Colombia: delinquent loans give clues to the size of the economic slowdown of 2023

By Daniel Gerrero

The most recent figures from the Colombian Financial Superintendence show that non-performing loans are increasing month after month and this could give a clue as to where the slowdown in the economy will come from in 2023.

According to information from the Superfinanciera (as of September), all portfolio types follow dynamics consistent with the activity data recorded at the end of the third quarter of 2022.

The gross balance of the portfolio amounted to $648.9 trillion, consequently, the depth indicator stood at 46.7% of GDP.

In real terms, the gross portfolio registered an annual variation of 5.1%, behavior that reflects:

• (i) the increase in the balance in inter-monthly terms ($8.6 trillion);
• (ii) the dynamism of financing to households and companies, which in the month totaled disbursements for $39.7 trillion ($42.4 trillion in September 2021);
• (iii) the effect of inflation, since the nominal growth rate is higher (17.1%);
• (iv) the lower relative importance of the write-offs, which totaled $9.6 trillion in the last twelve months compared to the $12.3 trillion accumulated as of September of the previous year, of the total written off in the month, 84% corresponds to the consumer portfolio.

However, the balance that reports arrears of more than 30 days continues to grow at negative rates, consumption registers the second month of positive growth.

Past-due portfolio reached $23.8 billion, a decrease compared to $23.9 billion last year.

In month-on-month terms, an increase in the overdue balance of $399.5 billion was reported, however, compared to the same period in 2021, the overdue balance contracted at a real annual rate of 10.8%, given the reductions reported in commercial, housing and microcredit of 23.4%, 14.3% and 12.7%, in their order.

In contrast, the consumption modality resumed positive growth rates (7.1%) in September.

The daily portfolio reached $625.1 billion, that is, 96.3% of the total balance.

In the case of the Debtor Assistance Program (PAD), this proportion amounts to 81.1% of the balance that continues in the program and that at the end of September represented 3% of the total portfolio balance.

Of this balance that continues to be covered by the program within the commercial portfolio, 88.3% remains up to date, followed by consumption (78.7%), housing (76.1%) and microcredit (73.1%).

Sergio Olarte, chief economist at Scotiabank Colpatria, assured that “the consumer portfolio is beginning to worry because the deterioration of the new credit crops is already being seen.”

And it is that we must not ignore the fact that one of the main engines of the economy in 2021 and 2022 has been household spending.

It must be remembered that last year the economy grew 10.7%, while this year it is expected to reach 8%.

“This is still gradual, it is not worrisome, but it does make one believe that next year this portfolio will most certainly slow down significantly and that is where household consumption is going to slow down and that will make the GDP cannot continue as dynamic as we have seen it this year,” he added.

With information from Bloomberg Línea

The Rio Times · Power Map

See who really holds power in Latin America

Click to open the Power Map →