Brazilian banks’ default rates rise to near pre-pandemic levels

default rates pre-pandemic levels
Photo: Alf Ribeiro/Shutterstock

As inflation continues to rise — and unemployment rates remain in the double-digits — Brazil’s top publicly-traded banks (Bradesco, Itaú, Santander, and Banco do Brasil) are enhancing their default provisions as more customers struggle to pay their dues. 

During the pandemic, stimulus injected into the economy and debt-renegotiation programs helped millions stay afloat — but as access to aid money has decreased, default rates are climbing again to pre-pandemic levels. Analysts say, however, that it remains too soon to predict if default rates will stay on par with those from before Covid or if they will rise further still.

Santander’s provisions for bad payers are up 46 percent year-on-year. Increases were more modest in the other banks — 9.3 percent for Banco do Brasil, 12.9 percent for Bradesco, and 19.3 percent for Itaú.Worries about bank customers’ ability to pay their dues have led the stock prices of Brazilian fintechs to plummet in recent weeks, as we showed in last week’s market roundup.