Banks Left in the Lurch as Brazil Rates Diverge From US, Europe.

Brazil's central bank recently raised its benchmark interest rate, which could have negative implications for the country's banks. Unlike in the US and Europe, where banks are preparing for a decrease in interest rates, higher borrowing costs in Brazil may disrupt the growth in lending revenue that has been among the best in the world. The increase in interest rates will lead to higher funding costs for banks, potentially resulting in lower net interest income in the short term. Additionally, higher interest rates may strain borrowers in Brazil, leading to increased provisions for loan losses. However, banks are taking measures to mitigate the impact, such as selectively returning to credit lines with higher risk profiles and increasing credit card originations. [Extracted from the article]