• Net Income: Increased 11.7% quarter-on-quarter and 82% year-on-year.

• Return on Equity (ROE): 23.1% for the quarter and 18.2% year-to-date.

• Net Interest Margin: 3.9% for the quarter and 3.4% year-to-date.

• Loan Growth: Adjusted year-on-year growth of around 2%.

• Total Deposits: Increased 1.1% in the quarter and 3.7% year-on-year.

• Fee Income: Increased 8.3% quarter-on-quarter; 5.4% year-on-year growth, excluding interchange fee cap impact, would have been around 10%.

• Efficiency Ratio: 36.3% for the quarter and 40% year-to-date.

• Cost of Risk: Around 1.3% for the full year.

• Dividend Provision: Increased to 70% of 2024 income.

• Capital Ratio: 17.2% with a core equity ratio of 10.7% under Chilean regulation.

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

Release Date: October 30, 2024

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

Positive Points

• Banco Santander Chile (NYSE:BSAC) achieved a strong third quarter with a return on equity (ROE) of 23.1%, surpassing their guidance for the full year.

• The bank's digital transformation strategy is progressing well, with a 7% year-on-year growth in digital clients, reaching 2.1 million.

• BSAC's Getnet platform is gaining traction, contributing significantly to fee income with a 27% year-on-year growth in business current accounts.

• The bank's efficiency ratio improved to 36.3% in the last quarter, reflecting controlled expenses and improved financial income.

• BSAC's sustainability efforts were recognized with an 80-point score in the Dow Jones Sustainability Index, placing it in the top 3% of banks worldwide.

Negative Points

• The Chilean economy's labor market showed signs of slowing down in the third quarter, which could impact future growth.

• Asset quality ratios are deteriorating, with rising non-performing loans (NPLs) and impaired ratios due to economic cycle effects.

• The bank's commercial loan book contracted, partly due to slower economic activity and changes in consolidation perimeter.

• Inflation is expected to rise, closing 2024 at 4.3%, which could impact consumer purchasing power and loan demand.

• The bank faces potential headwinds from external factors such as geopolitical tensions and fluctuating commodity prices, which could affect macroeconomic conditions.

Q & A Highlights

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