9 Latin American Banks in Great Shape

by: David Hunkar

Emerging market banks were not affected much, if at all, in last year's global meltdown. While most banks in the developed world or the "core" played with exotic derivatives and offered reckless loans to almost anyone with a heartbeat, emerging market banks stayed prudent and followed stable growth strategies. Hence almost all of the banks in developing countries such as Brazil, China, India, Malaysia, Chile, Colombia, etc. remained stable during last year and revived their growth this year.

Some of the other reasons for the strength of banks in the developing world include:

1. Existence of both public and private sector banks
2. Strict banking regulations
3. High deposit to loan ratios
4. Strong capital adequacy ratios
5. Negligible involvement in subprime loans and derivatives

Many of the reasons mentioned above have helped Latin American bank stocks gain upward momentum year-to-date as noted below:

1. Banco Macro (NYSE:BMA)
YTD Change: 173%

2. Grupo Financiero Galicia (NASDAQ:GGAL)
YTD Change: 138%

3. Banco Bradesco (NYSE:BBD)
YTD Change: 121%

4. Itau Unibanco (NYSE:ITUB)
YTD Change: 121%

5. BBVA Banco Frances (NYSE:BFR)
YTD Change: 111%

6. Bancolombia (NYSE:CIB)
YTD Change: 87%

7. CorpBanca (BCA)
YTD Change:87%

8. Banco Santander-Chile (NYSE:SAN)
YTD Change:76%

9. Banco de Chile (NYSE:BCH)
YTD Change: 62%

The growth of these bank stocks also shows domestic and foreign investors' confidence in growth of this sector. With strong balance sheets and sound policies, Latin American banks are in good shape to expand further next year and beyond.