Banking services transforming Brazil

RIO DE JANEIRO — BY JACK CHANG For decades, Brazilians had so little faith in their banks that they kept most of their money at home and paid for appliances, cars and even houses in lump sums. Financial tools that Americans take for granted, such as credit cards and affordable bank loans, seemed like science fiction in this 184 million-person country, where annual interest rates regularly soar into the triple digits.

Yet as Brazil enjoys a rare spell of sustained economic growth, millions of people are fueling an explosion in consumer credit and banking services that’s transforming the world’s 10th biggest economy. For the first time, Brazilians are scooping up consumer goods on credit and taking on mortgages to buy homes. Total bank loans have more than doubled over the past four years, passing $530 billion, and banks have raked in record revenue.

The banking system’s assets grew by 19 percent in 2006 alone to hit more than $1.1 trillion. The growth has allowed middle-class Brazilians such as government employee Maria do Carmo of Rio de Janeiro to buy more, and it’s fueled an industrial boom that’s lowered unemployment rates and raised incomes. SMALL LOANS Even Brazil’s legions of poor are getting more access to credit, often in the form of microloans.

Nearly four-fifths of payroll loans, which Brazilians use regularly, go to people earning less than $650 a month. ”Before, the income limits for credit cards were so high that only a very few people had them,” do Carmo said at a branch of the country’s biggest bank, state-owned Banco do Brasil. “Today, everyone has a credit card. We use it to buy everything, which isn’t always a good thing.