Felaban highlights stability of Bolivian banking, but observes high tax pressure and low profitability

Felaban highlights stability of Bolivian banking, but observes high tax pressure and low profitability

September 8, 2022, 5:50 PM

September 8, 2022, 5:50 PM

The figures of the Bolivian financial system remain stableThis was highlighted by the secretary general of the Federation of Latin American Banks (Felaban), Giorgio Trettenero Castro. The senior executive made an evaluation of the Latin American and national banks, within the framework of the Congress of this entity that brings together the region’s private financial institutions.

Although the numbers, in relation to Bolivia, are encouraging, the executive observed the rate of return in the country, which, according to him, is one of the lowest in the continent and that in the medium and long term it could cause problems.

He also noted the high tax pressure that exists on the financial sector, which exceeds 50%factors that in the long term can lead to capital flight.

“Bolivia has grown in credits. The default level is 1.8%, one of the lowest in the region, and the equity and solvency level is above 200% coverage. And solvency level, 12%. However, I am concerned about the issue of profitability, it is one of the lowest rates in the region“, he pointed.

He argued that Bolivia, unlike other countries, has an exclusive tax on banks of 52% “which is very high”, when in the rest of the region the pressure is between 25 and 30%.

To that must be subtracted the 6% surplus that goes to a guarantee fund. And you have to reinvest 25%, and in the end there is very little left for the shareholder. That has its risk because in the end if you are not very profitable the capital can go away and the idea is that they come. That is the only loose leg I see in Bolivia”said.

According to the latest report from the Financial System Supervisory Authority (ASFI), Until July, financial entities reported profits of Bs 917 million (US$ 131.7 million).

“Profitability has to be improved, otherwise there may be a flight of capital”, the executive alerted.

During this September 8 and 9, Santa Cruz will host the seventh edition of the Latin American Risk Congress, which is organized by Felaban. This meeting seeks to discuss the experiences, opportunities and best practices identified by risk managers, after two years of an unprecedented social and economic crisis in recent history.

This congress brings together senior managers from the areas of financial risk management (credit, market, liquidity) and non-financial (operational, cybersecurity), as well as managers in the areas of financial planning, treasury, and new businesses in banks, microfinance institutions, cooperatives, and savings banks.

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