Report on Banks

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

Summary

• Credit from the financial system to the private sector grew 1.2% in April (39.9% YoY), driven by financing to companies. Financing to this sector, which increased 1.3% in the month (accumulating an expansion of 38.4% YoY), came to represent 56.2% of the total balance of financing to the private sector. Most of the credit lines to companies grew in the month, highlighting mortgages and advances. The monthly and year-on-year expansion of credit to firms was mainly promoted by public banks, which managed to manage a third of the loan portfolio to companies in the financial system.
• Credit for families also increased in the month (1.1%), presenting a general improvement in all lines. Title and personal loans grew above average. In year-on-year terms, financing to households increased 41.6%.
• In April, the non-compliance ratio of financing to the private sector grew slightly (0.1 p.p.) to 1.6%, mainly due to the performance of private banks and EFNBs. However, in year-on-year terms, this indicator continues to show a fall of 0.2 p.p. The financial system maintained a high level of coverage with forecasts (153.2% of the portfolio in non-performing loans).
• In the month, the balance sheet of total deposits in banks as a whole (in domestic and foreign currency) grew by 1.9% (or 21.4% YoY), mainly driven by private sector deposits (2.1% or 26.5% YoY) and, to a lesser extent, by those of the public sector (1.2% or 9.2% YoY). In April, private sector placements were driven by both demand accounts (2.6%) and term accounts (1.5%). In both public and private banks, the year-on-year expansion rate of private sector time deposits exceeded that of demand accounts.
• The broad liquidity indicator of the financial system (in domestic and foreign currency, including the holdings of LEBAC and NOBAC) increased in the month by 0.9 p.p. of deposits, to 41.1%. Thus, 5 months of increases in this indicator were accumulated, placing it below the level of April 2011 (45.1%). The liquidity ratio excluding holdings of LEBAC and NOBAC also increased slightly in the month, to 27% of deposits.
• The net worth of the consolidated financial system expanded 2.1% in the month (30.5% YoY), mainly due to accounting gains. For its part, so far this year the financial system accumulated capitalizations of almost $600 million. In the last 12 months, the increase in net worth was relatively higher than that evidenced in total assets, so the leverage for the aggregate of financial institutions decreased.
• In the month, the capital integration ratio stood at 16.3% of risk-weighted assets (RWA) and accumulated an increase of 0.7 p.p. throughout the year. For its part, in April the capital position continued to be in surplus, showing a regulatory capital slack equivalent to 59% of the total requirement. Compared to March 2012, this indicator decreased by 9 p.p., mainly as a result of the start of the scheme to integrate the capital requirement for operational risk.
• In April, the profitability of the financial system fell compared to last month (up to 2.5% of assets), mainly due to lower gains from securities. For its part, in the first 4 months of the year, the banks as a whole accrued profits of 2.8% of assets, 0.2 p.p. more than a year ago, mainly due to higher interest results.
• The aggregate financial system continued to expand its infrastructure, with increases in employment, ATMs, and branches. As of March 2012, banks’ staffing increased 0.4% compared to the end of 2011 and 2.6% YoY, mainly driven by private banks. The expansion of employment occurred together with improvements in productivity, reflected in a 10.4% YoY increase in the number of accounts managed per worker. The number of branches and ATMs increased by 2.8% YoY and 13.4% YoY, respectively.