Discusión Estratégica

Corporate Presentation
As of June 30th, 2014
I.Introduction to Banco de Chile
Introduction to Banco de Chile:
Leading Financial Institution in Profitability and Soundness…
Most Profitable and Strongest Bank
Institution in LatAm1
As of June 2014
Local
Ranking
December 2013
 US$46 billion in Assets
 US$28 billion in Deposits
 US$4.3 billion in Equity
 26% ROAE
Rating
(S&P)
ROAE
23,9%
Santander
Itau
Santander
21,7%
20,5%
19,5%
A+
BBB+
BBB-
A
 S&P: A+ | Moody’s: Aa3
(Strongest Private Bank in Latam)
 Listed locally and internationally
Santiago | NYSE | LSE
Bancolombia
Banorte
16,4%
13,7%
BBBBBB+2
1. Based on private financial institutions with market cap >US$5bn. 2.Fitch rating. S&P rating not available.
3
Attractive Free Float of 25.1%...
Simplified Ownership Structure
Free Float Evolution
Pre Capital
Increase 2011
Pre Capital
Increase 2012
12,1%
50.0%
50.0%
LQIF’s Direct and Indirect
Stake in Banco de Chile
51.2%
15,7%
25.9%
Pre LQIF
Secondary
Offering 2
Current
58.2%
SM-Chile
17,6%
Free
Float
25,1%
25.1%
100%
SAOS
12.8%
30.2%
Ergas
Group
6.0%
Free Float
Source: Banco de Chile.
1.- Simplification of current situation.
2.- Sale on behalf of LQIF of 6,700,000,000 common stock of Banco de Chile.
4
…With a Diversified Business Model
Total Loans
Income Before Taxes
2Q14
1H14
4%
5%
22%
28%
49% US$37,824 mm
US$619 mm
19%
39%
19%
Subsidiaries1
Large Companies
5%
Individuals and SME
Corporate
9%
Consumer Finance
Treasury
Note: CLP/US$ = 552.95 as of June 30, 2014. Information in Chilean GAAP.
1.- Subsidiaries include Banchile Corredores de Bolsa S.A., Banchile Administradora General de Fondos S.A., Banchile Corredores de Seguros Ltda., Banchile Asesoría Financiera S.A.,
Banchile Securitizadora S.A., Promarket S.A., Socofin S.A. 2
5
II.
Banco de Chile:
An Attractive Investment Opportunity
Why Banco de Chile?
7
Macroeconomic Environment in Chile
GDP & Domestic Demand
GDP Breakdown
(%)
(Year on Year, %)
20%
30%
15%
20%
10%
10%
5%
0%
0%
-5%
-10%
GDP
-10%
Domestic Demand
-20%
-15%
2006 2007 2008 2009 2010 2011 2012 2013
Inflation
7
6
5
4
3
2
1
0
-1
-2
-3
2010
2011
2006
2007
2008
Gross Fixed Investment
2009
2010
2011
2012
2013
Monetary Policy Rate
(CPI ∆Year on Year, %)
2009
Consumption
-30%
2012
2013
2014
(%)
6,0
5,5
5,0
4,5
4,0
3,5
3,0
2,5
2,0
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
8
Why Banco de Chile?
9
Attractive Financial System in Chile
1 Substantial Growth Potential
Assets in the Chilean Financial System
Banking System Loan Penetration
% of GDP1
% of GDP
235%
Total
Loans
Assets Under
Management
202%
171%
82%
Consumer
Mortgage
11%
20%
114%
60%
122% 130%
82%
56%
28% 35%
Commercial
51%
Banks
15%
Pension
Funds
Mutual
Funds
Source: Banco Central, SBIF, SAFP, AAFM, and SVS.
1.- Nominal LTM figures as of September 2013.
18%
Insurance
17%
11
7
GDP per Capita (US$ Thousands)
8 11 16 23 51 29 51
42
Source: The Economist Intelligence Unit as of December 20, 2013, central banks and
regulators.
2.- Source: Central Bank of Chile and SBIF.
40
10
Attractive Financial System in Chile
2 Solid and Profitable Banking Industry with Consistent Growth
Total Loans1 and ROAE2
Chilean Banking System, US$ Billions, %
Chilean Banking System
 12 Chilean banks and 11 international banks
125
15,7%
2009
136
159
181
199
208
 5 largest banks hold more than 70% of total
loans
 Sustained growth in loans of 2x4 GDP growth
19,3%
18,7%
2010
2011
15,7%
16,0%
2012
2013
18,8%
Jun-14
 High credit quality
 Attractive return on equity
 Good capitalization
> 90-Day Past-Due Loans / Total Loans:
3.0%
2.7%
2.6%
2.2%
2.2%
BIS Ratio:
14.3% 14.1%
13.9% 13.3% 13.2%
2.2%
 Strict regulation with increasing focus on
consumer protection
13.5%
Source: SBIF, information in Chilean GAAP. CLP/US$ = 552.95 as of June 30, 2014.
1.- Excludes subsidiaries outside Chile. 2.- ROAE: Return on average equity. 3.- Compounded annual growth rate. 4.- Linear regression between real GDP growth and real loans growth
in the banking system, for years in which there was real positive change in GDP, from 1996 to 2014.
11
Why Banco de Chile?
12
Solid Competitive Position
1
Strong Brand Recognition that Translates into High
Client Attraction and Retention
First Mention by Attribute
% of Total Mentions
Bank You Would Change to
33%
14%
9%
8%
2%
10%
3%
CorpBanca
Itau
BCI
1%
Santander
CorpBanca
Itau
BCI
Santander
6%
12%
1%
CorpBanca
16% 16%
Itau
28%
BCI
30%
Security and Solvency
Santander
Top of Mind
Source: Adimark GFK. Includes all brands from each institution.
13
Solid Competitive Position
2 Leading Market Position
#2 in Total Loans
#1 in Commercial Loans
Market Share, as of June 20141
19,2%
Market Share, as of June 20141
18,4%
18,3%
12,9%
7,6%
Santander
BCI
9,3%
CorpBanca Itau
Santander BCI
5,7%
CorpBanca Itau
#1 in Assets Under Management
Market Share, as of June 2014
16,4%
14,2%
5,1%
#1 in Net Fees and Commissions
19,8%
17,3%
Market Share, as of June 2014
21,2%
14,7%
15,1%
11,4%
14,0%
5,2%
Santander BCI
CorpBanca Itau
Santander
BCI
5,9%
5,4%
Larraín Vial
BICE
Source: SBIF, AAFM.
1.- Excludes subsidiaries outside Chile.
14
Solid Competitive Position
3 Lowest Cost of Funding in the Industry
Demand Deposits Market Share1
Liability Structure
%, as of June 2014
% Over Total Assets, as of June 2014
Financial
Institutions
2,9%
Other
7,2%
(∆-172 bp y/y)
(∆-189 bp y/y)
Saving
Accounts and
Time Deposits
37,4%
23,0%
21,2%
15,0%
(∆-179 bp y/y)
Equity
9,4%
Retail
39%
(∆47 bp y/y)
Wholesale
61%
Debt Issued
19,0%
(∆+131 bp y/y)
BCI
3,2%
CorpBanca
Itau
Cost of Funding
Interest paid / Average volume of interest bearing liabilities and demand
deposits, annualized June 2014
(∆+363 bp y/y)
Current Accounts and
Demand Deposits
24,1%
Santander
4,5%
3,9%
4,3%
Retail
43%
Wholesale
57%
Financial System
Source: SBIF.
1.- Excludes subsidiaries outside Chile.
15
Solid Competitive Position
4 Recognized Credit Risk Management
Delinquency Ratio
Loan Loss Provisions Ratio
%, Past Due Loans1 / Total Loans
3,4%
Provisions for Loan Losses/ Average Loans
3,1% 3,1%
1,8%
1,3% 1,3% 1,4% 1,3% 1,3%
1,7%
1,2%
2009
1,0%
1,3%
1,2% 1,0%
1,0% 1,1%
2010
2011
Allowances for Loan Losses / Past-Due Loans1
2,1x 2,1x
2,5% 2,4% 2,4%
1,5%
Coverage Ratio
2012
2013 Jun-14
1,2%
2010
2011
2012
2,0x 1,9x
1,7x
1,4%
0,8%
2009
2,4x
2013 Jun-14
1,0x 1,1x 1,1x
0,9x
0,7x 0,8x
2009
2010
2011
2012
2013 Jun-14
System ex Banco de Chile
Renowned risk management based on:
• Proven capacity for origination and structuring
• Solid follow-up and collection processes
• Senior management deeply involved
Source: SBIF. Information in Chilean GAAP.
1.- Loans overdue 90 days or more, including overdue installments, as well as outstanding capital and interests.
16
Why Banco de Chile?
17
Proven Value Creation Capabilities
1 Sustained Growth in Loans and Operating Revenues…
Total Loans
Total Operating Revenues
US$ Billions
US$ Billions
$37,7
$31,4
$23,8
$33,9
$26,0
$2,11
$2,21
20,6%
20,5%
20,8%
20,0%
2010
2011
2012
2013
$1,84
19,1%
19,2%
19,8%
19,0%
19,1%
19,6%
2009
2010
2011
2012
2013
2009
Total Loans
$2,43
$2,63
Market Share
1
Operational Revenues
Market Share
Information in Chilean GAAP.
Source: SBIF, Banco de Chile. CLP/US$ = 552.95 as of June 30, 2014.
1.- Excludes subsidiaries outside Chile.
18
Proven Value Creation Capabilities
2 Distinguishing Itself in the Local Market…
Highest Profitability in the Local
Industry…
…Based on Superior Risk Management and Efficiency
Operating Margin
% Over Average Interest Earning Assets, June 2014
ROAE
7,8%
June 2014
7,9%
7,5%
6,9%
Santander
BCI
CorpBanca
5,3%
26,1% 25,0%
20,8%
Itau
Loan Loss Provisions Ratio
%, Provisions for Loan Losses / Average Loans, June 2014
13,5%
11,7%
1,4%
1,5%
BCI
1,5%
0,9%
Santander CorpBanca
1,0%
Itau
Efficiency Ratio
Operating Expenses / Operating Revenues, June 2014
Santander
BCI
CorpBanca
Itau
2.2%
1.6%
0.8%
1.3%
40,3%
44,7%
38,8%
51,1%
51,7%
ROAA:
2.4%
BCI
Santander CorpBanca Itau
19
Proven Value Creation Capabilities
3 Consistent Track Record of Profitability…
Return On Average Equity (ROAE)
Return On Average Assets (ROAA)
%, Times over Peers
%, Times over Peers
Banco de Chile’s Multiple over Peers
0.8x
1.1x
1.2x
27,8% 26,9%
1.4x
1.3x
1.3x
0.9x
1.4x
1.4x
2,2%
1.4x
2,4%
2,1%
2,1%
2,1%
1,4%
1,5%
2012
2013
24,5%
21,7%
1,7%
17,9% 17,5%
2009
1.2x
26,1%
25,7%
23,5%
22,6%
19,1%
1.1x
2010
2011
2012
2013
19,4%
2,0%
1,7%
1,5%
Jun-14
2009
2010
2011
1,7%
Jun-14
Local Peers1
Source: SBIF. 1.- BCI, CorpBanca , Itau and Santander
20
Proven Value Creation Capabilities
4 …and Adding Significant Value for its Shareholders
Market Capitalization of Banco de Chile
bn: Billions
US$ Billions
US$2 bn1
US$5 bn2
Banco de Chile &
Banco Edwards
Merger
Banco de Chile &
Citibank Chile
Merger
US$12 bn3
16
14
12
10
8
6
4
2
0
2000
2001
2002
2003
2004
Source: Bloomberg.
1.- January 4 , 2002. 2.- February 13 , 2008. 3.- August 8, 2014.
2005
2006
2007
2008
2009
2010
2011
2012
2013
21
Why Invest in Banco de Chile?
22
Solid Corporate Governance and Consistent Strategy
1 Solid Corporate Governance…
Solid Corporate Governance Practices
 Active Board involvement
 11 board members (2 are independent)
 5 risk committees, including weekly sessions
of Loan Portfolio Committee
 6 monthly business committees
 Best Practices in pursuant to NYSE and SEC
standards
Successful Partnership with Citi
 Growth of existing businesses
•
Transactional and Multinational Banking,
Treasury, Investment Banking, Consumer Finance
 International Connectivity provide us with
significant growth potential to develop:
•
•
•
International business opportunities
Regional and multinational client development
Best practices in internal management processes
Source: Banco de Chile.
23
Solid Corporate Governance and Consistent Strategy
2 …and a Focused Strategy to Sustain Profitable Growth
24
III.
Closing Remarks
26
Final Considerations
Banco de Chile: A Unique Investment Opportunity
 Positive and stable track record
 Low risk and attractive business environment
 Solid and profitable industry with consistent growth
 Substantial growth potential




Strong brand recognition
Leading market position
Lowest cost of funding in the industry
Outstanding credit risk management
 Sustained growth in loans and income
 Highest profitability in Chile and Latin America
 Consistently delivering value to its shareholders
 Successful partnership with Citi
 Solid practices in corporate governance
 Focused strategy to sustain profitable growth
25
IV.
Recent Results
28
Financial Performance
Chilean GAAP
Statement of Income (in billions of CLP)
Net Interest Income
Total Operating Revenue
Provisions for Loan Losses
Total Operating Expenses
Net income
Balance Sheet (in billions of CLP)
Total Loans
Total Assets
Equity
Profitability Indicators
Net Interest Margin1
Operating Margin
ROAE - Return on Average Equity2
ROAA - Return on Average Assets3
Credit Quality
Provisions for Loan Losses/ Average Loans
Non-Performing Loans / Total Loans
Allowances for Loan Losses / Non-Performing Loans
Operational Efficiency
Operating Expenses / Operating Revenues
Capital Ratios
Total Regulatory Capital / Risk-weighted Assets
Tier 1 Capital / Risk-weighted Assets
2011
2012
2013
871
1.224
-125
-614
429
953
1.342
-188
-634
466
1,059
1.456
-242
-623
514
17,378
21,741
1,739
18,762
23,261
2,007
20,870
25,934
2,284
4.77%
6.70%
24.03%
2.12%
4.62%
6.41%
23.31%
2.09%
0.79%
1.03%
2.1x
Variation
2013 / 2012
%
11.2%
10.1%
28.4%
1.8%
9.8%
1H13
1H14
488
683
-104
-300
243
617
819
-149
-330
304
Variation
1H14/1H13
%
33.5%
20.5%
43.3%
10.1%
25%
19,064
24,404
2,167
20,392
25,461
2,381
4.71%
6.47%
21.30%
2.13%
11.2%
11.5%
13.8%
bps
9
6
(201)
4
4.46%
6.25%
22.76%
2.10%
5.20%
6.91%
25.49%
2.37%
7.3%
4.3%
9.9%
bps
74
66
273
27
1.04%
0.97%
2.4x
1.23%
1.13%
2.0x
19
16
0.4x
1.08%
1.08%
2.1x
1.42%
1.31%
1.9x
34
23
0.2x
50.16%
46.26%
42.78%
(348)
43.8%
40.3%
(350)
12.91%
8.88%
13.22%
9.69%
13.05%
9.94%
(17)
25
13.29%
10.00%
13.40%
10.40%
11
40
Source: Banco de Chile, based on historical Financial Statements submitted to the SBIF and not including reclassifications. Information in Chilean GAAP. 1.- Annualized net interest income
divided by average interest earning assets. The average balances for interest earning assets, including interest and readjustments, have been calculated on the basis of our daily balances
and on the basis of monthly balances for our subsidiaries. 2.- Annualized net income (loss) divided by average equity. The average balances for equity have been calculated on the basis of
our monthly balances. 3.- Annualized net income (loss) divided by average total assets. The average balances for total assets have been calculated on the basis of our daily balances and
on the basis of monthly balances for our subsidiaries.
27
Forward-looking Information
The information contained herein incorporates by reference statements which constitute
‘‘forward-looking statements,’’ in that they include statements regarding the intent, belief or
current expectations of our directors and officers with respect to our future operating
performance. Such statements include any forecasts, projections and descriptions of anticipated
cost savings or other synergies. You should be aware that any such forward-looking statements
are not guarantees of future performance and may involve risks and uncertainties, and that
actual results may differ from those set forth in the forward-looking statements as a result of
various factors (including, without limitations, the actions of competitors, future global
economic conditions, market conditions, foreign exchange rates, and operating and financial
risks related to managing growth and integrating acquired businesses), many of which are
beyond our control. The occurrence of any such factors not currently expected by us would
significantly alter the results set forth in these statements.
Factors that could cause actual results to differ materially and adversely include, but are not
limited to:
•
•
•
•
•
changes in general economic, business or political or other conditions in Chile or
changes in general economic or business conditions in Latin America;
changes in capital markets in general that may affect policies or attitudes toward
lending to Chile or Chilean companies;
unexpected developments in certain existing litigation;
increased costs; and
unanticipated increases in financing and other costs or the inability to obtain
additional debt or equity financing on attractive terms.
You should not place undue reliance on such statements, which speak only as of the date that
they were made. Our independent public accountants have not examined or compiled the
forward-looking statements and, accordingly, do not provide any assurance with respect to such
statements. These cautionary statements should be considered in connection with any written or
oral forward-looking statements that we may issue in the future. We do not undertake any
obligation to release publicly any revisions to such forward-looking statements to reflect later
events or circumstances or to reflect the occurrence of unanticipated events.
30