Moody’s Negative on Bolivia Banks

Moody’s says that even though Bolivia’s banking system is stronger than it was 10 years ago, it may still feel the sting of the global slowdown, which could undermine fundamentals in the medium term. “We expect bank profits will shrink because of Bolivia’s weakened export prices and declining business volumes; interest rate margins will also be squeezed as the competition to attract customer deposits increases,” Moody’s VP Maria Andrea Manavella says. She expects the ratings of the banks to remain generally stable. Moody’s ratings for the Bolivian banks, as reflected by the average bank financial strength rating of D minus, fall beneath the LatAm weighted-average of C. However, Manavella says this is because they are primarily capped by the agency’s low country ceilings for Bolivia, as well as by the still high, although declining, level of financial dollarization – both on assets and deposits – which may affect the banks’ financial condition.