S&P Global Ratings on Jan. 27 revised its economic risk trend on Chile's banking industry risk assessment to negative from stable due to a prolonged period of low economic growth and external pressures that could weaken local banks' credit profiles.
As a result of the revision to the economic risk trend, which follows S&P changing its outlook on Chile to negative from stable, the rating agency has now revised its outlook on 12 Chilean financial institutions to negative from stable, while affirming their ratings.
These companies include Banco del Estado de Chile, Banco de Chile, Banco Santander Chile, Banco de Credito e Inversiones SA, Itaú CorpBanca, Banco BICE, Banco Bilbao Vizcaya Argentaria Chile SA, Banco Security SA, Cooperativa del Personal de la Universidad de Chile Limitada, Tanner Servicios Financieros SA, Larraín Vial SA Corredora de Bolsa and LQ Inversiones Financieras SA.
S&P also affirmed its ratings and maintained the negative outlook on Corp Group Banking SA.
"If the negative economic risk trend materializes, domestic financial institutions will face tougher operating conditions, which we believe could weaken their financial profiles, particularly in terms of asset quality, funding, and capital and earnings," the rating agency said.
S&P estimates that Chile's GDP expanded 1.8% in 2016, down from 2.3% in the previous year. It expects growth to improve slightly to 2.2% in 2017.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.