Stocks around the emerging world have had a tough week, but the Brazilian financial sector has been lagging the rest of the Bovespa, not to mention banks elsewhere. There’s a good reason for this, and it hasn’t been reported widely.
Brazilian banks are more profitable than Americans for the eighth consecutive year, according to a recent survey from consulting Economatica.
The rating agency Moody’s has put the ratings of the nine biggest banks doing business in Brazil on negative credit outlook.
Vermilion’s analysts believe Brazil continues to emerge as the short-term global leader in Latin America and that there are plenty of individual opportunities there.
As the rest of the world struggles to maintain GDP growth above flatline, Latin America and the rest of the emerging world attempt to hold up the global economy. The IMF expected GDP growth for Latin America to end 2011 at 4.5% and slightly below in 2012 — not the heady days of the last decade but stellar in comparison to a forecasts of 2% for the U.S. and just 0.5% for the European Union.
Brazil’s central bank, Banco Central do Brasil, recently announced changes to some of its policies regarding consumer loans in Brazil. The types of loans involved include personal loans, payday loans, mortgages and vehicle financing. The changes are meant to give the economy a boost.
Despite problems in the global economy and credit markets, Latin American financial institutions continue to benefit from significant growth and those in Chile in particular are receiving interest from big regional and global rivals.