This report analyzes the situation of the Argentine financial system on a monthly basis.
Summary of the month
The trend of slowdown in the growth of domestic financial intermediation continues, conditioned by the developments of an international context of high volatility. This process takes place in a framework of good conditions of soundness of the local financial system, mainly as a result of adequate liquidity and solvency positions. However, the moderation in the increase in the volume of operations together with the gradual deterioration in the quality of the financing portfolio reduce the profitability of the sector.
The financial system maintains a limited mismatch of foreign currency, which represents less than 30% of the net worth of all financial institutions, practically half of what it was 4 years ago. The BCRA’s financial policy promoted this evolution through the implementation of prudential regulations aimed at adequately regulating intermediation operations in foreign currency.
The balance sheet of total deposits in the non-financial sector increased by 1.2% in March, closing the first quarter with a year-on-year increase of 10% YoY (compared to an increase of 22% YoY a year ago). The monthly movement was driven by placements in foreign currency, given that deposits in pesos by the private sector fell temporarily in the month by 1.2%.
Financial institutions maintain adequate levels of liquidity, reaching 31% of deposits, with a monthly increase of 1.2 p.p. The broad liquidity indicator (including the position in Lebac and Nobac) remains at 41.4% of deposits.
The balance sheet of credit to the private sector grew 1.1% in the month, accumulating a variation of 16% YoY, being 24 p.p. lower than that recorded in March 2008. The balance sheet of credit to the private sector in pesos increases by almost 1% if adjusted for the monthly issuance of financial trusts, highlighting the dynamism of documents and consumer lines (personal and credit cards).
There is a gradual increase in the irregularity of financing to the private sector, within low levels in a historical perspective. During the first quarter of 2009, irregularity increased by 0.4 p.p. to 3.5%, mainly due to what happened in loans granted to households (irregularity has increased by 0.6 p.p. so far this year). The degree of coverage of irregular financing with forecasts stands at 123%.
The consolidated net worth of the financial system increased 1.7% (or 12.7% YoY) in the month. Capital integration stands at 17.2% of risk assets, a level similar to that of the last 3 years and higher than international recommendations and local requirements. The excess capital integration of all financial institutions is 86% of the requirement, and this situation of slack among banks is generalized.
