In 1Q09, net income attributable to shareholders totaled Ch$76,652 million (Ch$0.41 per share and
On a comparable distributable basis, that is, compared to historical net income distributable as dividends and not restated to account for new accounting standards, net income attributable to shareholders was up 1.3% YoY. The Bank's ROAE in the quarter reached 20.2%.
Operating income increased 18.6% compared to 1Q08 (from now on YoY). Net interest income was flat YoY and totaled Ch$187,273 million in the quarter. The negative inflation rates in the quarter placed pressure on the net interest margin as the Bank has more assets than liabilities linked to inflation. As a result, in 1Q09, the Bank's net interest margin reached 4.8% compared to 5.6% in 1Q08. The effects of lower inflation on margins were offset by the 16.6% YoY increase in average loans coupled with our continued focus on spreads. As a result, client net interest income, that is net interest income generated by our commercial areas, increased 11.3% YoY in 1Q09.
The impact of negative inflation on results was also offset with the Bank's proactive management of the asset and funding mix. In 4Q08, the Bank increased its bond portfolio - which is comprised mainly of liquid and low risk Chilean Central Bank bonds - in anticipation of lower inflation and interest rate levels in 1Q09, and as a way to hedge our results in this scenario. As the world economy slowed and inflation dropped, interest rates decreased sharply. As a consequence, the results from financial transactions, net increased 415.1% YoY in 1Q09.
Net fee income 5.2% YoY in 1Q09 and was led by a rise in fees from checking accounts and card fees. Fees from checking accounts and lines of credit increased 15.3% YoY in the quarter. Santander is the leader in the checking account market with 630,000 accounts and 27.0% of the market. Fees from credit, debit and ATM cards increased 6.8% YoY. In the banking credit card business, Santander, with 33.5% of the credit card accounts, generated 36.3% of all purchases in 1Q09 compared to 35.3% in 1Q08. In the ATM market, Santander, with approximately 30% of the ATMs installed in the country, generated 41% of the total transactions in 2008.
In 1Q09, the Bank's net provision expense increased 48.0% YoY. This rise was driven by the increase in charge-offs, in line with the economic slowdown. As a result of this rise in charge-offs, asset quality indicators remained stable. The expected loan loss ratio or risk index (Loan loss allowances / Total loans) reached 2.01% as of
In summary, operating income, net of provision expense increased 10.0% YoY in 1Q09. The strategy of focusing on selective loan growth, funding, capital, spreads and actively managing the balance sheet offset the negative effects of deflation and rising credit risks. The growth rate of operating expenses was curbed in the quarter. In 1Q09, the efficiency ratio reached 34.5% compared to 36.6% in 1Q08. Operating expenses increased 2.8% YoY in 1Q09 compared to the 18.6% rise in operating income. We have the highest level of efficiency among the larger banks in
The Bank continued with its approach to selective loan growth given the more difficult economic environment. In addition, loan volumes were negatively affected during the quarter by the translation loss produced by the deflation (-2.3%) and appreciation of the peso against the US$ (7.5%). As a consequence, total loans decreased 4.1% QoQ and increased 12.6% YoY. Adjusting for translation losses, total loan volumes decreased approximately 2.4% QoQ and increased 14.6% YoY.
In the retail side, total loans to individuals decreased 1.8% QoQ and increased 8.9% YoY. The growth of lending to individual was focused mainly on the middle-upper income segments, which increased 2.5% QoQ and 31.7% YoY. In the mass consumer market volumes decreased 10.4% QoQ and 25.3% YoY. Lending to SMEs decreased 3.5% QoQ and increased 8.4% YoY. Lending to the middle market decreased 5.8% QoQ and increased 8.4% YoY. Corporate loans decreased 20.5% QoQ and increased 10.4% YoY. The main reasons for these declines were the translations losses produced by the deflationary environment and the appreciation of the Chilean peso.
As of
The Bank's capitalization ratios improved in the quarter. As of
The Bank credit risk ratings were improved in the quarter by Moody's, following their upgrade of Chile's sovereign ratings. The Bank deposits rating were improved from A2 to A1, senior debt rating was improved from Aa3 to Aa2. Subordinated debt rating was unchanged at Aa3. Both the senior and subordinated debt ratings pierced the sovereign ceilings, making Santander Chile the highest rated company in
Institutional Background
As per the latest public records published by the Superintendency of Banks of
Banco Santander, S.A., (SAN.MC, STD.N), headquartered in
In
(1)Safe harbor statement under the Private Securities Litigation Reform Act of 1995: All forward-looking statements made by Banco Santander Chile involve material risks and uncertainties and are subject to change based on various important factors which may be beyond the Bank's control. Accordingly, the Bank's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Such factors include, but are not limited to, those described in the Bank's filings with the Securities and Exchange Commission. The Bank does not undertake to publicly update or revise the forward-looking statements even if experience or future changes make it clear that the projected results expressed or implied therein will not be realized.
(2)The exchange rate used for translating Ch$ to US$ was Ch$641.25 per US$ dollar. All figures presented are in nominal terms. Historical figures are not adjusted for inflation.
CONTACT INFORMATION
Robert Moreno
Manager, Investor Relations Department
Banco Santander Chile
Bandera 140 Piso 19,
Santiago, Chile
Tel: (562) 320-8284
Fax: (562) 671-6554
Email: rmorenoh@santander.cl
Website: www.santander.cl
SOURCE Banco Santander
