Families prefer to pay debts before asking for more credit

It points out that “in line with the slowdown in household spending and in a context of lower household debt, household gross savings continue to recover and are approaching pre-pandemic levels.”

The director also explained that the financial burden, which is the division between the fees that households must pay and the income they have, also registered a reduction in 2023: “For its part, the financial burden, which we calculate as the total of financial quotas on the disposable income of households, for those households that accessed new credits, has been decreasing so far in 2023 and stood at 32.3%.”

Stability

According to the general manager of the Bank of the Republic, Leonardo Villar, the financial stability report allows the financial markets and citizens to know the risks that may affect the country’s monetary system, which is why it is useful for decision-making future in the national territory.

“The results presented here also serve the monetary authority as input for decision-making, as well as the entities that are part of the financial safety networks within the framework of the coordination and monitoring committee of the financial system,” said Villar.

Regarding inflation, Villar explained that in Colombia it has taken longer than what was budgeted, so measures have been taken to preserve the value of the Colombian peso.

“In the local scenario, the high and persistent levels of inflation in Colombia have required a contractionary monetary policy in order to preserve the purchasing power of the currency. “This position aims to facilitate an orderly adjustment of the economy after it exhibited high growth rates and excess demand in 2021 and 2022, which were partly driven by a notable increase in the portfolio by credit establishments.” , the manager pointed out.

Likewise, Quicazán maintained that credit establishments have enough capital to face a scenario like the one that is occurring at this moment, where they have lower profits.

“We have seen lower household debt, which has also led to a decrease in the financial burden on them, which is why they have a greater willingness to be able to face financial obligations,” added the director of Financial Stability of the Bank of the Republic.

According to this document, during the first half of 2023, increases in delinquencies were recorded in the commerce, manufacturing and construction sectors.

The higher expense for provisions, especially in consumer loans, and lower interest income, explained the decreasing trend in profitability.

Likewise, the deceleration of the portfolio would continue in the short term, consistent with the perception of lower demand and more demanding conditions for granting loans by credit establishments.