By Nathan Gill

Sept. 3 (Bloomberg) — Bank lending in Chile probably will increase 2 percent this year as the economy rebounds in the second half from its deepest recession in a decade, the nation’s banking association said.

Commercial loans and consumer lending should rise about 1 percent this year, the Asociacion de Bancos e Instituciones Financieras de Chile wrote in a note distributed today by e-mail. Home loans should increase 5 percent, the association said.

Chile may be recovering from its worst economic slump since 1999 as prices rise for its exports, led by copper, President Michelle Bachelet said Sept. 1. The government has pumped more than $4 billion into the economy and the central bank has slashed interest rates by 7.75 percentage points this year, more than any major central bank.

“During the second half, economic activity should rebound, reversing current negative trends,” the bank association wrote in the statement.

Chilean banks’ combined profit increased 35 percent in July from the previous month and consumer lending rose, the country’s banking regulator wrote in a report last week. Consumer lending increased 0.5 percent and the combined interest margin, a measure of lending profitability, rose 17.5 percent, the regulator’s report said.