Q2 2016 Banco Santander-Chile Earnings Call

Jul 29, 2016 AM EDT
BSANTANDER.SN - Banco Santander-Chile
Q2 2016 Banco Santander-Chile Earnings Call
Jul 29, 2016 / 03:00PM GMT 

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Corporate Participants
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   *  Raimundo Monge
      Banco Santander Chile - Director, Strategic Planning
   *  Robert Moreno
      Banco Santander Chile - Manager, IR Department

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Conference Call Participants
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   *  Nicolas Riva
      Citigroup - Analyst
   *  Diego Ciconi
      Scotiabank Global Banking & Markets - Analyst
   *  Carlos Macedo
      Goldman Sachs - Analyst

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Presentation
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Operator   [1]
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 Good day, ladies and gentlemen, and welcome to the Banco Santander Chile second quarter 2016 earnings conference call. At this time, all participants are in a listen-only mode. (Operator Instructions) Later we will conduct a question-and-answer session and instructions will follow at that time. And now I'd like to introduce you host for today's conference, Mr. Raimundo Monge, Director of Strategic Planning. Sir, please go ahead.



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 Raimundo Monge,  Banco Santander Chile - Director, Strategic Planning   [2]
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 Good morning, ladies and gentlemen, and thank you very much for attending the call. My name is Raimundo Monge and I'm Director of Strategic Planning at the Bank and I'm joined today by Emiliano Muratore, our CFO; and Robert Moreno, Manager of Investor Relations. Thank you for attending today's conference call in which we will discuss our performance in the second quarter. Let us start our call with a brief update of the outlook for the Chilean economy. According to market consensus, the economy should manage to grow this year close to 1.7% and recover to something between 2% and 2.2% in 2017. Although the mining sector has been weak, there are other sectors that are showing positive growth trends such as non-mining exports, the communication sector, utilities, and infrastructure.

 Unemployment, which until now has been resilient, has shown lately some weaknesses and for this reason, there shouldn't be any interest rate hikes this year. Inflation should also stabilize below 4%, a level that the Central Bank feels comfortable with, finishing this year with a level close to 3.3% to 3.5%. Loan growth in the banking sector remains relatively stable. As of May, loans were growing at 8% year-on-year. As expected, the growth rate of mortgage loans has been decelerating, but the positive growth of most non-mining sectors and the stability of employment has kept loans to individuals expanding at a healthy rate. Asset quality has been improving, a reflection of loan growth in riskier segments and a healthy corporate loan book. For the entire year 2016, we continue to expect loan and deposit growth of around 7% or 8%.

 Now we will give further detail into the implementation of our strategy and how it's benefiting our client activity on results this quarter. Net income attributable to shareholders in the second quarter of 2016 decreased 17.1% year-on-year and totaled CLP116.3 billion representing an ROE of 17.1%. As announced in last quarter's earnings call, result in the second quarter included an extraordinary one-time severance expense of CLP10.8 billion. Excluding this one-time charge, the Bank's adjusted net income would have been CLP124 billion for the period and the adjusted ROE reach a high level of 18.3%. At the same time, 2Q 2015 figures were positively impacted by relatively high inflation rates while in the second quarter of this year, we had a more normalized quarterly inflation rate. This also drives our profitability as the banks in Chile have more assets than liabilities linked to inflation.

 On the positive side, our business segments' net contribution expanded 15.5% year-on-year. This metric includes all revenues, provisions, and costs related with our clients excluding all non-client revenues and expenses especially the impact of inflation. We think this gives a better understanding of the underlying recurrent profitability of our franchise and the thorough execution of our business strategy. In terms of strategy, the Bank made important advances this quarter in all of our four strategic objectives. As seen in the slide our strategy has circled around number one, focusing our growth on those segments with high risk adjusted return; second, increasing client loyalty through an improved client experience and quality of service; three, deepening our ongoing commercial transformation by expanding the Bank's digital banking capabilities; and four, optimizing our profitability and capital use to increase shareholder value and time.

 In the rest of this webcast, we will review the usual figures; but at the same time, we'll give a little bit more color on the developments regarding customer activities and our digital banking capabilities, which are helping to boost our recurrent results. Regarding our first strategic objective; during the second quarter of 2016, loans increased 1.8% QonQ and 8% year-on-year with high yielding retail lending expanding 2.6% QonQ and 12.7% year-on-year. Consumer loan growth accelerated in the quarter and increased 2.4% QonQ and 6.1% year-on-year, still led by growth in the higher income segments. Residential mortgage loans expanded 2.7% QonQ and 16.5% year-on-year. As expected, the growth rate of residential mortgage loans has begun to decelerate. The Bank also continued to focus growing our mortgages with loan-to-value below 80%.

 Loans to small and middle-sized enterprises, SMEs, also accelerated in the quarter and increased 2.7% QonQ and 11% year-on-year. Our sound management of risks and an important rise in loan lending revenues are accompanying the growth of loans to SMEs and therefore this segment continues to contribute to the Bank's ROE despite slower economic growth. Loan growth in the middle market and in our large corporate unit has been less robust in part due to lower credit demand, but at the same time given that our commercial effort has been put on the non-lending activities such as cash management, fees, and treasury services, which boost revenues with very little capital use. Loans to individuals increased 12.7% QonQ and 13.2% year-on-year, but with very different trends by sub-segment. Loans to high income clients attended by our Santander Select network increased 21.3%.

 Loans to middle income earners attended by our traditional branch network increased 7.9% while loans to the low income segment decreased by 11.1% year-on-year. This reflects the Bank's focus on driving growth in those areas with higher risk-adjusted return and is in line with Chile's slower economic growth. The Bank's strategy of focusing equally on both lending and non-lending businesses has also led to solid deposit growth. Total deposit increased 2.2% QonQ and 10.3% year-on-year. Time deposits increased 2.2% QonQ and 11.3% year-on-year. This growth came from our customer segments as well as wholesale deposits from institutional sources. The high levels of liquidity in the local market led to improvement in spreads earned over deposits from wholesale investors. Despite this, Santander Chile continued to be one of the banks with a lower exposure to short-term wholesale deposits as a percentage of total funding.

 Non-interest bearing deposits increased 2.2% QonQ and 8.7% year-on-year. This sustained growth is a reflection of our strength in cash management services in this Company and our focus on non-lending activities with our customers both retail and corporate. Despite a more selective approach to loan growth, we are gaining market share across the board in the Chilean market. In the first five months of the year, we increased our market share in terms of total loans by 40 basis points with a rise in share in consumer mortgage and commercial loans. In total deposits, our market share went up by 60 basis points with rises in both demand and time deposits. As a result of all the above, client net interest income increased 1.5% QonQ and 6.3% year-on-year. As a reminder, the client net interest income is the Bank net interest margin from our business segments and exclude among other things the impact of inflation.

 Client NIMs were stable at 4.8% for the third quarter in a row despite growing in less risky segments. This has been a direct result of rising asset spreads and an improvement in our funding mix. Total net interest margins, which reached 4.6% in the quarter, should also remain relatively stable going forward as we expect inflation in 3Q and 4Q to be similar to current levels. The change in the asset mix continued to improve asset quality. In the second quarter of 2016 the non-performing loans ratio improved to 2.2% from 2.5% in the previous quarter and 2.7% in the second quarter of 2015. Total impaired loans, our broader measure of asset quality that includes non-performing loans and renegotiated loans, improved 10 basis points QonQ to 6.3% and 40 basis points since the end of the second Q of 2015. Total coverage of non-performing loans in the second Q of 2016 reached a 140.9% (sic -see press release, "140.5%"), the highest level since 2008.

 The cost of credit in the quarter was 1.3% compared to 1.2% in the first quarter and 1.4% in the second Q of 2015 and in line with our previous guidance. Provisions for loan losses increased 7.1% QonQ and 2.3% year-over-year in the second quarter. These QonQ rise in provision for loan losses was mainly due to higher provision expenses in consumer loans as the Bank continued to push forward its strategy of lowering exposure to the low end of the consumer loan market. This takes an active policy of charge-offs and bolstering coverage ratio in the lower income segment. This implies that a greater amount of consumer loans will be charged off even though asset quality trends are improving. This should help to stabilize and further reduce our cost of credit in 2017. The improvement in asset quality was visible in all products.

 The consumer loan NPL ratio improved 20 basis points QonQ to 2.1% while the coverage ratio of non-performing consumer loans reached 307% as of June 30, 2016. At the same time, the commercial NPL ratio reached 2.3% compared to 2.7% in the first quarter of 2016 while the coverage ratio of commercial non-performing loans reached 144% as of June 2016. In mortgage lending, the non-performing loan ratio of mortgage loans decreased to 1.9% in the second Q from 2.2% in the first quarter. The coverage of mortgage NPLs also increased to 41% as of June 2016, the highest level since 2008. Regarding our second strategic objective, the Bank continued to increase customer loyalty, which is a key strategic goal as it creates sustainable and long-term value for our shareholders. Loyal customers among high income earners defined as clients with at least four products plus a minimal usage and profitability levels increased 8.7% year-on-year.

 The same indicator for SMEs and the middle market clients rose 12.8% (sic - see slide 17, "12.7%"). However, let it be said that still around 15% of our customer base meets our redefined loyalty standards reflecting the large potential we have for further growth.

 Several initiatives are driving this rise in loyalty, one of the most important is the improvement in customer satisfaction. We are aiming to become the leader in customer satisfaction among our peer group. As of May, we have almost closed the gap and we have already tied up our main competitor in an industry-wide survey. Our CRM has been a key tool that has helped not only to boost through commercial [activity], but increase the quality and speed of our service. This has been accompanied by a profound cultural indoctrination based on Santander's simple, personal, and fair culture; which we feel will help to really place the customer as the center of our strategy.

 A second major initiative, which is helping to boost customer loyalty, is improving what we call customer journey. We had mapped out and defined in detail how we will relate and treat our customers from the very moment they initiate their relationship with us. This implies defining and developing an attention model at every point of contact with the client. This is an ongoing process, which is also boosting our loyalty metrics going forward. Greater customer loyalty is driving fee growth. Fee income increased 9.6% year-on-year in the second quarter of 2016. Fees in retail banking grew 5.6% and in the middle market they rose 17.2% year-on-year. The driver of fees in this segment was our core products such as credit and debit card fees as well as checking account fees. In the global corporate banking, fees increased 101% year-on-year due to the recovery of investment banking activities following a relatively weak performance in 2015.

 Another key strategic objective has been to deepen our ongoing commercial transformation by expanding our digital banking capability. This with a sense are 360 degrees review of our product, attention model, channels, and processes to better align them with the needs of our customers. As part of these efforts, since 2013 we have been engrossed in an ambitious project of redesigning and testing new distribution models. Three years ago we took the first steps at transforming our branch network away from a model in which an important percentage of transactions carried out added little value and cost relatively high to a branch network more focused on profitable client activity. Today of 10 people who enter our branch, 8 are non-clients performing unprofitable transactions such as paying bills.

 By 2019, our aim is to transform our network into true business centers with a more intelligent layout in which employees are engaged in creating value and hopefully removing all unprofitable transactions out of the branch. As of June 2016, we already have 45 branches under our new model. These branches have already become the most profitable and productive in the network. This has been accompanied by a total reduction in the number of branches especially in the low income segment and among payment centers. This process of branch closure plus the improvements in productivity will help to fund our investment program. As we said in the recent shareholder meeting, we expect to invest approximately [$140] million per year until 2018 in this process, which should boost customer loyalty, productivity, and efficiency.

 Apart from transforming the brick and mortar branch layout, we are expanding our digital banking capabilities. As of June 2016, we had 942,000 digital clients, up 7% year-on-year. Until now, our strength has been in Internet Banking in which we have 38.5% market share, twice the level of our main competitors. Currently our focus is on expanding mobile phone banking. In the first half for example we launched the second version of our bank app, which has more functionalities and is more personalized. At the same time, we launched Click 123, which allows clients to obtain a consumer loan in less than five minutes through his/her app or the website with no paperwork whatsoever. This was a key product that helped us to accelerate consumer loan growth in the quarter as already mentioned. This transformation has already boosted productivity.

 Since we started this process, we have closed 65 branches and the total volumes per branch has grown 61%. We believe that this trend should continue in time contributing to increase our operational excellence and contain cost growth. In the second quarter of this year for example operating expenses increased 4% year-on-year, the lowest quarterly year-on-year growth in the last seven quarters. Personnel salaries and expenses increased 5.1% in the second Q of 2016, also the lowest growth rate in the last seven quarters. The Bank has been reducing high level management positions in order to mitigate personnel cost growth. This process has entailed greater severance payments, including the one-time recognized in this quarter. Going forward, the growth rate of personnel expenses should continue to decelerate as the result of these cost cutting measures become more visible.

 Administrative expenses decreased 2.7% year-on-year. This fall is due to three main reasons. First, the appreciation of the peso in the quarter since various outsourced IT costs are denominated in foreign currency; two, general cost cutting efforts; and three, greater efficiency of the distribution network as previously described. Finally, our client-driven strategy should optimize profitability and capital and increase shareholder value in time. In the first half of 2016 net income, excluding the one-time severance expense already mentioned, grew 6% year-on-year representing an adjusted ROE of 18.2%, slightly ahead of our previous guidance. The net contribution of our business segment was the driving force behind these positive results rising 11% year-on-year in the first half.

 Retail banking net contribution rose 11%, middle market net contribution was up 12%, while corporate banking net results grew close to 10% in the same period. The Bank also concluded the first half with the strong capital ratios. The core capital ratio reached 10.1% and the Bank's BIS ratio was 13%. The growth of risk weighted assets was 4% year-on-year, half of the 8% growth in loans as the Bank has being implementing a series of initiatives to control the growth of non-productive risk weighted assets. The Bank also paid its annual dividend in April equivalent to 75% of 2015 earnings. The dividend yield was 5.3% considering the share price at the close of the record day in Chile. Despite this increase in payout, the Bank's core capital ratio increased 10 basis points year-on-year due to the Bank's high ROE and controlled growth of risk weighted assets.

 With this dividend plus the share price appreciation, since the end of 2014, the ADR price of Santander Chile has outperformed several of our main LatAm peers reflecting the positive results our strategy is bringing to shareholders despite being a relatively challenging period for banks. In summary, during the quarter the Bank continued executing its strategy and maintained a solid client business momentum. Our ROEs have been moving between 17% and 18%. We have maintained steady growth of client revenues and volumes coupled with better service and loyalty indicators. We have also been able to gain market share both in the lending and deposit business. Asset quality keeps improving and cost growth is starting to decelerate given the different initiatives the Bank has been implementing. This shows our strategy is allowing us to succeed in the current microenvironment while setting the foundations for long-term growth.

 At this time, we will gladly answer any questions you might have.



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Questions and Answers
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Operator   [1]
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 (Operator Instructions) Nicolas Riva, Citi.



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 Nicolas Riva,  Citigroup - Analyst   [2]
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 My first question is on asset quality. So, the NPL ratio improved 30 basis points quarter-on-quarter across all the segments so that was very good. Now your NPLs came down about CLP73 million and you wrote off CLP50 million so the NPL formation was actually negative CLP23 million, however you still booked CLP83 million so way above the NPL formation. My question really is why did you book this number of loan loss provisions? For example if I look at your coverage ratio, now it's around 140% which is high relative to your history so maybe you're being conservative in case the economy deteriorates. But again, my question would be why this level of loan loss provisions given the improvement in NPLs? And then my second question on operating expenses. You booked CLP10 billion for this one-time severance payments in the second quarter, but if I take that out, your OpEx actually went down 2% year-on-year. So, what is behind this decline in operating expenses year-on-year and also if you're going to see more headcount reductions and more severance payments in the third quarter? Thank you.



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 Raimundo Monge,  Banco Santander Chile - Director, Strategic Planning   [3]
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 Concerning the first part, there are two things there. Number one is that, as you know, the regulation has changed in many aspects. To some extent, it's forcing banks to set provisions in many cases by passing your internal models. That was the case in large corporate lending where you have to set a minimum provision regardless of the status of the client, also happens with mortgages. As you know, this year we started with a new provisioning model that is you have to provision according to a standard model set by the superintendency or your internal model whomever is more conservative. And accordingly, we have some guidelines that we have to follow that sometimes to couple your provision levels with the reality of your non-performing loan formation.

 So, that is part of the explanation that we are forced to take provisions that otherwise probably would not be in the immediate. So, that's one element. And the second element is that, as we commented in the press release, we have been foreseeing our credit in the low end of the consumer market in anticipation of further deterioration of the macro conditions especially employment. So, it's a mixture I would say that's prudent because it's better to take provisions when you have the revenues to do so. And secondly, the regulations that are in some cases forcing us to set provisions that we think we don't need it and that's why the coverage ratio has been trending up. So, it's something that at the end it's no problem to be conservative especially given that the macroenvironment is not at the stated level that most economies believe it should be in the economy.

 So, that's why it's a mixture of prudence and regulation. In terms of OpEx, I don't know how you do the calculation that gives you the sense of a drop. Our operation expenses we stated are rising 4%, which is the lowest level in close to seven quarters or more. There it's a combination of three or four things. One is as we comment through the call is the fact that we have been laying off especially senior management since the second half of last year and that has an effect in our ongoing growth rate. The second is through productivity gains because all these tools that we have implemented; scoring models, CRMs, and the new format that we are implementing in the branches; are improving the commercial productivity of our people and contact with clients.

 And thirdly, there is the fact that some expenses are linked to the US or foreign currency and given the fact that in the quarter the peso appreciated, that to some extent reduced the growth of our operating expense, which from the bottom line perspective is neutralized by gains on the trading gains. We have hedged US dollar position across our entire balance sheet and it has no result, but in this line you see that effect. So, it's a combination of many initiatives we have taken to control cost and also the fact that all the investment we have done in system, in IT, and market intelligence apparently are starting to pay off.



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 Nicolas Riva,  Citigroup - Analyst   [4]
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 One follow-up, Raimundo. The CLP172 billion in operating expenses for the second quarter is including the CLP10 billion for the one-time severance payments, it is right?



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 Raimundo Monge,  Banco Santander Chile - Director, Strategic Planning   [5]
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 No.



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 Robert Moreno,  Banco Santander Chile - Manager, IR Department   [6]
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 It's not including the other operating expenses (inaudible).



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 Raimundo Monge,  Banco Santander Chile - Director, Strategic Planning   [7]
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 The severance expenses was booked in other operating expenses, it's not in terms of [severance].



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 Nicolas Riva,  Citigroup - Analyst   [8]
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 Okay. So, that's why you said that your operating expenses were up 4% year-on-year. Thanks.



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 Raimundo Monge,  Banco Santander Chile - Director, Strategic Planning   [9]
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 That's right. We're talking about the specific line called operating expenses that exclude this one-time expense.



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Operator   [10]
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 Diego Ciconi, Scotiabank.



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 Diego Ciconi,  Scotiabank Global Banking & Markets - Analyst   [11]
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 I wanted to understand a little bit about the reversal that you registered in the mortgage segment about CLP4.3 billion and I wanted to understand what caused this reversal and if we should expect further reversals in the coming quarters. And also going back to the question on the severance payments of CLP10 billion, I wanted to know if we should expect further one-time expenses coming up until the end of the year? Thank you.



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 Raimundo Monge,  Banco Santander Chile - Director, Strategic Planning   [12]
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 In terms of the reversal in the mortgage business, as you know, we have models that are run and sometimes the health of the loans improve and that's why sometimes as you a reversal, but then in the last number of quarters has been the opposite. So, it's not been unusual. Remember that we're moving into the upper end of the market in the mortgage and the fact that we are limiting or close to zero mortgage that are with loan to value higher than 80% at the end represents you have a younger or a better quality mortgage portfolio resulting that. So, there's nothing really very important to mention. It's simply something that sometimes happens when the overall portfolio improves.



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 Diego Ciconi,  Scotiabank Global Banking & Markets - Analyst   [13]
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 And the recovery went up, you're doing a much better job.



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 Raimundo Monge,  Banco Santander Chile - Director, Strategic Planning   [14]
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 Yes, correct. That's a very good point, we are also improving our recovery. So, we are doing a number of things to try to stabilize and not to have a drag because of the mortgage. Because remember that the mortgage business in Chile is very low yielding, but is very low risk as well. That's why it's no surprise that sometimes you have reverse in provisions because you simply improve your commercial effort and your recovery effort as well. In terms of severance payments, we don't foresee that for the remainder of the year, but of course it's something that you normally do to get rid of personnel that don't fit your expectations. But we don't foresee extraordinary programs when we concluded the second quarter.



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 Diego Ciconi,  Scotiabank Global Banking & Markets - Analyst   [15]
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 Just one follow-up on the provisioning. I was under the impression at the end of last year that a level more reasonable for provisional expenses would be about CLP100 billion and you proved me wrong in the first and the second quarters. So I wanted to get some feedback on how do you see this line, 1.3% cost of credit is reasonable going forward?



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 Raimundo Monge,  Banco Santander Chile - Director, Strategic Planning   [16]
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 What happened is that if you back up a little bit, we have been changing the mix in the last three or four years away from the low end into the upper end and that has an impact in your gross revenues, which is what we have seen in the last two years. Our net interest margin has been trending down, especially the client net interest margin trending down, because you're originating new business at lower prices than the old portfolio to some extent. And then eventually you see that the spreads of the new businesses start being the same of their [forgone] business. We passed that moment by the end of last year more or less; second half, end of second half. So from now on what you see our net interest margin has been fairly stable, has been 4.8% client net interest margin in the last three quarters in a row reflecting that the [suite] of the mix is to a large extent concluded and as a consequence from now on should be relatively stable or rising if your mix is a little bit better.

 For the provision inside, the same movement has to be expected but lagged in time because of course the marginal growth that you originate doesn't have a meaningful impact in provisions except once time passes and that's why we think that the downward trends on cost of credit still has room to improve going forward. We have hinted that probably next year should be something close to 1.2%, 1.3%. So we think there is room, but of course the negative element is that the macro conditions have been weak and so there are two clashing forces. One positive that the origination models that we're using and the mix effect has been dominating, but of course this is assuming a central macro scenario in which the economy bounces a little bit regarding the levels of growth we've seen in the last two years or something similar.

 So, again there are two clashing forces. One is beneficial because the new business is much better in terms of quality and the vintages, you tend to measure this business for vintages, have every quarter improved. However, the negative force is that the macro conditions have been really soft and as a consequence, you don't know where the final result will be. We think that there is still room to improving and we hope that next year provision expense will be relatively low and as a consequence, cost of credit could relatively go down 10 basis points, 15 basis point. But again, it's something that is a little bit more open due to the more uncertain macro conditions that we might be facing.



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Operator   [17]
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 (Operator Instructions) Carlos Macedo, Goldman Sachs.



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 Carlos Macedo,  Goldman Sachs - Analyst   [18]
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 First question, the success that you had in implementing this new Select model has been pretty impressive. Have you seen any response from your competitors? Are they trying to pursue similar models or are they going out of their way to retain their clients? What has been the response because at this point you have enough of a track record there to show your success? Second question I'll ask after you respond to my first.



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 Raimundo Monge,  Banco Santander Chile - Director, Strategic Planning   [19]
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 The Select model as you rightly point has been quite successful. We have been fortunate that some banks have been going under their own changes so of course (inaudible). But at the same time basically we're leveraging in a very successful product; in credit card, we have been very successful and as a consequence, we had many clients that were just having the credit card. Today, through our new attention model you can offer them a more broad supply of products with a very high quality of service and the CRM also has helped in the process. So, we think we have a right approach for tackling these more demanding consumers with our model. In terms of competition, of course you see that the competitors are trying to have credit cards comparable to ours, but probably not as comprehensive as the one we have or things like that.

 So, we have to rush things to get and the way to do that is basically by getting new ideas and new tricks and as we talk in the call, these customer journeys' starting point are usually the high end of the customers and there we learn of how others respond et cetera. In the CRM, it's more or less the same. It's a tool that is very nicely fitted for more demanding customers and also for more comprehensive clients; clients not only have a loan or a credit card, but also have insurance, mutual fund, et cetera. So, it's difficult to know what's going on with the rest, but at least in our case we think we have a proven model that is delivering good results and now the challenge is how to kind of move down market with what we have learned in the upper market.



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 Carlos Macedo,  Goldman Sachs - Analyst   [20]
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 Second question, you highlighted that you've 45 branches in the new model and you aim to push out more branches in this model because obviously they're a lot more profitable and it makes sense. What are the costs associated with expanding and building out these branches? Is it something that we should expect to see in your expense line in the next two to three years?



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 Raimundo Monge,  Banco Santander Chile - Director, Strategic Planning   [21]
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 No, because today the bulk of the kind of one-time expenses have been assumed. Most of the changes are related with IT investments, simplifying your process, internal homework to a large extent. From now on what you start doing is changing the format of the brands. There are of course costs involved, but not meaningful and that's why we think that we can contain cost growth by financing most of the new investment and expenses, replacing expenses that were already incurred or by releasing square feet of the branches we close and replacing by the new square feet of the branches where we're doing things like that. So, we don't foresee a big increase given that most of the heavy investments have already been done in the last two or three years.



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Operator   [22]
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 I'm showing no further questions at this time, I'd like to hand the call back to Mr. Monge for closing remarks.



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 Raimundo Monge,  Banco Santander Chile - Director, Strategic Planning   [23]
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 Thank you all very much for taking the time to participate in today's call. We look forward to speaking with you again soon. Have a good day.



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Operator   [24]
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 Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program and you may now disconnect. Everyone have a great weekend.




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