UPDATE 1-Brazil bank lending spreads widen, loan defaults inch up in January - central bank

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By Jamie McGeever

BRASILIA, Feb 25 (Reuters) - Bank lending spreads in Brazil widened and loan defaults edged up in January, figures showed on Thursday, both rising from historic lows registered the previous month.

Credit growth was zero, reflecting a cautious start to the year in terms of consumer and business appetite to borrow as the economy faced the headwinds of a second wave of the COVID-19 pandemic and an end to emergency cash transfers to the poor.

Lending spreads widened to 23.4 percentage points in January, the central bank said, the widest since June last year. December's 20.9 percentage points was the narrowest since June 2013.

A broad 90-day default ratio covering households and businesses rose to 3.0% in January from a series low of 2.9% in December, driven by an uptick in corporate defaults.

The default ratio for non-financial companies edged up to 1.6% from a series low of 1.45%, while the broad measure of household defaults, including borrowing such as auto loans and overdrafts, fell to a series low of 4.1% from 4.2% in December.

The central bank made available more than 1.2 trillion reais worth of credit and liquidity to businesses, banks and financial markets last year to cushion the economic shock of COVID-19. Many of these measures expired on Dec. 31.

The stock of outstanding loans in Brazil held steady in January at 4 trillion reais ($736 billion), the central bank said. Personal loans rose 0.6% in January to 2.3 trillion reais, and business loans fell 0.8% to 1.8 trillion reais.

The total stock of loans rose 16% in the 12 months to January, with personal loans rising 10.9% and business loans up 23.1%, the central bank said. ($1 = 5.4350 reais) (Reporting by Camila Moreira and Jamie McGeever; Editing by Alex Richardson)