Bank financing to families fell in 2020 and delinquencies also fell

In a year complicated by the coronavirus, the financial system’s assistance to Cordoba families was reduced in 2020 although the different official measures managed to improve the level of delinquency that had reached its highest in 2019.

On the other hand, the productive activities of the province of Córdoba had a retraction of bank financing at the beginning of the quarantine, in March, and in the following two quarters they were able to recover it to the prepandemic level.

This information comes from the latest data shown by the Central Bank (BCRA) discriminated by province, as of September 30, 2020. Despite the slight improvement in the second half of last year, total loan levels show a retraction of 29, 6 percent compared to the same period in 2018), measured in real terms (adjusted for inflation).

At the end of the third quarter of 2020, all economic activities in the province had a balance of 225,012.65 million pesos, of which 69,554.14 million corresponded to individuals in a dependency relationship. These amounts represent 7.4 and 6.5 percent, respectively, of the country’s total.


Until March 2020, bank financing to the entire Cordoba economy followed the downward trend that had begun in mid-2018 and fell by almost a third in that period. Starting in the second quarter of last year, some activities began to regain ground in the assistance of the financial sector surveyed by the BCRA, but the segment of individuals continues to decline.

In the first three quarters of 2020, households reduced the stock of bank loans by 4.8 percent, measured in real terms. Among productive activities, the service sector equaled end-2019 financing, while industry was 4.7 percent above (but still below year-on-year).

On the other hand, other sectors had a more important recovery from the sharp decline they had experienced since 2018. In the first nine months of 2019, primary production increased its level of bank loans by 16.5 percent; construction, 13.4 percent, and commerce, 35.2 percent.

In some cases, the increase in financing to companies is explained by the subsidized rate loans that the Government implemented to alleviate the effects of the crisis on employers, but in other cases (such as agriculture) they are related to increased activity. In addition, in recent months, state lines for the productive sector have returned, at a rate lower than inflation, which is channeled through the banks.

Beyond this particular behavior in the pandemic, influenced by this particular context, the comparison of the last two years (September 2020 versus the same month in 2018) shows a generalized retraction.

Individuals reduced their level of loans by 33 percent in that period. The sectors most affected were the manufacturing industry with a contraction of 43.8 percent and that of public services (electricity, gas and water), with 48.2 percent. They are followed by primary production and services with falls close to 30 percent. hundred. On the other hand, trade had a drop of 11.9 percent, while construction almost recovered the level of two years ago.

Late payment

In 2020, the various official measures to mitigate the effects of the pandemic on indebtedness managed to reduce the level of delinquency in the Cordoba economy in general, which had risen the previous year to a maximum of 7.9 percent in December 2019.

Last September, 5.4 percent of debtors had arrears of more than 30 days with the financial system. The rest were in situation 1 (normal compliance).

But when disaggregating by activity, a very uneven behavior is observed.

Families were the most benefited by the facilities decided by the State. The freezing of loan installments, the refinancing of credit card balances, the cap on interest rates and other measures led to a drop in delinquencies from a high of 7.4 percent of debit balances in the first half from 2019 to 4.4 percent at the end of the third quarter of 2020. It is a lower level, even, than 2018.

On the contrary, among the productive companies the situation was very different according to the activity sector.

Leaving aside the public service companies (with a 23.5 percent arrears), the most complicated sector is the commerce sector with almost 9.9 percent delinquency in September. Although it improved compared to previous periods (it reached 18 percent in March of last year), it more than doubled the levels of 2018.

The industry shows a much more important deterioration, since, until mid-2019 it did not exceed three percent in arrears, while in September 2020 it was at 7.3 percent (somewhat lower than the maximum of 8.6 in March) .

Primary production is the segment with the least delay, 3.6 percent according to the latest data, although it doubles the level of two years ago. Meanwhile, construction and services also show similar levels.

The money deposited returns less to the productive sector

The money that the people of Cordoba and the companies deposit in the banks of the province is destined less and less to finance the local economic activity. This conclusion arises when analyzing loan and deposit data only from the non-financial private sector that reports to the Central Bank on a quarterly basis.

According to the latest data, as of September 30, 2020, private holders had deposits in the Córdoba branches for 304,105.64 million pesos (adding the placements in local and foreign currency), of which, half corresponded to the capital city and the rest to the interior of the province.

On the contrary, the level of loans to the same private sector was 200,262.75 million pesos, that is, only 70 percent of the money from banks located in the provincial territory lent funds to companies or families from Córdoba.

This gap of 30 percent improved in the third quarter of 2020 since it was at higher levels (with peaks of 37 percent difference) since the end of 2018. However, it is very high compared to historical values: two years before it did not exceed 17 percent.

Between September 2018 and the same month of 2020, private loans fell 27.4 percent, while deposits fell 13.9 percent.

Less dollars

One effect of the economic and financial crisis (including the devaluation) unleashed in 2018 was the strong relative drop in loans and financing made in foreign currency.

In this segment of operations, loans also fell more than deposits. Measured in constant pesos (to remove the inflationary effect), financing in foreign currency fell 61.8 percent in the last two years, while deposits in the same currency fell by 55.7 percent.

In contrast, in the same period, while loans in local currency fell 17 percent, deposits recovered almost six percent.

Thus, the share of credit in dollars went from representing 24 percent of total financing to the private sector in Córdoba in September 2018, to only 12.4 percent at the end of the third quarter of 2020. In the same period, the Foreign currency deposits fell from 32 to 16.4 percent of the total in real terms.


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The original text of this article was published on 01/18/2021 in our print edition.