Argentine banks suffered from a sharp collapse in credit over the course of 2022 and, although they have partly “compensated” for this slower pace of activity with higher placements in the public sector, its profit margins have declined over the past year. This week, the presentations on the stock exchange of the results of the last quarter of last year of the main entities continued, with one common factor: the dependence on government bonds is increasing to preserve their profitability.
The first to present the results was Macro desk. At the end of February, the entity reported a more than 16% inflation-abiding increase in its net income over what it had added in the final quarter of 2021. Of these incomes, more than 80% corresponds to the interest that the bank receives and only 17% to the collection of commissions.
PPI analysts noted: “The dependence to advances on public securities, having represented 61% of total interest income. This is also a consequence of the greater holding of public assets. The instruments issued by public bodies in Banco Macro’s portfolio have been added together 50% of its total assets at the end of 2022.“
In terms of profitability, in the last quarter of the year the entity presented a strong increase compared to the previous result, of almost 60%, but in the interannual comparison it showed a drop of almost 20%.
Another of the entities that has made its financial statements public in recent days has been the BVA Argentina. The company’s net result at the end of 2022 showed a growth in its revenues of 51%. However, like its other competitors, The entity’s portfolio increased its exposure to government bonds: 42% of the interest income corresponds to the state debt.
“Argentine bank valuations are generally influenced by exposure to public sector bonds, which has been growing since the beginning of 2020. In the case of BBVA Argentina, which is among the Argentine banks with the lowest relative exposure, the public debt of the government represents 10% of assets and 54% of equity,” they detailed in Delphos.
In the advisory they added that these figures do not include central bank stocks, such as Leliq holdings and repo rates, which would raise these levels to 200% of the Bank’s equity.
Finally the Galician financial group presented conflicting results. The entity’s profits are down about 20% compared to 2021, although most of this result is explained by the decline of its fintech leg, Naranja X; and not from the results of the bank.
Damián Vlashich, of IOL, explained: “The entity achieved a net result of AR$22,599 million, which represents an increase of 29% compared to the same quarter of the previous year. However, and in addition to the fact that the Grupo Financiero In’s business in general terms presented a slight improvement, the full fiscal yearshows a 20% decline compared to 2021″.
Galicia’s budget has shown nuances, but one common factor with the rest of the entities that have made their results public: a growing exposure to state debt. “Reversing this dynamic to achieve a scenario where banks grow according to credit demand (today the private loan-to-GDP ratio is close to historic lows) will require a global effort and a giant structural economic shift,” they said in PPI.
Source: Clarin
