Banco Santander Chile, the country’s second-largest lender by loans, fell to a two-month low after Bank of America Corp. cut its rating of the stock to the equivalent of sell.
Shares retreated 1.5 percent to 33.83 pesos at the close of trading in Santiago, the lowest price since Jan. 3. The benchmark Ipsa index fell 0.9 percent.
Bank of America cut its recommendation from neutral and lowered its target price by 9 percent to 34 pesos, according to an e-mailed note. Slower inflation will lead to a lower net interest margin, or NIM, the bank’s analysts wrote.
“Over the long-term horizon, we see soft loan growth, NIM pressures, rising provisions and higher corporate taxes affecting earnings,” analysts BofA Jose Barria and Jorg Friedemann said in an e-mailed note. “These trends plus a regulatory overhang and high valuations make Chilean financials unattractive at the moment.”
Chilean banks hold inflation-linked instruments among their assets including loans in Unidades de Fomento, the country’s inflation-linked accounting unit.
Consumer prices rose 1.3 percent in February from a year earlier, below the central bank’s target range of 2 to 4 percent. Inflation will probably speed up the rest of the year, with inflation at 2.7 percent in 2013, according to the median estimate of analysts polled by Bloomberg.