Brazil has had its share of economic troubles in recent years. Economic growth was flat in 2014. Paradoxically, the banking industry did well during this period. Two of the leading private banks serve as examples. Itau Unibanco posted a 50 percent increase in profits in the third quarter compared to the previous year. Banco Bradesco racked up a 26 percent gain in earnings.
Read more at wikidot.com to know more about Igor Cornelsen
Explaining the Paradox
Why did Brazilian banks do so well in a weak economy? Igor Cornelsen offers some answers in a recent PR Newswire article. Cornelsen is an investor and banker who spent his career managing some of Brazil’s top financial houses. He attributes the performance of Brazil’s private banks to prudent lending policies. Private banks limited lending to the most credit worthy borrowers in the uncertain economic climate. Businesses with less pristine credit ratings had to make do with public banks or cash. Some had to shelve growth plans. As a result, private banks continued to inspire investor confidence.
A Primer on Brazilian and Economic Prospects
Igor Cornelsen believes many investors are not knowledgeable regarding Brazil’s investment potential. He provides a brief primer on the basics of Brazilian economic features. First, he notes that there is growth potential because of abundant natural resources and high demand for infrastructure due to population growth. The banking industry is dominated by 10 large institutions. Cornelsen expects the economic fortunes of the country to catch up with the banking system because of recent political events that ended the populist administration of Dilma Roussef. LCornelsen advises investors to pay attention to China as well. China is both Brazil’s largest trading partner and a major competitor for the South American industrial market. Investors should also be aware that Brazil’s currency is likely overvalued. A process of controlled devaluation will probably continue for some time.