Panama Has the Lowest Credit Growth in Central America According to Moody’s Local.
Panama registers the lowest positive credit growth among the analyzed banking systems in Central America and the Dominican Republic, according to a recent report by Moody’s Local. Despite experiencing a structural disconnection between its robust GDP growth and domestic financing, the country’s credit portfolio shows signs of gradual recovery.
The rating agency highlighted that after several years of strong credit expansion in the region, most banking markets are facing a moderation in their growth. However, performance remains heterogeneous (mixed variety) among countries, with El Salvador leading regional dynamism and Panama at the opposite end of the spectrum.
According to Moody’s Local, Panama’s loan portfolio could close 2026 with growth of around 4.4%, up from 2.9% in 2025, provided the pace observed during the first half of the year is maintained. Even so, this expansion remains the lowest among the countries evaluated.
In contrast, El Salvador leads the list with an estimated credit expansion of 9.8%, followed by Honduras (8.7%), Nicaragua (7.5%), the Dominican Republic (7.4%), and Guatemala (6.6%). Costa Rica is the only economy with an estimated contraction of 3.9%, influenced primarily by exchange rate effects stemming from the appreciation of its currency.
Moody’s Local notes that one of Panama’s distinctive features is that the growth of local and foreign credit is currently more balanced. Between 2023 and 2025, the foreign loan portfolio grew by an average of 12.1%, significantly higher than the 3.1% growth of the local portfolio. However, both segments are projected to experience similar growth rates by 2026.
Furthermore, the structure of Panamanian credit has remained relatively stable in recent years. Between 2023 and June 2026, mortgages represented 33% of the total portfolio, followed by consumer loans at 23% and the commercial sector at 21%.
Panamanian banking system maintains solid levels of liquidity. At the close of the first half of 2026, liquid assets represented 33.3% of total assets, placing it above El Salvador and at similar levels to Costa Rica and Honduras, although below the Dominican Republic, Guatemala, and Nicaragua.
Despite low dynamism, the Panamanian banking system remains sound. Past-due loans decreased from 2.6% to 2.3% as of June 2026. Total deposits grew 3.4%, strengthening internal liquidity (liquid assets make up 33.3% of total assets) and reducing reliance on external institutional funding.
Moody’s Local concludes that the regional banking sector maintains a controlled portfolio quality and a favorable liquidity position. “In the case of Panama, although growth continues to lag behind its Central American neighbors, the gradual recovery of credit, the improvement in delinquency levels, and the strengthening of deposits suggest a more stable evolution of the financial system in the coming months,” the document states.
