Report on Banks

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

Summary

• In December, deposits in pesos of the private sector grew nominally 4%, driven by
  time placements (7.5% nominal). In the context of better yields, foreign currency
  deposits increased in the month – in the currency of origin. In all of 2015, the balance of deposits
  in pesos in the private sector accumulated an increase of 40.4% (10.6% in real terms using
  the IPCBA), with a remarkable dynamism of time deposits, which grew 56.1% (23% adjusted for inflation) in the period.
• Liquid assets – including domestic and foreign currency, without LEBAC holdings – increased
  3.6 p.p. of total deposits in the month to 28.2%. This performance was explained by the segment
  denominated in foreign currency. Considering the holding of monetary regulation instruments, in
  December the broad liquidity ratio reached 46.6% of deposits, 3.9 p.p. and 1.2 p.p. above
  the figure for last month and the end of 2014, respectively.
• Total bank financing to the private sector (in domestic and foreign currency) increased
  nominally by 3.8% in December. Among the lines in national currency, only the balance of credit cards showed real growth in the month in line with seasonal performance. In 2015, credit to
  the private sector accumulated a nominal increase of 36.8% (7.8% y.o.y. in real terms), a dynamic driven
  mainly by financing to companies.
• At the end of 2015, the BCRA implemented the “Financing
  Line for Production and Financial Inclusion” for the first half of 2016. The financial institutions covered must maintain
  a balance of financing that represents at least 14% of the deposits of the non-financial
  private sector in pesos, corresponding to the monthly average of daily balances in November 2015 (approximately
  $117,000 million). At least three-quarters of the quota must be granted to MSMEs, for a total term
  that may not be less than 3 years and at a rate of up to 22% nominal per annum.
• The NPL ratio for financing to the private sector decreased slightly in December
  to 1.7%. This monthly decrease was mainly due to the performance of loans to
  households, whose irregularity coefficient stood at 2.3%, while that corresponding to loans to companies remained unchanged at 1.3%. Throughout 2015, the indicator of
  irregularity of financing to the private sector fell by 0.3 p.p., mainly due to the performance
  of private bank debtors. At the end of the year, the balance of accounting forecasts of the financial system
  represented 145.5% of the portfolio in an irregular situation.
• In the last month of the year, the profits accrued by the banks as a whole in terms of their assets
  (ROA) reached 5%y, exceeding last November’s figure by 0.5 p.p., mainly from
  extraordinary results of a public bank. In 2015, the ROA of the financial system was 4.1%, similar to that recorded last year.
• The balance of net worth of the consolidated financial system grew 3.6% in the month (-0.3% in real terms
  ), and 35.7% y.o.y. (6.9% y.o.y. deflated). The nominal expansion of net worth was driven mostly by earnings accruals. The excess of capital integration stood at 77% of
  the regulatory requirement at the end of the year, while the integration ratio of the