Report on Banks

Monthly report that analyzes the situation of the Argentine financial system.

About the use of inclusive language in this publication

The use of language that does not discriminate and that makes all gender identities visible is an institutional commitment of the Central Bank of the Argentine Republic. This publication recognizes the influence of language on ideas, feelings, ways of thinking and evaluation schemes.

This document has sought to avoid sexist and binary language. However, for ease of reading, resources such as “@” or “x” are not included.

Executive summary

• In the context of COVID-19, the BCRA continued to adopt measures to stimulate credit, encourage savings in pesos, and promote the use of electronic means of payment. In August, all financial institutions carried out their activity while preserving adequate liquidity and solvency margins.

• For the sixth consecutive month, in August the balance of credit to the private sector in pesos expressed in real terms grew, 1.3% compared to the previous month and 11.1% year-on-year (YoY). This performance has been underpinned by the various assistance programs implemented by the BCRA. Through the special line to MSMEs and Health Service Providers at a nominal rate of 24% per year, about 324,635 financings were granted for a total accumulated amount of $533,784 million until the end of October. Through the MSME Plus credit line, $2,683 million were disbursed, facilitating access to financing for more than 5,927 companies. In the month, credit assistance designed for single-tax and self-employed people also continued to expand. Through the Zero-Rate Credit line, 554,743 loans were granted, for a total amount of $65,692 million until the end of October. In addition, within the framework of the Zero Rate Cultura Credit line, 2,097 loans were generated for a total of $221 million.

• With the aim of continuing to expand the conditions of access to credit for the productive sector, the BCRA recently approved a new scheme with 3 lines of financing for MSMEs: (i) MSME line with nominal annual interest rates of 24%, aimed at companies that have benefits from the Emergency Assistance Program for Work and Production (ATP); (ii) MSME line for Capital Investment for firms that acquire capital goods and the construction sector, with an annual nominal interest rate of 30% and an average term equal to or greater than 24 months, weighting capital maturities, without the total term being less than 36 months; (iii) line intended to finance the working capital of MSME companies, with an annual nominal interest rate of 35%. The normalization of the level of activity that is beginning to be evident in some regions and sectors will gradually make it possible to reduce and focus credit assistance efforts, adapting to the needs of the new stage.

• On the funding side, the balance of time deposits in national currency of the private sector grew for the fifth consecutive month in real terms, 3.6% compared to July and 22.3% y.o.y. Within the framework of the measures adopted by the BCRA aimed at encouraging savings in pesos in the financial system, as of October, a minimum annual nominal yield of 34% was guaranteed on placements of up to $1 million constituted by individuals and 32% nominal annual for the rest. For its part, in the framework of tax maturities, the balance of deposits in national currency of the private sector on demand fell in the month, leading to a decrease of 1.9% in real terms in pesos compared to July.

• Within the framework of changes in the criteria for classifying debtors and the financial relief mechanisms in force since March aimed at counteracting the negative effects of the pandemic, in the month the ratio of irregularity of credit to the private sector reached 4.8%, 0.2 p.p. less than in July. In the period, the balance of accounting forecasts totaled 119% of the irregular portfolio, increasing 2.3 p.p. compared to July and 22.3 p.p. y.o.y.

• In August, the sector’s aggregate solvency indicators increased. The capital integration (RPC) of the financial system totaled 23.4% of risk-weighted assets (RWA), 0.4 p.p. more than last month. This indicator exceeds the local average of the last 10 years and the average for the latest information available from other financial systems in the region. The capital position (RPC minus regulatory requirement) of the aggregate of entities stood at 173% of the regulatory requirement in the month, growing 4.5 p.p. compared to July. For its part, the broad sense liquidity of the financial system represented 66.1% of total deposits in August, 0.3 p.p. less than in July.

• In the cumulative 8 months of the year, the financial system obtained total comprehensive results in homogeneous currency equivalent to 2.7% annualized (a) of assets (ROA) and 18.6% y. of equity. It is estimated that in a year-on-year comparison, the implied lending interest rate fell more than the implicit funding cost for deposits, leading to a reduction in the differential between the two concepts (-5.8 p.p. y.o.y. nominal and -2.9 p.p. y.o.y. real).

I. Financial intermediation activity

Within the framework of the various programs implemented by the BCRA to mitigate the effects of lower economic activity in the face of the COVID-19 scenario and the sanitary measures taken, in August the real balance of credit to the private sector in pesos increased for the sixth consecutive month. Meanwhile, private sector time deposits in pesos showed real growth for the fifth consecutive month.

According to the estimated flow of funds for the financial system on items in national^{currency 1}, the most relevant sources of funds in August were the reduction in the broad liquidity of financial institutions and, to a lesser extent, the increase in public sector deposits. On the other hand, the reduction in total deposits from the private sector and the increase in financing to this sector were the main applications of funds in the month. The monthly dynamics of deposits occurred in the context of transfers of resources from the private sector to the public sector in the month, partly due to tax maturities 2.

In August, the balance of financing to the private sector in pesos increased by 1.3% in real terms compared to the previous month (4% nominal) (see Graph 1)³, mainly explained by the performance of credit card financing and commercial lines (documents and advances). The increase in loans in the period was widespread among groups of financial institutions, with a greater relative increase in groups of private financial institutions 4.

The growth in peso financing to the private sector – in real terms – that has been recorded since March is being driven in part by the various credit assistance programs implemented by the BCRA. Through the special line for MSMEs and Health Service Providers at a nominal rate of 24%⁵, about 324,635 loans were granted for a total accumulated amount of $533,784 million until the end of October (of which 10.3% are guaranteed by FoGar) (see Graph 2, left panel). More than 80% of the total disbursed was used to cover deferred checks and to supply certain working capital needs of MSMEs. Domestic private entities accounted for 39.8% of total disbursements, followed by public entities with 30.3% and foreign private entities with 29.9%⁶.

The MSME Plus⁷ credit line, aimed at a segment of companies that did not have assistance from financial institutions, totaled disbursements of $2,683 million at the end of October (46.1% of them are guaranteed by FoGAr)⁸, facilitating access to financing for more than 5,927 micro, small and medium-sized enterprises (see Graph 2, right panel). National private entities continued to be the main drivers of this financial assistance, granting more than 70% of the total amount.

At the same time, through the line of financing at subsidized interest rates for companies enrolled in the “Emergency Assistance Program for Work and Production” (ATP)⁹ , a total of $3,371 million was granted until the end of October, reaching more than 165,239 workers.

On the other hand, in recent months, new credit assistance aimed at single-tax and self-employed people continued to grow. Through the Zero Rate Credit Line 10, nearly $65,692 million have been granted until the end of October, of which more than 97% have already been disbursed through some 554,743 loans (see Graph 3). Since this program is implemented exclusively through advances on the credit cards or demand accounts of the beneficiaries, so far more than 245,698 new credit cards have been issued and 737 demand accounts have been opened for this purpose. In addition, through the Cultura¹¹ Zero-Rate Credit line, 2,097 loans have been granted for a total of $221 million, of which 57.5% has already been credited.

Moreover, with the aim of continuing to improve the conditions of access to financing for the productive sector, in mid-October the BCRA approved a new financing scheme for MSMEs, which consists of three lines of credit: (i) MSME line with nominal annual interest rates of 24%, aimed at all companies that have benefits from the ATP, which will have – if necessary – a guarantee from FOGAR; (ii) MSME line for Capital Investment for those firms that acquire capital goods and for those related to the construction sector, with an annual nominal interest rate of 30% and an average term equal to or greater than 24 months, weighting capital maturities, without the total term being less than 36 months; (iii) line intended to finance the working capital of MSME companies, with an annual nominal interest rate of 35%. Likewise, the different lines of credit with a rate subsidized by FONDEP¹² will remain in force.

In a year-on-year comparison, in August the balance of credit in national currency to the private sector accumulated an increase of 11.1% in real terms (2.3 p.p. above last month’s record), mainly due to the performance of documents and cards. Financing channeled by private financial institutions showed higher relative real growth in the period (see Graph 1, right panel).

Given the monthly reduction in financing in foreign currency (-8.4% in foreign currency), in August the total credit balance to the private sector (in domestic and foreign currency) accumulated a real decrease of 0.3% compared to July (-14.8% y.o.y.).

On the other hand, influenced by the maturities of the payment of income tax and personal assets, the balance of deposits in national currency of the private sector fell 1.9% in real terms (+0.8% nominal) in August compared to July, as a result of a 6.3% real decrease in demand accounts (-3.7% nominal). In contrast, in the period, time deposits in pesos in this sector showed real growth for the fifth consecutive month, equivalent to 3.6% compared to July (+6.4% nominal) (see Chart 4). Thus, so far this year, time deposits increased their weighting in the balance of total deposits by 1.3 p.p., to represent 45.6% in the aggregate of the financial system.

For its part, in August the balance of deposits in foreign currency of the private sector increased 1.1% (in currency of origin). Total deposits (in domestic and foreign currency) in this sector fell 1.3% in real terms in the month compared to July.

Continuing with the strategy of harmonizing the monetary policy interest rate 13, the BCRA recently decided to raise the interest rate on overnight passive passes (or active passes from the point of view of financial institutions) to 30% nominal annual^{rate 14}, to offer seven-day passive passes at a rate of 33% and to reduce the interest rate on LELIQ to 36% nominal annual (see Chart 5). This will allow the interest rates of monetary sterilization tools to be gradually aligned with the interest rates of National Treasury instruments. In this way, the aim is to gradually reduce the cost of sterilization while increasing the effectiveness of influencing the economy’s short-term interest rates. In addition, in order to continue promoting savings in national currency, the coefficients of the minimum interest rates for fixed terms were modified, to guarantee a nominal annual yield of 34% on placements of up to $1 million constituted by individuals and 32% nominal annual for the rest.

Meanwhile, in August the balance of public sector deposits in pesos increased by 5.8% in real terms (8.7% nominal), mainly due to higher tax revenues after the aforementioned tax payment. Thus, taking into account the monthly movements of both the public and private sectors, total deposits in pesos decreased 0.5% in real terms compared to July (2.2% nominal).

In a year-on-year comparison, deposits in pesos of the private sector increased 34.8% y.o.y. real (89.7% y.o.y. nominal) in August, while those constituted by the public sector increased 8.8% y.o.y. real (53% y.o.y. nominal). As a result, the balance of total deposits in pesos accumulated a growth of 27.8% YoY in real terms (79.8% YoY nominal).

II. Aggregate composition of the balance sheet

In August, the total assets of the financial system did not show significant changes in real terms compared to last month (+2.7% nominal), growing in the group of public financial institutions and decreasing in private ones.

Compared to the end of January 2020, assets in real terms increased in all groups of entities, accumulating an increase of 14% in real terms for the aggregate of the system (see Chart 6). This performance was partly explained by the dynamics of credit to the private sector in national currency (detailed in the previous section). In addition, the increase in total assets was also affected, relatively considerably, by the greater holding of BCRA instruments on the balance sheet of the entities. It should be noted that, in order to moderate the adverse economic effects of the pandemic, this Institution actively intervened to finance extraordinary assistance programs, both for families and companies. In this sense, part of the monetary issuance generated by transfers from the BCRA to the National Treasury was sterilized, via LELIQ and passes, thus explaining the increase of these instruments in the assets of the financial^{system 15}.

In this context, as of August, loans to the private sector in national currency and BCRA instruments remained the items with the greatest relative weight in the total assets of the financial system (see Chart 7). Compared to last July, the relevance of BCRA instruments, credit to the private sector and the public sector increased among assets in national currency, while the weighting of the balance of current accounts in the BCRA decreased. For its part, in the segment denominated in foreign currency, in August the relative importance of liquidity increased and that of credit to the private sector decreased. In year-on-year terms, credit to the private sector in pesos and total liquid assets in the same denomination increased their weighting in assets, while credit and liquidity in foreign currency decreased it.

The local financial system exhibits moderate exposure to the public sector. In August, credit to the public sector increased slightly to 10.4% of total assets, a level similar to the average of the last 10 years (see Chart 8). When considering public sector deposits, this sector remains a net creditor of all financial institutions, for a value equivalent to 1.7% of the total assets of the financial system. It should be noted that, in an international comparison, the local financial system has levels of exposure to the public sector that are below the average of other emerging and developed economies (see Chart 9).

In relation to the total funding of the financial system (liabilities and net worth), the weighting of private sector time deposits in pesos and public sector deposits in pesos increased during the month (see Chart 10), and that of demand deposits in pesos in the private sector decreased. Compared to the same period in 2019, private sector demand and time deposits in local currency increased their share of the total funding of the financial system by 7.7 p.p. and 3.4 p.p., respectively. On the other hand, private sector deposits in foreign currency decreased their relative weight in the last year.

From a macroprudential approach, it is relevant to monitor the relative importance of foreign currency assets and liabilities in the financial system, as well as the differential between the two. In this regard, within the framework of the current regulation on the matter, in August the assets in foreign currency represented 19.8% of the total assets and the liabilities in this denomination reached 18.6% of the total funding. These records did not present changes in magnitude compared to last month. When considering foreign currency forward transactions (classified off-balance sheet), the spread between assets and liabilities in this denomination of the financial system as a whole stood at around 10% of regulatory capital, 1.1 p.p. more than last month (see Chart 11).

III. Portfolio quality

The total credit balance to the private sector (including domestic and foreign currency) in terms of the assets of the financial system stood at 33.6% in August, relatively stable compared to the previous month. Credit in foreign currency decreased its share of assets during August, while financing in pesos increased (0.3 p.p. per month to total 28.6%, see Chart 12).

It should be noted that, in order to mitigate part of the adverse economic effects caused by the pandemic and the sanitary measures taken to reduce its effects on the population, since March there has been a modification of the parameters for classifying debtors in the financial system, as well as relief measures implemented by the BCRA for the same purpose¹⁶. In relation to this last point, according to the responses of the entities within the framework of the “Credit Conditions Survey (ECC)” recently published (Third Quarter of 2020), approximately 14% of the balance of credit to the private sector in pesos of the surveyed entities would have used the mechanism of deferral of unpaid loan installments —excluding credit cards— (5% for the segment in foreign currency). Regarding the mechanism on credit cards only, this ratio stood at approximately 19% for September and 27% for April – weighted average balance – based on the information provided by the financial institutions as a whole.

In this context, the irregularity ratio of credit to the private sector for the aggregate financial system fell 0.2 p.p. in August to 4.8%, a decrease that was evident in all groups of financial institutions, highlighting the performance of EFNBs and foreign private entities (see Chart 13).

In August, the default rate on loans to companies stood at 6.4%, 0.4 p.p. below the value of July. This decline was mainly driven by advances and pledges, and was partially offset by the increase in irregularity in export^{financing 17} (see Chart 14). For its part, the NPL ratio of loans to households fell slightly to 3%, without presenting large monthly variations between the different lines of credit.

In August, the balance of accounting forecasts (originated by both the regular and irregular portfolios) represented 118.7% of credit to the private sector in an irregular situation of the financial system, 2.3 p.p. more than last month (see Chart 15). The estimated balance of forecasts attributable to the non-performing portfolio stood at almost 98% of such loans. It is estimated that financing in an irregular situation not covered with forecasts attributable to this portfolio totaled 0.3% of the PRC of the financial^{system 18}.

IV. Liquidity and solvency

The liquidity and solvency margins with which all institutions operate are at adequate levels, comfortably exceeding international recommendations in this area.

In August, the Liquidity Coverage Ratio (LCR) for the entities covered (group A) stood at 2.3, compared to a local minimum requirement of^1.19. The Stable Net Funding Ratio (NSFR) in June (latest available information) totalled 1.8 in obligated entities (group A), while the minimum required at the local level is 1²⁰.

Ample^{liquidity 21} represented 66.1% of total deposits as of August (61.7% for items in pesos and 83% in the foreign currency segment), 0.3 p.p. less than in July (-1.1 p.p. and +2.3 p.p. for the indicator in pesos and foreign currency, respectively, see Chart 16). In terms of the composition of liquid assets in pesos, the share of LELIQ²² holdings increased during the month, while the balance of the current accounts of the entities in the BCRA and the balance of the net passes with this institution decreased. In the last 12 months to August, the broad liquidity ratio increased by 7.5 p.p. of deposits, a performance mainly explained by the foreign currency segment.

In relation to the solvency of the financial system, regulatory capital integration indicators increased in the month (see Chart 17). The system’s capital integration (RPC) increased by 0.4 p.p. of risk-weighted assets (RWA) to a total of 23.4% (25.6% for private entities and 19.2% for public entities). The capital position (RPC minus regulatory requirement) of the aggregate of entities stood at 173% of the regulatory requirement in August, growing 4.5 p.p. in the last month (212% for private entities and 107% for public entities). For its part, the leverage ratio of²³ of the aggregate of entities stood at 12% in the middle of the year (latest available information), well above the minimum threshold of 3%.

As in previous months, the financial system on an aggregate basis continued to verify additional capital margins (2.5% of RWAs for all institutions and an additional 1% for those with systemic importance).

It should be considered that the maintenance of adequate solvency indicators of the sector is partly favored by the different micro and macroprudential policies that this Institution has been implementing since the beginning of the health emergency, following the experience addressed by other Central Banks. In particular, during 2020 financial institutions have suspended the possibility of distributing dividends²⁴.

In this context, it should be mentioned that in the first eight months of the year, the group of entities accrued total comprehensive results in homogeneous currency in the order of 2.7% annualized (a) of assets (ROA) and 18.6% y. of net worth (ROE).

The accumulated financial margin between January and August stood at 11.4% of assets. Interest income (8.8% y/y of assets) and equity earnings (8.4% y/y) were the main positive items of the financial margin in the year to date. On the other hand, interest outflows (8.6% y/y of assets) were the main financial outflows of the financial system so far this year. On the other hand, among the most relevant non-financial items in the profitability of the entities, the results for services (1.9% y/y. of assets) stood out as income generation, while charges for uncollectibility (1.6%y. of assets) and administrative expenses (6.7%y/y. of assets) were the main non-financial expenses.

In order to be able to compare, to a certain extent, current levels of relevant items of income and costs of the sector with records from previous^{years 25}, the estimation of implicit interest rates in national currency and their differentials is used. These have the advantage of comparability, although they also have the particularity of being “partial” in the sense of reflecting only some (important) aspects of the scoreboard²⁶. In addition, as they are defined as interest rates (for each peso of loanable capacity or for each weight of profitable asset), they do not incorporate the dimension of quantities (evolution of balances). Thus, it is estimated that in a year-on-year comparison, the nominal implied average active interest rate in pesos and the nominal implicit implicit deposit cost of deposits fell by 20.2 p.p. and 14.4 p.p., respectively, consequently reducing the differential between the two concepts by about 5.8 p.p. in the period considered (see Graph 18).

This evolution of nominal implied rates occurred in periods with different levels of inflation (higher in 2019 compared to the last months with available information from 2020). When estimating the implicit interest rates in real terms, a reduction of 5.6 p.p. y.o.y. in the lending rate and a fall of 2.7 p.p. y.o.y. in the cost of funding for deposits is observed, leading to a 2.9 p.p. y.o.y. differential also decreased.

Taking into account the last few months, the implied nominal lending rate of the financial system estimated for the fourth quarter of 2020 was 0.6 p.p. lower than that of the previous two months. Meanwhile, for the implicit nominal funding cost for deposits in pesos of the aggregate of entities, an increase of 1.9 p.p. was observed in the same period. As a result, the spread between the two narrowed by 2.6 p.p. at margin²⁷.

V. Payment system

The operations of the payment system continued to be adequately deployed in the environment defined by the COVID-19 pandemic and the health measures opportunely adopted to reduce its impact on the population.

During September (latest available information), the use of instant electronic transfers in transactions in the economy continued to deepen (see Chart 19). Compared to August, total immediate transfers increased both in amounts (7.8%) and in real amounts (7.4%). These transfers increased in all the channels used. In particular, the greatest monthly dynamism was recorded in transfers through mobile banking, both in amounts (17.3%) and in real amounts (13%). Compared to the same month of the previous year, total immediate transfers increased in amounts (118.2%) and in real amounts (46.4%). The largest relative year-on-year increase was recorded in transfers through mobile banking, both in amounts and in real amounts.

In August (latest available information), mainly influenced by seasonal factors, the number of debit card transactions fell slightly compared to July: -1% through e-commerce and -2.1% in face-to-face transactions (-1.8% for the total). In the month, the amounts processed in real terms decreased monthly by 10.1% for the electronic channel and 6.2% for the face-to-face channel (-7.4% for the total). In the monthly performance, there continues to be a greater relative dynamism in the use of debit cards for the payment of electronic transactions (see Chart 20). In this way, this channel has been gaining prominence in recent months, reaching 28% of the number of debit card transactions in August and 30% in terms of amounts, well above what was observed at the beginning of the year (in the order of 12% and 11% in quantities and amounts, respectively).

With respect to cash withdrawals through ATMs, compared to the pre-pandemic situation, a lower frequency of withdrawals continues to be observed, with a higher average amount withdrawn (see Graph 21). In this sense, in a year-on-year comparison, ATM withdrawals decreased in quantities (9.9%) and increased in real amounts (21%). This situation is in line with the measures adopted by the BCRA in the context of the pandemic, to minimize the mobility of people²⁸.

The total clearing of checks increased in September (latest available information) in amounts (9.4%) and in real amounts (9.8%). The compensation of ECHEQs increased both in quantities (30%) and in real amounts (15.2%) (see Graph 22). For its part, the compensation of physical documents grew in quantities (7.8%) and in real amounts (7.9%). In this way, the compensation of ECHEQs continues to increase its share in the total (to represent 8.5% in quantities and 26.2% in real amounts). Compared to the same month of the previous year, the total clearing of checks decreased in amounts (30.8%) and in real amounts (21.4%).

Compared to the previous month, the ratio of rejections due to lack of funds from total checks over the total compensated decreased in amounts (-0.3 p.p., with a level of 0.72%) and in amounts (-0.2 p.p., with a level of 0.58%). The ratio of rejections of ECHEQs to the total number of compensated ECHEQs increased in quantities (0.8 p.p., with a level of 1.29%) and in amounts (-0.4 p.p., with a level of 1.03%)²⁹. Compared to the same month of the previous year, the ratio of total check rejections due to lack of funds to the total compensated fell in amounts (0.4 p.p.) and in amounts (0.4 p.p.) (see Graph 23).

References

¹ Differences in balance sheet balances expressed in homogeneous currency.

²In order to cushion the negative effects of the pandemic, the deadlines for the payment of the Income Tax and Personal Property Tax were extended to the month of August.

³Includes principal adjustments and accrued interest.

⁴Throughout the Report, when reference is made to groups of private (national and/or foreign) and public financial institutions, it corresponds to banking entities. Non-bank entities will be referred to as “EFNBs”.

⁵Communication “A” “6937” and amendments.

⁶Until the end of October, some $6,912 million had been approved through this line that have not yet been disbursed, with additional applications in process for approximately $2,823 million. It should be considered that the entities that participate in the credit lines promoted by the BCRA obtain regulatory exemptions.

⁷Communication “A” “7006” and amendments.

¹⁸As of October 23, an additional $222 million had been approved with disbursements pending implementation, with additional applications in process for almost $6 million.

⁹See Communication “A” “7082” and Communication “A” “7102”.

¹⁰See Communication “A” “6993”.

¹¹See Communication “A” “7082”.

¹²See “Press Release” of October 15, 2020 and Communication “A” “7140”.

¹³See “Press Release” of October 15, 2020.

¹⁴It should be noted that on October 1, the rate of overnight pass-through loans increased by 5 p.p., to 24%, and a week later it rose again to 27%.

¹⁵For more details, see the latest edition of the “Monetary Policy Report (IPOM)”.

¹⁶Communication “A” “6938” and Point 2.1.1. of the Ordered Text “Financial Services in the Framework of the Health Emergency Provided for by Decree No. 260/2020 CORONAVIRUS (COVID-19)”. In this regard, it should be mentioned that the BCRA recently decided, through Communication “A” “7107”, to extend until December 31, 2020 a large part of these measures.

¹⁷The irregularity in export credit lines was explained by a small group of relevant companies.

¹⁸The estimated balance of regulatory forecasts attributable to the non-performing portfolio follows the criteria of the minimum forecast standards for risk of uncollectibility, without using the IFRS criteria for entities A.

¹⁹The LCR considers the liquidity available to deal with a potential outflow of funds in the event of a possible stress scenario in the short term. See Ordered Text —TO— “Liquidity Coverage Ratio”.

²⁰The NSFR takes into account the availability of stable funding from entities, in line with the terms of the businesses to which it applies. See TO “Stable Net Funding Ratio”.

²¹It considers availability, integration of minimum cash and BCRA instruments, in national and foreign currency.

²²This is mainly driven by the higher holdings of LELIQ for minimum cash integration in the context of a relatively higher growth in total time deposits relative to demand deposits. In addition, as of August, the limit on LELIQ’s excess net position was extended due to the positive difference between the limit for the spot position of the rules on “Global Net Foreign Currency Position” and the monthly average of daily balances of the spot position (for more details see Communication “A” “7077”).

²³Recommended by the Basel Committee – defined as the ratio of the highest quality regulatory capital to a broad measure of exposures.

²⁴Communications “A” “6939” and “A” “7035”.

²⁵It should be remembered that since 2020 entities have reported their balance sheets in homogeneous currency (see Communication “A” “6651” for more detail), making the information incomparable with respect to previous years. Hence, the need arises to generate certain partial indicators in order to facilitate in some way comparability between different periods.

²⁶These indicators do not include administrative expenses, taxes, risk or cost of capital components.

²⁷This performance occurred in months with different levels of inflation. When estimating implicit interest rates in real terms, it is also observed that the differential between the two narrowed in the aforementioned period.

²⁸By means of Communication “A” “6945” (text according to Communications “A” “6957” and “7044”), it was established that financial institutions may not charge charges or commissions for operations carried out through all ATMs enabled and operated in the country by them and must arbitrate the means so that withdrawals of at least $ 15,000 per day can be made. Communication “A” “7107” established the extension of communication “A” “6945” until December 31, 2020.

²⁹The rejection of ECHEQs corresponds to all the reasons for rejection.