Colombia Banking System Stable, Says Moody’s

Moody’s gave a stable outlook to Colombian banks, which carry an average D+ financial strength rating. The agency cites strong financial performance, adequate risk management practices and positive regulatory support. “We believe that Colombian banks are well positioned to profit from growing banking activity,” says analyst David Olivares-Villagomez. Lending as a percentage of GDP reached 32% in mid-2007, boosted by robust consumer-loan growth. Moody’s says the ratio is still modest by international standards, and points to potential growth opportunity as the economy expands. The agency says Colombian banks would gain from further improving metrics – core capitalization, operating efficiency, loan granularity and profitability ratios – which tend to lag other LatAm countries, despite Colombia’s high 9.5% interest rate. Bolivian banks also received a stable outlook from the agency.