With strongly negative interest rates In the last two months, fixed-term deposits have begun to show signs of this They have stopped being the Argentinians’ favorite investment. In January, savers preferred to dismantle positions in banks after the jump in devaluation and with an exchange rate gap that had started the month at its lowest.
Forward placements fell by 19% real monthly in January, which extends the dynamics observed the previous month. “Interest rates well below inflation explain this result. In annual terms, term loans decline by 55.9% in real terms,” consultancy firm LCG highlighted.
What happened with fixed deadlines is part of a fall of all deposits in pesos. Although demand deposits grew by 4.6% in real monthly terms at the beginning of 2024, the stock of pesos in banks accumulated a real decline of 8.3% compared to what was observed at the beginning of 2023.
On one side, Inflation “eats” the ability to save, especially by retailers. But at the same time, tariff policy of the Central Bank discourages any type of placement in pesos. Savers and companies They prioritize liquidity be able to migrate towards shorter-term placements, although these also have negative returns.
“A process of Demonetization of the economyalso encouraged by an expansionary monetary policy of negative rates”, they observed in LCG and added: “In this context of high inflation, which discourages the possession of money without remuneration, It is expected that by 2024, demand deposits will continue to evolve below the price level of the economy and gradually migrate towards interest-bearing demand accounts. through the transfer of funds to the FCI money market”.
Fixed terms tied to inflation have also decreased in the first month of the year, because the Central Bank decided to extend the minimum time for placement to six months. But the trend, in this case, could be reversed: “The decline in previous months has been so large that it is possible that it will slow down, due to peso-bound agents having difficulty accessing other methods of saving.”
The “B-side” of fixed conditions in banks is the placement of credit for the private sector. Loans also showed a drastic decline in the first month of the year and accumulated three consecutive months of collapse. If you look at the stock of bank loans, the cumulative decline in the last twelve months is more than 32% in real terms.
“The private sector abandons banks as a source of financing and there is a strong adjustment in the values of the activity, to demonstrate this it is enough to consider that the total financing to the private sector in pesos granted by the entire financial system is less than 15,000 million dollars measured at the MEP price”, explained Guillermo Barbero , partner of First Capital Group.
Personal loans vs. Credit cards
In January all credit lines fell. Consumer finance loans did so at a slower pace compared to December: personal loans and credit card financing fell by 12.7% and 10.9% real monthly respectively.
“Banks are once again turning their attention to this product with offers and promotions, but it is far from historical levels. In the recent past, personal loan levels rivaled those of credit cards in volume each segment represents 50%; Currently we see it «The ratio is 75% for cards and 25% for personal loans».Barbero said.
The specialist announced: “It is expected that the use of the Cuota Simple program, which replaces the Ahora 12 programs, will make it possible to recover the card wallet. The increase in the value of the products is faster than the income of the cardholders and therefore consequently, that the credit limit updatesfor this reason growth is hampered in real terms from your wallet.”
Source: Clarin
