UPDATE 2-Brazil's Caixa to sharply slow lending growth this year

miércoles 26 de marzo de 2014 15:29 GYT
 

(Recasts to add comments, details on lending focus, background throughout)

By Guillermo Parra-Bernal

SAO PAULO, March 26 (Reuters) - Brazil's state-run Caixa Economica Federal plans to slow lending growth dramatically this year, in a sign the country's largest mortgage lender is seeking to preserve capital after years of rapid expansion.

Brasilia-based Caixa, which on Wednesday reported a sharp slump in fourth-quarter profit, plans to expand its loan book between 22 percent and 25 percent this year, down from 36.8 percent in 2013. At such pace, the bank would need no capital injection from the federal government, Caixa's sole owner, for 2014 and 2015, chief financial officer Marcio Percival said.

The bank will aim for Tier 1 and 2 capital ratios, or average regulatory capital under Basel II rules, of between 13.5 percent and 16 percent this year. The ratio ended last year at 15.1 percent. Currently, Caixa and the government are negotiating the dividend payout ratio that best helps bolster the bank's coffers, Chief Executive Officer Jorge Hereda said.

The move underpins government efforts to slow the pace of loan disbursements from state-owned banks and, with it, curtial National Treasury financing for them. Standard and Poor's, which on Monday cut Brazil's sovereign debt rating, remains skeptical of President Dilma Rousseff's ability to phase out a five-year-long strategy using state banks to ramp up credit ahead of the October election. Rousseff is expected to run for a second term.

"We believe we can grow and maintain the required balance in our business plan with this arrangement," Percival said at an event to discuss fourth-quarter earnings. With cash injections not coming as frequently from the government as in recent years, Caixa is considering other ways to replenish capital, he noted.

A potential offering of global bonds in international markets, which could help beef up the bank's capital base, will depend on whether market conditions are favorable, Percival added.

Caixa will focus primarily on mortgages and credit to infrastructure projects, and less on loans to large- and mid-sized companies and personal credit, executives said. Caixa's loan book rose above an average annual rate of 30 percent for the past three years, mainly under Rousseff's instructions.   Continuación...