Debt and Delinquency Remain at Concerning Levels
- Despite the exchange rate appreciation, which reduced the stock of non-financial sector debt denominated in reais, both indebtedness and delinquency levels remained at concerning levels in January 2026. The situation is likely to worsen (with the economic slowdown) before improving (with lower interest rates).
- The outstanding stock of broad credit to the non-financial sector totaled BRL 20.8 trillion (162.6% of GDP), slightly below (-0.3%) the level observed in the previous month.
- Credit supply from the financial system remains predominantly strong in earmarked lending modalities, with year-over-year growth of 12.6% compared to 8.3% for free-market credit. Overall credit increased 10.1%.
- The average delinquency rate in the corporate segment reached 2.6% of total loans, up from 2.0% a year earlier. However, recent dynamics have been characterized by relative stability. For households, however, delinquency remains on a strong upward trend, reaching 5.2% in January, compared to 3.0% in the same month of the previous year (Chart 2).
- Household debt burden (principal and interest payments) remained stable at 29.2% in the latest available reading (December). This level is extremely high: it fluctuated between 22% and 25% for ten years until 2021 but surged after COVID-19.
- The financial burden will likely pose a challenge to the recovery of consumption and may even influence elections.
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