Report on Banks

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.