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Significantly higher treasury gains in March helped Chilean banks' net profits to grow 6.18% year-on-year in 1Q11, with earnings amounting to 444bn pesos (US$965mn).
Benefiting from the market's rebound in March, banks' revenues from treasury activities were the fastest-growing income generator in 1Q11, rising 33% compared with the same quarter in 2010, CorpResearch analyst Jorge Rios told BNamericas.
Banks' treasury gains soared 261% to 264bn pesos in March compared with February, according to a report published Friday (Apr 29) by banking regulator SBIF.
Their net interest income rose 2.92% in the quarter to 943bn pesos, and provision expenses were down 32.8% to 225bn pesos.
A 15.7% increase in net interest margin, explained by stronger inflation and loan volume, and a 11% rise in fee income also boosted banks' bottom line in the period, said Claudia Benavente, analyst at financial services firm Banchile.
All in all, Chilean banks had a fairly solid quarter and continued to deliver among the highest ROEs in Latin America, Deutsche Bank (NYSE: DB) said in a report. Banks' average ROE hit 20.5% in the quarter, according to the SBIF report.
SANTANDER BACK ON TOP
The country's largest bank, Santander Chile (NYSE: SAN), regained its status as the system's top profit generator after two consecutive months in second place, booking earnings of 144bn pesos.
LOAN GROWTH PICKS UP SPEED
Lending rose for the third consecutive quarter in 1Q11. Loan growth was 7.99% in the 12 months through March to 78.8tn pesos, and climbed 0.94% compared with end-February on the back of strong consumer lending, which rose by 2.56%.
Corporate and mortgage loans grew a respective 0.90% and 0.76% compared with end-February.
The banking system's non-performing loan ratio improved to 1.31% as of March 31 compared to 1.42% at the same time in 2010.
Chilean banks had 114tn pesos in combined assets and 8.69tn pesos in equity at the end of the first quarter.