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Average Interest Rate in Brazil: 29% a Year. In the World: 4%

Erivaldo Rodrigues of Austin Rating reports that Brazilian bank profits in 2005 were the biggest in a decade. They were also very high by world standards.

He explains that one of the main reasons was high interest rates charged for bank loans which were at world record levels. "The average interest rate in Brazil is 29% per year, compared to the world average of 4%. In the United States it is 3.5% and in Japan it is 2.8%," he says.

As a result, explains Rodrigues, Brazilian banking profits rose an average of 44.5%, compared to 2004. "Bradesco’s 80.2% rise in profits beats all prior records," he says.

With the country’s key interest rate, the Selic, at 17.5% per year, banks kept their spread (the difference between what banks pay for money and what they loan it for) as wide as possible. At the same time there was an average expansion of loan portfolios of 21.5%.

The government has promised to reduce the basic interest rate and has done so gradually, but the reductions have not been passed on to the final consumer. The Selic did come down some, but the final cost of money did not and that explains the record bank profits, says Rodrigues.

Agência Brasil


  • Show Comments (3)

  • david wilmarth

    I’d like to see your site kept current and a list of brazil banks with ratings and contact emails or phone #s

  • Guest

    HERE ARE THE TRUE NUMBERS, even much higher than thought :

    The survey showed that on February 1st, the average lending rate on personal loans to individual customers was at 5.41% per MONTH, down from 5.42% p.m. a month earlier. This was a cut of just 0.19%! Of the ten banks surveyed, HSBC cut from 4.97% to 4.91% p.m. and Banco do Brasil from 4.85% to 4.80% per month.
    The average overdraft interest rate meanwhile in the same comparison fell from 8.31% per month to 8.28% per month, a drop of just 0.36%. HSBC cut its average rate on this credit modality from 8.47% to 8.37% p.m., Banespa from 8.50% to 8.40% p.m. and Banco do Brasil from 8.03% to 7.99% p.m.

  • Guest

    they just don’t pass the benefits on to the consumer!! The banks see a way of making additional profits, but screwing the customers in the process….normal! With the nearly 33% reduction of the value of the dollar in contrast to the real over the last 6-8 months one would logically think that the price of imports such as cars and electronics would drop accordingly, not as of yet!!! Someone has to be making money and these benefits are certainly not being passed on to the consumer!!

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