Informe Sobre Bancos

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

Summary of the month

• In April, deposits and loans to the private sector continued to increase, maintaining the process of expansion of financial intermediation. Banks carry out their activity within a framework of limited credit and liquidity risks, maintaining appropriate levels of solvency, showing adequate resilience in the face of a context of greater volatility in the financial markets.
• This growth in financial intermediation is being accompanied by an expansion of the operational structure of the system during the first part of 2008. The number of people employed by banks increased by 0.6% in the first quarter of 2008 (600 individuals), reaching an expansion of 5.9% (almost 5,600 people) in the last 12 months, to be practically in line with pre-crisis levels of 2001-2002. The number of ATMs and the number of branches also grew. This growth in the operational structure of the banking sector is taking place in a context of expansion in the number of accounts managed per employee and per branch, above the values of 2001, evidence of the progress in the operational efficiency of the sector.
• In perspective, total deposits have been gaining share in the total funding of the banks: they currently reach 69% of liabilities and net worth taken in aggregate form (14 p.p. more than at the end of 2004). In the last 12 months, the growth in total placements has been boosted by time deposits (28.6% YoY) and demand accounts (17.2% YoY). In particular, the monthly increase in deposits in April was mainly driven by private sector placements.
• The liquidity of the financial system stood at 24.2% of total deposits in April, surpassing the levels verified a year ago, before the beginning of the period of greatest volatility in the international financial markets governed by the U.S. subprime crisis. Thus, at the end of April, banks had adequate liquidity levels to face the greater financial turbulence evidenced during May, a situation that was strengthened by the measures implemented by the BCRA to consolidate systemic liquidity levels.
• In this context, financing to the private sector maintained its growth rate in the month. In particular, in April, credit to the private sector increased by 4.1% (42.7% YoY), boosted by both commercial lines (5.2% or 34% YoY) and consumer lines (4.4% or 59% YoY). The year-on-year expansion of financing to companies was widespread among all tranches by residual balance.
• The financial system continues to register limited levels of non-performing loans and solid coverage with forecasts, a sign that its strength against private sector credit risk is maintained. In April, the irregularity ratio of financing to the private sector remained at 3.3%, reducing 0.8 p.p. in the last 12 months, mainly due to the dynamics of the lines granted to companies. For its part, the level of provisioning reached 123% of financing in an irregular situation in April.
• In the month, the net worth of the financial system fell by $80 million (0.2%, presenting a year-on-year increase of 8.6%) due to the distribution of dividends by two private banks and by the valuation adjustments of securities. These movements were partially offset by the receipt of new capital contributions and by the positive results accrued in the month. In this sense, during April the financial system continued to make gains. Profits reached $260 million in the month (ROA of 1.1%y. and ROE of 9.1%y), verifying a reduction compared to March, mainly due to the gradual increase in administrative expenses and the fall in results from securities.
• Thus, in April the banks continued to verify solid levels of solvency. Capital integration in terms of risk-weighted assets in the financial system continues to exceed local requirements and internationally recommended minimums, reaching 17% in April (0.2 p.p. more than in March). Capital integration exceeded the requirement under prudential rules in force in April by 83%.