Banco Santander-Chile (NYSE:BSAC) Q4 2025 Earnings call February 05, 2026 09:00 AM ET Company ParticipantsCristián Vicuña - Head of Strategy and Investor RelationsLindsey Shema - Equity Research AssociateLorena Palomeque - EconomistNeha Agarwala - SVPPatricia Pérez - CFOYuri Fernandes - Managing DirectorConference Call ParticipantsErnesto Gabilondo - Senior Financial Equity AnalystEwald Stark - Equity Research AnalystOperatorLadies and gentlemen, thank you for standing by, and I'd like to welcome you to Ban ...

Core Insights - Wells Fargo's home lending business is underperforming, with CEO Charlie Scharf describing its returns as "subpar" and indicating a need for potential remedies [2][9] - The bank is transitioning its home lending division to a smaller operation with higher profitability, following a strategic pivot announced nearly three years ago [3][4] Home Lending Performance - The residential mortgage portfolio decreased by 10% from $222.5 billion at the end of 2022, with originations dropping from $14.6 billion in Q4 2022 to $7 billion by September 30, 2025 [4][5] - Compared to pre-pandemic levels, the decline in mortgage originations is significant, falling from $58 billion in Q3 2019 [5] Strategic Changes - Since 2023, Wells Fargo has exited mortgage correspondent lending and reduced its servicing activities, reflecting a broader trend among major U.S. banks to scale back home lending [5][6] - The bank's downsizing is particularly notable given its historical position as the top home lender in the industry [6] Overall Consumer Prospects - Despite challenges in home lending, Wells Fargo's overall consumer prospects are positive, with resilient household spending and growth in auto lending and card businesses [7][9] - Scharf noted improvements in consumer spending, deposit balances, and investment balances, indicating a strong financial position [8][9]

Financial Data and Key Metrics Changes - The bank generated a net income of CLP 798 billion, a 37% year-over-year increase, resulting in a return on equity (ROE) of 24% and an efficiency ratio of 35.9% [10][13] - Net interest income increased by 17% year-over-year, with a net interest margin (NIM) remaining at 4% [12][15] - The recurrence ratio reached 62% year-to-date, indicating that over 60% of expenses were financed by fee generation [17] Business Line Data and Key Metrics Changes - Fee income rose by 8%, while financial transactions increased by 19% [12] - The bank's fee generation increased from 15% to 20% of total revenues, reflecting the success of expanding the client base and non-credit-related services [11] - Credit card transactions grew by 12%, and mutual fund volumes increased by 15% [16] Market Data and Key Metrics Changes - The Chilean economy is expected to grow by approximately 2% year-on-year in Q3, with GDP growth projected at 2.4% by the end of the year [4] - Inflation remains above the 3% target, but is expected to converge to below 4% by year-end [5] - The Central Bank of Chile maintained a policy rate of 4.75% during Q3, with expectations for a reduction to 4.5% by year-end [6] Company Strategy and Development Direction - The bank aims to attract 5 million clients by 2026 and is focused on becoming a digital bank with efficient operational processes [9] - The strategy includes leveraging artificial intelligence and process automation to reduce costs and improve operational excellence [9] - The bank targets an efficiency ratio in the mid-30s and aims for ROEs above 20% with a dividend payout of 60%-70% [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a favorable business environment in 2026, driven by potential political changes and economic growth [20] - The bank expects mid-single-digit loan growth and stable NIMs around 4% despite lower inflation [21] - Management highlighted the importance of monitoring external macroeconomic factors that could impact growth [24] Other Important Information - The bank's CET1 ratio reached 10.8%, significantly above the minimum requirement [15] - The bank has been recognized for its performance, including awards for best bank in Chile and improvements in sustainability ratings [13] Q&A Session Summary Question: What are the main upside and downside risks for ROE estimates in 2026? - Management noted that potential political changes could positively impact growth, but current guidance does not factor in these benefits [23][24] Question: Can you provide guidance on loan growth by segment for 2026? - Management expects homogeneous growth across segments, with consumer loans growing healthily and mortgage portfolios benefiting from government support [27][28] Question: What is the current status of interchange fees and potential impacts? - Current interchange fees are at 1.14% for credit and 0.5% for debit, with potential second cuts under review that could impact fees by CLP 20 billion-CLP 25 billion [30][31]

Financial Data and Key Metrics Changes - The company's net income for the quarter was EUR 3.7 billion, reflecting a 10% year-on-year increase and a slight decrease in ROAE [5][48] - Net Interest Income (NII) decreased by 3.3%, primarily due to market NII and carryover costs, although client NII showed a positive evolution [5][39] - The efficiency ratio improved, being the best in the last three years, with expenses growing well below inflation [7][47] Business Line Data and Key Metrics Changes - Consumer finance grew by 16%, while card spending increased by 13% year-on-year [36] - The portfolio for SMEs increased by 11%, indicating a positive trend despite macroeconomic challenges [36] - Personal loans secured by FGTS grew by 81%, while real estate loans increased by approximately 7% year-on-year [37] Market Data and Key Metrics Changes - The bank's customer base reached almost 72 million, with active customers growing by 34 million [9] - The Net Promoter Score (NPS) increased to 86%, reflecting strong customer satisfaction [14] - Digital consumption increased by 38%, while visits to physical stores decreased by 30% over the past two years [29] Company Strategy and Development Direction - The company aims for profitability of 20% to 21% in the coming years, focusing on technology and customer service improvements [8][50] - There is a strong emphasis on digital transformation, with the introduction of the ONE App to enhance customer engagement [25][50] - The strategy includes diversifying the portfolio and maintaining a disciplined approach to capital allocation [51][72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a 20% ROE, although high interest rates pose challenges [56][60] - The macroeconomic environment is being closely monitored, particularly regarding the impact of interest rates on SMEs and overall loan growth [70][72] - The company remains cautious in capital allocation while seeking growth opportunities in the SME sector [70][72] Other Important Information - The company is investing 30% more in technology compared to previous years, aiming to enhance operational efficiency [27] - There is a focus on improving asset quality, with a slight decrease in non-performing loans (NPL) in certain segments [45][75] - The bank is adopting a proactive approach to write-offs, ensuring a cleaner portfolio [80][82] Q&A Session Summary Question: About ROE and its drivers - Management acknowledged the challenges posed by high interest rates but emphasized their commitment to achieving a 20% ROE through efficiency and disciplined capital management [56][60][66] Question: Concerns regarding SMEs and delinquency rates - Management remains optimistic about the SME sector, indicating plans for cautious growth while monitoring macroeconomic impacts [70][72] Question: Asset quality and write-off policies - The bank is closely monitoring asset quality, with a focus on maintaining strong coverage ratios and proactive write-off strategies [75][80] Question: Growth in individual portfolios and payroll loans - Management is rebalancing its individual portfolio towards higher income segments while being cautious with payroll loans due to profitability concerns [94][98][102]