Report on Banks

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

Summary

• Following the recommendations of the Basel Committee, the BCRA introduced the ”
Net Stable Funding Ratio” (NSFR), which will enter into force in early
2018. The objective of this prudential regulation is for institutions to maintain a funding
profile in accordance with the maturity structure of their asset portfolio. Likewise, to promote longer-term
funding, in August the minimum term for banks to intermediate or buy
debt securities of their own or issued by other financial institutions was abolished. For its part, regulatory modifications were made
to increase transparency and simplify procedures. From now on, entities must publish on their Internet pages the curriculum vitae of their
authorities; in relation to the participations of financial institutions in complementary services companies, the requirement of prior authorization for activities related to the granting of credits was annulled. To reduce operating times and costs, it was determined that customers
can voluntarily submit their national tax
returns to entities for the purpose of establishing their level of credit risk or preparing their customer profile.
• In July, the balance of total deposits increased 3.7% in nominal terms, 2% when adjusted for inflation1 (15.9% real YoY). This monthly performance was mainly explained by
public sector placements. Total private sector deposits grew 1.6% compared to June
(without significant changes in real terms), driven by foreign currency placements.
• In July, the balance of total financing to the private sector increased nominally
by 4.9%, equivalent to 3.1% when adjusted for inflation (19.2% real YoY). Loans in foreign currency grew 7.5% compared to June, driven by pre-financing for exports and
by single-signature documents. Loans in pesos to the private sector increased by 2.9% or 1.2% in real terms (9.6% y.o.y. in real terms
), with a greater relative dynamism of mortgage lines. This was reflected in a
greater share of private sector financing in the total assets of the financial system.
• So far this year, there has been a significant growth in the total number of
credit subjects in the financial system. For example, for the line of personal loans, it is estimated that in
the first half of 2017 more than 200,000 debtors were incorporated in net form, being the
largest increase evidenced for the period of the last nine years. The net
increase in debtors with mortgage loans in the period was 2,500 (after eight years of declines), while
in pledges it exceeded 40,000 (the highest in the last four years).
• In the context of credit growth, the liquidity of the broad financial institutions as a whole, including LEBAC, stood at 45.4% of total deposits at the end of July, falling from high levels for the fourth consecutive month. The balance of availabilities and current accounts at the BCRA in terms of
deposits also fell by 1.9 p.p. compared to June,
reaching 29.6%.
• The NPL ratio for loans to the private sector remained unchanged in
July, at around 2% of the total portfolio. The balance of accounting forecasts of all financial institutions
represented 131% of total loans to the private sector in an irregular situation.
• In July, the financial system continued to maintain comfortable solvency indicators. Regulatory
capital integration totaled 16.7% of risk-weighted assets (RWA) in the month. Level
1 capital continued to account for more than 90% of the Computable Patrimonial Liability (CPR). The excess of capital integration represented 93% of the requirement. In July, the net worth of the consolidated financial system grew 4.7% (2.9% in real terms) mainly due to accounting gains and
the capital increase of two private banks, effects that were partially offset by the
distribution of cash dividends made by one entity.
• The group of entities obtained monthly profits equivalent to 3.7% of assets. In the first
seven months of 2017, the results represented 3.1% of assets, falling 1 p.p. year-on-year.
All groups of entities reduced their profitability compared to the same period of the previous year.