In March 2008, we updated all data for the 59 countries surveyed with official figures, sourced from
central banks and regulators. In most cases, we were able to find data that pertained to the end of 2007: in
almost all other cases, the data pertains to 30 September 2007. As a result, the insights that we derive on
particular countries are based on consistently sourced information that is far more current than it had been
previously.
Although we gather data for countries such as the US, Japan, Australia and the eurozone, the vast
majority of the 59 countries whose banking industries we survey are, or are generally seen as being,
emerging markets. For all the widely publicised problems of large banks in developed countries, in the
wake of the subprime banking crisis in the US, 2007 was an extremely good year for the banking sectors
of the emerging markets. In local currency terms, the median growth in assets was 21% (in Brazil). The
median rates of growth in loans to non-bank customers and in deposits were 22% (in India) and 18% (in
Morocco). In some countries - and not just those enjoying oil booms - the figures were spectacular. In
Ukraine, for instance, assets and deposits rose by 76% and 62% respectively. Loans grew by more than
one-third in Bulgaria, Estonia, Latvia, Lithuania, Romania, Russia, Serbia, Slovenia, Peru, Bahrain, Iran
and Nigeria. Deposits also rose by more than one-third in most of those countries.
In absolute terms, Argentina’s banking sector enjoyed reasonable growth through the year to 31
December 2007. In local currency terms, total assets, total loans and total deposits increased by 15%,
29% and 20% respectively. The loan/deposit, loan/asset and loan/GDP ratios all rose.
However, relative to other countries surveyed by BMI, these achievements are not so impressive. Of the
59 countries surveyed, Argentina ranks 39th in terms of local currency asset growth, 21st in terms of local
currency loan growth and 24th in terms of local currency deposit growth. All three of the ratios are rising
from very low levels. As the tables above show, Argentina’s rankings in terms of its loan/deposit,
loan/asset and loan/GDP ratios are 53rd, 49th and 58th respectively. In a country with per capita GDP of
US$6,155, deposits per capita are around US$1,652.
In Q108, we envisaged that total assets, total loans and total deposits would rise by 10%, 25% and 20%
annually through the 2007-2012 forecast period. Now, and using an improved forecasting method, we are
looking for growth rates of 13%, 19% and 15% respectively.
Since Q108, we have calculated, on a consistent basis, a Commercial Bank Business Environment Rating
(CBBER) for each of the 59 countries surveyed. The CBBER includes an assessment of the limits of
potential returns: it does this by taking into account the size, growth potential and bancassurance potential
of the banking sector, as well as aspects of the economy in 2007. The CBBER also depends on an
assessment of the risks to the realisation of potential returns: this reflects BMI’s assessments of overall
country risk, together with the regulatory and competitive environment.
Argentina’s CBBER is 51.0. In the context of Latin America, this means it is no more than a moderately
attractive country - the CBBERs are higher in each of Brazil, Mexico, Chile and Colombia. The major
problem is the underdevelopment of the banking sector, which is reflected in the small relative size and
the small potential for growth. The ratings score for the market structure - the most important component
of the assessment of the limits to potential returns - is just 46.9. By Latin American standards, the ratings
score for the economy - at 47.2 - is also on the low side. Argentina’s banking sector remains constrained
by its past problems.
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