The analysis of credit institutions between August 2016 and February 2017 showed  a  lower  real  growth  of  the  loan  portfolio,  mainly  explained  by commercial loan-portfolio dynamics. The quality and non-performing loan indexes featured increases for all loan portfolio modalities; however, these levels remained below those observed in 2009, in general. As for liabilities, they continued with the declining trend shown since the second half of 2016.

By composition, term deposit certificates at longer maturities and savings accounts increased their share. Regarding  non-banking  financial  institutions,  a  slowdown  was  registered in  assets  in  February  2016,  both  in  proprietary  and  third-party  positions, compared  to  that  observed  in  August  2016.  Regarding  proprietary  and third-party  loan  portfolio  compositions,  investments  mainly  concentrated in  domestic  issuers’  government  and  private  debt  securities.  In addition, increases in the return on assets index (ROA) for all types of entities were observed in the same period. Analysis of the main debtors of the financial system shows that the corporate sector  featured  a  decrease  in  debt  as  GDP  percentage  during  2016.  As for  the  private  sector,  this  reduction  took  place  since  debt  with  domestic financial institutions grew at a lower rate than the output, and that funding with  overseas  suppliers  was  reduced  due  to  exchange-rate  appreciation. Regarding the public sector, the decrease was given by lower financing in foreign currency with domestic financial institutions, and by a reduction, due to appreciatio of the Colombian peso, of bonds issued abroad, and debt with bilateral entities.

Household debt increased between August 2016 and February 2017, mainly in the consumer modality. This dynamics was accompanied by a relative stability in the financial burden indicator calculated at the aggregate level. On the other hand, non-performing loans and quality indexes showed increases during this period, with a highlighted deterioration of personal loans. As  for  market  risk,  the  main  exposure  by  financial  institutions  was concentrated  in  the  fixed-income  market.  These securities exhibited valuations during the latter half of 2016 and the first months of 2017, driven by a greater global appetite for risk and by monetary policy stance changes. Variable yield market had a stable behavior due to oil price low volatility during the second half of 2016.

The liquidity risk indicator shows that credit institutions had adequate levels of liquid resources to meet their short-term obligations. On the other hand, credit institutions’ liabilities and equity dynamics continued with the decreasing trend featured since mid-2015,  highlighting  the  negative  contributions  of demand deposits, money market lending operations, and bank credits and financial obligations. Also, it is noteworthy that term deposits were the item that most positively contributed to funding real annual growth.

Finally,  the  proposed  sensitivity  tests  assessed  the  resilience  of  credit institutions to a negative (and unlikely) scenario, with an investment shock, a global confidence decline in the Colombian economy, and the materialization of a set of risks for the system (credit risk, market risk, and funding risk). Results  indicate  that  the  impact  of  the  hypothetical  scenario  on  the  total solvency of credit institutions would have a moderate magnitude. At the same time, certain negative effects on the volume of the loan portfolio, its quality, and  the  profitability  of  the  intermediation  business  would  be  observed. This shows the importance of continuing with the careful monitoring of the financial situation of debtors and entities.