Changing trend in banks: who they now decide to lend and why

Between November 2019 and the same month in 2022, banking resources grew by 18% in real terms, but there was change in its composition. Resources in real pesos rose by 24%, and in dollars it fell by 16.5%. percentage.

“In turn, this greater availability of pesos is are mainly directed to the public sector, whose participation in the total assets went from 36% to 50% in the period, while the exposure the private sector went from 42% to 28%“, warns an article by Quantum, Daniel Marx’s consulting firm.

Radiography of the sector

They detail the change in exposure to the public sector accelerated in the middle of last yearalthough it has been continuously since the end of 2019 lower growth in loans to the private sector both demand and supply factors are weighed.

The BCRA monetary policy which consists of setting passive interest rates which stimulate the demand for money and monetary policy rates that enable sterilization excess liquidity from banks through Leliq, Notaliq and Pasesincreased the share of these instruments in total consolidated assets.

This greater availability of pesos is are mainly directed to the public sector, whose share in total assets in the observed period increased from 36% to 50%, while exposure to the private sector increased from 42% to 28%.

limit funding

“Recently, the goal of limit monetary financing from the central bank to the treasuryin a more complex context in terms of renewal of maturity of national public titles, led to actions that encouraged an increase in the share of the latter in the balance sheets of commercial banks,” the research states.

Possession Treasuries increased by 127%slightly less than the 131% it increased collected liabilities BCRA (in November 2022 they were equivalent to 9.7% of GDP). These two elements make up 47% of the consolidated assets of the banks.

But, if this definition is extended to the minimum cash in pesos deposited by banks in the BCRA (outstanding liabilities), exposure increases to 50.6% of total assets.

Change in exposure to the public sector accelerated in the middle of last yearalthough it has been continuously since the end of 2019 lower growth in loans to the private sector both demand and supply factors are weighed.

Deposits

The private sector deposits in pesos increased by 44% between November 2019 and the same month in 2022 (61% of total liabilities in that month), and its composition has changed, which affects the cost of financing banks.

Deposits for for a certain period increased by 55%which is a relative increase higher than the growth of savings accounts and current accounts.

The financial system has increased its lending capacity in pesos against dollars and is becoming more so financier of the public sector, both the Central Bank, the National Treasury, and the province

In the meantime, private sector dollar deposits fell 41% in the period, less than loans in that currency did. At the end of November 2022, they amounted to US$ 15,434 million, and the decline in their participation in assets measured in pesos was also influenced by 30% appreciation of the real exchange rate.

Public sector

On its part, public sector deposits in pesos increased by 31%, which represents 13% of the commitment in November 2022.

In short, in recent years the financial system has increased its lending capacity in pesos relative to dollars and is becoming more so financier of the public sector, both for the Central Bank, as well as for the National Treasury and for the provinces”they noted from Quantum.

“It would be desirable if this trend is reversing as part and parcel of the extensive program that encourages it,” they added.