Righteous for sinners

The signs are clear: lPeople are planning Christmas in mid-November because they need this year to end soon
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The brake was expected. We knew that we had grown a lot, that the Bank of the Republic raised rates to slow down the economy, but the fall in investment has been enormous and that of broad household spending has been enormous.

High interest rates play a determining role in this, because they make people and companies prefer not to go into debt and save; But this already happened, when the CDTs were at rates of 15% and this window closed. However, another one remains open, which is worth analyzing: the delinquent portfolio.

From the second half of 2022, Many people began to go into debt and the banks gave them credit “without any major problem”, hoping that things would go well in the economy; As inflation increased, some stopped paying their debts, causing the non-performing portfolio to grow to 42.7%, becoming close to 5% of the total household debt with banks.

What happened? If the banks are always careful about this? That the rules changed.
There are changes that are slow and that are difficult to anticipate; This happened in the market due to the rules that “in good faith, wanted to help banking clients”: the aid for frozen installments during confinements, the “clean slate” law, now the “do not disturb” law and The change in SERLAF and the usury rate caused banks to be “more lax” in granting loans, because they did not have the story of their new clients, who changed their behavior due to aid in the pandemic and the new regulations, plus the change in usury, putting many banks in serious income problems.

For many, banks are bad, because they lend expensively and to few. Perhaps that is true, but today’s data demonstrates their way of acting: People are not paying, and if people don’t, everyone is going to be affected.

Banks must obtain the resources to lend and that costs them; placing credits, costs; collect the credits, too. Which means that they must lend at high rates, because our market saves little; If they don’t pay you, rates won’t go down and they’ll be much more careful about lending.

A 5% bad portfolio seems little, but with such rapid growth, it raises many alarms. This will further curb household spending and perhaps business credit.

The new rules may make many think that banks will be less careful, they will not be able to collect as easily and some may take advantage of that, affecting everyone: that is the risk of making rules to “protect the consumer” and that end up affecting them.

Camilo Herrera Mora
Fundador de Voices.