Igor Cornelsen is a Brazilian banker who was left completely confused as to how the Brazilian banks were doing well at the end of 2014. When the economy does poorly, the banks usually do poorly as well. Learn more about Igor Cornelsen: http://igorcornelsen.yolasite.com/ and https://igorcornelsen.wordpress.com/
However, when the economy in Brazil went south at the end of 2014, the banks actually continued to do surprisingly well. who was left scratching his head at the anomaly of Brazil’s banks at the end of 2014.
The top two private banks that included Itau Unibanco and Banco Bradesco saw shares rise by 1/3 during the year of 2014 despite the government’s economic turmoil. Itau’s 3rd quarter net jumped 36% in just 3 months. Bradesco’s rose 28% in that same time frame!
So how did these banks weather this storm? Simple: they are some of the most qualified borrowers who are the most worthy of credit. This streamlines the costs and provides banks with a sense of security to looking ahead to the future. These people with less desirable credit are the ones who will not get the loans that these banks can get.
However, despite how fascinating this is, Igor Cornelsen says that starting 2015 there are more investors from around the world backing the banking in Brazil after the success they had in 2014. Cornelsen finds this interesting as he feels that these investors must understand the “bare-bones” basics that will help the banking system succeed.
However, Igor Cornelsen has some simple tips to understand the banking system in Brazil before anyone tries to invest in these banks.
These tips include the understanding that there are only about 10 major players in the entire banking system in Brazil, but adding one or two fresh faces to that entire equation could cause the tides to turn on the banks that have been successful to date.
China is the largest trade partner Brazil has, so if the Chinese economy has a downturn it could affect the Brazilian economy as well. Brazil has for a long time had overvalued currency, so if they were to devalue their currency they will end up hurting their banking business.