This report analyzes the situation of the Argentine financial system on a monthly basis.
SUMMARY
In the first nine months of 2003, the net assets of private banks fell by 5% in real terms; while in September it did not show significant variation.
The funds obtained in September by private banks, basically through deposits ($465 million), were applied to the purchase of Lebac, to a greater holding of liquid assets and to cancel other liabilities. The total balance of private loans remained constant.
Liquidity indicators are at historically high levels (28%), accumulating a significant increase in 2003.
Foreign currency mismatch exposure remains stable year-to-date, maintaining broad heterogeneity across groups of entities. · The gap between indexed assets and liabilities increased in 2003, as a result of the fall and replacement of CEDRO.
In September, credit to the public sector reached 48% of total net assets, with no significant changes in 2003.
Given the fall in irregularity and the increase in the coverage ratio, equity exposure to private credit risk fell by 1.7 p.p. in September, accumulating a decrease of 4 p.p. in the year. Significant heterogeneity is maintained by homogeneous groups.
In 2003, losses were systematically reduced, which resulted in a ROA for the third quarter 2.5 p.p. higher than that observed for the first half of the year.
The losses reported in September by private banks represented, in annualized terms, 4.2% of net assets. · The results of the month under analysis reflected in particular the effect of the appreciation of the peso and the lack of recovery of net interest income.
Depending on the type of operation, a notable diversity was observed in the profitability by group. In particular, regional retail entities recorded positive figures for the third quarter (ROE of 3.6%).
Given the changes observed in the main context variables, by October 2003, the improvements recorded with respect to the first half of this year would be maintained.
