Regional commercial banks show growing confidence in SMEs

Commercial banks in Latin America and the Caribbean are demonstrating increased confidence in the viability of small and medium-sized entrepreneurial pursuits in the region, a development which is likely to see an increase in the level of credit by up to 77 per cent of commercial banks in Latin America and the Caribbean, a recent survey by the Inter-American Develop-ment Bank (IDB) says.

The survey says that most financial institutions in Latin America and the Caribbean are set to provide more investments and longer term loans to boost credit availability for SMEs next year. The survey was undertaken by the IDB in collaboration with the 106-member Latin American Federation of Banks.

The sampling reveals that across Latin America and the Caribbean all of the large banks, 87 per cent of midsize banks and 72 per cent of small ones have SME departments set up to deal specifically with servicing the financial and other business services needs of small and medium-sized enterprises. The survey says that 77 per cent of financial entities in Latin America and the Caribbean anticipate an increase in their SME portfolios as a share of their total lending portfolio.

The circumstance applies as much to Guyana as to anywhere else in the region where most of the country’s traditionally conservative commercial banks have, in recent years, been unveiling suites of services for small and medium-sized enterprises including start-up capital ventures. Over the past two years particularly, local commercial banks have been spending increasing amounts of their marketing budgets on their SME services, a trend which the IDB says is also visible among commercial banks elsewhere in the hemisphere.

The IDB survey highlights a significant increase in investments made by commercial banks in media advertising targeting SMEs. This year, the investment total practically doubled over 2011.

A new indicator in the 2012 survey shows that 89% of banks approved loans with maturities of three years or more to SMEs.
It highlights a jump in investments made by banks in media advertising to reach SMEs. This year’s investment total practically doubled since 2011.

Despite evidence of growing commercial bank confidence in SMEs the survey also alludes to obstacles that affect the current trend, the biggest one being the level of informality that attaches itself to SMEs.

Fifty-six per cent of banks engaged in the survey alluded to a lack of trustworthy information which they said rendered it difficult for banks to assess credit risk. Internal administrative costs are another drawback indicated in 41% of cases.

More in Business

GO-Invest Headquarters

GO-Invest not equipped to fulfil its mandate, PSC says

Private Sector Commission (PSC) believes that the Guyana Office for Investment (GO-Invest) is ill-equipped to effectively execute its mandate at this time and is unlikely to be able to do so unless it becomes free to attract its own international funding.

Central bank rules limit commercial bank lending

Development Bank still relevant – PSC

While the risk-averse nature of commercial banks’ lending policies have helped to keep the country’s financial system viable and sound in the face of banking crises in other countries, “rigid central bank restrictions” on commercial bank lending have limited expansion, the Private Sector Commission (PSC) says.

David Falconer

Reflecting on three years of the Credit Bureau

By David Falconer Three years into its introduction the local Credit Bureau seems set to reshape the country’s financial landscape, more particularly, to forever alter the procedures associated with lending.

Parliament View Vendor Oneika Douglas

Parliament View vendors see the over reduced conditions

What has come to be known as Parliament View Mall—the description could hardly be more inappropriate—is a hotbed of muted but ill-concealed resentment amongst the more than 100 vendors evicted from the Stabroek Market Square three months ago to their new, decidedly unappealing location.

Raymond Trotz

October festival poised to raise profile of local coconut industry

Guyana’s first ever coconut festival, billed for October, is poised to do more than any previous initiative to raise awareness of the importance of the product, Chairman of the National Stakeholders Forum for Coconut Development Raymond Trotz has said.

default placeholder

Corruption present in counterfeit, expired goods import – Public Health Ministry source

As increasing numbers of cases of importation of counterfeit and/or expired goods, particularly milk, drugs, items of food and medical devices continue to show up on the local radar, a reliable Public Health Ministry source has told Stabroek Business that it is rife with corruption, adding that the authorities no longer appear to have “reliable control” over the integrity of several consignments of consumer goods imported into the country.

Comments

About these comments

The comments section is intended to provide a forum for reasoned and reasonable debate on the newspaper's content and is an extension of the newspaper and what it has become well known for over its history: accuracy, balance and fairness. We reserve the right to edit or delete comments which contain attacks on other users, slander, coarse language and profanity, and gratuitous and incendiary references to race and ethnicity.

Stay updated! Follow Stabroek News on Facebook or Twitter.

Get the day's headlines from SN in your inbox every morning: