Ecuador’s Banco Bolivariano has taken major steps to position itself among the leading financial institutions in the country, improving shareholder return while operating within its target risk profile. Last year, current and savings accounts increased 28% while time deposits, a more expensive source of funding, grew 9%. This reflects the bank’s efforts to control its cost of funds and hence improve shareholder returns.
Similarly, while preserving the bank’s target liquidity level, one of the best in the system, the group managed to increase its loan portfolio 19% during the year, allowing its resources to be invested in higher yielding assets. The NPL ratio remained one of the best in the system, at 1.7% at end-2005.
Banco Bolivariano optimised its profitability by undertaking initiatives to create new sources of income from fees and services, while implementing strategies directed at improving these non-traditional sources of income. Together, these initiatives resulted in a net income figure of $13.5m for 2005, 44% higher than in the previous year and 42% above target.
The bank adopted a standardised consumer loan process, in which credit applications are analysed using statistical tools and processed, filtered and routed automatically. Thus, the credit approval and disbursement process became more efficient and effective while maintaining the high credit standards. This process allowed the bank to achieve growth in consumer and housing loans of 30% and 64%, respectively. The group has also continued to expand in non-traditional electronic channels that provide remote access to its services.
