Report on Banks, October 2024

• Financial intermediation kept on growing at an outstanding pace in October, thus recording six consecutive months of expansion in financing to households and companies. The non-performance ratio of loans to the private sector remained at a low level, exhibiting high systemic coverage based on existing provisions and financial institutions’ capital.

• In October, the real stock of financing to the private sector in pesos increased 6.9%. This monthly performance was observed across all credit lines, with consumer lines (personal loans and credit cards) standing out. As a result of the positive development of the past few months (an increase of 58.9% in real terms since the end of April), the real stock of financing to the private sector in pesos rose by 7.5% y.o.y. The stock of financing to the private sector in foreign currency increased 11.6% in October (in original currency), doubling in year-on-year terms. Consequently, the real stock of total financing (in domestic and foreign currency) to the private sector increased 7.5% in October and 15.8% y.o.y., with rises in loans to both companies and households.

• The stock of loans to the private sector increased relatively more than the total assets of the financial system, making gross exposure (in domestic and foreign currency) to the private sector grow by 1.4 p.p. of assets to 31.6% (+4.2 p.p. y.o.y.). The non-performance ratio of loans to the private sector slightly decreased in October to 1.5% at the systemic level. The monthly performance of this indicator was mainly explained by financing to households, whose non-performance ratio stood at 2.5%, slightly below the level recorded in September. The non-performance ratio of loans to companies remained stable in October at around 0.7%. The total provisions of the financial system accounted for 181.7% of the private sector non-performing portfolio, up 9.7 p.p. against September and up 53.8 p.p. in y.o.y. terms.

• The real stock of private-sector deposits in pesos increased 3.7% in October, mainly boosted by time deposits. The stock of private sector deposits in foreign currency grew 9.8% in real terms (in original currency) in October, driven by the inflows under the Asset Regularization Regime. The stock of total deposits (in domestic and foreign currency, in all sectors) improved 4% in real terms in the period.

• In October, the broad liquidity in domestic currency of the financial system represented 36.7% of deposits in pesos, in line with the previous month (-35.3 p.p. y.o.y.). In turn, the liquidity ratio in foreign currency stood at 81.2% of deposits in the same currency at the systemic level.

• Financial institutions' regulatory capital (RC) compliance stood at 33.1% of risk-weighted assets (RWAs) in October, down 1.7 p.p. against September. Such monthly performance reflected a slight decrease in RC (-1.4% in real terms) coupled with a rise in RWAs (3.6% in real terms, in line with credit expansion). Against this backdrop, the regulatory capital surplus of the financial system represented 315% of the regulatory requirement.

• The profitability indicators of the financial system kept on changing in October. In the past three months to October, the total comprehensive income in constant currency for the ensemble of financial institutions stood at 0.4% annualized (a.) of assets (return on assets, ROA). In this context, income stood at 4.3% of assets in the ten months to October 2024 (+0.4 p.p. y.o.y.).

• Instant transfers climbed 5.4% in volume and 8.5% in value in real terms compared to September, rising 65.4% y.o.y. and 24.2% y.o.y., respectively. Cleared checks also increased in the month—10.7% in volume and 11.8% in value in real terms—in a context in which e-checks kept on gaining share (50.8% in volume and 76.3% in value over the total cleared).

Report (full text) - in Spanish -

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December 26, 2024

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