In the banking system, credit activity is growing moderately, except for mortgage loans. Corporate and consumer loans continue to grow slowly. On one hand, the slowdown of the commercial portfolio is consistent with the economy’s cycle, which coincides with the reduction BIS central bankers’ speeches  5  in demand revealed by the Bank Credit Surveys of the past few months. On the other hand, the consumer portfolio shows zero growth in the lower amount segments, usually associated with lower-income debtors. In the mortgage category, the greater expansion of debt comes from loans of more than five thousand UF, partly explained by the housing price dynamics. Bank financial indicators show the sector losing strength. At the third quarter of 2015, ROE dropped to 15 percent, largely because of reduced interest rate spreads. This reflects the shift in portfolio composition from higher-yield segments (consumer and commercial) to mortgage. The capital adequacy ratio (CAR) continued to decline, to slightly below 13 percent as of August 2015, consolidating a fall of just over one percentage point in the last four years (figure 14). This has occurred in a context where international banks have tended to increase their capitalization levels to strengthen their capacity to respond to episodes of financial stress, in line with the new international regulations (Basel III), or as a voluntary way of building resilience. Although Chile, with capitalization levels of around 14.3 percent in 2009, was around the median of OECD economies, its place today is in the lower part of the distribution (figure 15).
8  BIS central bankers’ speeches  Figure 3 GDP, domestic demand and components (annual change, percent)  9  21  Domestic demand  6  14  Consumption GDP  3  7  0  0 Gross fixed capital formation (right axis)  -3  -7  -6  -14 12  13  14  15  Source: Central Bank of Chile.