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EconomyFeb 26, 2021 02: 15PM ET

© Reuters. The facade of a monetary institution is covered with wood sheets, eventually forward of a nationwide strike in Bogota

BOGOTA (Reuters) – Colombia banks are being asked to protect shut to 68% of the earnings they made in 2020 to enhance resources within the face of an anticipated additional deterioration of their mortgage portfolios this twelve months, the country’s banking regulator mentioned on Friday.

Bank earnings plummeted 55.3% final twelve months to 6.1 trillion pesos ($1.7 billion) thanks to adjustments made to rearrange debt that become as soon as past due by bigger than 30 days.

Previous due debt totaled 5.4% – equivalent to some 26.5 trillion pesos – of all debt on banks’ steadiness sheets in 2020, successfully above the popular for the final decade. The pattern is anticipated to continue this twelve months.

“This could per chance no longer be a in point of fact easy twelve months by strategy of easing of probability, the portfolio will continue to deteriorate and it be pure that can occur in share with a paddle between the behavior of the economy and the behavior of consideration to (debt) tasks,” mentioned Jorge Castano, the head of the Superintendency of Finance.

“While we are unsure how it could most likely switch eventually, it’s far prudent at the present no longer to distribute these dividends, to leave that cash through the entity so it could most likely well make stronger unexpected loss,” he added.

Banks, supported by the central monetary institution and the govt, possess opened credit ranking alternatives for oldsters and companies amid the coronavirus pandemic and connected shutdowns.

Banks had mortgage loss provisions of 39.7 trillion pesos at the shut of 2020, Castano mentioned, bigger than the volume of past due debt, which methodology the field remains solvent and willing to manufacture credit ranking in a reactivating economy.

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