Paraguay is a country with an emerging and diversified economy, which has achieved sustained growth in recent years. The financial sector is one of the pillars of this development, with the participation of more than 40 banking, financial and cooperative entities. Among them, there are three banks that stand out for their size, solvency and track record: Itaú, Banco Familiar and Banco Continental. These three banks represent more than 40% of the total assets of the Paraguayan banking system, and have a wide range of products and services for their clients. In this article, we will analyze the characteristics, results and challenges of each of these banks.
Itaú
Itaú is the largest bank in Paraguay, with assets of US$ 5.6 billion at year-end 2020. It is a subsidiary of the Brazilian group Itaú Unibanco, which is present in more than 20 countries. Itaú began operations in Paraguay in 1996, and consolidated its position as one of the country’s leading banks after acquiring Interbanco in 2006. Itaú focuses on offering personalized financial solutions to its clients, with a value proposition based on quality, innovation, and social responsibility. The bank has more than 1.2 million customers, including individuals and corporations, and a network of more than 100 points of service, including branches, ATMs and banking correspondents.
Itaú had a positive result in 2020, despite the crisis caused by the Covid-19 pandemic. The bank posted a net profit of US$ 95 million, a 9% drop compared to 2019, but above the industry average. The bank managed to increase its fee income, control its operating expenses and maintain its loan portfolio quality, which grew 8% in the year, reaching US$ 3.3 billion. The bank’s return on equity (ROE) was 17% in 2020, the highest in the industry.
Itaú’s challenges for the future include continuing to grow in the retail banking segment, where it has gained market share in recent years; strengthening its position in the wholesale banking segment, where it has a large portfolio of corporate clients; and continuing with its sustainability strategy, which includes a commitment to allocate 25% of its loan portfolio to projects with a social and environmental impact.
Banco Familiar
Banco Familiar is the second largest bank in Paraguay, with assets of US$3.9 billion at year-end 2020. It is the result of the merger of two local banks: Banco Regional and Banco Amambay, which took place in 2019. Banco Familiar is characterized by its service vocation, its closeness to its clients, and its support for the country’s development. The bank has more than 900 thousand customers, including individuals and legal entities, and a network of more than 150 points of service, including branches, ATMs and banking correspondents.
Banco Familiar had a negative result in 2020, due to the crisis caused by the Covid-19 pandemic. The bank posted a net loss of US$18 million, a 146% drop compared to 2019, and below market expectations. The bank came under severe pressure on its financial margins, due to lower interest rates and increased competition. In addition, it had to increase its credit provisions, to cope with the increase in non-performing loans. The bank’s loan portfolio grew 4% during the year, reaching US$ 2.5 billion. The bank’s return on equity (ROE) was -5% in 2020, the lowest in the sector.
Banco Familiar’s challenges for the future include recovering its profitability, which has been eroded by the crisis and the merger; accelerating its digital transformation to improve the customer experience and compete with fintechs; and consolidating its position as a close, reliable bank committed to the country’s development.
Banco Continental
Banco Continental is the third largest bank in Paraguay, with assets of US$3.8 billion at year-end 2020. It is a subsidiary of Paraguay’s Grupo Cartes, which is present in several economic sectors. Banco Continental was founded in 1981, and has stood out for its soundness, efficiency, and leadership in the Paraguayan financial market. The bank has more than 800 thousand customers, including individuals and corporations, and a network of more than 140 points of service, including branches, ATMs, and banking correspondents.
Banco Continental had a stable result in 2020, despite the crisis caused by the Covid-19 pandemic. The bank posted a net profit of US$80 million, a 1% drop compared to 2019, but in line with market expectations. The bank managed to maintain its interest income, increase its fee income and improve its operating efficiency, which reached 42%, the best level in the industry. The bank’s loan portfolio grew 7% during the year, reaching US$ 2.9 billion. The bank’s return on equity (ROE) was 16% in 2020, the second highest in the sector.
Banco Continental’s future challenges are to continue growing in the retail banking segment, where it has a strong presence in the agricultural sector;strengthen its position in the wholesale banking segment, where it has a diversified portfolio of corporate clients; and continue with its social responsibility strategy, which includes support for education, health and environmental projects.
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