Banco de Chile (BCH) 8 Nov 202020 Q3 Earnings call transcript

Good day everyone, and welcome to Banco de Chile’s Third Quarter 2020 results conference call.

If you need a copy of the press release issued yesterday, it is available on the company’s website. Today with us we have Mr. Rodrigo Aravena, Chief Economist and Senior VP of Institutional Relations, Mr. Pablo Mejia, Head of Investor Relations and Daniel Galarce, Head of Financial Control.

Instructions] regarding information operating the [Operator include today performance. begin, statements forward-looking company’s we And discussed that may Before financial and results All uncertainties, to subject may actual projections differ risks materially. are and and forward-looking the to the release note Please statements. refer detailed Company’s in press regarding I over Mr. the call turn will now to Aravena. Rodrigo Mr. Aravena, the floor sir. your is

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any questions, And We if you our answer are competitive us being better confident these best alternative be perspectives continue economy, Thanks. for allow for will to with advantages have we’d them. investors. the that together to superior happy the the long-term

Instructions] go first sir. of Please ahead. Tito And will Labarta question have you, we come Thank Goldman [Operator from Sachs. the

long to then that of cost Thank A forward? your you thing How your of the think come provision margins? you increase your everything. think you and terms that some of Do your Do versus think for much call. is about impacts you’ve your and understand impacted now first thinking Thanks. impact really been of to margins mentioned how for kind will quality about long feel questions. forward? And get even loans? how fourth asset – the how in given your continue going terms margins you for the Do margin going FOGAPE of Pablo. risk. How like or improvement down, your begin and in the question going cost do provisioning year? forward should in quarter? or we the that you about we your of in should feel margin? year you think appeals, I on provisioning next that couple have next second real the in expectations margin risk can I can Rodrigo Or maybe by to Hi, start, for And you we the margin, just how of guess,

Tito. Hi,

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you of right clear. risk, the it, that a elevated I it’s of in normalized bit the you in to the to normalized second uncertain, higher I was levels? predict, second mean half maybe difficult way levels But I about of Pablo, I cost in normalized and risk think cost in but half, remain back modeling. get do half maybe back to Thanks half, the Okay. to year, in just first half? getting know the to know think XXXX, help in to but somewhat the how first and on the can lower the Is little it’s that just needs pretty second guess, in

how pension Chile, of think there’s especially aid government example, this due SME or and year. will for of things estimate money, fund customers the evolve, pay next to payment for beginning that has holidays have I the comes this which helped loan it’s withdrawal on lot later still in of There’s difficult loans. different for book, a year their occurred which

what’s still happen, it of lot could and there’s areas. Europe difficult. we if a which second So at uncertainty, lockdown happening look other in A especially makes

the there levels. term normalized probably So, an be some to uncertainty before will in seeing medium we get before improvement, still

Yes.

for add very providing year like next to guidance the I a So, we – are because high would uncertainty. not more

clear, not between to the employment the relation GDP for recovery will how relative So be example, growth. the it’s

So what we’ve seen economy. in the is positive clean a sign

think that most we we as since here more presentation, not the high we is responsible for the a guidance very uncertainty, mentioned year. green that the next provide in So, shoots, have to

question we from And HSBC. next Agarwala have come of Neha the will

had question. reason My what And thank is a still percentage environment. that due? is Could releasing not sure for of uncertainty I’m first some there’s feel you behavior. actually my what question the the that loans? – provisions give the what of quite lot the those was given Hi in the of And additional payment you concern, some behavior the for the taking that loans you you regarding us came reprogrammed repayment of

So step like that? ask what maybe a second then question. take I’ll And my

it’s aspects that additional we mention terms take models. did actual occurring were model more today I think times. the the market and to provisions, used those provisions the into consideration And what important of we to updated uncertain are provisioning these for In of is

basically it so higher really reclassified book effect higher – use the one quarter provisions, to the we coverage from net ratio. have was but So could we’ve doesn’t this another, part of

considered record And just was evaluated we that methodology. was this this was it for bank. how how the could allowances was implement something best it on the So method to

new perhaps It’s important we have parameters. well normal with that to mention have scenario; new we macro different a as a

very hard rate today imagine, to the it’s of related the previous in delinquency that same to example, probability the So, future scenario. for the is

the probability way, trying current economic for is a to in do reflect current are of the situation, to we default, So model. what on current economic better the example,

That’s to we to normal our new aim have. basically, sphere – the models in the is real economy. adapt So the

the on repayment behavior? And Understood.

would which a is because FOGAPE little that other that all while for grace us the a of repaid. the terms but good and behavior the that postponed. have industry A their repaid. have from And have have get loan we’ve have loan took then mortgage customer Today, portion consumer book being go the the entailed of already SME a behavior, period. would book had that the to the still at customers bank customers the FOGAPE, loans loans, is repayment most loans of had of that repayment program we very In six-month for loan it

of the today postponed performing the we’ll book retail seeing to year, end book overdue this COVID prior second But have loans of happened what year, more next how we’re that is the is total of our average the probably of embedded quarter year, our So since during our on information crisis. level beginning this loan the in evolves. of

how analyze the the future, economy uncertainty. to in given important the evolve very will It’s

the related cautioned the been better-than-expected So have be economy far, at to it’s in we future. evolution to that of the

on impact next payout delays have can early or are think should level And it my My is question given on maintain, XXXX? of III And – Basel the in implementation questions you you that next you is year? you first the ratio happen And capital ratio more that and implementation your any What capital Okay. do what about second expect payout. from do the strongest capital? economy. expected

you We much. the impacts think – constitution? will it so Chile? think but process, do you on have you What see – the from Or recently. you this do how impact Thank do the final referendum two-year it’s will impact how a be would

is This Galarce. Hi. Daniel

As norms just six you five clean than them. regulator most know we framework but have the regarding for the III has the Basel yet. old know, regulatory more we the I regulations of or don’t mean published final of specific

calls, in the to are So previous mentioned have as we first regulations quite our estimate. far, similar

deterioration implementation in Yet phased the the December until impact past in has capital So, estimated regulator imposed see XXXX on III or any the our we what in XXXX. for significant ratios. of Basel of the regarding have December starting III we Basel don’t

order to we time some that commend any believe need it’s have capital, enough. reinforcing in of So we if not

base. we past capital have bolster taken to However, are the we quite confident steps our because in in order

Tier and regulation new you how know, additional terms capital. in know, subordinated XXXX, also, will of we in need issued As the we X market evolve the to bonds. how And evolve

room III regulation. don’t order capital So to our the lot in is capital as implementation due to long we deterioration ratios new see address of the gradual, We in us our to and in prepare as significant base Basel order have okay. a still

Neha, again. this is Aravena Rodrigo

but discussion view. course, experience uncertainty the body. of events learns the in changes physical the the In the want also with takes to I that in potential It’s as critical important select. future are discussion process, in the of long-term in discussed has constitution, consideration into be well next the development – in the that and the those next factor important approved in aware early. year. in to it here assets of to X/X potential to scenes. say be has during to based a development of the possibly impact keep of I very on the too important importance new in in of to Chile, think just constitution, by as body, process has mind –it’s the be of the had that and from elected each article preserving though ability will members of It of international new Even we is this That economy be in and conducting terms that been see of the the discussed

wait in we process now, thing year. that For to the for to prudent be the discussions next held the think the most is during

discussion. the economy you the very that has year say So, important it’s a Chile I more do other to had keep think, to during that? mind in for in How prudent wait this that very positive it’s recovery relative to countries.

and the well as we the have blue We etcetera, to have, as consensus, after. well. the average very according the the bank as during fact, central this solid year governments and activity, best as performance active as fundamentals central well consensus on In IMF is that to forecast, next Chile from estimates, the the response the off sold market expected

early specific from to any too we the coming impacts aware this So are discussion. is that uncertainty, of of potential increase anticipate as

on Anything the helpful. Very ratio? payout

maintain We should that.

over the over over has more very overtime. been them lifts consistent giving years We’re very,

the that’s don’t important on level, of it’s this mention, is however, this how the year think and this we will have to taken I evolve. side that until January something information of

mentioned, decide but level. into in Board market of consideration similar our will that to will we the Directors So to it factors, different have and depend term what should short shorter the be many happen take term, long-term, in how on to the capitalize. as in Daniel But

Thank you.

be XX%. than could lower That’s yet. not net decided the So

the no No, review. under pay something will no. that’s of discussion, It’s that being and There’s something in March that analyzed, the decision Board dividend still XXXX. Directors today for it’s will

for Perfect. Thank Very helpful. much so you your answer.

ahead. [Operator Benavente Claudia will go next of The come Instructions] Sandando. have question we Please

changes fair Chilean provisioning with? and X? the to that you made comply I model Thank IFRS banks consumer will Hi. believe compare the would or with eventually be question. made book to to possible X that the Do Is to have on IFRS you important enough it increased, that a that you. to reserves increase have comply you

I you in. important think And how have increase The evolves don’t Chile consideration. only It use provisions, models cycle non-performing in on what and and into depends to in you’re the point the take loans. this

It reconciliations XX-F, So, different is the generally there countries. is for example. so is for an accounting, impact in different large it like, other

had So it’s levels actually different. to X. would model reasonable apply That to is is But if we’ve to closer in us Chile on expect X that today. the this those model IFRS IFRS bring

Okay. just the change at the an wanted sure because to base. make translate like that – end, I expected before you No loss could mentioned into

be it – could should of it more So IFRS X. kind to similar

new a probably can to at you regulation with So help comply it in least way. the

Yes.

CLP level similar around the X we level. So IFRS for billion the XX it’s and a of that similar – a for example, recorded. it’s it’s around XX-F, It’s

exact, Now but similar. it’s

we reconciliation, So in be anymore. wouldn’t terms – and to apply be would had impact significant the it if the so

you, Thank Perfect.

You’re welcome.

we Falavina have JPMorgan. Domingos next, And of

question. my Hello. everyone. Good for Thanks morning taking

on as call. would as inflation, phone looking what NIMs sheet Just U.S. balance know ballpark basis I’m before, – if join you based quick the I mentioned points of today, on impact that Everyone want sorry on estimates tax And XXX your but I rate? a balance well changes couldn’t it the it your recap. either – in like quarter, at have higher sheet

trillion of CLP million terms CLP about the balance X.X the between trillion. balance CLP X the on runs on It GAAP In sheet, X and have GAAP we sheet.

XXX and points a interest XX it. billion and CLP net XX billion, between point interest rate that in XX for basis which net changes is we change, around how margin So CLP basis income cap

things. So two effective is look than when we at in because have liabilities. One assets the to tax the more offering have you at EURs you rate, look

rest. inflation, same authorities inflation a at tax have the practical positive time, We but use the impact accounting to the calculate higher of

to non-monetary asset have the position. you take net So

the have assets we liabilities to non-monetary. more our they are linked U.S., U.S. So Then linked

our our properties, are assets are – cetera, equipment, liabilities So and equity. our fixed et

for period by basically the So as you take loss. price multiplied level the and inflation your acquisition, restatement

when Chile So inflation around should de be rate tax its an calculation, around of X%, XX%, effective generally, it’s the generally, Banco bit XX%, running closer.

very much. That’s very you helpful. Thank

at questions further so Well, time. no this

floor section. closing We Chile’s I now the back turn the de question-and-answer would will conclude to to team management Banco for Gentlemen? like remarks,

conference to forward for you in We you this our Thank participating call. Thanks. results. look with for year-end speaking

presentation. At you, again, you, gentlemen. time, Take this Thank may a concludes day. today’s Thank This care your disconnect everyone. have great you lines.