Informe Sobre Bancos

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

Summary

• In November, the growth rate of financial intermediation increased, in a context in which banks maintain high solvency indicators. In contrast to what was evidenced during the previous year, in 2010 credit to the private sector stood out as the main application of bank funds, being funded mainly through the collection of deposits.
• Beyond the gradual expansion of the operational infrastructure of the financial system in recent years, there is still a high degree of geographical concentration in the provision of services in the sector. With the aim of extending banking penetration, the Central Bank approved new guidelines to authorize the opening of branches, especially considering whether the request for installation in the most banked jurisdictions is associated with an equivalent request in areas with less service provision.
• In the same sense of expanding the level of banking penetration, the BCRA adopted a series of measures to help achieve a more widespread use of financial services. In this sense, the Universal Free Account was implemented (the number of openings reached 29,800 at the beginning of 2011), the Cancelling Check was implemented (operations for $57.4 million were accumulated – almost 1,000 checks denominated in pesos – and US$46.2 million – 890 checks in foreign currency) and the cost of bank transfers was reduced. In relation to this last point, the total number of transfers made in December 2010 grew 25% compared to those made in October 2010 (in November the amount had grown 12.5%).
• The balance of total deposits of the banks as a whole increased 2% in the month, mainly reflecting the dynamism of private sector placements that grew 2.2% in the month (28% year-on-year -y.o.y.-). In November, the liquidity of the financial system (in national and foreign currency) stood at 29.1% of total deposits, showing a slight monthly reduction (increase of 0.6 p.p. in a year-on-year comparison).
• In November, financing to the private sector registered an increase of 3.4% (35% YoY), with a generalized increase among credit lines. Thus, the growth of credit to the private sector continued to accelerate to reach a cumulative 34% in the first 11 months of 2010 (28 p.p. above the same period in 2009). Financing to companies continued to increase its rate of expansion in the latter part of 2010, with growth higher than that of household consumer loans in the year to date.
• The irregularity ratio of financing to the private sector reached 2.3% in November, after verifying a reduction of 0.1 p.p. in the month. Throughout the year, the level of non-performing loans decreased by 1.2 p.p., a situation that was observed in all homogeneous groups of financial institutions. The irregular portfolio of the financial system continued to show a high level of coverage with forecasts (157%).
• Within the framework of the Bicentennial Productive Financing Program, the BCRA held the third auction of funds in January. The total amount awarded amounted to $455 million. The interest rate to be paid by each financial institution was set at 9% nominal per annum. With these resources, the entities will grant credit to the productive sector with a total financial cost of 9.9%. The financing must be denominated in pesos and have an average term equal to or greater than two and a half years. Accumulating the three auctions held so far, the total awarded by the BCRA reached $1,025 million.
• The evolution of financing to the private sector in the month occurred together with a slight drop in credit from the financial system to the public sector, reaching a level of 12.1% of total assets. It should be noted that the balance of public sector deposits in the aggregate of the financial system continues to be higher than the credit provided to this sector in an amount equivalent to 11% of total assets as of November 2010.
• The consolidated financial system’s equity increased 2.7% in November (or 17.1% YoY), mainly due to accounting gains. The capital integration of the banks as a whole stood at 17.7% of risk-weighted assets. The accounting results of the financial system reached 3.5% annualized (y) of assets in the month, with a fall of 0.3 p.p. compared to October. The ROA of the financial system accumulated in 2010 reached 2.8%y, 0.4 p.p. more than in the same period of 2009.