Banco Santander
Chile Announces Third Quarter 2018 Earnings
Santiago, Chile, October 31, 2018.
Banco Santander Chile (NYSE: BSAC; SSE: Bsantander) announced today
its unaudited results[1] for the
nine month period end September 30, 2018 (9M18) and third quarter
2018 (3Q18).
Net income
attributable to shareholder increased 1.2% YoY. ROAE 9M18 of
19.0%
Net income
attributable to shareholders accumulated up to September 2018
totaled Ch$435,258 million, increasing 1.2%, with a ROAE of 19.0%
year-to-date (YTD). Net income attributable to
shareholders in 3Q18 totaled Ch$129,727
million (Ch$0.69 per share and US$0.42 per ADR), decreasing 16.0%
compared to 2Q18 (from now on QoQ) and decreasing 5.5% compared to
3Q17. The lower results in 3Q18 was mainly due to the one-time
recognition of Ch$20,000 million of additional provisions before
tax .
Loan growth accelerating to 2.5%
in the quarter and 8.0% YoY
Total loans
increased 8.0% YoY and 2.5% QoQ in 3Q18, driven by greater economic
activity, a higher level of investment and greater business
confidence. This has led to strong commercial growth with loans in SCIB[2]
increasing 4.1% QoQ and loans in the
Middle-market growing 3.1% QoQ and 15.1% YoY as these companies
increase their activities and need for funding. Loan growth in
Retail banking also accelerated in the quarter
and increased 2.1% QoQ and 6.9% YoY with growth from Loans to individuals growing 2.4% QoQ and 8.2%
YoY.
Demand deposits increase 9.8%
YoY
In 3Q18, the Bank's total deposits
decreased 0.2% QoQ and increased 4.5% YoY. The Bank's non-interest
bearing demand deposits continued to grow strongly, reaching an
increase of 9.8% YoY and a slight decrease since June 2018.
In 3Q18 time deposits grew 1.5% YoY and 0.8% QoQ, as we focused on
controlling the cost of deposits in light of rising short-term
interest rates. The Bank's liquidity levels remained healthy
in the quarter. Our LCR ratio reached 131.8%
and the NSFR ratio reached 108.4% as of
September 30, 2018.[3]
Capital ratio rises 20bp QoQ to
10.2%. New Banking Law approved by Congress
The Bank's capital ratios remained solid with the
core capital ratio[4] at
10.2% and the total BIS ratio[5]
at 13.0% as of September 30, 2018.
During September 2018 the new banking law reform
was approved by Congress and is now awaiting the final presidential
approval. The main changes to the banking law are: i) the creation
of a new regulatory body for the financial system; and ii) new
capital regulation for banks in Chile in line with Basel III
standards.
NIM down to 4.4%
in 3Q18. NIM net of risk increased to 3.5% in the quarter
The Bank's net
interest margin (NIM)[6] in 3Q18
reached 4.4% in 3Q18 compared to 4.5% in 2Q18. Loan growth
continues to be driven by SCIB, Middle Market and mortgages that
are generally lower yielding than consumer loans, but also less
risky. As a result, the Bank's NIM net of risk (excluding one-time
provision charge) increased slightly to 3.5% in 3Q18.
Asset quality
stable. One-time charge of Ch$20,000 million in additional
provisions.
Anticipating future changes to our consumer
expected loss model, the Bank recognized a one-time charge of Ch$20,000 million as additional
provisions for consumer loans. Adjusting the provisions to exclude
this one-time charge, the provisions for loan losses increased 6.1%
compared to 3Q17 and decreased 4.5% compared to 2Q18 and the
adjusted cost of credit[7]
remained stable at 1.0% of loans. The total NPL
ratio remained stable at 2.2% as of September 2018 and the
impaired loan ratio decreased 45bp YoY and 18bp QoQ to 6.0%. The
slight improvement in both the NPL and impaired loan ratio, along
with a lower expected loss ratio, reflects the more positive
economic trends in Chile in 2018 and loan growth in lower risk
segments. The Total Coverage ratio (including
the effect of the additional provisions) reached 124.7% in the
quarter.
Positive fee
growth from business segments offset by lower collection
fees
In 3Q18, fee income increased 1.5% compared to
3Q17 and decreased 12.3% compared to 2Q18. The QoQ decrease was
mainly due to lower collection of mortgage related fees. On the
other hand, Fees in Retail banking increased
7.2% compared to 3Q17 and 1.7% compared to 2Q18. Client loyalty
continues to rise in retail banking with loyal individual customers
(clients with >4 products plus minimum usage and profitability
levels) in the High-income segment grew 6.7% YoY and loyal
Mid-income earners grew 7.5% YoY. Fees in the
Middle-market increased 2.8% compared to 3Q17 and 1.5% compared
to 2Q18. Customer loyalty has also been expanding with Loyal
Middle-market and SME clients growing 5.6% YoY. Fees in SCIB increased 62.5% compared to 2Q18 and 10.7%
compared to 2Q18. In the quarter, the Bank saw important fee income
from various financial advisory projects, as well as a positive
quarter in cash management services.
Results from financial
transactions, net recovering in the quarter
In 3Q18, the results from total financial transactions, net was a
gain of Ch$27,531 million in 3Q18, an increase of 48.3% compared to
2Q18. The improved QoQ results in 3Q18 was mainly driven by a 65.1%
increase in Non-client treasury income in the quarter, as local
medium and long-term rates were more stable, resulting in higher
result from our ALM liquidity portfolio.
Low cost
growth driven by improvements in productivity and
digitalization
In 3Q18, Operating
expenses, excluding Impairment and Other operating expenses
decreased 2.4% QoQ and increased 1.5% YoY. The efficiency ratio[8] in 3Q18
reached 40.8%. In 9M18, the Bank's efficiency ratio reached 40.0%
compared to 40.2% in the same period of last year. The improvement
of the efficiency ratio is mainly due to the various initiatives
that the Bank has been implementing to improve productivity and
efficiency through digitalization.
About Banco
Santander
Banco Santander Chile is the largest Bank in the
Chilean market in terms of assets, loans and equity. As of
September 30, 2018, we had total assets of Ch$38,026 billion
(U.S.$57.9 billion), outstanding loans net of allowances for loan
losses of Ch$29,153 billion (U.S.$44.4 billion), total deposits of
Ch$20,762 billion (U.S.$ 31,613 billion) and equity of Ch$3,129
billion (U.S.$4.8 billion). We have 377 branches, 769 ATMs, and
11,439 employees. Our BIS ratio up to September 30, 2018 was 13.0%,
with a core capital ratio of 10.2%. Our long-term credit risk
rating are A1 by Moody's, A Fitch and A Standard &
Poor's.
[1] The
information contained in this report is unaudited and is presented
in accordance with Chilean Bank GAAP as defined by the
Superintendency of Banks of Chile (SBIF).
[2].Santander
Corporate and Investment Banking formerly GBM.
[3].LCR=
Liquidity Coverage Ratio under ECB rules. These are not the Chilean
models. NSFR= Net Stable Funding Ratio according to internal
methodology.
[4]. Core
Capital ratio = Shareholders' equity divided by Risk-weighted
Assets (RWA) according to SBIF BIS I definitions.
[5]. BIS ratio:
Regulatory capital divided by RWA.
[6]. NIM = net
interest margin or net interest income divided by average interest
earning assets.
[7]. Adjusted
cost of credit = Annualized provision for loan losses (adjusted to
exclude the additional provision of Ch$20,000 million in 3Q18) /
YTD average total loans. Averages are calculated using monthly
figures.
[8] Efficiency
ratio= =(Net interest income+ net fee and commission income
+financial transactions net + Other operating income +other
operating expenses) divided by (Personnel expenses + administrative
expenses + depreciation). Excludes impairment charges
This
announcement is distributed by West Corporation on behalf of West
Corporation clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Banco Santander-Chile via Globenewswire
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