Buenos Aires, November 26 (NA) -- Santander and BBVA banks are taking drastic measures in the face of Argentina's current situation. Among these factors are the reduction of credit and the elimination of coverages on capital and profits, decisions that have been addressed to reduce costs, according to the Argentine News Agency. The precautions are taken due to the growth prospects recorded by the entities, which expect them to have slowed down. "Economic growth prospects have deteriorated in the third quarter as a result of political uncertainty, high interest rates, and exchange rate pressures," states BBVA. The bank's CFO, Luisa Gómez, acknowledged this in the last meeting she held with analysts. In response, loan production fell by 9% between July and September. The bank led by Carlos Torres recorded a 10% growth in the third quarter, much lower than in the second (which grew by 21%). Meanwhile, Hector Grisi, CEO of Santander, explained that the credits they grant in the country "are for dollar-exporting and energy companies."
Causes Among the causes of the credit slowdown, they attribute it to interest rates, which reached 60% in October. This generated an increase in the cost of risk: 4.91% for BBVA and 7% for Santander. "With real interest rates at these levels, it is impossible to make money," criticized Grisi.
Fall in their profits Santander lost 348 million euros between January and September, 8.7% less, with a 36% cut in the third quarter. BBVA obtained profits in that quarter amounting to 13 million euros, down to 104 million, which represented a 25% decrease.
What they expect from Argentina However, these banks are not giving up on Argentina. "We believe that the continued focus on macroeconomic policies, on reducing inflation and interest rates, should contribute to improving the environment," Gómez noted. For now, Santander awaits the impact of the financial aid from the United States, although it remains with maximum caution. While Santander indicated that the situation "is complicated." Both Spanish-origin banks had to increase their provisions to clean up non-performing loans, and profits have reduced due to the greater difficulty for customers to repay loans.
Fewer credits Regarding credit, BBVA stated that the slowdown in credit granting was "significant."
