The Challenges faced by Argentine banks gradually decreased by credit growth to the private sectorat the same time as the asset quality and profitability indicators showed better performance than expected, according to a report by the international credit rating agency Fitch Ratings.
The rating of the operating environment of Argentine banks went from “CCC-” to “CCC” and changed the perspective of the operating environment from negative to stableaccording to Fitch.
“While the operating environment remains challenging, Real credit growth expected to improve in 2025 due to economic recoverygreater demand for private credit and the continued reduction of the banking system’s exposure to the public sector, which will increase its capacity to grant loans to the private sector”, they detailed from the rating agency.
These improvements follow the sovereign rating update from Argentina to “CCC”.
Fitch expects the recent trend of improvement in loans deteriorated and non-productive remains, while the Capital and liquidity ratios should remain stronggiven that banks have relatively low direct exposure to the government.
Furthermore, the rating agency’s analysts predict that the profitability would benefit from the projected positive real interest rates, as the Money demand continues to recover due to the tightening of the Government’s monetary policya gradual reduction in inflation and the elimination of exchange controls. These factors will allow maintaining a healthy recovery in credit intermediation after several years of displacement caused by the large fiscal deficit.
Forecasts for 2025
The American rating agency projects a drop in gross domestic product (GDP) of 3.6% in 2024 and a rebound of 3.9% in 2025with a wide margin of uncertainty depending on the fate of capital controls.
It is also expected that the real interest rates turn positive as the demand for money recovers and the Central Bank normalizes monetary policy, while inflation decreases.
At a global level, the risk rating agency predicts that global interest rates and domestic keep falling until 2025. This would, in turn, help reduce financing costs in the medium term.
Source: Ambito
I am Pierce Boyd, a driven and ambitious professional working in the news industry. I have been writing for 24 Hours Worlds for over five years, specializing in sports section coverage. During my tenure at the publication, I have built an impressive portfolio of articles that has earned me a reputation as an experienced journalist and content creator.
