The drop of more than 40% in mortgage loan flows in the last year is leaving a big loser in Chile: the cconstruction. According to the latest data published by the Commission for the Financial Market (CMF) at the end of August, Loans to this economic sector have fallen 7.7% compared to 12 months ago, reaching loans for US$ 11,188 million.
Within the category, loans for home construction contracted 13.8% compared to 2021. A smaller fall was shown by placements for other works and constructions, which fell 2.9% during this period.
The decrease in loans for housing construction was explained by the lower exposure to this business by Banco de Chile and Scotiabank.
A year ago, the firm linked to the Luksic group had a presence in this niche of 41.1% and placements that reached US$2,183 million. In 2022, these loans fell by 87.2% and their market share reached 6.1%, with a portfolio of US$280 million.
The situation is repeated with Scotiabank —which was the second largest player in housing construction during 2021— with a participation share of 13.1%. The Canadian firm recorded a 40.6% drop in these placements in the last year, reducing its credits by almost half, reaching US$ 415 million. With this lower appetite, the firm positioned itself with 9.1% of this niche within the industry.
Despite this situation, there were some entities that granted more loans. Even triple-digit growth was recorded during this period, as was the case of Banco Security, which expanded 278.5% in this business and became the second largest player after BancoEstado.
The state bank became the largest player in this business, recording a 55.2% increase in its placements for housing construction and its loan portfolio reached US$ 1,022 million.
Among the surprises is that the bank of BTG Pactual, which entered this business where it was not present last year. As of August, the firm had a loan portfolio of US$47 million.
while en the “other works and construction” business, although the drop in placements is less, almost half of the financial entities that participate in this niche reduced their loans. The banks BICE, Banco de Chile, Bci, BancoEstado, Itaú and Santander decreased their positions in this segment compared to 2021.
Among the most important changes within the banking sector is Banco de Chile, which showed a drop in its placements of 19.4%; Itaú contracted its loans by 14.4% compared to last year; and BancoEstado showed a double-digit drop in its placements in the last 12 months, with a decrease of 12.9%.
The firms put their chips in this category were BTG Pactual, Banco Consorcio, Banco Internacional, Banco Security, China Construction Bank, HSBC and Scotiabank.
The perspectives
Given the macroeconomic scenario projected for the end of the year, the commercial manager of Siena Inmobiliaria, Ana María del Río, says that during the last quarter one of the challenges “It is the access to financing and the flexibility so that clients can pay the required feet. For next year, we project a slight increase in sales.”
While the director for the southern cone of Tinsa, Felipe García, estimates that the challenges for the next quarter and probably for the following years, “It is to find the opportunities that are still present in the market and that from now on will take on much greater relevance.”
Regarding the evolution of the mortgage market, García acknowledges that “this year has undoubtedly been one of the most complex for the real estate market” and pointed out that “The different actors have had to make the necessary adjustments to be able to cope with it, from construction, supply and also financing.”
It should be remembered that this week the president of the Chilean Chamber of Construction, Antonio Errázuriz, announced on Monday the formation of a group dedicated to “attack financing” of the companies in the sector. This, because the financing for the development of projects -in addition to the readjustment to current contracts- has been one of the hardest problems that the sector has had to face.
The Central Bank released last week the survey of bank loans corresponding to the third quarter and reported that the supply of loans to construction and real estate companies remains limited in the third quarter of the year.
Another large construction company files for bankruptcy
Financial Journal-RIPE
