The volume of credit in the Brazilian National Financial System totaled 1.067 trillion reais (US$ 634.7 billion) in June, a value equivalent to 36.5% of the country's Gross Domestic Product (GDP). According to the Central Bank of Brazil (BC), the percentage is the highest since January 1995, when the volume of credit was equivalent to 36.8% of GDP.
The BC expects the credit-to-GDP ratio to reach 40% by the end of the year. The head at the BC Economic Department, Altamir Lopes, stated, however, that the forecast may be exceeded, should credit continue to grow at the current rate.
"This 40% ratio is still lower than those of countries with economies similar to that of Brazil, with the same performance and risk level. Credit is expanding, especially to legal organizations, which are basically turned to the working capital modality, turned to sales and investment, characterized by more flexible deadlines," said Lopes.
According to him, in the case of natural persons, the highlight is the slowdown in direct credit to consumers for purchases of vehicles, as many buyers are opting for leasing procedures. In December 2006, of every 100 vehicles, 82 were sold through direct credit to the consumer, and 18 by means of leasing. As of June 2008, the ratio was 65 to 35, respectively.
The increase in the benchmark interest rate (Selic), used by the Central Bank to contain inflation, has not yet influenced the volume of credit granted in the country, even in face of higher interest rates for natural persons.
"The figures for June do not point to that type of trend. Partial data for June show a continuing expansion of credit." As credit is reduced, consumption, which drives up inflation, decreases as well. The Selic provides a reference for setting other interest rates.
In the first 13 working days of this month (until the 17th), in comparison with the same period of June, the volume of credit used as reference for setting interest rates (operations taken into account in order to calculate average interest rates for credit modalities) grew 1.6% in total, being 0.2% for natural persons, leasing operations not included, and 2.7% for companies.
The average interest rate increased 1.3%, to reach 39.3%. For natural persons, the rate grew 2.1% (51.2% in the year) and for legal entities, 0.9% (27.4% in the year). In the case of overdraft facilities, one of the most expensive modalities, interest rates reached 162.4% in the year.
In the opinion of Lopes, consumers are still adopting a "policy" of not looking at interest rates, but rather checking whether the installments "fit their pocket." According to data supplied by the BC, the average installment plan for families rose from 456 to 467 consecutive days. In the case of companies, average plans reached 303 consecutive days in June, as against 298 consecutive days in May.
The overall insolvency rate, considering delays of more than 90 days, decreased from 4.3% in May to 4% in June, the lowest rate since August 2005 (3.9%). For legal entities, the insolvency rate was 1.7%, as against 1.8% in May. For natural persons, the rate decreased from 7.4% to 7%.
However, Lopes explained that the insolvency rate was influenced by sales of credit portfolios by financial institutions to securitization companies, which are not included in the statistics of the BC. Had it not been for this operation, said Lopes, the overall insolvency rate would be 4.2%.
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