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Fitch sees stable outlook for Central American bank ratings in 2017

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Fitch sees stable outlook for Central American bank ratings in 2017

Fitch Rating's outlook for Central American bank ratings is stable for 2017, reflecting "slight changes in growth and financial performance," according to a new report released Dec. 13.

Although Fitch expects bank profitability to be generally stable, the level will likely vary between countries with Nicaraguan and Dominican banks expected to maintain good profitability ratios, while Panamanian, Salvadoran and Guatemalan banks are expected to "lag peers."

"The operating environment will have a growing influence on the banks' performance given the downside risks that could potentially develop in some countries, adversely affecting asset quality and capital, or funding and revenue stability," Fitch said.

As for loan growth, rates in 2017 will likely be similar to 2016, although there is some downside risk related to economic headwinds in some countries, Fitch noted.

Finally, nonfinancial risk management is increasingly important as "recent events have shown that risk controls and corporate governance standards still have significant weaknesses."