Banco Santander-chile · BCS:BSANTANDER
Banco Santander-chile — Q1 2019 Earnings Presentation
35 slides from Banco Santander-chile's earnings presentation, May 1, 2019
Slide 1: Banco Santander Chile 1Q19 Results
Banco Santander Chile 1Q19 Results April 30, 2019
Slide 2: Important information
Important information Banco Santander Chile caution that this presentation contains forward looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. These forward looking statements are found in various places throughout this presentation and include, without
Slide 3: Agenda
Agenda Macro-economic environment Strategy update Results Outlook
Slide 4: Solid economic growth in 2019 driven by investment
4 4 2.8 1.7 2.9 2.3 2.8 2016 2017 2018 2019 (e) 2020 (e) 1.6 1.5 4.0 3.0 3.2 2016 2017 2018 2019 (e) 2020(e) 3.50 2.50 2.75 3.00 3.25 2016 2017 2018 2019 (e) 2020 (e) Solid economic growth in 2019 driven by investment… Macroeconomic environment Source: Banco Central de Chile and estimates Santander
Slide 5: With growth and inflation picking up in the coming quarters
5 5 0.0 0.8 0.8 0.8 2.3 1Q19 2Q19 3Q19 4Q19 2019 1.8 2.5 4.4 3.3 3.0 1Q19 2Q19 3Q19 4Q19 2019 2.75 3.00 3.00 3.00 3.00 4Q18 1Q19 2Q19 3Q19 4Q19 ..with growth & inflation picking up in the coming quarters Macroeconomic environment Source: Banco Central de Chile and estimates Santander Chile YoY real
Slide 6: Agenda
6 6 Agenda Macro-economic environment Strategy and results Outlook
Slide 7: Strategy and results: objectives for healthy growth / higher profitability
7 7 3 objectives for healthy growth / higher profitability Strategy and results I … by increasing client loyalty through an improved client experience and quality of service and expanding digital banking capabilities II Optimizing profitability and capital use to increase shareholder value in time I
Slide 8: Offering innovative proposals for each market segment
8 8 Unbanked population: Individuals & SMEs Middle-income High income Offer transactional products with access to digital economy Build a lasting relationship with our clients while controlling the risk Offer a differentiated and specialized service to gain their loyalty Investment hubs WORK CAFÉ •O
Slide 9: Intention to enter high growing auto loan business announced
9 9 •Banco Santander Chile entered into an agreement with SKBergé Financiera S.A. to acquire its 49% share ownership in Santander Consumer Chile S.A., for Ch$59,063 million. •The final outcome of the operation will depend on the conclusion of the contractual agreements and the time it takes to achie
Slide 10: Santander Consumer Finance: Financial Summary
10 10 11.6% 11.9% 12.0% 11.9% 11.2% 7.5% 9.3% 8.6% 9.0% 8.6% 2014 2015 2016 2017 2018 NIM NIM net of risk Santander Consumer Finance: Financial Summary Strategy and results 202 218 228 303 388 13.3% 7.9% 5.0% 32.5% 28.3% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% - 50 100 150 200 250 300 350 400 450 2
Slide 11: Funding strategy driven by efforts to grow deposits
11 11 20,144 20,809 20,762 21,809 21,462 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Funding strategy driven by efforts to … Ch$bn Strategy: I. Re-focusing on growth as economy recovers… 1. Banco Santander Chile is the exclusive broker of mutual funds managed by Santander Asset Management, a subsidiary of SA
Slide 12: Defend our funding costs as short term rates rise
12 12 …defend our funding costs as short term rates rise… Strategy: I. Re-focusing on growth as economy recovers… 1. Interest expense paid over nominal CLP deposits divided by CLP nominal deposits. Source of data to construct ratio = SBIF CLP Time Deposit Cost Evolution1 2.9% 2.9% 2.8% 3.0% 3.1% 3.2
Slide 13: Maintain healthy liquidity ratios
13 13 …and maintain healthy liquidity ratios Strategy: I. Re-focusing on growth as economy recovers… 1. LCR: Liquidity Coverage Ratio under new SBIF rules. Source: Company information 127% 92% 116% 100% 146% 110% Local LCR1 Minimum Requirement 60% Average 115%
Slide 14: Loan growth driven by Individuals and Middle-market in the quarter
14 14 28,344 29,234 29,973 30,282 30,600 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Ch$bn Strategy: I. Re-focusing on growth as economy recovers… 1. Includes other commercial loans to individuals. 2. Includes other non-segmented loans and interbank loans Total Loans Loan growth driven by Individuals and Mid
Slide 15: Lower inflation and higher short term rates contracts the NIM
15 15 Lower inflation and higher short term rates contracts the NIM Strategy: I. Re-focusing on growth as economy recovers… 1.Annualized Net interest income divided by average interest earning assets. 2. Annualized gross interest income divided by average interest earning assets. 3. Annualized inter
Slide 16: NIM and Inflation; Net Interest Income
NIM1 & Inflation Net Interest Income Ch$bn 3M19 YoY QoQ Net interest income 322.7 (6.9%) (9.8%) Average interest-earning assets 31,836 3.7% 1.0% Average loans 29,145 4.2% 4.5% Interest earning asset yield2 5.6% -131bp -160bp Cost of funds3 1.73% -77bp -118bp NIM YTD 3.9% -61bp
Slide 17: NIM should improve given rate and inflation outlook
NIM should improve given rate and inflation outlook for the rest of the year 16 16 2.4% 2.2% 2.0% 1.8% 1.7% 6.8% 6.4% 6.0% 5.6% 5.5% 256% 264% 312% 316% 324% Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 NPL(1) Impaired Loans(2) Coverage (3) 2.3% 2.2% 2.2% 2.1% 2.0% 6.4% 6.2% 6.0% 5.9% 5.9% 123% 124% 125% 129%
Slide 18: Low cost of credit partially mitigates lower gross NIM
17 17 1.1% 1.0% 3M18 3M19 -3bp 3.5% 3.0% 3M18 3M19 -50bp 4.5% 3.9% 3M18 3M19 NIM1 -61bp Cost of Credit2 NIM net of risk3 Low cost of credit partially mitigates lower gross NIM Strategy: I. Re-focusing on growth as economy recovers… 1. Annualized Net interest income divided by average interest earnin
Slide 19: Higher client satisfaction
18 18 3 objectives for healthy growth / higher profitability Strategy and results Re-focusing on growth as economy recovers… I … by increasing client loyalty through an improved client experience and quality of service and expanding digital banking capabilities II Optimizing profitability and capita
Slide 20: Digital transformation inside and out
20 20 ….digital transformation inside and out… +75% Digital Consumer Operations QoQ ‘17-’18 +27% MAU1 APP YoY ‘17-’18 +21% Life consumer credit Dec’18-Mar’19 85% Of our Current Account holders are digital 2018 1. MAU = Monthly active users Strategy: II. Increasing client loyalty and expanding digita
Slide 21: Leading to higher client loyalty
21 21 854 1,077 515 675 98 151 331 427 37 50 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 Total digital clients Total loyal clients Loyal high income Loyal middle
Slide 22: Good growth in non-NII across business segments
22 22 Ch$bn 75.5 78.8 69.1 67.4 70.7 23.2 18.6 27.5 35.8 38.8 1Q18 2Q18 3Q18 4Q18 1Q19 Net fee income Financial trx Strategy: II. Increasing client loyalty and expanding digital banking Non-interest income (fee + financial trxs) Good growth in non-NII across business segments Ch$bn 3M19 YoY QoQ Reta
Slide 23: Restructuring our physical distribution network
23 23 Work Café 43 Traditional 337 11,444 11,280 3M18 3M19 379 380 3M18 3M19 948 926 3M18 3M19 Restructuring our physical distribution network Points of sale ATMs Employees +0.3% -2.3% -1.4% Strategy: II. Increasing client loyalty and expanding digital banking
Slide 24: Investing to improve productivity and efficiency
24 24 Operating Expenses 170.9 186.0 181.6 183.4 180.1 1Q18 2Q18 3Q18 4Q18 1Q19 Investing to improve productivity and efficiency Ch$bn 1. Operating expenses excluding Impairment and Other operating expenses 2. Efficiency ratio: Oper. Expense excluding impairment / Net interest income + fee income +
Slide 25: Strategy and results: objectives for healthy growth / higher profitability
25 25 3 objectives for healthy growth / higher profitability Strategy and results … by increasing client loyalty through an improved client experience and quality of service and expanding digital banking capabilities II Optimizing profitability and capital use to increase shareholder value in time I
Slide 26: 20bp of capital generated in the quarter despite lower ROE
26 26 20bp of capital generated in the quarter despite lower ROE Strategy: III. Optimizing profitability and capital BIS Ratio 11.1% 10.6% 10.8% 3M18 12M18 3M19 Core capital 14.0% 13.4% 13.6% 3M18 12M18 3M19 Payout of 60%. Dividend yield of 3.7%
Slide 27: ROAE down in the quarter but we remain above the competition
27 27 ROAE down in the quarter but we remain above the competition Strategy: III. Optimizing profitability and capital 3M19 2018 2017 2016 2015 Santander 15.3% 19.2% 19.2% 17.1% 17.1% Chile 12.2% 18.7% 19.3% 19.6% 21.3% BCI 13.7% 13.5% 14.0% 14.7% 17.5% Itaú Corpbanca 3.4% 5.3% 1.8% 0.1% 14.8% Scoti
Slide 28: Agenda
28 28 Agenda Macro-economic environment Strategy and results Outlook
Slide 29: Sound outlook for rest of 2019
29 29 Sound outlook for rest of 2019 xGoing forward we expect inflation to normalize, rates to remain stable at 3.0% and GDP growth to pick up. GDP growth estimate of 3.0% in 2019 xAmbitious investment plan announced focusing on technology and new businesses xEstimated loan growth of 8-10% with grow
Slide 30: Thank You
30 Our purpose is to help people and business prosper. Our culture is based on believing that everything we do should be: Thank You.
Slide 31: Annexes
Santander Annexes at
Slide 32: Unaudited Balance Sheet
32 32 Annexes Unaudited Balance Sheet Mar-19 Mar-19 Mar-18 Mar-19/Mar-18 US$Ths1 Ch$Million% Chg. Cash and deposits in banks 2,280,593 1,550,598 1,599,697 (3.1%) Cash items in process of collection 603,927 410,616 511,561 (19.7%) Trading investments 139,442 94,808 172,501 (45.0%) Investments under r
Slide 33: Unaudited YTD Income Statement
33 33 Annexes Unaudited YTD Income Statement Mar-19 Mar-19 Mar-18 Mar-19/Mar-18 US$Ths1 Ch$Million% Chg. Interest income 677,665 460,751 528,052 (12.7%) Interest expense (203,042) (138,050) (181,337) (23.9%) Net interest income 474,623 322,701 346,715 (6.9%) Fee and commission income 178,503 121,366
Slide 34: Unaudited Quarterly Income Statement
34 34 Annexes Unaudited Quarterly Income Statement 1Q19 1Q19 4Q18 1Q18 1Q19/1Q18 1Q19/4Q18 US$Ths1 Ch$Million% Chg. Interest income 677,665 460,751 587,413 528,052 (12.7%) (21.6%) Interest expense (203,042) (138,050) (229,812) (181,337) (23.9%) (39.9%) Net interest income 474,623 322,701 357,601 346
Slide 35: Annexes: Key Indicators
35 35 Annexes: Key Indicators Profitability and efficiency Mar-19 Mar-18 Change bp Net interest margin (NIM) 1 3.9% 4.5% (61) Efficiency ratio2 42.5% 38.7% 387 Return on avg. equity 15.3% 19.4% (406) Return on avg. assets 1.3% 1.7% (39) Core Capital ratio 10.8% 11.1% (30) BIS ratio 13.6% 14.0% (36)
Banco Santander Chile — Q1 2019 Earnings Presentation on 6ix