Bank credit back after increase in deposits; the head of the cooperatives is still not raising his head

Grass symptoms of one small recovery in a situation credit from private banksafter almost two consecutive semesters of slowing down.

Jesus slow motion began back a bit from June 2024. In that month, the annual growth The banks portfolio was at 8.1% and now, in July 2024, the annual increase was 8.2%, bringing the entire portfolio It closed at $43,892 million.

And that’s him bank credit getting faster after that April and May 2024 he Annual growth of the pack still at 8%the lowest number reported from July 2021.

The consumer credit sector is the one that has been more dynamic and has gained the most weight in the credit portfolio. In July 2023, the consumer credit represented 40.2% of the total portfolio, but by July 2024, It came to represent 41.7%.

More deposits broke banks

The credit recovery banking because of its importance increase in deposits which private banks have been catching, says economist David Castellanos, professor at the Simón Bolívar Andean University.

“With more investments the the bank has more funding and it has been able to increase credits a little more in the last two months,” he said.

Lose bank deposits grew at a rate of 3.9% in March from 2024, but with July 2024he The change amounted to 11%. annualized, the highest since February 2022.

One of the private banking strategies there were increase interest rates for fixed term investments attract more savers. So the rates for policies savings in banks reached highest levels since 2007according to data from the Central Bank of Ecuador (BCE).

But, although you see a some improvement in bank portfolio in June and July, credit growth continued does not reach the levels which he had inside first half of 2023. During that period, the banks’ loan portfolio grew at a distance between 10% and 14%.

Credit in cooperatives has not been recovered

he is collaborative settingBut, it doesn’t get better. The credit card of cooperatives began 2023 with a 15% annual growth.but since then it started to slow down.

So, in June 2024, the credit portfolio of cooperatives grows by almost 0.7%. This is a growth phase not seen since December 2016 and it is even lower thanthan reported in 2020, during the Pandemic covid-19.

And it is that the deposits of these groups of the Popular Economy and Solidarity they failed to grow as in private banking. In January 2023, the growth rate of investments in cooperatives grew at the rate of a 15.4% annually and to June 2024 they only grew to 3.2%.

The economy will slow in the first half of 2024 It mostly affected low-income clients.which is usually cooperative clients. In addition, after the 2020 pandemic, many clients of these organizations They did not regain their ability to pay and they are still in debt.

That explains that the credit delinquency rate in cooperatives already there changed so far -8.13% compared to yesterday. In contrast, crime in banks is at 3.6% as of July 2024.

Credit demand will grow, says the Central Bank

The credit slowdown This was one of the factors that analysts and the ECB took into account to make sure that the the economy entered a business cycle of recession in the first half of 2024.

However, according to the manager of the ECB, Guillermo Avellán, in the the second half of this 2024he belief will become more dynamic, because the economy will enter a recovery ratesaid the manager.

In fact, the latest study by Credit Supply and Demand Forecastprepared by the ECB, announcing that the banks provide that in the third quarter of 2024 (July to September), the Credit demand could increase.

Castellanos says that one of the things that could affect a more demand for loans that is in the second semester, that the Noboa Government expects the excluding USD 3 billion of payments loans from multilateral agencies.

If that happens, more dollars would flow into the economyso Ecuador could seek more loans, he said.

Another factor is the seasonalsays Castellanos. And between November and December there is usually more consumption, for Black Friday, Christmas and New Year’s Eve.

The Director of Research at the consultancy Business Intelligence, Juan Javier Jarrín, agrees that it could continue. some increase in bank credit in this second part of the year.

However, Jarrin doubts whether the groups can return to “open the credit key” at the rates of 2022. Therefore who does not believe that belief can stimulate the economy to a large extent in the rest of 2024.

Jarrin mentioned among the reasons for steady increase In the’ interest rates of the United States Federal Reserve (Fed). These increases led to it is more expensive for the bank ecuadorian access to foreign loansput that money into local credit.

And although expect the FED can stop his policy of aggressive rate hikes at their next meeting in September 2024, these increases are coming collecting from 2022 and it won’t be easy send back immediately the level of financing costshe says.

In addition to the increase in rates abroad, the the high-risk country of Ecuador It also makes credit more expensive for him organizations seeking loans abroad.

Another feature is that the banks have had less liquidity with tax changes and that has limited their margin of action throughout the year, says Jarrin.

The last one tax reform of the Daniel Noboa Governmenteffective from March 2024, has created a new tax on it banking profits. In addition, that same reform established that several banks believe that large taxpayers pay monthly advance payment of income tax.

The reform too increase the rate of the Foreign Exchange Outflow Tax which banks also pay in several of their activities.

And the third element is that Ecuador is close to new elections presidential elections scheduled for February 2025.

The above because, according to Castellanos, the pre-election uncertainty that would damage productive credit, as companies could install it reverse your investment plans so that we know who will be the next president of the country and what he will have Government line.