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Argentina's credit boom forces banks to raise savings rates

Argentine banks have started to improve rates offered to depositors as the country observes a credit boom, La Nación reported citing a central bank survey which showed that rates for fixed short-term deposits averaged 18.2% compared to 16% about six months ago.

Credit disbursed grew by 49.6 billion Argentine pesos in September, an expansion of three times higher from a year ago, according to data from Banco Central de la República Argentina

For deposits exceeding 1 million pesos, the rates stand now at average 20.5%, up from 18.4% four months ago, the report said.

Fixed-term deposits in Argentina have suffered as rates did not compensate for inflation levels, the publication noted, citing market research data from Quantum that showed a decrease of 11% in real terms in fixed-term rates.

The stock of private fixed term funds remained stagnant at 550 billion pesos between April and September, as savers opted for Lebac notes from the central bank, investments on the stock exchange or investment funds, La Nación noted.

But last week central bank boss Federico Sturzenegger suggested banks should bring more rewards to savers to avoid liquidity problems in the coming year with soaring credit disbursements, the publication said, which seems to have translated into increased rates.

Banks have also seen a disparity in the expansion of the recently introduced inflation-adjusted mortgage lending and inflation-adjusted deposits, known as UVA, but as the indexed credit still only represents a small portion of their assets, analysts said the imbalance is not considered a grave concern for the sector.

As of Oct. 9, US$1 was equivalent to 17.51 Argentine pesos.