The novel coronavirus outbreak and its financial impact pushed regulators to take some major decisions. In its latest move, Brazil's senate recently approved a bill to limit interest rates charged on credit card debt and overdraft lines. However, the bill will now be presented to Brazil's lower house to vote.
Per a Reuters article, a cap of 30% per year has been placed on debt rolled over on credit cards and overdraft lines for all loans extended by banks from March 2020 until the end of the state of emergency declared by Brazil's government.
Also, the regulator slashed the benchmark interest rate — Selic — by 25 basis points to 2% on Aug 5, marking the ninth consecutive cut. Having lowered the key interest rate to all-time lows, the central bank did not rule all possibilities of additional reductions, as the outlook for inflation remained below target amid the impact of the coronavirus pandemic on the economy.
The moves are expected to impact the already hurting bottom line of Brazilian Banks. The second-quarter results of Brazilian banks have been affected by the pandemic.
Brazil’s largest bank in terms of assets, ItauUnibanco (ITUB - Free Report) , posted a year-over-year decline of 40% in recurring earnings to R$4.2 billion ($0.78 billion) in second-quarter 2020. Results were affected by the surge in provisions and a fall in revenues. Also, Banco Bradesco SA (BBD - Free Report) announced a quarterly profit of R$3.5 billion ($0.66 billion) down 42% compared with the year-ago quarter.
Notably, Fitch Ratings said that it expects Brazilian banks’ revenues and the bottom line to remain under pressure in 2020.
While the Brazilian central bank is taking active steps to support the economy and help companies remain operational, businesses will continue to be affected by the virus outbreak until the invention of a vaccine.
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The novel coronavirus outbreak and its financial impact pushed regulators to take some major decisions. In its latest move, Brazil's senate recently approved a bill to limit interest rates charged on credit card debt and overdraft lines. However, the bill will now be presented to Brazil's lower house to vote.
Per a Reuters article, a cap of 30% per year has been placed on debt rolled over on credit cards and overdraft lines for all loans extended by banks from March 2020 until the end of the state of emergency declared by Brazil's government.
Also, the regulator slashed the benchmark interest rate — Selic — by 25 basis points to 2% on Aug 5, marking the ninth consecutive cut. Having lowered the key interest rate to all-time lows, the central bank did not rule all possibilities of additional reductions, as the outlook for inflation remained below target amid the impact of the coronavirus pandemic on the economy.
The moves are expected to impact the already hurting bottom line of Brazilian Banks. The second-quarter results of Brazilian banks have been affected by the pandemic.
Brazil’s largest bank in terms of assets, ItauUnibanco (ITUB - Free Report) , posted a year-over-year decline of 40% in recurring earnings to R$4.2 billion ($0.78 billion) in second-quarter 2020. Results were affected by the surge in provisions and a fall in revenues. Also, Banco Bradesco SA (BBD - Free Report) announced a quarterly profit of R$3.5 billion ($0.66 billion) down 42% compared with the year-ago quarter.
Notably, Fitch Ratings said that it expects Brazilian banks’ revenues and the bottom line to remain under pressure in 2020.
While the Brazilian central bank is taking active steps to support the economy and help companies remain operational, businesses will continue to be affected by the virus outbreak until the invention of a vaccine.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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