Credit Remains Weak

BRAZIL ECONOMICS - Report 25 Jun 2013 by Marcelo Gazzano, Cristina Pinotti and Affonso Pastore
The expansion of bank loans continues to be lethargic. Despite the decline of nearly 1.5 percentage points in the household debt service level since the July 2012, the current level remains high, sustaining the high default rate and deterring private banks from expanding credit. The only dynamism comes from earmarked credit, particularly business loans by the BNDES and home mortgage loans.The 12-month growth of total credit in real terms reached 9.0% in May, and continued decelerating (Graph 1). What growth there was derived almost exclusively from earmarked lending, where the 12-month grow...

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