Moody's report: Chile banks 'improving'

Moody's Investors Service said in its annual report that its stable outlook for the financial strength ratings of Chile's major banks reflects their improving earnings quality, exemplary operating efficiency and proactive balance sheet management.

According to Moody's, the rated banks are well positioned to confront the risks of rising interest rates and higher credit costs that might arise from the present boom in consumer credit.

However, the analysts also said that "profitability remains constrained by competition and weak fee growth when compared to that of other top banks in the region," Moody's added.

Higher credit costs could also arise down the road from the already two-year-old boom in consumer credit, however, Moody's said that these risks are somewhat mitigated by a healthier credit market with stronger borrowers as well as by the banks' much cleaner balance sheet and improved capitalization.

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