Banco Itau Chile (ITCL) 2014 Q1 法說會逐字稿

Thank you for standing by, ladies and gentlemen. Welcome to the CorpBanca conference call on the first quarter 2014 financial results.

We have with us Mr. Fernando Massu, Chief Executive Officer; Mr. Eugenio Gigogne, Chief Financial Officer; and Miss Claudia Labbe, CorpBanca's Manager of Investor Relations.

(Operator Instructions). I must advise you that the conference is being recorded today Wednesday June 4, 2014.

We now pass the floor to your speaker today, Miss Labbe. Please go ahead.

Good morning. Thank you for join our conference call for our first quarter 2014 financial results. I'm Claudia Labbe, Investor Relations Manager. Here I am with Mr. Fernando Massu, CEO; and Mr. Eugenio Gigogne, CFO.

I would like to remind you that all figures are presented in Chilean pesos unless otherwise stated; and, that my remarks may include forward-looking information and our actual results could differ materially from what it is discussed.

The audio is available through Capital Link and the slides are available on CorpBanca's website.

To begin, I would like to highlight that in first quarter 2014, net income attributable to shareholders totaled CLP40 billion, which represent CLP0.1180 per share, or $0.3213 per ADR, reflecting a 39.2% increase when compared to first Q 2013 year over year.

The increase mainly reflects the growing commercial activity in Chile; the positive impact of inflation rate in the local market; and full incorporation of Helm Bank since fourth Q 2013.

Total loans, excluding interbank and contingent loans, reached [$24.5 billion] as of March 2014, allowing CorpBanca to achieve a market share of 11.5%, an increase of 137 basis point year over year, and similar to first Q 2013, due to our focused shift towards increasing profitability and liquidity in Chile.

CorpBanca continues to be the fourth largest private bank in Chile in terms of loans and deposits and have closed the gap to the third place bank. CorpBanca has also ranked as the fifth largest private bank in Colombia.

Other important highlights for the quarter are net operating profit increased by 93.3% year over year, and decreased 10% quarter over quarter.

Net provisions for loan losses increased by 13.5% quarter over quarter, and increased 13.9% (sic - see press release, "39.85%") year over year.

Total operating expenses decreased by 5.6% quarter over quarter and increased 79.4% year over year.

Before starting the presentation, Fernando Massu will like to comment some recent highlights.

Thank you, Claudia. Good morning. The results during the first Q 2014 have far exceeded our expectation for the quarter and show a significant improve compared to last year, year on year. First quarter 2013 results fully incorporates Helm Bank, although one-time cost do not allow to successfully reflecting all the benefits coming from the integration process.

Though we still are in the early stages of that integration process, on June 1, 2014 the merger between Banco CorpBanca Colombia, as absorbing society, and Helm Bank, as the absorbed entity, was successfully formalized. As a result, CorpBanca Colombia consolidates as the fifth largest bank in Colombia.

After this legal merger, CorpBanca Colombia will keep working on technological and operational integration, which is expected to be accomplished during the second half of 2015. Today, all expected synergies coming from this merger have been reached and scheduled -- as scheduled, sorry, at the time.

We have been moving forward in the application filings to the relevant regulators as part of the steps to follow to complete the future integration with Banco Itau Chile.

Another recent highlight was the reduction of related loans' exposure in compliance with the Board of Directors and senior management guidelines. According to the new regulations since November 2013, all related parties' loans, both by ownerships and management, reached CLP414 billion as of December 31, 2013.

By the end of the first quarter 2014, this amount decreased by 27%, totaling CLP303 billion. A further and a significant decrease was registered in May 2014, as FIP Synergia fully paid its CLP71 billion obligation.

Now Claudia will refer to CorpBanca trend during first quarter 2014.

To begin, let's move to slide 3. This chart shows the trend in our 12 months' trailing net income from December 31, 2006 through March 31, 2014.

During this period, our net income for the 12 months' trailing March 2014 reached record levels, CLP166.4 billion, resulting in a 33% increase year over year.

As Fernando mentioned, first quarter 2014 has far exceeded our expectations for the quarter, and show a significant improve compared to last year, year over year, which represented CLP40.1 billion, a 39.2%, or CLP11.3 billion increase from CLP28.8 billion in first Q 2013.

Next slide, page 4, in order to show the impact of the Colombian operation, the following table presents the results generated in Chile, as well as the one generated in Colombia. It is important to mention that the books of CorpBanca in Chile include some expenses that are associated with the operations in Colombia, in particularly interest expenses in connection with the part of the acquisition of Banco Santander Colombia, now known as Banco CorpBanca Colombia, that has not financed with equity -- that was not financed with equity.

Amortization of the intangible assets generated in Banco Santander Colombia acquisition, and in the acquisition of Helm Bank, and impact in connection with the fiscal hedge used for coverage of the tax effect of the total investment in Colombia.

These adjusted results for the first quarter 2014 allows the separation of the Chilean results from any impact related with the acquisition of Banco Santander Colombia, today Banco CorpBanca Colombia, on May 2012, and of Helm Bank on August 2013. The adjusted first quarter 2014 results present, in our opinion, an unbiased result achieved in Chile.

In terms of adjusted net income it is observed that the operation in Colombia generated CLP10.1 billion, while the Chilean operation generated CLP13 billion (sic - see slide 4, "CLP37.027 billion"). These figures show that greater business diversification in Chile has generated an increasing revenue stream and that one one-time expenses have impacted CorpBanca Colombia after the acquisition of Helm Bank.

Moving along to slide 5, profitability. We have achieved an average annual return on equity [20.1%] between 2009 and 2012. Capital increases raised between 2011 and 2013 to fulfill our organic growth in Chile and our acquisitions in Colombia for a total amount of $1.6 billion approximately have impacted our ROE since the third quarter 2011.

The following other items have also impacted our ROA; the increase in our corporate loans with lower risk profiles and lower spread than in our retail loans on 2011 and beginning 2012. The accrual of Banco Santander Colombia, now known as Banco CorpBanca Colombia, net income commencing on the second half of 2012, and of Helm Bank for only five months starting on August 2013. That was partly offset by the higher valuation observed in March 2014.

As of March 2014, according to the SBIF, we were the fourth largest private bank in Chile in terms of the overall size of our loan portfolio. 11.5% market share on a consolidated basis and 7.2% market share on an unconsolidated basis, only taking into account our operations in Chile.

During third quarter 2013 CorpBanca added $5.3 billion in loans through the acquisition of Helm Bank, which explains the level reached in market share on a consolidated basis for the two last quarters.

On the other hand, CorpBanca's local market share remained on similar level in comparison to fourth quarter 2013, and on unconsolidated basis only taking into account our operations in Chile, reflecting its focus on increasing profitability and liquidity in Chile.

Upon the recent merger with Helm Bank, Banco CorpBanca Colombia consolidates as the fifth largest bank in Colombia by loans with a significant presence in the commercial banking and medium-high income individual segments.

The consolidated entity will be a larger scale actor along all product lines with a balanced business combination focused on commercial and retail operations.

As of March 2014, the combined bank had [$14.3 billion] in assets, [$9.9 billion] in loans and approximately [$9.6 billion] in total deposits.

Moving along to number 7, let's talk about our asset quality. Consistent with one of our core strategies, CorpBanca has one of the lowest risk indexes, loan loss allowances to total loans, in the banking industry in Chile.

As of March 2014 CorpBanca had the lowest risk index in its Chilean loan portfolio, 1.48%, and one of the lowest on a consolidated basis, 2.29%, among the top eight Chilean banks, representing more than 90% of market share in terms of total loans.

Next slide, number 8; continue to talk about asset quality. CorpBanca's high asset quality has been maintained after the acquisition of Banco Santander Colombia, known as Banco CorpBanca Colombia, which took place in May 2012, and after the acquisition of Helm Bank in August 2013.

The chart illustrates how our consolidated non-performing loans ratio continues to be better than the industry average in Chile. We believe that our risk management system and methodology enables us to identify risk and resolve potential problems on a timely basis, and we have significantly invested resources to improve the technology we use to manage risk.

Finally on slide number 9 our capitalization level. The increase of capital during first quarter 2013 improved the trend in our BIS ratio in 2013. With the incorporation of Helm Bank's risk-weighted assets and the goodwill deduction, our BIS ratio remains strong, reaching 12.7% in March 2014.

Thank you. Now if you have any questions we would be happy to answer them.

(Operator Instructions). Miss Labbe there appear to be no questions at the moment ma'am. Please continue.

Okay. So if there are no questions we'll thank you for joining our first quarter conference call and I'm looking forward to our next one.

Thank you.

Thank you very much indeed, Ma'am; and with many thanks to our speakers today. That does conclude the conference. Thank you for participating. You may now all disconnect.