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Argentina Commercial Banking Report Q3 2007Product Type: Market Research ReportPublished by: Business Monitor International Published: October 2007 Product Code: R302-1618 Description Key IssuesThis quarter we have updated a lot of the numeric information in the banking reports. We now have final banking statistics, sourced from the central bank/regulator or trade association, in relation to the end of 2006 for all countries other than Iran. All of the commercial banking reports need to be considered in the context of a global environment that was benign for banks in the vast majority of the 59 countries for which have collected data. In 2006 the median local currency growth in total assets was 17.2% (in Croatia). The median local currency growth in total loans was 18.2% (in Bangladesh). The median local currency growth in total deposits was 16.9% (in Algeria). In almost all countries local currencies were stable or rising relative to the US dollar. Except in Venezuela and Iran, figures were not distorted by double-digit inflation. Loan/deposit, loan/asset and Loan/GDP ratios all provide a rough measure of the development of the banking systems. Across the 59 countries for which we have collected data, the median loan/deposit ratio is 85.1% (in Thailand). The median loan/asset ratio is 54.8% (in Romania). The median loan/GDP ratio is 53.4% (in Kuwait). Across the eurozone, by comparison, the equivalent numbers are 126.4%, 50.6% and 119.3%. All three ratios are rising in most of the countries for which we have collected data. The Argentine banking system is continuing the trend of the previous few years, and is continuing to gradually overcome the problems that stemmed from a series of systemic crises. Its very small size and underdevelopment —the most visible effect of the crisis— continue to constitute the sector’s biggest impediment. Domestic demand continues to drive growth in economic activity, although underlying inflationary pressures have been allowed to mount. We expect the economy will decelerate and forecast real GDP growth of 7% year-on-year (y-oy) in 2007 (down from 8.5% in 2006) as high inflation, price controls and institutional instability are disincentives to investment. While the banking sector remains vulnerable to anything that could result in a run on deposits, continuing favourable economic conditions are underpinning the steady growth in deposits. The need for continuation of structural reform remains, if the system’s resilience to negative shocks is to progress beyond previous increases. Table of Contents
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