Retail lending in developing countries has been zooming ahead, driving a banking-sector boom since the beginning of the decade, according to a new report from Standard & Poor’s Ratings Services.

The report notes that the so-called BRIC countries — Brazil, Russia, India, and China — saw loans to individuals for housing, car purchases, and other consumer spending more than triple from 2001 to 2005, from US$145 billion to an estimated US$477 billion.

This amount remains small compared with retail lending in mature economies, where loans to individuals in Germany alone totaled approximately US$1.7 trillion in 2005. But it is growing quickly. BRIC retail lending soared at almost 40% weighted average annual growth in the four years to 2005, S&P says. Extrapolate that rate over the next four years starting January 2006, and BRIC retail loans would grow to US$1.8 trillion by year-end 2009.

“The speed of the expansion and enormous potential in emerging markets are remarkable,” said Standard & Poor’s credit analyst Scott Bugie. “We believe that such growth is not hypothetical, but a real possibility that is making domestic and international financial services groups salivate
at the business prospects.”

“Our base scenario is for loans to individuals in the BRIC countries to grow 20%-30% a year in the medium term,” he says.

Looking beyond the BRIC countries, S&P finds that the trend is truly global. It reports that double-digit growth characterizes retail lending in the banking sectors of Central and Eastern Europe, the Middle East, Latin America, and Southeast Asia.