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New Market Study Published: Colombia Commercial Banking Report Q3 2012

Fast Market Research recommends "Colombia Commercial Banking Report Q3 2012" from Business Monitor International, now available


Boston, MA -- (SBWIRE) -- 10/17/2012 -- Banking Sector Growth To Cool In 2012 BMI View: We maintain a relatively constructive outlook for Colombia's banking sector in 2012. Though loan growth will slow, partly due to rising interest rates, we expect strong demand for bank services and a robust regulatory framework will ensure the sector expands at a sustainable pace this year. Colombia's banking sector looks poised to maintain a solid growth trajectory in 2012, driven by three key factors. ???? Relatively low banking sector penetration combined with rising incomes points to strong growth potential in 2012 and beyond. ???? Though rising interest rates will ensure more moderate loan growth in 2012, strong investment prospects and a robust consumer story should keep credit flowing. ???? Rising deposits and a solid capital base will continue to ensure Colombia's banking sector is relatively well prepared for any deterioration in macroeconomic conditions. Growth Potential Remains Robust Although total banking sector assets in Colombia increased substantially last year, banking sector penetration remains relatively modest compared to its regional peers, supporting our view that the sector's growth potential remains massive. Assets-to-GDP came in at 53.6% in January, up significantly from 49.4% in January 2011, but still considerably lower than in Brazil (131.9%) and Chile (111.0%). Relatively low penetration, combined with a strong growth outlook for the economy - we forecast real GDP growth of 4.7% in 2012 and 4.4% in 2013 - underpins our view that rising demand for bank services will drive continued expansion in the coming years, though at a slower pace than in 2011. This moderation is in line with our forecast for total assets to rise by 12.0% this year and 11.0% in 2013 (down from 21.2% in 2011), and will mark a move back to a more sustainable growth trajectory for the sector, implying the potential for a credit bubble to develop remains relatively low. Loan Growth To Moderate We maintain our view that credit growth will cool in the coming years, in line with our forecast for loan growth to average 16.0% in 2012 and 11.0% in 2013, down from 24.0% in 2011. Strong base effects and the continuation of the central bank's hiking cycle in Q112 - the authorities have hiked the benchmark rate by 50 basis points (bps) since January to 5.25% - supports our view for a moderation in credit growth. That said, we believe a number of factors, including a relatively constructive macroeconomic outlook for Colombia, will ensure credit keeps flowing over the coming quarters. Indeed, the country's strong investment prospects, stemming from the oil and gas and infrastructure sectors in particular, as well as a robust consumer story will be supportive of credit growth over the coming quarters. In addition, non-performing loans (NPLs) remained low at 2.7% in January, having come down substantially since 2010, and stabilizing around pre-crisis levels. Our forecast for unemployment to come in at 9.0% by year-en

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