Banco Santander Chile (NYSE: BSAC; SSE: Bsantander) announced today
its resultsi for the nine-month period ended September 30, 2023,
and third quarter 2023 (3Q23).
ROAE1 of 10,4% in 9M232, with a solid net
contribution from business segments that increases 33.0%.
As of September 30, 2023, net income
attributable to shareholders reached Ch$319,486 million ($1.70 per
share and US$ 0.76 per ADR), decreasing 54.8% compared to the same
period last year and with an ROAE of 10.4%. This lower result was
mainly due to the impacts perceived in the NIM3 produced by the
deceleration of inflation, especially in the third quarter, and
higher interest rates that reduced the return on assets in UF and
increased the funding costs.
The net contribution of our business segments
continues to be very strong, increasing 33.0% YoY4. Specifically,
the Retail Banking segment increased 21.6% YoY with total revenues
increasing 20.8% YoY. The net contribution of the Middle-market
segment increased 27.3% YoY, with an increase in total revenues of
18.8% YoY. Finally, the net contribution of our Corporate and
Investment Banking (CIB) unit grew 68.3% YoY, driven by a 43.6% YoY
increase in total revenues.
Net income from fees increases 29.6% in 9M23,
with the recurrence5 ratio reaching 56.8%.
Net commissions have followed a positive
trajectory in recent years, strongly influenced by the increase in
customers, both individuals and Small and Medium sized companies
(SMEs), which have boosted the cross-selling of our products.
During 9M23, net commissions increased 29.6% YoY, with positive
variations in all lines, but to a greater extent in card fees,
insurance brokerage, Getnet and others. Within this last item,
commissions for financial advisory services are considered, which
have increased in recent months due to good business from CIB.
During 3Q236, commissions fell 10.6% QoQ7mainly due to one-time
commissions due to good CIB business and a release of provisions
related to the insurance brokerage contract in the “Others”
item.
Top 1 in NPS among our main Chilean peers
The first pillar of our strategy is based on
cutting-edge technology and customer-focused processes and
products. We are building a bank with strengths in digital channels
that already allows digital onboarding in a safe, fast and
user-friendly way, offering our Life and Más Lucas accounts for the
mass segment and the PYME (SME) Life account and payment services
through Getnet for small and medium-sized businesses and
entrepreneurs. These initiatives not only encourage our clients to
become more digital, they are also managing to increase financial
inclusion in these segments and supporting them with transaction
services, with the potential to extend the offer of other products
and financing options.
As a result of all our efforts, our clients are
the most satisfied with us. As of September 30, 2023 our NPS
reached 58 points, and our digital channels continue to be our
strength, with our website with an NPS of 71 and the App with
70.
Issuance of the first green bond under our ESG Framework to
finance green mortgages
In mid-October, the bank placed its first green
bond under its ESG Framework which incorporates ESG criteria
focusing on the green mortgage product. The objective of the
transaction is to refinance or finance new operations of this
product, which is offered by the Bank for the purchase of homes,
based on energy efficiency certifications existing in the industry,
and which benefits clients with a preferential rate. This is the
first green bond with use of funds for green mortgages in the
country. The issue was for JPY 8,000 million, equivalent to US$ 53
million, with a rate of 0.845% and a term of two years.
Loan growth led by retail
bankingRetail banking loans grew 1.6% QoQ and 4.1% YTD.
Consumer loans increased 0.5% QoQ and 3.0% YTD. Between the end of
2019 and 2021 credit card loans decreased 7.0% as clients reduced
large purchases such as travel and hotels which fuels credit card
loans. At the same time many clients paid off credit card debt with
the liquidity obtained from government transfers and pension fund
withdrawals. At the end of 2022, as household liquidity levels
returned to normal and holiday travel resumed credit card loans
began to grow again, increasing the total balance compared to pre
pandemic levels. In the last quarter we have seen a slight decrease
in loans through credit cards, because clients are preferring
consumer installment loans, reflecting a better planning of their
debt.
Origination of new mortgage loans has fallen as
inflation and rates remain high, however, in the quarter mortgage
loans once again grew stronger than inflation, reaching a growth of
1.5% QoQ and 5.9% YTD in the way clients adjust to market
conditions.
Total deposits increase 1.4% QoQ as the
Bank takes advantage of the inverted yield curveThe Bank's
total deposits increased 1.4% QoQ and 5.5% YTD. The increase was
driven by time deposits that increased 5.1% QoQ and 20.6% YTD,
mainly in the CIB segment, because high rates led our clients to
switch to more attractive deposits explaining the decrease of 2.8%
QoQ and 8.4% YTD of demand deposits. Our clients' investments
through mutual funds intermediated by the Bank also grew in the
quarter, reaching an increase of 8.7% QoQ and 19.1% YTD.
The bonds increased 3.5% QoQ and 8.6% YTD.
During the first 9M23, the Bank has placed bonds for UF3.9 million,
CLP $403,150 million, US $30 million and JPY $17,500 million,
taking advantage of attractive opportunities in the different fixed
income markets at a national and international level.The Bank's
Liquidity Coverage Ratio (LCR), which measures the percentage of
liquid assets over net cash outflows, as of September 30, 2023, was
192.8%, well above the minimum. As of the same date, the Bank's Net
Stable Funding Ratio (NSFR), which measures the percentage of
illiquid assets financed through stable funding sources, reached
104.4%, also well above the current regulatory minimum established
for this index.
Solid capital levels with a CET1 of
10.7% Our CET1 ratio remains solid at 10.7% and the total
Basel III ratio reaches 17.1% at the end of September 2023.
Risk-weighted assets (RWA) increased 4.9% YTD
and 2.9% QoQ. We are actively seeking to reduce our market
risk-weighted assets through netting and novation of our
derivatives portfolio, resulting in a 2.3% decrease this quarter.
This was offset by higher credit risk-weighted assets due to the
effect of the depreciation of the Chilean peso on our foreign
currency portfolio.
At the same time, basic capital increased
slightly by 0.6% QoQ mainly due to lower growth in results and an
increase of 1.5% YTD which considers the payment of dividends
authorized at the last shareholders meeting in the month of
April.
Income from interest and readjustment
fall QoQ due to lower inflation (UF variation)Year to date
net interest income and readjustments (NII) as of September 2023
decreased by 43.8% compared to the same period in 2022. This
decrease in NII was mainly due to lower inflation in the period, a
higher funding cost caused by a higher MPR and to a lesser extent
by our financial investments held to maturity that are at a fixed
rate. The above is partially offset by a higher spread earned on
deposits.
Net income from readjustments decreased 43.8% in
9M23 compared to the same period in 2022, given that the variation
in the UF reached 3.1% in 9M23 compared to 10.5% in the same period
in 2022. The UF GAP is significantly lower in 9M23 compared to
9M22, decreasing 21.8%, in line with lower inflation
expectations.
The Bank has a shorter duration of
interest-bearing liabilities than interest-bearing assets, so our
liabilities recognize the change in prices more quickly than our
assets. During the third quarter of 2023, the Central Bank began to
cut the MPR from 11.25% to 10.25% at the end of July to 9.50% in
September. Given this, net interest income increased by 3.9% in
9M23 compared to 9M22. Despite the above, the effect of a lower
inflation has been significantly greater, decreasing the MIN from
3.7% as of September 30, 2022 to 2.0% as of September 30, 2023.
Cost of credit of 1.20% YTD and coverage
of 158.0%During the Covid-19 pandemic, asset quality
benefited from state aid and pension fund withdrawals, resulting in
a positive evolution of asset quality during that period.
Currently, with an economy that continues to slow down and with the
excess household liquidity that we had during the pandemic almost
completely drained, asset quality is returning to pre-pandemic
levels. Given the above, in 3Q23, the non-performing loan ratio
(NPL) increases from 1.7% in 3Q22 to 2.3% in 3Q23. On the other
hand, the impaired portfolio ratio increases from 4.4% in 3Q22 to
5.5% in 3Q23. Finally, the expected loss ratio (provisions for
credit risk divided by total loans) remains more stable, increasing
to 2.8% in 3Q23, from 2.6% in 3Q22 as a result of higher provisions
made in the last periods.
In the quarter, the expense for credit losses
increased 2.9% QoQ due to special provisions for credit risk
established in the quarter, which was partially offset by an
increase in recoveries by 9.5% QoQ. Finally, the expense of
provisions for credit risk for banks and loans and accounts
receivable from clients remains stable. With these results, the
cost of credit in 3Q23 increased slightly from 1.19% in 2Q23 to
1.22% in 3Q23. The non-performing loan coverage ratio decreased to
158.0% in 3Q23.
Solid client treasury income with net
financial results increasing 51.5% in 9M23Net financial
results recorded a profit of Ch$ 243,545 million in 9M23, an
increase of 51.5% compared to 9M22, mainly due to higher gains on
financial assets and liabilities for trading. In 3Q23, net
financial results decreased 4.4% QoQ due to a higher loss on
financial assets and liabilities for trading in the quarter, which
was offset by a higher gain on exchanges, readjustments and foreign
currency hedge accounting.
Operating expenses decreased 7.7% in
9M23, demonstrating the solid cost control in the
yearOperating expenses decreased 7.7% in 9M23 compared to
the same period in 2022 demonstrating solid cost control in the
quarter as the Bank continues to improve its productivity levels.
In 3Q23 operating expenses increased 4.4% QoQ due to higher
personnel expenses.
The Bank's efficiency ratio reached 48.0% as of
September 30, 2023, higher than the 40.4% in the same period last
year, due to lower growth of our operating income. On the other
hand, the ratio of costs to assets is 1.3% in 9M23.
The Bank continues to advance in the execution
of its investment plan of US$260 million for the years 2023-2025
with a focus on digital initiatives both on the front and
back-end.
Our earnings webcast will be held on
Friday, November 3, 2023 at 10am New York time. For more
information please visit our website.
Banco Santander Chile is the largest bank in the
Chilean market in terms of loans and assets. As of September 30,
2023, we had total assets of Ch$ 72,490,744 million (U.S.$ 81,500
million), outstanding gross loans (including interbank loans) at
amortized cost of Ch$ 40,139,445 million (U.S.$ 45,128 million),
total deposits of Ch$ 28,555,320 million (U.S.$ 32,104 million) and
shareholders’ equity of Ch$ 4,192,619 million (U.S.$ 4,714
million). The BIS capital ratio as of September 30, 2023, was
17.1%, with a core capital ratio of 10.7%. Banco Santander Chile is
one of the companies with the highest risk classifications in Latin
America with an A2 rating from Moody's, A- from Standard and
Poor's, A+ from Japan Credit Rating Agency, AA- from HR Ratings and
A from KBRA. All ratings have a Stable Outlook.
CONTACT INFORMATIONCristian VicuñaChief
Strategy Officer and Head of Investor RelationsBanco Santander
ChileBandera 140, Floor 20Santiago,
ChileEmail: irelations@santander.clWebsite: www.santander.cl
1. Return on Average Equity. Annualized net income
attributable to shareholders divided by average equity attributable
to shareholders.
2. Nine months accumulated as of September 30, 2023.
3. NIM: Net interest margin. Annualized net income from
interest and readjustments divided by interest earning assets.
4. Year on year, the nine months accumulated as of
September 30, 2023 compared to the nine months accumulated as of
September 30, 2022.
5. Recurrence: Net fees divided by operating expenses.
6. Third quarter of 2023.
7. Current quarter compared with last quarter.
i The information contained in this report is presented in
accordance with Chilean Bank GAAP as defined by the Financial
Markets Commission (CMF).
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