Loan concessions for companies fall 24.8% in January – 02/27/2023 – Market

Loans granted to companies with free resources – in which rates are freely negotiated between banks and customers – totaled R$ 181.6 billion in January. The value represents a decrease of 24.8% compared to December 2022, when R$ 241.4 billion were granted, the Central Bank informed this Monday (27).

The credit balance for corporate customers in free resources fell by 3.5%, from BRL 1.4 trillion in December 2022 to BRL 1.357 trillion in January of this year. In total, including earmarked credit (one that has parameters regulated by the government), there was a drop of 2.4%, to BRL 2.094 trillion (compared to BRL 2.145 trillion).

The data were released amid growing fears about the possibility of a credit crisis in the country, driven by the high level of interest rates – today the basic rate (Selic) is at 13.75% per year– and the case of the Americanas.

Despite the reduction in credit to companies in the first month of this year, the head of the BC’s statistics department, Fernando Rocha, said that the impact of the retailer’s case on January’s statistics is still “incipient”.

“It’s too early to say. The first announcement of the Americanas case took place around January 9 [divulgação foi em 11 de janeiro]so we took all the concessions that occurred in the month, the balance at the end of January, the impact is still incipient, very initial”, he said.

“What we saw in the January data is that the reduction in credit for legal entities has a strong seasonal character,” he added. The BC technician points out that there is a growth trend in credit releases at the end of each quarter and a reversal with a decline at the beginning of each following quarter.

“The main modalities that had a reduction in the balance within free credit operations with legal entities were those that present a seasonal behavior, mainly related to the prepayment of receivables, either due to the discount of trade notes and receivables, or the prepayment of credit card bills” , highlighted.

The BC also showed that the total stock of credit in Brazil fell by 0.3% in the month, to R$ 5.317 trillion. Total loan concessions to companies and families in Brazil fell by 15.3% in January of this year compared to December 2022, the BC also reported.

Total defaults in the nonearmarked resources segment stood at 4.5% in January, against 4.2% in the previous month. In 12 months, there was a significant increase of 1.2%.

Only among legal entities, default reached 2.3% in the first month of this year, an increase of 0.2% compared to December 2022.

In recent days, the Ministry of Finance has issued more scathing warnings about the possibility of a credit crisis in the country. The case of Americanas, a retailer that filed for bankruptcy in January after revealing accounting problems, also contributes to increasing the aversion of banks to granting credit.

For a wing of economists, the risks to economic activity, the increase in defaults and the signs of greater financial difficulties faced by companies may lead the BC to reassess its scenario with the anticipation of the Selic cut.

Others, on the other hand, consider that the fiscal risk —translated into the expansion of expenses and the absence of a concrete design of the new expenditure framework— and the resilient inflation are still predominant and inspire caution, justifying the maintenance of the monetary policy adopted by the Central Bank.