Informe Sobre Bancos

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

Summary of the month

• In April, the financial system continued to expand: the capture of private deposits was the main source of funding, while the growth of credit to the private sector maintained its positive trend, in a context of limited counterparty risk. The reduction in banks’ exposure to the public sector was accelerated, and the sector’s solvency was strengthened, as a result of new capital injections and the positive results obtained.
• In line with the incentives established by the BCRA, in April the banks verified a contraction of 1.4 p.p. of the assets in exposure to the public sector, reaching a value of 18.3%. Thus, the financial system continued to increase its independence from the financial needs of the public sector.
• The normalization of the balance sheet of the financial system continued to deepen. On the one hand, and in addition to the April, May and June installments of the matching scheme, the only bank with outstanding rediscounts for illiquidity made advance payments of about $800 million in June. On the other hand, in April a large part of the pending compensations of the National Government was delivered, practically disappearing from the assets of the financial system.
• Credit to the private sector maintained its growth path in April, increasing 2.2% (40.5% YoY). Among the financing to companies, the sectors that stood out were industry and commerce, while advances and lines for export printed the highest rate of expansion. In the case of families, title loans and credit cards were the most dynamic lines.
• The quality of financing to the private sector continued to improve in 2007. The irregularity ratio reached 4.1% of total private financing in April, accumulating a decrease of 0.4 p.p. in the year.
• The growth of private non-financial deposits was the main source of funds in the month, increasing 2.5% (26.9% YoY). Unlike what has been happening in recent months, the expansion of private deposits in April was due to the dynamics of demand accounts. In fact, the month saw a growth in current accounts, a movement partly linked to the greater liquidity needs of the private sector to meet the tax deadlines in May.
• In this context, the financial system allocated a significant amount of resources to the constitution of liquid assets during April. Thus, the liquidity indicator increased 1.1 p.p. of deposits in the month, standing at 23%. In line with abundant liquidity, the call market recorded a lower traded volume and declining interest rates.
• Banks verified gains of 1.3% of assets (9.4% of net worth) during April. The monthly fall in accounting results was mainly explained by losses linked to adjustments in the balance sheet of two foreign banks, partially offset by the increase in interest results and lower charges for uncollectibility, in a context of greater volume of financial intermediation. If these two financial institutions are excluded, the accrued profits would amount to 2.1% of assets and 15.9% of equity.
• In April, the solvency of the financial system deepened thanks to capitalization and accrued accounting profits. The net worth of the financial system expanded by $720 million (2.1% or 23.5% YoY) in the month, a movement that was explained by the capitalization made by a foreign bank (approximately $780 million) and the earnings in April, these movements being partially offset by the constitution of reserves in certain banks for the payment of dividends ($290 million).
• Banks are deepening the expansion of their operational structure, observing, in particular, growth in the staff (6.6% YoY), which was above the creation of formal employment, and in the number of ATMs (16.9% YoY).