Two out of every three loans that are unrecoverable are from virtual wallets

The percentages of delinquencies with credit cards and consumer loans began to climb strongly since the middle of last year due to the general increase in interest rates that the economy experienced during the months of pre-election exchange tension.

There are 20.9 million people with some type of current line of credit. Of that total, they are considered delinquent, which implies a late payment greater than 90 daysabout 5.8 million according to numbers from the Central Bank that EcoGo processed.

There is a portion of that total (2.6 million people) that owes money to both banks and simultaneously to non-bank entities who give loans. The rest are “exclusive” debtors, that is, they chose one of the two credit channels to get into debt.

Repayment arrears are markedly higher among non-banking entities (28% in May, according to EcoGo) in relation to banks (12,8%), for different reasons. The main one is that they have higher interest rates than traditional banks. They start, at base, at four times above inflation according to the Central.

For this reason, many debtors They prefer to be up to date with their bank so that the cheapest financing tap is not closed to them and they leave for later the liabilities they accumulate with alternative wallets and creditors.

The universe of entities that provide loans without being banks is diverse: it includes entities of single signature loans (almost 59% of late payment), appliance chains (44% of overdue debt) with the highest numbers to others such as cooperatives and mutualswith less critical situations (15%). The BCRA recently relieved delivery apps as credit givers of their own delivery people and exhibited a growing phenomenon.

Within the delinquency data there are realities that are more pressing than others. According to a survey by the Center for Argentine Political Economy (CEPA), there are $3.4 billion of credits that are already considered unrecoverable. That is, they are more than a year behind. 66% of that amount corresponds to virtual wallets and fintech.

In a previous category of irregularity (4, which implies delays of between 6 months and 1 year) 6.6 billion pesos are concentrated. In this case, on the contrary, the majority (almost 5 billion) is in the hands of the banks. A conclusion from this data, according to CEPA, is that the number of irrecoverable defaulters could continue to increase.

The urgency of the situation triggered different behaviors in the financial system. Banks practically stopped granting loans due to the high level of delinquencies and that is why wallets gained ground.

One hypothesis, supported by CEPA, is that there is a part of debtors that is increasing their debt with wallets and fintech to catch up with the banks. That is to say, They replace a “cheap” debt with a more expensive one.

Once debts become uncollectible, banks usually write off that credit on their balance sheets and They sell that liability to law firms to an amount less than the original so that they can seek – through judicial means – a recovery of that liability.

A study by the consulting firm Analytica attempted to make a sort of “sociology” of debtorsby studying in depth based on official data which segment of the population they belong to, where in the country they live and how much money they owe.

In that report, they concluded that in the northwest Argentine provinces the default percentages, measured as the number of people with some current credit, are the highest in the country. San Juan (35.2%), Catamarca (34.2%), San Luis (34.1%) and La Rioja (34.0%) They lead that ranking.

On the contrary, the lowest ratios are observed in the City of Buenos Aires (16.1%), followed by La Pampa (19.5%) and Neuquén (23.3%).

In the province of Buenos Aires it was 27.8%. In the Buenos Aires suburbs there are also disparate realities: in municipalities such as Florencio Varela reaches 38.7%, in José C. Paz 37.5%, in Moreno 36.2%, Malvinas Argentinas 35.5% and Merlo, 34.6%.

The banks explain that the sectors of the labor market most affected are the lowest-income earners (mainly state employees such as municipal or police officers) and also monotributistas. It also mainly impacts young people: 38.3% of those under 30 years of age have arrears of debt according to Analytica; and also 32.6% of those between 31 and 40 years old.

The amount of the debt depends on the city in which they live: in CABA the average balance is $1.2 million per personin the Province of Buenos Aires, meanwhile, is $925.000.