Informe Sobre Bancos

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

Summary of the month

• In May, the financial system obtained profits of more than $400 million. Of this amount, $170 million came from private banks, which reduced the accumulated loss in the year to 1.3% annualized (y) of the assets. The positive results were widespread: of 61 private banks, 47 (78%) made a profit.
• Excluding the effect of the amortization of amparos and the adjustment to the valuation of public sector assets, the cumulative profitability of private entities in 2004 is positive: 0.3% of assets (a strong increase compared to the adjusted loss of 2% of assets in the same period of 2003).
• May’s total gains reflect the effects of the nominal depreciation of the peso against the dollar and the impact of the debt restructuring of one of the largest private banks. In addition, the generalized improvements in operating income as a result of the growth in lending in recent months are maintained.
• For the first time this year, the operating profitability of private banks was positive (0.6% annualised of assets). In addition to the consolidation of the progress made in recent months, there were higher results in interest and assets generated by the restructuring of liabilities. With administrative expenses declining, its coverage with operating income managed to exceed 100%, consolidating its upward trend since September 2002.
• The level of activity in the financial system grew in May. Higher levels of liquidity and deposits were observed in the system, explained by the behavior of public banks that received $4,800 million in placements from the public sector, mainly due to the payment of income tax.
• On the other hand, private banks faced an outflow of private deposits due to the aforementioned tax deadline, reducing their level of liquidity to $15,000 million, 27% of total deposits.
• The pace of growth in credit to the private sector accelerated in May. In the first five months of the year, private banks accumulated a net application of resources of $1,700 million, increasing the share of private credit in total assets with a yield of 2p.p. (reaching 28% in May). The disparity in the evolution of credit to the private sector by group of institutions has been narrowing in recent months.
• The foreign debt of private banks was reduced by US$115 million in the month, reflecting the effects of debt restructuring of liabilities, cancellation of debt with public securities and capitalization of subordinated obligations of foreign entities.
• The process of recovering portfolio quality resumed its pace in May. Irregularity fell more than 1 percentage point to 22.6% for private banks, driven by the improvement in the commercial portfolio. The net irregular portfolio of forecasts of private banks fell to 5.2% of their assets, its lowest level in the last 10 years.
• Private bank capitalization levels continued to grow in May, reaching 16% of risk-weighted assets. Year I – No. 9 Report on Banks –