in full “Equilibrium Season” At the Merval, the Argentine banks presented the numbers for the first quarter of the year and the “photo” shows the reality of the sector: decrease in loans and deposits and increase in exposure to “sovereign risk” due to higher placements of leliq, repos and other debt instruments affect their profit margins.
The surprise was on the side of the supervisory bank, which after several quarters of losses since 2021, managed to start 2023 with a profit. The entity reported earnings of 557 million dollars, to have anticipated an improvement that the Group had planned only for the second year of this year, due to a lower cost structure which results in higher operating leverage.
Unlike other banks, the ratio of loans to deposits has remained stable in Supervielle. Another interesting data from the presentation of this entity was the increase in the “doubtful collection” portfolio, due to the decrease in the credit portfolio and also to the lower real income of the bank’s customers.
“Argentine banks in general remain at low valuations compared to the rest of the region’s financial sector. Nonetheless, even considering the poor performance of local banks’ equity relative to the Merval, we understand that they contain high risk due to their exposure to sovereign debt. With the current unstable macro and close to key political moments, we prefer to steer clear of the sector,” they said in Delphos.
He Macro bank reported poor quarterly results: Its net income decreased 20% in real terms from last year’s first quarter, to $9,777 million. Operating profit grew by 28% in real terms and the operating result by 39%. Like other entities, Macro reduced funding to the private sector ($8 compared to the first quarter of 2022).
“Generally speaking, what worries banks is public sector exposure. The macro has reduced its holdings of public sector securities by -2% q/q. However, both relative to assets (44%, ex- BCRA 17%) and equity (167%, formerly BCRA 65%) increased due to a larger decrease in denominators,” they said in Delphos. “These are worrying numbers, adding significant risk to banks’ balance sheets.”
IOL’s Damian Vlassich said the picture painted by Argentine banks’ balance sheets is not good, despite some banks reporting year-over-year improvements. “He BBVA seems to be the most stable, especially regarding the ratio of loans to deposits, at Banco Galicia we see a decline of 12%,” he said, stating that this is due to a political and economic scenario and a higher dollarization of savings.
“These are deposits that leave the banks and stay out of the formal financial system, they go to sleep under the mattress,” he said.
Despite these numbers, bank stock prices have risen so far on the Buenos Aires stock market this year, reaching 77% in the case of Galician financial group. For Vlassich this is due more to a “lag” in prices than to a specific commitment to the sector by investors.
“During the Merval rally in the second half of last year, the banks were left behind. In these first months of the year, prices have made a “recovery”. However, the financial sector lags behind other sectors, such as energy, both on the Buenos Aires Stock Exchange and the ADRs operating in the United States”. she said.
At Delphos they agreed: “Argentine banks in general remain at low valuations relative to the rest of the financial sector in the region. However, even considering the poor performance of local bank capital relative to Merval, we understand that they contain high risk due to exposure to the sovereign debt. With the current unstable macro environment and close to key political moments, we prefer to steer clear of the sector,” they said.
Source: Clarin
