CostaRican financial institutions increased their reserves for impaired loans by 25%in the 12 months through August, while total loans grew only 11% in the same period,El Financiero reported Oct. 9, citingdata from financial regulator Sugef.

The reasonfor the higher growth in reserves compared to loans was attributed to new regulatoryrequirements that were implemented in 2015.

For example,lenders must calculate higher reserves for some debtors with loans denominated inU.S. dollars and make anti-cyclical provisions for use in periods of economic contraction.

Non-banklenders, such as Caja de Ahorro yPréstamos de la Asociación Nacional de Educadores, known as Caja deAnde, showed the highest increase in reserves through August, the report said.

Cajade Ande's reserves rose 66% in the 12 months to August, reaching 61.06 billion CostaRican colones, representing the fourth highest total in the country's financialsystem after Banco Nacional de CostaRica, Banco Popular yde Desarrollo Comunal SA and the sum of all regulated savings and loancooperatives, the report said.

As forCosta Rican banks, bank executives cited in the report said the local banking systemhas seen some deterioration in asset quality in 2016 due to loan defaults, but thatthe impact on financial results depends on the risk management of each bank.

As of Oct. 7, US$1 was worth 552.25Costa Rican colones.