Corporate Presentation. As of June 30th, 2014

Transcription

1 Corporate Presentation As of June 30th, 2014

2 I. Introduction to Banco de Chile

3 Introduction to Banco de Chile: Leading Financial Institution in Profitability and Soundness As of June 2014 Local Ranking Most Profitable and Strongest Bank Institution in LatAm 1 December 2013 ROAE Rating (S&P) US$46 billion in Assets 23,9% A+ US$28 billion in Deposits Santander 21,7% BBB+ US$4.3 billion in Equity Itau 20,5% BBB- 26% ROAE Santander 19,5% A S&P: A+ Moody s: Aa3 (Strongest Private Bank in Latam) Bancolombia 16,4% BBB- Listed locally and internationally Santiago NYSE LSE Banorte 13,7% BBB Based on private financial institutions with market cap >US$5bn. 2.Fitch rating. S&P rating not available. 3

4 Attractive Free Float of 25.1%... Free Float Evolution Simplified Ownership Structure Pre Capital Increase ,1% 50.0% 50.0% Pre Capital Increase ,7% 25.9% 58.2% LQIF s Direct and Indirect Stake in Banco de Chile 51.2% Pre LQIF Secondary Offering 2 17,6% Free Float SM-Chile 12.8% 100% SAOS Ergas Group Current 25,1% 25.1% 30.2% 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

5 With a Diversified Business Model Total Loans 2Q14 Income Before Taxes 1H14 4% 28% 5% 22% 49% US$37,824 mm 39% US$619 mm 19% 19% 5% 9% 1 Subsidiaries Individuals and SME Consumer Finance Large Companies Corporate Treasury Note: CLP/US$ = as of June 30, 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

6 II. Banco de Chile: An Attractive Investment Opportunity

7 Why Banco de Chile? 7

8 Macroeconomic Environment in Chile GDP & Domestic Demand (%) 20% 15% 10% 5% 0% -5% GDP -10% Domestic Demand -15% GDP Breakdown (Year on Year, %) 30% 20% 10% 0% -10% -20% -30% Consumption Gross Fixed Investment Inflation (CPI Year on Year, %) Monetary Policy Rate (%) 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

9 Why Banco de Chile? 9

10 Attractive Financial System in Chile 1 Substantial Growth Potential Assets in the Chilean Financial System % of GDP 1 Total Loans Assets Under Management Banking System Loan Penetration % of GDP 171% 202% 235% Consumer Mortgage Commercial 82% 11% 20% 51% 60% 15% 18% 17% 28% 35% 56% 82% 122% 130% 114% GDP per Capita (US$ Thousands) Banks Pension Funds Mutual Funds Insurance Source: Banco Central, SBIF, SAFP, AAFM, and SVS. 1.- Nominal LTM figures as of September Source: The Economist Intelligence Unit as of December 20, 2013, central banks and regulators. 2.- Source: Central Bank of Chile and SBIF. 10

11 Attractive Financial System in Chile 2 Solid and Profitable Banking Industry with Consistent Growth Total Loans 1 and ROAE 2 Chilean Banking System, US$ Billions, % Chilean Banking System 12 Chilean banks and 11 international banks largest banks hold more than 70% of total loans Sustained growth in loans of 2x 4 GDP growth 15,7% 19,3% 18,7% 15,7% 16,0% 18,8% Jun-14 > 90-Day Past-Due Loans / Total Loans: 3.0% 2.7% 2.6% 2.2% 2.2% 2.2% BIS Ratio: 14.3% 14.1% 13.9% 13.3% 13.2% 13.5% High credit quality Attractive return on equity Good capitalization Strict regulation with increasing focus on consumer protection Source: SBIF, information in Chilean GAAP. CLP/US$ = as of June 30, 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

12 Why Banco de Chile? 12

13 Santander BCI Itau CorpBanca Santander BCI Itau CorpBanca Santander BCI Itau CorpBanca Solid Competitive Position 1 Strong Brand Recognition that Translates into High Client Attraction and Retention First Mention by Attribute % of Total Mentions Top of Mind Bank You Would Change to Security and Solvency 30% 28% 33% 16% 16% 6% 2% 9% 14% 8% 1% 12% 10% 3% 1% Source: Adimark GFK. Includes all brands from each institution. 13

14 Solid Competitive Position 2 Leading Market Position #2 in Total Loans Market Share, as of June ,2% 18,4% 12,9% 7,6% 5,1% #1 in Commercial Loans Market Share, as of June ,3% 17,3% 14,2% 9,3% 5,7% Santander BCI CorpBanca Itau Santander BCI CorpBanca Itau #1 in Net Fees and Commissions Market Share, as of June 2014 #1 in Assets Under Management Market Share, as of June ,8% 16,4% 14,7% 11,4% 5,2% 21,2% 15,1% 14,0% 5,9% 5,4% Santander BCI CorpBanca Itau Santander BCI Larraín Vial BICE Source: SBIF, AAFM. 1.- Excludes subsidiaries outside Chile. 14

15 Solid Competitive Position 3 Lowest Cost of Funding in the Industry Liability Structure % Over Total Assets, as of June 2014 Demand Deposits Market Share 1 %, as of June 2014 Financial Institutions 2,9% Equity 9,4% ( 47 bp y/y) ( -189 bp y/y) Other 7,2% ( -172 bp y/y) Saving Accounts and Time Deposits 37,4% ( -179 bp y/y) Retail 39% 23,0% 21,2% 15,0% 4,5% 3,2% Santander BCI CorpBanca Itau Debt Issued 19,0% ( +363 bp y/y) Wholesale 61% Cost of Funding Interest paid / Average volume of interest bearing liabilities and demand deposits, annualized June 2014 Current Accounts and Demand Deposits 24,1% Retail 43% 3,9% 4,3% ( +131 bp y/y) Wholesale 57% Financial System Source: SBIF. 1.- Excludes subsidiaries outside Chile. 15

16 Solid Competitive Position 4 Recognized Credit Risk Management Delinquency Ratio %, Past Due Loans 1 / Total Loans 3,4% 3,1% 3,1% 1,5% 1,2% 1,0% 1,0% 2,5% 2,4% 2,4% 1,1% 1,3% Loan Loss Provisions Ratio Provisions for Loan Losses/ Average Loans 1,8% 1,3% 1,3% 1,4% 1,3% 1,3% 1,7% 1,2% 0,8% 1,0% 1,2% 1,4% Coverage Ratio Allowances for Loan Losses / Past-Due Loans 1 1,7x 2,1x 2,1x 0,7x 0,8x 0,9x 2,4x 1,0x 2,0x 1,9x 1,1x 1,1x Jun Jun 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

17 Why Banco de Chile? 17

18 Proven Value Creation Capabilities 1 Sustained Growth in Loans and Operating Revenues Total Loans US$ Billions Total Operating Revenues US$ Billions $23,8 $26,0 $31,4 $33,9 $37,7 $1,84 $2,11 $2,21 $2,43 $2,63 19,1% 19,2% 19,8% 19,0% 19,1% 19,6% 20,6% 20,5% 20,8% 20,0% Total Loans Market Share 1 Operational Revenues Market Share Information in Chilean GAAP. Source: SBIF, Banco de Chile. CLP/US$ = as of June 30, Excludes subsidiaries outside Chile. 18

19 Proven Value Creation Capabilities 2 Distinguishing Itself in the Local Market Highest Profitability in the Local Industry ROAE June ,1% 25,0% Based on Superior Risk Management and Efficiency Operating Margin % Over Average Interest Earning Assets, June ,8% 7,9% 7,5% 6,9% 5,3% 20,8% Santander BCI Loan Loss Provisions Ratio %, Provisions for Loan Losses / Average Loans, June 2014 CorpBanca Itau 13,5% 11,7% 1,4% 1,5% 1,5% 0,9% 1,0% ROAA: Santander BCI CorpBanca Itau 2.4% 2.2% 1.6% 0.8% 1.3% BCI Efficiency Ratio Operating Expenses / Operating Revenues, June 2014 Santander CorpBanca Itau 40,3% 44,7% 38,8% 51,1% 51,7% BCI Santander CorpBanca Itau 19

20 Proven Value Creation Capabilities 3 Consistent Track Record of Profitability Return On Average Equity (ROAE) %, Times over Peers Return On Average Assets (ROAA) %, Times over Peers Banco de Chile s Multiple over Peers 0.8x 1.1x 1.2x 1.4x 1.3x 1.3x 0.9x 1.1x 1.2x 1.4x 1.4x 1.4x 22,6% 19,1% 27,8% 24,5% 26,9% 21,7% 25,7% 23,5% 17,9% 17,5% 26,1% 19,4% 2,2% 2,1% 2,1% 2,1% 1,7% 2,0% 1,7% 1,5% 1,4% 1,5% 2,4% 1,7% Jun Jun-14 Local Peers 1 Source: SBIF. 1.- BCI, CorpBanca, Itau and Santander 20

21 Proven Value Creation Capabilities 4 and Adding Significant Value for its Shareholders Market Capitalization of Banco de Chile bn: Billions US$ Billions 16 US$2 bn 1 US$5 bn 2 US$12 bn Banco de Chile & Banco Edwards Merger Banco de Chile & Citibank Chile Merger Source: Bloomberg. 1.- January 4, February 13, August 8,

22 Why Invest in Banco de Chile? 22

23 Solid Corporate Governance and Consistent Strategy 1 Solid Corporate Governance Solid Corporate Governance Practices Successful Partnership with Citi 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 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

24 Solid Corporate Governance and Consistent Strategy 2 and a Focused Strategy to Sustain Profitable Growth 24

25 III. Closing Remarks 26

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

27 IV. Recent Results 28

28 Financial Performance Chilean GAAP Variation Variation / H13 1H14 1H14/1H13 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 17,378 18,762 20, % 19,064 20, % Total Assets 21,741 23,261 25, % 24,404 25, % Equity 1,739 2,007 2, % 2,167 2, % Profitability Indicators bps bps Net Interest Margin % 4.62% 4.71% % 5.20% 74 Operating Margin 6.70% 6.41% 6.47% % 6.91% 66 ROAE - Return on Average Equity % 23.31% 21.30% (201) 22.76% 25.49% 273 ROAA - Return on Average Assets % 2.09% 2.13% % 2.37% 27 Credit Quality Provisions for Loan Losses/ Average Loans 0.79% 1.04% 1.23% % 1.42% 34 Non-Performing Loans / Total Loans 1.03% 0.97% 1.13% % 1.31% 23 Allowances for Loan Losses / Non-Performing Loans 2.1x 2.4x 2.0x 0.4x 2.1x 1.9x 0.2x Operational Efficiency Operating Expenses / Operating Revenues 50.16% 46.26% 42.78% (348) 43.8% 40.3% (350) Capital Ratios Total Regulatory Capital / Risk-weighted Assets 12.91% 13.22% 13.05% (17) 13.29% 13.40% 11 Tier 1 Capital / Risk-weighted Assets 8.88% 9.69% 9.94% % 10.40% 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

29 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