Itaú Corbanca unlikely to pay dividend in 2020 - CEO
July 13, 2020
Bank cites non-cash impairment of $930 million and economic downturn related to COVID-19 pandemic for likely inability to pay dividends in 2020.
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Chile's Itaú Corbanca said on Friday the $930 million non-cash impairment charge, due mainly to a combination of the economic impact of the COVID-19 pandemic and goodwill from prior acquisitions will result in nearly no profits in 2020 and therefore the likelihood it will not pay a dividend this year.
In a conference call with analysts on, Gabriel Moura, chief executive officer of Itaú Corbanca, said the charge will have "no impact on our liquidity, have no impact on our market risk. It is a non-cash expense on the bank." There is no expected impact on the banks' capital ratios under Basel III banking rules.
The bank, with operations in Chile and Colombia, is a subsidiary of Brazil's Itaú.
"As it goes through results, it affects our ability to pay dividends this year because of the size of the impairment, most likely we will not be able to generate profits in order to pay dividends this year. But it does not affect our ability to pay dividends, or the results that we are going to generate in 2021 onwards," he said.
"But as of this year, as of the dividends from 2020 that we were going to pay in 2021, yes they are affected so probably you are going to see a dividend close to zero for this year," he said.
The loan book and fees are expected to grow slower than expected due to the pandemic, Moura said.
Itaú Corbanca, as of March 2020, has assets of $45 billion, the majority of which are in Chile, with loans of $27.7 billion and 321 branches. The bank was created in 2016 when Banco Itaú Chile merged with Corbanca. It has operations in Chile, Colombia and Panama and Peru.