Economic Information

PRESS RELEASE - December 22, 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$3,064 billion in November, (+0.4 percent in the month and -1.3 percent in twelve months). In the month, operations with individuals (R$1,640 billion) continued growing (+0.8), while the balance with corporate transactions fell again (-0.2 percent), standing at R$1,423 billion. The credit/GDP ratio (47 percent) remained stable compared to the previous month, with a 2.9 p.p. reduction in the twelve-month comparison.

Transactions with nonearmarked resources (R$1,553 billion) recorded increases by 1.0 percent in the month and 0.3 percent in twelve months. In the household portfolio, with a balance of R$847 billion (+1.2 percent in the month), the highlights were cash cards (+5.0 percent), vehicle financing (+1.2 percent) and payroll loans (+0.5 percent). The corporate portfolio (R$705 billion) grew 0.7 percent in the month, highlighting business operations: discount of trade notes and receivables (+8.1 percent) and advance on credit cards (+8.0).

Earmarked credit (balance of R$1,511 billion) fell 0.3 percent in the month and 2.9 percent in twelve months), with a 1.1 percent retraction in the corporate portfolio (R$718 billion), reflecting settlements of operations with BNDES funds. Earmarked credit for individuals grew 0.4 percent in the month, totaling R$793 billion, with increases of 0.6 percent in rural credit and 0.3 percent in housing credit.

In corporate credit, a retraction in loans for the industrial segment stood out (-0.9 percent, to R$678 billion), especially the transformation sector (-1.2 percent, R$363 billion). Conversely, loans for the retail segment grew 1.1 percent in the month (R$240 billion), led by supermarkets. In regional credit, including household and corporate operations, the highlights were the South (+0.6 percent, R$557 billion), Southeast (+0.4 percent, R$1,612 billion) and Northeast (+0.4 percent, R$398 billion) regions.

Interest and default rates

In November, the average cost of active credit operations in the National Financial System, measured according to the Cost of Credit Indicator (ICC), stood at 21.7 percent p.y. (-0.1 p.p. in the month and -1.5 p.p. in twelve months), with reduction in nonearmarked credit (-0.4 p.p., to 35.5 percent) and stability in earmarked credit (at 8.9 percent p.y.)

The ICC spread (portfolio spread), which corresponds to the difference between the ICC and the average funding cost of active credit operations, stood at 14.4 p.p. in the month (stable in the month, with a 0.4 p.p. drop in twelve months), recording reduction in nonearmarked credit (-0.2 p.p., to 26.3 p.p.) and stability in earmarked credit (at 3.5 p.p.).

The average interest rate of financial system credit operations in the month stood at 26.8 percent p.y. in November (-0.6 p.p. in the month and -6.4 p.p. in twelve months). In the nonearmarked portfolio, the average cost reached 42.7 percent (-0.9 p.p. in the month and -11.4 p.p. in twelve months), while in the earmarked segment it stood at 9.3 percent, (-0.5 p.p. and -1.3 p.p. in those same periods).

In household credit, the average rate stood at 33.4 percent p.y., (-0.8 p.p. in the month and -9.8 p.p. in twelve months). In nonearmarked loans there was a monthly fall of 1.4 p.p., to 58.1 percent, especially unsecured personal credit (-6.1 p.p.), regular card (-2.8 p.p.) and non-regular card (-3.2 p.p.). In earmarked credit the highlight was a 0.8 p.p. reduction in the cost of housing credit with regulated rates, to 7.4 percent p.y.

In the corporate portfolio, the average interest rate reached 17.7 percent. p.y. (-0.3 p.p. in the month and -3.3 p.p. in twelve months). In the nonearmarked segment, the rate stood at 22.9 percent (-0.4 p.p. in the month), with a cost reduction in several modalities. In earmarked credit, the rate fell 0.3 p.p., to 11.4 percent p.y.

The average spread of the financial system, based on the interest rate of operations over the month, stood at 20.0 p.p. in November (-0.5 p.p. in the month and -3.6 p.p. in twelve months). In nonearmarked credit, the indicator reached 34.2 p.p. (-1 p.p. in the month), while in the earmarked credit it stood at 4.3 p.p. (-0.3 p.p). The spread for individual borrowers fell 0.7 p.p., to 26.7 p.p., while for corporate borrowers it dropped 0.3 p.p., to 10.7 p.p.

The default rate of financial system credit operations, considering credit balances overdue for more than 90 days, reached 3.6 percent of the portfolio, remaining practically stable (-0.1 p.p. in the month), standing at 3.8 percent in the household segment and 3.3 percent in the corporate segment. Operations with both nonearmarked and earmarked credit recorded a 0.1 p.p. drop in rates, which stood at 5.3 percent and 1.8 percent, respectively.

II - Evolution of monetary aggregates

The monetary base recorded an average daily balance of R$256.6 billion in November (up 0.9 percent in the month and 5.4 percent in twelve months. The monthly variation reflected the increase in the balance of bank reserves (2.8 percent) and of currency issued (0.6 percent).

Among the monthly flows of factors conditioning the monetary base, the most notable were operations with federal government securities and deposits of financial institutions (variation in the balance of mandatory deposits), with expansionist impacts of R$17.8 billion and R$5.3 billion, respectively. On the other hand, National Treasury operations resulted in a contraction of R$13.6 billion.

The average daily balance of the restricted means of payment (M1) totaled R$321.7 billion in November, up 0.9 percent in the month, corresponding to growth of 1.2 percent in demand deposits and of 0.6 percent in currency outside banks. In twelve months, M1 grew 3.6 percent.

The balance of the means of payment in the M2 concept, which corresponds to M1 at the end-of-month position plus savings deposits and private securities issued by financial institutions, grew 1.0 percent in November, totaling R$2.4 trillion. This result was determined by increases of 4.9 percent in M1, 1.0 percent in savings deposits (balance of R$705.6 billion) and 0.2 percent in private securities (balance of R$1.4 trillion). Net funding in the month reached R$3.9 billion, while time deposits recorded net redemptions of R$1.0 billion.

The M3 concept, which comprises M2, fixed-income funds and government securities backing repurchase operations between the public and the financial sector increased 0.3 percent in the month, totaling R$5.7 trillion. The balance of fund quotas fell 0.4 percent in the month, standing at R$3.2 trillion. M4, the concept that comprises M3 plus public securities held by the non-financial public, rose 0.7 percent in the month and 8.8 percent in 12 months, totaling R$6.6 trillion.