Banco Santander-Chile Q4 FY2025 earnings call

• Strategy focuses on being a digital bank with Work Cafe, targeting over 5 million clients by 2026, using AI and process automation for efficiency. - Achieved ROE above 20%, with ROE at 23.5% for the period. Efficiency ratio was 36%, the best in the Chilean banking industry in 2025. - Fee income increased from 15% to 21% of total revenues driven by client growth and noncredit services. - Received recognitions like Best Bank in Chile and Best Bank for SMEs. - MSCI ESG rating improved from A to AA, sustainability score at 15.4.

As of December, the bank generated net income of CLP 1,053 billion, up 23% year-on-year. Fee income increased 9%, financial transactions rose 8%, mutual funds grew 7%. Net interest income, including adjusted income, increased 11% year-on-year with NIMs stable at 4%. Fee income participation in total revenues moved from 15% to 21%. The recurrence ratio reached 63.7% year-to-date. The CET1 ratio stands at 11%, and a 60% dividend payout is planned.

• Expect 2026 GDP growth of low 2%, UF variation below 2.9%, average monetary policy rate around 4.3%. - Mid-single-digit loan growth anticipated, with stronger rebound in the second half. - NIMs expected to remain stable at 4%. - Fees and financial transactions to grow mid- to high single digits. - Efficiency ratio to remain around mid-30s. - Cost of credit expected to gradually improve to around 1.3% for the full year. - ROE expected to be within the range of 22% to 24%.

• Regulatory changes, such as tax rate reduction and credit card limit discussion, may take time to materialize and get congressional approval. - Competitive environment in the payments sector, especially with new regulations and players, poses challenges for Getnet. - Inflation sensitivity impacts net income, with an average exposure to inflation of around CLP 8.5 billion, translating to ~$80 million pretax per 100 basis points of inflation movement.

Q: How does the cost of risk improve in 2026?

A: 2025 cost of risk was around 1.4%, expected to improve to ~1.3% in 2026. Work done on improving NPLs in commercial portfolio, with mortgage portfolio expected to gradually improve though judicial collection process is slow.

Q: Expense growth projections and efficiency improvements?

A: Aim to control expense growth at inflation plus 1%. Using technology and AI to eliminate routinary tasks, with slight modifications to branch network. Peso appreciation and currency-linked expenses contribute to expense management, aiming for best-in-class efficiency.

Q: Does guidance include Getnet stake sale impact?

A: Sale of Getnet stake has negligible impact on ROE, included within the 22%-24% ROE range. Minority interest effect is less than 1% of total P&L, contributing ~20 bps to ROE.

Q: Thoughts on interest rate caps for consumer lending?

A: Interest rate caps have limits on lending rates. Discussion on amending caps is early, not expected soon as Kast administration takes office and legislative process unfolds. Could benefit mass market bancarization but no immediate changes expected in 2026.

Q: Risk-weighted assets density expectations for 2026?

A: With mid-single-digit loan growth, expect risk-weighted assets to grow around 2%, keeping density consistent. If loan portfolio grows 5%, risk-weighted assets growth would be ~2.5% assuming density remains stable.

Q: Getnet's future in competitive environment?

A: Industry facing transformations with new regulations and competitors. Partnership with PagoNxt to support efficiency and growth, but competition is intensifying, posing challenges for Getnet's near-term growth prospects