The Dominican financial system has the lowest level of credit risk in the Central American region. A report released by the Superintendency of Banks (SB) indicates that the Dominican Republic stands out for low levels of non-performing loans, lower delinquency and solvency of local financial system.
As of December 2021, the delinquency indicator for the countries of Central America and Panama was at 2.33%, while in the Dominican Republic it is at 1.24%.
Regarding the past-due portfolio coverage indicator, the Dominican Republic is at 332.8%, much higher than Nicaragua’s 234.7%, the country that comes closest. This means that the institutions have sufficient reserves to cover their expected losses.
Of the seven economies that make up the CAPRD countries (Guatemala, Costa Rica, Honduras, El Salvador, Nicaragua, Panama and the DR), the Dominican Republic is the largest. As of December 2021, it ranked third in the gross domestic product (GDP) growth ranking, with estimated growth of 5.5% in 2022, according to the International Monetary Fund (IMF), behind only Panama, whose outlook is 7.5%.
Access to the Dominican Republic’s financial market, determined by the proportion of private credit from multiple banks over GDP, reached 27.4% as of December 2021.
In terms of loan portfolio composition, the share of foreign currencies is below 50% for most non-dollarized countries, suggesting a lower exposure to exchange rate risk.
A notable exception is Nicaragua, which has a high rate of its credit placements in dollarized balances, at 92%.
After Guatemala, the Dominican Republic is the second country in the group analyzed with the highest level of financial investments, amounting to US$15.81 billion, according to the Superintendency of Banks.
Since December 2020, the financial investment portfolio of the country has shown remarkable dynamism, with a year-on-year growth rate of 64.3% at the end of 2021, reports the Superintendency of Banks.
For all countries in the region, with the exception of Costa Rica, the largest proportion of financial income comes from the loan portfolio. The local case stands out, with the highest concentration of income from investments, according to official data.
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El Caribe
Superintendency of Banks
21 July 2022