UPDATE 1-Brazil bank lending growth quickens in February

miércoles 26 de marzo de 2014 10:40 GYT

(Recasts to add details on borrowing costs, earmarked loans)

By Silvio Cascione and Luciana Otoni

BRASILIA, March 26 (Reuters) - Lending growth in Brazil accelerated in February from the previous month despite higher interest rates, driven up by a sharp increase in government-mandated loans aimed at encouraging housing and business investments.

Outstanding loans in Brazil's banking system rose 0.6 percent in February from the prior month, the central bank said in a report on Wednesday.

The so-called earmarked loans, or credit aimed at investments and homebuilding in accordance with government mandates, jumped 1.2 percent from January. Non-earmarked loans increased only 0.1 percent.

President Dilma Rousseff has used state banks to push down Brazil's credit costs, among the world's highest for a major economy, while fostering competition with private banks. Outstanding loans by state-controlled banks rose 0.8 percent in February from January and 22.7 percent from a year earlier, while loans by local private-sector banks increased 0.6 percent from January and 6.5 percent from February of last year.

As a result, loans from state banks represented 51.8 percent of outstanding loans in Brazil in February, compared with 51.6 percent in January and 48.4 percent a year earlier. The share of local private-sector banks fell to 33.1 percent from 35.6 percent a year earlier.