Informe Sobre Bancos

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

Summary of the month

• In June, for the second consecutive month, the financial system managed to register profits ($170 million). Private banks had positive results of $45 million in the month and closed the quarter with an annualized gain of 0.3% of assets, compared to losses of 2.2% and 6% y/y in the previous quarter and in the same period of 2003, respectively.
• Excluding the effect of the amortization of injunctions and the revaluation of public sector assets, private banks show a cumulative profit so far in 2004 of approximately $300 million, equivalent to 0.5% of assets. This is 0.2 percentage points (p.p.) of the asset above the result recorded in the previous semester and around the levels prior to the crisis.
• Of 61 private banks, 52 (85%) posted adjusted earnings during the second quarter of 2004. This was possible even despite the negative effect of the downward correction of the CER/CVS compensation made by various entities.
• June’s earnings reflect both the consolidation of the progress made in terms of financial margin (higher interest income, CER adjustment and profit or loss from holdings of financial assets) and earnings from services as well as higher miscellaneous earnings.
• In June, the financial margin of private banks managed to remain at high levels (about 4% of assets) compared to previous months. The sum of this margin and the results by services represented 140% of the administrative expenses for the month. In the second quarter of 2004, these expenses were reduced by an amount equivalent to 0.5 p.p. of the assets with respect to the same period in 2003.
• The level of activity of private banks continued to grow. The increase in credit is consolidated, with an expansion of loans to the private sector by $1,200 million in June, applying more than half of the funds raised in the month to this destination. The most dynamic lines were advances and documents.
• The sharp increase in deposits – especially those adjustable by CERs – allowed private banks to more than compensate for the outflow of funds in May, motivated by the payment of income tax. Its liquidity ratio (liquid assets to total deposits) remained stable at 27.6%.
• The significant growth in adjustable fixed terms with CER led to a reduction of more than $700 million (-5%) between the end of April and June in CER instruments for the aggregate of private banks, reducing a source of volatility in the results of financial institutions.
• The quality of the private banks’ portfolios continued to improve: irregularity fell another percentage point to 21%, accumulating a reduction of 16 p.p. since June 2003. The advance in June was driven by the commercial portfolio, which, with a greater irregularity (25%) than that of consumption (14%), has been showing greater dynamism in its recovery. Private banks with a national scope are leading this evolution.
• The improvement in portfolio quality resulted in an improvement in solvency indicators: at the end of June 2004, the net irregular forecast portfolio represented less than 4% of the assets of private banks, 0.6 p.p. less than in the previous month.