Brazil bank lending spreads, loan defaults fall to lowest in years

By Jamie McGeever

BRASILIA, Aug 28 (Reuters) - Bank lending spreads and loan defaults in Brazil fell in July to their lowest in years, figures showed on Friday, further evidence that financial conditions and economic activity continue to improve from the coronavirus shock earlier this year.

A broad measure of bank lending spreads fell to 23.0 percentage points in July from 23.4 percentage points in June, the central bank said. That was the lowest since January 2014, and sharply down from 29 percentage points in February just before the onset of the COVID-19 pandemic.

A broad 90-day default ratio covering households and businesses fell to 3.5% in July from 3.7% in June, the central bank said, marking the lowest level since the series began in 2011.

The 90-day default ratio for personal credit fell to 3.6%, the lowest this year. Total household loan defaults, including borrowing such as auto loans and overdrafts, fell to 5.1%, the lowest since February.

The stock of outstanding loans in Brazil rose 1.0% in July to 3.7 trillion reais ($674 billion), the central bank said. Corporate loans rose 1.2% on the month to 1.6 trillion reais, and personal loans increased 0.9% to 2.1 trillion reais.

In the 12 months to July, total loan growth in Brazil was up 11.3%.

($1 = 5.49 reais)

(Reporting by Camila Moreira and Jamie McGeever Writing by Jamie McGeever; editing by David Evans and Jonathan Oatis)

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