Brazil loan growth hits 1.2% in September, led by business credit

BRASILIA, Oct 30 (Reuters) - Outstanding loans in Brazil rose 1.2% in September from the previous month to 6.2 trillion reais ($1.08 trillion), with growth mainly driven by business credit, central bank data showed on Wednesday.

The total credit balance for businesses increased by 1.6% from August, while household credit grew by 1.0%.

In annual terms, total outstanding loans rose 9.9%, matching the growth rate reported in the previous month.

A broad measure of Brazilian consumer and business default ratios, covering non-earmarked credit, stood unchanged at 4.5%, while lending spreads reached 28.4 percentage points, slightly down from the 28.6 percentage points seen the month before.

Central bank chief Roberto Campos Neto noted earlier this week that subsidized loans have grown in Brazil but not to a level that would significantly impact the neutral interest rate, which could have implications for monetary policy.

According to the central bank data, non-earmarked credit - loans where interest rates are freely negotiated between banks and clients and therefore are sensitive to rate changes by policymakers - rose 9.1% in the 12 months through September to 3.6 trillion reais.

Over the same period, earmarked credit, which involves subsidized rates, expanded 11.2% to 2.6 trillion reais. ($1 = 5.7613 reais) (Reporting by Marcela Ayres Editing by Tomasz Janowski)