Brazil loan defaults jump to 17-month high

Loan defaults in
Brazil rose in July to their highest in 17 months in a further
indication that higher borrowing costs and an economic slowdown
hampered the credit-worthiness of consumers and companies in
Latin America’s largest economy.

 Loans in arrears for 90 days or more rose to the equivalent
of 5.2 percent of outstanding loans in July from 5.1 percent in
June, the central bank said on Wednesday. The level is the
highest for the indicator, known as the default rate, since the
5.3 percent reading in February 2010.

 The rise in defaults came along with a decline in the pace
of new loans in Brazil last month, the report showed.
Outstanding loans in Brazil’s banking system BRLEND=ECI rose
1.1 percent in July from June, totaling 1.854 trillion reais
($1.16 trillion), the report said.

 Average daily new loan disbursements fell to the lowest
since February, as government steps to restrain credit to
individuals and central bank steps to raise interest rates
contained red-hot demand for consumer, working capital and
mortgage loans.

 The average annual rate charged for loans to both
individuals and companies rose to 39.7 percent from 39.5
percent in June. It climbed from 34.6 percent a year earlier,
the report added.