Banco Santander Chile NYSE: BSAC reported second-quarter net income attributable to shareholders of more than CLP 382.6 billion, up 40% from both the prior quarter and a year earlier, as elevated inflation supported readjustment income and the bank maintained cost and risk discipline.
The lender generated a return on average equity of 31.5% in the second quarter and 27.2% for the first half of 2026. Management raised its full-year profitability outlook and now expects return on average equity to exceed 24%, compared with its prior range of 22% to 24%.
“This quarter reinforces the strength of our franchise, high profitability, disciplined cost management, and a solid capital position,” Chief Financial Officer Patricia Pérez said during the company’s earnings call.
Inflation Supports Margins as Economic Growth Slows
Net income from interest and readjustments totaled CLP 1.11 trillion in the first six months of 2026. Chief Strategy Officer and Head of Investor Relations Cristián Vicuña said the result was supported by high inflation during the second quarter, when the UF inflation-indexed unit rose 2.46%.
The bank reported a quarterly net interest margin of 4.7% and a year-to-date NIM of 4.3%, up 16 basis points from a year earlier. Santander Chile now expects full-year NIM of about 4.1%, slightly above its initial target of around 4%.
Chief Economist Andrés Sansone said Chile’s economic environment remains challenging. The bank lowered its 2026 GDP growth outlook to about 1%, citing supply shocks in mining and fishing, the effect of higher oil prices on household disposable income, and a slower-than-expected construction recovery. Seasonally adjusted unemployment rose to 9.3%, he said.
June consumer prices were flat month over month but exceeded expectations, bringing annual inflation to 4.3%, according to Sansone. The bank expects Chile’s central bank to keep its policy rate at 4.5% for an extended period as inflation risks have increased.
Loans and Customer Funds Increase
Total loans reached CLP 41.4 trillion, rising 1.2% year to date and 1.3% from the first quarter. Mortgage lending increased 2% during the quarter, while commercial loans grew 1.3%. Consumer lending was broadly stable, though auto loans increased 1.8% in the quarter and 4.9% year to date.
Total deposits rose to CLP 32.4 trillion, up 6% year to date and 4.5% sequentially, driven largely by time deposits. Total customer funds, including mutual funds, reached CLP 48.3 trillion, an increase of 7.1% year to date.
Management maintained a mid-single-digit loan-growth outlook for 2026, though Vicuña told analysts growth could land toward the lower end of that range, around 4.5%. He cited improving trends in commercial lending, consumer lending and mortgages entering the third quarter.
The bank expects potentially stronger industry growth in 2027 if inflation normalizes near 3% and GDP expands around 3%. Vicuña identified middle-market corporate lending, consumer credit and mortgages as areas that could benefit from improved investment, employment and confidence.
Efficiency Gains Offset Softer Transaction Activity
Santander Chile’s efficiency ratio improved to 31.6% in the first half, which management said positioned it as Chile’s most efficient bank based on industry information available through May. Operating expenses declined 4.3% from a year earlier, while core expenses fell 3.5%.
The bank attributed the performance to its digital operating model, cost controls and the normalization of technology expenses following cloud-migration costs incurred early last year. Its network included 91 Work Café branches at the end of the period.
Fees and financial transactions totaled CLP 452 billion in the first half, up 4.9% year over year. Fees were broadly stable, while income from financial transactions rose 16%, supported by market-related activity. Vicuña said transaction activity slowed in the quarter amid pressure on customers from oil prices.
In payments, management said competition has pressured margins, particularly among mass-market and retail merchants. Vicuña said the company expects some improvement in the second half as larger corporate clients increase their use of Getnet’s platforms.
Asset Quality, Capital and Regulatory Outlook
Cost of risk was 1.38% for the first half and 1.22% in the second quarter, down from 1.55% in the first quarter after a one-time commercial-portfolio provisioning event was reversed in subsequent months. Nonperforming loans represented 3.4% of total loans, while impaired loans accounted for 7.5%.
The company expects full-year cost of risk near 1.35%. Vicuña said new loan originations have shown better performance and that growth in nonperforming-loan metrics should decelerate in coming quarters, with marginal improvements expected in 2027.
The bank’s BIS ratio stood at 16.4% and its CET1 ratio was 11.1% as of June, about 200 basis points above the 2026 regulatory minimum of 9.08%.
Management also highlighted Chile’s National Reconstruction Plan, which has completed its passage through Congress and includes a gradual reduction of the corporate tax rate from 27% to 23% between 2027 and 2029, investment incentives and faster permitting measures. Santander Chile said these policies could support investment, housing demand and mortgage origination over time.
During the question-and-answer session, Vicuña said the bank expects its effective tax rate to normalize in the 18% to 20% range over several years. He said Santander Chile continues to target return on equity above 20% through a normalized cycle, although returns could range from the high teens to low 20% levels during weaker economic periods.
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.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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