Fitch: Venezuelan banking grows

Fitch Ratings said in a report that for the fourth year in a row, the Venezuelan banking system was able to expand its loan portfolio in real terms, boosted by record imports, higher government spending and negative real interest rates that have exacerbated consumption among households.

Contrary to earlier periods of rapid loan growth, the agency said that this expansion has been funded by a significant reduction in the investment portfolio and the liquidity of the system has been diminished.

"Given the challenges in terms of profitability, capitalization and the persistent government interference in the banking system, Fitch's outlook for Venezuelan banks remains negative," according to Franklin Santarelli, senior director in Fitch's Latin America financial institutions group.

"While bank management has a history of adapting to rapid change in the Venezuelan market, their flexibility is increasingly limited by existing and prospective controls on their activities."

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