Report on Banks

Executive Summary

• In April, the financial system provided fund intermediation services while maintaining robust coverage of liquidity, provisions, and capital. The total stock of bank loans to the private sector showed no significant changes in real terms compared with the previous month, exhibiting a heterogeneous performance across currencies: the segment in pesos decreased—though at a slower pace than in previous months—and the stock of financing in foreign currency continued to increase.

• In April, the real stock of financing to the private sector in pesos fell 0.9% (+8.5% y.o.y.), rising in secured loans and decreasing in commercial and consumer lending. The monthly reduction of the stock of loans in pesos was relatively smaller than that observed on average during the first three months of the year. In April, the stock of loans to the private sector in foreign currency increased by 5% (in original currency) (+59.9% y.o.y.). The real stock of financing to the private sector (in pesos and in foreign currency) remained virtually unchanged against March (-0.2% and +14.7% y.o.y.).

• The non-performance ratio of financing to the private sector stood at 7.3% in April, up 0.3 p.p. against March. The delinquency rate of financing to households totaled 12.1% in April, with the monthly increase rate slowing down mainly due to a decrease in the growth rate of the non-performing stock in real terms (numerator of the indicator). The delinquency ratio for lending to companies reached 3.3% in April. The estimated probability of default (PD)—based on the dynamics of borrowers’ status transitioning from performing to non-performing—for the private sector fell for the third consecutive month, reaching 2.6% in April. This behavior of PD was observed in both loans to households and to companies. Regarding coverage, the total provisions of the ensemble of financial institutions accounted for 87.6% of the non-performing portfolio, and 6.4% of the total stock of loans to the private sector.

• The real stock of deposits in pesos increased 1.7% in April (+0.6% y.o.y.). Sight deposits posted an uneven performance: non-remunerated accounts increased while remunerated accounts decreased, with time deposits growing in the period. In April, the stock of private sector deposits in foreign currency increased 1% (in original currency) (+28.2% y.o.y.).

• Systemic liquidity in domestic currency, considering only liquid assets, remained at around 12.8% of deposits in pesos. When government securities used to comply with minimum cash requirements are included as well as short-term net transactions in pesos with the BCRA, this indicator reached 31.5% of deposits in domestic currency (-3 p.p. against March). In turn, foreign currency aggregate liquidity decreased 5.7 p.p. of deposits in that currency, reaching 51.8%.

• The financial system recorded high, increasing levels of solvency. In April, the financial system’s regulatory capital compliance increased by 0.7 p.p. of risk-weighted assets (RWAs), to 31.1%. The surplus of regulatory capital (above regulatory requirements) totaled 286.1% (+9.3 p.p. monthly), and 37.2% of financing to the private sector net of provisions (+0.3 p.p. monthly).

• In the past three months to April, the financial system’s profitability was 1.3% annualized (a.) of assets (return on assets, ROA), increasing against the previous months.

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I. Financial intermediation activity

In April, the total balance of bank credit to the private sector did not show significant changes compared to the previous month, when expressed in real terms, with a heterogeneous performance between currencies: a slight reduction in pesos and an increase in the segment in foreign currency.

When analyzing the main movements – in homogeneous currency – of the aggregate bank balance in pesos, in April the main sources of funds were the increase in the real balance of private sector deposits and the decrease in the real balance of credit destined to that sector. These resources were mainly channeled to increase the real balance of financing to the public sector. With regard to items denominated in foreign currency, during the month there was an increase in the balance of credit to the private sector, which was funded mainly by a reduction in liquid assets and, to a lesser extent, by the increase in deposits.

In April, the real balance of financing to the private sector in pesos decreased 0.9% between the end of the month, with heterogeneous performances among credit assistance and groups of financial institutions (see Graph 1). The monthly reduction in the balance was relatively smaller than that verified on average during the first three months of the year. When differentiating by segment, in the month lines with real collateral increased 0.3% in real terms compared to March, while consumer and commercial loans decreased 0.9% in real terms and 0.3% in real terms, respectively. In year-on-year terms, the real balance of credit in pesos to the private sector accumulated a growth of 8.5%.

In relation to the foreign currency segment, in April the balance of credit to the private sector increased by 5% (see Chart 2), driven mainly by export pre-financing. In a year-on-year comparison, the balance of foreign currency financing to the private sector increased 59.9%.

The real balance of total credit to the private sector (in domestic and foreign currency) did not show significant changes compared to the end of March (-0.2% in April). In year-on-year terms, the real balance of financing to the private sector accumulated an increase of 14.7%.

When considering the evolution of the real balance of credit to the private sector at the entity level, the number of banks showing monthly credit growth continued to increase in April (an increase had already been verified in March). Fewer entities were also recorded in April with relatively significant monthly reductions in the real balance of credit to the private sector.

In April, it is estimated that 1,534 new mortgage loan debtors were incorporated into the financial system (“registrations” of individuals), of which more than 95% were arranged in UVA. The monthly performance was explained mostly by public banks and, to a lesser extent, by foreign private banks (see Chart 3). In the accumulated of the last 12 months, the number of new UVA mortgage debtors reached almost 39,800.

In relation to the funding of the aggregate financial system, in April the real balance of private sector deposits in national currency increased by 1.7% (see Chart 4). When distinguishing by segment, demand deposits presented a mixed performance in the period: non-interest-bearing accounts increased by 1.5% in real terms, while interest-bearing accounts decreased by 5.8% in real terms. For its part, the real balance of time deposits increased 3.5% compared to March. ¹ In year-on-year terms, the real balance of private sector deposits in pesos did not show significant changes (+0.6% YoY).

The balance of deposits in foreign currency of the private sector increased by 1% – in currency of origin (+28.2% YoY, see Chart 2). The real balance of total deposits (considering all currencies and sectors) did not change in magnitude in the month (+0.2%), accumulating a year-on-year increase of 2.5% at the aggregate level.

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II. Aggregate evolution and composition of the balance sheet

In April, the aggregate assets of the financial system registered a monthly decrease of 0.5% in real terms. This dynamic was observed in a generalized way in the different groups of entities. In comparison with the same month of the previous year, the sector’s assets accumulated a real increase of 3%.

The structure of the balance sheet presented limited modifications during the month. Within assets, there was a reduction in the share of liquid assets in foreign currency, while the relevance of credit to the public sector increased (see Chart 5). On the funding side, the share of foreign currency deposits in the private sector decreased slightly, while the relevance of term placements in pesos in this sector and net worth increased.

The estimated spread between foreign currency assets and liabilities continued to be at low levels for the aggregate financial system. In April, this indicator stood at 3.5% of the Computable Patrimonial Liability (CPR), 0.7 p.p. below the previous month’s figure and 1.9 p.p. lower than a year ago (see Graph 6). For its part, the spread associated with items adjustable by CER or denominated in UVA stood at 84.8% of the PRC of the financial system, 2.5 p.p. more than in March, although 3.3 p.p. below the value observed in April 2025. The monthly increase was mainly due to the increase in the share of public securities adjustable by CER and, to a lesser extent, of mortgage financing in UVA.

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III. Portfolio quality

The financial system’s exposure to the private sector did not change significantly in April. The share of the balance of loans to the private sector represented 45% of total assets at the aggregate level (+0.2 p.p. compared to March and +4.6 p.p. y.o.y.). When disaggregated by currency, the credit balance in pesos totaled 34.8% of assets (-0.1 p.p. monthly), while the ratio between financing in foreign currency and total assets stood at 10.2% in the period (0.3 p.p. more than in March). Distinguishing by debtor, financing to companies accounted for 24.4% of the total assets of the financial system (+0.3 p.p. monthly), while credit to households reached 20.6% (-0.2 p.p. in the month).

The non-performing loan ratio to the private sector reached 7.3% in April at the aggregate level, increasing 0.3 p.p. compared to March (+5.1 p.p. y.a., see Chart 7). The ratio of irregularity of financing to families stood at 12.1% in the month, 0.5 p.p. more than in March (+8.4 p.p. y.o.y.). In recent months, there has been a slowdown in the rate of increase in the irregularity ratio of household credit. This performance mainly reflects the effect of the evolution of the portfolio in an irregular situation (numerator), whose real growth has been gradually tempered (see Chart 8). For its part, the NPL ratio of loans to companies increased by 0.2 p.p. in the month, totaling 3.3% in April (+2.4 p.p. y.o.y.).

The estimated probability of default (EDP)² is a complementary indicator to the irregularity ratio (indicator of the materialisation of credit risk) that provides information on the dynamics of the transition of debtors between situations (from fair to irregular). The (PDE) – measured in terms of balances – for total credit to the private sector fell for the third consecutive month in April, to 2.6% (-0.1 p.p. in the month, see Chart 9). By type of debtor, the PDE in families totaled 4.4% in the period (-0.2 p.p. compared to March); while in the business segment it remained at 1.2%.

The financial system retains a relatively high coverage with forecasts. The balance of total forecasts for all financial institutions stood at 87.6% of the portfolio in an irregular situation (-1.8 p.p. monthly and -53.5 p.p. y.o.y.) and 6.4% of the total credit balance to the private sector (+0.1 p.p. compared to March and +3.3 p.p. y.o.y.). When considering together the levels of non-performing loans, forecasts and available capital, in April the balance of irregular credit net of the forecasts represented 1.9% of the PRC at the aggregate level, a level that places it below a sample of emerging and developed countries (with medians around 6% and 6.4%, respectively).

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IV. Liquidity and solvency

Systemic liquidity in national currency, considering only availabilities, remained at around 12.8% of deposits in this denomination in April (+0.1 p.p. monthly and +0.9 p.p. y.o.y., see Chart 10). When incorporating the public securities used for the integration of minimum cash and short-term net active operations in pesos remunerated with the BCRA, this indicator reached 31.5% of deposits in national currency (-3 p.p. monthly and -5.1 p.p. y.o.y.). ³ Aggregate liquidity in foreign currency decreased by 5.7 p.p. of deposits in this denomination in the month to 51.8% (-10.1 p.p. y.o.y.).

The financial system maintained high levels of solvency. In April, capital integration (PRC) of the financial system increased 0.7 p.p. of risk-weighted assets (RWA) to 31.1% (1.3 p.p. y.o.y., see Chart 11). The monthly dynamics were explained by a relatively larger real reduction in RWAs (in line with credit performance) compared to that verified in the PRC. Excess capital integration (above regulatory requirements) totalled 286.1% of the regulatory requirement (+9.3 p.p. monthly and +16.7 p.p. y.o.y.) and 37.2% of credit to the private sector net of forecasts (+0.3 p.p. m/m and -2.7 p.p. y.o.y.).

From moderate levels, the profitability of the financial system registered an increase in recent months. Considering the cumulative figure for the three months to April, the aggregate results were positive and equivalent to 1.3% annualized (a) of assets (ROA), exceeding the records of the previous three months (see Chart 12)⁴. This marginal improvement in quarterly profitability indicators was explained by an increase in the real comprehensive financial margin (mainly due to higher results on securities and lower interest expenses), coupled with an incipient decrease in charges for uncollectibility. For its part, the ROA of the entities as a whole in the last 12 months reached 1.2%, reducing 0.8 p.p. in a year-on-year comparison.

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V. Payment system

In April, the amounts of immediate transfers (TI) operated remained at levels similar to those of the previous month in real terms, while the amount of TI decreased slightly in the period. In a year-on-year comparison, IT increased 23.5% in quantities and 11.6% in real amounts (see Graph 13). When disaggregated by modality, in the last year the dynamism – in terms of real amounts – of CBU to CVU operations (16.8% YoY) and between CBU (12.1% YoY – excluding intra-entity ones) stood out. ^{5 6} It is estimated that the volume of IT operated in the last three months (annualized) represented 90% of GDP, increasing 9.7 p.p. compared to the level of a year ago.

In the month, payments with transfers via QR code (PCT QR) did not present significant changes. In a year-on-year comparison, the dynamism of PCT QR remained high, with an increase of 65.6% in the number of operations and 73.3% in real amounts. From still low levels, PCT QR continued to gain relevance within retail payment instruments, representing 2.6% of GDP (measured as the amount traded in the last three months annualized), 1.0 p.p. more than in the same period of the previous year. ⁷

In April, the clearing of checks fell compared to the previous month (see Graph 14). In a year-on-year comparison, compensation showed a mixed behavior: compared to April 2025, the amounts were reduced by 4.7%, while the real amounts remained at similar levels (+0.2%). When distinguishing by format, ECHEQs continued to increase (9.4% YoY in quantities and 6.1% YoY in real amounts), while physical checks maintained their downward trend (-21.5% YoY in amounts and -22.5% YoY in real amounts). In April, the ECHEQs accounted for 62.5% of the total compensated in amounts and 83.9% in amounts. The amount of annualized cleared checks in the last 3 months reached 24.9% of GDP, increasing 0.8 p.p. in year-on-year terms. ⁸

Bounce checks due to lack of funds (measured on the total compensated) decreased in April. In quantities, the indicator fell 0.03 p.p. to 2.19%, while in amounts it fell 0.19 p.p. to 1.41%. Both indicators were higher in a year-on-year comparison: 0.89 p.p. in quantities and 0.56 p.p. in amounts.

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References

¹ The growth in fixed-term deposits was largely driven by a portfolio rotation of Mutual Funds and virtual wallets, favored both by the rate differential and by the regulatory modification of the CNV that raised the investment limit in traditional and pre-cancelable fixed terms from 50% to 60% of assets under management (General Resolution 1126/2026).

² The EDP is defined here as the proportion of the credit balance that has been in a regular situation (category 1 and 2) in month T-3 and becomes irregular (categories 3, 4, and 5) in month T.

³ When incorporating LECAP holdings maturing in the next 3 months, the broad liquidity ratio in local currency stood at around 36.8% of deposits (-1.6 p.p. monthly and -5.2 p.p. y.o.y.).

⁴ Comprehensive total results in homogeneous currency.

⁵ In year-on-year terms through April, the amount of IT among CBUs increased 44%, while those among CVUs grew 40%. CBU-to-CVU operations also increased (8.5% YoY), while CVU-to-CBU operations decreased (0.7% YoY).

⁶ In April, the average value of IT was $114,563.

⁷ In April, the average value of PCTs through QR codes was $22,876.

⁸ In the month, the average amount of cleared checks was $4.71 million (physical format: $2.02 million; ECHEQs: $6.32 million).