Brazil's credit delinquency hits record high in May

Brazil's central bank reported that delinquency on credit operations rose to 4.7% in May, the highest level since the series began in 2011. The rise was seen in both consumer and corporate credit, with family delinquency reaching a record 5.6% and corporate delinquency climbing to 3.2%. In the free‑credit segment, the delinquency rate increased to 6.2% and the overall credit stock grew 0.6% month‑on‑month to 7.3 trillion reais.

Amid the worsening defaults, the Lula government launched an expanded phase of the Desenrola debt‑renegotiation program. By the end of May it had renegotiated roughly R$ 15‑16 billion of debts, targeting households earning up to five minimum wages and offering direct negotiations with banks for credit‑card, overdraft and personal loan balances.

A Reuters report added that non‑earmarked loans—vehicle, unsecured personal, and payroll‑deducted credit—also saw record‑high delinquency, averaging 6.2% in May, with vehicle loans at 6.5%, unsecured credit at 14.2% and payroll loans at 7.9%.

A separate study by Chicago Advisory Partners highlighted the potential of credit‑portability via Open Finance to halve the income burden of a typical R$ 15,000 loan, dropping the debt‑to‑income share from 39% to about 19.7% when borrowers switch to lower‑rate institutions.