Double-digit drop in Chilean bank profits in October

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Thursday, December 1, 2016

Earnings in the Chilean banking system fell 10.6% month-on-month in October, as a result of higher net provisions and operating expenses, but partly offset by higher interest margins and the results of financial operations, according to local banking regulator Sbif.

Loans grew 2.59% in October compared to the same month of 2015, down from the 4.59% year-on-year growth seen in September.

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Loans to companies, accounted for 58.7% of total loans, were up 1.13% year-on-year, which was a decrease from the 3.79% year-on-year increase in September. Consumer loans were up 2.53% compared to October 2015, down from the 3.79% growth in September, and mortgage loans rose 6.64% year-on-year, down from 8.92% in September.

The average non-performing loan ratio in the banking system increased slightly to 1.84% in October from 1.83% in September, but was still below the 1.89% seen in October 2015.

The Chilean economy started Q4 with disappointing news, as the industrial production indicator slipped 7.4% year-on-year in November, leading some analysts, such as Spain's BBV Research, to forecast a 0% variation in the Imacec economic activity index to be revealed next week.