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Financial Inclusion
In Brazil
Alexandre Tombini
Governor
G20 Finance Ministers and Central Bank
Governors’ Meeting
Washington DC
April 20, 2012
2
1. General Overview
– Brazil Demographics
– Social Development
– Recent Economic Indicators
– The National Financial System
2. Financial Inclusion
– Financial Inclusion Framework
– Financial Inclusion Statistics
3. Challenges
Annex – Correspondents: Brazilian Experience
General Index
3
General Overview
Brazil Demographics
Recent Economic Indicators
Social Development
The National Financial System
4
• Brazil is among the largest countries in
terms of territory, population and GDP
• Brazil has vast natural resources,
including recently discovered large
offshore oil fields, a diverse industrial
base, a dynamic and sophisticated
private sector, and a well-structured
public sector
• Brazil is a vigorous democracy, with free
multiparty elections and a stable political
system
• Brazil has good relations with all its
neighbors and has increased its ties with
all regions of the world
Source: IBGE
Brazil Demographics Brazil Demographics
• 6th largest GDP: US$ 2,475 billion (2011)
• Continental country: 5th largest area
8,514,877 km2
• 5th largest population: 191 million people
(2010)
5 Source: IBGE
Socioeconomic Development Groups Brazil Demographics
Municipalities According to Socioeconomic Development Groups
Developed Urban Groups Urban Agricultural Groups Urbanized Rural Groups Rural Workers Group Rural Livelihood Groups
6
• Sources: IBGE / UN
Sources: IBGE / UN
Demographics Brazil Demographics
Dependency Ratio Population Pyramid (2010)
Note: The dependency ratio is the ratio of the sum of the population
aged 0-14 and that aged 65+ to the population aged 15-64
• Brazil’s dependency ratio is still
declining, a trajectory to be reverted to
an upward trend around 2020-2030
• Brazil’s population is highly concentrated
within the Economically Active
Population range
-10 -5 0 5 10
0-4
10-14
20-24
30-34
40-44
50-54
60-64
70-74
80-84
90-94
100+
millions of people
men women
0
25
50
75
100
19
50
19
60
19
70
19
80
19
90
20
00
20
10
20
20
20
30
20
40
20
50
7
General Overview
Brazil Demographics
Recent Economic Indicators
Social Development
The National Financial System
8
Macroeconomic Policy Recent Economic Indicators
• Main features of the macroeconomic policy framework:
- Inflation targeting
- Fiscal responsibility
- Exchange rate flexibility
• The macroeconomic fundamentals, combined with
adequate prudential policy and strong bank supervision,
resulted in:
- Capacity to absorb internal and external shocks
- Macroeconomic and financial stability
- Sustainable growth
- Credit and capital market development
- Investment growth
9 Sources: BCB / IBGE
GDP Recent Economic Indicators
0
500
1,000
1,500
2,000
2,500 1
99
0
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
2003
20
04
20
05
20
06
20
07
20
08
20
09
20
10
2011
US
$ b
illio
n
US$ 2,475
10 Sources: BCB / IBGE
GDP Real Growth Recent Economic Indicators
%
*Forecast from Central Bank of Brazil (Inflation Report – Dec 11)
-4.4
1.0
-0.5
4.9
5.9
4.2
2.2
3.4
0.0 0.3
4.3
1.3
2.7
1.1
5.7
3.2
4.0
6.1
5.2
-0.3
7.5
2.7
3.5
-6
-4
-2
0
2
4
6
8
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
*
11 Sources: BCB / IBGE
GDP per Capita Recent Economic Indicators
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
2000
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
US
$
US$ 12,696
12 Source: IBGE
Unemployment Rate Recent Economic Indicators
% (
seasonally
adju
ste
d)
5
6
7
8
9
10
11
12
13
14
Jan 0
3
Ja
n 0
4
Jan 0
5
Jan 0
6
Jan 0
7
Jan 0
8
Jan 0
9
Jan 1
0
Jan 1
1
Jan 1
2
Jan 12
5.6%
up to Jan 12
13
6,821% Apr/90
4,922% Jun/94
5.8% Feb/11 0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000 D
ec/8
0
Dec
/81
Dec
/82
Dec
/83
Dec
/84
Dec
/85
Dec
/86
Dec
/87
Dec
/88
Dec
/89
Dec
/90
Dec
/91
Dec
/92
Dec
/93
Dec
/94
Dec
/95
Dec
/96
Dec
/97
Dec
/98
Dec
/99
Dec
/00
Dec
/01
Dec
/02
Dec
/03
Dec
/04
Dec
/05
Dec
/06
Dec
/07
Dec
/08
Dec
/09
Dec
/10
Dec
/11
% y
oy
Consumer Price Index – 1980-2011 Recent Economic Indicators
0
2
4
6
8
10
Jan 0
4
Jan 0
5
Jan 0
6
Jan 0
7
Jan 0
8
Jan 0
9
Jan 1
0
Jan 1
1
Jan 1
2
% y
oy
Inflation target
Source: IBGE
14 Sources: IBGE / FGV
General and Producer Price Index Recent Economic Indicators
3.39
1.73
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
12.5
15.0
17.5
20.0 Jan
07
Jul 07
Jan
08
Jul 08
Jan
09
Jul 09
Jan
10
Jul 10
Jan 1
1
Jul 11
Jan
12
General Price Index Producer Price Index
% y
oy
General Price Index (IGP-DI) data up to Feb 12; Producer Price Index data up to Jan 12
15
IPC-Fipe: families living in the municipality of São Paulo with monthly income below 6,220
INPC-IBGE: urban-living families with monthly income below BRL 3,732; wage-earner head of family; 11 metro areas
IPCA-IBGE: urban-living families with monthly income below BRL 24,880, from all sources; 11 metro areas
Sources: IBGE / Fipe
Consumer Price Index Recent Economic Indicators
4.6
5.5
5.8
0
1
2
3
4
5
6
7
8
9
10 Jan 0
7
Jul 07
Jan 0
8
Jul 08
Jan 0
9
Jul 09
Jan 1
0
Jul 10
Jan 1
1
Jul 11
Jan 1
2
IPC-Fipe INPC IPCA
% y
oy
up to Feb 12
USD = 1.709 BRL (Feb 12)
16 Sources: BCB / IBGE
Inflation – Convergence to Target Recent Economic Indicators
%,
yoy
target (4.5%)
0
2
4
6
8
10
12
14
16
18
20
22 Jan 9
6
Jan 9
7
Ja
n 9
8
Jan 9
9
Jan 0
0
Jan 0
1
Jan 0
2
Jan 0
3
Jan 0
4
Jan 0
5
Jan 0
6
Jan 0
7
Jan 0
8
Jan 0
9
Jan 1
0
Jan 1
1
Jan 1
2
Jan 1
3
BCB’s reference scenario (Inflation Report – Dec 11); target up to Dec 13
Reference
scenario
17
0
5
10
15
20
25 Jan 0
2
Jan 0
3
Jan 0
4
Jan 0
5
Ja
n 0
6
Jan 0
7
Jan 0
8
Jan 0
9
Jan 1
0
Jan 1
1
Jan 1
2
Sources: BM&FBovespa / BCB
Real Interest Rate Recent Economic Indicators
% a
nn
ua
l
360-day market rate discounted by the IPCA expected for the next 12 months
Focus up to Feb 11; BCB’s reference scenario up to Mar 12 (Mar 9th)
Mar 9th
3.9%
18 Source: BCB
International Reserves Recent Economic Indicators
US
$ b
illio
n
*as of Mar 8th
4 5 12 12 7 7 9 10 10 9
24 32
39 52
60 52
45 36 33 36 38
49 53 54
86
180 194
239
289
352 357
0
50
100
150
200
250
300
350
400 1
98
2
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
2006
20
08
20
10
2012*
19 Source: BCB
External Debt Ratios Recent Economic Indicators
%
* estimate
120.6%
63.4%
42.4%
21.5% 17.0%
12.1%
0
20
40
60
80
100
120
140
short term debt/intl. reserves
debt services/exports external debt/GDP
Dec 03 Jan 12*
20 Source: BCB
Net External Debt Recent Economic Indicators
US
$ b
illio
n
* estimate Jan 12
79 87 88 92
103 106 96 97
105 108 100 99
88 92 101
131
182 190 190
163 165
151
136
101
75
-12
-28
-62 -51
-79 -79
-100
-50
0
50
100
150
200 1
98
2
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
*
21
Main Economic Indicators Recent Economic Indicators
2004 2005 2006 2007 2008 2009 2010 2011 2012
Gross Domestic Product
GDP (USD bn) 663.8 882.4 1,088.8 1,366.5 1,650.9 1,625.6 2,143.9 2,475.1
GDP (USD per capita) 3,665.2 4,812.0 5,867.3 7,282.7 8,706.7 8,489.8 11,093.9 12,696.1
Real GDP (growth rate) 5.7 3.2 4.0 6.1 5.2 (0.3) 7.5 2.7
Household consumption 3.8 4.5 5.2 6.1 5.7 4.4 7.0 4.1
Gross fixed capital formation 9.1 3.6 9.8 13.9 13.6 (6.7) 21.8 4.7
Economic Activity
Unemployment rate (annual average) 11.5 9.9 10.0 9.3 7.9 8.1 6.7 6.0 5.5 /4
Real payroll (growth rate) 1.6 4.2 5.9 5.8 6.9 3.9 7.4 4.8 4.6 /2
Industrial production (growth rate) 8.3 3.1 2.8 6.0 3.1 (7.4) 10.5 0.3 -0.2 /2
Consumer price index (% yoy) 7.6 5.7 3.1 4.5 5.9 4.3 5.9 6.5 5.8 /5
Fiscal (consolidated public sector. % of GDP)
Primary balance 3.7 3.8 3.2 3.3 3.4 2.0 2.7 3.1 3.3/2
Public sector net debt 50.6 48.4 47.3 45.5 38.5 42.1 39.1 36.5 37.2/4
Balance of Payments
Exports (USD bn) 96.7 118.5 137.8 160.6 197.9 153.0 201.9 256.0 267.0/1
Imports (USD bn) (62.8) (73.6) (91.4) (120.6) (173.0) (127.7) (181.7) (226.2) (244.0) /1
Current account (USD bn) 11.7 14.0 13.6 1.6 (28.2) (24.3) (47.4) (52.6) (65.0) /1
Current account (% of GDP) 1.8 1.6 1.3 0.1 (1.7) (1.5) (2.2) (2.1) (2.5) /1
Foreign direct investment (USD bn) 18.1 15.1 18.8 34.6 45.1 25.9 48.4 66.7 50.0/1
Foreign direct investment (% of GDP) 2.7 1.7 1.8 2.5 2.8 1.6 2.3 2.7 1.9/1
International reserves (USD bn) 52.9 53.8 85.8 180.3 193.8 238.5 288.6 352.0 356.9/3
/1 Central Bank forecast /4 in Jan 12
/2 12 months until Jan 12 /5 12 months until Feb 12
/3 on Mar 8th
22
General Overview
Brazil Demographics
Recent Economic Indicators
Social Development
The National Financial System
23
• Both macroeconomic and inclusion
policies have led to marked improvement
in living conditions
• A significant share of low income groups
joined the middle class
Social Development Social Development
24 Source: IBGE
Gini Coefficient Social Development
0.63
0.60
0.52
0.50
0.52
0.54
0.56
0.58
0.60
0.62
0.64
19
81
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
92
19
93
19
95
19
96
19
97
19
98
19
99
20
01
20
02
2003
2004
20
05
20
06
20
07
20
08
20
09
index (
0-1
)
25
Average Income Social Development
Source: IBGE/PNAD
Average monthly income of 10+ year-old individuals
USD = 1.709 BRL (Feb 12)
600
650
700
750
800
850
900
2001 2002 2003 2004 2005 2006 2007 2008 2009
BR
L / m
onth
BRL 855
26 Source: IPEA
Extreme Poverty Social Development
15.3
7.3
6
7
8
9
10
11
12
13
14
15
16
2001 2002 2003 2004 2005 2006 2007 2008 2009
% o
f p
op
ula
tio
n
The extreme poverty line here employed is a household’s per capita income estimation which
allows the acquisition of a food basket providing a minimum calorie intake required for survival, as
recommended by FAO and WHO. Different per capita estimations for 24 Brazilian regions.
27
Families – Per Capita Income* < BRL 70 Social Development
2000 ** 2010
Families % 2000 2010
0 – 12% 42% 69%
12 – 24% 19% 22%
24 – 36% 19% 8%
36 – 48% 14% 1%
48% – 6% -
Municipalities %
* Monthly per capita income below BRL 70 is equivalent to
internationally accepted criterion for extreme poverty
** Both maps at 2010 prices
Municipalities in which more than 36% of families had a per capita income below BRL 70
reduced to 39 (2010) from 1,099 (2000) – a 96% reduction.
Source: IBGE Ellaboration: BCB
BRL 70 = USD 40.96
USD = 1.709 BRL (Feb 12)
28 Source: FGV
Social Mobility Social Development
49
26 16
47
39 40
66
102 113
13 23
31
0
50
100
150
200
250
2003 2011 2014*
E D C A/B
mill
ions o
f people
Social Classes
7.6%
37.6%
26.7%
28.1%
12.0%
53.6%
20.7%
13.7%
15.5%
56.5%
20.0%
8.0%
monthly per capita incomes
A/B: above BRL 923 D: BRL 135 – 214
C: BRL 214 – 923 E: below BRL 135
* FGV Forecast
USD = 1.709 BRL (Feb 12)
29 Source: IBGE/PNAD
Social Development
17.2
9.6
8
9
10
11
12
13
14
15
16
17
18
19
92
19
93
19
95
19
96
1997
19
98
19
99
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
Illiteracy
Illiterate adults (age 15 or older) over total adult population
% o
f popula
tion
30 Source: IBGE
Years of Schooling* Social Development
3.8
7.2
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5 1
98
1
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
92
19
93
19
95
19
96
19
97
19
98
19
99
20
01
20
02
20
03
20
04
2005
20
06
2007
20
08
2009
years
* 25-year-old people and older
31 Source: IBGE/PNAD
Population with 11+ Years of Study Social Development
33.3
10
15
20
25
30
35
19
92
19
93
19
94
*
19
95
19
96
19
97
19
98
19
99
20
00
*
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
% o
f popula
tion
* Interpolated values
32
Up to 1 mobile/citizen
1 – 1.2
1.2 – 1.3
1.3
Source: Anatel
Mobile Access and Density* Social Development
mill
ion
lin
es
29
44
87
123
176
245
0
50
100
150
200
250
2002 2004 2006 2008 2010 2012
* Jan 12
33
General Overview
Brazil Demographics
Recent Economic Indicators
Social Development
The National Financial System
34
National Monetary Council (CMN)
- Composed by the Minister of Finance, the Minister of Planning, Budget and
Management and the Governor of the Central Bank of Brazil
- Establishes the inflation target for monetary policy, prudential rules and credit
policy
- The Central Bank of Brazil (BCB) is the financial supervisory authority
Source: BCB
The National Financial System The National Financial System
NATIONAL
FINANCIAL SYSTEM
National Council of Private Insurance -
CNSP
National Monetary
Council - CMN
Securities and Exchange
Comission - CVM
Other financial
intermediaries
Stock Exchange
Bovespa
Commodities and Futures Exchange
Central Bank of
Brazil - BCB
Other financial
intermediaries Exchange
Brokers
Financial Institutions
Management Council
of Complementary Pension - CGPC
35
Central Bank of Brazil – Main Activities The National Financial System
Monetary
Policy
Financial
Regulation and
Supervision
Payment
System
Wide scope of BCB’s authority helps
policy coordination
36
Number of Institutions by Type The National Financial System
Type 2007 2008 2009 2010 2011 2012*
Multiple bank 135 140 139 137 139 139
Commercial bank 20 18 18 19 20 21
Development bank 4 4 4 4 4 4
Savings bank 1 1 1 1 1 1
Investment bank 17 17 16 15 14 14
Exchange bank 2 2 2
Consumer finance company 52 55 59 61 59 58
Securities brokerage company 107 107 105 103 99 99
Exchange brokerage company 46 45 45 44 47 50
Securities distribution company 135 135 125 125 126 123
Leasing company 38 36 33 32 31 30
Real estate credit company and savings and loan association 18 16 16 14 14 12
Mortgage company 6 6 6 7 8 7
Development agency 12 12 14 15 16 16
591 592 581 579 580 576
Credit cooperative 1,465 1,453 1,405 1,370 1,312 1,299
Micro-entrepreneur credit company 52 47 45 45 42 42
2,108 2,092 2,031 1,994 1,934 1,917
Consorcio company 329 317 308 300 284 274
Total 2,437 2,409 2,339 2,294 2,218 2,191
Source: BCB
* Feb 12
37 Source: BCB
Top 10 Financial Institutions The National Financial System
Name Ownership Total assets
(BRL billion)
Credit and
leasing
operations (BRL billion)
Total
deposits
(BRL billion)
Net
worth
(BRL billion)
Employees
(Thousand)
Branches
(#)
Basel
capital ratio (%)
Banco do Brasil Federal government 908 377 420 55 132 5,156 14.5
Itaú Domestic private 810 279 237 69 123 3,796 15.1
Bradesco Domestic private 636 229 225 54 95 3,953 15.0
BNDES Federal government 568 196 21 56 3 1 21.6
Caixa Federal government 507 227 257 18 109 2,252 13.5
Santander Foreign controlled private 422 166 120 66 52 2,449 24.2
HSBC Foreign controlled private 152 47 76 9 31 868 13.4
Votorantim Domestic private 127 60 25 9 2 34 12.7
Safra Domestic private 89 40 17 6 6 103 12.7
Citibank Foreign controlled private 62 13 17 7 6 128 17.5
Others 765 286 244 109 69 1,649
Banking segment total 5,048 1,920 1,659 458 627 20,389
Sep 11
38 Source: BCB
Credit / GDP The National Financial System
25.8 26.0 24.6
25.7 28.3
30.9
35.2
40.5
43.7 45.2
49.1 48.8
0
5
10
15
20
25
30
35
40
45
50
2001
20
02
20
03
20
04
20
05
20
06
20
07
2008
20
09
20
10
2011
20
12
*
% o
f G
DP
2009-2011: 18.3% (average growth of nominal credit) 2005-2008: 25.2%
(average growth of nominal credit)
* Jan 12
39 Source: BCB
Total Credit The National Financial System
0
10
20
30
40
50
Ja
n 0
1
Jan 0
2
Jan 0
3
Jan 0
4
Ja
n 0
5
Jan 0
6
Jan 0
7
Jan 0
8
Ja
n 0
9
Jan 1
0
Jan 1
1
Jan 1
2
individuals corporations
% o
f G
DP
up to Jan 12
40 Source: BCB
Credit to Individuals by Destination The National Financial System
% o
f G
DP
0
5
10
15
20
25 Jan 0
5
Jul 05
Jan 0
6
Jul 06
Jan 0
7
Jul 07
Jan 0
8
Jul 08
Jan 0
9
Jul 09
Jan 1
0
Jul 10
Jan 1
1
Consumption Real Estate Rural up to Jun 11
41 Source: BCB
Housing Credit / Total Credit The National Financial System
% o
f to
tal
6.5 6.1 6.4 6.8 7.5 9.0 11.1 13.1
0
10
20
30
40
50
60
70
80
90
100
20
04
2005
20
06
2007
20
08
2009
20
10
20
11
housing credit other credits
42
Financial Inclusion in Brazil
43
• Macroeconomic stability contributed directly to financial
inclusion, allowing the government to advance on the
social development agenda
• The government has promoted financial inclusion in many
ways: improving distribution channels, adopting targeted
social programs, increasing transparency, and adapting
regulation of financial services to low income customers
• We are now reaping the benefits of these policies:
– All 5,565 municipalities are served by the Financial
System
– Individuals with active relationship with FIs grew 31%
to 121 million over the last five years
Highlights Financial Inclusion
44
Financial Inclusion in Brazil
Financial Inclusion Framework
Financial Inclusion Statistics
45
• As financial inclusion has gradually gained
relevance in BCB’s agenda, the regulatory scope
has also advanced
• Since 2010, promoting financial inclusion is one of
BCB’s strategic objectives
BCB’s Evolving Approach Financial Inclusion Framework
Microcredit Microfinance Financial Inclusion
46
Financial System in Brazil is highly spread out. Three
alternative channels were fostered by BCB to
complement the traditional ones:
• Correspondents - Non financial firms hired by FIs to
provide services in remote regions and more
convenient access in metropolitan areas
• Credit Cooperatives - Relevant for specific activities
and social sectors
• Bank Services Outposts - Bank satellite with smaller
staff and infrastructure for unassisted municipalities
Complementary Distribution Channels Financial Inclusion Framework
47
• Transparency – regulation directed at enhanced
transparency in prices and services, standardized and
simpler contracts to support clients’ decision-making
• Switching costs reduction – regulation creating automatic
inter-bank procedures to transfer accounts, loan balances,
and personal data
• Simplified accounts – targeted at low income clients, they
are exempt of fees, require simpler procedures and limit
balances
• Payroll-guaranteed loans – legal framework that ensures
repayment favoring access to credit for workers and
pensioners, with adequate safeguards
• Mandatory FI staff certification, including correspondents
Tools and Initiatives Financial Inclusion Framework
48
Financial inclusion initiatives and social programs are fully
integrated policies
• Poverty Reduction – innovative distribution channels enable
G2P cash transfer programs to reach remote communities
such as “Brasil sem Miséria” and “Bolsa Família”
• Social Finance Programs – innovative distribution channels
enable access to subsidized credit programs such as:
- Low income farmers program (Pronaf)
- Microcredit programs (PNMPO, “Crescer”)
- Social housing loan program (“Minha Casa Minha Vida”)
Synergies Between Financial Inclusion and Social Programs
Financial Inclusion Framework
49
Financial Inclusion in Brazil
Financial Inclusion Framework
Financial Inclusion Statistics
50 Sources: BCB / IBGE
Savings accounts penetration has grown Financial Inclusion Statistics
Clients with savings accounts per 1,000 adults
573
601
646 641
671
500
525
550
575
600
625
650
675
700
2006 2007 2008 2009 2010
Values in each
December
51 51
Financial Inclusion Statistics
Source: BCB
New clients are active users of financial services m
illio
ns
* BCB General Registry of the National Financial System (CCS) – Identifies FIs and their clients for
demand deposits, savings deposits, fixed-term deposits and other assets and values
** Feb 12
Individuals with active relationship with FIs*
Values in each
December
88
93
98
105
110
115
121.3 122.4
80
85
90
95
100
105
110
115
120
125
2005 2006 2007 2008 2009 2010 2011 2012**
52 Source: BCB – Survey
Access grew most in low income classes (1) Financial Inclusion Statistics
%
Individuals with demand deposits account
63
39
16
70
52
29
0
10
20
30
40
50
60
70
80
A/B C D/E
2005 2010
Social Classes
53 Source: BCB – Survey
Access grew most in low income classes (2) Financial Inclusion Statistics
%
Individuals with credit card
53
30
15
60
43
25
0
10
20
30
40
50
60
70
80
A/B C D/E
2005 2010
Social Classes
54 Source: BCB
Broader access to credit (1) Financial Inclusion Statistics
29.0
5
10
15
20
25
30
Jan 03
Jul 0
3
Jan 04
Jul 0
4
Jan 05
Ju
l 0
5
Jan 06
Jul 0
6
Jan 07
Jul 0
7
Jan 08
Jul 0
8
Jan 09
Jul 0
9
Jan 10
Jul 1
0
Jan 11
Jul 1
1
mill
ions
up to Dec 11
Clients with loan balances over BRL 5,000
55 55
Financial Inclusion Statistics
Source: BCB
32.0
47.8
64.8
79.3
107.8
138.5
157.5
0
20
40
60
80
100
120
140
160
180
200
2005 2006 2007 2008 2009 2010 2011
Broader access to credit (2) B
RL b
illio
n
USD = 1.709 BRL (Feb 12)
Payroll-guaranteed loans
Values in each
December
56
Low Income Farmers Finance Program* Financial Inclusion Statistics
Source: BCB
7.2 7.1
8.7
11.2 12.0
0
2
4
6
8
10
12
14
2006 2007 2008 2009 2010
BR
L b
illio
n
* Pronaf
USD = 1.709 BRL (Feb 12)
57 Source: MTE
Microcredit Program*
0.47
0.67
0.95
1.69
2.23
2.80
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2005 2006 2007 2008 2009 2010
Financial Inclusion Statistics
BR
L b
illio
n
* PNMPO
USD = 1.709 BRL (Feb 12)
58 Source: BCB
Access to Banking Services Financial Inclusion Statistics
2002 2009 2011
Accounts (for the banking sector) 55,708,468 83,308,800 91,944,421
Customers 87,630,527 151,102,765 174,791,126
Branches
For the banking sector 17,049 20,046 21,278
For all financial institutions 17,756 21,287 22,628
Posts of service (for the banking sector) 32,769 53,628 60,375
ATM’s 129,913 165,567 174,920
Domestic correspondents 78,539 151,351 177,925
Municipalities
Without banking services 222 - -
With banking services 5,337 5,565 5,565
Municipalities banking services coverage 96% 100% 100%
59 59
Financial Inclusion Statistics
2000 2010
0 (20%)
>0 to 2 (22%)
>2 to 5 (40%)
>5 to 10 (16%)
>10 (2%)
# of points per 10,000 adults
(% of municipalities)
0 (0%)
>0 to 2 (0%)
>2 to 5 (6%)
>5 to 10 (29%)
>10 (65%)
# of points per 10,000 adults
(% of municipalities)
82% of municipalities had less than 5 points per 10,000 adults in 2000.
In 2010, 94% were above this level.
Geographic coverage increased
Sources: BCB / IBGE
Bank branches, bank advanced outposts (PAA), credit cooperatives
(headquarters and outposts) and correspondents
60 Sources: BCB / IBGE
Complementary channels are important
Financial Inclusion Statistics
Bank branches – 2010 Bank branches, outposts, credit cooperatives
and correspondents – 2010
All municipalities have at least one bank branch, outpost or correspondent.
Correspondents contribute to network density.
0 (38%)
>0 to 1(25%)
>1 to 5 (26%)
>5 to 10 (13%)
>10 (14%)
# of points/1,000 km2
(percentage of municipalities)
0 (0%)
>0 to 1(3%)
>1 to 5 (12%)
>5 to 10 (12%)
>10 (73%)
# of points/1,000 km2
(percentage of municipalities)
61
Financial Inclusion shows relevant evolution Financial Inclusion Statistics
2000 2010
8 – 12
12 – 15
15 – 25
> 25
Indicator Ranges (pp)
Source: BCB
* BCB’s Financial Inclusion Indicator combines 18 access and usage measures
Financial Inclusion Indicator*
62
Less well-served regions benefited most Financial Inclusion Statistics
Sources: BCB / IBGE
3.9 5.0
15.3 16.4
14.8
9.0 8.1 7.7
21.7 22.8 22.9
13.8 13.8 13.4
31.5 32.5
37.6
21.7
0
5
10
15
20
25
30
35
40
North Northeast Midwest Southeast South Brazil
2000 2005 2010
* BCB’s Financial Inclusion Indicator combines 18 access and usage measures
Financial Inclusion Indicator* - Region Average
63
Challenges
64
• Our main objective is to foster financial inclusion
and to ensure it remains a sustainable process
• Financial education is key to achieve this goal, by
promoting responsible and rational decision-making
• Another requisite is the continuous development of the
regulatory framework: suitability and transparency,
improvement of distribution channels (e.g. mobile
payments), consumer protection and mandatory
training of financial services providers
• Coordination of public and private agents through the
National Partnership for Financial Inclusion
Agenda Challenges
65
• Financial education is key to promote responsible and
rational decision-making, specially taking into account the
recent incorporation of millions of new financial consumers
• Workstreams:
– Government created the National Committee for
Financial Education (CONEF) to coordinate actions of
financial regulatory agencies, Ministry of Education and
other government bodies
– Partnerships with financial industry and Non-
Governmental Organizations
Financial Education Challenges
66
The National Partnership for Financial Inclusion will coordinate
the actions of the different government bodies and other
entities, in line with G20 guidelines, with the following
objectives:
• Assessment – to deepen our understanding of the issues concerning
access and use of financial services
• Suitability – promoting the provision of financial services that suit the
needs of different society segments
• Information for responsible finance – favoring the responsible use of
financial services
• Access to financial services – fostering the development of distribution
channels and products to increase access
• Sustainable microcredit – promoting the supply of microcredit on a
sustainable basis
National Partnership for Financial Inclusion Challenges
67
Correspondents
Annex
68
• Definition: non-financial firms hired by FIs to
render basic banking services on their behalf
• Main correspondent chains are post offices,
lottery outlets, supermarkets
• Over 180,000 points of sale, compared to 20,000
branches of FIs (May 2011)
• Allows banking system to cover all 5,565
municipalities
• Due diligence and anti-money laundering rules
apply to correspondents
Bank Correspondents Correspondents
69
• Reception of applications and transaction
handling
– Checking accounts
– Savings accounts
– Investment in mutual funds
– Loans
– Credit cards
• Processing of payments: government benefits,
utility bills, taxes
• Transfer of funds
Bank Correspondents Correspondents
70
• Financial institution (licensed, supervised) takes
full responsibility for the services
– Even when there is total or partial subcontracting
• Correspondent may not charge additional fees to
the public for its services
• Main activity of the correspondent must be
commercial, non-related to financial services
• Mandatory disclosure to customers regarding the
associated financial institution
Bank Correspondents Correspondents
71
• Benefits for the bank
– Broadens client base
– Lower overhead and direct costs
– Informal environment, appreciated by lower-income
customers
– Flexible hours of operation
• Benefits for the correspondent
– Source of revenues (transaction fees)
– Use of spare capacity
– Increased flow of customers
– Link with a renowned brand
Synergies in Correspondent Banking Correspondents
72 72
Correspondents
In the last decade regulation changed and correpondents network
expanded, so as to support an increase in competitiveness and access to
financial services market.
Sources: BCB/IBGE
0 (39%)
> 0 to 5 (44%)
> 5 to 15 (11%)
> 15 to 40 (3%)
> 40 (3%)
# of points/1,000 km2
(municipalities %)
0 (0%)
> 0 to 5 (18%)
> 5 to 15 (25%)
> 15 to 40 (30%)
> 40 (27%)
# of points/1,000 km2
(municipalities %)
82% 17%
Correspondents per 1,000 Km2
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