·· In a further step in the process of recovering their traditional role of
financial intermediation, more than 50% of private
entities increased their balances of loans to the private sector during October,
allocating half of the funds obtained in the period for this purpose.
The main source of funds for private entities was
private sector deposits, representing $1,600 million this month.
Most of these deposits were made in demand accounts,
influencing the way these resources are applied towards the
integration of liquid assets and LEBACs.
The equity structure of private banks showed an improvement in
terms of the risk/return profile. A decrease
in exposure to the public sector was observed – by 1 p.p. of net assets – and a
gain in the share of liquid assets, LEBAC holdings
and loans to the private sector.
The quality of the loan portfolio of private entities continues on
an upward path. In October, financing to the private sector in
an irregular situation accounted for 34% of the total, 4 p.p. less than at the
beginning of 2003.
The level of capitalization of the financial system is in line with
the capital requirements applicable as of January 2004. Capital
integration in terms of risk assets was around 13%, while capital integration was
more than
double the requirement for the system as a whole.
In October, about 50% of private banks made
a profit. In annualized terms, the results of private banks in
the second half of 2003 represented an increase of
2.9 p.p. of net assets compared to those of the first half of the year.
· The stability of the results of intermediation and services, the
price level and the exchange rate, added to the notable fall in charges
for uncollectibility, were the driving factors of this advance.
Based on the behavior of the main variables affecting
banks’ results, it is estimated that November’s
contribution will contribute to increasing the improvement observed in profitability in the second half of the
year, with an estimated loss of less than 1.5% of net assets
, compared to a negative ROA of 4.5% recorded in the first half of the year
