Nicaragua lending rates remained above 9% 

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By LatAm Reports Editor

The cost of credit in Nicaragua remained at almost 2023 above 9 per cent, while interest paid to depositors last year did not exceed 5 per cent, according to figures from the Central Bank (BCN) with information provided by the National Financial System.

In December last year, the weighted average rate of all loans stood at 9.95 per cent, more expensive than in December last year, when it stood at 9.80 per cent. Meanwhile, the weighted interest on deposits in that month was 4.29 per cent, slightly better than the 3.60 per cent reflected in December 2022.

It should be mentioned that most of the credits in Nicaragua are awarded in dollars, hence the importance of the evolution of this rate in the national financial system. In this regard, the average rate of this type of loan in December was 9.95 per cent, with short-term loans being the cheapest for those that obtained it in the longer term.

The dollar credits

Short-term dollar credits to December had an average rate of 8.88 percent, down from 9.50 percent reported in the same month of 2022. In this type of loan, the most affordable were those requested by those in trade (8.25 per cent) and industrialists (8.14 per cent).

By contrast, the most expensive short-term dollar loans are personal (14.76 percent) and the rancher (13.45 percent). Farm and mortgage loans moved at a rate of 10.27 percent and 8.77 percent, respectively.

For its part, if you opt for a long-term dollar credit, last year it ended at an average rate of 11.28 percent. The most accessible loans of this type were mortgages (8.77 per cent) and agricultural loans (9.75 per cent).

The most inaccessible long-term dollar loans were those that are classified as personal (12.78 percent) and commercial loans (11.32 percent). Meanwhile, livestock credit stood at 9.92 per cent; and industrial credit stood at 10.63 per cent.

The situation of loans in córdobas

For its part, the credits that are delivered in córdobas closed the year with an average rate of 10.87 percent, which is in line with the decision of the Central Bank of Nicaragua to maintain the sale of its currency at a high rate (7 percent).

Since December 2022, the central bank authorities have decided to keep their reference rate at 7 percent in their córdobas sales windows to the national financial system, which is reflected in the cost of the loans that banks offer to customers.

The average rate of córdobas credits is above 9.02 per cent in December 2022. In that year, in no month this rate exceeded 10 per cent, as was the case last year when in January, May and December interest exceeded that threshold, reflecting the impact of the NCB’s decision to keep the rate high in the sale of córdobas to the national financial system.

Even in June and July, the average rate of loans in national currency stood at 12.26 and 12.42 per cent.

In the short and long term

It is worth mentioning that applying for short-term national currency loans was more expensive (12.27 per cent as of December) than long-term (6.32 per cent), which proved to be reversed in the case of dollar credits.

In short-term loans in national currency, staff ranked second most expensive (14.67 per cent), behind the factoring (16.08 per cent). The most accessible was agricultural (9.34 per cent) and commercial (9.24 per cent).

If the credit is in córdobas in the long term, which are minorities, the most accessible was agricultural (8.04 per cent) and commercial (9.19 per cent), while at the other end the livestock loans (13 per cent) and staff (19.07 per cent) were located.

Rate of deposits

And while loan rates move high, the truth is that depositors continue to receive low interest on their money, albeit better than in 2022. According to NCB figures, on average the passive rate closed at 4.29 per cent, after falling from November of this year (4.31 per cent), which had been the highest month of that period.

If the deposit was in dollars, the bank paid on average in December 4.27 percent, while in November it was 4.38 percent. The lowest level was recorded in January (3.39 percent), the highest in the penultimate month of that year.

If the bill was in national currency, on average as of December it was paid 4.85 percent, more than the 3.10 percent paid in November. In May and June, they were the lowest rates 2.52 and 2.78 percent, respectively.

This article has been translated from the original which first appeared in La Prensa NI