Oct. 30, 2012
/PRNewswire/ -- Banco Santander Chile (NYSE: BSAC; SSE: Bsantander) announced today its unaudited results for the third quarter and nine-month period ended
September 30, 2012
. These results are reported on a consolidated basis in accordance with Chilean GAAP.
3Q12: Net income affected by deflation and one-time provision expense
Net income in the nine-month period ended
September 30, 2012
totaled Ch$274,565 million (Ch$1.46 per share and
3Q12 Net income
attributable to shareholders totaled Ch$50,563 million (Ch$0.27 per share and
/ADR). Compared to 2Q12 (from now on QoQ), net income decreased 52.2%. Compared to 3Q12 (from now on YoY), net income decreased 32.7%. This decline was mainly due to the lower inflation rate in the quarter that negatively affected net interest margins and a one-time provision expense.
Positive evolution of client margins offset by deflation in the quarter
Net interest income
decreased 6.4% QoQ and increased 2.9% YoY. The
Net interest margin
(NIM) in 3Q12 reached 4.7% compared to 5.0% in 2Q12 and 4.6% in 3Q11. In the quarter, the Bank's margins were negatively affected by deflation. The Bank has more assets than liabilities linked to inflation and, consequently, margins have a positive sensitivity to variations in inflation.
In 3Q12, the variation of the Unidad de Fomento (an inflation indexed currency unit), was -0.16% compared to inflation of +0.42% in 2Q12 and +0.56% in 3Q11. This reduction signified a QoQ decrease of net interest income of approximately
or Ch$19,000 million. This was partially offset by higher client spreads and an improved funding mix. In 4Q12 UF inflation is expected to be greater than 1%, which should drive NIMs back to levels greater than 5%.
Provision expense includes a one-time expense of Ch$24.7 billion in the quarter
Net provision for loan losses
in the quarter totaled Ch$119,459 million an increase of 52% QoQ and 32.2% YoY. As previously mentioned in the 2Q12 Earnings Report, in the current quarter, the Bank
recalibrated the consumer loan-provisioning model.
This resulted in an increase in the minimum provision set aside for consumer loans at origination given the higher risks observed in this portfolio. As a result, gross provision expenses in 3Q12 includes a
non-recurring provision expense
of Ch$24,753 million.
Solid growth of core deposits
(demand deposits + time deposits from non-institutional sources), increased 2.1% QoQ and 12.3% YoY. Core deposits as a percentage of total deposits reached 77.2% compared to 73.3% as of
and 69.7% as of
. This improved the Bank's funding mix, as non-institutional deposits tend to be cheaper and more stable than other sources of funding.
decreased 3.1% QoQ as the Bank, given its high structural liquidity, proactively reduced relatively more expensive institutional short-term deposits, which are not considered as structural funding by the Bank. YTD (as of August, 31st), the Bank's market share in terms of total deposits has increased 36 basis points.
Selective loan growth
In 3Q12, total loans increased 0.7% QoQ and 4.7% YoY. Loan growth was driven by the favorable evolution of the Chilean economy and was mainly focused in the high-end of the retail market, SMEs and the middle-market. The Bank continued with its prudent approach to loan growth in the lower end of the consumer loan segment.
Loans to individuals
increased 0.8% QoQ in 3Q12 and 4.6% YoY. Loans to high-income individuals increased 2.0% QoQ in comparison to a decrease of 1.6% in the mass consumer market.
Lending to SMEs
(defined as companies that sell less than Ch$1,200 million per year) expanded 3.3% QoQ (8.8% YoY), reflecting the Bank's consistent focus on this growing segment. YTD (as of
), the Bank's market share in terms of total loans has decreased 19 basis points.
Solid levels of capital: Core capital at 10.6%, BIS at 13.9%
reached 10.6% as of
September 30, 2012
and the Bank's
reached 13.9% at the same date. Voting common shareholders' equity is the sole component of our Tier I capital. Santander Chile has not issued new shares in more than 10 years.
Cost growth moderates as key project advance
in 3Q12 decreased 1.5% QoQ led by a 3.6% QoQ decrease in
Bank continued with its projects of investing in a new Client Relationship Management system and the Transformation Initiatives aimed at enhancing productivity in retail banking. The installment of the new CRM and other initiatives should further limit cost growth in coming quarters.
As per the latest public records published by the Superintendency of Banks of
, Banco Santander Chile was the largest bank in terms of assets and equity. The Bank has among the highest credit ratings among all Latin American companies, with an A+ rating from Fitch, A from Standard and Poor's and Aa3 by Moody's. The stock is traded on the New York Stock Exchange (NYSE: BSAC) and the Santiago Stock Exchange (SSE: Bsantander). The Bank's main shareholder is Santander, which controls 67% of Banco Santander Chile.
For more information see
 Earnings per ADR was calculated using the Observed Exchange Rate Ch$470.48 per US$ as of
Sept. 30, 2012
. The ratio of ordinary shares per ADR was modified form 1,039 share per ADR to 400 shares per ADR.
Manager, Investor Relations DepartmentBanco Santander ChileBandera 140 Piso 19
Tel: (562) 320-8284Fax: (562) 671-6554Email:
SOURCE Banco Santander Chile