Goldman Initiates Itau Corpbanca At Buy, Sees 18% Upside

Itau Corpbanca, which was formed with the merger of Itaú Unibanco's Chilean operation and CorpBanca, is the fifth-largest bank in Chile by assets, and the fifth-largest in Colombia.

Goldman expects merger "synergies and know-how brought by Itaú Unibanco to lift profitability over the next three years, leading ROA to increase by 40 bp from the 2013–2015 average."

The company "has outlined US$100 million in recurring synergies that can be obtained over a three-year period," primarily on the cost side, and Goldman expects the target is achievable.

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"We do not see this reflected in shares, which trade at a deep discount to peers in Chile, particularly if medium-term EPS (with full synergies) is considered," analyst Carlos Macedo wrote in a note.

Macedo said Itaú Unibanco's experience in consumer lending should allow Itau Corpbanca to address some of the main shortcomings it has compared to peers.

"Better funding costs should be an early win, but we believe the bank will be more effective in selling saving and lending products retail clients, partially through improved segmentation, and will also improve its credit card business," Macedo highlighted.

The analyst expects 2016 EPS of $0.48 on revenue of $1.59 billion.

At the time of writing, ADRs of Itau Corpbanca were up 1.86 percent to $12.04.