Outstanding loans slipped 0.1% in February from the previous month to 5.319 trillion reais ($1.03 trillion), pushing 12-month growth down to 12.6% from 13.8% in the previous month.
The performance was driven by a 0.7% decline in corporate credit, while there was a 0.4% increase in household loans. Brazil's benchmark interest rate is at a six-year high of 13.75% from a record low of 2% in March 2021, leading to a deceleration in bank lending.
This has prompted criticism from the new leftist President Luiz Inacio Lula da Silva and his political allies about widespread economic damage from high financing costs and fears of a potential credit crisis.
Bank lending spreads in non-earmarked credit increased to 31.6 percentage points in February from 30.6 percentage points the previous month. A broad measure of Brazilian consumer and business default ratios remained at 4.5%. In the minutes of its latest policy decision, the central bank said on Tuesday that while some members of its rate-setting committee see the credit slowdown as expected due to the monetary tightening, others saw a more intensive movement "but focused on some specific markets". Policymakers stressed they had appropriate "liquidity instruments" linked to macroprudential policy to address localized relevant frictions in the system, should they occur. ($1 = 5.1655 reais) (Reporting by Marcela Ayres; Editing by Emelia Sithole-Matarise)
