Informe Sobre Bancos

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

Summary

• In 2011, the expansion of banks’ financial intermediation with the private sector was consolidated: deposit collection was consolidated as the main source of funding for the financial system and most of the resources were allocated to credit to companies and households, in a context of limited counterparty risk. The earnings earned, together with the capital injections, maintain high solvency indicators for the sector.
• The balance sheet of credit to the private sector grew 3.8% in May (43.6% YoY), representing almost 44% of the net assets of the financial system. Credit to companies accumulated a year-on-year expansion of almost 46%, exceeding the pace observed for loans to families for the eleventh consecutive month. Industry1 stood out among the sectors that explain the year-on-year expansion of the total balance of financing to companies, ranking well above the rest of the activities.
• The irregularity ratio of financing to the private sector of the financial system remained stable at around 1.8% in May. In the last 12 months, this indicator fell by 1.3 p.p., reflecting improvements in portfolio quality in all homogeneous groups of financial institutions. For its part, the coverage ratio of the financing portfolio to the private sector in an irregular situation with forecasts stood at 156%, 39 p.p. more than a year ago.
• Total deposits of all financial institutions increased 2.2% in May (31.7% YoY). Within the framework of the expiration of the income tax, public sector placements were the most dynamic in the month (they grew 3.6% in the month). Private sector deposits registered a monthly expansion of 1.6%, driven by both time placements and demand accounts. In the last year, the share of private sector deposits in the total funding of banks increased by 2.6 p.p. to 53.7%, while the contribution of public sector placements remained stable at around 24%.
• The liquidity indicator of the financial system, which includes items denominated in domestic and foreign currency, stood at 27.1% of deposits, without registering significant variations with respect to April, although it was down 5.6 p.p. compared to the level evidenced 12 months ago. The broad liquidity indicator (which includes bills and notes of this institution not linked to passes with the BCRA) also remained stable in the month, standing at around 45% of total deposits (1.4 p.p. less than in May 2010).

• The mismatch of foreign currency in the financial system, considering the difference between items of assets and liabilities as well as net forward purchases of foreign currency, fell 6.5 p.p. of equity in May to 28.1%, mainly because foreign private banks reduced the component of net forward purchases. In year-on-year terms, this mismatch was reduced by almost 16 p.p. of net worth.
• The net worth of the consolidated financial system increased 1.6% (19.8% YoY) in the month, mainly due to accounting gains and, to a lesser extent, capital contributions. So far this year, the capital contributions received by the financial system reached $475 million. In the context of the growth in financing to the private sector, the capital integration ratio of the financial system saw a slight decrease in the month to 16.7% of risk-weighted assets (RWA), but it continues to far exceed local regulatory requirements and international standards.
• Accounting profits stood at 2% of assets in May, with a slight monthly decrease mainly due to higher administrative expenses within the framework of the entry into force of the salary agreement for the sector. Thus, so far this year, the banks as a whole have accrued an ROA of 2.5%y, 0.3 p.p. above the same period last year.
• The Central Bank has been promoting a greater degree of banking penetration of the population, promoting the use of new instruments and generating facilities in the use of existing ones. As of mid-July, the number of Universal Free Account (CGU) holders exceeded 68,400. In addition, to safeguard the security of financial operations, the Central Bank reintroduced the Cancelling Check, accumulating until the end of the first half of 2011 operations denominated in pesos for $117 million (1,774 checks) and denominated in foreign currency for US$135 million (2,500 checks). Immediate accreditation of bank transfers is currently in effect, a measure that complements the reduction in the costs of this type of operation defined in 2010. In June 2011, 900,000 immediate transfers were made (for a total amount of $3,200 million), representing an increase of 9% compared to May.