Brazil's banking system is prepared against risks and recording positive results in credit concessions despite slowing bank lending, the country's central bank said on Thursday. The bank's Financial Stability Committee (Comef) decided to maintain its Additional Countercyclical Main Capital value related to Brazil at 0% as it says the country's banking system is "prepared" against risks.
"The credit portfolio continues with a positive return," it said in statement. Credit risk has materialized in micro and small companies and in higher risk lines for individuals, while there have been specific cases in larger companies, Comef added. The decision comes during the Brazilian government's frequent criticism of current credit conditions, with new leftist President Luiz Inacio Lula da Silva arguing that the country's benchmark interest rate level, held at a six-year high of 13.75% since September to combat inflation, may choke the economy and disrupt the credit market. The committee added that financial institutions are capable of "absorbing" the credit risk and that concessions on higher risk lines have originated with better credit quality.
"(We) believe that provisions for credit losses and banks'
liquidity and capital levels remain adequate," it added.
The Secretariat of Economic Policy (SPE) of the Finance
Ministry warned in a statement earlier on Thursday that the
current level of interest rates worsens the conditions of both
bank and non-bank credit, threatening economic activity this
year by making it difficult for companies to roll over debt.
(Reporting by Marcela Ayres; Writing by Carolina Pulice;
Editing by Josie Kao)
