Acrefi: Consumer lending to grow 20-25% this year

Brazilian banks and other financial institutions should see their consumer lending operations grow 20% to 25% this year compared to 2004, Érico Ferreira, president of Brazil's consumer finance association Acrefi, told BNamericas. Last year consumer lending grew an impressive 40% to 43.5bn reais (US$16bn) on the back of strong economic growth, job creation and increased consumer confidence. Ferreira said the consumer finance growth forecast for this year should be seen as "very good" because it would be "impossible" to keep growing at 40% annually. Last year many Brazilian banks shifted part of their assets to consumer lending to tap into the fast-growing and high-yielding consumer finance business. Today there is "great interest" among banks in the consumer loan market, he said. Ferreira said that within the consumer finance industry, payroll-linked loans would see the strongest increase this year at around 60% to 70% compared to 2004. The payroll-linked loan business is fairly new in Brazil and therefore it is easier for that segment to grow at very high rates due to its low initial loan base, he explained. Auto financing will see the second highest growth rate at 20% to 30% compared to 2004, Ferreira added. The performance of the Brazilian economy is a fundamental factor for consumer finance growth and therefore Ferreira said it is too early to make any growth forecasts for 2006.