Argentine private sector credit rebounded in February, driven by corporate demand and a surge in mortgage lending, even as consumer financing continued to contract, according to data released by the Central Bank of the Republic of Argentina (BCRA) and analyzed by financial consultancies Equilibra and Bastien Consultores.
The overall recovery follows a real decline in financing during January. Credit in pesos expanded by 0.6% in February, seasonally adjusted, reversing the 0.2% contraction seen the prior month. Dollar-denominated lending continued its upward trend, fueled primarily by corporate borrowers. Still, this broader recovery masked a significant divergence in performance across different credit segments.
Financing through credit cards and personal loans failed to recover in February, hampered by high interest rates and reduced consumer spending. Bastien Consultores noted that credit to consumers “remains stagnant” with February’s seasonal factors offering no boost. The consultancy described a “two-speed market,” with strong performance in primary production contrasting with weak results in consumption and commerce, a dynamic mirrored in the credit landscape.
Credit card balances in pesos grew by just 4.15% year-on-year, lagging behind other credit lines and barely outpacing inflation. Personal loans increased by 64.7% in pesos, but this figure was influenced by strong growth in the first months of last year and has not been sustained in recent months.
In contrast, mortgage lending emerged as a bright spot. According to Bastien Consultores, mortgages in pesos rose by 4.0% in February, while dollar-denominated mortgages increased by 2.0%. This segment is the only one exhibiting genuine real growth. The surge in mortgage activity comes despite elevated interest rates, with rates ranging from 9% in public banks to 12% in private institutions, plus adjustments tied to the UVA (Unidad de Valor Adicional, a unit of account indexed to inflation).
Outlier consultancy pointed to the impact of rising interest rates on consumer credit, stating that personal loans and credit cards were “particularly affected” by increased active interest rates and are contributing most to rising default ratios. The consultancy noted that while delinquency rates increased for loans to individuals, the slowdown in private sector credit in pesos was consistent with the rise in interest rates, which averaged 69% nominal annual for personal loans.
LCG consultancy reported a 1.3% real decline in peso-denominated loans for the second consecutive month, attributing the decrease to consumer credit. Consumer financing fell by 1.6% month-on-month, marking the fourth consecutive month of decline. Credit card balances were down 2.8% month-on-month, while personal loans saw a slight decrease of 0.2%. The irregularity rate for family credit increased to 9.3% in December (the latest available data), accumulating 15 consecutive months of increases, driven by high active interest rates and stagnant wages.
Several banks are responding to the mortgage market’s strength. Banco Macro recently announced the return of dollar-denominated mortgages, up to USD 1 million, with an interest rate of 11.5%. This move is linked to the modern regulations introduced by the Fiscal Innocence Law, which eases restrictions on the use of “mattress dollars” (savings held in US currency). Banco Ciudad also launched a UVA-indexed bond offering of $100 billion pesos, exclusively for mortgage loans, with demand reaching nearly $160 billion pesos, indicating continued funding availability.