Brazilian banks’ profitability falls in 2020, but recovery expected this year – central bank

Stock Markets58 minutes ago (Jun 07, 2021 09:11AM ET)

(C) Reuters. FILE PHOTO: The central bank headquarters building is seen in Brasilia, Brazil May 16, 2017. REUTERS/Ueslei Marcelino/File Photo

BRASILIA (Reuters) – Brazilian banks saw profitability fall last year for the first time since the 2015-2016 recession, according to a central bank report on the banking system on Monday, as the COVID-19 pandemic forced institutions to increase provisions.

In December 2020, the banking system’s aggregate return on equity was 11.5%, the lowest in the central bank’s series, although the 2021 outlook is improving despite ongoing uncertainty surrounding the pandemic, it said.

“The fall in profitability was widespread, affecting banks of different types of control, size and activity,” the central bank said in its annual report.

“Bolstering provisions in 2020 reduces the need for significant new provisions, and the rebound in economic activity will support growth, credit quality, and demand for banking services,” it added.

The report also highlighted reduced concentration of the banking system, as the market share of state-owned institutions such as Banco do Brasil, Caixa Economica Federal and the BNDES national development bank fell.

The five largest banks – Itau, Bradesco, Santander (MC:SAN), Banco do Brasil and Caixa Economica Federal – accounted for 77.6% of total assets in December 2020, down from 81% a year earlier, the central bank said.

The concentration of total deposits in these institutions dropped to 79.1% from 83.4% in December 2019, it added.

Brazilian banks’ profitability falls in 2020, but recovery expected this year – central bank

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Related Stories

Discover

Popular Categories