Fitch Affirms Chile's Banco de Credito e Inversiones's Ratings; Outlook Stable.

BUENOS AIRES, Argentina & SANTIAGO, Chile -- Fitch Ratings has affirmed Banco de Credito E Inversiones's (BCI) ratings as follows:

--Local currency long-term Issuer Default Rating (IDR) at 'A-';

--Support rating at '2';

--Support rating floor at 'BBB-'.

The following ratings were affirmed in a local press release dated August 8, 2007:

--Long term National rating at 'AA(chl)'

--Short-term National rating at 'N1+(chl) '.

The Rating Outlook is Stable.

BCI's ratings reflect its sound and stable historical performance, its prominent position within the Chilean financial system, healthy asset quality ratios, and lower capital ratios compared with its local and regional peers.

BCI's profitability has declined somewhat due to margin pressure, higher administrative expenses and increased loan loss provisions from loan growth in lower income segments. Its net interest revenue has remained fairly stable supported by loan growth, which helped to offset the pressure on its spreads from stiff competition and a somewhat higher than its peers reliance on costlier wholesale deposits.

The bank's significant growth has led to higher administrative expenses and the cost/income ratio has deteriorated but, at around 55%, remains low and is supported by revenue generation.

BCI's loan book has grown faster than the sector average since 2003. Growth has mainly been in the corporate and mid-size company segments but consumer lending has also grown strongly. Loans are well diversified and asset quality ratios have improved in line with the healthy economic environment and prudent risk management policies. At end-May 2007 the ratio of past-due loans, under the local definition (i.e. past-due installments over 90 days), was 0.80%, with loan loss reserve coverage of around 163%.

The bank benefits from a large and stable low cost retail deposit base. However, to finance the strong loan growth in recent years, it has heavily relied on deposits from institutional investors, which represent a higher proportion of the total (62.5% at end-May 2007) than that of its peers.

BCI's capital adequacy ratios have historically been lower than those of its peers and the company has supported growth with internal capital generation and subordinated debt issuance. BCI's subordinated debt has a high equity-like component and represented an elevated 30% of regulatory capital, just at the limit considered acceptable by Fitch. The bank's target is to maintain a minimum total capital to risk weighted assets of 10% (it was 10.4% at end-May 2007).

BCI is controlled by a group of Chilean investors led by the Yarur family. At end-May 2007, it was Chile's fourth-largest bank, with a loan-market share of 12.4%. It operates in all market segments through a nationwide network of 255 branches.

Fitch's National Ratings provide a relative measure of creditworthiness for rated entities in countries where the sovereign's foreign and local currency ratings are below 'AAA'. National ratings are not internationally comparable since the best relative risk within a country is rated 'AAA' and other credits are rated only relative to this risk. They are signified by the addition of an identifier, for the country concerned, such as 'AAA (chl)' for national ratings in Chile.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.