Panama'sprivate banking sector posted year-over-year growth in its loan portfolio of12.8% in the first two months of 2016, reaching $25.02 billion, according todata from banking regulator SBP.

The growthshows consumer appetite for loans and the willingness of banks to lend despitestricter lending conditions, tougher competition and an emphasis on riskmanagement, Capital Financieroreported May 9.

Eventhough banks are facing higher risks amid global financial volatility, Panama'sGDP is expected to grow 6% in 2016, according to the report.

However,since banks have limited room to maneuver, the deterioration of loan quality incertain segments could trigger a downturn in their financial performance, whichwould in turn reduce profitability, Fitch Ratings reportedly said.

Totalbank deposits grew 6.9% to $26.39 billion in the two-month period.