Despite BCB measures, lending grows at annual pace of 21% in February

Tuesday, March 29, 2011

Despite efforts by Brazilian central bank BCB to cool down inflationary risks, lending increased 21% at end-February compared with the same time last year to 1.74tn reais (US$1.06tn), according to the latest figures from BCB.

When compared with the previous month, lending increased 1.3%. Private sector loans rose 1.4% to 1.67tn reais. Lending to the industrial sector was up 1.3% to 366bn reais, while lending to the commerce sector climbed 1.5% to 174bn reais. Service-oriented loans edged up 1.3% to 296bn reais at end-February.

Barclays Capital said in a research note that "although credit expansion came in quite strong, we would not anticipate the need for market participants to be more concerned with the next steps from BCB," as it would be "naïve to believe that February data alone would be a reason for authorities to turn more aggressive on tightening [credit measures]."

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Analysts Roberto Attuch and Fabio Zagatti noted that BCB officials are acknowledging credit growth has slowed down, "especially in targeted consumer credit lines, accommodating to the macro-prudential measures, which has led to higher spreads."

Just like the previous month, the housing segment continued to show the fastest loan expansion, up 2.7% in February and 50.9% in the 12-month period, to 146bn reais.