The solvency of financial institutions established in Uruguay remains stable, with the average capital of banks 88% above the regulatory minimum capital requirements, which includes credit, market, operational and systemic risks.
In order to analyze the status of the banking system, the Superintendency of Financial Services performs stress tests that have satisfactory results from the impact of predetermined adverse scenarios. In terms of system average, regulatory capital of banks would be above the regulatory minimum if there is a severe stress scenario, while in a less severe scenario the impact would be of low significance.
Total assets of the banking system as of December 2018 amounted to USD 37,502 million, of which 38% was credit to the resident private non-financial sector. Liabilities were USD 33,214 million, of which 85% was of non-financial private sector deposits, and 90% of these were residents.
In 2018, loans extended to the private non-financial resident sector in national currency increased $ 26,519 million (+ 12.5%) and foreign currency loans rose USD 62 million (+ 0.8%). The stock of credit is almost equal among domestic and foreign currency. After adjustment for measuring the increase in credit without delinquency distortions and different exchange rates, we see that credit to the resident private sector grew by USD 818 million (+5.4 %).
Debt in Uruguayan families remained stable at 27% with regards to annual income when bank debt is recorded (including the Banco Hipotecario del Uruguay BHU) and debt with credit management companies.
Delinquency remained stable throughout the period with a slight decrease at the end of the year, closing at 3.2% (the average for the year was 3.6%). Delinquency of consumer loans was 4.1% and 3.5% for companies at the end of 2018, while mortgage loan delinquency was 1.3% at the end of the year.
Deposits of the private non-financial sector in local currency increased once again by $ 24.228 million (+11,1%). Foreign currency deposits in 2018 rose by USD 90 million (+0,4%) of which USD 77 million belong to residents and USD 13 million to non-residents. This shows an annual growth rate in dollars of 831 million (+ 2.9%). Local currency demand deposits and savings accounts are approximately 72% of total deposits, while for foreign currency it remains stable at 90%.
Bank results were significantly higher than in previous years, partly as a result of the appreciation in the exchange rate. The positive results amounted to USD 24,607 million, with a return on assets (ROA) of 2.1% and 18.9% return on equity (ROE).
In the pension savings system, total accumulated funds reached USD 502.756 million of which USD 500,025 million represent the savings of 1,415,522 affiliates as of December 31, 2018 (+ 7.3%) and the rest is a Special Reserve in case of inadequate profits. The average real profitability in UR (Unidades Reajustables) for the sub-fund accumulation amounted to 4.25% while sub-fund withdrawal reached 3.31%.
The volume traded in the stock market reached USD 52.539 million and had a 12% rise with regards to 2017 partly due to the issuance of certificates of deposit in dollars by private banks. New funding included: negotiable bonds of private companies USD 91million, mortgage bonds USD 24 million, and financial trusts USD 990 million, of which USD 647 million were certificates of participation and the remaining USD 343 million debt securities.
Of the total trusts issued, about 27% were effectively integrated since several were destined for private public participation projects (PPP) where integration of funds is carried out as the works progresses.
Observing the contribution of the stock market to medium and long-term company financing, in 2018 it represents approximately one third of total funding, which shows the important role of the stock market in funding.
Insurance companies' sales fell 6,21% on average in real terms over the previous year, reaching a net premium earned of $ 41.933 million, which is approximately 2.3% of GDP. This is mostly from life insurance policies, an area that is operated almost exclusively by the State Insurance Bank and records a real drop of 18.7%
Without considering this, the real decrease in sales of insurance companies amounts to 0.8% in 2018. Life insurance policies continue to have the highest share of total premiums issued (26%) followed by vehicle insurance (24%) a market that is getting more competitive every day.