Towards the end of 2014, the entire banking world was perplexed over the anomalies that hit Brazilian banks. Banks are known to suffer in times of troubled economies. However, the two top private banks in Brazil, Banco Bradesco (BBD) and Itau Unibanco (ITUB) witnessed a rise in their shares by a third in 2014. The two banks also saw their profits increasing with Itau getting its third-quarter net profit jump 36% from 2013 while Bradesco posted 28%. How did these banks manage to weather the storm? Igor Cornelsen, a top Brazilian investment expert and banker revealed the secret as proper knowledge of their market as well as experience in other difficult years.
Brazilian Bank’s Secrets
According to Igor Cornelsen, private sector bankers only lend to borrowers deemed the most credit worthy. This helps in streamlining their costs as well as offers them with some security going forward. People whose credit worthiness is less desirable have to go to banks in the public sector or abandon their plans. This is a huge challenge to the country’s macro economy and its development. The government ought to move in and boost investors’ confidence by instilling more fiscal austerity and reforms targeting the market.
Despite the country’s uncertain economic climate, investors ought to consider Brazil. The country has lots of natural resources and needs infrastructure development for its expanding population, making it an attractive market in the whole of South America. In addition, Brazil is the largest in the continent and among the top producers of food in the world.
Basics on Brazilian Banking
Igor Cornelsen advises any interested investors in Brazil to first understand the basics of Brazilian banking. It is wise to note that Brazilian banks are backed by 10 major state and privately owned investment and commercial banks. Secondly, the appointment of a fresh finance minister may turn things round. Lastly, keeping an eye on China will impart more knowledge of your investments.