Report on Banks, February 2024

• Financial intermediation with the private sector decreased in February. The ensemble of financial institutions kept high coverage indicators of liquidity, provisions and capital. • The number of transactions carried out through the main retail electronic means of payment went down, partly driven by seasonal factors. However, instant transfers were on the rise both in volume (+120.3%) and in value (17%) in real y.o.y. terms, the former exhibiting a more than two-fold increase. This was mainly explained by transactions carried out between accounts with financial institutions and accounts with payment service providers (PSPs), and those made between accounts at PSPs exclusively. • In February, the real stock of financing to the private sector in pesos decreased 1.7% (-30.1% y.o.y.). Business credit lines slightly increased, while the remaining credit lines went down. The stock of financing to the private sector in foreign currency decreased 1.4% (-1.3% y.o.y.) in February; this change was explained by the transactions conducted by the ensemble of public banks, which was partially offset by those made by private banks. • The non-performance ratio of financing to households stood at 2.6% in February, remaining virtually unchanged against January. In turn, the non-performance ratio of financing to companies fell to 1.4% of the portfolio in February. This monthly change was mainly explained by the removal of non-performing loans to record them in off-balance sheet accounts. Consequently, the non-performance ratio of financing to the private sector stood at 1.9% in the month (-1.6 p.p. against January and -1.3 p.p. y.o.y.). The financial system continued recording relatively high provisioning levels. • The real stock of private sector deposits in pesos decreased 8.7% in February (-36.4% y.o.y.), mainly explained by the dynamics of sight accounts. In turn, the real stock of time deposits exhibited a slight increase in February. Deposits in foreign currency were up 2.9% against January. • Broad liquid assets in the financial system went down by 7.5 p.p. of deposits, from relatively high levels to 83.1% in February. The indicators for items denominated in pesos and in foreign currency fell to 81.9% (9.4 p.p.) and to 87.6% (0.7 p.p.), respectively. The monthly performance of the liquidity indicator in pesos was mainly explained by repo transactions, which were mostly allocated to increase holdings of government securities. Notwithstanding the monthly reduction, the broad liquidity indicator of the financial system (including items in pesos and foreign currency) was up 6.9 p.p. against February 2023. • The solvency indicators of the aggregate sector posted a monthly increase. Financial institutions' regulatory capital (RC) compliance stood at 37.9% of risk-weighted assets (RWAs), up 5.1 p.p. against January (+6.7 p.p. y.o.y.). Within the framework of the current regulations, the monthly growth of RC was mainly driven by the record of income in full in the last quarter of the year. The capital position (RC minus the regulatory requirement) reached 375.1% of the regulatory requirement at systemic level, and 78.1% of the stock of financing to the private sector net of provisions. • In the past 12 months to February, the total comprehensive income in constant currency was 5.3% of assets (return on assets, ROA) and 25.5% of the net worth (return on equity, ROE) in y.o.y. terms.

Report (full text) - in Spanish -

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April 17, 2024