Coverage: weekly note · Information to 5 June 2025
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TGB Weekly Research Note · 5 June 2025
Argentine banks ended 2024 with regulatory capital at 30.2% of risk-weighted assets, far above Brazil, Mexico and Colombia, while real peso lending grew 49.4% and policy moved towards competition between currencies rather than replacing the peso.
The desk view
Regulatory capital stood at 30.2% of risk-weighted assets in December 2024, against 17.2% in Brazil, 19.39% for Mexican banks in September 2024 and 16.98% for Colombian banks. Real peso lending grew 49.4% over 2024, while the capital ratio fell from 32.4% a year earlier. Argentina did not adopt the dollar: it let contracts be settled in any agreed currency, drew dollars into banks through an asset regularisation regime and, in April 2025, moved to a peso band that the central bank calls a transition towards free competition of currencies. Our reading is that banks have room to keep lending, but the gap with peers is likely to narrow as they re-leverage.
A buffer built in contraction, spent in recovery
In December 2023 peso lending to the private sector had contracted 23.7% year on year in real terms, and institutions held capital equal to 32.4% of risk-weighted assets. The BCRA's March 2025 reading of 31.9% was 7.5 percentage points lower year on year, implying a ratio of 39.4% in March 2024.
Over 2024 peso credit to the private sector regained momentum and rose 49.4% in real terms, while foreign-currency lending tripled. In December alone the ratio fell 2.8 percentage points, as capital fell 3.9% in real terms while risk-weighted assets rose 4.9%. The BCRA cited strong growth in private-sector credit plus one-off effects, including a domestic bank's progress in acquiring a foreign bank. By December 2024 the ratio was 30.2%, 2.2 percentage points below a year earlier. Excess capital was still 279% of the requirement, against a 10-year average of 170%. The leverage ratio, Tier 1 capital over a broad measure of exposure, rose 2.6 percentage points over the year to 20.9%, against a regulatory minimum of 3%.
The non-performing ratio for private-sector credit closed 2024 at about 1.6%, down from 3.7% a year earlier. Return on equity fell to 15.8% in 2024 from 26.9% in 2023. Real private credit grew 10.4% in the first quarter of 2025, more than in the same period of any of the previous twenty years, and lending reached 39.6% of bank assets in March 2025. The capital ratio recovered to 31.9% that month, when new operational-risk rules aligned with Basel Committee guidelines took effect. Earnings were thinner: the system as a whole recorded a small loss in the first quarter of 2025, equal to 0.4% of assets at an annualised rate.
Argentina's banking system, December 2023 to March 2025
| Measure | Dec 2023 | Dec 2024 | Mar 2025 |
|---|---|---|---|
| Capital, % of risk-weighted assets | 32.4% | 30.2% | 31.9% |
| Non-performing private credit | 3.7% | 1.6% | 2% |
| Real peso credit, year on year | -23.7% | 49.4% | 88.9% |
Source: Banco Central de la República Argentina (BCRA), Informe sobre Bancos, diciembre de 2023, 21 February 2024; Banco Central de la República Argentina (BCRA), Informe sobre Bancos, diciembre de 2024, 19 February 2025; Banco Central de la República Argentina (BCRA), Informe sobre Bancos, marzo de 2025, 21 May 2025.
Currency competition, not dollarisation
Argentina did not replace the peso; the BCRA describes its policy as a transition towards free competition of currencies in an economy it calls bimonetary and highly dollarised. The legal groundwork came early: Decree 70/2023, published on 21 December 2023, rewrote the Civil and Commercial Code so that a debtor is discharged only by paying in the agreed currency, legal tender or not, and judges cannot change that currency. The BCRA described the elimination of the fiscal deficit as the cornerstone of the economic programme, with the removal of regulations among its other central elements, and called the end of LELIQ issuance an important step towards giving banks incentives to take deposits in order to lend.
Law 27,743, published on 8 July 2024, created an Asset Regularisation Regime under which declared cash had to be deposited in a special bank account that institutions could not refuse to open. Private-sector dollar deposits ended 2024 98.7% higher than a year earlier, a rise the BCRA attributed to that regime. Funds leaving those accounts for any other account before 31 December 2025 face a 5% withholding, with listed exceptions. Dollar lending also rose: foreign-currency credit to the private sector was 180.2% higher year on year in March 2025.
On 11 April 2025 the BCRA moved to Phase 3 of the programme, letting the exchange rate float within a band of 1,000 to 1,400 pesos per dollar that widens by 1% a month, and removing foreign-exchange restrictions on individuals.
How far above the region
Brazil's total capital ratio was 17.2% in December 2024, down from 17.7% in June, a decline the BCB described as slight while saying capitalisation remained comfortably above requirements. Mexico's commercial-bank capitalisation index eased from 19.49% in March 2024 to 19.39% in September 2024, as risk-weighted assets grew faster than capital. Colombian banks' total solvency rose to 16.98% in December 2024 from 16.53% a year earlier. Argentina's ratio was 13 percentage points above Brazil's. National definitions of capital and risk weights differ, so the gaps are indicative.
Total capital ratio, latest reading, %
Source: Banco Central de la República Argentina (BCRA), Informe sobre Bancos, diciembre de 2024, 19 February 2025; Banco de México (Banxico), Reporte de Estabilidad Financiera, diciembre 2024, 11 December 2024; Banco Central do Brasil (BCB), Financial Stability Report, Volume 24, No. 1 (April 2025), 30 April 2025; Superintendencia Financiera de Colombia (SFC), Actualidad del Sistema Financiero Colombiano, diciembre 2024, 1 April 2025.
What the gap means
The contrast in lending is as sharp as the contrast in capital: Chilean banking-system loans grew 0.78% in real terms in the 12 months to December 2024, against 49.4% real growth in Argentine peso lending. Private-sector lending rose from 22.4% of Argentine bank assets in March 2024 to 39.6% a year later. If credit keeps outpacing capital generation, the cushion will narrow. Peers face their own drag: the BCB expects regulatory changes to cut Brazil's total capital ratio by 0.45 percentage points in 2025.
What to watch
- Ongoing from 11 April 2025: the peso band widens by 1% a month at each end.
- 31 December 2025: end of the 5% withholding period on transfers out of special regularisation accounts.
Primary sources: Banco Central de la República Argentina (BCRA), Informe sobre Bancos, diciembre de 2024, 19 February 2025; Banco Central do Brasil (BCB), Financial Stability Report, Volume 24, No. 1 (April 2025), 30 April 2025; Banco de México (Banxico), Reporte de Estabilidad Financiera, diciembre 2024, 11 December 2024; Superintendencia Financiera de Colombia (SFC), Actualidad del Sistema Financiero Colombiano, diciembre 2024, 1 April 2025; Banco Central de la República Argentina (BCRA), Inicio de la Fase 3 del Programa Económico con flexibilización cambiaria y flotación entre bandas (news release), 11 April 2025; Banco Central de la República Argentina (BCRA), Informe sobre Bancos, marzo de 2025, 21 May 2025; Banco Central de la República Argentina (BCRA), Informe sobre Bancos, diciembre de 2023, 21 February 2024; Boletín Oficial de la República Argentina, Decreto 70/2023 (DNU-2023-70-APN-PTE), Bases para la reconstrucción de la economía argentina, 21 December 2023; Boletín Oficial de la República Argentina, Ley 27.743, Medidas fiscales paliativas y relevantes, 8 July 2024; Comisión para el Mercado Financiero (CMF), Chile, CMF informa el desempeño de bancos y cooperativas supervisadas a diciembre de 2024 (press release), 31 January 2025.