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Argentine banks see UVA loans soar in September, while UVA deposits fall

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Argentine banks see UVA loans soar in September, while UVA deposits fall

The stock of UVA-indexed loans grew by 10 billion Argentine pesos in September, but the amount of UVA-adjusted deposits contracted 16% during the month, falling from an average of 1.60 billion pesos to 1.30 billion pesos, La Nación reported.

Analysts told the publication that the disparity, with the banks only having 2.5 pesos deposited for every 100 pesos given out as credit, is explained by the substantial demand for mortgage loans denominated by the inflation-index, which tarnishes the "good dynamics" of the deposit figures, according to the report.

Despite the decline in September, UVA-indexed peso deposits have actually increased tenfold during the last year, analyst Paulo Moauro told the publication, adding that the mismatch should not be of grave concern for Argentine banks as the indexed credit still only represents a small portion of their assets. Nevertheless, he thinks the banking sector should encourage savings in indexed pesos more actively.

Argentinian banks, meanwhile, have worked on improving the conditions of UVA-adjusted deposits, with interest rates now ranging from 0.2% to 2.5% for customers who keep deposits for at least 180 days in the bank, according to a separate La Nación report.

The popularity of so-called Lebac central bank notes has not helped the UVA deposits but as inflation decreases they are thought to become more attractive to investors, experts told the newspaper.

Argentine state-run banks launched UVA inflation-indexed mortgage loans in March, and private banks have also started offering such loans since then.

As of Oct. 6, US$1 was equivalent to 17.51 Argentine pesos.