Lending growth will slow this year in Brazil

Significance

Amid a backdrop of anaemic growth, lending in Latin America's largest banking market slowed last year. Loan expansion in Brazil was once again led by the country's large public sector banks -- albeit at a slower pace than in 2013. Loan growth will continue to slow this year due to less aggressive lending by public sector banks.

Impacts

• Less aggressive lending by public sector banks will probably reduce competitive pressure on private sector banks.
• It will also translate into market share gains for private lenders and lower asset quality risk for public sector lenders.
• Crucially, it should also generate fiscal savings for a federal government committed to improving accounts this year.