After 21 months of gains, poupança shows weakest net deposits since March

- Monday, February 7, 2011

After 21 months of gains, poupança shows weakest net deposits since March

Following 21 months of net deposits, Brazil's emblematic savings product poupança accounts showed its smallest gain since March 2010, adding just 275mn reais (US$164mn) in January 2011, according to new central bank BCB data.

This compares to 6.36bn reais in December - a traditionally high month for savings, due to the local tradition of "the 13th salary," in which Brazilians usually receive a double monthly salary in December - and 2.62bn reais in January last year.

While the stock of savings accounts has grown 18.0% in the 12 months to end-January, it was up just 0.6% from end-December to 381bn reais.

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Federally controlled Caixa Econômica Federal (CEF) is the leading bank in this funding source, followed by Banco do Brasil (BB). CEF said in a statement that it had 34.3% of the total amount of poupança savings in the country.

However, both banks have seen major expansions in their mortgage lending portfolios - one of the required lending destinations of poupança funds - in the last year, with the overall segment growing more than 50% in 2010. This has prompted interest in what other funding may be able to fuel this housing drive, including plans from CEF to step up securitization efforts.

Poupança accounts are remunerated at 6% in addition to a reference rate (TR).