The document warns that despite general stability, financial entities face the medium-term challenge of maintaining acceptable profitability ratios, especially in a context of increasing levels of inflation and rate control.
Fitch Ratings considers that until the level of credit to the private sector recovers, “The interest margin on loans will continue to register a moderate participation in the total income“says the risk rating agency in its most recent report on the sector.
This is because currently the spread is highly influenced due to the rates regulated by the Central Bank (BCRA) “both in assets and liabilities,” says Fitch.
For the entity, cost reduction, in which the financial market is immersed“will be key to obtaining better levels of efficiency that result in profitability indicators proper operations. Additionally” and warns that the impact of inflation on the balance sheets of the entities will be significant, as well as that the operating context looks “something uncertain“.
The report of “Comparative Statistics” of Argentina contains detailed financial information on 51 financial entities publicly rated on a national scale by FIX SCR (affiliate of Fitch Ratings).
Qualification of national entities
In this context, it is worth noting that the risk rating agency FIX maintains a stable outlook for the broader financial industry due to adequate liquidity levels and the good quality of the credit portfolios of financial entities. This situation is expected to continue in 2024.
Banco Galicia Banks
Ignacio Petunchi
However, the document warns that despite the general stabilityfinancial entities face the medium-term challenge of maintaining acceptable profitability ratios, especially in a context of increasing levels of inflation and rate control.
Likewise, it stands out that a year-on-year improvement is observed in the indicators of operational profitability, average efficiency and asset quality in the investment grade rating ranges. which suggests a positive trend in terms of financial stability.
Finally, he mentions that he registers a decrease in default levels in the last yearwhich is a positive indicator for the quality of the credit portfolios of financial entities.
Source: Ambito
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