Report on Banks

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

Summary

• In November, credit to the private sector showed the largest monthly increase of 2012. This evolution took place in a context of strong expansion of deposits in national currency, both in the private and public sectors, which allowed bank liquidity levels to increase.
• In the month, the balance of credit to the private sector (in national and foreign currency) grew 3.1%, accumulating a year-on-year increase (YoY) of 27.9%. Loans in pesos led to an increase in financing to the private sector (3.5% in the month and 38.6% YoY), to represent 92% of the total balance. In the last 3 months, financing to the private sector was driven by loans granted to companies, a segment that accumulated an annualized growth (a.) of 37.1% (up 3.3% in November); while loans to households increased 29.9% y. (2.1% in the month).
• The evolution of loans to companies, among other reasons, has reflected the effect of the various measures implemented by the BCRA aimed at promoting productive investment. During the period, the “line of credit for productive investment” was highlighted, through which the target of credits to be placed for 2012 ($14,930 million) was exceeded. Effective January 2013, the BCRA renewed this tool with the same general conditions, considering as a reference 5% of the balance of deposits in pesos of the private sector as of November 2012. In this way, the new loan fund to be disbursed amounts to approximately $17,000 million.
• The ratio of irregularity of financing to the private sector remained low and stable at 1.8% in the month. The coverage of the irregular portfolio of the private sector with accounting forecasts stood at 140% in November.
• The balance of total deposits (in domestic and foreign currency) in the financial system increased by 3.4% (28.3% YoY) in November, with an expansion of public sector deposits of 6.4% (28% YoY) and private sector deposits of 2.1% (28.7% YoY). Private sector placements were driven by both demand accounts in pesos (up 2.8%) and term accounts (1.8%). The year-on-year increase in deposits was led by the term segment of the private sector in pesos, with an expansion of 50.7% YoY.
• The liquidity indicator for the financial system (in domestic and foreign currency) stood at 27.3% of deposits, with an increase of 1.4 p.p. in November. The liquidity indicator that includes the holding of LEBAC and NOBAC showed a monthly increase of 0.6 p.p. in deposits and stood at 39.8%.
• The use of electronic means of payment to channel the transactions of companies and families intensified in the last year as a result of the measures taken by the BCRA. In November, the number of immediate transfers increased 2.7% (2.6% in terms of amounts), accumulating a 70% YoY increase (97% YoY in amounts). For its part, the amount and amount of direct debits to make payments for services accumulated a year-on-year improvement of 11.4% and 47% respectively.
• In the month, the net worth of the consolidated financial system increased 2.2% (30.9% YoY), driven mainly by accrued earnings. The capital integration ratio of the banks as a whole remained stable, at around 16.9% of credit risk-weighted assets (RWA). For its part, the capital position (defined as the excess of capital integration) of the financial system stood at 61.5% of the total regulatory requirement.
• The financial institutions as a whole accrued gains equivalent to 2.8% of assets in the month, increasing 0.6 p.p. compared to October, mainly due to higher gains on securities. In the year to date, the ROA of the financial system increased 0.3 p.p. compared to the cumulative level in 11 months of last year, to 2.9%a.