Banco Itau Chile (ITCL) 2017 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, thank you for standing by and welcome to the Itau CorpBanca conference call on the first quarter 2017 financial results. We have with us Mr. Gabriel Moura, Itau CorpBanca's Chief Financial Officer and Ms. Claudia Labbe, Itau CorpBanca's Head of Investor Relations. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (Operator Instructions). And I must advise you, this conference is being recorded today. We now pass the floor to one of your speakers to Ms. Labbe, please go ahead.

Good morning, thank you for joining our conference call for our first quarter 2017 financial results. I would like to remind you that all figures are presented in Chilean pesos unless otherwise stated and that our remark may include forward-looking information and our actual results could differ materially from what it is discussed. In order to allow for comparison with previous periods, historical pro forma data of the consolidated combined results of Itau Chile and CorpBanca deconsolidating our former subsidiary, SMU Corp, which was no longer considered strategic as of June 30, 2016 and excluding non-recurring events is presented in the Management Discussion & Analysis presentation. The pro forma income statement for the periods prior to the second quarter of 2016 has been calculated as if the merger occurred on January 1, 2015. The pro forma information presented here is based on the combined consolidated historical unaudited financial statements of each of CorpBanca and Itau Chile as filed with the SBIF, the deconsolidation of SMU Corp unaudited financial statements as filed with the SBIF, and the exclusion of non-recurring events. The pro forma combined financial information included in the MD&A presentation is provided for illustrative purposes only, and does not purport to represent what the actual combined results of Itau Chile and CorpBanca could have been if the acquisition occurred as of January 1, 2015.

Finally, I would like to draw your attention to the changes that were introduced to the managerial income statement since the fourth quarter 2016 to include the adoption of managerial reclassification complementary to the tax effect of hedge. Please refer to page seven of our report for further details. Now, Mr. Moura will continue with the presentation.

Good morning, everyone. Thank you for joining us for this first quarter conference call. Today, we will be going through our results for the first three months of the year and I'll be giving you an update on our digital strategy execution and what we (technical difficulty) for Chile and Colombia for this year.

So to start, let's move to slide four where we begin briefly discussing our market environment and how it affects our results. So as you can see in both Chile and Colombia, we have been experiencing a cycle of lower than potential GDP growth. As a result, we have a more challenging environment for credit in both in portfolio growth, as well as for its [quality]. While we expect a higher marginal GDP growth compared to 2016, we do not foresee any major reversals in credit growth trends. On the other hand, our base case scenario for low interest rates have been materializing in the past few months and we expect interest rates to reach levels of 5.5% for Columbia and 2.5% for Chile. In the case of Colombia, we expect to benefit from this scenario as we're going to discuss in the next slide.

So if we move to slide five, we can see how important the downshift in the yield curve has been for Chile and Colombia in the past few months. As you remember, Colombia interest margin suffered with the rise in interest rates as the bank had a higher sensitivity of interest rates in its balance sheet. (inaudible) we have been reducing interest rate sensitivity in Colombia especially on the longer part of the yield curve as levels converge to historical levels. On the other hand, we maintained some of the exposure on the short-term that we expect to help in recovering some of the margin we lost in 2016. As we mentioned in previous calls, we have implemented a strong governance with Colombia in order to align risk policies, procedures in that side with that of Chile.

If you move to the next slide, we can discuss the managerial results for the first quarter. So in slide six, we present our consolidated managerial results for the quarter. In this first three months of the year, we had an accounting net income of CLP24.4 billion that correspond to CLP26.3 billion of recurring net income when we adjust for non-recurring events to provide a clearer view of the underlying results by excluding some of the effects of the merger process that has recently completed here. You can find some of the more details of these events on our MD&A report that is available to you on our Investor Relations website.

So if we move to slide seven, now we can see how these results break down between our operations in Chile and Colombia. Please remember that we assign to our operation in Colombia, any revenues or costs incurred by the bank in Chile due to its investment abroad. The main effects as you can see is the cost of hedging our investment in Colombian pesos to Chilean pesos due to the negative carry between the two currencies. Therefore, in Chile, as a stand-alone operations, we have ended the quarter with CLP34.3 billion net income and in Colombia a CLP7.9 billion net loss, a relevant recovery from the previous quarter in both countries, which was marked by an important adjustment in credit provisions that left us with a stronger balance sheet as we discussed in our previous conference calls.

If we move to slide eight, we can now see the evolution of our ROE. As you can see, the evolution of our managerial recurring ROE, which we adjust for the exclusion of both goodwill and the other intangibles from business combinations as to improve comparability with our peers in our combined pro forma results. Under this view, we are running at a 6.4% ROE for our consolidated business and a 10.2% ROE for our Chilean operations on a stand-alone basis. We expect this [ratio] to gradually improve as we consolidate the merger and implement our strategy for the next three years.

Going to page nine, we present a P&L of our bank in Chile for the first quarter. Here I would like to highlight that the flow dynamics in volumes still affect our interest rate and commission income as we have a more cyclical business mix than our peers. On the other hand, we had an important improvement on financial transactions as we position our balance sheet for a low interest rate scenario that has materialized as we discussed a few moments ago. Moreover, we are beginning to see our loan loss provisions especially in the large corporate segment returning to a more normalized level. Finally, we are also seeing the benefits of the merger throughout our lower operating expense growth especially when you compare our own historical growth and to that of our peers.

If you move to slide 10 now, we can discuss our credit portfolio growth in Chile. Here we see the evolution of our credit portfolio in Chile. Year-over-year, we have a 2.4% contraction in total loans is a [reflection] of diminishing investment projects from our corporate clients, as well as a conservative approach to credit quality and pricing. We expect to end 2017 with a portfolio growth in line with the overall market, but we do not expect to expand overall market share as we are focusing right now on profitability and value creation.

So moving to Slide 11, we can highlight the improvement of our underlying net interest margin excluding the volatility from inflation indexation and a gradual convergence to market average. Nonetheless, the main driver of our conversion will be through the change in business mix and deepening our client relationships. Both these movements will take some time and are aligned with the overall strategy.

On the next page, we will discuss credit quality and provisions. Here on slide 12, we do see the gradual normalization of our loan loss provisions to analyze level of 1% of our average portfolio. Throughout 2016, especially in the fourth quarter, we have adjusted our portfolio to reflect credit events on the corporate segment, a more adverse macroeconomic scenario and a more conservative view on credit provisioning. We remain cautiously optimistic for loan loss provisions for the reminder of the year and on the next slide, we'll discuss some credit indicators.

On slide 13 , we can see the trends on our main credit quality indicators. We continue to see a comfortably provisioned portfolio with a marginal improvement of our ratios for the Cartera Deteriorada, which comprises the riskier part of our portfolio. In terms of NPL, we can see some increase in both our commercial and mortgages portfolio that we will discuss with you in more detail on the next slide.

So on slide 14, we see the evolution of our NPL creation in Chile that is calculated by the change in the balance of the NPL 90 days in periods, plus the write-off to create a same basis comparison. Hence this number shows the net inclusion of NPLs in our balance sheet. Here we present the ratio of NPL creation to loan and give you a comparison of ratio-to-debt of the Chilean financial system. On the commercial portfolio that is inherently more volatile, we saw an increase that is in line with the market and has already been considered in our expectations and provisions. On the mortgage portfolio on the other hand, we have seen some deterioration that is above market especially in specific vintages that we are working to normalize.

If we move to slide 15, we can now see the evolution of our operating expenses in Chile. As you can see because of the merger, we were able to reduce headcount by 10% since last year. As a result, personnel expenses have fallen by 8.3% year-over-year. On the other hand, administrative expenses have risen by 11% year-over-year specifically due to rent expenses as we consolidated all administrative personnel in a new corporate office. Throughout this year, we expect administrative expenses to grow at a lower pace as we exit and sell several of our old office buildings. In our estimates, we have already captured one-third of our target synergies for the merger and we continue to focus on opportunities to increase our efficiency.

On the next slide we will discuss Colombia's financial statement. As you can see on slide 16, our operation in Colombia still suffers from an adverse macroeconomic scenario. Like our Chilean operation, Colombian operation is also more cyclical than our peers due to its business mix and because of low corporate investment, we do see a contraction in our credit portfolio that led to a lower net interest income. On the other hand, we do observe a lower level of credit provision expense compared to other quarters. However, due to some corporate events, provisions in the first quarter were marginally higher than our expectation. Moreover, operating expenses were higher in comparison to last year especially due to Colombia's fiscal reform and the increase in the IVA tax.

If we move to slide 17, we can discuss Colombia's loan portfolio. I think here the picture isn't different from what we saw in our Chilean business, is that we decreased the portfolio by 2.4% on a constant currency basis in the last year and we are losing market share specifically because, as I mentioned before, our business year is more cyclical and we are more focused now on profitability, pricing, and also within the process of merging the two banks. The expectations here in Colombia are not different from what we talked about in Chile, is that we do see us growing at market or meaning that we are not going to accrue some market share in Colombia this year as we are preparing the bank's platform for growth now with the merger of our operations of Helm and [CorpBanca].

If you move to slide 18, we can discuss a little bit Colombia's net interest margin. In terms of NIM, we start to seeing some improvement as interest rates begin to decline in Colombia and benefits through the repricing of our deposit. It's important to remind that we have been working with low exposure on the long-end of the yield curve, but also have left the exposure in the short-term for interest rate, as our expectations of the increase that now gradually materialized, we improved margins in our P&L. We do not expect margins to converge to the same levels that we saw in 2014 and 2015 as interest rates are still higher than on that period. Nevertheless, we do see a pickup in our NIM.

If we move to the next slide, we can discuss provision loan losses in Colombia that now amounted to CLP38.5 billion in the first quarter or about 3% of our loan portfolio, a level that is still higher than what we expect. We see and expect some deterioration in NPLs for the SME portfolio, but do see a stabilization of both [corporate and middle] levels and expect this to reasonably sustain throughout the year. As I mentioned, we saw some credit corporate advance in the first quarter in Colombia and although the provisions were lower than the [first quarter 2016 than the last quarter], it was a little bit higher than what we expected.

If you move to slide 20, now we have a little bit of the next step for the bank and I brought you two different slides, one is our agenda for digital banking and the second one, as we always do it's a little bit of the next step of the merger process.

So on slide 21, I'd like to share you an update on our digital banking front, that is absolutely central to the point of what we are doing for Itau CorpBanca, mainly seeing how the successful strategy that Itau Unibanco implemented in Brazil. Although this is long in construction that involved investments in infrastructure systems and processes, we are already implementing some first initiatives with some improvements in our digital channels in terms of legal and offers and are starting to see an improvement to use those channels for transactions, that's the most important part for us and although from a low level, this is key to improving client relationship and moving the bank towards new levels of client satisfaction and efficiency in order to improve sustainable profitability and earnings.

So in the next slide, we have a little bit of the next steps that we have for Chile and Colombia. So this is quite the same slide that we had on our previous conference calls. So you see the major milestones we have for Chile, the completion of the branch migration and client segmentation. We expect to finish this in Chile by December 2017. We have roughly completed one-third of the migration and segmentation and now in the [end of the year we expect to finish it off]. We now have a strong focus on the topline on revenues and client satisfaction, I think in the same way that we have a strong focus on merging the bank, adopting the same governance and risk procedures and policies. We are now more focused this year on the topline and growing revenues and also in client satisfaction. As you know, Itau Chile for many years was the top bank in terms of client satisfaction in the service of the Chilean market. We also are extremely focused on our digital strategy, as you saw in the previous slide, it's something that we are dealing with some low levels of penetration so with some simple leverage product, we were able to ship client to the digital distribution channel with higher satisfaction and also with lower cost.

And finally, the implementation of the synergies that we have. I think it was very important that we achieved one-third of the milestone. As you remember, we said to the market that we are going to generate roughly $100 million in synergies at the end of the third year, so this is the end of the first year that we are now into and according to our estimate especially taking consideration the averages, expense growth for both banks and also for the Chilean market, we think that we achieved one-third of the target synergies and we still continue working on this and it will be especially important after the core migration at the end of this year also to migrate the product systems in order to achieve these operational synergies.

As for Colombia, I think that we have a very important milestone now this month of May, which is introduction of the Itau brand for the first time in the retail market in Colombia. We are changing all of the brands from Helm to that of Itau. Itau used to have a presence of Itau BBA in Colombia, but as a corporate investment bank and not as a retail brand. So this is an important introduction to the market. We have also the completion of the systems integration as we move all the clients from the CorpBanca legacy platforms in Colombia to that of Helm, now rebranded to Itau, we expect to achieve that by the end of June 2018 and also, I think a very deep discussion of redefining the business model for wholesale and retail in Colombia in order to generate a better business mix and introduce the digital strategy so on and so forth. These are the discussions that we are starting to have in Colombia. So this is the presentation we have for you this morning and we will be glad to take any questions you might have.

(Operator instructions) Jason Mollin, Scotiabank.

My first question is related to the costs and the operating admin expenses that you mentioned that you had some additional cost to new corporate offices. What kind of improvement can we expect as you I guess close or vacate the other offices and what -- you mentioned that the growth rate should be lower in costs going forward, admin expenses going forward, what kind of range should we have for that?

Hi, Jason. I think that in terms of administrative costs, one thing that we did as I mentioned, we shifted everyone to the same building in order to do all the digital strategy, in order to facilitate the discussion with all the teams. If you remember, Itau and CorpBanca, they operated in different and we have mainly four or five different buildings throughout Santiago. So, we've made an effort to put everyone in the same building, but on the other hand, we are still [occupying] the buildings that we have. So we are in the process of renting out the old spaces that we have or some of them are our own. So we are in the process of selling them.

My expectations for administrative costs will be something around -- prior to the implementation of the synergies would be something around what is banking inflation in Chile and for this year, I estimate something around 4% to 5% in growth. I think that some of the agenda and we've been working with a consulting open efficiencies here in Chile, mapping all the opportunities and we do see lots of opportunities in administrative expenses. I can give you one example, is that 90% of the providers that we have for Itau or CorpBanca, they are unique meaning that I have an opportunity of putting both providers in the operation and increasing the efficiency and volume through one of the providers, but this is something that we are able to achieve as we migrate from one platform to the other. So this is a discussion that we have so far.

I think that in terms of the synergies, we talked about that [one-third and releasing two-thirds] for the next two years, I do expect that most of the synergies now is coming from the administrative part. Personnel costs are roughly 50% of what we have. So I think that in terms of the reductions, we did a huge effort and now what is missing from the equation is all the things that we can do in administrative expenses, as we move out of the old buildings and also implement unique providers for both banks.

Gabriel, thank you and maybe just a second question on recurring return on equity on a consolidated basis and perhaps even on Chile, which would, therefore you'd be telling us what you're saying for Colombia, but we saw 6%, we know that we have another two years to capture at least on your expectations, the full amount of the synergies. I mean, what is the, you talked about previous range is much higher in terms of target ROEs, are those the same? What's your expectation for long-term returns on a consolidated basis and for Chile?

For Chile now, we didn't change our plans in terms of what we think is possible for ROE. So what we are aiming for Chile and if you take the history of both banks, you are going to see that they achieved that kind of profitability years before. I think that adjusting for goodwill and intangibles for Chile I think it's possible to run between 16% and 18% based on the market that we now have with the prices that we now have, with the amount of capital that we now have. So, on the same comparison basis, what we have to other banks.

On a consolidated basis, I think that I do expect Colombia to converge to a level of ROE in the next few years, something around 10% to 12% because of the scale of the bank in Colombia, I do not see the bank running at a much higher pace especially because I think it will take a little bit more time in order to gain the scale and also to fix all the platforms that we need in Colombia. So thinking about in separate ways, I would say that something what we are aiming for is something around 16% to 18% for Chile and 10% to 12% for Colombia.

Diego Ciconi, Scotiabank.

I just wanted to get a sense of credit quality, the cost of risk has significantly decreased quarter-on-quarter mainly because of the extraordinary provisions that you made in the last quarter. However, it's is still a little bit higher than the historical pro forma level. So I wonder what do you expect to be like a recurring or target level of cost of risk going forward?

Hi, Diego, if we take a look at the portfolio and let's talk about Chile. If you take a look at the portfolio, historical levels were something around 50 basis points of cost of credit related to portfolio. We ran last year as you mentioned because of all the credit advance and also the more provision that we did something around 1.5%. Now we are running at 1%. I do not expect us to return to levels of 0.5% specifically because of the macro environment that we now have. However, I feel that something a little bit lower than the levels that we are now of 1% makes sense for us. We don't have any specific guidance in terms of loan [amount] provisions, but I can tell you that our expectations are not going to be 50 basis points, it's not going to be 150 basis points, perhaps something in the middle which is lower than we now have, it's something that makes sense for us.

Nicolas Riva, Citi.

Just two questions, the first one on margins. We saw an expansion of the net interest margin, both in Chile and despite the lower inflation and also in Colombia, the Central Banks are cutting rates. So my question is what's your outlook for the net interest margin both in Chile and Colombia because everyone expects in Colombia, the Central Bank, to continue cutting rates? And then the second one on taxes. So if we look at the income tax line, it shows a tax benefit on a consolidated basis and it seems to be driven by Colombia, specifically. So I wanted to ask for the driver of the tax benefit in the first quarter? Thanks.

Sure, hi, Nicolas. Margins in Chile and Colombia, I think they have different [ratings]. You see in Chile that we have increasingly better net interest margins as we do see our cost of funding reducing to the level of our peers in Chile and now we have between 5 basis points and 10 basis points premium over our competitors.

So what do you see, we are gradually improving and I take a look at net interest rate without inflation, this is something that we have implemented here in the asset liability matching book, is that I think that we have lower [west] exposure, inflation exposure than our peers. As you know, the Chilean financial system is very indexed, in margins specifically are very indexed and we are more active in terms of managing our inflation gap. Now we have a lower exposure. So we do see a pick-up in how we do the (inaudible) net interest margin without inflation.

So Chile is driven by our cost of funding. I do expect this to get a little bit better as we move mix, but the market is very competitive when we take a look at prices that we charge for the portfolio, they are aligned with the market. So I do not see many opportunities for pricing on the client level, but we do see, as I have a stock in terms of the deposits that I have (inaudible). On Colombia, it's a little bit different, I think in Colombia, as we discussed exhaustively, we had the exposure in interest rates in Colombia. The scenario that we had for Colombia was -- for Chile and Colombia, we were more dovish than the market, so we prepared for a scenario where we had lower interest rate. I think that what we are seeing is the front loading in terms of the Central Banks in Chile and Colombia lowering interest rate, that's its aligned with the scenario that we have. We expect interest rate in Colombia to get a little bit better. If you take a look at that, we are now have a NIM around 3.5%, which is aligned with what we have on the [first quarters of 2015 and at the end of 2016].

So, I don't think that we are going to go back to the levels of [four point something neither] what the other banks have in Colombia as our cost of funding in Colombia is still higher than our peers and we still have a mix in deposits that cost us more especially on current account deposit to our peers. So I think it's a gradual improvement in margins, but I don't see a rapid convergence to our competitor's levels.

And I'm sorry, the second question you had was in taxes?

Taxes, yes.

In taxes, as you can see, we have because of the merger of Helm and CorpBanca in Colombia, we have generated goodwill and other intangibles, and as you remember, this goodwill generated a tax benefit for us in Colombia. So on a consolidated basis, I have an amortization of deferred tax asset in Colombia that does not affect the consolidated results. So that was [around $10 million] for last year. We do expect to have the same benefit for this year, but probably this benefit will end by the end of 2018. So you do see us with a lower effective tax rate. For last year, it was a little bit lower when adjusted by the investment hedging effect, which is important to adjust, but we do expect this movement to go throughout 2018. After 2018, probably we will convert to a marginal effective tax rate that you have on the [margins].

Sebastian Gallego, Credicorp Capital.

I have three questions, if I may. The first one, going back to OpEx and the expectation going forward of our cost to income ratio, what are your expectations on total OpEx growth for this year. I know you mentioned administrative cost, but I just want to get a sense on the total account. The second question is regarding Colombia. The question is, when do you guys expect to see a breakeven in terms of profits within that operation and the third one is regarding integration costs, we saw a very different number in this MD&A compared to the one released at the end of 2016, non-recurring events for 2016 was around [$62 billion at the end of 2016 and this quarter it appears to be around $23 billion]. So I'm just trying to get a sense what the integration cost was in 2016 and what can we expect for this year. Thank you.

Hi, Sebastian, let me answer you the first question together with the third one. So in operating efficiency, in terms of efficiency ratio, the main problem in taking a look at the efficiency ratio now with the bank is on the side of the revenues. So if you take a look at the revenue growth on the bank as a whole, we are behind something around 12% of what we had is 2015.

So when taking a look at efficiency ratio, I think that I'm more impacted by the falling revenues than I am on the size of the cost. So at this moment for the bank, I'd like to take a look at operating efficiency and also the ratio just taking a look at what is the growth of my expenses. So when we take a look at both numbers combined, I think that what we are going to see this year is the benefit on the side of the personnel expenses. So as you saw, we have a 7% reduction because of the headcount, the first synergy that we have from the merger is by integrating management teams and taking a look at all the synergies that we have for the different teams that we have. So that's what the first part that we tackle. So with that, we have a roughly 7% -- 10% less headcount, 7% less expenses.

We think that we're going to maintain the trend. I don't see us reducing headcount in the same way in the past. I think that we have the first impact of the merger, but now we are focusing as I discussed with Jason prior the administrative costs that we think that we are going to reduce by [reducing them], but getting to an increase of around 4% to 5%. So if you take both numbers combined, we kind of having 1% growth on this year. I think that we are going to be on par of this year, it range between 1% and 2%, it's going to be the total growth of our operating expenses, at least this is our expectation, but please keep in mind, I think that most important part is that when you take a look at the market as a whole because if you take a look at what was the CAGR for OpEx growth for the financial system in the last 10 years in Chile, it was something around 10%. For both banks combined, it was something around 12%. So by growing 1%, 2% compared to 10% on the market, the market is not 10% right now because all the other banks are taking a strong look in efficiency, nevertheless, it's something around 5%. So we are gaining about 4% to 5% each year [towards] the market as we implement the synergies.

The integration costs that you mentioned, I think this is a difference in criteria. By talking to some analysts, they wanted us to be more clear of what their motivation costs that we had for the intangibles that were generated by the business combination. So the difference that what we saw in 2016 and what we are now disclosing is the cost that we have for the amortization of intangibles. So remember by integrating both banks we did a mark-to-market of the position of Itau CorpBanca and recognized that as goodwill and other intangibles. Goodwill is not amortized, but all the other intangibles are. So we have [roughly CLP28 billion per year] of expenses (technical difficulty).

Mr. Moura, sorry. We weren't able to understand you there. The line, the sound quality distorted. Could you try again, please?

(technical difficulty).

Mr. Gallego, can you make any sense out of the answer?

Sorry, but I can't hear. The connection is lost.

Sorry, Mr. Gallego, sir, I don't know whether we've lost the speakers. Okay, if you all standby just a moment. Thank you for holding, we're sorry to have keep you waiting, we're just trying to reconnect the speakers. So if you could please standby.

Thank you for continuing to hold. We do apologize for the delay. If you could stay connected, we hope to have the speakers back with you very, very shortly. Thank you everybody for your patience. You have now been rejoined by Claudia, please go ahead.

(multiple speakers). No, not again. I cannot hear you anymore.

No, I can hear you loud and clear, Claudia.

Okay, that I heard, but not previously.

I think your participants will be able to hear you.

Okay.

Thank you, ma'am.

Hello.

Yes, if you could go ahead with your presentation, please.

Okay, Sebastian, are you on the line? Sorry, we had a problem with our call.

(Operator Instructions). Sorry, Gabriel. I don't know whether he's disconnected, but he's not coming back through with his question. I'm sorry, he's just come through now. Sebastian, your line is reopened. Thank you.

Hi, Gabriel. Sorry for the inconvenience. Your answer on (multiple speakers).

No problem, we had a problem here. So (technical difficulty).

Yes, the OpEx question.

Hello?

Can you hear me?

Yes, I can.

Yes, sorry, I was saying that the OpEx question was answered, but unfortunately, the integration costs that you mentioned, the connection was lost, you were explaining about the amortization of intangibles, but the connection then got lost. So we couldn't hear anything.

If you take a look at the managerial report, one of the things that we have included in order to give more transparency to you is the amortization of intangibles generated by the merger of Itau and CorpBanca. We do not consider them as integration cost because these are mainly cash expenditures and they weren't generated by the cash acquisition of (inaudible). So this is a known cash expense that in order to compare to the other banks, (technical difficulty) in order to give the transparency, but these are non-integration costs per se, they are not included with (technical difficulty) of the integration part for both banks. So, in terms of integration cost, what we had last year was [around $17 million] in integration costs. Most of them were related to (technical difficulty) of the bank.

So most of the movement that we saw in the (technical difficulty) [50%] of the integration cost we had, those were related to personnel expenses. We still knew the [$85 million] integration costs (technical difficulty), that we are probably going to consume this year for the merger. So, the main difference here is the amortization of intangibles probably of what we are seeing in the disclosure but we have [the marketing terms] as integration costs. In terms of Colombia, breakeven, we were expecting Colombia to be breakeven this year. We are running a little bit behind in our expectations in Colombia, because of the tax reform and also because of lower development than what we expecting, I think that it might be a little bit on the negative side, but very close to breakeven. I believe this is the expectation we have for 2017. In order to achieve the ROE target, what we have for Colombia, I think it will take two more years in order for us to see the bank at those levels. That was pretty much it.

All right, thank you, Gabriel.

And I do apologize for getting disconnected.

And as there are no further questions for your Gabriel, I shall pass the floor back to you for closing remarks.

Okay, thank you so much everyone for one more conference call for Itau CorpBanca. We are in the process of creating a bank and give you more information and be very transparent to our results, how we calculate them, our governance there. You can take a look at the MD&A that we posted in our website. I think that you are going to see very good and detailed information and analysis for the bank and we can discuss with you on the many meetings that we have on the next few months and we going to update you on the conference call for the second quarter. So, thank you so much for participating and I'm sorry again for the disconnecting on the line sorry.

Thank you very much indeed and with many thanks to both our speakers today, that does conclude our conference. Thank you all for participating and you may now disconnect. Thank you Mr. Moura, Mr. Labbe.

Thank you.