As the Brazilian central bank nears the end of its cutting cycle – with the Selic (the Brazilian central bank’s overnight rate) predicted to be at or near 7% in the first quarter of 2018 – the focus for the improvement in the results of the country’s banks is set to switch to credit growth.
Brazil’s banks have been profiting from an improvement in the cost of the country’s risk, better economic prospects and reduced political noise.
Most have also been benefiting from the falling Selic as they run unhedged mismatches between loans and deposits, which have been boosting earnings in the short term.
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