Itau Corpbanca likely to pay dividends close to zero after impairment

SAO PAULO (Reuters) – Chile’s Itau Corpbanca ITAUCORP.SN is unlikely to post a profit or pay dividends in 2020 after taking a $930 million impairment charge, its chief executive, Gabriel Moura, said on Friday.

The bank disclosed the charge on Thursday, saying it reflected the new fair value of cash generation for units in Chile and Colombia. It said the charge was “primarily the result of economic conditions as of June 30, 2020.”

The losses were mainly in the goodwill from earlier acquisitions in Chile and Colombia and will not lead to impacts on cash and capital.

Moura, speaking on a conference call with analysts, said Corpbanca, the Chilean unit of Brazil’s biggest lender, Itau Unibanco Holding SA ITUB4.SA, is likely to post lower-than-expected loan book and fee growth in the comings quarters due to the coronavirus pandemic.

The asset impairment underscores Itau’s challenges in building a wider Latin American retail footprint. Itaú Chile merged with Chilean Corpbanca in 2016. The combined entity has operations in Chile, Colombia, Peru and Panama.

Since the acquisition, Itau has faced an integration that took longer than expected, loan losses, weak profitability and violent protests in Chile.

Itau’s chief financial officer, Milton Maluhy, said in an interview with Reuters that impact on the Brazilian bank will be close to zero. Itau’s 38.1% stake in the Chilean lender is not significant for the large Brazilian bank.

“We saw the current moment, with the crisis caused by the coronavirus pandemic, as an opportunity to adjust Corpbanca’s balance sheet,” he added.

Itau Corpbanca ended March with $45 billion in assets and 321 branches. Its shares were little changed in early afternoon trading in Chile.