Brazilian policymakers are focusing on the rapid rise in household debt, particularly credit card balances and unsecured consumer loans, segments where Mercado Pago has been expanding aggressively.
Mercado Pago issued 2.6 million credit cards in the second quarter, up from 1.6 million a year earlier. Delinquency rates between 15 and 90 days stood at 4.6% for its card portfolio and 7.0% across its total loan book, while loans more than 90 days past due rose to 18.7%.
The company has also faced rising funding costs and higher credit-loss provisions. MercadoLibre reported that provisions for doubtful accounts increased nearly 85% in the second quarter year-on-year, contributing to a decline in net profit despite record revenue growth.
Management says portfolio remains healthy
Still, Estivariz dismissed concerns about asset quality.
"We have a very healthy portfolio," he said, adding that Mercado Pago's credit models give the company confidence to keep growing.
"We have a very robust system to determine who receives credit and who does not," Estivariz said. He cited the use of artificial intelligence and thousands of customer data points, including information from MercadoLibre's e-commerce platform.
The executive added that Mercado Pago maintains regular dialogue with regulators and would comply with any measures eventually adopted by the central bank.
The central bank's supervision director Ailton de Aquino said earlier on Tuesday that a "relevant measure" to curb indebtedness in higher-cost credit segments would be unveiled soon.
Mercado Pago expands credit card business despite debt concerns
BRASILIA, Sept. 1 (Reuters) - Mercado Pago, the fintech arm of Latin American e-commerce giant MercadoLibre, said it remains comfortable expanding its credit card business despite the Brazilian central bank's growing concern over rising household indebtedness.
Speaking to Reuters on the sidelines of a financial industry association Zetta event, Mercado Pago Vice President Ignacio Estivariz said the company's underwriting models remain robust and its loan portfolio healthy.
"We have no problem slowing down at the right moment," Estivariz said. "We constantly monitor the health of our portfolio and determine the pace of growth accordingly."
MELI•
