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Fitch affirms BBVA Chile at AAcl; outlook stable

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Fitch affirms BBVA Chile at AAcl; outlook stable

Fitch Ratings on March 28 affirmed the long-term national scale ratings of Banco Bilbao Vizcaya Argentaria Chile SA at AA(cl), with a stable outlook.

The ratings reflect the high probability of support from the bank's parent, Spain's Banco Bilbao Vizcaya Argentaria SA, as Fitch considers the Chilean unit strategically important for BBVA.

The bank's conservative lending practices, and the predominance of commercial loans and mortgages in its portfolio, mean the bank has historically shown good asset quality, the rating agency noted.

The bank's profitability, however, has tended to be below its peers, Fitch said, due to its small scale of operations and lower financial margin given the composition of its loan portfolio and higher funding costs.

Fitch noted for example that as of December 2016, operating profit on risk-weighted assets lowered to 0.94%, from 1.15% in December 2015. This was influenced by extraordinary expenses in subsidiaries, as well as by net interest income and increase in support costs.

As of December 2016, the bank had a 6.1% share of total loans in the Chilean banking system and 6.3% of deposits.

"The entity maintains a development plan in retail banking, mainly in personal banking, checking accounts and retail funding, where there are still gaps with respect to its larger competitors," Fitch Ratings said.