The total amount of loans granted to companies is one of the factors to increase the countercyclical capital buffer in 2024.
On June 29, the Central Bank of Uruguay (BCU) informed the market that the Superintendence of Financial Services (SSF) decided to increase the countercyclical capital buffer (CCC) by 25 basis points until reaching the 0.75% as of July 1, 2024. One of the main factors was the debt that companies maintain with banks, which amounted in March to 11,641 million dollars,
According to the state body, the decision is based on an analysis of the increased clock of the cycle, which would indicate that the Uruguayan economy is entering a weakening phase after experiencing a recovery in 2021 and 2022, consolidated by the growth of exports and investment.
The BCU technical report also highlights that another of the reasons for raising the CCC is the increase in credit in dollars and pesos for companies, where a significant percentage are indebted within the domestic banking system
Bank credit to companies exceeds 11.5 billion dollars
In March 2023, total credit from banks to companies reached 11,641 million dollarswhen a year ago that amount was 9,999 million dollars, meaning a total increase of 16.4%.
This level of credit had stagnated in 2014, but resumed a strong growing trend between 2020 and 2021in the midst of a pandemic, especially with regard to credit in dollars, guiding the tradable sector.
In the breakdown, as of March 2023, credit in dollars to companies was 8,947 millionan increase of 18.4% year-on-year, while credit in pesos reached 102,126 million pesosrepresenting a drop of 4.8% compared to March 2022.
Credit in pesos stabilized at a level close to 100,000 million since the end of 2021, and was maintained during the first quarter of this year. The growth of loans to companies has occurred in loans in dollars, and has been concentrated in the tradable sector.
Source: Ambito
