UPDATE 2-Brazil bank lending rises in Sept for 18th month

* Total loans rise 1.8 pct in September vs August

* Growth fueled by mortgage, subsidized loans

* Delinquency rates edge down to 4.7 pct
(Recasts, adds details, comment)

By Ana Nicolaci da Costa

BRASILIA, Oct 26 (BestGrowthStock) – Bank lending in Brazil rose in
September for an 18th consecutive month, led by mortgages and
subsidized credit, which are helping fuel red-hot growth in
Latin America’s largest economy, the central bank said on

Outstanding loans in the banking system (BRLEND=ECI: )
climbed 1.8 percent in September to 1.61 trillion reais ($948
billion) from August, showing “a consistent trend of
expansion,” the Brasilia-based central bank said in a monthly

Outstanding lending, which has more than doubled since
President Luiz Inacio Lula da Silva began his “credit
revolution” with the launch of paycheck-deductible loans in
September 2003, was 46.7 percent of gross domestic product last
month, compared with 46.2 percent of GDP in August.

Loan defaults fell to 4.7 percent of outstanding credit in
September, the smallest since January 2009. The so-called
default rate was 4.8 percent in August and 5.8 percent a year

Credit “is growing at a very reasonable rate,” Altamir
Lopes, the central bank’s head of economic research, told
reporters. “It’s in line with the momentum of the economy.”

Credit has swollen in Brazil as Lula pressed state banks to
slash borrowing costs and give more access to credit to a
growing mass of workers. Stable inflation and a strengthening
currency have also encouraged private sector lenders to boost
their supply of credit to companies and wealthier individuals.

Credit growth could pick up toward the end of the year,
Lopes said, since consumer demand tends to rise during the
holiday season.

“For the end of the year, there is stronger demand for
credit, it’s a seasonal demand, especially from companies
(preparing for) year-end activity, but also from families,” he

Commercial banks allocated 2.5 percent more in loans from
state development bank BNDES in September, while mortgage
lending surged 3.6 percent, the data showed. BNDES lending,
most of which is made at below-market rates, has risen about
two-thirds since the start of last year.

Outstanding mortgages have more than doubled over the same
period, according to the report.

Demand for loans has also been propelled by the fastest
economic expansion in at least two decades. Analysts are now
expecting economic growth to settle into a robust but
sustainable growth path in the third quarter, and there are
signs that this is already taking place.

“As some indicators have shown, the third quarter shows a
certain stability in the level of activity and the credit
(dynamic) is no different.”

A central bank index earlier this month showed economic
activity in Brazil grew 6.43 percent in August from the year
ago period. See [ID:nN20193696].

Lopes reiterated the central bank expected credit to grow
22 percent in 2010.
Click on: http://www.bcb.gov.br/htms/notecon2-p.asp?idioma=P to
access the central bank report.
(Additional reporting by Peter Murphy; Writing by Elzio
Barreto and Ana Nicolaci da Costa; Editing by Guillermo
Parra-Bernal and Leslie Adler)

UPDATE 2-Brazil bank lending rises in Sept for 18th month