Report on Banks

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

Summary

• At the end of the year, financial intermediation continued to expand markedly. Thus, throughout 2013, credit to the productive sectors and households accumulated significant dynamism, while the private sector’s time deposits in pesos increased their participation in the total funding of the banks as a whole. The financial system closed the ninth consecutive year with accounting gains, presenting high liquidity and solvency indicators.
• In December, financing in pesos to the private sector increased 4.3% (34.1% YoY), with an expansion spread among the different lines of credit. The monthly growth of total credit (pesos and dollars) to the private sector was mainly driven by the business segment, which saw an increase of 4.8% (30.7% YoY). On the other hand, financing to families grew 2.8% (30.9% y.o.y.) in the period.
• The BCRA continues to promote financing for productive purposes. From its implementation until the end of 2013, some $53.7 billion was disbursed through the Credit Line for Productive Investment (LCIP), $35,100 million in 2013. At the end of the year, the BCRA decided to promote a new tranche of the LCIP for the first half of 2014. The new amount to be allocated is equivalent to approximately $23,000 million. On this occasion, the quota must be granted exclusively to MSMEs, admitting only under certain conditions that a proportion of it can be allocated to mortgage loans for individuals and large companies with certain productive projects. In addition, through the Bicentennial Productive Financing Program (PFPB), the BCRA has awarded $7,780 million to date – almost $2,000 in 2013 – among fourteen financial institutions, of which 77% have already been credited to companies. More than half of the operations arranged through these initiatives were channeled to MSMEs.
• In the month, the irregularity of credit to the private sector fell slightly to 1.7% of total financing, a level that is in line with that of the end of 2012. The financial system continued to exhibit comfortable levels of forecasting, with irregular portfolio coverage reaching 140.2% as of December.
• Total deposits in pesos in the financial system increased 2.2% in the month, driven by private sector impositions, which grew 3.9%. Throughout 2013, total deposits in pesos grew 27.4%, with increases in deposits from the private sector (28.5% YoY) and the public sector (24.5% YoY). Term placements in pesos by the private sector were the most dynamic throughout the year, increasing 33.1%.
• The liquidity indicator – including domestic and foreign currency – of the financial system increased slightly in December to 26.8% of total deposits. The broad liquidity ratio – which includes the holdings of LEBAC and NOBAC – for the banks as a whole stood at 38.5% of total deposits in December, with a slight monthly increase. These aggregate levels of liquidity are in line with those evidenced at the end of 2012.
• The net worth of the consolidated financial system increased 4.3% in December (35.1% YoY), mainly due to earned earnings. The capital integration ratio increased slightly in the month to 13.6% of risk-weighted assets (RWA), while excess capital integration represented 75.5% of the regulatory requirement, 16.8 p.p. above the end of 2012.
• In the period, the accounting profits of the banks as a whole grew by 2.2 p.p. of net assets to 5.7% of assets. In 2013, the financial system registered a ROA of 3.4%, a level higher than that evidenced 12 months ago. In a monthly and year-on-year comparison, all groups of financial institutions improved their accounting profits.