“Banks do not need high interest rates to make a profit”, says president of Febraban

In the week in which President Luiz Inácio Lula da Silva returned to criticize the independence of the Central Bank and high interest rates, the president of the Brazilian Federation of Banks (Febraban), Isaac Sidney, came out in defense of the banks and said that financial institutions They need high interest rates to make a profit.

“Banks don’t need high interest rates to make a profit. What we need is an agenda to reduce the cost of credit. Interest rates need to go down and this does not depend only on the banks”, said Sidney at an event by the Lide group in Lisbon.

The president of Febraban made no direct reference to Lula’s recent criticisms about the high level of basic interest rates in the economy, but defended that banks have high spreads (difference between the interest paid on funding and charged on loans) because of the high level of default and the difficulty of executing guarantees.

“It is very expensive in Brazil to take credit. We have to get out of the shameful position of being the banking sector that least recovers guarantees in the world”, said Sidney.

The president of Febraban said that banks defend interest rates and lower loans to democratize access to credit in the country and added that the “banking sector is doing its part”, granting around R$ 15 trillion in loans.

Regarding the part that would be up to the government, Sidney emphasized the need to move forward with administrative and tax reforms. With regard to tax reform specifically, he said that it is essential that the proposal also include consumer reform.

He opened his speech by saying that the private sector can contribute to the government by offering a proposal for the new fiscal framework, the set of rules that govern public accounts.

“We do need to be protagonists. We can offer a proposal for a fiscal framework. We talk a lot about fiscal responsibility. I am not advocating that there is a desperate race for us to manage to make the public debt sustainable […]. I see no opposition between social and fiscal,” he said.