May 8, 2019 / 8:39 PM / 2 months ago

Brazil lender Banco Pan to offer free checking accounts

SAO PAULO, May 8 (Reuters) - Mid-sized lender Banco Pan SA is preparing to launch free checking accounts for all clients in September, a move that should help it become a full-service bank for low income clients, its CEO said on Wednesday.

The launch is part of a strategy to boost profitability, conceived by the bank’s controlling shareholders, Banco BTG Pactual SA and state-owned Caixa Economica Federal .

Banco Pan’s move is also likely to fuel competition among Brazilian banks which have long benefited from a highly concentrated market with few interlopers. That has started to change as financial startups and small lenders have used free checking accounts to lure clients and sell financial products.

Up until now, Banco Pan has focused on providing low income clients with products such as auto and payroll loans, but had not offered banking services like checking accounts and overdraft facilities.

“Banco Pan has 4.5 million clients, but once they pay off their loans, we don’t retain the consumers,” said CEO Luiz Francisco de Barros Neto. “By offering checking accounts, the bank intends to keep this client and offer paid products.”

The bank will run a pilot test with checking accounts for a limited number of clients next month and intends to offer them for all consumers in September, targeting 1 million clients by June 2020.

After posting losses for many years, Banco Pan has been in the black since 2017. Profit at Banco Pan came in at 96.1 million reais ($24.46 million), up roughly 70 percent from the same period a year earlier, according to a filing on Wednesday.

The bank’s loan book reached 21.8 billion reais, up 6 percent in the quarter, outpacing Brazil’s largest banks. ($1 = 3.9295 reais) (Reporting by Carolina Mandl; Editing by David Gregorio)

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