Banks concentrate sector profits, Ipea president contests high hunger and what matters in the market

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Banks concentrate 78% of profits

Of the BRL 132 billion of net income recorded in the banking system in 2021, 78% took the five largest banks in the country – Itaú, Bradesco, Santander, Caixa Econômica Federal and Banco do Brasil.

The data were gathered by the BC (Central Bank) at the request of the Sheet and show a net profit of BRL 103.5 billion last year in the sum of the five banks.

In numbers: according to the balance sheets of the institutions, Itaú was the private bank with the highest net book income in 2021, with BRL 24.9 billion.

• Bradesco (BRL 21.9 billion) and Santander Brazil (BRL 14.988 billion) come next.
• Among public institutions, BB (Banco do Brasil) comes first, with BRL 19.7 billion. The box (BRL 17.2 billion) comes next. BC data has adjustments to eliminate non-recurring events.
• The amount of BRL 132 billion was 49% higher than the net income recorded by banks in 2020 and 10% higher than that observed in 2019.

what explains: the rise in bank profits was driven by better margins with the advance of interest rates, the reduction of expenses with provisions (money set aside to cover defaults) and efficiency gains, according to the BC document.

Concentration? The high percentage of profit in the hands of a few institutions is considered by specialists as a sign of the concentration of the sector in Brazil, something that Febraban, the entity representing the banks, denies.

• She says the banking industry is “extremely competitive and open to new competitors.”

the BC has sought a way to increase competitiveness among financial institutions. Examples of this effort are the regulation of fintechs, the creation of open banking and the launch of open finance.

• Roberto Campos Neto, president of the municipality, says that banking concentration dropped from 81.2% in 2018 to 77.6% in 2020. He said in May that the 2022 figure should be close to 71%.

$1 billion for using WhatsApp

Large American banks must pay up to $1 billion in fines to the SEC (American CVM) for its employees having used WhatsApp to exchange work messages with clients.

Understand: the body that functions as a sheriff of the American market obliges institutions to keep records of the communications of their employees, in case there is a need to investigate the conversations.

• Applications such as WhatsApp and some email providers, because they are encrypted, make it impossible for the SEC to access conversations, and therefore are prohibited.

The investigation It began last year and has already garnered a $200 million fine for JPMorgan, which admitted the conduct violated securities laws.

Other institutions such as Bank of America, Morgan Stanley, Citi, Barclays, Goldman Sachs, Credit Suisse, Deutsche Bank and UBS have admitted that they are being investigated over their communications, and some have even reserved the amount of the fines.

Crisis at IPEA

A study signed by the current president of Ipea (Institute of Applied Economic Research), Erik Alencar de Figueiredo, contests recent research that points to the increase in the number of Brazilians in a situation of food insecurity or hunger.

What does he say: Figueiredo cites stability in data on hospitalizations due to diseases resulting from hunger and malnutrition and in the number of births of underweight children.

• According to him, the increase in hunger should have resulted in a “significant shock” in these indicators, according to the specialized literature.

• Internally, the material was not discussed nor received an opinion from other researchers, unlike what is usually done. Experts from other institutions questioned the conclusions

The reviews: researcher Patricia Jaime, from the nutrition department at the USP School of Public Health (University of São Paulo), says that the Ipea president’s premise to counteract the worsening situation of hunger is questionable.

• She says that not being admitted to a hospital does not mean that the person has not gone hungry, and that the impact of food insecurity on people’s health takes a while to appear.

Food insecurity: is characterized when the person does not have access to food in adequate quantity and quality, and is classified as moderate or severe.

In Brazil, about 3 out of 10 inhabitants (61.3 million) live with some type of food insecurity, according to the UN, which places the country in fifth place in the world in this perverse ranking. The survey is from 2019 to 2021.

Only agro see income rise

In a period of ten years, the average income from work in Brazil only grew for agriculture among the national productive sectors. The survey is from Pnad Contínua, from IBGE, and covers the second quarter of 2013 to the same period of 2022.

In numbers: the real average income of the employed population (considering the formal and informal markets) was estimated at BRL 1,690 in agriculture, livestock, forestry, fishing and aquaculture activities from April to June this year.

• It’s a high of 12.7% compared to R$ 1,500 in 2013, already considering the adjustment for inflation.
• The other ten activities analyzed in the Pnad showed relative stability or decrease in income in the same comparison. The biggest drop was registered by accommodation and food (-14%).

What explains: the rise in the income of agro workers follows the appreciation of agricultural commodities in the pandemic and the evolution of productivity in the sector with the advancement of technology in the field.

More on agricultural productivity: