At a glance: Paraguay's 7 biggest profit generators

Paraguay's banks are among the most profitable in the region and no major storm clouds appear to be brewing on the horizon that could hobble the sector, according to Moody's.

The agency, in a sector report, forecasts that loan growth will come in at 9% this year and loan quality will continue to improve.

"The outlook for Paraguay's banking system is stable, underpinned by steady economic growth, declining loan delinquencies, improving capitalization and continued strong profitability," Moody's said in a statement accompanying the report.

Return on assets was 2.05% in 2017 - among the highest in the region - up from 1.67% in 2014.

Paraguay's economic fortunes are tightly entwined with that of the country's all-important farming sector. The nation is a major exporter of soybeans and beef. The economy, however, is slowly diversifying.

Moody's forecasts economic growth will come in at 4.5% this year, in line with the IMF's estimate. The IMF expects inflation will print at 4.2%.

"The banking system remains vulnerable to a downturn in the agriculture and livestock industries, which continue to represent over 40% of total loans," Moody's said in the statement. "However, commodity prices and the exchange rate have stabilized and a strong soybean crop is expected in 2018, while beef exports to the US are set to increase due to a recent USDA ruling."

Political risk has diminished following the election of business-friendly Mario Abdo Benítez, who has campaigned on an anti-corruption platform and pledged to maintain the conservative economic policies of his predecessor, Horatio Cartes.

Paraguay, however, is still one of the region's poorest countries and, according to the World Bank, poverty and income inequality remains a major challenge.

LOANS

The bulk, or 40%, of the system's portfolio corresponds to the agricultural and livestock segments. The consumer sector, Moody's said in a sector report, is mainly served by unregulated specialists and only accounts for 12% of the banks' portfolio.

Sixty-day delinquencies dipped to 2.7% in 2017 from 2.8% in 2016.

Paraguay's banking system comprises 13 commercial banks, a state-owned bank and three branches of international banks.

PARAGUAY'S TOP 7 BANKS BY PROFIT IN Q1

No. 1

The biggest bank by profit for January-March was Itaú Paraguay, the local branch of Brazilian giant Itaú. The lender posted 144bn guaraníes (US$25.6mn).

No. 2

Domestic commercial lender Banco Continental - which also has a presence in Brazil through Novo Banco Continental - reported 100bn guaraníes.

No. 3

In a distant third was state-owned Banco Nacional de Fomento, which reported 55.5bn guaraníes.

No. 4

BBVA Paraguay, the local branch of Spain's BBVA held the fourth spot with 48.3bn guaraníes.

No. 5

Founded by local farmers, domestic commercial lender Banco Regional, in which Dutch bank Rabobank acquired a 40% stake in 2008, reported 45.1bn guaraníes. In 2009 Rabobank supported Banco Regional's acquisition of the Paraguayan business of ABN Amro.

No. 6

Domestic commercial lender Banco Basa, whose main shareholder - with a 91.0% stake - is Sarah Cartes, the sister for former president Horatio Cartes, reported 43.4bn guaraníes.

No. 7

Domestic commercial lender Banco Atlas, part of Grupo Azeta, which, in turn, is linked to the local Zuccolillo family, posted 38.7bn guaraníes

System total: 590.331bn guaraníes

Pictured: A farmer works with a maize harvester in Caaguazu, 270km east of Paraguay's capital, Asunción.