BUENOS AIRES, Argentina & SANTIAGO, Chile--(BUSINESS WIRE)--The outlook for Southern Cone Banks is mixed in 2013, with a stable outlook for Chile and Uruguay, while Argentina faces a negative outlook and the potential for downgrades, according to a new Fitch Ratings report.
'Fitch does not anticipate any rating changes for Chilean banks given low credit risk and adequate capitalization and liquidity ratios. No change is expected for banks in Uruguay unless the sovereign, Rating Outlook currently Positive, is upgraded,' said Santiago Gallo, Director, in Fitch's Latin America group.
'The ratings of many Argentine financial institutions were recently downgraded in line with the sovereign downgrade and any further downgrade of the latter will likely impact the ratings of many banks. In addition, the solid asset quality and profitability ratios of Argentine banks may deteriorate due to sluggish economic growth, higher inflation and greater macroeconomic volatility - creating the possibility of further downgrades in 2013,' said Maria Fernanda Lopez, Senior Director, in Fitch's Latin America group.
Chilean bank profitability will remain under pressure in 2013. While loan growth will continue to be strong, bank operating revenues will be undermined by stable interest and inflation rates and new regulations tending to limit some interest rates and fees and lower operating revenues. Additionally, the cost of funding is expected to increase due to greater competition among banks for structural deposits, particularly retail.
Fitch expects Uruguayan banks' profitability to remain moderate in the medium term. Increased profitability depends on private sector credit growth, and expanded recurring operating revenues via higher commissions and service fees to reduce vulnerability to exchange rate volatility and inflation adjustments.
The Argentine government has recently imposed a number of controls and new regulations that limit activities in the financial sector, which reduce banks' ability to adjust to changes in the operating environment.
Profitability may come under pressure due to the slowdown in credit growth, lower yields on government securities, higher inflation-related expenses, greater loan loss provisions and a possible hike in the cost of funding as a result of increased macroeconomic volatility.
Fitch will be hosting a conference call in English and Spanish to discuss the 2013 Latin America banking outlooks.
Latin America Banking - English Call
Date: Thursday Feb. 7th
Time: 9:00 AM EST
Call ID: 91010082
U.S. Toll Free Dial In: +1-877-467-8597
International Dial In: +1-706-902-0405
Latin America Banking - Spanish Call
Date: Thursday Feb. 7th
Time: 10:30 AM EST
Call ID: 91014519
U.S. Toll Free Dial In: +1-877-467-8597
International Dial In: +1-706-902-0405
International Toll Free access is as follows:
Argentina 08006660273
Bolivia 800100835
Brazil 08008916189
Chile 12300206168
Colombia 018005180165
Costa Rica 08000130990
Dominican Rep. 18887512305
El Salvador 8006392
Mexico 018009269157
Panama 0018002018157
Peru 080052957
Spain 900971520
U.K. 08000288438
Uruguay 00040190120
Venezuela 08001002762
A full presentation will be available for each call on the day of the teleconference on Fitch Ratings' website, under 'Events'.
2013 Outlook reports for Latin America Banking is available at www.fitchratings.com/outooks.
Replay will be available beginning two hours after each call until March 7th under the respective Conference ID# provided above. The dial-in numbers for the replay are +1-855-859-2056 (toll-free in the U.S.) and +1-404-537-3406.
For more information, Fitch's special report titled '2013 Outlook: Southern Cone Banks' is available at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Republic of Chile' (February 2012);
--'Argentina's Weakening Credit Profile' (December 2012);
--Uruguay: Close to Return to Investment Grade' (May 2012);
--'Macro-Prudential Risk Monitor' (August 2012);
--'2013 Outlook: Spanish Banks' (December 2012)
--'Global Financial Institutions Rating Criteria' (August 2012).
Applicable Criteria and Related Research: 2013 Outlook: Southern Cone Banks
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=698916
Chile
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=668930
Argentina's Weakening Credit Profile
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=696152
Uruguay: Close to Return to Investment Grade
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=676374
Macro-Prudential Risk Monitor
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684629
2013 Outlook: Spanish Banks
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=695932
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686181
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