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2 of the World's Best Banks to Own

Wide-moat Banco Santander Chile and Banco De Chile both have tremendous earnings power--and both are currently trading below fair value.

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Timothy Puls: Today, we'd like to highlight two Chilean banks that we recently upgraded to wide moat--Banco Santander Chile (BSAC) and Banco De Chile (BCH). We've upgraded these two banks to wide moat primarily because of the tremendous earnings power that each bank possesses--which is illustrated by historical returns on equity of over 20% for each bank--as well as our recent assessment that Chile's banking system is a good and, therefore, stable banking environment.

We consider Banco De Chile and Banco Santander Chile to be the best-run banks in their home country but also two of the best in all of Latin America. Both banks command a nearly 20% share of the Chilean deposit market, which contributes to a funding cost advantage over peers.

Timothy Puls does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.