Credit in pesos falls again: consumption declined in August and delinquency continues to pressure

Credit in pesos to the private sector fell again in August, in a scenario marked by the deterioration of lines intended for consumption and the increase in delinquency. According to data from the Central Bank (BCRA), financing in local currency contracted by 1% month-on-month in real terms, marking the first decline since March of this year.

The decline was mainly concentrated in consumer loans and, to a lesser extent, in commercial lines. In contrast, mortgage loans maintained their expansion, and financing in dollars continued to grow.

Despite the real setback, the average volume of loans in pesos recorded a nominal increase of $1.8 trillion during August.

Credit cards accounted for a significant part of the decline.

Financing for consumption decreased by 1.9% month-on-month in real and seasonally adjusted terms. Within that segment, credit cards showed the worst performance, with a contraction of 3.3% in real terms compared to July. Personal loans, on the other hand, remained relatively stable.

Lines intended for companies also declined. Commercial credits fell by 0.7% in real terms during the month, although with differences among the various instruments.

Current account advances grew by 1.8%, while discounted documents fell by 2% and documents with a single signature decreased by 1.9%. The latter two lines explained the contraction in commercial financing.

Delinquency rose again.

The decline in credit occurs in a context of increasing irregularity in payments. The delinquency rate in the banking system rose again in July, reaching levels not seen in over two decades.

According to a report by consulting firm 1816 based on figures from the BCRA, irregular credits in the non-financial private sector increased from 7.63% of the total in June to 7.73% in July.

The deterioration was observed among both families and companies. In households, loans with delays exceeding 90 days reached 12.94%, compared to 12.77% the previous month. Among companies, the irregularity rate increased from 3.50% to 3.61%.

The behavior was different among loans backed by real guarantees. This segment increased by 1.1% month-on-month in real terms, mainly driven by mortgages, which grew by 2.8% in August at constant prices. In contrast, pledged loans fell by 1.1% and have accumulated a decline of 8% over the past twelve months.

Financing for home purchases has thus accumulated more than two consecutive years of positive monthly variations. Compared to the same period last year, mortgage loans grew by 41.6% in real terms, with a significant share of lines adjusted by UVA. In this context, the Government seeks to give a new boost to the segment through resources from the Sustainability Guarantee Fund (FGS) of Anses.

The first auction allocated $200 billion to fund financial entities that must channel these resources towards new UVA mortgage loans. 42 offers were received from 18 banks, and 13 entities were finally awarded.

While financing in pesos lost momentum, loans in dollars continued to expand. In August, they increased by $258 million and closed the month with a stock of $25.241 billion.

According to the BCRA, this type of financing has maintained a virtually uninterrupted growth trajectory since January 2024, mainly driven by documents with a single signature linked to foreign trade operations.

At the same time, the Government recently expanded the universe of companies that can access loans in foreign currency, including firms that do not generate foreign exchange. Official and private estimates suggest that banks could channel up to $6 billion additional through this route.

In aggregate terms, the stock of financing in pesos to the private sector remains around 9% of GDP. When incorporating loans in foreign currency, the ratio rises to 12.6% of the product.

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