Moody’s Local warned that the high dollarization of credit in Costa Rica could put pressure on portfolio quality due to the large proportion of loans granted to borrowers with foreign exchange exposure. This was highlighted by the group of local rating agencies, present in the main financial markets of Latin America, in a recent study. The report also noted that Costa Rican banks are expected to maintain stability through 2026.
According to the study, the dollar-denominated loan portfolio represents 27% of the total banking system, mainly concentrated in private banks. Additionally, 65% of credit has been granted to borrowers with foreign exchange exposure. “Under scenarios of significant depreciation of the colón, there could be an impact on loan quality and pressure on capital positions, especially for institutions with lower loss-absorption capacity, niche entities, and those with larger dollar exposures,” Moody’s Local warned.
The report indicates that credit growth in Costa Rica’s banking system remains modest and comparatively lower than that of its regional peers. By the end of 2025, the gross loan portfolio grew by 5.5%, down from 8.1% in 2024 and below nominal gross domestic product (GDP) growth of 8%. This performance was linked to slower expansion among banks created by special law and to exchange-rate effects on foreign currency balances, which dominate private banks’ balance sheets.
Growth in 2025 was driven by retail segments, particularly consumer, housing, and vehicle loans, under a strategy that prioritized portfolio quality over volume. Past-due loans stood at 2.1% at the end of 2025, in line with previous years. Consistent with their higher-risk profile, impairments remain concentrated in consumer and small and medium-sized enterprise (SME) segments.
In 2026, growth is expected to remain moderate, with stable portfolio quality supported by prudent lending policies and adequate provisioning. However, performance will continue to depend on the economic cycle and exposure to segments more sensitive to changing market conditions.
In terms of structure, public banks maintain diversified portfolios backed by collateral, which helps moderate loss risk. However, their structural exposure to sectors aligned with public policy objectives may continue to exert upward pressure on delinquency rates, which are already above the banking system average.
Private banks are more exposed to segments that typically exhibit higher delinquency rates, such as consumer and credit card lending. However, they mitigate this risk through a significant presence in the corporate and business sectors.
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