Santander Brasil estimates that the national market for Agribusiness Credit Letters (LCAs) has the potential to expand from 20 to 30 percent this year after easing rules in the sector while maintaining a double-digit growth bet in its agricultural credit portfolio, a bank chief said on Monday.
Exempt from Income Tax, the LCA is fixed income security issued by banking institutions and which has a bearing on agribusiness loans. At the end of January, the National Monetary Council (CMN) announced that 100 percent of the volume of LCAs intended for rural producers would be traded at free rates, agreed between banks and borrowers, versus 60 percent previously.
“With this simplification, the whole market can grow. We think it can grow 20 to 30 percent … It was not the biggest change in the sector, but it will encourage this growth,“ said Santander‘s Agribusiness Director Carlos Aguiar, during a press conference with journalists in Sao Paulo.
The Brazilian LCA market closed 2018 at almost R $ 150 billion, with Santander holding 8 percent market share, according to data from the Central Bank.