Banco BICE Overview

Investor Presentation
March 2014
www.bice.cl
Presenters
♦ Alberto Schilling – Chief Executive Officer (47, married (23), 3 children)
♦ Mr. Schilling has served in various positions at BICE prior to becoming CEO, including, Credit Analyst and Account Executive
(Corporations), Vice President of Structured Finance, Director of Investment Banking (BICE Chileconsult Asesorías
Financieras S.A) and Head of Corporate Banking. Between 1995 and 1997 worked in NM Rothschild & Sons Ltd. in London.
♦ Mr. Schilling is currently on the boards or executive committees of BICE Inversiones Administradora General de Fondos S.A.,
Securitizadora BICE S.A., BICE Inversiones Corredores de Bolsa S.A., BICE Corredores de Seguros Ltda., BICE Factoring
S.A., BICE Chileconsult Asesorías Financieras S.A., BICE Asset Management, BICE Carteras S.A.
♦ Aside from his involvement in BICE, he is a member of the boards of Corporación Chileno-Alemana de Beneficencia
(Chilean-German non-profit organization), Clínica Alemana SpA (3 Clinics in Chile), and Chairman of Hogares Alemanes and
Hogares Alemanes Osorno (3 elderly homes). Has been a board member of Club Deportivo Manquehue (Sport Club) and
Cámara Chileno-Alemana de Comercio (Chilean-German Chamber of Commerce).
♦ Mr. Schilling holds a degree in Business Administration from Universidad de Chile; he attended the Advanced Management
Program at Harvard Business School in 2008.
♦ Rodrigo Álvarez – Chief Financial Officer (51, married (28), 4 children)
♦ Mr. Alvarez has been the CFO at BICE for 10 years, prior to which held various positions including at Bancard S.A. and
Citibank in Chile, where he held the positions of FX Trader, FX Professional Head, FX Unit Head and Research Head, and
eventually Country Treasurer and Head of the Sales and Trading Business from 1998 to 2004.
♦ Mr. Alvarez is a Board member of BICE Vida Compañía de Seguros S.A., where he sits on the Financial Investment
Committee and the Real Estate Investment Committee. He is also a member of the executive committee of BICE
Chileconsult Asesorías Financieras S.A. and a former member of the Boards of Securitizadora BICE S.A. and BICE
Inversiones Corredores de Bolsa S.A.
♦ Aside from his involvement in BICE, he is a member of the board of OPTE, a non-profit organization with the purpose of
improving the education of children in a vulnerable social situation.
♦ Mr. Alvarez holds a degree in Civil Industrial Engineering from the Catholic University of Chile and a Master of Science
Degree in Engineering. He attended the Financial Management Program at Stanford University in 1995 and the Advanced
Management Program at Harvard Business School in 2010.
2
Section 1
Investor Highlights
www.bice.cl
Investment Highlights
Strong bank in the Emerging Markets’ highest rated country
Solid brand recognition and a key part of
Chile’s prestigious Matte Group
Strong, consistent asset quality
Conservative risk policies resulting in stability
throughout economic cycles
Experienced management team
4
Section 2
Chilean Macroeconomic Highlights
www.bice.cl
Chile’s Strong and Stable Macroeconomic Fundamentals
GDP Growth and GDP per Capita
Unemployment
7.0%
$18,000
$12,771
$14,561
6.0%
$15,424
$16,019
8.4%
$16,641
7.2%
$16,000
5.0%
6.5%
6.2%
6.5%
2012
2013
2014E
4.0%
$14,000
3.0%
2.0%
$12,000
1.0%
5.8%
5.9%
5.6%
4.2%
4.0%
2010
2011
2012
2013
2014E
0.0%
$10,000
2010
Annual Inflation
2011
Central Bank Reference Rate
4.4%
5.30%
3.0%
3.0%
5.00%
4.50%
4.00%
2.8%
3.30%
1.5%
2010
2011
2012
2013
2014E
Year End
2010
2011
2012
2013
2014E
Source: Central Bank of Chile
6
Chile’s Prudent Financial and Monetary Policies
Gross Government Debt to GDP Ratios Throughout the Region*
60%
Fiscal Deficits Throughout the Region*
0.5%
-0.5%
29%
32%
18%
-2.0%
-2.3%
12%
Peru
Chile
Peru
Mexico
Colombia
Chile
-3.2%
Brazil
* Financial balance of the central government vs. GDP for the year 2013
Central Bank Reserves (USDmn)
$41,979
$41.650
Central Government Investments (USDmn)
$22,754
$41,088
$20,881
$16,557
2009
Mexico
Brazil
* For the year 2013
$25,373
Colombia
$14,706
$27,864
2010
$17,563
2011
2012
2013
2009
2010
2011
2012
2013
Source: Central Bank of Chile, Moody’s
7
Chile’s Superior Credit Rating, Low Sovereign Risk, and Stable FX
Low Sovereign Risk – 5-year CDS
Highest Sovereign Rating in the Emerging Markets
230
Mexico
Colombia
Brazil
Peru
Chile
210
Switzerland
190
170
Australia
+188bps
150
+122bps
130
Singapore
+119bps
110
+89bps
90
USA
70
+83bps
50
Jan-12
Japan
May-12
Sep-12
Jan-13
May-13
Sep-13
Jan-14
AA-
Chile
Stable FX
China
CLP629
Peru
CLP534
Mexico
CLP524
CLP521
CLP508
CLP496
CLP468
Colombia
CLP479
Developed Markets
Emerging Markets
Brazil
2006
S&P Rating
BBB-
BBB
BBB+
A-
A
A+
AA-
AA
AA+
2007
2008
2009
2010
2011
2012
2013
AAA
Source: Bloomberg
8
Chile’s Well-Capitalized, Profitable Financial System
Banking System ROE (%)
Banking System Loan Growth (Q-o-Q)
18.6%
18.0%
10%
17.5%
9.8%
8.3%
14.7%
14.9%
6.1%
6%
3.8%
Average
Growth
2.4%
3.1%
3.2%
2%
1.1%
-1.6%
-2%
-3.7%
2009
2010
2011
2012
2013
-5.7%
-6%
Sep-11 Dec-11
High Capital Ratios Across the System
Tier I
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Declining NPL Ratio Across the System
3.3%
Tier II
3.1%
14.1%
13.9%
3.5%
13.3%
3.1%
13.0%
4.0%
3.9%
3.3%
9.9%
10.87%
10.12%
10.0%
10.0%
9.7%
2008
2009
2010
2011
2012
2013
3.0%
3.3%
2.9%
2.8%
2.7%
2.6% 2.6%
2.7%
2.4%
2.9%
2.8%
2.9% 2.9%
2.3%
2.2%2.2%2.2%2.2%
2.1%
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13
14.3%
12.9%
Source: Superintendence of Banks and Financial Institutions; Ministry of Finance of Chile; Central Bank of Chile
9
Section 3
Banco BICE Overview
www.bice.cl
Banco BICE Overview
Key Metrics
 Founded in 1979
 Controlled by the Matte Group
 Subsidiary of BICECORP
 Main business areas:
• Corporate Banking
• SME Banking
• Retail Banking
• Asset Mgmt., Wealth Mgmt. & Inv. Bkg.
Santiago
• Treasury
All figures except ratios expressed in USDmn
Balance Sheet
2011
Total Assets
6,811
Loan Portfolio
4,740
Deposits (demand and time)
4,268
Shareholders Equity
472
Income Statement
2011
Net Interest Income
109
Net Fee Income
60
Capitalization
2011
Total Capitalization
11.2%
Profiltability
2011
ROA
1.19%
ROE
17.1%
Efficiency
51.4%
Revenue by Business Segment as of 2013
2013
8,140
6,145
5,203
617
2013
129
61
2013
12.6%
2013
1.20%
15.9%
48.6%
Corporate Structure
Subsidiaries
17%
Matte Group
Corporate & MSE
Banking
47%
Treasury
15%
2012
8,028
5,902
5,046
600
2012
125
64
2012
12.9%
2012
1.19%
16.0%
50.0%
96.23%
99.97%
100%
 Life Insurance Company
 Total Assets: 8,140mn
 Total Assets: 4,325mn
Retail Banking
21%
11
BICECORP’s History
Grupo Matte acquires NM
Rothschild & Sons Ltd’s
participation in BICECORP
Acquisition of 50% of
Allianz BICE Cía. de
Seguros de Vida S.A.
Association with NM
Rothschild & Sons
Ltd. in Investment
Banking Services
Joint venture for financing of
Mercedes Benz Buses, Trucks
and Cars in Chile
IPO in Chile
merges with
Sociedad Renta
Urbana S.A.
Creation of
Banco BICE
Creation of Allianz
BICE Compañía
Seguros de Vida S.A.
acquires Compañía
de Seguros de Vida
La Construcción
S.A.
Creation of
BICECORP
1978
1979
Creation of
Crediautos
1980
1992
1994
1999
2001
2004
2005
2009
2013
12
Key position in Chile’s Prestigious Matte Group
■ The Matte Group is among the most prestigious names in the Chilean economy, with a range of businesses in the Forestry, Energy, Telecom, Ports,
Building Materials and Financial Services sectors, among other investments.
Sector
Financial Services
Forestry
Telecom
Energy
Description
One of the most
important financial
holding companies
in Chile
Diversified pulp,
paper, and other
forestry products
Leading Chilean
Telecom company
2nd largest electricity
generator in Chile
USD1.2bn
USD1.3bn
USD5.0bn
USD5.0bn
USD3.0bn
USD3.1bn
USD1.4bn
USD1.7bn
(Net Income)
USD0.2bn
USD0.2bn
USD1.0bn
USD1.0bn
USD1.1bn
USD1.0bn
USD0.3bn
USD0.4bn
Sales
2012
LTM
EBITDA
2012
LTM
Market Cap
(current)
USD1.4bn
USD5.3bn
USD2.7bn
USD4.0bn
~55%
~18%
(controlled through a
shareholder agreement)
~49%
Ownership
of the Group
~96%
Other Investments
Energy, Forestry, Conglomerate
~11% ownership
USD17.1bn Mkt. Cap
Container Port Terminals
~71% ownership
USD0.2bn Mkt. Cap
Building materials
Joint venture with Saint Gobain
~46% ownership
USD0.3bn Mkt. Cap
Processor of Molybdenum
~10% ownership
USD1.9bn Mkt. Cap
13
Corporate, SME, and Retail Banking
Corporate Banking
SME Banking
Client
Description
Corporate clients with Sales
> USD35 million
Number of
Clients
2,757
9,164
54,554 (*)
Number of
Banking
Officers
20
59
103
Percentage of
Total Loan
Portfolio
Client Types
Corporate clients with Sales > USD1.2
million and < USD35 million
Retail Banking
28%
High-end retail and
private banking clients
21%
51%
Corporate (~750 clients, 17% of total
BICE loan portfolio)
 Agribusiness (~750 clients, 7% of
total BICE loan portfolio)
 Private Banking (~5,000 clients, 5%
of total BICE loan portfolio)
Financial (~550 clients, 6% of total
BICE loan portfolio)
Middle Market (~8,500 clients, 21% of
total BICE loan portfolio)
Retail Banking (~50,000 clients, 16%
of total BICE loan portfolio)
Industrial and Services (~800 clients,
11% of total BICE loan portfolio)
Real Estate & Construction (~650
clients, 17% of total BICE loan
portfolio)
(*) Number of current accounts.
14
Credit Policies and Procedures
♦ All transactions that involve Credit Risk require a previously approved credit line.
♦ All credit lines must be approved by a Credit Committee.
♦ All credit approvals are granted on a unanimous basis.
♦ Credit Committee structure (limits without collateral):
• Subgerente (VP)
< US$
80,000
• Gerente (SVP)
< US$
400,000
• Gerente División (EVP)
< US$
600,000
• Head of Risk
< US$ 1,600,000
• CEO
< US$ 2,000,000
• 1 Board Member
< USD 4,000,000
• 2 Board Members
< Legal Lending Limit
• Credit Committee
< Legal Lending Limit
Daily sessions
Weekly session
♦ Current Legal Lending Limit for one client, without collateral: USD 85,700,000.
♦ Approximately 90% of the credit lines currently in place have been approved by at least one board member.
♦ Lines for individual clients are analyzed taking into consideration their related companies, when applicable.
15
Asset Management, Wealth Management and Investment Banking
Fund Management
~USD2.6bn in AUM
37 different funds (30
Mutual Funds and 7
Investment, Real Estate
and closed end funds)
Brokerage
Brokerage services
include equities, fixed
income, FX, and
international instruments
3.7% market share of
total equity and
investment fund trade
volumes on the Santiago
Stock Exchange
Wealth Management
One of the three largest
players in the Chilean
financial sector.
~USD3bn in AUM
Custody of local
instruments is done
through Banco BICE and
for international
instruments through
Pershing LLC, a
subsidiary of Bank of
New York Mellon
Fund Distribution
Corporate Finance
Currently manages
~USD1.2bn in Goldman
Sachs funds, USD40mn
in Van Eck ETFs and
USD400mn in TIAA Cref
funds
M&A advisory
Distribution agreements
with
Valuations (fairness
opinions), general
advisory
ECM / DCM
Privatizations and public
concessions
Restructuring
BICE Inversiones Assets Under Management (USDmn)
Fund Management
Fund Distribution
$7,976
Wealth Management
$6,027
Custody
$6,288
$7,046
$4,669
$2,927
$3,085
$2,911
2004
2005
2006
$3,358
$3,704
$2,002
2003
2007
2008
2009
2010
2011
2012
2013
16
Experienced Management Team and Board
Executive
Position
Years at BICE
Years in the Industry
Alberto Schilling R.
Chief Executive Officer
24
24
Rodrigo Álvarez S.
Chief Financial & International Officer
10
28
Joaquín Izcue E.
Head of Corporate Banking
28
28
Daniel Troncoso C.
Head of SME Banking
9
35
José Pedro Balmaceda M.
Head of Retail Banking
22
22
Pedro Robles E.
Head of Operations & Technology
12
37
Máximo Latorre E.
Head of BICE Inversiones
26
26
Carlos Klapp S.
Chief International and Foreign Trade Officer
24
33
José Luis Arbildúa A.
Head of Credit Risk
24
40
Board Member
Position
Years of Experience
Bernardo Matte Larraín
Chairman
30
Vice-Chairman
18
Kathleen Barclay Collins
Director
35
Patricio Claro Grez
Director
40
Juan Carlos Eyzaguirre Echenique
Director
26
Bernardo Fontaine Talavera
Director
27
José Miguel Irarrázaval Elizalde
Director
32
Eliodoro Matte Capdevila
Director
11
René Lehuedé Fuenzalida
Director
35
Juan Eduardo Correa
García1
1 CEO of BICECORP
17
Section 4
Financial Highlights
www.bice.cl
Total Assets and Loan Portfolio
Total Assets (USDmn)
Evolution of Loan Portfolio (USDmn)
$8,028
Corporate
SME
Retail
$8,140
$6,811
$5,375
$5,212
$5,837
$4,163
$827
$1,285
2009
2010
2011
2012
2013
$4,593
$1,002
$947
$6,631
$6,799
$1,295
$1,431
$1,802
$1,872
$3,534
$3,497
2012
2013
$1,509
$1,332
$2,052
$2,313
$2,701
2009
2010
2011
Note: Portfolio includes contingent loans
Loan Portfolio by Currency
Loan Portfolio by Type
US
Dollar
21%
Mortgage
12%
UF
43%
Commercial Loans by Economic Sector
Consumer
3%
Transport and Consumer
Communications
3%
Real Estate and
Retail 5%
Construction
7%
18%
Leasing
8%
Manufacturing
7%
Utilities
8%
Foreign
Trade
7%
Chilean
Peso
36%
Commercial
70%
Agriculture and
Fishing
10%
Mortgage
10%
Financial
18%
Services
14%
19
Asset Quality
Past Due Loans / Total Loans
Provisions / Total Loans
1.2%
2.5%
1.13%
2.04%
2.16%
2.0%
0.8%
1.44%
0.76%
0.34%
0.4%
1.43%
1.5%
1.49%
1.0%
0.27%
0.28%
0.0%
0.5%
0.0%
2009
2010
2011
2012
2013
2009
Write-Offs / Total Loans
2010
2011
2012
2013
Provisions / Past Due Loans
8x
0.5%
7.0x
6.9x
0.40%
0.4%
5.6x
6x
0.3%
0.23%
4x
2.9x
0.2%
1.8x
0.10%
2x
0.12%
0.1%
0.06%
x
0.0%
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
20
Deposit Base
Evolution of Funding Base
Time Deposits
Shareholders' Equity
Repurchase Agreements
Sight Deposits
Other
Subordinated Debt
Breakdown of Largest Depositors
Local Bonds
International
$8,028
$8,140
Depositer G Depositer H
Depositer I
1%
Depositer F
1%
1%
2%
Depositer E
BICE Vida Compania de
2%
Seguros
Depositer D
1%
3%
$6,811
$5,375
2009
Depositer C
3%
$5,837
2010
2011
2012
Prof. market through
BICE Inversiones
Corredores de Bolsa
37%
2013
Loans to Deposits Ratio
Prof. market though
BICE Agente de Valores
49%
Cost of Funding vs. System (Local Currency CD Rates as of 2013)
6.10%
BICE
BCI
Chile
Santander
System Average
1.57
5.90%
1.54
1.51
5.70%
1.52
1.48
5.50%
5.30%
2009
2010
2011
2012
2013
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Tenor in months
Note: Includes only Time Deposits
21
Treasury Investment Portfolio
Investments by Type
Other*
4%
Investments by Currency
 Total Investment Portfolio Value US$ 736 million
 99.84 % Investment Grade Assets (local rating)
CLP and UF
(Inflation Indexed
CLP)
100%
Chilean
Central Bank
and Chilean
Government
49%
Domestic
Chilean Banks
47%
* Other includes investments in Mutual Funds.
Cash and Equivalents (USDmn)
$926
$541
$442
$430
$285
2009
2010
2011
2012
2013
22
Financial Performance (cont’d)
Net Interest Income (USDmn)
$125
$114
Net Fee Income (USDmn)
$129
$65
$64
$60
$109
$61
$50
$96
2009
2010
2011
2012
2013
2009
2010
Net Income (USDmn)
2012
2013
Efficiency Ratio
$96
$87
2011
$98
51.4%
$81
50.0%
$71
48.6%
47.9%
47.3%
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
23
Financial Performance and Capitalization
Shareholders Equity (USDmn)
Shareholders' Equity
700
Dividend Payout Ratio
$600
$617
75%
600
50%
500
50%
50%
50%
400
$409
$481
$472
300
200
30%
30%
25%
100
0
0%
2009
2010
2011
2012
2013
12.9%
12.6%
3.9%
3.6%
8.6%
9.0%
9.0%
2011
2012
2013
Capitalization Ratio
Tier I
Tier II
13.0%
12.7%
11.2%
3.2%
3.0%
2.6%
9.8%
9.7%
2009
2010
24
BICE’s Superior Performance vs. the Chilean Banking System
25.0%
ROE
BICE
Corpbanca
Security
BBVA
Itaú (Boston)
Scotiabank
Period
Average
20.0%
15.0%
BICE 17.8%
Corpbanca 14.5%
10.0%
Security 13.8%
BBVA 11.1%
Itau 10.6%
5.0%
Scotia 7.0%
0.0%
-5.0%
2005
2006
2007
2008
2009
2010
ROE vs. the Chilean Banking System
Banco BICE
18.0%
System Average
Banco BICE
16.0%
2013
System Average
1.5%
1.5%
17.5%
18.0%
2012
ROA vs. the Chilean Banking System
18.6%
17.4%
2011
1.4%
15.9%
17.1%
1.3%
1.2%
14.7%
2010
2011
2012
2013
2009
1.2%
1.2%
1.2%
2009
1.2%
14.9%
1.2%
2010
2011
2012
2013
Source: Superintendence of Banks and Financial Institutions
25
www.bice.cl
Thank You