Report on Banks

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

Summary

• Operational infrastructure of the financial system continued to expand at the margin – latest
  information available as of December 2015. Last year the number of branches increased 1.4%
  to 4,463, while the number of ATMs and self-service terminals grew 4.2% in
  the period, to 19,667. Staffing accumulated an increase of 2.2%, exceeding 108,000
  employees. This performance was accompanied by certain improvements in the sector’s productivity indicators, in a context in which the levels of concentration in terms of loans and deposits remained at moderate values.
• In January, the balance of private sector deposits in pesos remained stable compared to December
  2015. The monthly variations of its components were in line with seasonal performance: in
  the month, term placements grew nominally by 2.6%, while demand accounts fell
  by 3.1%. Deposits in foreign currency from the private sector expanded 5.4% in January –
  in the currency of origin. In the last twelve months, private sector deposits in pesos increased nominally by 38.6% (6.9% in real terms using the IPCBA1
  ), driven by the 52.1% increase in the balance of term deposits (17.3% in real terms).
• The broad liquidity ratio of the financial system—which includes holdings of LEBACs and considers
  resources in domestic and foreign currency—increased 0.3 p.p. of deposits compared to the end of
  2015, to 46.9%. This level was higher than in January 2015 and the average of the last five
  years. For its part, the sector’s liquidity ratio – without LEBAC holdings – fell by 3.5 p.p. of
  deposits in January to 24.7%, mainly due to the decrease in the minimum cash integration of banks given the December-February quarterly requirement.
• In January, the total credit balance to the private sector grew 0.5% compared to the end of 2015,
  a performance explained by foreign currency lines. On the other hand, financing in pesos to companies and families nominally decreased by 0.4% in the month, a variation partly influenced by seasonal factors. In the last twelve months, total loans to the private sector increased by 36.8%
  (5.5% in real terms). Both at the margin and in a year-on-year comparison, the nominal growth rate of
  loans to companies exceeded that verified for loans to households.
• In the first month of the year, the irregularity ratio of total financing to the private sector stood
  at around 1.7%. The non-performing loan ratio to households increased slightly in the month
  to 2.4% of total financing, while the irregularity of loans to companies
  did not show any relevant modifications, starting the year at 1.3% of the portfolio. The accrued forecasts represented 145% of the balance of financing to the private sector in an irregular situation in
  January.
• The profits accrued by the financial system in the first month of 2016 represented 4.4%a.
  of its assets (ROA) in line with the record of January last year. In the cumulative twelve months to
  January 2016, the banks as a whole recorded profits equivalent to 4.1% of assets.
• The positive results continued to drive the increase in the sector’s net worth, which
  grew nominally by 2.6% compared to the end of 2015 and by 35.2% YoY (4.3% YoY in real terms). In
  January, the integration of regulatory capital for all financial institutions represented
  13.5% of their total risk-weighted assets (RWA) and Tier 1 capital reached 12.7% of RWA
  . At the beginning of 2016, the excess of capital integration in relation to the regulatory requirement
  (capital position) at the aggregate level was 78%. The level of the so-called Leverage Ratio
  (based on the new additional standard on solvency defined by the Basel Committee on Banking Supervision, to come into force in 2018) reached 10.6% for the aggregate of the financial system at the end of 2015 (latest available information). The value of this indicator for each of the local entities was higher than the initial lower level of 3% recommended
  internationally.