Brazil’s biggest listed banks are tightening credit standards and shifting towards secured loans and wealthier customers as household debt remains near record levels, despite low unemployment and resilient economic growth.
Executives at Banco do Brasil, Itaú, Bradesco and Santander Brasil signalled greater caution during the latest earnings season, Reuters reported.
The lenders’ approach reflects concern that a slower economy could expose weaknesses built up during years of rapid household borrowing.
“It is really an acknowledgment, and a reminder, that caution in credit underwriting may need to become even more stringent,” said Katherine Hennings, an analyst at BRCG.
She said previous periods of rapid credit expansion and rising indebtedness had been followed by weaker consumer spending, citing Brazil’s experience after household debt increased sharply between 2011 and 2015.
Household debt now stands at about 50% of disposable income. Hennings said regulatory changes, fintech growth and wider digital payment use had expanded access to borrowing, while government policies had also encouraged consumption and credit.
Itaú CEO Milton Maluhy Filho said credit supply had exceeded what borrowers could absorb. Banco do Brasil expects economic growth of about 1% in 2027 and plans to prioritise payroll-backed loans to reduce delinquency.
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