The post-pandemic growth has been accompanied by a sharp rise in remittances.
Central American economies have thrived since the pandemic, driven by inflation that has been below the regional average, allowing central banks to pursue more accommodative policies than larger economies around the world.
However, the region received a further boost in 2023 with record remittances and an improving labor market, driven mainly by a boom in coastal regions, booming tourism and continued profitability across the commodity spectrum. As a result, the United Nations Economic Commission for Latin America and the Caribbean (Eclac) estimates that Central America’s total GDP will grow by 3.5% at an annualized rate (YoY) in 2023, well above the global average of 3.1%. . .
Panama stood out as the big winner among the region’s leaders, boasting impressive GDP growth of 6.1% last year. Costa Rica follows with growth of 4.9%, according to Eclac estimates.
In the banking sector, ongoing efforts to further digitize (one area in which the region still lags) and growth in the commercial loan portfolio were the main drivers of profitability among the best-known players.
| Best Banks in Central America | |
|---|---|
| Belize | Belize Bank Limited |
| Costa Rica | BAK Credomatic |
| Salvador | Banco Cuscatlan |
| Guatemala | Banco Industrial |
| Honduras | Fikosha |
| Nicaragua | Banco LAFIZ |
| Panama | Banco General |
With a strong presence in Panama and Costa Rica, BAK Credomatic is our top bank in Central America for the fourth year in a row and in its home country of Costa Rica for the sixth year in a row.
The Bank took advantage of macroeconomic tailwinds to strengthen its leadership and achieve significant growth across all its operations. The company reported robust net profit growth of 27.2% year-on-year for its regional division, primarily driven by higher loan yields and the development of investment banking activities in Costa Rica and Panama.
These figures were helped by BAC’s focus on small and medium-sized enterprises (SMEs), where the bank achieved an impressive 22% growth last year. The rise of digital banking integration led to these remarkable numbers, which grew by 50% that year. BAC’s private banking sector has also grown to 4.7 million clients at the end of 2023.
A big boost to these numbers came from banking money transfer app Kash, which helped increase the number of new digital accounts by 340%. This was driven primarily by increased activity in BAC’s home country of Costa Rica, where the bank has tested innovative features such as Apple Pay and the integration of artificial intelligence into its financial services.
Improved digital integration and growth in SME lending were also the secret behind a fantastic year for Best Bank of Guatemala. Banco Industrial. Amid significant political challenges, the bank increased its market share in the country to 29.2% in total assets, 29.1% in total net loans, 27.6% in total deposits, 23.6% in equity and 28.4% by net profit.
Amid a hotly contested El Salvador market, the 2024 winner Banco Cuscatlanhas focused its growth efforts on corporate and mortgage lending, where it has posted the fastest growth rates in the country over the past three years.
In Belize the winner, Belize Bank, has increased its investment and loan portfolio to maintain its position as the country’s largest bank by assets and profitability. According to the Central Bank of Belize, its assets stood at 1.9 billion Belize dollars (about $939 million) as of July 2023.
Leveraging its position as the leading bank in Honduras in terms of assets and profitability, Banco Ficosa was able to grow its asset base by 13.5% year-on-year, the best in the country.
The secret to Ficohsa’s strong performance lies in its continued investment in its digital offering. Moreover, by partnering with over 30 remittance companies, Ficohsa has benefited from the explosive growth in remittances.
In Nicaragua, Banco LAFISE Bancentro achieved and exceeded several key milestones, demonstrating continued growth and resilience. Among the bank’s main achievements is the double-digit growth rate of its loan portfolio (14.4%), which significantly exceeds the projected real GDP growth rate for 2023. These figures were mainly driven by the bank’s above-average penetration into the country’s SME sector. , representing almost 70% of LAFISE’s loan portfolio.
Finally, Banco General returned as Panama’s top bank after an absence thanks to its digital offerings and expanded customer base.