Developments: banks see more credit and less default – 07/19/2023 – Market

The Desenrola program launched this week by the federal government should favor an increase in the granting of loans by banks, and, at the same time, reduce the level of default in portfolios.

XP analysts say they look favorably on Desenrola. In track 1, which should be released in September and which will include bank and non-bank debts, the benefit is the fact that the renegotiated amounts are guaranteed by the FGO (Operations Guarantee Fund).

As for band 2, the difference will be the possibility of constituting a tax credit in the same amount as the renegotiations. “Tax credits usually reduce reference equity. However, in order to encourage Desenrola, the government has managed to ensure that tax credits arising from the program do not reduce equity, freeing up capital for banks”, point out XP analysts in report.

Financial institution risk analyst at Austin Rating, Luis Miguel Santacreu explains that when a customer fails to pay an obligation and defaults, banks are required to make a provision that is not automatically deductible from the IR (Income Tax).

“Banks pay tax on this provision and, only after proving that they have not been able to recover the credit, the amount of the provision, which is considered a tax credit, is deducted from the tax calculation base”, a process that takes a few quarters to be completed. concluded, says Santacreu. The provision, therefore, has a negative weight in terms of efficient allocation of capital, adds the analyst.

According to Desenrola, the amounts renegotiated in band 2 will be released immediately to be deducted from the tax, which will be reflected in an increase in the capacity of the financial institution to make new loans, says Santacreu.

Partner and educational manager at Órama Investimentos, Gilvan Bueno adds that the program brings gains in operational efficiency for banks.

Provision for doubtful debts (PDD) tends to be reduced, giving institutions breath to open new lines of credit at a time when interest rates are still at a high level.

“Banks will end up having room to lend money at a still high Selic for a less indebted population”, says Bueno.

According to calculations by Bofa (Bank of America), the program should “significantly improve bank defaults.”

According to BofA estimates, if banks renegotiate R$50 billion under Desenrola, the combined default of the five largest banks will decrease from 3.2% to 1.6%.

“The main debts that should be part of the program are personal credit lines and credit cards, which showed a very high default rate post-pandemic”, says Guilherme Machado, analyst of financial institutions at the risk rating agency Standard & Poor’s.

He adds that the choice to renegotiate overdue credits will be a financial decision in which entities must decide whether the renegotiated amount in the program will be greater than the traditional recovery expectation of a defaulting portfolio.

Analyst at Senso Investimentos, João Augusto Frota says that the debts considered in the Desenrola are those that the chance of being settled was already very low.

In this sense, it is more interesting to have some renegotiated value that can be deducted from the IR immediately than to continue in an attempt to recover or even recognize the debt as a loss, says Frota. “A bird in the hand is better than two in the bush.”

The Senso analyst also points out that, in the case of those financial institutions that give a relevant discount to people who are negative, the National Treasury will assume the default of this new renegotiated debt.

“The banks themselves will be able to decide in which portfolios and with which customers they want to do this. In this sense, I do not see a high risk in the operation. Everyone wins, the banks and the defaulters. The Treasury pays the bill.”

Frota claims that retailers that work directly with the lower income part of the population should be the most benefited, such as Carrefour, GPA, Lojas Renner, Magazine Luiza and Via.