Fitch: Good 2013 Performance for Banks in Chile and Uruguay; Argentine Banks, Negative Outlook

BUENOS AIRES, Argentina & SANTIAGO, Chile--()--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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Contacts

Fitch Ratings
Maria Fernanda Lopez, +54-11-5235-8130
Senior Director
Fitch Argentina Calificadora de Riesgo S.A.
Sarmiento 663 - piso 7 - C1041AAM
Buenos Aires, Argentina
or
Santiago Gallo, +54-11-5235-8137
Director
or
Eduardo Santibanez, +56-2-499-3307
Senior Director
Fitch Chile Clasificadora de Riesgo Ltda.
Alcantara 200, Of. 202.
Las Condes. Santiago, Chile
or
Media Relations:
Magdalena Abalos, Santiago, +562 499 3304
Email: magdalena.abalos@fitchratings.com
Brian Bertsch, New York, +1 212-908-0549
Email: brian.bertsch@fitchratings.com
Laura Villegas, Buenos Aires, +54 11 5235 8139
Email: laura.villegas@fitchratings.com

Contacts

Fitch Ratings
Maria Fernanda Lopez, +54-11-5235-8130
Senior Director
Fitch Argentina Calificadora de Riesgo S.A.
Sarmiento 663 - piso 7 - C1041AAM
Buenos Aires, Argentina
or
Santiago Gallo, +54-11-5235-8137
Director
or
Eduardo Santibanez, +56-2-499-3307
Senior Director
Fitch Chile Clasificadora de Riesgo Ltda.
Alcantara 200, Of. 202.
Las Condes. Santiago, Chile
or
Media Relations:
Magdalena Abalos, Santiago, +562 499 3304
Email: magdalena.abalos@fitchratings.com
Brian Bertsch, New York, +1 212-908-0549
Email: brian.bertsch@fitchratings.com
Laura Villegas, Buenos Aires, +54 11 5235 8139
Email: laura.villegas@fitchratings.com