Consumer credit grew 42% by May in Paraguay; banks concentrate most of the portfolio

Consumer credit in Paraguay is expanding at a rapid pace, reaching a 42% annual growth rate by May and now leading all bank financing. This significant increase has prompted concerns among economists and the International Monetary Fund (IMF) regarding the potential for over-indebtedness, particularly among vulnerable populations.

For several consecutive periods, consumer credit growth has exceeded 30% annually. The IMF recently issued a warning, urging vigilance and readiness to act if lending criteria weaken. Consumer credit is defined as loans granted to individuals for purchasing goods or services, including financing through credit cards and other forms of personal loans.

Data from the Central Bank of Paraguay (BCP) shows that consumer credit now represents nearly 20% of the total loan portfolio of banks in the system. Five major banks dominate this market, holding 76% of the consumer credit portfolio. Banco Nacional de Fomento leads with G. 8.35 trillion, followed closely by Banco Itaú with G. 8.13 trillion. Banco Familiar, Ueno Bank, and Sudameris hold the remaining significant portions.

Within the consumer credit sector, financing through credit cards is also experiencing accelerated and sustained growth. While the overall average interannual increase for credit cards stands at 30%, the segment with lower credit limits (up to G. 3 million) is growing at a concerning 50% rate. This suggests that individuals are increasingly relying on credit for basic consumption needs.