14 January 2009

Santander Chile Falls on Lending Slowdown Concern (Update1)

By Nathan Gill and James Attwood
     Jan. 14 (Bloomberg) -- Banco Santander Chile, the country’s biggest lender, fell the most in a month in Santiago trading on concern that a deepening global economic slowdown is stifling lending.
     Santander Chile fell 3 percent to 22.1 pesos, the steepest drop since Dec. 15. Banco de Chile, the second-largest lender, slid the most since October.
     U.S. stocks slid to a six-week low after a government report showed retail sales decreased at more than twice the rate forecast by economists last month. Banks led declines in Europe after Deutsche Bank AG reported a fourth-quarter loss and investors speculated financial firms may need to raise more capital. Chile’s central bank today said the consumer lending boom is over as banks scale back credit on concern that slowing economic growth will hamper borrowers’ ability to repay.
     “In a scenario in which all the banks are dropping, Santander should fall more than the rest because it is a lot more expensive,” Javier Pizarro, an analyst at Larrain Vial SA, said by phone from Santiago today.
     Santander fetches 13 times earnings. Smaller rivals Corpbanca SA and Banco de Credito e Inversiones have multiples of 11 and 8.1, respectively, according to Bloomberg data.
     Consumer loans by Chilean banks fell 1.6 percent in real terms in the 12 months through October, the first decline in more than five years, the central bank said in a report published today.
     Banco de Chile lost 6.8 percent to 34 pesos, the lowest price this year.