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With the release of the credit market figures for December 2022, it is possible to take stock of the past year. The consolidated figures are in the trillions: according to the Central Bank of Brazil, the credit balance reached R$ 5.33 trillion. This figure represents the value of active credit operations carried out through the National Financial System.

These trillions represent 54.1% of GDP. This was not always the case. Over the last two decades, the country has seen a gradual advance in the credit market, which went from around 25% of GDP in 2021 to the current level. There were some setbacks along the way. In the wake of the 2014-2016 crisis, the credit market shrank to around 45% of GDP in mid-2018The recovery came in 2020, right in the middle of another crisis: during the pandemic, this market was mobilized to ensure the survival of companies and the solvency of households.

Some considerations about the credit profile help us to understand the momentum of this market. In the last year, credit grew more in the individual segment than in the corporate segment. As a result, the share of credit in the hands of individuals increased and continues to represent more than half (60%) of the National Financial System's credit portfolio.

According to Central Bank data, nominal growth in credit to individuals was 17.4% in 2022, well above inflation, which shows real growth. Growth in credit to companies, on the other hand, was 9.3% - a much smaller increase than that seen in the individual segment.

In the PJ segment, another detail is worth highlighting: credit to MSEs grew more than credit to large companies. The nominal increase in credit to small businesses (15.3%; while among large companies, the index stood at 3.7%). The largest share still goes to large companies, although this difference has been falling in recent years. In short, despite the setbacks and unexpected shocks, the long-term trend of credit growth continues. This trend is important for Brazil to get closer to the credit/GDP ratio observed in other countries that are more advanced in credit discipline. Following the International Monetary Fund (IMF) metric, with data from 2020, Brazil has a lower credit/GDP ratio than the world average, where this ratio reaches 147% of GDP, and is below countries like Chile (124.6%) and well below the United States (216%).

The vectors acting on the performance of the credit market can be divided into cyclical and structural. The economic climate has been of little help to credit: average interest rates rose by around 5 percentage points over the course of 2022. The growth in defaults reveals another cyclical difficulty. Data from credit bureaus point to a significant increase in the number of people in default throughout 2022. As a result, the country is approaching the unprecedented mark of 70 million consumers with their name registered with a credit bureau.

On the other hand, some structural changes favor the advance of credit, such as the implementation of the Positive Registry with automatic inclusion of consumers and companies, which has made it possible to include potential borrowers who until recently lived on the margins of the market.

This year, the economic situation requires special attention if the recent growth in credit is to be maintained. And the truth is that the situation changes and the transformations remain. Looking to the future, the agenda of transformations must continue to modernize the credit market and bring Brazil closer to the world.

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By: Elias Sfeir President of ANBC & Member of the Climate Council of the City of São Paulo & Certified Advisor