A global risk aversion trend toward emerging markets which could cause an "abrupt deterioration" in external financing conditions, continues to be one of the most important external risks facing Chile's economy, Banco Central de Chile said.
While the macro-financial situation of emerging economies continued to improve in the latest quarters, "development was disparate in terms of external and political vulnerabilities," the central bank said in its latest financial stability report, noting the financial market volatility in Argentina.
Still, the regulator said it did not detect any important disruptive trends within the Chilean financial system and that users of the system and credit providers alike would be able to accommodate the impacts of different stress scenarios.
Chile's banking system slightly increased its profitability indicators since the third quarter of 2017, while equity solvency remained lagging behind international standards.
Meanwhile, the central bank noted financial indicators of Chilean households showed "some degree of deterioration," with risks laying with the future evolution of the labor market.
"Since the third quarter of last year, bank mortgage debt has continued to rise, which has been consistent with housing prices that have continued to grow and with the largest share of debtors who hold two or more mortgages," Banco Central de Chile said.
