Major Latin American banks differed in terms of the evolution of their common equity Tier 1 ratios in the 12 months through Sept. 30, with almost half the lenders in a sample analyzed by S&P Global Market Intelligence posting declines.
CET1 ratios, which measure a bank's common equity Tier 1 capital as a percentage of risk-weighted assets, were introduced after the 2008 financial crisis as global regulators sought to ensure that banks would be able to survive an economic downturn.
Four out of the seven Brazilian banks included in the sample showed a lower CET1 ratio at the end of the third quarter compared to a year ago. Banco Santander (Brasil) SA's ratio saw the sharpest decline in the period, dropping by 114 basis points to 14.16%. Banco Bradesco SA, on the other hand, registered the highest increase with its CET1 ratio rising by 141 basis points to 12.47%
Itaú Unibanco Holding SA had a CET1 ratio of 16.71% at the end of the third quarter, the highest among the group. State-run Banco do Brasil SA had the lowest ratio at 10.04%
Mexican lenders also returned a mixed performance, with CET1 ratios rising for Grupo Financiero BBVA Bancomer SA de CV and Grupo Financiero HSBC SA de CV but falling for Grupo Financiero Banorte SAB de CV and Grupo Financiero Santander Mexico SAB de CV.
Under Basel III rules, banks have to attain a minimum CET1 ratio of 7% by 2019.
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