Report on Banks

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

Summary

• Total financing (including domestic and foreign currency) from the financial system to the private sector increased 0.4% in March (29.5% YoY), with a slight monthly increase in loans in pesos (30.7% YoY) and 2.2% (-28.2% YoY) in those denominated in foreign currency. In a year-on-year comparison, financing to companies and families expanded in all groups of financial institutions, with foreign and public private banks showing the greatest dynamism. Credit to companies accumulated an expansion of 30.7% YoY, above the variation of loans to households: 28.3% YoY.
• The irregularity of credit to the private sector remained at low levels, standing at 1.9% of the total portfolio in March. Financing to households registered a non-performing loan ratio of 2.8%, while those to companies maintained the level of irregularity at 1.1%. The coverage with accounting forecasts of the portfolio in an irregular situation reached 139%, exceeding the level observed a year ago.
• In March, the balance of deposits in pesos in the private sector increased by 2.3% (27.8% YoY), mainly explained by the 4% expansion (35.5% YoY) of time placements and, to a lesser extent, by the 0.7% (20.9% YoY) increase in demand accounts. Foreign currency deposits from the private sector declined. For its part, total deposits in the public sector grew 1.9% compared to February (24.5% YoY). Thus, the balance of total deposits (in domestic and foreign currency) expanded by 1.7% (28% YoY) in the period.
• The portfolio of liquid assets (pesos and dollars) of the financial system stood at 27% of total deposits in March, increasing 2.5 p.p. compared to February, mainly due to the increase in transfers of financial institutions with the BCRA. Considering the holdings of LEBAC and NOBAC, the increase in the portfolio of liquid assets in its broad definition was smaller (1.6 p.p. of deposits), with liquidity remaining at comfortable levels (42.1% of total deposits) in all groups of banks.
• At the end of the first quarter of the year, the foreign currency mismatch (which includes forward operations) continued to reduce for the aggregate of the financial system to around 32.2% of the RPC (Computable Patrimonial Liability). The fall in the mismatch of the group of entities was due both to a reduction in the gap of assets and liabilities in foreign currency as well as to a slight increase in the net selling position at the future. · In March, the net worth of the consolidated financial system increased 2.1% (42.9% YoY), mainly due to accounting gains. Regulatory capital integration accounted for 13.3% of total risk-weighted assets (RWAs) at the aggregate level, while Tier 1 equity accounted for 12.4% of RWAs. Thus, in March the excess of capital integration in relation to the regulatory requirement (capital position) stood at 73.5%.
• The profitability of the banks as a whole totaled 3.3% of assets in March, slightly reduced compared to last month in the context of a decrease in the financial margin. Thus, in the accumulated of the last twelve months, the ROA of the sector stood at 4.3%.