Corporate Presentation. As of March 31, 2014

Transcription

1 Corporate Presentation As of March 31, 2014

2 Table of Contents I. II. III. IV. Introduction to Banco de Chile Banco de Chile: An Attractive Investment Opportunity Closing Remarks Recent Results

3 I.Introduction to Banco de Chile

4 Introduction to Banco de Chile: Leading Financial Institution in Profitability and Soundness As of March 2014 Local Ranking Most Profitable and Strongest Bank Institution in LatAm 1 December 2013 ROAE Rating (S&P) Market Cap (US$ bn) US$48 billion in Assets 23,9% A US$30 billion in Deposits Santander 21,7% BBB 15.0 US$4.2 billion in Equity Itau 20,5% BBB % ROAE Santander 19,5% A 10.2 S&P: A+ Moody s: Aa3 (Strongest Private Bank in Latam) Bancolombia Banorte 16,4% 13,7% BBB N/A Listed locally and internationally Santiago NYSE LSE Credicorp 12,9% N/A Based on private financial institutions with market cap >US$5bn 2. Market Capitalization based on Bloomberg as of February 18,

5 Attractive Free Float of 24.8%... Free Float Evolution Simplified Ownership Structure Pre Capital Increase ,1% 50.0% 50.0% Pre Capital Increase ,7% 25.6% 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 13.0% 100% SAOS Ergas Group Current 24,8% 24.8% 30.7% 5.9% 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. 5

6 With a Diversified Business Model Total Loans 1Q14 Income Before Taxes 1Q14 4% 29% 6% 19% 48% US$38,155mm 47% US$313 mm 16% 19% 6% 7% 1 Subsidiaries Individuals and SME Consumer Finance Large Companies Corporate Treasury Note: CLP/US$ = as of March 31, 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 6

7 Banco de Chile: II.An Attractive Investment Opportunity

8 Why Invest in Banco de Chile? 8

9 Stable Macroeconomic Environment in Chile 1 Positive and Stable Performance Gross Domestic Product Real Annual Growth, % 5,8% 5,8% 5,4% 4,1% Average Unemployment % 10,8% 8,2% 7,1% 6,4% 5,9% 1,0% Investment Investment 5 / Real GDP, % 2 21,9% 23,3% 25,2% 26,8% 25,8% Inflation 12 Month Variation, % 1,4% 3,0% 4,4% 1,5% 3,0% Source: Central Bank of Chile and INE 9

10 Stable Macroeconomic Environment in Chile 2 Low Risk and Attractive Business Environment Country Real GDP Growth 2013E 1 (%) GDP per Capita 1 (US$ thousands) Inflation (%) Public Debt % of GDP 1 Rating 2 Economic Freedom Index (Rank) 3 Doing Business Index (Rank) 4 4.1% % 13.9% AA #7 #34 1.1% % 37.5% BBB+ #50 #53 2.3% % 59.1% BBB #100 # % % 39.7% BBB #37 #43 5.0% % 15.3% BBB+ #44 #42 1. Source: The Economist Inteligence Unit as of December 20, S&P Rating based on foreign currency debt. Source Bloomberg as of January 10, Source: Heritage Foundation. 4 Source: World Bank. 10

11 Why Invest in Banco de Chile? 11

12 Attractive Financial System in Chile 1 Substantial Growth Potential Assets in the Chilean Financial System Banking System Loan Penetration % of GDP 1 % of GDP Total Loans Assets Under Management Bank Loans Penetration (%) 171% 202% 235% Consumer Mortgage 81% 11% 20% 60% 17% 28% 35% 56% 81% 114% 122%130% Commercial 51% 15% 18% 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. 12

13 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, % ,7% 19,3% 18,7% 15,7% 16,0% 18,2% Chilean Banking System 12 Chilean banks and 11 international banks 5 largest banks hold more than 70% of total loans Sustained growth in loans of 2x 4 GDP growth High credit quality mar 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% n.a. Attractive return on equity Good capitalization Strict regulation with increasing focus on consumer protection Source: SBIF, information in Chilean GAAP. CLP/US$ = as of March 31, 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

14 Why Invest in Banco de Chile? 14

15 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 35% Bank You Would Change to 27% Security and Solvency 35% 19% 18% 15% 5% 1% 8% 4% 2% 9% 11% 1% 1% Santander BCI BBVA Corpbanca Santander BCI BBVA Corpbanca Santander BCI BBVA Corpbanca Source: Adimark GFK, ABC1 & C2 segments. Includes all brands from each institution. 15

16 Solid Competitive Position 2 Leading Market Position #2 in Total Loans Market Share, as of March ,3% 18,8% 13,1% #1 in Commercial Loans Market Share, as of March ,9% 17,5% 14,5% 7,2% 7,0% 8,7% 6,1% Santander BCI Corpbanca BBVA Santander BCI Corpbanca BBVA #1 in Net Fees and Commissions Market Share, as of March 2014 #1 in Assets Under Management Market Share, as of March ,2% 17,0% 15,1% 9,8% 3,6% 21,4% 15,3% 13,7% 5,9% 5,8% Santander BCI Corpbanca BBVA Santander BCI Larraín Vial BICE Source: SBIF, AAFM. 1. Excludes subsidiaries outside Chile. 16

17 Solid Competitive Position 3 Lowest Cost of Funding in the Industry Liability Structure % Over Total Assets, as of March 2014 Demand Deposits Market Share 1 %, as of March 2014 Financial Institutions 2,3% ( -270 bp y/y) Equity 8,8% ( -23 bp y/y) Other 7,4% ( 5 bp y/y) Saving Accounts and Time Deposits 38,2% ( -310 bp y/y) Retail 39% 24,9% 21,2% 14,8% 4,8% 3,7% Santander BCI BBVA Corpbanca Debt Issued 18,2% ( +363 bp y/y) Current Accounts and Demand Deposits 25,2% Wholesale 61% Retail 43% Time Deposits Cost of Funding Interest paid by currency / average volume by currency 1, annualized CLP UF Fx 7,48% 7,77% 7,53% 4,63% 4,70% 4,94% ( +235 bp y/y) Wholesale 57% 0,42% 0,57% 0,51% Source: SBIF. 1. Excludes subsidiaries outside Chile. Source: SBIF. BCI Santander 17

18 Solid Competitive Position 4 Recognized Credit Risk Management Delinquency Ratio %, Past Due Loans 1 / Total Loans Loan Loss Provisions Ratio Provisions for Loan Losses/ Average Loans Coverage Ratio Allowances for Loan Losses / Past Due Loans 1 3,4% 3,1% 3,1% 2,5% 2,4% 2,4% 2,5% 2,4% 2,4% 2,3% 2,3% 2,2% 1,5% 1,2% 1,0% 1,0% 1,1% 1,2% 1,9% 1,8% 1,5% 1,7% 1,3% 1,2% 1,4% 1,4% 1,3% 1,4% 1,3% 1,4% 1,3% 1,3% 0,8% 1,0% 1,2% 1,5% 2,1x 2,1x 2,4x 2,0x 2,0x 1,7x 0,9x 1,0x 1,0x 1,1x 1,2x 1,3x 0,7x 0,8x 0,9x 1,0x 1,1x 1,1x Mar Mar14 Local Peers Mar 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. 2. BBVA, BCI, Corpbanca and Santander 18

19 Why Invest in Banco de Chile? 19

20 Proven Value Creation Capabilities 1 Sustained Growth in Loans and Operating Revenues Total Loans US$ Billions Total Operating Revenues US$ Billions $25,1 $27,3 $33,1 $35,7 $39,7 $1,93 $2,22 $2,33 $2,55 $2,77 19,1% 19,2% 19,8% 19,0% 19,1% 19,6% 20,6% 20,5% 20,8% 20,0% Total Loans Market Share 1 Operational Revenues Market Share Information in Chilean GAAP. Source: SBIF, Banco de Chile. CLP/US$ = as of December 31, Excludes subsidiaries outside Chile. 20

21 Proven Value Creation Capabilities 2 Leading the Industry in Net Income Generation Chilean System Net Income Market Share %, Annually 35,6% 21,3% 25,7% 24,2% 13,3% 14,6% 7,0% 6,9% 5,6% 3,6% Mar14 BCH Santander BCI BBVA Corpbanca Source: SBIF. Information in Chilean GAAP. 21

22 Proven Value Creation Capabilities 3 Distinguishing Itself in the Local Market Highest Profitability in the Local Industry ROAE March 2014, Chile GAAP Based on Superior Risk Management and Efficiency Operating Margin % Over Average Interest Earning Assets, March ,8% 6,5% 6,8% 4,2% 5,8% 26,1% 23,6% 21,3% BCI Santander BBVA CorpBanca Loan Loss Provisions Ratio %, Provisions for Loan Losses / Average Loans, March ,4% 10,9% 1,5% 1,6% 1,5% 1,1% 0,9% BCI Santander BBVA CorpBanca Efficiency Ratio Operating Expenses / Operating Revenues, March 2014 BCI Santander BBVA Corpbanca ROAA: 2.3% 1.6% % 1.0% 39,2% 42,7% 38,9% BCI Santander 52,7% 52,7% BBVA CorpBanca 22

23 Proven Value Creation Capabilities 4 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 0.9x 1.2x 1.3x 1.5x 1.4x 1.4x 0.9x 1.2x 1.3x 1.5x 1.5x 1.5x 22,4% 19,1% 27,8% 26,9% 25,7% 26,1% 23,5% 23,4% 21,5% 18,4% 17,5% 16,6% 1,6% 1,5% 2,3% 2,2% 2,1% 2,1% 2,1% 1,8% 1,6% 1,4% 1,4% 1,5% Mar Mar 14 Local Peers 1 Source: SBIF. 1. BCI, BBVA, CorpBanca and Santander 23

24 Proven Value Creation Capabilities 5 and Adding Significant Value for its Shareholders Market Capitalization of Banco de Chile bn: Billions US$ Billions 16 US$1.9 bn 1 US$5.3 bn 2 US$12.0 bn Banco de Chile & Banco Edwards Merger Banco de Chile & Citibank Chile Merger Source: Bloomberg. Exchange rate as of January 10, 2014: $ CLP/US$. 1. January 4, February 13, February 18,

25 Why Invest in Banco de Chile? 25

26 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. 26

27 Solid Corporate Governance and Consistent Strategy 2 and a Focused Strategy to Sustain Profitable Growth Optimize segmentation Maximize use of client intelligence Increase use of transactional services Optimize sale channels Increase cross selling Maximize internet channel Accompany clients through Citi s international network Generate synergies with retail divisions Construct culture of excellence Implement sales force productivity programs Redesign / automate processes and centralize functions Superior goals for employee reviews Redesign critical processes affecting quality of service Increase effectiveness of contact center 27

28 III. Closing Remarks 28

29 Final Considerations Banco de Chile: A Unique Investment Opportunity Positive and stable performance 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 29

30 IV. Recent Results 30

31 Financial Performance Chilean GAAP Variation Variation / Q13 1Q14 1Q14/1Q13 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, % 19,201 20, % Total Assets 21,741 23,261 25, % 23,825 26, % Equity 1,739 2,007 2, % 2,145 2, % Profitability Indicators bps bps Net Interest Margin % 4.62% 4.71% % 5.03% 53 Operating Margin 6.70% 6.41% 6.47% % 6.81% 57 ROAE Return on Average Equity % 23.31% 21.30% (201) 23.02% 24.78% 176 ROAA Return on Average Assets % 2.09% 2.13% % 2.14% 5 Credit Quality Provisions for Loan Losses/ Average Loans 0.79% 1.04% 1.23% % 1.45% 40 Non Performing Loans / Total Loans 1.03% 0.97% 1.13% % 1.22% 16 Allowances for Loan Losses / Non Performing Loans 2.1x 2.4x 2.0x 0.4x 2.2x 2.0x (0.2)x Operational Efficiency Operating Expenses / Operating Revenues 50.16% 46.26% 42.78% (348) 44.04% 39.22% (482) Capital Ratios Total Regulatory Capital / Risk weighted Assets 12.91% 13.22% 13.05% (17) 13.46% 12.94% (52) Tier 1 Capital / Risk weighted Assets 8.88% 9.69% 9.94% % 9.94% (16) 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 excluding provision for minimum dividends. 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. 31