BCI investment in tech, branches to improve efficiency ratio to 44% this year - analyst

Friday, April 1, 2011

Chilean bank BCI's announced US$103mn investment plan aimed at revamping its technology systems and opening new branches will help drive down its efficiency ratio significantly over the next few years, analyst at local financial services firm Banchile Claudia Benavente told BNamericas.

BCI, Chile's third largest private bank, ended 2010 with a 50% efficiency ratio, and Benavente expects that indicator to improve to 44% by year-end.

"BCI has always sustained its strategy and differentiated itself through technological development. With this capex, they are expecting their efficiency ratio to reach 40% over the next 3-5 years, which means that they should begin to be more efficient starting this year," the analyst said.

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At the bank's annual shareholders meeting, BCI also approved a 145bn-peso (US$303mn) capitalization, equal to 65.2% of last year's profits.

The bank's dividend is roughly in line with the sum it has paid out in the last two years, or 32%, Benavente said.

BCI ended 2010 with a capital adequacy ratio of 13.6% and Tier 1 ratio of 9.41%, both above minimum requirements, so it seems to have a solid capital base to face this year's growth challenges, Benavente said.

The capital increase will allow the bank to grow lending at 17% this year, according to BCI's CEO, Lionel Olavarría.

BCI, controlled by the local Yarur family, had 13.2tn pesos in assets as of end-2010, of which 72.1% are loans.