Economic Information

PRESS RELEASE - June 28, 2017

Monetary Policy and Financial System Credit Operations
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I - Financial system credit operations

The balance of financial system credit operations reached R$3,065 billion in May (-0.2% in the month and -2.6% over twelve months). The corporate portfolio, balance of R$1,478 billion, contracted by 1% in the month, while the household portfolio grew by 0.6%, reaching a balance of R$1,587 billion. The credit/GDP ratio dropped by 0.2 p.p. in the month to 48.6%, compared with the 51.8% posted in May 2016.

The credit portfolio with nonearmarked resources totaled R$1,521 billion (-0.3% in the month and -3.7% over twelve months). The balance of household credit grew by 1% in the month, totaling R$814 billion, the highlights being in payroll-deducted loans and demand credit cards. Corporate transactions fell by 1.6% in the month to R$707 billion, the most notable decreases being those in working capital and guaranteed accounts.

The earmarked credit portfolio totaled R$1,544 billion (-0.1% in the month and -1.5% over twelve months). The balance of household operations grew by 0.3% in the month, reaching R$773 billion, the highlight being mortgages. In the corporate segment, the balance fell by 0.4% in the month, reaching R$771 billion, the emphasis being on liquidations with investment financing from BNDES.

Major decreases, regarding the economic activity of borrowers by segment, occurred in the manufacturing industry (-1%, R$388 billion), in construction (-1.6%, R$94 billion) and in trade (-2.1%, R$251 billion). Considering operations above R$1,000, there were regional decreases in the Southeast (-0.1%, R$ 1,620 billion) and in the South (-0.1%, R$550 billion).


I1 - Interest and default rates

The Cost-of-Borrowing Indicator (CBI), which calculates the average cost of all active credit operations, fell for the third consecutive month, reaching 22.3% (-0.5 p.p. in the month and -0.4 p.p. over twelve months). The indicator for nonearmarked credit fell by 0.9 p.p. to 37.5% in the month, with decreases of 1.7 p.p. for households (49.4%) and 0.6 p.p. for legal entities (24.8%). The CBI remained at 8.9% regarding earmarked credit.
The average interest rate of credit operations in the financial system, considering operations with nonearmarked and earmarked resources, fell by 1 p.p. in the month to 29.2% p.y. in May (-3.5 p.p. over 12 months). The average rate for nonearmarked credit fell by 2.5 p.p. in the month decreased, reaching 46.8% p.y., while the average rate for earmarked credit was 10.2% p.y., increasing by 0.4 p.p.
The average interest rate of the credit to households continued a decreasing trend, reaching 36.9% p.y. (-1.9 p.p. in the month and -5.3 p.p. over 12 months). The interest rate decreased by 4.5 p.p. in the month to 63.8% p.y. in the nonearmarked segment, the highlight being the fall of 50.2 p.p. in revolving credit cards (297.7% p.y. to 247.5% p.y.). In the earmarked segment, the interest rate increased by 0.7 p.p. to 9.7% p.y., the most significant rise being the 0.9 p.p. in real estate financing.

Considered monthly interest rates, the decline observed in the rate for revolving credit cards corresponded to the decrease of 12.2% p.m. to 10.9% p.m. Concerning the monthly repayments, the rate fell from 8.4% p.m. to 8.3% p.m. The interest rate for overdrafts, another form of revolving credit provided to households, decreased from 12.9% p.m. to 12.8% p.m.

In the corporate segment, the average interest rate reached 19% p.y. (-0.2 p.p. in the month and -2.6 p.p. over twelve months). In the nonearmarked segment, the rate continued to fall to 25.9% p.y. (-0.4 p.p. in the month) as a result of various modalities. In the earmarked segment, the average rate reached 11.1% p.y. (+0.1 p.p.).

The bank spread of operations with nonearmarked and earmarked resources was posted at 21.2 p.p. (-1.1 p.p. in the month and -1.6 p.p. over twelve months), resulting from a decrease of 2.4 p.p. in nonearmarked credit (36.9 p.p.) and an increase of 0.1 p.p. in earmarked credit (4.2 p.p.). Regarding the household segment, the spread posted a decrease of -2.2 p.p. to 28.8 p.p. in the month, while credit taken by corporations fell by 0.1 p.p. to 11.1 p.p.

The default rate of financial system credit operations related to credit balances overdue for more than 90 days corresponded to 4% in May (+0.1 p.p. in the month and +0.3 p.p. over twelve months). Regarding household credit, the rate reached 4.1% (+ 0.1 p.p. in the month and -0.2 p.p. over 12 months), while it reached 4% in the corporate segment (0.2 p.p. and +0.8 p.p.). In the nonearmarked credit segment, defaults increased by 0.2 p.p. in the month, reaching 5.9%, while defaults remained stable at 2.2% in the earmarked credit segment.


II - Evolution of monetary aggregates

The average daily balance of the monetary base reached R$248.1 billion in May, varying by -0.3% in the month and +4.1% over twelve months. This monthly result reflected the decrease of 0.6% in the balance of currency issued and the increase of 1.9% in bank reserves.

Among the monthly flows of factors conditioning the monetary base, items worth highlighting were operations federal government securities, representing a contractionary impact of R$39.8 billion (net redemptions of R$21.3 billion in the primary market and net sales of R$61.1 billion in the secondary market) and the National Treasury operations, which resulted in expansionary impacts to the amount of R$17.1 billion.

The average daily balance of the restricted means of payment (M1) totaled R$312.5 billion in May, following decreases of 0.6% in the month, which resulted from decreases of 1% in demand deposits and 0.4% in currency held outside banks. M1 grew by 3.2% over twelve months.

The balance of the means of payment in the M2 concept, which corresponds to M1 plus savings deposits and private securities, increased by 1.3% in May, totaling R$2.4 trillion. This result reflected the monthly increases of 2.1% in private securities, balance of R$1.4 trillion, and 0.6% in savings deposits, which reached R$669 billion. There were net deposits of R$35.3 billion in time deposits and R$762 million in savings deposits.

M3, which comprises M2, quotas of fixed-income funds and government securities backing repurchase operations between the public and the financial sector, grew by 0.9% in May, adding R$5.5 trillion. The balance of quotas of fixed-income funds grew by 0.9% to R$3 trillion over the period, following net deposits of R$16.4 billion. M4, which comprises M3 and government securities held by the nonfinancial public, grew by 0.7% in the month and 9.2% over the last twelve months, totaling R$6.3 trillion.