I - Financial system credit operations
The total balance of loans and financing, including nonearmarked and earmarked resources, reached R$ 2,804 billion in May, following increases of 1% in the month and 12.7% in the twelve-month period. The amount corresponds to 56.1% of GDP, compared to 56% in April and 54.5% in May 2013. Credit to households totaled R$ 1,311 billion, up 1.3% in the month and 14.7% in the twelve-month period, while credit to non-financial corporations added up to R$ 1,493 billion, up 0.7% and 11.1% for the same periods.
The balance of nonearmarked credit operations reached R$ 1,513 billion, or 54% of the total portfolio of the financial system, showing 0.7% growth in the month and 5.7% in the twelve-month period. The monthly result reflected an increase of 0.7% in the credit portfolio for non-financial corporations and of 0.6% for households, totaling, respectively, R$ 757 billion and R$ 756 billion. In the non-financial corporations segment, driving factors include increases in working capital, advances on foreign exchange contracts and financing of exports, while in operations with households the change was driven primarily by increases in payroll loans and credit card operations.
Earmarked credit operations reached R$ 1,291 billion in May, growing 1.3% in the month and 22.3% in the twelve-month period. Credit to households increased by 2.2% in the month, with a balance of R$ 554 billion and strong performance in the real estate and rural financing segments. Earmarked credit operations for non-financial corporations totaled R$ 737 billion, reflecting a 0.6% increase driven by variations in real estate financing portfolios at market rates and investment financing with BNDES funds.
Considering transactions with nonearmarked and earmarked resources, loans to the private sector progressed 1% in the month, closing at R$ 2,636 billion in May. Real estate financing for households and non-financial corporations showed a 2.5% increase in the month and a 30.9% increase in the twelve-month period, reaching a balance of R$ 440 billion or 8.8% of GDP, compared to 7.4% in May 2013. Financial system credit for the industry, driven mostly by the food and beverages and construction sectors, totaled R$ 522 billion, a 0.9% increase in the month. Rural credit rose by 1.8% in the month and 33.3% in the twelve-month period, reaching R$ 236 billion.
1 - Interest rates and default rates
The average lending rates for credit operations in the financial system (considering nonearmarked and earmarked resources) was of 21.4% p.y in March, or an increase of 0.3 pp in the month and of 3.3 pp in a twelve-month period. In earmarked credit, the average cost rose to 32% p.y, following increases of 0.3 pp in the month and 6.2 pp compared to May 2013. In the earmarked resources segment, the average rate reached 8.4% p.y, showing increases of 0.4 pp and 1.5 pp on the same bases of comparison.
In credit for households, the average interest rate rose by 0.2 pp in the month and 3.9 pp in the twelve-month period, reaching 27.9% p.y. In the nonearmarked resources segment, the average rate stood at 42.5% p.y, following an increase of 0.5 pp in the month. Earmarked operations recorded an average cost of 7.9% p.y, after an increase of 0.2 pp in the month.
In credit to non-financial corporations, the average rate reached 16.3% p.y, following increases of 0.3 pp in the month and 2.8 pp in the twelve-month period. In operations with nonearmarked resources, the average cost rose by 0.1 pp in the month, standing at 23% p.y. In the earmarked resources segment, the average rate reached 8.7% p.y, following an increase of 0.4 pp in the month.
The spread for credit operations in the financial system (including nonearmarked and earmarked resources) was of 12.9% p.y in May, presenting increases of 0.4 pp in the month and 1.7 pp in a twelve month period. The spreads for households and non-financial corporations reached 18.8 pp and 8.2 pp, respectively.
The overall default rate in the Brazilian financial system (corresponding to the rate of operations more than ninety days in arrears) for nonearmarked and earmarked resources stood at 3.1%, with a 0.1 pp increase in the month and a 0.5 pp decrease in the twelve-month period. The default rate stood at 4.5% for credit operations to households and at 2% for credit operations to non-financial corporations. In credit operations with nonearmarked resources, the default rate reached 5%, following increases of 0.2 pp on credit operations to households and non-financial corporations, with respective default rates at 6.7% and 3.5%, while the same rate remained at 1.1% for earmarked operations.
II - Evolution of monetary aggregates
The working day average balance for the monetary base stood at R$ 223.1 billion in May, reflecting a 1% decrease in the month but a 7.2% increase in the twelve-month period The monthly variation was due to a 1.4% decrease in currency issuance and a 0.8% increase in banking reserves.
Items of highlight in the monthly flows of conditioning factors for currency issuance included National Treasury operations and adjustments to operations with derivatives, with contractionary impacts of R$ 4.9 billion and R$ 2.2 billion, respectively. In the expansionary direction, contributing impacts included net purchases of foreign currency in the interbank market, of R$ 3.4 billion, and actions by the Brazilian Central Bank in adjusting money market liquidity, of R$ 827 million.
The average daily balance of restricted (M1) money supply totaled R$ 306.1 billion in May, after a monthly decline of 2% resulting from decreases of 2.9% in demand deposits and 1% in currency held by the public. The M1 money supply balance has a registered cumulative growth of 5.3% in the last twelve months.
The balance of money supply under the M2 concept (M1 plus savings deposits and corporate bonds) fell 0.1% in May, to R$ 2 trillion. This variation reflected primarily a decrease of 1.7% in the balance of M1. Private securities remained stable, reaching R$ 1.1 trillion, following net redemptions of R$ 2.6 billion from fixed deposit accounts. The balance of savings deposits increased 0.6% to R$ 620 billion after net inflows of R$ 2.3 billion
The M3 concept (which comprises M2 plus shares from fixed income funds and government securities underlying repurchase agreements between the public and financial sectors) expanded by 0.8% in the month to R$ 3.9 trillion. The balance of shares from fixed income funds grew by 1.9% in the period, reaching R$ 1.8 trillion following net inflows of R$ 9.5 billion. The M4 concept (comprising M3 plus government securities held by non-financial entities) grew by 0.7% in the month and 7.6% in the twelve-month period, totaling R$ 4.6 trillion.