Report on Banks

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

Summary

• The BCRA continues to implement measures to contribute to the development of the financial system,
expand the banking penetration of the population and deepen the use of electronic means of payment. In
April, the limits on the amounts of bank transfers were removed, to the extent that it is requested
by customers to carry out a particular operation. Additionally, the non-face-to-face opening
of all types of demand accounts was enabled. In order to extend the offer of financial services,
in May the installation of ATMs by non-bank entities was enabled. For its part, the destinations to which the lending capacity of
deposits in foreign currency can be channeled continued to be expanded, adding the possibility of financing importers of Argentine products or
services and residents who have guarantees from foreign banks. Likewise, the maximum limits of credit assistance were relaxed using screening and credit scoring methods, while
the limits of the net global foreign currency position were increased (up to 30% of the
Computable Patrimonial Liability) and the limit of the general exchange position of
financial and exchange institutions was eliminated.
• In March, the nominal balance of total credit to the private sector increased by 2.1% compared to February
(-0.9% when adjusted for inflation1
), with a slight increase when considering the seasonal
adjustment on the series in real terms. Loans in foreign currency increased 5.7% in the period.
On the other hand, lines in pesos grew nominally by 1.6% (-1.4% in real terms). Despite some moderation
in the real growth rate observed at the beginning of 2017, the total credit balance to companies and
households accumulated a real year-on-year increase of 2.9%, reversing the negative
variations recorded in the same period of the last three years.
• In March, the NPL ratio for loans to the private sector continued to remain at low levels,
in the order of 2%, with no significant changes compared to last month. The level of irregularity of credit to households remained at 2.9% in the period, while that corresponding to loans to
companies stood at 1.2% of this portfolio. In the period, the accounting forecasts of the aggregate financial
system reached an amount equivalent to 130% of the portfolio in arrears.
• The balance of private sector deposits grew slightly in March, mainly due to the performance of the
segment in foreign currency (+1.5% in foreign currency). On the other hand, private sector placements in pesos increased 0.5% in the month, with an increase in term deposits
and a decrease in demand accounts. At the end of the first quarter of 2017, the balance of
private sector deposits – considering national and foreign currency – continued to show a
year-on-year increase in real terms.
• In March, the reduction of minimum cash requirements for deposits in
pesos came into force and the destruction of deteriorated banknotes that were in the possession of banks intensified. As a
result, the availability and balance in pesos of the current accounts of the entities at the BCRA were reduced. Part of these resources were applied to the increase in passes and LEBAC holdings.
These movements, added to the increase in liquidity in foreign currency, led to a monthly increase in the broad liquidity ratio of the financial system in March, reaching a level of 52.1% of
deposits.
• At the end of the first quarter of 2017, capital integration in the financial system accounted
for 16.8% of risk-weighted assets (RWA). Tier 1 capital totaled 15.3% of RWA. In
March, banks as a whole registered an excess of capital integration equivalent to 94% of the regulatory requirement, increasing 12.7 percentage points (p.p.) in a year-on-year comparison.
• In the month, the accounting gains of the financial system in terms of its assets (ROA) totaled
3.3%y, recomposing with respect to February. Cumulative earnings in the first quarter of
2017 reached 2.7% of assets. Compared to the first quarter of 2016, all groups of financial institutions reduced their profitability indicators.