The financial statements of Venezuela’s banks paint a curious picture. Net profits are up and loan books are expanding rapidly — not what one might expect from lenders in such a difficult economy. But dig a little deeper and there is little mystery: the numbers reflect Venezuela’s galloping inflation, which the IMF expects to reach 500% this year. The country’s economic meltdown, triggered by a drop in oil prices and rampant government overspending, shows few signs of easing. The IMF forecasts the economy will contract by 10% in 2016.

Venezuela’s larger banks are navigating the crisis and accompanying volatility, although triple-digit inflation makes it extremely difficult to gauge banks’ overall financial performances. Nonetheless, Banco Mercantil, LatinFinance’s Bank of the Year Venezuela 2016, has stood out for growing its asset base, controlling costs and incorporating digital technologies to drive its business in a difficult operating environment.

“We continue to focus on our long-term strategy while constantly adapting to the economic situation and the changes that occur in the financial sector,” says Nelson Pinto Alves, Banco Mercantil’s chief executive officer.

The bank’s assets grew 82.4% in the year to June, reaching 697.8 million bolivares ($70 million). At the same time, it posted the smallest increase in operating costs among Venezuela’s top four banks.

In a sign that Mercantil continues to benefit from a strong customer base, the bank holds the largest number of savings accounts among the banks in the country, with a 21.5% market share.

“It shows the confidence our clients have in us,” says Pinto.

Despite Venezuela’s deepening recession, soaring inflation and weakening currency, Mercantil has pushed ahead with plans to expand its digital presence and increase its mobile banking offerings.

Over the last year, the bank became the first in Venezuela to offer loans through a mobile application. In the first quarter of 2016, Mercantil conducted more than 65 million electronic transactions on both its personal and corporate banking mobile apps.

The bank also launched a new online bill-paying service that can be used not only by Mercantil clients but those at other banks too. LF

WINNER: Banco Mercantil