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Delinquencies in Argentina double to 4.0% amid economic recession

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Delinquencies in Argentina double to 4.0% amid economic recession

Delinquency rates in the Argentine financial system doubled to 4.0% from a year ago, data compiled by Banco Central de la República Argentina shows.

Delinquencies grew by 0.2% in March from the linked month, the bank's latest data showed. The delinquency rate stands at 3.8% for companies, and 4.5% for families. The Banco Central de la República Argentina underscored that UVA-adjusted housing loans have meanwhile withstood the economic downturn, with "very low" delinquency levels of 0.26%.

Given their capital buffers, however, financial entities are confident they will weather the recession with their provisions. In a recent report, Moody's said they were "sufficient to withstand projected loan losses till year-end." It estimated NPL ratio will most likely stretch to 4.50% by year-end.

The agency also said that as real lending recedes in 2019, banks would likely make up "a large part of earnings" by shifting liquid resources to high-yielding Leliq notes from the Central bank, with yearly returns of around 70.0%.

"Few banks are recording inflation-adjusted- profit under present operating conditions," Moody's said. "Banks will again rely heavily on securities income to support profit," it added.

Less than 10% of Argentine banks' income was attributed to core lending activities in 2018, down from above-30% figures from previous years.