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Brazil Commercial Banking Report Q2 2008Product Type: Market Research ReportPublished by: Business Monitor International Published: April 2008 Product Code: R302-3029 Description In March 2008, we updated all data for the 59 countries surveyed with official figures, sourced fromcentral banks and regulators. In most cases, we were able to find data that pertained to the end of 2007: in almost all other cases, the data pertains to September 30 2007. As a result, the insights that we derive on particular countries are based on consistently sourced information that is far more current than it had been previously. Although we gather data for countries such as the US, Japan, Australia and the eurozone, the vast majority of the 59 countries whose banking industries we survey are, or are generally seen as being, emerging markets. For all the widely publicised problems of large banks in developed countries, in the wake of the subprime banking crisis in the US, 2007 was an extremely good year for the banking sectors of the emerging markets. In local currency terms, the median growth in assets was 21% (in Brazil). The median rates of growth in loans to non-bank customers and in deposits were 22% (in India) and 18% (in Morocco). In some countries - and not just those enjoying oil booms - the figures were spectacular. In Ukraine, for instance, assets and deposits rose by 76% and 62% respectively. Loans grew by more than one-third in Bulgaria, Estonia, Latvia, Lithuania, Romania, Russia, Serbia, Slovenia, Peru, Bahrain, Iran and Nigeria. Deposits also rose by more than one-third in most of these countries. In absolute terms, Brazil’s banking sector enjoyed strong growth through the year to December 31 2007. In local currency terms, total assets, total loans and total deposits increased by 21%, 31% and 18% respectively. The loan/deposit, loan/asset and loan/GDP ratios all rose. However, relative to other countries surveyed by BMI, these achievements are, perhaps, not so impressive. Of the 59 countries surveyed, Brazil ranks 30th in terms of local currency asset growth, 16th in terms of local currency loan growth and 29th in terms of local currency deposit growth. The loan/deposit ratio is virtually the highest of any country whose banking sector is surveyed by BMI; however, the loan/asset and loan/GDP ratio are not especially high. In a country with per capita GDP of US$6,884, deposits per capita are US$2,304. In Q108, we envisaged that total assets, total loans and total deposits would rise by 20%, 25% and 10% annually through the 2007-2012 forecast period. Now, and using an improved forecasting method, we are looking for growth rates of 14%, 18% and 13% respectively. Since Q108, we have calculated, on a consistent basis, a Commercial Bank Business Environment Rating (CBBER) for each of the 59 countries surveyed. The CBBER includes an assessment of the limits of potential returns: it does this by taking into account the size, growth potential and bancassurance potential of the banking sector, as well as aspects of the economy in 2007. The CBBER also depends on an assessment of the risks to the realisation of potential returns: this reflects BMI’s assessments of overall country risk, together with the regulatory and competitive environment. Brazil’s CBBER is 67.4. In the context of Latin America, this means that Brazil is the most attractive market opportunity in Latin America. Its CBBER is only a little ahead of that of Mexico. Interestingly, this is despite the fact that the country elements of the CBBER are significantly lower for Brazil than for Mexico. Where Brazil really leads is that the current absolute size of its banking sector, together with the absolute growth that we envisage, is extremely large. Provided that the economy continues to perform well, and the risk premium attaching to Brazilian assets continues to move in a downwards direction, Brazil really could be, for bankers, the country of the future. Table of Contents
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