Given the domestic and global macroeconomic environment, interest rates on bank products keep rising, although the Superintendency of Banks of the Dominican Republic says that margins are falling, Diario Libre reported.

According to the institution's most recent quarterly report on the functioning of the financial system as of September 2022, the rate of consumer loans registered increases compared to the previous quarter to settle at 19.4% per year.

An increase in commercial rate was observed compared to the previous quarter, registering 11.9% to September, the report indicated.

Similarly, the report also observed an increase in the rates of mortgage loans, with an increase from 12.1% in June 2022 to 13.4% in September.

The Superintendency of Banks notifies that the weighted average interest rates of commercial banks closed in June with levels of 13.7 and 8.3%, (+4.5 and +6.0 percentage points since December 2021), respectively.

The Central Bank continued a stringent program to control inflation between the end of 2021 and the beginning of 2022, with a consecutive increase in the monetary policy interest rate, which went from 3.50% per year in November 2021 until pausing it at 8.50% per year in November of 2022.

The Association of Multiple Banks of the Dominican Republic explains that once the Central Bank raises its monetary policy interest rate, this creates a gradual increase in interest rates in the various types of credit and deposit products in the financial system, depending on whether they are contracted at a fixed rate or variable.

The Superintendency of Banks states in its report that the system's solvency reflects the effects of the rise in interest rate volatility.

It states that as of September, the financial system's solvency index, which is currently 17.29% (1.0 percentage point), has slightly increased from the second quarter.

In the third quarter of the analyzed period, the capital needed to cover market risk reached 103.6% of the technical equity, down from 124.5% the previous quarter.

According to the Superintendency's quarterly report, the Dominican financial system is still strong, robust, and capable of absorbing losses. It also exhibits acceptable levels of profitability, solvency, and liquidity to react to changes in the market environment and the state of the economy.

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