Banco Santander Chile Q1 Earnings Call Highlights

Key Points

• Banco Santander Chile posted strong Q1 profitability, with net income rising sequentially and return on average equity reaching 23%. Management said higher inflation is supporting near-term margins, though a weaker macro backdrop could pressure growth and credit quality later in the year.
• The bank’s digital-plus-physical strategy continues to drive customer growth, with 4.8 million total customers and 2.4 million active customers. Current accounts, credit card transactions and mutual fund volumes all increased year over year.
• Credit quality and capital remain solid despite a one-off provisioning hit that lifted cost of risk to 1.55% in the quarter. Santander Chile still expects full-year cost of risk around 1.3% to 1.35%, while its CET1 ratio of 10.9% remains above the minimum requirement.

Banco Santander Chile NYSE: BSAC said first-quarter profitability remained strong despite a more uncertain macroeconomic backdrop, with management pointing to higher inflation as a near-term support for margins while cautioning that weaker growth and household pressures could weigh later in the year.

On the bank’s first-quarter 2026 earnings call, Patricia Pérez, chief financial officer, introduced a presentation focused on Chile’s economic outlook, Santander Chile’s digital strategy and quarterly results. Cristian Vicuña, chief strategy officer and head of investor relations, said net income increased sequentially and return on average equity reached 23% in the quarter.

Management Flags More Challenging Macro Backdrop

Andrés Sansone, chief economist, said the global environment had become “more challenging and more uncertain” since the bank’s prior webcast, citing the geopolitical shock in the Middle East and its impact on energy markets. He said the bank’s baseline assumes the conflict gradually deescalates but leaves lasting damage, keeping oil prices above pre-conflict levels.

Sansone said higher oil prices affect Chile through imported inflation, weaker terms of trade outside copper and less room for global monetary easing. He estimated Chile’s economy contracted 0.3% year over year in the first quarter, or 0.2% sequentially, marking the first quarterly setback since early 2023.

Under Santander Chile’s reference scenario, WTI oil remains near $100 per barrel during the second quarter before declining to about $80 to $85 by year-end. Sansone said the bank still expects Chile’s economy to grow 2% in 2026, but with risks tilted to the downside. Inflation is expected to end the year between 4% and 4.5%, while the central bank is expected to keep the policy rate unchanged at 4.5% through 2026. The bank expects the exchange rate to close the year near CLP 890 per U.S. dollar.

Sansone also discussed Chile’s National Reconstruction and Economic Development Plan, which he said is aimed at competitiveness, private investment and reducing environmental permitting bottlenecks. In the Q&A, he said the tax proposal includes reducing the corporate tax rate from 27% to 23% between 2026 and 2029, full reintegration of the tax system over time and tax stability mechanisms for sectors including mining, energy and technology. He said the plan is pro-growth but that the fiscal transition remains an open issue.

Digital Strategy and Customer Growth Remain Central

Vicuña said Santander Chile’s strategic ambition is to become “a digital bank with a physical presence,” using its Work Café branches to combine digital banking scale with in-person advice and service. He said the strategy is organized around three pillars: “think customer,” “think global” and “think value.”

The bank reported 4.8 million total customers and 2.4 million active customers. Current accounts increased 7% year over year, active clients rose 4% and total clients increased 10%. Credit card transactions rose 12%, while mutual fund client volumes increased 11%.

Vicuña said the retail business remains the backbone of the balance sheet, representing 66% of loans, 48% of deposits and 69% of margin. He also highlighted contributions from corporate and investment banking, payments, wealth management, insurance and consumer banking.

First-Quarter Results Show Fee Growth and Cost Discipline

Vicuña said loan evolution was stable overall, with divergence across segments. Consumer lending remained resilient, particularly auto loans and credit cards, while mortgage and other consumer loans were softer. Deposits increased, supported by demand deposits and a recovery in time deposits, and liquidity remained well above regulatory requirements.

Net interest income posted high single-digit year-over-year growth, reflecting improved margins and lower funding costs. Funding costs decreased to 3.2% in the first quarter, in line with the average monetary policy rate moving from 5% to 4.5%. Net interest margin stood at 3.8% year to date, below the prior period because of lower inflation in the quarter.

Fees increased 4.5% year over year, while fees plus financial transactions grew more than 9%, driven by asset management and market-related income. Operating expenses decreased 6.2% from a year earlier, which Vicuña attributed to the fading of cloud migration costs incurred in early 2025. The bank’s efficiency ratio was 32.5%, and its recurrence ratio reached nearly 69%. Santander Chile had 94 Work Cafés across Chile.

Credit Quality, Capital and Shareholder Returns

The cost of risk reached 1.55% in the quarter, mainly because of what Vicuña described as a one-off provisioning event in the commercial portfolio. He said underlying trends were stable, with nonperforming loan and impaired loan ratios showing only moderate increases. In the Q&A, he said the corporate case reflected a recovery process taking longer than expected and that management expects a reversal toward the end of the second quarter or the first part of the third quarter.

Vicuña said the bank maintained its full-year cost-of-risk guidance around 1.3%. Later, he said the bank still sees the full-year figure in the 1.3% to 1.35% area, subject to how inflation affects the portfolio.

On asset quality risks, Vicuña said higher inflation could pressure mortgage borrowers because mortgage balances adjust with UF inflation-linked units, particularly in lower-income segments, though he said the bank had not yet seen those impacts. In commercial lending, he said Santander Chile is cautious on agriculture exporters because of climate risks and expected movements in El Niño, while trends in mining, mining services and energy remain positive.

The bank reported a BIS ratio of 16.4% and a fully loaded CET1 ratio of 10.9%, above its minimum requirement of 9.08%. Shareholders approved a 60% dividend payout at the April 28 annual meeting, equivalent to a 4.5% dividend yield.

Management Sees ROE Above Initial Target Range

Santander Chile’s original 2026 guidance included mid-single-digit loan growth, net interest margins around 4%, mid- to high-single-digit noninterest income growth, an efficiency ratio in the mid-30s, cost of risk around 1.3% and ROE between 22% and 24%.

Vicuña said the environment has become too volatile for a formal numerical update, but higher inflation should provide upward pressure on interest income and margins, while also supporting efficiency in the short term. At the same time, a weaker macro environment could pressure portfolio growth and risk later in the year.

In response to an analyst question, Vicuña clarified that the bank was not simply maintaining its prior ROE guidance. He said management expects to be above the upper bound of the original ROE target, adding that “the 22% ROE is completely out of the equation” and that the bank should be at “25% ROE and above,” while noting that the final impact of moving parts remains uncertain.

On loan growth, Vicuña said the bank expects mid-single-digit growth overall, around 5.5%, supported by consumer lending, auto loans and credit cards, with installment loans expected to follow later in the year. He said the bank is seeing early positive signs in mortgages but expects market-rate growth in middle-market and corporate portfolios.

Vicuña also said Santander Chile had been informed it is the first Chilean bank included in the Dow Jones Sustainability World Index, ranking among the 25 most sustainable banks globally.

About Banco Santander Chile NYSE: BSAC

Banco Santander Chile NYSE: BSAC is one of the leading financial institutions in Chile and a key component of the global Santander Group. The bank offers a comprehensive range of banking and financial services, including retail and commercial lending, deposit accounts, credit cards, wealth management, insurance products and corporate banking solutions. Headquartered in Santiago, it operates an extensive network of branches, ATMs and digital platforms to serve individual customers, small and medium-sized enterprises and large corporations across the country.

Originally founded as Banco de Santiago in the late 1970s, the institution became part of the Santander Group following the privatization wave in Chile during the late 1980s.

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