Banco Santander-Chile Q3 FY2025 earnings call

Economic Environment: The Chilean economy showed positive indicators with GDP growth estimates of 2.4% for 2025 and ~2% for 2026. Inflation is moderating, core inflation below 4%, and expected to converge to below 4% by year-end. Monetary policy rate maintained at 4.75%, with further cuts anticipated. The mortgage subsidy law has provided momentum to the housing sector, while the interchange fee second rate cap reduction is under review. ### Strategy: Focus on becoming a digital bank with Work/Café, aiming for over 5 million clients by 2026, maintaining an efficiency ratio in the mid-30s, and growing fee generation in double digits. ### Results: ROE remained above 21% in recent quarters, net income up 37% y-o-y, NIM at 4%, efficiency at 35.9%. Recognitions include Best Bank in Chile, Best Bank for SMEs, and improved sustainability rankings with MSCI ESG rating from A to AA.

As of September, Banco Santander-Chile generated a net income of CLP 798 billion, a 37% year-on-year increase. Fee income grew by 8%, financial transactions rose 19%, and mutual funds saw a 15% growth. Net interest income, including readjustment income, increased 17% year-on-year with a net interest margin remaining at 4%. Fee income contribution to revenues has increased from 15% to 20% over recent years, driven by an expanded client base and noncredit-related services. The recurrence ratio reached 62% year-to-date, and net interest income growth was supported by a 17% increase year-over-year.

2025: On track to meet guidance with NIM around 4%, efficiency mid-30s, and ROE slightly above 23% by year-end. ### 2026: Expected GDP growth of 2%, UF variation just below 2.9%, and average monetary policy rate around 4.4%. Anticipates mid-single-digit loan growth, NIM around 4%, fees on financial transactions mid-to-high single digits, efficiency mid-30s, cost of credit to improve to ~1.3%, and ROE in the range of 22%-24%.

Election Uncertainty: Uncertainty around presidential and congressional elections in Chile, with a potential change in government administration that could impact the economy though longer-term impact is expected to be limited. ### Interchange Fee: Second rate cap reduction is on hold and under review by the commission, posing potential impact on fee income. ### External Macro Volatility: Uncertainty from international trade policies and asset/commodity price volatility, which could affect the bank's performance.

Q: Looking ahead to 2026, what are the main upside and downside risks for ROE estimate?

A: Benefits from a potential political change in Chile that could boost loan growth are not fully factored into current guidance. External macro volatility, such as international trade policies and asset price fluctuations, also poses risks.

Q: Can you provide further color on loan growth in 2026 by segment?

A: Consumer loans are growing healthily, mortgage portfolio is seeing good dynamics due to government subsidies, and commercial loans are dependent on the political landscape and regulatory changes.

Q: Regarding NPLs and cost of risk, what's the path for 2026?

A: Cost of risk is expected to improve as commercial nonperforming loans have been decreasing, with seasonal effects in NPLs but overall positive trends.

Q: Current levels of interchange fee and risk of second caps?

A: Current credit card interchange fee is 1.14%, debit is 0.5%; the second rate cap reduction is under review, with an expected impact of ~$20-25 million on fees in 2026 if implemented.

Q: Why isn't cost of risk coming down more in 2026 targets?

A: Guidance is conservative to leave room for ongoing improvements in collection cycles and to account for potential uncertainties.