FORM
6-K
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Report
of Foreign Issuer
Pursuant
to Rule 13a-16 or 15d-16 of
the
Securities Exchange Act of 1934
Commission
File Number: 001-14554
Banco
Santander Chile
Santander
Chile Bank
(Translation
of Registrant’s Name into English)
Bandera
140
Santiago,
Chile
(Address
of principal executive office)
Indicate
by check mark whether the registrant files or will file annual reports
under
cover of Form 20-F or Form 40-F:
|
|
Form 20-F
|
x
|
|
Form 40-F
|
o
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|
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as
permitted
by Regulation S-T Rule 101(b)(1):
|
|
Yes
|
o
|
|
No
|
x
|
|
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as
permitted
by Regulation S-T Rule 101(b)(7):
|
|
Yes
|
o
|
|
No
|
x
|
|
Indicate
by check mark whether by furnishing the information contained in this Form,
the
Registrant is also thereby furnishing the information to the Commission
pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
|
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Yes
|
o
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No
|
x
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If
“Yes” is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): N/A
Table
of Contents
|
Item
|
|
|
|
|
|
1.
|
Third
Quarter Earnings Report published on Oct. 29, 2008 (nominal
terms)
|
|
2.
|
Results
for the Nine-Month Period ended Sept. 30, 2008 (Spanish version,
real
terms)
|
2
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
| BANCO SANTANDER-CHILE | ||
|
By:
|
/s/
Gonzalo
Romero A.
|
|
|
Name:
|
Gonzalo
Romero A.
|
|
|
Title:
|
General
Counsel
|
|
Date:
Nov. 13, 2008
3
INDEX
|
SECTION
|
PAGE
|
|
|
SECTION
1: SUMMARY OF RESULTS AND STRATEGY
|
2
|
|
|
SECTION
2: BALANCE SHEET
|
6
|
|
|
SECTION
3: ANALYSIS OF QUARTERLY INCOME STATEMENT
|
10
|
|
|
SECTION
4: CREDIT RISK RATINGS
|
18
|
|
|
SECTION
5: SHARE PERFORMANCE
|
19
|
|
|
SECTION
6: INSTITUTIONAL BACKGROUND
|
20
|
|
|
ANNEX
1: BALANCE SHEET
|
21
|
|
|
ANNEX
2: YTD INCOME STATEMENT
|
22
|
|
|
ANNEX
3: QUARTERLY INCOME STATEMENT
|
23
|
|
|
ANNEX
4: QUARTERLY EVOLUTION OF MAIN RATIOS AND OTHER
INFORMATION
|
24
|
|
|
ANNEX
5: QUARTERLY EVOLUTION OF BALANCE SHEET
|
25
|
|
|
ANNEX
6: QUARTERLY EVOLUTION OF INCOME STATEMENT
|
26
|
|
|
CONTACT
INFORMATION
|
Santiago,
Chile
|
|
Robert
Moreno
|
Tel:
(562) 320-8284
|
|
Manager, Investor Relations Department
|
Fax:
(562) 671-6554
|
|
Banco
Santander Chile
|
Email:
rmorenoh@santander.cl
|
|
Bandera
140 Piso 19,
|
Website:
www.santander.cl
|
Investor
Relations Department
Bandera
140 19th
Floor,
Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
1
SECTION
1: SUMMARY OF RESULTS AND STRATEGY
SOLID
PROFITABILITY TRENDS
*
Core
revenues: Net interest income + fee income
**
Net
operating income: Core revenues + provision expense + operating expenses +
market related income + other operating income, net
In
3Q08,
net income attributable to shareholders totaled Ch$96,497 million (Ch$0.51
per
share and US$0.96/ADR), increasing 23.0% QoQ and 13.3% YoY. As a consequence,
ROAE in 3Q 2008 reached 28.6% compared to 23.2% in 2Q08 and 26.1% in 3Q07.
We
have the highest pre-tax return in the Chilean financial system.
Core
revenues, that is, Net interest income plus fee income, increased 11.5% QoQ
and
24.0% YoY. This strong operational results were partially offset by a larger
loss from price level restatement and higher operating costs compared to 3Q07,
which were negatively impacted by high inflation.
In
our
previous earnings report, we outlined our strategic objectives for the second
half of 2008 and 2009. Results in 3Q 2008 were in line with these strategic
objectives, which reflect our continued focus on expanding profitability through
client-driven, plain
vanilla
banking
activities, a conservative stance towards risk and high levels of efficiency.
These 4 strategic objectives are also concurrent with today’s global financial
crisis and its potential effects on the future growth rates of the Chilean
economy.
| 1. |
Proactive
management of the balance
sheet.
|
| · |
Selective
loan growth with a focus on upper and middle income individuals and
companies.
|
In
3Q08,
total loans increased 4.3% QoQ and 18.4% YoY. Corporate lending increased 4.8%
QoQ and 13.5% YoY and lending to the middle market increased 4.7% QoQ and 20.2%
YoY. Lending to SMEs increased 4.5% QoQ and 20.1% YoY. The Bank’s solid
liquidity position has helped to boost lending to corporations at attractive
spreads. This is a trend we expect to continue through 2009.
Total
loans to individuals increased 4.0% QoQ and 19.3% YoY. As mentioned in the
previous quarter earnings report, loan growth to individuals has been centered
in middle and upper income segments to improve the Bank’s loan book risk
profile. Loans to upper income individuals increased 43.5% YoY and lending
to
lower income segments decreased 10.7% YoY in 3Q08.
Investor
Relations Department
Bandera
140 19th
Floor,
Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
2
| · |
Focus
on customer deposits, liquidity and maintaining strong capitalization
ratios.
|
In
3Q08,
inflation continued to exceed market expectations fuelling further rises in
short-term interest rates. The Bank actively managed its funding base in the
quarter in order to control funding costs. The Bank extended the maturity of
its
liabilities by issuing bonds in the market and avoided raising expensive
short-term inflation indexed deposits. As of September 30, 2008, Santander
Chile’s loan to deposit ratio reached 100.2% (excluding portion of mortgage loan
funded through bonds and foreign trade loans funded through correspondent
banks).
Capitalization
ratios remained solid in 3Q08. During the quarter, the Bank issued, in the
local
market, US$117 million in subordinated bonds to further improve capitalization
ratios. This bonds were priced at an attractive yield of 70bp over the 30 year
Chilean Central Bank rate. As of September 30, 2008, the Bank’s BIS ratio
reached a solid 13.1% with a core capital ratio of 9.7%.
|
·
|
Increasing
spreads.
|
A
key
part of the Bank’s strategy since 2007 has been to focus on spreads in order to
sustain profitability in a period of lower economic growth and to compensate
for
higher funding costs and provisioning levels. Loan spreads to companies have
also been increasing as liquidity abroad has become scarcer and more
expensive.
As
a
result of the Bank’s management of the asset and funding mix coupled with rising
spreads and higher inflation, in 3Q08 net interest income was up 14.3% QoQ
and
28.0% YoY. The Bank’s net interest margin reached a record level of 7.1% in 3Q08
compared to 6.2% in 2Q08 and 6.4% in 3Q07.
| 2. |
Proactive
management of risks to balance growth with an expected rise in
risks.
|
As
mentioned in previous earning reports, provisions continued to increase. Net
provision expense increased 52.8% YoY in 3Q08. Including the sale of charged-off
loans, which are recognized as a net gain from financial transactions, net
provision expense increased 38.2% YoY in 3Q08. This rise was driven by the
growth in retail banking activities, higher charge-offs in consumer loans due
to
the economic slowdown and high inflation levels seen in the last 12 months
and
an increase in risk in the middle-market segment following negligible levels
in
the past three years.
In
3Q08,
the Bank continued to focus loan growth in lower risk segments in order to
reduce the growth of provision expense. As a result, net provision expense
on a
sequential basis in 3Q08, grew 2.5% QoQ. Despite this rise in provision expense,
in 3Q08 net interest income net of provision expenses increased 19.9% QoQ and
20.2% YoY, reflecting that the Bank’s higher spreads, higher inflation rates and
the improved funding mix has more than offset the rise in risks.
Investor
Relations Department
Bandera
140 19th
Floor,
Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
3
| 3. |
Focus
on increasing cross-selling and product usage to boost
fees
|
Net
fee
income increased 0.3% QoQ and 8.8% YoY in 3Q08, in line with the expansion
of
cross-selling and product usage. Santander Chile has the largest client base
(excluding the state owned bank) in Chile. The total number of clients increased
7.2% YoY to 3.0 million in 3Q08 and the amount of cross-sold clients increased
7.9% YoY in September 2008. In order to continue to expand our fee income base,
the Bank is focusing on expanding cross-selling. Santander Chile has advanced
IT
systems that facilitates cross-selling and that provide commercial teams with
easy to use tools for selling bank products.
| 4. |
Tight
control of costs. Focus on productivity gains and control of recurring
costs. Maximize profitability of new
branches.
|
In
3Q08,
the efficiency ratio reached a solid 35.9% improving from 38.8% 2Q08 and 37.9%
in 3Q07. Total operating expenses increased 4.1% QoQ and 16.9% YoY. Personnel
expenses increased 4.0% QoQ and 18.0% YoY in 3Q08. The QoQ increase in personal
expenses was mainly due to CPI adjustments to salaries as a result of the high
inflation rates. The Bank’s average headcount increased 2.9% YoY and 0.9% QoQ.
The
growth rate of administrative expenses was curbed in the quarter as the Bank
has
been limiting the opening of new branches in order to maximize the profitability
of the existing network and to control costs. Administrative expenses increased
0.6% QoQ and 4.1% YoY in 3Q08. As of September 2008, the Bank’s distribution
network totaled 472 offices, increasing 0.9% QoQ and 8.3% YoY. As of September
2008, the Bank had 1,987 ATMs, decreasing 1.4% QoQ and increasing 9.9% YoY.
Since 1/3 of the Bank’s branches have been opened in the past three years, there
is still room to sustain growth and improve efficiency by maximizing
profitability of the newly opened offices. We
have
the highest level of efficiency among the larger banks in Chile and among the
best in emerging markets.
Investor Relations Department
Bandera
140 19th
Floor,
Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
4
Banco
Santander Chile: Summary of Results
|
Quarter
|
Change %
|
|||||||||||||||
|
(Ch$ million)
|
3Q08
|
2Q08
|
3Q07
(Reclassified)
|
3Q08 / 3Q07
|
3Q / 2Q 08
|
|||||||||||
|
Net
interest income
|
253,221
|
221,451
|
197,891
|
28.0
|
%
|
14.3
|
%
|
|||||||||
|
Fee
income
|
56,139
|
55,946
|
51,538
|
8.9
|
%
|
0.3
|
%
|
|||||||||
|
Core
revenues
|
309,360
|
277,397
|
249,429
|
24.0
|
%
|
11.5
|
%
|
|||||||||
|
Financial
transactions, net
|
33,933
|
22,019
|
23,757
|
42.8
|
%
|
54.1
|
%
|
|||||||||
|
Other
operating income
|
(1,094
|
)
|
4,850
|
4,719
|
(123.2
|
)%
|
(122.6
|
)%
|
||||||||
|
Total
operating income
|
342,199
|
304,266
|
277,905
|
23.1
|
%
|
12.5
|
%
|
|||||||||
|
Operating
expenses
|
(122,967
|
)
|
(118,112
|
)
|
(105,219
|
)
|
16.9
|
%
|
4.1
|
%
|
||||||
|
Provision
expense
|
(72,128
|
)
|
(70,374
|
)
|
(47,197
|
)
|
52.8
|
%
|
2.5
|
%
|
||||||
|
Net
operating income
|
147,104
|
115,780
|
125,489
|
17.2
|
%
|
27.1
|
%
|
|||||||||
|
Net
income
|
96,457
|
79,573
|
86,085
|
12.0
|
%
|
21.2
|
%
|
|||||||||
|
Minority
interest
|
(40
|
)
|
1,133
|
889
|
(104.5
|
)%
|
(103.5
|
)%
|
||||||||
|
Net
income attributable to shareholders
|
96,497
|
78,440
|
85,196
|
13.3
|
%
|
23.0
|
%
|
|||||||||
|
Net
income/share (Ch$)
|
0.51
|
0.42
|
0.45
|
13.3
|
%
|
23.0
|
%
|
|||||||||
|
Net
income/ADR (US$)1
|
0.96
|
0.83
|
0.92
|
4.9
|
%
|
15.8
|
%
|
|||||||||
|
Total
loans
|
13,791,128
|
13,216,808
|
11,645,812
|
18.4
|
%
|
4.3
|
%
|
|||||||||
|
Customer
funds
|
14,074,217
|
14,619,427
|
12,738,673
|
10.5
|
%
|
(3.7
|
)%
|
|||||||||
|
Shareholders’
equity
|
1,500,504
|
1,373,196
|
1,367,475
|
9.7
|
%
|
9.3
|
%
|
|||||||||
|
Net
interest margin
|
7.1
|
%
|
6.2
|
%
|
6.4
|
%
|
||||||||||
|
Efficiency
ratio
|
35.9
|
%
|
38.8
|
%
|
37.9
|
%
|
||||||||||
|
Return
on average equity3
|
28.6
|
%
|
23.2
|
%
|
26.1
|
%
|
||||||||||
|
PDL
/ Total loans
|
1.1
|
%
|
1.1
|
%
|
1.0
|
%
|
||||||||||
|
Coverage
ratio of PDLs
|
181.0
|
%
|
173.2
|
%
|
197.2
|
%
|
||||||||||
|
Expected
loss4
|
2.0
|
%
|
1.9
|
%
|
1.9
|
%
|
||||||||||
|
BIS
ratio
|
13.1
|
%
|
12.9
|
%
|
12.5
|
%
|
||||||||||
|
Branches5
|
472
|
468
|
436
|
|||||||||||||
|
ATMs
|
1,997
|
2,016
|
1,808
|
|||||||||||||
|
Employees
|
9,331
|
9,230
|
9,057
|
|||||||||||||
| 1. |
The
change in earnings per ADR may differ from the change in earnings
per
share due to the exchange rate.
|
| 2. |
Annualized
Quarterly Earnings / Average
Equity.
|
| 3. |
Allowance
for loan losses / Total loans.
|
| 4. |
Includes
SuperCaja and mini payment centers.
|
2007
figures have been re-categorized under the new format in order to make them
more
comparable, but the modification regarding minimum dividends has not been made
to historical shareholders’ equity.
Please
note that this information is provided for comparative purposes only and that
this re-categorization of line items may undergo further changes during the
year
and, therefore, historical figures, including financial ratios, presented in
this report may not be entirely comparable to future figures presented by the
Bank. Re-classified historical figures have not been audited.
In
this earnings report, 3Q07 and 2007 figures have suffered minor
reclassifications between line items compared to figures for these periods
presented in previous earnings reports. This affected mainly net gains from
financial transactions, other operating income and other operating
expenses.
Investor
Relations Department
Bandera
140 19th
Floor,
Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
5
9M08
Results Summary
In
the
nine-month period ended September 30, 2008 (9M08), net income attributable
to
shareholders increased 5.3% YoY and totaled Ch$250,580 million (Ch$1.33/share
and US$2.50/ADR). Growth was led by a 25.4% increase in core revenues. Net
interest income increased 29.1% and fee income 12.5% YoY. The net interest
margin in 9M08 reached a record level of 6.2% compared to 5.7% in 9M07. The
efficiency ratio reached 37.8% in 9M08 compared to 37.7% in 9M07. Net operating
income increased 12.3%. These higher operating results were partially offset
by
a 50.4% rise in non-operating losses, net which were negatively affected by
higher losses from price level restatement. ROAE reached 24.2% in
9M08.
SECTION
2: BALANCE SHEET
LOANS
Selective
loan growth with a focus on companies and upper and middle income
individuals
|
Loans
|
Quarter ended,
|
% Change
|
||||||||||||||
|
Sep-08
|
Jun-08
|
Sep-07
(reclassified)
|
Sept. 08 / 07
|
Sept. 08 /
Jun 08
|
||||||||||||
|
Total
loans to individuals1
|
6,654,210
|
6,397,456
|
5,576,602
|
19.3
|
%
|
4.0
|
%
|
|||||||||
|
Consumer
loans
|
2,241,163
|
2,205,135
|
1,988,434
|
12.7
|
%
|
1.6
|
%
|
|||||||||
|
Residential
mortgage loans
|
3,853,088
|
3,637,108
|
3,202,566
|
20.3
|
%
|
5.9
|
%
|
|||||||||
|
SMEs
|
2,418,645
|
2,314,975
|
2,013,521
|
20.1
|
%
|
4.5
|
%
|
|||||||||
|
Institutional
lending
|
216,212
|
231,156
|
198,446
|
9.0
|
%
|
(6.5
|
)%
|
|||||||||
|
Middle-Market
|
2,831,381
|
2,703,058
|
2,355,899
|
20.2
|
%
|
4.7
|
%
|
|||||||||
|
Corporate
|
1,648,671
|
1,573,148
|
1,452,592
|
13.5
|
%
|
4.8
|
%
|
|||||||||
|
Total
loans 2,3
|
13,791,128
|
13,216,808
|
11,645,812
|
18.4
|
%
|
4.3
|
%
|
|||||||||
| 1 |
Includes
consumer and mortgage lending and other loan products to
individuals
|
| 2 |
Includes
past due loans in each category.
|
| 3 |
Excludes
allowance for loan losses and interbank
loans
|
In
3Q08,
total loans increased 4.3% QoQ and 18.4% YoY. Corporate lending increased 4.8%
QoQ and 13.5% YoY and lending to the middle market increased 4.7% QoQ and 20.2%
YoY. During the quarter, the Bank saw an increase in spreads (See Net interest
income) in these segments as foreign sources of funding have become scarcer
and
more expensive. The Bank’s solid liquidity position has also help to boost
lending to these low risk segments. Growth in corporate segments was also driven
by the 6.2% depreciation of the peso against the US$ dollar in the quarter,
which resulted in a translation gain in dollar denominated loans. This partially
explains the 7.6% QoQ rise in foreign trade lending in the quarter.
Lending
to SMEs increased 4.5% QoQ and 20.1% YoY. Commercial loans to this segment
grew
4.9% QoQ and leasing 5.8% QoQ. Foreign trade loans rose 19.0% QoQ in this
segment driven by translation gains.
Investor
Relations Department
Bandera
140 19th
Floor,
Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
6
|
Total Commercial lending
|
Ch$mn
|
% Change
Sept / June 08
|
|||||
|
Commercial
loans
|
4,982,394
|
3.9
|
%
|
||||
|
Foreign
trade loans
|
1,105,549
|
7.6
|
%
|
||||
|
Lines
of credit to companies
|
275,591
|
16.6
|
%
|
||||
|
Factoring
|
321,561
|
1.0
|
%
|
||||
|
Leasing
|
946,584
|
0.7
|
%
|
||||
|
Other
commercial loans
|
65,199
|
13.6
|
%
|
||||
|
Total
commercial lending
|
7,696,878
|
4.4
|
%
|
||||
As
mentioned in the previous quarter earnings report, loan growth to individuals
continued to be centered in middle and upper income segments. Total loans to
individuals increased 4.0% QoQ and 19.3% YoY. Residential mortgage lending
increased 5.9% QoQ and 20.3% YoY. Despite higher long-term rates, demand for
residential mortgages remained healthy, especially among middle-upper income
segments. The translation gain produced by the high inflation in the third
quarter also boosted loan volumes in this product. Adjusted for inflation,
residential mortgage lending increased 2.3% QoQ and 10.7% YoY. Consumer loans
expanded 1.6% QoQ and 12.7% YoY. Loan growth was concentrated in middle to
upper
income segments. Lending to low income individuals decreased 10.3%
YoY.
Investor
Relations Department
Bandera
140 19th
Floor,
Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
7
FUNDING
Lengthening
the maturity of liabilities
|
Customer funds
|
Quarter
|
Change %
|
||||||||||||||
|
(Ch$ million)
|
Sep-08
|
Jun-08
|
Sep-07
(reclassified)
|
Sept. 08 / 07
|
Sept. 08 /
Jun 08
|
|||||||||||
|
Non-interest
bearing deposits
|
3,132,432
|
3,195,906
|
2,598,156
|
20.6
|
%
|
(2.0
|
)%
|
|||||||||
|
Time
deposits
|
8,408,557
|
8,390,418
|
7,273,079
|
15.6
|
%
|
0.2
|
%
|
|||||||||
|
Total
customer deposits
|
11,540,989
|
11,586,324
|
9,871,235
|
16.9
|
%
|
(0.4
|
)%
|
|||||||||
|
Mutual
funds
|
2,533,228
|
3,033,103
|
2,867,438
|
(11.7
|
)%
|
(16.5
|
)%
|
|||||||||
|
Total
customer funds
|
14,074,217
|
14,619,427
|
12,738,673
|
10.5
|
%
|
(3.7
|
)%
|
|||||||||
|
Senior
bonds
|
1,536,539
|
1,507,574
|
980,497
|
56.7
|
%
|
1.9
|
%
|
|||||||||
|
Subordinated
bonds
|
592,718
|
573,426
|
440,598
|
34.5
|
%
|
3.4
|
%
|
|||||||||
|
Quarterly
inflation rate
|
3.63
|
%
|
2.17
|
%
|
2.98
|
%
|
||||||||||
|
Avg.
overnight interbank rate (nominal)
|
7.58
|
%
|
6.39
|
%
|
5.45
|
%
|
||||||||||
|
Avg.
10 year Central Bank yield real)
|
3.39
|
%
|
3.06
|
%
|
3.08
|
%
|
||||||||||
|
Avg.
10 year Central Bank yield (nominal)
|
7.74
|
%
|
6.98
|
%
|
6.38
|
%
|
||||||||||
In
3Q08,
inflation continued to exceed market expectations fuelling further rises in
short-term interest rates. In the quarter the Bank actively managed its funding
base in order to control funding costs, especially considering the Bank’s strong
structural liquidity position. The Bank extended the maturity of its liabilities
by issuing bonds in the market and avoided raising expensive short-term
inflation indexed deposits. As a result, time deposits increased 0.2% QoQ and
15.6% YoY while senior bonds issued have increased 56.7% YoY and subordinated
bonds 34.5% YoY.
The
average balance of non-interest bearing checking accounts increased 0.7% QoQ
and
18.9% YoY and the balance of non-interest bearing demand deposits decreased
2.0%
QoQ and increased 20.6% YoY. The higher inflation rates in the quarter resulted
in lower growth of this non-interesting bearing deposit.
As
of
September 30, 2008, Santander Chile’s loan to deposit ratio reached 100.2%
(excluding portion of mortgage loan funded through bonds and foreign trade
loans
funded through correspondent banks).
Total
foreign sources of funding, as of September 30, 2008, totaled Ch$1,463,040
million (US$ 2.6 billion) or 7.5% of total funding. US$239mn of this total
matures in the fourth quarter. The Bank also holds ample liquidity in foreign
currencies with overnight deposits in US$ dollars.
Assets
under management decreased 16.5% QoQ and 11.7% YoY due to unfavorable market
conditions, especially in equity markets that affected valuations.
Investor
Relations Department
Bandera
140 19th
Floor,
Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
8
SHAREHOLDERS’
EQUITY AND REGULATORY CAPITAL
Solid
capitalization ratios. ROAE reached 28.6% in the third quarter and 24.2% in
9M08
|
Quarter
|
Change %
|
|||||||||||||||
|
(Ch$ million)
|
Sep-08
|
Jun-08
|
Sep-07
(reclassified)
|
Sept. 08 / 07
|
Sept. 08 /
Jun 08
|
|||||||||||
|
Capital
|
818,535
|
818,535
|
761,853
|
7.4
|
%
|
0.0
|
%
|
|||||||||
|
Reserves
|
133,429
|
89,057
|
99,437
|
34.2
|
%
|
49.8
|
%
|
|||||||||
|
Unrealized
gain (loss) Available-for-sale financial assets
|
(31,204
|
)
|
(45,900
|
)
|
(3,872
|
)
|
705.9
|
%
|
(32.0
|
)%
|
||||||
|
Retained
Earnings:
|
||||||||||||||||
|
Retained
earnings previous periods
|
381,030
|
381,030
|
252,873
|
50.7
|
%
|
0.0
|
%
|
|||||||||
|
Net
income
|
250,580
|
154,083
|
237,872
|
5.3
|
%
|
62.6
|
%
|
|||||||||
|
Provision
for mandatory dividend
|
(75,174
|
)
|
(46,225
|
)
|
0
|
|||||||||||
|
Minority
Interest
|
23,308
|
22,616
|
19,312
|
20.7
|
%
|
3.1
|
%
|
|||||||||
|
Total
Equity
|
1,500,504
|
1,373,196
|
1,367,475
|
9.7
|
%
|
9.3
|
%
|
|||||||||
| * |
By
law banks must pay at least 30% of earnings and the Bank must now
provision for this minimum mandatory dividend.
|
Shareholders’
equity totaled Ch$1,500,504 million (US$2.56 billion) as of September 30, 2008.
ROAE in 3Q08 reached 28.6% compared to 26.1% in 3Q07 and 23.2% in
2Q08.
The
Bank’s BIS ratio as of September 30, 2008 reached 13.1% with a Tier I ratio of
9.7%. During the quarter, the Bank issued US$117 million in subordinated bonds
in the local market in order to extend the maturity of its funding base and
to
improve capitalization ratios. These bonds were issued at an attractive yield
of
70bp over the 30 year Chilean Central Bank rate. This is in line with our
strategic objectives of focusing on liquidity, funding and capital.
|
Capital Adequacy
|
Quarter ended
|
Change %
|
||||||||||||||
|
(Ch$ million)
|
Sep-08
|
Jun-08
|
Sep-07
(reclassified)
|
Sept. 08 / 07
|
Sept. 08 /
Jun 08
|
|||||||||||
|
Tier
I
|
1,477,245
|
1,350,580
|
1,110,290
|
33.1
|
%
|
9.4
|
%
|
|||||||||
|
Tier
II
|
514,005
|
461,436
|
440,432
|
16.7
|
%
|
11.4
|
%
|
|||||||||
|
Regulatory
capital
|
1,991,250
|
1,812,016
|
1,550,722
|
28.4
|
%
|
9.9
|
%
|
|||||||||
|
Risk
weighted assets
|
15,170,215
|
14,066,367
|
12,364,773
|
22.7
|
%
|
7.8
|
%
|
|||||||||
|
Tier
I ratio
|
9.7
|
%
|
9.6
|
%
|
9.0
|
%
|
||||||||||
|
BIS
ratio
|
13.1
|
%
|
12.9
|
%
|
12.5
|
%
|
||||||||||
| * |
Tier
I includes year-to-date net income in
2008
|
Investor
Relations Department
Bandera
140 19th
Floor,
Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
9
SECTION
3: ANALYSIS OF QUARTERLY INCOME STATEMENT
NET
INTEREST INCOME
Positive
evolution of NIM driven by improved asset/funding mix and higher inflation.
|
Quarter
|
Change %
|
|||||||||||||||
|
(Ch$ million)
|
3Q08
|
2Q08
|
3Q07
(reclassified)
|
3Q08 / 3Q07
|
3Q / 2Q 08
|
|||||||||||
|
Net
interest income
|
253,221
|
221,451
|
197,891
|
28.0
|
%
|
14.3
|
%
|
|||||||||
|
Average
interest-earning assets
|
14,365,245
|
14,252,583
|
12,343,716
|
16.4
|
%
|
0.8
|
%
|
|||||||||
|
Average
loans
|
13,037,608
|
12,817,994
|
11,345,844
|
14.9
|
%
|
1.7
|
%
|
|||||||||
|
Net
interest margin1
(NIM)
|
7.1
|
%
|
6.2
|
%
|
6.4
|
%
|
||||||||||
|
Avg.
equity + non-interest bearing demand deposits / Avg. interest earning
assets
|
29.6
|
%
|
31.9
|
%
|
32.0
|
%
|
||||||||||
|
Quarterly
inflation rate2
|
3.63
|
%
|
2.17
|
%
|
2.98
|
%
|
||||||||||
|
Avg.
overnight interbank rate (nominal)
|
7.58
|
%
|
6.39
|
%
|
5.45
|
%
|
||||||||||
|
Avg.
10 year Central Bank yield (real)
|
3.39
|
%
|
3.06
|
%
|
3.08
|
%
|
||||||||||
| 1. |
Annualized.
|
| 2. |
Inflation
measured as the variation of the Unidad de Fomento in the
quarter.
|
In
3Q08,
net interest income was up 28.0% YoY. Average earning assets increased 16.4%
in
the same period while the net interest margin – NIM - increased 70 basis
points in the same period. Among the reasons for this improved NIM, it is worth
mentioning:
|
·
|
Focus
on spreads.
A
key part of the Bank’s strategy since 2007 has been to focus strongly on
spreads in order to sustain profitability in a period of lower economic
growth and to compensate for higher funding costs and provisioning
levels.
Loan spreads to companies have been increasing as liquidity abroad
has
become scarcer and more expensive. Deposit spreads have also benefited
from the Bank’s higher credit risk ratings.
|
|
·
|
Inflation.
The rise in margins is also due to higher inflation rates in 3Q08.
The
Bank maintains long-term assets (mainly medium and long-term financial
investments and mortgage loans) that are denominated in Unidades
de
Fomento (UFs), and inflation indexed unit, which are partially funded
with
nominal or non-interest bearing peso short-term deposits. As the
Bank
maintains a positive gap between assets and liabilities indexed to
inflation, a rise in inflation has a positive effect on net interest
income and margins. This is partially offset by the loss from price
level
restatement and higher operating costs which are for the most part
indexed
to inflation.
|
Net
interest income in 3Q08 increased 14.3% QoQ and the NIM increased 90bp. This
QoQ
rise in margins was mainly due to the higher quarterly inflation rates and
a
higher spread earned on deposits. This was partially offset by a lower loan
spreads that was negatively affected by a shift in the loan mix to lower
yielding loan products.
Investor
Relations Department
Bandera
140 19th
Floor,
Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
10
Going
forward margins could begin to descend as inflation moderates, funding costs
rises and the asset mix shifts towards lower yielding and less risky loans.
As
mentioned above, this is being confronted by increasing spreads and actively
managing the asset and liability mix.
PROVISION
FOR LOAN LOSSES
Net
provision expense and asset quality stable on a QoQ basis
|
Provision for loan losses
|
Quarter
|
Change %
|
||||||||||||||
|
(Ch$ million)
|
3Q08
|
2Q08
|
3Q07
(reclassified)
|
3Q08 / 3Q07
|
3Q / 2Q 08
|
|||||||||||
|
Gross
provisions
|
(13,055
|
)
|
(12,824
|
)
|
(10,055
|
)
|
29.8
|
%
|
1.8
|
%
|
||||||
|
Charge-offs
|
(68,325
|
)
|
(66,250
|
)
|
(49,465
|
)
|
38.1
|
%
|
3.1
|
%
|
||||||
|
Gross
provisions and charge-offs
|
(81,380
|
)
|
(79,074
|
)
|
(59,520
|
)
|
36.7
|
%
|
2.9
|
%
|
||||||
|
Loan
loss recoveries
|
9,252
|
8,700
|
12,323
|
(24.9
|
)%
|
6.3
|
%
|
|||||||||
|
Net
provisions for loan losses
|
(72,128
|
)
|
(70,374
|
)
|
(47,197
|
)
|
52.8
|
%
|
2.5
|
%
|
||||||
|
Total
loans
|
13,791,128
|
13,216,808
|
11,645,812
|
18.4
|
%
|
4.3
|
%
|
|||||||||
|
Total
reserves (RLL)
|
(269,167
|
)
|
(256,183
|
)
|
(221,070
|
)
|
21.8
|
%
|
5.1
|
%
|
||||||
|
Past
due loans* (PDL)
|
148,709
|
147,874
|
112,130
|
32.6
|
%
|
0.6
|
%
|
|||||||||
|
Gross
provision expense / Loans
|
2.36
|
%
|
2.39
|
%
|
2.04
|
%
|
||||||||||
|
Cost
of credit**
|
2.09
|
%
|
2.13
|
%
|
1.62
|
%
|
||||||||||
|
PDL
/ Total loans
|
1.08
|
%
|
1.12
|
%
|
0.96
|
%
|
||||||||||
|
Expected
loss (RLL / Total loans)
|
1.95
|
%
|
1.94
|
%
|
1.90
|
%
|
||||||||||
|
Coverage
of past due loans***
|
181.0
|
%
|
173.2
|
%
|
197.2
|
%
|
||||||||||
| * |
Past
due loans: installments or credit lines more than 90 days overdue.
|
| ** |
Net
provision expense / loans annualized.
|
| *** |
RLL
/ Past due loans.
|
In
3Q08,
the Bank’s net provision expense increased 2.5% QoQ and 52.8% YoY. Including the
sale of charged-off loans, which are recognized as a net gain from financial
transactions, net provision expense increased 38.2% YoY in 3Q08. As mentioned
in
previous earning reports, this rise was driven by the growth in retail banking
activities, higher charge-offs in consumer loans due to the economic slowdown
and high inflation levels seen in the last 12 months and an increase in risk
in
the middle-market segment following negligible levels in the past three years.
|
Net provisions for loan losses
by segment
|
Quarter
|
Change %
|
||||||||||||||
|
(Ch$ million)
|
3Q08
|
2Q08
|
3Q07
(reclassified)
|
3Q08 / 3Q07
|
3Q / 2Q 08
|
|||||||||||
|
Retail
banking*
|
67,089
|
64,068
|
48,211
|
39.2
|
%
|
4.7
|
%
|
|||||||||
|
Middle-market
|
4,799
|
6,308
|
265
|
1710.9
|
%
|
(23.9
|
)%
|
|||||||||
|
Corporate
banking
|
65
|
123
|
(126
|
)
|
—
|
%
|
(47.2
|
)%
|
||||||||
|
Total
net provisions for loan losses**
|
71,953
|
70,499
|
48,350
|
48.8
|
%
|
2.1
|
%
|
|||||||||
| * |
Includes
individuals, institutional lending and SMEs.
|
Investor
Relations Department
Bandera
140 19th
Floor,
Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
11
The
increase in net provision expense in 3Q08 was also due to the 24.9% YoY
reduction in loan loss recoveries. The collection departments is now focused
on
increasing the rate of recoverability in the first six months of non-performance
as efforts to collect after this period tend to be less cost efficient. After
this period, the Bank tries to sell these charged-off loans and any gain will
be
recognized as a gain in financial transactions, net. In 3Q08, the Bank realized
a gain of Ch$6,902 million from the sale of charged-off loans that is recognized
in financial transactions, net.
In
3Q08,
the Bank continued to focus loan growth in lower risk segments in order to
reduce the growth of this expense. Spreads have also been increased to cover
for
this higher requirement. As a result of these measures, net interest income
after net provision expense increased 20.2% YoY in 3Q08 and 26.9% year-to-date
in September compared to the nine-month period ended September 30, 2007
reflecting that the Bank has up to now been able to offset the rise in
risks.
The
past
due loan ratio (Past due installment >90 days / Total loans) as of September
2008 reached 1.08% compared to 1.12% in 2Q08 and 0.96% in 3Q07. Coverage of
past
due loans (Loan loss allowance / Past due loans) reached 181.0% as of September
2008 compared to 173.2% at June 2008 and 197.2% at September 2007.
The
expected loan loss ratio (Loan loss allowances / Total loans), which is a ratio
that measures how much of the Bank’s loan portfolio is at risk, remained steady
QoQ and YoY at 1.95% due to the Bank’s conservative charge-off policies. The
cost of credit (Net provision expense / Total loans, annualized) reached 2.09%,
steady QoQ and up from 1.62% in 3Q07. Going forward, the expected loan loss
ratio and the cost of credit should rise given the expected lower economic
growth.
IFRS
note:
In
2009, and in line with IFRS standards being adopted by Chilean banks,
non-performing loans will include the entire balance of loans, including
the
performing portions. As a result, the PDL ratio will be more in line with
the
expected loan loss levels.
Investor
Relations Department
Bandera
140 19th
Floor,
Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
12
NET
FEE INCOME
Focus
on cross-selling
|
Quarter
|
Change %
|
|||||||||||||||
|
(Ch$ million)
|
3Q08
|
2Q08
|
3Q07
(reclassified)
|
3Q08 /
3Q07
|
3Q / 2Q 08
|
|||||||||||
|
Checking
accounts & lines of credit
|
15,865
|
15,468
|
17,037
|
(6.9
|
)%
|
2.6
|
%
|
|||||||||
|
Collection
fees
|
10,915
|
10,265
|
8,259
|
32.2
|
%
|
6.3
|
%
|
|||||||||
|
Credit,
debit & ATM card fees
|
10,326
|
10,524
|
9,024
|
14.4
|
%
|
(1.9
|
)%
|
|||||||||
|
Asset
management
|
7,622
|
7,592
|
8,238
|
(7.5
|
)%
|
0.4
|
%
|
|||||||||
|
Guarantees,
pledges and other contingent operations
|
4,237
|
3,960
|
3,599
|
17.7
|
%
|
7.0
|
%
|
|||||||||
|
Insurance
brokerage
|
3,880
|
4,286
|
3,032
|
28.0
|
%
|
(9.5
|
)%
|
|||||||||
|
Fees
from brokerage and custody of securities
|
1,953
|
2,115
|
1,662
|
17.5
|
%
|
(7.7
|
)%
|
|||||||||
|
Other
Fees
|
1,343
|
1,736
|
688
|
95.3
|
%
|
(22.6
|
)%
|
|||||||||
|
Total
fees
|
56,139
|
55,946
|
51,538
|
8.9
|
%
|
0.3
|
%
|
|||||||||
Net
fee
income increased 0.3% QoQ and 8.9% YoY in 3Q08 in line with the expansion of
cross-selling and product usage. Santander Chile has the largest client base
(excluding the state owned bank) in Chile. The total number of clients increased
7.2% YoY to 3.0 million in 3Q08 and the amount of cross-sold clients increased
7.9% YoY in September 2008. Despite this improvement, only 30% of our clients
have 2 or more products, reflecting the high cross-selling potential of the
Bank’s client base. Going forward the Bank is focusing on expanding
cross-selling over increasing the total client base as a way to grow efficiently
and in order to keep risks under control.
Fees
from
checking accounts and lines of credit decreased 6.9% YoY. Going forward and,
especially in 2009, fee income from lines of credit will be hampered by
regulatory changes that will limit amounts charged for un-authorized overdrafts.
The Bank has proactively closed some checking accounts due to credit risk
reasons.
Fees
from
credit, debit and ATM cards increased 14.4% YoY. The usage of electronic means
of payments continues to steadily grow in Chile as bank penetration and
cross-selling ratios improve. Fees from credit, debit and ATM cards decreased
1.9% QoQ. The Bank has proactively eliminated some credit card amounts due
to
credit risk reasons.
Investor
Relations Department
Bandera
140 19th
Floor,
Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
13
Collection
fees increased 6.3% QoQ and 32.2% YoY. The main driver of fee growth in this
line item is the collection of loan insurance policies on behalf of third
parties which evolves with overall commercial activity.
Asset
management fees were flat QoQ and decreased 7.5% YoY. Assets under management
decreased 16.5% QoQ and 11.7% YoY due to unfavorable market conditions,
especially in equity markets that affected valuations and asset management
fees.
Fees
from
guarantees, pledges and other contingent operations increased 7.0% QoQ and
17.7%
YoY, in line with higher commercial activity in corporate segments.
Insurance
brokerage fees decreased 9.5% QoQ and increased 28.0% YoY in 3Q08. The Bank’s
strength in cross-selling the client base by offering attractive insurance
products through the Internet has been a key driver in this line item. The
QoQ
decline is mainly due to seasonal factors and a slowdown of business volumes
in
line with decelerating economic growth.
Fees
securities brokerage and custody decreased 7.7% QoQ and increased 17.3% YoY.
The
YoY rise in securities brokerage was mainly due to an increase in cross-selling
of brokerage services to retail clients, an increase in traded volumes with
institutional investors and more foreign investment activity in our local stock
brokerage. The QoQ decline was mainly due to the weak evolution of equity
markets in the quarter.
OPERATING
EXPENSES AND EFFICIENCY
The
efficiency ratio improves to 35.9% in the quarter. The Bank continues to tighten
cost control
|
Quarter
|
Change %
|
|||||||||||||||
|
(Ch$ million)
|
3Q08
|
2Q08
|
3Q07
(reclassified)
|
3Q08 / 3Q07
|
3Q / 2Q 08
|
|||||||||||
|
Personnel
expenses
|
(53,889
|
)
|
(51,800
|
)
|
(45,686
|
)
|
18.0
|
%
|
4.0
|
%
|
||||||
|
Administrative
expenses
|
(42,238
|
)
|
(41,969
|
)
|
(40,566
|
)
|
4.1
|
%
|
0.6
|
%
|
||||||
|
Depreciation
and amortization
|
(14,038
|
)
|
(13,078
|
)
|
(11,000
|
)
|
27.6
|
%
|
7.3
|
%
|
||||||
|
Other
operating expenses
|
(12,802
|
)
|
(11,265
|
)
|
(7,967
|
)
|
60.7
|
%
|
13.6
|
%
|
||||||
|
Operating
expenses
|
(122,967
|
)
|
(118,112
|
)
|
(105,219
|
)
|
16.9
|
%
|
4.1
|
%
|
||||||
|
Efficiency
ratio*
|
35.9
|
%
|
38.8
|
%
|
37.9
|
%
|
|
|||||||||
| * |
Operating
expenses / Operating income. Operating income = Net interest income
+ Net
fee income+ Market related income + Other operating income.
|
In
3Q08,
the efficiency ratio reached 35.9%, improving from 38.8% 2Q08 and 37.9% in
3Q07.
Total operating expenses increased 4.1% QoQ and 16.9% YoY. Personnel expenses
increased 4.0% QoQ and 18.0% YoY in 3Q08. The QoQ increase in personnel expenses
was mainly due to CPI adjustments to salaries as a result of the high inflation
rates. The wage increase was approximately 4% in July following a 4% rise in
April and a 4% rise in 3Q07. The Bank’s average headcount increased 2.9% YoY and
0.9% QoQ. Going forward and depending on the evolution of inflation, we expect
a
further moderation in the growth rate of headcount and personnel
expenses.
|
Investor
Relations Department
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
|
14
The
growth rate of administrative expenses was curbed in the quarter as the Bank
has
been limiting the opening of new branches in order to maximize the profitability
of the existing network and to control costs. Administrative expenses in 3Q08
increased 0.6% QoQ and 4.1% YoY. As of September 2008, the Bank’s distribution
network totaled 472 offices, increasing 0.9% QoQ and 8.3% YoY. As of September
2008, the Bank had 1,987 ATMs, decreasing 1.4% QoQ and increasing 9.9% YoY.
Since 1/3 of the Bank’s branches have been opened in the past three years, there
is still ample room to sustain growth and improve efficiency by maximizing
profitability of the newly opened offices.
The
7.3%
QoQ and 27.6% YoY increase in depreciation and amortization expenses is also
directly related to the growth of the Bank’s distribution network.
Other
operating expenses are mainly expense primarily relating to the Bank’s call
center, credit card related expenses, expenses related to repossessed assets
and
provisions for non-credit contingencies. The increase in other operating
expenses was mainly driven by higher provisions for non-credit contingencies
in
3Q08 compared to 3Q07.
OTHER
OPERATING INCOME AND GAINS (LOSSES) ON FINANCIAL
TRANSACTIONS
Positive
results from client related activities
|
Other Operating Income and
Net Result from Financial
Transactions
|
Quarter
|
Change %
|
||||||||||||||
|
(Ch$ million)
|
3Q08
|
2Q08
|
3Q07
(reclassified)
|
3Q08 / 3Q07
|
3Q / 2Q 08
|
|||||||||||
|
Other
operating income
|
(1,094
|
)
|
4,850
|
6,083
|
—
|
%
|
—
|
%
|
||||||||
|
Net
gains from mark-to-market and trading
|
96,512
|
163,192
|
(4,342
|
)
|
—
|
%
|
(40.9
|
)%
|
||||||||
|
Exchange
differences, net
|
(62,579
|
)
|
(141,173
|
)
|
28,099
|
—
|
%
|
(55.7
|
)%
|
|||||||
|
Net
result from financial transactions
|
33,933
|
22,019
|
23,757
|
42.8
|
%
|
54.1
|
%
|
|||||||||
Other
operating income, which mainly includes the results from the sale and
maintenance of repossessed assets and other results, totaled a loss of Ch$1,094
million in 3Q08. The quarterly QoQ and YoY decline was mainly due to higher
non-credit provisions recognized in 3Q08 and reclassification of items between
other operating income and operating expenses in the quarter.
|
Investor
Relations Department
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
|
15
Net
gains
from financial transactions totaled a gain of Ch$33,933 million in 3Q08 and
increased 54.1% QoQ and 42.8% YoY. The net gains from mark-to-market and trading
mainly includes the mark-to-market of financial investments held for trading,
the interest revenue generated by this portfolio, any gain or loss from the
sale
of charged-off loans and the mark-to-market of derivatives. The results recorded
as exchange differences, net mainly includes the translation gains or losses
of
assets and a liability denominated in foreign currency, but does not include
the
mark-to-market of FX derivatives. As Santander Chile limits its foreign exchange
gap, the results that are recorded in foreign exchange transactions are, for
the
most part, offset by the mark-to-market of foreign currency forwards that are
included in the net gains from mark-to-market and trading. In order to better
understand this line item, we explain the net results from financial
transactions by business area in the table below.
|
Net Result from Financial
Transactions
|
Quarter
|
Change %
|
||||||||||||||
|
(Ch$ million)
|
3Q08
|
2Q08
|
3Q07
(reclassified)
|
3Q08 / 3Q07
|
3Q / 2Q 08
|
|||||||||||
|
Client
revenues*
|
30,649
|
26,687
|
25,253
|
21.4
|
%
|
14.8
|
%
|
|||||||||
|
ALCO,
Proprietary trading & other results
|
3,285
|
(4,668
|
)
|
(1,496
|
)
|
—
|
%
|
—
|
%
|
|||||||
|
Net
Result from Financial Transactions
|
33,933
|
22,019
|
23,757
|
42.8
|
%
|
54.1
|
%
|
|||||||||
| * |
Santander
Global Connect, market making & results from the sale of charged-off
loans
|
The
14.8%
QoQ and 21.4% YoY increase in client revenues in our Treasury was mainly due
to
a Ch$6,902 million gains from the sale of charged-off loans in the quarter.
The
net results from proprietary trading and ALCO totaled Ch$3,285 million in 3Q08
compared to a loss in 2Q08 and 3Q07. This was mainly due to higher gains from
prop-trading partially offset by the hedging costs of the Bank’s structural
liquidity position in US$. Our ALCO has followed a conservative policy regarding
liquidity, since the onset of the sub-prime crisis in mid-2007, by increasing
the Bank’s structural liquidity in pesos and US$. This liquidity position has
become a competitive advantage for the Bank in a moment in which funding has
become more expensive in local and international markets.
|
Investor
Relations Department
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
|
16
NON-OPERATING
ITEMS
|
Quarter
|
Change %
|
|||||||||||||||
|
(Ch$ million)
|
3Q08
|
2Q08
|
3Q07
(reclassified)
|
3Q08 / 3Q07
|
3Q / 2Q 08
|
|||||||||||
|
Income
attributable to investments in other companies
|
139
|
1,180
|
(635
|
)
|
—
|
%
|
(88.2
|
)%
|
||||||||
|
Price
level restatement
|
(31,157
|
)
|
(22,546
|
)
|
(23,902
|
)
|
30.4
|
%
|
38.2
|
%
|
||||||
|
Income
tax
|
(19,629
|
)
|
(14,841
|
)
|
(14,867
|
)
|
32.0
|
%
|
32.3
|
%
|
||||||
Price
level restatement in the quarter totaled a loss of Ch$31,157 million. The
difference in inflation rates explains the variation in price level restatement.
The Bank must adjust its capital and fixed assets for the variations in price
levels. When inflation is positive, the Bank records a loss from price
restatement, since the Bank's capital is larger than fixed assets. The inflation
rate was 3.63% in 3Q08 compared to 2.17% in 2Q08 and 2.98% in 3Q07.
IFRS
note:
In
2009, price level restatement will no longer be recognized. Capital will no
longer be restated to reflect changes in CPI and fixed and other non-financial
assets will not be adjusted for variation of the UF. 2008 balances sheet and
income statement will be restated to account for this effect.
|
Investor
Relations Department
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
|
17
SECTION
4: CREDIT RISK RATINGS
International
ratings:
The
Bank
has credit ratings from three leading international agencies. We have the
highest risk rating in Latin America.
|
Moody’s
|
Rating
|
|
|
Long-term
bank deposits
|
A2
|
|
|
Senior
bonds
|
Aa3
|
|
|
Subordinated
debt
|
Aa3
|
|
|
Bank
Deposits in Local Currency
|
Aa2
|
|
|
Bank
financial strength
|
B-
|
|
|
Short-term
deposits
|
P-1
|
|
Standard
and Poor’s
|
Rating
|
|
|
Long-term
Foreign Issuer Credit
|
A+
|
|
|
Long-term
Local Issuer Credit
|
A+
|
|
|
Short-term
Foreign Issuer Credit
|
A-1
|
|
|
Short-term
Local Issuer Credit
|
A-1
|
|
Fitch
|
Rating
|
|
|
Foreign
Currency Long-term Debt
|
A+
|
|
|
Local
Currency Long-term Debt
|
A+
|
|
|
Foreign
Currency Short-term Debt
|
F1
|
|
|
Local
Currency Short-term Debt
|
F1
|
|
|
Individual
rating
|
B
|
Local
ratings:
Our
local
ratings, the highest in Chile, are the following:
|
Local ratings
|
Fitch
Ratings
|
Feller
Rate
|
||
|
Shares
|
Level
2
|
1CN1
|
||
|
Short-term
deposits
|
N1+
|
Level
1+
|
||
|
Long-term
deposits
|
AAA
|
AAA
|
||
|
Mortgage
finance bonds
|
AAA
|
AAA
|
||
|
Senior
bonds
|
AAA
|
AAA
|
||
|
Subordinated
bonds
|
AA+
|
AA+
|
||
|
Outlook
|
Stable
|
Stable
|
|
Investor
Relations Department
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
|
18
SECTION
5: SHARE PERFORMANCE
As
of September 2008
Ownership
Structure:
ADR
Price Evolution
Santander
ADR vs. Global 1200 Financial Index
(Base
100 = 12/31/2003)
ADR
price
(US$) 2008
|
Year-end
2007:
|
50.99
|
|||
|
Maximum
(2008):
|
54.60
|
|||
|
Minimum
(2008):
|
37.10
|
|||
|
Close
(09/30/08):
|
42.79
|
Market
Capitalization: US$7,761 million
|
P/E
12 month trailing:
|
11.8
|
|||
|
P/BV
(24/10/08):
|
2.54
|
|||
|
Dividend
yield*:
|
4.5
|
%
|
| * |
Based
on closing price on record date of last dividend
payment.
|
Daily
traded volumes 3Q 2008
Local
Share Price Evolution
Santander
vs IPSA Index
(Base
100 = 12/31/2003)
Local
share price (Ch$) 2008
|
Year-end
2007:
|
24.49
|
|||
|
Maximum
(2008):
|
24.86
|
|||
|
Minimum
(2008):
|
19.30
|
|||
|
Close
(09/30/08):
|
21.92
|
Dividends:
|
% of previous year
|
|||||||
|
Year paid
|
Ch$/share
|
earnings
|
|||||
|
2005:
|
1.05
|
100
|
%
|
||||
|
2006:
|
0.83
|
65
|
%
|
||||
|
0.99
|
65
|
%
|
|||||
|
2008:
|
1.06
|
65
|
%
|
||||
|
Investor
Relations Department
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
|
19
SECTION
6: INSTITUTIONAL BACKGROUND
Institutional
Background
As
per
the latest public records published by the Superintendency of Banks of Chile
for
September 2008, Banco Santander Chile was the largest bank in terms of loans
and
deposits. The Bank has the highest credit ratings among all Latin American
companies, with an A+ rating from Standard and Poor’s, A+ by Fitch and A2 by
Moody’s, which are the same ratings assigned to the Republic of Chile. The stock
is traded on the New York Stock Exchange (NYSE: SAN) and the Santiago Stock
Exchange (SSE: Bsantander). The Bank’s main shareholder is Santander, which
controls 76.91% of Banco Santander Chile.
Banco
Santander (SAN.MC, STD.N)
is the
largest bank in the euro zone and seventh in the world by market capitalization.
Santander engages primarily in commercial banking with complementary activities
in global wholesale banking, cards, asset management and insurance. Founded
in
1857, Santander has as of June 2008, EUR 918,332 million in assets and EUR
1,050,928 million in managed funds, more than 65 million customers, 11,216
branches and a presence in some 40 countries. It is the largest financial group
in Spain and Latin America. Through its Abbey subsidiary, Santander is the
sixth
largest bank in the United Kingdom, and is the third largest banking group
in
Portugal. Through Santander Consumer Finance, it also operates a leading
franchise in 20 countries, with its principal focus in Europe (Germany, Italy
and Spain, among others) and the U.S. In the first half of 2008, Santander
registered EUR 4,730 million in net attributable profit, an increase of 22%
from
the previous year, excluding capital gains. For more information, see
www.santander.com.
In
Latin
America (excluding Banco Real), Santander manages over US$200 billion in
business volumes (loans, deposits, mutual funds, pension funds and managed
funds) through 4,528 branches. In the first half of 2008 (excluding Banco Real),
Santander reported US$2,171 million in net attributable income in Latin America,
up 20% from the same period of 2007.
|
Investor
Relations Department
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
|
20
ANNEX
1: BALANCE SHEET
|
Unaudited Balance Sheet
|
Sep-08
|
Sep-08
|
Jun-08
|
Sep-07
|
Sept. 2008 /
2007
|
Sept. / June
2008
|
|||||||||||||
|
|
US$ths
|
% Chg.
|
|||||||||||||||||
|
(Reclassified)
|
|||||||||||||||||||
|
Assets
|
|||||||||||||||||||
|
Cash
and balances from Central Bank
|
1,545,961
|
854,097
|
1,280,337
|
717,875
|
19.0
|
%
|
(33.3
|
)%
|
|||||||||||
|
Funds
to be cleared
|
930,083
|
513,843
|
487,591
|
339,009
|
51.6
|
%
|
5.4
|
%
|
|||||||||||
|
Financial
assets held for trading
|
1,612,884
|
891,070
|
893,938
|
879,302
|
1.3
|
%
|
(0.3
|
)%
|
|||||||||||
|
Investment
collateral under agreements to repurchase
|
15,938
|
8,805
|
11,697
|
39,192
|
(77.5
|
)%
|
(24.7
|
)%
|
|||||||||||
|
Derivatives
|
2,346,556
|
1,296,402
|
1,233,562
|
585,000
|
121.6
|
%
|
5.1
|
%
|
|||||||||||
|
Interbank
loans
|
137,591
|
76,015
|
150,406
|
182,051
|
(58.2
|
)%
|
(49.5
|
)%
|
|||||||||||
|
Loans,
net of reserves for loan losses
|
24,475,468
|
13,521,962
|
12,960,626
|
11,424,742
|
18.4
|
%
|
4.3
|
%
|
|||||||||||
|
Available-for-sale
financial assets
|
2,383,371
|
1,316,741
|
1,080,216
|
807,492
|
63.1
|
%
|
21.9
|
%
|
|||||||||||
|
Held-to-maturity
investments
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
Investments
in other companies
|
13,007
|
7,186
|
6,865
|
5,847
|
22.9
|
%
|
4.7
|
%
|
|||||||||||
|
Intangible
assets
|
125,860
|
69,534
|
61,458
|
52,883
|
31.5
|
%
|
13.1
|
%
|
|||||||||||
|
Fixed
assets
|
459,605
|
253,918
|
248,906
|
237,602
|
6.9
|
%
|
2.0
|
%
|
|||||||||||
|
Current
tax assets
|
22,218
|
12,275
|
17,824
|
1,451
|
746.0
|
%
|
(31.1
|
)%
|
|||||||||||
|
Deferred
tax assets
|
184,401
|
101,876
|
62,721
|
59,325
|
71.7
|
%
|
62.4
|
%
|
|||||||||||
|
Other
assets
|
1,209,648
|
668,294
|
593,297
|
428,116
|
56.1
|
%
|
12.6
|
%
|
|||||||||||
|
Total
Assets
|
35,462,592
|
19,592,018
|
19,089,444
|
15,759,887
|
24.3
|
%
|
2.6
|
%
|
|||||||||||
|
Liabilities
and Equity
|
|||||||||||||||||||
|
Total
non-interest bearing deposits
|
5,669,868
|
3,132,432
|
3,195,906
|
2,598,156
|
20.6
|
%
|
(2.0
|
)%
|
|||||||||||
|
Funds
to be cleared
|
558,121
|
308,345
|
297,611
|
194,630
|
58.4
|
%
|
3.6
|
%
|
|||||||||||
|
Investments
sold under agreements to repurchase
|
1,341,327
|
741,043
|
295,494
|
392,388
|
88.9
|
%
|
150.8
|
%
|
|||||||||||
|
Time
deposits and savings accounts
|
15,219,934
|
8,408,557
|
8,390,418
|
7,273,079
|
15.6
|
%
|
0.2
|
%
|
|||||||||||
|
Derivatives
|
2,031,928
|
1,122,579
|
1,081,784
|
568,580
|
97.4
|
%
|
3.8
|
%
|
|||||||||||
|
Deposits
from credit institutions
|
2,707,126
|
1,495,606
|
1,505,176
|
1,192,736
|
25.4
|
%
|
(0.6
|
)%
|
|||||||||||
|
Marketable
debt securities
|
4,294,150
|
2,372,389
|
2,405,006
|
1,891,697
|
25.4
|
%
|
(1.4
|
)%
|
|||||||||||
|
Other
obligations
|
184,622
|
101,998
|
138,185
|
118,870
|
(14.2
|
)%
|
(26.2
|
)%
|
|||||||||||
|
Current
tax liabilities
|
766
|
423
|
797
|
28,666
|
(98.5
|
)%
|
(46.9
|
)%
|
|||||||||||
|
Deferred
tax liability
|
102,978
|
56,892
|
23,549
|
4,271
|
1232.1
|
%
|
141.6
|
%
|
|||||||||||
|
Provisions
|
239,318
|
132,216
|
88,971
|
41,278
|
220.3
|
%
|
48.6
|
%
|
|||||||||||
|
Other
liabilities
|
396,463
|
219,034
|
293,351
|
88,061
|
148.7
|
%
|
(25.3
|
)%
|
|||||||||||
|
Total
Liabilities
|
32,746,600
|
18,091,514
|
17,716,248
|
14,392,412
|
25.7
|
%
|
2.1
|
%
|
|||||||||||
|
Equity
|
|||||||||||||||||||
|
Capital
|
1,481,592
|
818,535
|
818,535
|
761,853
|
7.4
|
%
|
0.0
|
%
|
|||||||||||
|
Reserves
|
241,514
|
133,429
|
89,057
|
99,437
|
34.2
|
%
|
49.8
|
%
|
|||||||||||
|
Unrealized
gain (loss) Available-for-sale financial assets
|
(56,481
|
)
|
(31,204
|
)
|
(45,900
|
)
|
(3,872
|
)
|
705.9
|
%
|
(32.0
|
)%
|
|||||||
|
Retained
Earnings:
|
0
|
0
|
0
|
-
|
|||||||||||||||
|
Retained
earnings previous periods
|
689,685
|
381,030
|
381,030
|
252,873
|
50.7
|
%
|
0.0
|
%
|
|||||||||||
|
Net
income
|
453,563
|
250,580
|
154,083
|
237,872
|
5.3
|
%
|
62.6
|
%
|
|||||||||||
|
Provision
for mandatory dividend
|
(136,069
|
)
|
(75,174
|
)
|
(46,225
|
)
|
0
|
62.6
|
%
|
||||||||||
|
Minority
Interest
|
42,189
|
23,308
|
22,616
|
19,312
|
20.7
|
%
|
3.1
|
%
|
|||||||||||
|
Total
Equity
|
2,715,992
|
1,500,504
|
1,373,196
|
1,367,475
|
9.7
|
%
|
9.3
|
%
|
|||||||||||
|
Total
Liabilities and Equity
|
35,462,590
|
19,592,018
|
19,089,444
|
15,759,887
|
24.3
|
%
|
2.6
|
%
|
|||||||||||
2007
figures have been re-categorized under the new format in order to make them
more
comparable, but the modification regarding minimum dividends has not been made
to historical shareholders’ equity.
Please
note that this information is provided for comparative purposes only and that
this re-categorization of line items may undergo further changes during the
year
and, therefore, historical figures, including financial ratios, presented in
this report may not be entirely comparable to future figures presented by the
Bank. Re-classified historical figures have not been audited.
In
this earnings report, 3Q07 and 2007 figures have suffered minor
reclassifications between line items compared to figures for these periods
presented in previous earnings reports. This affected mainly net gains from
financial transactions, other operating income and other operating
expenses.
|
Investor
Relations Department
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
|
21
ANNEX
2 : YTD INCOME STATEMENT
|
YTD Income Statement Unaudited
|
Sep-08
|
Sep-08
|
Sep-07
|
Sept. 2008 / 2007
|
|||||||||
|
US$ths.
|
Ch$ million nominal
|
% Chg.
|
|||||||||||
|
(reclassified)
|
|||||||||||||
|
Interest
revenue
|
2,752,599
|
1,520,728
|
1,119,110
|
35.9
|
%
|
||||||||
|
Interest
expense
|
(1,551,473
|
)
|
(857,142
|
)
|
(605,090
|
)
|
41.7
|
%
|
|||||
|
Net
interest revenue
|
1,201,125
|
663,586
|
514,021
|
29.1
|
%
|
||||||||
|
Fee
income
|
369,093
|
203,913
|
179,143
|
13.8
|
%
|
||||||||
|
Fee
expense
|
(69,223
|
)
|
(38,244
|
)
|
(31,888
|
)
|
19.9
|
%
|
|||||
|
Net
fee income
|
299,870
|
165,669
|
147,254
|
12.5
|
%
|
||||||||
|
Net
gains from mark-to-market and trading
|
309,539
|
171,011
|
75,294
|
127.1
|
%
|
||||||||
|
Exchange
differences, net
|
(184,211
|
)
|
(101,771
|
)
|
16,265
|
(725.7
|
)%
|
||||||
|
Financial
transactions, net
|
125,328
|
69,240
|
91,558
|
(24.4
|
)%
|
||||||||
|
Other
operating income
|
23,898
|
13,203
|
10,730
|
23.0
|
%
|
||||||||
|
Total
operating income
|
1,650,221
|
911,698
|
763,563
|
19.4
|
%
|
||||||||
|
Personnel
expenses
|
(271,558
|
)
|
(150,028
|
)
|
(125,945
|
)
|
19.1
|
%
|
|||||
|
Administrative
expenses
|
(222,464
|
)
|
(122,905
|
)
|
(112,762
|
)
|
9.0
|
%
|
|||||
|
Depreciation
and amortization
|
(69,851
|
)
|
(38,590
|
)
|
(30,407
|
)
|
26.9
|
%
|
|||||
|
Other
operating expenses
|
(59,661
|
)
|
(32,961
|
)
|
(19,016
|
)
|
73.3
|
%
|
|||||
|
Total
operating expenses
|
(623,533
|
)
|
(344,483
|
)
|
(288,131
|
)
|
19.6
|
%
|
|||||
|
Provision
expense
|
(368,220
|
)
|
(203,431
|
)
|
(151,537
|
)
|
34.2
|
%
|
|||||
|
Net
operating income
|
658,468
|
363,784
|
323,896
|
12.3
|
%
|
||||||||
|
Income
attributable to investments in other companies
|
1,913
|
1,057
|
(1,229
|
||||||||||