SANTIAGO, Chile, Feb. 9 /PRNewswire-FirstCall/ -- Banco Santander Chile
(NYSE: SAN; SSE: Bsantander) announced today its unaudited results for the
fourth quarter of 2008. These results are reported on a consolidated basis in
accordance with Chilean GAAP(1),(2),(3) in nominal Chilean pesos.
In 4Q08, net income attributable to shareholders totaled Ch$77,566 million
(Ch$0.41 per share and US$0.68 per ADR), increasing 9.6% compared to 4Q07
(from now on YoY). The YoY growth of net income was mainly driven by core
revenues, that is, net interest income plus fee income. Core revenue increased
16.0% YoY, led by a 17.7% increase in net interest revenue and a 9.7% rise in
fee income. Return on average equity attributable to shareholders reached
20.2% in 4Q08 compared to 19.9% in 4Q07.
In 4Q08, total loans increased 5.9% compared to 3Q08 (from now on QoQ) and
19.1% YoY. During the quarter, loan growth was mainly driven by the corporate
segment, in line with our strategy of continuing to expand the loan book, but
with a conservative approach to credit risk. Corporate lending increased a
record 24.5% QoQ and 26.0% YoY. Total commercial loans increased 8.8% QoQ and
22.6% YoY in 4Q08.
The Bank's selective approach to lending was also apparent in loan growth
to individuals in the quarter. Total loans to individuals increased 2.7% QoQ
and 16.9% YoY. Residential mortgage lending increased 3.3% QoQ and 19.0% YoY.
Consumer loans expanded 0.3% QoQ and 8.0% YoY. By segment, during 2008, loan
growth to high income individuals was up 35.6% YoY compared to 4.4% YoY for
middle income individuals and a decrease of 11.9% YoY to lower income
segments.
The Bank also experienced a favorable evolution of deposit growth in the
quarter. In 4Q08, Santander Chile's deposit base increased by a record 10.1%
QoQ and 18.1% YoY, outpacing loan growth and reflecting our focus on liquidity
and improving the funding mix. The Bank's market share of deposits increased
from 20.4% as of September 2008 to 20.8% at year-end 2008. The growth of
deposits was led by a 16.0% QoQ increase in time deposits. As of December 31,
2008, Santander Chile's loan to deposit ratio reached a healthy 94.1%,
improving from 100.2% as of September 2008 (excluding the portion of mortgage
loans funded with long-term bonds).
As mentioned in previous earning releases, since 2007 the Bank has been
focusing 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 and individuals have been increasing as
liquidity abroad has become scarcer and more expensive. Spreads earned over
commercial loans reached 2.63% in 4Q08 and were up 30 basis points QoQ and 45
basis points YoY. Consumer loan spreads reached 18.78% in 4Q08 and increased
18 basis points QoQ and 75 basis points YoY. Deposit spreads have also
benefited from the Bank's higher credit risk ratings.
Despite this positive evolution of spreads, the Bank's net interest margin
reached 5.8% in the quarter compared to 6.2% in 4Q07 and 6.9% in 3Q08. This
lower net interest margin was mainly due to the lower quarterly inflation in
4Q08 compared to 3Q08 and 4Q07.
The impact of lower net interest margins were offset by the Bank's
proactive management of the asset and funding mix, coupled with loan growth
and rising spreads. As a result, in 4Q08 net interest income was up 17.7% YoY.
Capitalization ratios continued to improve in 4Q08. The Bank's BIS ratio
as of December 31, 2008 reached a solid 13.8% with a Tier I ratio of 10.0%.
The Bank has one of the highest BIS ratios among the major players in the
Chilean financial system. During the quarter, the Bank issued US$40 million in
subordinated bonds in the local market in order to further improve
capitalization ratios.
In 4Q08, the Bank's net provision expense increased 14.4% QoQ and 50.6%
YoY. As mentioned in previous earning reports, this rise was driven by higher
charge-offs in consumer loans due to the economic slowdown, as well as an
increase in provisions in the middle-market following negligible levels in the
past three years. This rise in risk has been offset by a more selective loan
growth towards less risky segments and higher spreads. As a result, net
interest income after net provision expense increased 5.1% YoY in 4Q08 and
20.7% YoY in the twelve-month period ended December 31, 2008.
Net fee income increased 3.2% QoQ and 9.7% YoY in 4Q08 in line with the
expansion of cross-selling and product usage. Santander Chile has the largest
client base in Chile (excluding the state owned bank). The total number of
cross-sold clients increased 7.9% YoY. Fees from credit, debit and ATM cards
increased 13.1% QoQ and 11.0% YoY.
The growth rate of operating expenses was curbed in the quarter as the
Bank focused in cost control and limited the opening of new branches in order
to maximize the profitability of the existing network. Operating expenses
decreased 1.7% QoQ and increased 6.1% YoY in 4Q08. Administrative expenses in
4Q08 decreased 7.5% QoQ and increased 1.7% YoY. In 4Q08, the efficiency ratio
reached 38.8% compared to 42.4% in 4Q07. We have the highest level of
efficiency among the larger banks in Chile and among the best in emerging
markets.
In the twelve-month period ended December 31, 2008 (12M08), net income
attributable to shareholders increased 6.3% YoY and totaled Ch$328,146 million
(Ch$1.74 per share and US$2.82 per ADR). Growth was led by a 22.8% increase in
core revenues. Net interest income increased 25.9% and fee income 11.8% YoY.
The net interest margin in 12M08 reached a record level of 6.1% compared to
5.8% in 12M07. The efficiency ratio reached 38.0% in 12M08 compared to 39.4%
in 12M07. Net operating income increased 11.4% in the same period. These
higher operating results were partially offset by a 33.9% rise in non-
operating losses, net that were negatively affected by higher losses from
price level restatement. ROAE reached 23.0% in 12M08 compared to 23.7% in
12M07.
Institutional Background
As per the latest public records published by the Superintendency of Banks
of Chile for December 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, 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 EUR
8,876 million in attributable net profit, an increase of 9% from 2007,
excluding capital gains.
In Latin America, Santander manages over US$200 billion in business
volumes (loans, deposits, mutual funds, pension funds and managed funds)
through 6,089 branches. In 2008, Santander reported EUR 2,945 million in net
attributable income in Latin America, up 10% from the previous year.
For more information, see http://www.santander.com.
(1) Safe harbor statement under the Private Securities Litigation Reform
Act of 1995: All forward-looking statements made by Banco Santander Chile
involve material risks and uncertainties and are subject to change based on
various important factors which may be beyond the Bank's control. Accordingly,
the Bank's future performance and financial results may differ materially from
those expressed or implied in any such forward-looking statements. Such
factors include, but are not limited to, those described in the Bank's filings
with the Securities and Exchange Commission. The Bank does not undertake to
publicly update or revise the forward-looking statements even if experience or
future changes make it clear that the projected results expressed or implied
therein will not be realized.
(2) The exchange rate used for translating Ch$ to US$ was Ch$641.25 per
US$ dollar. All figures presented are in nominal terms. Historical figures are
not adjusted for inflation.
(3) As of January 1, 2008, and following the guidelines of the
Superintendency of Banks of Chile, SBIF, a re-categorization of certain line
items in the balance sheet and income statement was introduced in line with a
gradual shift towards International Accounting Standards to be fully adopted
in 2009. These changes did not involve any changes in accounting principles,
but do involve a change in total equity as banks must provision for mandatory
dividends and include minority interest as shareholder equity. 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.
CONTACT INFORMATION
Robert Moreno
Manager, Investor Relations Department
Banco Santander Chile
Bandera 140 Piso 19,
Santiago, Chile
Tel: (562) 320-8284
Fax: (562) 671-6554
Email: rmorenoh@santander.cl
Website:http://www.santander.cl
