Economic Information

PRESS RELEASE - November 24, 2017

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

The total balance of financial system credit operations reached R$3,052 billion in October, a variation of +0.1% in the month and -1.4% in twelve months (stability and -2%, respectively, in the previous month). Household transactions stood out with a balance of R$1,627 billion (+0.7% in the month and +5.6% in twelve months). The balance of corporate transactions, R$1,425 billion, fell 0.5% and 8.3% in the same periods. The credit/GDP ratio reached 46.9%, compared to 47% in September and 49.9% in October 2016.

Credit operations with nonearmarked resources totaled R$1,537 billion (+0.5% in the month and -0.4% in twelve months). In October, household credit operations increased by 1.1% to R$837 billion, especially credit card operations with immediate payment (+2.8%) and payroll-deducted loans (+0.6%). The corporate portfolio, on the other hand, fell 0.3%, totaling R$700 billion, with reductions of 6.1% under discount of trade bills and receivables and 0.6% under working capital.

Credit operations with earmarked resources reached a balance of R$1,515 billion (-0.2% in the month and -2.3% in twelve months). In the corporate segment, the credit balance reached R$726 billion (-0.7% in the month), with declines in all segments, especially the persistent contraction in operations with BNDES funds. On the other hand, household credit operations rose by 0.3% to R$790 billion, reflecting respective increases of 0.2% and 0.7% under housing and rural credits.

Considering economic activity segments, an overall reduction was observed in the credit portfolio: crop and livestock (-1.3%), manufacturing (-1%) and services (-0.1%), with expansion only in public administration services (+1.3%). In regional terms, including household and corporate operations, growth was recorded in the South and Center-West regions (+0.9%, R$554 billion; +0.6%, R$335 billion), while reductions occurred in the Southeast and Northeast regions (-0.1%, R$1,605 billion; -0.3%, R$396 billion).

Interest and default rates

In October, the average cost of active credit operations, measured by the Cost of Credit Indicator (ICC), remained stable at 21.8% p.y. (-1.4 p.p. in twelve months). In operations with both nonearmarked and earmarked resources, the indicator also remained stable at 35.9% p.y. and 8.9% p.y., respectively.

The average interest rate of financial system credit operations, considering nonearmarked and earmarked resources, reached 27.4% p.y. in October (+0.4 p.p. in the month and -6.0 p.p. in 12 months). With regard to the segment of nonearmarked credit operations, the average cost reached 43.6% p.y. (+0.3 p.p. and -10.6 p.p., respectively), while, in the segment of earmarked operations, it stood at 9.8% p.y., consequent upon variations of +0.5 p.p. and -1.1 p.p. in the same periods.

In the household segment, the average rate reached 34.2% p.y., following an increase of 0.3 p.p. in the month (-8.9% in twelve months). As for nonearmarked loans, the indicator reached 59.5% p.y. (+0.3 p.p. in the month), reflecting increases in revolving credit card: +14.4 p.p.; overdraft account: +2,4 p.p.; and personal credit other than payroll-deducted: +4,7 p.p. As for earmarked loans, the average household rate stood at 8.5% p.y. (+0.1 p.p.).

In corporate credit operations, the average interest rate stood at 18% p.y. (+0.5 p.p. in the month and -3.6 p.p. in twelve months). In the nonearmarked portfolio, the rate reached 23.3% p.y., +0.1 p.p. in the month (advance on credit card: +4.1 p.p., revolving credit card: +13.9 p.p.). As for earmarked credit, the average rate reached 11.7% p.y. (+1 p.p.) with a 1.3 p.p. increase in investment loans with BNDES funds.

The bank spread of operations with nonearmarked and earmarked resources increased 0.5 p.p. in the month to 20.7 p.p. in October (compared to 24.0 p.p. in October 2016). Indicators for the household and corporate segments increased 0.5 p.p. and 0.4 p.p. in the month, respectively, reaching 11 p.p. and 27.6 p.p. (respective reductions of 1.2 p.p. and 6.1 p.p. over twelve months). In the nonearmarked segment, the spread increased 0.3 p.p., to 35.4 p.p., while, in the earmarked segment, it rose 0.6 p.p., to 4.6 p.p.

The default rate of the financial system credit portfolio, considering payments overdue for more than 90 days, reached 3.6%, showing stability in October and a decline of 0.3 p.p. in the twelve-month period. In the household segment, the default rate remained stable at 3.9% for the fourth consecutive month, while, in the corporate segment, it increased 0.1 p.p. to 3.4% in October.

II - Evolution of monetary aggregates

The monetary base recorded an average daily balance of R$254.3 billion in October (down 0.1% in the month and up 4.2% in twelve months). The monthly variation reflected a decline of 0.4% in bank reserves and stability in the balance of currency issued.

Among the monthly flows of factors conditioning the monetary base, the most notable were National Treasury operations, with a contractionary impact of R$14.2 billion. On the other hand, operations with federal government securities recorded an expansion of R$2 billion (net sales of R$22.8 billion in the secondary market and net redemptions of R$24.8 billion in the primary market); coupled with adjustments in derivative operations, R$1.8 billion.

The average daily balance of the restricted means of payment (M1) reached R$318.9 billion in October, showing stability in the month, consequent upon variations of 0.9% in demand deposits and -0.6% in currency outside banks. In twelve months, M1 increased 2.4%.

The balance of the means of payment in the M2 concept, which corresponds to M1 plus savings deposits and private securities issued by financial institutions, fell 0.1% in October, totaling R$2.4 trillion. This variation was determined by reductions of 0.4% in the end-of-period balance of the restricted means of payment (M1), of 0.3% in private securities (balance of R$1.4 trillion), and expansion of 0.3% in savings deposits (R$697.9 billion). In the month, net redemptions of R$2 billion were observed in savings accounts and of R$1.1 billion in time deposits.

The M3 concept, which comprises M2, fixed-income funds and government securities backing repurchase operations between the public and the financial sector increased 0.8% in the month, totaling R$5.7 trillion, reflecting increases of 1.2% in the balance of fixed-income fund quotas and of 11.7% in repurchase operations, which totaled, respectively, R$3.2 trillion and R$97.1 billion. M4, the concept that comprises M3 plus public securities held by the nonfinancial public, rose 0.7% in the month and 9.2% in 12 months, totaling R$6.5 trillion.