LatinFinance - November/December 2013 - 46

WALTER BAYLY, BCP

"IF CHINA DOESN'T
GROW AT 7%, BUT
RATHER AT 4%, THAT
HAS A GREATER
IMPACT THAN IF US
RATES WERE TO RISE
200 BASIS POINTS"

issued subordinated debt worth around
$315 million in Chile's local market and in
January it drew $3 billion of demand for its
international bond debut, an $800 million
five-year note. Then in February, it closed
an equity increase worth more than $620
million.
Through acquisitions and organic
growth in recent years, Corpbanca has
built market share to 8.3% in Chile, from
7% in 2008. It reported a pre-tax return on
equity of 20.6% in the second quarter, up
from 18.3% a year earlier, and its assets were

Bayly intends to address the problem.
The bank has been tightening its credit
underwriting standards and will move
away from segments that have had higher
delinquencies. "We should start seeing an
improvement late in the first quarter of
next year," he says.
The bank is continuing to test new
products and distribution channels to
capture those that have no access to
financial services. It is participating with
other domestic banks on a mobile banking
project which will start in the middle of
next year.
As the US Federal Reserve unwinds its
extraordinary stimulus, higher interest
rates will make investing in local currencies
less attractive.
But the bigger fear is China's growth
and the price of commodities, Bayly says,
which will affect investment rates. "If China
doesn't grow at 7%, but rather at 4%, that
has a greater impact than if US rates were to
rise 200 basis points." LF

BANK OF THE YEAR CHILE

Banco Corpbanca
Ratings agencies may have
frowned on Corpbanca's
Colombian acquisitions,
but with a strong financial
set-up, the bank is confident it has a formula for
success, its chief executive
says
Corpbanca had a busy year. In the 12
months to June, it cut non-performing
loans, lifted its capital, and increased its
return on equity. In November 2012, it

46 LATINFINANCE.COM - November/December 2013

MASSÚ: Corpbanca caught the window for
well-priced acquisitions in Colombia

up 5%, at 14 trillion Chilean pesos ($27.6
billion), on the year. It increased its tier one
capital ratio by two points, to 10.33%, and
brought down its non-performing loan ratio
from 1.4% to 1.1%.
That growth and balance sheet
strengthening alone, amid a broader fall in
profitability in the Chilean banking system,
was enough for Corpbanca to stand out as

our Bank of the Year for Chile in 2013. But
additionally, the lender has been extending
its reach internationally.
Corpbanca agreed to buy Colombian
lender Helm Bank in October 2012 for
$1.3 billion. The acquisition, which closed
in May, offers scope for organic growth
in a market with a low rate of banking
penetration, and a population more than
twice the size of Chile's.
The purchase adds to a presence
in Colombia that Corpbanca started
building in December 2011, when it
bought Santander's
operations there.
Now around a third of
its loan exposures are
in Colombia.
Ratings agencies
have raised flags
over that increase:
Standard & Poor's
cut Corpbanca's
ratings one notch
from triple-B plus in
August, for example.
Fernando Massú,
the bank's chief
executive, chalks that
up to the Colombian
country rating,
which is four notches
below Chile's. The
diversification and
growth opportunities
in Colombia make the
purchase sound, he
tells LatinFinance.
The new business
is already paying
its way. Adjusted
pre-tax profit at
the Colombian
operations in the
second quarter was
23.3 billion Chilean
pesos. That was 39.4 billion pesos in its
home market in the same period.
Additionally, the acquisition was timed
well, Massú says. With purchase prices
rising, the window to buy Colombian
financial institutions at reasonable cost has
passed, he says.
Now the bank will focus on integrating
and consolidating its new businesses:
further acquisitions, or even a bond sale,
are unlikely in the next couple of years, he
says.
It plans to expand coverage of small
and medium sized companies. In Chile,
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