SANTIAGO, Chile, April 28 /PRNewswire-FirstCall/ -- Banco Santander Santiago announced today its unaudited results for the first quarter of 2006. These results are reported on a consolidated basis in accordance with Chilean GAAP, in nominal Chilean pesos.
Highlights
-- In the first quarter of 2006, net income totals Ch$64,434 million
(Ch$0.34 per share and US$0.67/ADR), increasing 19.4% YoY.
-- Core revenue growth drives earnings. Net financial income increases
19.4% and fee income expands 24.3%, YoY.
-- Better earnings mix enhances margins. Net interest margin increases
22 basis points to 4.37% in 1Q 2006 compared to 1Q 2005.
-- Total loans increase 5.8% QoQ and 17.8% YoY. Consumer loans increase
28.0%, residential mortgage loans grow 26.5% and commercial loans
increase 19.3% YoY.
-- Market share increasing in key products. Market share increases in
lending to individuals, corporate lending, checking accounts, credit
cards, time deposits and mutual funds.
-- Record low efficiency ratio of 38.3%. The Bank continues to improve
productivity, which has helped to finance the investments in the branch
network.
-- Sound asset quality. Past due loans in 1Q 2006 decrease 19.9% YoY. The
ratio of past due loans to total loans reaches 0.93% in 1Q 2006,
compared to 1.38% in 1Q 2005. Provision expense increases in line with
growth of consumer lending activities and seasonal factors.
In the first quarter of 2006, net income totaled Ch$64,434 million (Ch$0.34 per share and US$0.67/ADR), increasing 19.4% compared to 1Q 2005 (from now on YoY). Core revenues (net financial income and fees) increased 20.4% YoY as the Bank continued to gain market share in key products and services.
Net financial income grew 19.4% YoY driven by higher margins and strong loan growth. The better earnings mix resulted in a higher net interest margin, which increased 22 basis points to 4.37% compared to 1Q 2005. In the quarter, total loans increased 5.8% QoQ and 17.8% YoY. Total loan market share reached 23.0% as of March 2006, increasing 40 basis points since year-end 2005. Higher consumer confidence continued to fuel the demand for consumer and residential mortgage loans in the quarter. Total market share in lending to individuals, as defined by the Superintendence of Banks, was 25.3% as of March 2006 and went up 20 basis points since the beginning of the year and 80 basis points YoY. The growth of internal investment and foreign trade led to a rise in lending to small and mid-sized companies (SMEs), the middle market and corporates. Spreads in these segments have also been rising, increasing the attractiveness of lending to these clients. As a result, market share in lending to companies, as defined by the Superintendence of Banks, increased 50 basis points QoQ to 21.9%.
Net fee income increased 24.3% YoY. Greater product usage has boosted fee income. In 1Q 2006, fees from checking accounts increased 24.2%. Market share in checking accounts reached 25.6% as of February 2006, compared to 23.6% as of February 2005, the latest figures available. Credit card fees increased 41.6% YoY. Santander Santiago's credit cards were growing 19.5% YoY. ATM fees increased 15.9% in 1Q 2006, compared to the same period of 2005. This rise is in line with the 17.5% YoY growth of the Bank's ATM network. Insurance brokerage fees increased 26.0% YoY as the Bank continues to successfully cross-sell its client base with innovative insurance products.
Provision expense increased 49.9% YoY. The net charge-off ratio (total provisions, net of recoveries divided by total loans) reached 0.95%, compared to 0.75% in 1Q 2005 and 0.66% in 4Q 2005. This rise in provision expenses was mainly due to the rise in consumer lending and a seasonal increase in short- term non-performance (1-89 days). Asset quality continued to improve in the rest of the portfolio in line with the evolution of the economy. The ratio of required reserves over total loans, which measures the expected loss of the loan portfolio, reached 1.36% as of March 2006, compared to 1.42% as of December 2005 and 1.86% in 1Q 2005. Past due loans in 1Q 2006 decreased 5.8% QoQ and 19.9% YoY. The ratio of past due loans to total loans reached 0.93% in 1Q 2006, compared to 1.05% in 4Q 2005 and 1.38% in 1Q 2005. Coverage of past due loans reached 145.2% in 1Q 2006, compared to 135.1% in 1Q 2005.
Costs remain under control. In 1Q 2006 the efficiency ratio reached a record level of 38.3%, compared to 41.8% in 1Q 2005. The Bank has the lowest efficiency ratio among the leading banks in Chile and Latin America. Operating expenses increased 6.9% YoY in 1Q 2006. The Bank continues to improve productivity, which has help to fund the investments in the branch network.
INSTITUTIONAL BACKGROUND
As per latest public records published by the Superintendency of Banks for March 2006, Banco Santander Santiago was the largest bank in Chile in terms of loans and deposits. The Bank has the highest credit ratings among all non- publicly owned Latin American companies with an A rating from Standard and Poor's, A by Fitch and a Baa1 rating from Moody's, which are the same ratings assigned to the Republic of Chile. The Company's stock is traded on the New York Stock Exchange and the Santiago Stock Exchange (SSE: Bsantander). The Bank's main shareholder is Banco Santander Central Hispano, S.A., which directly and indirectly owns 83.94% of Banco Santander Santiago.
BANCO SANTANDER CENTRAL HISPANO
Santander (SAN.MC, STD.N) is the largest bank in the Euro Zone by market capitalization and one of the largest worldwide. Founded in 1857, Santander has EUR815,000 million in assets and EUR975,000 million in managed funds, 66 million customers, 10,300 offices and a presence in 40 countries. It is the largest financial group in Spain and Latin America, and is a major player elsewhere in Europe, including the United Kingdom through its Abbey subsidiary, and Portugal, where it is the third largest banking group. Through Santander Consumer, it also operates a leading consumer finance franchise in Germany, Italy, Spain and nine other European countries. In the first quarter of 2006, Santander recorded EUR1,493 million in net attributable profits, 26% more than in the same period of the previous year.
In Latin America, Santander manages over US$200 billion in business volumes (loans, deposits, mutual funds and pension funds) through 4,170 offices. In the first quarter of 2006, Santander recorded US$743 million in net attributable income in Latin America, 35% higher than in the prior year.
Website: http://www.santandersantiago.cl/
