SANTIAGO, Chile, Oct. 27 /PRNewswire-FirstCall/ -- Banco Santander Santiago announced today its unaudited results for the second quarter of 2006. These results are reported on a consolidated basis in accordance with Chilean GAAP (1,2), in nominal Chilean pesos.
Net income increased 20.3% in the third quarter of 2006 compared to 3Q 2005 (hereinafter YoY) and totaled Ch$79,934 million (Ch$0.42 per share and US$0.81/ADR). Core revenues (net interest income and fees) increased 20.5% YoY as the Bank continued to gain market share in key products and services. ROE in the quarter reached 27.5% compared to 26.8% in 2Q 2005.
Net interest income in 3Q 2006 increased 21.3% compared to 3Q 2005. This rise was mainly driven by the 19.0% increase in average interest earning assets and a 10 bp YoY rise in net interest margins that reached 5.0% in this period. In 3Q 2006 total loans increased 2.4% QoQ with strong growth in high yielding products. Consumer loans led growth expanding 6.4% QoQ and 29.5% YoY. Market share in consumer lending reached 26.5% as of September 2006, increasing 20 basis points compared to June 2006 and 60 basis points YoY. Residential mortgage lending increased 5.8% QoQ and 23.9% YoY. Market share in residential mortgage lending reached 25.5% as of September 2006 and increased 10 basis points since June 2006 and 90 basis points YoY.
Net fee income increased 17.3% YoY in 3Q 2006 driven by a rise in the number of clients and product usage. The total client base has increased 8.9% since the beginning of the year to 2.40 million clients. In 3Q 2006, fees from checking accounts increased 17.8% and fees from lines of credit rose 30.4% YoY. Credit card fees increased 25.2% YoY.
In 3Q 2006, the efficiency ratio reached 35.9% compared to 39.9% in 3Q 2005. Operating expenses increased 5.6% YoY in 3Q 2006. The Bank has the lowest efficiency ratio among the leading banks in Chile and Latin America.
Asset quality remained sound in the quarter. Past due loans decreased 22.1% YoY. The ratio of past due loans to total loans improved to 0.78% 3Q 2006 compared to 0.79% in 2Q 2006 and 1.17% in 3Q 2005. The coverage ratio of past due loans reached 177.9% as of September 2006, compared to 163.1% as of June 2006 and 129.4% as of September 2005.
During 2006, the Bank has been improving its credit scoring systems for consumer loans, which in addition to non-performance, takes into account additional negative behavior when calculating individual risk levels. This factor and the overall growth of lending to retail segments explains the 56.9% YoY increase in gross provisions and charge-offs in 3Q 2006. In the quarter, the Bank also finished a complete overhaul of Santander Banefe's systems, fully integrating them into the Bank's computer platform. This temporarily affected the recovery process at Santander Banefe, a key element in this unit's credit cycle. As result provision expense, net of recoveries increased 103.9% YoY in 3Q 2006.
Net income increased 23.1% in the nine month period ended September 30, 2006 (hereinafter 9M 2006), compared to the nine-month period ended September 30, 2005 (hereinafter 9M 2005), and totaled Ch$224,713 million (Ch$1.19/share and US$2.26/ADR). Growth was led by a 20.4% increase in core revenues. The Bank's ROAE in this period reached 27.0% in 9M 2006 compared to 24.3% in 9M 2005. The efficiency ratio improved to 36.6% compared to 40.2% in the same period.
INSTITUTIONAL BACKGROUND
As per latest public records published by the Superintendence of Banks for September 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 an A2 rating from Moody's, which are the same ratings assigned to the Republic of Chile. The stock is traded on the New York Stock Exchange and the Santiago Stock Exchange (SSE: Bsantander). The Bank's main shareholder is Santander, which directly and indirectly owns 83.94% of Banco Santander Santiago.
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 euro 798,540 million in assets and euro 961,093 million in managed funds, 67 million customers, 10,583 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 Finance, it also operates a leading consumer finance franchise in Germany, Italy, Spain and nine other European countries. In the first nine months of 2006, Santander recorded euro 4,947 million in net attributable profit, 28% 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, pension funds and managed funds) through 4,200 offices. In the first nine months of 2006, Santander recorded in Latin America US$2,237 million in net attributable income, 31% higher than in the prior year.
(1) Safe harbor statement under the Private Securities Litigation Reform
Act of 1995: All forward-looking statements made by Banco Santander
Santiago involve material risks and uncertainties and are subject to
change based on various important factors which may be beyond the
Bank's control. Accordingly, the Bank's future performance and
financial results may differ materially from those expressed or
implied in any such forward-looking statements. Such factors include,
but are not limited to, those described in the Bank's filings with the
Securities and Exchange Commission. The Bank does not undertake to
publicly update or revise the forward-looking statements, even if
experience or future changes make it clear that the projected results
expressed or implied therein will not be realized.
(2) The Peso/US dollar exchange rate as of September 30, 2006, was
Ch$538.22 per dollar. All figures presented are in nominal terms.
Historical figures are not adjusted by inflation.
CONTACT INFORMATION
Robert Moreno
Manager
Investor Relations Department
Banco Santander Santiago
Bandera 140 Piso 19,
Santiago,
Chile
Tel: (562) 320-8284
Fax: (562) 671-6554
Email:
