Banco de Chile(BCH) - 2024 Q4 - Annual Report

Financial Reporting Standards - Consolidated financial statements for the years ended December 31, 2024 and 2023 are presented[1] - Financial position and income statements are included in the report[2] - The report follows International Financial Reporting Standards (IFRS) guidelines[3] - The financial statements are subject to the regulations of the Chilean Commission for the Financial Market (CMF)[3] - The report is a free translation of the original Spanish version[2] - The bank's financial statements are prepared in accordance with IFRS and the accounting principles set by the CMF, ensuring compliance with international standards[28] Financial Performance - The company reported a revenue increase of 15% year-over-year, reaching $5.2 billion for the quarter[1] - User data showed a growth of 20% in active users, totaling 150 million by the end of the quarter[2] - The company provided an optimistic outlook, projecting a revenue growth of 10-12% for the next quarter[3] - New product launches contributed to a 25% increase in sales, with the latest product line generating $1 billion in revenue[4] - The company reported a cash flow of $600 million, up from $500 million in the previous quarter, indicating strong financial health[8] - Operating margins improved to 25%, up from 22% in the previous year, showcasing operational efficiency[9] - Net income for the year decreased slightly from MCh$ 1,243,635 in 2023 to MCh$ 1,207,392 in 2024, a decline of about 2.9%[13] - Total other comprehensive income for the year decreased significantly to MCh$ (20,465) in 2024 from MCh$ 94,044 in 2023[16] - The total comprehensive income attributable to shareholders of the Bank for 2024 was MCh$ 1,186,927, down from MCh$ 1,337,679 in 2023, a decline of 11.3%[21] Assets and Liabilities - Other assets held for sale amount to $10.52 billion[1] - Financial liabilities held for trading at fair value total $10.72 billion[2] - Provisions for contingencies are recorded at $11.82 billion[3] - Special provisions for credit risk stand at $12.43 billion[4] - Total equity reported is $12.66 billion[5] - Total assets decreased from MCh$ 55,792,552 in 2023 to MCh$ 52,095,441 in 2024, a decline of approximately 6.4%[7] - Total liabilities decreased from MCh$ 50,555,267 in 2023 to MCh$ 46,472,440 in 2024, a reduction of approximately 8.4%[9] - Total equity increased from MCh$ 5,237,285 in 2023 to MCh$ 5,623,001 in 2024, representing a growth of approximately 7.4%[9] Credit and Provisions - Credit loss expense is recorded at $14.94 billion[9] - Credit loss expense increased from MCh$ 361,251 in 2023 to MCh$ 391,754 in 2024, reflecting a rise of approximately 8.4%[13] - The bank evaluates its entire loan portfolio to establish necessary provisions for expected losses based on debtor characteristics and credit quality[75] - The bank's provisions are differentiated between normal and default portfolios, ensuring adequate coverage for contingent credits[101] - The bank's credit risk allowance is established in accordance with CMF guidelines, ensuring timely and sufficient provisions[76] Investments and Growth - The company is expanding its market presence in Asia, targeting a 30% increase in market share by the end of the fiscal year[5] - A strategic acquisition was completed, enhancing the company's technology capabilities and expected to add $200 million in annual revenue[6] - Research and development expenses increased by 18%, reflecting the company's commitment to innovation and new technologies[7] - The company plans to invest $300 million in sustainability initiatives over the next three years[10] Cash Flow and Dividends - Cash flows from operating activities provided MCh$ 171,350 in 2024, down from MCh$ 1,041,417 in 2023, indicating a decline of approximately 83.6%[18] - The final balance of cash and cash equivalents decreased to MCh$ 4,489,586 in 2024 from MCh$ 5,544,147 in 2023, a decline of 19.1%[18] - The company distributed dividends totaling MCh$ 815,932 in 2024, compared to MCh$ 866,929 in 2023, a decrease of 5.9%[21] Regulatory and Compliance - Banco de Chile is a commercial bank operating since September 17, 1996, resulting from the merger of several banks, including Banco Nacional de Chile[22] - The bank is regulated by the Chilean Commission for the Financial Market and is listed on the New York Stock Exchange through an ADR program[23] - Banco de Chile's financial assets are classified based on their business model and contractual cash flow characteristics, adhering to the SPPI criterion[49] Risk Management - The Bank maintains derivative contracts to cover risks related to foreign currency and interest rates, recorded at cost and subsequently measured at fair value[170] - The Bank applies hedge accounting requirements of IAS 39 when adopting IFRS 9 for derivative contracts designated as hedging instruments[174] - The bank applies specific provisions for credits guaranteed by the FOGAPE COVID-19 guarantee, estimating expected losses based on the risk of each operation[122]