Bank interest rises 8.2 points in 2022, more than the Selic high, and bank credit advances 14%

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Information was disclosed this Friday by the Central Bank. Revolving credit card interest rose more than 60 percentage points in 2022 and ended the year above 400%. The average interest rate charged by banks in their operations with individuals and companies registered an increase of 8.2 percentage points in the year 2022, and reached 42% per year in December. The information was released this Friday (27) by the Central Bank. The average interest rate, in this case, was calculated based on free resources, that is, it does not include the housing and rural sectors and the National Bank for Economic and Social Development (BNDES). According to the BC, the average interest rate charged on operations with companies rose from 19.7% per year, in December 2021, to 23.1% per year at the end of last year. The increase was 3.4 percentage points. In operations with individuals, interest rose from 45% per year in December 2021 to 55.8% per year at the end of last year. The high was 10.8 percentage points. Increase in basic interest With the increase registered last year, average bank interest rates rose more than the economy’s basic rate, the Selic, which advanced 4.5 percentage points (from 9.25% to 13.75% per year) in the same period. The objective of the Selic rate hike cycle, according to the BC, was to contain the inflationary pressures resulting from the Covid pandemic, the rise in fuel and food prices (reflection of the war in Ukraine). Overdraft and credit card In the overdraft of individuals, the rate dropped from 127.9% per year, in December 2021, to 131.9% per year at the close of last year. The increase was 4 percentage points in 2022. The average interest rate charged by banks on revolving credit card operations, in turn, increased from 347.4% per year at the end of 2021 to 409.3% per year in December last year. Revolving credit card interest growth was 61.9 percentage points in 2022 and the rate ended the year at the highest level since August 2017 (428% per year). The BC’s historical series begins in March 2011. The credit card revolving credit can be activated by those who cannot pay the total amount of the invoice on the due date, but do not want to be in default. Even with the fall in September, the level of the revolving interest rate remains prohibitive. This is the most expensive line of credit on the market and, according to analysts, should be avoided. The recommendation is that bank customers pay the entire invoice amount monthly. Bank credit The total volume of bank credit on the market, according to the Central Bank, advanced 14% in 2022, to R$ 5.32 trillion. Despite the increase, there was a slowdown compared to 2021, when an expansion of 16.3% (adjusted value) was recorded. Credit to companies grew 9.3% in 2022, compared to a larger increase of 10.5% in the previous year. Credit to families, on the other hand, grew by 17.4% in the last year, after an increase of 21% in 2021. In credit to families, the BC reported that the modalities of non-consigned personal credit stood out; payroll loans for civil servants, INSS retirees and pensioners; for the acquisition of vehicles; and credit card. Household indebtedness and default According to BC, indebtedness amounted to 49.5% of accumulated income in the twelve months up to November last year. The BC’s historical series for this indicator began in January 2005. As a result, it recorded a marginal drop compared to the end of 2021, when it was at 49.7%. Record family debt will be a challenge for the next government Federal debt renegotiation program will focus on people earning up to 2 salaries In February 2020, before the Covid-19 pandemic, family debt totaled 41.8%. At the same time, the average default rate recorded by banks in credit operations rose from 2.3% in December 2021 to 3% at the end of last year. It is the highest since May 2020 (3.2%). In operations with individuals, defaults increased from 3%, at the end of 2021, to 3.8% in December 2022. Corporate defaults ranged from 1.3%, in December 2021, to 1.7% at the end of last year, the highest since August 2020 (1.8%).

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