Banco Santander Chile anuncia los resultados del Primer Trimestre 2020
ROAE of 16.8% reached in the first quarter of 2020
Net income attributable to shareholders in 1Q20 increased 23.4% QoQ and 14.8% YoY, totaling Ch$ 144,014 million (Ch$ 0.76 per share and
Impact of Covid-19 on the operations of the Bank
January and February were strong months for the Bank with net income in 2M20 growing 39.1% compared to 2M19 and ROAE reached 18.9%. The first case of Covid-19 in
Due to the social unrest experienced in
In terms of transactionality, the reduction in clients coming to our branches is being supported by our digital channels with the amount of digital transactions increasing 7.4% in 1Q20 compared to the same period last year and digital clients have increased 22.2% in the last 12 months.
Measures taken by Chilean authorities
The Government has announced various initiatives for different segments of the Chilean population such as tax breaks and one-off payments to vulnerable households. The Government,
Firstly, the
The Government announced the extension of the Fogape fund, offering state guarantees for lending to SMEs, defined as companies with annual sales of up to 1,000,000 UF. The government estimates that this program will benefit 99.8% of the companies in
The CMF has announced measures for reprogramming loans to individuals. These are:
- Mortgages: Maximum grace period of 6 months for debtors who are 0-30 days overdue.
- Consumer loans: Maximum grace period of 3 months for debtors who are 0-30 days overdue.
The CMF also approved the freezing of provisions of these reprogrammed loans while they are in the payment holiday period. The CMF also announced the temporary extension in the write off in assets received in payment from 12 to 18 months, and the possibility to use the excess of mortgage guarantees to guarantee SME loans. For our larger commercial loans, provisions are estimated based on internal ratings which consider the following factors: industry or sector, business position, partners and management, financial situation, payment capacity and payment behavior.
In terms of capital ratios, the CMF announced flexibility for the implementation of Basel III in
Loan growth driven by Middle-market and large corporates in the quarter
Total loans increased 12.3% YoY and 5.0% QoQ, driven by higher demand for commercial loans from the Middle-market and CIB segment in the quarter. On a year-on year basis, growth was driven by mortgage lending due to low interest rates in the second and third quarter of 2019 and by the acquisition of
In the quarter, loans from our Middle-market and CIB segments grew strongly 8.6% QoQ and 30.0% QoQ, respectively. Our strategy with these segments continues to focus on the overall profitability of clients. After the social unrest experienced in
As of March asset quality remains stable with coverage of NPLs of 135.9%
During the quarter provisions increased 34.9% YoY and decreased 32.3% QoQ. The higher YoY expense is mainly due to the evolving Covid-19 crisis and strong loan growth of 12.3% YoY. The QoQ decrease is mainly explain by the strong increase in provisions in 4Q19, a slight deterioration in asset quality from the social unrest in
After the social unrest in 4Q19 the asset quality quickly started to show signs of rebounding, highlighting the responsible management of our loan book in recent years. The NPL ratio improved from 2.1% in 4Q19 to 2.0% in 1Q20, similar to 1Q19 and impaired loans ratio improved from 5.9% in 4Q19 and 1Q19 to 5.7% in 1Q20. The total Coverage ratio including the additional provisions reached 135.4% at year-end 2019. The expected loan loss ratio (Loan loss allowance over total loans) improved from 2.8% in 4Q19 to 2.7% in 1Q20. The cost of credit for 1Q20 reached 1.2%, an improvement on the 1.9% in 4Q19. Asset quality saw limited impact from the COVID-19 crisis in 1Q20.
Non-interest bearing demand deposits increase 7.3% QoQ and 29.6% YoY
The Bank’s total deposits increased 17.7% YoY and 7.5% QoQ in 1Q20. In the quarter, non-interest bearing demand deposits, which grew 7.3% QoQ and 29.6% YoY due to high growth of retail checking accounts and continued strength in the Bank’s transactional banking services for companies as they looked to increase their liquidity to confront the coming months. Account opening among retail clients was also strong in the quarter. This also led to a high liquidity ratio at year-end with the Bank’s LCR and NSFR reaching 205% and 105%, respectively.
In 2020, the
Bonds grew 21.2% YoY and 8.8% QoQ in part due to the strong increase in mortgage growth over the last year, with our funding strategy aiming to match long-term assets with long-term bonds. In January, the Bank placed a 5 year bond in the international market for
Payout reduced to 30% to support capital levels and client growth
Shareholders’ equity totaled Ch$3,494,433 million as of
In the recent past, the Bank has maintained a dividend policy of between 60-70% of net income. However, given the evolving Covid-19 crisis, the depreciation of the peso and the need to support clients during the current economic downturn, the Bank has proposed a dividend payout of 30% of 2019 net income to be approved at the next Shareholders’ meeting on
As mentioned above, the Bank also issued a Tier II bond to bolster total regulatory capital levels. This issuance is considered as Tier II capital for our BIS ratio and helps soften the fall in this ratio due to the foreign exchange effects.
Higher NIMs in the quarter due to higher inflation and improved funding mix
In 1Q20, Net interest income, NII, increased 20.3% compared to 1Q19 and 3.3% compared to 4Q19. This rise was driven by strong growth of interest earning assets and a higher Net interest margin (NIM). The Bank’s NIM in 1Q20 was 4.2%, stable compared to 4Q19 and an improvement on the 3.9% in 1Q19. The YoY increase in the NIM was mainly due to the higher UF inflation rate, a decrease of 250bp in the short-term interest rates, and the improved funding mix driven by the high growth of demand deposits.
Record client growth and client satisfaction. Number 1 in NPS.
The Bank’s business activity remained solid in 1Q20 with record account openings in the quarter, reflecting the strength of the Bank’s digital channels in capturing new clients and cross-selling existing ones. In 2018, client acquisition ranged between 30,000-40,000 a quarter compared to 60,000 in 2019 and 87,000 in 1Q20.
The rise in clients and cross-selling was also fueled by the ongoing improvements in client service. According to the latest surveys, we became Top 1 in Net Promoter Score (NPS), closing the gap with the leader.
Investment plans moving forward. Klare launched.
The Bank has announced a 3-year investment plan totaling
In April, Klare was officially launched (www.klare.cl). This is an online digital platform for brokering insurance products of an insurtech that Santander supports. In the first stage, it will be offering mainly life insurance and expects to add on more products in the future. In this site individuals can easily compare and shop for a life insurance that suits their needs and budget.
Fee income increasing 5.3% YoY driven by the rise in clients card fees
The strength of client growth, rising client loyalty and our successful strategy in the card business drove fee income in the quarter, which increased 5.3% YoY. Fees from retail banking increased 2.0% YoY and fees from the Middle-market segment rose 8.0% YoY.
Lower treasury income in the quarter
Results from Total financial transactions, net was a gain of Ch$22,847 million in 1Q20, a decrease compared to 1Q19 and 4Q19. Client treasury services revenues, which make up the bulk of our treasury income, reached a solid gain of Ch$30,413 million in the quarter, an increase of 0.5% compared to 1Q19 and a decrease of 13.3% compared to 4Q19. With the uncertainty in the global markets and volatility of exchange rates, demand for treasury products remained high. Non-client treasury totaled a loss of Ch$7,566 million in the quarter main due to the increase in volatility in fixed income markets that led to a higher loss from the credit value adjustment of derivatives.
Productivity continues to rise. Efficiency ratio of 40.6% in the quarter
In 1Q20, operating expenses increased 6.2% YoY and 1.1%QoQ. The YoY growth was mainly due to the depreciation of the peso, the spike in inflation and the incorporation of
CONTACT INFORMATION
Investor Relations
Bandera 140, Floor 20
Tel: (562) 2320-8284
Email: irelations@santander.cl
Website: www.santander.cl
1 The information contained in this report is unaudited and is presented in accordance with Chilean Bank GAAP as defined by the
2 Additional provisions as defined by the CMF, which are not specific to any loan provisioning model and must be approved by the Board
3
4 BIS ratio: Regulatory capital divided by RWA.
Source: Banco Santander Chile