Release Date: February 07, 2025

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

Positive Points

• Banco Santander Chile (NYSE:BSAC) reported a net profit of 865 billion Pesos for 2024, a 73% increase compared to 2023.
• The bank's return on average equity improved to 20.2% for the year, with the fourth quarter reaching 26%.
• Total deposits increased by 5.9% in the fourth quarter, improving the loan to deposit ratio by over 10 percentage points in two years.
• The bank received significant recognition in 2024, being named Best Bank in Chile by Latin Finance and Euromoney.
• Banco Santander Chile (NYSE:BSAC) successfully migrated its legacy system to the cloud, enhancing digital transformation and platform performance.

Negative Points

• Non-performing loans have been increasing over the year, particularly in mortgage and commercial loan books.
• The bank's cost of risk was 1.3%, with asset quality ratios affected by weaker loan growth.
• Fee income decreased by 5.2% quarter on quarter due to lower collection fees and insurance brokerage.
• The bank set aside provisions for restructuring its branch network and operational risks, impacting total operating expenses.
• The effective tax rate may increase as inflation realigns to the central bank's target.

Q & A Highlights

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

Q: How do you see the political landscape in Chile affecting the bank, especially with upcoming presidential elections? A: Andres Anon, Chief Economist, noted that recent elections have shown a trend towards moderation and consensus in Chile. There is a focus on growth, which is expected to be a priority for presidential candidates. The recently approved pension reform is seen positively, as it should bolster Chilean capital markets.

Q: What is the outlook for your effective tax rate and long-term ROE? A: Christian Vicuna, Chief of Strategic Planning and Investor Relations, stated that the effective tax rate for 2025 is expected to remain similar to the previous year due to a stable inflationary scenario. Long-term ROE is anticipated to remain in the 20% range, reflecting improvements in operational performance and digitalization strategies.

Q: Why is the 2025 ROE guidance lower than the recent quarters' profitability? A: Christian Vicuna explained that the guidance reflects a cautious approach considering current macroeconomic conditions and potential risks. While positive trends are acknowledged, factors like market volatility and political scenarios are also considered. The bank aims for an ROE of 20-21% for 2025.

Q: Can you discuss your capital strategy and expected payout? A: Patricia Perez, CFO, mentioned that the bank expects to maintain a payout ratio similar to past years, around 60%. The bank is well above the Basel III capital requirements, and different scenarios will be evaluated later in the year.

Q: What are the expectations for loan growth across different segments? A: Patricia Perez indicated that loan growth is expected to be driven mainly by retail lending, particularly consumer loans, due to lower rates. Commercial loan growth may improve with better investment dynamics, while mortgage demand remains subdued due to high long-term yields.

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