Banco Santander-Chile(US:BSAC)2023-08-05 04:45Financial Data and Key Metrics Changes - The bank's accumulated net income as of June 2023 totaled CLP263 billion, decreasing 50% year-over-year [57] - The book value of equity increased 16% year-over-year, with TNAV per share and dividend per share growing 23% [28] - The NPL ratio rose to 2.1%, gradually returning to pre-pandemic levels, with coverage of NPLs reaching 165% [34] Business Line Data and Key Metrics Changes - Retail banking results increased 21% year-over-year, driven by a greater client base and increased activity [14] - Getnet, the acquiring business, grew 83% year-over-year in SME clients, generating fees of CLP21 billion [11] - Corporate Investment Banking (CIB) results increased 84.5% year-over-year, with a significant rise in deposit spreads and fees [58] Market Data and Key Metrics Changes - The Central Bank of Chile began a monetary easing cycle, cutting the policy rate by 100 basis points [6] - The peso depreciated due to global factors, with inflation expected to close 2023 at around 4% [21] - Total deposits increased 0.3% quarter-on-quarter and 2% year-over-year, driven by a 25% year-over-year increase in time deposits [61] Company Strategy and Development Direction - The company aims to become a digital bank with Work/Cafes, focusing on customer service and technological innovation [23] - The strategy includes specialized services for corporate and private banking, seeking growth opportunities and sustainable transformation [23] - The bank is committed to maintaining cost discipline while investing in digital transformation [17] Management's Comments on Operating Environment and Future Outlook - Management expects a weak economy in the coming months, with a revised GDP contraction estimate of 1% for the year [5] - The bank anticipates a recovery in NIMs due to the Central Bank's easing cycle, projecting a NIM of 2.3% for the full year [38] - The cost of risk is expected to remain manageable at 1.1% to 1.2% for the rest of the year [38] Other Important Information - The bank's liquidity coverage ratio (LCR) was 175%, well above the minimum requirement [62] - The bank's operating expenses decreased 7.5% year-over-year, indicating effective cost control [36] - The bank is the only Chilean bank included in the Dow Jones Sustainability Index for Global Emerging Companies [27] Q&A Session Summary Question: NIM projection for 2024 - Management expects NIM for 2024 to be around 3.5%, with a potential rebound to 3% by the end of 2023 [41] Question: Impact of FCIC facility repayment and derivatives expiration - The expiration of the FCIC will be non-material for NII, as it will not significantly affect the overall NIM [43] Question: Effective tax rate normalization - The effective tax rate is expected to increase as inflation decreases, returning to levels closer to 20%-23% [97] Question: Reserve coverage ratio - The bank is comfortable maintaining the reserve coverage ratio at current levels due to significant voluntary provisions [72] Question: Non-NII growth expectations - Non-NII growth is expected to continue at around 10% for 2024 and 2025, despite headwinds from interchange fees [100] Question: Asset quality and NPL concerns - The commercial NPL has increased slightly, but management does not foresee significant risks in the portfolio [84]