Banco Santander Chile (BSAN), the country’s second-largest lender by assets, dropped the most in five months after reporting lower-than-expected profit for the second quarter.
Santander retreated 3.9 percent to 35.05 pesos at 1:16 p.m. in Santiago, the biggest decline since Feb. 2 on a closing basis. It earlier slumped 5.4 percent.
The bank reported yesterday a 25 percent drop in quarterly profit from a year earlier to 106 billion pesos, or $1.14 per American depositary receipt. The average estimate of six analysts surveyed by Bloomberg was $1.30 per ADR.
“This decline was mainly due to the lower inflation rate in the quarter that negatively affected net interest margins,” Santander said in a statement yesterday.
Santander’s return on equity, a measurement of performance, slipped in the quarter to 20.7 percent, from 30 percent a year earlier, according to Banchile-Citi, the joint research department of Citigroup Inc. and Banco de Chile.
“The stock now trades at 3.4 times last reported book value, a valuation level that we deem too demanding for a bank whose return on equity is now very far from the high 20s it once recorded, and seems to be settling in the low 20s,” analysts Daniel Abut, Juan Carlos Arandia and Carlos Rivera wrote in the report.
Chile’s annual rate of inflation has fallen in the past four months to 2.7 percent in June, which is below the central bank’s 3 percent target.
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