Colombians are borrowing significantly more than they are saving, said the Colombian banking association Asobancaria in its half-year fiscal report.
Credit grew by 23%, while deposits grew only 17%, economic magazine Portafolio reported Wednesday.
From January to May 2011, Colombians saved approximately $91.4 billion, 17% more than last fiscal semester’s $78.4 billion in savings.
The loan portfolio, however, grew 6% faster, meaning that banks are selling bonds and government securities to keep up with the high demand for credit.
“In 2011, in addition to savings deposits, banks are increasingly financing from credit derived from other intermediaries and bonds. Consequently, the Term Deposit Certificates, Certificates of Savings Deposits and other deposit instruments have become less important as sources of resources,” said a representative from Asobancaria.
The substantial growth in lending, coupled with lower loan loss provisions, indicates that Colombian banks will see record profits for 2011, analyists at financial website BNamericas said.
While the 23% credit growth rate will help stimulate the Colombian economy, the president of the National Association of Financial Institutions warned that Colombia must be attentive to the problems that can result from excess liquidity.
According to the president, Colombia may need to pursue measures to slow the growth of the portfolio in order to minimize risk.