The rise in credit card defaults observed in Argentina during April, which persisted through May and June, raises concerns regarding sustained consumer spending in the forthcoming months and may also have implications for the financial sector’s market performance.
The consulting firm Labor, Capital and Growth (LCG) highlights in its latest report that the issue, as documented by official data up to April 2025, is likely to deteriorate further. “The default on household financing, based on the calculation of expected credit losses (according to international standards), will negatively impact banks’ bottom lines,” the LCG report states.
In the context of financial sector equities, the year 2025 is projected to be unfavorable. In 2025, Grupo Supervielle has experienced a decline of 25%; Banco Macro has fallen by 24.3%; Grupo Financiero Galicia has decreased by 15%; and BBVA has seen a reduction of 11.5% on the S&P Merval. Although the declines in the market can be attributed to macroeconomic factors, the rise in household delinquency may exert an even more significant influence. Both banks and financial service providers are increasingly scrutinizing the data regarding payment delays with a sense of concern.
The consulting firm LCG reports that “public data on defaults (until April 2025) show that it rose to 4.6% for personal loans and 2.9% for credit cards.” “These are not alarming levels, but various banks report that default rates continued to rise in May and June, affecting families across various economic segments,” states LCG. The report indicates that “a pattern was seen in cards: first, more and more cancellations of amounts just above the minimum, and then, not even reaching the minimum (late payments).”
The report posits that among the potential factors contributing to the default are, firstly, the burden of family loans, which are crucial for maintaining consumption, becoming increasingly significant in relation to stagnant wage growth, and secondly, the prevailing interest rate. “In terms of wages, personal loans have experienced a more rapid increase relative to the minimum set in April 2024, whereas credit card financing has reached its peak level.” In this context, it appears justifiable that families are encountering challenges in meeting their debt obligations,” the report states. The survey suggests that “these issues may herald a further slowdown in the growth of household loans and begin to raise doubts about the ability to continue sustaining the increase in consumption in the coming months.”
Financial services firms also report defaults, a study conducted by the Argentine Chamber of Financial Services Companies (CAEFPI) indicates that “an increase in defaults has been observed during the first half of the year compared to last year.” Data from a member company of the Chamber indicates that the proportion of late payments surpassing 30 days stands at 13.50% at 30 days, 10.40% at 60 days, and decreases to 8.30% at 90 days. In comparison to the prior year, the consulted sources suggest that the short-term rise in late payments has varied between 5% and 10%.
In this context, the credit rating agency Moody’s has added its voice to the growing chorus of organizations cautioning against a notable rise in Argentine debt levels. “In recent quarters, a sharp deterioration has been observed in the performance of loan portfolios originated by Non-Financial Credit Providers (NFCs),” they cautioned.
In its latest report, the rating agency indicated that “the average debt-to-salary ratio has increased sharply since the second half of 2024,” rising 72% between June of last year and January 2025. This was compared to “levels similar to those of 2018.”