UPDATE 1-Brazil bank lending gains despite cenbank efforts

* Outstanding loans rise 1.3 percent in Feb. from Jan.

* Default rate at 4.7 percent in Feb from 4.6 pct in Jan.
(Rewrites, updates with context)

BRASILIA, March 29 (Reuters) – Lending in Brazil’s banking
system sped up in February, the central bank said on Tuesday,
despite government measures to cool credit.

Outstanding loans (BRLEND=ECI: Quote, Profile, Research) rose 1.3 percent in February
from January, compared with a previously reported 0.5 percent
growth in January.

Loan delinquencies as a proportion of total loans, or the
average loan default rate, edged up to 4.7 percent in February
from 4.6 percent in January.

But the central bank noted in a statement that February’s
gains came in part from a relatively low base of comparison in
January, when lending slowed on government efforts to clamp
down on credit.

Relatively easy credit along with a strong labor market
helped fuel 7.5 percent growth in Latin America’s largest
economy in 2010 — and nearly 6 percent annual inflation.

To counter those price pressures and avert a credit bubble,
central bank officials in December raised the amount of
reserves that banks are required to hold against their loans.

The central bank has increased borrowing costs by 100 basis
points so far this year to 11.75 percent, but Brazil’s central
bank has signaled it will rely more on credit curbs to fight
inflation.

Brazil’s central bank is assessing whether new regulatory
measures are needed to counter lingering inflation risks,
Central Bank President Alexandre Tombini said last week.
(Reporting by Ana Nicolaci da Costa and Leonardo Goy, editing
by Gerald E. McCormick)

UPDATE 1-Brazil bank lending gains despite cenbank efforts