Banco de Chile Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Macroeconomic Context: Chilean economy recovering, GDP growth revised up to 2.5% for 2025. Inflation remained above target, with the Central Bank keeping the interest rate at 4.75%.
• Bank Strategy: Focus on digital transformation, high potential segments, and operational productivity. Achievements included integrating SOCOFIN, launching an API store, the 4270 project, and maintaining top customer satisfaction rankings.
• Operational Initiatives: Increased digital onboarding, implemented AI tools for staff and customers, launched an API store for corporate clients, and introduced sustainability training for suppliers.

Segment Performance

• Net Income: Reached CLP 927 million in Q3 2025, up 1.9% YOY with ROAC of 22.3%.
• Operating Income: Totaled CLP 736 billion in Q3 2025, up 2.1% YOY. Customer income was CLP 630 billion (+5.4% YOY), while noncustomer income was CLP 105 billion (-14.1% YOY).
• Loan Portfolio: Total loans stood at CLP 39.6 trillion as of September 2025, up 3.7% YOY. Mortgage loans grew 7.3% YOY, consumer loans 3.7% YOY, and commercial loans 1.3% YOY. Retail banking accounts for 66% of total loans, wholesale 34%.
• Balance Sheet: Loans made up 71.4% of total assets, with the securities portfolio at 12.5% (up 54% YOY). Deposits were 53.1% of total assets, and debt issued increased to 20% of total liabilities.
• Capital Position: CET1 ratio was 14.2%, with total Basel III capital ratio at 18%.
• Asset Quality: Expected credit losses were CLP 80 billion, cost of risk at 0.8%. Nonperforming loans were 1.6%, total provisions were CLP 1.5 trillion, and coverage ratio was 234%.
• Operating Expenses: Totaled CLP 276 billion in Q3 2025, up 1.2% YOY. Efficiency ratio was 36.8% for the 9-month period ended September 30, 2025.

Guidance

• GDP Forecast: Revised GDP forecast for 2025 up to 2.5% from 2.3% due to stronger domestic demand.
• Full-Year 2025: Expected return on average capital around 22.5%, efficiency near 37%, and cost of risk close to 0.9%.
• Interest Rate: Central Bank likely to cut the monetary policy interest rate once more in Q4 2025 to end the year at 4.5%.

Risks

• Macroeconomic Uncertainty: Global factors and upcoming presidential/parliamentary elections in Chile pose uncertainties.
• Lending Activity: Subdued loan growth, especially among corporations, and competition in consumer lending segments.
• Inflation and Interest Rates: Persistent inflation above target could impact margins and net interest margin (NIM).

Question and Answer

• Q: Midterm targets for commercial and consumer loans market share A: Focus on digital transformation, high potential segments, and operational productivity. Leverage technology to scale efficiency, enhance customer experience, and grow in middle-upper income segments using AI.
• Q: Impact of upcoming presidential elections on macro-outlook A: Consensus on economic growth, investment, and tax proposals, which are positive for domestic demand and loan growth.
• Q: Loan growth outlook for 2026 A: Expected acceleration driven by commercial loans (SMEs, large corporates) and consumer loans as the economy improves.
• Q: Capital adequacy for future growth A: CET1 ratio above peers, with normalization over the midterm depending on loan growth evolution, aiming to stay 1-2% above regulatory limits.