Report on Banks

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

Summary

• In June, the financial system deepened the level of intermediation of resources with the private sector and maintained a moderate exposure to activity risks and high levels of liquidity and solvency.
• Financing in pesos to the private sector increased 3.5% in June, mainly as a result of the good performance of commercial lines. In the last 12 months, credit in national currency to the private sector expanded by 40%, while total financing (domestic and foreign currency) increased by 32.3% YoY. In this context, total financing to the private sector in relation to GDP increased 1.2 p.p. in the last 12 months to 16.7%, with a notable increase in the segment in pesos. Credit growth was mainly driven by loans to companies, which increased 4.5% (33.1% YoY) in the period, being boosted by lines to industry and commerce. On the other hand, financing to families increased 1.4% in the month (30.3% y.o.y.).
• The dynamism of financing to companies reflects the impact of the Credit Line for Productive Investment (LCIP). The total loans to be granted through the three stages of the LCIP would reach approximately $52,000 million. It is estimated that from the implementation of the line until the end of the first half of 2013, the disbursements associated with this measure represented approximately 50% of the increase in the balance of loans to companies in force in June. Additionally, considering the first 6 months of 2013, the share of the amount of bank financing in pesos granted to SMEs over the total loans placed to legal entities in national currency reached 39%, increasing 12 p.p. compared to the same period of the previous year.
• In June, the irregularity of credit to the private sector remained at 1.9% of total financing. In the month, the NPL ratios of loans to companies (at 1.1%) and to households (at 3.1%) remained stable. The financial system continued to exhibit high levels of forecasting, with a ratio between total forecasts and financing in an irregular situation that reached 132.4%.
• The balance sheet of deposits in pesos of the private sector increased 4.6% in the month (34.2% YoY), explaining the upward movement of total placements in that currency (2.1%), given the decrease in public sector deposits (-4%). The monthly behavior of deposits in national currency was influenced by the payment of half of the complementary annual salary. For its part, total deposits of the private sector (including domestic and foreign currency) increased 4.2% in the month (29.5% YoY).
• The liquidity indicator (pesos and dollars) of the financial system stood at 23.8% of total deposits in June, presenting a slight monthly decrease (-0.7 p.p.). If the holdings of LEBAC and NOBAC are included, the broad definition of liquidity reached 36.8% of total placements.
• In the last 12 months, monthly transfers of funds with the immediate credit modality showed a variation of 66% in amounts and 48% in amounts. In order to deepen the use of electronic means of payment, the BCRA recently decided to increase the daily amount of electronic transfers to $20,000 that do not generate any cost for the user.
• The net worth of the consolidated financial system expanded 1.7% in June (29.5% YoY), driven by accounting profits. The capital integration of the banks as a whole stood at 14% of total risk-weighted assets (RWA) in mid-2013. The excess capital integration of the financial system reached 69.4% of the regulatory requirement in the month, increasing 10.7 p.p. so far this year.
• The profitability of the financial system stood at 2% y/y of assets during June, thus closing the first part of the year with a cumulative ROA of 2.7%y.