Inflation Rises in Q3, So Do Earnings for Corpbanca

| About: Itau CorpBanca (ITCB)

Corpbanca (BCA), the fifth-largest private bank in Chile, reported a Ch$17.8 bln net income for the third quarter of 2008, a 35.6% increase from the second quarter. At the current exchange rate of Ch$630/US$, the quarterly income equals US$28.254 million, which amounts to Ch$0.0803/share, or US$0.7301/ADR.

Corpbanca's total operating revenue increased 24.1% from 2Q '08, arriving at Ch$80 bln (US$127 million). A gain which was "offset by higher provisions for loan losses, operating expenses and price-level restatement expenses," according to the management's Discussion and Analysis.

The company also reported Net Interest Income up 31.5% from 2Q, reaching Ch$15.6 bln (US$24.8 million). Gross interest revenues were up 38.3%, from Ch$122.6 bln to Ch$169.6 bln (US$269 million).

The management reported:

This rise in interest revenues was offset by higher funding cost related to inflation indexed interest-bearing liabilities, our increased financing needs to fund our growth in loans, and the effect of the monetary policy interest rate hikes.

Interest expenses for the third quarter grew from Ch$73.0 bln to Ch$104.3 bln, 42.9% compared to the prior quarter. During the third quarter, the rate of inflation was greater than experienced during the second quarter. Our current assets and liabilities strategy is positively affected by inflation because we have a greater amount of assets denominated in inflation indexed Chilean UF (Unidad de Fomento) currency than our UF denominated liabilities. Accordingly, this gap allows us to profit from inflation.

Corpbanca also reported a Ch$29.2 bln (US$46.3 million) Trading and Investment Income, and a currency loss of Ch$26.8 bln (US$42.5 million).

The bank's loan portfolio at the end of 3Q '08 amounted to Ch$4.613 bln (US$7.3 bln), which is up (+5.8%) from 2Q '08 and (+19.78%) from 3Q '07.

Corpbanca's shares trade at Santiago Stock Exchange (CORPBANCA), and as NYSE listed ADR's.

The company's latest earnings release can be downloaded in our download section.

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