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Elypsis: Argentina's credit market to slow in 2018

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Elypsis: Argentina's credit market to slow in 2018

Argentina's credit market is expected to slow on the back-end of a surge in peso credit that was released to the private sector last year, partly as a result of much slower growth in deposits, El Cronista reported, citing data from research firm Elypsis.

While peso disbursements grew 17% in 2017 in real terms, private sector deposits in pesos only increased 1%, which is expected to push lenders to seek more funding in 2018.

According to the firm, credit growth will also decrease as banks are expected to have lower levels of liquidity and families are more indebted than a year ago.

In addition, it also expects banks will be less eager to release credit due to a growing need for long-term financing to sustain Argentina's mortgage market. That market is growing rapidly from a near nonexistent base following a move by the central bank that created the UVA inflation-indexed unit for mortgage loans and after President Mauricio Macri's government launched 30-year inflation-indexed mortgages in March 2017.

"Bank liquidity decreased significantly throughout the year. In order to cope with the increase in loans, financial entities decreased their stake in Lebac [central bank notes] and their liquidity in pesos. ... Even so, liquidity is at a minimum since April 2017, putting pressure on interest rates," Elypsis said.