Banco Bradesco SA, Latin America’s second-largest lender by market value, may boost lending by 10 billion reais ($4.5 billion) after Brazil’s central bank cut reserve requirements and changed rules on risk-weighted assets.
“These measures are very important as they ease credit concession, boost credit,” Chief Executive Officer Luiz Carlos Trabuco Cappi said in a telephone interview today. “Bradesco could increase its loan book by 10 billion reais without altering its solvency and Basel ratios.” The change wouldn’t be immediate, he said.
Brazil’s central bank is injecting an estimated 45 billion reais into the economy to boost credit as growth slows. Economists surveyed by the central bank on July 11 reduced their 2014 expansion outlook to 0.97 percent. New lending was little changed at 315 billion reais in May from a year earlier, according to central bank data.
Bradesco’s first-quarter loan book expanded 10 percent to 432.3 billion reais, according to its earnings statement. The Osasco, Brazil-based bank expects loans to increase 10 percent to 14 percent this year, it said in January.
Bradesco, which reports second-quarter earnings on July 31, declined 0.9 percent to 35.28 reais at 1:53 p.m. in Sao Paulo, compared with a 0.3 percent drop for Ibovespa benchmark index.
The central-bank measures will increase competition, affecting lending spreads, Cappi said, adding that he expects all credit lines to benefit.
“Lenders will use their creativity to take advantage of this opportunity,” Cappi said.
Itau Unibanco Holding SA, Latin America’s largest bank by market value, said today it sees the measures as positive, according to an e-mailed statement from CEO Roberto Setubal.
These initiatives “create conditions to boost lending in some segments of the financial markets where liquidity was less abundant,” he wrote.