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May 26, 2021

Econviews Monthly

Argentina: Special Analysis on the Argentine Banking System

BY Miguel A. Kiguel, Alejandro Giacoia, Andrés Borenstein, Lorena Giorgio, Rafael Aguilar, Isaías Marini

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( 2 mins)

In Search of a Program: Hope in Paris, Not So Much in Buenos Aires

I. Politics and economic decisions

Who is in command? This is a critical question when it comes to economic policies.  Minister Guzman is formally the Minister of Economy, but he seems to be primarily in charge of managing debt and the relationship with multilateral organizations.  This is a good start, because a potential IMF agreement will set monetary and fiscal policies and through the budget affect key decisions such as the size of the energy subsidies, among others.

 

II. Hard Times for Argentine Bankers

The return on equity and return on asset ratios are at the lowest point in over a decade for the Argentine banking system. Both indicators are floating at around a 35-45% of their long-term averages. In the last few months profits fell considerably. In January and February, the system made an average of 5 billion pesos a month, an 80% decline compared to the average of 2020 or almost 90% less than the average monthly profit of 2019, all in constant money. This trend is widespread. State-owned banks, private banks both foreign owned and domestically owned as well as non-bank financial companies have seen their profits decline. Actually, the last group has been losing money every single month since June 2020.

 

Econviews Weekly May 26th 2021

More by Miguel A. Kiguel, Alejandro Giacoia, Andrés Borenstein, Lorena Giorgio, Rafael Aguilar, Isaías Marini