Banco Santander
Chile
Update
March 2020
Important information
Banco Santander Chile caution that this presentation contains forward looking statementswithin the meaning of the US Private Securities Litigation Reform Act of 1995. These forward looking statements are found in various places throughout this presentation and include, without limitation, statements concerning our future business development and economic performance. While these forward looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) general market, macro-economic, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates, and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. The risk factors and other key factors that we have indicated in our past and future filings and reports, including those with the Securities and Exchange Commission of the United States of America, could adversely affect our business and financial performance.
Note: the information contained in this presentation is not audited and is presented in Chilean Bank GAAP which is similar to IFRS, but there are some differences. Please refer to our 2019 20-F filed with the SEC for an explanation of the differences between Chilean Bank GAAP and IFRS. Nevertheless, the consolidated accounts are prepared on the basis of generally accepted accounting principles. All figures presented are in nominal terms. Historical figures are not adjusted by inflation. Please note that this information is provided for comparative purposes only and that this restatement may undergo further changes during the year and, therefore, historical figures, including financial ratios, presented in this report may not be entirely comparable to future figures presented by the Bank.
2 2
AGENDA
CHILE AN UPDATE
SAN CHILE: BALANCE SHEET
SAN CHILE: BUSINESS GROWTH AND RESULTS
3 3
Update
Despite increase in contagions, Chile has managed to slowdown its
progression
Coronavirus daily cases
(Thousands) | |
500 | Argentina |
450 | Brazil |
400 | Chile |
350 | |
300 | Ecuador |
250 | Peru |
200 | Spain |
150 | United |
100 | Kingdom |
50 | United States |
of America | |
0 | |
-5-3-1 1 | 3 5 7 9 11 13 15 17 19 21 23 25 27 29 |
(0= first day with 40 or more total cases)
Chile: accumulated cases
(Thousands)
4000
3500 | Exponetial projection |
CAt= 1.18e0.35t |
3000
2500
2000
1500
1000
500 | Effective cases | ||||||||||
0 | 3-11 | 3-16 | |||||||||
3-10 | 3-12 | 3-13 | 3-14 | 3-15 | 3-17 | 3-18 | 3-19 | 3-20 | 3-213-223-233-243-25 |
4 4
Source: ECDC, Ministry of Health and Santander
Update
Mortality has been low in Chile
Deaths on reaching 900 contagions
(as of March 24th)
Irán | 66 | ||||||||||
China | 41 | ||||||||||
EEUU | 38 | ||||||||||
Japón | 36 | ||||||||||
España | 30 | ||||||||||
Italia | 29 | ||||||||||
Reino Unido | 21 | ||||||||||
Francia | 19 | ||||||||||
Brasil | 18 | ||||||||||
Ecuador | 16 | ||||||||||
Corea del Sur | 12 | ||||||||||
Suiza | 11 | ||||||||||
Chile | 2 | ||||||||||
Alemania | 0 | ||||||||||
0 | 20 | 40 | 60 | 80 |
Number of deaths
50
45
40 | Argentina |
35 | Brazil |
30 | Chile |
25 | Ecuador |
20 | Peru |
15 | Spain |
10 | United |
5 | Kingdom |
United States | |
0 | of America |
-5-2 1 4 | 7 10 13 16 19 22 25 28 |
(0= first day with 40 or more total cases)
5 5
Source: Worldmeter / The coronavirus app and ECDC
Update
Oil price fall favors the terms of exchange
Commodity prices | Terms of Trade | |
400 | Copper (US$/lb) | 120 | 115 |
350 | 100 | 110 | |
300 | |||
250 | 80 | 105 | |
200 | 60 | 100 | |
150 | 40 | 95 | |
100 | |||
50 | Oil WTI (US$/bbl) | 20 | 90 |
0 | 0 | 85 |
(Average 2012-2019=100) |
6 6
Source: CBC and Santander
Update
There is a moderate impact in March's activity
Electric generation
(GWh adjusted by weekends and holidays)
220 | |||
210 | Oct 18th | ||
200 | |||
190 | March 23rd | ||
180 | |||
170 | |||
160 | |||
Aug-19 | Oct-19 | Dec-19 | Jan-20 |
7 7
Source: Electric Coordinator and Santander
Update
Chilean assets have lost less value than other countries
Stock market indices | Currencies |
(Feb 20 = 100) | (Feb 20 = 100) | ||||||||
120 | 140 | ||||||||
110 | |||||||||
130 | |||||||||
100 | |||||||||
90 | 120 | ||||||||
80 | 110 | ||||||||
70 | |||||||||
60 | 100 | ||||||||
50 | 90 | ||||||||
Jan-20 | Feb-20 | Mar-20 | |||||||
Jan-20 | Feb-20 | Mar-20 | |||||||
Chile | Brazil | Mexico | Colombia | Peru | Chile | Brazil | Mexico | Colombia | Peru |
8 8
Source: Bloomberg and Santander
Update
Long-term rates remain relatively low
Nominal long-term interest rates | 5yrs CDS |
(%) | (Basis points) | ||||||||
10 | 420 | ||||||||
8 | 320 | ||||||||
6 | 220 | ||||||||
4 | 120 | ||||||||
2 | 20 | ||||||||
Jan-20 | Feb-20 | Mar-20 | |||||||
Jan-20 | Feb-20 | Mar-20 | |||||||
Peru | Mexico | Colombia | Chile | Brazil | Chile | Peru | Brazil | Colombia | Mexico |
9 9
Source: Bloomberg and Santander
Update
Central Bank cut its MPR to 1% and announced additional measures
Monetary Policy Rate (TPM)
(%)
3.0 | |||
2.5 | |||
2.0 | |||
1.5 | |||
1.0 | |||
0.5 | |||
0.0 | |||
Mar-18 | Jun-19 | Sep-20 | Dec-21 |
TPM Fwd-NS Santander Fwd
Additional measures
- New liquidity facility FCIC
- Corporate bonds accepted as collateral
- Purchase of banks bonds
- Exchange rate intervention program extended up to January 2021
10 10
Source: Bloomberg, CBC and Santander
Fiscal announcements (US$11.8 billion)
- Expenditure increase:
- Health's budget increased by US$1.5 billion (2% PIB)
- Allowance per family (US$ 230) for those without formal jobs
- Solidarity fund (US$100 million) for social emergencies
- Tax cuts
- Transitory reduction of the stamp tax
- Liquidity measures
- Corporate tax provision delayed 3 months
- VTA and local taxes delayed 3 months
- Job protection
- Bill to allow for the continuation of labor relations (salaries paid for by the unemployment insurance system)
- Capitalization of Banco Estado for US$500 million
11 11
Source: Min Hacienda and Santander
CMF announcements
- For the bank
- CMF has suggested the implementation of Basel III could be postponed
- Extension of the term that banks have for the alienation of Goods Received in Payment
- Modification to the treatment of derivatives (capital charge reduction)
- For mortgage loanbook
- Possibility of deferring up to 3 installments in the payment of mortgage loans
- For SMEs and individuals
- Facilities for banks to make loan installments more flexible to SME and individuals up to 6 months, without this being considered a renegotiation
- Possibility of using mortgage guarantee surpluses to guarantee loans to SMEs
12 12
Source: CMF and Santander
AGENDA
CHILE AN UPDATE
SAN CHILE: BALANCE SHEET
SAN CHILE: BUSINESS GROWTH AND RESULTS
13 13
Balance sheet
A universal and diversified bank
% of total loans | % of total contribution | |||
70% | 0.1% | |||
37% | 13% |
Retail | Middle Market | Corporate Investment | Corporate Activities |
Banking (SCIB) |
- Loans: 58% Individuals / 42% Companies
- High diversity by sector. All loans in Chile
- Individuals: focus on growing the middle income, selective growth in lower income
- SMEs: focus on larger SMEs, especially those with balanced income flow (range of products)
- Middel market: Focus on non-credit activities, loans are part of an integrated relationship
- SCIB: Strong focus on non-credit activities
Mining | Fishing | ||
1% | 1% | ||
Forestry | Utilities | ||
1% | |||
1% | |||
Transportation 2% | |||
Construction 3% | |||
Manufacturing 4% | |||
Mortgages | Agro 4% | ||
34% | Services 9% | ||
Consumer Other | Commerce 10% | ||
17% | 12% | ||
14 | 14 | ||
Balance sheet
Solid balance structure and liquidity levels
Structural balance sheet | Liquidity coverage ratio3 |
US$bn Feb. 2019 | |||||||||||
Maturity | 168% | ||||||||||
143% | |||||||||||
128% | 102% | 102% | 109% | 125% | |||||||
Average | |||||||||||
14.3 | Demand | ||||||||||
deposits | 60% | ||||||||||
Regulatory | |||||||||||
Commercial | 2 yrs | minimum | |||||||||
27.0 | |||||||||||
& Consumer | 21 mths 1 | ||||||||||
Lending | Time | ||||||||||
17.1 | |||||||||||
deposits | NSFR4 | ||||||||||
Mortgage | 109.5% | 108.0% | |||||||||
5 yrs | 4 yrs | 2 | Bonds | 105.5% | |||||||
lending | 14.1 | 12.4 | |||||||||
Assets | Liabilities | Dec-18 | Dec-19 | Feb19 | |||||||
15 | 15 |
- Assumes an actual duration for demand deposits of four years. 2. Includes pre-payment estimate. 3. LCR calculated following the new local Chilean models
- Internal methodology and not the local Chilean regulator's guidelines still under discussion
Balance sheet
Maintaining solid liquidity levels
LCR1
230.0%217.0%
210.0% | 183.0% | Under Chilean guidelines |
190.0% | 163.1% | |
170.0% | ||
150.0% |
130.0%
110.0%
90.0%
70.0%
50.0%
148.9%
110.8%
NSFR2
1.14 | 112.7% | |||||||||
1.12 | ||||||||||
110.6% | ||||||||||
1.1 | ||||||||||
1.08 | 105.5% | |||||||||
1.06 | ||||||||||
1.04 | 102.0% | |||||||||
1.02 | ||||||||||
102.9% | ||||||||||
1 | ||||||||||
0.98 | ||||||||||
0.96 | ||||||||||
Jan-15 | Jul-15 | Jan-16 | Jul-16 | Jan-17 | Jul-17 | Jan-18 | Jul-18 | Jan-19 | Jul-19 | Jan-20 |
16 16
1. Liquidity coverage ratio. Jan-15 to Dec-17 under internal models. According to local Chilean regulations from Jan-18. ". Net Stable Funding Ratio according to internal models.
Balance sheet
Positive evolution of funding mix
Total Deposits | Ch$ bn | 2M20 | YoY | |||||
Ch$bn | ||||||||
Demand deposits | 10,499 | 24.4% | ||||||
+7.7% | ||||||||
Time deposits | 14,007 | 8.3% | ||||||
+4.3% | ||||||||
Total Deposits | 24,506 | 14.7% | ||||||
21,809 21,462 22,032 22,868 23,490 24,506 | ||||||||
Mutual funds1 | 7,105 | 21.1% |
Loans/Deposits2 92.5%
Dec-18Mar-19Jun-19Sep-19Dec-19Feb-20 | ||||||||||||||||||||||||||||||||||||||||
Demand deposits by segment | ||||||||||||||||||||||||||||||||||||||||
CLP Time Deposit Cost Evolution3 | ||||||||||||||||||||||||||||||||||||||||
3.13% | Ch$ bn | 12M19 | YoY | QoQ | ||||||||||||||||||||||||||||||||||||
2.86% | 2.61% | |||||||||||||||||||||||||||||||||||||||
2.75% | Individuals | 3,650 | 8.5% | 0.5% | ||||||||||||||||||||||||||||||||||||
2.40% | ||||||||||||||||||||||||||||||||||||||||
2.50% | ||||||||||||||||||||||||||||||||||||||||
2.29% | SMEs | 1,698 | 15.3% | 0.5% | ||||||||||||||||||||||||||||||||||||
1.75% | Retail | 5,348 | 10.7% | 0.5% | ||||||||||||||||||||||||||||||||||||
Middle Market | 2,991 | 14.4% | 2.7% | |||||||||||||||||||||||||||||||||||||
Dec-17 | Feb-18 | Apr-18 | Jun-18 | Aug-18 | Oct-18 | Dec-18 | Feb-19 | Apr-19 | Jun-19 | Aug-19 | Oct-19 | Dec-19 | ||||||||||||||||||||||||||||
Corporate (SCIB) | 1,959 | 55.0% | 13.0% | |||||||||||||||||||||||||||||||||||||
Santander | Chile | BCI | Central Bank Rate | Total6 | 10,297 | 17.8% | 8.8% | |||||||||||||||||||||||||||||||||
17 17
1. Banco Santander Chile is the exclusive broker of mutual funds managed by Santander Asset Management, a subsidiary of SAM Investment Holdings Limited. 2. (Net Loans - portion of mortgages funded with long-term bonds) / (Time deposits + demand deposits). 3. Source: CMF. Quarterly Calculation is based on time deposit in CLP average and interest paid on time deposits in pesos. August rate considers the last 3 months 6. Includes non-segmented deposits
Balance sheet
Evolution of demand deposits versus Banco de Chile
Deposits and other demand deposits
Ch$bn
10,607 10,499
10,297
9,584
8,741
Banco de Chile | Santander | |
18 18
Balance sheet
Loan growth driven by Retail banking
Total Loans | 12M19 | YoY | QoQ | ||||||||||||
Ch$ bn | |||||||||||||||
Ch$bn | +8.1% | ||||||||||||||
Individuals1 | 18.834 | 11,3% | 5,1% | ||||||||||||
+3.2% | Consumer | 5.539 | 13,6% | 9,4% | |||||||||||
30,282 30,600 31,095 31,905 32,732 | 33,788 | Mortgages | 11.263 | 11,0% | 3,3% | ||||||||||
SMEs | 4.085 | 5,7% | 1,1% | ||||||||||||
Retail | 22.919 | 10,3% | 4,3% | ||||||||||||
Middle Market | 8.093 | 5,2% | 1,1% | ||||||||||||
Corporate (SCIB) | 1.672 | (0,6%) | (5,9%) | ||||||||||||
Total2 | 32.732 | 8,1% | 2,6% | ||||||||||||
Dec-18Mar-19Jun-19Sep-19Dec-19Feb-20
19 19
1. Includes other commercial loans to individuals. 2. Includes other non-segmented loans and interbank loans
Balance sheet
Stable asset quality throughout the years
Total loans: NPLs, coverage and cost of risk
118%
Economic Crisis
US and Europe
71% | |
2.7% | 2.8% |
2.4% |
2.4%
Feb 2010 Earthquake in
Maule Chile- 8.8Mw
and destructive Tsunami
148%
2014: Changes to | |||
provisioning | |||
models: Consumer | 2016: Standard | ||
and Commercial | |||
provisioning model | |||
87% | for mortgages (B1). | ||
Higher provisioning | |||
for LTV > 90% | |||
3.1% | Sept 2015:Earthquake in | ||
Coquimbo, Chile - 8.3Mw | |||
2.6% | 2.4% | 2.2% | |
Caso La Polar
Borronazo DICOM
146%
July 2019: Standard provisioning model for SMEs (B1)
1.9%
1.8%
Oct. 2019: Start of | 1.4% |
social unrest |
Jan-20
Oct-19
Jul-19
Apr-19
Jan-19
Oct-18
Jul-18
Apr-18
Jan-18
Oct-17
Jul-17
Apr-17
Jan-17
Oct-16
Jul-16
Apr-16
Jan-16
Oct-15
Jul-15
Apr-15
Jan-15
Oct-14
Jul-14
Apr-14
Jan-14
Oct-13
Jul-13
Apr-13
Jan-13
Oct-12
Jul-12
Apr-12
Jan-12
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
NPL (1) | Cost of Risk (3) | Coverage (2) | 20 | ||
20 |
1. Loans with 90 days or more overdue. 2. Stock of provisions divided by NPLs.. 3. Quarterly cost of risk = quarterly provision expense/ quarterly average loans.
Balance sheet
Deterioration of asset quality in periods of stress improving
Total loans
% of loans
124% | 146% | 138% 149% | ||||||||||
72% | ||||||||||||
2.8% | 3.0% | 2.2% | ||||||||||
1.8% | ||||||||||||
2.5% | 2.6% | 2.4% | 1.8% | |||||||||
Mar-09 | Dec-09 | Sep-10Jun-11 | Mar-12Dec-12 | Sep-13 | Jun-14 | Mar-15 | Dec-15 | Sep-16 | Jun-17 | Mar-18 | Dec-18Sep-19 | Feb-20 |
NPL(1) | Cost of risk (2) | Coverage ratio (3) | ||||||||||
Consumer loans | ||||||||||||
% of loans | ||||||||||||
279% | 319% | 323% 363% | ||||||||||
121% | ||||||||||||
13.1% | 11.1% | |||||||||||
6.6% | ||||||||||||
6.0% | ||||||||||||
5.3% | 3.4% | 2.0% | 1.6% | |||||||||
Mar-09 | Dec-09 | Sep-10Jun-11 | Mar-12Dec-12 | Sep-13 | Jun-14 | Mar-15 | Dec-15 | Sep-16 | Jun-17 | Mar-18 | Dec-18Sep-19 | Feb-20 |
NPL(1) | Cost of risk (2) | Coverage ratio (3) |
Commercial loans
% of loans
145% | 136% | ||
111% | 116% | ||
74% | 2.3% | 2.4% 2.3% | |
2.2% | |||
2.6% | 73% | 2.8% | 1.8% |
1.2% | |||
1.2% | ||||||||||||||
0.6% | ||||||||||||||
Mar-09 | Dec-09 | Sep-10Jun-11 | Mar-12 | Dec-12Sep-13Jun-14Mar-15Dec-15 | Sep-16 | Jun-17 | Mar-18 | Dec-18 | Sep-19 | Feb-20 | ||||
NPL(1) | Cost of risk (2) | Coverage ratio (3) | ||||||||||||
Mortgage loans
% of loans
43% | 50% | 48% | |||||||||||||
14% | 14% | 2.9% | |||||||||||||
2.7% | 1.2% | 1.7% | 1.2% | ||||||||||||
0.4% | |||||||||||||||
0.5% | 0.4% | ||||||||||||||
Mar-09 | Dec-09 | Sep-10 | Jun-11 | Mar-12 | Dec-12 | Sep-13 | Jun-14 | Mar-15 | Dec-15 | Sep-16 | Jun-17 | Mar-18 | Dec-18 | Sep-19 | Feb-20 |
NPL(1) | Cost of risk (2) | Coverage ratio (3) |
21 21
1. 90 days or more NPLs. 2. Quarterly cost of risk = quarterly provision expense/ quarterly average loans. 3. Loan loss reserves over NPLs, includes additional consumer provisions of Ch$ 20 billion in 3Q18 and provisions due to new provisioning model for commercial loans analyzed on a group basis for Ch$ 31 billion in 3Q19 and additional provisions of Ch$ 16 billion in 4Q19 for the consumer loan book
Balance sheet
A better client mix through derisking
Composition of loans to individuals
72.0% | 74.8% | ||||||
69.2% | |||||||
66.4% | |||||||
64.2% | |||||||
61.2% | |||||||
59.4% | |||||||
55.1% | |||||||
37.3% | 33.6% | ||||||
32.5% | 30.6% | 29.3% | |||||
27.8% | 26.2% | ||||||
24.0% | |||||||
7.6% | 7.1% | 6.5% | 5.4% | 4.3% | 3.1% | ||
1.9% | 1.3% | ||||||
Dec-12Jun-13 | Dec-13Jun-14 | Dec-14Jun-15 | Dec-15Jun-16Dec-16Jun-17 | Dec-17Jun-18Dec-18Jun-19Dec-19 | |||
High income | Middle income | Mass income |
22 22
Balance sheet
Consistently improving our asset quality
Consumer NPLs1
% of loans; base = 100 as of Dec. 2015
200
150
100
Santander Chile BCI
171
141
56
50
Dec-15 | Jun-16 | Dec-16 | Jun-17 | Dec-17 | Jun-18 | Dec-18 | Jun-19 | Dec-19 |
Consumer Impaired loans 2
% of loans; base = 100 as of Dec. 2015
150
130
110
90
70
110
90
50 | 63 | |||
Dec-15 | Dec-16 | Dec-17 | Dec-18 | Dec-19 |
23 23
1. 90 days or more NPLs. 2.Impaired NPLs + restructured loans. 3. Provisions/NPLs Source: CMF
Balance sheet
Sustainable capital ratios
Core capital | BIS Ratio | |
10.9% 10.3% 10.5% 11.0% 10.6% 10.1%
14.0% 13.2% 13.4% 13.9% 13.4% 12.9%
Dec-14Dec-15Dec-16Dec-17Dec-18Dec-19 | Dec-14Dec-15Dec-16Dec-17Dec-18Dec-19 |
We recently decided to adjust our payout this year to 30% from 60% originally. This in order to maintain our internal limit of reaching a core capital ratio above 10%.
24 24
AGENDA
CHILE AN UPDATE
SAN CHILE: BALANCE SHEET
SAN CHILE: BUSINESS GROWTH AND RESULTS
25 25
Business growth and results
Clients: moving forward in our innovations
Challenge
Offer transactional products with access to digital economy
Increase SME access to banks
and to digital economy
Enter the car loan market, creating synergies with other bank products, creating synergies with other bank products
Reactivate loan growth within
mass segment
Continue expanding cross- selling with our clients with better products
Offer differentiated and specialized service to gain loyalty
Approach
Acquiring
Wealth management
Progess
More than 18,000 clients. Launch during 1H20
Agreement with Evertec. First operation in Dec. 2019. Operations begin 1H20
Transaction complete. Acquired in November 2019 Adquirido en noviembre 2019
Over 136,800 new clients, including 58,000 through Life
Approval received for the first open digital platform to sell insurance. Launch during 1H20
New private banking model to be launched 1H20
We have announced an investment plan of US$380 million for the period of 2019-2021 in technology,
branch upgrading and new products and services.
26 26
Business growth and results
Clients: moving forward in our innovations
Business growth and results
Santander: Measures to confront coronavirus
US$6.000mm
Delay your installment
- Product available since October 2019 after social unrest
- Geared towards clients in default or up to 89 days late in their payments
- List of eligible clients selected and approved by risk department
- Enables to delay up to 6 installments
- Installments are capitalized in new payment schedule
- Insurance will cover the whoke life of the loan
Delay consumer installments
- New product
- For all clients that want to reprogram their debts
- Can be taken out on the internet, with one click
- Term of up to 60 months
- 3 months grace period
Refinance digitally
- Product available since 2019
- Clients who are complicated or with delay in payments can refinance their consumer loans, card loans, or credit line
- Client refinances all debt into one
One-on-one financial
assistance and refinancing
- There is no one-size-fits-all solution for all SMEs
- Personalized solution for each client
Business growth and results
Results as of February 2020
Ch$ mn | 2M20 | YoY |
Net interest income | 247,698 | 18.5% |
NIM1 | 4.0% | +24bp |
Fees | 52,356 | 13.0% |
Financial transactions | 20,795 | 31.8% |
Provisions | (61,288) | 22.6% |
Cost of credit2 | 1.1% | +12bp |
Operational expenses | (123,008) | 4.7% |
Efficiency ratio3 | 38.7% | -479bp |
Net income attributable to | 106,896 | 39.1% |
shareholders | ||
ROE | 18.9% | +480bp |
29 29
1. Annualized Net interest income annualized divided by average interest earning assets. 2. Provision expense annualized divided by average interest earning assets 3. Efficiency ratio: Oper. Expense excluding other operating expenses / Net interest income + fee income + financial transactions, and Other operating income, net
Business growth and results
Strong growth in new clients
Quarterly new gross accounts1
84,447 | 87,623 |
74,617 |
42,312 40,703 47,128
Dec-18 | Mar-19 | Jun-19 | Sep-19 | Dec-19 | Mar-20 |
During the 1Q20 we opened 115% more accounts than in 1Q19 despite the social conflict and coronavirus, reflecting the strength of our brand and digital channels
22% | Current account openings 12M192 |
Market share of | 27.4% | New current accounts | Market share | ||||
current accounts2 | |||||||
100.0 | |||||||
90.0 | 95.0 | 25.00% | |||||
80.0 | 14.2% | 13.1% | 16.2% | 20.00% | |||
27% | 70.0 | 11.0% | |||||
60.0 | 9.8% | 15.00% | |||||
50.0 | 4.5% | 56.1 | |||||
40.0 | 49.4 | 10.00% | |||||
Market share of | 30.0 | 45.6 | 38.3 | 5.00% | |||
current account | 20.0 | 34.1 | |||||
10.0 | 15.7 | 0.00% | |||||
openings2 | |||||||
0.0 | -5.00% | ||||||
30 | 30 |
1. Include current accounts, Life and Superdigital. First quarter of 2020 is data from January and February 2020 quartered. 2. Market share with information published by the CMF
Business growth and results
Higher inflation and lower cost of funds drives recovery in NIMs
NIM1 & Inflation
5.0% | 6.50% | ||||||
4.5% | 4.4% | 4.4% | 4.0% | 4.2% | |||
3.9% | 5.50% | ||||||
4.0% | |||||||
3.5% | 3.00% | 4.0% | 4.50% | ||||
3.0% | 2.75% | 2.50% | 3.50% | ||||
2.5% | 2.00% 1.75% | 2.50% | |||||
2.0% | 1.00% | ||||||
1.50% | |||||||
1.5% | 1.2% | ||||||
0.9% | 0.50% | ||||||
1.0% | 0.8% | 0.0% | 0.5% | 1.0% | |||
0.5% | |||||||
-0.50% | |||||||
4Q18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | 1Q20 | ||
NIM (1) | MPR (2) | UF |
Net interest income
Ch$ bn | 2M20 | YoY |
Net interest income | 247.7 | 18.5% |
Average interest-earning assets | 36,758 | 11.5% |
Average loans | 33,315 | 9.5% |
Interest earning asset yield3 | 6.5% | +112bp |
Cost of interest bearing liabilities4 | 2.5% | +84bp |
NIM YTD | 4.0% | +24bp |
31 31
1. Annualized Net interest income divided by average interest earning assets. 2. MPR: Monetary Policy Rate. 3.Annualized gross interest income divided by average interest earning assets. 4. Annualized interest expense divided by sum of average interest bearing liabilities and demand deposits.
Business growth and results
Inflation picking up and yield curve increasing slope
Central Bank nominal 10-year notes, Monetary Policy Rate and UF Inflation1
%
Long-term rates fell faster than short- | Now the slope of long-term is | ||
increasing while the MPR has | |||
term rate, which promoted the | decreased. Inflation has also | ||
5 | refinancing of mortgages | increased | |
4.5 | 4.25 | 4.03 | 6.5% |
3.89 | |||
4 | 3.42 |
3.5 | 5.5% |
3.46 | |
3 | 2.51 |
4.5% |
2.5
2
1.5
1
0.5
3.00
2.50 | 3.7% | |||
2.00 | 3.5% | |||
1.75 | ||||
2.9% | 1.00 | |||
2.8% | 2.5% | |||
2.4% | 2.2% | 2.3% |
0 | 1.5% | |||||||||||||||
CHBCP10Y | MPR | 12M UF Inflation | 32 | |
32 |
1. Source: Bloomberg
Business growth and results
Larger provisions for robust coverage
Cost of risk1 | Provision for loan losses | ||||||||
% | |||||||||
1.9% | |||||||||
1.5% | Ch$ bn | 2M20 | YoY | ||||||
1.7% | |||||||||
1.0% | |||||||||
Gross provisions and write- | |||||||||
1.0% | 1.0% | (77,855) | 22.4% | ||||||
1.1% | offs | ||||||||
1.1% | Recoveries | 16,567 | 21.9% | ||||||
Provision for loan losses | (61,288) | 22.6% | |||||||
Cost of risk(YTD)1 | 1.10% | +12bp | |||||||
4Q18 1Q19 2Q19 3Q19 4Q19 1Q20
Cost of risk | Adjusted cost of risk2 |
33 33
1. Provision expense annualized divided by average interest earning assets. For 1Q20, months of January and February turned into quarter. 2. Adjusted cost of risk for the change in the provisioning model for SMEs for Ch$ 31 billion in 3Q19 and Ch$16 billion in additional provisions for consumer in 4Q19.
Business growth and results
Non-interest income: Client driven
Fees & financial transaction
Ch$bn
109.5 | 117.0 | 136.4 | 131.1 | +18.9% | ||
38.8 | 49.0 | 64.7 | 54.4 | 67.1 | 79.8 | |
27.4 | ||||||
20.8 | ||||||
70.7 | 68.0 | 71.7 | 76.7 | |||
46.3 | 52.4 | |||||
Net fee income | Financial trx | |
Fees
Ch$ mn | 2M20 | YoY |
Checking accounts | 5,856 | (0.7%) |
Lines of credit | 1,106 | 5.3% |
Credit, debit & ATM card fees | 12,220 | 27.4% |
Collection fees | 7,356 | 34.7% |
Asset management | 7,931 | 10.4% |
Guarantees, pledges and other | ||
contingent operations | 5,954 | 2.3% |
Insurance brokerage | 7,521 | 4.7% |
Fees from brokerage and | ||
custody of securities | 2,128 | 49.1% |
Other Fees | 2,284 | (15.4%) |
Total | 52,356 | 13.0% |
Financial transactions, net
Ch$ mn | 2M20 | YoY |
Client | 26,436 | 17.0% |
Non-Client | 936 | --% |
Total | 27,372 | 31.6% |
34 34
Business growth and results
Investing to improve productivity and efficiency
Operational expenses
Ch$bn
500 | 46.0% | ||||||
450 | 43.5% | ||||||
42.5% | 44.0% | ||||||
400 | |||||||
42.0% | |||||||
350 | 40.3% | ||||||
39.3% | 38.7% | 40.0% | |||||
300 | 38.3% | ||||||
250 | 38.0% | ||||||
200 | 180 | 192 | 189 | 189 | +4.7% | ||
36.0% | |||||||
150 | 117 | 123 | |||||
34.0% | |||||||
100 | |||||||
32.0% | |||||||
50 | |||||||
0 | 30.0% | ||||||
1Q19 | 2Q19 | 3Q19 | 4Q19 | Jan-Feb | Jan-Feb | ||
19 | 20 |
Ch$ bn | 2M20 | YoY |
Personnel expenses | 63.3 | 5.8% |
Administrative | 41.2 | 2.3% |
expenses | ||
Depreciation | 18.5 | 6.4% |
Operational expenses | 123.0 | 4.7% |
Efficiency ratio | 38.7% | -480bp |
Costs/assets | 1.4% | -40bp |
Expenses Efficiency
35 35
1. Gastos operativos excluye deterioro y otros gastos operativos 2. Ratio de eficiencia: Gastos operativos excluyendo deterioro/ Margen financiero + comisiones transacciones financieras, y otros ingresos operativos, netos
Conclusions
A difficult outlook but well positioned
- The Central Bank and CMF have launched a series of initiatives that will help to maintain liquidity and capital levels. Measures are also coming to give people relief, which will help asset quality
- The Bank has worked profoundly on its asset quality metrics in the last decade which can help to absorb the expected impacts to asset quality
- Liquidity levels are sound and deposit growth has been high
- Loan growth should decelerate with a focus on medium and larger corporates with renegotiation program for individuals and SMEs
Client growth has remained strong through digital channels
Capital ratios are healthy. Payout lowered to 30% proactively
Results as of February were strong. Higher inflation, lower rates, client growth and cost control should help to offset higher cost of credit in the rest of the year
36 36
Thank you.
Our purpose is to help people and business prosper.
Our culture is based on believing that everything we do should be:
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Banco Santander-Chile published this content on 26 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 March 2020 18:02:06 UTC