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Chilean Banking Sector: A Market on the Rise

The Chilean banking sector is known for its moderate risk appetite and adequate governance and transparency practices. Here are some key points that highlight its competitive dynamics.

Return on Equity (ROE) and Net Operating Income

The ROE of domestic banks has fluctuated over the years, with a decline in 2020 due to higher provisions for the pandemic and lower margins on government-backed loans. However, it is expected to recover in 2021-2022.

Systemwide Return on Average Assets (ROAA)

The systemwide ROAA has also declined in recent years, but is expected to improve in 2021-2022.

The largest three banks control around 50% of the market share.
Government-owned and not-for-profit banks account for 20-22% of the market share.

Growth Rate of Domestic Assets

The annual growth rate of domestic assets has slowed down in recent years, but is expected to stabilize in 2021-2022.

Key Trends

Increasing focus on digital platforms and fintechs: Banks are shifting their focus towards online banking and financial technology solutions.
Consolidation in the banking sector: The number of banks operating in Chile is decreasing due to consolidation efforts.
Government-owned bank plays a significant role: Banco Estado, a government-owned bank, provides essential financial services to the population.

Conclusion

The Chilean banking sector is expected to recover from the pandemic-induced shock and continue to grow steadily, driven by stable governance and transparency practices.