Brazil’s Central Bank’s – March, 2014 Financial Stability Report is out today, and it gives a decent macro picture of the local credit/bank loan market:
-Bottom line – Credits is (slowly) decelerating and local banks are focusing on mortgages. No news or breakdown of how much of this growth is related to government programs (Nossa Casa Nossa Vida) but the Central Bank has issued guidelines/new regulations for the market (more details here).
-Total Credit (total credit inventory in the Brazilian Financial system, excluding local and overseas capital markets) reached BRL $ 2.7 trillion (~ USD $1.1 trillion), 56.5% of GDP with a 14.6% YoY growth
-Credit growth was driven mainly by public-sector banks a 22.6% yoy growth of the credit versus 7.3% yoy growth of privately owned banks
-Both public and privately owned banks continue the movement out of more risk consumer credit lines (overdrafts, autocar loans) and working capital towards mortgages and payroll loans (‘credito consignado) – with public banks now leading the market on autocar loans and working capital lines.
-Consumer Credit represents roughly 46% of total credit – and mortgages (‘credito imobiliario’) are now the largest part of it (27.3%) with a 33.7% YoY growth (and this is where Public and Privately-Owned banks are competing head to head – mortgage growth on Privately-owned banks was 31.5% compared with 34.2% at Public banks).
-As of December, 2013 77% of the mortgage stock were loans granted during 2011-2013 period (pre-slowdown) and the stock still carries a Loan-to-Value of 66.3% (not considering any increases on real estate value), current average LTV (Dec.2013) is 70.1%
-Corporate bank loans are 56% of Total Credit, it continues to slowly lose share to Capital Markets but still represent 63.1% of the ‘Total Indebtedness’ of local corporations.
-Even considering the recent BRL devaluation (that may distort numbers here) – there’s a clear tendency of local Banks towards large corporations (but SMEs still represent 46.8% of total corporate credit) and into foreign trading lines (out of unsecured working capital lines) – reflecting the economic slowdown/credit quality deterioration.
-Aggregated figures on delinquency (and spreads) at the report are usually not very useful but the overall delinquency rate (over 90 days) was 3.0% as of December 2013, 4.4% on the consumer side and 1.8% on the corporate side.
As usual – send me any corrections, comments.
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