2018 Performance of the International Banking Center€¦ · Construction USD 73 0.9% Other Sectors...
Transcript of 2018 Performance of the International Banking Center€¦ · Construction USD 73 0.9% Other Sectors...
2018 Performance of the International Banking Center
Ricardo G. Fernández D.Superintendent of Banks
March 20, 2019
Agenda
1. National economic context
2. 2018 Financial Results of the Banking Center
3. 2019 Regulatory roadmap
4. FATF Assessment Schedule
5. Financial System modernization
6. Institutional matters - SBP
6.0
4.1
3.63.4 3.2
2.5
GDP Outlook for 2019
Panama Peru Colombia Chile Uruguay Mexico
-3.8%
-3.2%
0.7%
1.8%
2.1%
2.6%
2.8%
3.1%
3.2%
3.6%
4.2%
7.3%
8.4%
-6.0
%
-4.0
%
-2.0
%
0.0
%
2.0
%
4.0
%
6.0
%
8.0
%
10
.0%
Hotels and restaurants
Fishing
Manufacturing industry
Primary sector
Other activities
Utilities (Electricity, gas and water)
Real estate activities
Mining and quarrying
Construction
Commerce
Financial intermediation
Transportation and telecommunications
Central government
Panama: International Banking Center2018 GDP Growth and 2019 Outlook
(in percentages)
GDP Growth 3.7%
Source: International Monetary FundSource: NISC Comptroller General of the Republic
0
1,000
2,000
3,000
4,000
5,000
6,000
20
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20
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20
02
20
03
20
04
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20
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20
08
20
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20
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20
11
20
12
20
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20
14
20
15
20
16
20
17
20
18
Net Foreign Investment(in millions of USD)
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
3.5
5.9 5.7
4.0
2.6
0.1 0.7 0.9 0.8
Perc
enta
ge
Consumer Price Index2010 - 2018
Panama160.1 PBS
5,548
Panama: International Banking CenterDomestic Macroeconomic Context
0
100
200
300
400
500
20
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20
11
20
12
20
13
20
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20
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20
18
Global EMBIDec. 2010 - 2018
Chile (A+) Colombia (BBB-) Mexico (BBB+) Panama (BBB) Peru (BBB+)Source: Credit Rating Agencies
Rating Stable
Moody’s Baa1
Fitch BBB
S&P BBB
Source: NISC Comptroller General of the Republic Source: NISC Comptroller General of the Republic
Panama: International Banking CenterProfit Statement
December 2018 (in millions of USD)
IBC Jan.-Dec.
2017Jan.-Dec.
201812-month Diff. (%)
Total Diff.
A. Interest Income 5,279 5,731 8.6% 452
Loans 4,508 4,809 6.7% 301
Deposits 190 264 38.8% 74
Investments 545 627 15.1% 82
Other Income 36 31 -14.2% -5
B. Operating Expenses 2,648 2,931 10.7% 282
Interest paid 2,434 2,703 11.0% 268
Commissions 214 228 6.6% 14
C. Net Interest Income 2,631 2,801 6.5% 170
D. Other Income 2,233 2,258 1.1% 25
E. Operating Income 4,864 5,058 4.0% 195
F. General expenses 2,581 2,609 1.1% 28
G. Profit before provisions 2,283 2,449 7.3% 166
H. Provisioning 501 597 19.2% 96
I. Profit for the period 1,782 1,852 3.9% 70
1.9% 1.9%
1.0Veces
1.1Veces
1,0
74
1,2
96
1,4
68
1,4
21
1,5
28
1,5
75
1,5
24
1,7
82
1,8
52
55% 54% 55% 56%
0%
10%
20%
30%
40%
50%
60%
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200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Dec
.10
Dec
.11
Dec
.12
Dec
.13
Dec
.14
Dec
.15
Dec
.16
Dec
.17
Dec
.18
Profit Efficiency
Profit vs Efficiency
Source: Superintendency of Banks of Panama
55% 54% 55% 56%51%
a < Ratio > Efficiency
ROA
2018 1.58%2017 1.49%
ROAA2018 1.65%2017 1.55%
ROE
2018 13.16%2017 12.92%
MIN
2018 2.61%2017 2.45%
Panama: International Banking CenterProfitability Ratios
December 2018 (in percentages)
Source: Superintendency of Banks of Panama
Panama: International Banking CenterAssets (in millions of USD)
December 2010-2018D
ec.1
0
Dec
.11
Dec
.12
Dec
.13
Dec
.14
Dec
.15
Dec
.16
Dec
.17
Dec
.18
Domestic Foreign
Source: Superintendency of Banks of Panama
48%
52%57%
43%
55%
45%
50%
51%
49%
50%
69 %USD 50,002 millions
71,842121,484
Dec
-10
Dec
-11
Dec
-12
Dec
-13
Dec
-14
Dec
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Dec
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Dec
-17
Dec
-18
Commerce Construction Industry Agriculture Other sectors
10%
6%4%5%
21%
12%
6%
4%
4%
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
Consumption credit USD 12,020
Personal loan 65%
Credit card 21%
Car loan 15%
1,781
2,482
7,757
Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
Mortgages USD 16,984
Non-preferential law 65%
Preferential law 35%
Mortgage Commercial establishment
2,061
5,223
9,700
Panama: International Banking CenterDomestic Credit Portfolio by Activity
(in millions of USD)
620
806
3,782
833
2,267
3,707
USD 25,112
USD 12,707
27%
Total : USD 54.12 billion 5%
Corporate credit
Source: Superintendency of Banks of Panama
Panama: International Banking CenterClassification of Portfolio
December 2018
3.5%
1.2%
0.9%
0.8%
Special mention Substandard
Doubtful Unrecoverable
93.6% Standard
Classification of Credit Portfolio(in percentages)
Classification of Portfolio(in millions of USD)
2,900
3,705
Companies
1,121
1,316
Consumers
2017
2018
Source: Superintendency of Banks of Panama
Panama: International Banking CenterQuality of Portfolio
December 2018 (in millions of USD)
MortgageUSD 550 3.2%
MortgageUSD 334 1.9%
CommerceUSD 670.8%
ConstructionUSD 73 0.9%
Other SectorsUSD 435 1.0%
Delinquent NPL
USD 1,1241.43%
USD 1,2131.55%
* Other sectors includes: Industry, services, agriculture, financial and public sectors.
CommerceUSD 213 2.6%
ConstructionUSD 86 1.1%
Other sectorsUSD 581 1.3%
Source: Superintendency of Banks of Panama
IFRS 9(Expected loss)
1,284
Source: Superintendency of Banks of Panama
872933
833
0
200
400
600
800
1,000
1,200
1,400
Dec
-15
Jan
-16
Feb
-16
Mar
-16
Ap
r-1
6
May
-16
Jun
-16
Jul-
16
Au
g-1
6
Sep
-16
Oct
-16
No
v-1
6
Dec
-16
Jan
-17
Feb
-17
Mar
-17
Ap
r-1
7
May
-17
Jun
-17
Jul-
17
Au
g-1
7
Sep
-17
Oct
-17
No
v-1
7
Dec
-17
Jan
-18
Feb
-18
Mar
-18
Ap
r-1
8
May
-18
Jun
-18
Jul-
18
Au
g-1
8
Sep
-18
Oct
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No
v-1
8
Dec
-18
Regulatory IFRS
IAS 39 : Principle of
incurred losses
Objective evidence of deterioration
Panama: International Banking CenterRegulatory vs. IFRS 9 Provisioning
December 2015-2018 (in millions of USD)
15.2% 15.4% 15.8% 16.1% 16.1% 15.9% 16.1% 16.0% 16.1%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Dec
-18
Mar
-18
Jun
-18
Sep
-18
Dec
-18
Mar
-18
Jun
-18
Sep
-19
Dec
-19
IBC Minimum required (8%)
58.6% 58.6%
65.0%62.4% 61.4%
Dec
-14
Dec
-15
Dec
-16
Dec
-17
Dec
-18
IBC Minimum Required (30%)
Panama: International Banking CenterSolvency and Liquidity
December 2018 (in percentages)
Capital Adequacy Index Legal Liquidity Index
8% 30%
Source: Superintendency of Banks of Panama
The solvency index as of December 2018 is enough to cover market risk and operational risk requirements
4,086
2,638
2,1321,936 1,829 1,716 1,687 1,617 1,548 1,527 1,500
Panama: International Banking CenterDeposits (in millions of USD)
December 2018Domestic deposits
USD 52,666 million
Foreign depositsUSD 30,799 million
Demand
Time
Savings
Co
lom
bia
Ve
nez
ue
la
Ecu
ado
r
Pe
op
le’s
Re
p.
of
Ch
ina
Gu
atem
ala
Cay
man
Is
lan
ds
Co
sta
Ric
a
Can
ada
USA
Vir
gin
Is
lan
ds
Do
m. R
ep
.
63%Domestic
37% Foreign
USD 11,498
USD 28,752
USD 12,416
1.2 1.5 2.0
3.0
Dec
-15
Mar
-16
Jun
-16
Sep
-16
Dec
-16
Mar
-17
Jun
-17
Sep
-17
Dec
-17
Mar
-18
Jun
-18
Sep
-18
Dec
-18
BSN: FTD Interest Rates(in percentages)
1 MONTH 3 MONTHS 6 MONTHS 1 YEAR
Source: Superintendency of Banks of Panama
USD 83,465 million
Sector consolidation
Interest rate evolution
Commercial conflicts
Climate change
Macroeconomic performance
Competition for access to domestic funds
Over-indebtedness risk
Reputational risk
Risk Factors
Panama: International Banking CenterRisk Factors
Source: Superintendency of Banks of Panama
Conservation buffer
Stress-testing and capital self-assessment
Securitizations
Management, limits, provisions, stress-testing
Gradual capital requirement starting in
December 2019
2018 gradual implementation in
tranches of 25% per year
Panama: International Banking CenterRoadmap towards Basel III
Gradual capital requirement starting in
2019. Securitizations
Approved regulations 2019 Regulations
Source: Superintendency of Banks of Panama
Average adequacy
15.00%
Average adequacy
15.5%
8.0%
1.5%
2.5%
8.0%
1.5%
2.5%
Panama: National Banking SystemCapital Requirement Exercise
December 2018
Systemic Banks Non-systemic Banks
Conservation buffer
Average dynamic provision
Minimum adequacy
Buffers
12.0%
3.5%Additional regulatory
Conservation buffer
Average dynamic provision
Minimum adequacy
12.0%
3.0% Additional regulatory
BuffersSource: Superintendency of Banks of Panama
Panama: International Banking CenterAgenda with the Financial Action Task Force
February 2019
FATF plenary meeting: Decision on the face-to-face with ICRG
April 2019
Face-to-face with ICRG
March 20: submittal of template to ICRG
April 10: ICRG’s answer approved by co-chairs
April 18: Country’s answer to comments. Submittal of final version for ICRG assessment
June 2019
FATF plenary meeting: Decision on the country’s progress
✓ April assessment is on theeffectiveness of the ImmediateOutcomes rated moderated (6) andlow (3).
✓ Plenary’s decision is on the progress;not for immediate outcome changes.
✓ Country is still on intensified follow-up until we can prove progress onmutual assessments with the FSRB.
✓ Evidence of later progress maychange the status to periodic follow-up.
✓ Important identification andmanagement of critical aspects.
✓ FATF matters must be part of the NewGovernment’s transition agenda.
Source: Superintendency of Banks of Panama
Panama: International Banking CenterRTGS and Modernization of Payment Instruments
• Clearinghouse
• Telered
• Latinclear
• BNP Core Integration
• Tax collection
Phase I
• National cash reserve
• MEF (CUT) payments received through the Banking System
• Nonbanking financial institutions
Phase II
• RTGS optimization
• Autonomous entities
Phase III
• Bank Payment instruments
Phase IV
RTGS: Real time gross settlementSource: Superintendency of Banks of Panama
Panama: Financial Sector(in millions of USD)
2.5%
Insurance93.8%
1.4%
1.7%
0.7%Securities
Cooperatives
Finance
Banks
Total Assets USD 128,000 (pre)
Entities supervised by the Superintendency of
Banks
84 Banks
70Trust
companies
246Other
entities
Source: Superintendency of Banks and NISC
IBC Employees 26,416
IBC WagesUSD 930
Human talentSBP
478SBP employees
Training for technical areas 24,806 hours
75.6% Banking supervisor career
Laws and Regulations
Market Risk
Operational Risk
Interest rate risk (Banking Book)
Updating Rule on Investments based on
IFRS 9
Administrative management
Derivatives
LCR
100% income collection
1st International Congress planning
90.3% expense efficiency
ISTMO system implementation
Superintendent’s Management 2018
Reinforcement of Technical areas - AML
Supervisory processes
402Comprehensive examinations
53Trust companies
33 *Other supervised entities
34Special FECI
23Bank security
* Other supervised entities: Finance, leasing and factoring companies, money service businesses, and exchange bureaus
Banking Industry
E-Learning 30,297 participants
Other supervised entities: 27 Training seminars,
3,211 participants
Atoms: 28 Seminars
2015
2016-2017
2018Prudential
Compliance
2019
Money laundering• 4-2015• 5-2015• 7-2015• 9-2015• 10-2015
Money laundering• 6-2016• 7-2016• 1-2017• 3-2017• 8-2017
• Anticyclical buffer• Macro prudential
measures• Credit risk Money laundering
• 13-2018
Other reporting entities• 1-2018• 2-2018• 3-2018• 4-2018• 5-2018
• Capital requirement• Risk-weighted assets• Derivatives
• LCR• Market risk• Country risk• Operational risk
Panama: International Banking CenterSuperintendency of Banks
Summary of Regulations 2015-2019
Prudential
• Conservation buffers
• Stress-testing and Capital self-assessment
• Securitizations
• Securities investment - IFRS 9
• Interest rate banking book risk management
Compliance
• Regulations on Tax evasion
Source: Superintendency of Banks of Panama
Favorable macroeconomic and tax context
Sound, stable and secure banking system. Liquidity and solvency exceed the legally required percentages. Income vs. expenditure operating efficiency of 1.9 to 1 evidence of profit-generating capacity and equity increases.
Roadmap towards Basel III with clear progress in LCR, Capital requirements for credit, market and operational risk. Systemic buffer and stress-testing and capital self-assessment are part of the 2019 rules.
AML/CFT framework has strengthened the financial sector. Challenges to strengthen the identification of corporate-style structures
Modernization of the financial system and enhancement of financial inclusion.
Strengthening SBP’s institutional and budgetary autonomy. Supervision and regulation of payment instruments and clearance are short-term challenges.
Panama: International Banking CenterSummary
Thank you!