Economic Information

PRESS RELEASE - September 27, 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, including nonearmarked and earmarked resources, reached R$3,047 billion in August, falling 0.1% in the month and 2.2% in twelve months (-0.9% and -2.1%, respectively, in July). The monthly reduction reflected a decline of 1% in the balance of the corporate portfolio to R$1,437 billion, coupled with an increase of 0.7% in the balance of the household portfolio to R$1,610 billion. The credit/GDP ratio declined 0.1 p.p. in the month, closing at 47.1%, compared with 50.4% in August 2016.

Credit with nonearmarked resources totaled R$1,527 billion (+0.3% in the month and -1.5% in twelve months). The balance of the corporate portfolio remained stable at R$699 billion. The balance of the household portfolio rose by 0.6% in the month to R$828 billion, highlighting payroll-deducted loans, vehicle financing and credit cards with immediate payment.

Credit with earmarked resources totaled R$1,520 billion (-0.6% in the month and -2.9% in twelve months). Credit operations with individuals reached R$782 billion (+0.7% in the month), with increases of 1.3% and 0.5% in rural and housing credit, respectively. Corporate credit fell 1.9% in the month to R$738 billion, reflecting increased settlement and reduced disbursements of operations with BNDES funds, in addition to settlement of rural loans.

Considering borrowers' economic activity segments, the main contractions occurred in trade (-3.9%, balance of R$238 billion), construction (-2.4%, R$89 billion) and public utilities (-0.8%, R$202 billion). Regionally, including operations above R$1,000, the credit balance declined in the Southeast region (-0.3%, R$1,605 billion), and expanded in all other regions, especially the South (+0.4%, R$549 billion) and Northeast (+0.2%, R$399 billion).

Interest and default rates

The average cost of active credit operations, measured by the Cost of Credit Indicator (ICC), fell 0.2 p.p. in August, closing at 22.1% p.y. (-0.8 p.p. in twelve months). In operations with nonearmarked resources, the indicator fell 0.4 p.p. in the month and 2.3 p.p. in twelve months, and, in the earmarked segment, it remained stable at 8.9% p.y.

The average interest rate, including the nonearmarked and earmarked segments, reached 28.5% p.y. in August (-0.5 p.p. in the month and -4.5 p.p. in 12 months). As for the nonearmarked segment, the average rate fell 1.0 p.p. in the month to 45.6% p.y.; in the earmarked segment, it dropped 0.1% to 10% p.y.

In the household segment, the average rate reached 35.6% p.y. (-0.9 p.p. in the month and -6.6 p.p. in twelve months). As for nonearmarked loans, the rate fell 1.5 p.p. to 62.3% p.y., especially in overdraft account (-4 p.p.) and personal credit other than payroll-deducted (-2.8 p.p.). As for earmarked loans, the average rate declined 0.5 p.p. to 8.5% p.y., with reductions of 0.4 p.p. in rural credit and 0.7 p.p. in housing loans.

The revolving credit card interest rate fell from 10.3% p.m. in July to 10.2% p.m. in August, maintaining the downward trend observed since the introduction of changes to revolving credit card operations (the rate reached 14.9% p.m. in March 2017). In installment and non-revolving credit card, average interest rates remained stable over the month at 8.3% p.m. and 16.2% p.m., respectively. In August, the overdraft account interest rate registered a slight decrease to 12.6% p.m. (from 12.7% p.m. in July).

With regard to corporate credit operations, the average interest rate reached 18.8% p.y. (-0.1 p.p. in the month and -3.2 p.p. in twelve months). In the nonearmarked segment, the 0.9 p.p. monthly drop to 24.4% p.y. reflected reductions in working capital (-0.6 p.p.) and discount of trade notes and receivables (-2.5 p.p.). In the earmarked segment, the rate reached 12.2% p.y. (+0.6 p.p. in the month), with a 0.8 p.p. increase in investment financing with BNDES funds.

The average bank spread of operations with nonearmarked and earmarked resources closed at 21.3 p.p. (-0.2 p.p. in the month and -2.0 p.p. in twelve months), reflecting decreased household credit operations (-0.4 p.p., to 28.6 p.p.). As for the corporate segment, the indicator reached 11.5 p.p. (+0.1 p.p. in the month). In the month, the spread fell by 0.7 p.p. to 36.9 p.p. in the nonearmarked segment and rose by 0.3 p.p. to 4.5 p.p. in the earmarked segment.

The default rate remained stable at 3.7% for the third consecutive month. Stability was observed in both household (4.0%) and corporate (3.4%) operations and in the nonearmarked (5.6%) and earmarked (1.8%) segments.

II - Evolution of monetary aggregates

The monetary base registered an average daily balance of R$249.9 billion in August, with a 0.6% decrease in the month and a 5.4% increase in twelve months. The monthly variation reflected the decline of 0.8% in the balance of currency issued and an expansion of 0.3% in bank reserves.

Among the monthly flows of factors conditioning the monetary base, the most notable were operations with federal government securities, with a contractionary impact of R$7.2 billion (net purchases of R$29 billion in the secondary market and net redemptions of R$36.2 billion in the primary market) and National Treasury operations, with an expansion of R$3.8 billion.

The average daily balance of the restricted means of payment (M1) reached R$313.7 billion in August, reflecting a monthly decline of 1.8% consequent upon reductions of 3.1% in demand deposits and 0.9% in currency outside banks. In twelve months, M1 increased 4.1%.

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, totaled R$2.4 trillion in August (up 0.6% in the month). This result reflected expansions of 1.1% in private securities (balance of R$1.4 trillion) and 0.8% in savings deposits (R$690.4 billion). In the month, net inflows of R$2.1 billion in savings deposits and R$14 billion in time deposits were observed.

M3, which comprises M2, quotas of fixed-income funds and government securities backing repurchase operations between the public and the financial sector increased 1.6% in the month to R$5.6 trillion, reflecting an increase of 2.4% in the balance of fund quotas to R$3.1 trillion. In the same period, the balance of repurchase operations fell 2.4% to R$89 billion. M4, which comprises M3 and public securities held by the nonfinancial public, rose 1.3% in the month and 9% in 12 months, totaling R$6.5 trillion.