OREANDA-NEWS. March 12, 2015. Brazilian banks will face more asset quality pressure and rising loan loss provisions in 2015, dampening the profitability of the Brazilian banking industry, says Fitch Ratings.

A tougher 2015 for Brazilian banks is emerging due to downward credit pressure in the corporate sector due to weak demand, higher corporate leverage and lower liquidity.

Loan loss provisions of up to 30% higher than 2014 should be manageable for most Brazilian banks, with limited impact on their ratings, assuming that capitalization, funding and liquidity remain aligned with historic trends.

The Petrobras investigation and the energy giant's reduced capital expenditures are adding to pressures on the Brazilian banking sector. While banks' revenues have risen due to 2014's interest rate hikes, borrower payment strain increases with it.

The full report is available to subscribers at www.fitchratings.com or by clicking on the link.


Eduardo Ribas
Director
Latin American Financial Institutions
+ 55 11 4504 2213
Sao Paulo, Brazil

Matthew Noll, CFA
Senior Director
Financial Institutions - Fitch Wire
+ 1 212 908-0652
33 Whitehall Street
New York, NY

Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.

Applicable Criteria and Related Research: Brazilian Banks Brace for Rising Provisions in a Tougher 2015

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.