Despite the fact that people with unpaid commitments decreased by 1% on a quarterly basis, there is an increase of new defaulters, being the highest growth since March 2023.
According to the latest Delinquent Debt Report prepared by Universidad San Sebastián (USS) and Equifax, as of June of this year, people with unpaid commitments decreased by 1% on a quarterly basis and by 0.1% annually. However, total unpaid debts rose to US$9,145 million, the average delinquency amounted to $2,170,734 and new defaulters rose 13%, being the highest growth since March 2023. Likewise, at the end of June, the total number of delinquent persons in the 70-year age bracket recorded the highest increase (+15%).

The report reveals that at the close of this last quarter (April-June) of 2024, Chile recorded 4,006. 499 people with unpaid commitments, this figure decreased compared to the previous version, which for Alejandro Weber, dean of the Faculty of Economics and Government of the USS, despite the fact that the delinquency figures remain stable, the report reveals signs of “concern”, due to the significant increase of new defaulters; which to date are more than 261 thousand citizens, and people over 70 years old, which exceed 282 thousand people.

Also, total debt rose both quarterly (+0.6) and annually (+4%) to US$9,145 million, equivalent to 2.97% of GDP. In the study's press release, they point out that these figures are a sign of a deteriorating economy, a weak labor market and persistent inflation.
Regarding the increase in new delinquent accounts, the report emphasizes that this group, which refers to people with no debts reported in the previous quarter, increased by 13% in the second quarter and is the highest growth since March 2023. In fact, the average delinquency of this group was also the highest of the period, amounting to $425,971, 7.8% more than in the previous quarter.

*The factors
Francisco Labarca, an academic from the Faculty of Economics and Business of the Universidad del Desarrollo (UDD), points out that “these data reflect a lower exposure that credit granting companies are generating, given that they are seeking to reduce the credit risk to which they are exposed. However, in addition to the above, it can be seen that the increase in delinquent amounts reflects the deterioration of the labor market, reflected in the defaults of debtors, which leads to this increase in delinquent amounts”.
In relation to the increase of new defaulters, the academic points out that this population “is affected by elements such as the real disposable income of households, which is affected by a higher cost of living, together with a stagnation in the national economy, which grows below the cost of living, generating postponements in payments by debtors”.

Meanwhile, Rafael Romero, Partner of PKF Chile & Director of the Department of Management and Business of the Faculty of Economics and Business of the Universidad Alberto Hurtado (UAH), said “the changes in the number of people with unpaid commitments are relatively small, so it is difficult to draw precise conclusions because they do not indicate a clear trend”. However, he points out that “one variable that clearly helps to understand people's financial health is the unemployment rate. Based on data from the Central Bank, it is observed that while the unemployment rate in June is relatively high, it has decreased from that observed in March 2024. It is possible that part of the explanation lies in this slight improvement in the unemployment rate between March and June 2024”.
In relation to what these figures reflect about the economy, the UDD academic comments that the results of the report reflect two significant effects that Chileans are experiencing, the first refers to the deterioration of the labor market and the second to its lack of dynamism, which is reflected in the credit evaluation of consumers in the country. Credit grantors seek not to increase their risk in the face of possible future defaults”.

By Andrea Cova Moore, www.emol.com