Banco Santander-Chile(US:BSAC)2020-01-31 03:51Financial Data and Key Metrics Changes - Net income attributable to shareholders for 2019 was CLP 552 billion, translating to an ROE of 16.7%. Adjusted for extraordinary provisions, ROE reached 17.7% [29] - Total deposits decreased by 7.7% year-over-year and 2.7% quarter-on-quarter, while demand deposits increased by 8.8% quarter-on-quarter and 17.8% year-over-year [30] - Total loans increased by 8.1% in 2019, with a quarter-on-quarter growth of 2.6% [32] - The cost of credit ended the fourth quarter at 1.9% and 1.3% for the whole year, with an adjusted cost of credit of 1.7% in the quarter [36] Business Line Data and Key Metrics Changes - Loans to individuals were the fastest-growing segment in 2019, driven by high-income earners and the incorporation of Santander Consumer, contributing CLP 451 billion of consumer loans [32] - Noninterest income increased by 25% in 2019, with expectations for continued recovery in 2020 [39][40] - The acquiring business is expected to bolster fee income, with the launch of Getnet and Claire, a digital insurance platform [20][21] Market Data and Key Metrics Changes - The economic activity in Chile contracted by more than 2% year-on-year in Q4 2019, with GDP growth for the year at 1.1% [5][7] - Unemployment is expected to rise to 8% to 8.5% during the year, impacting consumer spending and loan growth [7][62] - The Central Bank lowered the monetary policy rate to 1.75%, affecting funding costs and liquidity ratios [30] Company Strategy and Development Direction - The company is focused on digitalization and technological improvements, with an ambitious investment plan for 2020 [46] - The bank aims to maintain a stable NIM around 4.1%, despite regulatory changes and economic challenges [34][47] - The company is enhancing its ESG initiatives, improving its ESG score significantly in 2019 [25] Management's Comments on Operating Environment and Future Outlook - The management expressed cautious optimism regarding the economic outlook, noting potential risks from social unrest and political uncertainty [6][11] - Loan growth is expected to reach 5% in 2020, with a focus on retail loans and larger SMEs [32][47] - The management anticipates stable cost of credit at 1.3% to 1.4% due to expected increases in unemployment and economic growth challenges [47] Other Important Information - The bank's core capital ratio reached 10.1%, and the BIS ratio was 12.9%, providing room for growth [44] - The bank's distribution network included 377 branches, with some branches affected by social unrest but most damages covered by insurance [41] Q&A Session Summary Question: Economic outlook and potential credit rating changes - Management noted that credit agencies have been positive regarding Chile's outlook, but risks remain due to economic activity and public deficit concerns [50] Question: Expectations for loan growth and SME segment - Loan growth of 5% is expected to be organic, with a focus on larger SMEs and export-oriented sectors [51][53] Question: Asset quality and cost of risk expectations - Management indicated that while asset quality may deteriorate, proactive measures have been taken to build coverage, and cost of risk is expected to remain stable [66][68] Question: Regulatory changes and asset quality concerns - No significant regulatory changes are anticipated beyond those already mentioned, and the bank is being prudent in lending to new clients [70] Question: IFRS implementation update - Full IFRS implementation is expected by January 2021, except for credit loss provisioning [71][72]