Report on Banks

Executive summary

• In March, the financial intermediation activity of banks with the private sector showed a disparate behavior depending on the currency: a slight reduction in the segment in pesos and an increase in the one denominated in foreign currency. The financial system as a whole maintained a solid equity position, showing high levels of liquidity, forecasts and capital.

• In the month, the balance of financing to the private sector in pesos decreased 0.5% in real terms (+13.2% real YoY). In the foreign currency segment, the balance of credit to the private sector increased 7.7% in March (53.5% YoY). Thus, the real balance of total credit (in domestic and foreign currency) to the private sector remained without significant changes compared to February (+19.6% YoY).

• The balance of deposits in pesos in the private sector fell by 1.4% in real terms in March (-0.3% real YoY), mainly due to the performance of demand accounts. The balance of deposits in foreign currency of the private sector increased 0.4% in the month (31.4% YoY).

• In March, the non-performing ratio of loans to the private sector for all institutions amounted to 7%, 0.3 p.p. above the February figure. The NPL ratio of households stood at 11.5%, while that of companies reached 3.1% in the period. The financial system maintained high levels of coverage with forecasts in the month, which represented 90.1% of the portfolio in an irregular situation and 6.3% of credit to the private sector. The balance of irregular credit net of forecasts totaled only 1.5% of the PRC of the financial system (similar level to the previous month).

• The balance of availabilities in national currency at the end of March remained at 12.7% of deposits in the same denomination for the aggregate financial system. The indicator, which also includes public securities used for the integration of minimum cash and short-term net active operations in pesos remunerated with the BCRA, amounted to 34.5% of deposits in national currency (-0.7 p.p. monthly). In this context, the median liquidity coverage ratio for the segment in pesos (LCR, Basel), for the set of entities subject to the corresponding prudential regulations, stood at around 1.4 in the period, increasing slightly in the month (similar in a year-on-year comparison). With respect to the foreign currency segment, the systemic liquidity indicator reached 57.5% of deposits in the period (-2.5 p.p. monthly).

• The financial system continued to show high solvency indicators in March. Capital integration (RPC) of all financial institutions increased 0.2 p.p. in the month to 30.5% of risk-weighted assets (RWA). The capital integrated above the regulatory requirement represented 277% of the regulatory requirement (+2.5 p.p. monthly) and 37.2% of the credit to the private sector net of forecasts (+0.5 p.p. monthly). In this context, the leverage ratio (Basel) of the aggregate of entities totaled 21.4% in March, well above the regulatory minimum of 3%.

• The financial system accrued an annualized ROA of 0.9% (y) in the first quarter of the year. In the 12-month cumulative to March, ROA totaled 1.3% (-1.2 p.p. in a year-on-year comparison).