Credit cycle should gradually worsen and JPMorgan remains cautious with banks in Brazil
According to InfoMoney, JPMorgan sees Brazilian banks challenged in 2027, with high interest rates, slowdown and household debt putting pressure on credit.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM INFOMONEY · 2 MIN
JPMorgan assesses that the credit cycle should gradually worsen and that Brazilian banks will remain challenged in 2027. According to InfoMoney, the institution is therefore cautious with the sector, at a time when credit occupies a central position in banks' accounts.
The analysis is based on the Central Bank's Financial Stability Report, according to the same report. When looking at the document, JPMorgan identifies three pressure factors: high interest rates, economic slowdown and increased household debt.
This set, in the bank's view, must produce concrete effects on institutions. According to InfoMoney, lower growth in the credit portfolio, compression of the net financial margin (NIM) and more expenses with provisions for loan losses are expected.
The point that interests the market most is the effect on results. Provisions and margins, according to the report, are linked to banks' profit revisions, that is, they are the variables that tend to move the analysis houses' projections.
Investors' focus on the credit cycle, according to InfoMoney, should increase again after the elections. Until then, the topic remains on the radar of those who follow the financial sector.
What changes for the investor
For those who invest in banks on the stock market, the report's message is to pay attention to the upcoming balance sheets. If the portfolio grows less and provision expenses rise, the margin and profit start to be revised, and this tends to affect the price of the sector's shares. The analysis does not forecast quotes, but indicates that credit quality and margins should gain weight in the assessment of institutions.
Automatically translated from Portuguese.
