Informe Sobre Bancos

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

Summary of the month

• In line with the trend evidenced in recent months, in July the dynamism of deposits and private loans was sustained, consolidating the profitability of the financial system. Banks continue to normalize their balance sheets: falling exposure to the public sector, canceling rediscounts and reducing private credit risk. These processes have a positive influence on the deepening of the solvency of the financial system.
• Bank financing to the private sector consolidated its advance in the face of exposure to the public sector. This trend is largely explained by the regulatory changes introduced by the BCRA, in an encouraging macroeconomic context. Thus, private credit reached 27.3% of total assets, exceeding exposure to the public sector by 1.6 p.p. During July, the exposure of the financial system to the official sector fell by 1.3 p.p., reaching a level of 25.7%.
• Loans to the private sector increased by 2.5% in July, reaching an expansion of 39% in 2006. The growth of financing through current account advances (6.2%, $600 million) and personal loans (4.9%, $500 million) led the monthly dynamism. On the other hand, mortgage loans experienced the highest growth rate since the 2001-2002 crisis, expanding 2.2% in the month (13% y/y in 2006). Leasing financing amounted to $1,900 million, 4.1% above the balance in June.
• The financial system continues to normalize its liabilities with the BCRA at an accelerated rate. In this sense, between January and September, the banks made payments to the BCRA for $6,370 million within the framework of the matching scheme. Likewise, a private financial institution must recommend all its matching liabilities, with only 2 banks currently indebted for this concept.
• In July, banks obtained the highest monthly accounting profits since the crisis: $490 million (2.6% annualized -a.- of assets). This led to accumulated profits of $2,290 million (1.8% yr. of assets) in the first seven months of 2006. Private banks led the profits for the month ($410 million, 3.8% y/y. of their assets), accumulating $1,520 million (2%y. of their assets) so far in 2006.
• The positive results and capitalizations are consolidating the solvency of the banks. The net worth of banks expanded 1.6% in the month, accumulating an increase of 12.2% throughout 2006. The capital integration of the financial system in terms of risk-weighted assets reached 16.5% in July, while the capital position stood at approximately 135% of the capital requirement.
• The trading volume continues its upward trend. The net assets of the financial system increased by 1.1% in July, accumulating an increase of 9.3% (16%y) in the first 7 months of 2006, movements mainly explained by the generation of new private loans.
• During July, the main sources of banking resources were the increase in public deposits (3.8%, $1,400 million) and private deposits (1%, approximately $1,200 million). In the month, the expansion of time deposits (1.1%) exceeded the growth of demand loans (0.9%). In addition, the reduction in exposure to the public sector generated additional funds for banks ($650 million). On the other hand, the increase in financing for the private sector ($1,900 million, including leasing and the constitution of trusts), the increase in the holding of Lebac and Nobac and the cancellation of rediscounts were the main applications of resources from the financial system.