Argentina’s Rising Loan Defaults Signal Economic Strain

Buenos Aires – A concerning trend of rising loan defaults is emerging in Argentina, signaling potential strain on both households, and businesses. Data from the Central Bank of the Republic of Argentina (BCRA) indicates a significant increase in non-performing loans, particularly within the personal loan and credit card segments, raising red flags for the financial system as of December 2025.

Overall Default Rates Climb

The overall private sector default rate reached 5.5% in December 2025, the highest level recorded since the series began in 2010 [BCRA Banking Report, December 2025]. Although this represents a general increase, the impact is disproportionately felt by families, where the deterioration in loan repayment is accelerating at a faster pace than among companies.

Household Defaults Surge

Arrears in the family segment reached 9.3% in December 2025, a 0.5 percentage point increase for the month and a substantial 6.7 percentage point jump compared to December 2024 [BCRA Banking Report, December 2025]. Within this segment, consumer loans and credit cards are the most affected:

• Personal Loans: Default rates soared to 12%, nearly quadrupling the 3.3% recorded a year earlier.
• Credit Cards: Arrears reached 9.3% of financing, with a 7.4 percentage point increase over the past twelve months.

Conversely, loans with collateral exhibited lower, though still rising, default levels.

Factors Driving Non-Compliance

A report indicates that a key factor contributing to the rise in defaults is the increasing relationship between loan installments and borrowers’ expected income [BCRA Banking Report, December 2025]. As inflation slows, loan installments are no longer “liquefied” by inflationary pressures and represent a larger portion of monthly income, reducing disposable income and future consumption capacity. For variable-rate loans, particularly those adjusted by the UVA (Unidad de Valor Ajustable), the real interest rate has exceeded the variation in real wages since July 2024, creating a growing gap that complicates repayment.

In response to these trends, banks have begun to limit credit card balances and tighten requirements for granting new loans, aiming to contain further deterioration of their loan portfolios.

Corporate Defaults: A More Moderate Increase

While corporate defaults are also increasing, the rise is more moderate. The overall ratio reached 2.5% in December, an increase of 1.8 percentage points year-on-year [BCRA Banking Report, December 2025]. This increase coincides with a greater rejection of checks due to insufficient funds.

According to the BCRA Banking Report, the increase in corporate defaults is primarily attributed to companies involved in trade and primary production.

• Corporate Mortgages: Default rates reached 3.9% in December, slightly down from a peak of 4.7% the previous month.
• Business Pledges: Irregularity closed the year at 3.6%, an increase of 2.6 percentage points over twelve months.
• Current Account Advances: Defaults tripled, reaching 2.4%.
• Document Discount: Irregularity quadrupled, ending at 2%.

Implications for 2026

The record levels of credit deterioration observed in 2025 raise questions about the evolution of consumption and economic activity in 2026. While nominal income is improving, it may not be sufficient to offset the growing burden of loan installments [BCRA Banking Report, December 2025]. The BCRA has announced a new phase of the economic stabilization program, aiming to reconcile economic growth with price stability and strengthen the central bank’s liquid reserves [BCRA Monthly Monetary Report, December 2025]. The success of this program will be crucial in mitigating the risks posed by rising loan defaults and fostering sustainable economic recovery.