It is hardly news that life has become more challenging for Brazils big banks. With economic growth slowing and the Selic benchmark interest rate falling to earthly levels, lenders are waving goodbye to profitability rates above 20%.
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Although consumer credit has not brought the bubble many feared, there is still the danger that lenders may have overextended, particularly if the economy which few can count on any more to grow at the 6% of years past turns for the worse.
On top of this, the government has been piling pressure on credit providers to lower the rates charged to consumers for loans, credit cards and other products. Private lenders are additionally challenged in that they have to compete with state-owned Banco do Brasil and Caixa Econômica Federal, which enjoy lower-cost federal funding.
Brazils larger banks are best equipped to withstand lower profits and an...
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