The local subsidiary of the Moody’s risk rating group closely follows the evolution of the various sectors of the economy, including the banking sector. Clarion consultation with Marcelo De Gruttola, analyst high from Moody’s Ratings. who explained that the mid-term and long-term outlook for Argentine organizations seems positive, but some weaknesses still appear in the current situation.
–After acquiring HSBC’s business in Argentina, do you think the banking sector is moving towards consolidation, with fewer players in the country?
-For many years we have talked about Argentina’s system of having few loans and many financial institutions. But these consolidation processes take place over a long period of time. It is not something that happens from one year to the next, it happens little by little with special cases. If the outlook of the banks changes to a sharp fall in the rate of inflation, with a sharp reduction in rates, many organizations will need more to improve their efficiency, because their margins will be smaller.
– Is this consolidation of the banking sector going to come hand in hand with macroeconomic recovery?
It’s not necessary. For now, Argentine banks have a slightly more positive outlook in the medium term and this could lead to a greater interest of some in evaluating the purchase of other groups or making mergers. But it’s not something we’re particularly looking at. What happened to him business between Galicia and HSBC, after a change in the political and economic cycle, the supply and demand met to carry out this work.
– Do you expect to recover credit in 2024?
We do not believe that the conditions are still in place for a major recovery. This requires a deeper reduction in the rate of inflation. Some improvement could begin to be seen in the second half of the year. In the context of a recession, the demand for credit is not going to appear, but the banks could start to improve the supply and what we do not see yet is that the banks go out to look for that supply.
-Official data shows a drop in branches: how will the consolidation of the sector and the reduction in these service points affect customers?
There is a global change that causes branches to be used less. In some countries the number of branches decreased faster, in others it did not happen or it has been slower. In Argentina it has not been so much. Individuals use digital channels more and do not go as close to branches, so it is logical to think that banks need to review this model. In any case, from a logistical and management point of view it is not easy to close branches.
-Argentine banks’ ADRs have risen more than 70% since the beginning of the year on Wall Street. Are investors’ appetites aligned with fundamentals?
Argentine banks are relatively strong. Unemployment rates on the loan portfolio are low and have remained so, despite being in recession last year and this year.
Did the monetary policy implemented by the Central Bank improve these balances?
The policy change happened a few months ago, it is something that is happening and we have not yet seen such a big change in the balance sheets of the banks. Credit demand has not yet recovered so we can see in the banks’ balance sheets whether they are still exposed to the debts of the Central Bank and the Government. We believe this is a year of transition. That is why we still have a more negative outlook for this year. We believe that the challenge is still great, but in the capital indicators, the level of portfolio quality, credit, liquidity levels and others offer an edge to withstand the potential pressure of a year like this, with changes in very important policies that are evident. they have implementation risks that could create risk for the bank as well.
2024-04-27 22:16:03
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