Report on Banks

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

Summary

• In August, the financial intermediation of banks continued to expand. Thus, bank credit and private sector deposits accounted for 16.7% and 18% of GDP, respectively, accumulating a year-on-year improvement of almost 1 p.p. in each case. This dynamic was generated entirely from intermediation with the private sector in national currency, leading to the balance of financing in pesos representing 94% of total credit and the balance of deposits in pesos reaching 92% of total deposits.
• The use of electronic means of payment has been showing a positive performance, helping to diversify the tools that provide greater security and efficiency in operations In particular, in a year-on-year comparison, the monthly value of fund transfers with instant crediting increased 65% while the number of operations expanded 30%. In order to deepen the use of electronic means of payment, since September it was decided to increase from $10,000 to $20,000 the daily amount of electronic transfers that do not generate cost for users.
• Financing in pesos to the private sector expanded 3% in August (36.9% YoY) with a wide dissemination to all credit lines. The dynamism of financing in national currency boosted total credit to the private sector (including domestic and foreign currency), which grew 2.7% in the month (31.9% YoY). Both in monthly and year-on-year terms, financing to companies was the most dynamic, increasing 3.4% in August (34.4% YoY) and contributing more than 59% of the year-on-year increase in credit to the private sector. On the other hand, loans to households increased 1.8% in the month (29.3% YoY).
• The level of irregularity of credit to the private sector remained at 1.9% of total financing in the month. Compared to July, the NPL ratios for loans to companies (1%) and to households (3%) also remained stable. With a coverage ratio of 134.2% of the non-performing portfolio, the financial system continued to exhibit high levels of forecasting.
• The balance sheet of total deposits in national currency in the financial system increased by 2.1% (28.2% YoY) in August, with a growth in private sector placements of 1.8% (32.9% YoY) and public sector of 2.8% (17.3% YoY). In the period, the dynamism of time deposits in pesos in the private sector stood out, with an expansion of 2.9% (40.4% YoY). In this context, the balance sheet of total deposits of the private sector and the public sector (considering national and foreign currency) registered an increase of 2% in August (26.6% y.o.y.).
• The broad liquidity indicator of the financial system (including items in domestic and foreign currency and the holdings of LEBAC and NOBAC) remained at 37.5% of total deposits in the month. Meanwhile, the liquidity indicator (with items in domestic and foreign currency) stood at 24.4% of total deposits in August, observing a reduction of 0.3 p.p. in the month.
• The net worth of the consolidated financial system grew 2.3% in August. The financial system’s regulatory capital integration in terms of total risk-weighted assets (RWA) remained at levels similar to those of last month, at around 13.2%. For its part, in August the excess of capital integration over the regulatory requirement (capital position) increased by 0.9 p.p. to 68.8%, accumulating a year-on-year increase of 6.5 p.p.
• In August, the gains accrued by the financial system stood at 3.5% of assets, with a slight monthly decrease. In the first 8 months of 2013, all financial institutions accrued an ROA of 2.9%y, a level similar to that recorded in the same period of 2012, in a context in which the increase in terms of assets of the main items of income (interest and services) was offset by an increase in expenditures. In year-on-year terms, public banks increased their accumulated ROA in the year, while foreign private banks reduced it.
• In recent years, the availability of financial infrastructure in the different regional economies has improved. The number of inhabitants per ATM was reduced, especially in the least supplied areas. However, considering that disparity persists in terms of banking penetration and economic development, since the beginning of 2011 the BCRA introduced a series of regulatory modifications on the guidelines for the authorization of new branches. With this, it was achieved that, in the last 2 and a half years, a total of 102 new branches were authorized in the least banked areas, equivalent to more than 40% of the growth in the total number of branches.