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Chilean financial services holding Grupo Security's planned US$200mn capital increase will be key for its main asset, Banco Security, to grow lending above the market in 2011 and revert the 0.49 percentage point market share loss it suffered last year, Fitch senior director Eduardo Santibáñez told BNamericas.
Banco Security boosted its earnings last year by 46% to 33.1bn pesos (US$70.1mn) and ended 2010 with a 2.62% loan market share.
"Credit is expected to expand above 15% this year, and the bank cannot afford the luxury of continuing to lose market share," Santibáñez said.
Strengthening its capital base would allow the bank to improve its competitiveness in the corporate segment, especially among large companies, in which the bank has an edge.
Banco Security could finance about two years of growth in line with the market if half of the capital increase goes to strengthen its equity.
It would also allow the bank to maintain a healthy 12% equity to risk-weighted assets ratio, while at the same time contributing significantly to the group's bottom line given the coming years' benign outlook for the banking industry, Santibáñez said.
JOINING THE CAPITAL INCREASE CLUB
The group's plan for a capital increase follows similar capitalization announcements made recently by larger players such as Banco de Chile (NYSE: BCH) and CorpBanca (NYSE: BCA), the studies department of BCI, Chile's fourth largest bank, said in a note to investors.
A shareholders meeting on March 24 has been called by Grupo Security to approve the increase, which will be done by issuing 450mn new shares.
The fresh capital will go to strengthen Grupo Security's subsidiaries to support their expansion over the next three years, which entails "ambitious" growth goals, the group said when disclosing its 2010 results on Thursday (March 3).
The group saw profits rise 36% last year to a record 40.9bn pesos thanks to the strong performance of Banco Security and life insurance unit Vida Security.
Grupo Security also operates in the P&C, insurance brokerage, real estate, factoring and travel agency businesses.