...Earnings Likely to Deteriorate Due to Asset Quality Pressures and Lower Growth Fitch expects Chilean retail banks and non-bank financial institutions' profitability to suffer due to deterioration in asset quality and slow er growth. The performance of retail banks has held up w ell so far, based on lower funding costs, good risk management and different levels of cost effi c iency. The Cajas de Compensacion de Asignacion Familiar (CCAFs) are undergoing a period of weak performance (see section below), and Cooperativa del Personal de la Universidad de Chile's (Coopeuch) strong franchi s e, diversified funding and prudent risk management have allow ed it to continue to post strong results. Fitch expects the economic slowdown to weigh on the Chilean retail lenders' asset quality and profits. In addition, taxes are set to rise due to the recent tax reform in Chile. Asset Quality Deteriorates While the banking system's consumer loans quality remains solid, that of the payroll lenders has markedly...
