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Montevideo, March 25th 2019 - 20:34 UTC

Brazil’s top private banker denies any risk of a credit bubble in the country

Wednesday, February 23rd 2011 - 06:33 UTC
Full article 2 comments
President Roberto Setubal: “There is plenty of room to grow” President Roberto Setubal: “There is plenty of room to grow”

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.

Categories: Economy, Brazil.

Top Comments

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  • Jefferson Michaelis

    Itau Unibanco Holding SA, posted days ago a fourth-quarter net profit of 3.89 billion Brazilian reais ($2.33 billion), up from BRL3.2 billion in the year ago period, as its credit portfolio continues to expand. The bottom line is that they are extending (giving away) credit to everybody outthere...some banks in Brazil are charging interest rates around 1.68 to 3.5 per month!

    Feb 24th, 2011 - 01:49 pm 0
  • Forgetit87

    AFAIK, high interest rates and bank profits don't indicate a bubble risk, quite the contrary. It is when banks take risks and lose too much money that there's a danger that a bubble will burst.

    J. Michaelis, are you the Commerce and Industry Chamber guy?

    Feb 24th, 2011 - 03:17 pm 0
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