Executive summary
In August, September and October, the financial system continued to recover after the financial shock suffered in the first months of the year. Deposits continued to increase, credit grew although at a lower rate than deposits, and interest rates continued to decrease, reflecting higher levels of liquidity in the system.
During this period, liquidity requirements were introduced that will gradually replace traditional reserve requirements. The net effect of this measure, added to the growth in deposits, allowed the lending capacity of the financial system to increase approximately $1,200 million throughout the quarter.
In addition, there was a drastic reduction in the number of rejected checks during these months, a fact that was driven by the recovery of the payment system and the new check law that imposed more severe penalties than those previously existing.
In the previous issue of this Bulletin, data from private financial institutions up to April 1995 were analysed. In this edition, the period between April and August is studied. In these months, the balance sheets of private financial institutions show a strong increase in the levels of assets and net worth. There were also changes in the composition of the active portfolio, with a sharp increase in the holding of public securities and availabilities. This corresponds to the increase in credit granted to the public sector.
Private banks’ balance sheets also reveal a slight deterioration in the quality of the loan portfolio, with an increase in non-performing loans net of forecasts from 4.2% to 5.2% of the portfolio over the period. In addition, there has been an increase in excess capital in terms of the requirement, which went from 25.9% in April to 35.7% in August.
