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Home > Business/Finance > Financial Services > Banking
Chile Commercial Banking Report Q3 2007
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Key Issues
This quarter we have updated a lot of the numeric information in the banking reports. We now have final banking statistics, sourced from the central bank/regulator or trade association, in relation to the end of 2006 for all countries other than Iran.
All of the commercial banking reports need to be considered in the context of a global environment that was benign for banks in the vast majority of the 59 countries for which have collected data. In 2006 the median local currency growth in total assets was 17.2% (in Croatia). The median local currency growth in total loans was 18.2% (in Bangladesh). The median local currency growth in total deposits was 16.9% (in Algeria). In almost all countries local currencies were stable or rising relative to the US dollar. Except in Venezuela and Iran, figures were not distorted by double-digit inflation.
Loan/deposit, loan/asset and Loan/GDP ratios all provide a rough measure of the development of the banking systems. Across the 59 countries for which we have collected data, the median loan/deposit ratio is 85.1% (in Thailand). The median loan/asset ratio is 54.8% (in Romania). The median loan/GDP ratio is 53.4% (in Kuwait). Across the eurozone, by comparison, the equivalent numbers are 126.4%, 50.6% and 119.3%. All three ratios are rising in most of the countries for which we have collected data.
The key issue for Chile’s banking sector remains the interest rate ceiling, which does not allow banks to charge more for riskier loans. Despite being one of the most highly developed markets in the region, the Chilean banking sector has a way to go.
Deposits and loans grew at 15% and 18%, respectively in local currency terms, for the year ending 2006.
Continuing strong consumer confidence within Chile and benign external conditions will keep stimulating the economy.
The bond holdings of Chile’s banks dropped 17.6% in local currency terms on the previous year to US$14.2bn. At approximately 11% of total assets, the system is not heavily exposed to risk from its bond holdings.
We expect the most likely scenario to be one of relatively high copper prices where copper revenues continue to fuel the economy albeit at a slower rate. With this in mind we retain our forecast of currency stability but a slightly weaker peso
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