Compared to South American neighbors like Brazil, Argentina, Venezuela, and Colombia, Chile's economy has held up well despite its heavy reliance on mining for export income. That said, growth has been slowing, sentiment is weakening, and there has been more grumbling about the government in the richest Latin American economy (as measured by GDP per capita).
That leaves Banco de Chile (NYSE:BCH) in an interesting spot. Banco de Chile has long been a standout performer among Latin American banks, with double-digit annualized asset growth over the last five years and double-digit earnings growth over the past decade, as well as strong credit, spread, and margin performance compared to rivals like Santander Chile (NYSE:BSAC), BCI, and Itau CorpBanca (NYSE:ITCB). At the same time, though, loan growth has been slowing and spreads have been tightening.
Assuming that Banco de Chile can continue to generate ROEs near 20% over the long term, the shares have some appeal at this price for investors who want exposure to the above-average growth potential of Latin America but with a lower degree of risk.
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Banco De Chile Looks Like An Island Of Relative Stability