2024-11-21 17:15

Brazilian banks' profitability improved in the first semester led by digital banks Annual ROE for country's banking system rises to 15.11% Financial institutions expected to increase provisions ahead of a major regulatory change in January BRASILIA, Nov 21 (Reuters) - Brazilian banks' profitability improved in the first half of this year, led by digital banks, and net interest income and service revenues should continue to rise in the second half, the central bank said on Thursday. In its Financial Stability Report, the central bank noted that the annual return on equity (ROE) for the country's banking system rose to 15.11% by June 30, up from 14.23% at the end of December 2023. Digital banks stood out, with their ROE rising to 19.1% by the end of June - the highest among segments - from 11.45% at the end of December. The group includes institutions such as Nubank (NU.N) , opens new tab, Banco Inter (INTR.O) , opens new tab, and C6 Bank. The central bank attributed the sharp increase to "positive effects of operational leverage through the monetization of customer bases by some institutions and lower pressure from provisioning expenses." Between April 2020 and the end of last year, digital banks consistently reported single-digit or negative 12-month ROE. Speaking at a press conference, the central bank's director of supervision, Ailton de Aquino, said digital banks have a "robust" credit model, attributing their lower provisioning levels compared with public and private banks to the sector's level of maturity. He noted that the evolution of digital institutions in Brazil reflects the central bank's efforts to promote innovation and competition. Following reports that Nubank, the country's largest digital bank with nearly 100 million clients, was considering relocating its domicile to Britain, Aquino said the central bank is "aware" of the initiative. REGULATORY CHANGES Ahead of a major regulatory change set to take effect in January, which will align the accounting of financial instruments with international standards, the central bank estimated institutions would need to increase provisions by around 38 billion reais ($6.5 billion) due to the changes, equivalent to 10% of current provisioning levels. The new provisions will be accounted for as "capital counterparts," meaning the move will not impact institutions' results or their credit issuance, Aquino said. He added that a smaller group of banks had expressed concerns about the upcoming impact but noted that there had been adequate time for the transition and that any issues would be addressed on a case-by-case basis by the central bank. For the sector as a whole, the central bank said the cycle of risk materialization had weakened, easing the burden of provisioning expenses on overall results. "The outlook for profitability in the coming periods is for continued gradual improvement, supported by revenue growth, relatively stable provisioning costs, and controlled operating expenses," it said in the report. Aquino further highlighted that the central bank is exploring new funding mechanisms for the real estate sector and that changes to banks' reserve requirements are on the table, although he emphasized that discussions are ongoing. ($1 = 5.8137 reais) Sign up here. https://www.reuters.com/business/finance/digital-banks-lead-profitability-gains-among-brazilian-lenders-says-central-bank-2024-11-21/

2024-11-21 14:14

BRASILIA, Nov 21 (Reuters) - Brazil recorded another month of strong growth in federal tax revenue in October, data from the tax revenue service showed on Thursday. Collections reached 247.92 billion reais ($42.58 billion), representing a 9.77% real increase compared to the same month a year earlier. Year-to-date, tax revenue saw a real increase of 9.69% over the same period last year, driven by factors such as legal changes to the taxation of exclusive investment funds and the reinstatement of a federal fuel tax. Higher revenue from imported goods has also supported collection, reflecting stronger-than-expected economic performance and an increased average tax rate, according to the federal revenue service. The government of leftist President Luiz Inacio Lula da Silva is relying heavily on higher revenues to meet this year's fiscal target of eliminating the primary deficit, with a tolerance margin of 0.25% of GDP in either direction. However, with mandatory spending rising rapidly, Lula's administration has pledged structural measures to address expenditures, aiming to ensure the long-term sustainability of a fiscal framework that ties primary balance targets to a cap on overall spending growth. According to Chief of Staff Rui Costa, drafting of a highly anticipated fiscal package is expected to be finalized this week, though Lula must still decide on its details and the timing of its announcement. ($1 = 5.8228 reais) Sign up here. https://www.reuters.com/markets/brazils-federal-tax-revenue-posts-another-strong-performance-october-2024-11-21/

2024-11-21 12:52

PARIS, Nov 21 (Reuters) - A group of protesting farmers on Thursday sought to block operations at the port of Bordeaux in southwestern France, as a new bout of agricultural anger intensified in Europe's largest crop-producing country. Farmers in their tractors blocked all of the access roads to the port, which links the city to the Atlantic via the Garonne river, Jose Perez, a local labour representative from the Coordination Rurale union told Reuters. "We will stay here because we still don't have answers (from the government)", Perez said. For many farmers, the port, which also includes a grains terminal, stands for what they call unfair competition from foreign producers who aren't subject to the same regulation. A push by the European Union to wrap up long-running trade negotiations with Latin American countries has rekindled anger in France, where farmers were already frustrated by rain-hit harvests, livestock disease outbreaks and a snap election that delayed promised support measures. The port's operator did not immediately reply to a request for comment. A spokesperson from the local prefecture in charge of security said that the protests had not affected port operations so far, adding that she was unaware of any planned police intervention. "For now, we're just talking," she said. Sign up here. https://www.reuters.com/world/europe/angry-farmers-block-access-bordeaux-port-up-pressure-french-government-2024-11-21/

2024-11-21 12:30

NAPERVILLE, Illinois, Nov 20 (Reuters) - China on Wednesday gave Brazil the go-ahead to begin exporting sorghum to Chinese buyers, a somewhat peculiar move since Brazil hardly exports the grain at all. But the United States has a dominant presence in the Chinese sorghum market, which is why the development could help gauge U.S.-China trade relations going forward, especially from January when President-elect Donald Trump begins his second term. U.S. agricultural exporters have lost Chinese business to Brazil over the last several years, and many market-watchers fear this could continue if Trump dials up trade tariffs on China. Global production of sorghum, a grain used for both animal feed and liquor, pales compared with that of corn or wheat, though it may compete locally with these grains. For U.S. exporters, sorghum trade with China brought in more than $1 billion last year. The United States is overwhelmingly the world’s top exporter of sorghum and China almost exclusively controls imports. The U.S. Department of Agriculture predicts that in 2024-25, the United States will account for 56% of all sorghum exports while No. 2 Australia will supply 23%. China is set for an 88% share of global imports. Breaking this down further, some 94% of U.S. sorghum shipments in the recently concluded 2023-24 marketing year went to China, and three-quarters of last year’s U.S. crop hit the export market. In other words, the United States is effectively growing sorghum for China. So where does Brazil come in? Brazil’s sorghum crop has more than doubled in the last few years thanks to a boost in plantings, but the harvest remains about 40% smaller than the U.S. one. Further, its exports of the grain are currently negligible. In Brazil, sorghum competes for area with the heavily exported second corn crop, so a Brazil-China sorghum relationship could help preserve the United States as top corn exporter. The center-west state of Goias produces about 40% of Brazil’s sorghum. Meanwhile, U.S. sorghum is primarily grown in the Southern Plains. Last year, Kansas accounted for 53% of the national harvest and Texas claimed 24%. Kansas is considered a “swing” acreage state given its diverse crop options. Following the 2018 U.S.-China trade war, Kansas farmers in 2019 flocked to corn at a much more significant rate than the national average and ditched beans at a relatively lower rate. Therefore, China’s sorghum arrangement with Brazil could impact the U.S. acreage mix, potentially freeing up more land for corn, soybeans and wheat. Ironically, sorghum had been the first U.S. agricultural casualty of the 2018 trade war, so the latest turn of events could cause a superstitious trader to feel uneasy about what might lie ahead in 2025. Karen Braun is a market analyst for Reuters. Views expressed above are her own. Sign up here. https://www.reuters.com/markets/commodities/chinas-nod-brazilian-sorghum-may-serve-test-us-relations-2024-11-21/

2024-11-21 12:17

ATHENS, Nov 21 (Reuters) - Greece signed a deal with the European Commission and the European Investment Bank (EIB) on Thursday to set up a fund that will help its tourism-reliant islands wean off fossil fuel and reduce power costs, the Greek government said. Greek Prime Minister Kyriakos Mitsotakis met EIB's Chair Nadia Calviño on Thursday. Mitsotakis then attended a ceremony for the signing of the agreement on the island of Naxos. Most of Greece's rocky and sun-drenched islands in the Aegean and the Ionian Sea in southern Europe depend on costly oil-fired stations to generate electricity that occasionally break down when demand peaks with the arrival of thousands of tourists in the summer. Greece has made strides in expanding cheap renewable energy to nearly half of its power generation. But Mitsotakis said the Mediterranean country still relied heavily on expensive oil and gas imports. "The fund we're presenting today is a financial tool which will facilitate our islands to make green transition a reality," Mitsotakis told the event in Naxos at the presence of senior European Union and EIB officials. The aim of the deal is to allow Greece mobilise 5.6 billion euros ($2.11 billion) to speed up the construction of power links and wind and solar stations with batteries and finance water reservoirs for hydroelectric power and charging stations for docking ships on the islands, a senior EIB official told the same event. The EIB has invested nearly 50 billion euros in small and medium-sized companies, infrastructure, tourism and energy in Greece since 1963. Sign up here. https://www.reuters.com/sustainability/sustainable-finance-reporting/greece-will-set-up-fund-decarbonise-its-islands-2024-11-21/

2024-11-21 12:12

Market concerned about escalation of Russia-Ukraine war OPEC+ may delay output increases in December China announces policy measures to boost trade US crude inventories rose by 545,000 barrels last week HOUSTON, Nov 21 (Reuters) - Oil climbed nearly 2% on Thursday as tensions between Russia and Ukraine were rapidly rising as the countries launched missiles at each other, worrying markets about crude supply if the conflict widened. Russian President Vladimir Putin said on Thursday that Russia had launched a hypersonic medium-range ballistic missile attack on a Ukrainian military facility, and warned the West that Moscow could strike the military installations of any country whose weapons were used against Russia. Putin said the West was escalating the conflict in Ukraine by allowing Kyiv to strike Russia with long-range missiles, and that the war was becoming a global conflict. Ukraine fired U.S. and British missiles at targets inside Russia this week despite warnings by Moscow that it would see such action as a major escalation. Brent crude futures rose $1.42, or 1.95%, to $74.23 per barrel, while U.S. West Texas Intermediate crude futures increased $1.35, or 2%, to $70.10. "The market's focus has now shifted to heightened concerns about an escalation in the war in Ukraine," said Ole Hvalbye, commodities analyst at SEB. Russia is the world's second-largest crude oil exporter after Saudi Arabia, so major disruptions could impact global supplies. "For oil, the risk is if Ukraine targets Russian energy infrastructure, while the other risk is uncertainty over how Russia responds to these attacks," said ING analysts in a note. Weighing on the market was a rise in U.S. crude inventories of 545,000 barrels to 430.3 million barrels in the week ended Nov. 15, exceeding analysts' expectations. Gasoline inventories last week rose more than forecast, while distillate stockpiles posted a larger-than-expected draw, according to the Energy Information Administration data. China on Thursday announced policy measures to boost trade, including support for energy product imports, amid worries over U.S. President-elect Donald Trump's threats to impose tariffs. OPEC+ may push back output increases again when it meets on Dec. 1 due to weak global oil demand, said three OPEC+ sources familiar with the discussions. The group, which combines the Organization of Petroleum Exporting Countries and allies like Russia, pumps around half the world's oil. It had initially planned to gradually reverse production cuts from late 2024 and through 2025. Meanwhile, Chicago Federal Reserve President Austan Goolsbee on Thursday reiterated his support for further interest rate cuts and his openness to doing them more slowly. Slower-than-expected interest rate cuts keep the cost of borrowing elevated in the meantime, which can slow economic activity and dampen demand for oil. Sign up here. https://www.reuters.com/business/energy/oil-prices-firm-geopolitical-tensions-raise-supply-concerns-2024-11-21/