Banco Santander Chile (BSAC) 2009 Q1 法說會逐字稿

Good day, and welcome to our first quarter earnings release conference call. Today's call is being recorded. At this time for opening remarks and introduction, I would like to turn the call over to Raimundo Monge. Please go ahead.

Thank you very much. Good morning, ladies and gentlemen. Welcome to Banco Santander-Chile's first quarter 2009 results conference call. My name is Raimundo Monge, Director of Strategic Planning, and today with me is Robert Moreno, Manager of Investor Relations at the Bank.

Thank you for attending today's conference call in which we will discuss the Bank's recent results and strategy. Afterwards, we will be happy to answer your questions.

Next to slides; you should be in slide number three of the webcast. In the first Q of '09, net income attributable to shareholders totaled CLP76,652 million, that is CLP0.41 per share, and $0.72 per ADR. In 2009, the Bank adapted accounting standards in line with international standards, IFRS.

Historical figures in our earnings report have been restated to make them more comparable. The main difference compared to previous account standards was the elimination of price level restatement, and non-cash expense related to the level of inflation.

Compared to the restated net income, first Q '09 net income decreased 10.9% year-on-year. However, on a comparable distributable basis, that is compared to the historical net income distributable as dividend and not restated to account for the new accounting standards, net income attributable to shareholders was up 1.3% year-on-year. The Bank's ROAE in the quarter reached 20.2%.

Next slide; in 1Q '09, the Bank faced a challenging operating environment, as the economy slowed and interest rate and inflation decelerated significantly. This posed a significant challenge for us, but as we will discuss in this presentation, the Bank's thorough execution of its strategy has resulted in a sound evolution of results in the quarter.

Next slide; although the operational environment will be difficult throughout the year, there are some early symptoms that make us expect that growth could be resuming in the second half of the year, while inflation is also expected to be positive, reverting the deflationary process we saw in the first Q of '09, which put pressure on our margins and net interest income this period.

Next slide; as discussed in previous earnings releases, the Bank's strategy since 2007 has been centered around four objectives. The first one is to actively manage our balance sheet.

The Bank ended the first Q '09 with stronger capitalization ratios, a sound liquidity position, and a solid core deposit base, and has been selectively growing in the lower risk categories. We have also been increasing our spreads in order to absorb potentially higher funding costs, lower inflation, and deteriorating credit risks.

Our second strategic objective is to increase cross-selling and product use to boost fee income. We believe we have two very important advantages to succeed in this goal. First of all, Santander-Chile has the largest client base in Chile among private banks.

Secondly, we have IT systems which are unparalleled in Chile, and that allow us -- our account executives to cross-sell more easily their client base. The third strategic objective is the proactive management of all risks and recoveries.

The Bank has taken a number of actions in order to curb the provision expense growth in the coming quarters. Nevertheless, as mentioned in previous earning releases, we expect some further deterioration of asset quality throughout '09 as the economy slows down.

In line with our last strategic goal, the growth rate of operating expenses was effectively curbed in the fourth quarter. In this period, the Bank focused in cost control, and limited the opening of new branches in order to maximize the profitability of the existing network and client base. Cost control should be a key driver of the bottom-line performance of the Bank in 2009.

Next slide; you should be on page seven of the webcast. As stated, since mid-2007 we have been stressing the importance of proactively managing our balance sheet in order to continue expanding operating income while controlling risks.

In the first Q of '09, the Bank's capitalization ratios improved once again. As of March 31, 2009, the Bank's Basel ratio or BIS ratio reached a solid level of 15% with a Tier I ratio of 11%. It is important to point out that voting common shareholder equity is the sole component of our Tier I capital.

So our Tier I capital is 100% core capital. This is in line with our strategic objective of maintaining a strong core capital base. The Bank credit ratings were improved in the quarter by Moody's, following the upgrade of Chile's sovereign ratings. The Bank deposit ratings were improved from A2 to A1.

Senior debt rating was improved from Aa3 to Aa2. Subordinated debt rating was unchanged at Aa3. Both the senior and subordinated debt ratings pierced the sovereign ceilings, making Santander-Chile the highest rating company in Latin America.

The Bank's shareholders also approved the payment of a dividend of CLP1.3 per share or approximately $2 per ADR. This was equivalent to a payout ratio of 65% of 2008 mid-earnings, the same payout the Bank has kept for the last three years, and we presented a dividend yield of around 6%.

These clearly reflect that the Bank's focus on profitability has translated into a steady flow of dividends for shareholders without the need for capital increases. The number of shares has remained the same since the merger with Banco de Santiago in 2002.

Next slide; you should be on page eight. The Bank continued with its approach to selective loan growth given the more difficult economic environment, with a focus on spreads and profitability over market share concerns.

In addition, this quarter loans were affected by the translation loss produced by the deflation, negative 2.3% was the actual [CBI] this quarter, and the appreciation of the Chilean peso against the US dollar of around 7.5% in the same period.

As a consequence, total loans decreased 4.1% Q-on-Q, and increased 12.6% year-on-year. Adjusting for translation losses which affected mainly the SMEs, middle market, and corporate loan portfolio, total loan volume decreased approximately 2.4% Q-on-Q, and increased 14.6% year-on-year.

In the quarter, the Bank kept intact its focus of lending to those corporate clients that generate a high return on our capital, both on the lending and non-lending side of the relationship. In the retail side, total loans to individuals decreased 1.8% Q-on-Q, and increased 8.9% year-on-year.

The growth of lending to individuals was focused mainly on the middle-upper income segments which increased 2.5% Q-on-Q, and 31.7% year-on-year. In the mass consumer market, volumes decreased 10.4% Q-on-Q, and 25.3% year-on-year.

This contraction of loan volumes in the lower-income segment should also help to contain asset quality deterioration going forward.

Next slide; during the first Q of '09, loan spreads increased in all products. The focus on loan spreads was also an important measure to counterbalance the negative effect on deposit spreads caused by the lower interest rate environment.

As rate declined, the spread earned over free funds, that is capital plus non-interest-bearing time deposits, contracted.

Next slide; these contraction of deposit spreads also explained the evolution of our customer funds in the quarter. As seen in the chart, customer funds remained stable Q-on-Q, and increased 7.3% year-on-year.

In the first Q of '09, our financial market in Chile started to normalize following the high volatility scene in the last quarter of '08. The Bank liberated some of its excess liquidity position.

In order to do so, it reduced its most expensive time deposits, and funneled those funds to money market funds which generate a higher spread for the Bank via fee income. The reduction in interest rates also explained the shift of client funds from time deposits to short-term fixed income mutual funds.

As a consequence, time deposits decreased 11.1% Q-on-Q, and mutual funds under management rose 40.3% Q-on-Q. The Bank's balance of non-interest-bearing demand deposits increased 4.8% Q-on-Q, and 11.5% year-on-year.

As of March 31st, Santander-Chile's loan to deposit ratio, excluding the portion of mortgage loans funded through the bonds, reached a healthy 96.5% improving from 91.4% at March 2008.

Next slide; net interest income was flat year-on-year despite lower inflation and lower rate environment that we saw. The rise in spreads, selective loan growth, and active management of our funding minimized the contraction of net interest margins.

Compared to our main competitor, the Bank maintains the highest margins and experienced the lowest year-on-year reduction in net interest income in the period.

In order to understand the underlying trends of our net interest income, we break these revenues between client net interest income, which is the net interest income and margins generated by our commercial area, raising deposits and granting loans, and non-client interest income, which is the net interest income generated by centralized activities, non-segmented portions of our balance sheet, and asset and liability management.

As seen in chart in slide 11, the evolution of non-client interest income fully reflects the negative impact of lower rates and inflation on our net interest income, and that's why you see a negative figure.

The Bank maintains long-term assets, mainly medium and long-term financial investments that are denominated in Unidades de Fomento, UFs, an inflation indexed unit. These assets are partially funded with nominal or non-interest-bearing peso short-term deposits.

Therefore, deflation has a negative impact on the net interest income of margins, as the Bank maintains a positive gap between assets and liabilities index to inflation.

Contrary to that, client net interest income increased 11.3% year-on-year in the first quarter. This growth was led by the 16.3% year-on-year increase in average loans.

As shown in previous slides, our strategy of selective loan growth, and rise in spreads, and actively managing our funding mix has allowed the Bank to defend profitability on margins in a negative inflationary environment.

Next slide; you should be on page 12. The negative inflation rate in the quarter were also offset by the mark-to-market gains in the fixed income portfolio that had been increased to hedge our results in anticipation of lower inflation levels.

The reduction of our fixed-income portfolio also reduced our positive US GAAP and, therefore, the impact of deflation on margins. The financial investment portfolio decreased 19.3% in the first quarter as compared to the end of 2008, and the net result from financial transactions increased 415% year-on-year in the quarter.

Next slide; the Bank continues to focus on expanding cross-selling and product use, our second strategic objective. These we believe is a cost-efficient way to continue expanding fee income in a lower economic growth period.

Net fee income increased 5.2% year-on-year in the first Q of '09, and was led by rise in fees from checking accounts and card fees.

Next slide; in the first Q '09, the Bank net provision expense increased 48% year-on-year. This rise was mainly driven by the increasing charge-offs in line with the economic slowdown.

As a result of this ongoing effort, the Bank has been able to keep relatively stable asset quality indicators, in spite of the more difficult operational environment.

The expected loan loss ratio risk index, that is loan loss allowances over total loans, reached 2.01% as of March 2009 compared to 1.88% at the yearend 2008 and 1.9% as of March 2009.

This is a key asset quality indicator as it determines the Bank's required a level of reserves and provisions. The Bank is required to set provisions according to it, and to have 100% coverage of this risk index.

The past due loan ratio, that is unpaid loans and installments above 90 days over total loans, as of March 2009 reached 121% compared to 1.1% in fourth Q 2008 and 1.09% in March 2008. The coverage of past due loans, that is loan loss allowances over past due loans, reached 166.2% as of March 2009.

Next slide; you should be in page 15. In summary, operating income, net of provision expense, increased 10% year-on-year in the first Q of '09. The strategy the Bank has been following including selective loan growth, improving funding and spreads, strengthening capital, and actively managing the balance sheet offset the negative effects of inflation and rising credit risk in the quarter.

At the same time, we believe this figure shows that despite the challenging environment the Bank has been facing we have been able to sustain a fairly resilient client revenue generation.

Next slide; in the quarter, the Bank continued with its process of consolidating the growth of distribution network to control costs. Since approximately one-third of the Bank's branches have been open in the past three years, there is still enough room to sustain growth and improve efficiency by maximizing profitability of the existing network.

Next slide; as a result of these measures, the growth rate of operating expenses was curbed in the quarter. Operating expenses increased 2.8% year-on-year below the 5% cumulative inflation on a year-on-year basis, and was smaller than the 18.6% rise in operating income.

Therefore, the efficiency ratio reached 34.5% in the first Q of '09, improving from 36.6% in the first Q of 2008. We have the highest level of efficiency among the larger banks in Chile, and our efficiency level is among the best in emerging markets.

Next slide; in summary, first Q '09 results were positive, especially considering the adverse environment we face and clearly outperforming the rest of the market. In this period, we were to maintain a big advantage in terms of efficiency and almost double the return on capital compared to the rest of our competitors.

Our higher client margins, ample liquidity, improving funding mix, conservative asset quality policy, solid fee income growth, and world-class efficiency gave us a clear competitive advantage in the local market.

Going forward, we will continue to focus strongly on profitability as detailed throughout this presentation. The issues continue to boost our client net interest income and fees although at a lower rate than in 2008. As inflation normalize, this should also help to boost non-client margins.

We are also undergoing many actions to stabilize provision expense, but we expect further deterioration of asset quality.

Finally, cost should remain under control, and we see a positive evolution of efficiency and productivity going forward.

At this time, we would gladly answer any questions you might have. Operator?

Thank you. And at this time we will take questions. (Operator Instructions) And first we'll go to Saul Martinez with JPMorgan.

Hi guys, how are you? I apologize if these questions have been addressed already; the earlier conference call went a little bit too long, so I caught just the tail end of your presentation.

I guess my first question is more general and I'm trying to understand the earnings power and the profitability power of Santander-Chile. You had a lot of moving parts, so to speak, in the first quarter with deflation adversely impacting your margin, the movement to IFRS which hurt you in a deflationary environment, but at the same time extraordinary trading gains which probably won't recur and you also have, you've mentioned deteriorating asset quality.

If I look at IFRS, last year the earnings were extremely high because of the inflationary environment. What kind of profitability, what kind of ROEs should we expect in an environment when the economy remains under some pressure?

We do have positive inflation. How should we be thinking about the earnings drivers and what kind of profitability in earnings we should expect in -- during the rest of 2009?

Okay. Well, we are fully -- we would view that the first Q was a little bit noisy because of a very challenging operational environment, as we addressed throughout the presentation, negative inflation followed by cut rates, et cetera, has made things more difficult for the Bank.

But we were anticipating this situation and to some extent we took advantage, yes. So those trading gains although are by its nature one-timers, they basically were able to fully compensate for the negative non-client interest income that we generate, and it's very clear that -- in a table we included in our presentation, yes.

So that was kind of a hedge situation in anticipation. So going forward, and as we expect that inflation will start to normalize and be slightly positive, around 2% for the year is what we are expecting, that means that for the remaining of the year we expect some cumulated focus on inflation. That should have a reverse effect on our negative non-client net interest income.

So that situation is taking care of itself and the important part is what we are doing with our clients. And that's why it was encouraging to see a relatively solid client revenue stream, both in terms of fees, and in terms of client net interest income.

And as you correctly point, the only concern is about the asset quality. And the answer there is that we have taken for very much 2008 and 2009 a number of actions to be strengthening our capabilities to tackle asset quality deterioration.

So if you see in the presentation, we have included three metrics about asset quality. The three tend to move very much in line. There were some concerns that the -- as a consequence of IFRS standard we now include another measure which is quite demanding; non-performing loans which include not only the installments and lines of credit that are unpaid for 90 days or more, but also the principal, and in the case of the Chilean regulation also the expected future interest that we'll be gaining on that position.

So of course that is a very demanding measure, and it's fine. The actual thing is that the three metrics that we include had been evolving very much in line with a slight deterioration, but up to now at a very controlled pace.

And given that the Bank has had very strong client and top-line generation, we have been able to fully compensate for the high provision expense. And as a consequence net interest operating income, net of provision has been growing at 10%.

Going forward, it's very difficult to give firm predictions because we still think that the first half will be a very challenging period, and according to the information that we have currently, we have some better feelings about how the second half will evolve.

But really no firm position there anyway, simply that there are some early symptoms that some growth of the economy could be expected by the end of the year.

If that is the case and our -- and the measures that we've been adopting in terms of asset quality control and the actual drop of cost -- of our cost-base that we have seen in the last two or three quarters, we think that we are still poised to repeat the results that we saw last year -- the historical result that we saw last year, or some slight growth if inflation is increasing in the second half.

That will mean that our ROE should go back to 23%-24% as it was the case last year, on historical terms. IFRS comparison, a little bit tricky because the many lines are being changed but net-net what -- your comment is that because now we don't have that non-cash expense called monetary correction 2004 -- 2008 results, sorry, were extremely high.

This year we won't have that cost anyway, but of course the amount that we are saving is much smaller than what we saved "last year."

So end of the story, we think our client revenue generation is -- has been fairly resilient. We think that the provisions will be growing, but hopefully we shouldn't see them going out of control and probably growing in line with our operating income.

Non-client interest revenue starting to benefit from the lower interest rate environment, and compensated for the drop that we saw in first Q. And a firm control over costs, which at the end of the day is what you're really controlling this more weak operational environment.

And the bottom-line is hopefully repeating the historical results that we saw last year, and therefore approaching profitability on a trailing basis not -- probably the second Q will be also -- our profitability will be under stress followed by a more -- a better outlook for the third and fourth, especially the fourth. So on a trialing basis trying to repeat the 2008 results and ROE.

Okay. So just to be clear then, when you say '08, you mean on a Chilean GAAP basis, the actual I think it was CLP328 billion with '08. You're not talking about the IFRS results, right?

No, that is that case. What we actually gave and what was the result that we generated -- the historical results of last year.

Okay. So but doesn't that imply you expect a pretty nice contraction then, because today you're under IFRS, which was going to have some benefit to your bottom-line which -- so if you're basically flat, I mean, you're essentially saying that on an apples to apples basis you expect earnings to decline this year? Not that I want to put you on the spot, but -- yes.

Basically what we have mentioned is that on an operational basis we plan to repeat last year. And we can have some beneficial impact this year as compared to last year simply because we won't have monetary correction compared to last year.

Yes.

So we could -- some increase from the historical figures, but I would think in terms of operational trends that should be -- we think we could be able to repeat the last year performance on a pre-monetary correction basis, to call it some way.

Okay, okay, all right. Okay, great. And just one more specific question, your other operating expense, and maybe you addressed it on the call; it went up a lot, CLP35 billion, I think the run-rate was CLP8 billion to CLP10 billion. What drove that in the quarter? Was that extraordinary?

Well, as you know in this line we include mainly expenses related to the Bank call center, credit card related expenses --

Yes.

-- and expenses related to repossess assets. There are -- a number of things are included, and provisions for other contingency. And the Bank in the first Q recognized some additional provisions there for both credit and non-credit contingencies.

Given that we are expecting -- although we expect some improvement in the second half, we still feel that in first Q we will have a fairly challenging environment.

So that's basically the reason we set aside some additional provision for both credit and non-credit contingencies, and that is --

Okay.

-- fully explained in the year-on-year rise of that line.

So that has credit -- potential credit contingency costs in that line?

Yes.

Okay. All right, great. Thank you very much. That was helpful.

Okay.

(Operator Instructions) Next we'll go to Tito Labarta with Deutsche Bank.

Hello, good morning, Raimundo. Just a question in terms of the provisions; you said that the asset quality did deteriorate too much.

So you get -- how comfortable are you with your current level of provisions -- gross provisions are on 2.8% of loans. So do you feel comfortable with that level for the rest of the year?

And then also given what you just mentioned in terms of additional provisions, like how much of those provisions were related to credit, and how would that impact your outlook for provisions going forward? Thanks.

Okay. Today we have a, as you mentioned, 2.8% that is the non-performance measure. We think that we can sustain and/or see some little deterioration going forward. That to some extent was -- this quarter was inflated to some extent because of the drop of volumes, something that we expect to be reverted once inflation starts to normalize. But 2.7%-2.8% is a good estimation.

And concerning provisions, well the largest amount that we set aside in -- as other operating expenses was related to traditional loan losses provision that we took in view of potential credit risk as a consequence of the economic slowdown.

So as this provision do not respond to a specific credit risk requirement, the local accounting regulation established that they should be registered in the line of other operating expenses.

So a large extent of those extraordinary provisions are for credit purposes. It's simply that we are not in a position today to say specifically which loans are the ones that we will be strengthening going forward. It's a process that simply we took the provision that we -- given that we have fairly strong results in first Q in anticipation of some further deterioration of asset quality going forward.

Okay, great, very helpful. And then, just given the new accounting standards and your coverage ratio over the performing -- the non-performing loans declined compared to how it was [before].

So do you feel comfortable now with this level below 100%, or do you think that you would eventually want to increase that to where it was before the accounting change?

Okay. What happened is the following that the Bank, and that is the case for most of the banks in Chile, had to set provisions according to the expected loss or the risk index, which is the best assessment that you have according to your internal models and the guidelines set by Superintendency of your banks of how much money you are expecting to lose in your loan book.

So among the many elements that you take into consideration to assess that expected loss is whether the client is paying you or not. And that's why we don't feel a need of covering 100% of non-performing loans, because non-performing loans is simply a reflection that the client is not paying you.

But it's not necessarily what you expect to lose in that position. To give an example, there are many cases where you set provisions for client that today might be paying you or vice versa that you don't set a provision for client that are not paying you, because we realize that they are facing some short-term concern, or because you have a collateral, or something like that.

So the biggest change in the traditional past due metrics -- past due loan metrics that we were using, and the non-performing loans there is an additional metric that we follow has to do with mortgage lending.

And historically and according to the best judgment that we have and the guidance set by the Superintendency, the actual losses in mortgage lending is very small, less than 0.5% on average. And that's why even if we would like to coverage 100%, we will be risking in the extreme case -- not having a clean opinion in our balance sheet because that provision won't be needed, because losses have to be covered, but not necessarily 100% of whatever is not performing.

So again, and that's why the chart again shows that the coverage ratio of the -- under the three metrics has been moving in line and we feel comfortable with that level. But the actual truth is that you have to have 100% coverage of your expected losses, not necessarily 100% of the non-performing or 100% of past due loans.

So sometimes as the definition of non-performing loans is more demanding than say a past due loan, you have a lower coverage. So if that coverage that is some result of a -- provisions are set according to the expected loss, and then you simply [call for it], but difficult comparisons.

You compare it to either past due loans or non-performing loans, but you're not for it and it wouldn't make sense we believe to fully provision that non-performing loans because it's not a reflection of what we expect to lose on the loans.

Thank you. And next we'll go to Jorge Chang with Euroamerica.

Hello, thank you for your presentation. Could you please elaborate a little bit more on the prospects of credit quality for the remainder of the year? Could you just explain these by business segment?

Okay. Up to now -- and here I'm talking in the last day 18 months or so, the bulk of asset quality deterioration has been concentrated in consumer products, credit cards, plain vanilla installment loans, et cetera and mostly in the low end of the consumer market. And that explains why we have been basically reducing our exposure in that segment.

Lately, we have seen some deterioration in the middle -- middle-high end of the consumer market, especially in -- well, in consumer again and some in the mortgage market. But again, given that we have a fairly -- this is simply a reflection of more problems, but the actual level still is very low.

And also we have seen some deterioration in the corporate side, especially the small and middle-sized companies. Again, as we put in our press release, and as you see there, very clearly -- it's in page 12 -- very clearly the bulk of our provisions, I would say close to 80% are provisions for consumer loans which are mostly in the low end of the consumer market.

Then you have a further 6%-7% in mortgage, residential mortgage lending, and the remaining 15% or so are for commercial loans.

So that pattern has been -- what we have seen in the -- at least this quarter, but has been very similar in the previous quarter. And going forward, we think that we will see some increased provision recorded in mortgage, more or less in line with what we have seen in the last two or three quarters.

Some more provisions coming in commercial lending because there are -- at the -- in the commercial lending, the longer the slowdown of economy lasts, the more problems you face.

At the beginning, companies are able to absorb part of the lower sales, et cetera, but if this situation prevails for too long a period, they start facing difficulties.

And in terms of provisions of consumer lending we think we are probably reaching the peak, given that the mix that we have been -- or the growth that we have been seeing in the last 17-18 months has been mostly on the high-end of the consumer market, and we have seen actual decrease of the low end of the consumer market.

So in terms of consumer lending provisions, probably we are very close to be capping that process. We have one or two quarters in which this situation still grows, but probably -- as long as we don't have any further shock on the real economy coming from abroad or internally, that the level should be hopefully starting to be close to the ceiling -- be capped.

And in terms of mortgage, some deterioration in terms of commercial lending, some deterioration. And that's why although we expect that the non-performing loans or past due loans should be moving in line of what we have seen lately, we think that some further provisions should be required going forward.

Thank you. And next we'll go to Lucas Ramirez with Bank of America Merrill Lynch.

Thank you very much, good morning. Raimundo, my question is on the expense side Q1 showed a lot of cost containment and improvement and efficiency, so I was wondering if we saw a net branch reductions for the first time in a while at Santander in the quarter. And the personnel has been declining for now, I guess a year or so.

So my question is how much more room do you have to improve efficiency indicators, and whether we can see some further branch closings over the upcoming quarters?

In terms of branches, we don't have plans for reducing them massively. We are simply shifting the branches in -- between towns and between some segments, and things like that. So the average would be more or less the same for the rest of this year.

And in terms of personnel -- remember that Santander has a very flexible paying structure where 99% of our employees have performance bonuses and (inaudible). So as lending volumes and other metrics that we are using have been under pressure because of the slowdown of economy, those compensations then to also to move in line, so that has been helping.

So going forward we think that we have taken a number of actions. Here we are relying a lot in our IT platform that is helping us to do big increases in productivity in terms of how you relate with clients, in terms of how you -- you do your day-to-day business.

And that is very little exploited up to now. Well, I'm not an expert in IT, but if half of the claims that we receive of the technical people are true, we still think we have big inroads to do in that process.

I think most of the processes that you know we can generate like 70% of the revenue out of 20%-something of our clients. So you have a lot f room to improve. It's simply that you have to get with the correct product and the correct time to the client for -- in order to grab that business.

And that process is very much helped by means of using cleverly your technology and information you have about our clients. And the other thing that we have been doing very actively is relying on the remote channels to limit the amount of the transactions done at the branch network.

Our ATM -- Internet platform has been growing very rapidly, 70%-something growth of total transactions last year. Our call center has also been much more sales-oriented than simply answering inquiries by clients.

So we are relying very much in our remote channels of attention not only of a way to get people out of branches, but also for selling process.

Last year like 30%-something of all consumer lending was done by remote channels as opposed to the physical branches. So the combination of more technology, improvement in efficiency, well, of course less investment in branches, and more use of remote channels we think can support very contained growth of cost, if at all, this year and therefore increase our profitability and efficiency.

All right, thank you very much.

And no other questions at this time. I'll now turn the call back over to you for any final or closing remarks.

Okay, well, thank you all very much for taking the time to participate in today's call. We look forward to speaking with you again soon. Have a good day.

And with that -- ladies and gentleman, that will conclude today's presentation. Thank you for joining.