Writing in today’s Diario Libre, Thursday 8 May, economist Alejandro Fernandez comments that 98% of all the increase in borrowing in the Dominican Republic was gulped down by the Dominican government. Central Bank statistics show that borrowing increased by RD$41.896 billion during the first quarter. Of that amount RD$40.087 billion was channeled to the public sector, and of that 89% through the BanReservas. Lending to the private sector was only RD$1.8 billion during the first quarter.
Fernandez looks into how the governmental commercial bank, BanReservas has taken the lead in lending in the Dominican Republic. As of March 2014 BanReservas accounted for 28% of all banking assets in the country. He writes that the bank has doubled its market share since the turn of the century, going from 15% in 2000 to 28% in March 2014.
Banks that posted growth in 2014 have been the Progreso, Caribe, Promerica and the BDI, none of which are market leaders. The market leaders, namely the Popular, BHD, Leon and Citibank, posted slight declines in their market share in 2014.
Fernandez points out that according to the financial reports published by the Superintendence of Banks, as of March 2014, 75% of all the growth in bank lending in the quarter was due to the RD$34.647 billion increase of BanReservas. The runner up bank, Banco Popular increased its lending portfolio by just over RD$4 billion.
The economist says that the private banks that posted growth did so because of loans made to the government, too.
In his conclusions Fernandez says that local borrowing should slow down now that the government has made significant bond placements to borrow abroad.