...Negative Outlook for Banking Industry: In Fitch's opinion, risks in the Panamanian banking system are on the rise, but the impact on the banks' balance sheets is expected to be gradual due to the still favorable operating environment. However, since the banks' room to maneuver has decreased, a weakening in loan quality within certain segments could trigger sensible deterioration in the banks' financial performance. This would be reflected in lower profitability, tighter capitalization and higher delinquency rates. Lower Profitability Due to Margin Pressures: Fitch believes that Panamanian banks will face a greater pressure in their margins in 2016, due to increased local competition and the gradual rise of international interest rates, which are not expected to be channeled automatically to the loan portfolio. Margin pressures will continue weakening the industry's profitability, coupled with the limited room to improve operating efficiency and reduce loan impairment charges. PDLs Increasing...
