© Jessica Bahia Melo
BRASILIA (Reuters) – The Central Bank recognized on Thursday night, in a note released on the internet, that Brazil is experiencing a credit slowdown in various modalities, on the same day that the President of the Republic, Luiz Inácio Lula da Silva , again criticized the monetary authority and said that “soon” the country could suffer a crisis in financing.
The BC’s note was released after the meeting of the Financial Stability Committee (Comef), a group formed by the top of the institution that establishes guidelines for maintaining financial stability and preventing systemic risks.
This Thursday’s meeting was attended by the president of BC, Roberto Campos Neto, and seven of the eight directors of the autarchy.
According to the institution, Comef verified “a deceleration in the growth of credit in the various modalities and a deterioration in asset prices”.
At the same time, the BC issued recommendations to banks in granting credit.
“Given the risks related to economic activity and the reduction of disposable income for paying family debts, it is important that banks continue to preserve the quality of concessions”, pointed out the BC in the note.
According to the monetary authority, banks in general voluntarily maintain capital and liquidity at levels higher than required.
The most recent BC data show that, in January, the total credit balance of the financial system fell by 0.3% compared to December 2022, to 5.317 trillion reais. In free credit (without guidelines), the decrease was 0.9%. These numbers, released at the end of February, were treated by the Central Bank as seasonal adjustments, which would not indicate a downward trend.
This Thursday’s assessment by Comef comes on a day when Lula, in an interview with journalist Reinaldo Azevedo, from BandNews, once again criticized Campos Neto and the current level of interest rates. The president has been insisting that the Selic – the basic interest rate, currently at 13.75% per year – has harmed credit.
Despite citing the slowdown in funding, the BC said, in the note, that the Brazilian financial system is prepared to face risks and has adequate provisions for credit losses.
At the same time, the BC found incidents in operations with small businesses and individuals, in addition to “specific cases” in larger companies.
“The Committee considers that the financial system is prepared to face the materialization of risks”, said the BC. “The materialization of credit risk has occurred in operations with micro and small companies, in higher risk lines granted to individuals, in addition to specific cases in larger companies”, he added, noting that banks have shown themselves capable of to absorb these incidents.
Market and government agents have been following the evolution of credit in the country, in view of the strong monetary tightening promoted by the Central Bank, with increased fears after the crisis at retailer Americanas.
“The Committee monitors the evolution of broad credit, including the developments of recent events that affected risk premiums in the capital market”, pointed out the BC in the note, without specifying.
The note also highlighted that the macroprudential policy remains in a neutral position, “consistent with periods without significant accumulation of financial risks.” The committee recommended that banks persist with the policy of prudent capital management due to economic uncertainties.
“The Committee is attentive to the evolution of the domestic and international scenarios and remains prepared to act, minimizing any disproportionate contamination on the prices of local assets”, he said.
At its meeting, Comef also decided to maintain the Countercyclical Additional Principal Capital (ACCP) at 0%. The additional is a portion of the capital of the institutions to be accumulated in moments of expansion of the credit cycle, dealing with credit and asset price risks.
(By Bernardo Caram; Editing by Fabrício de Castro)