The latest data released by the Central Bank allow us to take stock of the credit market in 2023. The figures confirm the trend seen in previous months of a slowdown in the pace of credit growth. In the individual segment, the value of outstanding transactions made through the National Financial System (SFN) grew by 10.1% in the period, on a nominal basis. Despite the significant variation, it should be noted that growth was lower than that seen in 2022 (17.7%).

The growth in the volume of credit lent to companies, on the other hand, was 4.5% in 2023 - compared to growth of 10% in 2022. Measured as a proportion of GDP, the total balance of credit, including PF and PJ, was practically stagnant, estimated at 53.2%. This means that, in real terms, credit grew at the same rate as the economy. This ratio provides a measure of the presence of credit in the country's economic activities.

Over the last two decades, the relationship credit-GDP practically doubled in Brazil. The advance was interrupted by the strong recession of 2014-2016 and only resumed during the pandemic, with the impetus of credit stimulus programs and as a reflection of the sharp drop in GDP.

International comparisons use a broader indicator published by the World Bank, which takes into account financing operations through the capital markets. The most recent data is from 2022 and shows that the ratio between domestic credit to the private sector and domestic production reached 71.8% in Brazil. This percentage is lower than that observed in middle-income countries, which have a credit-to-GDP ratio of 131.6%. In the United States, the ratio reached 216% in 2022.

The comparison, especially with middle-income countries, shows that there is room for credit to grow in Brazil, both via the banking market and the capital market. In parallel with the stabilization of the credit-to-GDP ratio in recent years - after the significant growth seen at the beginning of the pandemic - it is important to note that these years have been marked by progress in the credit market modernization agenda.

As we have already highlighted in this space, there are incentives for increased competition in the banking sector, efficiency gains in the use of collateral, the creation of data sharing infrastructures and the broadening of the scope of credit information, which favors the visibility of consumers and companies before the National Financial System. The effects of these measures need time to mature. In the long term, the expectation is for a positive impact on credit concessions.

In the final balance of defaults in 2023, data from the credit bureau sector shows that the number of people in debt in the country has started to fall back, after a period of highs in which the percentage of the adult population in debt exceeded 44%. After a period of rising indebtedness, there has also been a slow fall in the Central Bank's data measuring total household debt to the National Financial System as a proportion of income.

In conjunctural terms, the year begins with the prospect of relief in household debt conditions, which will allow credit to continue to advance in this segment. This relief is related to the recovery of the job market and, consequently, of real income, which has once again surpassed pre-pandemic levels.

More important than the economic relief is the advance in credit discipline. Little by little, consumers have become aware that data is an important asset when it comes to contracting resources and that a good credit history helps to obtain fairer conditions. Between the short and long term, the bureau sector will continue to monitor credit conditions and contribute to the health of the financial system.

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