Banco Santander-chile · BCS:BSANTANDER
Banco Santander-chile — Q2 2017 Earnings Presentation
30 slides from Banco Santander-chile's earnings presentation, Aug 9, 2017
Slide 1: Solid business and client profitability trends
Simple | Personal | Fair Investor Relations | Santiago, Chile Banco Santander Chile Solid business and client profitability trends July 28th, 2017
Slide 2: Important information
2 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 limitation, statem
Slide 3: Agenda
3 ■ Macro - economic environment and financial system ■ Strategy and results ■ Outlook Agenda
Slide 4: Macroeconomic environment
4 GDP Central Bank ST Reference Rate YoY real growth , % % GDP growth expectations rise for 2018 - 19 Macroeconomic environment Inflation Annual change in UF inflation, % Unemployment % of workforce, % 2.3 1.6 1.5 2.2 3.0 2015 2016 2017 (e) 2018 (e) 2019 (e) 3.50 3.50 2.25 2.80 4.00 2015 2016 2017 (
Slide 5: Financial system: loans and customer funds
5 207 209 212 213 216 J'16 S'16 D'16 M'17 M'17 4.9 % 1.7 % 4.7 % 4.1 % 5.0 % 205 208 211 212 214 J'16 S'16 D'16 M'17 M'17 7.4 % 4.2 % 5.7 % 5.5 % 4.5 % Total Loans 1 Customer funds 1,2 US$bn US$bn Financial system: loan and customer funds Financial system outstripping GDP growth Source Superintenden
Slide 6: Agenda
6 ■ Macro - economic environment and financial system ■ Strategy and results ■ Outlook Agenda
Slide 7: Positive results in 2Q17
7 116 150 2Q16 2Q17 17.1 20.8 2Q16 2Q17 Ch$bn ROE reached 20.8% in 2 Q17 Net income 1 29.4 % 1. Net income attributable to shareholders Positive results in 2Q17 % ROE Strong quarterly results driven by successful management of margins, fees, cost of credit and costs +370bp
Slide 8: Positive results in 6M17
8 281 369 6M16 6M17 242 293 6M16 6M17 Ch$bn ROE reached 20.3% in 6M17 Net income 2 Ch$bn Net income from reporting segments 1 31.6 % 21.1 % 1. Net interest income + Net fee and commission income + Financial transactions, net - Provision expense – Operating expenses from our reporting segments. 2. Ne
Slide 9: 4 objectives for healthy growth / higher profitability
9 I. Focusing growth on segments with the highest contribution, net of risk… II. … by increasing client loyalty through an improved client experience and quality of service III. Deepening ongoing commercial transformation by expanding digital banking capabilities IV. Optimizing profitability and cap
Slide 10: Mutual funds brokered increase; deposits
10 20,236 20,040 20,691 20,109 19,255 J'16 S´16 D´16 M'17 J'17 Mutual funds brokered increase 14.0% YoY 6M’17 YoY(%) QoQ (%) Demand 7,196 (0.6) (2.9) Time 12,059 (7.2) (5.0) Total deposits 19,255 (4.8) (4.2) Mutual funds 1 5,563 14.0 1.3 Customer funds 24,818 (1.2) (3.0) Loan to deposit 2 100.3% Tot
Slide 11: Lower funding costs
11 Lower funding costs Strategy: IV. Optimizing profitability and capital % of loans Cost of time deposits 1 3.5 % 3.4 % 3.4 % 3.2 % 3.0 % Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 Quarterly average time deposit cost 1. Quarterly Interest expense from time deposits / average quarterly balance of time depos
Slide 12: Loans grow 2.9% YoY, with individual loans expanding 5.2%
12 26,401 26,868 27,206 27,453 27,156 Jun-16 Sep-16 Dic-16 Mar-17 Jun-17 Loans grow 2.9% YoY, with individual loans expanding 5.2% Total Loans Ch$bn 6M ’17 YoY (%) QoQ (%) Individuals 1 15,005 5.2 0.4 Consumer 4,470 5.4 ( 0.7) Mortgages 8,861 6.5 1.3 SMEs 3,720 5.1 (0.1) Retail 18,725 5.1 0.3 Middle
Slide 13: Stable asset quality metrics
13 NPL and coverage ratio % of loans Cost of Credit 1 2.1 % 2.1 % 2.1 % 2.2 % 2.2 % 140% 146% 145% 135% 136% Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 Strategy: I . Growth focused on segments with highest contribution, net of risk Cost of credit at 1.1 %. Stable asset quality metrics 1. Annualized quarterl
Slide 14: Positive evolution of NIMs, net of risk
14 3.6 % 3.5 % 3.5 % 3.7 % 3.9 % 4.7 % 4.9 % 4.8 % 4.8 % 5.0 % 2Q16 3Q16 4Q16 1Q17 2Q17 Client NIM net of risk Client NIM 4.6 % 4.5 % 4.2 % 4.2 % 4.6 % 3.4 % 3.2 % 3.1 % 3.2 % 3.6 % 0.9 % 0.6 % 0.5 % 0.5 % 0.7 % 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 2Q16 3Q16 4Q16 1Q17 2Q17 NIM NIM Net or risk Inf
Slide 15: 4 objectives for healthy growth / higher profitability
15 I. Focusing growth on segments with the highest contribution, net of risk… II. … by increasing client loyalty through an improved client experience and quality of service III. Deepening ongoing commercial transformation by expanding digital banking capabilities IV. Optimizing profitability and ca
Slide 16: Customer loyalty in targeted segments continues to grow
16 42 46 6M16 6M17 371 384 6M16 6M17 117 131 6M16 6M17 Loyal Middle income customers 1 Customer loyalty in targeted segments continues to grow Loyal High income customers 1 + 12.1 % Strategy: II. Increasing client loyalty Loyal customers, thousands Loyal SME + Middle market customers 2 +10.3% +3.4%
Slide 17: Fee income growth
17 N et fee income Ch$bn Fee income from business segments Ch$bn 63.9 64.4 63.1 72.8 71.8 2Q16 3Q16 4Q16 1Q17 2Q17 This leads to a 14.0% YoY growth in fee income in 6M17 12.5% - 1.4 % Strategy: II. Increasing client loyalty Fees from Corporate are driven by greater financial advisory services 6M’17
Slide 18: 4 objectives for healthy growth / higher profitability
18 I. Focusing growth on segments with the highest contribution, net of risk… II. … by increasing client loyalty through an improved client experience and quality of service III . Deepening ongoing commercial transformation by expanding digital banking capabilities IV. Optimizing profitability and c
Slide 19: Improving and reducing the physical distribution network
19 1,484 1,059 Jun-16 Jun-17 Improving and reducing the physical distribution network… - 13.2 % ATMs Branches Employees - 28.6 % - 5.0 % Strategy III: Digital transformation 468 406 Jun-16 Jun-17 11,653 11,068 Jun-16 Jun-17
Slide 20: Expanding the use of digital banking
20 … expanding the use of digital banking… Internet usage market share 1 Strategy III: Digital transformation 30% of consumer loans are now sold digitally Innovations in the APP 1. Market share over clients that enter a website with a passkey. Excludes Banco de Estado. Source: Superintendency of Ban
Slide 21: Multi-segment business centers
21 … and creating friendlier and more productive multi - segment business centers 20 Work Cafes by year - end 100% dedicated to value added activities Multi - segment No tellers No back office Paperless Fully digital Strategy III: Digital transformation
Slide 22: Increasing our productivity
22 66,230 73,746 83,939 95,201 110,109 114,313 2012 2013 2014 2015 2016 2Q17 Increasing our productivity… Volume* per branch ( Ch $ Million ) 2,822 3,157 3,466 3,825 4,219 4,193 2012 2013 2014 2015 2016 2Q17 Volume* per employee ( Ch $ million ) +72.5 % +48.6 % Productivity per Branch Productivity p
Slide 23: Improving our efficiency
23 6M17 YoY% QoQ % Personal exp. 194 (0.1) 9.4 Adm . exp . 113 (0.7) (7.0) Depreciation 36 20.6 6.6 Op. expenses 343 1.5 3.4 172 171 178 169 175 2Q16 3Q16 4Q16 1Q17 2Q17 9.8 % 4.0 % 3.9 % 1.7 % 1.4 % Quarterly YoY cost growth ..and improving our efficiency Operating expenses Ch$bn Efficiency Ratio 1
Slide 24: 4 objectives for healthy growth / higher profitability
24 I. Focusing growth on segments with the highest contribution, net of risk… II. … by increasing client loyalty through an improved client experience and quality of service III. Deepening ongoing commercial transformation by expanding digital banking capabilities IV. Optimizing profitability and ca
Slide 25: Core capital ratio increases / Attractive dividend paid in 2Q17
25 Core capital ratio increases / Attractive dividend paid in 2Q17 Dividend per share 1.41 1.75 1.79 1.75 2014 2015 2016 2017 60% Payout 60% Payout 75% Payout Strategy: IV. Optimizing profitability and capital Ch $ per share 70% Payout 1. Source: Bloomberg Core Capital ratio 1 % A higher and more su
Slide 26: New banking law submitted to Congress
26 New banking law submitted to Congress Capital requirements: Basel III, current GBL and new proposed requirements (% over risk weighted assets) Capital categories BIS III Current Law Proposed Bill (1) Total Tier 1 Capital (2+3) 6 4.5 6 (2) Basic Capital 4.5 4.5 4.5 (3) Additional Tier 1 Capital (A
Slide 27: Implementation of BIS III and RWA density
27 Implementation of BIS III should not lead to a need to increase the Bank’s capital due to a high RWA density RWA density 3 of 77% should fall under BIS III. Under Chilean BIS I mortgage loans weigh 60% and other loans weigh 100% Strategy: IV. Optimizing profitability and capital
Slide 28: Capital ratio higher under BIS III
28 Under BIS III ( ECB model ) our core capital ratio is 140bp higher New risk weightings under Chilean regulations will be known after law is approved Capital ratio higher under BIS III 1,2 1. BIS I according to the SBIF. 2. According to ECB regulation and headquarters. Strategy: IV. Optimizing pro
Slide 29: Agenda
29 ■ Macro - economic environment and financial system ■ Strategy and results ■ Outlook Agenda
Slide 30: Sound outlook for Santander Chile
30 Sound outlook for Santander Chile BSAC: stronger Client contribution driving profitability in 2017, in line with strategy ▪ Business segment contribution up 21.6% YoY in 6M17 ▪ Loan growth at 2.9 %, led by segments with highest contribution, net of risk, with retail loans growing 5.1% ▪ Demand de
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