Banco Santander-Chile (BSAC) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary presents a mixed outlook. While there are positive elements such as strategic partnerships and expected improvements in cost of risk and efficiency, concerns about competitive pressures on Getnet and the lack of clarity on future policy impacts temper enthusiasm. Additionally, the management's avoidance of providing specific answers on key issues raises uncertainty. Therefore, the overall sentiment is neutral, anticipating a modest reaction in the stock price.
Key Financial Performance
Net Income CLP 1,053 billion, up 23% year-on-year. Growth supported by a 9% increase in fee income and an 8% rise in financial transactions.
Return on Average Equity (ROE) 23.5%, consistently maintained above 21% even in quarters with lower inflation.
Efficiency Ratio 36%, reflecting disciplined cost control and digital transformation. Operating expenses grew just 1.6% for the full year.
Net Interest Income (NIM) Increased 11% year-on-year, with NIMs stable at 4%. Driven by a lower cost of funding, which improved by approximately 100 basis points year-on-year.
Fee Income Increased 9% year-on-year, driven by client growth and expansion of noncredit services.
Mutual Funds Grew 7% year-on-year, contributing to overall financial growth.
Client Base 4.6 million clients, with 58% active and approximately 2.3 million digital clients. Current accounts increased 9% year-on-year, supporting 5% growth in active clients and 7% growth in total clients.
Credit Card Transactions Increased 15% year-on-year, reflecting higher client activity.
CET1 Ratio 11% in December 2025, above the minimum requirement of 9.08%. Demonstrates about 50 basis points of capital creation since December 2024.
Cost of Credit Remains above historical average, with active management of loan portfolio and stabilization of nonperforming loans with 90 days or more.
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Operating Highlights
Digital Bank with Work Cafe: Focus on attracting and activating new clients, understanding their needs, and deepening engagement. Targeting over 5 million clients by 2026, leveraging AI and process automation for efficiency.
Fee-generating services: Expansion of transactional and noncredit fee-generating services, supporting double-digit fee growth and best-in-class recurrence.
Digital Ecosystem: Encourages frequent and seamless interactions, strengthening engagement and loyalty.
Client Base Expansion: Client base grew to 4.6 million, with 58% active and 2.3 million digital clients monthly. Business current accounts increased by 19%.
Recognition and Awards: Received recognitions such as Best Bank in Chile and Best Bank for SMEs by various organizations.
Efficiency Ratio: Achieved an efficiency ratio of 36%, the best in the Chilean banking industry in 2025.
Cost Control: Operating expenses grew by just 1.6% for the year, with a decline in core expenses in Q4.
Capital Ratios: CET1 ratio reached 11%, above the minimum requirement, demonstrating strong capital management.
Regulatory Modernization: Advances in fintech and open finance laws, simplifying regulatory approvals and enhancing innovation in digital financial services.
Economic Policy Initiatives: Potential reduction in corporate tax rate from 27% to 23%, focus on large-scale investment projects, and simplification of permitting processes.
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Risk or Challenges
Mortgage origination challenges: Affordability constraints and higher interest rates have significantly affected mortgage origination in previous years, and while the mortgage subsidy law aims to address this, the impact is expected to be gradual.
Regulatory hurdles: The implementation of new laws, such as the fintech and open finance law, while beneficial in the long term, may pose short-term challenges in terms of compliance and adaptation for financial institutions.
Economic uncertainties: Chile's economy, while improving, still faces vulnerabilities such as a fragile labor market and global risks including geopolitical tensions and economic fragmentation.
Cost of credit and asset quality: The cost of credit remains above historical averages, and the impaired loan ratio has increased, reflecting potential risks in loan portfolio quality.
Interchange fee reduction uncertainty: The potential impact of a further interchange fee reduction, which is yet to be defined by the interchange fee commission, could affect fee and financial transaction income.
Operational expenses: Temporary increases in operating expenses, such as cloud migration costs, have been observed, which could impact efficiency ratios if not managed effectively.
Legislative dynamics: The implementation of economic policy initiatives by the new administration depends on congressional approval, which introduces uncertainty regarding the scope, timing, and final design of these policies.
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Guidance & Outlook
Economic Growth: Economic activity is projected to expand between 2.1% and 2.4% in 2026, broadly in line with trend growth before picking up in 2027.
Inflation and Monetary Policy: Inflation is expected to remain marginally below the 3% target in 2026, with an additional cut to the monetary policy rate anticipated in the first half of the year, taking it to an estimated neutral level of 4.25%.
Business Environment: A more market-friendly credit policy environment, combined with regulatory simplification and a stronger focus on competitiveness and investment, is expected to improve business confidence and support a gradual recovery in credit demand.
Loan Growth: Mid-single-digit loan growth is anticipated in 2026, with a stronger rebound in the second half of the year.
Net Interest Margins (NIMs): NIMs are expected to remain at 4% levels in 2026, supported by loan growth and slightly lower rates.
Fee and Financial Transaction Growth: Fees and financial transactions are projected to grow mid- to high single digits in 2026, excluding potential impacts from further interchange fee reductions.
Efficiency Ratio: Efficiency is expected to remain around the mid-30s in 2026.
Cost of Credit: The cost of credit is expected to improve gradually to reach around 1.3% for the full year 2026.
Return on Equity (ROE): ROE is projected to be within the range of 22% to 24% in 2026, reflecting strong profitability.
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Shareholder Return Plan
Dividend Payout Ratio: Banco Santander-Chile has a dividend payout ratio of 60% to 70%.
Dividend Provision: The bank is provisioning a 60% dividend payout to be paid in April next year.
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Key Q&A
Q:What is the economic and political outlook, including the possibility of reducing the statutory tax rate and credit cap limit?
A:The growth projections for 2026 and 2027 were corrected due to improved copper prices, better trading performance, and internal demand dynamics. Politically, the new government is expected to have a transition period, and tax reductions are anticipated to take effect more in 2027 and the second half of this year rather than the short term. The credit card limit discussion is expected to take longer and is unlikely to see changes in 2026.
Q:What are the loan growth expectations for this year, and can you break it down by segment?
A:The guidance for loan growth is mid-single digits, consistent with a gradually improving macroeconomic environment. Consumer lending is seeing steady growth in auto loans, while installment loans are expected to improve. Commercial lending is expected to grow due to reactivation in mining investments and improved confidence. Mortgages are also seeing gradual improvement, especially in the affluent segment, supported by better construction conditions and a mortgage subsidy launched last year.
Q:What are the details and implications of the Getnet sale?
A:A strategic partnership was formalized with Getnet Payments, including an initial payment of CLP 68 billion and a service agreement where Banco Santander provides infrastructure and services. Santander Chile will receive 10% of net operating revenues for the next year, with an automatic extension for three more years. Approximately 65%-70% of Getnet's total net income will go to Banco Santander Chile, with negligible P&L impact. The transaction was approved with strong shareholder support.
Q:What is the guidance for cost of risk and asset quality for 2026?
A:The cost of risk is expected to improve from 1.4% in 2025 to around 1.3% in 2026. Improvements in NPLs in the commercial portfolio and controlled cost of risk are anticipated. The mortgage portfolio is expected to improve gradually, although judicial collection processes are taking longer.
Q:What are the efficiency improvements and expense growth projections?
A:The aim is to control expense growth to inflation plus 1% long-term. Efficiency improvements include technological platform transformations, AI implementation, and reducing routine tasks. The network size will see slight modifications, with some new formats and branch renovations. Peso appreciation also contributed to lower administrative expenses.
Q:Does the guidance include the reduction in Getnet stake, and what is its relevance for ROE and non-NII guidance?
A:The guidance includes the reduction in Getnet stake, with less than 1% impact on total P&L and about 20 bps impact on ROE. Fee figures will not change, but there will be an increase in the minority stake line in the P&L.
Q:What is the NPS for SMEs, and are there plans to improve it?
A:The SME NPS is around 37%, consistent with the local industry average of 33%-37%. Efforts are being made to improve it closer to 50%, but the industry reality in Chile keeps SME NPS lower.
Q:Are there other business areas with potential synergies similar to Getnet?
A:Most pieces are in place, including Santander Asset Management and Santander Consumer Finance. The group recently acquired an annuities company, which is expected to integrate by mid-year. No significant new synergies are expected in the near term.
Q:What is the outlook on removing interest rate caps for consumer lending?
A:Interest rate caps are unlikely to change this year. Discussions are in early stages and will require the new administration to take office and set priorities. Removing caps could improve bancarization and access for the mass market.
Q:Is the loan growth guidance influenced by the new administration's potential impact on investments?
A:The guidance accounts for a low 2% GDP growth year, translating to 5%-6% loan growth. Structural changes from the new administration are expected later in the year, with economic growth impacts more likely in late 2026 and 2027.
Q:What are the expectations for risk-weighted assets density and inflation sensitivity?
A:Risk-weighted assets are expected to grow around 2%, with density mildly decreasing as loans grow by 5%. Inflation sensitivity is around CLP 8.5 billion, or 15 basis points per 100 basis points of inflation.
Q:What are the growth expectations for Getnet, and how does competition affect it?
A:Getnet's growth is expected to face challenges due to increased competition, regulatory changes, and new market entrants. Near-term growth remains strong, but the environment is becoming more competitive, necessitating strategic partnerships to sustain efficiency and growth.
Q:Review of Unclear Management Responses
A:Management avoided providing direct answers or clarity on the following: 1) The timeline and specifics of tax rate reductions and credit cap limit changes, citing delays and transition periods. 2) The exact impact of the new administration's policies on loan growth, stating it is too early to predict structural changes. 3) The long-term growth prospects for Getnet, acknowledging increased competition but not detailing specific strategies to counteract it.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Banco Santander
Bank normalization
Chile environment
Chile tax
Chile trajectory
Commerce confidence
Cristian presentation
Cristian priority
Kast competitiveness
Palomeque Economist
President elect
Santander Chile
Slide
adjustment
administration
agenda
approval
beginning
competitiveness investment
condition activity
construction
credit demand
household
investment project
labor market
law
level labor
measure
outlook
parallel
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scale investment
sector economy
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stance
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territory
BSAC Transcript
Banco Santander-Chile (BSAC) Q4 2025 Earnings Call Transcript
Unknown2-5
The earnings call summary presents a mixed outlook. While there are positive elements such as strategic partnerships and expected improvements in cost of risk and efficiency, concerns about competitive pressures on Getnet and the lack of clarity on future policy impacts temper enthusiasm. Additionally, the management's avoidance of providing specific answers on key issues raises uncertainty. Therefore, the overall sentiment is neutral, anticipating a modest reaction in the stock price.
Banco Santander-Chile (BSAC) Q3 2025 Earnings Call Transcript
Positive11-5
Banco Santander-Chile's earnings call reveals strong financial performance with a 37% increase in net income and improved ROE at 24%. Despite competitive pressures and elevated operating expenses, efficiency remains industry-leading. Asset quality is improving, and the dividend payout plan is favorable. Q&A highlights manageable risks and optimistic loan growth prospects. Overall, the strong financial metrics and optimistic guidance outweigh concerns, suggesting a positive stock price reaction.
Banco Santander-Chile (BSAC) Q2 2025 Earnings Call Transcript
Positive8-5
The earnings call summary shows strong financial performance with sustained ROE above 20%, improved NIM, and efficient cost control. Despite weak loan demand, the bank's digital transformation and client growth are positive indicators. The Q&A section highlights healthy consumer loan growth and sustained fee growth, although some uncertainties remain. The bank's shareholder return plan includes a significant dividend provision, enhancing investor sentiment. Overall, the positive financial metrics, optimistic guidance, and strategic initiatives outweigh the risks, leading to a positive stock price prediction over the next two weeks.
Banco Santander-Chile (BSAC) Q1 2025 Earnings Call Transcript
Positive5-11
The earnings call highlighted strong financial performance with a 131% YoY increase in net profit, a historic high ROAE, and a robust dividend plan. Despite some concerns in the Q&A about external risks and competition, the overall sentiment remains positive due to record financial metrics and shareholder returns. The lack of significant impact from new capital requirements and stable asset quality trends further support a positive outlook, potentially leading to a 2% to 8% stock price increase.
BSAC Report
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