Some of Brazil’s digital retail banks are leading a new credit cycle in the country. They are posting strong results on the back of an increase in consumer credit exposure, even before the banking system has registered a pick-up in credit demand.
Data from the Brazilian central bank appears to show that retail non-performing loans (NPLs), which peaked in the first half of 2023, have now started to fall. Delinquencies are trending lower in the third quarter (down 10 basis points), but consumer credit demand is also still trending lower as loans to individuals decelerated by 189bp to 5.1%
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