According to Brazilian banking expert, Igor Cornelsen, there are two main things that keep Brazilian banks profitable during turbulent times. First, is what they have learned from previous experiences. Second, is their extensive knowledge of the market.
At the end of 2014 Brazilian banks stunned the banking world by finishing on top. During a year of no economic growth, two of the country’s biggest private banks managed to increase their profits. The two banks, Itau Unibanco and Banco Bradesco’s profits in the third quarter rose by 36% and 28% respectively. Their shares also increased by over a third.
How did they do it?
Brazilian bankers, in light of poor economic conditions, only lent to the most credit-worthy clients. This reduced costs for the banks and is one of the ways in which they were able to make profits despite their circumstances. Read more: Adicione uma descrição a este tópico
This tactic also made banks feel secure about their future. Those individuals who did not have attractive credit portfolios had to choose other sources of credit such as public banks. Alternatively, they also opted to spend cash or give up on their business prospects altogether. This was tricky in the poor economic environment as it would make the economic conditions worse.
Igor Cornelsen’s Basics on Brazilian Banking
There are 10 major banks in Brazil
Brazil’s has ten major privately and state-owned banks which support the largest economy in South America. It is also the 8th largest economy in the world.
A new appointment to the finance docket
While the previous fiscal policy was a disaster, a newcomer to the docket might turn things around.
Focus on China
China and Brazil are linked as a result of their strong trade partnership. Ironically, they are also major competitors in the export of industrial goods.
An overvalued currency
The competitiveness of Brazil’s exports has been made worse by the country’s overvalued currency. The new administration is expected to change things for the better to increase investment.
Learn more about Igor Cornelson: