Report on Banks, June 2023
• Financial intermediation for transactions in pesos within the private sector grew in June, in a context in which financial institutions' liquidity and solvency remained remarkably high. In June, electronic means of payment went on gaining momentum due to the measures adopted by the BCRA.
• The stock of loans to the private sector (mainly business credit lines and secured loans) in domestic currency increased 1.3% (-10.5% y.o.y. in real terms). The estimated stock of loans channeled through the Credit Line for Productive Investment (Línea de Financiamiento para la Inversión Productiva, LFIP) reached ARS1.7 trillion as of the first half of the year, with a share of 13.4% in the total stock of loans to the private sector (+1.2% p.p. y.o.y.), and of 23.3% in the business credit lines (+0.5 p.p. y.o.y.).
• The non-performance ratio of loans to the private sector remained virtually unchanged in June, 3% (-0.2p.p. y.o.y.). The delinquency rate of financing to households reached 3.3% (+0. p.p. p.p. monthly and y.o.y.). Similarly, the delinquency rate of companies stood at 2.9% (-0.1 p.p. monthly and -0.4 p.p. y.o.y.). In June, private sector total provisions had a share of 3.8% in the total portfolio and of 126% in the non-performing loan portfolio.
• The stock of private sector time deposits and sight deposits in pesos increased 0.9% in real terms in June (-3%% y.o.y. in real terms). In a scenario where the nominal benchmark interest rates exhibited no significant changes, traditional time deposits (at a fixed interest rate) increased 1.8% in real terms against May (+15.8% y.o.y. in real terms).
• On August 14, the BCRA raised the monetary policy interest rate by 21 p.p. (the APR on 28-day Liquidity Bills was increased to 118%). Accordingly, the minimum interest rates on time deposits were adjusted in terms of the new monetary policy rate. Thus, the level of interest rates was readjusted in line with the adjusted official exchange rate, seeking to anchor foreign exchange rate expectations, to reduce the pass-through to consumer prices, to yield positive real returns on investments in domestic currency, and to encourage the accumulation of international reserves.
• Broadly, liquid assets in the financial system reached 81.5% of total deposits in June, up 2.8 p.p. against May and 12.4 p.p. in year-on-year terms. In June, the liquidity ratio was 80.2% for accounts denominated in pesos, and 88.6% for accounts denominated in foreign currency.
• Financial institutions' regulatory capital (responsabilidad patrimonial computable, RPC) compliance stood at 29.5% of risk-weighted assets (RWAs), down 0.9 p.p. against May (+1.3 p.p. y.o.y.). The capital position (RPC minus the minimum regulatory requirement) totaled 269.4% of the regulatory requirement at systemic level, and 43.9% of the stock of loans to the private sector net of provisions. In June, the leverage ratio (according to Basel guidelines) accounted for 15.9% of the weighted average at an aggregate level, increasing 1.9 p.p., well above the minimum regulatory requirement (3%).
• In the past 12 months to June, the total comprehensive income in constant currency was equal to 3% of assets (return on assets, ROA) and 16.7% of the net worth (return on equity, ROE), in y.o.y. terms.
•In June, instant transfers made using either a CBU or a CVU increased 7.9% y.o.y. in volume and 9.2% y.o.y. in value in real terms. In year-on-year terms, instant transfers doubled to +24.4% in value in real terms. Payments by transfer also increased in June, and virtually tripled against last year. In addition, ECHEQs continued gaining momentum in total check clearing in June (64.2% in terms of value and 38.2% in terms of volume).
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August 16, 2023
