In February, Argentine banks reported a real contraction of 1.3% in loans issued in pesos to the private sector for the second month in a row. This decline coincides with increasing levels of delinquency within the loan portfolio and a drop in deposits in the national currency, which also saw a decrease of 1.1% during the same month. Analysts from the consulting firm LCG based their calculations on official data from the Central Bank of Argentina (BCRA), which assumed a 2.6% inflation rate for this month; the inflation data will be officially revealed on February 12.

The decrease in loans can be attributed to a reduction in both consumer loans (-0.7%) and loans to companies (-0.5%), which highlights a general cooling within the financial market. Given the context of tightening monetary policy and declining deposits, banks are likely to become more cautious in their lending practices. The persistently high delinquency rates further complicate the lending landscape, adding pressure on banking institutions to reassess credit risk.

Overall, the stagnation in peso loans and the accompanying decline in deposits signal a challenging economic environment in Argentina, characterized by high inflation and tightening liquidity. These conditions could hinder private sector growth and limit financial access for consumers and businesses alike, potentially affecting overall economic recovery efforts in the country.