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Brazil central bank cuts key rate; López Obrador wants Mexico to follow suit

S&P Global Market Intelligence presents the week's latest news and trends in Latin American banking.

Growth and monetary easing

* Banco Central do Brasil cut its benchmark Selic rate by 50 basis points to 6.00%, marking the key rate's first reduction in more than a year, as it pointed toward expectations for a slower economic recovery.

* The Colombian central bank, Banco de la República, revised its economic growth forecast for 2019 to 3% from a previous estimate of 3.5%, citing weak exports and external demand.

* Banco Central de la República Dominicana cut its monetary rate by 25 basis points to 4.75% as part of efforts to combat GDP and inflation readings that have fallen short of targets.

* Mexico's economy narrowly dodged a technical recession as preliminary data showed GDP growing 0.1% in real terms in the second quarter from the prior three months. The economy shrank 0.2% in the first quarter.

* Mexican President Andres Manuel López Obrador said he would prefer it if Banco de México slashed interest rates "to kick-start the economy" but added that he respects the central bank's independence in setting monetary policy.

Earnings buzz

* Itaú CorpBanca's recurring profit fell for the second consecutive quarter as income tax expenses and higher personnel costs offset a decline in provisions for loan losses. The Santiago-based bank's second-quarter recurring net income fell 7.0% year over year to about 60.39 billion Chilean pesos.

* Banco de Chile's net income for the first half of 2019 dropped 3.8% annually to about 293.66 billion Chilean pesos from 305.21 billion pesos as the bank booked higher loan-loss provisions and operating expenses.

* Banco de Credito e Inversiones SA's second-quarter net income rose 14.23% year over year to reach 112.36 billion Chilean pesos from 98.36 billion pesos, partly driven by growth of 22.39% in net fee income.

* Grupo Financiero BBVA Bancomer SA de CV posted net income of 13.58 billion Mexican pesos for the second quarter of 2019, up 2.7% from 13.22 billion pesos a year earlier.

* Itaú Unibanco Holding SA booked a 10.2% year-over-year increase in its second-quarter recurring net income to about 7.03 billion Brazilian reais. The bank also announced a voluntary severance program aimed at aligning the company's structure "to the reality of the market."

Reorganization and strategy

* Banco do Brasil SA said it approved measures that, among other things, will reduce the company's branch network and streamline its workforce. The bank also approved the creation of an analytical intelligence unit to help push its digital transformation.

* Banco Agrario de Colombia SA plans to increase its headcount by 12.2% as part of a restructuring aimed at boosting the state-owned bank's presence in Colombia's rural regions. The plan includes hiring 403 commercial advisers.

In other news

* Banco Nacional de Desenvolvimento Econômico e Social might not be able to achieve its disbursement goal of 70 billion Brazilian reais for 2019 following a weak first half that saw loan consultations fall 49%, sources told Reuters.

* Banco Inter SA said it raised about 1.25 billion Brazilian reais through a share offering in which it priced its units at 39.99 reais apiece. SoftBank Group Corp. reportedly purchased almost all of the equity sold by Banco Inter.

* Banco Original SA will gain a minority stake in financial technology company PicPay Serviços Ltda. under a newly approved reshuffling of J&F Investimentos SA's majority ownership. Brazil's antitrust regulator has approved the plan.

* Banco Multibank SA transferred a tranche of its investment portfolio and certain liabilities to Colombian financing company Coltefinanciera SA Compañía de Financiamiento.

* The shareholders of Banco Bradesco SA on Aug. 30 will vote on a plan for the bank to absorb card unit Banco Bradesco Cartões SA, subject to regulatory approval.

* Brazilian banks shed 2,057 jobs during the first half of 2019, continuing a multiyear downsizing trend amid a growing shift to digital, data from the interunion department of statistics and socioeconomic studies Dieese showed. Brazil's banking industry now has 62,700 fewer positions than it did in 2013.

Featured this week on S&P Global Market Intelligence

* Banco de Chile expects up to 4B pesos in gains from insurance deal: Executives at Banco de Chile expect to realize monthly gains of between 3 billion Chilean pesos and 4 billion pesos this year from a 15-year exclusive distribution agreement with Switzerland-based insurer Chubb Ltd.

* Facing weak economic growth, Itaú shifts strategy to efficiency, cost-cutting: Itaú Unibanco is looking to cull some 6,900 workers from its payroll as the bank works to combat weaker-than-expected economic growth.

* Itaú CEO says GDP forecasts were 'too optimistic,' pares down guidance: Itaú Unibanco CEO Candido Bracher said macroeconomic prospects previously factored into the bank's guidance were "too optimistic."

* Green bond issues in Latin America rebound in H1 to surpass all of 2018: The Latin American green bond market rebounded in the first half of 2019 with seven placements worth $2.69 billion, surpassing the $1.89 billion issued during the whole of 2018.

* Bank cost-to-income ratios improve in Americas amid worldwide split: Banks around the world showed mixed progress in their 2018 cost-to-income ratios, although the majority of countries in the Americas showed improvement.

* Hires and Fires: A weekly rundown of executive management, board and other personnel moves at Latin American financial institutions.

* Ratings Roundup: A summary of various ratings actions on Latin American financial institutions and economies.