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UPDATE 1-Brazil retailer Lojas Renner cuts credit card rates
September 28, 2012 / 3:31 PM / 5 years ago

UPDATE 1-Brazil retailer Lojas Renner cuts credit card rates

* Monthly credit-card rate cut to 9.8 pct from 12-16 pct now

* Renner shares down on weaker performance from finance unit

* Central bank has slashed rates, gov’t pressuring lenders

SAO PAULO, Sept 28 (Reuters) - Brazil apparel retailer Lojas Renner will cut interest rates it charges credit card customers beginning in November, as fiercer competition and government pressure have squeezed the lucrative consumer finance business.

Renner will cut monthly rates on financial products to 9.8 percent from between 12 and 16 percent now, a spokeswoman said on Friday.

Shares of Renner fell 1.6 percent and have lost about 6 percent this week as investors braced for weaker performance from the retailer’s consumer finance division.

Renner, like others in the industry, created its consumer credit services to encourage sales. Profits from that business have grown more important to the company, BTG Pactual Group analysts led by Fabio Monteiro wrote in a note to clients.

Brazil’s biggest private sector banks, Itaú Unibanco Holding and Banco Bradesco, have announced sharp reductions in credit-card rates and more-aggressive payment terms in recent weeks.

Itaú also took control of card payment processor Redecard this week in a move that may hasten change in the relationship between banks and card users.

The government has also pushed for cheaper consumer credit, condemning high interest rates for personal loans and credit cards at a time when central bank policy has dropped borrowing costs to record lows.

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