This report analyzes the situation of the Argentine financial system on a monthly basis.
Summary of the month
The financial system continues to show a slowdown in the growth rate of its intermediation levels. The delinquency of financing to families and companies continues to increase, showing its impact on the profitability of the sector. However, all financial institutions maintain adequate liquidity and solvency positions.
The balance sheet of total deposits in the non-financial sector increased by 1.8% (or 10.2% YoY) in April, driven mainly by private sector placements (both in pesos and in foreign currency) and, to a lesser extent, by those of the public sector. In the first part of the year, the dynamism of private sector placements in foreign currency is higher than in previous years.
The liquidity indicator of the financial system stands at 30.7% of deposits, similar to that of March and 6.4 p.p. higher than a year ago. For its part, the broad liquidity indicator (includes the holdings of Lebac and Nobac not linked to passes with the BCRA) reaches 41.8%, a level slightly higher than a year ago.
The balance sheet of credit to the private sector grew 0.4% in the month (adjusted for the monthly issuance of financial trusts), accumulating a variation of 12% YoY, being 31 p.p. lower than that registered in April 2008. Throughout 2009, credit to the private sector was mainly driven by financing to companies. Loans to the corporate sector grew 15% YoY, thus reaching 23.6% of the net assets of the financial system (1.1 p.p. above the record of a year ago).
The quality of financing to companies and households continues to deteriorate, a sign of a certain materialization of the credit risk faced by banks. However, the level remains limited, reaching 3.7% of financing. The credit lines channeled to households (mainly for consumption) drove the increase in irregularity during the last months. The degree of coverage of loans in an irregular situation with forecasts is high, although it is lower than in recent years.
The consolidated net worth of the financial system increased 1.2% in April (14.2% YoY). Capital integration stands at 17.5% of risk assets. , exceeding international recommendations and local requirements. The results of the banks are lower than those of the same period in 2008. In addition, higher administrative expenses and charges for uncollectibility continue to be observed so far in 2009, and this trend is expected to continue in line with the gradual increase in the irregularity of the private sector credit portfolio.
