Average Interest Rate in Brazil: 29% a Year. In the World: 4%

Erivaldo Rodrigues of Austin Rating reports that Brazilian bank profits in 2005 were the biggest in a decade. They were also very high by world standards.

He explains that one of the main reasons was high interest rates charged for bank loans which were at world record levels. "The average interest rate in Brazil is 29% per year, compared to the world average of 4%. In the United States it is 3.5% and in Japan it is 2.8%," he says.

As a result, explains Rodrigues, Brazilian banking profits rose an average of 44.5%, compared to 2004. "Bradesco’s 80.2% rise in profits beats all prior records," he says.

With the country’s key interest rate, the Selic, at 17.5% per year, banks kept their spread (the difference between what banks pay for money and what they loan it for) as wide as possible. At the same time there was an average expansion of loan portfolios of 21.5%.

The government has promised to reduce the basic interest rate and has done so gradually, but the reductions have not been passed on to the final consumer. The Selic did come down some, but the final cost of money did not and that explains the record bank profits, says Rodrigues.

Agência Brasil

Tags:

You May Also Like

A Map to Lower Brazil’s Interest Rates from 19.5% to 4%

One of the goals established in the Strategic Map of Industry, released Tuesday, April ...

Under the Gods’ Eyes

I arrived at the Pelourinho on Sunday night. The square exploded with the sound ...

Israel President Calls Brazil Leader to Apologize for Dwarf Remark

The newly-elected president of Israel, Reuven Rivlin, apologized to Brazilian president Dilma Rousseff for ...

Extramusical Phenomena

In a list of 150 countries classified by the he Gini index—an indicator used ...

Brazil Resigned to Lose World Leadership in Beef, After Cattle Disease

The presence of hoof and mouth disease in a cattle herd in the state ...

Brazil Boasts of Being a BRIC, But Being a FICS Would Be Much Better

BRIC is the acronym for Brazil, Russia, India and China. The Gross Domestic Product ...

POR AÍ

It is the 23rd century in America. For the first time in history, Blacks ...

Brazil’s Congress Beheads Whistleblower

The Brazilian deputy who triggered the worst crisis in the country’s Congress in the ...

In Brazil, Buggies Never Go Out of Style

The buggies, those little hoodless cars with fiberglass bodies and large back wheels, have ...

200 Air Force Men at Boeing Crash Site in Brazilian Jungle

Brazilian authorities restarted at 5;30 am, this Sunday, their search for victims of the ...