Brazil Consumer-Delinquency Rates Skyrocket as Emergency Credit Swells
- Forced debt renegotiation seen as red alert on personal loans
- Investors underweight banks expect more negative surprises
A worker checks real banknotes in Rio de Janeiro, Brazil.
Photographer: Andre Coelho/BloombergThis article is for subscribers only.
Brazilians are falling behind on their loan payments in record numbers — with delinquencies on credit-card revolving lines as high as 44% — prompting the nation’s biggest banks to cut credit to the poor and calling into question promises by the once-hot fintech industry to serve the unbanked.
“The near-term outlook is quite bad,” Rafael Furlan, a founding partner at Norte Asset Management in Sao Paulo, said in an interview. “Not only is asset quality expected to keep worsening, but banks are tapping the brakes and should see a slower credit expansion,” said Furlan, who’s keeping his exposure to local banks below the benchmark index’s.