Banco de Chile (CHILE) Q2 2024 earnings summary

Executive summary

• Achieved net income of CLP 324 billion in Q2 2024 and Ch$621,255 million for H1 2024, maintaining industry leadership in profitability, efficiency, and asset quality.

• ROE reached 24.6% in Q2 2024, with a CET1 capital ratio of 13.8% and total capital ratio of 17.5%.

• Maintained strong cost control, with expenses growing only 3.2% year-over-year and operating expenses decreasing 0.7% year-over-year.

• Strategic focus on customer centricity, digital transformation, and sustainability continues to drive operational improvements.

• Maintained robust capital and liquidity positions, supporting ongoing growth and resilience.

Financial highlights

• Operating revenues grew 3% year-over-year to CLP 771 billion, with net interest margin at 5.04% and net income for 2Q24 at Ch$323.6 billion, up 3.9% year-over-year.

• Loan portfolio grew 4% year-over-year, with retail loans comprising 65% of the portfolio and mortgage loans up 7.2%.

• NPL ratio stable at 1.5%, with coverage ratio at 262.54% and cost of risk at 1.00% for 2Q24.

• Credit loss expense rose 42% year-over-year due to a low base in Q2 2023 and some wholesale deterioration.

• Efficiency ratio reached 35%, reflecting ongoing productivity and digitalization initiatives.

Outlook and guidance

• Upwardly revised ROE guidance to 21% for 2024, reflecting higher interest rates and inflation.

• Loan growth expected to slightly exceed industry average of 5.5% for 2024, with mid- to high-single digit growth in fees.

• Efficiency ratio guidance for 2024 is around 37%, with long-term target below 42%.

• Inflation forecast raised to 4.3% for 2024, with CPI expected to reach 3% only by 2026.

• Adoption of a new standard provision model for consumer loans in January 2025 is expected to result in a one-time charge of Ch$66,000 million before tax, to be offset by releasing additional provisions.