In March 2008, we updated all data for the 59 countries surveyed with official figures, sourced fromcentral banks and regulators. In most cases, we were able to find data that pertained to the end of 2007: inalmost all other cases, the data pertains to September 30 2007. As a result, the insights that we derive onparticular countries are based on consistently sourced information that is far more current than it had beenpreviously.
Although we gather data for countries such as the US, Japan, Australia and the eurozone, the vastmajority of the 59 countries whose banking industries we survey are, or are generally seen as being,emerging markets. For all the widely publicised problems of large banks in developed countries, in thewake of the subprime banking crisis in the US, 2007 was an extremely good year for the banking sectorsof the emerging markets. In local currency terms, the median growth in assets was 21% (in Brazil). Themedian rates of growth in loans to non-bank customers and in deposits were 22% (in India) and 18% (inMorocco). In some countries - and not just those enjoying oil booms - the figures were spectacular. InUkraine, for instance, assets and deposits rose by 76% and 62% respectively. Loans grew by more thanone-third in Bulgaria, Estonia, Latvia, Lithuania, Romania, Russia, Serbia, Slovenia, Peru, Bahrain, Iranand Nigeria. Deposits also rose by more than one-third in most of these countries.
In absolute terms, Venezuela’s banking sector enjoyed reasonable to excellent growth, depending on themeasure quoted, through the year to December 31 2007. In local currency terms, total assets, total loansand total deposits increased by 26%, 73% and 6% respectively. The loan/deposit, loan/asset andloan/GDP ratios all rose.
Relative to other countries surveyed by BMI, Venezuela’s position remains reasonably strong, againdepending somewhat on the measure considered. Of the 59 countries surveyed, Venezuela ranks 19th interms of local currency asset growth, fourth in terms of local currency loan growth and 55th in terms oflocal currency deposit growth. Argentina’s rankings in terms of its loan/deposit, loan/asset and loan/GDPratios are 32nd, 37th and 51st respectively. In a country with per capita GDP of US$6,856, deposits percapita are just US$2,190.
In Q108, we envisaged that total assets, total loans and total deposits would all rise by 30% annuallythrough the 2007-2012 forecast period. Now, and using an improved forecasting method, we are lookingfor growth rates of 27%, 46% and 19% respectively.
Since Q108, we have calculated, on a consistent basis, a Commercial Bank Business Environment Rating(CBBER) for each of the 59 countries surveyed. The CBBER includes an assessment of the limits ofpotential returns: it does this by taking into account the size, growth potential and bancassurancepotential of the banking sector, as well as aspects of the economy in 2007. The CBBER also depends onan assessment of the risks to the realisation of potential returns: this reflects BMI’s assessments ofoverall country risk, together with the regulatory and competitive environment.
Venezuela’s CBBER is 52.0. In the context of Latin America, this means it is no more than a moderatelyattractive country; the CBBERs are higher in Brazil, Mexico, Chile and Colombia. The major problemsare low bankassurance potential, underdeveloped financial infrastructure and a complex bureaucracy. Theratings score for the market structure - the most important component of the assessment of the limits topotential returns - is a very middle of the road 56.3. By Latin American standards, the ratings score forthe economy - at 34.4 - is the lowest in the region.
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