Banco de Chile Continues to Benefit from High Interest Rates and Inflation but Economic Risks Remain

Banco de Chile’s reputation and long history in Chile have allowed it to attract a large pool of noninterest-bearing deposits, giving it a lower cost of funds than most of its rivals. This funding advantage has contributed to the bank’s impressive profitability, historically delivering returns on equity in the mid to high teens. Like its competitors, the bank is making a pivot to more digitally integrated offerings and expanding efforts to reach a large population of unbanked Chileans. While the bank’s efforts in these spaces have found initial success, especially the highly successful introduction of "Cuenta Fan," Banco de Chile will need to continue to invest to position itself for success, particularly as it is not the only major bank in Chile looking to bolster its digital deposit base.