Informe Sobre Bancos

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

Summary of the month

• In the first four months of 2006, the financial system continued to consolidate the gains made during the previous year. In particular, in April there was a marked expansion of private credit accompanied by less irregularity, a reduction in financing to the public sector and higher profitability, trends that underpin a higher degree of solvency of banks, in a framework of competition and limited risks.
• The financial system’s exposure to the public sector is close to half of the levels observed in 2004. In April, it continued to accentuate its decline, falling 1 p.p. to 27.7% of total assets. In the group of private banks, the decrease was somewhat higher (1.2 p.p.), standing at a level of 24.3% of total assets.
• Banks continue to make progress in terms of normalization of their liabilities. In particular, in the first half of the year, the financial system made payments to the BCRA for $5,845 million within the framework of the scheme commonly called matching. Thus, of the 24 financial institutions originally indebted under the matching, as of June 2006 only 3 had obligations under this concept.
• The solvency indicators of the financial system reflected the advances in terms of profitability: while the net worth of the banks increased 0.3% in April (accumulating a growth of 5.8% in the year, a value that extends to 21% if the period January 2005 to April 2006 is considered), the equity of the group of private banks grew 0.2% in the month (consolidating an expansion of almost 6.1% so far in the year). 2006). Capital integration in terms of risk-weighted assets grew for the system as a whole to 16.2% (18.8% in the case of the group of private banks).
• The sustained increase in the levels of financial intermediation was reflected in April in a significant increase in total deposits (1.9%). The growth rate of demand deposits and time deposits was even in April (they grew 1.8% and 1.6%, respectively). Thus, in the first four months of the year, the increase in fixed-term placements (9.1%) was much higher than that recorded in demand deposits (4.4%). For its part, in April, loans to the private sector showed the highest growth rate so far this year (2.9%).
• The irregularity of the portfolio allocated by the financial system to the private sector fell 0.1 p.p. in April to a level of 6.7%. This improvement was mainly explained by public banks (their irregularity ratio fell 0.1 p.p. to 9.6%), since in private banks the portfolio non-performing loan remained at a level of 5.7%.
• For private banks, the increase in private sector deposits ($1,390 million) together with the placement of negotiable obligations in dollars ($620 million) and the fall in credit granted to the public sector ($550 million), constituted the main sources of funds in April. More than half of the funds generated in the month ($1,680 million) were used to increase the balance of loans to the private sector, while a significant part was used to make payments for rediscounts to the BCRA ($570 million). The acquisition of LEBAC and NOBAC ($470 million) and the increase in assets