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Credit Suisse Witnesses Loan Growth in Brazil Amid Pandemic

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Credit Suisse Group AG’s has witnessed a boost in the loan portfolio in Brazil despite lingering concerns over the coronavirus pandemic. Per a Bloomberg article, declines in interest rates and tax incentives might have pushed the demand for debts among borrowers.

With a view to secure economy from fallout, the Swiss government temporarily provided relief to borrowers by exempting loans from annual taxes as high as 3.38%. Jose Olympio Pereira, chief executive officer at Credit Suisse, is of opinion that this could have supported the surge in loans.
Also, billionaires are taking advantage of the current low rate environment by taking more loans to buy back shares of their company.

The article also said that loans to corporations have been rising as well. Credit Suisse was one of the banks that participated in a R$14.8-billion syndicated loan to power-distribution companies organized in July by the government development bank, BNDES.

Furthermore, the performance of investment banking unit is likely to be impressive. Per Pereira, central banks around the world have made substantial liquidity injections in the markets, which are shifting preferences from fixed-income products to equity.

Credit Suisse has been actively making efforts to strengthen its business globally. Having attainted the majority stake in its China securities joint venture in June, the Swiss Bank is aiming to raise its shareholding in Credit Suisse Founder Securities to 100%.

Also, the company recently announced plans to cut up to 500 jobs, which is expected to save about $110 million in annual costs. Further, the bank’s focus on enhancing its digital-banking capabilities is encouraging.

Shares of this Zacks Rank #2 (Buy) company have gained 20.3% over the past three months compared with 7.5% growth of the industry.

 

 

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