BC committee sees credit risks and recommends that banks preserve quality of concessions – 03/02/2023 – Market

The Comef (Financial Stability Committee) of the Central Bank said this Thursday (2nd) that it had seen a slowdown in credit growth in the country and recommended that banks preserve the quality of concessions in the face of the risk of default.

According to the BC collegiate, “the materialization of credit risk has occurred in operations with micro and small companies, in higher risk lines granted to individuals, in addition to specific cases in larger companies”.

A possible “domino effect” of the Americanas case, a retailer that filed for bankruptcy in January after revealing accounting problems, sparked the warning of analysts and members of the Luiz Inácio Lula da Silva (PT) government about the impacts on the economy.

In recent days, the Ministry of Finance began to issue more forceful messages about the possibility of a credit crisis in the country.

Without mentioning the Americanas case, the committee said it was monitoring the evolution of broad credit, “including the developments of recent events that affected risk premiums in the capital market”.

As shown to Sheetgranting new loans and financing to companies declined in January, according to data released by the Central Bank on Monday (27).

In free resources, in which rates are freely negotiated between banks and customers, BRL 201.6 billion were granted to legal entities in January, compared to BRL 213.6 billion in December 2022. This represents a decrease of 5.6 % in the period. In 12 months, in turn, there was growth of 16.8%.

The volume of concessions for corporate clients still exceeds previous years, even in a more expensive credit scenario – driven by the high level of interest, with the basic rate (Selic) at 13.75% per year– and high default rates.

Data from Serasa Experian shows that the number of defaulting people started to rise in September 2021 and has not stopped. Currently, there are 70 million consumers and 6.4 million companies struggling to pay overdue bills.

“Given the risks related to economic activity and the reduction in disposable income for paying family debts, it is important that banks continue to preserve the quality of concessions,” he said.

Despite the warnings, the BC instance focused on the prevention of systemic risks considers that financial institutions continue to be capable of absorbing the materialization of credit risk.

According to the monetary authority collegiate, the financial system is prepared to face eventual problems, and the credit portfolio continues with a positive return.

“The Comef judges that the provisions for credit losses and the levels of liquidity and capital of the banks remain adequate”, he added.