Two of Panama's largest banks post solid profits for 2008

Panama continues to provide a bright spot on the international finance scene.

At a time when the US is talking about trillions of dollars more in bailouts, "walking dead banks" and the word meltdown still makes the headlines daily, two of Panama's largest banks post solid year-on-year growth.

Banco General reported net profits of 183.68 Million in 2008, up 14.4% from 2007.

Banistmo posted net profits of 100.7 Million in 2008, up 6.2% from 2007.

While there has been some talk of liquidity shortage here in Panama, these numbers demonstrate that financing is not drying up but the banks are simply continuing the stringent, responsible lending and investment policies that have allowed them to continue growing while banks around the world are failing.

Their stability and continued growth now suggests they got it right the first time, and will be able to continue functioning normally while much of the world’s financial sector struggles just to get out of its slump.

There are signs that the recession is slowing, including Goldman Sachs surprisingly strong first quarter-earnings and expected good (or at least not-so-bad) news from large banks, but optimism is tempered while analysts investigate the nature of growth reported by Goldman (which included pushing back its fiscal year-end from November to December, effectively erasing from their books between $1.3 billion in pre-tax losses during that time). The wait-and-see approach remains the majority attitude regard the financial sector.

Comparatively speaking, the solid, consistent growth of Banco General and Banistmo in 2008 is reason to have confidence in the future.

They continue to post profits, ensuring their ability to provide reasonable financing for reasonable projects.

It looks like one of the main pillars of Panama's growth engine -- its robust responsible banking sector -- is performing just as strongly as we expected.