Brazilian banks loan almost BRL 1 trillion amid crisis

. Jun 01, 2020
Brazilian banks loan almost BRL 1 trillion amid crisis

Brazilian banks have lent a total of BRL 914.2 billion between March 1 and May 22,  including new loan renegotiations and the suspension of installments, according to bank association Febraban. 

Official data from the Central Bank showed that credit concessions jumped 15 percent in March and April, rising to BRL 692 billion. Partial data from May also shows that free credit operations — those where interests are defined freely among banks and customers — already add up BRL 222.1 billion. Increasing lending to provide companies and individuals with more room to weather the crisis has been one of the Central Bank’s main strategies to support the Brazilian economy. 

Another concern was that banks could steeply increase banking spreads or interest rates to make up for eventual losses.

Febraban data, however, shows that interest for credit operations has fallen from 23.1 percent to 21.5 percent per year, while the average spread per credit operation diminished from 18.6 percent to 17.2 percent. “Even though there were more concessions, the increase in the risk and default ratios have already been reflected in the significant spike in provisions, so both interest rates and spreads fell in the period,” explained Febraban.

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Natália Scalzaretto

Natália Scalzaretto has worked for companies such as Santander Brasil and Reuters, where she covered news ranging from commodities to technology. Before joining The Brazilian Report, she worked as an editor for Trading News, the information division from the TradersClub investor community.

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