Banco Santander Chile (NYSE: BSAC; SSE: Bsantander) announced today
its resultsi for the twelve-month period ended December 31, 2023,
and fourth quarter 2023 (4Q23).
ROAE of 16.6% in 4Q23 and 11.9% in
12M23, with a solid net contribution from business segments that
increases 34.7%. As of December 31, 2023, net income
attributable to shareholders reached Ch$496,404 million ($2.63 per
share and US$ 01.20 per ADR), decreasing 38.6% compared to the same
period last year and with an ROAE of 11.9%. This lower result was
mainly due to the impacts perceived in the NIM produced by the
deceleration of inflation during the year and higher interest rates
that reduced the return on assets in UF and increased the funding
costs, respectively.
The net contribution of our business segments
continues to be very strong, increasing 34.7 YoY. Specifically, the
Retail Banking segment increased 25.6% YoY with total revenues
increasing 22.0% YoY. The net contribution of the Middle-market
segment increased 27.9% YoY, with an increase in total revenues of
16.3% YoY. Finally, the net contribution of our Corporate and
Investment Banking (CIB) unit grew 65.4% YoY, driven by a 42.8% YoY
increase in total revenues.
Net income from fees increases 22.4% in
12M23, with the recurrence ratio reaching 55.3%. During
12M23, net commissions increased 22.4% YoY due to an increase in
clients and greater usage of our products. With this, the
recurrence ratio (total net fees divided by total expenses)
increased from 42.4% accumulated as of December 2022 to 55.3%
accumulated as of December 2023, demonstrating that more than half
of the Bank's expenses are financed with the commissions generated
by our clients.
In 4Q23, commissions decreased 5.2% Q/Q, mainly
because the other commissions line fell due to a quarter with fewer
insurance brokerage commissions and lower collections. However,
commissions on our main products continue to show good trends.
Top 1 in NPS among our Chilean
peersThe first pillar of our strategy is based on
cutting-edge technology and customer-focused processes and
products. We are building a bank with strengths in digital channels
that already allows digital onboarding in a safe, fast and
user-friendly way, offering our Life and Más Lucas accounts for the
mass segment and the PYME (SME) Life account and payment services
through Getnet for small and medium-sized businesses and
entrepreneurs. These initiatives not only encourage our clients to
become more digital, they are also managing to increase financial
inclusion in these segments and supporting them with transaction
services, with the potential to extend the offer of other products
and financing options.
As a result of all our efforts, our clients are
the most satisfied with us. As of December 31, 2023 our NPS reached
60 points, and our contact center reached 72 points, being
recognized as the best in the industry. Our digital channels also
continue to be our strength, highlighting the website with an NPS
of 73 and the App with 74 points.
Solid capital levels with a CET1 ratio
of 11.1% and a BIS ratio of 17.6%Our CET1 ratio remains
solid at 11.1% and the total Basel III ratio reaches 17.6% at the
end of December 2023. Risk-weighted assets (RWA) increased 4.0%
since December 31, 2022 and decreased 0.9% Q/Q. We are actively
seeking to reduce our market risk-weighted assets through netting
and novation of our derivatives portfolio, resulting in a 9.2%
decrease this quarter. At the same time, core capital increased
slightly by 2.9% Q/Q, mainly due to lower growth in results and
4.4% since December 31, 2022, which considers the payment of
dividends authorized at the last shareholders meeting in the month
of April.
Additionally, in January 2024, the FMC announced
the Pillar II charges for six banks in the Chilean system, and we
highlight that, on this occasion, they did not assign a Pillar II
charge to the Bank.
We launched Workcafé Inversiones and
reached a total of 91 Workcafés in ChileIn 4Q23 we
launched Work/Café Inversiones, a new space open to the community
aimed at helping people improve their financial well-being. Clients
and potential clients will be able to access specialized advice,
talks and workshops on different topics that will help them learn
and understand more about investment instruments, the impact of
market movements and how to prepare for their various personal
projects. Through concrete initiatives such as the opening of this
new space, the Bank continues to clearly advance its purpose of
helping people progress.
This branch is part of our network of 91
Workcafé branches, which includes our Work/Café StartUp and
Work/Café Expresso, in addition to our traditional Workcafés. The
Work/Café StartUp is an initiative that aims to offer a
comprehensive solution to all the needs of entrepreneurs. The
Work/Café Expresso are transaction centers with cashier or
self-service services, service desk, stampers for card printing and
lockers for product delivery, all of the above in Work/Café format,
where our clients can carry out their transactions in an
environment efficient and secure, providing a better customer
experience. As of December, we have opened 5 Work/Café Expresso,
with an customer satisfaction (NPS) of 74.
Successful issuance on the Swiss market
in January 2024In January 2024, the Bank returned to the
international market with the successful issuance of a bond in
Swiss francs for CHF 225 million (equivalent to US$ 263 million)
for a three-year term, achieving a spread of 125 basis points over
the reference rate, which is equivalent to a coupon of 2.445%. The
results of this transaction reflect the great interest and demand
from investors, making it the third largest placement of a Chilean
issuer in this market. The previous two also belong to Banco
Santander, for CHF 250 million in 2010 and for CHF 300 million in
2014.
This new operation consolidates the excellent
reception of Santander Chile in international markets, considering
that the entity had not issued new bonds in this market since 2021.
Thanks to this recent instrument, the Bank's position in the Swiss
franc market is around CHF 900 million (close to US$ 1,000
million), consolidating itself as the second most relevant within
the entity's financing diversification strategy, thus reaching
around 25% of the total foreign debt.
We made important progress in our Chile
First strategy in 2023
- Largest bank in terms of loans and
deposits (17.4% market share according to latest information from
the CMF).
- only Chilean bank included in the
DJSI emerging markets.
- More than 167,000 people bankerized
through the Life y Más Lucas accounts in 2023.
- A total of 91 Work/café in Chile,
serving our clients and the community in their different
formats.
- TSR of 35.8% in 2023, the highest
among Chilean banks.
- First green bond of US$ 50 million
to finance green mortgages.
- Recognized as the Best Bank in
Chile in 2023 by The Banker and Euromoney.
- More than US$450 million committed
to invest in infrastructure and technology between 2023 and
2026.
Loan growth led by retail
bankingRetail banking loans grew 3.1% QoQ and 7.3% since
December 31, 2022, driven by growth in mortgages. In recent
periods, the origination of new mortgage loans has decreased due to
high inflation and rates, however, in the second half of the year
mortgage loans once again grew stronger than inflation, reaching a
growth of 2.5% QoQ and 8.5% from December 31, 2022 in the way that
clients adjust to market conditions.
Consumer loans increased 2.9% QoQ and 6.0% YTD.
Between the end of 2019 and 2021 credit card loans decreased 7.0%
as clients reduced large purchases such as travel and hotels which
fuels credit card loans. At the same time many clients paid off
credit card debt with the liquidity obtained from government
transfers and pension fund withdrawals.
At the end of 2022, as household liquidity
levels returned to normal and holiday travel resumed credit card
loans began to grow again. In the last quarter we have seen an
acceleration of credit card loans, mainly related to the increased
use of cards and seasonality.
As for the SME loans, after several quarters
with a contraction in this portfolio, growth is beginning to
normalize. During the pandemic, our SME clients had access to
Fogape programs with a state guarantee. As clients are finishing
paying their debt and also thanks to the increase in SME clients
through checking accounts and Getnet, the demand for credit in this
segment is reactivating. Given the above, the SME segment portfolio
increased 2.4% QoQ and decreased 1.8% YTD.
Solid liquidity levels and total
deposits increase 3.9% QoQ The Bank's total deposits
increased 2.9% QoQ and 9.6% YTD. The increase was driven by time
deposits that increased 24.3% YTD, mainly in the CIB segment,
because high rates led our clients to switch to more attractive
deposits explaining the decrease of 3.9% YTD of demand deposits.
The growth in the fourth quarter is due to both time deposits and
demand deposits with our clients maintaining more liquidity for the
end of the year.
The bonds increased 1.1% QoQ and 9.8% YTD.
During 2023, the Bank has placed bonds for UF7.7 million, CLP
$424,400 million, US $30 million and JPY $25,500 million, taking
advantage of attractive opportunities in the different fixed income
markets at a national and international level.
In addition to the above, in mid-October the
Bank placed its first green bond under its ESG Framework which
incorporates ESG criteria focusing on the green mortgage product.
The objective of the transaction is to refinance or finance new
operations of this product, which is offered by the Bank for the
purchase of homes, based on energy efficiency certifications
existing in the industry, and which benefits clients with a
preferential rate. This is the first green bond with use of funds
for green mortgages in the country. The instrument was placed
privately to a Japanese investor with the advice of Daiwa
Securities Capital Markets, for an amount of JPY 8,000 million,
equivalent to US$ 53 million, for a term of two years and with a
rate of 0.845%.
Additionally, in the first days of 2024, the
Bank issued a senior bond for a total of CHF 225 million in the
Swiss market with a term of 3 years and a rate of 2.445%.
Solid capital levels with CET1 in 11.1%
with an ROAE of 16.6% in 4Q23Our CET1 ratio remains solid
at 11.1% and the total Basel III ratio reaches 17.6% at the end of
December 2023. Risk-weighted assets (RWA) increased 4.0% YTD and
decreased 0.9% QoQ. We are actively seeking to reduce our market
risk-weighted assets through netting and novation of our
derivatives portfolio, resulting in a 9.2% decrease this
quarter.
At the same time, core capital increased by 2.9%
QoQ mainly due to lower growth in results and an increase of 4.4%
YTD which considers the payment of dividends authorized at the last
shareholders meeting in the month of April.
The Bank's ROAE was 16.6% in 4Q23 compared to
5.4% in 3Q23, due to greater inflation in the quarter and the rate
cuts that improved our margin. The accumulated ROAE 2023 is
11.9%.
Income from interest and readjustment
rebound in 4Q23 due to greater inflation (UF variation) and a lower
MPRYear to date net interest income and readjustments
(NII) as of December 2023 decreased by 29.8% compared to the same
period in 2022. This decrease in NII was mainly due to lower
inflation in the period, a higher funding cost caused by a higher
MPR and to a lesser extent by our financial investments held to
maturity that are at a fixed rate. The above is partially offset by
a higher spread earned on deposits.
Net income from readjustments decreased 62.0% in
12M23 compared to the same period in 2022, given that the variation
in the UF reached 4.8% in 12M23 compared to 13.3% in the same
period in 2022. The UF GAP is significantly lower in 12M23 compared
to 12M22, decreasing 21.4%, in line with lower inflation
expectations.
The Bank has a shorter duration of
interest-bearing liabilities than interest-bearing assets, so our
liabilities recognize the change in prices more quickly than our
assets. After the rapid rise in the MPR that began in mid-2021 and
continued throughout 2022, the Central Bank began to cut the MPR in
July 2023 from 11.25%, with five successive cuts to reach 8.25% in
December 2023. This has produced a rapid recovery in net interest
income, increasing by 23.3% in 12M23 compared to 12M22. Despite the
above, the effect of lower inflation has been significantly
greater, decreasing the NIM from 3.3% as of December 31, 2022 to
2.2% as of December 31, 2023.
Cost of credit of 1.20% YTD and coverage
of 157.3%During the Covid-19 pandemic, asset quality
benefited from state aid and withdrawals from pension funds, which
produced a positive evolution of these during that period, later
normalizing in line with the economy and the drainage of excess
liquidity from households. More recently, the behavior of our
clients is reflecting the state of the economy and the labor
market, where delinquencies are slightly higher than usual. Given
the above, in 4Q23, the non-performing loan ratio (NPL) increases
from 1.8% in 4Q22 to 2.3% in 3Q23 and 4Q23 with data for 4Q23 below
the rising trend due to a calendar effect in the quarter. The
impaired portfolio ratio increases from 4.8% in 4Q22 to 5.5% in
3Q23 and 5.6% in 4Q23. Finally, the expected loss ratio (provisions
for credit risk divided by total loans) remains more stable,
increasing to 2.8% in 4Q23, from 2.7% in 4Q22 as a result of higher
provisions made in recent periods.
The expense for net credit losses totaled Ch$
473,593 million in the twelve-month period ended December 31, 2023,
an increase of 27.7% compared to the same period in 2022 and in the
same line, the cost of credit goes from 0.98% at the end of
December 2022 to 1.20% in 2023.
Solid client treasury income with net
financial results increasing 37.9% in 12M23Net financial
results recorded a profit of Ch$ 300,239 million in 12M23, an
increase of 37.9% compared to 12M22, mainly due to higher gains on
foreign exchange hedges.
In 4Q23, net financial results recorded a loss
of $89,049 million due to losses from writing off financial assets
at fair value in the quarter and a loss from trading financial
assets and liabilities, which was partially offset by a higher gain
in exchanges, readjustments and accounting hedges of foreign
currency.
Operating expenses decreased 5.4% in
12M23, demonstrating the solid cost control in the
year Operating
expenses decreased 5.4% in 12M23 compared to the same period in
2022 demonstrating solid cost control in the quarter as the Bank
continues to improve its productivity levels. In 4Q23 operating
expenses increased 4.1% QoQ due to higher administration
expenses.
The Bank's efficiency ratio reached 46.6% as of
December 31, 2023, higher than the 42.8% in the same period last
year, due to lower growth of our operating income. On the other
hand, the ratio of costs to assets decreased to 1.3% in 12M23 vs
1.4$ in the same period last year.
Our earnings webcast will be held on
Friday, February 2, 2023 at 8.30am New York time. For more
information please visit our website.
Banco Santander Chile is one of the companies
with the highest risk classifications in Latin America with an A2
rating from Moody's, A- from Standard and Poor's, A+ from Japan
Credit Rating Agency, AA- from HR Ratings and A from KBRA. All our
ratings as of the date of this report have a Stable Outlook.
As of December 31, 2023, we had total assets of
Ch$ 70,857,886 million (U.S.$ 81,031 million), outstanding gross
loans (including interbank loans) at amortized cost of Ch$
40,811,866 million (U.S.$ 46,671 million), total deposits of Ch$
29,675,768 million (U.S.$ 33,936 million) and shareholders’ equity
of Ch$ 4,367,159 million (U.S.$ 4,994 million). The BIS capital
ratio as of December 31, 2023, was 17.6%, with a core capital ratio
of 11.1%. As of December 31, 2023 Santander Chile employed 9,229
people and has 247 branches throughout Chile.
CONTACT INFORMATIONCristian
VicuñaChief Strategy Officer and Head of Investor RelationsBanco
Santander ChileBandera 140, Floor 20Santiago,
ChileEmail: irelations@santander.clWebsite: www.santander.cl
_____________i The preliminary unaudited information contained
in this report is presented in accordance with Chilean Bank GAAP as
defined by the Financial Markets Commission (CMF).
Banco Santander Chile (NYSE:BSAC)
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