Reuters: Financial Services and Real Estate: UPDATE 1-Brazil loan defaults resume rise in April

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UPDATE 1-Brazil loan defaults resume rise in April May 25th 2012, 14:02 Fri May 25, 2012 10:02am EDT * Loan defaults rise slightly, hit 2 1/2 year high * Consumers kept falling behind in payments in April * Stock of credit rose 18.1 pct y/y, above estimate SAO PAULO, May 25 (Reuters) - Loan delinquencies at Brazilian banks rose for the third month in four in April, a sign that an abrupt economic slowdown is still offsetting the benefits of the nation's strongest job market in decades and a decline in borrowing costs. Loans in arrears for 90 days or more, the most widely followed gauge of bank defaults, rose slightly to the equivalent of 5.8 percent of outstanding loans in April, compared with 5.7 percent the prior month, the central bank said in a report on Friday. The level is the highest for the indicator, known as the default ratio, since November 2009. The relative stability in loan delinquencies should provide a brief relief to investors, who are increasingly concerned over the rising trend of defaults in Brazil, Latin America's largest economy. Rising defaults led Banco do Brasil and Itau Unibanco Holding, the country's two biggest banks, to set aside more money for bad loan provisions. The driver behind the increase in overall defaults was a jump in consumer loan delinquencies, which reached 7.6 percent last month. Defaults on corporate loans remained stable at 4.1 percent of the segment's loan book for a third month. Outstanding loans in Brazil's banking system rose 1.2 percent in April from March, the report showed. The stock of credit rose to a record 2.10 trillion reais ($1.04 trillion), up 18.1 percent from the same period a year earlier. At that pace, credit is rising above the central bank's estimate of 15 percent growth for this year. Last year, credit rose 19 percent. Link this Share this Digg this Email Reprints

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