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Report: Caixa selling off large swaths of NPLs

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Report: Caixa selling off large swaths of NPLs

Caixa EconômicaFederal sold a record 13.1 billion Brazilian reais in bad debt during2015 and is continuing to do so this year in an effort to clean up its balance sheet,O Estado de S.Paulo reported April 7.

The sales of nonperforming loans in 2015 represents a markedincrease from a year earlier, when the state-controlled lender divested about 8.3billion reais in defaulted debt.

The move, which analysts reportedly say distorts Caixa's reporteddefault rates, has come at a cost. The bank received just 439.3 million reais forthe 13.1 billion reais of nonperforming debt sold in 2015; by comparison, it got1.6 billion reais for a far lower amount of defaulted debt sold in 2014.

Despite the losses, Caixa is continuing to try to offload badassets, according to the newspaper. It reportedly put another 1.5 billion reaisof nonperforming loans up for sale in February, mainly consisting of debt from microand small businesses.

In reporting its 2015 results,Caixa posted a ratio of loans more than 90 days past due at 3.55%, up by a fullpercentage point from the year-ago period.

Estado cited analystsfrom JPMorgan as estimating that Caixa's NPL ratio would have been closer to 3.89%at year-end were it not for the bad loan sales.

As of April 7, US$1 wasequivalent to about 3.70 Brazilian reais.