Banco de Chile SA Q3 FY2024 earnings call

• Strategic progress: Focus on customer satisfaction, efficiency, and sustainability with six main priorities, aiming for long-term return on average equity of ~18% and cost-to-income ratio exceeding long-term targets.
• Digital banking: Added new functionalities to the main banking app, introduced a mortgage loan credit simulator, launched a digital account for university students, and enhanced digital services for companies, leading to a 36% year-on-year growth in digital client base.
• Efficiency: Closed five branches this quarter, reducing the total network by 10% in 12 months, and optimized support areas and subsidiaries for better synergies and agility.
• ESG: Active in volunteer programs like beach/river cleanups, supported SMEs, launched the Entrepreneurial Challenge, and recognized by MERCO as the best bank for talent management for 11 consecutive years.

Banco de Chile's net income for the third quarter was CLP288 billion, with a return on average equity of 21.3% in the quarter and 22.8% year-to-date. The loan portfolio is strategically balanced with retail loans representing 65% of the total loan book and wholesale commercial loans at 35%. Net interest margin was 4.6%, fee margins 1.3%, and total operating margin 6.4% for the quarter. Customer income grew annually, driven by improved lending spread, and net fees increased 10% year-over-year, with growth in mutual funds management and transactional services.

• GDP growth: Expected to continue recovering, with GDP growth forecasted to increase from 0.2% in 2023 to 2.3% in 2024, driven by exports and consumption, but investment likely to remain negative.
• Loan growth: For 2025, expecting nominal loan growth around 5%, with normalization in different segments and considering inflation expectations of 3.5%.
• Interest rates: Central bank likely to maintain a contractionary policy with interest rates ending the year at 5%.

• Global economic factors: Uncertainties from China and US GDP growth, Middle East/Eastern Europe conflicts, and US government changes.
• Local factors: Potential second-round effects of inflation, weak investment indicators, and political election impacts on economic policies.

Q: Color on loan growth for 2025 and inflation outlook A: Rodrigo Aravena mentioned loan growth around 5% nominal for 2025, considering normalization and inflation expectation of 3.5%. Also discussed global and political factors affecting loan growth.

Q: Regarding NPL coverage and asset quality outlook A: Pablo Mejia stated current NPL coverage is high due to past provisions, with possibility of releasing provisions in future, but triggers not defined. Also discussed inflation impact on asset quality and payment behavior