UPDATE 2-Brazil bank lending slows as state-run banks pull back
BRASILIA/SAO PAULO Oct 29 (Reuters) - Brazilian bank lending growth cooled in September as state-run banks began putting the brakes on their rapid growth in loan disbursements, central bank data showed on Tuesday.
Outstanding loans in Brazil's banking system rose 0.8 percent in September from August, down from 1.3 percent in August from July, the central bank said in a report released on Tuesday. September's lending expansion came well below this year's 1.2 percent monthly average, the data showed.
Disbursements at state-run lenders rose 26.5 percent in the 12 months through September, down from 28.1 percent in the 12 months through August, the report added. Private-sector banks increased their loan books by 5.8 percent in the 12 months through September, up from 5.3 percent in August.
The numbers could at a first glance spell a brighter outlook for private-sector lenders in coming quarters. Fierce competition by state-run banks is expected to lessen, helping lending margins in the banking system recoup some of the erosion suffered since late 2011, analysts said.
"Credit expansion is likely to remain relatively stable at the current level until the end of the year," Credit Suisse Group analysts led by Nilson Teixeira wrote in a note.
A shift in President Dilma Rousseff's use of state-run banks to stoke competition will likely mark a change of fortune for private-sector banks, analysts including Grupo BTG Pactual's Eduardo Rosman recently noted. Stiff competition resulted in a secular downward trend for consumer, small- and mid-sized corporate and working capital loan spreads, market share losses at private-sector banks and lower profits across the board.
Over the past two years, state development bank BNDES, Banco do Brasil SA and Caixa Econômica Federal were incentivized by Rousseff and top government officials to cut credit costs in Brazil - which remain among the world's highest - and to foster competition with private banks. At the same time, private banks pulled back after a surge in delinquencies since early 2011 ate into profits.
The annual pace of growth in earmarked loans, or credit aimed at encouraging investment for homebuilding purposes in accordance with government policies, slowed to 26.3 percent in the 12 months through September from 27.2 percent in August and 21 percent at the start of the year.
Non-earmarked loans, or the portion of freely allocated loans in Brazil's banking system, rose 8.7 percent in the 12 months through September, down from 8.8 percent in August and about 14 percent in December.
Loans in arrears for 90 days or more, the industry's benchmark gauge for credit delinquencies, remained unchanged from the previous month at 5.1 percent, the report said.
In particular, defaults between 15 days and 90 days, a gauge of the future behavior of delinquencies, rose slightly among consumers though remained stable for companies.
Defaults remained stable despite an increase in the cost of borrowing, the report showed. The average lending rate rose 0.2 percentage points to 19.5 percent in September, with rates on loans to individuals up 0.3 points to 25.5 percent. Corporate lending rates remained stable.
Spreads, or the difference between the rate at which banks lend money and funding costs, remained unchanged from August at 11.3 percent.
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