Banks in Argentina have declared record profits for the month of August despite the South American country slipping even further into an economic crisis with rising unemployment, poverty, and hunger. The banking sector recorded a 264 percent growth in profits this August in comparison to the same month last year, the Central Bank's monthly report revealed.
According to local newspaper Pagina12, the profits registered in August by financial entities, including private and local banks as well as public and foreign institutions, exceeded 26 billion Argentine pesos (US$715 million) while in August 2017 banking profits reached 7 billion Argentine pesos, or US$192 million.
The figures for August are not isolated but a part of a trend that has seen stable growth throughout the year.
The record profits come as Argentines who receive pensions, cash transfers known as the Universal Allocation Per Child, and local salaries have seen their purchasing power greatly affected by currency devaluation and inflation rates, while banks’ profits have increased at a rate superior to that of devaluation.
Actually, as the peso rapidly lost value during April and May, financial institutions registered high profits. According to the Central Bank, in May they accumulated 14.5 billion pesos, or US$405 million, in profits.
Investment in state bonds represents the main driving cause of such great profits. In August, the Central Bank increased interests rates on state bonds to over 60 percent in a failed attempt to curb currency devaluation.
The other driving force is the interest banks are able to charge on loans. Income for interest increased by over 70 percent in August.
Argentines continue to be affected by the economic crisis and the economic policies implemented by the government of Mauricio Macri. This year, public teachers and university professors have organized national strikes against the loss of purchasing power due to inflation and currency devaluation. The real economy — which creates jobs — continues to contract on a monthly bases, and layoffs continue to increase in the private and public sector.