He bank credit to the private sectorwhich has just touched a historic low, is making steady progress in its recovery. Between May and August 2024, the Loans grew by 46% in real terms to $10.942 billion pesosaccording to a report by the Association of Argentine Banks (ADEBA)“The high-frequency indicators for September are trending in the same direction,” said the entity that groups together private banks with Argentine capital.
In May, June, July and August, loans in pesos rose in real terms at rates of 7%, 11%, 13% and 10%, respectively. “We always said that when the minimum conditions are met, the banks would come out to give loans.; we are doing it: 46% increase in credit in pesos since May”, he celebrated Javier Bolzicopresident of ADEBA.
Even so, the Bank credit to the private sector is at September 2023 levelssince as detailed above it comes from historically low values.
“High-frequency data for September allow us to be optimistic: credit continues to grow”said the president of ADEBA. “Economic reactivation and credit growth are two sides of the same coin. We have always said that banks like to work as banks, they only need a minimum of conditions, which have begun to be verified; hopefully these conditions will be strengthened,” he added. Javier Bolzico.
The report also highlights that the growth of bank credit to the private sector was significant compared to the Evolution of deposits and GDP. Loans have risen faster than deposits over the past four months.This means a redirection of deposit funds towards loans to the private sector. The credit-to-product ratio also increased by more than 1.5 pp of GDP, exceeding 5.3%, starting to leave behind the historical minimum recorded.“, ADEBA stresses.
Credit and economic recovery
The growth in credit is consistent with the “recovery of certain sectors of the economy,” which, according to ADEBA, possibly hit a low point in activity during the second quarter of the year. “The recovery of credit accompanies and boosts economic growth”emphasized the employers’ organization.
In addition, a substantial increase was observed in the dollar loans in the first eight months of the year, which is mainly explained by the “improvement in the exchange rate at the end of the year favoured sectors linked to exports”.
The recovery of dollar credits so far this year is US$3.238 millionwhich represents a 93%It should be noted that dollar loans constitute a small proportion of total loans to the private sector, only accounting for a 16% of the total.
“As long as the current Administration persists with reducing public spending, maintains fiscal discipline, lowers inflation, deepens deregulation – of economic activities in general and those of the financial system in particular – and moves towards exchange rate freedom, bank credit will continue to consolidate as a driver of growth,” highlights the ADEBA report.
Bank loans: ranking of real growth by sector
The bank loans to the private sector rose up to 77% in real terms in four months. According to ADEBA, the two encouraging factors of this recovery are the return of the positive real interest rates and, on the other hand, that loans are distributed among both businesses and households.
Ranking of bank credit growth by sector:
- Personal: +77%
- Documents: +65%
- Pawnbrokers: +51%
- Cards: +30%
- Advances: +21%
- Mortgage: +6%
“As inflation and country risk continue to decline, these loans will demonstrate even greater dynamism,” ADEBA said.
Finally, ADEBA pointed out the importance of “continue to improve the regulatory framework” and apply equitable regulation in order to “avoid asymmetries”as well as the emergence or deepening of the so-called “shadow banking”, which refers to the set of banking services and products that are offered outside of formal regulation.
“A recent report by the Fintech Chamber He pointed out that ‘Virtual wallets already manage 5% of private sector deposits in Argentina’“This means that 5% of deposits – generally from small savers – are in unregulated entities,” ADEBA concluded.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
