Uruguay’s Credit Sector Grows 9% in 2024, Yet Debt Penetration Remains Low

Uruguay’s credit market reached $25 billion in 2024, marking a 9% increase from the prior year and continuing a four-year growth streak after stagnation between 2018 and 2020.

According to data from the Central Bank of Uruguay (BCU) analyzed by consultancy Exante, credit now represents 29% of the country’s GDP—16% allocated to businesses and 13% to households.

Household credit saw notable growth, rising 13% in local currency terms. Auto loans led this segment with a nearly 50% increase, while personal and mortgage loans grew by 11%, driven largely by private banks.

Non-bank financial institutions accounted for approximately 20% of personal loan balances. Business credit expanded by 6% in dollar terms, maintaining its predominantly dollarized structure.

Sectors such as agribusiness, commerce, construction, and services drove demand, with some reaching record borrowing levels. However, this growth was slower than in previous years, signaling cautious borrowing trends.

Despite this dynamism, Uruguay’s credit penetration remains modest compared to other economies. Exante partner Priscilla Pelusso noted that credit accounts for just 29% of GDP in Uruguay.

Uruguay’s Banking Sector

This is far below the over-100% ratios seen in developed markets like the U.S. or New Zealand and the roughly 50% levels in regional peers like Chile or Brazil. She highlighted untapped potential for growth, particularly in business loans and housing finance.

Pelusso identified several reasons for restrained borrowing. Moderate economic growth has limited large-scale projects. High dollarization has reduced credit demand due to exchange rate risks.

Additionally, there are perceptions of high costs associated with local currency loans. Cultural factors may also play a role. Uruguay’s banking sector remained profitable in 2024. It doubled its pre-2020 earnings, reaching $1.53 billion.

This was driven by favorable interest rate margins and exchange rate gains. Default rates stayed low at 1% for businesses and 3% for households, reflecting stable financial health across sectors.