I - Financial system credit operations
The balance of financial system credit operations, including both nonearmarked and earmarked resources, totaled R$2,835 billion in July. This result followed growth of 0.2% in the month and 11.4% in 12 months, against respective growth rates of 0.9% and 11.8% in the previous month. The credit/GDP ratio closed at 56.1%, against 56.3% in the previous month and 54.8% in July 2013. Household operations added up to R$1,331 billion, an increase of 0.5% in the month and 13.5% in 12 months, while corporate operations totaled R$1,504 billion, following a falloff of 0.1% and expansion of 9.6% in the same respective periods.
The evolution of credit operations in July was generated by different performances in operations with nonearmarked and earmarked resources. The portfolio of earmarked resources maintained a strong pace of growth, mainly driven by house financing operations with households. In its turn, the nonearmarked segment registered a downturn in July, reflecting a seasonal drop in corporate operations and lesser household credit demand.
Accounting for 53.5% of the credit stock, operations with nonearmarked resources totaled R$1,516 billion, reflecting a monthly decline of 0.5% and 12-month growth of 5%. The monthly reduction was caused by a 1.1% cutback in corporate operations, particularly under working capital operations, discount of trade bills, and guaranteed overdraft accounts. The balance of the household credit portfolio expanded 0.2%, mainly focused on payroll-deducted loans.
Earmarked credits reached R$1,319 billion, expanding 1% in the month and 19.8% over 12 months. Both household and corporate operations expanded 1% in the month, led by household house financing and investments financing with BNDES resources.
Operations with the private sector posted expansion of 0.1% in the month, reaching R$2,661 billion in July, generated by 2.1% growth in house financing operations in both corporate and household segments, accounting for 9.1% of GDP, against 7.6% in July of the preceding year. The balance of operations targeted to the commercial segment dropped by 1.5% in the month, reflecting lesser demand by durable and semi-durable goods in the retail segment, as in the automotive sector, for example. With regard to rural credits, the 0.1% decline accompanied a falloff in current expenditure operations. Credits channeled to industry and other services showed respective reductions of 0.2% and 0.5%. The balance of public sector financing closed at R$175 billion, following 2.3% growth in the month, with respective increases of 3.3% and 1.2% in credits channeled to the states and municipalities and to the federal government.
I.1 - Interest and default rates
When both nonearmarked and earmarked operations are included, the average rate of interest on financial system credit operations reached 21.4% per year in July, following highs of 0.3 p.p. in the month and 2.3 p.p. in 12 months. The average rate of interest closed at 32.3% per year in nonearmarked credit operations, reflecting increases of 0.3 p.p. in the month and 4.8 p.p. over 12 months, while earmarked operations closed with 8.2% per year, following increases of 0.4 p.p. and 1 p.p., using the same bases of comparison.
In the household segment, the average rate of interest increased 0.3 p.p. in the month and 3.1 p.p. in 12 months, closing at 28.2% per year. In operations with nonearmarked resources, the average cost expanded 0.2 p.p. to 43.2% per year, while the average rate in operations based on earmarked resources closed at 8.2% per year, reflecting growth of 0.5 p.p. in the month, mainly as a result of the 0.5 p.p. high in house financing loans.
In the case of corporate loans, the average cost reached 16% per year, with variations of 0.3 p.p. in the month and 1.6 p.p. over 12 months. The average rate in the segment of nonearmarked resources increased 0.5 p.p. in the month, reaching 23.1% per year. This result was impacted by the 0.8 p.p. high under working capital loans. In operations with earmarked resources, the average cost rose by 0.3 p.p. in the month and closed at 8.2% per year.
With regard to operations involving both nonearmarked and earmarked resources, the banking spread closed at 13.1 p.p., following growth of 0.4 p.p. in the month and 1.7 p.p. in 12 months. The spreads for the household and corporate segments reached 19.4 p.p. and 8.1 p.p., respectively. In the case of nonearmarked resources, the spread increased 0.5 p.p. in the month, closing at 21.4 p.p., while the spread on operations with earmarked resources came to 3 p.p., representing a high of 0.2 p.p. in the month.
Financial system defaults, defined as operations with arrears of more than 90 days, remained at a level of 3%, the lowest in the historical series that began in March 2011. In the household and corporate segments, the indicator remained stable at 4.3% and 2%, respectively. In operations with nonearmarked resources, defaults came to 4.9%, following a high of 0.1 p.p. in the month, and remained at 1% in the segment of earmarked resources.
II - Monetary aggregates
Average daily monetary base balances reached R$226 billion in July, following growth of 1.2% in the month and 6.8% in 12 months. Monthly variations reflected growth of 6.8% in banking reserves, coupled with stability in the balance of currency issued.
Among monthly flows of the factors that determine monetary issuances, one should highlight net purchases of exchange on the interbank market and adjustments in derivative operations, with respective expansionary impacts of R$11.4 billion and R$2.6 billion. In contrast, operations with federal public securities, including Central Bank operations aimed at adjusting money market liquidity, generated contraction of R$12.9 billion, reflecting net sales of R$68.1 billion on the secondary market and net redemptions of R$55.2 billion on the primary market.
The average daily balance of the restricted money supply (M1) closed at R$308.9 billion in July, an increase of 0.5% in the month, resulting from increases of 0.6% in currency held by the public and 0.4% in demand deposits. Cumulative 12-month M1 growth reached 2.6%.
In the M2 concept, which corresponds to M1 plus savings deposits and private bonds, the money supply balance increased 0.1% compared to June, reaching a total of R$2 trillion. This variation reflected growth of 0.9% in savings deposits, the balance of which reached R$634.3 billion, following net inflows of R$4 billion. The balance of private securities remained stable, with an overall total of R$1.1 trillion, impacted by net redemptions of R$15.5 billion in time deposits.
In terms of the M3 concept, which includes M2, quotas of fixed income funds and public sector bonds used as backing for repo operations between the public and the financial sector, monthly expansion came to 1.3%, closing at R$4.1 trillion, due to an increase of 1.3% in quotas of fixed income funds, which closed at R$1.9 trillion. M4, the concept that includes M3 and public sector bonds held by nonfinancial institutions, registered growth of 0.7% in the month and 10.6% in 12 months, closing at R$4.7 trillion.