Report on Banks

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

Summary

• With the aim of promoting the banking penetration of the population and greater levels of transparency and
  competition in the financial system, the BCRA recently ordered the implementation of a set of measures. On the one hand, it was established that savings banks, the use of debit cards and all
  transfers made by families are free. In addition, the daily limit
  for immediate transfers was increased to $100,000. On the other hand, it was determined that entities must provide
  users with more and better information regarding the costs of non-free products. In this
  last sense, the possibility of increasing commissions for such products only up to 20% was enabled,
  increases that must be reported to the BCRA 30 days before notifying customers. Banks
  will have to make these changes known to their users 60 days in advance. Finally, entities that decide to increase the value of fees will be obliged to report the prices charged
  by other entities for the same product (based on information provided by the BCRA).
• In order to facilitate access to housing for families and to stimulate long-term savings
  , at the beginning of April the BCRA implemented a new type of credit and term deposits and investment. The particularity of these instruments lies in the fact that they will be denominated in
  Housing Units (UVIs), whose value will be updated by the Reference Stabilization Coefficient (CER). In terms of mortgage credit, the advantage is that it makes it possible to make much more
  accessible down payments than those of a traditional loan, potentially allowing a greater number of families to make use of the instrument.
• In line with the objective of encouraging savings in national currency, as of May the amount of the deposit guarantee was
  also increased to $450,000. The contribution that
  banks allocate to the Deposit Guarantee Fund (FGD) was modified, establishing since the beginning of April
  at 0.015% of the monthly average of daily balances.
• In February, in order to stimulate the use of foreign currency resources in productive activities, the BCRA expanded the destinations to which the lending capacity of
  deposits in that currency can be applied. Thus, assistance was incorporated for exporters who have a future income stream
  in foreign currency and who are verified, in the year prior to the granting of the financing, a turnover in the same currency for an amount that is reasonably related to the loan.
• In February, the pace of growth in banking activity slowed down partly due to seasonal factors. The balance sheet of private sector deposits in the financial system increased 3% in
  the month (48.1% YoY nominal or 11.4% YoY in real terms using the IPCBA1
  ), mainly due to the increase in the foreign currency segment. Placements in pesos by the private sector grew
  nominally by 1% in the month (36.6% YoY nominal or 2.8% YoY in real terms. The broad liquidity indicator – in
  national and foreign currency, and LEBAC holdings – did not show significant variations in February,
  standing at 46.8% of deposits.
• Financing to the private sector grew 1.6% in February and accumulated a nominal increase of 36.2%
  YoY (2.5% YoY adjusted for the IPCBA). In the month, the increase in loans in foreign currency stood out, while lines in pesos remained unchanged, partly reflecting the
  seasonal effect. In year-on-year terms, loans to companies expanded 39.3% (4.8% y.o.y.
  real), while financing to families increased 31% (a fall of 1.4% real YoY).
• The NPL ratio of loans to the private sector stood at 1.8% of total loans
  in the month. The irregularity of loans to households increased slightly in February, to 2.5%
  of the total portfolio. For its part, the NPL ratio of financing to companies remained
  at levels similar to those of last month, around 1.3%. The accounting forecasts of the financial system
  represented 143% of the portfolio in an irregular situation in the period.
• The monthly result accrued by the financial system in terms of its assets (ROA) was 5.8%, increasing compared to January,
  mainly due to higher gains on securities and on the difference in share price. The accumulated ROA in the last twelve months reached 4.3%. Accounting profits drove the growth of 4.2% in the net worth of the consolidated financial system during
  February and 37.2% YoY (3.2% YoY in real terms). During the period, solvency indicators remained
  relatively high. The aggregate excess of capital integration in terms of the regulatory requirement was 78% in the month. Capital integration accounted for 13.5% of total risk-weighted assets (RWAs) and Tier 1 capital reached 12.8% of RWAs