Editorial
CREDIT PERFORMANCE Nº 34
Are we still swimming in the sea of credit? Since 2008, it is said that Latin American countries are sailing in the sea of credit. Whether because of their successful financial systems or as a result of governmental policies encouraging domestic consumption, the overall numbers backed up the growth of the local economies.
Brazil prepares for a year of adjustment as the Banco do Brasil reduces the goal of consumer credit. The provision was altered by macroprudential measures implemented by the Brazilian Central Bank, which will make it more costly for financial institutions to offer such loans.
In Argentina, governmental policies have also sought to increase local consumption. In this line the strategy was carried out from different aspects. The impact of sales through consumer financing with cards and discounts is undeniable. It is worth noting that this increase has been evident since 2003, when the critical cycle began to turn positively. In this regard 2010-2011 was the period of highest growth exceeding a variation of over 40% in consumption levels, according to studies presented by Deloitte. In addition, we should also consider the substantial contribution of nontraditional lending and financing institutions, such as retailers, supermarkets or providers, with their own cards.
Even though Argentina is in a good granting situation, Chile continues to be one of the region’s jewels in this area. While their high interest rates were a point of criticism and discussion during 2011, their power as a financing tool is indisputable. The placement of credit in 2010 was a record, accumulating a growth of over 17% annually, according to the Chamber of Commerce of the trans-Andean country. These are relevant data, compared with those of two decades ago, plus the analysis of the growing numbers of households' expenses. These loans came mostly from the banks, so that insurance companies reduced their credit placements.
Venezuelan banks note that since mid-2011 the limitation of consumer credit has been affecting the demand from both households and businesses. The new regulation affects the placement of credit and collections. The increase in delinquencies is a point of alert for financial institutions and the discussion focuses primarily on the rates applied to the plastic. Today, the banking system gives less than 25% of its loan portfolio to consumer loans, and after the applicable regulations, the number fell to 20%.
In our last interview with industry leaders, we talked with Jesus Terciado, President of the Spanish Confederation of Small and Medium Enterprises, who warned us about the difficult times that SMEs are going through, regarding the access to financing. According to the studies conducted by this institution, more than 80% of the Spanish companies that applied for financing had to overcome many obstacles to access credit, and 14% were ultimately unable to obtain the desired result. This situation challenges all microenterprises that arise in these times of crisis.
A crisis. An opportunity. A challenge.
Next, we would like to share with you the articles that our editorial team has selected for this edition.
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Líderes...
- Interview Darío CastillaCMS Commercial Director and Country Manager for Spain and Portugal.
