Latin America's top 100 banks: strong growth, good outlook: Latin Trade ranks the top 100 banks in Latin America and asks three reading bankers for their outlook.

Author:Otis, John
Position::INDUSTRY REPORT - Company overview
 
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BOGOTA -- Carlos Raul Yepes, president of Colombia's top bank, Bancolombia, sees plenty of opportunities these days--and not just among big companies in the cities. In June, he visited one of Bancolombia's newest branches--in the remote town of San Jose de Guaviare--in southeast Colombia. The size of the town? 45,573 inhabitants.

"We are designing strategies to reach 14 million people who today don't have access to the financial system, due to the high cost or their geographic location,"Yepes says. "We want to reach what we call la otra Colombia ["the other Colombia"], which means outlying areas like Amazonas and Guaviare departments."

Next up? A branch in Leticia, on Colombia's southern border with Peru and Ecuador, by the end of the year.

"You can't just be where everything is profitable, where everything is fine, where there are no problems,"Yepes tells Latin Trade. "We have a strategy to be a universal bank and be in the most number of towns in Colombia."

Yepes, 46, took over as president of Bancolombia in February; replacing long-time president Jorge Londono. Yepes previously served as vice president at Grupo Argos, a cement and energy company based in Medellin.

Bancolombia last year boosted its assets by 27.1 percent to $25.4 billion. Its net income grew 25.8 percent to $615.5 million.

STRONG GROWTH

However, it's not the only bank doing particularly well in Latin America. The top 100 banks in the region increased their assets last year by an average of 29.7 percent. All in all, they reached assets of $3.3 trillion, according to Latin America's Top 100 Banks list from Latin Trade.

The performance of Latin America's banks is striking in contrast to European institutions grappling with sovereign debt crises and the U.S. sector still dealing with a legacy of bad loans.

The global recession that began in 2008 prompted ratings agency Moody's to assign a negative outlook to the sector in Latin America. That outlook, based on the possibility of credit ratings downgrades, persisted into 2009, "but it was more an expression of the uncertainty," says Celina Vansetti-Hutchins, managing director for Latin American bank ratings at Moody's. By last year, Moody's had revised the outlook to stable.

"There's very little legacy to the crisis," Vansetti-Hutchins says. "Some systems are seeing a very good recovery."

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In Brazil, Peru and Colombia, in particular, "there's a tremendous increase in credit this year compared to recent years," she says.

Even Mexico, whose economy is closely tied to the United States and therefore its GDP is growing at a slower pace compared with other countries, is moving along at a steady 3 percent to 4 percent rate, Vansetti-Hutchins notes. "No spikes, no fails."

Latin America also has continued to stand out as a bright spot for global banks.

Profits in Mexico, along with those in Turkey, are credited with offsetting a downturn in its home market for Spain's BBVA. BBVA Bancomer, its Mexican subsidiary, was sixth in the ranking of Latin America's top 100 banks, the same spot as last year.

UK-based HSBC announced in August thousands of layoffs and the closure or divestiture of some businesses as part of a global restructuring. Although annual revenue was flat for the group in 2010, the bank highlighted double-digit revenue growth in Latin America.

And while cutting jobs in Europe, HSBC will continue to hire in markets such as Brazil. HSBC Bank Brasil ranks eighth on the list, the same spot as last year.

The Latin America banking markets that are growing most are Brazil, Colombia and Peru, Vansetti-Hutchins says. "Even Mexico, [although it's] less than what it was at the peak, but more than what it has been recently," she says.

BRAZIL DOMINATES

Brazil dominates the ranking of Latin America's biggest banks. The top five banks, and seven of the top 10, are all from Brazil. All in all, 33 Brazilian banks make the list, accounting for $2.2 trillion in assets, or 67 percent of the total assets of the top 100 banks. Brazilian banks also performed better, with their assets growing at an average of 36.1 percent last year.

State bank Banco do Brasil tops the ranking of Latin America's biggest banks, with assets of $486.8 billion, an increase of 19.6 percent. Itau Unibanco follows in second place, with assets of $453.2 billion, a 29.7 percent increase from 2009...

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