Your business can’t make money in Brazil, but banks can.

Lines on brazilian banks.People usually ask me what is a good business to start in Brazil, and I usually say: you have to lend money. In 2015, this is still true and here’s proof. Banks in Latin America seem to have found the formula of dreams in the business world: earn more money even in times of crisis. In Brazil, the whole profit of the four largest banks grew 46% in the first half of this year compared to the same period of 2014, despite the country facing a recession, and a corruption scandal involving Petrobras and the federal government.

Something similar happens in other Latin American nations with economies slowing: despite the characteristics of each financial system, varying by size and regulation, Latin Americans have points in common, analysts point out.

One is that they usually charge high interest rates for consumer loans. In Brazil, for example, the annual fee for credit cards has just reached 350.79%.

Brazil has one of the highest real interest rates (adjusted for inflation nominal interest) in the world, which exceeded 9% last week, while the S & P removed the country’s investment grade category. And if high interest rates put pressure on the cost of borrowing money for all, banks tend to circumvent the problem to pass on this cost to customers.

The four largest Brazilian banks (Bradesco, Santander, Itaú and Bank of Brazil) reported earnings equivalent to US$ 8.7 billion in the first half of 2015.

But things could be starting to change in the country. The agency S & P, for example, lowered the grade of the main banks in Brazil last week, a day after withdrawing the country’s good payer seal. And in search of fiscal resources, the government is now seeking to raise taxes on bank profits, which, in the opinion of Fitch risk analysis agency, can slow down the credit and, according to opposition politicians, impose more costs to the consumer.

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Joe Cloud
Dutch, American, Brazilian... lived there for 5 years and owns property in Brazil. Out of the country for a few years now and would like to go back, however current circumstances tell me it's not the right time.