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Chilean banks booked a combined 530bn-peso (US$959mn) net profit in the first half of 2009, according to figures released by banking regulator Sbif.
The regulator did not provide comparative year-on-year figures due to the recent adoption of new accounting rules based on international financial reporting standards (IFRS).
Banks earned 82.8bn pesos in June alone, 0.73% more than in the previous month, according to the Sbif report.
The country's largest bank Santander Chile (NYSE: SAN) led the pack with earnings of 188bn pesos in January-June. Second biggest player Banco de Chile (NYSE: BCH) made a 123bn-peso profit in the period.
The banking sector's net interest income hit 1.52tn pesos in 1H09, with June's figure falling 8.14% compared to May. Net operating income totaled 649bn pesos for the first half, while in June alone it rose 3.19% from May.
Fee income was at 489bn pesos for the first half, and was up 5.64% in June compared to May. Administrative expenses totaled 1.13tn pesos in 1H09, with such expenses increasing 3.08% in June compared to the previous month.
Provisions for loan losses hit 742bn pesos in 1H09, and were 3.83% lower in June than in May, confirming a deceleration in the growth rate that banks have been experiencing since the beginning of the year, Raúl Barros, analyst at Santiago-based research firm FIT told BNamericas.
While banks' margins remain compressed by negative inflation - which amounted to -0.8% in this year's first half - Barros said that June should mark a turning point as a series of recent central bank measures ought to spur credit demand and inflation should start moving towards the monetary entity's 2-4% target range over the rest of the year.
Chilean banks benefit from inflation because they have a greater amount of assets than liabilities denominated in the country's UF inflation-linked unit.
Earlier this month, the central bank cut the country's benchmark lending rate by 25 basis points to a record low of 0.5% and implemented additional measures to achieve inflation targets as well as align financial asset prices with monetary policy. Analysts believe these measures will have a positive effect on banks by lowering funding costs, which should translate into cheaper credit over the coming months.
The sector's loan book - net of interbank loans and provisions - was 65.2tn pesos at end-June, down 0.85% compared to a month before, led by a 13% drop in foreign trade loans and a 1.61% decrease in the corporate segment.
Retail loans, on the other hand, were up 0.65% compared to end-May fueled by a 1.18% monthly increase in mortgage lending.
In a report, local brokerage Banchile said it was expecting loans to grow a mere 1.1% this year as banks are focusing their efforts on containing risk and managing their mismatch between pesos and UFs, but added that loans should grow 9.9% in 2010 as the Chilean economy begins to recover.
Asset quality deteriorated in the month, with the non-performing loan ratio worsening to 3.16% as of end-June compared to 3.03% at the end of May, Sbif said.
Banking sector assets and deposits amounted to 97.3tn pesos and 57.6tn pesos, respectively, as of June 30.