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Chilean bank profits fall 7.93% through August as lending growth stalls

The Chileanbanking sector's net profit in the first eight months of 2016 reached 1.42 trillionChilean pesos, banking regulator SBIF said in its monthly banking system updatepublished Sept. 30.

The resultwas 7.93% lower than the same period a year ago, but SBIF reiterated that due tothe merger between Banco Itaú Chile and CorpBanca, which closed April 1 to createItaú CorpBanca, CorpBanca'sfirst-quarter earnings are not included in the total sector profit, which meansthe 2016 figures are not entirely comparable with 2015.

In August,sector profits fell 20.12% from the previous month mainly due to lower net interestmargins and net commissions, as well as higher provisions and taxes, the regulatorsaid.

In termsof bank lending, total loans in August rose 5.37% year over year, down slightlyfrom growth of 5.59% in the previous month. Excluding loans by Chilean bank branchesabroad, credit growth was 3.37%, down from 3.94% in July.

The mainreason was slower growth in mortgages, which was partly offset by higher growthin commercial and consumer loans. Commercial loans expanded 4.77% in August up from4.55% growth in July. Meanwhile, consumer loans rose 3.58%, up from 2.48% growtha month earlier, but mortgages rose only 9.39%, down from 9.45% in July.

In termsof credit risk, the sector's ratio of loans overdue by 90 days or more to totalloans edged up to 1.83% in August from 1.82% in July. However, the ratio improvedfrom 1.96% in August 2015.

Separately,SBIF said the cooperatives it supervises posted profits of 31.37 billion pesos throughAugust. As a result, their annualized return on equity rose to 9.85% at the endof August from 9.42% in the previous month and 9.16% a year earlier.

Totalloans by cooperatives rose 1.02% annually in real terms as consumer loans rose 2.71%,while commercial loans fell 9.08% in 12 months and mortgages were down 0.80%.

As of Sept. 30, US$1 was equivalentto 657.30 Chilean pesos.