UPDATE 1-Brazil bank lending growth slows in October, defaults drop
By Asher Levine
SAO PAULO Nov 28 (Reuters) - Brazilian bank lending growth cooled in October as state-run banks continued to put the brakes on loan disbursements and private sector banks tightened credit standards, contributing to a slight drop in delinquency rates and bigger lending spreads, central bank data showed on Thursday.
Outstanding loans in Brazil's banking system rose 0.5 percent in October from September, down from a 0.75 percent gain in September from August, the central bank said in a report released on Thursday.
Disbursements at state-run lenders rose 23.9 percent in the 12 months through October, down from a 26.5 percent rise in the 12 months through September, the report added. Brazilian private-sector banks increased their loan books by 6.0 percent in the 12 months through October, up from a 5.8 percent gain in September.
Over the past two years, state development bank BNDES, Banco do Brasil SA and Caixa Econômica Federal were given incentives by President Dilma Rousseff and top government officials to cut credit costs. Recently, the banks have cut back on those efforts in order to comply with Basel III regulatory requirements.
The pullback from public banks could lead to a brighter outlook for private-sector lenders in coming quarters as the fierce competition between the two moderates.
October's data shows some evidence of that transition taking place, as spreads, or the difference between the rate at which banks lend money and funding costs, rose by 0.4 percentage point from September to 11.6 percent, the highest since April.
Loans in arrears for 90 days or more, the industry's benchmark gauge for credit delinquencies, fell from the previous month to 5.0 percent, reaching the lowest level since June, 2011, the report said.
Defaults have been on a falling trend throughout the year despite an increase in the cost of borrowing over the past six months, the report showed. The average lending rate rose 0.4 percentage point to 19.8 percent in October, with rates on loans to individuals up 0.6 point to 26.1 percent. Corporate lending rates edged up just 0.1 point.
Defaults between 15 days and 90 days, a gauge of the future behavior of delinquencies, remained stable for both consumers and companies.
The annual pace of growth in earmarked loans, or credit aimed at encouraging investment for home building in accordance with government policies, slowed to 24.6 percent in the 12 months through October from 26.3 percent in September.
Non-earmarked loans, or the portion of freely allocated loans in Brazil's banking system, rose 8 percent in the 12 months through October, down from an 8.7 percent gain in September.
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