Retail financing costs rise to 12.3% of revenue by 2026
A study projects Brazilian retail financing expenses will climb significantly, jumping from 5.1% in 2018 to 12.3% of net revenue by 2026 for the most pressured companies.
Financial institutions project that Brazil's benchmark Selic rate may gradually decline toward the end of the year. However, a new study indicates rising financial pressure on retail consumers. The report "The Price of Debt in Brazilian Retail," released by Málaga & Associados and accessed via InfoMoney, analyzed financial statements for 30 listed companies from 2018 to 2026.
According to the data, companies in the most financially pressured group see their financing expenses increase from 5.1% of net revenue in 2018 to 12.3% by 2026. Even in a less pressured group, costs rise from 1.6% to 3.1%. The researchers state these figures represent an annualized projection.
The study was conducted when market discussions regarding monetary easing continue. In August, the Central Bank lowered the Selic rate to 14% annually. Some institutions, such as XP, are now expecting potential further cuts reaching 13.25% by the end of 2026. The report suggests a widening gap between current debt burdens and historical levels for retailers.
