Many companies in Brazil have been seeing steep rises in loan loss provision due to consumer defaults. This became more clear as the companies reported their 1Q results, which exposed the increasing costs to cover these loan losses. Below are seven companies that were hurt in the first quarter:
1. Itau Unibanco (financial)
Itau’s provisions against default rose 37.7% to R$6.031 billion in the first quarter of this year, up from R$4.38 billion in the same period last year. The default rate on overdue payments was 5.1%, up 0.9% over the same period in 2011.
2. Magazine Luiza (retail)
Magazine Luiza has increased loan loss provisions by over R$100 million to R$467 million in the first quarter compared to last year’s R$333 million.The jump in provisions, however, followed the expansion of its credit portfolio which rose from R$2.4 billion to R$3.3 billion in the period.
3. Bradesco (financial)
The delinquency rates at Bradesco reached 4.1% in the first quarter this year, up 0.5% over last year. In response, the bank increased its expense in provisions by 31.1% to R$3.094 billion, up from R$ 2.36 billion in the same period in 2011.
4. Oi (telecom)
Oi provisioned R$ 200 million for doubtful accounts in the first quarter, a figure 22.7% higher than the previous quarter (4Q11).
5. Estacio de Sa (education)
One of the largest education groups in Brazil, Estacio de Sa has also taken steps to protect itself from defaulters: it accrued R$14 million in the first quarter for doubtful accounts, a figure that corresponds to 4.2% of the R$330 million revenue for the period. The loan loss provision for last year was R$5 million, or 1.9% of the R$256 million in revenue at that time.
6. Santander do Brasil (financial)
In the first quarter, Santander registered a 0.5% increase in delinquency rates for late payments over 90 days, bringing the default rate to 4.5% of the total loan portfolio. Cost for provisions jumped 44.3% to R$3.091 billion when compared to last year’s R$ 2.142 billion.
7. Kroton (education)
Here is another education group that saw an increasing rate of expense with provisions. In the first quarter, the group registered R$15 million in provision expenses, which is 122% higher than last year’s R$7.169 million.