SANTIAGO, Chile, October 29 /PRNewswire/ --
Banco Santander Chile (NYSE: SAN; SSE: Bsantander) announced today its unaudited results for the third quarter of 2008. These results are reported on a consolidated basis in accordance with Chilean GAAP(1)(2)(3) in nominal Chilean pesos.
In 3Q08, net income attributable to shareholders totaled Ch$96,497 million (Ch$0.51 per share and US$0.96/ADR), increasing 23.0% QoQ and 13.3% YoY.
Core revenues, that is, net interest income plus fee income, increased 11.5% QoQ and 24.0% YoY. These strong operating trends were partially offset by a larger loss from price level restatement and higher operating costs compared to 3Q07, which were negatively impacted by high inflation.
In 3Q08, total loans increased 4.3% QoQ and 18.4% YoY. Corporate lending increased 4.8% QoQ and 13.5% YoY and lending to the middle market increased 4.7% QoQ and 20.2% YoY. Lending to SME's increased 4.5% QoQ and 20.1% YoY. The Bank's solid liquidity position has helped to boost lending to corporations at attractive spreads. Total loans to individuals increased 4.0% QoQ and 19.3% YoY. Loans to upper income individuals increased 43.5% YoY and lending to lower income segments decreased 10.7% YoY in 3Q08.
Capitalization ratios remained solid in 3Q08. As of September 30, 2008, the Bank's BIS ratio reached a solid 13.1% with a core capital ratio of 9.7%.
As a result of this proactive management of the asset and funding mix coupled with rising spreads and higher inflation, in 3Q08 net interest income was up 14.3% QoQ and 28.0% YoY. The Bank's net interest margin reached a record level of 7.1% in 3Q08 compared to 6.2% in 2Q08 and 6.4% in 3Q07.
Net provision expense increased 52.8% YoY in 3Q08. Including the sale of charged-off loans, which are recognized as a net gain from financial transactions, net provision expense increased 38.2% YoY in 3Q08. This rise was driven by the growth in retail banking activities, higher charge-offs in consumer loans due to the economic slowdown and an increase in risk in the middle-market segment following negligible levels in the past three years. Despite this rise in provision expense, in 3Q08 net interest income net of provision expenses increased 19.9% QoQ and 20.2% YoY, reflecting that the Bank's higher spreads, higher inflation rates and the improved funding mix has more than offset the rise in risks. Net provision expense on a sequential basis in 3Q08 grew 2.5% QoQ.
Net fee income increased 0.3% QoQ and 8.8% YoY in 3Q08, in line with the expansion of cross-selling and product usage. Banco Santander Chile has the largest client base (excluding the state owned bank) in Chile. The total number of clients increased 7.2% YoY to 3.0 million in 3Q08 and the amount of cross-sold clients increased 7.9% YoY in September 2008.
In 3Q08, the efficiency ratio reached a solid 35.9%, improving from 38.8% in 2Q08 and 37.9% in 3Q07. Total operating expenses increased 4.1% QoQ and 16.9% YoY. Personnel expenses increased 4.0% QoQ and 18.0% YoY in 3Q08. The QoQ increase in personnel expenses was mainly due to CPI adjustments to salaries as a result of the high inflation rates. Administrative expenses increased 0.6% QoQ and 4.1% YoY in 3Q08. As of September 2008, the Bank's distribution network totaled 472 offices, increasing 0.9% QoQ and 8.3% YoY. As of September 2008, the Bank had 1,987 ATMs, decreasing 1.4% QoQ and increasing 9.9% YoY.
Institutional Background
As per the latest public records published by the Superintendency of Banks of Chile for September 2008, Banco Santander Chile was the largest bank in terms of loans and deposits. The Bank has the highest credit ratings among all Latin American companies, with an A+ rating from Standard and Poor's, A+ by Fitch and A2 by Moody's, which are the same ratings assigned to the Republic of Chile. The stock is traded on the New York Stock Exchange (NYSE: SAN) and the Santiago Stock Exchange (SSE: Bsantander). The Bank's main shareholder is Santander, which controls 76.91% of Banco Santander Chile.
Banco Santander (SAN.MC, STD.N) is the largest bank in the euro zone and seventh in the world by market capitalization. Santander primarily engages in commercial banking with complementary activities in global wholesale banking, cards, asset management and insurance. Founded in 1857, Santander has as of June 2008, EUR 918,332 million in assets and EUR 1,050,928 million in managed funds, more than 65 million customers, 11,216 branches and a presence in some 40 countries. It is the largest financial group in Spain and Latin America. Through its Abbey subsidiary, Santander is the sixth largest bank in the United Kingdom, and is the third largest banking group in Portugal. Through Santander Consumer Finance, it also operates a leading franchise in 20 countries, with its principal focus in Europe (Germany, Italy and Spain, among others) and the U.S. In the first half of 2008, Santander registered EUR 4,730 million in net attributable profit, an increase of 22% from the previous year, excluding capital gains. For more information, see http://www.santander.com.
In Latin America (excluding Banco Real), Santander manages over US$200 billion in business volumes (loans, deposits, mutual funds, pension funds and managed funds) through 4,528 branches. In the first half of 2008 (excluding Banco Real), Santander reported US$2,171 million in net attributable income in Latin America, up 20% from the same period of 2007.
Contact Information Robert Moreno Manager, Investor Relations Department Banco Santander Chile Bandera 140 Piso 19, Santiago, Chile Tel: +562-320-8284 Fax: +562-671-6554 Email: rmorenoh@santander.cl Website: http://www.santander.cl
(1) Safe harbor statement under the Private Securities Litigation Reform Act of 1995: All forward-looking statements made by Banco Santander Chile involve material risks and uncertainties and are subject to change based on various important factors which may be beyond the Bank's control. Accordingly, the Bank's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Such factors include, but are not limited to, those described in the Bank's filings with the Securities and Exchange Commission. The Bank does not undertake to publicly update or revise the forward-looking statements even if experience or future changes makes it clear that the projected results expressed or implied therein will not be realized.
(2) The exchange rate used for translating Ch$ to US$ was Ch$552.47 per US$1 dollar. All figures presented are in nominal terms. Historical figures are not adjusted by inflation.
(3) As of January 1, 2008, and following the guidelines of the Superintendency of Banks of Chile, SBIF, a re-categorization of certain line items in the balance sheet and income statement was introduced in line with a gradual shift towards International Accounting Standards to be fully adopted in 2009. These changes did not involve any changes in accounting principles, but do involve a change in total equity as Banks must provision for mandatory dividends and include minority interest as shareholder equity. 2007 figures have been re-categorized under the new format in order to make them more comparable, but the modification regarding minimum dividends has not been made to historical shareholders' equity. Please note that this information is provided for comparative purposes only and that this re-categorization of line items may undergo further changes during the year and, therefore, historical figures, including financial ratios, presented in this report may not be entirely comparable to future figures presented by the Bank. Re-classified historical figures have not been audited.
Web site: http://www.santander.cl http://www.santander.com
