...Slower Economic Growth Pressures: Chilean banks are facing a third consecutive year of economic slowdown (GDP growth around 2%). While Fitch Ratings doesn¦t expect a significant impact for Chilean banks, this will likely put some pressure on their lending growth rates, profitability and asset quality. Credit expanded 7.5% during the first nine months of 2015, in line with Fitch projections (8%¡10%), while it is expected to move at a slower pace in 2016 (6%-8%). Banks are Well Positioned: Having anticipated this scenario, recent loan growth has been more concentrated on higher-income segments of the population. However, over the medium term, Fitch expects further pressure on credit costs, arising from adoption of standardized regulatory models, starting with mortgage loans in January 2016. Commercial Banking Business Model: The Chilean banking system has historically focused on commercial banking, mainly locally. However, in the past few years, local banks have initiated an internationalization...
