Q2 2024 Banco Santander-Chile Earnings Call
Operator: Ladies and gentlemen, thank you for standing by, and I would like to welcome you to the 2Q2024 results conference call on the 2nd of August 2024. At this time, all participant lines are in listen-only mode. The format of the call today will be a presentation by the management team followed by a question and answer session. So, without further ado, I would now like to pass the line to Mr. Emiliano Muratore, the CFO of Bco Sntndr Chile. Please go ahead, sir. Good morning, everyone.
Operator: Ladies and gentlemen, thank you for standing by, and I would like to welcome you to Baco Sntndr Chile 2Q 2024 results conference call on the 2nd of August 2024.
Ladies and gentlemen, thank you for standing by and I would like to welcome you.
Tobacco Santander: Tobacco Santander, Chile, Tokyo 2024 results conference call on the second of August 2024 at this time all participant lines are in listen only mode. The format of the call today will be a presentation by the management team followed by a question and answer session.
Operator: At this time, participant lines are on listen-only mode.
Operator: The format of the call today will be presentation by the management team, followed by a question and answer session.
Operator: So, without further ado, I would now like to pass the line to Mr. Emiliano Muratore, the CFO, Baco Sntndr Chile. Please go ahead, sir.
Emiliano Muratore: So without further Ado I would now like to pass the line to Mr. Emiliano Muratore CFO Banco Santander, Chile. Please go ahead Sir.
Emiliano Muratore: Good morning everyone. Welcome to Banco Sntndr Chile's second quarter 2024 results webcast and conference call. This is Emiliano Muratore, CFO, and I'm joined today by Cristian Vicuna, Chief of Strategic Planning and Investor Relations, and Carmen Gloria Silva, our economist. The agenda for today is the following. First, Carmen Gloria will discuss the macro scenario. Then Cristian will review the strategy and results of the second quarter and guidance for the year. And finally, we will have a Q&A. Now, I pass it on to Carmen Gloria.
Emiliano Muratore: Good morning, everyone. Welcome to Baco Sntndr Chile's 2Q 2024 results webcast and conference call. This is Emiliano Muratore, CFO, and I'm joined today by Cristian Vicunia, Chief of Strategic Planning and Investor Relations, and Carmen Gloria Silva, our economist.
Emiliano Muratore: Good morning, everyone welcome to Banco Santander, Chile second quarter, 2024 results webcast and conference call.
This is Sam again, I'm would've thought as CFO and I'm joined today by Chris Young Laconia, Chief of strategic planning and Investor Relations.
Speaker Change: Government, obviously by our economist.
Emiliano Muratore: The agenda for today is the following. First, Carmen Gloria will discuss the macro scenario. Then, Cristian will review the strategy and results of the 2nd quarter and guidance for the year, and finally, we will have a Q&A session.
The agenda for today is the following first government Gloria will discuss the macro scenario then well.
The strategy of results of the second quarter and guidance for the year and finally, we will have a Q&A session.
Emiliano Muratore: Now I pass it on to Carmen Gloria.
Now I pass it on to government Gloria.
Carmen Gloria Silva: Thank you, Emiliano. The Chilean economy has continued to show fine self-recovery, although at a more moderate pace. Following a better-than-expected performance at the beginning of the year, the preliminary estimate for GDP growth for the 2nd quarter is just 1.6% annually. This result has been influenced by transitory factors, such as the decline in educational services and the calendar effect. However, the seasonally adjusts the activity index exhibited growth consistent with this trend. Domestic demand has been gradually recovering, especially in consumption, while investment performance has remained weak. The contribution of the mining sector to activity growth has been substantial, and the external impulse is greater, given the higher international corporate prices and better terms of trade.
Government Gloria: Thank you Amy.
Carmen Gloria Silva: The Chilean economy has continued to show signs of recovery, although at a more moderate pace. Following a better-than-expected performance at the beginning of the year, the preliminary estimate for GDP growth for the second quarter is just 1.6% annually. This result has been influenced by transitory factors such as the decline in educational services and the calendar effect. However, the Seasonally Adjusted Activity Index exhibited growth consistent with this trend. Domestic demand has been gradually recovering, especially for consumption, while investment performance has remained weak.
Gloria: The Chilean economy has continued to show signs of recovery, although at a more moderate.
Government Gloria: Yeah.
Gloria: Following a better than expected assortments are at the beginning of the year. The preliminary estimates for GDP growth for the second quarter is just one 6% annually.
Speaker Change: This result has been influenced by transitory factors.
Government Gloria: The decline in international services and the calendar effect.
Government Gloria: However, the seasonally adjusted activity index exhibited growth consistent with the facts.
Government Gloria: Domestic demand has been gradually recovers, especially in consumption.
Government Gloria: Investment performance has remained weak.
Carmen Gloria Silva: The contribution of the mining sector to activity growth has been substantial, and the external impulse is greater given the higher international copper prices and better terms of trade. The labor market continues to gain momentum, with the participation rate approaching pre-pandemic levels. Real wages continue to rise, which, along with employment growth, has been supporting private consumption.
Speaker Change: You really shouldn't the mining sector activity growth has been substantial and external having both is great. There given the higher international copper prices and better shape.
Carmen Gloria Silva: The labor market continues to gain momentum, with the substantial rate of approaching pre-pandemic levels. Real wages continue to rise, which, along with employment growth, has been supporting private consumption.
Government Gloria: Great.
Speaker Change: The labor market continues to gain momentum with the participation rate approaching rep endemic level.
Government Gloria: Real wages continue to rise.
Government Gloria: Along with employment growth has been supporting Brexit concerns.
Carmen Gloria Silva: Looking ahead, we estimate that the economy will continue to grow. However, the recent lower level of activity has led us to revise the annual GDP estimate downward this year from 2.8% to 2.5% and to 2.4% for 2025. The exchange rate appreciated by 4% in the second quarter, but it exhibited high volatility.
Carmen Gloria Silva: Lufina has, we estimate that the economy will continue to grow. However, the recent lower level of activity has led us to survive the annual GDP estimate downward this year, from 2.8% to 2.5%, and 2.4% for 2025. The exchange rate appreciated by 4% in the 2nd quarter, but exceeding high volatility. The most important drivers were the rising corporate prices and the shift in risk appetite from global investors. In the baseline scenario, we estimate that the local currency will continue a gradual process of convergence toward its equilibrium values. Let by expectations of a greater interest rate differential, hovering at a level slightly below 900 pesos as of December this year.
Government Gloria: Looking ahead, we estimate that the economy will continue to grow however.
Government Gloria: However, the risk at a lower level of activity has led us to revise the annual GDP estimates downward this year from two 8% to one 5%.
Government Gloria: Two 4% for 2025.
Government Gloria: The exchange rate appreciated by 4% in the second quarter, but exceeded the high volatility.
Carmen Gloria Silva: The most important drivers were the rise in copper prices and the shift in risk appetite from global investors. In the baseline scenario, we estimate that the local currency will continue a gradual process of convergence toward its equilibrium value, led by expectations of a greater interest rate differential hovering at a level slightly below 900 pesos as of December this year. In the first half of 2024, inflation followed the predicted trend, with a decline in both the total and core inflation indexes.
Government Gloria: The most important drivers where the rising copper prices and the shift in risk appetite from investors.
Government Gloria: In the baseline scenario, we estimate that the local currency will continue at Bravo roster of competitors.
Government Gloria: Lithium.
Speaker Change: That my expectations are of great interest rate differential hovering at the levels slightly below at 900.
Government Gloria: As of December this year.
Carmen Gloria Silva: In the first half of 2024, inflation followed the predicate trend with a decline in both the total and core index. This reflects a moderate path through of the deposition of the peso in the first month of the year and the increase in oil prices. The central bank continued with the rate cutting process during the first half of 2024, accumulating a decline of 250 basis points in the monetary policy rate. In this week's meeting, the board held a rate at 5.75% and highlighted that it would have gathered the bulk of the cuts for this year. In the central scenario, the rate will be reduced further over the two-year horizon.
Government Gloria: In the first half of 'twenty 'twenty four inflation fall I would predict that trend with a decline in both total.
Speaker Change: And in Texas.
Carmen Gloria Silva: This reflects a moderate pass-through of the depreciation of the peso in the first month of the year and the increase in oil prices. However, inflationary pressures are expected to rise in the coming months due to the anticipated adjustment in electricity rates and the rebound in domestic demand. Therefore, the CPI estimate has been raised from 3.9% to 4.3%, which means a U.S. variation of 4% this year and to 3.4% for 2025. Inflation is expected to reach the 3% target in the first quarter of 2026.
Speaker Change: This reflects a mother I threw off the depreciation of the peso in the first month of the year and the increase in oil prices.
Speaker Change: Inflationary pressures are expected to rise in the coming months, you don't the anticipated adjustment electricity to get rate.
Speaker Change: The rebound in domestic demand.
Speaker Change: Therefore, the CPI estimate has been raised from three 9%.
Speaker Change: 424, 3%, which means you have a variation of 4% this year and two three.
Speaker Change: 4% for 2025 infill.
Speaker Change: Inflation is expected to reach the 3% target in the first quarter at 26.
Carmen Gloria Silva: The central bank continued with the rate-cutting process during the first half of 2024, accumulating a decline of 250 basis points in the monetary policy rate. At this week's meeting, the board held the rate at 5.75% and highlighted that it would have gathered the bulk of the cuts foreseen for this year. In the central scenario, the rate will be reduced further over the two-year horizon. Based on this, we estimate a reduction of between 25 and 50 basis points for the following meetings of the year, bringing the rate close to 5.25 percent by December 2024 and to its neutral value of 4.25 percent in the first quarter of 2026.
Speaker Change: The Central Bank continue with the rate cutting process. During the first half of 2024, accumulating a decline of 250 basis points in the monetary policy rate.
Speaker Change: In this week's meeting.
Speaker Change: The more healthy rate.
Speaker Change: Five 175%.
Speaker Change: You highlighted that you would gather the bulk of the costs, we're seeing for this year.
Speaker Change: In the central scenario the rate will be reduced further over the two year alright.
Carmen Gloria Silva: With this, we estimate a reduction of between 25 and 50 basis points for the following meetings of the year, bringing the rate close to 5.25% by December 2024 and to its neutral value of 4.25% in the first quarter or 2026.
Speaker Change: With this we estimate a reduction of between 25 and 50 basis points, Florida following meetings of the year, bringing the rate close to 525% by December 2024, and two it's neutral value of 425% in the first quarter or.
Speaker Change: 2026.
Carmen Gloria Silva: On the slide 5, we present the advances in the relevant regulatory framework. The tax compliance bill aims to increase tax revenue by 1.5% of GDP and reduce tax evasion and avoidance. This bill is currently being discussed in the Senate, where it has received support from opposition parties and was approved in general terms. Meanwhile, the pension system reform is still undergoing an intense negotiation process in Congress to gain approval. The government presented new proposals related to the distribution of the 6% additional contribution, considering 3% to individual accounts and 3% to solidarity. The first impressions from opposition parties suggest that there's still a long way to go to reach an agreement.
Carmen Gloria Silva: On slide five, we present the advances in the relevant regulatory framework. The Tax Compliance Bill aims to increase tax revenue by 1.5% of GDP and reduce tax evasion and avoidance. This bill is currently being discussed in the Senate, where it has received support from opposition parties and was approved in general terms. Meanwhile, the pension system reform is still undergoing an intense negotiation process in Congress to gain approval. The government presented new proposals related to the distribution of the 6% additional contribution, considering 3% for individual accounts and 3% for solidarity. However, the first impressions from opposition parties suggest that there's still a long way to go to reach an agreement.
Speaker Change: On slide five we present the advances in the relevant regulatory frameworks.
Speaker Change: The tax compliance aimed to increase revenue by one 5% of GDP.
Speaker Change: Reduce excavation and other items.
Speaker Change: This deal is currently being discussed in the Senate.
Speaker Change: Where it has received support from opposition parties and once approved in general sense.
Speaker Change: Meanwhile, the pension system reform is still undergoing intense negotiation process in congress to gain approval.
Speaker Change: The government perspective, new proposals related to the distribution of the 6% additional contribution.
Speaker Change: 3%.
Speaker Change: Is that 3% to study that.
Speaker Change: The first impressions from competition for Rguest suggests that there's still a long way to go to reach an agreement.
Carmen Gloria Silva: In July, the CMS published the regulatory framework for implementing the open finance system. The rule becomes effective 24 months after publication and considers the progressive submission of information to be shared by banks, and payments are issues within the next 18 months. This is an additional 18-month period for the rest of the participants.
Carmen Gloria Silva: In July, the CMF published the Regulatory Framework for Implementing the Open Finance System. The rule becomes effective 24 months after publication and considers the progressive submission of information to be shared by bank and payment card issuers within the next 18 months, with an additional 18 month period for the rest of the participants. Rest in peace. Changes to the Fraud Law were approved with the aim of containing so-called self-fraud. The responsibility remains with the issuer, but now the client must file a complaint before requesting a refund. It also establishes situations where reimbursement can be suspended, and thresholds for reimbursement are reduced. Finally, the Consolidated Debt Registry Law was published in June and will become effective in 2021.
Speaker Change: In July the CMS published their regulatory framework for implementing that up and finance system.
Speaker Change: The rule becomes effective 24 months after publication and considers the progressive submission of information to be shared by banks and statements are issuers within the next 18 months.
Speaker Change: With an additional 18 in U S.
Speaker Change: For the rest of the party.
Carmen Gloria Silva: Restlessly, changes to the fraud law were approved with the aim of containing so-called self-fraud. The responsibility remains with the issue, but now the client must find a compliant before requesting a reform. It also establishes situations where reimbursement can be suspended, and threshold for reimbursement are...
Speaker Change: Rest of the fleet.
Speaker Change: Changes to the front law, whereas with the aim of maintaining so call itself for us.
Speaker Change: Our responsibility remains with the issuer, but now the client file our compliance before requesting our Florida.
Speaker Change: It also establishes situations where reimbursement can be suspended at <unk>.
Speaker Change: Fresh coat, where reimbursements are reduced.
Carmen Gloria Silva: Finally, the consolidated depth registry law was published in June and will become effective in 21 months.
Speaker Change: Finally, the consolidated debt registry.
Speaker Change: Average in June and will become effective in 'twenty one.
Carmen Gloria Silva: Thank you, Cameron Gloria.
Cristian Vicuña: Thank you, Carmen and Gloria. Turning our attention to slide seven, let me begin by reminding you of our commitment to our Chile First strategy. We aspire to lead the Chilean banking industry in terms of contribution to its various stakeholders. This strategy, which we have named Chile First with four pillars, focuses on what we want to become and the second two pillars on how we want to do it.
Gloria: Thank you Gloria.
Cristian Vicuña: Turning our attention to slide seven, let me begin by reminding you of our commitment to our Telefirst strategy. We aspire to lead the Chilean banking industry in terms of contribution to its various stakeholders. This strategy we have named Chile First with four pillars. The first two pillars focus on what we want to become, and the second two pillars on how we want to do it. So first and foremost, we are engaged in a transformative journey towards becoming a digital bank with branches. Our transformation into a digital bank is not only about adopting the cutting-edge technology, but also about having a friendly physical presence through our innovative work affairs.
Speaker Change: Turning our attention to slide seven let me begin by reminding you of our commitment to our to the first strategy.
Speaker Change: We aspire to lead the Chilean banking industry in terms of contribution to its various stakeholders. This strategy. We have named the first with four pillars. The first two pillars focus on what do we want to become and the second two pillars on how we want to do it. So first and foremost we are engaged in <unk>.
Cristian Vicuña: So, first and foremost, we are engaged in a transformative journey towards becoming a digital bank with branches. Our transformation into a digital bank is not only about adopting cutting-edge technology but also about having a friendly physical presence through our innovative WorkFS. These spaces are more than just places to interact with retail customers.
Speaker Change: Transformative journey towards becoming a digital bank with branches.
Speaker Change: Our transformation into a digital bank is not only about adopting the cutting edge technology, but also about having a friendly physical presence through our innovative work assess these spaces are more than just places to interact with retail customers.
Cristian Vicuña: These spaces are more than just places to interact with retail customers. They are dynamic apps that promote connectivity for both customers and potential customers. With advanced technology and a commitment to excellence service, our work affairs are designed to redefine the banking experience.
Cristian Vicuña: They are dynamic hubs that promote connectivity for both customers and potential. With advanced technology and a commitment to excellent service, our work cafes are designed to redefine the banking experience. The medium-term objective is to reach 5 million customers and 450,000 SMEs.
Speaker Change: Our dynamic house that promote connectivity for both customers and potential customers with advanced technology and our commitment to excellent service. Our workers are designed to redefine the banking experience.
Cristian Vicuña: The medium term objective is to reach 5 million customers and 450,000 SME clients. Our second pillar is centered on providing specialized value added services tailored to some business segments. Our commitment is to deliver premium transactional trade, foreign exchange, sustainable finance, and advisory products and services. Ensuring our clients receive a top-notch experience. Examples of this include our corporate investment bank, our specialized attention model for commercial banking, our sometimes their consumer business that offers cross-financing and get net or acquiring business.
Speaker Change: The medium term objective is to reach 5 million customers and 450000 SME clients.
Cristian Vicuña: Our second pillar is centered on providing specialized value-added services tailored to some business segments. Our commitment is to deliver premium transactional trade, foreign exchange, sustainable finance, and advisory products and services, ensuring our clients receive a top-notch experience. Examples of this include our corporate investment bank, our specialized attention model for commercial banking, our Sntndr consumer business that offers cash financing, and Gettnet, our acquiring discounts. In our third pillar, we are committed to fostering innovation and propelling growth by challenging the status quo and creating new business opportunities. A good example of this is the disruption we caused in Chile with the four-part model when we introduced our acquiring business, GetNet, to the market.
Speaker Change: Our second pillar is centered on providing specialized value added services tailored to some business segments. Our commitment is to deliver premium transactional trade foreign exchange sustainable finance and advisory products and services, ensuring our clients receive a topnotch experience.
Speaker Change: Examples of this include our corporate investment bank, our specialized attention model for our commercial banking, our Santander consumer business that offer cost financing and getting it our acquiring business.
Cristian Vicuña: In our third pillar, we are committed to fostering innovation and proper growth by challenging the status quo and creating new business opportunities. A good example of this is the disruption we incurred in Chile with the four-part model when we introduced our acquiring business Getnet to the market. So we aim to lead the change in redefining the banking landscape. We actively seek out new business opportunities, pioneering the sustainable transformation of our customers. By challenging conventions, we aim to drive growth and cultivate success.
Speaker Change: In our third pillar, we are committed to fostering innovation and propylene growth by challenging the status quo and creating new business opportunities.
Speaker Change: A good example of this is there is Russian we incurred in Chile with the four part model when we introduced our acquiring business getting it to the market. So we aim to lead the change in redefining the banking landscape.
Cristian Vicuña: We aim to lead the change in redefining banking. We actively seek out new business opportunities, pioneering the sustainable transformation of our customers. By challenging conventions, we aim to drive growth and innovation. Lastly, we place great importance on the role of our organization. To realize our objectives, we need the best talent.
Speaker Change: We actively seek out new business opportunities pioneering the sustainable transformation of our customers.
Speaker Change: By challenging conventions, we aim to drive growth and cultivate success.
Cristian Vicuña: Lastly, we place great importance on the role of our organization. To realize our objectives, we need the best talent. We are dedicated to building an agile, collaborative, and high-performing culture. We recognize that diversity is our strength, and individuals will flourish based on merit. We are constructing a thriving community where talents are nurtured and innovative ideas are highly valued.
Speaker Change: Lastly, we place great importance on the role of our organization to realize our objectives, we need the best talent. We are dedicated to building on the gyro collaborated and high performing culture. We recognize that diversity is our strength and individuals will flourish based on merits we're constructing.
Cristian Vicuña: We are dedicated to building an agile, collaborative, and high-performance culture. We recognize that diversity is our strength, and individuals will flourish based on merit. We are constructing a thriving community where talents are nurtured, and innovative ideas are highly valued. The outstanding success of our diesel products has been firmly established during 2023 with the continuous growth of our digital client base. Key initiatives such as Santander Life and, more recently, Mas Lucas have been instrumental in achieving this.
Speaker Change: Thriving community, where talents are nurtured an innovative idea for a highly value.
Cristian Vicuña: The outstanding success of our digital products has been firmly established during 2023, with the continuous growth of our digital client base. He initiatives such as Santander Life and, more recently, Mass Lucas have been instrumental in achieving this. The Mass Lucas account was launched on March 23 and is the first 100 percent of the item savings account for the mass markets. In recent months, we have launched a mass-lookers account for young people too. In total, there are now more than 177,000 mass-lookers accounts with activity exceeding our expectations, with an average of 15,000 new accounts open per month.
Speaker Change: The outstanding success of our diesel products has been firmly established.
Speaker Change: During 2023 with the continued growth of our digital client base key initiatives, such as Santander life and more recently Mark Lucas have been instrumental in achieving this.
Cristian Vicuña: The Masked Lucas account was launched on March 23, and it is the first 100% digital site on savings accounts for the mass market. In recent months, we have launched a Maslucas account for young people too. In total, there are now more than 177,000 Maslucas accounts with activity, exceeding our expectations, with an average of 15,000 new accounts opened per month. Notably, the onboarding process for Maslucas is entirely digital, featuring facial recognition technology and no password requirement.
Mark Lucas: The mass Lucas account was launched in March 'twenty three.
Speaker Change: The first 100% Ddos Strydom savings account for the mass market.
Speaker Change: In recent months, we have launched our MS. Lucas account for young people to in total there are now more than 177000 must Lucas account with activity exceeding our expectations with an average of 15000, new accounts opened per month.
Cristian Vicuña: Notably, the onboarding process for mass-lookers is entirely digital, featuring facial recognition technology and no password requirements. These accounts come with no fixed or variable costs and accept deposits of up to 5 million pesos.
Speaker Change: Notably the Onboarding process for MS. Lucca see some pretty diesel featuring facial recognition technology and no password requirements. These account comes with no fixed or variable costs and accept deposits of up to 5 million pesos.
Cristian Vicuña: This account comes with no fixed or variable costs and accepts deposits of up to 5 million pesos. On slide 9, we can see how the advances of our digital strategy are allowing us to continue the transformation of the branch network through WorkCafes to improve productivity. Our bank's WorkCafe branches are expanding to cater to the specific needs of our clients. We have launched three types of WorkCafes.
Cristian Vicuña: On slide 9, we can see how the advances of our needle strategy are allowing us to continue the transformation of the branch network through work-a-fest to improve productivity. Our bank's work-a-fest branches are expanding to cater to the specific needs of our clients. We have launched three types of new work-a-fest performance: successful work-a-fest, which consolidates cash operations into transaction apps while maintaining our work-a-fest ambiance. This is a great initiative as it provides an efficient and secure banking experience for our customers. We have already opened seven of these branches, impacted positively in the communities that use them, with better levels of experience, extended hours, and increased security.
Speaker Change: On slide nine we can see how the advantages of our diesel strategy is allowing us to continue the transformation of the branch network through work asked this to improve productivity.
Speaker Change: Our banks work of our branches are expanding to cater to the specific needs of our clients. We have launched three types of new work of performance successful work of Expresso, which consolidates cash operations into transaction, perhaps while maintaining a work if the ambiance. This is a great initiative as it provides some efficient unsecured banking.
Cristian Vicuña: New WorkAffair format, the successful WorkAffair Expresso, which consolidates cash operations into transaction hubs while maintaining a WorkAffair ambience. This is a great initiative as it provides an efficient and secure banking experience for our customers. We have already opened seven of these branches, impacting positively on the communities that use them, with better levels of experience, extended hours, and increased security. We also have our WorkFS startup, which offers a comprehensive solution to all the needs of entrepreneurs, especially to increase banking usage, carry out pilot programs with the bank, and even offer financing.
Speaker Change: <unk> for our customers we have already opened seven of these branches impacted positively in the communities that use them with better levels of experience extended hours and increased security.
Cristian Vicuña: We also have our work-a-fest startup, which offers a comprehensive solution to all the needs of entrepreneurs, and especially to increase banking usage, carry out pilot programs with the bank, and even offer financing. This is a great way to support entrepreneurs and help them grow their business. Finally, we have launched work-a-festionists, a dedicated asset management work-a-fest design especially for investment advice for clients and non-clients, independent of their income situation. In this branch, we offer weekly talks about different investment products or economic trends to provide advice services, and in this way support financial education.
Speaker Change: We also have our work as a startup which offers a comprehensive solution to all the needs of entrepreneurs and especially to increased banking usage carryall pilot programs with the bank and even offer financing. This is a great way to support entrepreneurs and help them grow their business.
Cristian Vicuña: This is a great way to support entrepreneurs and help them grow their business. Finally, we have launched WorkCafe Inversiones, a dedicated asset management WorkCafe designed especially for investment advice for clients and non-clients, independent of their income situation.
Speaker Change: Finally, we have launched work up in Brazil.
Speaker Change: Dedicated asset monitoring the work of <unk>.
Speaker Change: Sign, especially for investment advice for clients and non clients independent of their income situation.
Cristian Vicuña: In this branch, we offer weekly talks about different investment products or economic trends to provide advice services and, in this way, support financial education. On the bottom of the slide, you can see how the use of digital channels and the transformation of our branch network has led to a new level of branch footprint, decreasing 15% in 2023 and a further 1% in 2024 to a level of 244 branches as of today.
Speaker Change: In this branch we offer weekly talks about Detroit investment products or economic trends to provide a buy services and in this way support financial education.
Cristian Vicuña: At the bottom of the slide, you can see how the use of the use of channels and the transformation of our branch network has led to a new level of branch footprint, decreasing 15% in 2023 and a further 1% in 2024, to a level of 244 branches as of today. Notably, 35% of our branches no longer have human tellers, with these branches providing value-added services like our traditional work-a-festionists. At the same time, our productivity has continued to improve, with loan and deposit volumes per branch increasing 10.2% year over year and a 6.7 rise in the same metric per employee during the same period.
Speaker Change: At the bottom of the slide you can see how the use of the adult channels on the transformation of our branch network has led to a new level of branch footprint decreasing 15% in 2023 and a further 1% in 2024 to a level of 244 branches as of today.
Cristian Vicuña: Notably, 35% of our branches no longer have human tellers, with these branches providing value-added services like our traditional work. At the same time, our productivity has continued to improve, with loan and deposit volumes per branch increasing 10.2% year-over-year and 6.7% rise in the same metric per employee during the same period. On slide 10, we can see how we have rolled out key initiatives to meet company needs and add value to their business. Our digital life account for SMEs is low-cost and simple to open.
Speaker Change: Notably 35% of our branches no longer have human tellers.
Speaker Change: With these branches providing value added services like our traditional work at.
Speaker Change: At the same time, our productivity has continued to improve with loan and deposit volumes per branch, increasing 10, 2% year over year on six seven right in the same metric per employee during the same period.
Cristian Vicuña: On slide 10, we can see how we have rolled out key initiatives to meet company needs and add value to their businesses. Our digital life account for SMEs is low cost and simple to open. It continues to prove popular, with a 29% year-over-year increase in current account for businesses, as reported by the CMF, capturing 37.2% of the market as of April 2024. GedNet, our acquiring business, continues to be an important driver for capturing new clients. Our range of payment solutions integrated with the banking services such as the current account, have attracted smaller merchants, and we are now expanding into larger, more sophisticated clients using a host-to-host solution, providing a more integrated payment.
Speaker Change: On slide 10, we can see how we have rollout key initiatives to meet company needs and add value to their businesses.
Speaker Change: <unk> life account for Smes is low cost and simple to open it continues to prove popular with a 29% year over year in current accounts for businesses as reported by the CMS, capturing 37, 2% of the market as of April 2024.
Cristian Vicuña: It continues to prove popular, with a 29% year-over-year increase in current accounts for businesses, as reported by the CMF, capturing 37.2% of the market as of April 2024. GetNet, our acquiring business, continues to be an important driver for acquiring new clients. Our range of payment solutions, integrated with banking services such as the current account, have attracted smaller merchants, and we are now expanding into larger, more sophisticated clients using a host-to-host solution, providing a more integrated payment system.
Speaker Change: GAAP net our acquiring business continues to be an important driver for capturing new clients.
Speaker Change: Our range of payment solutions integrated with the banking services such as the current accounts have attracted smaller merchants and we are now expanding into larger more sophisticated clients using our house the whole solution, providing a more integrated payment system.
Cristian Vicuña: Currently, there are more than 227,000 active Get-Net points of sales terminals across the country. These POSs serve a total of 170,000 clients, including some 140,000 SMEs.
Cristian Vicuña: Currently, there are more than 227,000 active getnet points of sale terminals across the country. These POSs serve a total of 170,000 clients, including some 140,000 SMEs. During the first semester of 2024, GEDNET generated fees totaling 29.9 billion pesos and a net income of 7.7 billion pesos. On slide 11, we would like to highlight the latest products that we have launched in the last quarter. As we briefly mentioned a few minutes ago, we have launched a Maslucas account for 12 to 17-year-olds, free of charge, with monthly interest gains.
Speaker Change: Currently there are more than 227000 active get net points of sales terminals across the country.
Speaker Change: <unk> serve a total of 170000 clients, including some 140000 SME.
Cristian Vicuña: During the first semester of 2024, Get-net generated fees totaling 29.9 billion pesos and a net income of 7.7 billion pesos.
Speaker Change: During the first semester of 2020 for getting it generated piece totaling $29 9 billion pesos and a net income of $7 7 billion peso.
Cristian Vicuña: On the slide 11, we would like to highlight the latest products that we have launched in the last quarter. As we briefly mentioned a few minutes ago, we have launched a mass-lookers account for 12 to 17-year-olds, free of charge, with monthly interest gains. This is a 100% idle-side account with a debit card. With this, we aim to track clients as they begin their banking relationship, delivering digital products that allow for debit cards and inline transfers. We also launch a common humanitarian health insurance with the UC Priestus Medical Centers, where they implemented a revolutionary medical model for Chile.
Speaker Change: On the slide 11, we would like to highlight the latest products that we have launched in the last quarter as.
Speaker Change: As we briefly mentioned a few minutes ago, we have long term us Lukas account for 12% to 17 year olds free of charge with monthly into its gains. This is 100% diesel side account with a debit card.
Cristian Vicuña: This is a 100% Deedleside account with a debit card. With this, we aim to attract clients as they begin their banking relationship, delivering digital products that allow for debit cards and online funds. We also launched a co-implementary health insurance with the UC Christos Medical Centers, where they implemented a revolutionary medical model for Chile. Clients have access to a primary care doctor who is available for both in-person and online consultations and who refers patients to the appropriate specialist and maintains a holistic view of the patient, encouraging prevention and reducing waiting times for specialists.
Speaker Change: With this we aim to attract clients as they begin their banking relationships delivering diesel products that allow for debit cards in line transfers.
Speaker Change: We also launched a complementary health insurance with the UC priestess medical centers, where they implemented a revolutionary medical model for Chile.
Cristian Vicuña: Clients have access to a primary care doctor who is available for both in-person and online consultations and who refers patients to the appropriate specialist and maintains a holistic view of the patient, encouraging prevention and reducing waiting times for specialists.
Speaker Change: Clients have access to a primary care Doctor who is available for both in person and online consultations and <unk> patients to the appropriate specialists that maintains a holistic view of the patient encouraging prevention in reducing waiting times for specialist.
Cristian Vicuña: In June 24, we open our auto-compara platform up to non-bank customers. Auto-compara is a digital platform to compare current insurance in a transparent and efficient way, allowing people to make an informed decision before purchasing insurance. This is one of the few platforms available in Chile with this service. We also market our foreign exchange platform. We can currently make currency transfers to 28 countries online through the platform. These transfers are safer and faster than strict transfers and are free of charge for our customers.
Cristian Vicuña: On June 24, we opened our Autocompara platform to non-bank customers. Autocompara is a digital platform to compare car insurance in a transparent and efficient way, allowing people to make an informed decision before purchasing insurance.
Speaker Change: In June 24, we open our output competitor platform up to non bank customers. Our telecom product. These are these are platform to compare current insurance in a transparent and efficient way, allowing people to make an informed decision before birth chasing the assurance. This is one of the few platforms available in tumor with this service.
Cristian Vicuña: This is one of the few platforms available in Chile with this service. We also market our foreign exchange platform. We can currently make currency transfers to 28 countries online through the platform.
Speaker Change: We also market our foreign exchange platform. We can currently make currency transfers to <unk> 28 countries online through the platform. These transfers are safer and faster than script transfers on our free of charge for our customers.
Cristian Vicuña: These transfers are safer and faster than SWIFT transfers and are free of charge for our customers. On slide 12, we are pleased to show that we have been very consistent in leading the market in terms of customer recommendation, net promoters, scores, and peers. Our NPS score is based on feedback from over 50,000 surveys measuring over 30 NPS metrics across our various service channels on a daily basis. These invaluable feedbacks allow us to proactively manage and improve our client service.
Cristian Vicuña: On flight 12, we are pleased to show that we have been very consistent in leading the market in terms of customer recommendation in a promoter's course and P.S. Sustaining levels of around 60 points. Our MPS score is based on feedback from over the 50,000 surveys measuring over 30 MPS metrics across our various service channels on a daily basis. This invaluable feedback allows us to proactively manage and improve our client service. Our data and remote channels continue to receive very high levels of study extraction from our clients, with our app and our website achieving scores of about 70 points.
Speaker Change: On slide 12, we're pleased to show that we have been very consistent in leading market in terms of customer recommendation net promoter scores NPS sustaining levels of around 60 points. Our NPS score is based on feedback from over the 50000 surveys measuring over 30 NPS metrics across.
Speaker Change: Our various service channels on a daily basis. This invaluable feedback allow us to proactively manage and improve our client service.
Cristian Vicuña: Our digital and remote channels continue to receive very high levels of satisfaction from our clients, with our app and our website achieving scores of above 70 points. Our contact center is also highly rated, outperforming our peers. On slide 13, we can see how we are highly recognized as leaders in our industry. This year, Euromoney has awarded us the best bank in Chile for SMEs and ESG. ALAS20, an initiative that evaluates the public disclosure of sustainable development, ranked us in first place in sustainability.
Speaker Change: Are these all on remote channels continue to receive very high levels of predicts function from our clients.
Speaker Change: Our app on our web site achieving scores of about 70 points. Our contact center is also highly rated outperforming our peers.
Cristian Vicuña: Our contact center is also highly rated, outperforming our peers.
Cristian Vicuña: On flight 13, we can see how we are highly recognized as leaders in our industry. This year, EuroMani has awarded us with the best bank in Chile for SMEs and ESG. Alas, 20 and initiative that evaluates the public disclosure of sustainable development positions as in first place in sustainability in Chile. Regarding our sustainability rankings, we continuously lead the industry with sustainability, improving our rating to 14.1, the best among Chilean banks.
Speaker Change: On slide 13.
Speaker Change: We can see how.
Speaker Change: <unk>.
Speaker Change: How we are highly recognized as leaders in our industry. This year Euromoney has awarded US with the best Bank in Chile for Smes and ESG I'll ask 20 and initiative that evaluates the public disclosure of sustainable development positions us in first place in sustainability in Chile.
Cristian Vicuña: Regarding our sustainability rankings, we continue to lead the industry, with Sustainalytics improving our rating to 14.1, the best among Chilean banks. Now, let's talk about the trends in our results and balance sheet for 2024 and in the second quarter. On slide 15, we show a robust rebound in profitability and return on average equity for the second quarter of the year. As we can see, we reached an ROE of 20.7% in the quarter, and net income in the quarter totaled 218 billion pesos, an 81% increase compared to the first quarter of this year.
Speaker Change: Regarding our sustainability rankings, we continue to lead the industry with sustainability, improving our rating to $14 one the best one Chilean banks.
Cristian Vicuña: Now, let's talk about the trends in our results and balance sheet in 2024 and in the second quarter. On slide 15, we show a robust rebound of profitability and return over average equity on the second quarter of the year. As we can see, we reach an ROE of 20.7% in the quarter, and net income in the quarter total 218 billion pesos and 81% increase compared to the first quarter of this year. With this, our ROE year to date improved 285 basis points year over year to reach 15.8%. Well, within our guidance for 2024, with net income increasing 28.6% year over year.
Speaker Change: Now, let's talk about the trends in our results and balance sheet in 2024 and in the second quarter.
Speaker Change: On slide 15, we show a robust rebound of profitability and return it over to Robert <unk> equity on the second quarter of the year as we can see we reach on a ROE of 27% in the quarter. Our net income in the quarter totaled 218 billion pesos and 81% increase.
Speaker Change: Prior to the first quarter of this year.
Cristian Vicuña: With this, our ROE year-to-date improved 285 basis points year-over-year to reach 15.8%, well within our guidance for 2024, with net income increasing 28.6% year-over-year. These notable results are mainly due to our improvement in our main income lines, as we will see in the coming slides, with operating income improving 19.4% in the quarter driven by better margins. On slide 16, we can see the trends in our long. Our retail loans continue to grow steadily, with loans driven by consumer and mortgage, while commercial loans contracted 5.5% in the quarter.
Speaker Change: With this our ROE year to date improved 285 basis points year over year to reach 15, 8% well within our guidance for 2024 with net income increasing 28, 6% year over year.
Cristian Vicuña: These notable results are mainly due to our improvement on our main income lines, as we will see in the coming slides, with operating income improving 19.4% in the quarter, driven by better margins.
Speaker Change: This notable results are mainly due to an improvement in our main income lines as we will see in the coming slides with operating income improving 19, 4% in the quarter driven by better margins.
Cristian Vicuña: On slide 16, we can see the trends in our loan book. Our retail loans continue to grow steadily, with loans driven by consumer and mortgage, while commercial loans contracted 5.5% in the quarter. This contraction in the commercial loan book is in part due to a change in our consolidation perimeter. Bansa, a company dedicated to financing automotive dealers, is now excluded from the consolidation of the bank, decreasing the commercial loan book by 1%. Furthermore, the commercial loan book has been impacted by its lower economic activity. Mortgage loans grew in line with the US variation, while consumer lending was driven by credit cards and auto loans, with the latter in part explained by a loan portfolio purchase by our subsidiaries and their consumer.
Speaker Change: On slide 16, we can see the trends in our loan book.
Speaker Change: Our retail loans continued to grow steadily with loans driven by consumer on mortgage while commercial loans contracted five 5% in the quarter. This contraction in the commercial loan book.
Cristian Vicuña: This contraction in the Commercial Loan Book is, in part, due to a change in our consolidation perimeter. Bamsa, a company dedicated to financing automotive dealers, is now excluded from the consolidation of the bank, decreasing the commercial loan book by 1%.
Speaker Change: This in part due to a change in our consolidation perimeter Bunshaft a company dedicated to financing ultramodern dealers is now excluded from the consolidation of the bank decreasing the commercial loan book by 1%. Furthermore, the commercial loan book has been impacted by the slower economic activity.
Cristian Vicuña: Furthermore, the commercial loan book has been impacted by a slower economic... Mortgage loans grew in line with the U.S. variation, while consumer lending was driven by credit cards and auto loans, with the latter in part explained by a loan portfolio purchased by our subsidiary Santander. Overall, our loan book is following the economic cycle, and we expect modest growth for the full year. Regarding our funding, we see that time deposits decreased 5% in the quarter in response to the fall in short-term rates in Chile, while our demand deposits also fell 2.1%, leading to an overall decrease in our deposit base of 3.7% in the quarter. Despite this quarterly contraction, our total deposits increased by 4% on a yearly basis. However, we have seen our clients strongly prefer mutual funds, where we are the exclusive broker of Sntdr Asset Management.
Speaker Change: Mortgage loans grew in line with the U S variation, while consumer lending was driven by credit cards and auto loans with a ladder in part explained by our loan portfolio purchased by our subsidiary Santander consumer.
Cristian Vicuña: Overall, our loan book is following the economic cycle, and we expect modest growth for the full year. Regarding our funding, we see that time deposits decreased 5% in the quarter in response to the fall in short-term rates in Chile, while our demand deposits also fell 2.1%, leading to an overall decrease in our deposit base of 3.7% in the quarter. Despite this quarterly contraction, our total deposits increased 4% on a yearly basis. However, we have seen our clients strongly preferring mutual funds, where we are the exclusive broker of some tender asset management. Mutual funds increased 39% year over year and close to 8% in the quarter, achieving a high growth of AUMs. Furthermore, the bond insurance went up, taking advantage of local and global fixed income markets.
Speaker Change: Our loan book is following the economic cycle, and we expect modest growth for the full year.
Speaker Change: Regarding our funding we see that time deposits decreased 5% in the quarter in response to the fall in short term rates in Chile, while our demand deposits also fell two 1% leading to an overall decrease in our deposit base of three 7% in the quarter. Despite this quarterly contraction.
Speaker Change: Our total deposits increased 4% on a yearly basis. However, we have seen our clients strongly preferring mutual funds, where we are the exclusive broker of Santander asset management mutual funds increased 39% year over year on a close to 8% in the quarter achieving a high growth.
Cristian Vicuña: Mutual funds increased 39% year-over-year and close to 8% in the quarter, achieving high growth of AUM. Furthermore, bond insurance went up, taking advantage of local and global fixed income markets. During the pandemic, we obtained 6.2 trillion pesos in credit lines from the Central Bank of Chile. This credit line had two deadlines, one on April the 1st, representing 55% of the credit line, and the second installment and final one on July the 1st. We used the Liquidity Deposit Program provided by the Central Bank to make this payment, with no liquidity issues when making this payment.
Speaker Change: Yes.
Speaker Change: Furthermore, the bond insurance went up taking advantage of local and global fixed income markets.
Cristian Vicuña: During the pandemic, we obtained a 6.2 trillion pesos in credit lines from the Central Bank of Chile. This credit line had two deadlines, one on April 1st, representing 55% of the credit line, and the second installment and the final one on July 1st. We used the liquidity deposit program provided by the central bank to make these payments, with no liquidity issues on making these payments.
Speaker Change: During the pandemic, we obtain a fix.
Speaker Change: <unk> vessels in credit lines from the Central Bank of Chile.
Speaker Change: This credit line had two deadlines one on April the first representing 55% of the credit line and the second installment and final one on July the first.
Speaker Change: We used the liquidity deposit program provided by the Central Bank to make these payments with no liquidity issues on making these payments.
Cristian Vicuña: On July 18th, for the second quarter of 2024, we achieved a net interest margin of 3.6% and 3.1% year to date, confirming our recovery as planned. Our net interest income grew 54.5% year on year and 26% in the quarter. The NII in the second quarter benefited from higher interest income, as the lower monetary policy rate reduced our funding cost to 5% in the semester, down 2% in the same period last year. This improvement in cost of funds is explained by the following short-term rates from an average rate of 11.25% in the first semester of 2023 to 7% in the first semester of this year.
Cristian Vicuña: On slide 18, for the second quarter of 2024, we achieved a net interest margin of 3.6% and 3.1% year to date, confirming our recovery as planned. Our net interest income grew 54.5% year on year and 26% in the quarter. NII in the second quarter benefited from higher interest income as the lower monetary policy rate reduced our funding costs to 5% in the semester, down 2% in the same period last year.
Speaker Change: On slide 18 for the second quarter of 2024, we achieved a net interest margin of three 6% and three 1% year to date confirming our recovery as planned our net interest income grew 54, 5% year on year and 26.
Speaker Change: Percent in the quarter the NII in the second quarter benefited from higher interest income as the lower monetary policy rate reduced our funding cost to 5% in the semester was down 2% in the same period last year.
Cristian Vicuña: This improvement in the cost of funds is explained by the fall in short-term rates from an average rate of 11.25% in the first semester of 2023 to 7% in the first semester of this year. Our liabilities tend to have a lower duration than our assets, and therefore, when rates fall, the cost of our funding falls faster than the asset yield. Our net readjustment income improved 81.8% in the quarter after a weak start to the year after the U.S. variation increased from 0.8% in the first quarter to 1.3% in the second quarter. However, year on year, the UF variation was less than in 2023, and therefore, we saw a year-over-year decrease in this line.
Speaker Change: This improvement in cost of funds is explained by the falling short term rates from an average rate of 11, 25% in the first semester of 2020, 327% in the first semester of this year.
Cristian Vicuña: Our liabilities tend to have a lower duration than our assets, and therefore, when rates fall, the cost of our funding falls faster than the asset yield. Our net read adjustment income improved 81.8% in the quarter after a weak start to the year. The US variation increased from 0.8% in the first quarter to 1.3% in the second quarter. Year and year, the US variation was less than in 2023, and therefore, we saw a year-over-year decrease in this line. The first payment of the FCIC reduced our interest earning assets by around 5% in the quarter and contributed to the improvement in our NIM ratio.
Speaker Change: Our liabilities tend to have a lower duration than our assets and therefore when rates fall the cost of our funding falls faster than the asset yield.
Speaker Change: Our net <unk> adjustment income improved 81, 8% in the quarter after a weak start to the year. After the U S variation increased from <unk>, 8% in the first quarter to one 3% in the second quarter.
Speaker Change: Year on year, the U S variation was less than in 2023.
Speaker Change: And therefore, we saw year over year decrease in this line.
Cristian Vicuña: The first payment of the FCIC reduced our interest-earning assets by around 5% in the quarter and contributed to the improvement in our NIM ratio. We expect our NIM to keep recovering in the next quarters and to reach between 3.3 and 3.5 for the 2024 full year, taking into account a U.S. variation of around 4% for the year with an average monetary policy rate of around 6%.
Speaker Change: The first payment of the FDIC reduced our interest earning assets by around 5% in the quarter and contributed to the improvement in our NIM ratio.
Cristian Vicuña: We expect our NIM to keep recovering in the next quarters and to reach between 3.3 and 3.5 for the 2024 full year. This considers a US variation of around 4% for the year with an average monetary policy rate of around 6%. With this, our cost of funds should continue to improve in the coming months, and we will see a further reduction in interest earning assets with the second payment of the FCIC that we made in July the first, driving the improvement in the NIM calculation.
Speaker Change: We expect our NIM to keep recovering in the next quarters and to reach between three three and three five for the 2020 for full year.
Speaker Change: This considers of U S variation of around 4% for the year with an average monitory policy rate of around 6%.
Cristian Vicuña: With this, our cost of funds should continue to improve in the coming months, and we will see a further reduction in interest-earning assets with the second payment of the FDIC that we made on July 1st, driving the improvement in the NIM calculation. Regarding other qualities, we see that our NPO and import ratio is rising. The slight deterioration in this asset quality duration is mainly explained by the effect of the economic cycle on both the numerator, our client's payment behavior, and the denominator, the slower growth of our loans.
Speaker Change: With this our cost of funds should continue to improve in the coming months and we will see a further reduction in interest earning assets with the second payment of the FDIC that we made in July the first driving the improvement in the NIM calculation.
Cristian Vicuña: Regarding asset quality, we see that our MPL and NIM per ratio is rising. The slight deterioration in this asset quality duration is mainly explained by the effect of the economic cycle on both the numerator, our client's payment behavior, and the denominator, this lower growth of our loan book. The June figure for consumer loans and PLs was 2.4, and the mortgage and PLs was 1.6, while our commercial portfolio and PL was 3.8 for the quarter. As we can see, most of the MPL growth is explained by commercial loans and, to a lesser extent, by the mortgage loan book in the semester.
Speaker Change: Regarding asset quality.
Speaker Change: We see that our NPL and NPA ratios racing.
Speaker Change: The slight deterioration in asset quality ratio is mainly explained by the effect of the economic cycle on both the numerator our clients' payment behavior doesn't dominator this lower growth of our loan book.
Cristian Vicuña: The June figure for Consumer Loans NPLs was 2.4, and the Mortgage NPLs was 1.6, while our Commercial Portfolio NPL was 3.8 for the quarter. As we can see, most of the NPL growth is explained by commercial loans and to a lesser extent by the mortgage loan book this semester. The growth in commercial loans and PLCs is explained largely by some particular names in the agricultural industry and some real estate companies, most of them already considered in the impaired portfolio, in general. All mortgage loans and some commercial loans have guarantees, reducing the risk exposure.
Speaker Change: The June figure for consumer loans Npls was two four on the mortgage Npls was one site one six while our commercial portfolio NPL was three eight for the quarter.
Speaker Change: As we can see most of the NPL growth is explained by commercial loans and to a lesser extent by the mortgage loan book in this semester.
Cristian Vicuña: The growth in commercial loans and PLs is explained largely by some particular names in the agricultural industry and some real estate companies; most of them already consider in the impaired portfolio. In general, all mortgage loans and some commercial loans have guarantees reducing the risk exposure.
Speaker Change: The growth in commercial loans Npls is explained largely by some particular names in the agricultural industry on some real estate companies most of them already considering the impaired portfolio.
Speaker Change: In general all mortgage loans on some commercial loans have guarantees reducing the risk exposure.
Cristian Vicuña: Our impaired loan ratio reached 6.2% at the end of June. This ratio includes MPLs, restructural loans, and customer deterioration in the commercial single names. The coverage ratio of our MPLs when including voluntary provision in prior years reaches 138% in June. Since the pandemic, the composition of our loan portfolio has changed, with the weight of mortgage loans increasing from around 1.3% to over 40% of the loan book, due to the strong growth of the US-dominated loans in recent years. As mortgages are backed by a property, they need less coverage, so the changing loan mix will require less total coverage.
Cristian Vicuña: Our impaired loan ratio reached 6.2% at the end of June. This ratio includes NPLs, restructured loans, and customer deterioration in the commercial single net. The coverage ratio of our NPLs, when including voluntary provision in prior years, reached 138% in June. Since the pandemic, the composition of our loan portfolio has changed, with the weight of mortgage loans increasing from around one-third to over 40% of the loan book due to the strong growth of U.S.-dominated loans in recent years. As mortgages are backed by a property...
Speaker Change: Our impaired loan ratio reached six 2% at the end of June this ratio includes npls restructured loans and customer the duration in the commercial single names.
Speaker Change: The coverage ratio of our mpls, when including voluntary provision in prior years, reaching 138% in June since the pandemic. The composition of our loan portfolio has changed with the weight of mortgage loans, increasing from around one third to over 40% of the loan book due to the strong growth of the U S.
Speaker Change: Emanated loans in recent years.
Speaker Change: As mortgage backed by a property they need less coverage. So the change in loan mix will require less total coverage our consumer loan book coverage as high of 354% while commercial portfolio coverage is at 123% on the mortgage portfolio coverage is 69% with <unk>.
Cristian Vicuña: They need less coverage, so the change in loan mix will require less total coverage. Our consumer loan book coverage is high at 354%, while commercial portfolio coverage is at 123%, and the mortgage portfolio coverage is 69%, with strong collateral and a solid loan to buy. Moving on to the cost of credit, on slide 20. The cost of credit was 1.25% in the quarter and year-to-date. As shown, our cost of credit has increased slightly along with the changes in asset quality, although it remains contained thanks to the high levels of collateral. As a reminder, in July, the Bank will recognize a one-time provision of 18 billion pesos for the commercial portfolio due to a model adjustment in the evaluation of guarantees.
Cristian Vicuña: Our consumer loan book coverage is high at 354%. While commercial portfolio coverage is at 123%, and the mortgage portfolio coverage is 69%, with strong collateral and a solid loan to buy.
Speaker Change: Strong collateral and solid loan to value.
Cristian Vicuña: Moving on to cost of credit on slide 20. The cost of credit was 1.25% in the quarter and year to date. As shown, our cost of credit has increased slightly, along with the changes in asset quality, although remain contained thanks to the high levels of collateral. As a head up, in July, the bank will recognize a one-time provision of 18 billion pesos for the commercial portfolio due to a model adjustment in the valuation of guarantees. These represent approximately 2% in additional stock of commercial provisions and concludes the CMF review from the third quarter of 2023.
Speaker Change: Moving onto cost of credit on slide 'twenty.
Speaker Change: The cost of credit was $1, 25% in the quarter and year to date as shown our cost of credit has increased slightly along with the changes in asset quality of bolt remain contained thanks to the high levels of collateral.
Speaker Change: As I head up in July the bank will recognize a onetime provision of $18 billion vessels for the commercial portfolio due to our model adjustments in the evaluation of guarantees.
Cristian Vicuña: This represents approximately 2% in additional stock of commercial provisions and concludes the CMF review from the third quarter of 2023. With all this, we reaffirm our estimation that the cost of credit will stay around 1.3 for the full year. Looking at the non-NIR revenue source, P income increased 6.5% on the quarter-on-quarter as our clients used our digital platform more for our main products.
Speaker Change: This represents approximately 2% in additional stock of commercial provisions and concludes the CMS review from the third quarter of 2023.
Cristian Vicuña: With all this, we reaffirm our estimation that the cost of credit will stay around 1.3 for the full year, following the economic cycle and labor market conditions.
Speaker Change: With all this we reaffirm our estimation that the cost of credit will stay around one three for the full year following the economic cycle and labor market conditions.
Cristian Vicuña: Next, we look at the Non-Enaia Raven resources. The income increased 6.5% on the quarter-on-quarter as our clients used our digital platform more for our main products. The small year-on-year decline is mostly because of the effect of the inter-Change P regulation that started in the last quarter of 2023. Income from financial transactions went down year over year, mainly because of lower income from the periodic contract after a strong comparison base last year. In the second quarter of this year, results in this line improved due to better results from our liquidity portfolio. Our core expenses increased 4.2% year over year, consistent with inflation, and grew 4.7% in the quarter, mainly due to accessibility in personal expenses in the first quarter, related to the holiday season.
Speaker Change: Next we look at the non <unk> revenue sources paying.
Speaker Change: <unk> income increased six 5% in the quarter on quarter as our clients used our ddos platform more for our main products. The small year on year decline is mostly because of the effect of the interchange fee regulation that started in the last quarter of 2023.
Cristian Vicuña: The small year-on-year decline is mostly because of the effect of the interchange fee regulation that started in the last quarter of 2023. Income from financial transactions went down year over year, mainly because of lower income from derivative contracts after a strong comparison base last year.
Speaker Change: Income from financial transactions went down year over year, mainly because of lower income from derivative contracts. After a strong comparison base last year in.
Cristian Vicuña: In the second quarter of this year, results in this line improved due to better results from our liquidity portfolio. Our core expenses increased 4.2% year-over-year, consistent with inflation, and grew 4.7% in the quarter, mainly due to accessionality in personal expenses in the first quarter, mainly related to the holiday season.
Speaker Change: In the second quarter of this year results in this line improved due to better results from our liquidity portfolio.
Speaker Change: Our core expenses increased four 2% year over year, consistent with inflation and grew four 7% in the quarter, mainly due to seasonality in personnel expenses in the first quarter related to the holiday season.
Cristian Vicuña: Though, as we can see in this line, decreased 8.5% year on year, mainly due to a decrease in the number of employees. Our administrative expense that have increased in the year due to outsource services indexed to inflation or in foreign currency, such as our services related to technology. In the first quarter of this year, with a quarter of one time operating expense of 17 billion pesos related to restoration provisions, this is aligned with our strategy related to a branch network transformation and the progress of digital banking.
Cristian Vicuña: Though, as we can see in this line, decreased 8.5% year-on-year, mainly due to a decrease in the number of employees. Our administrative expenses have increased this year due to outsourced services indexed to inflation or in foreign currency, such as our services related to technology. In the first quarter of this year, we recorded a one-time operating expense of 17 billion pesos related to restricted provisions.
Speaker Change: As we can see in this line decreased eight 5% year on year, mainly due to decreasing the number of employees.
Speaker Change: All of the midstream <unk> expenses have increased in the year due to outsource services index to inflation or in foreign currency, such as our services related to technology.
Speaker Change: In the first quarter of this year, we recorded a one time operating expense of 17 billion vessels related to restoration provisions. This is aligned with our strategy related to our branch network transformation.
Cristian Vicuña: This is aligned with our strategy related to the branch network transformation and the progress of digital banking. As a result of our controlled expenses and improved financial income, our efficiency ratio was 37.6% in the quarter and 42.1% year-to-date. In 2024, the bank is continuing to concentrate on the implementation of its 450 million dollar investment plan for the years 2023-2026 for technology projects and branch renovations. Moving on to Cato.
Speaker Change: <unk> Opdivo banking.
Cristian Vicuña: As a result of our control expenses and improved financial income, our efficiency ratio was 37.6% in the quarter and 42.1% year to date.
Speaker Change: As a result of our controlling expenses and improving financial income our efficiency ratio was 37, 6% in the quarter and 42, 1% year to date.
Cristian Vicuña: During 2024, the bank is continuing to concentrate on the implementation of its 450 million dollar investment plan for the years 23-26 for technology projects and branch renovation.
Speaker Change: During 2020 for the bank is continuing to concentrate on the implementation of its $450 million investment plan for.
Speaker Change: For the year to 23% to 26, four technology projects and branch renovation.
Cristian Vicuña: Moving on to capital, at the end of June, the bank reported a BIS ratio of 17.4% and a authority to raise the dividend payout provision above the legal minimum 30% for 2024 and onwards. So, in June 2024, the bank increased the dividend provisions to 60% of our 2024 income. This 60% is in line with our historical dividend payout, and with this, our equity base was reviewed and our capital ratio was impacted by 26 states.
Speaker Change: Moving onto capital.
Cristian Vicuña: At the end of June, the bank reported a BIS ratio of 17.4% and a core equity ratio of 10.6%. At the past shareholders meeting, the board was granted the authority to raise the dividend payout provision above the legal minimum of 30% for 2024 and onward. So, in June 2024, the bank increased the dividend provisions to 60% of our 2024 income. This 60% is in line with our historical dividend payout, and with this, our equity base was reduced, and our capital ratio was impacted by 26 basis points.
Speaker Change: At the end of June the Bank reported a bis ratio of 17, 4% on a core equity ratio of 10, 6%.
Speaker Change: In the pasture shareholders' meeting the board was granted the authority to raise the dividend payout provision above the legal minimum 30% for 2024 and onwards.
Speaker Change: In June 2020 for the bank increased the dividend provisions to 60% of our 2020 for income.
Speaker Change: 60% is in line with our historical dividend payout.
Speaker Change: With this our equity base once we've used on our capital ratio was impacted by 26 basis points.
Cristian Vicuña: As a reminder, we currently do not have a pillar to requirement; however, it is important to mention that the measurement of the market risk on the banking book will continue to be discussed by the regulator, and capital charges may be made in the coming years.
Cristian Vicuña: As a reminder, we currently do not have a Pillar 2 requirement; however, it is important to mention that the measurement of market risk on the banking book will continue to be discussed by the regulator, and capital charges may be made in the coming years.
Speaker Change: As a reminder, we currently do not have a pillar two requirement. However, it is important to mention that the measurement of the market risk on the banking book will continue to be discussed by the regulator and capital charges may be made in the coming years.
Cristian Vicuña: Finally, on slide 25, we conclude with a review of our 2024 guidance. Based on our current macro expectations for 2024, we have updated our guidance for several line items. Long growth remains dependent on the economic cycle, and we continue to expect single-digit growth for the full year. Given the increased estimate of the US variation and better evolution of the recovery of our nymphs, where we have already reached a year-to-date figure of 3.1%, we are increasing our nymph guidance to the range of 3.3 to 3.5 for the full year. Our piece should reach a growth of mid-single-deeds, considering the second stage of the implementation of the interchange fee regulation in the fourth quarter of this year.
Speaker Change: Finally.
Cristian Vicuña: On slide 25, we conclude with a review of our 2024 guidance. Based on our current macro expectations for 2024, we have updated our guidance for several line items. Long growth remains dependent on the economic cycle, and we continue to expect single-digit growth for the full year. Given the increased estimate of the U.S. variation and a better evolution of the recovery of our NIMS, where we have already reached a year-to-date figure of 3.1%, we are increasing our NIM guidance to the range of 3.3% to 3.5% for the full year.
Speaker Change: On Slide 25, we conclude with a review of our 2020 for guidance.
Speaker Change: <unk> on our current macro expectations for 2024, we have updated our guidance for several line items.
Speaker Change: Loan growth remains dependent on the economic cycle and we continue to expect mid single digit growth for the full year.
Speaker Change: Given the increased estimate of the U S variation and better evolution of the recovery of our Nims.
Speaker Change: Where we have already reached our year to date figure of three 1% we are increasing our NIM guidance to the range of three three to three five for the full year.
Cristian Vicuña: Our fees should reach a growth of mid-single digits considering the second stage of the implementation of the interchange fee regulation in the fourth quarter of this year. With financial income back on track, our efficiency ratio should return to normalized levels of the high 30s percent. As discussed, we expect our cost of risks to remain around 1.3 for the year. With the ROE year-to-date already at 15.8%, and with our expectations for the second half of this year, we are upgrading our guidance for 2024 ROE to a range of 17 to 18 percent, which signals the return of our performance to historical levels as we expect 2024 to finish within our long-term ROE range for very high. With this, I finish the presentation and hand it over to Emiliano Muratore.
Speaker Change: Rfp's should reach a growth of mid single digits, considering the second stage of implementation of the interchange fee regulation in the fourth quarter of this year.
Cristian Vicuña: With financial income back on track, our efficiency ratio should return to normalised levels of high 30s persons. As discussed, we expect our cost of risk to remain around 1.3 for the year.
Speaker Change: With financial income back on track our efficiency ratio should return to normalized levels of high 30 persons.
Speaker Change: As discussed we expect our cost of risk to remain around one three for the year.
Cristian Vicuña: With the ROE year-to-date already at 15.8% on our expectations for the second half of the year, we are upgrading our guidance for 2024 ROE to a range of 17 to 18%. This signals the return of our performance to historical levels.
Speaker Change: With the our ROE year to date already at 15, 8% on our ROE expectations for the second half of the year.
Speaker Change: We are upgrading our guidance for 2024 ROE to a range of 17% to 18%.
Speaker Change: This signals the return of our performance to historical levels. As we expect 2022 finished within our long term ROE range for very very high teens.
Emiliano Muratore: As we expect 2024 to finish within our long-term ROE range for verified, very high teams. With this, I finish the presentation and hand over to Emiliano Muratore.
Speaker Change: With this I.
Speaker Change: Finished the presentation and hand over to Emiliano muratore.
Emiliano Muratore: Thank you, Cristian. Now we will welcome your questions.
Emiliano Muratore: Thank you, Christian. Now we will welcome your questions, please. Thank you very much for the presentation.
Emiliano Muratore: Thank you Christian now we will welcome your question please.
Operator: Thank you very much for the presentation. We will now be moving to the Q&A part of the call. If you have a question, please press star 2 on the keypad. That's star 2 on the keypad for questions. We acknowledge questions that have already been asked at the start of the queue. Our first question comes from Mr. Yuri Fernandes from J.P. Morgan. Please go ahead, sir.
Operator: We will now be moving to the Q&A part of the call. If you have a question, please press Start 2 on the keypad. That's start 2 on the keypad for questions. We acknowledge already the questions that have already been asked at the start of the Q.
Emiliano Muratore: Thank you very much for the presentation, we will now be moving to the Q&A part of the call. If you have a question. Please press star two and the keypad Thats start to open for questions. We acknowledged already the questions that have already been asked.
Emiliano Muratore: The start of the Q.
UE Fernandez: Our first question comes from Mr. UE Fernandez from JP Morgan. Please go ahead, sir.
Speaker Change: Our first question comes from Mr. Yuri Fernandes from Jpmorgan. Please go ahead Sir.
UE Fernandez: Thank you. Hi Emiliano. Good morning, Christian.
Yuri Fernandes: Thank you. Hi Emiliano, good morning Cristian, and congrats on the quarter. Cristian, I guess you already mentioned BANs during the presentation, but can you provide more details, like why is this no longer consolidated within the bank? I know it is small, but just to understand the moving parts on these BANs, you know, deconsolidation, where is this going, like are you still, you know, consolidating any kind of equity income from this investment? Just any color on this, and then I can ask a second question. Thank you.
Yuri Fernandes: Thank you Hi, Emilia and good morning, Christian Congrats on the quarter.
Cristian Vicuña: Congrats on the quarter. Christian, I already mentioned a bunch during the presentation, but can you provide more details? Like, why is this no longer consolidated within the bank? I know it is small, but just understand the moving parts on this bunch, you know, the consolidation. Where is this going? Like I still, you know, consolidating any kind of equity income from this investment? Just any caller on this?
Yuri Fernandes: Christian I guess, the reclamation bonds during the presentation, but can you provide more details like why is this no longer consolidated within the bank I know it is small, but just understand the moving parts on these bonds.
Yuri Fernandes: Deconsolidation.
Yuri Fernandes: Or is this going like ICU consolidating any kind of exiting come from these investments just any color on this and then I can ask a second question. Thank you.
UE Fernandez: And then I can ask a second question. Thank you.
Cristian Vicuña: Hello, Judith. So regarding BANSA, basically BANSA was the entity that was doing the, what we call the floor plan, basically is the stock financing for dealers in the related to our auto loan business. So even though because of legal restriction, that's the stock financing is not an activity that the bank or nor its subsidiaries can do with that BANSA was the entity doing that business because of the commercial dependence to Santa and the consumer finance, which is the company that does the auto loan, basically we don't do the stock finance by itself. We do the stock finance because then we create what we call the retail part of the auto business.
Cristian Vicuña: Hello Yuri, so regarding Bansa, basically Bansa was the entity that was doing what we call the floor plan, basically the stock financing for dealers related to our auto loan business. So even though, because of legal restriction, stock financing is not an activity that the bank nor its subsidiaries can do, Bansa was the entity doing that business. Because of the commercial dependence on Santander Consumer Finance, which is the company that does the auto loan. Basically, we don't do the stock finance by ourselves. We do the stock financing because then we create what we call the retail part of the auto business.
Speaker Change: Hello.
Speaker Change: Regarding bonds basically banks I was the entity that was doing.
Speaker Change: The what we call the floor plan basically the stock financing for dealers in the related to all our auto loan business, so even though.
Speaker Change: Because of legal restrictions.
Speaker Change: The stock financing is not.
Speaker Change: On activity that the bank or nor its subsidiaries or can do that.
Speaker Change: That's.
Speaker Change: And what they ended up doing that business because of the commercial dependence to Santander consumer finance, which is the company that does the.
Speaker Change: The auto loan basically we then do the stockpiling by itself.
Speaker Change: Do the financing that we create the what we call the retail part of the of the auto business. So that's why from the accounting point of view <unk> consolidate in into Santander consumer finance that is a subsidiary of the bank that consolidation to the banks. So basically banks that was moving down was <unk>.
Cristian Vicuña: So that's why, from the accounting point of view, Bansa was consolidating into Santander Consumer Finance, which is a subsidiary of the bank that consolidated into the bank. So basically, Bansa was moving up from Santander Consumer to the bank. But on the ownership point of view, neither a consumer, nor the bank owns a single dollar of Bansa. So basically, we were consolidating the balances on the assets and on the liabilities, but 100% of the results of the company were taken out on the minority's interest line.
Cristian Vicuña: So that's why, from the accounting point of view, BANSA was consolidating into Santa, and the consumer finance, that is the subsidiary of the bank, that consolidates into the bank. So basically BANSA was moving down, was moving up from Santa and the consumer to the bank. But on the ownership point of view, neither consumer, neither the bank owns a single dollar of BANSA. So basically we were consolidating the balance; the balance is on the asset and on the liabilities. But 100% of the results of the company were taken out on the minority interest line. So now basically BANSA because of the relationship with the company that funds the activity in terms of lending.
Speaker Change: Moving up from.
Speaker Change: Sure.
Speaker Change: Santander consumer to the bank, but on the ownership point of view neither at consumer neither the back.
Speaker Change: A single <unk>.
Speaker Change: So basically.
Speaker Change: <unk> consolidated the balance the balances on the asset on the liabilities, but 100% of the results of the company were taken out on the minority.
Speaker Change: On the minority interest line. So now basically band saw because of the relationship with the company that funds.
Cristian Vicuña: So now, basically, Bansa, because of the relationship with the company that funds the activity in terms of lending, is now, let's say, more dependent on that company than on the commercial link to Santander Consumer. And that's why, considering the accounting rules, it has to consolidate into the company that funds Bansa rather than into Santander Consumer, which was, let's say, the commercial partner of Bansa. So basically, it's affecting the consolidated view in terms of asset and liability but has, let's say, no impact on net income, neither, let's say, ROE, because 100% of that result was taken out on the minority interest line. I don't know if I was clear enough.
Speaker Change: PBT in terms of our lending now it's like let's say more dependent on that company that on the on the commercial link to Santander consumer and that's why from the considering the accounting rules.
Cristian Vicuña: Now it's like let's say more dependent on that company than on the commercial link to Santa and the consumer, and that's why from the considering the accounting rules, it has to consolidate into the company that funds BANSA rather than consumer that was like let's say the commercial partner of BANSA. So basically it's affecting the consolidated view in terms of asset and liability. But has, let's say, no impact on net income, neither, let's say, ROE because 100% of that result was taking out on the minority interest line. I know if it was clear enough. No, no, no, no, no, no, no, no, no, no, no, no, no.
Speaker Change: It has to consolidate into the company that funds.
Speaker Change: <unk> rather than consumer it was late let's say the commercial partner of banks. So basically its effect in the consolidated view.
Speaker Change: In terms of asset and liability, but has let's say no impact.
Speaker Change: Our net income neither let's say our OE because.
Speaker Change: 100% of that result was <unk>.
Speaker Change: Out on the minority interest line.
Speaker Change: If I was clear.
Cristian Vicuña: No, that's clear, but just to be clear, do you receive any money, like any compensation on that, like the consolidation? Like, is this kind of a sale or, you know, or... No, no, no, I mean, no, it's not a sale because there was no ownership on Bansa, neither from the bank nor from the Sntndr consumer. I mean, Bansa is, let's say, owned by other parts of the Sntndr group. So, basically, it was a pure accounting consolidation because of the commercial, let's say, dependence on the Sntndr consumer to do the stock finance. But there was no ownership of Bansa, neither of the revenues or of the cost of that activity.
Speaker Change: But just to be clear do receive any money like any compensation on that like a deconsolidation is this kind of a CR or no no no.
Cristian Vicuña: So it's not a say because there was no ownership on BANSA, neither from the bank nor Santa and the consumer. I mean BANSA is, let's say, owned by other part of the Santa and the group. So basically it was a pure accounting consolidation because of the commercial, let's say, dependence on Santa and the consumer to do the stock final. But there is, there was no ownership on BANSA, neither the revenues or the cost of that activity. So you never like on the company we're just consolidating for this regulation. And now you're no longer consolidation, but we're never, never the owner.
Speaker Change: No it's not a size because there was no ownership mindset, neither from the bank northern under consumer I mean, <unk>, let's say owned by other part of the Santander group. So basically it was a pure accounting consolidation because of the commercial let's say dependence on.
Speaker Change: Also at the consumer to do there's still final, but they are there is there was no ownership on an biocide, neither the revenues or the bulk of the cost of that activity.
Cristian Vicuña: We never owned the company, we were just consolidating for this regulation, and now you're no longer a consolidation, but we were never the owners; we were just consolidating for the regulation.
Speaker Change: So we never like on the company, we're just consolidating for deregulation and now you are no longer consolidation, but youre never never do on or you are just consolidating for it.
Cristian Vicuña: We're just consolidating for. If you look, even though the number is small, that let's say part of the minority interest that we're taking out of the consolidated net income. Now it will be smaller because we don't have to take out the BANSA part. And before it was, let's say, 100% taking out on the minority interest. No, no, super clear.
Cristian Vicuña: So, if you look, even though the number is small, that, let's say, part of the minority interest that was taken out of the consolidated net income, now it will be smaller because we don't have to take out the balance apart, and before it was, let's say, 100% taken out on the minority interest line.
Speaker Change: So.
Speaker Change: If you look even though the numbers are small that let's say.
Speaker Change: Of the minority interest that were taken out of the consolidated net income now it will be a smaller because we don't have to take out the <unk> and before it was let's.
Speaker Change: Let's say, 100%.
Speaker Change: Taken out on the minority interest line.
Cristian Vicuña: No, no, super clear. Now a little bit more on the structural question of long growth. I know we are not discussing 2025 yet, but I think 2024 is pretty clear, like the trends are better, margins, you know, you are doing very well on efficiency. Cristian and Emiliano, what can we expect from growth in Chile? Because, over the past few years, we have been seeing very slow, long growth, and I don't know, can we anticipate long growth accelerating even further in 2025?
Speaker Change: No Super clear now a little bit more social question on loan growth I know, we are now discussing 2025, yet, but I think 2020 as far its pretty clear like to change their better margins.
UE Fernandez: Now, a little bit more social question on long growth. I know we are not discussing 1025 yet, but I think 1024, it's pretty clear like the trends are better, margin, you know, you are doing very well in efficiency. Cristian and Emiliano, what can we expect on growth in Chile? Because over the past many years we have been seeing, you know, very timid long growth, and I don't know, can we anticipate a long growth accelerating even further in 2025? Any kind of color on your expectations for maybe the industry, like for us to maybe see high single digit, like what could we think about long growth and where the growth will come from?
Speaker Change: We're doing very well in efficiency.
Speaker Change: And then what can we expect on growth in Chile, because over the past many years, we have been seeing very timid loan growth.
Speaker Change: And then it'll hold can we anticipate loan growth accelerating even further in 2025 any any kind of color on your expectations for maybe the industry like for us to maybe see high single digits like what could we think about loan growth and where the growth will control will continue to be retail will continue to be able to loss.
Cristian Vicuña: Any kind of color on your expectations for maybe the industry, like for us to maybe see high single digits, like what should we think about long-term growth and where the growth will come from? It will continue to be retail, it will continue to be auto loans. Where can we be more positive about growth here? Thank you.
Cristian Vicuña: We will continue to be retail; it's continuing to be auto loans. Where can we be more positive on growth here? Thank you.
Speaker Change: Where can we be more positive on growth here. Thank you.
Cristian Vicuña: Yeah, so, regarding long-term growth, as you said, the last few years were a very slow pace of growth, and actually, if you, let's say, take out the indexation effect of the U.S., that, in real terms, that was even lower, but it's important to mention that it was in a context of low GDP growth and also the fact that all the liquidity injected into households had, through the pension fund withdrawal With nominal GDP growing around 5, we do expect the multiplier of low growth to GDP to be again above 1, maybe definitely not as high as it was maybe some years ago when it was closer to 2%, but we do expect the system as a whole to grow in nominal terms at that highest rate, 7 to 8%.
Cristian Vicuña: Yeah, so I mean, regarding long growth, as you said, I mean, the last few years, we're very slow pace of growth, and actually, if you, let's say, take out the indexation effect of the UF, that in real terms, that was even lower. But it's important to mention that it was in a context of low GDP growth and also the fact that all the liquidity injected into households had through the pension fund withdrawals and the health that the government handed in during the pandemic. So looking to 2025, with GDP expected to grow in the 2.4 to 0.5 in real terms and inflation expected to be between 3.5, nominal GDP growing around 5, we do expect the multiplier of low growth to GDP to be again above 1, maybe definitely not as high as was maybe some years ago, that was closer to 2%, but we do expect the system as a whole to grow in the nominal terms in that higher than this than the 7 to 8%.
Speaker Change: Yes, so regarding loan growth.
Speaker Change: As you said in the last few years.
Speaker Change: We are very.
Speaker Change: Slow pace of growth and actually if you let's say.
Speaker Change: Take out the indexation effect.
Speaker Change: The U S.
Speaker Change: So we'll see them, even lower bad it's important to mention that it was in the context of low GDP growth and.
Speaker Change: And also.
Speaker Change: The fact that all the liquidity injected into households.
Speaker Change: Through the bedroom five withdraws.
Speaker Change: The hubs that.
Speaker Change: The government.
Speaker Change: Bidding during the pandemic, so look into 2025 with GDP expected to grow in the $2 four to five Ria in real terms and inflation expected to be.
Speaker Change: Between three to three five.
Speaker Change: Non real GDP growing at around five.
Speaker Change: We do expect the multiplier of loans loan growth to GDP to be again above one maybe it's definitely not as high.
Speaker Change: As was maybe some years ago that it was closer to 2%, but we do we do expect the system as a whole to grow in.
Speaker Change: In nominal terms in that high single digit seven 7% to 8%.
Cristian Vicuña: And that's driven by consumer and, in our case, auto loans 2, which is a relevant part of our consumer business and because of subfactors. First, GDP growth and activity improving, then rates much lower than in the past, so the tendency of the prevention for people to borrow at this level of rates is definitely higher than in the past. And also the normalization of the liquidity position of households that was extremely high during the last 2-3 years and now let's say it's going back to normal situation where people, let's say, will have higher propensity to tomorrow.
Speaker Change: And Thats.
Cristian Vicuña: Dr. Manuel Lemos, M.D., Ph. D., Ph. D., Ph. D., Ph. D., Ph. D., Ph. D.
Speaker Change: Driven by by consumer in our case auto loans too which is.
Speaker Change: I'd, rather one part of our consumer business.
Speaker Change: Because of some factors.
Speaker Change: First.
Speaker Change: GDP GDP growth and activity.
Speaker Change: Moving then rates much lower than in the past so the let's say the.
Cristian Vicuña: D., much lower than in the past, so the tendency of the prevention for people to borrow at this level of rates is definitely higher than in the past, and also the normalization of the liquidity position of households that was extremely high during the last two to three years, and now, let's say it's going back to a let's say normal to normal situation where people, let's say, will have a higher propensity to borrow. So on the consumer part, we are, let's say, supportive in terms of mortgages. We always have the UF and inflation at the base for the growth of the total balance, and then again, with rates much lower, we do expect the real estate market to improve for next year, maybe closer to the second half of next year when long-term rates normalize and go down from where they are now and where they were in the recent past.
Speaker Change: Tendency of the prevention for people to to grow at this level of rates is definitely.
Speaker Change: Higher than that in the past and also the <unk>.
Speaker Change: Normally station of the liquidity position of households that was extremely high during the last two to three years and now let's say is going back to let's say normal.
Speaker Change: Two normal situation, where people, let's say.
Speaker Change: Have a higher propensity to tomorrow. So on the consumer part we are.
Cristian Vicuña: So, on the consumer part, we are, let's say, supportive in terms of mortgages. We always have the UF and the inflation at the base for the growth of the total balance. And then again, with rates much lower, we do expect the real estate market to prove for next year, maybe closer to the 2nd half of next year with when long-term rates normalize and go down from where they are now and they were in the recent past. And going into it too commercial, then we see a couple of very positive tailwinds for us. I mean, related to all the growth we are getting through GedNet in the SMEs and all the visibility that the GedNet gives us in terms of the flows and the activity of clients.
Speaker Change: Let's say that supportive.
Speaker Change: In terms of mortgages.
Speaker Change: We always have that the U F on deflation of the base.
Speaker Change: Portfolio the growth of the of the total balance.
Speaker Change: Then again with.
Speaker Change: With rates are much lower we do expect that the real estate market to prove for next year, maybe closer to the second half of next year with.
Speaker Change: When long term rates normalizes.
Speaker Change: Down from where they are now than they were in the in the recent in the recent past.
Cristian Vicuña: And going into commercial, then we see a couple of very positive tailwinds for us, I mean related to all the growth we are getting through GetNet in the SMEs and all the visibility that GetNet gives us in terms of the flows and the activity of clients. So we are, let's say positive on growth prospects for commercial lending related to the whole SMEs and payments ecosystem, and maybe the higher or the bigger question mark is related to commercial lending with let's say more capex oriented or capex related, which will definitely be driven by the potential rebound or improvement in investment that is expected to be timid going forward, and so that maybe is where we have the higher level of uncertainty about the growth prospects in terms of lending. But as a whole, we do expect the system to grow that let's say from six to eight percent as a range, and we should also be in that range.
Speaker Change: And going into.
Speaker Change: Commercial then we see a couple of.
Speaker Change: Very positive tailwind for us I mean related to all the growth we are getting.
Speaker Change: Through getting that in the in the Smes and all the all the visibility that.
Speaker Change: We're getting it give us in terms of the flows of the activity of clients. So we are.
Cristian Vicuña: So we are, let's say, positive on long growth prospects on commercial lending related to the whole SMEs and payments ecosystem. And then maybe the higher or the bigger question mark is related to commercial lending with, let's say, more CAPEX oriented or CAPEX related that definitely that will be driven by the potential rebound or improvement in investment that it's expected to be teaming it going forward, and so that maybe it's where we have the higher level of uncertainty about the growth prospect in terms of lending. But as a whole, the system, we do expect the system to grow that, let's say, from 6 to 8% as a range.
Speaker Change: Let's say positive on loan growth prospects.
Speaker Change: Marshall lending related to the whole SME and payments ecosystem and maybe the higher or the bigger question Mark is related.
Speaker Change: Our commercial lending with let's say more capex oriented capex.
Speaker Change: Related that definitely that will be driven by the potential rebound or improvement in investment that is expected to be.
Speaker Change: Going forward and so that maybe is where we had the higher level of uncertainty about the growth prospect in terms of lending, but in there as a whole the system, we do expect.
Speaker Change: The system to grow that.
Speaker Change: Say from 6% to 8%.
UE Fernandez: And I wish it would be also in that no, super, very, very good, very, very good answer. Thank you, guys, and again congrats on the R.O.E. improvement lately. Thank you.
Speaker Change: Range and.
Speaker Change: We should be also in that range.
Beatriz Abrao: No, super. Very, very good. Very good answer. Thank you, guys. And again, congratulations on the ROE improvement lately. Thank you. Okay, thank you very much. The next question comes from Beatriz Abrao from Goldman Sachs. Please go ahead, ma'am. Your line is open.
Speaker Change: No Super very very good very good answer. Thank you guys and again congrats on the ROE improvements lately. Thank you. Thank you.
Operator: Okay, thank you very much.
Beatriz Abreu: Next question comes from there, please Abreu, from Goldman Sachs. Please go ahead, mam, your line is open.
Speaker Change: Okay. Thank you very much.
Chris Brown: Next question comes from Chris Brown from Goldman Sachs. Please go ahead Maam. Your line is open hi, everyone. Good morning, and thank you for taking my question I guess, just a quick follow up on the bank loans.
Beatriz Abrao: Hi everyone, good morning and thank you for taking my question. I guess just a quick follow-up on the BANSA loans just to make sure that we understand. So, does that explain the contraction in the corporate CIB line? How much of the BANSA loans exclusion can be explained in that line just because of the big drop there, quarter for quarter? And then just a second question on asset quality, right? So, NPLs did increase quite a bit this quarter.
Beatriz Abreu: Hi, everyone. Good morning, and thank you for taking my question. I guess just a quick follow-up on the Benza loans, just to make sure that we understand. So does that explain the contraction in the corporate C.I.B. line, how much of the Benza loans exclusion can be explained in that line just because of the big, big drop there quarter of a quarter.
Chris Brown: Loans just to make sure that we understand so.
Speaker Change: Does that explain the contraction in the corporate CIB line, how much of the banter.
Speaker Change: Loans exclusion can be explained in that line just because of the.
Speaker Change: The big.
Speaker Change: Big drop there.
Cristian Vicuña: And then just a second question on as a quality, right? So in Pieles did increase quite a bit this quarter. And I guess what gave you comfort to keep the cost of risk? Guided? Then set 1.3 this year. Is there any chance that you will have to increase provisions going forward in addition to this 18 billion one time additional provisions for commercial loans that you mentioned? Thank you.
Speaker Change: And then just the second question on.
Speaker Change: Asset quality right. So npls did increase.
Beatriz Abrao: I guess what gave you comfort to keep the cost of risk guidance at 1.3 this year? Is there any chance that you will have to increase provisions going forward in addition to this 18 billion one-time additional provision for commercial loans that you mentioned? Thank you.
Speaker Change: Quite a bit this quarter I guess, what gives you comfort to keep the cost of risk guidance at $1 three this year.
Speaker Change: Any chance that you will have to increase provisions going forward. In addition to this 18 billion one time additional provisions for commercial loans that you mentioned.
Speaker Change: Thank you.
Cristian Vicuña: Thank you very much for your question. And regarding Banza, that was part of the middle market segment. It's not the part of the C.I.B. So it's not, it doesn't explain any of the C.I.B. fall that it's much more related to the concentration of the C.I.B. that there are a few but larger tickets, and some of them weren't renewed in the quarter. And so that explains the fall in C.I.B. Banza, it's in the middle market. It's, let's say, a relevant part but not most of the fall in middle market. It was like 250,000 pesos portfolio that was deconsolidated.
Cristian Vicuña: Thank you, Beatriz, for your question. Regarding Balsa, that was part of the middle market segment. It's not part of the CIB, so it doesn't explain any of the CIB fault, but it's much more related to the, let's say, the concentration of the CIV that there are few but larger tickets and some of them weren't renewed in the quarter, and so that explained the fall in CIV. Bansaids in the middle market, it's, let's say, a relevant part, but not most of the fall in middle market, it was like a 250,000 pesos portfolio that was deconsolidated, so trends or the drivers in commercial lending related to middle market and the CIV had more to do of let's say lack of demand in terms of credit and borrowing and let's say the peculiarities in the CIV segment that a few syndicated loans that were originated in lower level of rate environment during the pandemic expired and were renewed but Banca is an element but it was not the most part of the And regarding cost of risk and asset quality, basically we don't, we are let's say in a high level of cost of risk compared to where we were in the past and we do expect that to stay where it is.
Speaker Change: Thank you for your question I mean regarding balance out that was part of the middle market segment is not the part of the CIB. So it's not.
Speaker Change: It doesn't explain any of the CIB fall that it's much more related to the let's say.
Speaker Change: The concentration of the Civ that there are few fueled but larger tickets.
Speaker Change: Some of them werent renewed in the quarter and so that explains.
Speaker Change: The fall in CIB.
Speaker Change: <unk> sites in the in the Midland market.
Speaker Change: Let's say relevant part, but most of the of the fall and winter market as was like 250000 vessels portfolio.
Speaker Change: That was the consolidated so.
Cristian Vicuña: So the trends or the drivers in commercial and in related to middle market and the C.I.B. have more to do of say lack of demand in terms of credit and borrowing and say the peculiarities in the C.I.B. segment that a few syndicated loans that were originated in lower lower level of rates environment and during the pandemic expired and weren't renewed. But Banza was not an element, but it was not the most part of the fall.
Speaker Change: Sure.
Speaker Change: Trends are the drivers and in commercial lending related to middle market on the CIB had more to do off let's say lack of demand and therefore in terms of credit borrowing and let's say the popularity in the CIB segment that if you.
Speaker Change: Syndicated loans that were originated.
Speaker Change: Lower lower level of rate environment and during the pandemic.
Speaker Change: Spire.
Speaker Change: And when we renewed but advanced node.
Speaker Change: As an element, but it was it was not.
Speaker Change: The most part of the of the fall.
Cristian Vicuña: And regarding C.I.B. race and inequality basically, we are, let's say in a high level of C.I.B. risk compared to where we were in the past, and we do expect that to stay where it is. So the 1.25 that we have a year to date. We think that we'll be there for the rest of the year. So we are not seeing yet an improvement or fall in because of risk by neither are the further deterioration to considering what we are seeing and in the behaviors of the portfolios. And also, as I said before, the level of rates is now definitely given some room for people regarding the burden of their payment in the consumer and also in the mortgage in the mortgage business.
Speaker Change: Regarding.
Speaker Change: We also raised our asset quality basically.
Speaker Change: Don't we are.
Speaker Change: Let's say.
Cristian Vicuña: So the 1.25 that we have year to date, we think that will be there for the rest of the year. [inaudible] The level of rates is now definitely giving some room for people regarding the burden of their payments in the consumer and also in the mortgage business. And so we expect to stay where we are around 40 billion pesos in terms of net provisions a month. And that will take us to the 1.3 area cost of rate for the year even though, and also let's say compensating for this one off that we are pointed out that we'll have in July. Even considering that one off, we reaffirmed the 1.3 for the year.
Speaker Change: A high level of cost of risk.
Speaker Change: Compared to where we were.
Speaker Change: In the past and we do expect that to stay where it is so the 125 that we have.
Speaker Change: Year to date.
Speaker Change: We think that will be there for the rest of the of the year. So.
Speaker Change: We are not.
Speaker Change: Seen yet.
Speaker Change: An improvement or a fall in cost of risk by good either.
Speaker Change: The duration, considering what we are seeing in the behaviors of the of the portfolios and also as I said before.
Speaker Change: On.
Speaker Change: The level of rates.
Speaker Change: Now definitely given some room for people regarding the burden of their of their payments in the consumer and also in the mortgage.
Cristian Vicuña: And so we expect to stay where we are around like 40 billion pesos in terms of net provisions a month. Than that will take us to the 1.3 year cost of rate for the year even though. And also, let's say compensating this one of that we are putting out that we'll have in July, even considering that one of we reaffirmed the 1.3 for the province.
Speaker Change: In the mortgage business and so we expect it to stay where we are around like 40 40 billion vessels in terms of net provisions a month and that will take us to the to the $1 three area plus the rate for the year, even though I know.
Speaker Change: So, let's say compensating. This one off that we are pointed out that we'll have in July even considering that one off.
Speaker Change: We reaffirmed that the one three for the for the year.
Cristian Vicuña: We are seeing mild improvements in the job market in terms of unemployment figures, and that makes us also be somehow a little more confident on that turnaround coming in the next semester or final quarters of the year, starting to see early signs of improvement in the job market.
Cristian Vicuña: Emiliano's answer: we are seeing mild improvement in the job market in terms of unemployment figures, and that makes us also be somehow a little more confident about that turnaround coming in the next semester or final quarters of the year, starting to see early signs of improvement in the job market.
Speaker Change: So as to when we got to answer.
Speaker Change: We are seeing mild improvement in the job market in terms of unemployment figures and makes us also be somehow.
Speaker Change: A little more confident on that turnaround coming in the next semester, our final quarters of the year starting to see early signs of improvement in the job market.
Cristian Vicuña: That's very clear. Thank you so much. https://www.youtube.com.ac
Beatriz Abreu: That's very clear. Thank you so much.
Speaker Change: That's very clear thank you so much.
Operator: Okay, thank you very much.
Operator: Okay, thank you very much. Our next question comes from Mr. Eric Ito from Bradesco BBI. Please go ahead, sir. Your line is open. Mr. Eric Ito, your line is open in case you are muted. Okay, we'll come back to Eric's line in a second. In the meantime, we'll take the line from Mr. Daniel Mora from Credit Core Capital. Please go ahead, sir. Your line is open.
Speaker Change: Okay. Thank you very much.
Eric Ito: Our next question comes from Mr. Eric Ito from Brothersco BBI. Please go ahead, sir. Your line is open.
Speaker Change: Our next question comes from Eric <unk> from Bradesco <unk>. Please go ahead, Sir your line is open.
Speaker Change: Yeah.
Operator: Mr. Eric Ito, your line is open in case you are muted. Okay, we'll come back to Eric's line in a second.
Speaker Change: Mr. Erik <unk>. Your line is open in case you are muted.
Speaker Change: Okay, we will come back to Eric's line and a second in the meantime, we will take the line from Mr. Daniel Moore from credit core capital. Please go ahead, Sir your line is open.
Daniel Mora: In the meantime, we'll take the line from Mr. Daniel Mora from Credit Core Capital. Please go ahead, sir. Your line is open.
Daniel Mora: Hi, good morning, and thank you for the presentation. I have just one question regarding the asset quality indicators. When do you expect to see the MPLs to start decreasing, especially in the commercial segment? You already explained that the performance of the MPL has been explained by Agri Culture and also real estate.
Daniel Mora: Hi, good morning. And thank you for the presentation.
Daniel Moore: Hi, good morning, and thank you for the presentation I have just one question regarding the asset quality indicators. When do you expect to see the npls to start decreasing especially in the commercial segment you already explained that these.
Daniel Mora: I have just one question regarding the asset quality indicators. When do you expect to see the MPLs to start decreasing, especially in the commercial segment? You have already explained that the performance of the MPL has been explained by agriculture and also real estate. But I want to understand if those segments are under control and you now expect in the second half of the year or in 2025 to see an improvement, and also, I would like to understand what will be a normalized figure of MPLs considering the portfolio structure that you're having, the increase in SMEs, the increase in consumer out loans. What will be a normalized figure of MPLs when economic activity recovers and rates and inflation are normal. Thank you so much.
Speaker Change: Performance of the NPL has been explained by agriculture, and also real estate, but I want to understand.
Cristian Vicuña: But I want to understand if those segments are under control, and you now expect in the second half of the year, and in 2025 to see an improvement. I would also like to understand what will be a normalized figure of MPLs considering the portfolio structure that you are having, the increasing SMEs, the increase in consumer auto loans. What will be a normalized figure of MPLs when economic activity recovers and rates and inflation will be normal? Thank you so much.
Speaker Change: Yes.
Speaker Change: Those segments are under control and you now expect in the second half of the year on in 2021 to see an improvement and also I would like to understand what will be a normalized figure of npls considering the portfolio structure that you are having the increase in Smes they are increasing.
Speaker Change: Consumer loans, while it will be a normalized figure of npls win when economic activity recovers and rates on installation will be normal. Thank you so much.
Cristian Vicuña: Answering your second question first, what we expect as a normal range of MPLs for the current type of portfolio that we have, it's something in the low 2s, so something between 2.2 to 2.4, a little over what we had at the beginning of the pandemic, which was somehow slightly higher than 2. So a little higher than that, especially because of the increased composition of the SME part of the commercial portfolio and an expectation of an increase in our consumer loan portfolio too.
Cristian Vicuña: Thank you, Daniel.
Speaker Change: Thank you.
Cristian Vicuña: Answering your second question first, what do we expect as a normal range of MPLs for the current type of portfolio that we have? Well, it's something in the low tools, so something between 2.2 to 2.4, a little over what we had at the beginning of the pandemic that was somehow slightly higher than 2. So a little higher than that, especially because of the increased composition of the SME part in the commercial portfolio, and an expectation of an increase in our consumer loan portfolio, too.
Speaker Change: I'm, sorry, and your second question first.
Speaker Change: What do we expect as a normal range of Npls for the current type of portfolio that we have.
Speaker Change: Something in the low twos, so something between two two to two point or a little over what we had.
Speaker Change: The beginning of the pandemic that was somehow it was slightly higher than two.
Speaker Change: A little higher than that.
Speaker Change: Especially because of the increased composition of the SME part in the commercial portfolio and.
Speaker Change: An expectation of.
Speaker Change: Increasing our consumer loan portfolio too so.
Cristian Vicuña: So that's what we should expect as a stabilized figure in terms of MPLs. In terms of when we are expecting a turnaround on the commercial portfolio, some part of the deterioration of the impaired ratio is explained by the decrease in the total size of the loan book of the portfolio in the quarter. So that figure actually is not as high as it seems, like the 8.6% of the impaired ratio on the 3.8% of the MPLs is suffering from the decrease that we mentioned in the quarter. So having that in mind, we are seeing not as a huge increase in the total impaired volume of the portfolio or the MPL figures.
Speaker Change: So thats.
Speaker Change: Thats why do we should expect to stabilize to figure in terms of from Pls in terms of.
Cristian Vicuña: So that's what we should expect as a stabilized figure in terms of MPLs. In terms of when we are expecting a turnaround on the commercial portfolio, some part of the deterioration of the impaired ratio is explained by the decrease in the total size of the loan book of the commercial portfolio in the quarter. Not as a huge increase in the total impaired volume of the portfolio or the NPL figures, but we're seeing some signs of a decrease in the acceleration of those figures in absolute terms. So that makes us believe that we're close to the turnaround point in terms of at least the absolute figures. And we're expecting this to happen in 6 to 9 months.
Speaker Change: Why not when are we expecting a turnaround is on the commercial portfolio.
Cristian Vicuña: Perfect, thank you so much.
Speaker Change: Some part of the deterioration of the impaired ratio is explained by the decrease in the total size of the loan book of the portfolio in the quarter, so that figure actually it's not us.
Ashley: Hi, Ashley seems like the eight 6% for the preparation of this three 8% of the Npls are actually suffering from that from the decrease that we mentioned in the in the quarter. So having that in mind, we are seeing.
Speaker Change: Not off.
Speaker Change: A huge increase in the total impaired volume of the portfolio or the NPL figures, we are seeing some sign of.
Cristian Vicuña: We are seeing some signs of a decrease in the acceleration of those figures in absolute terms. So that makes us believe that we are close to the turnaround point in terms of at least the absolute figures. And we are expecting this to happen in the next...
Speaker Change: Decrease industrial duration of those figures in absolute terms. So that makes us believe that we are close to the to the turnaround point in terms of lease up the absolute figures. We are expecting this to happen in the next.
Cristian Vicuña: 6-5 months, 6-2-9 months.
Speaker Change: 625 months six to nine months.
Daniel Mora: Thank you so much.
Speaker Change: Perfect. Thank you so much.
Operator: Okay, once again, we will unmute Eric Ito's line. Eric Ito, Bradesco BBI.
Eric Ito: Once again, we will unmute Eric Ito's line. Eric Ito by starting the expectations for 2025. I think you already gave some expectations regarding loan growth, but maybe a quick follow-up on NIMS. I think this year we should have a quite full attire variation of NIMS, because on the only one hand we have this changes in interest rates. We have the impact from FCIC, but I guess next year we should have lower funding, lower inflation, and I guess FCIC will not be an issue again. So just want to get what you guys are expecting for NIMS for 2025, considering the loan mix you guys will also have.
Speaker Change: Okay. Once again, we will on mute Eric E. <unk> line, Eric E Mail Bradesco BBA. Please go ahead, Sir your line is open.
Eric Ito: Please go ahead, sir. Your line is open. Hello, can you hear me? Yes, please go ahead.
Speaker Change: Hello can you hear me yes. Please go ahead.
Eric Ito: Hi guys, good morning. Thanks for taking my question here and for the opportunity. I have two questions as well. The first one is regarding the expectations for 2025. I think you already gave some expectations regarding loan growth, but maybe a quick follow-up on NIMS. I think this year we should have a quite volatile variation in NIMS because, on the one hand, we have these changes in interest rates, we have the impact of FCIC, but I guess next year we should have lower funding, lower inflation, and I guess FCIC will not be an issue again.
Eric E: Okay, Hi, guys.
Speaker Change: Good morning. Thanks for thank you for taking my question here and for the opportunity.
Speaker Change: I have two questions. The first one is regarding the expectations for 2025, I think you already gave some expectations regarding loan growth, but maybe a quick follow up on NIM I think this year, which should have a quite volatile.
Speaker Change: Variation of names because on the on one hand, we have this changes in interest rates will have the impacts from FDIC, but I guess next year, we should have lower funding lower inflation and I guess FDIC wont will not be an.
Eric Ito: So I just want to get what you guys are expecting for NIMS for 2025 considering the loan mix you guys will also have. And my second question is regarding the efficiency ratio, mainly focused on fees. I think we should have the full impact from the interchange rate cap fully loaded in 2025. I think you guys estimate an impact of $50 billion for the full year. So I just want you to get your sense on how much we can expect fees to grow in 2025 as well. So, thank you.
Speaker Change: And again, so just once you get to what you guys are expecting for NIM for 2035, considering the loan mix you guys will also also half and my second question is regarding efficiency ratio.
Emiliano Muratore: And my second question is regarding efficiency ratio, mainly focused on fees. I think we should have the full impact from the interchanged rate cap fully loaded in 2025. I think you guys estimate an impact of 50 billion for the full year. So just want to get your sense on how much can we expect fees to grow in 2025 as well. So thank you.
Speaker Change: The focus on Pes.
Speaker Change: I think we should have the full impact from the interchange rate cap are fully loaded in 2025, I think you guys.
Speaker Change: Estimate any impact of 50 billion for the full year. So I just wanted to get your sense on how.
Speaker Change: How much can we expect fees to grow in incentive spend five as well so thank you.
Emiliano Muratore: Hello, Eric. Thank you for your question.
Speaker Change: Hello, and thank you for your question I'll take the first one and then the second one okay.
Emiliano Muratore: I will take the first one, and I'll leave the second one for Christian. So regarding NIMS Outlook for 2025, as you said, I would say that maybe the biggest source of volatility for next year would be the level of inflation that should be slightly or will say below what we have this year. So that's going to be a headwind regarding to regard the NIMS, but as you can see in the quarterly evolution, our NIMS during the second quarter was like 3.6 in the second quarter. So going forward with respect to be around that level, the inflation in the second quarter was relatively high.
Cristian Vicuña: So, regarding NIMA's Outlook for 2025, as you said, I would say that maybe the biggest source of volatility for next year would be the level of inflation that should be slightly or, let's say, below what we have this year, so that's going to be a headwind regarding NIM, but as you can see in the quarterly evolution, our NIM during the second quarter was around 3.6, so going forward, we expect to be around that The inflation in the second quarter was relatively high, so going forward, it should be below that level, and with that, we see the second semester with a NIM level of 3.6, 3.7, and that takes us to this 3.3, 3.5 for 2024.
Speaker Change: Okay. So regarding <unk>.
Speaker Change: NIM outlook for 2025.
Speaker Change: As you said I would say that maybe the biggest.
Speaker Change: Source of volatility for next year would be the level of inflation.
Speaker Change: That should be.
Speaker Change: Slightly or will it stay below what we had this year, so thats going to be.
Speaker Change: Headwind regarding the regarding <unk> as you can see them.
Speaker Change: In the quarterly evolution.
Speaker Change: Our NIM during the second quarter was like three six and seven.
Speaker Change: One quarter, so going forward, we expect to be around that level.
Speaker Change: So in the second quarter was relatively high as helpful going forward it should be.
Emiliano Muratore: So for going forward, it should be below that level, and with that we see the second semester with a NIMS level of 3.6, 3.7, and that take us to this 3.3, 3.5 full year for 2024. So for 2025, as I said, inflation should be a headwind bad; interest rates should still fall in the short part of the curve and maybe, let's say, from 50 to 100 basis points in the next 12 months. So that will take the yield curve to recover some positive slow that's also going to be positive for NIMS and in terms of long growth and long mix that also should be kind of positive.
Speaker Change: Below that that level and with that we see the second semester with.
Speaker Change: NIM level of 367 in that take us to this three three to three five for the year for 2024 or so for 2025.
Cristian Vicuña: So for 2025, as I said, inflation should be a headwind, bad [inaudible] the yield curve to recover from positive slow. That's also going to be positive for NIMS. And in terms of loan growth and loan mix, that also should be kind of positive. So even though it's still early to call, we do see NIMS next year at around the level that we'll have during the second half of this year, let's say 3.5, 3.7, subject to the evolution of inflation and rates.
Speaker Change: I said inflation should be.
Speaker Change: Headwind bad.
Speaker Change: Interest rates should still fall in the in the short part of the curve, but maybe let's say from 50 to 100 basis points in the in the next 12 months, so that will take them.
Speaker Change: The yield curve to recover some positive has slowed thats also going to be positive for nims and in terms of.
Speaker Change: Loan growth our loan mix that also should be kind of positive. So even though it's still early to call. We do see nims next year to around the level that we will have during the second half of this year, let's say 23537 subject to the evolution of.
Emiliano Muratore: So even though it's still early to call, we do see NIMS next year around the level that we'll have during the second half of this year, let's say 3.5, 3.7, subsick to the evolution of inflation and rate.
Speaker Change: <unk>.
Speaker Change: Rates.
Cristian Vicuña: Thank you, Emiliano. Regarding your P-question, Eric. So, the main driver of our P-expansion is the growth in terms of our customer base and the increased customer's interactions. And you can see how that is translated into our checking account growth year over year on quarter over quarter. This growth has been sustained, and it's also impacted positively on our card fees figures. Because if you take into consideration that we have the impact of the interchange pickup incorporated in the first half of the year, figures actually the growth in the card transactional volume and fees is actually pretty impressive.
Speaker Change: Thank you Olivier regarding your fee question.
Cristian Vicuña: Thank you, Emiliano. Regarding your P-question, Eric... So the main driver of our fee expansion is the growth in terms of our customer base and increased customer interactions. And you can see how that is translating into our checking account growth year over year and quarter over quarter. This growth has been sustained, and it's also impacted positively on our card fees figures because, if you take into consideration that we have the impact of the interchange fee cap incorporated in the first half of the year figures, the growth in card transactional volume and fees is actually pretty impressive.
Speaker Change: Eric.
Speaker Change: The main driver of <unk> expansion.
Speaker Change: The growth in terms of our customer base and the increase.
Speaker Change: Customers these directions.
Speaker Change: And you can see our valued strongly translating into our checking account growth year over year on quarter over quarter. This growth has been sustained.
Speaker Change: It's also impacted.
Speaker Change: Impacted positively on our card fees figure, but because if you take into consideration that we have the.
Speaker Change: The impact of the interchange fee cap incorporated in the first half of the year figures actually the growth in the cards.
Speaker Change: Transactional volume piece is actually pretty impressive. We also expect net to continue its growth performance.
Cristian Vicuña: We also expect the net to continue its growth performance, although at a slightly lower rate.
Cristian Vicuña: We also expect JetNet to continue its growth performance, although at a slightly lower rate. And we are also seeing opportunities in asset management because we are seeing some interest from customers to find higher-yielding assets by moving out from time deposits where they put the money into 2022 and 2023 with the high monetary policy rate. With all of that, we are expecting our fees figure to grow slightly higher than our stabilized net interest-income figure, so we should be aiming for a high single-digit growth in fees for next year, which should consider also the impact of the card fit. So, mid to high single-digit growth.
Speaker Change: No.
Speaker Change: Slightly lower rate and we are also seeing opportunities on the asset management.
Cristian Vicuña: And we are also seeing opportunities in the asset management business because we are seeing some interest from customers to find higher yielding assets by moving out from the deposits, the time deposits that were where they put the money. We are expecting our fees figure to grow slightly higher than our stabilized net interest income figures, so we should ABA ming for a high single-debt growth in fees for next year. That should consider also the impact of the card fees. So, mid to high single-debt growth in total.
Speaker Change: Business, because we are seeing some.
Speaker Change: Interest for customers to find higher yielding assets from.
Speaker Change: Moving out from the deposits.
Speaker Change: The time deposits that were where they put the money into 2020 223 with a high monetary policy rate will all of that we're expecting our fees figure to grow slightly higher than our stabilized.
Speaker Change: Net interest income figures, so we should.
Speaker Change: Aiming for high single digit growth in fees for next year.
Speaker Change: Sure.
Speaker Change: Should consider also the impact of the card streets, so mid to high single digit growth in total.
Cristian Vicuña: Great. And just to follow up, if I may, you mentioned that customers are moving out from time deposits. Could you just recall us what's the cost of funding regarding this time deposit compared to the mutual funds that they are migrating in?
Cristian Vicuña: Great, and just to follow up, if I may, you mentioned that customers are moving out of time deposits. Could you just recall what the cost of funding this time deposit is compared to the mutual funds that they are migrating into? Thank you.
Speaker Change: Great and just a follow up if I may you mentioned that customers are moving out from time deposits could you just.
Dan Lightman: Recall us whats the cost of funding are regarding this time deposits compared to the to the mutual funds that Dan lightweight Ian Thank you.
Cristian Vicuña: Thank you. Yeah, so let's say that the levels are similar in the sense that today when you look at the rate for time deposits compared to the yield of mutual funds on the clients, let's say on the spot, or if you look at the numbers today, it's like the same. The point is that mutual funds usually the short part of the money market mutual funds are has like, let's say, 60 to 90 days average duration and they don't go like market market on their net asset value. So, they have like a kind of lag into recognition, the fall of rates.
Cristian Vicuña: Yeah, so let's say that the levels are similar in the sense that today when you look at the rate for time deposits compared to the yield of mutual funds for clients, let's say on the, I don't know how to put it, but on the spot, or if you look at the numbers today, it's pretty much the same. The point is that mutual funds usually, the short part, the money market mutual funds are, have like, let's say 60 to 90 days average duration, and they don't go like mark to market on their net asset value.
Speaker Change: Yes so.
Speaker Change: Let's say that.
Speaker Change: The level are similar in the sense that today when you look at the rates for for time deposits compared to the yield on mutual funds on the clients, let's say on the <unk>, but on the on the spot or if you look at the number today is like the same.
Speaker Change: One is that mutual funds.
Speaker Change: Surely the short part of the money market mutual funds or has like let's say 60 to 90 days average duration.
Speaker Change: They don't go like Mark to market on the on the.
Speaker Change: Our net asset value so they have like.
Cristian Vicuña: So they have a kind of lag in recognizing the fall of rates. So when you have a cycle of rates going down, especially a sharp cycle of the one we are having, you still have mutual funds yielding a higher return on investors until the level of rates kind of plateaus and stays. So what I'm trying to say is that for the next three to six months, you will have, let's say, higher yields on mutual funds until the level of rates stabilizes, and you have some kind of indifference levels.
Speaker Change: Kind of lag into regarding recognizing the.
Cristian Vicuña: So, when you have a cycle of rates going down, especially a sharp cycle of the one we are having, you still have mutual funds yielding a higher return on investors until the level of rates kind of plateau. So, I'm going to say, so, what I'm trying to say is that for the next still three to six months you will have, let's say, higher yields on mutual funds until the level of rates stabilizes and you have some kind of indifferent levels. The point there is that when that happens by the end of this year, early next year, again the slope of the curve will be positive again and that will, let's say, give people more appetite to go a bit longer on their duration, and usually that kind of extension in their duration, people tend to do it through mutual funds, fixing capital funds rather than taking longer than or deposits.
Speaker Change: The falloff right. So when whether you have a cycle of rates going down, especially sharp site.
Speaker Change: Cycle is that while we are we are having used to have mutual funds yield in a higher return on investors.
Speaker Change: Until the the level of rates kind of Pla.
Speaker Change: <unk>.
Speaker Change: So.
Speaker Change: What I'm trying to say is that for the next is still three to six months.
Speaker Change: You will have let's say higher yields on our mutual funds until the level of rates or stabilizes and you have some kind of different levels. The point. They are is that went up.
Cristian Vicuña: The point there is that when that happens by the end of this year and early next year, the slope of the curve will be positive again, and that will, let's say, give people more appetite to go a bit longer on their duration. Usually, that kind of extension in their duration, people tend to do it through mutual funds, fixed income mutual funds, rather than taking longer.
Speaker Change: Uh huh.
Speaker Change: That happens by the end of this year early next year again, the slope of the curve.
Speaker Change: B.
Speaker Change: Positive again and that will lets say give people more appetite to go a bit longer on their duration and usually that's kind of extension in the duration people tend to do it through mutual funds fixed income mutual clients rather than taking.
Speaker Change: Taking longer than our deposits.
Cristian Vicuña: Very clear, thank you.
Speaker Change: Very clear thank you.
Operator: Okay, thank you very much. It looks like we have no further questions at this point.
Operator: Okay, thank you very much. It looks like we have no further questions at this point. I'll pass the line to the management team for the closing remarks.
Speaker Change: Okay. Thank you very much it looks like we have no further questions at this point I'll pass the line to the management team for the concluding remarks.
Operator: I'll pass the line to the management team for the concluding remarks. So thank you all very much for taking the time to participate in today's call. We look forward to speaking with you again soon. Thank you very much.
Cristian Vicuña: So, thank you all very much for taking the time to participate in today's call. We look forward to speaking with you again soon.
Speaker Change: So thank you all very bad for taking the time to participate in today's call. We look forward to speaking with you again soon.
Operator: Thank you very much. This concludes today's conference call. We'll now be closing all the lines. Thank you, and goodbye.
Operator: This concludes today's conference call. We will now be closing all the lines. Thank you and goodbye.
Speaker Change: Thank you very much. This concludes today's conference call will now be closing all the lines. Thank you and goodbye.