In the latest analysis of Panama’s financial institutions, Moody’s Investors Services found the country’s banks are “stable,” with a variety of positive market factors ahead.
Panama’s economy is expected to continue to recover over the next 12 to 18 months, including 6.5% growth in 2022, the respected agency reports. Improved investment, the growth of the Cobre Panama mining operation, and the expansion of the Panama Canal will continue to provide a solid foundation for the banks, even in tumultuous times, the agency says.
Panama’s banks are well-positioned for many reasons, Moody’s concluded, including an increase in business volumes, higher interest rates, and good efficiency will support profitability.
“Liquid assets will remain plentiful and it will continue to offset risks stemming from the lack of a central bank in Panama, which limits its ability to support the banking system,” Moody’s stated.
Moody assessed seven banks for the analysis, including Banco General, Banco Latinoamericano de Comercio Exterior, Banco Nacional de Panamá, Banistmo, SA, BAC International Bank, Inc, Global Bank Corporation and Subsidiaries, and Banco Internacional. of Costa Rica, S.A.
The economic recovery will continue to support improving asset quality, and Panama banks continue to maintain adequate reserve levels to absorb any uncertainties in the market, Moody’s concluded. Rising commodity prices will add to inflationary pressures, but will remain “subdued relative” to other countries in the region given Panama’s fully dollarized economy, according to Moody’s.