The Argentine government doesn¹t make it easy for banks.
Although they mostly remain in good shape, a slowing economy
has thrown up yet another challenge for the country¹s
The government forecasts growth of 3.4% in 2012, down from
8.9% last year, while output in 2013 as a growing number
of forecasters now predict could be still slower.
Banco Santander Río is the biggest bank in the
country and the strongest in retail lending, which remains the
largest business line for the country¹s banks. Its $10.65
billion in assets as of year-end 2011 grant it a cushion that
leaves it well positioned to deal with a deteriorating economic
³In the past two or three years Santander Río
has been the best performer in terms of growth, profitability
and cost efficiency,² says Santiago Gallo, an analyst at
Retail lending has been the focus for the bank¹s
growth. Commercial lending is growing too, but uncertainties
facing the private sector are a challenge.
³In the coming years most of the growth in Argentina
will be in retail lending,² Gallo says. ³The
government¹s economic model is based on strong local
demand and consumption. That fosters retail lending.²
Santander Río has the largest private-sector loan
portfolio (8.8% market
share) and deposit base (9.7% market share) in Argentina.
During 2011, Santander Río says the bank accounted for
36% of the total system¹s expansion in new branches.
The bank¹s net income in 2011 was $406 million, up 5%
year-on-year. It is also the most profitable with a return on
equity of 43%. Santander Río continues to be the most
efficient private-sector bank compared to peers with a
cost-to-income ratio of 46%.
³Banks in Argentina are in good shape,² Gallo
says. ³The risk mainly comes from the economy, from the
government and the political environment.² So far there
have been no adverse effects from any troubles from its Spanish
parent. Santander plans to float part of its profitable
Argentine operation just as it did with its Mexican unit
in September in an operation that appears to have been
successful so far. Santander Río¹s connection to
Santander has also allowed it to have one of the top capital
markets operations in the country.
Argentina¹s economic slowdown could lead to a
deterioration in asset quality, though Gallo says Santander
Rio¹s strengths leave it in a strong position to face
these risks, and historically it has always maintained a high
Gallo points out there are some factors benefitting the
country¹s economy, such as a high soy price. Nobody is
expecting a crisis, but Santander Río is again the best
prepared to face any challenges ahead. LF