Bank credit increases 14% in 2022, driven by individuals

In the first half, growth in the balance remained at a high pace, driven by higher cost modalities in the individuals (individuals) segment and by working capital in the corporate (corporate) segment. In the second half, however, the BC observed a deceleration in credit expansion, with the cooling of free credit.

The total balance of loans and financing grew 14% in the year, reaching R$5.3 trillion. However, the document points out that the increase in the Selic rate, currently at 13.75% per year, was passed on to interest charged on credit operations contracted last year. The average interest rate on new contracts increased more sharply in the segment of PFs with free resources. With regard to defaults, there was an increase in non-earmarked credit, especially in the household segment.

In the first half of 2022, credit growth in the segment of individuals remained at a high pace, reaching a variation equivalent to 17.7% per year in June, even with the implementation of the more contractionary monetary policy, since the beginning of 2021 The ratio between credit and Gross Domestic Product (GDP) reached 53.8% in December, an increase of 1.2 percentage points in the year.

“The expansion of credit aimed at PFs in 2022 occurred heterogeneously across geographic regions, with the North Region showing the highest growth and the Southeast Region, the lowest. Credit for females grew slightly higher than for males in 2022, unlike the previous two years, when it had grown less. In terms of age group, the youngest experienced the greatest credit slowdown and the greatest increase in defaults in 2022,” says the report.

Legal entities

With regard to credit for legal entities (PJs), the pace of expansion last year was also heterogeneous among the regions of Brazil, with the Southeast Region showing the lowest growth. Younger companies were the ones that had the highest growth rates in their credit balance, which reinforces the trend of recent years. In 2022, there was growth in credit for companies in all sectors of economic activity, with emphasis on Construction and Extractive Industries.

Another point highlighted in the report is that the expansion of credit to legal entities in 2022 was driven by micro, small and medium-sized enterprises (MSMEs), whose credit portfolio balance continued to gain share in the PJs portfolio.

On the other hand, the default rate of smaller companies (micro and small) continues with an upward trend, contrary to the trend of large companies, which showed decreasing default rates in the last two years.

As a result, the Quarterly Survey of Credit Conditions (PTC) registered more restrictive credit approval situations by financial institutions throughout 2022, consistent with the scenario of rising interest rates.

Among the factors that contributed to the greater restriction on credit are the general conditions of the domestic economy in the segment of large companies; level of default in the case of MSMEs; level of income commitment in the consumer credit segment; and cost or availability of funding (financing) in the case of housing loans.

On the demand side, in the corporate credit segments, the need for working capital was pointed out as the main factor for the increase in demand. The change in the interest rate was perceived by financial institutions as an important factor inhibiting demand in the two credit segments for PFs and MSMEs.

In the final balance of 2022, the stock of credit to individuals recorded an increase of 17.7% (21% in 2021), with variations of 17.4% in the free credit modalities (emphasis on payroll loans) and 18% in the earmarked credit (emphasizing both rural credit and real estate financing).

In the corporate segment, there was an increase in the balance of 9% (10.6% in 2021), with a variation of 10.1% in free credit, with emphasis on working capital, discount of trade notes and receivables and vehicle financing.

Directed credit increased by 6.9%, with increases of 5.5% in the balance of BNDES operations, 12% in rural credit and 5% in the modality of other directed credits, in which the National Support Programs for Microenterprises and Small Businesses (Pronampe) and the Emergency Credit Access Program (Peac).

Cost of Credit

The Credit Cost Indicator (ICC), the average cost of the entire financial system portfolio, registered, in December 2022, a rate of 21.5% per annum. The ICC on loans based on nonearmarked resources reached 30.7%, with 19.4% for legal entities and 40.4% for individuals.

The ICC on loans with earmarked resources reached 9%, 9.4% for companies and 8.8% for individuals. The trajectory of spread of the ICC was also on the rise, from 11.8 percentage points at the end of 2020 to 13.9 percentage points at the end of 2022.

The document reinforces that the Selic increase was passed on to interest charged on credit operations contracted in 2022, reaching an average rate of 30.1% per year in December, an increase of 5.5 percentage points throughout the year. In free credit, the average interest rate increased by 7.9 percentage points, ending the year at 41.7% per annum.

The average rate of modalities with free resources in hiring individuals reached 55.4% per year in December, with an increase of 10.4 pp in the year. There was an above-average increase in interest charged on revolving credit cards, which stood at 60.3 percentage points.

In December, in the corporate segment, the free rate reached 23.1% per annum, an increase of 3.4 percentage points in the year.

default

In 2022, there was an increase in defaults on credit granted within the scope of the National Financial System. The default rate on loans to families with free resources grew more sharply in the first half, mainly in the modalities of revolving credit card and non-payroll personal credit. In the segment of companies with free resources, there was a worsening in arrears of more than 90 days in the fourth quarter, especially in the modality of working capital.

The bank credit default rate increased by 0.7 percentage points in the year, reaching 3% in December. Defaults on the corporate loan portfolio rose 0.4 percentage points to 1.7%, with an increase of 0.6 percentage points in non-earmarked credit and stability in earmarked loans. Credit to individuals grew 0.9 percentage points, reaching 3.9%, with a variation of 1.5 percentage points in free modalities and also stability in targeted ones.