Report on Banks, August 2024
• In August, financial intermediation with the private sector kept on growing. The monthly increase in loans to companies and households was higher than the one in private sector deposits, leading to a reduction of excess systemic liquidity. The non-performance ratio of loans to the private sector remained at moderate levels. Financial institutions posted high aggregate coverage of provisions and capital.
• In August, the real stock of financing to the private sector increased 6.5%, exhibiting rises across all credit segments and all groups of financial institutions, with an accumulated expansion of 39.3% since the end of April. The stock of financing in foreign currency also grew in August (4.3% in original currency). Thus, the total stock of loans to the private sector in real terms (in domestic and foreign currency) increased 5.9% in August. This was observed in both loans to companies (6.5% in real terms) and to households (5.4% in real terms).
• The non-performance ratio of loans to the private sector stood at 1.6% in August, remaining virtually unchanged against July (-1.5 p.p. y.o.y.). The delinquency rate of loans to companies reached 0.8% (-2.4 p.p. y.o.y.), while the delinquency rate of financing to households remained at 2.7% (-0.5 p.p. y.o.y.). The estimated stock of provisions for the non-performing portfolio fully covered said portfolio at an aggregate level (106.1% in August).
• The real stock of private sector deposits in pesos improved 0.7% in August. The stock of time deposits increased 4% in real terms against July, more than offsetting the 1.9% fall in real terms of sight accounts. The stock of private sector deposits in foreign currency grew 4.2% (in original currency), mainly explained by the inflows under the Asset Regularization Regime. Private sector total deposits (in domestic and foreign currency) increased 1% in real terms in August.
•The broad liquidity ratio of the ensemble of financial institutions totaled 43.6% of total deposits, down 2.6 p.p. against July. Liquidity performance measured month-on-month was mainly explained by the segment in pesos. This was mainly due to the reduction in LeFi holdings in a context of a rise of the financing to the private sector. Considering only liquid assets (in domestic and foreign currency), the liquidity ratio reached 24.3% of total deposits in the period.
• The financial system posted high levels of solvency in August. Financial institutions' regulatory capital (RC) stood at 36.6% of risk-weighted assets (RWAs), up 1.5 p.p. against July. The regulatory capital surplus of the financial system represented 359% of the regulatory requirement in August.
• Over the past few months, there has been a slowdown in the earnings accrued by the financial system as observed in most groups of financial institutions. The financial system's profitability accumulated in the past three months to August stood at 3.4% annualized (a.) of assets (return on assets, ROA) and 12.4% (a.) of the net worth (return on equity, ROE), posting lower levels against the previous months. These profitability levels are also lower than those obtained for the accumulated 12-month period: 6.6% of ROA and 26.5% of ROE.
•In August, electronic means of payments continued growing. Instant transfers increased 11.7% in volume (106.9% y.o.y.) and 9.1% in value (50.2% y.o.y.) in real terms. In August, e-checks continued gaining share in cleared checks: 49% in volume and 75% in value.
To access previous editions, click here
October 16, 2024
