedo Estrada, President of the Association of Economists stated that the CA's operating costs are increasing and there is no kind of growth in revenues that are generated through the services of the Bank.

He pointed out that this shows that there is a financial situation that has to be revised aimed to take the necessary corrective actions for the good sake of the institution.