Brazilian banks improved their projections for the growth of their credit portfolios in 2023, from 7.9 percent in March to 8.1 percent in May. This improvement is driven more by positive forecasts regarding credit to individuals (which is now estimated to grow 7.1 percent this year, up from 6.8 percent in the previous survey) than credit for businesses (targeted lending), which is now expected to grow just 3.9 percent this year (down from a previous forecast of 5.1 percent). The data comes from a survey carried out every 45 days by the banking federation Febraban.
According to the banks, there was an increase in the perception of credit risk to companies after the Americanas case — the retailer has been under judicial recovery since January due to possible accounting fraud related to credit operations — and the increase in bankruptcy protection requests driven by the country’s high interest rates. They also see less appetite for loans among entrepreneurs precisely because of the still-adverse economic scenario.
Although better than in March, the projections are slightly below the growth of 8.3 percent for the loan portfolio that the sector had expected at the beginning of the year. This is because banks only see the Central Bank starting to cut the country’s benchmark interest rate in the third quarter, more precisely in September — which would ease the burden of current debt on consumers’ pockets and help reduce bad debt rates.
According to Febraban’s survey, 57.9 percent of financial institutions forecast interest rate cuts in Q3 (against 63.2 percent in the previous edition). Another 26.3 percent expect reductions to occur in the fourth quarter, while 10.5 percent do not predict any change in monetary policy until 2024.
If most financial institutions are correct, two more cuts to the benchmark interest rate would be made at the meetings scheduled for November and December, leading the Selic to end 2023 at 12.25 percent.
It is a more optimistic view than that presented in the latest Focus Bulletin, the Central Bank’s weekly survey of more than 140 financial institutions, which this Monday pointed to expectations of a benchmark interest rate of 12.50 percent at the end of 2023, and of 10 percent by 2024.
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