Bolivia Banks Stable: Moody’s

The outlook on Bolivia’s banking system remains stable, Moody’s says, as sustainable economic growth, decreasing unemployment, and moderate inflation continue to support the banks’ expansion. “Economic stability has improved credit conditions in Bolivia and contributed to record low non-performing loans at the banks in 2011. Banks have also cleaned up their balance sheets of legacy loans from Bolivia’s last financial crisis,” the agency adds. Declining financial dollarization in Bolivia is also helping profitability, liquidity and asset quality at the banks. The favorable conditions are partly offset by the effects of Bolivia’s still sizeable informal economy, and by low investor confidence in the banking system, along with a potentially adverse political environment, all of which may hinder the demand for credit. Moody’s expects Bolivian banks’ asset quality to remain stable.