The banking sector in central and South America has higher returns on capital and assets than any other in the world. The aggregate return on capital of 27.09% far outstrips the next-best region, Africa. This is despite the fact that Latin American banks are among the best capitalised, with only eastern Europe and the Middle East keeping larger equity cushions.
![Data story Data story](https://www.ft.com/__origami/service/image/v2/images/raw/https://www.thebanker.com/var/ezflow_site/storage/images/media/images/data-story2/1846453-1-eng-GB/Data-story.jpg?source=specialist-tb-article&width=600&height=370)
Low bank penetration is one of the factors allowing high returns. Panama stands out as an anomaly, with the large offshore banking industry driving bank assets to more than 200% of gross domestic product (GDP). In many other Latin American countries, bank assets are about 50% of GDP, or much less in some cases. Among the larger economies, Argentina has bank assets of just 35% of GDP, and exhibits the highest return on assets in the region, at 3.37%.
But not all underbanked markets offer such rich opportunities, as risks remain high in some of the least-developed economies. Banks in El Salvador have the lowest return on assets, at less than 0.5%, despite bank assets totaling only 42% of GDP. They also maintain the highest capital adequacy in the region, at 11.14%, suggesting a lack of good-quality lending opportunities.
![Data_story_teaser Data_story_teaser](https://www.ft.com/__origami/service/image/v2/images/raw/https://www.thebanker.com/var/ezflow_site/storage/images/media/images/data_story_teaser/1846398-1-eng-GB/Data_story_teaser.jpg?source=specialist-tb-article&width=340&height=304)