UPDATE 1-Brazilian bank lending stabilizes, default rates rise

miércoles 27 de mayo de 2015 11:54 GYT

(Adds details, comment from Citibank chief in Brazil)

BRASILIA May 27 (Reuters) - Brazilian bank default rates increased in April despite a marked slowdown in lending growth as Latin America's largest economy enters an expected recession.

The 90-day default ratio, the most widely followed gauge of loan delinquencies, increased to 4.6 percent last month from 4.4 percent in March, the central bank said in a report on Wednesday.

Delinquencies had been stable in the previous three months, but they are likely to rise further over the next few quarters, said Helio Magalhaes, the head of Citibank in Brazil.

"Unemployment is causing default rates to increase," Magalhaes told reporters at an event in Sao Paulo. "Banks have been building reserves to weather a more challenging scenario."

Outstanding loans rose a mere 0.1 percent to 3.06 trillion reais ($961 billion) in April from March, or 54.5 percent of Brazil's gross domestic product, the central bank said. In the previous month, lending had grown 1.2 percent.

Also curbing lending growth is an aggressive monetary tightening by the central bank, which has taken the base Selic rate to 13.25 percent despite a looming recession and growing unemployment.

($1 = 3.183 reais) (Reporting by Marcela Ayres; Additional reporting by Aloisio Alves in Sao Paulo; Writing by Walter Brandimarte; Editing by Jeffrey Benkoe and Paul Simao)