Banco de Chile Q1 FY2025 earnings call

• Strategic Framework: Structured around 3 key components (strategic plan, pillars, purpose) with midterm targets including leading ROACE, below 42% cost-to-income ratio, market share leadership, and a Net Promoter Score of 75.8%.
• Digital Transformation: Deployed AI Copilot Chat across the organization, launched new credit cards and microlending products, enhanced digital accounts with a 21% year-on-year growth in FAN customer base, and improved internal processes boosting productivity by 35% in current account originations.
• ESG and Cost Control: Published 2024 annual report on financial and sustainability performance, centralized subsidiaries, streamlined technology expenses, and achieved an efficiency ratio of 36.1%.

In the first quarter of 2025, Banco de Chile reported a net income of CLP 329 billion with an ROAE of 23%. Operating income was CLP 779 billion, with customer income at CLP 617 billion (up 4.3% year-on-year) and noncustomer income at CLP 162 billion (down from the prior year). The net interest margin reached 5%, outperforming peers. Total loans stood at CLP 39 trillion, a 3.2% year-on-year growth. Mortgage loans grew 8.1% year-on-year to CLP 13.5 trillion, consumer loans increased 3.9% year-on-year to CLP 5.5 trillion, and commercial loans to SMEs were up 3.7% year-on-year to CLP 5.2 trillion.

• GDP Forecast: Expect GDP to expand 2% in 2025, driven by domestic demand offsetting export slowdown.
• Interest Rates: Central Bank expected to reduce reference rate to ~4.25% by year-end.
• Loan Growth: Expected to be slightly above industry average (around 4%), driven by consumer and mortgage loans, with commercial loans expected to grow more slowly but with SMEs showing potential.
• NIM: Margin guidance adjusted with expectations of mix changes benefiting margins.

• Macro Uncertainties: Global trade changes due to U.S. administration's policies, which could reduce global and local economic growth.
• Local Risks: Upcoming presidential and parliamentary elections in November 2025, introducing political and policy uncertainty.
• Inflation/Exchange Rate: Exchange rate depreciation and inflation pressures, with pass-through effects on inflation and banking results.

Q: Yuri Fernandes asked about capital deployment and additional provisions.

A: Daniel Galarce discussed capital buffers, stating the bank aims to maintain favorable buffers to support growth, and Pablo Ricci mentioned additional provisions are maintained for uncertain economic scenarios.

Q: Beatriz Abreu asked about margins and loan growth.

A: Pablo Ricci and Rodrigo Aravena discussed margin expectations influenced by mix changes and loan growth expectations, with loan growth expected to be slightly above industry average driven by consumer and mortgage loans.

Q: Neha Agarwala asked about macro concerns and inflation.

A: Rodrigo Aravena addressed global economic risks and local elections as key concerns, while Pablo Ricci discussed inflation sensitivity to exchange rates and the bank's UF GAP as a risk management tool.

Q: Andres Soto asked about medium-term ROE target.

A: Pablo Ricci and Rodrigo Aravena stated the ambition to be the most profitable bank in Chile, with expectations of ROE remaining attractive due to robust capital base and potential for growth when market conditions improve.