UPDATE 1 – Brazil’s rural loans in Santander soar to $ 4 billion in 2017

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(Adds information and quote from the interview)

SAO PAULO, Jan. 4 (Reuters) – Banco Santander Brasil’s agricultural loan volume rose about 44 percent last year as the Spanish bank’s local unit expanded its presence in the country’s booming agricultural sector, a manager said Thursday.

Carlos Aguiar, head of agribusiness lending, said the growth has catapulted the bank into the fifth largest provider of agricultural loans in the largest economy in Latin America.

Santander’s loans to farmers and agribusinesses totaled 13 billion reais ($ 4 billion) at the end of last year, up from 9 billion reais in 2016.

The bank’s agricultural loans in Brazil could grow between 10 and 15 percent in 2018, Aguiar said, as lower interest rates give private banks an opportunity to expand in a segment that is still dominated by state banks.

“The fall of the Selic base rate accelerates our strategy,” Aguiar told Reuters in a telephone interview.

Brazil’s central bank cut interest rates to an all-time low of 7 percent in December, the last in a long cycle of cuts that began in October 2016 amid government efforts to stimulate the economy.

With loans tailored for farmers and agribusinesses, the bank expects to thrive in the only sector relatively unscathed by Brazil’s deepest recession in decades from 2015 to 2017, according to Aguiar.

Santander last year announced plans to open 16 “agro-stores” focused on selling financial products to farmers in the country, 14 of which have now opened. About a third of this will be in the state of Mato Grosso, where grain farmers have recently relied more on the exchange system to finance their crops.

As part of barter, multinational commodity trading firms and resellers of agricultural products provide farmers with supplies to secure future delivery of part of their crops.

For the first time since the 2008/2009 harvest season, barter made up more than half of the crop funding for producers in the state, according to Imea, a research agency based in Brazil’s largest grain producer.

“Barter is only used in Brazil,” Aguiar said, adding that the bank can offer producers credit options that are potentially more competitive.

The state-run Banco do Brasil SA remains Brazil’s largest lender for rural areas, with around 66 percent of agricultural loans totaling 188 billion reais (as of October last year), according to a ranking by the banking association Febraban. ($ 1 = 3.2264 Reais) (Reporting by Ana Mano; Editing by Nick Zieminski)

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