Benefits for Leliqs are consolidated as the main income of the banks. With late payments in rising companies, bankers seek to reduce risk
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<p><span style="font-weight: 400;">In recent months the banking business changed substantially. The monetary adjustment faced by Guido Sandleris - sustained by high interest rates - and a recession that has not yet hit bottom made it more profitable for banks to place their pesos in the letters of the Central Bank rather than finance companies and families .</span>
On the one hand, they get on average a rate higher than 70% per year by leaving their pesos one week fixed, at a minimum risk, even lower than the sovereign and at a practically zero operating cost.
On the other hand, private demand to borrow at high rates was reduced and banks also took their feet off the accelerator, given the increase in delinquency.
In that context, in July the banks earned a total of $ 24,133 million, an increase of 6.3% compared to the $ 22,686 million they recorded in June and 165% more than the $ 9,098 million they had earned a year ago, in July of 2018. That is, considering that in July annual inflation was 54.4%, banks earned more than double the profit of a year ago.
The data comes from the last report on banks that the BCRA prepares, where it also shows that the bankers' workhorse were the Leliqs, since it contributed most of the benefits. Strictly speaking, the result for securities showed benefits to the banks for $ 72,957 million, a figure that represents 14% of netted assets.
Under this concept it reflects the gain or loss that they had for interest, amortization and changes in the price of bonds, bills and Leliqs, although 70% of their portfolio is composed of the Central Bank's liquidity bills.
The new banking business
Meanwhile, the classic financial business of banks, taking deposits and lending to families and businesses is not paying off. If one looks only at what they pay for deposits and what they charge for credits, the numbers are red, although in banks they point out that there are other businesses associated with each client.
Thus, what the banks paid in July in interest on deposits was $ 78,419 million, while the income from the loan rates left them $ 56,004 million, throwing a negative balance of $ 22,415 million.
"Lower expenditures for interest on deposits and higher gains on securities mainly explained the monthly increase in the financial margin," notes the monetary agency in its report, confirming that the Leliqs are today the mainstay of the banking business.
According to the Central, in the last 12 months the financial margin accumulated a level equivalent to 11.9% of the asset, 1.7 percentage points more in a year-on-year comparison.
The report also showed that according to the estimated flow of funds for July, the financial system obtained resources mainly through the increase of private sector deposits and that they were applied "fundamentally to the increase in the balance of Leliqs and, in second order of magnitude, to the nominal increase in credits to the private sector ".
Leliqs, bank by bank
When one analyzes the numbers by group of banks, it arises that private banks with national capital are the ones that most benefited from the letters of the Central. In fact, in this group of banks the benefits for securities represented 16.8% of its net assets, while for foreign banks it was the equivalent of 10.8% of its assets and for public banks, 14.9 %.
The holding of Leliqs according to the group of banks, is what explains these numbers. According to the data of the Central, In July, banks had $ 1,278 million in Leliqs, of which 41.5% ($ 460.9 million) was held by local private banks, 22% ($ 278,291 million) held by foreign banks and just over 36% ($ 460,985 million) in public banking portfolio.
"In July, net income from services of the financial system grew 0.2 p.p. of the asset compared to June to 2.1%," said the monetary agency. In the accumulated between August 2018 and July 2019, he added, banks obtained profits for this concept for 2.1% of the asset, 0.3 p.p. less than a previous year.
Thus, in July the nominal monthly profitability of the banks was at levels similar to those of June, the Central said. ROA totaled 4.6% a. (+0.2 p.p. in the month) and the ROE was around 41.4% a. (+0.8 p.p. in the month). In the accumulated of the last 12 months to July, the nominal gains accounted for represented 4.6% of the assets and 42.2% of the net assets.
At the same time that the banks focused their guns on the letters of the Central, they saw how the portfolio of the private sector deteriorated, mainly in loans granted to the corporate sector.
The blackberry continues to rise
The Central report shows that in July the irregularity of financing to the private sector stood at 4.7% of the total portfolio, increasing 0.1 percentage point in the month and 2.4 p.p. compared to July last year. In addition, he adds that the default ratio of loans to companies increased 0.3 percentage points in the month (+3.3 p.p. interannual) up to 4.6%
On the other hand, with the effect of the collection of the bonus, the coefficient of irregularity of loans to families decreased 0.1 percentage points (+1.3 p.p.year year-on-year) to 4.8%. Mortgage loans to families kept their delinquency ratio unchanged and remained 0.4% for the segment in UVA and 0.7% for the rest.
These numbers, however, were outdated after the dollar skyrocketed in August and the sharp rise in rates promoted by the Central Bank. In the banks they recognize that the delinquency in the collection of their loans was accentuated, as much in the segment companies as in the destined ones for the consumption.
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