UPDATE 1-Brazil state bank loans grow in January as rivals retreat

jueves 27 de febrero de 2014 11:42 GYT

By Guillermo Parra-Bernal and Luciana Otoni

SAO PAULO/BRASILIA Feb 27 (Reuters) - Lending in Brazil stagnated in January, in spite of a sharp increase in loan disbursements by state-controlled banks, after borrowing costs climbed to their highest level in almost two years.

Outstanding loans in Brazil's banking system rose 0.1 percent in January from the prior month, the central bank said in a report on Thursday. On an annual basis, state-banks disbursed loans at a pace almost four times faster than their private-sector peers, which turned more cautious as the economy entered a fourth straight year of slow expansion.

"The slight increase from previous month was driven essentially by public sector banks, particularly the BNDES," said Nilson Teixeira, chief Brazil economist for Credit Suisse Securities. BNDES is the country's development bank and is 100 percent owned by the Brazilian government.

The numbers highlight a strong expansion in so-called earmarked loans, or credit aimed at encouraging investment and homebuilding in accordance with government mandates. President Dilma Rousseff is using state banks to press down credit costs in Brazil - which are among the world's highest for a major economy - while fostering competition with private banks.

Loans made by all banks in Brazil totaled a record 2.717 trillion reais ($1.16 trillion) last month, the report showed. In the 12 months through January, lending growth accelerated to 14.8 percent, the fastest annual pace since September, Thomson Reuters data showed.

The BNDES as well as state-run mortgage lender Caixa Econômica Federal ramped up credit to companies, individuals and homebuyers by an average 26 percent in the past year, compared with 7.5 percent at private sector lenders.

The volume of loan origination declined sharply in January to 290.5 billion in January from 357.6 billion reais in December, the report said. Averaged by the number of business days, disbursements for consumer loans remained roughly stable while those for the corporate sector accelerated to 7 percent in January on an annual basis, compared with 3 percent in December, driven by earmarked loans, in particular from the BNDES.   Continuación...