Friday, February 1st 2013 - 07:38 UTC

Chile and Uruguay banks outlook for 2013 stable and negative for Argentina, says Fitch ratings

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.

The Argentine government has imposed a number of controls and regulations that limit financial activities

'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.

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1 willi1 (#) Feb 01st, 2013 - 10:55 am Report abuse
arg: “fitch and all these vultures only wish the worst to me and my poor people”, says the housewife on twitter and facebook today and tomorrow.
2 Pirate Love (#) Feb 01st, 2013 - 12:06 pm Report abuse
does this great news ever end? we are being spoilt :)

3 Optimus_Princeps (#) Feb 01st, 2013 - 01:29 pm Report abuse
I really hope the IMF puts their foot down today. Cristina will need more than a couple hundred b**** slaps to get anything resembling reality through her thick head.

@2 Knowing her personality, you very well might get quite the comedy show after all. Haven't you noticed that news of her stupidity is published almost daily?
4 Nostrolldamus the 8th (#) Feb 01st, 2013 - 02:38 pm Report abuse
Fitch casting judgments on Argentina is like asking Hezbollah what their prognosis is for the future of Israel.

The Brits are funny people, they pity those who are “gullible” to the info they are fed, but they fail to realize the British banking cabal is fully corrupt in bed with their governmment, and apparently neither a massive economic crisis they still are enduring, nor a large-scale criminal interest rate manipulation (nor a huge rating agency corruption uncovering, nor banking leaders calling them “plebs, muppets”), gets them to admit the truth of their situation.

Most delusional people on Earth. They deserve the triple dip, and the quadruple dip. I don't know the word for “five dip” recession, but I'm sure they will introduce it to us.
5 yankeeboy (#) Feb 01st, 2013 - 02:50 pm Report abuse
Rg banks are already bankrupt. They are forced to hold RG bonds paying rates at less than the inflation rate, forced to do mortgages and business loans at less than inflation rate and are losing their U$ deposit quickly.
They're bankrupt they just do know it yet.
6 reality check (#) Feb 01st, 2013 - 03:13 pm Report abuse
You run around spouting the name of a non existing island at the drop of a hat! and you call us gullible!
7 yankeeboy (#) Feb 01st, 2013 - 03:21 pm Report abuse
I would think it is pretty hard to run a modern economy when they can't keep the lights on under 40g and over 90f. Apparently teh Minister of Planning ws saying he is proud ther are only 2000 areas of BA out right now and it is much better than the last 5-6X they've been out!!
8/1 was breached

Interesting tidbit the unions are fighting for around P$8K/Mo and the guy who heads the tax collections makes P$100,000/mo!!!
simply outrageous.
Rgs are either very stupid or very lazy to let this go on year after year.
8 mastershakejb (#) Feb 01st, 2013 - 03:28 pm Report abuse
lollers forever @ argentina! I'm a rich american traveling the entire world slowly, at my leisure, and lovin it, eatin like a king all the while. Of all the countries I've seen thus far, Argentina is THE worst managed. Such potential, and yet such a disaster. If anyone with half a brain were in charge of that country, it'd have a GDP in the trillions of dollars.
9 Ayayay (#) Feb 01st, 2013 - 08:54 pm Report abuse
@4 Why not get Argentina to start a legitimate ratings agency?

I hear there were some educated economists let go from INDEC that might want work.
I'm sure Asia would love a better agency.
10 reality check (#) Feb 02nd, 2013 - 12:34 am Report abuse
That's like saying why wasn't christ born in Argentina?

Because they could not find three wise men and a virgin.

I know it's an old joke.

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