BRAZILIAN BANKS ARE STRENGTHENING BETS ON PAYROLL LOANS
March 8, 2019
Brazilian banks are reinforcing bet on payroll loans – by UOL Economia
SÃO PAULO, Brazil (Reuters) – Brazilian banks are stepping up their work on payroll loans, through promotoras and banking correspondents, and the sector is sending to the government proposals that could boost a market still underexploited in the country
Even with localized stumbling blocks in regions such as the states of Rio de Janeiro and Roraima, whose delays in civil servants’ salaries have directly affected these operations, banks still see payroll as the best way to avoid an even larger retraction of their total loan portfolios and at the same time control the escalation of their default rates.
Banco do Brasil and Banco Votorantim have recently launched the Promotiva, a promoter whose payroll is the flagship and has generated about R $ 500 million per month in new financing.
Banco Pan, whose work on the payroll is concentrated in promoters and bank correspondents, accelerated in June the generation of new loans with payroll discount from an average of R $ 800 million to R $ 900 million per month, a Reuters source together with the subject.
On another front, BB and Bradesco are in the test phase of a pilot to sell payroll through the Ibi, under the umbrella of Elopar, in which they divide the control.
The delinquency index with more than 90 days in the payroll segment was 2.3% in May, while the average banking system index for non-earmarked credit was 5.9%. In May, the payroll accounted for about 37% of the system’s R $ 800 billion consumer credit, according to the Central Bank.
In view of this, banks have sought ways to expand the service. A breakthrough in this direction came this week with the approval by the Chamber of Deputies and the Senate of the project that allows private sector workers to offer as collateral for the payroll deductible loan part of the FGTS funds and termination fine.
In parallel, another initiative is under way. Next week, the sector will send to the Central Bank a set of proposals for changes that, according to the project’s supporters, would make it possible to better exploit the potential of the consignment. Generally, the idea is to create mechanisms that allow large-scale use of the product also for private sector workers.
According to BC data, in May 93.5% of the R $ 282 billion in payroll deductible loans were distributed among public employees and retirees.
Among the claims of the set of proposals is that the BC reduce capital allocation requirements for operations in the sector. Others depend on legislative approval.
“This can increase the supply of consumer credit from 20% to 25% over the next five years and create about 50,000 jobs in the country,” another source told Reuters on the subject and asked not to be identified.