• Net Income: Increased 11.7% quarter-on-quarter and 82% year-on-year.
• Return on Equity (ROE): 23.1% for the quarter and 18.2% year-to-date.
• Net Interest Margin: 3.9% for the quarter and 3.4% year-to-date.
• Loan Growth: Adjusted year-on-year growth of around 2%.
• Total Deposits: Increased 1.1% in the quarter and 3.7% year-on-year.
• Fee Income: Increased 8.3% quarter-on-quarter; 5.4% year-on-year growth, excluding interchange fee cap impact, would have been around 10%.
• Efficiency Ratio: 36.3% for the quarter and 40% year-to-date.
• Cost of Risk: Around 1.3% for the full year.
• Dividend Provision: Increased to 70% of 2024 income.
• Capital Ratio: 17.2% with a core equity ratio of 10.7% under Chilean regulation.

• Warning! GuruFocus has detected 5 Warning Signs with BSAC.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Banco Santander Chile (NYSE:BSAC) achieved a strong third quarter with a return on equity (ROE) of 23.1%, surpassing their guidance for the full year.
• The bank's digital transformation strategy is progressing well, with a 7% year-on-year growth in digital clients, reaching 2.1 million.
• BSAC's Getnet platform is gaining traction, contributing significantly to fee income with a 27% year-on-year growth in business current accounts.
• The bank's efficiency ratio improved to 36.3% in the last quarter, reflecting controlled expenses and improved financial income.
• BSAC's sustainability efforts were recognized with an 80-point score in the Dow Jones Sustainability Index, placing it in the top 3% of banks worldwide.

Negative Points

• The Chilean economy's labor market showed signs of slowing down in the third quarter, which could impact future growth.
• Asset quality ratios are deteriorating, with rising non-performing loans (NPLs) and impaired ratios due to economic cycle effects.
• The bank's commercial loan book contracted, partly due to slower economic activity and changes in consolidation perimeter.
• Inflation is expected to rise, closing 2024 at 4.3%, which could impact consumer purchasing power and loan demand.
• The bank faces potential headwinds from external factors such as geopolitical tensions and fluctuating commodity prices, which could affect macroeconomic conditions.

Q & A Highlights

Q: With a core capital of 10.7%, how does Banco Santander Chile plan to manage its payout ratio if loan growth accelerates? A: Patricia Perez, Head of Asset & Liability Management, explained that the bank maintains a 1% buffer above the 9% fully loaded requirement, allowing for normal growth and a 60-70% dividend payout. Cristian Vicuna, IR Contact Officer, added that different asset lines have varying risk weights, and the bank should sustain current dividend levels even with higher industry loan growth.

Q: What is the outlook for asset quality and coverage levels in the credit cycle? A: Cristian Vicuna noted that NPL levels are expected to remain stable for the next two quarters, with early signs of improvement in commercial portfolios. The bank is comfortable with current coverage levels, with consumer lending at over 350% and commercial loans above 100%, supported by collateral.

Q: Why is the loan growth outlook for 2025 only mid-single digits despite improving economic conditions? A: Cristian Vicuna stated that the industry is currently experiencing negative real growth, and the bank expects to return to GDP plus inflation levels. Consumer and SME segments show recovery, but large corporate demand remains subdued. Political outcomes could influence investment and loan growth.

Q: What are the potential headwinds for Banco Santander Chile's ROE outlook? A: Patricia Perez highlighted potential risks such as lower-than-expected inflation and cost of risk. Cristian Vicuna added that external factors like geopolitical tensions and commodity prices could impact the macroeconomic scenario, but operationally, the bank remains solid.

Q: How does Banco Santander Chile view competition in the digital banking space? A: Cristian Vicuna emphasized the bank's first-mover advantage in digital onboarding and customer acquisition since 2016. While competition is intensifying, the bank leverages cross-selling capabilities and high customer experience levels to maintain its edge.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.