In March 2008, we updated all data for the 59 countries surveyed with official figures, sourced from
central banks and regulators. In most cases, we were able to find data that pertained to the end of 2007: in
almost all other cases, the data pertains to September 30 2007. As a result, the insights that we derive on
particular countries are based on consistently sourced information that is far more current than it had been
previously.
Although we gather data for countries such as the US, Japan, Australia and the eurozone, the vast
majority of the 59 countries whose banking industries we survey are, or are generally seen as being,
emerging markets. For all the widely publicised problems of large banks in developed countries, in the
wake of the subprime banking crisis in the US, 2007 was an extremely good year for the banking sectors
of the emerging markets. In local currency terms, the median growth in assets was 21% (in Brazil). The
median rates of growth in loans to non-bank customers and in deposits were 22% (in India) and 18% (in
Morocco). In some countries - and not just those enjoying oil booms - the figures were spectacular. In
Ukraine, for instance, assets and deposits rose by 76% and 62% respectively. Loans grew by more than
one-third in Bulgaria, Estonia, Latvia, Lithuania, Romania, Russia, Serbia, Slovenia, Peru, Bahrain, Iran
and Nigeria. Deposits also rose by more than one-third in most of these countries.
In absolute terms, Chile’s banking sector enjoyed reasonable growth through the year to December 31
2007. In local currency terms, total assets, total loans and total deposits increased by 22%, 21% and 18%
respectively. The loan/deposit and loan/GDP ratios are rising.
However, relative to other countries surveyed by BMI, these achievements are, at first glance, not so
impressive. Of the 59 countries surveyed, Chile ranks 28h in terms of local currency asset growth, 31st in
terms of local currency loan growth and 28th in terms of local currency deposit growth. Chile has for
some time been a medium-income country where the risk premium is low. As the tables above show,
Chile’s rankings in terms of its loan/deposit, loan/asset and loan/GDP ratios are 10th, seventh and 28th,
respectively. In a country with per capita GDP of US$9,859, deposits per capita are a very respectable
US$6,000.
In Q108, we envisaged that total assets, total loans and total deposits would each rise by 15%, annually
through the 2007-2012 forecast period. Now, and using an improved forecasting method, we are looking
for growth rates of 13%, 13% and 12% respectively.
Since Q108, we have calculated, on a consistent basis, a Commercial Bank Business Environment Rating
(CBBER) for each of the 59 countries surveyed. The CBBER includes an assessment of the limits of
potential returns: it does this by taking into account the size, growth potential and bancassurance
potential of the banking sector, as well as aspects of the economy in 2007. The CBBER also depends on
an assessment of the risks to the realisation of potential returns: this reflects BMI’s assessments of
overall country risk, together with the regulatory and competitive environment.
Chile’s CBBER is 62.4. In the context of Latin America, this means it is a fairly attractive country, given
that the CBBERs are higher only in Brazil and Mexico. Relative to Brazil, Chile is held back by the small
size of its banking sector and the absolute growth that we are looking for through the 2007-2012 forecast
period. Relative to Mexico, Chile is held back by BMI’s proprietary risk ratings. Chile has a regulatory
regime that is highly regarded, and rightly so, but the business opportunities in the banking sector are
fairly unexciting.
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