Colombia: Financial System Stability Assessment

IMF Staff Country Reports, April 4, 2022

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Colombia: Financial System Stability Assessment

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Bibliographic details

• Published: April 4, 2022
• Series: IMF Staff Country Reports

Summary findings

• The pandemic led to Colombia’s largest recession on record, but the economy bounced back strongly in 2021.
• The banking system has so far weathered the shock well, supported by a strong policy and support response and a strong initial position.
• Colombia is exposed to elevated external financing risks and the further prolongation of the pandemic.
• Large and complex financial conglomerates with increasing cross-border exposures dominate the financial system.
• The consumer-credit portfolio has been growing fast and had high impairment rate during the pandemic and therefore deserves attention.

Financial system resilience and structure

• Banking system performance:
  • Weathered the pandemic shock well to date, aided by policy support and an initially strong position.
• Dominant institution types:
  • Large and complex financial conglomerates with increasing cross-border exposures dominate the financial system.
• Key risk areas highlighted:
  • Elevated external financing risks.
  • Potential further adverse effects if the pandemic is prolonged.

Consumer-credit portfolio

• Growth and performance:
  • Consumer-credit portfolio has been growing fast.
  • Experienced high impairment rate during the pandemic.
• Policy implication:
  • The consumer-credit portfolio deserves attention from supervisors and policymakers due to rapid growth and elevated impairments.

External vulnerabilities

• External financing risks:
  • Colombia is exposed to elevated external financing risks.
• Pandemic contagion risk:
  • Further prolongation of the pandemic represents a material downside risk to the financial system and economic outlook.

Policy response and supervision

• Support measures:
  • A strong policy and support response mitigated banking sector stress during the pandemic.
• Supervisory focus needed:
  • Monitor large conglomerates with cross-border exposures.
  • Focus on consumer credit growth and asset quality deterioration.

Content in this bundle

• Colombia: Financial System Stability Assessment; IMF Country Report No. 22/98; March 10, 2022
  • Colombia: Financial System Stability Assessment; IMF Country Report No. 22/98; March 10, 2022 (Markdown version)
  • Colombia: Financial System Stability Assessment; IMF Country Report No. 22/98; March 10, 2022 (PDF)