Consumer Credit Retreats Amid Economic Cooling
Argentine households are tightening their belts. According to the monthly monetary report from the Central Bank of the Republic of Argentina (BCRA), credit for household consumption fell 0.8% in real terms during June 2024. The contraction was widespread, touching every major retail line.
Year-over-year figures underscore the slump: credit card financing dropped 4.2%, while personal loans fell 1.1%. Even the automotive sector is struggling to find traction, with loans for new and used vehicles declining 0.4% from May. The BCRA reports that this segment has been on a downward trajectory since late 2023, resulting in a 0.6% contraction compared to the previous year.
Corporate Lending Shows Signs of Resilience
While consumer appetite has withered, the corporate sector has proven more durable. Commercial lending expanded by 1.5% in real, seasonally adjusted terms. This growth was anchored by “documentos a sola firma” (single-signature promissory notes), which climbed 2.5%.
The picture is not universally bright for business, however. Small and medium-sized enterprises (SMEs) cut their use of current account overdrafts by 1.5%. Meanwhile, discounted documents—a vital source of short-term liquidity—remained effectively flat throughout the month.
Mortgage Growth Driven by Inflation-Linked Debt
The mortgage market is showing a flicker of life, growing 1.2% in June. This uptick is primarily fueled by UVA-adjusted loans, which are indexed to inflation. Despite the modest monthly gain, the segment has surged 63% year-over-year. Low delinquency rates persist in this category as households prioritize these specific obligations above other debts.
Foreign Currency Financing Surges
Financing in foreign currency has seen a massive expansion, jumping 48.7% over the last 12 months to reach a total balance of 23.741 billion dollars by the end of June. The BCRA attributes this climb to a 312 million dollar increase in June alone, largely driven by single-signature documents used to finance foreign trade operations.
Private deposits in dollars also saw an influx, growing by 503 million dollars in June. The central bank linked this rise to the payment of capital and interest on Bopreal (Bono para la Reconstrucción de una Argentina Libre) instruments, which totaled 1.027,8 million dollars. Although this boosted deposit levels, the BCRA noted that some funds were subsequently withdrawn, leaving the total balance of foreign currency deposits at 39.347 billion dollars.
Argentina’s Credit Market Remains Small by Regional Standards
Despite these movements, the broader landscape of Argentine credit remains constrained. As of June, total bank credit in pesos accounted for only 9.2% of the country’s Gross Domestic Product (GDP). Even when foreign currency loans are included, the figure rises to just 12.3%—a stark contrast to the regional average of approximately 47%.
Key Market Indicators
- Total Peso Loans: Marginal growth of 0.3%.
- Consumer Credit: Real-term decline of 0.8% month-over-month.
- Corporate Credit: 1.5% growth driven by promissory notes.
- Mortgage Market: 1.2% growth, with a 63% year-over-year increase.
- Foreign Currency Loans: 23.741 billion dollars total balance, up 48.7% annually.