(Adds details, share performance throughout)
By Guillermo Parra-Bernal and Silvio Cascione
SAO PAULO/BRASILIA, April 26 Brazilian loan
defaults rose in March for the first time in seven months, the
central bank said on Wednesday, a sign of caution as corporate
borrowers in Latin America's largest economy struggle with the
impact of a three-year recession.
Loans in arrears for 90 days or more, a benchmark for
delinquencies, rose to the equivalent of 5.7 percent of
outstanding non-earmarked credit last month, from 5.6 percent in
February, the central bank said in a report. The increase in the
default ratio came despite higher loan disbursements in March.
Delinquencies climbed most at state banks, which account for
almost 56 percent of lending. The corporate loan default ratio
rose the most in at least 1-1/2 years, climbing to 5.6 percent
from 5.2 percent in February, the report said.
Loan-loss provisions averaged the equivalent of 6.76 percent
of Brazil's outstanding bank loans last month, below 6.86
percent in February but above 6 percent in March 2016, the
The situation probably means that recent reductions in
Brazil's benchmark Selic overnight lending rate have yet to
reach borrowers, who have been engaged in heavy refinancing
efforts with banks over the past year. Spreads, or the
difference between bank lending rates and the Selic, eased in
March for the first month in three.
"Credit conditions should remain somewhat exigent but start
to gradually ease supported by the tentative signs of economic
stabilization and the central bank's front-loaded rate easing
cycle," said Alberto Ramos, chief Latin America economist with
Goldman Sachs Group Inc.
Corporate loan disbursements fell 0.3 percent last month,
bucking an increase in lending for individuals, the central bank
Outstanding bank loans in Brazil totaled 3.076 trillion
reais ($966 billion) at the end of March, down 2.7 percent from
the same month a year earlier. The central bank estimates 2
percent growth for outstanding bank loans this year.
($1 = 3.1841 reais)
(Editing by Chizu Nomiyama and James Dalgleish)