2014 Performance of the Banking Center · 2014 Performance of the Banking Center Gustavo Adolfo Villa, Jr. Secretary General Ref. No.: SG-TRAD-201500081 Prepared by: S. Lara Date:

2014 Performance of the Banking Center

Gustavo Adolfo Villa, Jr. Secretary General

Ref. No.: SG-TRAD-201500081 Prepared by: S. Lara Date: March 11, 2015

Outline

Economic environment and Strategic Plan Pillars


Institutional Issues and Challenges

Regulatory Road Map.

2 Ref. No.: SG-TRAD-201500081 Prepared by: S. Lara Date: March 11, 2015

Economic Environment and Strategic Plan Pillars


2011 2012 2013 2014

10.8 10.2 8.4 6.2

Panama: Real Economic Growth Economic Context

Stable economic fundamentals.

GDP grew 6.2% in real terms;

inflation, 2.6%; unemployment,

5.1%; NFPS Deficit, 4% of GDP.

Favorable economic perspectives.

Although the fiscal position has a

slightly unfavorable impact, its

short- and medium-term

management does not appear to

impact economic performance.

Source of growth came from:

Exports of goods and services

such as transportation,

finance sector, tourism,

Panama Canal activities and

agricultural products.

Consumption and investment:

wholesale and retail,

construction, electricity.

4

0.0

2.0

4.0

6.0

8.0

2010 2011 2012 2013 2014

Inflation (CPI)

2010 2011 2012 2013 2014

6.8 4.7 4.2 4.3 5.1

Unemployment

Panama: Recent Economic Performance

Economic Development

Logistics

Agriculture

Tourism

Mining

Social Development

Improve quality of

life

Human Development

Human capabilities

Infrastructure

Connectivity

Environment

Sustainability

Governance

Institutional strengthening

5

Panama: Economic Plan Pillars for 2015 - 2019

6



Sound capacity for generating equity Equity

• Capital adequacy index on risk assets of 14.8%

• Anticyclical provisions are introduced to reinforce soundness of the System

Stable funding base Liquidity

• Current stability of international interest rates favors the liquidity of the System.

Domestic credit with healthy indicators and collateral. Credit

• Total delinquency (30+ days) of Domestic credit is 2.6%

Normal for the economic cycle Growth

Good capacity for generating income. Profitability

• Efficiency of 1.8 for income over operating expenses.


Summary of the 2014 Banking Center Performance

8

Banking Center 2013 2014 2014 /2013

% Var. Average Balance 2014 /2013

% Var. December December 2013 2014 Liquid assets 17,322 21,346 23.2% 16,091 18,793 16.8% Loan portfolio 60,612 66,040 8.9% 60,227 63,305 5.1% Securities investment 16,245 17,594 8.3% 15,376 17,069 11.0% Other assets 3,743 3,681 -1.6% 3,403 3,484 2.4%

Total assets 97,922 108,661 10.9% 95,097 102,651 7.9% Deposits 70,110 78,163 11.4% 68,602 73,988 7.9% Obligations 14,978 16,361 9.2% 13,690 15,045 9.9% Other liabilities 2,827 2,766 -2.1% 2,873 2,844 -1.0% Equity 10,007 11,371 13.6% 9,931 10,774 8.5%

Banking System 2013 2014 2014 /2013

% Var. Average Balance 2014 /2013

% Var. December December 2013 2014

Liquid assets 14,193 17,560 23.7% 12,697 15,137 19.2% Loan portfolio 49,798 55,453 11.3% 49,924 52,553 5.3% Securities investment 12,820 13,975 9.0% 12,307 13,584 10.4% Other assets 3,362 3,208 -4.5% 2,929 3,045 3.9%

Total assets 80,173 90,196 12.5% 77,857 84,319 8.3% Deposits 59,487 67,052 12.7% 58,504 62,981 7.7% Obligations 10,100 11,621 15.0% 8,675 10,147 17.0% Other liabilities 2,616 2,449 -6.3% 2,641 2,603 -1.4% Equity 7,970 9,074 13.8% 8,037 8,588 6.9%

Panama: Balance Sheet of the Banking Center and Banking System

(in millions of USD)

9

G. Bancolombia

Banco General

Banco Nacional

Grupo Aval

BLADEX

Global Bank

Banesco

Banco de Crédito del Perú

Bank of China

Multibank

-50%

-30%

-10%

10%

30%

50%

70%

90%

110%

130%

150%

170%

0% 2% 4% 6% 8% 10% 12% 14% 16%

Gro

wth

Market Share

G. Bancolombia Banco General Banco Nacional Grupo Aval

BLADEX Global Bank Banesco Banco de Crédito del Perú

Bank of China Multibank

IBC: 12-month Percentage Asset Growth and Market Share

10

Banking Center Jan. – Dec. 2013 Jan. – Dec. 2014 2014/ 2013 % Var.

Net interest income 1,982 2,147 8.3%

Other income 1,876 1,889 0.7%

Operating income 3,858 4,036 4.6%

General expenses 2,182 2,219 1.7%

Income before provisions 1,676 1,817 8.4%

Provisions expenses 255 268 5.1%

Income 1,421 1,549 9.0%

Banking System Jan. – Dec. 2013 Jan. – Dec. 2014 2014/ 2013 % Var.

Net interest income 1,811 1,965 8.5%

Other income 1,466 1,485 1.3%

Operating income 3,277 3,450 5.3%

General expenses 1,964 1,927 -1.9%

Income before provisions 1,313 1,523 16.0%

Provisions expenses 226 246 8.8%

Income 1,087 1,277 17.5%

Panama: Income Statement of the Banking Center and

Banking System

11

G. Aval Banco General

G. Bancolombia

BLADEX

Banco Nacional

Global Bank

GNB Sudameris

Multibank

Banesco

Credicorp Bank

-40%

-20%

0%

20%

40%

60%

80%

100%

0% 5% 10% 15% 20% 25% 30%

Gro

wth

Market Share

G. Aval Banco General G. Bancolombia BLADEX Banco Nacional

Global Bank GNB Sudameris Multibank Banesco Credicorp Bank

IBC: Percentage Growth of Profitability and Market Share

12

11.7%

8.0%

4.6%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2012/Dec 2013/Mar 2013/Jun 2013/Sep 2013/Dec 2014/Mar 2014/Jun 2014/Sept 2014/Nov 2014/dic

Loans to Private Sector Private Domestic Deposits MIEA


NBS: 12-month Percentage Variation of Private Sector Loans and Deposits

Quarterly: Dec. 2012 – Dec. 2014

13

Description Dec. 14 / Dec. 13 Var.

Dec. 13 Dec. 14 Total % TOTAL 37,061 40,352 3,291 8.9%

Public sector 1,822 998 -824 -45.2% Private sector 35,239 39,354 4,115 11.7% Commerce 10,313 10,959 646 6.3% Colon Free Zone 2,598 2,461 -137 -5.3% Wholesale 1,903 1,637 -266 -13.9% Retail 1,787 2,227 440 24.6% Services 4,025 4,634 609 15.1% Residential mortgages 8,814 9,957 1,143 13.0% Preferential Interest rates 3,079 3,572 493 16.0% From 0 - 40,000 1,287 1,176 -111 -8.6% From 40,000.01 - 80,000 1,603 1,910 307 19.2% From 80,000.01 - 120,000 189 486 297 157.1% Non-preferential interest rates 5,735 6,385 650 11.3% Commercial mortgages 1,218 1,414 196 16.1% Construction 3,697 4,450 753 20.4% Personal consumption 7,110 7,894 784 11.0% Personal loans 4,917 5,329 412 8.4% Car loans 962 1,165 203 21.1% Credit card 1,231 1,400 169 13.7% Agriculture 1,351 1,479 128 9.5% Others 2,736 3,201 465 17.0%

NBS: Balance of Domestic Loans to the Private Sector

(in millions of USD)

1.7% 1.7% 1.5% 1.5%

1.0% 0.9% 0.9% 1.1%

0.0%

0.5%

1.0%

1.5%

2.0%

2011-dic 2012-dic 2013-dic 2014-dic

National Banking System

Moroso Vencido

1.4% 1.3%

1.1% 1.0%

0.7% 0.6% 0.8% 0.7%

0.0%

0.5%

1.0%

1.5%

2.0%

2011-dic 2012-dic 2013-dic 2014-dic

Panamanian Private Banking

Moroso Vencido

2.1% 2.2%

2.1%

1.6%

1.2% 1.2% 1.2% 1.4%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

2011-dic 2012-dic 2013-dic 2014-dic

Foreign Private Banking

Moroso Vencido

NBS: Domestic Credit Quality Indicators

NBS: Domestic Loan Quality Indicators by Sector (in percentages)

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0.7%

0.8%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2011-Dec 2012-Dec 2013-Dec 2014-DecMortgage

Personal consumption

Commercial

Other sectors

Specific regulatory provision / Domestic portfolio (right axis)15 Ref. No.: SG-TRAD-201500081

Prepared by: S. Lara Date: March 11, 2015

NBS: Balance of Secured Domestic Loan by Sector (in millions of USD)

16

Consumption Mortgage Commercial Other sectors

2,363

11,094

6,690

9,043 5,531

277

4,270 5,158

7,894

11,371 10,960

14,201

Secured loans Unsecured loans Total


NBS: Domestic Portfolio Classification (in percentages)

17

95.4%

2.8%

0.7%

0.8%

0.3%

Normal Special mention Substandard Doubtful Unrecoverable


NSB: Domestic Loan Classification of Doubtful and

Unrecoverable Portfolios by economic activity

Doubtful Portfolio USD208.8 million Unrecoverable Portfolio USD137.5 million

18

31.8%

16.9% 16.0%

9.7%

9.0%

7.4%

3.6% 3.6%

1.1%

0.8%

Residential mortgage Credit card

Commerce Other sectors

Personal loan Agriculture

Construction Car loan

Commercial mortgage Industrial

23.3%

20.0% 16.5%

14.0%

9.8%

5.6% 4.6% 3.7%

1.5%

0.9%

Residential mortgage Personal loan

Commerce Agriculture

Other sectors Construction

Credit card Car loan

Commercial mortgage Industrial

NBS: Collateral and Specific Provision

Doubtful and Unrecoverable Portfolios (in millions of USD)

0

100

200

300

400

500

2011/Dec 2012/Dec 2013/Dec 2014/Dec

406.9 456.8 498.7

299.8

226.2 224.9 261.6

208.8

85.4 93.3 102.8 77.2

Doubtful Portfolio

0

50

100

150

200

250

300

2011/Dec 2012/Dec 2013/Dec 2014/Dec

162.8 156.1 163.9

289.2

82.4 76.8 80.3

137.5

45.1 42.4 56.6 68.2

Unrecoverable Portfolio

Collateral value Unrecoverable balance Specific provisions19

20

NBS: Balance of Doubtful and Unrecoverable Portfolios (in millions of USD)

4

1

1

2

2

4

6

7

11

14

14

25

30

58

45

32

- 20 40 60

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

1

1

1

2

1

5

3

5

7

11

7

16

20

28

23

11

- 10 20 30

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Doubtful Portfolio Unrecoverable Portfolio


21

Banking System

Mortgages: Loan – Collateral Relationship

01,0002,0003,0004,0005,0006,0007,000

Lessthan50%

From51% to

60%

From61% to

80%

From81% to

99%

Over100 %

689 560

2,490

6,099

1,368

Initial Loan Value by Range December 2014 (in millions of USD)

RANGE

Dec-13 Dec-14

Initial Value (MM USD)

Collateral Loan / Collateral INITIAL VALUE

(MM USD) Collateral

Loan / Collateral

Less than 50% 636 1,761 36% 689 1,888 36%

From 51% to 60% 536 949 56% 560 994 56%

From 61% to 80% 2,281 3,155 72% 2,490 3,441 72%

From 81% to 99% 5,309 5,782 92% 6,099 6,626 92%

Over 100 % 1,098 1,000 110% 1,368 1,280 107%

Total 9,860 12,647 11,207 14,228

54% 22%

12% 6% 5%

From 81% to 99% From 61% to 80%

Over 100 % Less than 50%

Loan Distribution by Loan – Collateral Range

22

Banking System

Car Loans: Loan – Collateral Relationship

Loan Distribution by Range December 2014 (in percentages)

RANGE

Dec-13 Dec-14

INITIAL VALUE (MM USD)

Collateral Loan / Collateral Initial Value (MM USD)

Collateral Loan / Collateral

Less than 50% 168 462 36% 29 302 10%

From 51% to 60% 42 75 56% 35 62 56%

From 61% to 80% 234 326 72% 228 315 72%

From 81% to 99% 410 455 90% 566 624 91%

Over 100 % 496 361 137% 728 620 117%

Total 1,351 1,680 1,586 1,923

0

200

400

600

800

Lessthan50%

From51% to

60%

From61% to

80%

From81% to

99%

Over 100%

29 35

228

566

728

Initial Loan Value by Range December 2014 (in millions of USD)

46%

36%

14% 2% 2%

Over 100 % From 81% to 99%

From 61% to 80% From 51% to 60%

Less than 50%

23

NBS: Balance of Normal Portfolio and Dynamic Provisions

by type of Banking (millions of USD)

55 55 55 58

184 184 184 226 254 254 290 349

493 493 529 633

0

200

400

600

800

Sep-14 Oct-14 Nov-14 Dec-14

Dynamic Provisions

State-owned Panamanian private banking Foreign private banking Banking Sector

4,679 4,689 4,731 4,714

20,245 20,678 21,122 21,273 27,376 27,596 28,019 28,126

52,300 52,963 53,872 54,113

0

10,000

20,000

30,000

40,000

50,000

60,000

Sep-14 Oct-14 Nov-14 Dec-14

Balance of Normal Portfolio

State-owned Panamanian private banking Foreign private banking Banking Sector

NBS: Profitability Indicators

Indicators 2011 2012 2013 2014

Net interest income / General expenses 0.96 0.96 0.92 0.97

Operating income / General expenses 1.81 1.81 1.67 1.82

ROAA 1.76% 1.81% 1.47% 1.57

ROEA 14.10% 15.56% 13.80% 14.99

NIM 2.77% 2.70% 2.66% 2.41%

0%

2%

4%

6%

8%

2011 2012 2013 2014

NBS: Assets Profitability

Interest income/ Credit portfolio

Investment income / Investment

Deposit income / Interbank deposits

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

2011 2012 2013 2014

Funds Cost

Intereses pagados / DepósitosComisiones / Obligaciones

24

58.3%

45.2%

59.3%

81.0%

30%

40%

50%

60%

70%

80%

90%2

01

3-D

ec

20

14

-Jan

20

14

-Fe

b

20

14

-Mar

20

14

-Ap

r

20

14

-May

20

14

-Ju

n

20

14

-Ju

l

20

14

-Au

g

20

14

-Se

p

20

14

-Oct

20

14

-No

v

20

14

-De

c

NBS Panamanian Private Foreign Private State-owned25 Ref. No.: SG-TRAD-201500081

Prepared by: S. Lara Date: March 11, 2015

National Banking System

Average Liquidity Index: In percentages

NBS: Liquid Assets Portfolio

57.9% 59.5% 65.1% 67.4%

23.7% 23.3% 18.9% 18.7%

18.4% 17.2% 15.9% 13.9%

0%

20%

40%

60%

80%

100%

2011-Dec 2012-Dec 2013-Dec 2014-Dec

Cash and bank deposits Securities investment Cash flow


27

15.7% 15.8% 15.3% 15.4%

14.8% 15.0% 14.9% 14.3%

14.8%

0%

5%

10%

15%

20%

20

12

-Dec

20

13

-Mar

20

13

-Ju

n

20

13

-Sep

20

13

-Dec

20

14

-Mar

20

14

-Ju

n

20

14

-Sep

20

14

-Dec

Range Number of

Banks

Adequacy over

17 15

Adequacy

between 17

and 12

23

Adequacy

below 12 4


NBS: Capital Adequacy

28

Institutional Issues and Challenges


• Inclusion of crimes according to international standards in offense categories, including both Money laundering and the Financing of Terrorism

Criminalization of Money laundering and Terrorism

financing crimes

• Establishing a legal framework and mechanisms for the automatic freezing of assets pursuant to United Nation Resolutions 1267 and 1363

Implementing an appropriate legal

framework to freezing terrorist assets

• Broadening Designated non-financial business or professions (DNFBP)

• Requiring Enhanced Due Diligence measures for high-risk sectors and categories (ZLC)

• Extending Enhanced Due Diligence to trust services; supervise other complementary services offered by trust companies

• Law 47 grace period on bearer shares

Establishing effective measures for due

diligence and knowledge of the ultimate final

beneficiary to strengthen transparency

29

Panama: Summary of the Main Elements of the Action Plan

Panama: Summary of the Main Elements of the Action Plan

• Appropriate human, financial and technological resources to meet new responsibilities on accessing information on additional entities requiring reporting

• Strengthen legal framework to allow the FAU to access DNFBP’s information.

Operational strengthening of the Financial Analysis

Unit (FAU)

• Scope of the Suspicious Operations Report for all Financial Sector entities and DNFBP according to international standards

• Strengthening the quality of the Suspicious Operations Reports

Broadening and strengthening suspicious

operations reports for financial sector institutions

and designated non-financial businesses and

professions

• Ensure legal mechanisms and procedures for cooperation, even in the absence of treaties

• Broaden FAU Memorandums of Understanding

Ensure effective legal mechanisms for

international cooperation

30

Panama: Main Actions to be Delisted from FATF List

Strengthening FAU

Human, financial and technological resources;

Technical assistance

New guidelines on Suspicious Operations Reports

New Memorandums of Understanding

Bill on the Prevention of Money Laundering, the Financing of Terrorism and the Financing of the Proliferation of Weapons of Mass Destruction

New supervisory and regulatory institutional

supervision for preventing AML/FT

Broadening of entities requiring reporting; FAU

powers

Terrorist assets freeze, United Nations

Resolutions

Due diligence and ultimate final beneficiary

Financial Sector and DNFBP; including high-risk sectors, Trust funds

Bill on the Reforms to the Criminal Code; Bill on International Cooperation (Prosecutor General’s Office)

Piracy Forgery and

counterfeiting Smuggling

International Cooperation procedures


Panama: Schedule for Delisting from FATF List

Submittal of new developments: Beginning of April 2015

Acts on the Prevention of AMLFT and from the Prosecutor General’s Office, including main regulations

International cooperation

FAU

GAFILAT and Review Group Meeting: May 2015

Review meeting on Panama’s actions

FATF Plenary: June 2015

Approval onsite visit

Onsite visit: August – Sept. 2015

FATF Plenary: October 2015

Announcement – delisting from FATF list


33

Regulatory Road Map for 2015


Main Regulations for 2015

Risk-weighted assets (Standardized Basel II)

Compliance Officer

Securities Investment Classification (IFRS update)

Anti money laundering and CFT updated


Thank you!


2014 Performance of the Banking Center · 2014 Performance of the Banking Center Gustavo Adolfo Villa, Jr. Secretary General Ref. No.: SG-TRAD-201500081 Prepared by: S. Lara Date:

Documents