Banco de Chile rose after Deutsche Bank AG said profits at the country’s largest lender by assets will rise as inflation quickens in the second half of the year.
The shares gained 1.3 percent to 77.14 pesos in Santiago, the highest closing price since Sept. 11. The IPSA benchmark index fell 0.4 percent.
Deutsche Bank raised its recommendation to buy from hold and set a price target for Banco de Chile (CHILE) of $104 per American depositary receipt from $96, citing expectations of faster inflation in the second half of the year. Chilean banks hold inflation-indexed instruments whose value gains when consumer prices increase.
“In addition to an expected pick-up in inflation boosting second-half results, we think underlying operating trends should remain healthy through 2014 with less risk than other banks in the region,” analysts Tito Labarta and Mario Pierry said in an e-mailed report.
Deutsche Bank also raised Banco Santander Chile (BSAN) to buy from hold.
Analysts expect consumer prices will rise 1.8 percent in Chile this year and 3 percent in 2014, according to estimates compiled by Bloomberg. In the 12 months through May, prices rose 0.9 percent, below the central bank’s target range of 3 percent plus or minus one percentage point.
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