For the first time since leaving the corralito, banks posted losses in March

The financial system as a whole suffered in March a negative total comprehensive result of $ 1,821 million, which stopped the uninterrupted sequence of profits that the bank obtained since 2005, when the business began to normalize after the retention of deposits of the “corralito”, on the end of the government of Fernando de la Rúa, and the subsequent “corralón”.

The Report on Banks, released by the Central Bank of the Argentine Republic (BCRA), showed the strong contrast between these results and the $ 27,529 million earned by entities during March 2019.

The BCRA detailed that the recent monthly loss was concentrated in public entities, which lost $ 4,789 million in March, as private banks (both national and foreign) cut their results without falling into the red.

In the month analyzed, the financial system accrued a result, measured in homogeneous currency, equivalent to -0.3% of assets (ROA) and -1.9% of net equity (ROE).

But for publicly owned banks, the ratios were -2% and “17.1%, respectively,” the BCRA said.

As explained by the report of the monetary authority, “the monthly result of the financial system was influenced, in particular, by the behavior of the securities in the aggregate balance of the sector.”

This negative effect was reflected “in part due to the lower yield of the species in the portfolio, mainly from the monthly reduction in the interest rates of monetary policy and the positions in Leliq”.

The decrease in the monthly bank profitability also influenced “the general fall in the prices of public securities (for the part accounted for at market value)”.

These effects were reflected, in accounting terms, in the caption “results for securities”, which is part of the financial margin, and in the caption “other comprehensive income” (ORI).

In the accumulated in the first three months of 2020, banks recorded losses in ORI of the order of 1.4% of assets, the BCRA report pointed out.

In any case, he added, the set of banks in the system obtained during January-March a positive comprehensive result of $ 38,645 million, due to the still high results for Securities and Services.

Those benefits were concentrated almost entirely in private banks ($ 34,791 million), since public entities (Nación banks, Buenos Aires Province, City, etc.) limited their quarterly results to $ 3,838 million, the BCRA said.

Expressed in relative terms, the aggregate of financial entities operating in the country closed the first quarter with accounting benefits, in real terms, of the order of 2% of assets or 13.5% of net equity.

However, the Central Report indicated, during the same period there was a clear gap between public banks, which recorded an ROA of 0.5% and ROE of 4.5%, while private banks achieved results of 2, 9% and 17.8%, respectively.