Payroll and Americanas affected Caixa’s balance sheet in 2022 – 03/23/2023 – Market

The loan allocated to beneficiaries of the Auxílio Brasil program and the episode involving Americanas had a direct negative impact on Caixa’s results in 2022 – the bank reported a drop of around 40% in profit compared to the previous year.

The risk of credit losses related to the two events meant that the public bank had to increase the allowance for loan losses, which ended the year with a balance of approximately R$ 15.6 billion, an increase of approximately 40% in annual bases.

Caixa president Maria Rita Serrano stated that the decision of the bank’s previous management to adopt payroll for Auxílio Brasil beneficiaries was an “excrescence”. The loan was suspended by the bank in early January.

“Families cannot be indebted with aid that is for people to feed themselves. But Caixa lent R$ 7.6 billion of its budget to the payroll of Auxílio Brasil”, said the president of Caixa, during a press conference this Thursday. (23) in São Paulo to comment on the bank’s results last year.

Although the payroll loan for social program beneficiaries has not been reflected in an increase in defaults, not least because the discount is given directly at the source, Maria Rita pointed out that the loan resulted in an increase in provisions and jeopardized the allocation of bank resources to other lines of credit.

The bank also informed that the provision for doubtful debts was also impacted due to events related to two companies that had financial difficulties. Caixa did not disclose the names of the companies, but one of them is possibly Americanas.

“Caixa recognized in its Financial Statements of 12/31/2022 the impacts of a subsequent event disclosed in the media in January 2023 relating to a specific case of a large company group that entered into judicial recovery, reinforcing in turn the provision for doubtful debts which on 12/31/2022 reached the amount of BRL 249 million, which represents the provisioning of 50% of the portfolio due to the deterioration of the credit risk”, informed Caixa in the balance sheet.

The president of Caixa also stated that the bank was surprised by the decision of the CNPS (National Council of Social Security) to impose a ceiling of 1.70% for loans allocated to the INSS (National Institute of Social Security).

“We didn’t even know in advance that the measure would be taken”, said Maria Rita, adding that the bank cannot carry out an operation that does not generate return or that causes damage to the institution.

Along with a number of other banks, Caixa also opted to suspend the granting of payroll to INSS beneficiaries until a new government decision, which is studying a new ceiling for the operation.

The executive stated that, even if the bank chose to maintain the operation, it would not be able to absorb all the demand that would arrive due to the suspension of the other banks.

According to Maria Rita, negotiations are being carried out within the government to try to resolve the issue as soon as possible. “But there is still no final definition regarding this.”

High Selic may affect real estate financing, says president of Caixa

The president of Caixa also said that the bank is the main financier of Minha Casa Minha Vida, but stressed that, due to the current level of interest rates, maintained this Wednesday (22) at 13.75% by BC (Banco Central), begins to have a concern related to “funding” to finance the program’s credit contracting.

She stated that the two channels that the bank uses most to obtain funds for housing loans —savings and FGTS (Fundo de Garantia do Tempo de Serviço)— have suffered significant redemptions in recent months, and that it will be necessary to seek new alternatives to support the real estate sector program, possibly with higher funding rates than those traditionally used. “It is a problem that we have to solve”, stated the president of Caixa.

“Either we do less with the current rate, or we do more, but with a recomposition of the rate”, said Marcos Brasiliano, vice-president of finance and controllership at Caixa.

Brasiliano also said that he has an expectation that the growth of the bank’s credit portfolio this year will be in line with the market average, with an expansion of around 8% to 9%.

Asked about the measures being studied by the Ministry of Finance team to stimulate the credit market, the vice-president of Caixa stated that he was not aware of them.

“The government is working to democratize credit, with responsibility, but it still doesn’t have any measure”, stated Brasiliano.

He also added that Caixa’s result “is not measured exclusively by its profit”, but also by the social work it carries out in society. According to the executive, the bank paid around BRL 310 billion in social benefits over the past year.

Brasiliano said that part of the drop in profit last year was due to non-recurring events that took place in 2021, such as the IPO of Caixa Seguridade and the sale of Banco Pan shares.

Maria Rita stated that the policy of the past management of selling the bank’s assets will not be continued in the current management. She stated that the bank went through a “dismantling” with the policy adopted in the sale of assets in recent years.

“It is no longer intended to sell the bank’s assets, or privatize or go public,” said the president of Caixa, who also recalled that the bank went through the worst reputational crisis in recent years in 2021, with accusations against the former president of the bank , Pedro Guimarães, of moral and sexual harassment against employees of the institution.

Maria Rita said that the investigation process involving the accusations was closed and forwarded to the competent bodies. “We eagerly await the Justice’s position on the investigative process.”