Annual Report 2007

1
A n n u a l R e p o r t 2 0 0 7
The Financial Sector
The traditional banking sector consists of 19 private
banks,² three of which were licensed by the
regulatory authority in 2007: Banco Azteca (February
2007), Banco ProCredit (March 2007) and
Bancovelo (December 2007). For many decades
all Honduran banks had been locally owned, but
by the end of 2007, 11 of the country’s 19 banks
were majority foreign owned. After many years
of watching from the sidelines as other countries
were “discovered” by international banking
groups, Honduras has now become an attractive
market for foreign financial service providers;
acquisitions by Citigroup (Banco Uno and Cuscatlan),
Banco de America Central (Bamer) and
Banco Internacional (BanPais) underscore this
appeal.
Looking at the profits generated by banks in Honduras
during 2007, it is easy to understand why
the inflow of foreign capital into the country’s
financial system increased. The total for the
banking sector amounted to USD 138 million, a
32% increase compared to 2006. The consolidated
return on equity (RoE) for the banking system
for the year was 19.8%, up slightly from the
figure for 2006 (19.4%). Likewise, total sector
assets, including the loan portfolio, grew sub-
2 InDecember2007,thesupervisorybodyissuedabanking
Loan Portfolio Development – volume
Volume (in USD ’000)
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
licence to Fundación Covelo/Popular
500
0
Jun 07 Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07
g
g
g
USD 0 – USD 1,000
USD 1,001 – USD 10,000
USD 10,001 – USD 100,000
stantially, rising 15.8%. The strongest growth
in the loan portfolio was in housing loans,
loans to the trade sector and to textile producers,
and consumer loans, and particularly in the
issue of credit cards or credit lines to finance
spending on consumer goods. The manufacturing
(small-scale production) and agricultural
sectors continue to be those which are least
well served by the country’s banks. The financial
system’s loan-loss provisions amounted to
2.9% of the total portfolio, of which provisions
for the portfolio in arrears constituted 74.6%.
The distribution of funds among the three types
of deposits was as follows: term deposits: USD
1,917 million; current accounts: USD 2,869 million;
and savings accounts: USD 1,177 million.
Total customer deposits grew 15% between December
2006 and December 2007. Deposits in
foreign currency represented 37% of the total.
The level of customer deposits as a share of GDP
was relatively high in Honduras (49%, compared
to less than 13% in Mexico). However, the country
continues to be underserved in terms of the
availability of banking services, and substantial
segments of the population do not have access
to such services.
The microcredit market in Honduras has a great
potential for development because a large percentage
of the population has a demand for very
small loans to support their economic activities.
By the end of 2007, over 146,000 loans with a
Loan Portfolio Development – number
Number of loans
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Jun 07 Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07
g
g
g
USD 0 – USD 1,000
USD 1,001 – USD 10,000
USD 10,001 – USD 100,000