High levels of nonperforming assets and growing loan-loss reserves drove down profitability. Peru Troubled loans at Peruvian banks have stressed the country's financial system. To alleviate the pressure, the government established two programs enabling banks to temporarily exchange loans, including problem loans in the second program, for government securities. The goal is to improve liquidity and reported asset quality. Venezuela Suffering from a depressed economy for several years, Venezuela does not present its banking industry with many opportunities.
Lending is at a minimum, and many banks are keeping their assets in government securities.
Problem loans are growing because of the poor economy, which analysts expect to experience either flat growth or a decline in 2000.