Banco de Chile (CHILE) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was CLP 324 billion (Ch$323,600 million), down 2.6% year-over-year, while YTD net income reached Ch$621,255 million, up 3.9% from 1H23, driven by higher operating revenues and offset by increased credit losses and expenses.

• Return on average equity (ROE/ROAE) was 24.6% in Q2 2024 and 23.6% YTD, maintaining industry leadership in profitability.

• Efficiency ratio improved to 35% in Q2 and 35.9% YTD, reflecting productivity and digitalization initiatives.

• Loan portfolio grew 4% year-over-year, led by residential mortgages (+7.2%) and consumer loans (+3.4%), while commercial loans rose 2.3%.

• Maintained strong cost control, with expenses growing only 3.2% year-over-year, below inflation.

Financial highlights

• Operating revenues grew 3% year-over-year to CLP 771 billion, driven by 13% growth in customer income.

• Net interest margin stood at 5.04% in Q2 2024, the highest among peers.

• Expected credit losses rose 42% year-over-year in Q2 2024, mainly due to a low base in Q2 2023 and asset quality deterioration.

• NPL ratio stable at 1.5% in Q2 2024, with consumer loan delinquencies declining to 1.7%.

• Total capital ratio stood at 17.5% and CET1 at 13.8% as of June 2024, well above regulatory requirements.

Outlook and guidance

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

• Loan growth expected to slightly exceed the 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 a long-term target below 42%.

• 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.

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