Financial Stability Report - Second Semester of 2020

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dc.audiencePolicymakerseng
dc.audienceResearcherseng
dc.audienceStudentseng
dc.audienceTeacherseng
dc.coverage.sucursalBogotáspa
dc.creatorBanco de la República de Colombiaspa
dc.creatorEchavarría, Juan Joséspa
dc.creatorOffice of the Deputy Technical Governoreng
dc.creatorVargas-Herrera, Hernandospa
dc.creatorOffice for Monetary Operations and International Investmentseng
dc.creatorCardozo-Ortiz, Pamela Andreaspa
dc.creatorFinancial Stability Departmenteng
dc.creatorOsorio-Rodríguez, Daniel Estebanspa
dc.creatorSystemic Risks Assessment Sectioneng
dc.creatorCabrera-Rodríguez, Wilmar Alexanderspa
dc.creatorLiquidity Support and Risk Control Sectioneng
dc.creatorCardozo-Alvarado, Nathalispa
dc.creatorCely, Jorgespa
dc.creatorClavijo-Ramírez, Felipespa
dc.creatorGamba-Santamaría, Santiagospa
dc.creatorGómez, Camilospa
dc.creatorGualtero, Danielaspa
dc.creatorMeneses-González, María Fernandaspa
dc.creatorLizarazo-Cuellar, Angélica Maríaspa
dc.creatorNarváez, Alidaspa
dc.creatorPirateque-Niño, Javier Eliecerspa
dc.creatorRodriguez-Novoa, Danielaspa
dc.creatorSánchez-Quinto, Camilo Eduardospa
dc.creatorSarmiento-Paipilla, Néstor Miguelspa
dc.creatorSegovia-Baquero, Santiago Davidspa
dc.creatorYanquen, Eduardospa
dc.date.accessioned2021-03-10T20:27:58Zspa
dc.date.available2021-03-10T20:27:58Zspa
dc.date.created2021-03-09spa
dc.description.abstractThe Colombian financial system has not suffered major structural disruptions during these months of deep economic contraction and has continued to carry out its basic functions as usual, thus facilitating the economy's response to extreme conditions. This is the result of the soundness of financial institutions at the beginning of the crisis, which was reflected in high liquidity and capital adequacy indicators as well as in the timely response of various authorities. Banco de la República lowered its policy interest rates 250 points to 1.75%, the lowest level since the creation of the new independent bank in 1991, and provided ample temporary and permanent liquidity in both pesos and foreign currency. The Office of the Financial Superintendent of Colombia, in turn, adopted prudential measures to facilitate changes in the conditions for loans in effect and temporary rules for rating and loan-loss provisions. Finally, the national government expanded the transfers as well as the guaranteed credit programs for the economy. The supply of real credit (i.e. discounting inflation) in the economy is 4% higher today than it was 12 months ago with especially marked growth in the housing (5.6%) and commercial (4.7%) loan portfolios (2.3% in consumer and -0.1% in microloans), but there have been significant changes over time. During the first few months of the quarantine, firms increased their demands for liquidity sharply while consumers reduced theirs. Since then, the growth of credit to firms has tended to slow down, while consumer and housing credit has grown. The financial system has responded satisfactorily to the changes in the respective demands of each group or sector and loans may grow at high rates in 2021 if GDP grows at rates close to 4.6% as the technical staff at the Bank expects; but the forecasts are highly uncertain. After the strict quarantine implemented by authorities in Colombia, the turmoil seen in March and early April, which was evident in the sudden reddening of macroeconomic variables on the risk heatmap in Graph A,[1] and the drop in crude oil and coal prices (note the high volatility registered in market risk for the region on Graph A) the local financial markets stabilized relatively quickly. Banco de la República’s credible and sustained policy response played a decisive role in this stabilization in terms of liquidity provision through a sharp expansion of repo operations (and changes in amounts, terms, counterparties, and eligible instruments), the purchases of public and private debt, and the reduction in bank reserve requirements. In this respect, there is now abundant aggregate liquidity and significant improvements in the liquidity position of investment funds. In this context, the main vulnerability factor for financial stability in the short term is still the high degree of uncertainty surrounding loan quality. First, the future trajectory of the number of people infected and deceased by the virus and the possible need for additional health measures is uncertain. For that reason, there is also uncertainty about the path for economic recovery in the short and medium term. Second, the degree to which the current shock will be reflected in loan quality once the risk materializes in banks’ financial statements is uncertain. For the time being, the credit risk heatmap (Graph B) indicates that non-performing and risky loans have not shown major deterioration, but past experience indicates that periods of sharp economic slowdown eventually tend to coincide with rises in non-performing loans: the calculations included in this report suggest that the impact of the recession on credit quality could be significant in the short term. This is particularly worrying since the profitability of credit establishments has been declining in recent months, and this could affect their ability to provide credit to the real sector of the economy. In order to adopt a forward-looking approach to this vulnerability, this Report presents several stress tests that evaluate the resilience of the liquidity and capital adequacy of credit institutions and investment funds in the event of a hypothetical scenario that seeks to simulate an extreme version of current macroeconomic conditions. The results suggest that even though there could be strong impacts on the credit institutions’ volume of credit and profitability under such scenarios, aggregate indicators of total and core capital adequacy will probably remain at levels that are above the regulatory limits over the horizon of a year. At the same time, the exercises highlight the high capacity of the system's liquidity to face adverse scenarios. In compliance with its constitutional objectives and in coordination with the financial system's security network, Banco de la República will continue to closely monitor the outlook for financial stability at this juncture and will make the decisions that are necessary to ensure the proper functioning of the economy, facilitate the flow of sufficient credit and liquidity resources, and further the smooth operation of the payment systems. Juan José Echavarría Governoreng
dc.format.extent109 páginas : gráficas, tablasspa
dc.format.mimetypePDFspa
dc.identifier.handlehttps://hdl.handle.net/20.500.12134/9996spa
dc.identifier.urihttps://repositorio.banrep.gov.co/handle/20.500.12134/9996spa
dc.language.isoengeng
dc.publisherBanco de la República de Colombiaspa
dc.relation.doihttps://doi.org/10.32468/rept-estab-fin.sem2.eng-2020spa
dc.relation.ispartofReportes, Boletines e Informeseng
dc.relation.ispartofseriesFinancial Stability Reporteng
dc.relation.issn2145 - 650Xspa
dc.relation.isversionofFinancial Stability Report - II Semester 2020eng
dc.relation.portal-----spa
dc.relation.shortdoi-----spa
dc.rights.HabeasDatos personales: El(los) autor(es) ha(n) incluido sus datos personales (nombres, correo electrónico, cargo, entre otros) en el Reporte, informe o boletín y por consiguiente, manifiesta(n) que mediante el diligenciamiento y registro de sus datos personales autoriza(n) al Banco de la República el tratamiento (recolección, almacenamiento, uso, circulación o supresión) de todos los datos suministrados con la finalidad de adelantar la publicación del documento en el Repositorio Institucional, dar a conocer su medio de contacto para fines académicos y divulgativos, así como para la construcción de indicadores y estadísticas para el seguimiento y control de las actividades de divulgación del Portal del Banco de la República. Para tal fin, se informa que el tratamiento de los datos personales se realizará de acuerdo con las políticas o lineamientos generales disponibles en http://www.banrep.gov.co/proteccion-datos-personales, en la sección “Protección de Datos Personales - Habeas Data”.spa
dc.rights.ObjetoObjeto de publicación: La obra de mí (nuestra) autoría tiene por objeto ser publicada en el Portal del Banco de la República e incluirla en el Repositorio Institucional de esa misma entidad. La obra podrá consistir en documento escrito, audiovisual, audio, gráfico, fotográfico, infográfico, podcasts, etc., y podrá estar en cualquier formato conocido o por conocerse.spa
dc.rights.accessRightsOpen Accesseng
dc.rights.ccAtribucion-NoComercial-CompartirIgual CC BY-NC-SA 4.0spa
dc.rights.spaAcceso abiertospa
dc.rights.urihttps://creativecommons.org/licenses/by-nc-sa/4.0/eng
dc.subjectInstituciones financierasspa
dc.subjectRiesgospa
dc.subjectCréditospa
dc.subjectBancos extranjerosspa
dc.subjectColombiaspa
dc.subject.jelF65 - Economic Impacts of Globalization: Financeeng
dc.subject.jelG20 - Financial Institutions and Services: Generaleng
dc.subject.jelG29 - Financial Institutions and Services: Othereng
dc.subject.jelspaF65 - Impactos económicos de la globalización: Finanzasspa
dc.subject.jelspaG20 - Instituciones y servicios financieros: Generalidadesspa
dc.subject.jelspaG29 - Instituciones y servicios financieros: Otrosspa
dc.subject.keywordFinancial institutionseng
dc.subject.keywordRiskeng
dc.subject.keywordCrediteng
dc.subject.keywordForeign bankseng
dc.subject.keywordColombiaeng
dc.subject.lembEstabilidad financiera -- Colombia -- 2020 -- Informesspa
dc.subject.lembBanco de la República (Bogotá) -- 2020 -- Informesspa
dc.subject.lembSistema financiero -- Evaluación -- Colombia -- 2020 -- Informesspa
dc.subject.lembRegulación bancaria -- Colombia -- 2020 -- Informesspa
dc.titleFinancial Stability Report - Second Semester of 2020spa
dc.typeReporteng
dc.type.hasversionPublished Versioneng
dc.type.spaReportespa

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