Impact of additional provisions not material on BCI's 2010 earnings - analyst

Friday, January 7, 2011

The impact of the 10.3bn pesos (US$20.7mn) in additional provisions that Chile's fourth largest bank BCI will bring forward will not materially affect its 2010 profits, banking analyst at local ratings agency Feller Rate Claudia Labbe told BNamericas.

The charge represents 3.7% of BCI's annualized 252.626bn peso pre-tax profit for January-November, she said.

The figure is also irrelevant on the bank's ratio of provision expenses over revenues, which would grow to 17.5% from 16.1%, also annualizing both items accumulated for January-November, Labbe said.

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In a filing sent to local securities and insurance regulator SVS on Friday (Jan 7), the bank said the 10.3bn pesos aim at addressing new regulatory requirements and will be booked as a charge on the bank's 2010 earnings.

Local banking regulator SBIF published new guidelines in August for provisioning loan portfolios and called for countercyclical allowances, which began January 1.

Chilean banks have the option of booking the additional provisions as a one-time charge for 2010, or paying them in three installments this year.

During the last days of 2010, Chile's two largest banks, Santander Chile (NYSE: SAN) and Banco de Chile (NYSE: BCH), announced they would book 39.8bn-peso and 21.5bn-peso respective charges in 4Q10 for the same reason.