Report on Banks

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

Summary

•  In order to continue advancing in the development of a loan market that
  allows greater access for the population to own their own homes, the BCRA recently expanded
  the range of guarantees admitted. It was allowed to include, under certain conditions, the purchase and sale tickets as a guarantee for financing operations for the purchase of
  homes. This measure accompanies other provisions adopted by this Institution, such as the elimination of limits on the amounts of bank transfers to facilitate the performance of real estate operations
  . At the same time, the authorities of CABA, the province of Buenos Aires and Río Negro made progress in reducing the gross income rate on interest and principal adjustments on mortgage loans
  .
   The total credit balance to the private sector increased nominally by 2.1% in April, with a slight increase when adjusting for inflation1 and seasonality. The monthly performance
  was boosted by loans in foreign currency, which increased 4.2% in
  foreign currency. Meanwhile, lines in pesos grew 1.7% (-0.6% in real terms) in the period. Since the beginning of 2017, bank financing to companies and households has registered positive real year-on-year variations (4.6% y.o.y. as of April), a behavior observed in most groups of
  financial institutions. There is still greater dynamism in the household credit segment, mainly due to collateral and mortgage loans (the latter registered a real increase in April
  for the ninth consecutive month compared to the previous month).
   In April, irregularity in credit to the private sector stood at 2% of total financing. The NPL ratio for financing to households reached 3% in the month, while that corresponding to companies stood at 1.1%. The accounting forecasts of the financial
  system represented 134% of the portfolio in an irregular situation.
   The balance of private sector deposits grew 1.5% in the month, mainly due to the performance of the
  segment in foreign currency (3.1% in foreign currency). Placements in pesos by companies and
  families increased nominally 1% in the month, based on the increase in demand accounts. On
  a year-on-year basis, private sector deposits grew nominally
  by 39.7% (8.9% adjusted for inflation). For its part, the balance of total deposits expanded
  46.9% YoY (14.5% in real terms).
   In April, the broad liquidity indicator – which considers LEBAC holdings – fell by 2.8 p.p. of
  deposits to 49.5%. This performance was explained by the decrease in
  foreign currency availability and in pass operations with the BCRA. The higher holdings of LEBAC and availabilities in pesos partially offset the monthly evolution. Despite the performance evidenced in April, ample liquidity continues at high levels, standing 4.7 p.p. of deposits
  above the level evidenced twelve months ago.
   In April, regulatory capital integration of the financial system accounted for 16.7% of
  risk-weighted assets (RWAs). Tier 1 capital, of better relative quality, reached 15.3%
  of the aggregate RWA. The banks as a whole maintained a level of regulatory
  capital integration well above the minimum regulatory requirements. Thus, excess capital integration
  was in the order of 94% of the regulatory requirement, 14 p.p. more than in April 2016.
   The monthly gains of the financial system in terms of its assets (ROA) were equivalent to
  2.7%y. in April, falling from the March level (-1.3 p.p.). In the accumulated twelve months,
  the results of the banks as a whole represented 3.3% of assets, registering a fall
  in a year-on-year comparison. All groups of financial institutions reduced their
  profitability indicators for the cumulative twelve-month period (ROA and ROE).