UPDATE 2-Brazil outstanding loans up for 20th month in Nov

* Outstanding loans up 2 pct in November from October

* Loans in Brazil banking system up to nearly $1 trillion

* Delinquency rates hold steady for 3rd month at 4.7 pct

(Adds reserve requirements in fourth paragraph, central
bank comments, cost of credit)

BRASILIA, Dec 23 (BestGrowthStock) – Outstanding loans in Brazil
rose for a 20th straight month in November, underscoring the
lending boom that has fueled growth in Latin America’s largest
economy, central bank data showed on Thursday.

Loans in the banking system (BRLEND=ECI: ) rose 2.0 percent
from October and surged 20.8 percent from a year earlier to
1.68 trillion reais ($990 billion).

“Credit operations in the financial system have kept an
expanding trend in November, remaining an important factor in
giving support to aggregate demand,” the central bank said in a
statement.

The credit surge in Brazil underscores concerns by central
bank officials about fast growth in lending that could create
bubbles in the market. The bank on Dec. 3 raised the amount of
reserves that banks are required to hold against their loans in
a move to cool the economy, dampen credit growth and
inflation.

Data for early December shows the move might be having an
impact in the cost of lending, though it might be too early to
tell, said Altamir Lopes, head of economic research at the
central bank.

“The figures are very preliminary,” Lopes added.

The average cost for personal credit this month through
Dec. 9 rose by 1.2 percentage points from November to 43.2
percent a year, while vehicle loans became slightly more
expensive, up 0.2 percentage to 23 percent.

Credit expansion in Brazil could take a turnaround early in
2011 as the higher reserves, coupled with an expected hike in
benchmark borrowing costs make credit more expensive. The
country has been among several emerging economies, such as
China and India, that have sought to reign in credit by either
raising interest rates or implementing higher bank reserve
requirements.

Most of Brazil’s lending growth in November was due to
continued expansion in consumer credit, the banks said. There
was “more intense demand” for working capital from businesses
paying year-end bonuses to workers and building up inventory
ahead of the holiday shopping season, the bank added.

Loan delinquencies as a proportion of total loans, or the
average loan default rate, held steady for a third straight
month in November at 4.7 percent.

For the central bank’s November credit report see:
http://www.bcb.gov.br/?ECOIMPOM
($1=1.697 reais)
(Reporting by Isabel Versiani and Raymond Colitt, Writing by
Elzio Barreto)

UPDATE 2-Brazil outstanding loans up for 20th month in Nov