Credit slows down again and non-performing consumer loans shoot up 57.5% – Financial Sector – Economy

Loss of traction in the economy, the high cost of money and high inflation They are passing a higher bill to Colombians as 2023 progresses.

This seems to be corroborated by the most recent figures on the evolution of the Colombian financial system that show how, after 20 months of positive growth, the loan portfolio stagnated again and for April it presented a negative dynamic of 0.49 percent, impacted by the poor performance of consumer credit and housing financing.

(Also read: Pandemic dealt a hard blow to cash and brought banking to 76% in Latin America)

At the end of the fourth month of this year, the first fell 2.73 real annual percent, while the second did so by close to one percent, according to the Financial Supervision.

Until last April, the balance of the portfolio that the entities had placed in the national market totaled 678.5 billion pesos.

But it is not the only alert signal sent by the balance sheet of the financial system. To the above is added that the debts more than 30 days past due of Colombians already add up to close to 31 trillion pesos and their real annual growth until April exceeded 18.7 percent, a dynamic that has not been observed since the end of 2020 and mid-2021.

Only overdue consumer loans, which include vehicle loans, payroll, credit cards and free investment, among others, shot up by more than 57.5 percent by the end of the fourth month of the year, the Superfinanciera revealed. which also highlights that only in this segment the ‘hanging’ debts are around 15.5 trillion pesos.

Also the debts in arrears of the microcredit they are growing, although at a slower rate, close to 5.6 real annual percent.

The only portfolios that managed to reduce those late loans were commercial (4.64 percent) and housing (8.21 percent).

With this performance, the quality indicator of the system’s portfolio also begins to approach the levels seen in the pandemic. According to the Superfinanciera, for the closing of last April said indicator was found at 4.56 percent, 0.74 percentage points above the record for the same month last year. In February 2021 it was above 5.2 percent.

What is worrying about this situation is that this same quality indicator, for the consumer portfolioit already marks 7.25 percent, while in microcredit, 6.57 percent, well above the average for the system.

It should be noted, however, that although the deterioration of the portfolio is on the rise, so are the provisions, that is, the resources that normally Entities must save to support those overdue debtsthey have strengthened.

Thus, today for every 100 pesos in arrears, credit institutions have provisioned more than 132 pesos to respond in the event that those resources in arrears are not recovered.

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earnings affected

The effort that credit institutions are making in terms of provisions is one of the reasons why system gain does not train good dynamics and, in many cases, they had a negative performance, although in general terms they are in positive territory.

As of April, the financial system as a whole, which includes credit institutions, trust companies, insurance companies, Pension Fund Administrators (AFP) and official entities, among others, reported a profit of 9.81 trillion pesos, close to 4.5 percent more than those reached a year ago.

Of that amount, banks contributed 3.67 trillion pesos. However, compared to the results of April last year, a fall of 42.3 percent per year was recorded.

The second largest profits registered last April correspond to the group of entities such as official Findeter, Fogafín, Bancóldex and the National Savings Fund (FNA), among others, who obtained more than 2.14 trillion pesos in that month. They were followed by insurers with just over 2 trillion pesos.

At the same time, the public resources managed by the entities of the sector acquired in the accumulated between January and April of this year about actions of the order of 49.3 billion pesosbeing the public savings managed by the AFPs those that increased the highest figure, 26.6 trillion pesos, followed by those managed by the fiduciaries, more than 21 trillion.

(Also read: High rates continue to motivate Colombians to put their savings in CDT)

good yields

The positive balance of the system is due, precisely, to the savings of Colombians, who, despite the fact that many still prefer to have their money ‘under the mattress’, the high interest rates offered by some establishments —in some cases rates close to 16 percent annual effective— are increasingly motivating them to have that money in the different mechanisms offered by banks, such as certificates of deposit term (CDT) and savings accounts.

This was corroborated by the most recent figures of the balance of the system revealed by the Financial Superintendence, which indicates that until last April the CDT registered a real annual growth of 39.2 percent and that only between March and April the balance of resources in This instrument grew by 1.2 trillion pesos to reach a total of 268 trillion pesos, that is, 97 trillion more than in April 2022.

“The balance with a maturity of more than one year reached 155 trillion pesos, of which 91 trillion corresponded to deposits with a term of more than 18 months, that is, 58.7 percent of the total. The possession of CDT was distributed 67.5 percent in legal persons and official entities and 32.5 percent in natural persons, ”says the report of the surveillance and control entity.

According to statistics from the Superfinanciera, until last May the interests that financial entities recognized to people for depositing their resources in CDT ranged between 1 and 8.03 percent effective per year for a term of up to 30 days; from 0.05 and 9.74 percent at 60 days; between 8.83 and 14.13 percent at 90 days; between 7.06 and 15.36 percent at 120 days; between 8.05 and 14.96 percent at 180 days; between 8.82 and 15.37 percent for a one-year term, and between 11.25 and 15.53 percent for terms of more than one year.

The entity also presented that at the end of the fourth month of 2023 the balance of savings accounts reached 269.8 trillion pesosslightly above the balance obtained in the CDT.