This report analyzes the situation of the Argentine financial system on a monthly basis.
Summary of the month
In 2009, the financial system continued to increase the levels of financial intermediation with the private sector. The net assets of financial institutions grew 2.2% in December, accumulating an expansion of 14.2% in the year. The banking activity of providing means of payment has also been showing signs of expansion. Document clearing continued to recover throughout 2009 and the proportion of cheques bounced due to lack of funds declined from end-of-2008 levels.
Total deposits rose 2.9% in December (15.1% YoY), mainly due to the performance of private sector placements. The monthly increase in household and business deposits (4%) was mainly driven by demand accounts (8.3%) in a context of seasonal growth in the demand for liquidity that characterizes the month.
Banks close the year maintaining high levels of liquidity. The liquidity ratio (considering items denominated in domestic and foreign currency) rose slightly in the month to 28.6%. The broad liquidity indicator (which includes the holding of Lebac and Nobac not linked to pass operations with the BCRA) stood at 41.4% of deposits.
Credit to the private sector increased 3.1% in December (9.3% YoY). In the last quarter, the dynamism of credit was clearly higher than the rest of the year, driven mainly by lines for household consumption.
In recent months, the delinquency of financing to the private sector has been gradually decreasing. The irregularity of the private portfolio stood at 3.5% in December, falling 0.3 p.p. in the second half of 2009, mainly due to the performance of loans to households. Banks show solid coverage with forecasts. At the end of 2009, the degree of credit coverage to the private sector in an irregular situation with forecasts stood at 126%, increasing slightly in the second part of the year.
The consolidated net worth of all financial institutions expanded 1.6% in December, accumulating an increase of 21% throughout 2009. At the aggregate level, the integration of regulatory capital practically doubled the regulatory requirement. Over-integration is still widespread among financial institutions. The monthly accounting profits of all financial institutions stood at 2.6% of assets, increasing 0.6 p.p. compared to November, mainly due to higher results from securities and interest. In 2009, the accounting profits accumulated by the financial system reached 2.4% of assets.
