CHN Is One of The Most Profitable Banks in Guatemala

Fitch Ratings considers that the ratings are based on the Guatemalan government's ability and willingness to support CHN.

by Pamela Contreras
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Guatemala City, by Brenda Larios -AGN-. According to a study by the international credit rating agency Fitch Ratings, Crédito Hipotecario Nacional -CHN- is one of the most profitable banks in Guatemala.

According to the May 2023 report, “CHN is one of the most profitable banks in Guatemala, with an operating profitability indicator over risk-weighted assets (RWA) of 22.8% at the end of 2022 and a four-year average indicator of 25.7%.”

It highlights that the high profitability derives mainly from the income generation of the insurance and bonds departments and, to a lower percentage, from the profitability of the banking business improvement.

Such profitability is sustained by the diversification of insurance lines and efficiency, which in 2022 mitigated an increase in claims in the accident and health lines.

High Liquidity 

The report highlights that the institution’s capital has been significantly reinforced in the last two years thanks to government contributions and net revenue accumulation.

The capital base ratio, according to Fitch, was 20.8% as of December 2022. Although, it is expected to decrease moderately given the anticipated high growth, even though potentially mitigated in the long term by the capitalization of the COVID-19 funds.

CHN has a favorable liquidity situation; as of December 2022, liquidity resources (cash and investments excluding the insurance department’s portfolio) represented 54.6% of total deposits.

About CHN

CHN is a Guatemalan banking institution with a policy to promote economic development while helping to reduce the country’s banking system vulnerability.

It is a banking institution with minor participation of assets within the Guatemalan system, with 1.2% as of December 2022, which positions the institution in ninth place.

The main lending categories of the banking business are:

  • Housing
  • Banks
  • Universal commercial banks
  • Consumer
  • Small and medium-sized enterprises -SMEs-

Its main strength is that it has different lines of business under various departments, in which the insurance operation stands out as its primary source of income.

The insurance and bonds department has a market share of 6.3% of premiums written in the Guatemalan system, ranking seventh out of 29 insurance companies.

Although the banking business was secondary throughout its history, it has had a positive trend in recent years, with 2022 being the first year of profitability after 15 years of being in deficit, and its revenue generation is expected to consolidate in the medium term.

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