Banco Santander Chile (NYSE: BSAC; SSE: Bsantander) announced today
its resultsi for the six-month period ended June 30, 2023, and
second quarter 2023 (2Q23).
Solid net contribution from business
segments that increases 38.8%.
The net contribution of our business segments
continues to be very strong, increasing 38.8% YoY1. Specifically,
the Retail Banking segment increased 21.0% YoY with total revenues
increasing 20.8% YoY. The net contribution of the Middle-market
segment increased 38.0% YoY, with an increase in total revenues of
21.6% YoY. Finally, the net contribution of our Corporate and
Investment Banking (SCIB) unit grew 84.5% YoY, driven by a 53.0%
YoY increase in total revenues.
As of June 30, 2023, net income attributable to
reached Ch$262,870 million ($1.39 per share and US$ 0.70 per ADR),
decreasing 49.6% compared to the same period last year (and with an
ROAE2 of 12.9%. This result was mainly due to the impacts perceived
in the NIM3 produced by the deceleration of inflation and higher
interest rates that reduced the return on assets in UF and
increased the funding costs.
Net income from fees increases 38.5% in
6M234, with the
recurrence5 ratio reaching
60.6%.
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 2Q236, net commissions increased 4.6% QoQ7 and 38.5% YoY,
with positive variations in all lines, but to a greater extent in
card commissions, 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 SCIB.
Loan growth led by consumer
loansTotal loans increased 0.6% QoQ and 1.3% YTD, mainly
driven by the retail segment, by mortgage loans and consumer loans.
Consumer loans increased 1.3% QoQ and 2.4% from December 31, 2022.
This it was driven by a 2.1% QoQ increase in credit cards. 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.
Origination of new mortgage loans has fallen as
inflation and rates remain high, therefore the mortgage portfolio
growth of 2.4% QoQ and 4.3% from December 31, 2022 is due to the
indexation of this loan book to the UF, growing slightly above the
value of the UF.
Total deposits increase 3.8% QoQ as the Bank takes
advantage of the inverted yield curve
The Bank's total deposits increased 0.3% QoQ and
4.1% since December 31, 2022. The increase was driven by time
deposits that increased 4.4% QoQ and 14.7% YTD mainly in the CIB
segment, due to the fact that the increase in rates led our clients
to switch to more attractive deposits explaining the decrease of
3.9% QoQ and 5.8% YTD of demand deposits.
Bonds increased 2.6% QoQ and 5.0% YTD. During
6M23, the Bank has issued bonds for UF1.7 million and Ch$ 383,150
million US$ 30 million and JPY 17,500 million, taking advantage of
attractive opportunities in the various fixed income markets
locally and abroad.
The Bank’s Liquidity Coverage Ratio (LCR), which
measures the percentage of Liquid Assets over Net Cash Outflows as
of June 30, 2023 was 153.3%, well above the minimum. At the same
date, the Bank’s Net Stable Funding Ratio (NSFR), which measures
the percentage of illiquid assets financed through stable funding
sources, reached 108.5%, also well above the current legal minimum
set for this ratio.
CET1 reaches 11.0% with a BIS ratio of
17.5% in 6M23.
Our core capital increased 5.8% QoQ due to
higher results and an improvement in valuation adjustments and
decreased 0.8% YTD due to the dividend payment approved at the last
annual shareholders’ meeting in April. Risk-weighted assets (RWA)
increased 2.0% YTD and 1.0% QoQ. We are actively seeking to lower
our market risk through netting and novation of our derivatives
portfolio leading to a 0.8% QoQ decline in market risk-weighted
assets. As a result, our CET1 is 11.0% and the total BIS III ratio
17.5% at the end of June 2023.
Income from interest and readjustment
fall QoQYear to date net interest income and readjustments
(NII) as of June 2023 decreased by 44.5% compared to the same
period in 2022 and in 2Q23, total income net of interest and
readjustments decreased by 8.2% compared to 1Q23. This result was
mainly due to the lower inflation in the period, higher funding
costs due to the higher MPR and a lower carry earned over our
financial investments classified as held to collect that are at a
fixed rate. This was partially offset by a higher rate earned over
average generating assets due to higher inflation and higher spread
earned over deposits. Overall the NIM (Net interest income divided
by average interest earning assets) reached 2.1% as of June 30,
2023.
Cost of credit of 1.19% YTD and coverage
of 165.0% while the asset quality continues to normalize, towards
pre pandemic levelsDuring 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
without the excess liquidity in households that we had during the
pandemic, asset quality is returning to pre-pandemic levels. Given
the above in 2Q, the non-performing loan ratio (NPL) reached 2.1%
in 2Q23 while the impaired portfolio reached 5.4% in 2Q23. Lastly,
the expected loss ratio (provisions for credit risk divided by
total loans) has remained more stable at2.8% in 2Q23.
In the quarter, the expense for credit losses
increased 2.7% QoQ. Expenses for credit risk provisions for banks
and loans and accounts receivable from customers increased 9.9%
QoQ, which is offset by a 29.5% increase in recoveries in the
quarter. With these results, the cost of credit in 2Q23 remained at
1.19%. The non-performing portfolio coverage ratio decreased to
165.0% in 2Q23, which includes the voluntary provisions of Ch$293
billion approved by the Board of Directors between 2020-2022.
Solid client treasury income with net financial results
increasing 63.6% in 6M23.
Net financial results recorded a gain of Ch$162,338 million in
6M23, an increase of 63.6% compared to 6M22, mainly due to higher
gains from financial assets and liabilities to be traded. In 2Q23,
net financial results increased 9.8% compared to 1Q23, mainly due
to foreign exchange gains, readjustments, and foreign currency
hedge accounting.
Operating expenses decreased 7.5% in 6M23, demonstrating
the solid cost control in the first half of
2023.
Operating expenses decreased 7.5% in 6M23
compared to the same period in 2022 demonstrating solid cost
control in the quarter as the Bank continues to improve its
productivity levels. In 2Q23 operating expenses increased 2.0% QoQ
due to higher personnel expenses.
The Bank's efficiency ratio reached 45.4% as of
June 30, 2023, higher than the 37.9% in the same period last year,
due to lower growth of our operating income. On the other hand, the
ratio of costs to assets improved from 1.5% in 6M22 to 1.3% in
6M22.
The Bank continues to advance in the execution
of its investment plan of US$260 million for the years 2023-2025
with a focus on digital initiatives both on the front and
back-end.
Our earnings webcast will be held on Friday, August 4,
2023 at 11am ET. For more information please visit our
website.
As of June 30, 2023, we had total assets of US$
85,752 million, outstanding loans (including interbank loans) at
amortized cost, net of allowances for loan losses of US$ 47,78
million, total deposits of (US$ 35,164 million) and shareholders’
equity of US$ 5,205 million). The BIS capital ratio as of June 30,
2023, was 17.5%, with a core capital ratio of 11.0%. 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.
CONTACT INFORMATIONCristian VicuñaChief
Strategy Officer and Head of Investor RelationsBanco Santander
ChileBandera 140, Floor 20Santiago,
ChileEmail: irelations@santander.clWebsite: www.santander.cl
1. Year on year, the six months accumulated as of June 30, 2023
compared to the six months accumulated as of June 30, 2022.2.
Return on Average Equity. Annualized net income attributable to
shareholders divided by average equity attributable to
shareholders.3. NIM: Net interest margin. Annualized net income
from interest and readjustments divided by interest earning assets.
4. Six months accumulated as of June 30, 2023.5. Recurrence: Net
fees divided by operating expenses.6. Second 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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