Recent measures announced by Banco Central do Brasil that aim to reduce credit costs and improve the financial system's efficiency "are unlikely to provide a major boost to credit in the short term," but may achieve positive effects in the medium term, Fitch Ratings said Dec. 22.

"Fitch believes that macroeconomic variables are likely to remain far more relevant for credit growth and banking sector profitability, although the proposals signal a commitment to bolstering institutional capacity and enhancing the regulatory framework, which could be important steps toward aligning Brazil to global best practice," the rating agency said.

Although Fitch said there isn't enough information to determine the precise effects of such measures on banks individually or in the financial system, the rating agency believes that altogether the measures "could be important reforms to providing the banking system with a more robust operational and legal environment."

Nevertheless, macroeconomic metrics should remain the main driver for the banking sector's growth and margins in 2017. "There is potential for faster credit growth following the marked contractions in total credit to GDP since 2015 and as the economy stabilizes. However, Fitch expects banks to remain cautious and maintain tight underwriting standards," the rating agency noted.