The president of Brazil’s private bank Itau brushed aside risks of a credit bubble in the country and underlined that sustained economic growth will be rewarded by an expansion of between 15% and 20% in its credit portfolios in 2011.
The volume of credit is still not large in the Brazilian economy as a proportion of gross domestic product said Itau President Roberto Setubal at a news conference. There is plenty of room to grow.
Setubal said he expects Brazilian GDP to expand by 4.5% in 2011, solid growth on top of a robust 7.5% expansion for Latin America's biggest economy in 2010.
Setubal added, I don't foresee any risk of a credit bubble in Brazil. The expansion of lending volume is under control.
On Monday the Financial Times published an article on the ‘punitive’ interest rates on consumer goods and warned of a possible sub-prime crisis, similar to that of the US, as overburdened consumers are unable to pay back loans.
Itau's credit portfolios posted growth of 20.5% in 2010. Expansion of the bank's credit portfolios exactly matched the 20.5% expansion experienced by the Brazilian credit market as a whole in 2010, according to Brazilian Central Bank figures.
Itau posted its fourth-quarter profit earlier Tuesday. The bank earned a net profit of 3.89 billion Real (2.33 billion US dollars) up from 3.2 billion Real in the year-ago period.
For 2010, the bank posted a net profit of 13.3 billion Real, up from 10.06 billion Real in 2009.
Setubal said the bank's main focus in 2011 will be on expansion within Brazil.
We are still completing the full integration of Itau and Unibanco, Setubal said. There are many opportunities for growth within Brazil.
The Itau president said his bank was taking a look at the possible acquisition of a stake in the consumer credit division of Carrefour. The division is part of the Brazilian unit of huge French retailer Carrefour SA.