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Analysis of Consumer Lending Market in Brazil and Argentina in New Research Reports

 Analysis of Consumer Lending Market in Brazil and Argentina in New Research
                                   Reports

  PR Newswire

  DALLAS, December 18, 2012

DALLAS, December 18, 2012 /PRNewswire/ --

Brazilian economic growth was sustained by consumer credit and in Argentina,
consumers still prefer card lending.

ReportsnReports.com offers " Consumer Lending in Brazil " and " Consumer
Lending in Argentina " market research reports under the Banking and Financial
Services category on its store.

In Brazil, the millions of people who joined the middle class since 2002
stimulated consumption through consumer credit. The government's equation was
based on the simple motto: more people, more credit. Financial institutions
led by public banks followed the government's maxim and supplied the economy
with expanding consumer credit lines.

Mortgages/housing lead consumer credit in demand and supply

The dream of buying a house stimulated millions of Brazilians to take
advantage of mortgages/housing credit supply in 2012. While low-income
consumers gain access to credit lines through the government's programme Minha
Casa, Minha Vida (My House, My Life), the emerging middle class finds credit
opportunities offered primarily by public banks CEF (Caixa Econômica Federal)
and Banco do Brasil.

Auto-lending loses speed as a result of rising outstanding loans

The race to purchase a new car ended as rising numbers of outstanding loans
slowed down auto-lending in 2012. Banks decreased credit supply and began to
exercise greater scrutiny before accepting new auto-lending contracts.
However, lower-interest rates are expected to bring new life to auto-lending
as lenders become more confident about their ability to receive their
payments, and borrowers about their ability to fulfill their financial
obligations.

The strategic role of financial education becomes important

A significant number of consumers remain uneducated about basic elements
surrounding consumer credit and financial instruments. At a time of
lower-interest rates when banks need to compete based on price, the cost of
offering consumer credit became even more crucial for financial institutions'
profitability. Therefore, rather than constituting a social issue, financial
education took a strategic role in helping banks to lower operational costs
and increase competitiveness.

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In Argentina, Consumers still prefer card lending

Although during 2012 retailers and banks offered less in terms of promotions
such as discounts and long-term financing, consumers still preferred to take
advantage of them where possible, as well as reward programmes launched by
issuers of credit cards. In 2012, card lending outstanding balance registered
the highest growth rate within consumer lending outstanding balance compared
to 2011.

Auto lending boosts new car sales and renewal

Auto lending outstanding balance grew significantly during 2012, boosted by
loans with fixed interest rates in pesos and the high inflation rate, while
salaries followed the unofficial inflation rate of around 30% in 2012. Buying
cars, either new or used, became a way to preserve value.

Mortgage category unable to recover

During 2012, the mortgages/housing lending category significantly
underperformed compared to consumer lending as a whole, due to the absence of
long-term deposits in banks that would allow long-term credits, as well as the
high inflation rate, the increasing cost of property priced in US dollars
while salaries were set in pesos, and the absence of policies regarding
housing problems, mainly impacting low- and middle-income groups.

Interest rates under control

The Federal Government established foreign exchange controls in November 2011
and was able to minimise the flight of capital and thus reduce interest rates
that had been rising during 2011 as a consequence of the liquidity crisis,
itself caused by the economic uncertainty that had led people to look for the
security of the US dollar.

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