December 22, 2017 / 2:57 PM / a year ago

UPDATE 1-Brazil central bank expects corporate loans to shrink in 2018

(Adds details from central bank)

By Marcela Ayres

BRASILIA, Dec 22 (Reuters) - Outstanding loans to Brazilian companies will continue to shrink next year, mostly due to tighter credit from state development bank BNDES, the central bank said on Friday.

Even though interest rates are at all-time lows, the bank said it expected corporate loans to show declines of 8 percent this year and 2 percent next year.

That is likely to limit wider loan book growth, which the central bank sees at 3 percent in 2018 following a 1 percent contraction in 2017.

Brazil’s credit market has been slow to recover from the deepest recession in decades. Profits from listed banks took a positive turn in the third quarter as lower defaults allowed them to cut provisions, but loan book growth has been uneven.

Total outstanding loans rose 0.4 percent in November from the previous month to 3.064 trillion reais ($924 billion), as defaults and loan spreads fell.

$1 = 3.32 reais Reporting by Marcela Ayres; Writing by Bruno Federowski; Editing by Lisa Von Ahn

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