Estados Financieros

Transcription

Estados Financieros

Interim Consolidated Financial Statements
BANCO DEL ESTADO DE CHILE AND
SUBSIDIARIES
Santiago, Chile
As of September 30, 2013 and 2012
Interim Consolidated Financial Statements
BANCO DEL ESTADO DE CHILE AND SUBSIDIARIES
As of September 30, 2013 and 2012
(Translation of financial statements originally issued in Spanish- See Note 1b)
Contents
I.
II.
III.
IV.
V.
VI.
Ch$ =
MCh$ =
US$ =
MUS$ =
UF
=
Interim Consolidated Statement of Financial Position
Interim Consolidated Income Statement
Interim Consolidated Other Comprehensive Income Statement
Interim Consolidated Statement of Changes in Equity
Interim Consolidated Statement of Cash Flows
Notes to the Interim Consolidated Financial Statements
Chilean pesos
Millions of Chilean pesos
United States dollars
Millions of United States dollars
Unidades de Fomento (UF). The UF is a peso-dominated inflation-indexed
monetary unit. The UF rate is set daily in advance, based on the change in the
Consumer Price Index (CPI) of the previous month
TABLE OF CONTENTS
Page
Interim Consolidated Statement of Changes in Equity
Interim Consolidated Statement of Cash Flows
1. Corporate information and summary of significant accounting policies:
2. Accounting changes:
3. Relevant events:
4. Operating segments:
5. Cash and cash equivalents:
6. Portfolio sales:
7. Property, plant and equipment:
8. Debt instruments issued and other obligations:
9. Provisions:
10. Contingencies and commitments:
11. Personnel and expenses:
12. Transactions with related parties:
13. Assets and liabilities at fair value:
14. Events occurred after the reporting period:
1
2
3
4
5
6
40
41
44
47
49
50
51
54
57
61
65
69
75
As of September 30, 2013 and December 31, 2012
(Figures expressed in millions of Chilean pesos - MCh$)
(Translation of financial statements originally issued in Spanish - See Note 1b)
ASSETS
Cash and due from banks
Transactions in the course of collection
Financial assets held-for-trading
Repurchase agreements and security loans
Financial derivative contracts
Loans and advances to banks
Loans and accounts receivable from customers
Financial investments available-for-sale
Financial investments held to maturity
Investments in companies
Intangible assets
Property, plant and equipment
Deferred taxes
Other assets
Notes
5
5
09/30/2013
MUS$
09/30/2013
MCh$
12/31/2012
MCh$
5,561
665
2,475
201
219
593
28,397
5,750
111
18
206
490
1,086
523
2,803,826
335,269
1,247,837
101,187
110,538
298,996
14,317,777
2,899,132
56,149
9,166
103,897
246,807
547,417
263,684
3,528,861
270,114
1,269,674
100,638
128,140
299,173
13,527,447
3,003,534
58,220
6,830
66,979
241,031
487,600
165,070
46,295
23,341,682
23,153,311
9,259
600
821
23,170
189
1,146
7,264
108
83
307
1,000
194
4,668,294
302,363
413,800
11,682,343
95,477
577,860
3,662,740
54,373
41,977
154,970
504,264
96,965
5,952,854
175,276
520,344
9,984,854
99,755
1,192,023
3,355,645
19,921
88,840
108,649
406,583
106,565
44,141
22,255,426
22,011,309
552
1,582
(2)
278,497
797,760
(1,194)
278,497
797,760
6,162
143
(143)
72,118
(72,118)
95,891
(41,472)
Non-controlling interest
2,132
22
1,075,063
11,193
1,136,838
5,164
TOTAL EQUITY
2,154
1,086,256
1,142,002
46,295
23,341,682
23,153,311
7
TOTAL ASSETS
LIABILITIES
Current accounts and other demand deposits
Transactions in the course of payment
Saving accounts and time deposits
Obligations with banks
Debt issued instruments
Other financial obligations
Current taxes
Deferred taxes
Provisions
Other liabilities
TOTAL LIABILITIES
EQUITY
Attributable to equity holders of the bank:
Issued capital
Reserves
Other comprehensive income
Retained earnings:
From previous year
Net income for the period
Less: Provision for distribution of income to the benefit of the state
TOTAL LIABILITIES AND EQUITY
5
8
8
9
The accompanying notes 1 to 14 form an integral part of these Interim Consolidated Financial Statements
1
For the periods ended September 30, 2013 and 2012
Notes
09/30/2013
MUS$
1,920
(888)
1,032
09/30/2013
MCh$
968,139
(447,616)
520,523
09/30/2012
MCh$
901,780
(446,433)
455,347
Fees and commission income
Fees and commission expense
Net fee and commission income
375
(89)
286
189,070
(44,905)
144,165
171,328
(37,223)
134,105
Net income from financial operations
Foreign exchange transaction, net
Other operating income
154
(25)
13
77,773
(12,762)
6,705
56,755
9,004
6,023
1,460
736,404
661,234
Provisions for loan losses
(327)
(165,030)
(146,619)
OPERATING INCOME, NET
1,133
571,374
514,615
(487)
(291)
(50)
(15)
(245,358)
(146,752)
(25,454)
(7,451)
(224,252)
(128,078)
(16,243)
(10,413)
(843)
(425,015)
(378,986)
290
146,359
135,629
2
1,253
1,091
292
147,612
136,720
(131)
(66,264)
(63,183)
161
81,348
73,537
143
18
161
72,118
9,230
81,348
64,516
9,021
73,537
Interest income
Interest expense
Net interest income
Total operating income
Personnel expenses
Administrative expenses
Depreciation and amortization
Impairment
Other operating expenses
Total operating expenses
NET OPERATING INCOME
Income from investments in companies
Income before income taxes
Income taxes expenses
NET INCOME FOR THE PERIOD
Attributable to:
Equity holders of the bank
11
The accompanying notes 1 to14 form an integral part of these Interim Consolidated Financial Statements
2
Notes
NET INCOME FOR THE PERIOD
09/30/2013
MUS$
09/30/2013
MCh$
09/30/2012
MCh$
161
81,348
73,537
Net profit (loss) on valuation of investment securities available-for-sale
Loss on accumulated foreign currency translation adjustment
Net (loss) profit on cash flow hedge derivatives
12
(48)
5,993
(31)
(24,300)
(2,692)
(836)
15,754
Other comprehensive income before income taxes
(36)
(18,338)
12,226
22
10,982
(7,960)
(14)
(7,356)
4,266
-
-
-
TOTAL OTHER COMPREHENSIVE INCOME
(14)
(7,356)
4,266
CONSOLIDATED COMPREHENSIVE PROFIT FOR THE PERIOD
147
73,992
77,803
Attributable to:
Equity holders of the Bank
129
18
64,762
9,230
68,782
9,021
147
73,992
77,803
OTHER COMPREHENSIVE INCOME THAT WILL BE
RECLASSIFIED TO INCOME FOR THE PERIOD
Income tax on other comprehensive income
Total other comprehensive income that will be reclassified to income for the period
OTHER COMPREHENSIVE INCOME THAT WILL NOT BE
RECLASSIFIED TO INCOME FOR THE PERIOD
3
BANCO DEL ESTADO DE CHILE Y FILIALES
Interim Consolidated Statements of Changes in Equity
Other comprehensive income
Issued
capital
Reserves
MCh$
MCh$
Financial
investments
available
for sale
Cash
flow
hedge
Conversion
difference
Deferred
taxes
Prior
year's
retained
earnings
Income
for the
period
Provision for
distribution
of net income
period
Total
attributable to
equity holders
of the bank
Noncontrolling
interest
Total equity
MCh$
MCh$
MCh$
MCh$
MCh$
MCh$
MCh$
MCh$
MCh$
MCh$
Equity as of 01.01.2012
Transfers
Dividends paid
Variation of financial investments available-for-sale
Variation of hedge accounting derivates
Adjustment for conversion differences (NY)
Provision for distribution of minimum income
278,497
278,497
720,685
76,969
797,654
1,264
(2,692)
(1,428)
4,776
15,754
20,530
(4,388)
(836)
(5,224)
(2,663)
1,564
(9,524)
(10,623)
19,241
(19,241)
-
96,210
(96,210)
64,516
64,516
(67,266)
19,241
20,123
(27,902)
1,027,115
(1,128)
6,230
(836)
20,123
64,516
1,116,020
3,010
(731)
(930)
9,021
10,370
1,030,125
(731)
(1,128)
6,230
(836)
19,193
73,537
1,126,390
Transfers
Dividends paid
Variation of financial investments available-for-sale
Variation of hedge accounting derivates
Adjustment for conversion differences (NY)
Provision for distribution of minimum income
Equity as of 09.30.2013 MUS$
278,497
278,497
552
797,760
797,760
1.582
(3,998)
5,993
1,995
4
29,886
(24,300)
5,586
11
(5,110)
(31)
(5,141)
(10)
(14,616)
(3,597)
14,579
(3,634)
(7)
95,891
(95,891)
-
95,891
(95,891)
72,118
72,118
143
(41,472)
41,472
(72,118)
(72,118)
(143)
1,136,838
(54,419)
2,396
(9,721)
(31)
(72,118)
72,118
1,075,063
2,132
5,164
(2,851)
(350)
9,230
11,193
22
1,142,002
(57,270)
2.396
(9,721)
(31)
(72,468)
81,348
1,086,256
2,154
4
Interim Consolidated Statements of Cash Flows
Notes
09/30/2013
09/30/2013
09/30/2012
MUS$
MCh$
MCh$
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
161
81,348
73,537
Charges (credits) to income that do not represent cash flows:
Depreciation and amortization
Adjustment to market of financial assets held-for-trading
Gain from investment in companies
Net gain on sales assets received in lieu of payment
Loss on sale of property, plant and equipment
Write-off of assets received in lieu of payment
Other charges to income that do not represent cash movements
Net income (loss) for interest and inflation readjustment
50
415
(60)
(2)
(1)
1
195
(31)
25,454
209,290
(30,398)
(1,253)
(674)
15
482
98,482
(15,831)
16,243
146,619
35,567
(1,091)
(385)
403
103,451
30,844
Changes in assets and liabilities affecting operating cash flows:
Decrease of trading instruments
Increase in loans
Increase (decrease) in held to maturity and financial investments available-for-sale
Increase (decrease) in other credit transactions
Decrease in currents accounts
Increase of deposits and loans
Increase (decrease) in other demand and time liabilities
Increase (decrease) of other obligations through brokerage of documents
Decrease of obligations in letters of credit
Increase (decrease) of loans obtained from local banks
Decrease of loans obtained from foreign banks
Decrease of loans obtained from the Central Bank
Net decrease of other assets and liabilities
163
(1,983)
211
(2,690)
3,443
66
(211)
(228)
179
(778)
(618)
(177)
82,129
(999,620)
106,473
177
(1,356,505)
1,736,004
33,430
(106,544)
(114,721)
90,000
(392,421)
(311,742)
(89,136)
209,895
(1,064,997)
(952,182)
(284,041)
(1,003,392)
1,939,362
124,893
104,843
(103,992)
(5,457)
(177,801)
(311,237)
(67,743)
Net cash flows used in operating activities
(1,895)
(955,561)
(1,186,661)
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchase of property, plant and equipment and intangible assets
Sale of property, plant and equipment and intangible assets
Investments in companies
Dividends received from investments in companies
Sale of assets received in lieu of payment
(141)
(3)
1
2
(70,933)
15
(1,440)
657
1,151
(39,454)
188
(114)
463
603
Net cash flow used in investing activities
(141)
(70,550)
(38,314)
980
(256)
(190)
(26)
494,295
(129,227)
(95,891)
(12,914)
352,039
(12,339)
(19,242)
(10,756)
508
256.263
309,702
(1,528)
(769,848)
(915,273)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Issue of bonds
Redemption of bonds
Payment of profit for the year before taxes
Payment of income in benefit of non-controlling interest
8
8
Net cash flows provided by financing activities
NET VARIATION FOR THE PERIOD OF CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD
5
7,640
3,852,214
3,695,663
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD
5
6,112
3,082,366
2,780,390
5
As of September 30, 2013 and 2012 and December 31, 2012
NOTE 1 – CORPORATE INFORMATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Corporate Information - Background information for the Bank and its Subsidiaries
The Caja de Crédito Hipotecario was established on August 29, 1855. It was the founding institution
that promoted the country’s economic development, whose main objective was to provide access to
credit to the production sector and to the general public and to safeguard their deposits.
Subsequently, the Caja Nacional de Ahorro was established by law, on August 22, 1910, in order to
encourage savings, especially in the lower-income sector, and to ensure safe and profitable savings.
Under such law, it was agreed to combine in a single institution all of the saving entities in the
country under the sponsorship of the Government. The country’s needs, especially in the agricultural
sector led to the creation of the Caja de Crédito Agrario, in August 1926, in order to provide
financial services to a wide range of farmers. For similar purposes, but instead pursuant to the
manufacturing industry, the Instituto de Crédito Industrial was established in February 1928. The
four institutions mentioned above, operated separately until 1953, when under Law Decree No.126,
published in the Official Gazette on July 24, 1953, Banco del Estado de Chile (BancoEstado) was
established and began operating on September 1, 1953.
The purpose of its creation was to promote development of domestic economic activities by
providing financial products and services, and in doing so provide the best quality service to Chilean
citizens.
The Organic Law of Banco del Estado de Chile, Law Decree No. 2,079 of 1977, establishes that the
Bank is an autonomous State company, with its own legal status and equity, of indefinite duration,
exclusively subject to the supervision of the Superintendency of Banks and Financial Institutions
and related to the Government through the Treasury Department. Therefore, Banco del Estado de
Chile has no issued shares as it is governed by the previously mentioned Organic Law.
The Bank is governed by its Board of Directors consisting of seven members; where six of them
have the exclusive trust of the President of the Republic, and one is a representative of the Bank’s
employees. It is managed by an Executive Committee formed by the Chairman, Vice-chairman and
Chief Executive Officer.
The Bank’s headquarters are located at Av. Bernardo O’Higgins No. 1111, Santiago, Chile.
The Interim Consolidated Financial Statements of BancoEstado, for the period ended September 30,
2013 were approved by the Audit Committee on October 21, 2013 and by the Executive Committee
on October 23, 2013.
6
ACCOUNTING POLICIES (continued)
Banco del Estado de Chile is the parent company of a group of Subsidiaries which are engaged in
separate lines of business. Consequently the Bank is obligated to prepare Consolidated Financial
Statements including its Subsidiaries and its Foreign Branch and its investments in entities
supporting its line of business in addition to its own Financial Statements.
The Subsidiaries and Foreign Branch of the Bank are the following:
-
BancoEstado S.A. Corredores de Bolsa is a privately held Corporation, incorporated on August
17, 1989, as a stock agency, that became a stock broker on June 10, 1992. On January 19, 1990,
it obtained its registration as a stock broker and a stock agency with the Superintendency of
Securities and Insurance, under registry No. 0137. Its main purpose is the trading of publiclyoffered securities on behalf of third parties and on its own account.
-
BancoEstado S.A. Administradora General de Fondos is a privately held Corporation
established on June 23, 1997 and authorized by Resolution No. 272 dated August 20, 1997
issued by the Superintendency of Securities and Insurance, whose exclusive purpose was to
manage home savings. On April 25, 2003 through Exempt Resolution No. 105, the
Superintendency of Securities and Insurance approved the by-laws of BancoEstado S.A.
Administradora de Fondos para la Vivienda, consisting of changing its corporate name to
BancoEstado S.A. Administradora General de Fondos, and its purpose was the administration of
funds referred to in Article No. 220 of Law No. 18,045 on the securities market. On December
3, 2008, Banco del Estado de Chile entered into a sale agreement with BNP Paribas Investment
Partners for the sale of 4,999 shares out of the total of 10,000 shares of this Subsidiary,
equivalent to 49.99% of its equity interest. The sale of its equity interests became effective on
January 2, 2009. Currently the Company has under its administration 13 mutual funds and one
home savings fund.
-
BancoEstado Corredores de Seguros S.A. was established as a limited liability company on
August 4, 1999. Its by-laws were modified on September 13, 2004, becoming a privately held
corporation. This company is regulated by the Superintendency of Securities and Insurance. Its
purpose is the remunerated brokerage of all types of insurance ruled by Law Decree No. 251 of
1931, with any national insurance company located in the country and providing related
insurance advisory services.
BancoEstado has a strategic alliance with Metlife Chile Inversiones Ltda. for the development
of the insurance business and incorporated this company into the ownership of BancoEstado
Corredores de Seguros S.A. with a 49.9% interest. This alliance includes participation in the
management and development of products and businesses.
7
-
BancoEstado Servicios de Cobranza S.A. is a privately held company established on September
9, 1999, and registered with the Superintendency of Banks and Financial Institutions on August
10, 1999 under No. 752. Its exclusive objective is to collect on credit documents on its own
account or on behalf of others, whether through pre-judicial, judicial or extrajudicial means.
-
BancoEstado Microempresas S.A. Asesorías Financieras was incorporated on July 23, 1996,
and is subject to the regulations of the Superintendency of Banks and Financial Institutions. Its
exclusive purpose is to provide support services to the banking business in terms of financial
advisories to microenterprises.
-
BancoEstado Centro de Servicios S.A. was incorporated on November 13, 2004, for the sole
purpose of carrying out legal and operating activities related to those referred to in No. 1 of
Article No. 69 of the General Banking Law, except for those related to entering into contracts
for checking accounts and deposit transactions. Its main purpose is to provide support services
to the banking business related to cash services.
-
BancoEstado Contacto 24 Horas S.A. is a privately held company established on December 13,
2001. Its purpose is to provide telemarketing and technical assistance services, information on
products and services, etc., by using remote and/or virtual communication, and services in
general focused on developing and maintaining business relationships with the customers of
BancoEstado and its Subsidiaries.
-
Sociedad de Servicios Transaccionales Caja Vecina S.A. is a privately held company
established on October 19, 2006. Its sole and exclusive purpose is to carry out activities related
to legal and operational actions with the public referred to in No. 1 of Article No. 69 of the
General Banking Law, except for those related to entering into contracts for checking accounts
and deposits operations.
-
Sociedad de Promoción de Productos Bancarios S.A. is a privately held corporation, established
on May 7, 2008. Its sole and exclusive purpose is to promote the products and services of the
Bank and its Subsidiaries. This company is subject to the regulations of the Superintendency of
Banks and Financial Institutions.
8
-
BancoEstado New York Branch, who’s banking license was issued on July 25, 2005 by the
authorities of the State of New York, authorizes Banco del Estado de Chile to open and operate
a Branch. Its operation started on October 5, 2005. Its commercial orientation is towards
Chilean customers, corporations, entities and institutions with products and services for foreign
trade, such as letters of credit, discounts and payment orders, commercial loans in foreign
currencies, exchange operations, risks hedging, etc. The Branch fully depends on its parent
company. This Branch is regulated and supervised by the State of New York and the Federal
Reserve in the United States.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHERS:
a) Period covered:
The Interim Consolidated Financial Statements (hereinafter, "Financial Statements”) comprise the
following statements and periods: Interim Consolidated Statement of Financial Position which as
covers the periods ended September 30, 2013 and December 31, 2012, and the Interim Consolidated
Income Statement, Interim Consolidated Other Comprehensive Income Statement, Interim
Consolidated Statement of Changes in Equity and Interim Consolidated Statement of Cash Flows
for the periods ended September 30, 2013 and 2012.
b) Basis of presentation:
In accordance with Article No. 15 of the General Banking Law empowers the Superintendency of
Banks and Financial Institutions to set forth general application accounting standards to entities
subject to its oversight. On the other hand, the Companies Law requires that Generally Accepted
Accounting Principles be followed.
According to the mentioned legal regulations, banks must use the criteria set forth by the
Superintendency of Banks and Financial Institutions in its Compendium of Accounting Standards
and in that which is not dealt with therein, if they do not contradict its instructions, banks must
follow Generally Accepted Accounting Principles, which correspond to the technical standards
issued by the Chilean Association of Accountants, which are prepared based on the International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board
(“IASB”). Should there be discrepancies between these generally accepted accounting principles
and the accounting standard issued by the Superintendency of Banks and Financial Institutions, the
latter shall prevail.
The notes to the Financial Statements contain information in addition to that presented in the
Interim Consolidated Statements of Financial Position, Interim Consolidated Income Statement,
Interim Consolidated Other Comprehensive Income Statement, Interim Consolidated Statement of
9
Equity and Interim Consolidated Statement of Cash Flows. They include clear, relevant reliable and
comparative narrative descriptions of the details in those statements.
For the convenience of the reader, the Interim Consolidated Financial Statements and their
accompanying notes have been translated from Spanish to English.
These Interim Consolidated Financial Statements for the nine-month period ended as of September
30, 2013, have been prepared in accordance with chapter C-2 of the Compendium of Accounting
Standards of the Superintendency of Banks and Financial Institutions and IAS 34 Interim Financial
Information.
In accordance with IAS 34, interim financial information is prepared solely with the intention of
updating the contents of the latest annual Consolidated Financial Statements, with emphasis on new
activities, events and circumstances occurred during the accounting period described in letter a)
above and not duplicating the information previously published in the latest Consolidated Financial
Statements. Due to the above, these Interim Consolidated Financial Statements do not include all the
information required for full Consolidated Financial Statements prepared in accordance with
international financial accounting and reporting standards agreed upon by the IASB, therefore, for
an adequate comprehension of the information included in these Interim Consolidated Financial
Statements, they must be read in conjunction with the Annual Consolidated Financial Statements of
BancoEstado, for the year ended December 31, 2012.
Therefore, as of September 30, 2013, the Bank declares that it complies with IAS 34.
c) Consolidation criteria:
The Interim Consolidated Financial Statements comprise the preparation of the Financial Statements
of the Bank, New York Branch and Subsidiaries and include the adjustments and reclassifications
necessary to homogenize the accounting policies and valuation criteria applied by the Bank, in
accordance with the standards established in the Compendium of Accounting Standards issued by
the Superintendency of Banks and Financial Institutions.
10
Intercompany balances and any unrealized gains or losses from intercompany transactions are
eliminated in full during the preparation of the Interim Consolidated Financial Statements. As of
September 30, 2013, the assets and liabilities and operating income of Subsidiaries represent
altogether 9.21%, 9.61% and 28.06%, respectively (7.34%, 7.70% and 25.79%, respectively as of
December 31, 2012), of total consolidated assets, liabilities and operating income. Unearned income
from transactions with companies, whose investment is recognized using the equity method, is
eliminated from the investment, using the share percentage in the entity’s equity.
The companies in which BancoEstado participates are divided into the following:
•
Controlled entities and/or Subsidiaries
"Controlled" entities are considered to be entities over which the Bank has the capacity to exercise
control, capacity that manifests itself when there is exposure to, or entitlement to variable yields
arising from involvement in an entity where the Company has an interest and has the capacity to
influence those yieds through its power over the Company.
The entities (hereinafter jointly referred to as “Subsidiaries”) and foreign Subsidiary over which the
Bank has the capacity to exercise control, which have a significant share and form part of the
Consolidated Financial Statements as of September 30, 2013 and December 31, 2012 are detailed as
follows:
Ownership
Rut
Company
96.564.330-3
77.330.030-5
96.900.150-0
96.836.390-5
96.979.620-1
96.781.620-5
76.727.730-K
99.578.880-2
76.015.414-8
-
BancoEstado S.A. Corredores de Bolsa
BancoEstado Corredores de Seguros S.A.
BancoEstado Servicios de Cobranza S.A. (*)
BancoEstado S.A. Administradora General de Fondos
BancoEstado Contacto 24 Horas S.A. (*)
BancoEstado Microempresas S.A. Asesorías Financieras (*)
Sociedad de Servicios Transaccionales Caja Vecina S.A. (*)
BancoEstado Centro de Servicios S.A. (*)
Sociedad de Promoción de Productos Bancarios S.A. (*)
BancoEstado - New York Branch(*)
September 30, 2013
Direct
Indirect
Total
99.9996%
50.1000%
99.9000%
50.0100%
99.9000%
99.9000%
99.8500%
99.9000%
99.8300%
100.0000%
0.1000%
0.1000%
0.1000%
0.1500%
0.1000%
0.1700%
-
99.9996%
50.1000%
100.0000%
50.0100%
100.0000%
100.0000%
100.0000%
100.0000%
100.0000%
100.0000%
Direct
December 31, 2012
Indirect
Total
99.9996%
50.1000%
99.9000%
50.0100%
99.9000%
99.9000%
99.8500%
99.9000%
99.8300%
100.0000%
0.1000%
0.1000%
0.1000%
0.1500%
0.1000%
0.1700%
-
99.9996%
50.1000%
100.0000%
50.0100%
100.0000%
100.0000%
100.0000%
100.0000%
100.0000%
100.0000%
(*) These entities are regulated by the Superintendency of Banks and Financial Institutions. The
remaining companies are regulated by the Superintendency of Securities and Insurance. The New
York Branch is also regulated by the State of New York and the US Federal Reserve.
11
•
Entities supporting the line of business and/or associated entities:
Entities supporting the line of business are those over which the Bank has the ability to exercise
significant influence, but not control or joint control.
The companies that support the line of business are detailed as follows:
Company
Administrador Financiero Transantiago S.A.
Sociedad Operadora de la Cámara de Compensación de Pagos de Alto Valor S.A.
Operadora de Tarjetas de Crédito Nexus S.A.
Transbank S.A.
IMERC-OTC S.A. (*)
Ownership %
09/30/2013
12/31/2012
21.0000%
13.0336%
12.9030%
8.7188%
11.11%
21.0000%
13.0336%
12.9030%
8.7188%
-
(*) The new banking support company, IMERC-OTC S.A. was established on June 21, 2013 in
conjunction with other banks in the Chilean financial system. Its line of business is to operate a
centralized registry of operations, confirmation, storage, consolidation and reconciliation of
derivative transactions. On July 25, a capital contribution of MCh$1,440 was paid, leaving
BancoEstado with an 11.11% interest equivalent to 1,111 shares of that Company.
The Bank analyzed the valuation method and decided to continue using the equity method to
account for all entities supporting the line of business, using as main criterion the level of significant
influence exercised over these companies (through its participation on the Board) rather than its
share in the equity of those companies.
•
Investments in other companies:
Investments in companies correspond to those companies over which the Bank has no control, or for
those over which it has no significant influence. The aforementioned investments are presented at
their fair value.
Between September 30, 2013 and December 31, 2012 there have been no changes in the Bank's
composition or changes in ownership.
The Bank has no interest in special purpose entities.
12
d) Non-controlling interest:
The non-controlling interest represents the portion of the gains or losses and net assets over which
the Bank, directly or indirectly, has no ownership. The non-controlling interests are presented
separately within the Interim Consolidated Income Statements, and in equity in the Interim
Consolidated Statement of Financial Position, and are presented separately from shareholders' equity
attributable to the Bank.
e) Operating segments:
The Bank discloses segment information in accordance with IFRS 8 “Operating Segments”, which
establishes the standards to report operating segments and related disclosures for products and
services and geographical areas. An operating segment is defined as a component of an entity for
which separate financial information is available, that is used regularly by the chief decision maker
to decide how to allocate resources and to evaluate performance.
The Bank’s operating segments are determined based on the different business units. These business
units generate services subject to risks and performance that are different from another operating
segment.
f) Functional and presentation currency:
The Bank and its Subsidiaries have defined the Chilean peso as their functional currency because:
•
It is the currency of the main economic environment whose competitive forces and regulations
determine the prices of financial services provided by the Bank and its Subsidiaries.
•
It is the currency that mainly influences payroll and other costs necessary to provide the services
that the Bank and its Subsidiaries provide to its clients.
The New York Branch has defined its functional currency as the US dollar. Balances of the
Branch’s Financial Statements are converted to Chilean pesos as follows:
•
•
•
Assets and liabilities are converted at the exchange rate, as of the Financial Statement closing
date.
Income, expenses and cash flows, are converted applying the accounting representation
exchange rate for the month of the transaction.
Net equity at historical exchange rates.
13
The presentation currency for the Interim Consolidated Financial Statements is the Chilean peso,
expressed in millions of pesos (MCh$).
g) Foreign currency transactions:
All balances and transactions in currencies other than the functional currency are considered
“foreign currency”.
For the preparation of the Interim Consolidated Financial Statements of the Bank and its
Subsidiaries, monetary assets and liabilities in foreign currencies are translated into Chilean pesos
using exchange rates current as of the closing date of the respective Interim Consolidated Financial
Statements. The resulting gains or losses are recognized as profits or losses.
Foreign currency translation arises when there is conversion to Chilean pesos of balances in the
functional currency of the New York Branch, and is recorded in the "Valuation accounts - foreign
currency translation" in the Consolidated Statement of Changes in Equity.
h) Valuation criteria of assets and liabilities:
The measurement criteria of assets and liabilities recorded in the Consolidated Statement of
Financial Position are the following:
•
Assets and liabilities measured at amortized cost:
The amortized cost of a financial asset or financial liability is the amount at which the financial asset
or financial liability is measured at initial recognition minus principal repayments, plus or minus the
cumulative amortization of any difference between the initial amount and the maturity amount, and
minus any reduction for impairment or uncollectibility. For financial assets the amortized cost also
includes the amounts of corrections arising from the corresponding impairment.
For financial instruments the part systematically recorded in the accounts of profit and loss is
recorded under the effective interest rate method. The effective rate method is determined on the
basis of all cash flows estimated for all the concepts in the remaining useful life of a financial
instrument.
14
•
Assets measured at fair value:
The fair value of an asset or liability at a given date is understood to be the amount at which the
asset could be exchanged and the liability could be settled on that date between two prudent,
knowledgeable willing parties in an arm’s length transaction. The most objective and habitual
reference of the fair value of an asset or liability is the price that would be paid for it in an organized
and transparent market (“quoted price” or “market price”).
When there is no market price to determine the amount of the fair value for a certain asset or
liability, the price established in recent transactions of similar instruments is considered to estimate
its fair value.
In those cases, when it is not possible to determine the fair value of a financial asset or liability, it is
measured at amortized cost.
In addition, according to Chapter A-2 of the Compendium of Accounting Standards, banks are not
permitted to designate a financial asset or liability on initial recognition as one to be measured at fair
value in replacement of the general criterion of amortized cost.
The Interim Consolidated Financial Statements have been prepared based on the general criterion of
amortized cost, except for:
•
Derivative financial instruments, which have been measured at fair value.
Assets classified as held for sale are valued at fair value when it is lower than the carrying
amount minus the cost of executing the sale.
Financial assets held for trading are measured at fair value.
Financial investments available for sale are measured at fair value.
Assets valued at acquisition cost:
Acquisition cost is the cost of the transaction to acquire the asset, less any impairment losses should
there be any.
i) Investment securities:
Investment securities are classified into two categories: investments held-to-maturity and financial
investments available-for-sale. The category of investments held-to-maturity includes only those
instruments for which the Bank has the positive intent and ability to hold to maturity. All other
investment securities are categorized as available-for-sale.
15
Investment securities are initially recognized at cost, including transaction costs.
Subsequent to initial recognition, available-for-sale investments are measured at fair value based on
market prices or valuations obtained from using models, less impairment losses. Unrealized gains or
losses from changes in fair value are recognized with a charge or credit to equity accounts or income
if they are held for trading. When these investments are sold or impaired, the amount of the
accumulated fair value adjustment in equity is transferred to income and reported under “net income
from financial operations”.
Held-to-maturity investments are recorded at cost plus accrued interest and readjustments less
impairment provisions recorded when their carrying amount exceeds their estimated recovery
amount.
Interests and adjustments of held-to-maturity investments and available-for-sale instruments are
included under, "interest income".
Investment securities designated as hedged instruments are adjusted following the rules on hedge
accounting.
Investment securities purchases and sales that must be delivered within the time period established
by market regulations and conventions are recognized on the trading date, which is the date when
the commitment is made to purchase or sell the asset.
The Bank has evaluated its held-to-maturity and available-for-sale investment portfolio as of
September 30, 2013 and December 31, 2012, in order to assess whether there are any impairment
indicators. This assessment includes economic evaluations, credit rating of the debt issues and the
intent and ability of management to hold these investments to maturity. Based on such evaluation,
no impairment losses have been recognized.
j) Instruments held for trading:
Instruments held for trading are securities acquired for the purpose of generating earnings from
current price fluctuation or from brokerage margins, or which form part of a portfolio in which there
is a pattern of current profit-taking.
16
Instruments held for trading are valued at fair value based on market prices as of the closing date of
the Consolidated Statement of Financial Position. Gains or losses from changes in fair value, as well
as income from trading activities (sale of instruments), are included in the Interim Consolidated
Statement of Income under “net income from financial operations”. Accrued interest and
readjustments are also reported in the Interim Consolidated Statement of Income under “net income
from financial operations”.
Management has designated all investments held by Subsidiaries as instruments held for trading.
All purchases and sales of instruments held for trading to be delivered in the period established by
market regulations or conventions are recognized on the trading date, which is the date on which the
commitment is made to purchase or sell the asset.
k) Financial derivative contracts:
Financial derivative contracts including foreign currency and UF, interest rate futures, currency and
interest rate swaps, interest rate and currency options, and other financial derivatives are initially
recognized in the Consolidated Statement of Financial Position at their cost (including transaction
costs) and subsequently measured at fair value. Fair value is obtained from market rates, discounted
cash flow models and option valuation models, as appropriate. Derivative contracts are presented as
an asset when their change in fair value is positive and as a liability when it is negative under
"financial derivative contracts", as applicable.
Certain derivatives embedded in other financial instruments are treated as separate derivatives when
their risk and characteristics are not clearly related to the host contract and such host contract is not
recorded at fair value through profit or loss.
At inception of a derivative contract, it should be designated by the Bank as a trading derivative or
as a hedging instrument for hedge accounting purposes.
Any changes in the fair value of financial derivative contracts held for trading are included in the
Interim Consolidated Statement of Income under “net income from financial operations".
If the derivative instrument is classified as for accounting hedge purposes, it can be: (1) a fair value
hedge of existing assets or liabilities or firm commitments, or (2) a hedge for cash flows related to
existing assets or liabilities or expected transactions. A hedge relationship for hedge accounting
purposes must meet all the following conditions: (a) at inception of the hedge there is formal
documentation of the hedge relationship; (b) the hedge is expected to be highly effective; (c) the
effectiveness of the hedge can be reliably measured and (d) the hedge is highly effective in relation
to the hedged risk, continuously throughout the hedge relationship.
17
Certain transactions with derivatives that do not qualify for hedge accounting are treated and
reported as trading derivatives, even though they provide effective coverage for managing risk
positions.
When a derivative hedges exposure to changes in the fair value of a recognized asset or liability,
such asset or liability is recorded at fair value with respect to the specific risk hedged. Profits or
losses from valuating both the hedged item and the hedge derivative at fair value are recognized in
profit or loss.
If the hedged item in a fair value hedge is a firm commitment, changes in the fair value of the
commitment in regard to the risk hedged are recorded as an asset or liability with an effect on
income for the period. Profits or losses from fair value measurement of the hedge derivative are
recognized with an effect on income for the period. When an asset or liability is acquired as a result
of the commitment, the initial recognition of the acquired asset or liability is adjusted to incorporate
the accumulated effect of fair value valuation of the firm commitment that was recorded in the
Consolidated Statement of Financial Position.
When a derivative hedges exposure to changes in the cash flows of recognized assets or liabilities or
of expected transactions, the effective part of the change in fair value with respect to the hedged risk
is recorded in shareholders’ equity. Any ineffective part is recognized directly in income for the
period.
The amounts recorded directly in shareholders' equity for the effective portion of cash flow hedges,
are charged to income in the same periods in which the assets or liabilities hedged affect profit or
loss for the period.
l) Loans to customers:
Loans to customers are non-derivative financial assets with fixed or determined payments that are
not quoted in an active market and that the Bank has no intention to sell immediately or in the shortterm.
When the Bank is the landlord in a lease agreement and substantially transfers all incidental risks
and benefits over the leased asset, the transactions is presented under loans to customers.
Loans to customers are measured at amortized cost using the effective interest rate method.
18
m) Interest revenue and expenses:
Interest income and expenses are recognized on an accrual basis using the effective interest rate
method. However, when a loan is determined to be impaired, the Bank, on a prudent basis, will
suspend accrual of interest and readjustments, and recognize them in the accounting when they are
received.
In accordance with the criteria established by the Superintendency of Banks and Financial
Institutions, suspension occurs in the following cases:
Loans with individual assessment:
• Loans classified in categories C5 and C6: accrual is suspended by the sole fact of being in the
impaired portfolio.
• Loans classified in categories C3 and C4: accrual is suspended due to having been three months in
the impaired portfolio.
Loans with collective assessment:
• Loans with less than 80% real guarantees: accrual is suspended when payment of the loan or one
of its installments has been overdue for six months.
Notwithstanding the above, in the case of loans subject to individual assessment, recognition of
income from accrual of interest and readjustments can be maintained for loans that are being paid
normally and which correspond to obligations whose cash flows are independent, as can occur in the
case of project financing.
n) Income and expenses from fees and commissions:
Income and expenses from fees and commissions are recognized in the Interim Consolidated
Statements of Income with different criteria, depending on their nature. The most significant criteria
are:
-
Those originating from specific actions which are recognized when the action that generates
them is produced.
Those originating from transactions or services that are rendered over a period of time, which
are recognized over the life, maturity or term covering such transactions or services.
Those related to financial assets or liabilities, which are recognized at the time of their
collection.
19
o) Impairment:
The Bank, New York Branch and its Subsidiaries use the following criteria to assess impairment,
should it exist:
•
Financial assets:
Financial assets are evaluated at each reporting date to determine whether there is objective
evidence of impairment. A financial asset or group or assets will be impaired if there is objective
evidence that one or more events have had a negative effect on future cash flows of the asset.
An impairment loss related to financial assets recorded at amortized cost is calculated as the
difference between the carrying amount of the asset and the present value of estimated cash flows
discounted at the effective interest rate.
An impairment loss in relation to an available-for-sale financial asset is calculated by reference to its
fair value.
Individually significant financial assets are individually reviewed to determine their impairment
(individual assessment). The remaining financial assets are evaluated collectively in groups that
share similar credit risk characteristics (collective assessment).
All impairment losses are recognized in profit or loss. Any accumulated loss related to an availablefor-sale financial asset, previously recognized in equity is transferred to income.
Reversal of an impairment loss occurs only if it can be objectively related to an event occurred after
its recognition. In the case of financial assets carried at amortized cost and sales deeds available-forsale, reversal is recognized in income.
•
Non-financial assets:
The carrying amount of non-financial assets, excluding investment properties and deferred taxes, is
regularly reviewed to determine whether there is any indication that the asset may be impaired. If
any such indication exists, the Bank estimates the recoverable amount of the asset, which is its fair
value less cost of sales or its value in use, whichever is greater.
20
Impairment losses recognized in prior periods are assessed at the end of each reporting period to
determine whether there is an indication that such loss may no longer exist or may have decreased.
An impairment loss is reversed if, and only if, there has been a change in the estimates used to
determine the asset’s recoverable amount since the last impairment loss was recognized. The
increased carrying amount of an asset attributable to reversal of an impairment loss shall not exceed
the carrying amount that would have been determined, net of depreciation or amortization, had no
impairment loss been recognized for the asset in prior years.
p) Investments in associates:
Associated entities, which are entities supporting the Bank’s line of business, are valued using the
equity method (Note No. 1 c).
q) Intangible assets:
Intangible assets held by the Bank are mainly investments in software.
Acquired software is measured at cost less accumulated amortization and accumulated impairment
losses.
Expenses for internally developed software are recognized as assets when the Bank is able to
demonstrate its intention and ability to complete its development and use it internally to generate
future economic benefits, and the cost of completing its development can be reliably measured.
Capitalization of the cost of internally developed software includes all direct costs attributable to the
development of the software and is amortized over its useful life.
Amortization is recognized on a straight-line basis over the estimated useful life of the software
since it is ready for use. The average estimated useful life of software is 3 years.
Expenses incurred, in research and evaluation of technological alternatives, are recognized as an
expense in the period in which they are incurred.
21
r) Property, plant and equipment:
Property, plant and equipment items are stated at cost less accumulated depreciation and impairment
losses.
The cost includes expenses that have been attributed directly to the acquisition of those assets. The
cost of assets at the construction stage includes the cost of materials and direct labor, and any other
cost directly attributable to the process of leaving the asset in a condition to be used.
When part of a property, plant and equipment item has a different useful life, such part is recorded
as a separate item (significant components of property, plant and equipment).
Depreciation is recognized in the Interim Consolidated Income Statement on a straight-line basis
over the useful lives of each part of a property, plant and equipment item. Leased assets are
amortized over the term of the lease or their useful lives, whichever is shorter, unless there is
certainty that the Bank will obtain ownership at the end of the term of the lease.
As of September 30, 2013 and December 31, 2012, the Bank applied the following useful lives for
depreciation of assets
- Buildings
- Equipment and facilities
- Equipment and accessories
80 years
5 to 10 years
3 years
Depreciation, useful lives and residual values are calculated at each reporting date.
The estimated useful lives of property, plant and equipment items are reviewed at the end of the
reporting period in order to detect any significant changes. If changes are observed in the useful
lives of the assets, they are adjusted and depreciation is corrected in the current period and any
future affected periods.
Repair and maintenance expenses are recognized when they occur.
s) Lease agreements:
•
Operating leases:
When the Bank, New York Branch and its Subsidiaries act as lessee and the contract qualifies as an
operating lease, total payments are recorded as operating expenses.
At the end of the term of the operating lease, any payment related to contract fines required by the
lessor is recorded in expenses for the period in which such contract ended.
22
•
Financial leases:
Financial leases consist of lease agreements with a clause that gives the lessee the option to purchase
the leased asset at the end of the lease. The sum of the present value of lease payments that will be
received from the lessee, plus the purchase option is recognized as third party financing and
therefore presented in the loans and accounts receivable from customers at present value and the
asset is derecognized.
Goods acquired for financial lease operations are presented under “other assets” at acquisition cost.
t) Cash and cash equivalents:
The Bank has used the indirect method for preparing the Consolidated Statement of Cash Flows,
whereby the Bank’s net income is adjusted for the effects of non-cash transactions, as well as for
income and expenses associated to cash flows classified as from investing or financing.
In accordance with the specific requirements applicable to financial institutions, the Bank and its
Subsidiaries have considered as cash and cash equivalents the balance of “cash and due from
banks”, plus (less) the net balance of transactions in the course of collection presented in the
Consolidated Statement of Financial Position, plus available-for-sale money market securities and
repurchase agreements with little risk of change in value, maturing in three months or less from the
acquisition date. It also includes investments in fixed income mutual funds, which are presented
together with instruments held for trading in the Interim Consolidated Statement of Financial
Position.
The preparation of the Interim Consolidated Statements of Cash Flows considers the following
concepts:
a) Cash flows: inflows and outflows of cash and cash equivalents, understanding such to be
money market investments with low risk of change in value such as: deposits with the Chilean
Central Bank, local banks and foreign banks.
b) Operating activities: correspond to normal activities performed by banks, as well as other
activities that cannot be qualified as from investing or financing.
c)
Investing activities: correspond to acquisition or disposal by other means of non-current assets
and other investments not included in cash and cash equivalents.
d) Financing activities: correspond to activities that produce changes in the size and composition
of net equity and liabilities that do not form part of operating or investing activities.
23
u) Allowance for loan losses:
The provisions required to cover loan losses have been recognized in accordance with the standards
of the Superintendency of Banks and Financial Institutions. Assets are presented net of the
allowance or showing the reduction in the case of loans and accounts receivable from customers. In
the case of contingent loans, the corresponding allowances are recorded as liabilities under
provisions.
The models established by the Superintendency of Banks and Financial Institutions for determining
provisions are summarized as follows:
u.1) Allowance for individual assessment:
In accordance with Chapter B-1 of the Compendium of Accounting Standards of the
Superintendency of Banks and Financial Institutions the individual assessment of debtors is
necessary when dealing with clients who due to their size, complexity or exposure level, need
to be known and analyzed in detail.
•
Criteria of commercial portfolio rating with individual analysis:
The following risk rating criteria are applied to commercial debtors subject to individual analysis,
and are based on the principles established in Chapter B-1 of the Compendium of Accounting
Standards of the Superintendency of Banks and Financial Institutions.
The analysis for the rating should be mainly based on the debtor’s payment capacity and inherent
financial characteristics, taking the credit quality of the group it belongs to as referential
information.
Debtor portfolio with normal risk
The portfolio with normal risk includes debtors whose payment capacity allows them to fulfill their
obligations and commitments and it is not perceived that this condition will change based on the
assessment of their economic financial position. Therefore, these are debtors without substantial
risks, whose payment capacity allows them to cover obligations under the agreed terms and which
would continue being satisfactory in spite of unfavorable business, economic and financial
situations.
24
The probability of default and expected loss in each category of the normal risk portfolio is as
follows:
Type of
portfolio
Category
A1
A2
A3
A4
A5
A6
Normal risk
portfolio
Probability of
default
%
0.04
0.10
0.25
2.00
4.75
10.00
Loss due to
default
%
90.00
82.50
87.50
87.50
90.00
90.00
Expected
loss
(allowance %)
0.03600
0.08250
0.21875
1.75000
4.27500
9.00000
Substandard portfolio
The substandard portfolio includes debtors with financial difficulties or significant worsening of
their payment capacity and for which there are reasonable doubts about the total reimbursement of
agreed principal and interest, showing little room to fulfill their current financial obligations.
This portfolio also includes debtors, which lately (in the last twelve months) have shown
delinquencies in excess of thirty days, show poor payment behavior with the Bank or with third
parties (delinquency during the year for significant amounts outstanding for less than 90 days).
The probability of default and expected loss in each category of the substandard portfolio are
detailed as follows:
Type of
portfolio
Category
Substandard
portfolio
B1
B2
B3
B4
Probability of
default
%
15.00
22.00
33.00
45.00
Loss due to
default
%
92.50
92.50
97.50
97.50
Expected
loss
(allowance %)
13.87500
20.35000
32.17500
43.87500
25
Allowance for portfolio under normal or substandard compliance
To determine the amount of the allowance that should be established for portfolios with normal and
substandard compliance, banks must first estimate the exposure subject to allowance, to which the
respective loss percentages will be applied (expressed in decimals), which comprise the likelihood
of default and loss due to default established for the category within which the debtor and/or its
qualified guarantor fall, as applicable.
The exposure subject to allowance corresponds to loans plus contingent loans less amounts that
would be recovered by means of executing guarantees, as stated in No. 4.1 of Chapter B-1 of the
Compendium of Accounting Standards of the Superintendency of Banks and Financial Institutions.
Likewise, loans are understood to be the carrying amount of loans and accounts receivable of the
respective debtor, whereas contingent loans are understood as the value resulting from applying the
regulations contained in No. 3 of Chapter B-3 of the Compendium of Accounting Standards of the
Superintendency of Banks and Financial Institutions.
The following should be considered for calculation purposes:
Allowance debtor =(EAP-EA)x(PI debtor /100)x(PDI debtor /100)+EAx(PI GUARANTOR /100)x(PDI GUARANTOR /100)
Where:
EAP
=
EA
PI
PDI
=
=
=
Exposure subject to allowance (Loans + contingent loans) - financial or real
guarantees
Guaranteed exposure
Probability of default
Loss due to default
Notwithstanding the above, the Bank must maintain a minimum allowance percentage required of
0.50% on loans and contingent loans in the Normal Portfolio.
Non-performing portfolio
This portfolio includes debtors with loans overdue for more than 90 days or which are in judicial
collection and whose source of payment is supported in the guarantees established. Should there be
concrete information that justifies it; the present value of recoveries that might be obtained by
exerting the collection actions, net of expenses associated to them can also be considered.
26
“Concrete information” is considered to be any recovery by judicial means that is supported with a
report from the Bank’s Legal Department (“Fiscalía”), determining the effectiveness of the
collection. This must be free of any encumbrance or preferential creditors, leading to an actual
payment flow.
In addition, those debtors who have shown a negative past performance in the Bank or financial
system are considered as non-performing, such as: social security and tax payment infringement,
returned and not cleared notes, debt past due in the financial system, write-offs in the financial
system, etc., as well as debtors in default or showing a preventive judicial arrangement.
There are six categories for debtors with non-performing loans and each of them is associated to a
range of expected loss relating to commercial loans and commercial lease operations of the
customer as a whole; therefore it is necessary to determine the guarantee coverage. It should be
noted that all contingent loans must be fully considered, since they are rated as non-performing
loans.
Allowance for non-performing portfolio
For the purpose of establishing the allowance, there are percentages that must be applied to the
amount of the exposure which correspond to the sum of loans and contingent loans held by the same
debtor. To apply this percentage, an expected loss rate should first be estimated by deducting from
the amount of the exposure the amounts recoverable through execution of guarantees and, in case
there is concrete information to justify it, also deducting the present value of recoveries that can be
obtained exerting collection actions, net of the related expenses associated to them. This loss rate
should be included in one of the six categories defined according to the range of losses actually
expected by the Bank for all the operations of the same debtor.
27
These categories and their loss range as estimated by the Bank and the allowance percentages that
should ultimately be applied on the amounts of exposure for the non-performing portfolio are those
indicated in the following table:
Type of
portfolio
Risk category
Range of expected loss
Allowance
(%)
Nonperforming
portfolio
C1
C2
C3
C4
C5
C6
More than 0 up to 3%
More than 3 % up to 20%
More than 20% up to 30%
More than 80%
2
10
25
40
65
90
The following should be considered for calculation purposes:
Expected loss rate = (E-R)/E
Allowance =E x (PP/100)
Where:
E
R
PP
= Amount of the exposure
= Recoverable amount
= Allowance percentage (as per category where the expected loss rate must fall).
u.2) Collective assessment allowances:
Collective assessment is used to analyze a large number of operations whose individual amounts are
low, generally involving individuals or small businesses. For this purpose the Bank uses models
based on probability of default of debtors and their loans. In collective assessments, allowances are
always established according to the expected loss using the models and formulas indicated by the
Superintendency of Banks and Financial Institutions.
28
Allowances for the collectively assessed portfolio are determined as follows:
Provision= EG*(1-EA/100)*(PI/100)*(PDI/100)+EG*EA/100(PI GUARANTOR /100)x(PDI GUARANTOR /100)
Where:
EG
EA
PI
PDI
PI GUARANTOR
PDI GUARANTOR
=
=
=
=
Amount of exposure.
Percentage of guaranteed exposure, for the group of loans.
Probability of default.
Percentage of loss due to expected default, which must be calculated excluding
recoveries from guarantors.
= Percentage of probability that the guarantor will default.
= Percentage of loss due to guarantor default.
To estimate these parameters, the Bank’s loan portfolio is divided into groups called families. These
are selected by groups of similar products such as installment loans, housing mortgage loans without
government guarantee, etc.
With this grouping the PI and PDI parameters are obtained which have been developed with the
Bank’s internal information and are used for one or several products determined according to their
portfolio.
u.3) Impaired portfolio:
The impaired loan portfolio includes those loans for which there is concrete evidence that debtors
will default by failing to make contractual payments, regardless of whether or not there is a
possibility of recovering the amounts owed through guarantees, through exercising legal collection
actions or by agreeing to different conditions.
In any case, when dealing with debtors subject to individual assessment, the Bank considers in
impaired portfolio all credits of debtors classified in any of the categories of the non-performing
portfolio, as well as in categories B3 and B4 of the substandard portfolio. Likewise for debtors being
collectively assessed, the impaired portfolio includes all loans in the non-performing portfolio.
Based on the above, the Bank shall maintain loans in the impaired portfolio until it observes
regularization of the debtor’s payment capacity or behavior; otherwise it will write these loans off.
29
u.4) Loans write-off:
Loans and accounts receivable are written-off based on due, past due and outstanding installments.
The timeframe for the write-off is from the beginning of the default, i.e. when the default time of an
installment or portion of a loan of an operation reaches the deadline to be written-off, detailed as
follows:
Type of loan
Consumer loans with or without real guarantees
Other transactions without real guarantees
Commercial loans with real guarantees
Residential mortgage loans
Leasing of consumer goods
Other non-real estate lease transactions
Real estate lease (commercial and residential)
Deadline
6 months
24 months
36 months
48 months
6 months
12 months
36 months
As of 2012 year-end, the Bank decided to standardize the criteria for writing-off mortgage loans
with a subsidy, for the purpose of using it for the rest of the mortgage loan portfolios. Until 2012,
mortgage loans with subsidy were written-off by reducing the respective mortgage loan (once the
deadline for write-off was fulfilled), recognizing a transitory asset and establishing equivalent
additional allowances.
In accordance with this, in 2012 the Bank wrote-off the stock of mortgage loans with subsidy
recorded in transitory assets amounting to MCh$72,319 (MCh$57,576 en 2011) with a charge to
additional allowances established for this concept. For operating cash flows, as of January 2013, the
general criteria established in the Compendium of Accounting Standards of the Superintendency of
Banks and Financial Institutions was applied to write-off residential loans, i.e. 48 months of
delinquency.
u.5) Recovery of written-off loans:
Recovery of previously written-off loans is recognized directly in income under risky assets
provision, netting the allowance expense for the period.
30
u.6) Additional provisions:
In addition to the allowance for loan losses, the Bank may make additional provisions to those
derived from the application of portfolio assessment models, for the purpose of safeguarding against
unpredictable economic fluctuations that might affect the macroeconomic environment or the
situation of a specific economic sector, in accordance with the Bank’s policies (Note 9). Within the
additional provisions the Bank contemplates a countercyclical mechanism of accumulation of
provisions in the commercial, consumption and mortgage portfolio, to safeguard against any
recessionary periods and also considers additional provisions for portfolio concentration.
During 2011, the Bank’s Board decided to increase the limit for additional provisions over the total
amount of allowance for loan losses to 100%. As of September 30, 2013, the Bank has recorded
additional credit risk provisions equivalent to 65.12% (58.3% as of December 31, 2012). The effect
of these provisions is recorded under “provisions for loan losses” in the Interim Consolidated
Statement of Income.
v) Provisions and contingent liabilities:
Provisions are liabilities of uncertain timing and amount. These provisions are recognized in the
Interim Consolidated Statement of Financial Position when the following requirements are fulfilled
collectively:
•
It is a real obligation as a result of past events and,
•
As of the date of the Interim Consolidated Financial Statement it is probable that the Bank or
group will use an outflow of resources to settle the obligation and the amount of the obligation
can be reliably estimated.
A contingent liability is a possible obligation that arises from past events whose existence will be
confirmed only by the occurrence of one or more uncertain future events that are not wholly within
the control of the Bank, New York Branch and its Subsidiaries.
w) Employee benefits:
•
Employee vacations:
The annual cost of vacations and employee benefits are recognized on an accrual basis.
31
•
Current benefits:
The Bank provides to its employees an annual bonus incentive plan based on achievement of
certain objectives and goals, which consists of a specific number or portion of monthly salaries.
That bonus is accrued based on the expected amount to be paid.
The Bank has also agreed with its employees to a negotiation bonus which is amortized over the
term of the collective contract and the unamortized part is recorded under “Other assets”.
•
Non-current benefits:
The Bank has established provisions for non-current employee benefits pursuant to the
existence of implicit obligations derived from its collective agreement. Those obligations give
rise to the recognition of provisions which are determined by using actuarial assumptions
including the employee turnover rate, expected salary increases, mortality tables and the
likelihood of use of this benefit.
x) Current and deferred income taxes:
The Bank and its Subsidiaries have recognized a corporate income tax expense as of the end of each
reporting period in accordance with applicable tax regulations.
Additionally, as the Bank is treated as a public sector institution, it is subject to a tax credit in
accordance with Article No. 2 of Decree Law No. 2,398 dated 1978, that corresponds to a rate of
40%.
The effects of deferred taxes on temporary differences, between the tax balance sheet and the
Interim Consolidated Statement of Financial Position, are recorded in accordance with IAS 12.
The Bank and its Subsidiaries recognize, when applicable, deferred tax liabilities for future
estimated tax effects attributable to differences between the carrying amounts of liabilities and their
tax values. Deferred tax liabilities are measured on the basis of the tax rate, which according to
current tax legislation must be applied in the year in which the deferred tax liabilities are realized or
settled. Future effects of changes in tax legislation or in tax rates are recognized in deferred taxes, as
of the date in which the law approving those changes is enacted.
On September 27, 2012, the Official Gazette published Law No. 20,630 which permanently
modified the rate of article No. 20 of the Income Tax Law, setting the first category tax rate at 20%.
32
y) Transactions with agreements:
The Bank, New York Branch and Subsidiaries enter into sales with repurchase agreements as a
method of financing. In this regard, investments sold under repurchase agreements which serve as
loan guarantees are classified under “Instruments held for trading” and “Investment securities
available for sale”. The repurchase obligation is classified under “Repurchase agreements and
securities loans,” recognizing interest and adjustments accrued as of the closing date.
The Bank’s New York Branch and its Subsidiaries also enter into resale agreements as a method of
investing. Financial instruments purchased under resale agreements are included as assets under
“Repurchase agreements and securities loans” recognizing interest and readjustments accrued as of
the closing date.
z) Factoring transactions:
The Bank performs factoring transactions with its customers, whereby it receives invoices and other
commercial papers representing receivables, with or without the responsibility of the transferor,
paying the transferor a percentage of the total amounts receivable from the debtor for the transferred
documents.
Factoring receivables are valued at cash consideration paid for the receivables. The difference
between the cash consideration paid and the face value of the receivables is recognized as interest
income by using the effective interest method over the financing period. The transferor maintains
the responsibility of payment on the invoices not collected.
aa) Assets received in lieu of payment:
Assets received in lieu of payment are recognized at the lower of initial carrying amount and their
net realizable value, less any regulatory write-offs. Write-offs are required by the Superintendency
of Banks and Financial Institutions if the asset has not been sold within one year from its reception.
33
bb) Derecognition of financial assets and liabilities:
The Bank, New York Branch and Subsidiaries derecognize a financial asset from their Statement of
Financial Position when all the contractual rights over the cash flows of the financial asset expire, or
when they transfer the rights to receive contractual cash flows for the financial asset during a
transaction in which the risks and benefits of ownership of the financial asset are substantially
transferred. Any share in financial assets transferred that is created or retained by the Bank is
recognized as a separate asset or liability.
The Bank eliminates a financial liability (or part of it) from its Consolidated Statement of Financial
Position when, and only when, it has been extinguished, i.e. when the obligation specified in the
corresponding contract has been paid or cancelled or else expired.
When the Bank transfers a financial asset, it evaluates to what extent it retains the risks and benefits
inherent to ownership. In this case:
(a) If the risks and advantages inherent to ownership of the financial asset are substantially
transferred, it is derecognized in accounts and any rights and obligations created or retained due to
the transfer will be separately recognized as assets or liabilities.
(b) If the risks and advantages inherent to ownership of a financial asset are substantially retained, it
will continue to be recognized.
(c) If all the risks and advantages inherent to ownership of the financial asset are not substantially
transferred or retained, it shall determine whether it has retained control over the financial asset. In
this case:
(i) If the transferring entity has not retained control, it will derecognize the financial asset
and shall separately recognize, as an asset or liability, any right or obligation created or retained
due to the transfer.
(ii) If the transferring entity has retained control, it shall continue recognizing the financial
asset in the Interim Consolidated Statement of Financial Position in an amount equal to the
exposure to changes in value that it might experience and recognizes a financial liability associated
to the financial asset transferred.
34
cc) Use of estimates and judgment:
The preparation of Interim Consolidated Financial Statements requires that management to make
judgments, estimates and assumptions that affect the application of accounting policies and the
carrying amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates.
Significant estimates and assumptions are reviewed by the Bank’s management on an ongoing basis
in order to quantify certain assets, liabilities, income, expenses and uncertainties. Revisions to
accounting estimates are recognized in the period, in which the estimate is revised and in any other
affected future period.
In particular, the information regarding the most significant areas of estimates and uncertainties and
critical judgments in the application of accounting policies that have the most significant effect on
the amounts recognized in the Interim Consolidated Financial Statements, correspond to the
following items:
-
Useful lives of tangible and intangible assets.
Current and deferred income taxes.
Provisions for loan losses.
Assumptions used in the actuarial valuation of employee benefits liabilities and
commitments and other obligations.
Contingencies and commitments.
Impairment losses of certain assets.
Assets and liabilities at fair value.
During the nine-month period ended September 30, 2013 there have been no significant changes in
estimates performed as of 2012 year-end other than those indicated in the Interim Consolidated
Financial Statements.
dd) Non-current assets held-for-sale:
Non-current assets (or disposal groups) are classified as held-for-sale if their carrying amount will
be recovered mainly through a sales transaction rather than through continuing use. Immediately
before this classification, the assets (or elements of a disposal group) are re-measured in accordance
with the Bank’s accounting policies. From that time on, the assets (or disposal group) are measured
at the carrying amount or fair value less cost of sales, whichever is lower. Deferred assets, employee
benefits assets and investment properties continue being evaluated according to the Bank’s
accounting policies. In the initial classification of assets held-for-sale and profits and/or losses
subsequent to the revaluation, impairment losses are recognized in income. Profits are not
recognized if they exceed any cumulative impairment.
35
ee) Distribution of net income to the Government:
As of September 30, 2013 and December 31, 2012, the Bank has recognized a liability for the
portion of net income to be distributed to the Government in accordance with its dividend
distribution policy. For this purpose, it establishes a provision against a supplementary equity
reserve account.
This policy establishes that in order to determine the provision for the distribution of net income to
the Government, it shall consider the average distribution of net income for the last three years
(established from the decrees issued by the Treasury Department) or that of the last year should it be
greater. Based on the above, the percentage of provision used for distribution of benefits on profit in
each period was 100%, as of September 30, 2013 and 43.25%, as of December 31, 2012.
ff) Interim Consolidated Other Comprehensive Income Statement:
This statement presents income and expenses generated by the Bank for the period as a result of its
activities, and all other income and expenses are recognized directly in equity.
The Financial Statement is detailed as follows:
a)
b)
c)
d)
gg)
Consolidated income for the period.
Net amount of income and expenses temporarily recognized in equity as “valuation accounts”.
Deferred taxes originated from items a) and b), except for foreign currency translation
adjustment and hedge derivative for investments abroad.
Total consolidated income and expenses recognized, calculated as the sum of the previous
letters, separately showing the amount attributable to the Bank and to non-controlling interest.
Comparison of information
The information contained in these Consolidated Interim Financial Statements for 2012 is presented
solely and exclusively for the purpose of comparing it to the information for the nine-month period
ended September 30, 2013.
hh) Seasonality or cyclical nature of transactions in the interim period
Due to the line of business of the Bank, New York Branch and Subsidiaries, their transactions are
not of a cyclical or seasonal nature. Therefore no specific details are presented in the explanatory
notes to the Interim Consolidated Financial Statements for the nine-month period ended as of
September 30, 2013.
36
ii)
Relative significance
When determining the information to be disclosed regarding the different items of the Interim
Consolidated Financial Statements or other matters in accordance with IAS 34, the Bank has taken
into consideration their relative significance in relation to the Interim Consolidated Financial
Statements.
jj)
Restructuring costs
As of September 30, 2013 and December 31, 2012, the Bank, New York Branch and Subsidiaries
have not incurred restructuring expenses.
kk) Error correction
As of September 30, 2013 the Bank, New York Branch and Subsidiaries have not made error
correction adjustments.
ll)
Compliance with agreements
As of September 30, 2013, the Bank, New York Branch and Subsidiaries have not violated any
agreements.
mm) New accounting pronouncements (IFRS and Interpretation of the IFRS Interpretations
Committee (IFRIC))
The new standards and improvements to IFRS, as well as the interpretations that have been
published in the period are detailed below. As of the date of these Financial Statements these
standards are still not in force and the Bank has not applied them in advance:
37
a) New standards
IFRS 9
Financial Instruments: Classification and Measurement
Date of obligatory
application
January 1, 2015
IFRS 9 “Financial Instruments”
This Standard introduces new requirements for the classification and measurement of financial
assets, early application is allowed. It requires that all financial assets be classified entirely on the
basis of the entity’s business model to manage financial assets and the characteristics of financial
asset contractual cash flows. Financial assets under this standard are measured at amortized cost or
fair value. Only financial assets that are classified as measured at amortized cost must be tested for
impairment. Its application is effective for annual periods commencing on or after January 1, 2015,
early adoption is allowed.
The Bank is evaluating the potential impact that the adoption of the mentioned norm could generate
in the Consolidated Financial Statements.
b) Standard improvements and amendments
Investment
IFRS 10
IFRS 12
IAS 27
IAS 32
IAS 39
Entities - Amendments to:
Consolidated Financial Statements
Disclosures of Interests in Other Entities
Separate Financial Statements
Financial Instruments: Presentation
Financial Instruments: Recognition and Measurement
Date of obligatory
application
January 1, 2014
January 1, 2014
January 1, 2014
Investment Entities – Amendments to IFRS 10 – Consolidated Financial Statements; IFRS 12
– Disclosures of Interests in Other Entities and IAS 27 – Separate Financial Statements
On October 31, 2012, the IASB published "Investment Entities (amendments to IFRS 10, IFRS 12
and IAS 27)”, providing an exemption for consolidation of Subsidiaries under IFRS 10 Consolidated
Financial Statements for entities that comply with the definition of an "investment entity", such as
certain investment funds. Instead, such entities shall measure their investments in Subsidiaries at fair
value through profit or loss in conformity with IFRS 9 Financial Instruments or IAS 39 Financial
Instruments: Recognition and Measurement.
38
Amendments also require additional disclosure in respect as to whether the entity is considered an
investment entity, details of the entity's non-consolidated Subsidiaries and the nature of the
relationship and certain transactions between the investment entity and its Subsidiaries.
Amendments require that an investment entity account for its investment in a Subsidiary in the same
manner in its Consolidated Financial Statements and in its Individual Financial Statements (or that it
only provide Individual Financial Statements if all Subsidiaries are not consolidated). The effective
date of these amendments is for periods commencing on or after January 1, 2014. Early application
is allowed.
The Bank is evaluating the impact that the mentioned standard might generate.
IAS 32 “Financial Instruments: Presentation”
In December 2011, the IASB amended the accounting and disclosure requirements related to netting
of financial assets and liabilities through amendments to IAS 32 and IFRS 7. These amendments are
the result of the joint project of the IASB and the Financial Accounting Standards Board (FASB) to
address differences in their respective accounting standards pursuant to financial instrument netting.
Amendments to IAS 32 are effective for annual periods commencing on or after January 1, 2014.
Both require retrospective application for comparative periods.
The Bank is evaluating the impact that the mentioned standard might generate.
IAS 39 “Financial Instruments: Recognition and Measurement”
In June 2012, the IASB issued an Amendment to IAS 39 - Novation of Derivatives and Continuation
of Hedge Accounting. This amendment allows the continuation of hedge accounting (under IAS 39
and the next chapter on hedge accounting in IFRS 9) when a derivative is to a central counterparty
and certain conditions are met. A novation indicates an event where the original counterparties of a
derivative agree to replace the original counterparty with another one for each of the parties. To
apply the amendments and continue with hedge accounting, the novation to a central party must
occur as a consequence of a law or regulation or the introduction of laws or regulations. The
modifications must be applied for annual periods commencing on or after January 1, 2014. Early
application is allowed.
The Bank is assessing the impact that this amendment might have.
39
c) Interpretations
IFRIC 21 Levies
Date of obligatory
application
January 1, 2014
IFRIC 21 “Levies”
On May 20, 2013, the IASB issued IFRIC (International Financial Reporting Standards Committee)
21, Levies. This new interpretation provides guidelines on when to recognize a liability to pay a
government levy, both for levies accounted for in accordance with IAS 37 Provisions, Contingent
Liabilities and Contingent Assets and for those whose timing and amount are certain. This
interpretation defines a levy as “an outflow of resources that involve future economic benefits
imposed by governments on entities in conformity with legislation”. Taxes within the scope of IAS
12 Income Taxes are excluded from the scope, as are fines and sanctions. Payments to governments
for services or the acquisition of an asset under a contractual agreement are also out of the scope.
That is, the levy must be a non-reciprocal transfer to a government when the entity that is paying the
levy does not receive specific goods or services in exchange. For interpretation purposes, a
"government" is defined in conformity with IAS 20 Accounting for Government Grants and
Disclosure of Government Assistance, when an entity acts as a government agent to charge a levy,
the agency's cash flows charged are out of the scope of the Interpretation. The Interpretation
identifies the event that originates the obligation for recognition of a liability as the activity that
triggers the payment of the levy in conformity with the corresponding legislation. The interpretation
provides guidelines on recognition of a liability to pay levies: (i) the liability is recognized
progressively if the event that originates the obligation occurs over a period of time; (ii) if an
obligation is triggered when a minimum threshold is reached, the liability is recognized when the
minimum threshold is reached. The Interpretation is applicable retrospectively for annual periods
commencing on or after January 1, 2014.
The Bank is assessing the impact that the mentioned standard might have.
NOTE 2 - ACCOUNTING CHANGES
During the nine-month period ended as of September 30, 2013 there have been no significant
accounting changes that affect the interpretation of these Interim Consolidated Financial Statements.
40
NOTE 3 - RELEVANT EVENTS
a) Bond issuance:
Bank bond: on March 13, 2013, the Bank placed a bank bond in the amount of UF 3.0 million, with
a remaining term of 18 years and 10 months, at an annual issuance rate of 3.75%, with payment of
biannual interest and capital payment in one installment at final maturity.
Bank bond: on June 25, 2013, the Bank placed a bank bond in the amount of UF 5.0 million, with a
remaining term of 3 years and 6 months, at an annual issuance rate of 3.5%, with payment of
biannual interest and capital payment in one installment at final maturity.
Subordinate bond: on August 6, 2013, the Bank placed a subordinate bond in the amount of UF 2.0
million, with a remaining term of 27years and 11 months at an annual issuance rate of 4.00%, with
payment of biannual interest and capital amortization as of January 2037.
Subordinate bond: on September 3, 2013, the Bank placed a subordinate bond in the amount of UF
2.0 million, with a remaining term of 28 years and 4 months, at an annual issuance rate of 4.00%,
with payment of biannual interest and amortization of capital as of July 2037.
Foreign Bond: on May 7, 2013, the Bank increased the issuance of the foreign bond placed on
November 5, 2012, by US$200 million, with principal maturing on November 9, 2017, at an annual
cover page rate of 2.00% with biannual interest payments, beginning on November 9, 2013.
Foreign Bond: on June 11, 2013, the Bank issued a foreign bond in the amount of ¥24,000 million
(Japanese yen), with a 5-year term, with principal maturing on June 18, 2018 at an issuance rate of
0.837% annually, with biannual interest payments, beginning on December 18, 2013.
b) Renewal of and changes in the Board of Directors of Subsidiary BancoEstado S.A.
Administradora General de Fondos:
At the Extraordinary Shareholders' Meeting of BancoEstado S.A. Administradora General de
Fondos held on January 15, 2013 the shareholders agreed to renew the Board, leaving it composed
as follows:
Regular Directors
Alternate Directors
Juan Carlos Méndez González
Jorge Rodríguez Grossi
Cristian Wolleter Valderrama
Carlos Alberto Curi
Cécille Emmanuelle Besse Advani
Henri Jean Auguste Coste
Rodrigo Ochagavia Ruiz-Tagle
María Verónica Hevia Lobo
Osvaldo Iturriaga Trucco
Dominique Lienart
Max Diulius
Pascal Biville
41
NOTE 3 - RELEVANT EVENTS
At the 16th Ordinary Shareholders' Meeting of BancoEstado S.A. Administradora General de
Fondos held on March 25, 2013 the shareholders unanimously agreed to the distribution and
payment of a final cash dividend to the shareholders equivalent to 100% of net profits for 2012. The
shareholders at this meeting also agreed to renew the company's Board of Director, leaving it
composed as follows:
Regular Directors
Alternate Directors
Rodrigo Ochagavía Ruiz-Tagle
Jorge Rodríguez Grossi
Cristián Wolleter Valderrama
Carlos Alberto Curi
Cécille Emmanuelle Besse Advani
Henri Jean August Coste
Victoria Martínez Ocamica
María Verónica Hevia Lobo
Osvaldo Iturriaga Trucco
Dominique Lienart
Max Diulius
Pascal Biville
At the 188th Ordinary Board of Directors Meeting held on March 25, 2013 the Directors elected Mr.
Rodrigo Ochagavía Ruiz-Tagle as Chairman and Mr. Carlos Alberto Curi as Vice-chairman of the
company's board.
c) Renewal of the Board of Directors at Subsidiary BancoEstado Corredores de Seguros
S.A.:
On March 18, 2013, at the 5th Extraordinary General Shareholders' Meeting of the company the
shareholders agreed to renew the entire Board of Directors. The new Board was elected, leaving it
composed as follows: Mr. Roberto Palumbo Ossa, Mr. Carlos Martabit Scaff, Mr. Pablo Iacobelli
Del Río, and Mr. José Miguel Saavedra Florez, as regular directors and Mr. Álvaro Cambara
Lodigiani, Mr. Juan Paulo Mestre Carmona, Mr. Francisco Ugarte Larraín and Ms. Paulina Miranda
Valenzuela, as their respective alternate directors.
d) Renewal of and changes in the Board of Directors of Subsidiary Sociedad de Promoción
de Productos Bancarios S.A.:
At the Ordinary Shareholders' Meeting held on March 21, 2013 to renew the entire Board, the new
Board met extraordinarily on April 9, 2013, to designate its Chairman and grant new powers of
attorney, leaving it composed as follows:
Chairman
Director
Director
: Victoria Martínez Ocamica
: María Verónica Hevia Lobo
: Alejandro Romero Saccani
42
NOTE 3 - RELEVANT EVENTS (continued)
e)
Appointment of General Manager at Subsidiary Sociedad de Servicios Transaccionales
Caja Vecina S.A.:
At Extraordinary Shareholders' Meeting held on February 28, 2013, the directors designated Ms
Marta Verónica Jancso Acuña as General Manager, replacing Mr. Jorge Stuardo Luengo.
f)
Agreements reached in lawsuit with Corporación Nacional de Consumidores y Usuarios:
On May 6, 2013, the Bank arrived at an agreement in the lawsuit with Corporación Nacional de
Consumidores y Usuarios (CONADECUS), consisting of returning to customers that hold savings
accounts without covenant, the maintenance commissions for 2003 to 2011, in the total amount of
MCh$5,675. This agreement had no impact on income for the period, since that sum had already
been provisioned.
g) Capital contribution to the new banking support company:
The new banking support company, IMERC-OTC S.A. was established on June 21, 2013 in
conjunction with other banks in the Chilean financial system. Its line of business is to operate a
centralized registry of operations, providing registry, confirmation, storage, consolidation and
reconciliation services for derivative transactions. On July 25, a capital contribution of MCh$1,440
was paid, leaving BancoEstado with an 11.11% interest equivalent to 1,111 shares of that Company.
h) Signing of a new Collective Agreement:
On June 28, 2013 the new collective agreement was signed between management and the Sindicato
Nacional de Trabajadores de BancoEstado, with a 26-month term, from July 1, 2013 to August 31,
2015.
i)
Distribution of 2012 profit
On July 8, 2013, through Resolution No. 25, the Treasury Department requested that BancoEstado
distribute 100% of profits generated in 2012, destining the sum of MCh$95,891 to tax benefit,
which was sent to the General Treasury of the Republic in August 2013.
j)
Resignation of Director of BancoEstado S.A. Corredores de Bolsa
On July 26, 2013, Ms. Isabel Margarita Cabello Silva resigned as Director of BancoEstado S.A.
Corredores de Bolsa, leaving the Board of Directors composed of Messrs. Oscar González Narbona
(Chairman), Emiliano Figueroa Sandoval, Antonio Bertrand Hermosilla, Arturo Barrios Almarza
and Pedro Cristi Díaz.
43
NOTE 4 - OPERATING SEGMENTS
Segmentation criteria:
Segment information is structured according to the different lines of business of the Bank, which are
based on its organizational structure, products and services offered and the customer segments for
which they are intended.
Segment information provided is based on monthly reports prepared from information facilitated by
a management control information application.
The structure of this management information is designed as if each line of business were treated as
an autonomous business. The Bank obtains most of its income from interest, readjustments and fees,
discounting provisions and expenses. As such, the financial performance of each segment is
calculated by applying the following criteria: a) the net interest margin of loans and deposits is
measured at an individual transaction level and it corresponds to the difference between the effective
rate of the customer and the internal transfer pricing established based on the term and currency of
each operations; b) operating expenses are distributed at each area level. The allocation of expenses
from operating areas to business segments is carried out using different criteria for allocating
expenses, for which specific indicators are defined for the different concepts.
Transfer pricing between operating segments is carried out at market values as if they were
transactions with third parties.
Taxes are managed at a corporate level and are not allocated to the business segments.
Segments:
The Bank focused its activities on the following major lines of business:
Wholesale Banking, which comprises large companies, medium sized companies and institutions.
Retail Banking, which includes individuals, small companies and micro companies.
Treasury and International, which represents financial and international business.
Other Segments, this group comprises corporate concepts, where the assets, liabilities, income and
expenses, as applicable, cannot be clearly attributed to any of the lines of business or segment or
which are the result of decisions affecting the Bank as a whole.
44
NOTE 4 - OPERATING SEGMENTS (continued)
As of September 30, 2013 and 2012 segment income is detailed as follows:
a) Income
Net income for interest
September 30, 2013
Treasury
Wholesaler Retail
and
Banking
Banking International Other
MCh$
MCh$
MCh$
MCh$
Total
MCh$
Total
MUS$
September 30, 2012
Treasury
Wholesaler Retail
and
Banking
Banking International Other
MCh$
MCh$
MCh$
MCh$
Total
MCh$
150,200
320,558
(4,013)
53,778
520,523
1,032
135,992
270,899
2,191
46,265
455,347
20,941
6,003
2,506
56
123,041
26
2,257
3,006
1,527
71,744
(17,538)
-
(1,344)
13
3,643
144,165
77,773
(12,762)
6,705
286
154
(25)
13
18,689
4,255
2,507
149
117,174
1
1,750
3,742
1,602
52,499
4,401
1
(3,360)
346
2,131
134,105
56,755
9,004
6,023
Total operating Income
179,706
448,888
51,720
56,090
736,404
1,460
161,592
393,566
60,694
45,382
661,234
(33,307)
(72,172)
230 (59,781) (165,030)
(327)
(18,698)
(84,601)
Operating income, net
146,399
376,716
571,374
1,133
142,894
308,965
Operating expense
Other operating expenses
(417,564)
(7,451)
(828)
(15)
(368,573)
(10,413)
Total operating expenses
(425,015)
(843)
(378,986)
146,359
290
135,629
1,253
2
1,091
147,612
292
136,720
Net fee and commission income
Net income from financial operations
Foreign exchange transactions, net
Other operating income
Net operating income
Income from investments in companies
Income before income taxes
51,950
(3,691)
1,046 (44,366) (146,619)
61,740
1,016
514,615
45
NOTE 4 - OPERATING SEGMENTS (continued)
As of September 30, 2013 and December 31, 2012 the Statement of Financial Position by segment is detailed as follows:
Wholesaler
Banking
MCh$
September 30, 2013
Treasury and
International
Other
MCh$
MCh$
Retail
Banking
MCh$
Total
MCh$
Total
MUS$
Wholesaler
Banking
MCh$
Retail
Banking
MCh$
December 31, 2012
Treasury and
International
MCh$
Other
MCh$
Total
MCh$
ASSETS
Loans and accounts receivable from
customers
Financial investments available -for-sale
Other assets
-
-
2,803,826
335,269
1,247,837
-
2,803,826
335,269
1,247,837
5,561
665
2,475
-
-
3,528,861
270,114
1,269,674
-
3,528,861
270,114
1,269,674
6,157,305
18,093
95,367
8,153,629
-
(96)
2,881,039
471,503
6,939
1,170,971
14,317,777
2,899,132
1,737,841
28,397
5,750
3,447
5,879,773
48,997
88,028
7,647,428
4
2,954,537
498,447
246
967,202
13,527,447
3,003,534
1,553,681
TOTAL ASSETS
6,270,765
8,153,629
7,739,378
1,177,910
23,341,682
46,295
6,016,798
7,647,432
8,521,633
967,448
23,153,311
LIABILITIES
Transactions in the course of payments
Other liabilities
2,960,144
3,831,962
471,052
1,661,281
4,214,157
14,782
42,960
302,363
3,614,314
577,860
3,662,740
106,720
3,909
21,910
769,272
4,668,294
302,363
11,682,343
577,860
3,662,740
1,361,826
9,259
600
23,170
1,146
7,264
2,702
4,404,257
3,157,032
558,450
1,222,040
3,823,574
13,280
42,197
175,276
2,997,232
1,192,023
3,355,645
325,310
284,360
7,016
453,617
5,952,854
175,276
9,984,854
1,192,023
3,355,645
1,350,657
TOTAL LIABILITIES
7,263,158
5,890,220
8,306,957
795,091
22,255,426
44,141
8,119,739
5,058,894
8,087,683
744,993
22,011,309
-
-
-
1,086,256
1,086,256
2,154
-
-
-
1,142,002
1,142,002
7,263,158
5,890,220
8,306,957
1,881,347
23,341,682
46,295
8,119,739
5,058,894
8,087,683
1,886,995
23,153,311
EQUITY
TOTAL LIABILITIES AND EQUITY
The “others” column mainly includes the following concepts: a) assets: investments in companies, intangibles assets, property, plant and
equipment, deferred taxes and other assets; b) liabilities: current taxes, deferred taxes, provisions and other liabilities.
46
NOTE 5 – CASH AND CASH EQUIVALENTS
a) As of September 30, 2013 and December 31, 2012, balances included in cash and cash
equivalents and their reconciliation with the Consolidated Statement of Cash Flows are detailed
as follows:
09/30/2013
MUS$
09/30/2013
MCh$
12/31/2012
MCh$
Cash
Deposits in the Chilean Central Bank
Deposits in domestic Banks
Foreign Deposit
533
2,518
2
2,507
268,932
1,269,822
1,043
1,264,029
332,330
2,612,668
318
583,545
Subtotal Cash and due from banks
5,560
2,803,826
3,528,861
65
286
201
32,906
144,447
101,187
94,838
127,877
100,638
6,112
3,082,366
3,852,214
High liquidity financial instruments (1)
Repurchase contracts (2)
Total cash and cash equivalents
(1) Corresponds to instruments held for trading and investment securities available-for-sale
with little risk of change in value, maturing in 90 days or less from the date of acquisition.
Highly liquid financial instruments
09/30/2013
MUS$
09/30/2013
MCh$
12/31/2012
MCh$
Time deposits
Mutual fund units
Note Central Bank
Mutual fund
15
1
186
7,491
539
93,705
87,188
16,012
22,115
Subtotal financial assets held-for-trading
202
101,735
125,315
Time deposits
Note Central Bank
28
56
14,106
28,606
2,465
97
Subtotal financial investments available-for-sale
84
42,712
2,562
286
144,447
127,877
Total
47
NOTE 5 – CASH AND CASH EQUIVALENTS (continued)
(2) Corresponds to repurchase agreements in identical situation as that stated in the previous
point.
As of September 30, 2013 and December 31, 2012, the Bank presents balances corresponding to
mandatory reserves which are not available to be used in the amount of MCh$504,941 and
MCh$449,195, respectively as part of its cash and deposits in the Chilean Central Bank.
The level of cash funds and amounts held in deposits at the Chilean Central Bank is due to
regulations on mandatory cash reserves that the Bank must maintain on average, which are
measured monthly.
b) Transactions in the course of settlement
Transactions in the course of being settled correspond to transactions only pending settlement,
which will increase or decrease the funds in the Chilean Central Bank or in foreign banks, normally
within the following 12 or 24 business hours. As of September 30, 2013 and December 31, 2012,
these transactions are detailed as follows:
09/30/2013
MUS$
09/30/2013
MCh$
12/31/2012
MCh$
Assets
Outstanding notes from other Banks (clearing)
Accounts receivables
66
599
33,020
302,249
92,681
177,433
Subtotal assets
665
335,269
270,114
Liabilities
Accounts payables
600
302,363
175,276
Subtotal liabilities
600
302,363
175,276
65
32,906
94,838
Net transactions in the course of collection
48
NOTE 6 – PORTFOLIO SALES
In the period as of September 30, 2013, BancoEstado has not sold loan portfolios. As of December
31, 2012, BancoEstado sold part of the portfolio of the Stated Guaranteed University Loans
("CUGE") in the framework of the public bid on Financial and Administration Service for Higher
Education Studies Law No. 20,027. The bid model open to financial institutions is included in the
respective tender documents, and allows the selling of a percentage of the portfolio to third parties.
Regarding the sold portfolio, BancoEstado substantially transferred all the risks and benefits
associated to that portfolio, maintaining only its administration service, which considers the
generation of new loans and collection of loan installments. Loans sold are detailed as follows:
Sales December 31, 2012
Number of
transactions
Bid lists
New credits based on prior years lists
Others
40,846
9,416
-
Par
value
MCh$
52,596
15,589
-
Totals
50,262
68,185
Sale
value
MCh$
65,283
20,718
-
Release of
provisions
MCh$
(2,677)
(710)
-
Gain
on sale
MCh$
5,839
-
Income received
in advance
MCh$
15,364
-
86,001
(3,387)
5,839
15,364
(*) Income received in advance is reflected in other liabilities under unearned income and will be
taken to income once the term of determined is established.
49
NOTE 7 – PROPERTY, PLANT AND EQUIPMENT
As of September 30, 2013 and December 31, 2012, property, plant and equipment movements by
class are detailed as follows:
September 30, 2013
Property and
plant
MCh$
Equipment
Others
Total
Total
MCh$
MCh$
MCh$
MUS$
Cost
Balance as of January 1, 2013
Additions
Withdrawals / Disposals
Assets in transit
Others
214,496
2,818
(1,568)
5,581
10
89,904
4,978
(23)
2,301
14
40,983
10,807
(471)
(7,882)
(5)
345,383
18,603
(2,062)
19
685
37
(4)
-
Subtotal
221,337
97,174
43,432
361,943
718
Accumulated depreciation
(22,003)
(74,378)
(18,755)
(115,136)
(228)
Property, plant and equipment, net
balances as of September 30, 2013
199,334
22,796
24,677
246,807
490
December 31, 2012
Property and
plant
MCh$
Equipment
Others
Total
MCh$
MCh$
MCh$
Cost
Balance as of January 1, 2012
Additions
Withdrawals / Disposals
Impairment
Assets in transit
Others
199,568
154
(233)
15,007
-
87,476
515
(324)
2,237
-
40,248
28,734
(485)
(27,514)
-
327,292
29,403
(1,042)
(10,270)
-
Subtotal
214,496
89,904
40,983
345,383
Accumulated depreciation
Property, plant and equipment, net
balances as of December 31, 2012
(20,765)
(66,508)
(17,079)
(104,352)
193,731
23,396
23,904
241,031
50
NOTE 8 – DEBT INSTRUMENTS ISSUED AND OTHER OBLIGATIONS
As of September 30, 2013 and December 31, 2012, debt instruments issued and other obligations are
09/30/2013
MUS$
09/30/2013
MCh$
12/31/2012
MCh$
Debt issued instruments:
Bills of exchange
Ordinary bonds
Subordinated bonds
2,309
3,733
1,222
1,164,167
1,882,048
616,525
1,278,888
1,550,083
526,674
Subtotal
7,264
3,662,740
3,355,645
Other Financial Obligations:
Obligations public sector
Other local obligations
Borrowings abroad
108
-
54,373
-
19,921
-
Subtotal
108
54,373
19,921
7,372
3,717,113
3,375,566
Total
51
NOTE 8 – DEBT INSTRUMENTS ISSUED AND OTHER OBLIGATIONS (continued)
As of September 30, 2013 and December 31, 2012 bonds issued are detailed as follows:
09/30/2013
ORDINARY BONDS
Series
BEST-D0807
BEST-F1007
BEST-H1207
BESTA30400
BESTJ20708
BESTJ31008
BESTJ41008
BESTJ50109
BESTJ60109
BESTJ70112
BESTJ80112
Subtotal UF Bonds
Series
Foreign currency bonds
Subtotal US$ Bonds
Series
Subtotal ¥ Bonds
UF issued
6,000,000
2,000,000
4,000,000
3,000,000
3,000,000
5,000,000
2,000,000
5,000,000
2,000,000
5,000,000
3,000,000
40,000,000
UF placement
6,000,000
2,000,000
4,000,000
3,000,000
3,000,000
5,000,000
2,000,000
5,000,000
2,000,000
5,000,000
3,000,000
40,000,000
Issuance date
Maturity date
08-01-2007
10-01-2007
12-01-2007
04-01-2000
07-01-2008
10-01-2008
10-01-2008
01-01-2009
01-01-2009
01-01-2012
01-01-2012
08-01-2017
10-01-2027
12-01-2017
04-01-2025
07-01-2018
10-01-2018
10-01-2028
01-01-2019
01-01-2029
01-01-2017
01-01-2032
US$ issued
US$ placement
Issuance date
Maturity date
500,000,000
500,000,000
500,000,000
200,000,000
1,700,000,000
500,000,000
500,000,000
500,000,000
200,000,000
1,700,000,000
10-07-2010
02-08-2012
11-05-2012
05-07-2013
10-07-2020
02-08-2022
11-092017
11-09-2017
¥ issued
¥ placement
Issuance date
Maturity date
24,000,000,000
24,000,000,000
24,000,000,000
24,000,000,000
06-11-2013
06-18-2018
Issuance
rate
Original
currency
Balance due
MCh$
Balance due
MUS$
4.00%
4.25%
4.00%
6.50%
3.50%
3.50%
4.00%
3.50%
4.00%
3.50%
3.75%
6,069,570.84
2,125,834.64
4,130,514.16
2,202,095.52
2,939,891.57
4,968,794.42
1,942,598.78
5,044,118.58
1,974,816.87
5,081,457.45
3,073,374.01
39,553,066.85
140,153
49,088
95,378
50,849
67,885
114,734
44,857
116,474
45,600
117,336
70,967
913,321
278
97
189
101
135
227
89
231
90
233
141
1,811
Issuance
rate
4.13%
3.88%
2.00%
2.00%
Original
currency
503,899,739
484,538,061
489,202,552
200,836,413
1,678,476,766
Balance due
MCh$
254,066
244,304
246,656
101,262
846,288
Balance due
MUS$
504
485
489
201
1,679
Issuance
rate
0.84%
Original
currency
Balance due
MCh$
Balance due
MUS$
23,892,821,507
23,892,821,507
Total Ordinary Bonds
122,439
122,439
243
243
1,882,048
3,733
SUBORDINATED BONDS
Series
UEST-A0799
UEST-B0603
UEST-C0405
UEST-D0106
UEST-E0806
UEST-F0207
UEST-I0308
UESTI20110
UESTL10111
UESTL20711
UESTL30112
Total Subordinated Bonds
Total
UF issued
4,000,000
2,500,000
4,000,000
2,000,000
2,500,000
2,500,000
2,000,000
3,000,000
2,000,000
2,000,000
2,000,000
28,500,000
UF placement
4,000,000
2,500,000
4,000,000
2,000,000
2,500,000
2,500,000
2,000,000
3,000,000
2,000,000
2,000,000
2,000,000
28,500,000
Issuance date
Maturity date
Issuance
rate
Original
currency
07-01-1999
06-01-2003
04-01-2005
01-01-2006
08-01-2006
02-01-2007
03-01-2008
01-01-2010
01-01-2011
07-01-2011
01-01-2012
07-01-2024
06-01-2025
04-01-2027
01-01-2031
08-01-2031
08-01-2031
03-01-2033
01-01-2038
01-01-2041
07-01-2041
01-01-2042
6.50%
4.80%
4.50%
4.50%
4.50%
4.00%
4.00%
4.50%
4.00%
4.00%
4.00%
2,716,635.33
1,887,998.59
3,625,981.96
1,858,964.31
2,407,659.02
2,422,026.10
1,949,798.49
3,375,572.02
2,081,318.74
2,184,075.55
2,189,733.79
26,699,763.90
Balance due
MCh$
Balance due
MUS$
62,730
43,596
83,728
42,925
55,595
55,927
45,023
77,945
48,060
50,433
50,563
616,525
2,498,573
124
87
166
85
110
111
89
155
95
100
100
1,222
4,955
52
NOTE 8 – DEBT INSTRUMENTS ISSUED AND OTHER OBLIGATIONS (continued)
12/31/2012
ORDINARY BONDS
Series
BEST-D0807
BEST-F1007
BEST-H1207
BESTA30400
BESTJ10708
BESTJ20708
BESTJ31008
BESTJ41008
BESTJ50109
BESTJ60109
Subtotal UF Bonds
Series
Subtotal US$ Bonds
UF issued
6,000,000
2,000,000
4,000,000
3,000,000
5,000,000
3,000,000
5,000,000
2,000,000
5,000,000
2,000,000
37,000,000
US$ issued
500,000,000
500,000,000
500,000,000
1,500,000,000
UF placement
6,000,000
2,000,000
4,000,000
3,000,000
5,000,000
3,000,000
5,000,000
2,000,000
5,000,000
2,000,000
37,000,000
US$ placement
500,000,000
500,000,000
500,000,000
1,500,000,000
Issuance date
Maturity date
08/01|/2007
10/01/2007
12/01/2007
04/01/2000
07/01/2008
07/01/2008
10/01/2008
10/01/2008
01/01/2009
01/01/2009
08/01/2017
10/01/2027
12/01/2017
04/01/2025
07/01/2013
07/01/2018
10/01/2018
10/01/2028
01/01/2019
01/01/2029
Issuance date
Maturity date
10/07/2010
02/08/2012
11/05/2012
10/07/2020
02/08/2022
11/09/2017
Issuance
rate
4.00%
4.25%
4.00%
6.50%
3.10%
3.50%
3.50%
4.00%
3.50%
4.00%
Issuance
rate
4.13%
3.88%
2.00%
Balance due
MCh$
140,121
48,156
93,748
50,699
115,807
67,476
112,214
43,847
116,227
45,531
833,826
Original currency
6,134,694,78
2,108,350,07
4,104,399,05
2,219,675,66
5,070,214,07
2,954,185,47
4,912,892,81
1,919,668,25
5,088,593,53
1,993,416,17
36,506,089,84
Balance due
MCH$
238,713
238,692
238,852
716,257
Original currency
493,228,848
499,381,875
499,714,866
1,492,325,589
Total Ordinary Bonds
1,550,083
SUBORDINATED BONDS
Series
UEST-A0799
UEST-B0603
UEST-C0405
UEST-D0106
UEST-E0806
UEST-F0207
UEST-I0308
UESTI20110
UESTL10111
Total Subordinated Bonds
UF issued
4,000,000
2,500,000
4,000,000
2,000,000
2,500,000
2,500,000
2,000,000
3,000,000
2,000,000
24,500,000
UF placement
4,000,000
2,500,000
4,000,000
2,000,000
2,500,000
2,500,000
2,000,000
3,000,000
2,000,000
24,500,000
Issuance date
Maturity date
07/01/1999
06/01/2003
04/01/2005
01/01/2006
08/01/2006
02/01/2007
03/01/2008
01/01/2010
01/01/2011
07/01/2024
06/01/2025
04/01/2027
01/01/2031
08/01/2031
08/01/2031
03/01/2033
01/01/2038
01/01/2041
Issuance
rate
6.50%
4.80%
4.50%
4.50%
4.50%
4.00%
4.00%
4.50%
4.00%
Balance due
MCh$
66,823
43,740
84,117
44,527
57,610
57,982
45,719
78,038
48,118
526,674
Original currency
2,925,599,00
1,915,017,05
3,682,781,50
1,949,448,66
2,522,231,86
2,538,536,43
2,001,637,17
3,416,632,18
2,106,653,81
23,058,537,66
Total
2,076,758
53
NOTE 9 – PROVISIONS
As of September 30, 2013 and December 31, 2012, provisions are detailed as follows:
a) Provisions
Employee benefits and remunerations provision
Distribution of net income provision
Credit risk on contingent loans provision
Additional provision (*)
Country risk provisions
Total
09/30/2013
MUS$
09/30/2013
MCh$
12/31/2012
MCh$
233
143
57
566
1
117,349
72,118
28,909
285,393
495
100,598
41,472
23,685
240,188
640
1,000
504,264
406,583
(*) Includes additional provisions in the amount of MCh$277,700 as of September 30, 2013 (MCh$225,851 as of
December 31, 2012)
b) As of September 30, 2013 and December 31, 2012 the movement of provisions is detailed as
follows:
Employee
benefits and
remunerations
Contingent
credit risks
Provisions for
contingencies
Other
provisions
Total
Total
MCh$
MCh$
MCh$
MCh$
MCh$
MUS$
Balances at January 1, 2013
Provisions established
Applied provisions
Release of provisions
Other movements
100,598
36,383
(7,348)
(12,283)
(1)
23,685
11,544
(6,319)
(1)
240,188
52,064
(6,859)
-
42,112
72,577
(42,076)
-
406,583
172,568
(62,602)
(12,283)
(2)
806
342
(124)
(24)
-
Balances at September 30, 2013
117,349
28,909
285,393
72,613
504,264
1,000
Balances at January 1, 2012
Transitory assets effect (*)
Applied provisions
Release of provisions
Other movements
92,516
44,458
(22,277)
(14,081)
(18)
17,874
20,762
(14,941)
(10)
160,259
57,576
113,280
(1,025)
(89,902)
-
68,153
629
(19,241)
(7,480)
51
338,802
57,576
179,129
(57,484)
(111,463)
23
Balances at December 31, 2012
100,598
23,685
240,188
42,112
406,583
(*) Includes transitory assets in the amount of MCh$57,576 which were netted as per Note 1.u.4)
54
NOTE 9 – PROVISIONS (continued)
c) As of September 30, 2013 and December 31, 2012, provisions for employment benefits and
payroll are detailed as follows:
09/30/2013
MUS$
09/30/2013
MCh$
12/31/2012
MCh$
Severance indemnity provision
Severance benefit provision
Provision for other employee benefits
Vacation provision
153
33
47
76,958
16,776
23,615
65,227
12,137
23,234
Total
233
117,349
100,598
d) As of September 30, 2013 and December 31, 2012, termination benefits are detailed as follows:
09/30/2013
MUS$
09/30/2013
MCh$
12/31/2012
MCh$
Present value of liabilities at beginning of year
Increase in provision
Advanced payments
Applied provisions
Rerelease of provisions
Effects for discount rate
Others
129
36
(11)
(1)
-
65,227
17,922
(5,832)
(359)
-
60,428
10,274
(3,786)
(1,681)
(8)
Total
153
76,958
65,227
55
NOTE 9 – PROVISIONS (continued)
e) Additional provisions
Additional provisions (included under the concept of contingencies provisions) are destined to cover
countercyclical adverse effects on the Bank's businesses and concentration risks. As of September
30, 2013 and December 31, 2012, movements of additional provisions are detailed as follows:
09/30/2013
MUS$
09/30/2013
MCh$
12/31/2012
MCh$
Balance as of January, 1
Transitory assets effect (*)
Provision established
Rerelease of provisions
448
103
-
225,851
51,849
-
145,393
57,576
95,200
(72,318)
Total
551
277,700
225,851
(*) Includes transitory assets in the amount of MCh$57,576 which were netted as per Note 1.u.4)
The effects for the period are recorded in the Interim Consolidated Income Statement under
“Provisions for loan losses”.
56
NOTE 10 – CONTINGENCIES AND COMMITMENTS
a) Commitments and responsibilities recorded in memorandum accounts:
The Bank, its New York Branch and Subsidiaries, hold the following balances related to
commitments and responsibilities arising from its normal line of business in memorandum accounts:
09/30/2013
MUS$
Contingent Loans
Guarantee and deposits:
Guarantees and deposits in local currency
Guarantees and deposits in foreign currency
Confirmed foreign letters of credit
Issued documented letters of credit
Performance bonds
Interbank letters of credit
Immediately available lines of credit
Amount of committed credits and not placed
Other credit commitments
Credits for higher education Law No. 20,027
Others
Other contingent credits
Operations on account of third parties
Collections:
Foreign collections
Local collections
Placement or sale of financial instruments:
Placement of securities for public bid
Sale of letters of credit of bank operations
Sales of other instruments
Financial assets transferred to and managed by the Bank:
Assets assigned to Insurance companies
Securitized assets
Other assets assigned to third parties
Third party resources managed by the Bank
Financial assets administrated on behalf of third parties
Other assets administrated on behalf of third parties
Financial assets acquired
Other assets acquired
Security held in custody
Securities held in custody of the bank
Securities held in custody deposited in another entity
Securities issued by the bank:
Promissory notes of time deposits
Letters of credit for sale
Other documents
Commitment
Guarantees for underwriting operations
Commitments for assets purchase
Total
09/30/2013
MCh$
12/31/2012
MCh$
197
223
105
1,366
1,493
1,550
1,042
-
99,243
112,576
53,176
688,741
752,858
781,300
525,232
-
128,342
75,411
90,840
619,755
779,026
542,731
594,479
-
17
135
8,738
67,951
11,302
66,876
-
-
-
-
-
-
2,809
-
1,416,341
-
1,230,454
-
1,674
5,476
844,012
2,760,754
793,367
4,455,718
5,226
2
-
2,634,803
917
-
1,865,608
917
-
-
-
-
21,315
10,746,642
11,254,826
57
NOTE 10 – CONTINGENCIES AND COMMITMENTS (continued)
b) Lawsuits and legal proceedings:
b.1.)
Normal legal contingencies of the industry:
As of the date of issuance of these Interim Consolidated Financial Statements, there are
several legal proceedings that have been filed against the Bank, its New York Branch and its
Subsidiaries in relation to normal operations in its line of business. According to
management and based on the advice of its legal counsel, the Bank has recorded the
provisions it deems appropriate to cover potential losses not contemplated by the Bank, New
York Branch and its Subsidiaries. As of September 30, 2013 and December 31, 2012, the
Bank and its Subsidiaries have provisions for this concept in the amount of MCh$3,369 and
MCh$9,985, respectively; which form part of “provisions” in the Interim Consolidated
Statement of Financial Position. Lawsuits and provisions by type are detailed as follows:
TYPE
b.2.)
September 30, 2013
N°
Provision
Amount
MCh$
December 31, 2012
N°
Provision
Amount
MCh$
Provision
Amount
MUS$
Labor
Civil
60
386
478
2,891
1
6
34
357
859
9,126
Total
446
3,369
7
391
9,985
Contingencies due to significant lawsuits at Courts of Justice:
As of September 30, 2013 and December 31, 2012, the Bank, New York Branch and
Subsidiaries do not have contingencies due to significant lawsuits in courts, which affect or
could affect these Interim Consolidated Financial Statements.
c) Operating guarantees granted:
09/30/2013
09/30/2013
12/31/2012
MUS$
MCh$
MCh$
Financial assets in guarantee CCLV (compensation and clearing company)
Bolsa de Comercio de Santiago
Shares in guarantee for the Bolsa de Comercio de Santiago
13
6,728
5,558
26
12,939
10,556
Total
39
19,667
16,114
58
•
Guarantee on transactions and third party liability:
In accordance with Article No. 58 of Decree Law No. 251, as of September 30, 2013,
Subsidiary BancoEstado Corredores de Seguros S.A. has a guarantee deposit which covers
possible damages that might affect it as a consequence of infractions of the law, regulations
and complementary standards that regulate insurance brokers, and especially when the noncompliance arises from acts, errors and omissions of the broker its representatives,
managers or dependents participating in the brokerage.
Guarantee information is detailed as follows:
Number
Amount
Issuer
Purpose
:
:
:
:
Effective
:
6773877
U.F. 60,000
BancoEstado
To guarantee any present or future creditors that it may have pursuant
to its brokerage operations and for the exclusive purpose of being used
under the terms of Article No. 58 D.F.L. No. 251 dated 1931.
Until April 14, 2014.
•
Operating guarantees:
In order to comply with the obligation of transaction guarantees established in Article No.
30 of Law No. 18,045, Subsidiary BancoEstado S.A. Corredores de Bolsa has purchased
insurance policy No. 212103605 from Compañía de Seguros de Crédito Continental S.A.
for a value of UF 20,000, valid from April 22, 2012, to April 22, 2014, with Bolsa de
Comercio de Santiago, Bolsa de Valores as the representative of the beneficiaries of the
guarantee.
BancoEstado S.A. Corredores de Bolsa has established a first priority pledge on its share of
Bolsa de Comercio de Santiago, Bolsa de Valores, in order to guarantee faithful and timely
performance of its obligations owed to that institution. In addition, it has established a
second priority pledge in favor of all stock brokers to secure its obligations with them.
59
BancoEstado S.A. Corredores de Bolsa has purchased comprehensive broker insurance
from Chartis Chile Compañía de Seguros Generales S.A. Policy No. 0020058287 for
officer fidelity, with an insured sum of US$10,000,000 in force until January 31, 2014.
BancoEstado S.A. Administradora General de Fondos:
•
Operating guarantees
In compliance with Articles No. 226 and No. 227 of Law No. 18,045, Subsidiary
BancoEstado S.A. Administradora General de Fondos, designated Banco del Estado de
Chile as representative of the beneficiaries of the guarantees it has established. The
guarantee deposits established are detailed as follows:
Fondo Solidez BECH
Fondo Mutuo Corporativo BancoEstado
Fondo Mutuo Solvente BancoEstado
Fondo Mutuo Compromiso BancoEstado
Fondo Mutuo Conveniencia BancoEstado
Fondo Mutuo Protección BancoEstado
Fondo Mutuo BancoEstado Acciones Nacionales
Fondo Mutuo BancoEstado BNP Paribas Renta Emergente
Fondo Mutuo BancoEstado BNP Paribas Acciones Emergentes
Fondo Mutuo BancoEstado BNP Paribas Acciones Desarrolladas
Fondo Mutuo BancoEstado BNP Paribas Más Renta Bicentenario
Fondo Mutuo BancoEstado Perfil Dinámico A
Fondo Mutuo BancoEstado Perfil Tradicional C
Fondo Mutuo BancoEstado Perfil Moderado E
Currency
Amount
Start Date
Maturity
date
UF
UF
UF
UF
UF
UF
UF
UF
UF
UF
UF
UF
UF
UF
10,000.00
77,734.67
139,673.95
28,621.76
17,215.10
27,935.44
12,437.14
10,000.00
10,000.00
10,000.00
10,000.00
10,000.00
10,000.00
10,000.00
01/09/2013
01/09/2013
01/09/2013
01/09/2013
01/09/2013
01/09/2013
01/09/2013
01/09/2013
01/09/2013
01/09/2013
01/09/2013
01/09/2013
01/09/2013
01/09/2013
01/10/2014
01/10/2014
01/10/2014
01/10/2014
01/10/2014
01/10/2014
01/10/2014
01/10/2014
01/10/2014
01/10/2014
01/10/2014
01/10/2014
01/10/2014
01/10/2014
d) Contingent loans and liabilities:
To satisfy the needs of customers, the Bank acquired several irrevocable commitments and
contingent liabilities, although these obligations could not be recognized in the Interim Consolidated
Financial Statements, these contain credit risks and are therefore part of the Bank's global risk, as
indicated in letter a) of this note.
60
The contractual amounts of the transactions that obligate the Bank to grant loans and the amount of
the provisions established for the credit risk assumed are detailed as follows:
09/30/2013
MUS$
09/30/2013
MCh$
12/31/2012
MCh$
Guarantees and deposits
Document letter of credit
Performance bonds
Amounts available for users of credit card
Amount of committed credits and not placed
Credits for higher education Law No. 20,027
197
328
1,366
1,493
1,042
1,550
(57)
99,243
165,752
688,741
752,858
525,232
781,300
(28,909)
128,342
166,251
619,755
779,026
594,479
542,731
(23,685)
Total
5,919
2,984,217
2,806,899
NOTE 11 - PERSONNEL EXPENSES
a) As of September 30, 2013 and 2012 employee payroll and expenses are detailed as follows:
09/30/2013
MUS$
09/30/2013
MCh$
09/30/2012
MCh$
Personnel remunerations
Bonuses or other benefits
Severance indemnity
Training expenses
Welfare expenses
Other personnel expenses
337
51
37
4
31
27
170,070
25,903
18,445
1,733
15,783
13,424
154,006
31,961
9,509
1,707
15,021
12,048
Total
487
245,358
224,252
b) Employee benefits plans:
As of September 30, 2013 and December 31, 2012 the Bank and Subsidiaries maintain the following
employee benefits:
Employee vacations:
The annual cost of vacations and employee benefits is recognized on an accrual basis.
61
NOTE 11 - PERSONNEL EXPENSES (continued)
Current benefits
Current benefits are composed mainly of incentives to fulfill commercial goals and obtaining
operating efficiencies. These benefits are:
•
Individual performance bonus: provides a sum of money to each employee on the basis
of a polynomial that conjugates compliance with Bank and individual goals, and
employee income.
•
Corporate bonus: defines a percentage of the monthly Bank payroll to be distributed
equally among all Bank employees. It is based on compliance of commercial goals and
operating efficiencies.
In addition the Bank has agreed with its employees on a collective negotiation bonus, which is
amortized over the term of the collective contract and the unamortized part is recorded under other
assets.
Non-current benefits
Non-current benefits are benefits accrued by the Bank as established by Law and/or the existence of
implicit obligations derived from the current collective agreement, signed on June 28, 2013, which
was signed for a term of 26 months.
The methodology used to determine the provision for all its employees uses actuarial assumptions
which consider variables such as turnover rate, mortality rates, remuneration increases, probability
of use of the benefit based on the accumulated benefits valuation method or accrued cost of the
benefit method. This methodology is established in IAS 19.
The benefits are detailed as follows:
• Termination benefits: affects all the Bank's employees. The Bank estimates that
employees will stay with the Bank until their retirement age (60 years for women and
65 years for men) and consequently establishes provisions, depending on the
probability of occurrence for events such as resignation, death, termination or
retirement during their employment at the Bank. All this in accordance with legal
standards and current collective agreement.
• Seniority awards: affects all the Bank's employees. This award to permanence at the
Bank grants a percentage of income at each permanence benchmark. These are at 10,
15, 20, 25, 30, 35, 40 and 45 years of service.
62
• Retirement savings: affect all employees with indefinite employment contracts who
joined the Bank after August 14, 1981 and are not affiliated to the unemployment
insurance contemplated in Law No. 19,728. This benefit establishes a retirement
savings program in the form of self-insurance that will contribute a salary plus bonus
with a limit of U.F. 90 for every 36 months of effective contribution in the mentioned
program.
• Additional retirement plan benefits: affects all employees entitled to the plan
established by the collective agreement. The early and voluntary discharge benefit for
all female employees between 55 and 60 years; and male employees between 58 and
64 years that increase termination benefits by a percentage based on the age range.
Social security benefits refer to health insurance plans and life insurance for a period of
24 months, and scholarships during the current schooling cycle (preschool, elementary
school, high school and university) of its students.
Actuarial assumptions
Actuarial assumptions used to calculate the aforementioned non-current commitments in accordance
with IFRS are detailed as follows:
•
Mortality and incapacity: uses mortality table RV-2009 issued by the Superintendency
of Securities and Insurance.
•
Turnover rates (resignations and company needs): calculated on the basis of historical
values recorded at the company, which records events occurred between 2010-2012.
•
Discount rate: is determined on the basis of the BCU (rate of Central Bank of Chile
bonds in Unidades de Fomento) at 5, 10 and 20 years plus a spread equivalent to the
cost of bond issuances or high quality corporate bonds or obligations over the indicated
rate. As of September 30, 2013 real annual discount rates used are 3.04%, 3.07% and
3.26% respectively (3.13% BCU 10 years as of September 30, 2012).
•
Remuneration increase: historical estimates of an annual rate of 2%.
•
Retirement age: in accordance with current labor standards, 60 and 65 years for women
and men, respectively.
There is no corporate practice of advancing employee benefits.
63
As of September 30, 2013, movements of actuarial provisions are detailed as follows:
09/30/2013
MCh$
Changes obligations
Initial value of the obligation
Cost of current service
Interest cost
Change of others - the current value
Actuarial gains and losses
From experience or actual behavior
By rotation rate resignation
For pay turnover
For wage growth rate
For discount rate
For mortality
By changing parameters or hypotheses
By rotation rate resignation
For pay turnover
For wage growth rate
For discount rate
For other
Benefits paid during the year
Currency adjustments
Obligations at end of period
09/30/2013
MUS$
65,227
7,570
1,689
8,304
129
15
3
18
(312)
163
590
(2)
(174)
1
-
(548)
8,587
(1)
18
(5,832)
-
(12)
-
76,958
153
64
NOTE 12 – TRANSACTIONS WITH RELATED PARTIES
In accordance with the provisions of the General Banking Law and the instructions set forth by the
Superintendency of Banks and Financial Institutions, individuals or legal entities are considered to
be associated when they are involved in the ownership or management of the institution directly or
indirectly through third parties.
a) Group entities (consolidated in the financial statements)
September 30, 2013
Direct
Indirect
Total
Company and/or branch abroad
BancoEstado Servicios de Cobranza S.A.
BancoEstado S.A. Administradora General de Fondos
BancoEstado Contacto 24 Horas S.A.
BancoEstado Microempresas S.A. Asesorías Financieras
Sociedad de Servicios Transaccionales Caja Vecina S.A.
BancoEstado Centro de Servicios S.A.
Sociedad de Promoción de Productos Bancarios S.A.
BancoEstado - New York Branch
99.9996%
50.1000%
99.9000%
50.0100%
99.9000%
99.9000%
99.8500%
99.9000%
99.8300%
100.0000%
0.1000%
0.1000%
0.1000%
0.1500%
0.1000%
0.1700%
-
Direct
99.9996%
50.1000%
100.0000%
50.0100%
100.0000%
100.0000%
100.0000%
100.0000%
100.0000%
100.0000%
December 31, 2012
Indirect
Total
99.9996%
50.1000%
99.9000%
50.0100%
99.9000%
99.9000%
99.8500%
99.9000%
99.8300%
100.0000%
0.1000%
0.1000%
0.1000%
0.1500%
0.1000%
0.1700%
-
99.9996%
50.1000%
100.0000%
50.0100%
100.0000%
100.0000%
100.0000%
100.0000%
100.0000%
100.0000%
b) Loans with related parties
Loans and accounts receivable, contingent loans and assets corresponding to trading and investing
instruments associated to related entities are detailed as follows:
Productive
Companies
MCh$
Loans and receivables
Commercial loans
Mortgage loans
Consumer loans
Gross loans
Allowance for loan losses
Loans, net
Contingent credits:
Total contingent credits
Allowance for contingent loans
Contingent loans, net
Acquired instruments:
For negotiation
For investment
September 30, 2013
Productive
Investment
Investment
Companies
Companies
Companies
MUS$
MCh$
MUS$
102,255
-
203
-
102,255
(609)
Natural
Persons
MCh$
Natural
Persons
MUS$
December 31, 2012
Productive
Investment
Natural
Companies
Companies
Persons
MCh$
MCh$
MCh$
9
-
-
370
5,225
613
1
10
1
114,614
-
13
-
290
4,468
439
203
9
-
6,208
12
(1)
(1)
-
(37)
-
114,614
13
5,197
(253)
(1)
(25)
101,646
202
8
-
6,171
12
114,361
12
5,172
86,188
(217)
171
-
17,867
(224)
35
-
292
(4)
1
-
174,866
(395)
12,897
(134)
350
(3)
85,972
171
17,643
35
288
1
174,471
12,763
347
-
-
-
-
-
-
-
-
-
65
NOTE 12 – TRANSACTIONS WITH RELATED PARTIES (continued)
c) Other assets and liabilities with related parties
09/30/2013
MUS$
Assets
Other Assets
Liabilities
Demand deposits
Deposits and other loans
Other liabilities
09/30/2013
MCh$
12/31/2012
MCh$
-
37
11
138
318
-
69,583
160,423
2
2,195
170,708
17
d) Income from transactions with related parties
Type of income or expense
Income
MCh$
September 30, 2013
Income
Expense
MUS$
MCh$
Expense
MUS$
September 30, 2012
Income
Expense
MCh$
MCh$
Interest income (expense)
Income (expense) from commissions and services
Income (loss) from negotiation
Income (loss) from other financial transactions
Exchange differences
Expenses from operational support
Other expenses
4,921
430
14
-
10
1
-
(252)
(1,340)
(18)
(1)
(3)
-
4,846
386
70
-
(134)
(752)
(842)
Total
5,366
11
(1,610)
(4)
5,302
(1,728)
66
e) Contracts with related parties
Contracts with related parties
September 30, 2013
Type of Contract
December 31, 2012
Type of Contract
Lease of office
Back office services
Computational support
Compensation chamber service
-
Lease of office
Compensation chamber service
Unlock bank-cards
Unlock bank-cards
Lease of office
-
Lease of office
Inserts service
Checkbook services
Notary fees
Transportation of securities
1) Contracts over UF 1,000
Isapre Fundación
Operadora de Tarjetas de Crédito Nexus S. A.
Transbank S. A.
Sociedad Operadora Camara Compensación Pago Alto Valor S.A.
Administrador Financiero Transantiago
2) Contracts less than UF 1,000
Administrador Financiero Transantiago
Fundación Asistencial y de Salud
Comercial Dimobili
Transbank S. A.
f)
Payments to the Board of Directors and key management employees
As of September 30, 2013 and 2012 remunerations received by key management employees are
09/30/2013
MUS$
09/30/2013
MCh$
09/30/2012
MCh$
Short term benefits to employees
Staff severance indemnities
5
-
2,534
156
2,800
24
Total
5
2,690
2,824
67
g) Key employees
As of September 30, 2013 and December 31, 2012, the Bank's key employees are detailed as
follows:
September 30, 2013
December 31, 2012
Number of
executives
1
1
4
2
1
1
1
7
8
Number of
executives
1
1
4
2
1
1
1
7
8
26
26
Position
Chairman
Vice President
Director
Labor Director
General Manager
Chief Attorney
Controller
Area Managers
General Managers of Subsidiaries
Total
h) Transactions with key employees and their related parties
As of September 30, 2013 and 2012, the Bank has performed transactions with key employees and
their related parties, whose results are detailed as follows:
09/30/2013
Income of key
executives and
related parties
MCh$
09/30/2013
Income of key
executives and
related parties
MUS$
09/30/2012
Income of key
executives and
related parties
MCh$
Credit cards and other services
Loans
Guarantees
Mortgage credits
Others
139
3,008
48
6
-
310
4,022
74
Total
3,195
6
4,406
68
NOTE 13 – ASSETS AND LIABILITIES AT FAIR VALUE
In general, “fair value” is understood to be the price that a financial instrument has, at a specific
moment in time, in a free and voluntary transaction between interested parties, who are duly
informed and independent from each other. For financial instruments without available market
prices, fair values have been estimated using current values or other valuation techniques. These
techniques are significantly affected by the assumptions used, including the discount rate. In this
sense, the fair value estimates of certain financial assets and liabilities, cannot be justified by
comparison to independent markets and, in many cases cannot be made at immediate placement.
In addition, the fair value estimates presented below do not have the intention of estimating the fair
value of the Bank’s profits generated by its current or future business activities, and therefore do not
represent the Bank’s value as a going concern.
The methods used to estimate fair value of financial instruments are detailed below:
a) Cash and due from banks:
The carrying amount of cash and bank deposits approximates their estimated fair value due to
their current nature.
b) Transactions in the course of collection (assets and liabilities):
The carrying amount of transactions with foreign exchange approximates their estimated value
due to their current nature.
c) Financial investments and bonds issued:
The estimated fair value of these financial instruments was determined using market values at
prices quoted in the market for financial instruments with similar characteristics.
d) Loans and accounts receivable from customers, loans and advances to banks, deposits and
other obligations, letters of credit issued, agreements and other debts:
The fair values of these financial instruments are estimated using the analysis of cash flow
discounts, derived from the settlement of contractual cash flows for each of them, at a market
discount rate, which considers credit risk, when applicable.
69
NOTE 13 – ASSETS AND LIABILITIES AT FAIR VALUE (continued)
e) Derivative instruments
The fair value of derivatives represents the estimated amount that the Bank and its Subsidiaries
expect to receive or pay to rescind the contracts and agreements, keeping in mind current
interest rates and prices.
Regarding the fair value of derivatives the Bank performs contrast price adjustment and
adjustments for counterparty credit risk. In the case of contrast price adjustments (bid/ask) the
Bank takes market information and incorporates it in the rate curves when assessing. For
counterparty credit risk adjustments the Bank applies the criteria defined for the “normal
compliance” portfolio, one takes the counterparty credit exposure and applies the expected loss
factor on the fair value and it is recorded as goodwill in the Consolidated Income Statement for
the Period.
70
As of September 30, 2013 and December 31, 2012, estimated fair values of financial instruments are detailed as follows:
09/30/2013
Carrying
amount
MCh$
Carrying
amount
MUS$
Estimated
fair value
MCh$
12/31/2012
Estimated
fair value
MUS$
(Loss) gain
not
recognized
MCh$
(Loss)
gain not
recognized
MUS$
Carrying
amount
MCh$
Estimated
fair value
MCh$
(Loss) gain
not
recognized
MCh$
Assets
Cash and due from bank
Loans and advance to banks
Loans and accounts receivables from customers
Financial investment held to maturity
Total
2,803,826
335,269
1,247,837
101,187
110,538
298,996
14,317,777
2,899,132
56,149
22,170,711
5,561
665
2,475
201
219
593
28,397
5,750
111
43,972
2,803,826
335,269
1,247,837
101,158
110,538
281,676
16,378,601
2,899,132
51,755
24,209,792
5,561
665
2,475
201
219
559
32,484
5,750
103
48,017
(29)
(17,320)
2,060,824
(4,394)
2,039,081
(34)
4,087
(9)
4,044
3,528,861
270,114
1,269,674
100,638
128,140
299,173
13,527,447
3,003,534
58,220
22,185,801
3,528,861
270,114
1,269,674
100,638
128,140
322,593
15,340,363
3,003,534
58,220
24,022,137
23,420
1,812,916
1,836,336
Liabilities
Transactions in the course of payment
Other financial liabilities
Total
4,668,294
302,363
413,800
11,682,343
95,477
577,860
3,662,740
54,373
21,457,250
9,259
600
821
23,170
189
1,146
7,264
108
42,557
4,668,294
302,363
413,481
12,371,601
95,477
604,961
3,359,392
54,361
21,869,930
9,259
600
820
24,537
189
1,200
6,663
108
43,376
319
(689,258)
(27,101)
303,348
12
(412,680)
1
(1,367)
(54)
602
(818)
5,952,854
175,276
520,344
9,984,854
99,755
1,192,023
3,355,645
19,921
21,300,672
5,952,854
175,276
520,342
10,551,736
99,755
1,236,606
3,145,799
19,896
21,702,264
2
(566,882)
(44,583)
209,846
25
(401,592)
"Loans and advance to banks" and "Loans and accounts receivable from customers" are valued using market rates, discounting the
credit risk provision, if applicable.
71
Fair value measurement and hierarchy
IFRS 7 establishes a fair value hierarchy, which prioritizes the entry of valuation techniques used to
measure fair value. The hierarchy gives top priority to unadjusted prices quoted in active markets
for identical assets and liabilities (level 1 measurements) and the lowest priority to measurements
that imply important non-observable entries (level 3 measurements). The three levels of fair value
hierarchy are detailed as follows:
•
Level 1: entries with quoted prices (unadjusted) in active markets for identical assets and
liabilities, which the Bank has the capacity to access as of the measurement date.
•
Level 2: entries other than quoted prices included in level 1, which are directly or indirectly
observable for assets or liabilities.
•
Level 3: non-observable entries for assets or liabilities.
Banco Estado applies models recognized and validated in the financial industry to valuate financial
instruments. Fixed income instruments (IRF) and financial brokerage instruments (IIF) are valued
applying the model developed by DICTUC S.A., Subsidiary of Pontificia Universidad Católica de
Chile, which basically consists of valuating instruments in portfolio with real transaction prices.
Should there be no prices for a specific instrument; the Price Reference Model is applied based on
all information available on transactions for the day and all historical information recorded in the
Santiago Stock Exchange.
In the case of derivative instruments, the methodology applied corresponds to currency rate factors
obtained from valid market sources and modeled using a 6-factor Svenson model, obtaining the rate
curve with daily periodicity for each currency and term and market where the Bank operates.
72
As of September 30, 2013 and December 31, 2012, the assets and liabilities measured at fair value on a recurrent basis, are detailed as
follows:
September 30, 2013
Fair value measurements
Total
MCh$
Total
MUS$
Prices in active
markets for
identical assets
Prices in active
markets for
identical assets
(level 1)
MCh$
(level 1)
MUS$
Other
significant
input
observable
(level 2)
MCh$
Other
significant
input
observable
(level 2)
MUS$
Significant
input nonobservable
Significant
input nonobservable
(level 3)
MCh$
(level 3)
MUS$
ASSETS
Financial assets held for trading
Financial investments available for sale
1,247,837
110,538
2,899,132
2,475
219
5,750
284,461
562,877
564
1,116
963,376
110,538
2,336,255
1,911
219
4,634
-
-
TOTAL
4,257,507
8,444
847,338
1,680
3,410,169
6,764
-
-
LIABILITIES
95,477
189
-
-
95,477
189
-
-
TOTAL
95,477
189
-
-
95,477
189
-
-
73
Total
MCh$
12/31/2012
Fair value measurements
Prices in active
Other significant
markets for
input observable
identical assets
(level 1)
(level 2)
MCh$
MCh$
Significant input
non-observable
(level 3)
MCh$
ASSETS
Financial assets held for trading
Financial investments available for sale
1,269,674
128,140
3,003,534
108,397
466,621
1,161,277
128,140
2,536,913
-
TOTAL
4,401,348
575,018
3,826,330
-
LIABILITIES
99,755
-
99,755
-
TOTAL
99,755
-
99,755
-
Assets and liabilities classified in level 2 correspond to instruments whose rates or valuation prices are obtained from market prices by
the application of modeling.
74
NOTE 14 – EVENTS OCCURRED AFTER THE REPORTING PERIOD
On October 10, 2013, Ms. María Cecilia Vergara Fisher resigned as Director of BancoEstado
Contacto 24 Horas S.A., leaving the Board of Directors composed by Messrs. Hernán Saavedra
Parra (Chairman), Jaime León Romo and Jorge Franetovic Yob.
There are no other events after the reporting period that occurred from September 30, 2013 to
November 14, 2013, that might significantly affect the presentation of the Bank's Interim
Consolidated Financial Statements.
CARLOS MARTABIT SCAFF
Chief Finance Officer
PABLO PIÑERA ECHENIQUE
Chief Executive Officer
MARCOS GAÍNZA ARAGONÉS
Accounting and Management Manager
OSCAR GONZÁLEZ NARBONA
Planning and Management Control Manager
75

Estados Financieros

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