Executive summary
Monetary resources amounted to $88,600 million as of June, with an increase of 5.7% compared to March. The increase was explained in 93% by the increase in deposits and only 7% by the increase in working capital. Loans to the non-financial private sector continued to show significant growth and reached $63,850 million. For its part, the integration of minimum liquidity requirements resulted, in June, $1,300 million higher than the March average. Interest rates generally showed a downward trend in line with the greater liquidity prevailing in the system.
The international reserves of the financial system experienced a significant increase in the second quarter of the year, and reached US$32,150 million. The BCRA’s gold and foreign exchange reserves exceeded its financial liabilities at all times.
Further turbulence in East Asia in May and June led to the return of some capital market indicators – sovereign risk, government bond yields – to levels similar to those recorded between December 1997 and January 1998. On the other hand, stocks were at the lowest level since the beginning of the crisis in Asian countries, the previous year. Despite this, by the end of June, the Ministry of Finance of the Nation had practically met its financing needs for the first three quarters of the year.
This edition analyzes the financial statements of private banks in the four-month period from February to May 1998. During the period, there was a significant expansion of credit, mainly financed by growth in deposits and negotiable obligations. Profitability for the period was positive, following losses in the fourth quarter of 1997. Decreases were recorded in operating costs and uncollectibility charges in terms of assets. The main indicators of non-performing loans remained relatively stable during the period. The sharp falls in the interest rate risk index and the average weighting of non-fixed assets moderated the increase in the capital requirement for credit risk. For its part, the capital requirement for market risk increased due to the greater volatility of the price of financial assets. As a result, the excess integration of total capital with respect to the requirement fell to 22.3%.
