Report on Banks, March 2024
• In March, financial intermediation with the private sector exhibited a heterogeneous performance, posting reductions in real terms in the stock of financing and deposits in pesos, and an increase in the foreign currency segment. At the end of the first quarter, high liquidity and solvency indicators were observed across the financial system.
• Electronic means of payment grew in the period. Instant transfers increased 116.7% y.o.y. in volume and 9.3% y.o.y. in value in real terms, in March. Payments by transfer (pagos con transferencia, PCTs) using interoperable QR codes showed a positive performance, increasing 324% y.o.y. in volume and 245% y.o.y. in value in real terms.
• The stock of financing in pesos to the private sector decreased 2.7% in real terms, with all credit lines recording a decline. In turn, the stock of financing to the private sector in foreign currency increased 30% (26.3% y.o.y.), mainly boosted by pre-financing of exports.
• The BCRA implemented the MSMEs Minimum Quota (Cupo MiPyME Mínimo, CMM) with a new scheme of voluntary incentives to foster financing in this sector. Financial institutions will benefit from a reduction in minimum cash requirements as long as they allocate at least a certain stock of loans to MSMEs. Under the CMM, interest rates are to be freely agreed between parties.
• The non-performance ratio of loans to the private sector stood at 1.9% in March, remaining virtually unchanged against February (-1.3 p.p. y.o.y.). The delinquency rate of financing to households stood at 2.7%, while that of companies totaled 1.3%. The relative levels of provisioning of the ensemble of financial institutions remained high along the period.
• The real stock of private sector deposits in pesos decreased 2.7% in March, mainly explained by the dynamics of sight accounts. In a context in which the BCRA reduced the monetary policy interest rate and removed the minimum interest rate on time deposits, private sector time deposits in pesos increased 7.9% in real terms. In turn, the stock of private sector deposits in foreign currency increased 2.9%, in March, with rises in both sight accounts and time deposits.
• In March, broad liquid assets in the financial system went down by 5.2 p.p. in terms of deposits, to 78%. This indicator remained above the average of the last 10 years (58.1%). The ratio for items denominated in pesos stood at 77.1%, and the ratio for those in foreign currency totaled 81.1%.
• The solvency indicators of the aggregate financial system continued increasing at the end of the first quarter. Financial institutions' regulatory capital (RC) compliance stood at 39.5% of risk-weighted assets (RWAs) (8.4 p.p. y.o.y.) in March. The leverage ratio (RC tier one in terms of broad exposure) totaled 21.9% for the financial system (5.7 p.p. y.o.y.).
• In the past 12 months to March, the total comprehensive income in constant currency was equal to 6.2% of assets (return on assets, ROA) and 29.2% of the net worth (return on equity, ROE). In the first quarter of 2024, the ROA totaled 5.9% annualized (a.) (ROE, 23.2% a.).
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May 22, 2024
