Informe Sobre Bancos

Monthly report that analyzes the situation of the Argentine financial system.

Summary

• At the end of the first quarter of 2011, the process of intermediation between financial institutions and the private sector continued to expand. In March, the banks as a whole maintained high liquidity and solvency indicators, highlighting that the non-performing loans of their loan portfolio continued to fall to historic lows.
• In this context, the BCRA continued to generate tools to promote greater inclusion of the population in access to financial services. In mid-May, the number of Universal Free Accounts (UGC) reached 66,200. The Canceling Check accumulates operations for $530 million (mostly in foreign currency) at the end of April. A reduction in the costs of interbank transfers was also ordered, mainly in those of smaller amounts. In April, the number of transfers for amounts of less than $10,000, considering those operated through clearing houses, ATMs and home banking, grew 15% compared to last October (before the BCRA’s measure was effective) and gradually gain weighting in the total amount of bank transfers. In addition, the BCRA recently approved regulations to allow immediate accreditation of bank transfers.
• In March, financing to the private sector increased by 1.8%. With the exception of advances, all credit lines increased in the month, with an outstanding performance of pledges and personal loans. In the first quarter of 2011, total credit to the private sector grew 31%y, almost tripling the figure for the same period last year. In year-on-year terms, loans to the private sector grew 43%, driven mainly by financing to companies that increased 46% YoY, almost 4 p.p. more than what was observed for household consumer loans. At the end of the first quarter of 2011, financing to the private sector represented 12.6% of GDP, more than 1 p.p. above the figure observed 12 months earlier.
• The growth in financing to the private sector occurred in a context of low levels of credit risk. In this sense, the irregularity ratio of these financings fell 0.1 p.p. in the month, reaching a new historical low of 1.9%. In the last 12 months, this indicator verified a reduction of 1.4 p.p. as a result of an improvement in the quality of the portfolio in all homogeneous groups of financial institutions. This performance was mainly explained by what was observed in the consumer financing segment, with a decrease in its NPL ratio in the last 12 months from 2 p.p., to 2.7% in March. The level of coverage of the non-performing portfolio reached 176% in March, 43 p.p. above the value of the same month last year.
• Total deposits grew 2.5% in the month (35.3% YoY), driven mainly by private sector placements (2.8%). The latter were boosted by term deposits (3.8%) and, to a lesser extent, by demand deposits (2.6%). For its part, public sector deposits increased 2% in the month (42.5% YoY).
• In March, the liquidity indicator of the financial system, which includes items denominated in domestic and foreign currency, increased slightly to 27.4% of total deposits, driven by private banks, mainly as a result of an increase in the stock of passes with the BCRA. However, in year-on-year terms, this ratio showed a 4.5 p.p. reduction in deposits, with falls in all groups of banks. The broad liquidity indicator (with Lebac and Nobac not linked to passes with the BCRA) rose 1.1 p.p. of deposits in the month to 45.7%. In year-on-year terms, at the systemic level, the broad liquidity ratio remained stable.
• The net worth of the consolidated financial system fell 1.3% in March, although it accumulated an increase of 15.4% YoY. The monthly decrease was mainly explained by the decision of some financial institutions to allocate results from previous years to distribute among shareholders. The monthly fall in net worth was tempered by the accounting profits of the month and by new capital contributions received. In this context, the capital integration ratio fell slightly in the month, accumulating a decrease of 2.4 p.p. in risk-weighted assets (RWA) compared to March 2010, to 16.7%. Despite the slight monthly reduction mentioned above, the capital position of all groups of financial institutions continues to be largely in surplus, exceeding the requirement for the financial system by 77%.
• The accounting earnings of the financial institutions as a whole represented 3% of assets in March, 1.1 p.p. more than the previous month. Monthly increases in financial margin and service earnings mainly explained the improvement in profitability. Thus, the results of the financial system accumulated 2.6% of assets in the first quarter of 2011, 0.3 p.p. more than in the same period of the previous year. The increase in quarterly profitability in the year-on-year comparison was mainly explained by national public and private banks.