From Buenos Aires Times · Ignacio Olivera Doll, Bloomberg · · 1m 10s
Milei's banks shift to government debt
Argentine banks increasingly rely on government bonds as lending stalls.
In brief
Argentine banks increasingly rely on government bonds as lending stalls. Argentine banks now derive 56% of operating income from government securities versus 17% from private lending, signaling reduced banking activity under Milei's policies. Originally reported by Buenos Aires Times.
Banks prioritize government bonds
Argentine banks now earn 56 percent of operating income from government securities in July, more than three times the 17 percent from private lending.
Banks seek liquidity amid uncertainty
Banks prioritize liquidity in uncertain economic conditions, allowing faster reactions than traditional loan portfolios.
Milei's economic policy backfires
Milei's tight monetary policy and high interest rates drive banks toward government debt as economic growth slows.
Credit growth stalls
Bank credit to private sector rose to 12.5 percent of GDP from 5.3 percent at end of 2023, but net interest income fell to 3 percent of operating income.
Banks avoid credit risks
Banks face higher losses as delinquencies surge, reducing credit expansion and increasing reliance on government securities.
Election risks heighten caution
Banks prepare for 2027 election by holding liquid securities to avoid peso volatility during political uncertainty.
What to remember
Argentine banks now derive 56% of operating income from government securities versus 17% from private lending, signaling reduced banking activity under Milei's policies.
