Banco de Chile (BCH) 2011 Q4 法說會逐字稿

Good morning everyone, and welcome to Banco de Chile's Fourth Quarter '11 Results Conference Call. Today with us we have Mr. Pablo Mejia, Head of Investor Relations and Mr. Pedro Samhan, Chief Financial Officer.

Before we begin I would like to remind you that this call is being recorded and that the information that is discussed today may include forward-looking statements regarding the Company's financial and operation performance. All projections are subject to risk, uncertainties and actual results may differ materially. I will now turn the call over Mr. Pablo Mejia, please go ahead, sir.

Good afternoon. It's a pleasure for me to share with you our comments on Banco de Chile's fourth quarter and year-end 2011 financial results. As mentioned joining me is Mr. Pedro Samhan, Chief Financial Officer of Banco de Chile. Just as a reminder, a link to the slide presentation is available on our website, www.bancochile.com, within the investor relations site.

To begin, please move forward to slide number two. In today's presentation we will begin with a discussion of the Chilean economy followed by a brief review of the results in the Chilean banking industry. After discussing these topics, we will go over the results of the period and year-end.

As for the economic environments, as you can see on the following slide number three, the Chilean economy continued decelerating during the fourth quarter, mainly as a result of the lower dynamism in private consumption and a deteriorated scenario in Europe and the US.

In net context, there are still some sectors basically those associated with domestic demands such as commerce, services, and construction that continue steering the economic activity with the lower dynamisms.

On the other hand, exporting sectors such as industry and mining have evolved below market expectations in 2011, which is principally a consequence of the lower external demand and accumulation of inventories in the case of the industry sector.

Also as shown on the chart on the lower left -- lower left-hand side, despite the slowdown observed in our economy during 2011, unemployment remains stable and at low levels, reaching 6.6% in the fourth quarter and a yearly average of 7.1%, thus unemployment was the main driver to support private consumption throughout the entire year.

The higher consumption and also the higher food and transportation prices had an impact on inflation. As you can see on the upper right-hand chart, PPI increased above market expectations and in the fourth quarter 2011, posting a 4.4% year-on-year variation, which surpassed the central bank's long-term target range.

As a consequence, the central bank maintained the interest rates at 5.25% until December 2011, despite a deteriorated global scenario. However, in line with market expectations the central bank decided to decrease the monetary policy rates by 25 basis points in January of this year as a result of the moderate slowdowns observed in the local economy.

Moving forward to slide number four, we can notice that the Chilean economy counts on many strengths to face a potential world downturn. In fact, despite the risks that the global recession has lessened, our country maintains low sovereign risk, which can be compared to developed countries as measured by the CDS.

And this is a result of an economy that counts on a recognized economic stability and the tempered level of economic debt as shown on the chart on the upper right-hand side. These strengths could permit us to develop countercyclical policies for de-voiding a deterioration of public finance.

In addition, the market also expects as a result of high interest rates the monetary policy rate has room to intervene and promote higher consumption by easing liquidity.

In addition, as shown on the chart to the lower right hand side, the country maintains a significant financial cushion. Actually, the public treasury holds international reserves of CLP24 billion that represent 10% of 2011's estimated GDP.

Similarly, the Chilean Central Bank holds reserves of $42 billion that amount for about 18% of GDP, and finally, as an additional strength of our economy we could mention that the well-diversified export basket with several business partners mostly associated with emerging markets.

Going forward to slide five we can observe that 2011 was an important year for the Chilean banking industry. As you can see the banking sector posted a CLP98 billion rise in debt income during the fourth quarter of 2011 as compared to the same period last year, mainly as a result of significant amounts of additional provisions recognized in the fourth quarter of 2010 in order to reflect the effect of a new regulation for provisioning individual evaluated loan portfolios and also as a financial reserve to anticipate systemic risks.

As of December 31st, 2011, the Chilean banking system reached the net income of CLP1.7 trillion, which is 8.1% above last year's figure. Despite this important advance the systems profitability posted a slight year-on-year decrease attained a return on average capital 19.6% for 2011. This is the result of a capital increase processes carried out by some of the main banks in Chile as well as a higher level of retained earnings, all in order pace the growth in lending activity.

The year-on-year net income increase was supported by greater operating revenues that results from the up side in increments in total loans, a higher inflation, and a 6% raise in fees and commission. These factors were partially offset by greater provisions for loan losses and higher operating expenses, in line with a higher lending activity.

As for total loans, as shown on the chart on the right hand side, the industry posted a 17% year-on-year growth geared by commercial, consumer, and mortgage loans with double digit advances of 19%, 18%, and 12% respectively.

To conclude, I would like to give you our main thoughts about the Chilean economic outlook. Due to the current uncertainty regarding the global economy, we estimate that the Chilean GDP will grow at around 4% in 2012, which is below the 2011 expansion and in line with the trend observed during the second semester of 2011.

Accordingly, we also expect slightly higher unemployment rates for 2012 which should reduce the aggregate demands expansion while inflation should gradually return to the central bank's target range.

As a result of this lower inflation scenario and the slowdown of economic activity, we cannot rule out an expansionary monetary policy by the Central Bank in order to enhance economies dynamism but maintaining inflation within the target values of 3%.

According to this macroeconomic scenario and after the great dynamism posted in 2011, the system's loan portfolio growth should experience a moderate pace during 2012, reaching a level below 10% in real terms.

Now on the next slide, number six, begins our discussion on our consolidated results. We posted a 13% year-on-year rise in net income reaching CLP429 billion in terms of GDP and in terms of -- this translates to 17% year-on-year growth. Also worth mentioning is that we posted the highest return on average equity of 24% for the year and significantly closed the net income gap in terms -- in absolute terms with Santander as demonstrated on the chart on the upper right side of this slide.

Our net income for the year is even more impressive if we consider that during the period we recorded CLP28 billion in additional salaries expenses related to a collective bargaining agreement with our union and also established CLP24 billion in countercyclical provisions.

On a quarterly basis and as mentioned in previous earnings calls, we have managed to post an average earnings above CLP100 billion. Despite of an additional countercyclical provision charges recorded during the fourth quarter, we posted CLP100 billion with a return on average equity of 20% as demonstrated on the chart on the lower right side of this slide.

On the following slide, number seven, there is a closer look at our operating revenues. On a year-on-year basis, total operating income increased by 5% over last year. This figure is enhanced to 9% if we exclude the impact of local accounting rules related to the methods of sales of nonperforming loans are recorded in our books.

Under Chilean GAAP, the value of the loan excludes it related provision in the value recorded as financial income. Hence, we recorded a sale of a corporate nonperforming loan in the fourth quarter which decreased net financial operating and FX income by about CLP42 billion. However, it is important to mention that this loss is more than offset by [realities] of related allowances by an amount of CLP45 billion.

The 9% adjusted growth posted in operating income was significantly influenced by our core business activity specifically the higher revenue generated from our leadership in noninterest bearing deposits, the important expansion of our loan portfolio, and our fee based business such as insurance brokerage as well as income generated from our higher usage rates of products such as credit cards and debit cards.

On a quarterly and adjusted basis as seen on the chart on the right, we maintained our high revenue generation growing 9% over the same period last year. The main drivers for the increase over the fourth quarter of 2010 were higher interest rates that positively affected the revenue generation from non-interest bearing deposits, significant year-on-year growth in total loans, and higher inflation in the fourth quarter of 2011 with respect to fourth quarter 2010 that led the US to rise 1.3% versus 0.5%, generating additional revenues in our net positions in US assets.

This was partially offset by a reduction in fees associated with the lower activity in mutual funds, securities brokerage, and financial advisory services in light of the current global economic conditions.

In terms of loans, this continues to be one of the key drivers for revenue generation. This year, as demonstrated on slide number eight, was another outstanding year in terms of growth. We reached CLP17 trillion in loans, a rise of 21% over last year. This was achieved through effective commercial initiatives such as strategic alliances, new products, and a joint effort of certain commercial divisions. As a result, we gained 59 basis points in market share reaching a stake of 19.8% that enabled us to become the largest bank in Chile in terms of loans.

In monetary terms, we grew by CLP3 trillion, 60% higher than our closest competitor, as demonstrated on the chart on the bottom right.

Loans grew firmly in both retail and wholesale segments as shown on the next slide, number nine. [Loan] individuals and SMEs grew by 21% year-on-year and 5% quarter-on-quarter. It's important to mention that our efforts in improving our penetration in the SME segment have taken place growing 20% from CLP1.8 trillion to CLP2.1 trillion.

It's also noteworthy to mention that our very strong growth and mortgage loans, which grew 23% and captured almost 150 basis points in market share, ending the year with a market share of 16.4%. This is achieved through a clear commitment to attract new customers through marketing, competitive pricing, improved synergies between segments. Consumer loans grew strongly, capturing 22% over the year and ended the period with a stake of 22.3%.

In terms of our wholesale division, these loans also grew at 21% in line with the positive economic condition in Chile which resulted in the important financing demand from large companies and corporations.

On the next slide, begins our discussion of credit quality, a clear competitive advantage of Banco de Chile. Total provisions for loan losses reached CLP125 billion in 2011, 40% below the figure recorded in 2010. This resulted in a loan loss provision to average loan ratio of 0.8% and was influenced by the sale of a nonperforming corporate loan portfolio that resulted in the release of allowances of CLP45 billion as previously mentioned and countercyclical provisions established that totaled CLP24 billion in line with a prudent risk approach.

Both events were established in the fourth quarter of 2011 reducing the fourth quarter charge. As a result, loan loss provisions at the percentages average loans for that reached 0.9% at year-end, significantly lower than the 2010 figure which reached 1.2% when adjusted for countercyclical and other additional provisions. As one can see on the chart on the right, loan loss provisions even when adjusted for these events remained significantly below the average in the banking industry in our main peer group.

In terms of credit quality, we continue to maintain the highest quality loan portfolio in the industry with total past due loan-to-loan ratio of 1%, significantly lower than our peers or the banking system and the highest coverage ratio equal to 2.1 times.

Moving on to slide number 11, we can see that operating expenses grew by 13% over last year. This increase is mainly the result of our business initiatives related to implement our strategic plan which included the expansion of our distribution network by opening 25 new branches across Chile, our marketing efforts to improve our brand positioning, the implementation of new service models in regions to improve customer satisfaction levels, investments in new technologies such as [Murex], a front and back office system for our treasury area, development of a new website for online banking, a mobile banking application for cellular phones, and a new data center, just to name a few.

All these factors led us to increase administrative expenses by 9% over last year and our core personnel expenses which grew in line with inflations and our higher business activity. As mentioned in previous calls, we recorded an expense of CLP28 billion in a special bonus to employees related to the collective bargaining agreement with unions that took place during mid 2011.

As a result, we recorded an efficiency ratio of 50.2%, higher than the figure reported last year 46.6%. However, when operating expenses are adjusted for the collective bargaining and bonus, an operating income is adjusted for the loss related to the sale of the corporate loan portfolio that was previously mentioned, our efficiency ratio dropped to 46.3%, slightly below the figure posted last year demonstrating our clear commitment to control costs.

On a segment viewpoint, our core business segments are responsible for our EBIT revenue generation as shown on the following slide, number 12. EBIT for retail banking grew year-over-year by 43% reaching CLP260 billion at year-end. This year-on-year rise is mainly the result of greater operating revenues and was also due to lower provisions for loan losses.

In terms of our subsidiaries, this segment continued to generate this relatively stable revenues for the bank, decreasing slightly by 5% from last year mainly as a result of high volatility in the local and global financial markets. This reduced assets under management and equity trading volume.

In terms of our wholesale segment, similar to our retail segment, continued growing strong. As demonstrated on the chart on the lower left side of this slide. EBIT year-over-year grew by 38% reaching almost CLP150 billion at year-end. This rise is also mainly due to the result of greater operating revenues and lower provisions for loan losses.

Lastly, in terms of our treasury segment, this area decreased significantly as is EBIT by 69%. This is explained by the sharp increase in spreads of foreign currency instruments during the second half of 2011 that was mainly caused by the global economy slow down, the rise in interest rates which had a negative impact on the sale of fixed income securities, and the decrease of the spreads between local and foreign interest rates that has constrained the possibilities of arbitrage between local and foreign currency funding.

Nevertheless, we have been very active in terms of liabilities management as you can see on the following slide. At the beginning of the year, we carried out an equity offering for $445 million, successfully obtained a syndicated loan for $200 million with 15 Asian financial institutions in light of its strategy to strengthen our relationship with this region and placed approximately $1.4 billion in triple-A senior bonds in the local markets.

Lastly, in December 2011, we registered bonds in Mexico for approximately $720 million and placed $110 million in that market with a triple-A local rating just prior to year-end.

As for non interest [in] liabilities, we continue to be the market leader in current accounts with a demand deposit with a market share of 23% as shown on the chart on the bottom right hand corner. We continue to also be the bank with the highest proportion of funding from these deposits which in term reduces our financing costs.

Now, I would like to pass the call over to our CFO, Mr. Pedro Samhan.

Thank you Pablo. Please move to the next slide, number 14. 2011 was an excellent year for Banco de Chile. We grew our loan portfolio by approximately [$6 billion] equivalent to the size of a small bank ranking us for the first time as the largest bank in Chile with a market share of 19.8%.

It was really a great achievement for Banco de Chile. Also we made CLP100 billion net income in the fourth quarter in spite of the CLP22 billion of countercyclical provisions and we achieved a record figure in spite of the net income of the year of CLP429 billion.

We also posted the results on assets just over 2% and a retain of capital of 28% which was the highest figure in the industry. We achieved this figure in spite of our successful CLP445 million capital increase.

This figure was clearly attributable to our nominal market position, which we continue to strengthen throughout the year. In addition, we opened 25 new branches across the country. We further [we justify] our finance structure by building relationships in foreign markets and we continue to grow our 1.6 million customer base by adding 14,000 new SME loans.

10,000 new (inaudible) customers and incorporating 90,000 new current accounts. All in all, we are very proud of our performance in 2011 and we believe that we have a solid basis to take further advantage of future business opportunities. If there are any questions, we would be pleased to answer them.

(Operator Instructions). Your first question is from Jose Barria from Bank of America.

Hi, good morning, everybody. Thank you for taking my question. I have two questions, the first one is with regards to loan growth. We have seen other plays in the market take a more conservative approach to growth given the uncertainties in the economy and you guys have continued to gain share, which has been definitely a positive.

I want to know what your stance is in terms of loan growth going forward. Have you adjusted the way you look at growing specifically in terms of the commercial portfolio with regards to -- relative to other competitors this year, and should we continue to see you gaining market share?

The second question is with regards to your coverage ratio, we saw a drop in the coverage ratio during the fourth quarter, still very high at 215%, I just want to see how you are thinking that is going to evolve this year and where we can see that number going. Thank you.

Thank you Jose for your question. Let me try to answer in the same order. Regarding our loan growth, it really -- we know and we recognize that the market will not be the same as the market that we have and the growth that we have during 2011.

We think that the market will grow at a level of lower than 10% in real terms, so maybe between 7% and 10%. What's happening with us? We want to continue gaining market share not significant -- in a significant way, but really to continue gaining market share, but especially in those segments where our [strategic] focus is oriented, that's our consumer, consumer plan, consumer finance, SME.

Obviously, we want to continue to growing in the wholesale business, but mostly in terms of cross-sell. It doesn't mean that we want to lose market share, but really our emphasis and our focus will be in the retail market as we are doing now.

In terms of the coverage ratio, your second question, I have to clarify something that Pablo mentioned during his presentation he mentioned the situation that we have with one customer where we trade our portfolio and ultimately when you sell a portfolio that has been almost full provisions, ultimately the coverage ratio has to go down because of that.

So really we think that is a temporary in fact because of this one time transaction but it's not something that we think that it will continue happening in the future in terms of a decreasing in our [corporation].

We can let -- it can decrease a little bit, but always within this range where we are today and always will be with a big difference with respect to the market. We are talking that just a number today is about 2.4 times, so [240%].

Okay, thank you very much.

You're welcome.

Your next question is from Tito Labarta.

Hi, Pablo and Pedro, thanks for the call. A couple questions, first, in terms of asset quality as you grow more in the retail segments, how do you see that's going to develop going forward? NPLs have been very low, but do you think there could be some underlying deterioration overall, and then as the mix kind of shifts toward retail, what kind of impact do you think that would have.

And then the second question in terms of the margin which expanded quite a bit, but as inflation is expected to slow down in 2012, what kind of impact do you think that would have? Thank you.

Thank you very much.

Next question is from Luis Guzman from Santander.

I'm sorry. No, I have not answered yet.

One second.

Let me go to the first. Well in terms of asset quality, really, we think that even though our focus is to grow more in the retail segment and only in the retail segments the asset quality in the case are different and in general you have a higher level in terms of loan loss provision and all the provision (inaudible) really we think that our strategy in Banco de Chile is to be very prudent in terms of [managing] the risk.

So really we recognize an impact obviously because of -- we had a tightening segment that by definition has a higher level of credit losses. However we think that even though the level and the tradeoff between margin and risk it would be always positive. The other situation --

(Inaudible)

Yes, if you think even though the economic scenario would be a little bit deteriorated, we think that it would continue within some normal level. For example the unemployment will increase but you won't see on the current level that is the lower, during the last 15 years really even though it was increasing 15, 18 points it's not a number that should be of more concern because we had a very, very low level today.

In terms of inflation, your second question, obviously with the position that Banco de Chile managed, in terms of new asset net position that is one of the highest in the system, still one of the highest.

Obviously with the lower inflation, we are going to have an impact but in the same way also we expect to continue increasing our volume of assets, our volume of loans, we can take advantage of all of the increase that we have last year where the impact was not one was seen during the whole year, in terms of (inaudible).

So really we were continuing to generate profits for our [base] business irrespective of inflation -- of what happened with inflation.

In terms -- the other point that you have to consider, remember that during this year unlike two years ago, the repricing has a negative impact for Banco de Chile and for the banks in general in Chile because you know that the liability has been re-priced faster than our assets.

When the monetary -- the central bank monetary policy rates decreased obviously the impact is [exactly] in the other way around so really it is but we have during last year, we are now to have (inaudible) this year by (inaudible) if the [inflation] start to decrease as it start already during January, we expect some positive impact in this matter that will allow us to offset partially any impact in terms of inflation.

Okay. Your next question is from Luis Guzman from Santander.

Hello, good morning. Thank you for taking the questions.

Morning.

I have two questions. First, if would give guidance on operating expenses for 2012, and if you plan to open branches and the number of branches (inaudible).

And second, regarding the previous question, if I understood correctly, the net effect of having the inflation impacting the margins and the repricing of the rate in the margin would be flat, right? Is that correct?

Maybe the communication is not so good, so really when you start with the second question, it was a little bit disconnected. Could you repeat me the question please?

Sure, the second question was, if I understood correctly the previous question that you were answering, the net impact of the margins should be flat as inflation is going one way and repricing should impact in the other way right?

Let me start with your first question. Really Banco de Chile is growing in terms of growing our distribution net worth, however, during the 2012 we don't expect the same level in terms of opening up new branches. Really I can tell you that our expense basis that is affected by a lot of different initiatives. I was mention during the presentation, in terms of new branches, really we don't expect a growth more than a number of 10 or something like this.

But really the impact of that for the next year should not be so much, however the impact that we have are still in terms of the numbers if we grow some of the branches were open during the second half or during the last quarter, and the impact of this opening have to be seen more in 2012 than 2011, but not because of the new branch but because of the branch that we already open during this year. So really we don't see a high end impact of that.

In terms of the second question, in terms of inflation, yes, I can tell you that you have negative and positive impact. Obviously the inflation is the negative impact. If you ask me directly if the other impact in terms of the repricing or asset liability or any other impact, we lost [faith] the other in order to (inaudible) will continue in the same, not necessarily, because the inflation could have a little bit higher impact than the positive impact that you have in the other place.

Okay. Thank you very much.

You're welcome.

Your next question is from Nicolas Chialva, Itau BBA.

Hello, good morning. Thanks for the call, but my questions have already been answered. Thank you.

You're welcome.

Your next question is from Claudia Benavente, Deutsche Bank.

Hi. I'd like to know what's your sense regarding deposits, if you believe you are going to keep increasing at the rates that we've been observing that have been quite high. And in terms of funding I believe you are very diversified, if you have any strategy that you'd like to comment or something regarding funding. Thanks.

Claudia, can you please repeat the question. We couldn't hear you.

Okay. Sorry. Is I just like to know what's your sense regarding deposits, if you believe you're going to keep increasing at the rates that we've been observing that are quite high and if you have -- can give us in a sense regarding a strategic way of or change regarding funding. Like in terms of bonds or I know you have space, and if you attempt to issue or to grow in what sense. That's it.

Hold one second.

Your follow up question is from Tito Labarta from Deutsche Bank.

Just one second, sorry we haven't finished that question.

Claudia, to answer your question, you know we are going to continue with the same strategy as you continue in the last year in terms of increase our capital, well really issue bonds in the local market, but senior bonds for [$1.4 billion]. We also reduce there a transaction in the Mexican market where we are going to continue placing bonds there, but really our strategy is to grow in terms of -- when (inaudible) funding [results].

And we are going to continue with that. In terms of deposit really when you grow more in this kind of liability, obviously you -- the type deposit are losing some participation, relative participation but it is something that is very good if you [review] the liquidity of the bank because as long as you can extend the tenors of your liability, you are better protected for any problems in terms of liquidity.

And when you are growing at the level that we are growing, that is very important. On top of that, you have to consider that next year, even though we are going to continue growth and our intention is to gain market share, at the end of the day, this growth should not be at the same pace that we grow during this year.

Do you have any other questions, Claudia?

Your next question is from Tito Labarta from Deutsche Bank.

Hi, Pedro, just a follow up question to my earlier question from before. As you mention, you may see a little bit of deterioration as you move into the retail segments and the shift in mix, just want to get a sense then in terms of your provision charges. Is kind of what we saw in the third quarter and fourth quarter, would you say that's a recurring a level going forward or do you think provisions could continue to increase given the shift towards more retail loans. Maybe you can provide some more color on that. Thank you.

Yes. Well if you consider with regard our recurring level of provision, including any special impact, remember that we have two special impact during the last two quarters. One was the situation of one customer, I don't want to mention the name, where we had to make a significant important provisions and the other was the sale of the portfolio that we just made during December.

If you include this impact, really the level between the second, the third, and the fourth quarter are almost flat. You have really, little increase of -- between the second and the fourth quarters, the increase is less than 5% or 6% between these two quarters. So really at the end of the day, this is not a recurrent impact, is just one-timers and because of that we don't think that we are going to increase the number.

Obviously it could have some lower increase because of the mix of our portfolio for the future, however, something that will be more than that I don't expect that. Just for the mixing of the portfolio, the combination in terms of the business and the [balance] that obviously the environment is changing a little bit, but no more than that. And you have to consider that the impact that you see during the third and the fourth quarter are just one timers and I can explain to you [nicely] we have a conversation offline.

So just to -- so you're saying excluding the onetime items in the third and fourth quarter, that that's kind of the recurring level you would expect?

Well level that and similar to numbers like very close to CLP40 billion or something like this, both quarter.

Okay, thank you very much.

You're welcome.

(Operator Instructions). Your next question is from Jose Barria, Bank of America.

Hi, thanks again. Just to follow up on the provision question, regarding the countercyclical provisions that you took in the fourth quarter, can you tell us what drove your decision to do that and if we could expect that you will continue to be with a more conservative stance and booking more countercyclical provisions above what's required?

The reason of having this provision is exactly what the regulation is saying, when you see a very good economic cycle you can make these countercyclical provision in order to be prepared for the deteriorated period in the future. And really Banco de Chile has a very consistent policy in order to have this kind of provision according to our regulation and considering the growth also of our portfolio.

But really when the portfolio grows in $6 billion during the last year, obviously makes sense to increase the provision in order to have that relationship between the type of your portfolio and the type of this provision.

If you have mixed for the future really something really difficult to say, but if they growth of portfolio should not be the same as we have this year, obviously you should expect lower level of this kind of provision, but if you ask me if we expect something very specific and a specific number really, we don't have anything in the projection now, but it's something that cannot be ruled out in the future.

I see. Okay. So just to make sure I understood correctly, this provision, this countercyclical provision is -- you took it as per the regulation, not necessarily it wasn't a voluntary provision you took, is more -- it was required by -- according to the regulation?

Yes, but it's absolutely voluntary.

Okay.

So the regulation allows you to do it.

I see.

But it's completely voluntary matter for the bank.

Okay, excellent.

It's a board decision. And really knowing the prudent approach of Banco de Chile, obviously Banco de Chile prefer to do this provision taken (inaudible) special really of a very good economic cycle in order to be prepared for any problem in the future if -- well.

All right. Okay, thank you. That clears it up.

You're welcome.

(Operator Instructions). I'm showing there are no questions at this time.

Thank you. To close, I would like to emphasis that our biggest strategy is based on the premise of creating value for our shareholders in a sustained manner or time. Hence, in the coming year, we will continue to focus on growing our customer base in (inaudible) and SMEs while raising profitability in our wholesale segment.

However, for 2012 we expect that the volatility in international markets will affect the Chilean economy and the financial system in terms of growth and higher risk level obviously in comparison to 2011 that was a very good year for substantial growth.

Nevertheless, Banco de Chile has demonstrated a solid track record in acting with responsibility and caution throughout these cycles. So while this year brings with it more uncertainty we firmly believe that we have a solid foundation to continue meeting our goals and [awaiting] a very good scenario which may occur.

That, I am confident that we will carry on strengthening the prestige reputation [around] the generation of this institution. Thank you and we look forward to discussing our first quarter 2012 results.

This concludes today's conference call. You may now disconnect.