Latin America Advisor
Financial Services Advisor
A Publication of The Dialogue
What Headwinds & Tailwinds Face Chilean Banks?
Banco Santander Chile on Oct. 30 reported 243.1 billion pesos ($252.9 million) in net income attributable to shareholders for the third quarter, an increase of 11.7 percent as compared to the second quarter. How strong is Chile’s banking sector, and what headwinds and tailwinds does the sector face in the months ahead? To what extent have President Gabriel Boric’s policies helped or hurt Chile’s financial services sector? What do the Chilean central bank’s interest rate cuts mean for the country’s commercial banks?
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Felipe Carvallo Mendoza, vice president and senior credit officer in the Financial Institutions Group of Moody’s Ratings: “Chilean banks remain strong, with ample profitability, improving capitalization and deep core funding that is supported by strong, albeit pressured, government institutions with a long history of prudent macroeconomic and fiscal policymaking. Chile’s largest rated banks reported lower profitability in the third quarter, in line with reduced net interest margins on a smaller variation of the inflation-linked peso and less income from relatively higher-yielding government securities. High interest rates will continue to limit loan growth and a substantial decline in problem-loan ratios. Cuts to interest rates have resulted in a drop in funding costs, but interest rates remain high, which is limiting credit demand and loan growth. Although delinquency ratios continued to increase in the quarter, banks maintain ample loan-loss reserves. More stringent Basel III-like capital requirements will ensure…”
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About the Financial Services Advisor
Covering Latin America’s banking and insurance sectors, remittances trends and data, micro lending issues, new technologies in the industry, anti-money laundering regulations, and much more, the Inter-American Dialogue’s biweekly Financial Services Advisor, a sister publication of the Latin America Advisor, gives readers fresh insight and diverse viewpoints from financial sector leaders. To subscribe or for more information, contact Gene Kuleta, editor of the Advisor, at gkuleta@thedialogue.org.
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