Informe de Otros Proveedores No Financieros de Crédito

The Central Bank of the Argentine Republic (BCRA) groups under the category “Other Non-Financial Credit Providers” (OPNFC) companies that grant financing to the general public without being financial institutions or non-bank issuers of credit or purchase cards.

The Report on Other Non-Financial Credit Providers provides a semi-annual review of the evolution of the loans granted by these entities, the profile of their debtors and the financing conditions. It analyzes the amounts borrowed, interest rates, levels of irregularity, and financing they receive from the financial system and the capital market, offering a detailed overview of the segments of the population that access this type of credit.

Summary

New regulation | In October 2020, the BCRA introduced significant modifications to the regulation of OPNFCs that basically imply the obligation to register as OPNFCs for most non-financial credit companies (even when they do not receive financing from financial institutions) and compliance with provisions that grant greater protection to users of financial services.
OPNFC Number | In the last two years, the number of OPNFCs registered with the BCRA has grown significantly, reaching a total of 323 companies in January of this year, compared to 235 suppliers at the end of 2018. Between June 2020 and January 2021, 50 new suppliers were registered, while 9 were deregistered. The enrollment of 50 new providers is the highest registration since the second half of 2018 and more than double the average of the previous three semesters.
Total debtors | The number of people who took credit from the OPNFCs reached 6.1 million in October 2020, almost entirely being individuals.
Exclusive debtors | On the other hand, the number of people who were exclusively debtors of the OPNFCs (i.e., who in turn did not have debt with the financial system) was
approximately 2.8 million people.
Comparison with the financial system | If we consider that financial institutions had credit assistance to 13.4 million individuals in October 2020, this implies that the exclusive debtors of the OPNFCs represented around 20% of
the debtors of the financial institutions.
Debtors Shared with the Financial System | The total number of OPNFC customers who also had debt with the financial system fell from 4.3 million people in January 2018 to 3.4 million customers in October 2020.
Amount of financing | The number of OPNFCs that reported their portfolio to the BCRA reached 215 companies in October 2020, registering financing balances of $195,000 million. Excluding credit card assistance, the balance owed to OPNFCs was $88 billion.
Comparison with the financial system | In the first ten months of 2020, the balance of financing from OPNFCs averaged 8.5% of the total loans in pesos of the financial system to individuals and SMEs (excluding credit card financing in all cases).
Debtors’ Income Profile | The fact that in comparison with the financial system the proportion of people represents a higher percentage than that of financing (20% versus 8.5%), together with the credit practice of linking the amount financed with the debtor’s ability to repay, allows us to assume that the OPNFCs would serve, on average, a segment of the population that has lower and irregular incomes than the average income of the customer of the financial system.
Funding Trends | In the last three years, the evolution of OPNFC loans had a marked downward trend, with a cumulative reduction of 38% in real terms between January 2018 and October 2020. This contraction in the balances owed was associated with the fall in real income that was observed from the second quarter of 2018 and that tended to stabilize at the beginning of 2020, and even rise during the first months of that year (mainly in wage income), and then fall temporarily at the beginning of the pandemic. although still above the historic low of 2019. In addition, specific factors that characterize OPNFCs, such as the income segment they serve and a certain relative importance of companies selling durable consumer goods (such as household appliances) had a particular impact.
The reduction in the amount of financing can be broken down into a fall in the number of people assisted and a decrease in the balances owed on average per person in real terms. In this sense, between October 2018 and the same month of 2020 the number of people assisted decreased by around 960,000 debtors.
Irregularity | The irregularity of the OPNFC portfolio (excluding card financing) remains at high levels, reaching 39% in October 2020. However, this is not due to a deterioration of the portfolio in an irregular situation, but to the contraction of loan origination, which reduced the total balances owed and the basis of comparison for the calculation of the portfolio ratio. Compared to the beginning of the pandemic, the irregularity of financing, excluding credit card
financing, rose by around 2 percentage points.
Irregularity by supplier | When measuring irregularity by type of supplier, significant differences emerge. Cooperatives and mutuals and non-financial companies that issue credit cards show lower indicators (18.6% and 28.8%, respectively), while fintechs and companies selling household appliances exhibit substantially higher irregularity ratios than the average (50.3% and 56.9%, respectively).
Interest Rates | The weighted average annual nominal rate applied by OPNFCs in personal loan operations was around 84% in October 2020. With respect to the average rates in force in the first quarter of 2020, a significant drop of around 28 percentage points is observed. The reduction in the nominal rate towards the end of the first quarter of 2020 was also observed in the personal loan segment of the financial system. The reduction in the weighted average rate applied by OPNFCs could be associated with the reduction in inflation. While the monthly increase in the Consumer Price Index reached an average of 3.6% during 2019, between January and October 2020 it fell to 2.3% monthly average. Thus, the simultaneous reduction of both rates would have made it possible to sustain the rates charged by suppliers
in real terms.
Financing of the financial system to OPNFC clients | As for the balance of financial sector loans to OPNFC customers, it reached $612,000 million in October 2020. If the evolution of the series is analyzed in real terms, a
cumulative decrease of 27% in the total balance from January 2018 to October 2020 is observed.
Regarding the average balance per debtor in real terms, slight oscillations are observed between January 2018 and last October, showing a drop of 7% end to end.
Irregularity | The irregularity of financial sector loans to OPNFC customers reached the highest values between June 2019 and February 2020, with a maximum peak of 17% in November 2019, and then fell to 7% in October 2020.
Funding of OPNFCs with the financial system | OPNFCs are partially funded by the financial system. The financial system’s assistance to these suppliers has shown a negative trend in real terms since 2018, a situation that deepened as of June 2020 due to the reduction in balances owed by non-bank credit card issuers and appliance sales companies. At the end of October 2020, this financing represented 11% of the OPNFCs’
loan portfolio.
Irregularity | The irregularity of the debt of the OPNFCs with the financial system showed significant reductions as of May 2020, standing at 11% at the end of last October. Companies in the field of selling household appliances mainly explained the debt in an irregular situation. Cooperatives and mutuals and fintech companies did not have debt in an irregular situation with the financial system.