The Financial Supervision after getting out of the war for the purchase of a portfolio that is about to explode in the Colombian credit market. He gave serious warnings to the country’s entities so that in this process, which is part of the market’s own dynamics, debtors are helped to alleviate their financial burdens and avoid drowning them at alleven more so in a situation of high interest rates, high inflation and a slowdown in the economy.
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What the market authority is seeing is that given the brake that the indebtedness will experience —consumer credit will not grow this 2023—, the loans that were born did so at rates well above 26 and 40 percent annual cash, and that interest will drop by 2024, the banks will reverse their strategy and begin an aggressive campaign to win over clients of their winners, offering rates less than current levels.
However, the call of Jorge Castaño Gutiérrez, Financial Superintendent to their monitored is that they avoid those perverse practices of the past with which, on the one hand, they showed people lower rates to pay off their credit card debt, but on the other, they left them with double debt, more term or greater obligation .
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“Portfolio that includes a credit card, it is a requirement that whoever acquires it transfer the value of that debt to the initial entity and that they cancel the previous product. They can’t tie up people with more debttaking advantage of the fact that the fees with the purchase are lower”, the superintendent told the banks.
System figures indicate that the portfolio purchase business between entities moves around 8 trillion pesos on average per year, but in 2021 a historic figure of 14 trillion was reached.
For now, it is not moving much, but from May or June the war on the purchase of portfolio is coming, Castaño Gutiérrez told EL TIEMPO, by pointing out that these well-managed processes can bring benefits to people, as long as there are cost relief and no greater indebtedness.
An exercise that the Financial Superintendence has been carrying out, crossing data from the Dane, with the reports of the system’s debtors, showed that said financial burden went from 25 or 26 percent in the last three or four years to another between 33 or 34 percent.
means that for every 100 pesos of income, today a person allocates about 34 pesos to pay their financial debts.
“It may not be much, but the trend of the indicator is worrying and what is being seen ahead is a slowdown scenario with some unemployment, rising interest rates. And how people continue to get into debt, then that makes debts consume more and more of people’s income, ”says the official.
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What is consuming the most income for Colombians today are vehicle loans 40.2 percent of these; other consumption 32.1 percent, housing 21.7 percent, while credit cards only 15.7 percent.
120% financing
The reason for the high weight of the vehicle loans in people’s income is due to the fact that, as the Financial Superintendence was able to verify, dealers are financing up to 120 percent of the value of a vehicle, that is, not only its value, but insurance, registration and up to the cost of the beak and solidarity plate.
“There is an over-indebtedness in consumption. the financial burden It is growing not only because of the old credits, but because now they take out loans at much higher rates and that is something to be taken into account,” stated Castaño Gutiérrez, pointing out that to the extent that a person not only has a single loan, their burden increases up to levels of 79.5 percent, if there is, in addition, a home loan, credit card and other consumption to their credit, although they are usually people with alternative incomes who have a way to support those debts.
The official said that, for the moment, there is no systemic alert nor is the stability of the banks affected, especially when the entities have 2 trillion pesos more in provisions, partly as a result of the Circular 026 issued at the end of 2022.
In general terms, in the Superfinanciera they see that people are paying their loans judiciously, although they have noticed that free investment credits begin to show some signs of deteriorationbecause while last year these loans took between 7 or 9 months before presenting an impairment, now they do so the month following their opening.
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The explanation for this phenomenon may be, to the extent, that last year 1.65 million debtors entered formal banking with new products with a higher risk profile as a consequence, precisely, of this increase in interest rates.Data from the Financial Superintendence indicate that the balance of the system’s portfolio closed 2022 at 670 billion pesos.
One-on-one strategy, with relief
To prevent the quality of their portfolio from being damaged, banks are adopting some measures such as reducing quotas on credit cards, especially for advances, and applying the strategy of calling customers who are beginning to have difficulties in order to offer alternatives that alleviate your situation.
It is the same plan adopted during the pandemic, in which the conditions of some loans were adjusted to the difficulties of the clients and which yielded good results.
‘Mortgages, far from the 1999 crisis’
The Government rules out that, due to high inflation, the mortgage loans tied to the UVR they can become unpayable, forcing debtors to hand over their homes to the entities, as occurred in the so-called crisis of the Upac system at the end of the 1990s.
As explained by Jorge Castaño Gituérrez, Financial Superintendent, of the 110 trillion pesos, in 1.2 million mortgage loans, only 17 percent is a portfolio tied to UVR, the rest is a fixed rate, «so there is no alert in the mortgage system.
The foregoing despite the fact that people who have been paying their loans for a while today notice their debt does not go down, the balance is higher and the installments grow month by month.
(Keep reading: Maximum rate at which money can be lent in the country reaches 46.26% in March).
«This combination is being monitored,» says the official, who warns that this 17 percent of mortgage portfolio in UVR it is concentrated in only four entities, which are already providing alternatives to their clients to transfer their UVR credits to pesos.
bancolombia It has already started this offer to its clients, and it also announced that it will lend a maximum rate for VIS of 14.15 percent.
“We must pay attention to support mechanisms to debtors, that they have the option of extending the credit for longer or increasing the fee today to shorten the term of the credit, but we are not even close to what happened in 1999,” said Castaño Gutiérrez.