Fitch Publishes Chilean Banking Sector 1H16 Performance Dashboard
Mid-year six-month banking system results (1H16) continue to be supported by recurring operating income and adequate asset quality and cost control, which helps compensate for lower loan growth, higher corporate taxes and local currency devaluation. The latter factors are likely to continue pressuring the Chilean banking system's profitability in the near term, according to Fitch's report.
The banking system's gross loans, excluding lending by foreign subsidiaries and branches, increased by 7.4% year-over-year but only 2.5% since YE15, well below the 11.8% CAGR growth in the five years ended YE15. Despite the end of real state tax stimulus enacted by 2014 tax reform, mortgage lending continues to report the strongest level of growth, reaching 11.0% year - over-year at June 2016 but only 1.2% since YE15. Fitch Ratings expects these trends to persist during 2H16 based on the banks' cautious risk appetite and continued sluggish economic growth.