UPDATE 2-Brazil loan defaults stay at near two-year high in September

martes 27 de octubre de 2015 13:41 GYT

(Adds details on consumer and corporate defaults, background on banks, analyst comments, paragraphs 3-10; adds bylines)

By Guillermo Parra-Bernal and Marcela Ayres

SAO PAULO/BRASILIA Oct 27 (Reuters) - Bank loans delinquent for at least 90 days in Brazil remained in September at their highest in almost two years, as the deepest recession in a quarter century and rising interest rates strained borrowers' capacity to stay current on their debts.

The so-called 90-day default ratio, a benchmark for delinquencies, came in at the equivalent of 4.9 percent of outstanding non-earmarked loans last month, the central bank said in a report on Tuesday. September's number was the highest for the ratio since October 2013, when it reached 5 percent.

Consumer defaults rose in September, driven by a costlier refinancing of revolving credit card and renegotiated loans as urban unemployment jumped. Corporate defaults fell slightly, reflecting efforts by small and large firms to speed up debt repayments amid tighter credit standards.

The data provides a glimpse into loan book quality days before the nation's largest banks report third-quarter results. Defaults and loan-loss provisions kept rising due to the recession and fallout from a corruption scandal at state firms , a Reuters poll showed earlier in the day.

"Given the deteriorating economic backdrop, it remains likely that credit quality will deteriorate going forward," said Saúl Martínez, an analyst with JPMorgan Securities. The September data suggest "that at least some worsening in default ratios and loan losses are likely" in the third quarter.

Early default ratios, or loans in arrears between 15 days and 90 days, rose for both individual and corporate borrowers, indicating that future delinquencies are on the rise.

Last month, provisions as a share of capital fell for the first month in five, as state banks accelerated credit disbursements to help stem fallout from the recession, according to the report. Private-sector banks kept provisions at their highest levels in over two years.   Continuación...