September 13, 2012 / 6:36 PM / in 5 years

TEXT-Fitch on Peru and Colombia banks

(The following statement was released by the rating agency)

Sept 13 - Bank efficiency in Colombia and Peru excels in both the Andean Region and Latin America overall, while Ecuadorian and Venezuelan banks face an uphill battle to improve efficiency in difficult operating environments, according to Fitch Ratings. 'Operating efficiency is increasingly important to operating strategy for banks in Latin America, particularly in the Andean region,' says Pedro El Khaouli, Senior Director in Fitch's Latin America group. 'Markets with depth, better internal automation, and no transaction barriers are more fertile ground for greater operating efficiency. Growing use of alternative banking channels is also seen as a positive in terms of market penetration and better customer relations.' Peruvian banks lead in efficiency due to the sustained economic growth and fierce competition, surpassed in the Latin American region only by Chile. Greater market, geographical and demographic penetration is key to attaining even greater efficiency and sustained profitability. Asset growth correlated to the country's economic growth has helped Colombian banks' efficiency. However, relative to gross income, Colombia still lags behind other countries in the region due to a lack of market depth and penetration to date. Ecuadorian banks have been slow to modernize, still depending on more costly traditional distribution channels. This structure, combined with an increasingly regulated operating environment, leaves efficiency lagging other countries in the region. Venezuelan banks' efficiency ratios compare unfavorably with other countries in the region, largely due to the highly inflationary environment and intense government regulation and intervention. For more information, a special report titled 'Efficiency in Andean Banks' is available in both English and Spanish on the Fitch's web site at www.fitchratings.com. (Caryn Trokie, New York Ratings Unit)

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