(New throughout, adds details on extent of recession, comments, adds bylines)
By Guillermo Parra-Bernal and Marcela Ayres
SAO PAULO/BRASILIA, Sept 23 (Reuters) - Bank loans in Brazil delinquent for at least 90 days remained at their highest in almost two years in August, the central bank said on Wednesday, with companies and consumers still pressured by rising borrowing costs and the steepest recession in a quarter century.
The 90-day default ratio, a benchmark for delinquencies, came in at the equivalent of 4.8 percent of outstanding, non-earmarked loans last month, according to a report. That level is the highest for the indicator since December 2013, according to Thomson Reuters data.
Brazil is bracing for two straight years of recession for the first time since the 1930s, and Brazilian interest rates are among the world’s highest. That has made it harder for factories, farmers and individuals to repay loans, driving up delinquencies, unpaid utility bills and bounced checks.
Stubborn delinquencies climbed for consumers in August as unemployment rose in major urban areas. At the same time, banks stepped up efforts to ramp up loan-loss provisions and pare back disbursements. Private-sector lenders boosted loan-loss provisions to their highest in more than two years.
“Our read-through is negative for domestic private-sector banks, on the back of the increase in the provisions-to-loans ratio, which may indicate higher provision expenses” for this quarter, said Marcelo Telles, an analyst with Credit Suisse Securities.
An index comprising six banking stocks listed in the São Paulo Stock Exchange shed 1.8 percent on Wednesday, spurring a 1.5 percent decline in the benchmark Bovespa index.
The report showed that lending interest rates as well as spreads rose in August, a sign private-sector banks are growing more prudent. Last month, average borrowing costs climbed 1 percentage point to 45.3 percent while loan disbursements came in at 257.1 billion reais ($63 billion), the smallest since February.
The worsening in the default ratio stemmed from a jump in overdue credit cards loans, which charge average annual rates of around 400 percent, and other consumer lending products.
Total lending ended last month at 3.13 trillion reais. Lending rose 9.6 percent in the past 12 months, the slowest pace of expansion since at least 2011, yet above the central bank’s 9 percent estimate for this year.
$1 = 4.0914 Brazilian reais Editing by Chizu Nomiyama, Meredith Mazzilli and David Gregorio