"Peruvian Families more indebted than in Chile & Colombia

This is the place for ON or Off topic conversations. Almost anything goes - but be kind, and no trolling.
Forum rules
While the rules in this forum are more relaxed than in other parts of the Expat site, there are still a few things we’d like you to remember: No name calling, no insults – be civil to each other!
User avatar
tupacperu
Gold Member
Gold Member
Posts: 3350
Joined: Sun Sep 10, 2006 10:36 am
Location: Pimentel Beach-Chiclayo- Sanford NC
Contact:

"Peruvian Families more indebted than in Chile & Colombia

Postby tupacperu » Wed Jun 12, 2013 11:51 am

http://gestion.pe/impresa/familias-peru ... mas_leidas

"Peruvian Families are more indebted than in Chile and Colombia"
00:25
-The high dollarization in Peru is a latent danger, according to the rating agency Standard & Poor's (S & P). Watch more debt in the middle and lower middle classes.

OMAR Manrique
[email protected]

INTERVIEW.
Sergio Garibian, Director of Financial Services at Standard & Poor's

What weaknesses in the Peruvian economy?
There is a high dollarization of assets (loans) and liabilities (deposits) in the financial system. In the region, Uruguay, Paraguay and Peru are those with higher dollarization problem.

How can I overcome this problem?
It is extremely difficult, and regulatory restrictions put further worsens the situation. The only way to improve confidence, which is not so simple and is part of a gradual process.

Why risk exposing the economy with dollarization?
A further delay. When there is a sustained trend to devaluation people can not repay their loans in dollars. That happened in 2003 with the Uruguayan crisis, when the delay reached 70%. Although this is not the baseline scenario for Peru, dollarization is a latent danger.

And how assesses debt levels of households in the country?
It is superior to the families of Chile and Colombia. Unbanked people talk and do not include informal loans, as there is no way to measure the latter. Income level engaged in Peruvian household debt is higher and growing faster than in other countries, and this is due to strong credit growth in Peru in recent years.

How do you measure the degree of indebtedness?
In proportion to income. The 17% of family income is committed to debt service (interest plus repayment of obligations). In Brazil, this number is around 19.4% and is the highest in Latin America. While in Chile is at 10%, in Colombia, in 14%.

What risks posed by these levels of debt?
Eventually, people could not fulfill their commitments. So Standard & Poor's is continually this indicator. We see a higher level of debt in half and lower middle classes and emerging on credit cards and consumer loans.

But now consumer loans are growing less ...
Indeed, there is a slowdown will lead to a personal loan growth of 15% at year end, which remains strong. This lower growth is good because it allows people down debt and financial system conveniently rearranged as happened after 2009.

So what are the main concerns of S & P?
The high dollarization, as each point of reducing cost much, but the latest standards could give you more momentum. There is also the rapid credit growth and relaxation in some standards for lending.

Those are the three main concerns about the system
Financial. And in the mortgage segment?
We see price bubble linked to funding, but turn on the light by the loan to value (percentage of housing that is financed by banks) of mortgage loans, which is between 80% and 90%. In Chile and Colombia is 70%, which denote here is more aggressive in placing mortgages, and also has the government encouraging this market. We must be careful not sobreendeudar families. This could lead to complications in the medium term.

But the Central Bank has taken steps to discourage vehicle and mortgage loans in dollars.
That is healthy, because you have to pay to the debtor in the same currency with which receives its income. In addition, the Peruvian financial system is very liquid, high quality in its portfolio, is well capitalized and well provisioned, factors that counteract the negative aspects of which we speak.

RESUME
Name: Sergio Garibian
Position: Senior Manager and Analytical Manager of Standard & Poor's.
Nationality: Argentina.
Education: Economics at the Catholic University of Argentina.
Specialization: Masters in finance at CEMA

FIGURES
30%
THE PERUVIAN accessing funding are at high risk of default, according to Experian.
42%
OF APPROPRIATIONS financial system are in dollars, according to statistics from BCR.

SHORT
Increased dependence on external market
Refinancing. S & P also views with some concern the increased dependence on external funding from banks, which since 2010 accelerated bond issues on international markets. In a scenario not as benign as now, would be a risk to refinance these obligations in the medium term.


User avatar
JoshuS
Gold Member
Gold Member
Posts: 307
Joined: Sat Oct 24, 2009 9:40 am

Re: "Peruvian Families more indebted than in Chile & Colombia

Postby JoshuS » Wed Jun 12, 2013 2:52 pm

tupacperu wrote:What risks posed by these levels of debt?
Eventually, people could not fulfill their commitments. So Standard & Poor's is continually this indicator. We see a higher level of debt in half and lower middle classes and emerging on credit cards and consumer loans.


tupacperu wrote: So what are the main concerns of S & P?
The high dollarization, as each point of reducing cost much, but the latest standards could give you more momentum. There is also the rapid credit growth and relaxation in some standards for lending.


"There are two ways to conquer and enslave a nation,
one is by the sword, the other by debt." ~ John Adams
User avatar
chi chi
Gold Member
Gold Member
Posts: 6060
Joined: Tue Dec 06, 2011 5:28 pm
Location: Granada, Andalusia

Re: "Peruvian Families more indebted than in Chile & Colombia

Postby chi chi » Wed Jun 12, 2013 3:00 pm

JoshuS wrote:
tupacperu wrote:"There are two ways to conquer and enslave a nation,
one is by the sword, the other by debt." ~ John Adams


The second way is what the banks use.

With the extortionate interest rates, no wonder that people are in debt.
I have seen interest rates for buying white goods like fridges, cocinas and TV's of up to 134%.

It's no longer called lending but loansharking.
User avatar
tupacperu
Gold Member
Gold Member
Posts: 3350
Joined: Sun Sep 10, 2006 10:36 am
Location: Pimentel Beach-Chiclayo- Sanford NC
Contact:

Re: "Peruvian Families more indebted than in Chile & Colombia

Postby tupacperu » Tue Jun 18, 2013 11:01 am

Delinquencies are way up, according to this article 6/19/2013: Gestion.pe


http://gestion.pe/tu-dinero/uso-lineas- ... os-2068889

(translated - Google)

Using credit lines of bank cards is the highest in nearly five years
Tuesday, June 18, 2013

YOUR DINERO07: 52
Plastic money delinquencies exceed 5% and is the highest in more than seven years, according Asbanc. Interest rate of these loans reaches 41%, the highest average since March 2008.


(USI)



Omar Manrique P.
[email protected]

The use of the credit cards in April reached its highest level since January 2009.

The use of plastics by individuals was S /. 16.528 million, ie 30.4% of total authorized credit lines by banks and financial (S /. 54.312 million), according to the Association of Banks (Asbanc).

These figures show that banks are not approving many new cards, but people who already have some more plastic is used in the financing of their purchases, said Prof. Esan, Javier Ibáñez.

Indeed, card consumption grew by 12% last year, but in the same period the authorized amount of the lines by banks and financial rose just 4%.

"The approved lines do not grow as much as in previous years, when given easily, and cards now in circulation are being more used, consistent with what we observed rating outside Standard & Poor's and Moody's, on higher levels debt with consumer credit, "said the economist.

Saturation
"We are seeing some degree of saturation in the card market, are no longer as many people who put (the new cardholders show more delays). And part of that and use are monopolizing or borrowing lines to their fullest potential, "he added.

It held that the banks are being more careful in delivering new plastics, especially if the default continues to rise (in April reached 5.2%, its highest level in more than seven years). "There is concern that the delay is more than double that of the entire banking system (2.06%)," said Ibanez.

Consistent with the increased delinquencies and bank reserve increases determined by the BCR, the interest rates for card consumption in domestic currency reached 41.1%, the highest average of the past five years.
richiecry
Gold Member
Gold Member
Posts: 138
Joined: Fri Apr 20, 2012 9:43 am
Location: Lima

Re: "Peruvian Families more indebted than in Chile & Colombia

Postby richiecry » Tue Jun 18, 2013 11:52 am

41% interest is criminal and should be outlawed by the government.
falconagain
Gold Member
Gold Member
Posts: 843
Joined: Sat Jul 16, 2011 9:27 pm

Re: "Peruvian Families more indebted than in Chile & Colombia

Postby falconagain » Tue Jun 18, 2013 3:42 pm

richiecry wrote:41% interest is criminal and should be outlawed by the government.


If people sign for it. Then it is valid. Any lender has obligations to other lenders and there is
no way to recover this obligations unless there is a higher interest involved.

If you cannot afford the money then do not spend it.
SmartKitty
Gold Member
Gold Member
Posts: 88
Joined: Mon May 27, 2013 9:09 am

Re: "Peruvian Families more indebted than in Chile & Colombia

Postby SmartKitty » Tue Jun 18, 2013 5:13 pm

falconagain wrote:
richiecry wrote:41% interest is criminal and should be outlawed by the government.


If people sign for it. Then it is valid. Any lender has obligations to other lenders and there is
no way to recover this obligations unless there is a higher interest involved.

If you cannot afford the money then do not spend it.

100%!
My name is Fortunata Carhuapoma, pies de plomo. I'm a modest serrano girl in polleras and alpargatas.

Return to “Expat Conversations”

Login  •  Register