2024-04-28 07:14:49 ET
Summary
- Banco de Chile has sustained very strong profitability, helped by a higher interest rate environment.
- The Chilean central bank is now sharply reversing rates, however, and margin pressure is ramping up.
- The stock isn’t adequately priced for the coming regime shift.
Chilean banks are out with their monthly P&L figures for March 2024, and for the most part, results indicate a slowdown off a very solid 2023 base. For Banco de Chile ( BCH ) (see March release here ), net interest income continues to swing higher YoY, though on a sequential basis (i.e., relative to last quarter), the bank's numbers are down across the board - not surprising, given the pace at which the central bank (Banco Central de Chile or 'BCCh') has been cutting interest rates. Even with help from fee income and lower provisions, the pull of lower rates should continue to drive returns on equity much lower than the ~30% reported in Q4 last year....
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For further details see:
Banco de Chile: The Sugar Rush Is Coming To An End