Brazil loan defaults to decline starting in 2017, group says
SAO PAULO Dec 7 (Reuters) - Brazilian consumers and companies will only begin to get current on their unpaid utility bills, defaulted loans and bounced checks in 2017 as a state law protecting debtors cuts available credit and fans its costs, an industry group said on Monday.
ANBC, which represents credit bureaus, said defaults would stay high in the light of Brazil's worst economic recession in a quarter-century and climbing unemployment. Loan-loss provisions at Brazil's top-five banks accounted for 6 percent of their credit books at the end of the third quarter, the highest in more than two years.
The situation may be worsened with a plan by São Paulo state lawmaker Rui Falcão, the president of the ruling Workers' Party, to force credit bureaus to notify delinquent borrowers before their inclusion in default tallies. The plan, which the São Paulo state assembly is still discussing, will slow default data collection and lead banks to further cut credit, ANBC said in a note.
Bank loans delinquent for at least 90 days in Brazil are running at their highest level in two years, the central bank recently said. The 90-day default ratio, a benchmark for delinquencies, came in at the equivalent of 5 percent of outstanding non-earmarked loans last month, the highest since October 2013. (Reporting by Guillermo Parra-Bernal; Editing by Lisa Von Ahn)
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