Under the new administration of Enrique Ramirez Paniagua, the government commercial bank has reduced the share of government loans of its portfolio to 40.8% of the total loans. BanReservas loans to the private sector reached RD$116 billion (59.2%), while the government has loans for RD$79.9 billion.
Last year was a record year for the state bank that accumulated earnings of RD$5.04 billion in 2013, which was 112.5% compared to the previous year when it was RD$2.37 billion.
Writing in Diario Libre, banking analyst Alejandro Fernandez Whipple says that the increased yield is not due to a more efficient operation. He said rather it is due to treasury operations carried out by the bank. He points out that the bank has a large portfolio of investments in Central Bank and Ministry of Hacienda bonds. Some have an interest rate that if cashed in a market with significantly lower rates generates an extraordinary yield for the bank. He said this kind of operation is common in the private banking world, but was not a general practice under Ramirez Paniagua’s predecessor Vicente Bengoa’s administration. Fernandez Whipple writes that while in the first half of 2013, earnings for this chapter were under RD$220 million, in the second half of the year, with the start of the new administration they reached RD$1.7 billion, or 53% of the earnings for the period.
The banking expert comments that the Banreservas is not spending less, and instead increased its payroll by 32%, while private banks reported a 16% increase last year. Furthermore, he said that while there are 47 bankers at a Banco de Reservas branch, there are on average 30 bankers at a private bank, indicating lower operational efficiency.
He ended by commenting that government borrowing through the bank is still very high. In 2013 it closed at RD$79 billion, which is more than the RD$71 billion in 2012, a record for banking.
www.diariolibre.com/destacada/2014/02/20/i490811_bjele-algo-don-enrique.html