LatinFinance - November/December 2015 - 61

such as Paraguay's guaraní, have fallen
sharply against the US dollar, making it
more expensive to conduct business.
Agricultural and livestock production
accounts for the bulk of Paraguay's
economy, and roughly half the country's
population works in the industry. Soybeans
and beef contributed to almost 40% of the
country's exports in the first eight months
of 2015, according to data from the World
Bank.
Amid these difficult conditions,
Paraguay's banks have had to adjust their
strategies to remain profitable, and Banco
Continental, LatinFinance's 2015 Bank of
the Year Paraguay, has taken important
steps to withstand the downturn.
"Low commodity prices have put
pressure on earnings in the agricultural
sector in Paraguay," says John Matthias, subdirector at Banco Continental, adding that
a weak Brazilian real has cut into exports
from Paraguay to Brazil. "It's clear that
commodity prices are not going to come
back soon. Paraguay will have to confront
[low commodity prices] in 2016 and
possibly 2017 as well," he says.
While the Paraguayan economy is on
the decline this year, Banco Continental
increased its assets to 16.8 trillion guaraníes
($2.99 billion) at the end of March 2015
from 13.7 trillion guaraníes at the same time
last year. However, the bank's earnings per
share slipped to 17.6 guaraníes per share
from 19.7.
In 2013, Banco Continental purchased
NBC Bank in southern Brazil. NBC Bank
focused primarily on small and mediumsized enterprises (SMEs), but Banco
Continental worked throughout 2014 to
diversify its new subsidiary's portfolio.
While the economic situation in Brazil has

JOHN MATTHIAS,
BANCO CONTINENTAL

"IT'S CLEAR THAT
COMMODITY PRICES
ARE NOT GOING TO
COME BACK SOON.
PARAGUAY WILL HAVE
TO CONFRONT [LOW
COMMODITY PRICES]
IN 2016 AND POSSIBLY
2017 AS WELL"

proved challenging, Banco Continental's
chief financial officer Eduardo Céspedes
says the management team is comfortable
with the new business.
"All of last year, we had to transform
the bank's portfolio," Céspedes says. "We
had very good results in the first half of
2015. There is a very difficult business
environment in Brazil, considering
the political landscape. We hope the
situation in Brazil improves, but the bank
is well placed in terms of liquidity and
diversification."LF

BANK OF THE YEAR BOLIVIA

BANCO MERCANTIL
SANTA CRUZ

Amid new banking
legislation, the country's
largest lender
outperformed

housing. This year, Mercantil has grown its
social housing loan book by 27%, giving it
a market share of nearly 40%. The bank's
productive sector participation has grown
10% over the past year, Valdés says.
Mercantil's immediate objective is to
adapt to a more digitized world. Since
2012, the bank's client base has grown
exponentially and Valdés says Mercantil
needed to change the manual way things
were done.
"Looking from the outside in, we have
implemented new digital processes,
using software that promotes paperless
platforms," Valdés says. "We renewed our
webpage in 2015 and launched a new online
banking platform, making it more userfriendly and customer-oriented."
The bank is also planning to roll out a
mobile banking offering. Retail banking
accounts for 65% of the profits with the
remaining coming from corporate finance,
Valdés says, acknowledging the importance
of convenient transaction services for the
majority of its client base. LF

BANK OF THE YEAR PANAMA
Assets at Banco Mercantil Santa Cruz grew
9% year-on-year to the end of August, while
deposits grew a shade under 15% and loans
were up 11%.
The strong performance comes amid
a rapidly changing banking landscape
in Bolivia. State intervention called for
banks to prioritize their social obligations
over profit margins, says Alberto Valdés
Andreatta, the bank's chief executive. New
regulations limit credit to borrowers and
set a 6% interest rate ceiling on loans. Many
worried that bank profitability would take
a hit.
Banco Mercantil, with its impressive
growth numbers, is the best-positioned
bank in Bolivia to cope with regulatory
amendments, says Moody's analyst
Fernando Albano. "Banks have to comply
with intermediate goals and as of December
2018, 60% of their lending portfolios
must be in social housing and 'productive
industries'," Albano says. "If asset quality
and capital ratios deteriorate, universal
banks like Mercantil are well positioned.
With a diversified loan book, they are
better placed to develop new segments of
growth."
The 'productive sector' that banks must
prioritize includes agricultural, trading,
manufacturing, tourism and construction
industries, and Valdés says the bank
focuses on these areas as well as social

BANCO GENERAL

A deep dive into retail
banking, counterbalanced
with a move into the
corporate capital markets,
positions this bank for
regional expansion
Amid Panama's stable growth, Banco
General is faced with stiff competition in
both corporate and retail banking. General
has diversified its portfolio across loans,
credit cards and corporate finance this year,
while looking internationally for funding.
General's total assets grew 11.5% at
June 2015 year-on-year, reaching $14.2
billion, a faster pace than competitor BAC
International Bank, which recorded 9%
growth. At June 2015, the bank's profits were
up 7% year on year, while its tier one capital
ratio reached 17%, double the national
requirement of 8% and sharply higher than
other Panamanian lenders.
General manager Raúl Alemán stresses
the importance of keeping a balanced
portfolio. "The main attraction now is in
mortgages, energy and project financing

November/December 2015 - L ATINFINA NCE.COM 61
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