Q1 2025 Banco Santander-Chile Earnings Call
Yeah.
Operator: Ladies and gentlemen, thank you for standing by.
Speaker Change: Ladies and gentlemen, thank you for standing by I would like to welcome you to Banco Santander, Chile first quarter 2025.
Operator: I would like to welcome you to Bco Sntndr Chile first quarter 2025 earnings conference call on the 8th of May 2025. Please note that at this point all participant lines are in lesson only mode.
Earnings Conference call on the eighth of May 2025.
Speaker Change: Please note that this point all participants lines are in listen only mode. After.
Operator: After the call there will be an opportunity to ask questions.
Speaker Change: After the call there'll be an opportunity to ask questions.
Operator: So with this, I would like now to pass the line to Patricia Perez, the Chief Financial Officer. Please go ahead.
Speaker Change: So with this I would like now to pass the line to put your shippers the Chief Financial Officer. Please go ahead.
Patricia Pérez: Good morning, everyone.
Patricia Pérez: Welcome to Banco Sntndr Chile's first quarter 2025 results webcast and conference call. This is Patricia Perez, CFO, and I'm joined today by Cristian Vicuna, Head of Strategy and IR, and Andres Sansone, our Chief Economist. Thank you everyone for joining us today to review our first quarter performance and results.
Speaker Change: Good morning, everyone.
Speaker Change: Welcome to Banco Santander, Chile's first quarter 2025 results webcast and conference call. This is Patricia Baker, CFO and I'm joined today by Chris <unk> head of strategy, and IR and Andreessen sonnet or economy. Thank.
Speaker Change: Thank you everyone for joining us today to review, our first quarter performance and results.
Patricia Pérez: Today, Andres will start with an overview of the economic environment, and then Cristian will go through the key strategy points and the results of the banks in the first quarter of the year.
Speaker Change: Do they address we'll start with another view of the economic environment and make this yahoo. Both through the key is Friday viewpoints and the results of the box in the first quarter of the year.
Patricia Pérez: After that, we will have a Q&A session where we will be happy to answer your questions.
Speaker Change: After that we will have a Q&A session, where we will be happy to answer your questions. So let me hand over to Anders.
Andres Sansone: So, let me hand over to Andres. Thanks, Patricia. On slide four, we have our current outlook. Since the last webcast, the trade conflict has increased uncertainty in global financial markets. In Chile, the peso briefly reached 1,000 pesos per dollar after the announcement in the Liberation Day before returning to the 9.30-9.40 rate, with our model suggesting it should be closer to 9.60-9.70. Long-term interest rates in Chilean pesos fell by around 30 basis points, and short-term rates in both pesos and inflation-linked UF also decreased, reflecting lower growth expectations and reduced inflationary pressure. Although the trade war poses a risk to Chile, given its high integration to global trade, the direct impact of U.S.
Speaker Change: But Asia on slide four we hub our current outlook since the last last webcast the trade conflict costs, Greece uncertainty in global financial markets.
Speaker Change: In Chile, the peso briefly reached 1000 vessels per dollar after the announcement in the Liberation day before we started into the 9940 right.
Speaker Change: With our model, suggesting it should be closer to 916 917.
Speaker Change: Long term interest rates in Chilean pesos fell by around 30 basis points.
Speaker Change: Short term rates in both vessels in.
Speaker Change: Inflation linked.
Speaker Change: Also decrease reflecting lower growth expectations and reduce inflationary pressures.
Speaker Change: Although the trade war process at least two till it.
Speaker Change: Its tight integration into global trade.
Andres Sansone: tariffs is limited. Chile received the basic 10% tariff and the key products like copper and wood were excluded. However, the indirect effects, how it will affect business and consumer confidence, could impact local investment and consumption.
Speaker Change: Impact of USD is limited.
Speaker Change: The basic 10% tariff on the key products like copper our booth were excluded.
Speaker Change: However, the indirect effects, how it will affect business and consumer confidence.
Speaker Change: Impact local investment and consumption.
Andres Sansone: Despite this challenging environment, the Chilean economy started the year with strong momentum. The monthly activity index for March exceeded expectations and the economy grew by 2% in the first quarter compared to last year. Activity remains heterogeneous, with export sectors, tourism and investment in machinery leading the way, while construction still lacks.
Speaker Change: Despite this challenging environment the Chilean economy is start the year with strong momentum.
Speaker Change: The monthly activity index formats exceeded expectations and the economy grew by 2% in the first quarter compared to last year.
Speaker Change: Activity remains iterate goodness with explore sectors to resume on investment in micro <unk>.
Speaker Change: Leading the way while construction is still lacks.
Andres Sansone: Due to the external shock, we now expect GDP to grow 2.1% in 2025, down from the original forecast of 2.4, and 1.7% in 2026, down from 2.1%. On inflation, the first quarter inflation closed in line with expectations, slightly below 5%, with core inflation showing clear signs of moderation. The inflation conversion process should continue and could accelerate due to weaker global and local demands. Additionally, global trade diversion triggered by tariffs could reduce the prices of imported goods, supporting faster desinflation.
Speaker Change: Due to the external shock, we now expect GDP to grow two 1% in 2025 down from the original forecast of $2 four and.
Speaker Change: One 7% in 2026 down from two 1%.
Speaker Change: On inflation, the first quarter inflation growth in line with expectation of slightly below 5% with core inflation showing clear signs of moderation.
Speaker Change: The inflation comp burden process to continue and could accelerate due to weaker global and local demand.
Speaker Change: Additionally, global trade.
Speaker Change: <unk> III get Rytary will reduce the prices of imported goods supporting faster that's in place.
Andres Sansone: We downgrade our forecast for the U.S. of 2.6% for the end of 2025 and 3% by year-end in 2026, with risk due to the downs. The Central Bank kept the policy rate at 5% during its last meeting and maintained a cautious tone due to external risks. However, with inflation slowing and activity weakening, we expect the Central Bank to resume cuts in June. In our base scenario, the policy rate will close 2025 at 4.5% and reach 4% in 2026, which is close to its neutral level.
Speaker Change: We downgrade our forecast for the U S.
Speaker Change: Two 6% for the end of 2025 and 30% by year end in 2026 with risk due to the downside.
Speaker Change: The Central Bank kept the policy rate at 5% doing it less.
Speaker Change: Meeting our maintained a cautious tone due to external rates.
Speaker Change: With inflation slowing in activity, we can we expect the central bank to assume that you do.
Speaker Change: In our base scenario the policy rate will close 2025 at four 5% and reached 4% in 2036.
Speaker Change: What which is close to neutral level find.
Andres Sansone: Finally, the Ministry of Finance published its public finance report of the year, highlighting a delay in reaching the structural deficit target. The original target of a minus 0.5% GDP deficit for next year is now expected to be met only in 2028. According to the 2024 national account, the structural deficit reached 3.3% of GDP, exceeding the 1.9% goal set in the fiscal policy decree. For 2025, the new target is 1.6%, above the original 1.1%, with convergence now postponed to 2026. While the report reflects an effort to control spending and increase transparency, the overall fiscal situation remains tight.
Speaker Change: Finally, the Ministry of Finance published.
Speaker Change: Public finance will be part of the year, highlighting a delay in reaching the structural deficit CAGR target.
Speaker Change: The original target of minus <unk>, 5% GDP deficit for next year is now expected to be made only in 2028. According to the 'twenty 'twenty four national account the structural deficit reached three 3% of GDP exceed the one 9% goal.
Speaker Change: In the fiscal policy decrease.
Speaker Change: For 2025, the new target is $1, 6% above the original one 1% with convergence now postponed to 2000 and disease.
Speaker Change: While the report reflects our efforts to control spending and increased transparency. The overall fiscal situation remains tight.
Speaker Change: On slide five.
Andres Sansone: We present recent developments to the regulatory framework.
Speaker Change: We said recent developments with the regulated regulatory framework.
Andres Sansone: The tax reform proposed by the Ministry of Finance, which sought to reduce the corporate income tax from 27% to 24% and increase personal income taxes, has been officially withdrawn from the legislative agenda. Meanwhile, the Senate approved a temporary reduction in the SME income tax rate, lowering it from 25% to 12.5% for the year 2027 and to 15% in 2028. Progress has also been made on the Mortgage Subsidy Bill, which passed its second constitutional stage following the Senate Finance Committee's approval to proceed with the legislation. The initiative seeks to reduce the excess supply of housing, thereby stimulating the real estate and construction sectors and reviving mortgage credit flows.
Speaker Change: The tax reform for both by the Minister of Finance, we sought to reduce the corporate income tax from 37% to 24% and increased personal income taxes has been.
Speaker Change: Officially withdrawn from the legislative agenda.
Speaker Change: Remember the Senate approved a temporary reduction in the SME income tax rate lower.
Speaker Change: 25% to 12, 5% for the year 2000.
Speaker Change: Seven.
Speaker Change: 15% in 2000 to date.
Speaker Change: Progress SaaS also.
Speaker Change: <unk> made on the mortgage subsidy Bill, which bust second constitutional stage. Following the Senate Senate Finance Committee approval to proceed with the legislation.
Speaker Change: The initiative seeks to reduce the excess supply of Kelsey, thereby stimulating the real estate and construction sectors and reviving mortgage credit flows.
Andres Sansone: The benefit is aimed at individuals purchasing new homes, first sales, valued up to US$4,000 and including a 60 basis point interest rate subsidy and a state guarantee covering up to 60% of the loan amount for half of the loan term. with a cap of 50,000 housing units.
Speaker Change: The benefit is aimed at individual purchasing new homes first face value at all.
Speaker Change: Up to 4000 U S and including a 60 basis point interest rate subsidy.
Speaker Change: <unk> currently covering up to 60% of the loan amount for half of the long term.
Speaker Change: With a gap of 50000 housing units we.
Andres Sansone: Regarding politics, only the ruling coalition, Unidad por Chile, will hold primary elections on June 29. The right-wing parties have opted not to participate. According to the lastest Cadent poll, center-right candidate Evelyn Matei leads the presidential race with 22% support, followed by the right-wing candidate José Antonio Kass with 13%, and center-left candidate Carolina Toa, 11%.
Speaker Change: Regarding politics, only the ruling coalition will need four till it will call primary elections on June 29.
Speaker Change: The right wing party, Scott not to participate.
Speaker Change: According to the last last this current policy center right candidate every Monday lifts the preferential rates with 31, 32% supported follow by the right wing candidate concerned done your best.
Speaker Change: 13%.
Speaker Change: Centered less candida Catalina to up 11%.
Cristian Vicuña: Thanks, Andres. On slide seven, we highlight our key messages for the first quarter of this year. During the quarter, the net profits of the bank reached 278 billion pesos. a 131% increase compared to the same quarter last year. and our return on average equity reached 25.6% with a best-in-class efficiency ratio of 35%. Our fees and financial transactions grew very strongly, 17% and 40% year-on-year, respectively, thanks to the success of our digital strategy, where we have seen a strong demand for our products, such as mutual funds, which have grown 20% year-over-year. With this, our recurrence levels reached 61.9%.
Andreas: Thanks, Andreas on slide seven we highlight our key messages for the first quarter of this year.
Andreas: During the quarter the net profits of the bank reached 278 billion versus a 131% increase compared to the same quarter last year.
Andreas: Our return on average check we reached 25, 6% with a best in class efficiency ratio of 35%.
Andreas: Rfps and financial transactions grew very strongly at 17% and 40% year on year, respectively. Thanks to the success of our detailed strategy.
Andreas: Where we have seen strong demand for our products such as mutual funds, which have grown 20% year over year with this Ah records levels reached 61, 9%.
Cristian Vicuña: Also, our NII increased 42% with a LIM of 4.1% thanks to our balance sheet structure and relatively high inflation in the quarter.
Andreas: Also.
Andreas: Our NII increased 42% with a NIM of four 1%, thanks to our balance sheet structure and relatively high inflation in the quarter.
Cristian Vicuña: Furthermore, on April 22, our shareholders approved a dividend distribution of 70% of our 2024 profits at 3.19 pesos per share and a dividend yield of 5.5%. Behind the success is our strategy that we have been implementing over the last few years. Thanks to our digital products, we now have over 2.3 million digital clients and 4.3 total clients. And we are very well regarded for customer service among peers, where we obtained a net promoter score of 57 over the last six months.
Andreas: Furthermore, on April 22, our shareholders approved the dividend distribution of 70% of our 2020 for profits at 319 pesos per share and a dividend yield of five four.
Andreas: Behind this success is our strategy that we have been implementing over the last few years.
Andreas: Thanks to our digital products, we now have over $2 3 million digital clients and $4. Three total clients and we are very well regarded for customer service among peers, where we obtained a net promoter score of 57 over the last six months.
Cristian Vicuña: This quarter, we migrated our core banking systems to the cloud through the Gravity Project, and we are now operating 100% on the cloud, an important stepping stone for the digital transformation of our banking.
Andreas: This quarter.
Andreas: We might greater our core banking systems to the cloud through the gravity project.
Andreas: And we are now operating 100% on the cloud an important stepping stone for the digital transformation of our bank.
Cristian Vicuña: Furthermore, we were recognized as the best private bank in Chile by Euromoney. On slide 8, we can see the advances with our strategy of being a digital bank with WorkFS. As you can see, we have continued optimizing our branch network with 34% of our branches without human sellers. Recently, we have been launching Sntndr in your community, simple branches facilitating access to depository ATMs and other banking services such as daily bill payments and top-up phones and MetroCards, as well as opening accounts in a coffee area. We continue to simplify our products, reducing the total number of products in our system by 31%.
Andreas: Furthermore, we were recognized as the best private bank in Chile by Euromoney.
Andreas: On slide eight we can see the advances with our strategy of being a ddos banked with work effects. As you can see we have continue optimizing our branch network with 34% of our branches without human sellers.
Andreas: Recently, we have been launching Santander in Europe community simple branches facilitating access to depository Atms.
Andreas: And other banking services, such as daily Bill payments until about homes and Metro cards, whereas opening accounts on a coffee area.
Andreas: We continue to simplify our products, reducing the total number of quotes in our system by 31%.
Cristian Vicuña: This simplification of our product offering aims to provide simpler products to our clients, but also reduce system complexities and standardize operations. Here in the graph on the bottom, you can see how the digital transformation is leading to strong client acquisition since 2019. We have gained some 900,000 clients, while our digital clients have increased by 1.2 million clients driven by the launch of our digital initiatives such as Live and Masluca. 60% of our customers are active users, meaning that they use their account on a monthly basis. These active users and our digital customers are growing 7% year over year, while our total clients grew 9%.
Andreas: This simplification of our product offering aims to provide simpler codes to clients, but also reduce system complexity and under ice operations.
Andreas: Here in the roughly of the on the bottom you can see how the digital transformation is leading to strong client acquisition since 2019, we.
Andreas: We have gains from 900000.
Andreas: Clients, while our diesel clients have increased by $1 2 million clients driven.
Andreas: The launch of our detailed initiatives such as life and much Lucas.
Andreas: 60% of our customers are active users, meaning that they use their account on a monthly basis. This active users on our digital customers are growing 7% year over year, while our total clients grew 9%.
Cristian Vicuña: As of March 2025, we are ranked first for customer service. On slide 9, we can see how our strategy is translating into results through higher feed generation, which grew 17% year-over-year. GetNet, our acquiring business, continue to show a strong growth, attracting more clients with over 200,000 customers, an increase of 25% in the last 12 months, with over 20% market share in numbers of transactions. There is a strong incentive for our GEDMEC clients to open an account with us. such as having their sales deposited up to five times per day, a differentiating feature in the payment systems in Chile.
Andreas: March 2025, we are ranked first for our customer service.
Andreas: On slide nine we can see how our strategy is translating into results through higher fee generation, which grew 17% year over year.
Andreas: GAAP net our acquiring business continued to show strong growth attracting more clients with over 200000 customers an increase of 25% in the last 12 months with over 20% market share in numbers of transactions.
Andreas: There is a strong incentive for our getting the clients to open an account with us.
Andreas: Such as trading there are sales the positive up to five times per day as it were.
Andreas: Chasing feature in the payment systems in Chile.
Cristian Vicuña: With this, we have quickly become market leaders in business current accounts, increasing 25% year on year. The larger client base is leading to important increases in other products as well. Our current accounts have been increasing 10% year over year, with growth in dollar accounts particularly strong, as it is easy to contract through our APP, reaching a market share of almost 40%. Where these new clients comply with our risk appetite, they are given credit cards. So this, along with a reduction of cash in the Chilean economy, is leading to a 10% growth in credit card transactions in the last year.
Andreas: With this we have quickly become market leaders and business current accounts increased 25% year on year.
Andreas: The larger client basis, leading to important increases in other products as well.
Andreas: Our current accounts have been increasing 10% year over year with growth in all our accounts, particularly strong as it is easy to contract through our ACP, reaching a market share of almost 40%.
Andreas: Were these new clients complied with our risk.
Andreas: They are given credit cards. So this along with a reduction of cash in the Chilean economy is leading to the 10% growth in credit card transactions in the last year.
Cristian Vicuña: We are first for volume of credit card purchases in the Chilean market. Also with the lower interest rates and a simple straightforward investment platform available for all our clients, we have seen a shift from our prime deposits to mutual funds that we broker.
Andreas: We are first or volume of credit card purchases in the Chilean market.
Andreas: Also with the lower interest rates and a simpler straightforward investment platform available for all our clients. We have seen a shift from our time deposits to neutral pumps that we broker here our depot mutual funds.
Cristian Vicuña: Here are these unusual pumps. are best in the industry and the overall AUMs with broker have increased 20% year over year. Our fees generated from clients represent more than 60% of our core expenses. compared to the rest of the Chilean banking industry, we are far above the average. Our efficiency was also at first-class levels of 35%, best among our peers.
Andreas: Our best in the industry and the overall <unk>, we broker have increased 20% year over year.
Andreas: Our fees generated from clients represent more than 60% of our core expenses.
Andreas: Compared to the rest of the Chilean banking industry, we are far above the average power efficiency.
Andreas: Also our first class levels of 35% best among our peers.
Cristian Vicuña: Let us review the financial results. On slide 11, we can see the impressive improvement in our results over the last 12 months. Our quarterly ROE reached 25.6%, marking the fourth consecutive quarter above 20%, an historic high for quarterly net income. Our net income attributable to shareholders increased by 131% year-on-year, mainly due to higher income growth from a lower cost of funding and higher fees on financial transactions. compared to the fourth quarter, the income grew 0.5% despite lower inflation and higher provisions that were more than offset by higher fees and lower operating expenses.
Andreas: <unk> will review the financial results.
Andreas: On slide 11, we can see the impressive improvement in our results over the last 12 months.
Speaker Change: Our quarterly ROE reached 25, 6%.
Speaker Change: Marking the fourth consecutive quarter above 20% on a historic high for quarterly net income.
Speaker Change: Our net income attributable to our shareholders.
Speaker Change: By 131% year on year, mainly due to higher income growth from a lower cost of funding and higher fees on financial transactions.
Speaker Change: Compared to our fourth quarter net income group <unk>, 5%, despite lower inflation and higher provisions that were more than offset by higher fees and lower operating expenses.
Cristian Vicuña: all managing to sustain these impressive levels of profitability.
Speaker Change: Managing to sustain these impressive levels of profitability.
Cristian Vicuña: Oswalt Our non. net our non-interest income is growing 23.4% year-over-year as a result of continuing expansion of the client base and the usage of digital products and platforms. Our main products continue to grow very strongly. Of note, our cart fees show an annual growth of 37.6%.
Speaker Change: On slide 12.
Speaker Change: Our non.
Speaker Change: Nick our non interest income is growing 23, 4% year over year.
Speaker Change: As a result of continuing expansion of the client base.
Speaker Change: And the usage of diesel products on platforms.
Speaker Change: Our main products continue to grow very strongly.
Speaker Change: Note our card fees show, an annual growth of 37, 6%.
Cristian Vicuña: The second interchange fee cut is on hold until the Commission concludes their review and makes a decision. which we would expect to be later on in the year. Here, we can also see the financial impact of Ketnet that continues to do very well, attracting more business clients and also larger corporate clients with greater transactional volume. income from financial transactions increased strongly year on year mainly due to gains from exposure to foreign currency and local and offshore client pressure.
Speaker Change: The second interchange fee cap is on hold until the Commission concludes their review and makes a decision.
Speaker Change: Which we would expect to be.
Speaker Change: Later on the year.
Speaker Change: Here, we can also see the financial impact of cabinets, but continues to do very well attracting more business clients and also larger corporate clients with greater transactional volume.
Speaker Change: Income from financial transactions increased strongly year on year, mainly due to gains from exposure to foreign currency and local and offshore client pressures.
Cristian Vicuña: on a slide 13. We reviewed the evolution of our net interest margin over the last 12 months. As you can see, the recovery of our NEM has been driven by the improvement in the cost of funding.
Speaker Change: On slide 13.
Speaker Change: We review the evolution of our net interest margin over the last 12 months as you can see.
Speaker Change: The recovery of our NIM has been driven by the improvement in the cost of funding.
Cristian Vicuña: compared to the fourth quarter, the slightly lower UF variation affected our income for UF readjustment, leading to the slightly lower margin and nil in the quarter. Given our current macro expectation, we expect our net interest margin to stay around these levels for the rest of the year.
Speaker Change: Compared to the fourth quarter, despite the lower U S variation affected our income for U S. We adjustment leading to the slightly lower margin in the quarter given our current macro expectations. We expect our net interest margin to stay around these levels for the rest of the year.
Cristian Vicuña: We also display the growth of our funding base. Our total deposits remain stable year-on-year and decrease quarter-on-quarter after high liquidity of our corporate clients that then drain on the first week of the year. As interest rates fall, clients are moving to more attractive mutual funds managed by Santander Asset Banks. with the growth in customer deposit. We have improved our loan-to-deposit ratio in the recent years. reaching 130% as of March 2025 and 97% when adjusted for the portion of our mortgage loan financed through long-term bonds. Our Liquidity Coverage Ratio and Net Stable Funding Ratio remain well above regulatory limits.
Speaker Change: We also play the growth of our funding base.
Speaker Change: Our total deposits remained stable year on year and decreased quarter over quarter. After high liquidity of our corporate clients that demonstrate on the first week of the year as interest rates fall.
Speaker Change: <unk> are moving to more attractive mutual funds matched by some of the asset.
Speaker Change: With the growth in customer deposits.
Speaker Change: We have improve our loan to deposit ratio in the recent years.
Speaker Change: Reaching 130 <unk> March 25.
Speaker Change: And 97% when adjusted for the portion of our mortgage loans financed through long term bonds.
Speaker Change: Our liquidity coverage ratio and net stable funding ratio remains well above regulatory leaders.
Cristian Vicuña: On slide 15, we can see our loan book. Our loans contracted slightly in the quarter compared to December 2024. In large part, this is due to the appreciation of the Chilean test in the quarter, which contributed to a contraction of commercial loans and slower dynamics in the mortgage market.
Speaker Change: Slide 15, we can see our loan.
Speaker Change: Our loans contracted slightly in the quarter compared to December 2034 in large part this is Youtube the appreciation of the GM truck in the quarter, which contributed to a inflection of commercial loans and slower the nymex in the mortgage market.
Cristian Vicuña: Consumer Lending continues to grow well. through though affected by the high growth at year end due to the decisionality of credit card loans, which was has now normalized. Our auto loan book continues to grow more robustly, with our Sntndr consumer subsidy already benefiting from the growth of alliances with dealerships over the last year. In terms of segment growth, the retail segment growth was led by consumer lending, with the slower mortgage growth affecting the total overall growth of this sector.
Speaker Change: Consumer lending continued to grow well.
Speaker Change: Though affected by the high growth at year end due to the seasonality of credit card loans, which was has now normalized.
Speaker Change: Our auto loan book continues to grow more robustly with our Santander consumer subsidy are you benefiting from the growth of our items with dealerships over the last year.
Speaker Change: In terms of segment growth. The retail segment growth was led by consumer lending with the slower mortgage growth affecting the total overall growth in this segment.
Cristian Vicuña: Our wealth management and insurance segment saw an impressive growth over the last 12 months, with high-wealth clients increasing their demand for credit. Our middle market segment saw a slight pick up in demand, while our corporate investment buying long book has contracted due to our to less of a demand from the general microenvironment.
Speaker Change: Our wealth management and insurance segment saw an impressive growth over the last 12 months with high yield clients increasing their demand for credit.
Speaker Change: Our middle market segments saw a slight pickup in demand.
Speaker Change: Our corporate investment Bank loan book has good practice due to our.
Speaker Change: Two less of the demand from the general macro environment.
Cristian Vicuña: on slide 16. We review our efficiency that has been consistently improving, reaching 35% in the first quarter with recurrence levels of 62%. Total operating expenses are decreasing 1.8% year-on-year and 3.3% in the quarter.
Speaker Change: On slide 16.
Speaker Change: We review our efficiency that has been consistently improving reaching 35% in the first quarter with recognized levels of 62%.
Speaker Change: Total operating expenses are decreasing one 8% year on year and three 3% in the quarter.
Cristian Vicuña: All of this is supported by an increase in other operating expenses, as costs incurred last year related to branch risk factoring were not repeated in 2025, and we have had lower fraud expenses due to the change in the law in May 2024. Core support expenses, salaries, administration, and amortization drew 9% year-on-year, driven by the 5.9 quarterly increase. This pickup was particularly in administrative expenses, where we recognized greater costs related to technology as we reached the final stages of our migration of our mainframe to the cloud. All in all, efficiency in the quarter is within our guidance and one of the best in the industry.
Speaker Change: This is supported by an increase in other operating expenses.
Speaker Change: Costs incurred last year related to <unk> restructuring were not repeated in 'twenty five.
Speaker Change: Lower project expenses due to the change in the law in May 2024.
Speaker Change: Core support expenses salaries administration on amortization.
Speaker Change: <unk> grew 9% year on year, driven by the five nine quarterly increase does pick up.
Particularly in administrative expenses, where we recognized greater costs related to technology as we reached the final stages of army duration of our mainframe to the cloud.
Speaker Change: All in all efficiency in the quarter is within our guidance on one of the best in the industry.
Cristian Vicuña: on slide 17. We show our cost of risk and payment behavior for our clients. In the first graph, we can see the evolution of our car quality provision expense and cost. are shown in the graphs on the right, our MPLs. There are 90 days overview, increased during 2024 mainly in our mortgage and commercial loans. while our consumer loan will remain relatively stable.
Speaker Change: On slide 17, we.
Speaker Change: We show our cost of risk and payment behavior of our clients in.
Speaker Change: In the first graph, we can see the evolution of our caerphilly provision expense and cost of risk.
Speaker Change: As shown in the graph on the right our npls.
Speaker Change: There are 90 days overdue increased during 2024, mainly in our mortgage and commercial loans.
Speaker Change: While our consumer loan will remain relatively stable.
Cristian Vicuña: Our Impaired Loan Portfolio, which includes NPLs plus restructured loans, has also been increased significantly in the same portfolios, especially more recently. It is important to note that asset quality ratios are affected by weaker loan growth. However, the graphs also indicate that the increase in volumes is starting to slow down.
Speaker Change: Our impaired loan portfolio, which includes Npls plus restructured loans has also been increased significantly in the same portfolios, especially mortgages.
Speaker Change: <unk> to note that other slightly ratios are affected by weaker loan growth. However, the grass also indicate that the increasing volumes at <unk>.
Cristian Vicuña: And during the first quarter of 2024, we started to see early signs of asset quality stabilizing with improvements in our commercial loan.
Speaker Change: Starting to slowdown and during the first quarter of 2024, we started to see early signs of asset quality, despite utilizing with improvements in our commercial loan.
Cristian Vicuña: on Friday 18th. We can see how we maintain strong capital ratios well above our regulatory minimum. Our capital ratios as of March 2025 include a provision for a dividend payment of 70% of the 2024 earnings and 60% of the 2025 earnings year to date.
Speaker Change: On slide 18.
Speaker Change: We can see how we maintained strong capital ratios well above our regulatory minimums are.
Speaker Change: Our capital ratios as of March 2025 include a provision for a dividend payment of 70% of the 2024 earnings and 60% of the 2025 earnings year to date.
Cristian Vicuña: In April 2025, the CMF announced that we are now required to establish 25 basis points for Pillar 2 requirements. We have to have half of this established by June 25 and the remaining half in the next two years that will be reviewed to the results of the evaluation of the patrimonial adequacy of each year carried out by the CMT. 56.3% of this charge has to be composed by core equity tier 1. And therefore, all our all in fully loaded requirement for December 2025 will be 9.08%. As you can see, we have more than sufficient capital to cover this, and so it has not affected any strategic decision.
Speaker Change: In April 2025, the CMS announced that we are now required to publish 25 basis points for pillar two requirements.
Speaker Change: We have to have half of this established by June 25.
Speaker Change: And the remaining half in the next two years that will be reviewed to the response of the evaluation of the patrimonial adequacy of each year carried out by this year.
Speaker Change: 56, 3% of this charge has to be controls by core equity tier one and therefore all of our all in fully loaded requirement for December 2000, 22025 will be nine eight.
Speaker Change: 8%.
Speaker Change: As you can see we have more than sufficient capital to cover this.
Speaker Change: <unk> has not affected any strategic decisions.
Cristian Vicuña: In fact, on April 22, our shareholders approved the 70% dividend payout, so our latest dividend payment was 3.19 pesos per share, our historic high with a dividend yield of 5.4%.
Speaker Change: In fact on April 22, our shareholders approved the 70% dividend payout. So our latest dividend payments was 319 vessels per share our story type with a dividend yield of five 4%.
Cristian Vicuña: So now let's move to our current expectations for the rest of 2025 on slide 25. Firstly, we are considering a macro scenario of GDP growth of around 2.1%. with the U.S. variation of 3.6% and average monetary policy rate of 4.8%. With this, we expect our loan book to grow mid-single digits, adjusting for the effects of our generate-to-distribute model. With our current market expectations, our NIMS should remain around 4% throughout the year.
Speaker Change: So now let's move to our current expectations for the rest of 2025 on slide 20.
Speaker Change: Firstly, we are considering a macro scenario.
Speaker Change: GDP growth of around two 1%.
Speaker Change: With the U S by relation of three 6% and a rich monitor policy rate of four 8%.
Speaker Change: With this.
Speaker Change: We expect our loan book to grow mid single digits adjusting for the effects of our generate to distribute mode.
Speaker Change: With our current macro expectations, our nims should remain around 4% throughout the year.
Cristian Vicuña: Given the delay in the interchange fee regulation, we have increased our non-NII guidance to growth of high single digits. Our efficiency levels should remain around the current levels, so around mid-30s. Considering where we are in the credit cycle, and the initial slowdown in the creation of non-payments, we are guiding a stable cost of risk of around 1.3%, with the second semester improving compared to the first semester of this year.
Speaker Change: Given the delay in the interchange fee regulation, we have increased our non NII guidance to growth of high single digits.
Speaker Change: Our efficiency levels should remain around the current levels so around mid thirties.
Speaker Change: Considering where we are in the credit cycle and the initial slowdown and the creation of non payments. We are guiding a stable cost of risk of around one 3% with the second semester, improving compared to the first semester of this year.
Cristian Vicuña: With this, we are increasing our guidance for 2025 to returns over average equities of above 21%.
Speaker Change: With this we are increasing our guidance for 2025 to return is over average equity of above 21%.
Cristian Vicuña: With this, I finish my presentation.
Speaker Change: With this I finish my presentation. So now let's start with the Q&A session.
Operator: So now let's start with the Q&A session. Thank you. Thank you very much for the presentation.
Yes.
Speaker Change: Thank you. Thank you very much for the presentation. So we'll now most of the question and answer section.
Operator: So we'll now move to the question and answer section. If you would like to ask a question, please press start to on your phone and wait to be prompted. If you are dulling by the web, you can also request to ask a voice question.
Speaker Change: He would like to ask a question. Please press star two on your phone and wait to be prompted.
Speaker Change: <unk> by the web.
Requests to Oscar voice question.
Ernesto Gabilondo: We already have a few questions lined up so we'll start with Ernesto Gabilondo from Bank of America. Please go ahead. Your line is now open.
Speaker Change:
Speaker Change: We already have two.
Speaker Change: Questions lined up so we'll start with Mr. Copeland from Bank of America. Please go ahead. Your line is now open.
Ernesto Gabilondo: Hello, Ernesto, please go ahead. Ernesto, if you can check if your microphone might be muted on your end. Can you hear me now? Yes, yes, we can hear you now. Sorry, sorry about that.
Ernesto: Hello, Ernesto Please go ahead.
Ernesto: Our <unk> if you can check if your.
Ernesto: If your microphone businesses on your end.
Speaker Change: Can you hear me now yes, yes, we can hear you now.
Ernesto Gabilondo: Good morning, Patricia and all your team, and thanks for the opportunity to ask questions. My first question will be on the economic and political outlook. I would like to hear your thoughts on what will be the key topics or the challenges that will need to be addressed by the new administration. And on the other hand, how do you see could be the potential impact for Chile due to the tariffs?
Speaker Change: Sorry, sorry about that.
Speaker Change: Good morning, <unk> and thanks for your opportunity to ask questions.
Speaker Change: My first question will be on the economic and political outlook.
Speaker Change: I would like to hear your thoughts.
Speaker Change: What will be the peak or the challenges that will need to be addressed by the new administration.
Speaker Change: On the other hand, how do you see could be the potential impact for Chile.
Ernesto Gabilondo: And then my second question is on your non-NII growth expectation. Can you break it down in terms of fees and financial results?
Speaker Change: Due to the tariffs.
Speaker Change: And then my second question is on your new <unk>.
Speaker Change: Hi.
Speaker Change: Or sorry, non NII growth expectation.
Speaker Change: Can you break it down in terms of <unk> financial results.
Ernesto Gabilondo: And my last question will be on competition from Fintechs or new entrants. We have seen Tempo, Credit Corp Sintech in Chile, already trying to accelerate its process. So I wanted to hear your thoughts if you are seeing Tempo as a key competitor or still not a big competitor. And also if you can share if you are hearing something about Mercado Pago or any other type of competitor. Again, I just want to understand who is really the competition from new Sintechs and new entrants in Chile.
Speaker Change: And my last question will be on competition from <unk> or new entrants.
Speaker Change: We have seen temple.
Speaker Change: Credit cards being thinking Chile.
Speaker Change: <unk> already.
Speaker Change: The scenario these process.
Speaker Change: So I wanted to hear.
Speaker Change: You have seen at <unk>.
Speaker Change: A key competitor, we are still not a big competitor.
Speaker Change: Also you can share.
Speaker Change: You are hearing something about the kind of a basel or any other type of competitor again, I just want to understand who leads with the.
Speaker Change: The competition from Newfield, and our new entrants and teammates. Thank you. Thanks.
Ernesto Gabilondo: Thank you.
Andres Sansone: Thanks, Ernesto.
Andres Sansone: So, let's start with the economic and tariff question, so I'll pass the line to Andres for this question. Okay. Regarding the impact of the tariff on Chile, The direct impact of the new U.S. tariff on Chile's export is more or less limited. We know that key products, as copper and wood, have been excluded, and Chile remains subject to the base 10 percent rate. However, the indirect effects are more significant. We know Chile is a small, open economy, so there will be lower external demand, so that will affect exports. But more importantly, the key transmission channel is through business and consumer confidence, so that will deteriorate eventually consumption and investment by the end of the year, and that is why we are expecting to grow 2.1 percent this year.
Speaker Change: Thanks, very much so let's start with the economic on.
Speaker Change: Our next question so I'll pass the line to the rest for this question.
Speaker Change: Regarding the impact of the Hittite on Chile debt.
Speaker Change: The direct impact of the new U S site on Chile export is more or less limited.
Speaker Change: We know that key products as Copa would cut means to us.
Speaker Change: <unk> and.
Speaker Change: <unk> remains subject to the base 10% rate.
Speaker Change: However, the indirect effects are more significant.
Speaker Change: We know chili's on a small open economy.
Speaker Change: So there will be lower external demand so that will affect exports.
Speaker Change: But more importantly, they Keith asked Michelle channels is through business and consumer confidence so.
Speaker Change: That would deteriorate eventually.
Speaker Change: Consumption in.
Speaker Change: Investment by the end of the year and that is why we are.
Speaker Change: Expecting to well two 1% this year.
Andres Sansone: down from the original forecast of 2.4%. and 1.7% next year down from 2.1%.
Speaker Change: From the original forecast of two 4%.
Speaker Change: One 7% next year down from two 1%.
Speaker Change: Okay.
Andres Sansone: Maybe I can, on the political side, the upcoming presidential election has brought renewed focus on economic growth. There is now broader recognition across much of the political spectrum of the need to improve productivity, accelerate investment, and enhance regulatory certainty, and the recent pension reform achieved through cross-party agreement has helped reinforce that perception of institutional functionality. And in terms of electoral dynamics, the current polling suggests that Mateix is likely a frontrunner, as centrist voters appear to have shifted. in Direction but within a framework of stability and gradual reform.
Speaker Change: Maybe I got on the political side.
Speaker Change: In Brazil shell election.
Speaker Change: <unk> brought renewed focus on economic growth. There is now grow their recognition across much of the political spectrum of their need to improve productivity accelerate investment in case.
Speaker Change: Golar Arctic daily certainty.
Speaker Change: And the reset pension reform achieved through gross party agreement.
Speaker Change: It has reinforced that accenture enough institutional functionality.
Speaker Change: Intel Ralph elect dollar electoral dynamics. The current polling suggests that by basically slightly from Barnett.
Speaker Change: As <unk> said, we slowed our Sofia two cup sheet.
Speaker Change: Indirect shop, but within the framework of a stability in that logically fall.
Cristian Vicuña: Thank you, Ernesto. I'll take the other two questions, Ernesto. So regarding... the non-NII growth. So the main driver in increasing our guidance is the delay from the implementation of the second redaction in the interchange fee of credit card. So now we are expecting this to happen, if it's going to happen this year, by final quarters of the year. So with that, we are thinking that the initial impact that we were expecting of around 20 to 25 million dollars in lesson card fees is out of the equation for this year, and thus we are increasing guidance.
Amit: Thank you Amit.
Amit: I'll take the two questions are unethical regarding.
Amit: The non NII growth.
Amit: So the main drivers.
Amit: Increasing our guidance is.
Amit: Delay from the implementation of the second we've actually in the interchange fee of credit cards.
So now we are expecting this to happen.
Amit: If it's going to happen this year.
Amit: By final quarters of the year, so with that with that we are we're thinking that the initial impact that we were expecting around 20% to 45 million.
Amit: Millions of dollars in lessened card fees.
Amit: Is out of the equation for this year.
Amit: We are increasing guidance regarding.
Cristian Vicuña: Regarding our financial results, we are also expecting to sustain the rates we have been seeing in the last two to three quarters, so around something between 60 to 70 million dollars per quarter. So, but that's very dependent on the macro and market scenario, right? So, you have to take into consideration that.
Amit: Our financial results.
Amit: We are also expecting to sustain the rates we have been seeing in the last two to three quarters, so around something between $60 million to $70 million per quarter. So that's very dependent on the macro on market scenario right. So so.
Cristian Vicuña: And regarding the competition, we have seen the TEMPO movement, that's something interesting to watch.
Amit: Have to take into consideration that.
Amit: And regarding the competition.
Amit: We are we have seen the <unk>.
Amit: Simple movement of something interesting to watch deposit applied for a banking license. So they are going to start fulfilling public data by by the next semester.
Cristian Vicuña: TEMPO has applied for a banking license, so they are going to start fulfilling public data by the next semester, and that's going to provide a clear perspective on how the data operation is growing. Nowadays, there is little public data, but we have seen some little balance sheets, so not very relevant. They have a couple of million open accounts, but little balance sheets. and several years of investments. We know they have a good experience and a good platform, but we haven't seen a relevant competition from Tempo yet.
Amit: Subsequent to provide a clear perspective on how.
Amit: That operation.
Amit: Now unsold nowadays theres needle public data.
Amit: But we have seen some little balance sheets or not very relevant. So they have a couple of million open accounts, but little balance sheet.
Amit: And several years of investments.
Amit: We know they have a good experience on our platform, but we havent seen a relevant competition from 10 four yet.
Cristian Vicuña: Mercado Pago is also something very interesting to watch. They are a relevant competitor in the acquiring business and on the digital payments through Mercado Pago. And in Argentina last year, they applied for a banking license. That's something very differentiating to what their strategy has been. so far, so they haven't done that in Chile yet, but that's also something to watch, and that's really all I can say about it. But for now, super careful.
Amit: <unk> was also something very interesting to watch.
Amit: They are already one competitor in the acquiring business and on the.
Amit: Payments.
Amit: Through make whole bottle.
Amit: In Argentina.
Amit: They applied for a banking license.
Amit: Something very differentiated to what.
Amit: <unk> has been.
Amit: So far so they haven't done that in Chile, yet.
Amit: <unk>.
Amit: That's also something to watch.
Amit: And that's really all I can say about the competition.
Amit: Perfect Super helpful. Thank you very much.
Beatriz Abreu: So, we'll be now moving to the next question from Beatriz Abreu from Goldman Sachs. Please go ahead, your line is now open. Hi, good morning. Thank you for taking my question.
Speaker Change: Thank you. Thank you very much so we'll be now moving to the next question from approved.
Speaker Change: <unk> from Goldman Sachs.
Speaker Change: Please go ahead. Your line is now open.
Speaker Change: Hi, Good morning. Thank you for taking my question. My first question is on asset quality NPL ratio remained stable this quarter, but mortgage NPL still went up a little bit if you could give us a little bit more color on how youre seeing asset quality trends throughout the year and if you have seen any improvement into <unk>.
Beatriz Abreu: My first question is on asset quality. So, your NPL ratio remains stable this quarter, but mortgage NPL still went up a little bit. If you could give us a little bit more color on how you're seeing asset quality trends throughout the year, and if you have seen any improvements into 2Q already.
Beatriz Abreu: And my second question is regarding expenses. We saw that there was an increase in the quarter related to the mainframe migration to the cloud, as you explained in the call. Do you have any other tech transformation expenses on the pipeline for this year? And what kind of expense growth should we expect for this year and on a more normalized basis going forward? Thank you very much.
Speaker Change: Eddie.
Speaker Change: And my second question is regarding expenses, we saw that there was an increase in the quarter related to the mainframe migration to the cloud as you explained in the call do you have any other tech transformation expenses on the pipeline for this year and what kind of expense growth should we expect for this year and on a more normal.
Speaker Change: <unk> basis going forward. Thank you very much.
Cristian Vicuña: Thanks for the questions, Rebea. So regarding asset quality, as you mentioned, what we're seeing is a stable quarter in terms of MPLs. We have a positive perspective on our consumer portfolio, so that's working well, and we also are seeing an initial good trends on the commercial part of our loan book, so that's also something that we think is going to be showing better trends, especially regarding NPLs and impaired ratios.
Speaker Change: Thanks for the questions. So regarding the quality as you mentioned, what we're seeing is.
Speaker Change: Stable quarter in terms of Npls.
Speaker Change: We have.
Speaker Change: Positive perspective on our consumer portfolio, so that's working well.
Speaker Change: And we also are seeing initial good trends on the commercial part of our loan book.
Speaker Change: So that's also something that we think it's going to be showing.
Speaker Change: They're better trends, especially regarding <unk>.
Speaker Change: Npls and impaired.
Cristian Vicuña: The mortgage part of the portfolio, it's still slightly deteriorating. We are seeing a slowdown in the growth trends, so we expect to reach a plateau during the second or third quarter, so mostly from the second semester. But we are not going to be seeing the turnaround yet in that part of the portfolio. There's going to be definitely a slowdown in the growth in NPLs in that part of the portfolio. So all in all for the total portfolio, we expect to be showing better total news in terms of NPL and impair ratio for the full year compared to last year.
Speaker Change: Our ratios.
Speaker Change: The mortgage part of the portfolio, it's swaps steel.
Speaker Change: Slightly deteriorating we are seeing a slowdown in the growth trends. So we expect to reach us.
Speaker Change: A plateau during the second or third quarter, so mostly on the second semester.
Speaker Change: But we are not going to be seeing that turnaround yet in that part of the portfolio, but there is going to be definitely a slowdown in the growth and npls in that part of the portfolio. So all in all for the total portfolio.
Speaker Change: We expect to be showing.
Speaker Change: Better total news in terms of NPL any pair ratio going full year compared to last year.
Cristian Vicuña: And also we are expecting to show a cost of risk within our guidance, right? But we are going to be seeing a slightly higher cost of risk in the first half of the year and then a better performance in the second half of the year. This is how we are expecting this part of the portfolio to perform.
Speaker Change: So we are expecting too.
Speaker Change: To show our cost of risk within our guidance, but we are going to be seeing a slightly higher cost of risk in the first half of the year and then a better performance in the second half of the year.
This is how we are expecting this part of the portfolio too to perform and regarding expenses.
Cristian Vicuña: And regarding expenses, well, we are in a path of transformation. So there are going to be several other platforms that we're going to be renovating and updating during the next years. But having said that, none of those platforms is as relevant as the Gravity Project. So most of those are going to be absorbed through our business as usual capital expense and investments, right? So what we're seeing now is just the final stage of the implementation. We are very confident that we are going to be with a cost of income of around 35% for the full year, so around mid-30s.
Speaker Change: We already know.
Speaker Change: Path of transformation. So they are going to be several older platforms that we are going to be renovating updating during the next year.
Speaker Change: However, having said that none of those platforms is relevant the gravity projects. So most of those are going to be absorbed through our business as usual.
Speaker Change: Capital expense.
Speaker Change: And on investments right. So what we're seeing now is just the final stage of implementation of.
Speaker Change: With gravity that this quarter, we were doing two core systems of the time.
April we turn off the legacy system. So that's going to help improve our label that mutually figure. So let me know.
Speaker Change: We're very confident that we're going to be.
Speaker Change: Cost of income of around 30, 35% for the full year, so around mid thirties.
Beatriz Abreu: That's very helpful, thank you.
Speaker Change: That's very helpful. Thank you.
Beatriz Abreu: Perfect. Thank you.
Operator: Thank you very much.
Speaker Change: Perfect. Thank you. Thank you very much.
Operator: So we are now moving to the next question from Neha Agarwala from HSBC. Please go ahead. Your line is now open. We are hearing an echo. Hi, can you hear me now? Yes, yes, now it's better. Thank you so much for taking my question. Very quickly, what are the main risks that you see for the year? And if you could give us some more color about how should the NIM evolve through the quarters for this year as well as next year? We expect, I think, inflation to come down a bit more in 2026. So we believe some of the pressure on NIM is post-2026 versus what we expected for this year.
Speaker Change: So and we are now moving to the next question from <unk> <unk> from HSBC. Please go ahead. Your line is now open.
Speaker Change: I mean, we are hearing.
Speaker Change: <unk>.
Speaker Change: Okay.
Speaker Change: Alright can you hear me now.
Speaker Change: Now.
Speaker Change: Yes, yes, now it's better.
Speaker Change: Okay well. Thank you so much for taking my question.
Speaker Change: Thank you what are the main risks that you see for the and if you could give us some more color.
Speaker Change: Just how should women.
Speaker Change: Yeah.
Speaker Change: Two of the quarters for this year as well as next year, we expect I think.
Speaker Change: Nation to come down.
Speaker Change: A bit more.
Speaker Change: Thanks, Paul.
Speaker Change: Some of the pressure on NIM is postponed to 2006 versus what we expected for this year.
Neha Agarwala: So if you can give us some more color on that, that would be very helpful. Thank you so much.
Speaker Change: If you can give us some more color on that that would be very helpful.
Neha Agarwala: Thanks for the question, Neha.
Speaker Change: Thank you so much thanks.
Patricia Pérez: Patricia will answer your questions. Thanks, Neha, for your question. Yes, as Cristian showed on our guidance, we are expecting a NIM of 4% above 4%. And regarding risk, we are not seeing downside for this year in terms of interest rate. Inflation probably will slow down during the second part of the year, but we are already considering that in our base scenario. So we are confident with that guidance for this year. And regarding next year, we are expecting less inflation than, definitely less inflation than this year. We are expecting around 3% but we, as I mentioned, we are confident that we can keep delivering good levels of NIM and more structural levels at this point.
Speaker Change: Thanks for the question Anyhow Patricia.
Speaker Change: I'm sorry your questions. Thanks, Michael for your question Yes.
Speaker Change: Eric with cash out on our guidance we are.
Speaker Change: Second our NIM of.
Speaker Change: 5% of up 4% and.
Speaker Change: Regarding <unk>, we are not seeing downside for this year in terms of interest rate.
Speaker Change: Inflation probably.
Speaker Change: <unk> will and slowed down during the second part of the year, but we are already considered that in our base scenario.
Speaker Change: So we are confident with that guidance for this year and regarding next year, we are expecting.
Speaker Change: Less inflation definitely played less inflation than this year, we are expecting around 3% and that but we as I mentioned, we are confident that we can.
Barry: And thank you Barry.
Speaker Change: At what levels.
Speaker Change: NIM.
Speaker Change: Mark stockpile levels at <unk>.
Speaker Change: This point.
Cristian Vicuña: So regarding your your main risks for the year, what are we as complementing what Patricia was mentioning? We are not seeing relevant risks to our guidance from the local macro scenario, but the vulnerability that has been displayed. in the markets due to all the international trade news and the tariffs that have been implemented by North America. It's something to monitor and most of our risk sources, as we assess internally, are coming from the external commercial scenario.
Speaker Change: So regarding your your main risks for the year.
Speaker Change: Why.
Speaker Change: Complementing what particularly was mentioning we are not seeing.
Speaker Change: Relevant risks to our guidance from the local micro scenario.
Speaker Change: The volatility that has being displayed.
Speaker Change: In markets due to the oil.
Speaker Change: International strength.
Speaker Change: News.
Speaker Change: On the on the tariffs.
Speaker Change: <unk> bin.
Speaker Change: Implemented by the North America, it's something to monitor.
Speaker Change: Most of our resources.
Speaker Change: As we assess internally are coming from the external commercial scenario.
Neha Agarwala: That's great.
Neha Agarwala: If I can just one last question, what do you think is a more normalized ROE level for the bank? Would it be closer to 20% or between 18 to 20% as you have said in the past? Thank you so much. So regarding our ROE, before the pandemic and during the pandemic, we sustained a long-term ROE of between 17 to 19. So we recently updated that to above 20%. So we're pretty confident that we are going to be able to sustain levels of above 20% in ROE. We're not reassessing yet that medium to long-term guide.
Speaker Change: No that's great.
Speaker Change: I can just one last question.
Speaker Change: Do you take as a more normalized level for the bank.
Speaker Change: What is the closer to 30%.
Nathan: Thank you Nathan.
Speaker Change: And in the past.
Speaker Change: Thank you so much.
Speaker Change: So regarding our ROE.
Speaker Change: Before the pandemic during the pandemic.
Speaker Change: Sustained low.
Speaker Change: Long term ROE of between 17% to 19, so we recently updated that to above 20%. So we're pretty confident that we are going to be able to sustain.
Speaker Change: Levels of above 20% in a row.
Speaker Change: We are assessing yet.
Speaker Change: <unk>.
Speaker Change: That medium to long term guidance.
Neha Agarwala: Perfect, thank you so much. Thank you. Thank you very much.
Speaker Change: Perfect. Thank you so much.
Speaker Change: Thank you. Thank you very much.
Daniel Mora: So now we'll move to the next question from Daniel Mora from Credit Corp.
Speaker Change: Now we'll move to the next question from Daniel Mora from Credit Corp.
Daniel Mora: Please go ahead, Daniel. Your line is now open. Hi, good morning and thank you for the presentation. I have two questions if I may. The first one is regarding loan growth. With the reduction in the GDP estimates, what are the expectations for loan growth by segment in this year? And I would like to know, do you expect to see double-digit loan growth maybe in 2026?
Speaker Change: Please go ahead Daniel your line is now open.
Daniel Mora: Hi, good morning, and thank you for the presentation I half two questions. If I may the first one is regarding loan growth with the reduction in the GDP estimates what are the expectations for loan growth by segment in this year and I will like to know do you expect to see double digit loan growth maybe in 2026.
Daniel Mora: The second question is regarding capital. Do you see any impact on the bank's strategy or dividend payment coming from the new capital requirement related to the Pillar 2 on the potential increase that we might see in the countercyclical buffer?
The second question is regarding capital.
Daniel Mora: Do you see any impact on the bank's strategy or dividend payment coming from the new capital requirement related to the pillar two.
Daniel Mora: On the potential increase that we might see in the counter cyclical buffer.
Daniel Mora: And the third one is, what will be the main reasons behind the normalization of ROE for this year to figures close to 21% after a positive 26% in the first quarter? Considering that you maintain the NIM and you increase the non-net interest income guidance and also loan growth, it seems that will remain stable. What will be the main drivers for this normalization? Thank you so much. Thanks Daniel for your questions.
Daniel Mora: And the third one is <unk>.
Daniel Mora: It will be the main reasons behind that normalization of ROE for this year two figures close to 21% after a positive 26% in the first quarter.
Speaker Change: Considering that you maintain the NIM and your increase in non net interest income guidance on also loan growth. It seems that it will remain stable what will be the main drivers for this normalization. Thank you so much.
Patricia Pérez: I will take the first two and then Cristian will take the ROE questions. So, regarding loan growth, we're expecting, as we mentioned, a mid-single digit. Retail part of the loan book is behaving quite well, so in terms of the SMEs, portfolio, consumer lending, we are seeing good behavior and good figures for this year. Consumer mainly driven by credit cards. Mortgages, we are expecting that the second part of the year, we will have a better growth. And the question mark is the corporate loans, as we are still seeing a weak demand in that part of the loan book.
Speaker Change: Thanks Danielle.
Speaker Change: Yes, I will take the first two and then Cristiano will take the <unk> question.
Speaker Change: Regarding loan growth and we're expecting as we mentioned and mid single digit and retail.
Speaker Change: Part of the loan book is behaving quite well so in terms of and the SME portfolio consumer lending.
Speaker Change: <unk> behavior.
Speaker Change: <unk>.
Speaker Change: Each year consumers and mainly driven by credit card.
Speaker Change: <unk>, we are expecting and the second part of the year, we will have a better growth.
Speaker Change: And.
Speaker Change: The question Mark.
Speaker Change: Great.
Speaker Change: Absolutely.
Speaker Change: I am we are still seeing.
Speaker Change: And I hope that the loan book.
Patricia Pérez: Next year, I would say we still need to see how it evolves, the risk coming from abroad. according to our base scenario, consider a moderate growth GDP for next year. So, at this point, it is difficult to think in double-digit long growth for next year. And regarding capital, yes, I mean, we received this 20-basis point chart or requirement from the IMF related to the market risk in our banking book, Risk Portfolio Pillar 2. And we have to comply with this requirement in 50% during this year, as Cristian mentioned. In that line, 56.3% must comply with core capital.
Speaker Change: Next year I would say, we are still a need to need to see how it evolves then the rates coming from from.
Speaker Change: And.
Speaker Change: Regarding our base scenario for theatre.
Speaker Change: The other eight wells and GDP for next year. So at this point it is difficult and testing in and double digit loan growth.
Speaker Change: Our next year.
Speaker Change: And regarding capital and yes, I mean, we received these are 20 basis points.
Speaker Change: Chart.
Speaker Change: <unk> from the from the CMS.
Speaker Change: Related to them in market lease in our banking book.
Speaker Change: Our final pillar II.
Speaker Change: And when we we have to compete.
Speaker Change: Comply with these requirements.
Christian: At 2% and during this year as Christian mentioned.
Christian: In that line 56, 3%.
Patricia Pérez: So, this gives us 9.08% of Minimum of Regulatory Requirements and we don't see any risk or impact in our strategy regarding this new requirement.
Christian: Complied with capital. So this gave us 9.08%.
Christian: Minimum regulatory requirements, and we don't see any any rates or impact in our strategy.
Christian: Radar in DS and <unk> and new requirement.
Cristian Vicuña: So regarding your ROE question, what we are actually doing is actually increasing our guidance for the year. We have a very clear picture that we will be above the 21% mark. So, we understand that there is going to be a slightly lower performance in terms of NIMS, especially in the third quarter, as we are seeing the path of inflation. being projected for the year. But out of that, we are not seeing an ROE rationalization. We are expecting an ROE of about. So, yeah.
Christian: So regarding your <unk>.
Christian: ROE question, what we're actually doing its actually increasing our guidance for the year.
Christian: We have a very clear picture that we will be above the 21% Mark.
Christian: So.
Christian: We understand that there is.
Christian: Is it going to be slightly lower performance in terms of nims, especially in the third quarter also we are seeing the the path of inflation.
Christian: Dean predicted for the year.
Christian: But I don't know.
Christian: We are not seeing a narrow rationalization.
Christian: We are we are expecting an roe of above 21% so yes.
Christian: I hope this clarifies.
Daniel Mora: Perfect, thank you so much. Thank you very much.
Speaker Change: Perfect. Thank you so much.
Operator: Just before we move to the next question, just a quick reminder, if you're connected via the phone and want to ask a voice question, please press star 2. If you're connected via the web, you may also ask a voice question.
Speaker Change: Thank you. Thank you very much.
Speaker Change: Just before moving most of the Exosomes as a quick reminder, sure connected to the phone and want to ask a voice question. Please press star two pure connected together with you May also ask a voice question. Our next question comes from <unk>.
Ewald Stark: Our next question comes from Ewald Stark from Pizzei Inversioners. Please go ahead, your line is now open. Hello, good morning, and thanks for taking my question. Could you provide some guidance on how you expect acid density to evolve over the coming quarters? Can you clarify a little what are you mentioning about acid density? risk-weighted assets or total assets? How do you expect to go in the next couple of quarters? We think the ratio of risk-weighted assets to total assets is going to remain stable. We are not seeing any signs of movement. If there were to happen any movements, it will be probably something that's going to be happening on the derivative part of the assets in our portfolio that have some movements.
Speaker Change: <unk> from <unk>.
Speaker Change: Please go ahead. Your line is now open.
Speaker Change: Hello, Good morning, and thanks for taking my question.
Speaker Change: Could you provide some guidance on how you expect.
Speaker Change: Thank you.
Speaker Change: Over the coming quarters.
Speaker Change: Can you clarify a little weather, whether you mentioning about asset density.
Speaker Change: Risk weighted assets or total asking how how these fixed.
Speaker Change: In the next couple of quarters.
Speaker Change: We think the ratio for risk weighted assets to total assets going to remain stable.
Speaker Change: We are not seeing any signs of movement there.
Speaker Change: There were to happen any any movement, either will be probably something that's going to be happening.
Speaker Change: On the the rebound the cargo severity offsets in our portfolio that have some some movements but.
Cristian Vicuña: But I think it's actually non-material, so we expect to have the asset density stable from where it's displayed now. Complementing Cristian, I would say that the composition of our asset growth and market risk, if you want, should be stable during the rest of the year. The only thing that could change that composition is a regulatory change that we don't foresee in the coming months. But it's true that the CMF is reviewing some part of the rule. Do you expect any material change? Maybe like a small upward bias on this ratio of disputed assets to assets?
Speaker Change: I think it's actually no materials so.
Speaker Change: We expect to have.
Speaker Change: The other dose these statements from what we are displaying now yes complementing.
Yang: Mr. Yang.
Yang: Say that the composition of our asset growth and marketplace <unk> should be stable to and the rest of the year. The only thing that could change that composition ace and regulatory change and we don't foresee in the coming months, but it stood at CMS.
Yang: We view in some part of that.
Yang: Well.
Yang: And do you expect any material change maybe like a small upward.
Yang: Yes.
Yang: <unk>.
Yang: Thank you Chris.
Cristian Vicuña: No, not at this moment. Not at this moment. It's too soon to say something. We don't have any consultation process from the CMS, so not at this point.
Yang: To us it's not.
Speaker Change: Not at this moment not at this moment is to send to say something we don't have any consultation process from that CMS sell some.
Yang: This point.
Ewald Stark: Okay, perfect. Thanks. Thank you. Thank you, thank you very much.
Yang: Yes.
Yang: Okay perfect. Thanks.
Yang: Thank you.
Yang: Thank you. Thank you very much latest symptom comment.
Operator: Ladies and gentlemen, we would like to take this opportunity to share on your screens a very brief survey. Your feedback will be greatly appreciated. The question and answer section is still open, so please, if you are connected via the phone and you would like to ask a question, please press star 2, the star 2 on your keypad. If you're connected via the web, you may also ask a voice question. We'll just give a minute or so for the questions to come in.
Yang: I'd like to take this opportunity to share on your secured screens a very brief survey to your feedback will be greatly appreciated.
Yang: The question in a sense to open. So please if you are connected to the phone and he would like to ask a question.
Yang: These press start to start to on you keep it if you are connected to the web you might also ask a voice question, where does give a minutes or so for the questions to come in.
Yang: Yes.
Yang: Okay.
Operator: Okay, looks like we have no further questions from the audience, so I would like to pass the line to Bco Sntndr Chile team for concluding remarks. Thank you very much for joining us today. And we expect to be with you back again for our second quarter results in early July. Thank you very much. Thank you. Thank you everyone.
Yang: Okay.
Yang: Okay.
Yang: Looks looks like.
Yang: We have no further questions from the audience. So I would like to pass the line to Banco sometimes it to the team for concluding remarks.
Yang: Both.
Yang: Thank you very much for joining us today.
Yang: We expect to be with you back again for our second quarter results.
Yang: In early July.
Yang: Thank you very much.
Operator: This concludes today's call. Thank you and goodbye.
Yang: Thank you. Thank you everyone. This concludes today's call. Thank you and goodbye.