Informe Sobre Bancos

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

Summary

• Total financing (in domestic and foreign currency) to the private sector expanded 1% (24.1% YoY) in July, driven by advances, personal loans, and foreign currency lines. In a year-on-year comparison, the growth in total credit to the private sector was mostly explained by loans to companies, which increased 26.1% YoY, representing 61% of the total variation. Financing to families increased by 21.3% YoY.
• In order to continue promoting bank credit for productive purposes, the fifth tranche of the Credit Line for Productive Investment (LCIP) began in July. On this occasion, more than $28,000 million must be allocated for the financing of MSMEs and for other specific destinations. Considering the first four stages of the LCIP, loans totaling approximately $78,000 million have already been agreed.
• The level of irregularity of financing to the private sector remained unchanged during the month, in the order of 2% of the total portfolio. Both loans to households and companies did not present significant changes in their NPL levels compared to last June, remaining at 3.2% and 1.1% respectively. The coverage with accounting forecasts of the portfolio in an irregular situation stood at 138% in July, exceeding the record observed twelve months ago.
• The balance of deposits in pesos in the private sector increased 0.8% in the period, due to the expansion of term deposits (2.8%), which was partially offset by the slight reduction in demand accounts. Considering July’s performance, private sector deposits in pesos accumulated a year-on-year increase of 30.1%, with a similar expansion of time deposits and demand accounts. On the other hand, private sector placements in foreign currency did not show any changes in magnitude in the month, registering an increase of 1.3% y.o.y. – in source currency. In this context, total deposits in the financial system (in the public and private sectors, considering national and foreign currency) grew 0.3% in July (25% YoY).
• The liquidity indicator (including domestic and foreign currency) fell 1.5 p.p. of total deposits in July, to a level of 23%. For their part, the holdings of LEBAC and NOBAC accounted for 19.6% of deposits, increasing 1 p.p. compared to June. Thus, the broad liquidity ratio (considering national and foreign currency, with holdings of LEBAC and NOBAC) fell slightly in the month, standing at 42.6%.
• The broad mismatch in foreign currency of the financial system stood at 28.5% of the Computable Patrimonial Liability (CPR) in July, slightly reducing in the month and accumulating a decrease of 43 p.p. of the CPR compared to the end of 2013. In September 2014, the rule that regulates the sector’s currency mismatch was modified, reducing the maximum limit that banks can present in relation to the positive Net Global Position (GNP) of foreign currency. The limit was reduced from 30% to 20% of the PRC of the previous month or the liquid capital of that month, whichever is less, a measure that aims to strengthen the stability of the foreign exchange market.
• In July, the net worth of the consolidated financial system increased 2.9%, mainly driven by the effect of accounting gains. In the last twelve months, net worth expanded 43% and outpaced relative asset growth, which explained a year-on-year reduction in the sector’s leverage ratio. The integration of regulatory capital in the financial system totaled 14.1% of total risk-weighted assets (RWA) in the period (13.1% in the case of Basic Equity — Tier One capital). The excess integration of aggregate capital stood at 81% of the regulatory requirement.
• The ROA of the financial system totaled 4.4%y. in July, increasing compared to last month mainly due to the increase in the financial margin. All groups of financial institutions increased their monthly profitability. Thus, the accounting profits accumulated in the last twelve months represented 4.5% of the average assets for the period.