Report on Banks

Thisreport analyzes the situation of the Argentine financial system on a monthly basis.

Summary

• During April, banking activity expanded at a good pace, registering increases in credit, deposits and also in the provision of means of payment. The banks carried out their operations within a framework of limited risks and preserving high levels of coverage.
• In April, the balance of financing in national currency increased by 1.9%, accumulating an increase of 42.2% YoY. The behavior of credit in pesos in the last twelve months was largely explained by commercial credit as it registered the highest relative growth. On the other hand, total financing to the private sector (in domestic and foreign currency) increased 31.7% YoY in the month under analysis.
• The positive evolution of bank credit to companies was partly influenced by the Bicentennial Productive Financing Program and the Credit Line for Productive Investment. In particular, with respect to this last Line, it is estimated that the total loans granted between the second half of 2012 and the first half of 2013 will reach $34,000 million, which implies full compliance with the established goals. Based on this performance, the BCRA decided to renew this tool while maintaining the current general conditions and incorporating the possibility that MSMEs can allocate up to 20% of the project to finance working capital. In this way, disbursements of $20,000 million are expected for the second half of the year.
• In April, the irregularity of credit to the private sector stood at 1.9% of total financing to this sector, maintaining a low level both in historical and international comparison. The financial system continued to have a high coverage of the irregular portfolio with forecasts.
• In April, the balance of private sector deposits grew 2.2% (27.5% YoY), driven by time placements in national currency, which increased by 2.5% in the month (45.2% YoY). The significant dynamism of deposits in pesos at the time translated into an increase in their share of total private sector deposits, from 32.9% to 41.7% in the last three years. Based on this performance, the balance sheet of total deposits (in domestic and foreign currency) in the financial system increased by 1.8% in the period (25.7% YoY).
• The liquidity indicator (in domestic and foreign currency) reached 24.2% of total deposits in April, increasing 0.3 p.p. compared to last month; in the same vein, the broad liquidity ratio (which includes holdings of LEBAC and NOBAC) stood at 38% of total deposits, registering a monthly increase of 0.2 p.p.
• The net worth of the consolidated financial system increased 2.4% in April (30.6% YoY), mainly due to accounting gains.
• The integration of regulatory capital in the financial system totaled 14.3% of total risk-weighted assets (RWA) in April (12.9% in the case of Tier 1), up 0.2 p.p. compared to March. For its part, in the month the excess of capital integration for the group of entities stood at 66.4% of the regulatory requirement, increasing 3.5 p.p. compared to the previous month.
• In April, the profitability accounted for by the financial system stood at 3.4% of assets, increasing 0.5 p.p. compared to last month, mainly due to the increase in the financial margin and the decrease in charges for uncollectibility and administrative expenses. All bank groups increased their monthly profitability. In the first four months of the year, the financial system registered a ROA of 3%y, slightly higher than that evidenced in the same period a year ago in a context of a significant increase in the levels of financial intermediation.
• Financial system staffing continued to grow in the first quarter of 2013, accumulating an improvement of 1.1% YoY. The operational infrastructure of the banks also continued to expand – the number of branches increased by 2.8% YoY and the number of ATMs by 8.3% YoY – along with further improvements in productivity indicators, evidenced, among other indicators, by a greater number of accounts managed per bank employee