UPDATE 3-Credit growth in May helps fuel Brazil economy

* Outstanding loans in May rise 2.1 pct from April

* Loan delinquencies stable at 5.1 pct month-on-month

* Credit seen closing the year at 48 percent of GDP

(Adds comments from central bank official)

BRASILIA, June 23 (BestGrowthStock) – Brazil’s total stock of bank
credit climbed in May in the latest sign a credit expansion is
helping fuel growth in Latin America’s largest economy.

Outstanding loans in Brazil’s banking system rose 2.1
percent in May from April, the central bank said on Wednesday,
climbing to the equivalent of 45.3 percent of gross domestic
product from 44.8 percent in April.

“Credit is growing in a uniform way among individuals and
companies,” said Altamir Lopes, head of the central bank’s
economic research department told reporters in Brasilia.

“Our expectation is for (more credit) growth.”

Brazil’s economy has been among the fastest-growing this
year as red-hot domestic demand kept activity rumbling even as
the advanced world struggled with a debt crisis in the euro

A surge in available credit has stoked demand for
appliances, automobiles and housing, helping the economy to
grow 9 percent year-on-year in the first quarter of 2010.

Although officials have downplayed the risk of overheating,
the government has taken steps to help cool the economy, and
the central bank has raised borrowing costs by 150 basis points
since April to 10.25 percent.

But loan growth is expected to continue to help the Latin
American giant to expand at robust levels, with Finance
Minister Guido Mantega expecting 6-6.5 percent growth rates for
the rest of the year.

The central bank sees credit growing 20 percent this year
and closing 2010 at 48 percent of GDP.

Loan delinquencies measured as a proportion of total loans,
or the average loan default rate, stayed flat at 5.1 percent in
May from April, the central bank said.

Default rates should continue stable thanks to a solid
labor market, Lopes added. Brazil’s economy added more payroll
jobs in May than expected and will add a record number of
payroll jobs in June, the Labor Ministry said on Monday. See

Investment Analysis

(Reporting by Ana Nicolaci da Costa and Isabel Versiani;
Editing by Andrew Hay)

UPDATE 3-Credit growth in May helps fuel Brazil economy