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
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Banco
Santander Chile
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Santander
Chile Bank
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(Translation
of Registrant’s Name into English)
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Bandera
140
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Santiago,
Chile
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(Address
of principal executive office)
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Indicate
by check mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F:
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Form 20-F
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x
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Form 40-F
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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):
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Yes
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o
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No
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x
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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)(7):
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Yes
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o
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No
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x
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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
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o
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No
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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
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Item
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1.
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First
Quarter 2009 Earnings Report (English)
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2.
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First
Quarter 2009 Financial Statements (Spanish)
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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.
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BANCO
SANTANDER-CHILE
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By:
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/s/
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Name:
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Gonzalo
Romero A.
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Title:
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General
Counsel
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Date: May
6, 2009
3
INDEX
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SECTION
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PAGE
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SECTION
1: SUMMARY OF RESULTS AND STRATEGY
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2
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SECTION
2: BALANCE SHEET
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6
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SECTION
3: ANALYSIS OF QUARTERLY INCOME STATEMENT
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10
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SECTION
4: CREDIT RISK RATINGS
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19
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SECTION
5: SHARE PERFORMANCE
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20
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SECTION
6: INSTITUTIONAL BACKGROUND
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21
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ANNEX
1: BALANCE SHEET
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22
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ANNEX
2: QUARTERLY INCOME STATEMENTS
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23
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ANNEX
3: QUARTERLY EVOLUTION OF MAIN RATIOS AND OTHER
INFORMATION
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24
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ANNEX
4: RESTATEMENT OF 2008 FIGURES: MAIN IMPACTS
ASSETS
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26
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ANNEX
5: RESTATEMENT OF 2008 FIGURES: MAIN IMPACTS LIABILITIES &
EQUITY
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27
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ANNEX
6: RESTATEMENT OF 2008 FIGURES: MAIN IMPACTS INCOME
STATEMENT
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28
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ANNEX
7: RESTATEMENT OF 2008 FIGURES: COMPANIES
CONSOLIDATED
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29
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Santiago,
Chile
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Robert
Moreno
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Tel:
(562) 320-8284
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Manager,
Investor Relations Department
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Fax:
(562) 671-6554
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Banco
Santander Chile
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Email:
rmorenoh@santander.cl
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Bandera
140 Piso 19,
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Website:
www.santander.cl
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Investor
Relations Department
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1
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Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax:
562-671-6554,
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||
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email:
rmorenoh@santander.cl
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SECTION 1: SUMMARY OF
RESULTS AND STRATEGY
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-
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Distributable
net income: 2008 historical net income which does not reflect new IFRS
accounting standards, but is net income that can be distributed as
dividends.
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-
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Restated
net income: 2008 net income re-stated to reflect the adoption of new
accounting standards in 2009.
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Operating income up 18.6% YoY in
1Q09
In 1Q09,
net income attributable to shareholders totaled Ch$76,652 million (Ch$0.41 per
share and US$0.72/ADR).
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 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 increased 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 grew
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.
Provision expense up 48% YoY
in 1Q09
In 1Q09,
the Bank’s net provision expense increased 48.0% YoY. This rise was driven
mainly by the increase in charge-offs, in line with the economic slowdown. As a
result of this ongoing effort, the Bank has been able to keep relatively stable
asset quality indicators in spite of the more difficult operational environment.
The expected loan loss ratio or risk index (Loan loss allowances / Total
loans) reached 2.01% as of March 2009 compared to 1.88% at year-end 2008 and
1.90% as of March 2009. This is a key asset quality indicator as it determines
the bank’s required level of reserves and provisions. The Bank is required to
set provisions according to it and to have 100% coverage of its risk index. The
past due loan ratio (Unpaid loans & installments >90 days / Total loans)
as of March 2009 reached 1.21% compared to 1.10% in 4Q 08 and 1.09% in March
2008. The coverage of past due loans (Loan loss allowance / Past due loans)
reached 166.2% as of March 2009.
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Investor
Relations Department
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2
|
|
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Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax:
562-671-6554,
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||
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email:
rmorenoh@santander.cl
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Operating income net of
provisions increases 10.0% YoY in 1Q09
In
summary, operating income, net of provision expense, increased 10.0% YoY in
1Q09. The strategy of focusing on selective loan growth, improving funding and
spreads, strengthening capital, and actively managing the balance sheet offset
the negative effects of deflation and rising credit risks.
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Ch$bn
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1Q09
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YoY Chg.
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||||||
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Client
net interest income
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248 | 11.3 | % | |||||
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Fee
income
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62 | 5.2 | % | |||||
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Core
client revenue
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310 | 10.1 | % | |||||
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Non-client
net int. income
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(61 | ) | 75.0 | % | ||||
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Financial
transactions + other op. income
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71 | 205.1 | % | |||||
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Operating
income
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320 | 18.6 | % | |||||
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Provision
expense
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(91 | ) | 48.0 | % | ||||
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Operating
income net of prov.
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229
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10.0 | % | |||||
Cost kept under control.
Efficiency ratio improves to 34.5% in 1Q 09
The
growth rate of operating expenses was curbed in the quarter. Operating expenses
increased 2.8% YoY in 1Q09 compared to the 18.6% rise in operating income. As a
result, the efficiency ratio reached 34.5% in 1Q09, improving from 36.6% in
1Q08. We have the highest level of efficiency among the larger banks in Chile
and among the best in emerging markets.
Santander Chile adopts
international accounting standards
In 2009,
the Bank adopted accounting standards in line with international standards
(IFRS). Historical figures in the rest of this report have been re-stated to
make them more comparable. The main difference compared to previous accounting
standards was the elimination of price level restatement, a non cash expense
related to the level of inflation. Compared to re-stated net income, 1Q09 net
income decreased 10.9% YoY. For a more detail description of the changes made to
2008 figures, please see Annexes 4-7.
ROAE reached 20.2% in 1Q
09
On a
comparable distributable basis, that is, compared to the 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%.
Focus on selective loan
growth. Loan volumes negatively affected by translation
losses
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.
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Investor
Relations Department
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3
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|
|
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax:
562-671-6554,
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||
|
email:
rmorenoh@santander.cl
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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.
This outcome was a result, among other things, due to the translations losses
produced by the deflationary environment and the appreciation of the Chilean
peso.
The loan to deposit and
capital ratios remains healthy at 96.5% in
1Q09
As of
March 31, 2009, Santander Chile’s loan to deposit ratio (excluding the portion
of mortgage loans funded through bonds) reached a healthy 96.5% in 1Q09. As of
March 2009, 70% of our total liabilities were core funds (defined as retail
deposits, long-term institutional deposits and long-term bonds). This clearly
reflects our strategic objective of maintaining healthy liquidity and a strong
funding base.
The
Bank’s capitalization ratios improved in the quarter. As of March 31, 2009, the
Bank’s BIS ratio reached a solid level of 15.0% with a Tier I ratio of 11.0%. It
is important to point out, that voting common shareholders’ equity is the sole
component of our Tier I capital. This is in line with our strategic objective of
maintaining a strong core capital base.
The Bank’s credit risk
rating were upgraded in the quarter
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 Latin America.
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Investor
Relations Department
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4
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|
|
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax:
562-671-6554,
|
||
|
email:
rmorenoh@santander.cl
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Banco Santander Chile:
Summary of Quarterly Results
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Quarter
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% Chg.
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|||||||||||
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(Ch$ million)
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1Q09
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1Q08
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1Q09/1Q08
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|||||||||
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Net
interest income
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187,273 | 188,006 | (0.4 | )% | ||||||||
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Fee
income
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61,631 | 58,595 | 5.2 | % | ||||||||
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Core
revenues
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248,904 | 246,601 | 0.9 | % | ||||||||
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Financial
transactions, net
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68,815 | 13,359 | 415.1 | % | ||||||||
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Other
operating income
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2,498 | 10,015 | (75.1 | )% | ||||||||
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Total
operating income
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320,217 | 269,975 | 18.6 | % | ||||||||
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Provision
expense
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(90,934 | ) | (61,454 | ) | 48.0 | % | ||||||
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Operating
income net of provisions
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229,283 | 208,521 | 10.0 | % | ||||||||
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Operating
expenses
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(98,288 | ) | (95,615 | ) | 2.8 | % | ||||||
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Other
op. expenses
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(35,531 | ) | (8,631 | ) | 311.7 | % | ||||||
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Net
operating income
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95,464 | 104,275 | (8.4 | )% | ||||||||
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Net
income
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79,531 | 88,586 | (10.2 | )% | ||||||||
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Minority
interest
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2,879 | 2,589 | 11.2 | % | ||||||||
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Net
income attributable to shareholders
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76,652 | 85,997 | (10.9 | )% | ||||||||
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Net
income/share (Ch$)
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0.41 | 0.46 | (10.9 | )% | ||||||||
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Net
income/ADR (US$)1
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0.73 | 1.08 | (32.8 | )% | ||||||||
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Total
loans
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13,985,677 | 12,421,004 | 12.6 | % | ||||||||
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Customer
funds
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14,855,094 | 13,849,629 | 7.3 | % | ||||||||
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Shareholders’
equity
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1,543,040 | 1,329,122 | 16.1 | % | ||||||||
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Net
interest margin
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4.8 | % | 5.6 | % | ||||||||
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Efficiency
ratio
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34.5 | % | 36.6 | % | ||||||||
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Return
on average equity2
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20.2 | % | 25.6 | % | ||||||||
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PDL
/ Total loans
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1.2 | % | 1.1 | % | ||||||||
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Coverage
ratio of PDLs
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166.2 | % | 174.7 | % | ||||||||
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Expected
loss3
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2.0 | % | 1.9 | % | ||||||||
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BIS
ratio
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15.0 | % | 13.3 | % | ||||||||
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Branches
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501 | 496 | ||||||||||
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ATMs
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1,929 | 1,989 | ||||||||||
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1.
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The
change in earnings per ADR may differ from the change in earnings per
share due to the exchange rate.
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2.
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Annualized
Quarterly Earnings / Average
Equity.
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3.
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Allowance
for loan losses / Total loans. Based on internal credit models and SBIF
guidelines. Banks must have a 100% coverage of expected
loss
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2008 figures have been
restated in accordance with the new accounting standards adopted by Chilean
banks in 2009. Please note that this information is provided for comparative
purposes only and that this restatement 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. See Annex 4-7 for an explanation of how figures were
restated.
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Investor
Relations Department
|
5
|
|
|
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax:
562-671-6554,
|
||
|
email:
rmorenoh@santander.cl
|
SECTION 2: BALANCE
SHEET
LOANS
Focus
on selective loan growth. Loan volumes negatively affected by translation
losses
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Loans
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Quarter ended,
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% Change
|
||||||||||||||||||
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(Ch$ million)
|
Mar-09
|
Dec-08
(restated)
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Mar-08
(restated)
|
Mar. 09 / 08
|
Mar. 09 /
Dec. 08
|
|||||||||||||||
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Total
loans to individuals
|
6,115,175 | 6,229,521 | 5,612,830 | 8.9 | % | (1.8 | )% | |||||||||||||
|
Consumer
loans
|
2,187,832 | 2,248,996 | 2,158,563 | 1.4 | % | (2.7 | )% | |||||||||||||
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Residential
mortgage loans
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3,927,343 | 3,980,525 | 3,454,267 | 13.7 | % | (1.3 | )% | |||||||||||||
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SMEs
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2,385,720 | 2,471,356 | 2,201,005 | 8.4 | % | (3.5 | )% | |||||||||||||
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Institutional
lending
|
254,565 | 234,824 | 218,018 | 16.8 | % | 8.4 | % | |||||||||||||
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Middle-Market
& Real Estate
|
2,727,232 | 2,895,035 | 2,516,708 | 8.4 | % | (5.8 | )% | |||||||||||||
|
Corporate
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1,656,772 | 2,083,141 | 1,500,669 | 10.4 | % | (20.5 | )% | |||||||||||||
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Total
loans 1,2
|
13,985,677 | 14,585,554 | 12,421,004 | 12.6 | % | (4.1 | )% | |||||||||||||
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1
|
Includes
past due loans in each category and other non-segmented
loans.
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2
|
Excludes
allowance for loan losses and interbank
loans
|
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.
On the
retail side, total loans to individuals decreased 1.8% QoQ and increased 8.9%
YoY. In terms of products, consumer loans decreased 2.7% QoQ and have increased
1.4% YoY. Residential mortgage lending has decreased 1.3% QoQ and
increased 13.7% YoY. Adjusting for deflation, residential mortgage loans have
expanded by 0.9% QoQ and 16.3% 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, representing 56.4% of total lending to individuals compared to 48% in
1Q08. In the mass consumer market volumes decreased 10.4% QoQ and 25.3%
YoY.
|
Investor
Relations Department
|
6
|
|
|
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax:
562-671-6554,
|
||
|
email:
rmorenoh@santander.cl
|
On the
corporate side, lending volumes were also affected by the negative inflation and
the appreciation of the currency. Loans 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. As stated in
our latest earning report, the Bank experienced strong loan growth in the
corporate sectors during 4Q08, as alternative sources of borrowing were
constrained both internationally and locally. In 1Q09, this situation began to
normalize with an important rise in local bond issues and a normalization of
spreads. The Bank has kept its focus on profitability throughout this period and
continues to be centered on the whole pool of revenues generated by these
clients, which to a large extent comes from non-lending activities.
FINANCIAL
INVESTMENTS
|
Financial investments
|
Quarter
|
Change %
|
||||||||||||||||||
|
(Ch$ million)
|
Mar-09
|
Dec-08
(restated)
|
Mar-08
(restated)
|
Mar. 09 / 08
|
Mar. 09 /
Dec. 08
|
|||||||||||||||
|
Financial
assets held for trading
|
940,357 | 1,166,426 | 715,729 | 31.4 | % | (19.4 | )% | |||||||||||||
|
Available-for-sale
financial assets
|
1,276,382 | 1,580,240 | 1,457,900 | (12.5 | )% | (19.2 | )% | |||||||||||||
|
Total
financial investments
|
2,216,739 | 2,746,666 | 2,173,629 | 2.0 | % | (19.3 | )% | |||||||||||||
The
financial investment portfolio decreased 19.3% QoQ and increased 2.0% YoY in
1Q09. The Bank’s fixed income portfolio is comprised mainly of liquid Chilean
Central Bank bonds. In 4Q08, the Bank increased its bond portfolio: (1) as a
source of liquidity after a strong inflow of deposits and the tightening of
lending and (2) in anticipation of lower inflation and interest rate levels in
1Q09, as a way to hedge our results in that scenario. As interest rates
decreased and financial markets improved, the Bank sold fixed income
instruments. At the same time, the negative inflation rates in the quarter also
had a positive effect on the unrealized gains from the mark-to-market of our
fixed income securities portfolio.
|
Investor
Relations Department
|
7
|
|
|
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax:
562-671-6554,
|
||
|
email:
rmorenoh@santander.cl
|
FUNDING
Stable
evolution of customer funds
|
Customer funds
|
Quarter
|
Change %
|
||||||||||||||||||
|
(Ch$ million)
|
Mar-09
|
Dec-08
(restated)
|
Mar-08
(restated)
|
Mar. 09 / 08
|
Mar. 09 /
Dec. 08
|
|||||||||||||||
|
Non-interest
bearing deposits
|
3,092,010 | 2,949,757 | 2,772,568 | 11.5 | % | 4.9 | % | |||||||||||||
|
Time
deposits
|
8,677,857 | 9,756,266 | 8,407,623 | 3.2 | % | (11.1 | )% | |||||||||||||
|
Total
customer deposits
|
11,769,867 | 12,706,023 | 11,180,191 | 5.3 | % | (7.4 | )% | |||||||||||||
|
Mutual
funds
|
3,085,227 | 2,199,222 | 2,669,438 | 15.6 | % | 40.3 | % | |||||||||||||
|
Total
customer funds
|
14,855,094 | 14,905,245 | 13,849,629 | 7.3 | % | (0.3 | )% | |||||||||||||
|
Loans
/ Deposits*
|
96.5 | % | 93.9 | % | 91.4 | % | ||||||||||||||
* (Loans
- marketable securities that fund mortgage portfolio) / (Time
deposits + demand deposits)
Customer
funds remained stable QoQ and increased 7.3% YoY. In 1Q09, as financial markets
in Chile started to normalize following the higher volatility of 4Q08, the Bank
liberated some of its excess liquidity position. In order to do so, it reduced
its most expensive time deposits and funneled those funds to money market funds
which generate a higher spread for the Bank via fee income. The reduction in
interest rates also explains the shift of client funds from time deposits to
short-term fixed income mutual funds. As a consequence, time deposits decreased
11.1% QoQ and mutual funds under management rose 40.3% QoQ. The Bank’s balance
of non-interest bearing demand deposits increased 4.8% QoQ and 11.5% YoY and the
average balance of demand deposits decreased 1.9% QoQ and increased 5.2%
YoY.
As of
March 31, 2009, Santander Chile’s loan to deposit ratio (excluding portion of
mortgage loan funded through bonds) reached a healthy 96.5% at March 2009. At
the same date, 70% of our total liabilities were core funds (defined as retail
deposits, long-term institutional deposits and long-term bonds). This clearly
reflects our strategic objective of maintaining healthy liquidity and a strong
funding base.
|
Investor
Relations Department
|
8
|
|
|
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax:
562-671-6554,
|
||
|
email:
rmorenoh@santander.cl
|
SHAREHOLDERS’ EQUITY AND
REGULATORY CAPITAL
BIS
ratio reaches 15.0% as of March 2009 with a Tier I ratio of 11.0%
|
Shareholders' Equity
|
Quarter
|
Change %
|
||||||||||||||||||
|
(Ch$ million)
|
Mar-09
|
Dec-08
(restated)
|
Mar-08
(restated)
|
Mar. 09 / 08
|
Mar. 09 /
Dec. 08
|
|||||||||||||||
|
Capital
|
891,303 | 891,303 | 818,535 | 8.9 | % | 0.0 | % | |||||||||||||
|
Reserves
|
(16,960 | ) | (123,727 | ) | (20,618 | ) | (17.7 | )% | (86.3 | )% | ||||||||||
|
Unrealized
gain (loss) Available-for-sale financial assets
|
(7,856 | ) | (7,552 | ) | (21,155 | ) | (62.9 | )% | 4.0 | % | ||||||||||
|
Retained
Earnings:
|
676,553 | 729,664 | 552,360 | 22.5 | % | (7.3 | )% | |||||||||||||
|
Retained
earnings previous periods
|
721,340 | 413,053 | 581,652 | 24.0 | % | 74.6 | % | |||||||||||||
|
Net
income
|
76,652 | 415,055 | 85,997 | (10.9 | )% | (81.5 | )% | |||||||||||||
|
Provision
for mandatory dividends
|
(121,439 | ) | (98,444 | ) | (115,288 | ) | ||||||||||||||
|
Minority
Interest
|
28,403 | 25,879 | 20,679 | 37.4 | % | 9.8 | % | |||||||||||||
|
Total
Equity
|
1,571,443 | 1,515,567 | 1,349,802 | 16.4 | % | 3.7 | % | |||||||||||||
|
Equity
attributable to shareholders
|
1,543,040 | 1,489,688 | 1,329,123 | 16.1 | % | 3.6 | % | |||||||||||||
The
Bank’s capitalization ratios improved in the quarter. As of March 31, 2009, the
Bank’s BIS ratio reached a solid level of 15.0% with a Tier I ratio of 11.0%. It
is important to point out, that voting common shareholders’ equity is the sole
component of our Tier I capital. This is in line with our strategic
objective of focusing on liquidity, funding and capital. Shareholders’ equity
totaled Ch$1,543,040 million (US$2.6 billion) as of March 31, 2009. ROAE in 1Q09
reached 20.2%. In 2009, and in line with IFRS standards being adopted by Chilean
banks, the Bank’s year-end 2008 equity was restated. The main changes were: (i)
the restatement for 2008 earnings, in which the main impact will be the reversal
of 2008 price level restatement and (ii) the revaluation of fixed assets. This
has an impact of Ch$87,042 million charged directly against equity on January 1,
2009. For a detailed description of the impacts of IFRS on equity
please see Annexes 4-7.
|
Capital Adequacy*
|
Quarter ended
|
Change %
|
||||||||||||||||||
|
(Ch$ million)
|
Mar-09
|
Dec-08
|
Mar-08
|
Mar. 09 / 08
|
Mar. 09 /
Dec. 08
|
|||||||||||||||
|
Tier
I (Core Capital)
|
1,543,039 | 1,578,043 | 1,398,183 | 10.4 | % | (2.2 | )% | |||||||||||||
|
Tier
II
|
560,232 | 588,657 | 415,905 | 34.7 | % | (4.8 | )% | |||||||||||||
|
Regulatory
capital
|
2,103,271 | 2,166,700 | 1,814,088 | 15.9 | % | (2.9 | )% | |||||||||||||
|
Risk
weighted assets
|
13,979,591 | 15,710,202 | 13,593,098 | 2.8 | % | (11.0 | )% | |||||||||||||
|
Tier
I ratio
|
11.0 | % | 10.0 | % | 10.3 | % | ||||||||||||||
|
BIS
ratio
|
15.0 | % | 13.8 | % | 13.3 | % | ||||||||||||||
* Figures
for 2008 are not restated with new accounting standards.
In April
2009, the Bank will pay its annual dividend of Ch$1.13/share, equivalent to 65%
of 2008 earnings (not restated) attributable to shareholders. At the record date
in Chile, the dividend yield was 6.3%. All else equal, the Bank’s BIS ratio post
dividend will be approximately 14.2%.
|
Investor
Relations Department
|
9
|
|
|
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax:
562-671-6554,
|
||
|
email:
rmorenoh@santander.cl
|
SECTION 3: ANALYSIS OF
QUARTERLY INCOME STATEMENT
NET INTEREST
INCOME
Client
net interest income increases 11.3% YoY. Deflation in the quarter hurts
non-client margins.
|
Net Interest Income /
Margin
|
Quarter
|
Change %
|
||||||||||||||||||
|
(Ch$ million)
|
1Q09 |
4Q08
(Restated)
|
1Q08
(Restated)
|
1Q09/1Q08
|
1Q09/4Q08
|
|||||||||||||||
|
Client
net interest income 1
|
247,889 | 274,900 | 222,643 | 11.3 | % | (9.8 | )% | |||||||||||||
|
Non-client
net interest income 2
|
(60,615 | ) | (42,697 | ) | (34,637 | ) | 75.0 | % | 42.0 | % | ||||||||||
|
Net
interest income
|
187,273 | 232,203 | 188,006 | (0.4 | )% | (19.3 | )% | |||||||||||||
|
Average
interest-earning assets
|
15,742,285 | 15,959,439 | 13,539,003 | 16.3 | % | (1.4 | )% | |||||||||||||
|
Average
loans
|
14,312,882 | 14,295,443 | 12,277,279 | 16.6 | % | 0.1 | % | |||||||||||||
|
Net
interest margin (NIM) 3
|
4.8 | % | 5.8 | % | 5.6 | % | ||||||||||||||
|
Avg.
equity + non-interest bearing demand deposits / Avg. interest earning
assets
|
28.4 | % | 27.8 | % | 30.7 | % | ||||||||||||||
|
Quarterly
inflation rate 4
|
(2.30 | )% | 2.21 | % | 1.02 | % | ||||||||||||||
|
Avg.
overnight interbank rate (nominal)
|
5.49 | % | 8.24 | % | 6.22 | % | ||||||||||||||
|
Avg.
10 year Central Bank yield (real)
|
2.60 | % | 3.22 | % | 2.84 | % | ||||||||||||||
|
1.
|
Client
net interest income and margins, is net interest income (and margins)
generated by our commercial areas.
|
|
2.
|
Non-client
net interest income is net interest income generated by centralized
activities, non-segmented portions of the balance sheet and Financial
Management.
|
|
3.
|
Annualized.
|
|
4.
|
Inflation
measured as the variation of the Unidad de Fomento in the
quarter.
|
In 1Q09
net interest income was flat YoY. The negative inflation rates in the quarter
placed pressure on the Bank’s net interest margin, as the Bank has more assets
than liabilities linked to inflation. As a result, the Bank’s net interest
margin reached 4.8% in the quarter 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.
In order
to understand the underlying trends of our net interest income, we break these
revenues between Client net interest income, which is net interest income (and
margins) generated by our commercial areas, and Non-client interest
income.
|
Investor
Relations Department
|
10
|
|
|
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax:
562-671-6554,
|
||
|
email:
rmorenoh@santander.cl
|
Client net interest income.
Client net interest income increased
11.3% YoY in 1Q09. This growth was led by the 16.3% YoY increase in average
loans. In the quarter, the Bank continued to focus on increasing spreads to
defend profitability and margins in a negative inflationary environment.
Compared to our main competitors, the Bank maintains the highest margins and
experienced the lowest YoY reduction in net interest income in the period. This
positive evolution of client net interest income was partially offset by growth
in the less riskier, but lower yielding corporate and high-end individual
segments and a lower spread earned over the Bank’s equity and free funds as
interest rates descended.
Source:
SBIF as of March 2009. Industry excludes Santander Chile
Non-Client net interest
income. Non-client net interest income, which is net interest income
generated by centralized activities, non-segmented portions of the balance sheet
and Financial Management - totaled a loss of Ch$60,615 million increasing 75.0%
YoY. The QoQ rise of this loss was mainly due to the negative inflation rate in
the quarter. The Bank maintains long-term assets (mainly medium and long-term
financial investments) that are denominated in Unidades de Fomento (UFs), an
inflation indexed unit, which are partially funded with nominal or non-interest
bearing peso short-term deposits. Deflation has a negative impact on net
interest income and margins as the Bank maintains a positive gap between assets
and liabilities indexed to inflation. This situation was partially offset by
client activities and an active management of the asset and liability mix. The
negative inflation rates in the quarter hurt margins, but on the other hand, had
a positive effect on the realized and unrealized gains from the mark-to-market
of our fixed income securities portfolio that had been increased to hedge our
results in anticipation of lower inflation levels. The reduction of our fixed
income portfolio also reduced our positive UF gap and, therefore, the impact of
deflation on margins (See Financial investments and the results from Financial
transactions, net).
The 19.3%
QoQ decrease in net interest income was mainly due to the lower quarterly
inflation rates and the negative impact over the profitability of our free funds
in a lower rate environment.
|
Investor
Relations Department
|
11
|
|
|
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax:
562-671-6554,
|
||
|
email:
rmorenoh@santander.cl
|
PROVISION FOR LOAN
LOSSES
Net
provision expense rises as the economy slows down
|
Provision for loan losses
|
Quarter
|
Change %
|
||||||||||||||||||
|
(Ch$ million)
|
1Q09 |
4Q08
(Restated)
|
1Q08
(Restated)
|
1Q09/1Q08
|
1Q09/4Q08
|
|||||||||||||||
|
Gross
provisions
|
(6,098 | ) | (17,317 | ) | (14,104 | ) | (56.8 | )% | (64.8 | )% | ||||||||||
|
Charge-offs
|
(93,733 | ) | (75,984 | ) | (57,570 | ) | 62.8 | % | 23.4 | % | ||||||||||
|
Gross
provisions and charge-offs
|
(99,831 | ) | (93,301 | ) | (71,674 | ) | 39.3 | % | 7.0 | % | ||||||||||
|
Loan
loss recoveries
|
8,897 | 9,722 | 10,220 | (12.9 | )% | (8.5 | )% | |||||||||||||
|
Net
provisions for loan losses
|
(90,934 | ) | (83,579 | ) | (61,454 | ) | 48.0 | % | 8.8 | % | ||||||||||
|
Total
loans
|
13,985,677 | 14,585,554 | 12,421,004 | 12.6 | % | (4.1 | )% | |||||||||||||
|
Total
reserves (RLL)
|
(281,265 | ) | (274,205 | ) | (236,454 | ) | 19.0 | % | 2.6 | % | ||||||||||
|
Past
due loans1
(PDL)
|
169,220 | 160,824 | 135,354 | 25.0 | % | 5.2 | % | |||||||||||||
|
Non-performing
loans (NPLs)2
|
392,802 | — | — | — | — | |||||||||||||||
|
Gross
provision expense / Loans
|
2.86 | % | 2.56 | % | 2.31 | % | ||||||||||||||
|
Cost
of credit3
|
2.60 | % | 2.29 | % | 1.98 | % | ||||||||||||||
|
Expected
loss (RLL / Total loans)
|
2.01 | % | 1.88 | % | 1.90 | % | ||||||||||||||
|
PDL
/ Total loans
|
1.21 | % | 1.10 | % | 1.09 | % | ||||||||||||||
|
Coverage
of PDLs4
|
166.2 | % | 170.5 | % | 174.7 | % | ||||||||||||||
|
NPLs
/ total loans
|
2.81 | % | ||||||||||||||||||
|
Coverage
of NPLs5
|
471.7 | % | ||||||||||||||||||
|
1
|
PDLs:
Past due loans: installments or credit lines more than 90 days
overdue.
|
|
2
|
NPLs:
Capital + future interest of all loans with one installment 90 days or
more overdue.
|
|
3
|
Cost
of credit: Net provision expense / loans
annualized.
|
|
4
|
Coverage
of PDLs:
RLL / PDLs
|
|
5
|
Coverage
NPLs: (RLL + Equity) /
NPLs
|
In 1Q09,
the Bank’s net provision expense increased 48.0% YoY. This rise was driven
mainly by the increase in charge-offs caused by the economic slowdown. By loan
product, the most important rise in net provision expense was in the commercial
loan portfolio. The expected loss of this portfolio has been rising, following
various years of low credit risk and provisioning levels.
|
Provision for loan losses by loan
product
|
Quarter
|
Change %
|
||||||||||||||||||
|
(Ch$ million)
|
1Q09
|
4Q08
|
1Q08
|
1Q09/1Q08
|
1Q09/4Q08
|
|||||||||||||||
|
Net
provisions commercial loans1
|
(12,941 | ) | (11,787 | ) | (2,170 | ) | 496.4 | % | 9.8 | % | ||||||||||
|
Net
provisions res. mortgage loans
|
(5,403 | ) | (3,534 | ) | (2,782 | ) | 94.3 | % | 52.9 | % | ||||||||||
|
Net
provisions consumer loans
|
(72,590 | ) | (68,258 | ) | (56,502 | ) | 28.5 | % | 6.3 | % | ||||||||||
|
Net
provisions for loan losses
|
(90,934 | ) | (83,579 | ) | (61,454 | ) | 48.0 | % | 8.8 | % | ||||||||||
|
1
|
Includes
net provision expenses for interbank loans off-balance sheet contingent
operations.
|
In 1Q09,
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 and the Bank continues with its aggressive charge-off
policy to maintain healthy asset quality indicators. At the same time, during
1Q09 the Bank implemented a series of additional measures to control asset
quality. The weighting of recoveries and other preventive measures to control
asset quality in commercial teams’ variable incentives has been increased to
around 50%. Commercial teams at the branch level are now responsible for the
performing portion of their loan book and the first 89 days of their
non-performing portfolios. Previously, commercial teams were only directly
involved in the collection process in the initial 30 days of non-performance and
for then on NPLs were managed by the collections department. Despite these
measures, we still believe there is a risk that asset quality will further
deteriorate and provision expense will continue to expand.
|
Investor
Relations Department
|
12
|
|
|
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax:
562-671-6554,
|
||
|
email:
rmorenoh@santander.cl
|
The
expected loan loss ratio or risk index (Loan loss allowances / Total
loans), which is a ratio that measures how much the Bank expects to loose on its
loan book according to its internal models and the Superintendency of Banks of
Chile guidelines, reached 2.01% as of March 2009 compared to 1.88% at year-end
2008 and 1.90% as of March 2009. This is a key asset quality indicator as it
determines the bank’s required level of reserves and provisions. The Bank is
required to have 100% coverage of its risk index.
Concerning
other risk metrics, the past due loan ratio (Unpaid loans & installments
>90 days / Total loans) as of March 2009 reached 1.21% compared to 1.10% in
4Q 08 and 1.09% in March 2008. The coverage of past due loans (Loan loss
allowance / Past due loans) reached 166.2% as of March 2009.
In 2009,
and in line with IFRS standards, banks will publish an additional asset quality
indicator, Non-performing Loans (NPLs), that includes not only the
overdue portion of a loan, but also the entire performing balance and future
interest payments. This new definition does not affect the Bank’s provisioning
levels, which are determined by the expected loss indicators, as discussed. As
of March 2009, the ratio of NPLs to total loans reached 2.81%. The coverage of
NPLs - measured as Loan loss reserves plus equity over NPLs - reached 471.7% in
1Q09.
Note: NPL
figures for 2008 are estimated based on Spanish GAAP definitions.
|
Investor
Relations Department
|
13
|
|
|
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax:
562-671-6554,
|
||
|
email:
rmorenoh@santander.cl
|
NET FEE
INCOME
Focus
on cross-selling and increasing transactions
|
Fee Income
|
Quarter
|
Change %
|
||||||||||||||||||
|
(Ch$ million)
|
1Q09
|
4Q08
(Restated)
|
1Q08
(Restated)
|
1Q09/1Q08
|
1Q09/4Q08
|
|||||||||||||||
|
Checking
accounts & lines of credit
|
15,995 | 17,558 | 13,873 | 15.3 | % | (8.9 | )% | |||||||||||||
|
Collection
fees
|
15,365 | 14,139 | 15,415 | (0.3 | )% | 8.7 | % | |||||||||||||
|
Credit,
debit & ATM card fees
|
12,014 | 11,676 | 11,245 | 6.8 | % | 2.9 | % | |||||||||||||
|
Guarantees,
pledges and other contingent operations
|
6,216 | 5,084 | 3,812 | 63.1 | % | 22.3 | % | |||||||||||||
|
Asset
management
|
6,144 | 5,853 | 7,153 | (14.1 | )% | 5.0 | % | |||||||||||||
|
Insurance
brokerage
|
3,328 | 3,619 | 3,500 | (4.9 | )% | (8.0 | )% | |||||||||||||
|
Fees
from brokerage and custody of securities
|
1,263 | 977 | 1,497 | (15.6 | )% | 29.3 | % | |||||||||||||
|
Other
Fees
|
1,306 | 3,196 | 2,100 | (37.8 | )% | (59.1 | )% | |||||||||||||
|
Total
fees
|
61,631 | 62,102 | 58,595 | 5.2 | % | (0.8 | )% | |||||||||||||
Net fee
income increased 5.2% YoY in 1Q09. The YoY grow of fees 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. Fee
income from lines of credit is expected to decline throughout 2009 due to
regulatory changes that prohibits certain fees charged for unauthorized
overdrafts commencing in 2Q09.
Fees from
credit, debit and ATM cards increased 6.8% YoY. The usage of electronic means of
payments continues to steadily grow in Chile, especially the usage of credit
cards and ATMs. 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.
The Bank’s market share in acquisitions using debit cards reached 24.1% in 1Q09.
Going forward there will be regulatory changes limiting fees charged on
purchases made in installments using credit cards.
The
change to IFRS has an important change in the level of collection fees. The Bank
must now consolidate its outsourced collection entities and the income earned
from collection fees they charged for recovering loans is now consolidated into
the Bank (as well as the operating costs of these companies and headcount).
Collection fees in 1Q09 totaled Ch$15,365 million, decreasing 0.3% YoY. The main
driver of fee growth in this line item is the collection of loan insurance
policies on behalf of third parties.
Fees from
guarantees, pledges and other contingent operations increased 63.1% YoY, mainly
driven by growth of fees from stand-by letters of credit.
|
Investor
Relations Department
|
14
|
|
|
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax:
562-671-6554,
|
||
|
email:
rmorenoh@santander.cl
|
Asset
management fees decreased 14.1% YoY in the quarter mainly due to the shift in
the mix of funds managed away from higher yielding equity funds to lower
yielding money market funds. Compared to 4Q08, fees from asset management were
up 5.0% as funds under management increased 40.3% QoQ, reflecting the recovery
of both equity and money market funds, following the sharp decline experienced
in 4Q08.
Insurance
brokerage fees decreased 4.9% YoY in 1Q09. The lower growth of retail lending
negatively affects the brokerage of property and casualty
insurance.
Fees
securities brokerage and custody increased 29.3% QoQ as security brokerage fees
recovered following a sharp decline in volumes traded in 4Q08. Despite this
recovery, security brokerage volumes are still below 1Q08 levels and hence, the
15.6% YoY decline in this fee item.
Other
fees which totaled Ch$1,306 million were negatively affected by a one-time fees
expense of Ch$700 million recognized in the quarter.
|
Investor
Relations Department
|
15
|
|
|
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax:
562-671-6554,
|
||
|
email:
rmorenoh@santander.cl
|
OPERATING EXPENSES AND
EFFICIENCY
The
Bank continues to tighten cost control. Efficiency reached 34.5% in the
quarter
|
Operating Expenses
|
Quarter
|
Change %
|
||||||||||||||||||
|
(Ch$ million)
|
1Q09
|
4Q08
(Restated)
|
1Q08
(Restated)
|
1Q09/1Q08
|
1Q09/4Q08
|
|||||||||||||||
|
Personnel
expenses
|
(54,394 | ) | (67,547 | ) | (53,808 | ) | 1.1 | % | (19.5 | )% | ||||||||||
|
Administrative
expenses
|
(33,448 | ) | (32,605 | ) | (30,694 | ) | 9.0 | % | 2.6 | % | ||||||||||
|
Depreciation
and amortization
|
(10,446 | ) | (11,193 | ) | (11,113 | ) | (6.0 | )% | (6.7 | )% | ||||||||||
|
Operating
expenses
|
(98,288 | ) | (111,345 | ) | (95,615 | ) | 2.8 | % | (11.7 | )% | ||||||||||
|
Efficiency
ratio*
|
34.5 | % | 36.0 | % | 36.0 | % | ||||||||||||||
|
*
|
Operating
expenses / Operating income. Operating income = Net interest
income + Net fee income+ Financial transactions net + other operating
income and expenses.
|
The
growth rate of operating expenses was curbed in the quarter. In 1Q09, the
efficiency ratio reached 34.5% compared to 36.0% in 4Q08 and 1Q08. Operating
expenses increased 2.8% YoY in 1Q09. Personnel expenses increased 1.1% YoY in
1Q09. This positive evolution of personnel expenses was mainly due to the
deceleration of inflation and lower variable incentives.
The
growth rate of administrative expenses was also controlled in the quarter, as
the Bank has been limiting the opening of new branches. Administrative expenses
in 1Q09 increased 9.0% YoY. The rise was mainly due to higher rent that adjusts
with yearly inflation rates which as of March was approximately 5%. Since
approximately 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 existing network. As of March 2009, the Bank’s
distribution network totaled 501 offices (including the branches of the sales
force and collections services) and decreased 1.2% compared to year-end 2008.
The ATM network decreased 1.5% QoQ, totaling 1,929 ATMs.
Stable
evolution of distribution network
|
Investor
Relations Department
|
|
|
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
|
16
|
|
email:
rmorenoh@santander.cl
|
NET RESULTS FROM FINANCIAL
TRANSACTIONS
Positive
results from client and non-client related treasury activities mitigates
negative effects of deflation
|
Net Result from Financial
Transactions
|
Quarter
|
Change %
|
||||||||||||||||||
|
(Ch$ million)
|
1Q09 |
4Q08
(Restated)
|
1Q08
(Restated)
|
1Q09/1Q08
|
1Q09/4Q08
|
|||||||||||||||
|
Net
gains from mark-to-market and trading
|
19,429 | 102,222 | (88,622 | ) | (121.9 | )% | (81.0 | )% | ||||||||||||
|
Exchange
differences, net
|
49,386 | (85,271 | ) | 101,981 | (51.6 | )% | (157.9 | )% | ||||||||||||
|
Net
results from financial transactions
|
68,815 | 16,951 | 13,359 | 415.1 | % | 306.0 | % | |||||||||||||
|
Avg.
10 year Central Bank yield (real)
|
2.60 | % | 3.22 | % | 2.84 | % | ||||||||||||||
|
Avg.
10 year Central Bank yield (nominal)
|
5.09 | % | 6.50 | % | 6.46 | % | ||||||||||||||
The net
gains from mark-to-market and trading mainly includes the mark-to-market of the
available for sale investment portfolio, realized and unrealized gains of
financial investments held for trading, the interest revenue generated by the
held for trading portfolio, gains or losses 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. In order to better understand these
line items, we present the net results from financial transactions by business
area in the table below.
|
Net Result from Financial
Transactions
|
Quarter
|
Change %
|
||||||||||||||||||
|
(Ch$ million)
|
1Q09 |
4Q08
(Restated)
|
1Q08
(Restated)
|
1Q09/1Q08
|
1Q09/4Q08
|
|||||||||||||||
|
Santander
Global Connect & Market making*
|
39,240 | 21,263 | 25,564 | 53.5 | % | 84.5 | % | |||||||||||||
|
ALCO
& Proprietary trading
|
29,575 | (4,312 | ) | (12,205 | ) | — | % | — | % | |||||||||||
|
Net
results from financial transactions
|
68,815 | 16,951 | 13,359 | 415.1 | % | 306.0 | % | |||||||||||||
* Santander
Global Connect, market making & results from the sale of charged-off
loans.
The
415.1% YoY increase in the net results from financial transactions was mainly
due to higher realized gains from the available for sale fixed income portfolio
and realized and unrealized gains from the financial assets held for trading
(See Financial investments). In 4Q08, the Bank increased its bond portfolio to:
(1) increase liquidity after a strong inflow of deposits and the tightening of
lending and (2) in anticipation of lower inflation and interest rate levels in
1Q09, as a way to hedge our results in that scenario. The lower interest rates
and negative inflation had a positive effect on the realized and unrealized
gains from the mark-to-market of our fixed income securities
portfolio.
The
results from Santander Global Connect, a unit that sells treasury products to a
wide range of corporate and retail clients, and generates a recurring and
growing source of income also experienced a positive evolution in the quarter.
Income from Santander Global Connect increased 84.5% QoQ and 53.5% YoY in
1Q09.
|
Investor
Relations Department
|
|
|
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
|
17
|
|
email: rmorenoh@santander.cl
|
OTHER INCOME AND
EXPENSES
|
Quarter
|
Change %
|
|||||||||||||||||||
|
(Ch$ million)
|
1Q09 |
4Q08
(Restated)
|
1Q08
(Restated)
|
1Q09/1Q08 | 1Q09/4Q08 | |||||||||||||||
|
Other
operating income
|
2,498 | 2,014 | 10,015 | (75.1 | )% | 24.0 | % | |||||||||||||
|
Other
operating expenses
|
(35,531 | ) | (9,324 | ) | (8,631 | ) | 311.7 | % | 281.0 | % | ||||||||||
|
Income
attributable to investments in other companies
|
326 | 8 | (262 | ) | (224.4 | )% | 3975.0 | % | ||||||||||||
|
Income
tax
|
(16,259 | ) | (13,506 | ) | (15,427 | ) | 5.4 | % | 20.4 | % | ||||||||||
|
Tax
rate
|
17.0 | % | 12.4 | % | 14.8 | % | ||||||||||||||
Other
operating income, which mainly includes the results from the sale and
maintenance of repossessed assets and other results, totaled a gain of Ch$2,498
million in 1Q09, increasing 24.0% QoQ and decreasing 75.1% YoY. The YoY decrease
was mainly due to the fact that in 1Q08 the Bank perceived one-time income from
the sale of shares in Visa and the Santiago Stock Exchange.
The Bank
in 1Q09 recognized additional provisions for both credit and non-credit
contingencies given the difficult economic environment and the potential for
further deterioration. This explains the 311.7% YoY rise in other operating
expenses.
In 2009,
the Bank no longer recognizes the results from price level restatement except in
the tax books. As inflation was negative in the quarter, this produced, for tax
purposes, a gain from price level restatement and therefore, a higher effective
tax rate and tax expense.
|
Investor
Relations Department
|
|
|
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
|
18
|
|
email: rmorenoh@santander.cl
|
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. In 1Q09 Moody’s upgraded the Bank credit
risk ratings in line with the improvement of Chile’s sovereign
ratings.
|
Moody’s
|
Rating
|
|
|
Long-term
bank deposits
|
A1
|
|
|
Senior
bonds
|
Aa2
|
|
|
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,
|
19
|
|
email:
rmorenoh@santander.cl
|
SECTION 5: SHARE
PERFORMANCE
As
of March 2009
Ownership
Structure:
ADR
Price Evolution
Santander
ADR vs. Global 1200 Financial Index
(Base 100 = 12/31/2003)
ADR price
(US$) 1Q09
|
03/31/09:
|
34.35 | |||
|
Maximum
(1Q09):
|
38.80 | |||
|
Minimum
(1Q09):
|
31.20 |
Market
Capitalization: US$6,230 million
|
P/E
12 month trailing:
|
8.30 | |||
|
P/BV
(03/29/09):
|
2.34 | |||
|
Dividend
yield*:
|
6.3 | % |
|
*
|
Based
on closing price on record date of last dividend
payment.
|
Daily
traded volumes 1Q 2009
Local
Share Price Evolution
Santander
vs IPSA Index
(Base 100 = 12/31/2003)
Local
share price (Ch$) 1Q09
|
03/31/09:
|
19.14 | |||
|
Maximum
(1Q09):
|
23.00 | |||
|
Minimum
(1Q09):
|
18.23 |
Dividends:
|
Investor
Relations Department
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
|
20
|
SECTION 6: INSTITUTIONAL
BACKGROUND
Institutional
Background
As per
the latest public records published by the Superintendency of Banks of Chile for
March 2009, 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 A1 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, S.A., (SAN.MC, STD.N), headquartered in Madrid, engages primarily in
commercial banking with complementary activities in global wholesale banking,
cards, asset management and insurance. Santander had over EUR 1.168 trillion in
funds under management at the close of 2008, from more than 80 million customers
served through 13,390 offices – more branches than any other international bank.
Founded in 1857, Santander is the largest financial group in Spain and Latin
America and has a significant presence in Western Europe and in the United
Kingdom. In 2008, Santander registered €8,876 million in attributable net
profit, an increase of 9% from 2007, excluding capital gains.
In Latin
America, Santander manages over US$200 billion in business volumes (loans,
deposits, mutual funds, pension funds and managed funds) through 6,089 branches.
In 2008, Santander reported EUR 2,945 million in net attributable income in
Latin America, up 10% from the previous year.
For more
information, see www.santander.com.
|
Investor
Relations Department
Bandera
140 19th
Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email:
rmorenoh@santander.cl
|
21
|
ANNEX
1: BALANCE SHEET
|
Mar-08
|
Jun-08
|
Sep-08
|
Dec-08
|
Mar-09
|
Mar. 09 / 08
|
Mar. 09 / Dec. 08
|
||||||||||||||||||||||
|
Ch$million
|
%
Chg.
|
|||||||||||||||||||||||||||
|
Assets
|
||||||||||||||||||||||||||||
|
Cash
and balances from Central Bank
|
647,710 | 1,280,559 | 854,459 | 855,411 | 1,092,151 | 68.6 | % | 27.7 | % | |||||||||||||||||||
|
Funds
to be cleared
|
626,731 | 487,591 | 513,843 | 335,405 | 374,617 | (40.2 | )% | 11.7 | % | |||||||||||||||||||
|
Financial
assets held for trading
|
715,729 | 893,937 | 891,069 | 1,166,426 | 940,357 | 31.4 | % | (19.4 | )% | |||||||||||||||||||
|
Investment
collateral under agreements to repurchase
|
4,655 | 11,697 | 8,805 | - | 7,008 | 50.5 | % | -- | % | |||||||||||||||||||
|
Derivatives
|
1,427,176 | 1,233,562 | 1,296,402 | 1,846,509 | 1,598,218 | 12.0 | % | (13.4 | )% | |||||||||||||||||||
|
Interbank
loans
|
116,991 | 150,406 | 76,015 | 95,499 | 47,809 | (59.1 | )% | (49.9 | )% | |||||||||||||||||||
|
Loans,
net of loan loss allowances
|
12,184,550 | 12,954,140 | 13,515,005 | 14,311,349 | 13,704,412 | 12.5 | % | (4.2 | )% | |||||||||||||||||||
|
Available-for-sale
financial assets
|
1,457,900 | 1,080,216 | 1,316,741 | 1,580,240 | 1,276,382 | (12.5 | )% | (19.2 | )% | |||||||||||||||||||
|
Held-to-maturity
investments
|
- | - | - | - | - | |||||||||||||||||||||||
|
Investments
in other companies
|
6,859 | 6,663 | 6,762 | 7,277 | 7,452 | 8.6 | % | 2.4 | % | |||||||||||||||||||
|
Intangible
assets
|
57,727 | 58,526 | 65,090 | 68,232 | 68,248 | 18.2 | % | 0.0 | % | |||||||||||||||||||
|
Fixed
assets
|
202,941 | 201,234 | 198,133 | 200,389 | 196,553 | (3.1 | )% | (1.9 | )% | |||||||||||||||||||
|
Current
tax assets
|
4,859 | 18,235 | 12,654 | 18,715 | 8,310 | 71.0 | % | (55.6 | )% | |||||||||||||||||||
|
Deferred
tax assets
|
77,063 | 83,280 | 124,800 | 88,825 | 85,691 | 11.2 | % | (3.5 | )% | |||||||||||||||||||
|
Other
assets
|
648,287 | 586,287 | 663,188 | 508,653 | 579,639 | (10.6 | )% | 14.0 | % | |||||||||||||||||||
|
Total
Assets
|
18,179,178 | 19,046,333 | 19,542,966 | 21,082,930 | 19,986,847 | 9.9 | % | (5.2 | )% | |||||||||||||||||||
|
Liabilities
and Equity
|
||||||||||||||||||||||||||||
|
Total
non-interest bearing deposits
|
2,772,568 | 3,194,423 | 3,130,913 | 2,948,162 | 3,092,010 | 11.5 | % | 4.9 | % | |||||||||||||||||||
|
Funds
to be cleared
|
381,921 | 297,611 | 308,345 | 142,552 | 246,100 | (35.6 | )% | 72.6 | % | |||||||||||||||||||
|
Investments
sold under agreements to repurchase
|
91,545 | 294,438 | 739,967 | 562,223 | 369,905 | 304.1 | % | (34.2 | )% | |||||||||||||||||||
|
Time
deposits and savings accounts
|
8,407,623 | 8,390,418 | 8,408,557 | 9,756,266 | 8,677,857 | 3.2 | % | (11.1 | )% | |||||||||||||||||||
|
Derivatives
|
1,540,408 | 1,081,784 | 1,122,579 | 1,469,724 | 1,426,565 | (7.4 | )% | (2.9 | )% | |||||||||||||||||||
|
Deposits
from credit institutions
|
1,013,578 | 1,505,196 | 1,495,608 | 1,425,067 | 1,423,195 | 40.4 | % | (0.1 | )% | |||||||||||||||||||
|
Marketable
debt securities
|
2,196,889 | 2,405,006 | 2,372,389 | 2,651,372 | 2,632,433 | 19.8 | % | (0.7 | )% | |||||||||||||||||||
|
Other
obligations
|
113,873 | 165,833 | 130,521 | 131,318 | 120,780 | 6.1 | % | (8.0 | )% | |||||||||||||||||||
|
Current
tax liabilities
|
3,552 | 1,017 | 850 | 791 | 506 | (85.8 | )% | (36.0 | )% | |||||||||||||||||||
|
Deferred
tax liability
|
14,651 | 23,949 | 57,388 | 19,437 | 9,381 | (36.0 | )% | (51.7 | )% | |||||||||||||||||||
|
Provisions
|
154,570 | 92,938 | 137,460 | 166,719 | 204,211 | 32.1 | % | 22.5 | % | |||||||||||||||||||
|
Other
liabilities
|
138,199 | 295,128 | 220,667 | 293,732 | 212,461 | 53.7 | % | (27.7 | )% | |||||||||||||||||||
|
Total
Liabilities
|
16,829,377 | 17,747,741 | 18,125,244 | 19,567,363 | 18,415,404 | 9.4 | % | (5.9 | )% | |||||||||||||||||||
|
Equity
|
||||||||||||||||||||||||||||
|
Capital
|
818,535 | 818,535 | 818,535 | 891,303 | 891,303 | 8.9 | % | 0.0 | % | |||||||||||||||||||
|
Reserves
|
(20,618 | ) | (21,305 | ) | ||||||||||||||||||||||||