Panama Banks: Assets and Deposits Grow in H1 2026, but Higher Provisions Cap Profit Growth

Posted on 2026-08-07

The first half of 2026 ended with positive growth in business volume for institutions within Panama's International Banking Center (IBC). The financial system recorded expansion across assets, deposits, and equity, along with a strong recovery in new loan originations during June.

However, net profits remained virtually flat due to an increase in reserves earmarked for credit risk coverage under current accounting standards.

Performance of the International Banking Center

As of June 2026, total assets in the International Banking Center reached US$169.63 billion, representing a 6.95% year-over-year increase. This expansion was driven mainly by securities investments, which grew 17.74% and accounted for about 54% of total balance sheet growth. Net credit portfolio rose 3.81% to reach US$103.51 billion.

Deposits remained the main funding source for the system, totaling US$121.87 billion—a 7.69% increase, outpacing the growth rate of the loan portfolio. Equity rose 15.03% to US$20.60 billion, while financial liabilities remained largely unchanged.

The Impact of IFRS Provisions on Earnings

Between January and June 2026, accumulated net profit totaled US$1.45 billion, just 0.58% below the figure recorded during the same period in the previous year.

Operational performance remained positive across core metrics: net interest income grew 4.20%, operating income rose 10.00%, and pre-provision income advanced 5.14%. The primary factor capping net profit growth was a 36% increase in provision expenses for credit risk.

"These provisions are forward-looking. Thinking toward the future under IFRS requirements, necessary reserves must be maintained even if the risk has not yet materialized," explained representatives from the Superintendency of Banks of Panama (SBP).

Record High in New Loan Originations in June

During June, new loan placements reached US$2.86 billion, a year-over-year surge of 44.07%. This result marked the highest level recorded for the month of June since statistical tracking began in 2012.

June’s momentum was driven primarily by two key sectors:

• Mortgage loans: Increased by 34.3%.

• Construction loans: Increased by 37.1%.

The Superintendency of Banks noted that despite June’s acceleration, year-to-date cumulative originations in both categories remain below 2025 levels.

Breakdown of the National Banking System

In the domestic market, the gross local credit portfolio for the National Banking System closed June at US$65.59 billion (+1.26%):

1. Public Sector: Grew by 19.39%, accounting for approximately 56% of total local portfolio growth.

2. Consumer and Mortgage Credit: Maintained positive momentum, expanding by 5.83% and 1.50%, respectively.

3. Construction and Industry: Balances remained below figures reported twelve months earlier.

Strong Liquidity and Solvency Position

Financial reporting from the SBP confirms that liquidity and capital ratios remain well above regulatory minimums:

• International Banking Center Legal Liquidity: 58.83% (vs. 30% regulatory requirement).

• National Banking System Legal Liquidity: 56.86% (vs. 30% regulatory requirement).

• Capital Adequacy Ratio: Stood at 16.04% as of March 2026 data.