I - Financial system credit operations
The balance of financial system credit operations reached R$3,143 billion in April, falling by 0.6% in the month and expanding by 2.7% in twelve months (compared with respective variations of -0.7% and +3.3% in March). The slowdown in the credit market is mainly due to the reduced level of economic activity, rising interest rates and the low level of confidence indicators for businessmen and consumers, which negatively affect the supply and demand of credit. The monthly fall reflected the decline of 1% in the corporate portfolio to a balance of R$1,623 billion and the stability in the household portfolio at R$1,520 billion. The credit/GDP ratio closed at 52.5%, compared to 53% in March 2016 and in April 2015.
The credit portfolio with nonearmarked resources (balance of R$1,578 billion) fell by 0.9% in the month and rose by 0.2% in twelve months. The corporate portfolio declined by 1.3% in the month (-1% in twelve months) to R$781 billion, with emphasis on the reductions under external transfers, reflecting the exchange rate appreciation observed in April, and reductions in working capital loans. Nonearmarked household credit operations dropped by 0.4% to R$797 billion, highlighting the reductions of 1.6% and 1.4% in the respective balances of vehicle financing and credit cards, in addition to the growth of 1.1% under non-payroll deducted personal credit.
The earmarked credit portfolio totaled R$1,565 billion in April, decreasing by 0.2 % in the month and increasing by 5.3% in twelve months. The balance of corporate earmarked credit dropped by 0.8% to R$842 billion, reflecting the exchange rate appreciation on the balance of investment financing with BNDES resources. Household financing rose by 0.4%, reaching R$723 billion, highlighting the growth of 1.2% in rural credits.
Among borrowers' economic activity segments, the most significant reductions were observed in trade (-1.8%, balance of R$282 billion), manufacturing (-1.7%, R$442 billion) and transport (-1.5%, R$159 billion). It is noteworthy the growth in the balance of credits channeled to Industrial Public Utility Services (0.5%, R$203 billion).
Considering operations above R$1,000, credit balances fell by 0.7% in the Southeast (R$1,689 billion), 0.4% in the Central-West (R$327 billion) and 0.3% in the Northeast (R$401 billion), and remained stable in the North region at R$117 billion.
I.1 - Interest and default rates
The average interest rate of financial system credit operations, including credit operations with nonearmarked and earmarked resources, reached 32.4% p.y. in April, up 0.4 p.p. in the month and 5.9 p.p. in twelve months, reflecting higher banking spreads related to increased default rates in the nonearmarked segment. Interest rates reached 52% p.y. in the nonearmarked segment (+1 p.p. in the month and 10.2 p.p. in twelve months) and 10.7% p.y. in the earmarked segment (-0.2 p.p. in the month and + 1.8. p.p. in twelve months, respectively).
In the household segment, the average interest rate closed at 41.3% p.y., rising by 0.7 p.p. in the month and 7.3 p.p. in twelve months. In the month, interest rates rose by 1.6 p.p. in operations with nonearmarked resources (overdraft accounts. +7.9 p.p.; credit card installments, +4.8 p.p.; non payroll-deducted loans, +4.6 p.p.); and fell by 0.1 p.p. in operations with earmarked resources (house financing, -0.2 p.p.), reaching 70.8% p.y. and 10% p.y., respectively (56.1% and 8.7%, in the order, in April 2015).
In the corporate segment, interest rates fell to 22% p.y., dropping by 0.2 p.p. in the month and rising 3.5 p.p. in twelve months. As regards operations with nonearmarked credits, the rate remained stable in the month at 31.1%, and rose by 4.5 p.p. in twelve months. As regards operations with earmarked credits, the rate fell by 0.3 p.p. to 11.6% p.y., highlighting the decline in the average rate for house financing at market rates. (-1 p.p.).
In April, the bank spread of operations with nonearmarked and earmarked resources increased by 0.7 p.p. in the month and by 5.2 p.p. in twelve months, reaching 22.3 p.p. The monthly growth resulted from the rise of 1.4 p.p. to 38.8 p.p. in operations with nonearmarked resources and from the reduction of 0.2 p.p. to 3.9 p.p. in operations with earmarked resources. The banking reached 31.1 p.p. in the household segment (+1.1 p.p.) and 11.9 p.p. in corporate segment (-0.1 p.p.)
The default rate of financial system credit operations related to credit balances overdue for more than 90 days reached 3.7% in April, increasing 0.2 p.p. in the month and 0.7 p.p. in 12 months. The default indicator remained stable at 4.3% in the household portfolio and rose to 3.1% in the corporate portfolio (+0.2 p.p. in the month). The default rate increased by 0.1 p.p. to 5.7% in the earmarked segment and by 0.2 p.p. to 1.7%.in the nonearmarked segment.
II - Evolution of monetary aggregates
The average daily balance of the monetary base reached R$237.4 billion in April, with reductions of 1.6% in the month and 0.4% in twelve months. The monthly variation reflected declines of 6.9% in bank reserves and 0.6% in currency issued.
Among the monthly flows of factors conditioning the monetary base, it is worth highlighting National Treasury operations, with reductions of R$5.1 billion, and deposits from financial institutions, corresponding to variations in the compulsory reserve requirements, with an expansionary effect of R$5.2 billion.
The average daily balance of the restricted means of payment (M1) totaled R$303.3 billion in April, for a monthly reduction of 0.4%, consequent upon reductions of 0.6% in currency outside banks and 0.1% under demand deposits. In twelve months, M1 dropped by 2.6%.
The balance of the means of payment in the M2 concept, which corresponds to M1 plus savings deposits and private securities, totaled R$2.2 trillion, decreasing by 0.5% in April. This result mainly reflected the reduction of 0.4% in the balance of private securities to R$1.3 trillion, following net redemptions of R$9.6 billion in time deposits. The balance of savings deposits dropped by 0.7% in April, reaching R$642.8 billion, with net redemptions of R$8.2 billion.
M3, which comprises M2, quotas of fixed-income funds and government securities backing repurchase operations between the public and the financial sector, grew by 0.4% in the month, reaching R$4.9 trillion, reflecting the growth of 1.5% in the balance of quotas of fixed-income funds to R$2.4 trillion. M4, which comprises M3 and government securities held by the nonfinancial public, grew by 1.5% in the month and 12.1% in twelve months, totaling R$5.8 trillion.