Banco Santander-Chile Sponsored ADR Aktie

Ladies and gentlemen, thank you for standing by and I would like to welcome you to Banco Santander-Chile's Third Quarter 2026 Earnings Conference Call on the 4th of November 2026. [Operator Instructions]

So with this, I would now like to pass the line to Patricia Perez, the Chief Financial Officer. Please go ahead.

Good morning, everyone, and thank you for joining us today. I'm Patricia Perez, CFO of Banco Santander-Chile and I'm joined by Cristian Vicuna, Head of Strategy and Investor Relations; and Andres Sansone, Chief Economist. The third quarter confirms the resilience of our franchise. We delivered strong year-to-date profitability despite low inflation in the quarter, while maintaining disciplined cost management, stable capital and positive commercial momentum. Andres will begin with an overview of the economic and regulatory environment. Cristian will then discuss our strategy, third quarter results and initial guidance for 2027. We will conclude with a Q&A session.

With that, let me turn it over to Andres.

Thank you, Patricia. Let me start with the macro environment. The third quarter took place against a demanding external backdrop. The conflict in the Middle East kept energy prices high, particularly diesel, where refining capacity remains tight, while higher food and freight costs pushed up the price of imported goods. Major central banks maintain a restrictive bias and global long-term rates rose. The 10-year U.S. Treasury yield is up around 90 basis points this year and local long-term rates moved in line. Even so, Chile's sovereign spreads remain contained and copper continued to provide important support to the external accounts.

Domestically, activity has been weak through 2026 for 2 main reasons. First, mining fell to its lowest level since 1996 in August due to lower ore grades, maintenance and weather. We now expect mining output to contract by 6% -- 8% this year against the 2% increase we expected at the start of the year, which explains 1.4 to 1.7 percentage points of the growth downgrade, including spillovers. Second, the oil shock passed through quickly to domestic fuel prices, reducing disposable income and weighing on expectations. Nonmining activity has remained broadly stagnant since the end of 2025 and the labor market has deteriorated. As a result, we expect flat GDP growth in 2026. For 2027, we expect a recovery to 3.5% with investment as a main driver.

Chile has not lost its productive capacity. The normalization of mining and low base alone should take growth above 2%. On top of that, the pipeline of large investment projects has been revised up for 2027 and 2028 and the reconstruction law should reinforce this through a lower corporate tax rate and faster permitting. We expect gross fixed capital formation to grow by more than 5%. Consumption should recover more gradually as employment and real wages lag the recovery in activity. On inflation, annual CPI stood at 4.1% in September, while core inflation, excluding volatile items, is to 3.2%, consistent with weaker domestic demand. Higher fuel and food prices together with a weaker peso should lift headline inflation to around 5.5% by the end of 2026 before it returns to target during 2027. We expect the monetary policy rate to remain at 4.5% through 2027 with inflation still elevated. There is little room for cuts and risks are tilted towards a tighter path if the energy shocks persist or inflation expectations drift away from 3%.

Turning to the regulatory environment. The National Reconstruction and Economic and Social Development Law was published on October 17 this year. Its measure will phase in gradually between November 2026 and 2029. At its core is a tax agenda aimed at boosting investment, improving competitiveness and supporting the economic recovery. The corporate tax rate will reduce gradually from 27% to 23% in 2029. And the tax system will be fully reintegrated from 2027, simplifying the tax structure and lowering the cost of capital. The law also streamlines permitting procedures, investment benefits and property tax exemption for senior citizens and a special fund to rebuild areas affected by wildfires. Over time, these initiatives should contribute to higher private investment, improved business confidence and stronger economic activity and a recovery in commercial loan demand.

For households, the purchase of new homes with final municipal approval will be exempt from VAT for 12 months from December 1. This should help absorb the existing housing stock of more than 100,000 new homes, support real estate and construction activity and improve access to housing, creating a more supportive environment for mortgage origination. The mortgage interest rate subsidy program also continues to support housing demand. It offers a rate subsidy of up to 60 basis points. And together with the FOGAES state guarantee, the total reduction in the mortgage rate can reach up to 100 basis points. In 2026, the program was expanded from 50,000 to 80,000 subsidies and the maximum eligible home value was raised from 4,000 to 6,000 UF.

According to the ABIF, as of 25 September 2026, more than 100,000 eligible applications have received commercial approval and more than 33,000 mortgages have been granted. The second important development is the capital markets and home financing reform or MK4, which was sent to Congress on 9 September 2026. It includes more than 30 measures across 4 pillars: access to housing and saving, financing for companies of all sizes, modernizing financial regulation and strengthening Chile as a regional finance center. Key measures include FONAVI, a state-backed housing fund administered by BancoEstado. It will issue state guaranteed bonds to buy mortgages of up to 6,000 UF originated by banks through competitive tender with bank retaining servicing and a first-loss tranches.

FONAVI is intended to foster the markets -- market but so far, we see relevant uncertainty regarding final impact with current first loss and material risk transfer treatments. The bill also includes a voluntary housing saving scheme in which the state adds 3% of the home's value for the households that save 7% and a junior segment on the stock exchange for emerging and mining exploration companies. In addition, it eliminates the 4% withholding tax on interest paid to nonresident investors in qualifying fixed income instruments. Also extends the tax exemption to funding from foreign banks and allows insurance coverage to be incorporated into the framework for payment fraud.

With that, let me hand over to Cristian.

Thank you, Andres. So now let me walk you through our strategy, how we performed in the third quarter of 2026 and have a first glance of what we expect for 2027. So our strategic ambition remains unchanged. We want to become a digital bank with a physical presence, combining scalable digital capabilities with the proximity and advice of our WorkCafé network. Our strategy is organized around 3 pillars: Think Customer means offering the best value proposition across segments, attracting more customers, improving Net Promoter Scores and increasing our share of wallet. Our ambition is to serve over 3.5 million active customers, including 400,000 small- and medium-sized companies.

Think Global is about accelerating our digital transformation through global platforms and an AI-powered operating model. This enables a better digital experience, faster deployment of capabilities and a greater productivity and efficiency. Think Value focuses on converting our customer franchise and efficient operating model into strong, sustainable returns. We continue to prioritize high-quality revenues, recurring income streams, trading capabilities, long-term ROE above 20% and a dividend payout of 60% to 70%. Furthermore, in September, we announced our investment plan for the next 3 year of $450 million for technology and branch renewal. This will allow for a deeper use of technology and data to improve the customer experience and simplify processes as well as the continued evolution of our branch network and WorkCafés.

This strategy is supported by 5 complementary global business lines: Retail and Commercial, Corporate and Investment Banking, Wealth Management and Insurance, Consumer Banking and payments through Getnet. Retail and Commercial remains the core of our franchise. Our focus is on simplifying products and processes while continuing to scale our WorkCafé model. Corporate and Investment Banking adds strength in advisory, FX and transactional banking capabilities with a clear focus on sustainable solutions and capital optimization. Wealth Management and Insurance strengthens our advisory-led model, renews our private banking proposition and reinforces our position in insurance and mutual funds. Consumer Banking supports our leadership in auto financing, including new and electric vehicles while also expanding our presence in used car financing.

And through Getnet, our payment business is helping us reach new client segments with value-added services and simple bundled solutions. Retail, which includes the bulk of our individual clients remains the backbone of the balance sheet, representing 66% of loans, 48% of deposits and 69% of margins. At the same time, we have meaningful contributions from CIB, payments, wealth into the fee business. The diversified mix, combined with AI-enabled global platforms reinforces scale, efficiency and revenue diversification. Our progress continues to receive external recognition. Euromoney names us Best Bank in Chile, Best Banks for ESG and Best Bank for SMEs in 2026. We were also recognized as Bank of the Year by LatinFinance and Best Bank in Chile by The Banker last year, while Global Finance names us Best Bank for SMEs in 2025. Our annual report was recognized among the best in the MSCI Nuam Index companies in Chile, Peru and Colombia.

In sustainability, our MSCI ESG rating improved to AAA. We remain the first Chilean bank included in the Dow Jones Best-in-class World Index and Sustainalytics continued to classified us as low risk. The Santander Arena has been another milestone this year. Since September 2026, our brand has held the naming rights to Chile's 15,000-seat arena at Parque O'Higgins. This strengthens brand visibility and creates additional opportunities to connect customers with our payment and digital ecosystem.

Let me now turn to profitability and returns. For the first 9 months, attributable net income reached CLP 892.8 billion, increasing 12% year-on-year. Return over average equity was 29 -- 19.1% in the quarter and 24.5% year-to-date. Net income attributable to shareholders reached CLP 237.1 billion in the third quarter. This was 38% lower quarter-on-quarter, reflecting the normalization of inflation after the exceptionally high UF variation in the second quarter and 4% lower year-on-year. So even with quarterly UF variation of only 0.58%, the bank maintains solid profitability while year-to-date returns remained above our target.

On the balance sheet, this was a very encouraging quarter. After several periods of subdued loan growth, lending pick up led by commercial and auto loans, while customer funds grew even faster. Total loans, which include our loan book at amortized cost and at fair value through OCI reached CLP 48.8 trillion, up 2.3% Q-on-Q and 3.9% year-to-date. The highlight was commercial lending, which grew 4% in the quarter and 5.2% year-to-date, a clear sign that business demand is picking up. Mortgage grew 1.8% on the quarter and 4.5% year-to-date, while auto loans also kept up their good momentum, rising 1.3% on the quarter and 6.3% year-to-date. In consumer lending, installment loans grew 1%, while total consumer loans raised 0.5% Q-on-Q, mainly reflecting a 3.5% reduction in credit card balances.

On the funding side, deposits grew faster than loans, reflecting healthy customer dynamics. Total deposits reached CLP 33.3 trillion, up 2.8% Q-on-Q and 9% year-to-date, driven by 5.6% growth in time deposits, while demand deposits declined slightly 0.8%. Mutual funds also performed strongly, reaching CLP 16.8 trillion, up 5.5% Q-on-Q and 15.5% year-to-date. As a result, total customer funds reached CLP 50.1 trillion, increasing 3.7% in the quarter and 11.1% over the last year. Liquidity remains strong with a liquidity coverage ratio of 172% and a net stable funding ratio of 117%, both well above the regulatory minimum of 100%.

Turning on to interest income and margins. Year-to-date NIM remains strong at 4.1%, 10 basis points higher year-on-year. During the first 9 months, net interest income from interest and readjustments reached CLP 1.62 trillion, increasing 7% year-on-year. Net interest income grew 4.5%, while net readjustment income increased 21.8%. We can see here on the graph on the left, how our NIM follows the path of inflation. Q-on-Q, net interest income from interest and readjustment declined 18.1%, mainly reflecting the normalization of the UF variation from 2.46% in the second quarter to 0.58% in the third quarter. The quarterly NIM consequently declined from 4.7% to 3.8%. Overall, the bank preserved a solid 4.1% year-to-date NIM despite substantial quarterly volatility in inflation.

Looking at the second graph, we can see how the mix of funding has been improving with a 5.5% year-on-year increase in our demand deposits that do not pay any interest at 19.9% in our time deposits that pay the monetary policy rate minus a spread. Meanwhile, we have been reducing our bond portfolio, where the majority is in UF with a longer duration. This is in response to our inflation expectations and also part of our loan book where we see -- where we expect to see stronger growth in the near future. On Slide 14, customer acquisition remained positive, although slower transactionality at this point in the cycle temporarily affected fee growth. We reached 4.9 million total clients and 2.7 million active clients. Total customers increased 7% year-on-year and active customers increased 2% with 55% of total clients now active. Checking accounts increased 5% year-on-year. Credit card transactions rose 7% and mutual fund assets under management increased 10.1%. We also had 378,000 business current accounts.

Year-to-date fees totaled CLP 422 billion, decreasing 3% year-on-year. Asset management and insurance fees grew 13%, partially offsetting weaker payments and card fees. Results from financial transactions reached CLP 216.8 billion, up 0.6% year-on-year. In the quarter, fees declined 7% and results from financial transactions decreased 13%, reflecting a softer transactionality with more competition in the payment markets and a more moderate market environment. Efficiency continues to be a clear competitive strength. Our efficiency ratio was 33% year-to-date, 290 basis points better than a year ago and the bank remained the most efficient in Chile based on industry figures available as of August 2026. Operating expenses decreased 4.2% year-on-year, while core expenses declined 1.3%. Personnel expenses increased 3.4% but this was more than offset by a 5.5% reduction in administrative expenses and lower other operating expenses.

As a reminder, in 2025, we have migrated our legacy core servers to cloud servers and so our administrative expenses were inflated in the first semester of 2025 with both servers running in parallel. Our recurrence ratio was 60.8%, meaning that fees generated from clients represented more than 60% of our core expenses. The branch network now totals 219 locations, including 94 WorkCafés, 115 traditional branches and 10 other locations. This reflects the continued transformation of our distribution model. On the asset quality on Slide 16, cost of risk remained stable with year-to-date cost of risk at 1.4% compared with 1.39% in the same period last year. During 2026, risk levels have shown a trend towards normalization, although with some isolated cases in the commercial loan portfolio. Following the increase in nonperforming loans and impaired portfolios observed in previous years in a context of lower economic activity and weakening labor market, asset quality indicators have begun to stabilize with the NPL ratio at 3.5% and the impaired ratio at 7.4%.

Capital remains stable and the regulatory environment is evolving positively. Our capital adequacy stood at 16.3% and CET1 at 10.9% as of September 2026. This includes a provision for distributing 70% of 2026 earnings as dividends. CET1 remained above the 2026 minimum requirement of 9.08%. Risk-weighted assets were concentrated 70% in credit risk, 18% in market risk and 12% in operational risk with a risk-weighted asset density of 58%. The new regulatory model for market risk-weighted asset was published in the third quarter. Banks may opt to use the duration model for interest rate risk and we estimate a positive impact from the new framework. Looking ahead, we are also monitoring the regulation for internal credit risk models and potential changes to the D-SIB charges under the market capital IV reform.

To conclude, let me present our expectations for the coming periods. Firstly, we reaffirm our guidance of an return on average equity of more than 24% for 2026. This incorporates the one-off expense related to the reevaluation of our deferred tax assets due to the upcoming changes in the corporate tax rate, where we expect to incur in an expense of around CLP 40 billion. With our return over average equity year-to-date of 24.5%, we are confident on reaching our target. For 2027, we assume a GDP growth of 3.5% and a UF variation of 3.1%, which the monetary policy rate should remain at 4.5%. Against that backdrop, we expect loan growth of 6% to 7%, driven by commercial lending, where we have already begun to see early signs of reactivation of demand.

With the normalized inflation environment, we should see net interest margins of around 4%. Noninterest income should grow in the mid- to high single digits and we expect efficiency to remain in the low 30s with a stable cost of risk. This should lead to an ROAE of an initial guidance between 22% and 24% for 2027. The main drivers are a more supportive growth environment, improving commercial demand, a diversified revenue base and continued operating discipline. At the same time, we will maintain a prudent approach to risk and capital allocation.

With that, I will conclude the presentation. Thank you very much for your attention and we will now be happy to take your questions.

[Operator Instructions] Our first question comes from Daniel Ardila from Credicorp Capital.

I have a couple of questions. The first one is regarding loan growth. You have lost market share on a year-to-date basis. What has driven this performance? And how should we think about loan growth going forward? Do you expect to regain market share? Or will competitive pressures keep grow broadly in line with the -- in the industry level? That will be my first question. And the second one is regarding fees and Getnet. So fees have declined sequentially again and mainly due to payments and Getnet. Can you please elaborate a little bit more on the competitive environment of this industry? If you think that competition has stabilized? Or should we expect further pressures in the coming quarters for payment fees?

Daniel, thank you for your questions. I will pass the word to Patricia for the loan growth expectations and I'll take the fee question.

Thanks, Daniel, for your question. Regarding loan growth, we are -- as Cristian already mentioned in the presentation, we are already started to see early signs of the lending recovery we have been discussing throughout the year. As we mentioned, loan growth grew during the quarter, 2.3% with the commercial loans leading that improvement, increasing 4% during the quarter and 5.2% year-to-date. Mortgages have been growing as well above inflation. And on the commercial side -- commercial lending, consumer -- sorry, remains the weaker part of the portfolio. And in that sense, auto loans is the outlier, right, with a strong performance during the year with a improvement of 6.3% year-to-date. This is consistent with our view of a gradual and sequential recovery of the loan growth. Going forward, we are expecting the same trend with commercial lending leading that improvement, right? So as we already shown, we are expecting mid- to high single digits in terms of loan growth for next year, in line with the recovery of the economy for next year.

Yes. To complement a bit, we saw a milder first half of this year, which was expected. And we're seeing a final part of the year with stronger dynamics with what was also the path that we were seeing for the year. So all in all, we have increased the distance with our most closer peer. So I think the first position in the Chilean industry is still safely on our side. So regarding the fees, what we're seeing is a weakness that is concentrated in specific transactional categories related to the payment business. So the 2 main things that are not performing as expected this year are the card business where we saw a quite an impact of the high oil prices in consumer demand and domestic demand in Chile linked also to a weaker labor market, right?

And the second part is a very intense competition in the acquiring business, mostly from the large incumbents and the newcomers that we are seeing. So there is a price competition happening and at the same time that there is also a customer competition happening, right? So we are optimistic on the positioning of Getnet in this environment. We have nearly 300,000 POSs and above 240,000 merchants. And we think that most of the impact we are seeing, it's going to not be present next year. So with all that, we are still seeing good dynamics in the wealth management and insurance and the cash management and advisory businesses that provide us with a good backbone for the expectations for next year, right? To give you an example, asset management and insurance have increased 7% in the third quarter and 4% Q-on-Q. And current account and collection fees are growing 3.4% year-over-year in the third quarter. So we're guiding mid- to high single-digit growth for next year in fees plus financial transactions. I hope this gives you a little bit of flavor here.

Perfect. Very clear. If I may, I -- just one follow-up question regarding loan growth. Beyond the guidance that you already provide, I would like to understand the competitive landscape here. You're mentioning that especially commercial loan growth has started to pick up but I would like to understand if we are going to see an industry in which there's growth for every bank in the industry? Or should we see a lot of competitive pressures in the best tickets and resulting in that, we could see pressures in margins or spreads in that loan growth?

So we -- that's the scenario that we have been seeing for the last 2 years, right? So little demand and very tight spreads, especially in the best names, right? So the competition is already there. What we are seeing for next year is that the picking up of the economy dynamics and the implementation of all the stockpile of projects that Andres commented in the macro view will create relevant demand for -- from the commercial portfolio. And I think that there's going to be enough for the full industry to grow. So we expect a slightly reduced competition to what we have been seeing in the last 2 years.

Our next question comes from Neha Agarwala from HSBC.

Just wanted to check on -- it's good to get a very strong guidance for '27. What are the key areas of risk or downside risk that you -- in your view, you see for 2027? And what could be the catalyst for providing upside to the numbers that you already have stated? So just wanted to understand both the upside and downside risk that you have in mind as you give the 2027 guidance.

Neha , thank you for your question and comments. So in general terms, the main sources of risks that we are seeing in the last year and that we are expecting also to be the case for next year are coming from the external scenario, right? So the uncertainty that was created in the market dynamics because of high oil prices are things to monitor. Also, the long-term levels of rates from the international environment is also something that it's a risk scenario. The other things that we are seeing as increasing sources of uncertainty are the effects of the El Nino in the Chilean economy. So we have seen a very abnormal distribution of the rains in the geography and in the different seasons.

And the other things that I think are potential upside risks are coming from the pickup of the economy. So we're guiding a 3.5% GDP expansion and a 6% to 7% loan growth environment. But if the mortgage and real estate markets start gaining early traction and the effects of the reforms that the government has already approved and is discussing in Congress start picking up some momentum, there could be a case for stronger growth and a better loan expansion for the industry. So I believe that those are the alternative or the best scenarios that we are not incorporating in our initial guidance.

Very helpful. Any update on the -- any regulatory changes that we should note for 2027 that could impact the numbers?

So far, there's already in the numbers, the reduction in the corporate rate. We also commented on the changes that have already been made into the risk-weighted assets market risk. That's going to be positive for our capital and we expect the changes to be implemented potentially in the first months of next year. There's the discussion on the capital markets reform that Andres discussed. There are some interesting things that are aimed towards the financial markets. I believe that the reduction of the stamp tax and duties on overseas issuances from financial corporations could provide a boost for the industry. And well, there's also this discussion on the reform package to foster the mortgage market and the first homeownership that the government is pushing for but yet -- that is yet to be finished in Congress. So we are not quite certain yet on the final details on how that is going to impact us.

Our next question comes from Juliana Ohara from Goldman Sachs.

I just have 2 follow-ups. The first one is, I believe the last sensitivity you gave for inflation was a 15 bps impact in the NIM for every 100 bps change in inflation. But next year, you're guiding for only a 10 bps change in NIM, if I'm not mistaken with a much lower inflation. So I was wondering if you could share the updated sensitivity and what you're seeing as the offsets for keeping the NIM at a higher place. And also, I was wondering if you could share the -- what you're seeing for the tax rate next year because you already have a lower tax rate than the tax reform presents. And if you're -- you already -- you can already quantify what would the benefit be -- what would the impact be if you need to charge a one-off impact next quarter?

Thanks, for your question, Juliana. Regarding NIM and inflation sensitivity, during this year, we have had a UF gap position of around $8 billion. And for next year, we are aiming more or less the same sensitivity or the same position, right? So the sensitivity for next year will keep being 15 basis points to 100 basis points of inflation movement. So -- and the driver that improves the NIM to 4%, given the lower inflation we are expecting for next year is the loan growth, right? So for next year, we are expecting mid- to high single digits. This year will be roughly 4% to 5%. So that is the main driver for the improvement, assuming a monetary policy that remains stable at 4.5%, as Andres already discussed.

And regarding the tax question, so the first part of the question was how it's going to be the impact of the reduction in the corporate tax rate for next year. So the statutory tax rate decreases from 27% to 25.5% next year. So on the one hand, we will have a positive impact because of the lower corporate tax rate. At the same time, we're expecting a slightly milder inflation scenario for next year. So for next year, we're expecting that the net effects are pretty much countered between those 2. So we should be -- we should remain at levels similar to what we are currently delivering or slightly higher but not something very material.

In the long run, when all the effects are accounted for and the corporate tax rate reduces to 23%, in normal 3% year scenarios, we should be on the high teens of effective tax rate for the bank. And regarding the impact of this corporate tax rate in the fourth quarter financials, we are going to be seeing in October onetime noncash accounting effect of approximately CLP 40 billion in P&L in the tax line and a little change of about CLP 5 billion in other comprehensive income in -- that's going to take place this month. So over the long term, of course, the lower tax rate is a positive for earnings and consistent with the pro-investment agenda of the reform. But because we have a relevant position in terms of deferred tax assets, we need to reassess the net present value of those tax assets with the path of corporate tax rate reductions that we are seeing. And that's what's going to impact this fourth quarter. Let me reinforce here that this is a noncash accounting effect.

Super clear. I just have one follow-up maybe for Patricia on the NIM. So -- but I was just wondering if even with the loan growth, given the loan growth should be stronger with corporate loans that usually carry a lower spread, do you think that would present some additional pressures to the NIM?

I mean the growth that we are targeting for next year is quite balanced between corporate, commercial, considering the whole part of those segments, medium to large companies and mortgages in the individual part, we think that we -- it's enough to offset the potential drag in inflation for next year.

Part of the better performance in NIM that we have been delivering this year is because of the improvement that we've been able to implement in the funding side, right? So if you look at the year-over-year growth of our demand deposits, it has been 5.5%. So that's been stronger than our loan growth. And also at the same time, there has been an uptick in the time deposit portfolio at the expense of the bond portfolio, which tends to be slightly more expensive in terms of rates. So all in all, there has been a better performance of the funding side that's allowing us to sustain the interest margins.

And just to complement, liquidity ratios remain quite above the minimum. So we have an LCR as of September '26 of 172% and an NSFR of almost 117%. So we have room for improving and optimizing our funding mix within the balance sheet.

[Operator Instructions] Our next question comes from Yuri Fernandes from JPMorgan.

I have one on the guidance also on cost of risk being stable. I think stable means maybe the 1.4%, right, that we are seeing now around the 1.4%. My question is, what is driving that? Because the economy looks better, right? The GDP, as you put out, like 3.5%, inflation is moving lower. So my question is, are you being conservative on your cost of risk? Or is this just you, I don't know, increasing the coverage back to a higher level than the levels we are seeing on the coverage ratio now and then you are just building more provisions? Or no, you still have some impaired loans for you to provision? Just trying to understand because I know 1.4%, 1.3% like those levels of cost of risk for historical standards, they look a little bit higher than the numbers you used to have in the past. So just trying to understand if this is maybe a potential upside risk for your [indiscernible].

Thank you, Yuri, for the question. No, we're not seeing a potential upward risk. We are being -- if you ask me, a bit on the more conservative side. We haven't seen any sector-specific problems. It's more -- the story this year has been some additional provisioning on names that we have already seen struggling. But all in all, I'll say that when you compare our positioning to -- of the balance sheet to what we had some years ago, to your point, there is a more retail portfolio that will structurally will demand some slightly higher cost of risk. So we don't see going back to levels of 1.1s, so maybe 1.2s in the long run. I think that's the area where we are aiming for. We tend to expect some improvement in NPLs next year but we are still thinking of 1.35% to 1.4% area, which is where we have been in the last 2 to 3 quarters. on average.

[Operator Instructions] I'm not seeing any more questions. So perhaps I can hand it back to the Santander-Chile's team for the closing remarks.

Thank you all very much for taking the time to participate in today's call. We look forward to speaking with you again soon.

Thank you, everybody.

Thank you and have a nice day.

Ladies and gentlemen, thank you for standing by, and I would like to welcome you to Banco Santander-Chile's Second Quarter 2026 Earnings Conference Call on August 5, 2026. [Operator Instructions].

So with this, I would now like to pass the line to Patricia Perez, the Chief Financial Officer. Please go ahead.

Good morning, everyone, and thank you for joining us today. I'm Patricia Perez, CFO of Banco Santander-Chile, and I'm joined by Cristian Vicuna, Head of Strategy and Investor Relations; and Andres Sansone, Chief Economist.

This quarter reinforces the strength of our franchise, high profitability, disciplined cost management and a solid capital position, while we continue to execute our strategy to deliver a simpler and enhanced value proposition to customers with a focus on sustainable growth and shareholder returns.

First, Andres will give you an overview of the economic and regulatory environment. Cristian will then walk you through our strategy, our second quarter results and our updated view for 2026. Finally, we will conclude with a Q&A session.

With that, let me turn it over to Andres Sansone.

Thanks, Patricia. Let me start with the big picture. Since our last webcast, the global backdrop has remained complex. External inflationary pressures remain with geopolitical tensions driving oil prices and the inflationary scenario for Chile. At the same time, long-term rates have moved higher and expectations for monetary policy abroad have shifted upward, leaving global financial conditions less supportive.

For Chile, this has translated into a weaker peso, around CLP 930 per dollar during the last month and renewed pressures on short-term inflation. Locally, the June CPI was flat month-on-month, but still above expectation, bringing annual inflation to 4.3%, with the surprise mainly concentrated on food. Short-term inflation expectations have increased, and now we expect a variation of 4.4% in 2026 in the UF, although the 2-year expectations remain anchored at 3%.

On activity, the economy continued to lose momentum during the first half of the year. The weakness has been concentrated in 3 areas: First, supply shocks in natural resources sectors, particularly mining and fishing. Second, the impact of higher oil and fuel prices on household disposable income. And third, a slower-than-expected recovery in construction. Beyond these 3 factors, the labor market has also weakened with seasonal adjusted unemployment rising to 9.3%.

Looking ahead, activity should improve gradually, mining production faces a more favorable comparison base in the coming months. The mining and energy investment pipeline remains solid and the recent fall in fuel prices should help restore part of the disposable income lost during the oil shock. Pro-growth reforms, if approved and effectively implemented, can lift the country's potential growth over the medium term.

Based on this information, our economic team has revised down its 2026 growth forecast with the economy now expected to expand close to 1% this year, although the outlook for 2027 remains more constructive, supported by investment and a low comparison base. In this context, we continue to expect the central bank to keep the policy rate at 4.5% for an extended period. And overall, the message is that the inflation risks have increased again, while activity, although improving at the margin, will remain weak this year, making the macro scenario more challenging and calling for a more cautious monetary policy stance.

Now turning to the regulatory and policy environment on Slide 5. The main development is the completion of the National Reconstruction Plan bill passage through Congress. Yesterday, the senate approved the last outstanding provision. The bill is therefore now ready for enactment. The bill includes several pro market initiatives aimed at reactivating growth. On the business and investment side, the most relevant measures are the gradual reduction in the corporate tax rate from 27% to 23% between 2027 and 2029, the integration of the tax system, investment incentives and tax stability, faster permitting process and reconstruction spend. We believe these measures should support private investment, improve business confidence and strengthen economic activity over time. Moreover, the bill includes household support measures such as the temporary VAT exemption on new homes, housing reconstruction programs and improved housing affordability and employment support. If these are implemented effectively, these measures should support housing demand, mortgage origination and consumer activity.

Complementing this, the government has just submitted a bill to extend and expand the mortgage interest rate subsidy and the FOGAES state guarantee for first home purchases. The proposal raises the number of subsidies from 50,000 to 80,000, also lift the maximum value of eligible new homes from USD 4,000 to USD 6,000 and extend the program until May 2026.

Combined with the temporary VAT exemption on new homes, this should improve affordability for middle-income households, help absorb the stock of more than 100,000 unsold units and therefore, has the potential to support mortgage origination and a recovery in the construction sector.

In addition, we continue to monitor other regulatory relevant changes, including the repos and securitization law, the proposed model for market risk-weighted assets and the advances toward internal models for credit risk.

With that, let me hand over to Christian.

Thank you, Andres. I will now walk you through our strategy, our second quarter 2026 results and our outlook for the rest of the year.

Let me start with the strategy. At the center of what we do is a clear ambition to become a digital bank with a physical presence, leveraging our Work Cafe branches to combine the convenience of the scale and the digital banking with advice, service and proximity for our customers, leveraging the support of the Santander Group and its global platforms. We organize this around 3 pillars: First, think customer. We aim to offer the best value proposition to all our customer segments, grow active customers, increase transactionality and deepen loyalty. We aim to serve over 3.5 million active customers, and we continue to see room to improve the customer experience, raise NPS and capture a greater share of wallet, especially in higher-value segments.

Second, think global. We are accelerating our digital transformation through global platforms and an AI-enabled operating model. This allows us to simplify processes, improve the digital experience, deploy capabilities faster and operate with greater agility, productivity and efficiency in an increasingly dynamic environment.

Third, think value. Our goal here is to translate the strong customer franchise and an efficient operating model into recurring high-quality profitability. This means continuing to diversify revenues, leveraging other income streams while maintaining a strong focus on returns and capital discipline.

Overall, our strategy is designed to grow customers and loyalty, increase transactionality, improve the quality of revenues and as a result, deliver sustainable returns and an attractive payout to shareholders. This strategy is supported by a diversified platform with 5 complementary business lines. Retail and Commercial remains the core of the franchise, where we are simplifying products and processes and continuing to build on the Work Cafe model. Corporate and Investment Banking adds strength in advisory, FX and transactional banking capabilities with a clear focus on sustainable solutions and capital optimization. Wealth Management and Insurance strengthens our advisory-led model, renews our private banking proposition and reinforces our position in insurance and mutual funds. Consumer Banking supports our leadership in auto financing, including new and electric vehicles, while also expanding our presence in used car financing. And through Getnet, our payment business is helping us reach new client segments with value-added services and simple bundled solutions.

Retail remains the backbone of the balance sheet, representing 66% of loans, 48% of deposits and 69% of the margin. At the same time, we have meaningful contributions from CIB payments, Wealth into the fee business. The Santander Global platforms are helping us connect this business effectively, improve efficiency and diversify revenues. That supports stable profitability through the cycle and reinforces our ability to deliver attractive shareholders' returns.

Before we move on, I want to pause for a moment on something we are genuinely proud of, the external recognition our work has earned over the past year. It is a strong reflection of the progress we have made for our customers. Starting on the left with our awards and recognitions. Recently, Euromoney named us Best Bank in Chile, Best Bank for ESG and Best Bank for SMEs for 2026, 3 of their most important categories in a single year. This is in addition to the recognitions last year from LatinFinance and The Banker where we were awarded the Best Bank in Chile for 2025 and Global Finance awarded us Best Bank for SMEs in 2025.

On the right, our ESG ratings and index inclusions tell a complementary story. For the first time, this year, we were included in the Dow Jones Best-in-Class World Index. This is an outstanding achievement being the only Chilean bank to qualify for the World Index. Furthermore, we hold an MSCI ESG rating of AA and a Sustainalytics' Risk Rating of 15.4 of low risk. These are independent rigorous assessment, but they confirm that the way we grow matter to us.

We also wanted to briefly comment on an announcement we made last week. Santander is taking the naming rights of one of Chile's most iconic venues. From September, the 15,000-seat arena at the Parque O'Higgins becomes Santander Arena. This venue is ranked by Pollstar among the top 3 venues in the world by annual attendance. More than just brand recognition, this move allows us to connect with clients and potential clients in a highly engaging setting. We can leverage our payment capabilities with simple services and easy digital onboarding, offering concert goers relevant accessible solutions on the spot. This is a current example of the different ways we are implementing our strategy to become a digital bank and focusing on our customer needs and value creation.

Let me now move to our financial performance on Slide 11. The second quarter showed exceptionally strong profitability, supported by the particularly high inflation in the quarter and continued execution of our strategy. Net income attributable to shareholders reached over CLP 382.6 billion in the quarter, increasing 40% Q-on-Q and also 40% year-on-year. This translated into a return of average equity of 31.5% in the quarter and 27.2% year-to-date. This quarter demonstrates the earning power of the bank when revenue tailwinds combined with strong efficiency and disciplined risk management happens.

On Slide 12, looking at the balance sheet, we saw better loan growth dynamics in the quarter, while customer funds also increased. Total loans reached CLP 41.4 trillion, up 1.2% year-to-date and 1.3% quarter-on-quarter. Mortgage loans grew 2.0% in the quarter, in part due to the impact of higher inflation, but also due to better new origination trends. Commercial loans increased 1.3%, where we saw a significant improvement in demand from our clients. Consumer lending overall was relatively stable with some pressure in credit cards and installment loans in part due to better liquidity for our clients in the quarter. On the other hand, auto loans continued to shine, growing 1.8% in the quarter and 4.9% year-to-date.

On the funding side, total deposits reached CLP 32.4 trillion, increasing 6% year-to-date and 4.5% Q-on-Q. This was mainly driven by time deposits, which grew 11.8% year-to-date and 7% on the quarter. And it is worth mentioning the better growth of demand deposits during the quarter. Demand for mutual funds remained strong and therefore, total customer funds reached CLP 48.3 trillion, up 7.1% year-to-date and 4% on the quarter. Liquidity remains strong, comfortably above regulatory requirements.

On Slide 13, we can see our net interest income and margins. In the first 6 months of 2026, combined net income from interest and readjustments reached CLP 1.11 trillion, increasing 7.4% year-on-year and 27% Q-on-Q, driven by the strong inflation in the second quarter when the UF variation was 2.46%, which supported net readjustment income and drove the quarterly NIM to 4.7%. Meanwhile, the monetary policy rate remained at 4.5% in the quarter. With this, our year-to-date NIM reached 4.3%, up 16 basis points year-on-year and 89 basis points Q-on-Q.

Client activity and expansion of our client base remain a central part of our story. We reached 4.8 million total clients and 2.7 million active clients, meaning that 56% of total clients are active. Total customers increased 7% year-on-year, while active clients increased 1.3% year-on-year. Activity indicators remain positive. Checking accounts increased 6% year-on-year. Credit card transactions increased 11%. Mutual fund assets under management increased 8%, and we now have 519,000 business current accounts.

Fees plus financial transactions reached CLP 452 billion in the first half, growing 4.9% year-on-year. Within this, total fees were broadly stable year-on-year, while results from financial transactions increased 16%, supported by market-related income. In the quarter, we saw lower dynamics coming from lower transactionality and customer demand impacted by oil prices and lower results from financial transactions after a strong quarter driven by demand for market-making products and higher income from portfolio sales.

On Slide 15, efficiency continues to be one of Santander's key differentiator. Our efficiency ratio reached 31.6% in the first half of 2026, positioning us as the most efficient bank in Chile based on the industry information available as of May. Operating expenses decreased 4.3% year-on-year with total core expenses down 3.5%. This continues to reflect the benefits of our digital model, operating discipline and the normalization of technology-related costs after the cloud migration expenses that we had on the beginning of last year. Our recurrence ratio reached 64.1%, meaning that fees generated from clients cover more than 60% of our core expenses. This reflects the benefits of our digital model and ongoing optimization of our branch network, reaching 91 Work Cafes throughout Chile.

On Slide 16, we show an overview of our cost of risk and asset quality. On the asset quality side, trends remain stable. Cost of risk was 1.38% year-to-date, broadly in line with our expected range, and the quarterly cost of risk decreased to 1.22% in the second quarter from 1.55% in the first quarter after the one-off provisioning event in the commercial portfolio at the beginning of the year was subsequently reversed in recent months.

The bank continues to actively manage different parts of the portfolio. NPLs reached 3.4% of loans, while impaired loans reached 7.5% of loans. These indicators show a moderate increase, but the overall trend remains manageable and consistent with the macro environment that we saw on the past quarter.

Capital remains strong. Our BIS ratio stood at 16.4% and the CET1 at 11.1% as of June 2026. This places our CET1 ratio around 200 basis points above the regulatory minimum of 9.08% for 2026. Risk-weighted assets remain mainly concentrated in credit risk, which accounts for around 70% of total risk-weighted assets, while market risk represents 18% and operational risk 12%. The risk-weighted asset density stands at 62%.

We also see positive regulatory developments. The proposed new model for market risk-weighted assets would incorporate the duration model for interest rate risk and improve netting of derivative positions used to mitigate interest rate risk. The definitive model is still pending publication, but the direction is positive.

To conclude on Slide 19, let me summarize our updated view for 2026. At the start of the year, our initial target assume mid-single-digit loan growth, NIMs of around 4%, noninterest income growth in the mid- to high single digits and an efficiency ratio in the mid-30s, cost of risk of around 1.3% and a return of average equity between 22% and 24%. Based on our performance so far this year and the updated macro assumptions, we now expect loan growth to remain in the mid-single digits. NIM should be slightly higher around 4.1% for the full year, noninterest income growth in the mid-single digits with efficiency improving further into the low 30s. Our cost of risk should be around 1.35% for the full year. The key change versus the initial view is that higher inflation has supported NIM and profitability, while our efficiency and risk metrics remain solid. At the same time, we remain cautious on the macro backdrop and continue to prioritize profitable growth, asset quality and capital discipline. Considering all this, we are expecting the bank to generate return over average equity of above 24% for this year.

To sum up, Santander Chile delivered a strong set of results with return over average equity above our long-term target, solid customer activity, resilient asset quality. Furthermore, we saw the incipient signs of better loan demand and external factors such as the regulations that are currently under discussion should be positive for the bank coming periods.

With that, I conclude the presentation. Thank you very much for the attention, and we will now be happy to take your questions.

[Operator Instructions] Our first question comes from Ernesto Gabilondo from Bank of America.

Congrats on your results. I have a couple of questions from my side. The first question is on the tax reform. If we assume a normalized inflation of 3% over the next years, how should we think about the evolution of your effective tax rate with the new tax reform? And also, I believe this year, 2026, will be atypical because high inflation is making it to be low. So also if you can comment how are you seeing 2026? And then with the implementation of the tax reform, how it should be evolving in the next 3 years?

And my second question is on your sustainable ROE. So we saw you are improving your ROE guidance to have an ROE above 24% in this year. But you are keeping a long-term ROE guidance of above 20%. So can you walk us through when should we expect a more long-term ROE at the 20% level? Just to have an idea on how should we be thinking about that in the next years.

Thank you, Ernesto, for the questions. So regarding the effective tax rate, there are several things mixed here, right? So the current tax rate in Chile is 27%. And the proposal is going to reduce effective tax rate gradually in a couple of years up to the level of 2023. So the effect is not going to be immediate in terms of the effective tax rate that the bank is going to be paying. But gradually, you're going to be seeing a natural push for a normalized effective tax rate going below to what we currently have. But at the same time, in this high inflation scenario, we're seeing a resizing of the equity tax book that is used to calculate the effective tax rate, right? So we are seeing both phenomena at the same time. So we're currently pushing on to the low teens, the effective tax rate. I think that the more reasonable scenario is to expect an effective tax rate into the high teens or very low 20s on a normalized scenario environment. So I hope that actually gives you an idea of where we should be on normal years after the tax reform is implemented.

Regarding the long-term ROE, we have been able to deliver since the second quarter of 2024 a sustained trend of ROEs above 20%. But at the same time, we have been able to develop on our strategy and continue improving on efficiency. So our long-term ROE update was fairly recent. It's been a year since we updated our long-term ROE. So it's probably something that we will review in the near term. But for the current periods, we're still thinking that the scenario is that we are going to be delivering the 20-plus and we hope to continue on sustaining the current performance.

Perfect. Just a follow-up in terms of the effective tax rate. So you were saying we should expect something between the high teens below the low 20s. Is that correct?

Right. Yes. So 18% to 20% area is where this should be on a stabilized normal scenario, but that's going to take a couple of years, right?

And this gradual implementation is around 1.5% per year. Is that correct?

Yes. Exactly. That's correct.

Our next question comes from Yuri Fernandes from JPMorgan.

Congrats on the quarter. I have a question regarding the ROEs. I think the guidance is clear for this year above 24%, but it's a year with pretty high inflation. So my question is on a normalized base, right, now you have the lower taxes. It helps a little bit. Do you have any idea what should we work on -- I don't know, like not a guidance for 2027, but in a few years, what would be the level of returns we should expect for Santander? Is 20% 22% a good number for you?

And then I have a second question, just on regulation. I think tax is pretty positive, but sometimes we also hear some flexibilization on capital requirements in Chile. Sometimes I also hear about maybe some more flexibilization on interest rate cap. So are you seeing more good things to happen in the sector? Like can you give us an update on what should be the good news here for banks in Chile in the coming years?

Thank you for the questions, Yuri. So tackling the ROE question first, and then I'll ask Andres and Patricia to contribute on the regulation front. We have been able to deliver on our strategy, right? So we have been able to sustain and improve our levels of efficiency. NIMs have remained stable for the last 2 years, taking inflation phenomena side. We've been able to grow the customer base and at the same time, delivering on the fee side of the business, right? So all of this included gives you an idea that it's very feasible for us to deliver on a normalized cycle an ROE of above 20%. That's the area what we are aiming, right? A little of inflation helps, a little of less effective tax rate, of course, also helps. So in normal years, we are aiming to push slightly above the 20% ROE, but considering that there might be years with a slowdown in GDP expansion and inflation, we also have to take into consideration those sorts of periods where we might be in the very high teens to low 20s, right? So that's to give you an idea. We are going to try to update with this figure in the upcoming calls.

And now I'll pass the ball to Andres for regulation.

Okay. First of all, the National Reconstruction Plan is clearly the most important positive development currently on the table. Then we have this extension on the FOGAES mortgage guarantee program that could also support mortgage origination and help normalize the housing market. And from a capital perspective, we continue to see constructive discussions around the market risk-weighted asset framework. The proposal under discussion will better recognize hedging benefits and include duration-based approach for interest rate risk, which could eventually translate into more efficient use of capital for the industry. We're also monitoring progress on the repos and securitization framework.

And finally, advances to our internal models for credit risk remains an important medium-term opportunity. So overall, we see regulatory agenda becoming more growth oriented. The largest near-term impact is likely coming from the construction bill, while capital efficiency and investment-related measures will become increasingly relevant over the medium term.

Regarding capital regulation and market risk in particular, based on the CMF estimates, the industry could benefit from this new regulation, roughly 36% reduction in their market risk RWAs, right, which for Santander Chile would represent around 75 basis points of CET1. While the potential impact is clearly meaningful for us, it's important to note that the adoption is subject to a regulatory approval process that requires the submission of reviewing the supporting documentation that the bank could deliver. So the proposal does not define the approval timelines. So we are like quite -- we remain conservative about the implementation date and timing we could benefit from that change.

And regarding internal models, yesterday, the CMF just published a consultation paper that would allow banks to use internal models for both provision and regulatory capital, which is broadly consistent with the direction the regulator has been signaling over recent months. That said, this is a long-term initiative. We would expect any meaningful impact to materialize gradually over a 3- to 5-year horizon, given the complexity of the approval and implementation process. And in our case, our internal model road map will remain aligned with the framework already defined for the European regulator. But we think we have a strong starting position as we have been operating for several years with approved internal models covering part of our large corporate lending portfolio.

So to sum up, Yuri, the regulator, in our view, is tackling the missing part of the implementation of the Basel III framework in Chile. Until December last year, all banks were focused on constructing all the pillars, buffers and CET1 requirement. And now that the regulator is addressing the second part of the agenda, which is actually addressing the density of the assets, right? So we think it's very constructive, and it allows us to stay very optimistic about the developments of the industry in the upcoming years.

No, super clear, Christian and Patricia and Andres. And I see, maybe you agree with me, but you have this reconstruction bill driving potentially better economic growth and better loan growth? And maybe I ask for Andres, what should we pay attention for us to try to guess how the loan growth will accelerate. But you also have the regulator, right, helping the banks to unlock capital and maybe grow faster. So you have like the double tailwinds, right? You have the macro that I think is the most important one. But even on the sector specific, maybe after years of higher countercyclical buffer and more capital, we are entering a phase that easier capital allocations may drive more growth for Chilean banks, right?

So just a follow-up here for Andres, maybe what should we pay attention for us to see the growth reaccelerating? Is, I don't know, employment, is something on investments? What should be the lead indication for us to maybe get more confidence that the loan growth is coming back?

Yes. Our estimates suggest that the effect on the level of activity are significant. In the central scenario, the level of GDP will be around 6% higher by 2035. So it's around almost 0.5 point higher than in our baseline scenario for the next 10 years. So we will probably think of growth closer to 3% in the upcoming years. And the main channel is through investment. So that is also very positive for construction, employment on the bank side for all the commercial lending.

If I were to complement, Yuri. We've seen most of the growth that has been happening this year concentrated on mining and energy sector, right? And consumption has been lagging behind a little. So I think unemployment and also consumption metrics is something that is going to -- will start improving as economy is gaining traction.

Our next question comes from Daniel Ardila from CrediCorp Capital.

I have a couple of questions. The first one, you were already talking about that a little bit, but I want to expand. It's about loan growth. I would like to understand what is the loan growth strategy for 2026 and 2027, considering the current economic scenario and also unemployment figures. What will be those drivers that should explain an acceleration in loan growth already considering the approval of the reconstruction bill? And what will be those products or segments in which you expect to gain market share? That will be my first...

I think we lost Daniel.

Sorry, sorry. Can you hear me now? I would like -- the second question is regarding Getnet. Can you expand on the payment fees generated in the quarter? What are the competitive environment pressures that you mentioned in the report and then explain the reduction in payment fees during the second quarter? And do you expect this to be a trend in the coming quarters to see like the second quarter to be a normalized quarter of fees generated by Getnet.

Sure. So what we are seeing for 2026 is that the loan growth is going to be a little more muted to what we expected at the beginning of the year. It has been showing up on the year-to-date figures. We are still confident that we are going to get into the mid-single digits, but in the lower part of the guidance, maybe the 4.5% area, not the 5.5% area. But we're seeing better dynamics into the third quarter, especially in the commercial and consumer and also mortgages, especially supported by the recent announcements that the government made yesterday.

So into 2027, with a normalized inflation of 3% and a GDP expansion of 3%, we should be on the mid- to high single digits as an industry, and we expect to capture a fair share of that into next year. Where do we expect that to pick up? I think the middle market corporate part is a part that has been lagging behind in terms of dynamics and also an increased confidence from the consumer should also impact positively on the consumer lending and the credit card portfolio.

And regarding figures in Getnet, this is something that we discussed during the Chilean summer a lot with the market when we announced the JV with PagoNxt, right? We were seeing a configuration of the industry with an increased competition happening, and that has been showing up a lot more. So this has been forcing the industry, and we are, of course, a relevant player there to reduce margins on the fees, especially in the more mass market and retail. And at the same time, we are still confident that the figures will pick up a little in the second half of the year as we are expecting some large corporates to start picking up in terms of usage of our platforms. But all in all, this is something that was expected to happen. If you ask me, it happened even a little sooner to what we were expecting.

Our next question comes from Tito Labarta from Goldman Sachs.

My question is on asset quality and provisioning levels. We saw a slight pickup in NPL provisions did come down from the reversal of the specific corporate case, but we saw provisioning for consumer mortgage go up, cost of risk guidance is a little bit higher. So how are you thinking about the credit quality from here and the level of provisions going forward?

Thank you, Tito. So all in all, we think that the credit risk is going to remain stable for the rest of the year. We're seeing the dynamics happening between the 1.35% and the 1.4% area. So that's the area where we're expecting to be by the year-end. We are currently delivering 1.38% for the first half of the year. So that's the area that we think it's feasible to stay. In general terms, what we have been doing is improving the inflows of new lending and at the same time, addressing the part of the legacy portfolio that are not working that well.

All in all, we think the NPL metrics should start to decelerate growth in the next quarters, and we are seeing that happening consistently for the last year. We're still not reaching the pivot moment, but we expect to be there soon. And at the same time, the new origination is showing a lot of better performance metrics. So we're quite confident that this is going to be something that will get addressed in the upcoming periods. So all in all, we think it's going to be more of a stable news on this front with marginal improvements into 2027.

Our next question comes from Neha Agarwala from HSBC.

Just a more broader level question. If you see the loan penetration in Chile, it has gone down from the 90% ranges to 75% or so. What are the pockets that you see? Can we get back to the previous levels of loan penetration in the country? And which are the pockets where you see that opportunity in the next 5 years for loan growth to accelerate and for penetration levels to improve? And how is Santander placed to benefit from those segments?

Thank you for the question. Regarding loans, we are positive on most of the portfolio in terms of what we expect to happen in the next 2 to 3 years. After the pandemic, we saw that with the withdrawal of the Chilean Pension Fund [indiscernible], there was a relevant chunk of that money that was paid into prepayment, especially in the consumer lending portfolio. So there is a relevant room to pick up there in terms of credit card and also in the installment loans. That's a place that where with some improvement in unemployment and also better dynamics in terms of consumer confidence, we think that there's a room for the industry and for us, of course, linked to that to pick up.

The other part that has been quite muted in the last 5 years in terms of growth has been the mortgage portfolio because of the rate scenario and the increase in terms of the construction costs that have been showing up after the pandemic. So the current announcement of the government of supporting an additional package of another -- actually, the total program will be 80,000 mortgages, but there is about -- a little above 40,000 that have been executed in the last period -- in the last year, right? So actually, what the government is currently doing is more than doubling the amount of mortgage in terms of U.S. because it has increased the total size of the U.S. unit to up to USD 6,000 from USD 4,000, but it's also allowing the banks to go for another extra 40,000 units. That is the same size in terms of units of what has been executed so far.

So I think that's a very positive news in terms of helping the mortgage industry to get rid of the excess of inventory that's present. The initial estimations were around 100,000 units. So 40,000 units have already been executed by the industry. And actually, Santander has been a very, very relevant partner here, capturing about 17% of that total chunk of support. We expect to do our fair share in the upcoming years in this area, too.

And the other part that I think is very relevant is that in terms of investments in the last 3 to 4 years, the Chilean corporate sector has been very, very mild in terms of investing and growing in Chilean opportunities. So as Andres was mentioning before, we see that this stock of investment projects and capital deployed in the next 4 years is quite sizable. And that's also an area, the middle market and large corporate area is a place where we see growth happening and also cascading down into SMEs and consumer demand. So that's something that we are also quite optimistic. So to sum up, we expect to be delivering on the whole portfolio.

Perfect. If I can just ask another question. In the past, you've always talked about maybe going down market in the more mass market consumer segment with your digital initiatives to bring down the costs. What is the progress in that? Is there any discussion about the rate caps being eased, which could make it easier for you to go? Have you figured out a way to be more efficient to offer more attractive rates to the mass market segment? Or is that not something that you're looking at right now?

So in terms of what's the current formal discussion on interest rate caps, there's no institution discussing this. Yes, we have heard some paper articles in the news and there has been some vocal support of this discussion, but there's no really formal institution proposing this yet. So it's too soon to tell. Of course, if the economics of the mass market lending changes that changed the return over risk-weighted assets of this discussion. And it will force not only us, but the whole industry to review the penetration on the segment. This segment was actually banked out in terms of lending in the final part of 2014 when the reduction of caps happened and the industry reacted -- and let me remind you, Santander was the first one to react to this new environment, closing the consumer lending units. So we were the first, but all the industry followed us closing down the consumer lending units. And now if rates are on a different scenario, of course, that will make us review the economics of that business. But so far, nothing formal has been happening on this discussion.

Just to remind that we are going to show a survey at your screen. Thank you for answering it.

Now our next question comes from Ludovic Casrouge from Autonomy Capital. Seems like Lucovic disconnected.

Okay. I'm not seeing any more questions. So perhaps I can hand it back to the Santander Chile team for the closing remarks.

Thank you all very much for taking the time to participate in today's call. We look forward to speaking with you again soon.

Thank you very much, everybody.

Thank you very much. This concludes the call for today. We are now closing all the lines. Thank you, and have a nice day.

Ladies and gentlemen, thank you for standing by, and I would like to welcome you to Banco Santander-Chile's First Quarter 2026 Earnings Conference Call on the 6 of May 2026. [Operator Instructions]. So with this, I would now like to pass the line to Ms. Patricia Perez, Chief Financial Officer. Please go ahead, ma'am.

Good morning, everyone, and thank you for joining us today. I am Patricia Perez, CFO of Banco Santander-Chile. I'm joined today by Cristian Vicuna, Head of Strategy and Investor Relations, and Andres Sansone, Chief Economist. We will begin with Andres, who will provide another view of the economic and political environment, Cristian will then walk you through our strategic priorities and review our first quarter results in more detail. We will conclude with a Q&A session.

With that, I will now turn the call over to Andres.

Thanks, Patricia. Let me start with the big picture, since our last webcast, the global backdrop has become more challenging and more uncertain. The main change has been the geopolitical shock in the Middle East and its effects on energy markets. Our baseline scenario assumes that the conflict gradually deescalates but leaves lasting damage, which means oil prices do not return to the levels prevailing before the conflict.

At the same time, risks remain purely due to more adverse scenario, especially if supply disruptions proceed for longer or infrastructure damage proves more permanent. This matters for Chile through several channels: first, higher oil prices raised imported inflation on more terms of trade outside copper. Second, the external environment becomes less supportive for monetary easing globally, as energy prices have lift inflation expectations and reduced the room for central banks to cut rates.

And third, even though financial markets have shown resilience, especially in equities, long-term rates remain elevated and global uncertainty is still high. For Chile, this means that even if copper remains relatively supportive, the net external backdrop is no longer clearly benign.

Turning to domestic activity. The most recent relevant information is the March monthly economic activity indicators. Based on the preliminary Imasec readings, we estimate that the economy contracted 0.3% year-on-year in the first quarter of 2026 or minus 0.2% quarter-on-quarter, making this the first quarterly set back since early 2023.

Non-mining sector will have grown only 0.1% year-on-year and be flat sequentially. Altogether, from our perspective, the growth outlook for 2026 became more challenging and more dependent on the evolution of the external scenario. In our reference scenario, we assume that WTI oil remains around $100 per barrel during the second quarter of this year and then gradually declines ending the year around $80, $85 per barrel without returning to pre-conflict levels. Under this assumption, Chile's economic will still grow 2% in 2026, but of course, which, all feels to the downside. The main impact is on prices rather than activity in our base case, inflation will end in 2026 between 4% and 4.5%, and given that the inflation shock will give you as temporary and activity will slowly -- slow only moderately. The Central Bank will keep the policy rate unchanged at 4.5% through 2026, and in this same baseline scenario, we expect the exchange rate to close the year around CLP 890 per dollar.

So going to the next slide, we can see the current regulatory and policy environment. The main development so far has been the announcement of the National Construction and Economic Development Plan, which is centered on measures aimed at improving competitiveness supporting private investment and reducing environmental requirements bottlenecks. Its core components include a reduction in the corporate tax rate of 37% to 23%. Further integration of the tax system, tax stability incentive for strategic sectors such as mining, technology and energy and target measures to support formal employment, construction and housing activity.

In our view, the project is positive in direction, particularly in its core components in improving competitiveness, lowering the corporate tax burden and streamlining permits, all of which should be supportive of investment and medium-term growth.

In that sense, the plan helps offset part of the weak cyclical starting point that we are seeing in early 2026. And it is consistent with a more favorable medium-term supply side history for Chile. While the direction of this initiative -- initiative is positive for growth. Their credibility will also depend on the acceptance of a clear fiscal roadmap, while higher growth should eventually generate additional revenues, the project still requires a clear fiscal roadmap, especially during the transitional period. We'll see a policy mix that is more supportive of growth but where fiscal anchor remains an important issue to monitor.

With that, let me hand over to Cristian.

Thank you, Andres. I will now walk you through our strategy, our first quarter 2026 results and our outlook going forward. Let me start with our strategy.

At the center of our strategy is a clear ambition to become a digital bank with a physical presence, leveraging our Work Cafe branches to combine the convenience and scale of digital banking with advice, service and proximity to our customers.

We organized this around three pillars: First, think customer. Our objective here is to offer the best value proposition for every client segment, grow active customers increased transactionality and deepen loyalty. We aim to serve over 3.5 million active customers, and we continue to see room to improve the customer experience rates, Net Promoter Scores and capture greater share of wallet, especially in higher value segments.

Second, think global. We are accelerating our digital transformation through global platforms and artificial intelligence-enabled operating modes. This allows us to simplify processes, improve the digital experience, deploy capabilities faster and operate with greater agility, productivity and efficiency.

Third, think value. Our goal here is to translate the customer franchise and efficient operating model into more stable and improving profitability. This means continuing to diversify revenues towards fees, recurring income streams and other higher quality businesses while maintaining a strong focus on returns and capital discipline. Overall, our strategy is designed to grow customers and loyalty, increase transactionality, improve the quality of revenues and as a result, delivering sustainable returns and an attractive payout to shareholders.

This strategy is supported by a diversified platform with 5 complementary business lines. Retail and Commercial remains the core of the franchise, where we are simplifying products and processes and continuing to build on the Work Cafe model. Corporate and investment banking adds strength in advisory, FX and transactional banking with a clear focus on our sustainable solutions and capital optimization. Wealth management & insurance strengthens our advisory-led model, renews our private banking proposition and reinforces our position in insurance and mutual funds. Consumer Banking supports our leadership in auto financing, including new and electric vehicles while also expanding our presence in used car financing, and through Getnet, our payment business, is helping us reach new client segments with value-added services and simple bundled solutions.

Retail remains the backbone of the balance sheet, representing 66% of loans, 48% of deposits and 69% of margin. At the same time, we have meaningful contributions from CIB payments, Wealth into the fee business. The Santander global platforms are helping us connect this business effectively, improve efficiency and diversify revenues, that supports stable profitability throughout the cycle and reinforces our ability to deliver attractive shareholder returns.

Let me now move to our financial performance for the quarter. On Slide 10, in terms of balance sheet, we saw stable loan evolution with some divergence across segments. Consumer lending show resilience, particularly in auto loans and credit cards, while mortgage and consumer loans remain softer. On the funding side, total deposit increase supported by growth in demand deposits and our recovery in term deposits. Importantly, liquidity remains strong and well above regulatory requirements.

On Slide 11, Net interest income showed high single-digit growth year-on-year, reflecting improved margins and funding costs, which decreased to 3.2% in the first quarter in line with the reduction in the average monetary policy rate from 5% to 4.5%. Our net interest margins stand at 3.8% year-to-date below last periods due to lower inflation in the quarter, 0.3% compared to the first quarter of 2025.

One of the key highlights this quarter is the continued strength in fee income and client activity. Total fees increased 4.5% year-on-year, while fee plus financial transactions grew over 9% driven by a strong performance in Asset Management and market-related income. At the same time, we continue to expand our client base, reaching 4.8 million total customers with 2.4 million active clients. The number of current accounts increased 7% year-on-year, supporting 4% growth in active clients and 10% growth in total clients. This translated into a 12% increase in credit card transactions and an 11% increase in mutual fund volumes. Client satisfaction remains high across our products. This is a reflection on how our strategy is successfully monetizing digital growth through higher transactionality and engagement.

On Slide 13, efficiency remains a key differentiator for Santander Chile. We achieved an efficiency ratio of 32.5% positioning us as one of the most efficient banks in the system. Operating expenses decreased 6.2% year-over-year due to the phasing out of cloud migration costs that happened in early 2025 and generated higher technology and data processing expenses. Additionally, our recurrence ratio reached nearly 69%, meaning that a large portion of our costs is covered by recurring fee income. This reflects the benefits of our digital model and ongoing optimization of our branch network, reaching 94 work office throughout Chile.

On Slide 14, we show an overview of our cost of risk and asset quality. The cost of risk reached 1.55%, mainly driven by a one-off provisioning event in the commercial portfolio. Importantly, underlying trends remain stable with NPL and impaired loan ratio showing only moderate increases. The bank has been actively managing different parts of the portfolio increasing loan [ duration ] that is reflected in the increase of the impaired loan ratio, while our nonperforming loans with 90 days overdue or more has stabilized. We maintain our guidance for cost of risk for the full year.

On Slide 15, we report BIS ratio of 16.4%, well above regulatory requirements with a strong CET1 of 10.9% fully loaded, well above our minimum of 9.08%. In addition, our risk-weighted assets composition is approximately 70% from credit risk, 19% from market risk and 11% from operational risk. It is worth noting that our market risk, risk-weighted assets is relatively high compared to the industry average, which impacts the overall mix. However, we expect this to gradually decrease with the implementation of upcoming regulatory changes from the CMF. Our risk-weighted asset density stands at around 63%, reflecting a relatively lower level compared to the average Chilean banks. In line with our policy as Santander shareholders' meeting held at April 28 we approved a 60% dividend payout, equivalent to a 4.5% dividend yield, reflecting the strength of our earnings and our continued commitment to delivering attractive shareholder returns.

During the meeting, shareholders also elected the Board of Directors approving the proposed list of candidates, which ensures the continued strength of our corporate governance and supports the bank's strategic goals for the coming period.

To conclude the results section, profitability remains strong with a return over average equity of 23% in the quarter. Net income increased sequentially, highlighting the resilience of our business model and our ability to consistently generate earnings while continuing to invest in growth and digital transformation. Finally, on Slide18 we show our guidance for 2026 as well as the main areas where we now see pressure relatively to those original assumptions. When we set our initial targets, we were looking at a U.S. variation of around 2.9% for the year with a GDP growth of 2.4%. And with this, with the middle single-digit loan growth, NIMs of around 4%, noninterest income growth in the mid- to high single digits and an efficiency ratio in the mid-30s, cost of risk of around 1.3% and an ROAE between 22% and 24%.

Since then, the environment has become a lot more volatile as we recently discussed with Andres. Particularly given the current global backdrop. In that context, we think it is more appropriate to discuss the direction of the pressures on our initial guidance rather than provide a formal numerical update, with so many moving parts today. What we are seeing is that the higher inflation creates a strong upward pressure on interest income and NIMs. It will also support efficiency in the short term as revenue tends to adjust faster while cost remains relatively stable.

On the other hand, more demanding macro environment might potentially generate some pressure on the portfolio's growth or risks, particularly as we move further into the year and think about the medium-term impact. So while there are clear relevant -- supportive factors for revenues and profitability, there are also some offsetting risks, and that's why we prefer to remain cautious about giving a more specific update at this stage.

To sum up, the key message is that the current environment will be supported for the top line trends and returns and well above our initial targets. But given the level of uncertainty, we think it's prudent to frame this directionally rather than revised guidance with precise numbers today. Finally, I would also like to highlight that beyond our financial performance this quarter, we have just been informed that we are the first Chilean bank to be included in the Dow Jones Best In Class World Index, ranking among the 25 most sustainable banks globally. With that, I will conclude my presentation. Thank you so much for your attention, and we will now be happy to take your questions.

[Operator Instructions] Our first question comes from Mr. Tito Labarta from Goldman Sachs.

Two questions, if I may. I guess, first on the guidance, as you mentioned, right, there's some positive short-term impacts from the higher inflation. But there could be some negative consequences down the road. Just how do you think about the timing of that? Like when could just higher inflation, higher rates potentially put some pressure on credit quality and also on loan growth as you kind of reiterated the mid-single digits, but any concerns about how that loan growth could evolve, particularly if inflation remains elevated and any asset quality risk arise?

And then second question, somewhat related to that, we saw some of the retailers posting very strong loan growth in Chile, like almost high teens, just kind of curious how you're seeing the competitive environment, particularly with some of these retailers that have banking operations?

Thank you, Tito. Well, regarding timing, we're going to see most of the impact of the increased inflation yields this second quarter in our NIMs. There is a potential lower NIM third quarter because of the concentration of the inflation news on the second quarter and some -- some lower inflations in the third, but that's a very, very liquid and volatile moving part as of now. We expect loan growth to remain in the mid-single digits, but we are also seeing some lower expectation of GDP expansion, so that might translate into lower dynamics more skewed toward the final part of the year. And consequentially, if this inflation translates into some pressure in the household economy, on their ability to perform that could trigger some impacts mostly for the final part of the year or the first half of 2027. But this is all very volatile and liquid.

And regarding your question on growth, actually, in our portfolio, we have seen good demand from the current portfolio and also from the auto lending portfolio. Actually, the auto lending portfolio has been growing double digits year-over-year. So that's a sign of how that part of the market is performing quite well. I think that in our case, it's more concentrated -- the more muted performance is concentrated on the mortgage and the corporate portfolio. And we are seeing some early signs in the mortgage growth in the month of March. So we're a little more -- a little bit more optimistic on that part of the portfolio. And so I think that the things that you are seeing on retailer might also be translating on our retail part of the portfolio soon.

Okay. Great. That's very helpful. And it doesn't just increase the competitive environment at all, you're not seeing any competition on spreads or anything? From the retailer side of things yet?

Spreads in the middle market portfolio and the corporate portfolio are quite tight as local market conditions. So we see a lot of competition on that part of the market.

Our next question comes from Mr. Ernesto Gabilondo from Bank of America.

My first question will be on the tax reform. Could you provide us what is the latest update on the tax reform? And when do you expect its implementation? And my second question is on NIMs. As you mentioned, NIMs should be benefiting from high inflation levels, especially in the second half. But just wanted to understand, for example, in terms of the interest rate, not for this year, but maybe for next year that some economies are expecting it could be higher. How should we understand the sensitivity to rates to your balance sheet? Because I remember in the past, you tend to benefit when you have lower rates. So once we have the possibility to have higher rates, I would like to understand if you will be hedging or if you will give your same sensitivity?

Thank you, Ernesto. Let me take the opportunity to pass this first question to Andres. We have him here regarding the tax reform.

On the tax side, the made proposal showed reduction in the corporate tax rate from 37% to 23% between '26 and '28. Together with full integration of the tax system over time and that stability mechanism or strategic sectors, mining, energy and technology. Of course, these measures are clearly aimed at improving competitiveness, so attractive investment and strengthening the supply side of the economy. In terms of implementation, we will highlight two points.

First, the direction, of course, is pro growth, but the main open issue is the digital transition. We expect that the [indiscernible] should vote this proposal during May, before the first speech of the President on June 1. And then during July, August, we should see a discussion in the senate. So we should see this tax reform or broader reform being approved by September or October, if there is no -- any change in the world.

Thank you, Andres. Regarding our perspectives on sensitivities. We currently -- so we have two types of sensitivities in our balance sheet, right? So we have a sensitivity to inflation that impacts our net interest margin through the readjustment line, and that's what's going to be more impacted in the second quarter because of the higher inflation figures. Our sensitivity has remained stable on -- our sensitivity inflation on about 14 to 15 basis points of NIMs, for 100 basis points of U.S. valuation, right? So that has remained stable. We are also a little bit more neutral on the rate scenario, which I think is positive -- to your second question. Our current sensitivity is on the 5 basis points per 100 basis points of average monetary policy rate variation on a year. So that's 5 basis points for every 100 basis points of monetary policy rate. It's quite neutral and actually, our balance sheet was positioned in that way since early last year as we saw little room for further rate caps through -- from where the levels were at the time. I mean it has been consistent with our macro vision this year.

Yes. Regarding the macro perspective, as Andres already mentioned, we are expecting a monetary policy rate for this year that remain stable. And for 2027, depending on the inflation perspective and how sticky is the inflation that we are having right now. The market is expecting 2 hikes for next year of 25 basis points each. So we will -- in that scenario, we will be talking about 2.5 basis points in NIM according to the sensitivity Cristian already mentioned.

Our next question comes from Mr. Yuri Fernandes from JPMorgan.

I have one on cost of risk on the corporate case. If you can comment a little bit, provide more color, like is this over? Is this fully provisioned? How big was this? Just to understand if we should see eventually reversals like if you can recover some of those values. So just trying to understand, I get that the cost of risk this quarter was impacted by this corporate case. If you can provide a little bit of more color, we appreciate.

Then a second question regarding capital. The CMF put out for consultation, the internal risk models. I think this has been a discussion for years in Chile. There is an estimate from the regulator about $10 billion to be released eventually. But I don't know if you have your own estimate. I know the rules are not done yet. I also know that the risk [ East ] Chile is very high. If you can comment a little bit on what you expect on this potential tailwind for capital? We also appreciate.

And finally, just on the ROE guidance, I know you kept the guidance unchanged and inflation should be a tailwind for margins. My question is why keeping the guidance unchanged given inflation is expected to be a good tailwind for the near term?

So let me take your last question first because I think the message, it's very relevant, and then we'll dig on -- we'll dig down on the other two. So we're not sustaining guidance. What we don't know is -- what are the final effects of all these moving parts in our total results, right? So the situation in Iran, still not out of the equation. So our scenario is moving, and you are very familiar with this horse, of course, every single day. It's not a week.

What we see is that we are going to be above the upper bound of our ROE target for this year, meaning that the 22% ROE is completely out of the equation, which should be 25% ROE and above, right? But what we don't know is what are the final effects of all these moving parts this very early in this year. So we are going to probably going to be delivering a more clear view in our next call in the first days of -- in final days of July, early August. So that's regarding guidance. Regarding capital, do you want to comment?

Yes. I mean that the CMF is proposing several measures, I would say, in order to reduce the density of Chilean banks, which is still high, even though we are fully implemented, we have fully implemented Basel III frameworks. So one of the levers is market risk. We already have a proposal from the CMF and we will have a benefit from that rule when it applies. And the other lever is internal model. Right now, we do have a framework of internal models, but still very conservative regard or related what we have in developed markets, right? So they will propose a new -- a new framework, where it will be more convenient for banks to present the proposals to CMF. It's going to take long from our experience in Europe could take around 2 to 3 years to be implemented. But in our view, is in the right direction and the second part, it's going to take longer.

Thank you. So to complement here, what has been happening here in Chile with the implementation of the Basel III framework is that we started with all the buffers and pillars, and that's fully implemented. So now our minimum CET1 requirement is 9.08% fully loaded with all the pillars and [ discussions ] has been concluded, but there has been little to no discussion on the density of assets of the framework.

So this is the second part of the story that we were waiting. I think we have discussed this with several of you in the last year or so. The density of risk-weighted assets in markets is quite high, especially when you compare it to the European framework, and there is also some room in the credit intensity of risk weighted assets. So the President of the CMF has been announcing several implementations of teams and some revisions of the regulation in order to advance into improving the density of the assets.

Our stance here is that we believe that probably the most potential scenario is that the Chilean general system will work with more rooms between the actual CET1 level and the minimum requirements. So it's natural to expect that we will be as a system performing closer to other markets that have a lower density. It's too soon to tell where that will also translate into capital releases as we don't know many of the legal details of the upcoming changes.

But we know for sure that there is one that has been recently approved about an improvement in the density of market risk, but it's moving onto more of the developed frameworks in the way that the market risk is calculated and that will create some potential impacts on the system and on us, particularly as we have a relevant stake in risk-weighted asset density in market risk. So that's on capital. And our perspective is that CMF is moving naturally on the consequential next step of the implementation of the framework, which is reviewing the density of assets, right.

And then on the credit risk, it's -- to your question, we are not seeing particular pressure on any of the portfolios. The impact that we suffer in the first quarter in the corporate portfolio, it's actually more of a process of recovery taking longer, and we expect that to be reversed towards the final part of the second quarter or the first part of the third quarter. So that's why we are not moving our guidance in terms of the expectations on the cost of risk for the year. So we are still expecting to be in the neighborhood of the 1.3%.

Super clear, Cristian. And actually, the NPL for mortgage was down, right? And the message on capital is clear. It will take some time. Once this happens, you should unlock capital, maybe you can grow faster, maybe you can return capital to shareholders. But eventually, this can be a tailwind for us here. Super clear.

Our next question comes from Neha Agarwala from HSBC Global Research.

Just a quick one on asset quality, with the inflation running on the higher side. As you mentioned, we could see some pressure on asset quality, which pockets of the loan book you're being a bit more cautious on -- or the growth that you had budgeted in the beginning of the year, will actually be weaker because of this changed outlook that we are seeing now. If you could just give us some sense in terms of the cadence of how cost of risk could evolve in the coming quarters? That would be very helpful.

Thank you, Neha. So regarding asset quality, let me take the part of the first part of your question. So what are the most potential portfolio that could be impacted by higher inflation. Well naturally the mortgage portfolio readjusts on U.S. valuation, right? So that's the part that puts some pressure on families. And especially in the lower part of the portfolio, it's where we could see some impacts moving on to the final part of the year or early next year. But perhaps still a little too soon to tell. We haven't seen those impacts yet.

In terms of the commercial portfolio, we think that a part of the portfolio that we are very cautious on is particularly the agriculture portfolio, especially exporters, as those guys depends a lot on climate conditions, and we are expecting relevant movements in El Nino this year. So we still haven't seen any natural phenomena going on, but they have been broadly discussed topic regarding how strong those phenomenons are moving. And such, we're taking a very cautious stance on that part of the portfolio. And we are seeing very positive trends on the mining industry and the mining servicing industry and also in energy.

So those are our perspective like the more cautious and more optimistic parts of our portfolio in corporates. And in going also how this will translate into our -- how the cost of risk should move. We should see normal second quarter in terms of cost of risks. There is this reverse of the impact that we saw in the first quarter that might come on the second or the third quarter. On the -- for the final quarter of the year, we're still seeing the 1.3%, 1.35% area, but subject to how this inflation translates into the into our portfolio right.

[Operator Instructions] Our next question comes from Mr. Daniel Mora from CrediCorp Capital.

Perfect. I have just one question regarding loan growth. Can you provide the loan growth expectations by segment? I would like to understand what will be the drivers for growth considering the loan growth in the first quarter. And also if it is a concern to you the loss of market share during the last year. Do you expect to regain market share in any particular segment?

Thank you, Daniel. So regarding the loan growth, what we are expecting after general part of the portfolio is mid-single digits so around 5%, 6% [indiscernible]. That's the general expectation. We believe that there's good performance on the consumer part of the portfolio, particularly auto loans and credit cards. That should translate into installment loan later on the year, we are a bit more optimistic in that area. We are seeing some really good signs in the mortgage book. So we should start some growth, but mid-single-digit product portfolio, it's safe to assume.

And our growth has been muted in the middle market and corporate portfolio. So we're not seeing that growing double digits in our case, but going to market rate growth in that part of the portfolio is expected from our side. And regarding market share, we have been able to defend our market share in the consumer part of portfolio pretty much. I think that the product part has been more impacted than the commercial part, especially the other part of the commercial product portfolio, not the [indiscernible] part and mortgage most of our market share has been decreasing.

And I think that we remain with the willingness to be relevant in the market. So we'll capture all the growth opportunities that we'll see. We have the capabilities for growth. We have the capital. So we'll be monitoring the market and looking at opportunities to implement that growth in our portfolios looking forward.

Thank you. It looks like we have no further questions at this point. I'll be passing the line back to the management team for the concluding remarks.

Well, with that, thank you all very much for taking the time to participate in today's call. We look forward to speaking with you again soon.

Thank you very much. This concludes today's conference call. We'll now be closing all the lines. Thank you, and goodbye.

Ladies and gentlemen, thank you for standing by, and I'd like to welcome you to Banco Santander-Chile's Fourth Quarter 2025 Earnings Conference Call on the 5th of February 2026.

[Operator Instructions] So with this, I would now like to pass the line to Patricia Perez, the Chief Financial Officer. Please go ahead.

Good morning, everyone, and welcome to Banco Santander-Chile's Fourth Quarter 2025 Results Webcast and Conference Call. This is Patricia Perez, CFO, and I'm joined today by Cristian Vicuna, Head of Strategy and Investor Relations; Lorena Palomeque, our Economist.

Thank you all for joining us today as we review our performance and results for the fourth quarter. Lorena will begin with an overview of the economic environment followed by Cristian, who will walk you through our strategic priorities and fourth quarter results. We will then conclude with a Q&A session.

Thank you. Throughout 2025, Chile's macroeconomic environment continued to improve gradually after several years of significant adjustments, inflation maintaining a clear downward trend and continued converging towards targets, which allows monetary policy to move away from a clearly restrictive stance. As a result, financial conditions became progressively more supportive, helping to stabilize economic activity.

Here on Slide 4, we can see the regulatory and policy environment. A key development in 2025 was the implementation of the mortgage subsidy law, aimed to lowering effective borrowing costs and supporting the recovery of housing demand. This measure is particularly relevant in a context where affordability constraints and higher interest rates have significantly affected mortgage origination in previous years. While the impact is gradual, it represents an important step towards reactivating a strategic sector for the economy. In parallel, there were important advances in the regulatory modernization agenda. Progress on the fintech and open finance law established the foundations for greater asset portability, a stronger competition among financial institutions and increased innovation in digital financial services.

Over time, this framework should enhance efficiency, improve customer outcomes and support the development of new financial solutions while maintaining appropriate risk management standards. In addition, initiatives such as the sectoral permits law are designed to simplify and eliminate redundant regulatory approvals. By reducing administrative complexity and execution risk, these measures aim to lower barriers to investments and accelerate project development. Together with a continued focus on fiscal adjustment and spending efficiency, they contribute to a more predictable and sustainable policy framework.

The new administration will assume office in March 2026 with an agenda that includes 3 economic policy initiatives that may provide additional stimulus to economic activity in the period ahead. Based on public communications, we expect an emphasis on large-scale investment projects alongside efforts to simplify permitting process and technical requirements in order to reactivate key sectors of the economy. These measures could have positive spillovers for construction activity, household supply and private investment more broadly.

Another potential initiative is a reduction in the corporate tax rate. Currently, Chile's corporate tax rate stand at 27% and President-elect, Kast has indicated an initial target of reducing it to 23%. This would help improve competitiveness and attract domestic and foreign investment. Any such changes would likely be phased in over several years to mitigate fiscal impact. In parallel, the administration has highlighted the importance of improving spending efficiency and strengthening fiscal sustainability through enhanced budget allocation and expenditure review processes. It is important to note that the implementation of these initiatives will depend on congressional approval. While the new administration is close to achieving a majority, legislative dynamics will play a key role in shaping the scope, timing and final design of any policy changes.

As we can see on Slide 5, one of the most encouraging developments in recent months has been the improvement in confidence. Business confidence followed a steady upward trend and moved gradually into optimistic territory at the beginning of 2026, also differences across sectors persist. Commerce confidence is now firmly in positive territory, while construction, one of the sectors most negatively affected since the onset of the pandemic, has shown a significant improvement in recent months. This matters because confidence is a key leading indicator for investment and credit demand. What we are observing is an economy that is gradually shifting from a defensive stance towards a more constructive mindset, in which companies begin to reactivate investment decisions and households may start to incorporate this improved environment in their financial planning.

On Slide 6, we can see how the economy has been performing and what we expect for the coming years. Chile remained on a growth trajectory despite a challenging external environment and a still fragile labor market. The economy is estimated to have expanded by 2.3% in 2025, driven by a recovery in domestic demand. In particular, economic activity benefited from a strong increase in investment driven by the execution of larger-scale investment projects in the mining and energy sectors. In contrast, residential construction remains under pressure, meanwhile private consumption recovered gradually over the year.

Regarding inflation, after the application associated with the adjustment of electricity tariffs at the beginning of the year, the consumer price index followed a downward trajectory, closing the year at 3.5%. With inflation expectations well [ anchored ] in the medium term and a limited outlook, the Central Bank continued its normalization process, lowered the monetary policy rate to 4.5% in December 2025 and gradually approaching its neutral level. The labor market gained some traction over the course of the year. Also vulnerabilities remain.

During the first half of the year, job creation was limited, but this shifted in the second half when employment began to increase. As a result, the unemployment rate closed the year at 8%, averaging 8.5% over the year, the same level as in 2024. For the next year, we expect labor market conditions to improve gradually as activity recovers.

Looking ahead to 2026, inflation is expected to remain marginally below the 3% target, while an additional cut to the monetary policy rate is anticipated in the first half of the year, taking it to an estimated neutral level of 4.25%. Economic activity is projected to expand between 2.1% and 2.4%, broadly in line with trend growth before picking up in 2027. So even as global risk remains elevated amid geopolitical tensions and increasing economic fragmentation, the local outlook appears more constructive.

At the domestic level, expectation of a more market credit policy environment, combined with regulatory simplification and a stronger focus on competitiveness and investment should translate into an improvement in business client. This environment is supportive of a gradually recovery in credit demand as confidence improves and financial conditions ease. Importantly, this recovery is likely to be more balanced and sustainable than in previous cycles, supported by stronger macro fundamentals and a more resilient financial system.

I will now hand over to Cristian for the rest of the presentation.

Thank you, Lorena. On Slide 7, we outlined our strategy to create value for all our stakeholders entered in our vision of being a digital bank with Work Cafe. Our focus remains on attracting and activating new clients, understanding their needs and deepening engagement. We continue to target more than 5 million clients by 2026 while steadily increasing our active customers. At the same time, we're building a global platform that leverages artificial intelligence and process automation to scale efficiently. This supports lower cost per active client and reinforces operational excellence.

Our goal is to sustain an efficiency ratio in the mid-30s or better, reflecting a disciplined and digital operating model. We are also broadening our transactional and noncredit fee-generating services. This supports double-digit fee growth and best-in-class recurrence, defined as fee income over structural operating expenses. As our client base grows, activity levels continue to increase, particularly in payments. Our digital ecosystem encourages frequent and seamless interactions, strengthening engagement and loyalty. This growth is supported by strong CET1 levels, ensuring that expansion remains sound, responsible and aligned with regulatory expectations. Together, this strategy position us to deliver attractive value creation with ROEs above 20% and a dividend payout ratio of between 60% to 70%.

On Slide 8, we can already see how our strategy over the last few years has succeeded in changing our income mix and creating a more efficient and profitable bank. Our key measure of value creation has been the strong growth in ROE, which has increased by more than 6 percentage points, more than double the improvement seen in the industry while maintaining solid capital ratios throughout the implementation of Basel III. This has been supported by a 4 percentage point improvement in efficiency compared to 1 percentage point for the industry, reflecting disciplined cost control and the successful execution of our digital transformation.

At the same time, fee income has increased from 15% to 21% participation of our total revenues, driven by client growth and the expansion of noncredit services, including digital accounts, cards, asset management, brokerage and acquiring. Industry revenue composition has remained broadly unchanged. This shift has driven our recurrence ratio to the best-in-class levels now above 63%, well ahead of peers. We're very proud of the success of our study had so far. As you will see later on, we are enthusiastic about the evolution of our results in the coming year.

Now in Slide 10, we will take a closer look at the results this year. As of December, the bank generated net income of CLP 1,053 billion, up 23% year-on-year. This resulted in a return on average equity of 23.5% and an efficiency ratio of 36%. Growth was supported by a 9% increase in fee income and an 8% rise in financial transactions. Mutual funds grew 7% and the recurrence ratio reached 63.7% year-to-date. Net interest income, including the adjusted income increased 11% year-on-year, while NIMs remained stable at 4%. Our capital CET1 ratio stands at 11%, and we are provisioning a 60% dividend payout to be paid in April next year.

We also began 2026 with a successful $500 million 5-year 144A issuance at a rate of 4.55%. During the year, we received several important recognitions, Euromoney, Latin Finance and The Banker named us the Best Bank in Chile, while Global Finance recognized us as Best Bank for SMEs. We also strengthened our sustainability profile with our MSCI ESG rating improving from A to AA and our sustainability score improving to 15.4 levels.

On Slide 11, we show the evolution of the quarterly ROE. We have consistently maintained ROEs above 21% even in quarters with lower inflation. In the most recent quarters, new variation was 0.61% and ROE reached 21.9%. On a yearly basis, net interest income increased 10.9%, driven by a lower cost of funding, which improved by approximately 100 basis points year-on-year. As a result, year-to-date NIM reached 4%.

Slide 12 highlights the continued expansion of our client base and its impact on fee generation. We now serve close to 4.6 million clients with 58% active and approximately 2.3 million digital clients accessing our platform monthly. Current accounts increased 9% year-on-year, supporting 5% growth in active clients and 7% growth in total clients. This translated into a 15% increase in credit card transactions and a 7% increase in mutual fund volumes. Client satisfaction remains high across our products. We also continue to expand our corporate footprint, increasing business current accounts by 19% over the last 12 months, driven by simple business account and integrated payment solutions through Getnet. As shown on the right-hand table, higher client activity translated into 8.5% year-on-year growth in fees and financial transaction income with cards, Getnet, account fees and mutual funds showing strong momentum.

On Slide 13, the income growth and disciplined cost control supported strong operating metrics. The efficiency ratio reached 36%, the best in the Chilean banking industry in 2025, while the recurrence ratio reached 63.7%, meaning more than 60% of our expenses are covered by fee generation. Operating expenses increased temporarily in early 2025 due to cloud migration costs. For the full year, operating expenses grew just 1.6%. In the quarter, total core expenses declined 1%, driven by lower administrative costs, reduced data processing expenses and the appreciation of the Chilean peso. Overall, we continue to deliver best-in-class efficiency and recurrence. At the same time, we are evolving our branch network towards the Work Cafe format, improving efficiency and customer experience supported by continued enhancements to our digital platforms.

On Slide 14, we show an overview of our cost of risk and asset quality. As in prior quarters, cost of credit remains above the historical average. The bank has been actively managing different parts of the portfolio, increasing loan duration that is reflected in increasing the impaired loan ratio, while our nonperforming loans with 90 days over or more has stabilized.

On Slide 15, we can see that the CET1 ratio reached 11% in December, far above our minimum requirement of 9.08% for December 2025 and demonstrating about 50 basis points of capital creation since December 2024. This was driven by our income generation in '25 and considers a 60% dividend provision of our 2025 profit and a 2% increase in risk-weighted assets. Our capital ratios are now fully loaded with complete implementation of capital deductions in the Basel III Chilean framework.

In January of 2026, the regulator published the current Pillar 2 charges for the Chilean banks, where we were assigned a Pillar 2 charge of 13 basis points. This is a reduction from the original 25 basis points that were assigned last year, demonstrating our solid management. Of the 13 basis points of Pillar 2 charges, about 8% must be met with core equity Tier 1 capital.

So on Slide 17, we show our guidance for 2026. For this year, we're expecting a GDP growth of a low 2%, as Lorena already mentioned, with a UF variation just below the 2.9% and an average monetary policy rate of around 4.3%. We anticipate a more favorable business environment this year, supporting mid-single-digit loan growth with a stronger rebound in the second half of the year.

Despite the slightly lower inflation, loan growth and slightly lower rates will help to sustain our NIMs on 4% levels, while our fees and financial transactions should grow mid- to high single digits. This does not include any impact for a further interchange fee reduction, which is yet to be defined by the interchange fee commission. Our efficiencies should remain around the mid-30s, while our cost of credit should continue to improve gradually to reach around 1.3% for the full year. Based on these assumptions, our expectation for 2026 are for an ROE within the range of 22% to 24%, highlighting the strong profitability of Santander Chile.

With this, I finish the presentation, and we can start the Q&A session.

[Operator Instructions] Our first question is from Ernesto Gabilondo from Bank of America.

My first question will be on the economic and political outlook. So we have been hearing that there could be the possibility to reduce the statutory tax rate and also to reduce the credit cap limit. So any color on what you are hearing also will be very helpful. And then my second question is on your loan growth expectations. You were guiding between mid-single digit around that. Just wondered if you can break down in terms of how much we expect for each segment, also very useful. And for my last question is in the sale of Getnet. I don't know if you can provide more details on the implications behind that. I don't know if you obtain an amount of cash from this transaction. So any more details will be helpful.

Thank you, Ernesto, for the questions. So I'll pass the word first to Lorena for the economic political outlook. And then Patricia will comment on asset expansion. I'll get the last question from Getnet.

Yes. For the political and economic outlook, it's important to say that we correct growth projections for 2026 and '27 mainly due to -- for one side, improvement of copper prices process and better performance of trading process and of course, the dynamic of internal demand. But in the political side, we expect that the new government will have a transition period and the tax reduction could take some time. So we expect the effect more in the 2027 and in the second half of this year than in the short term.

Right. Regarding the credit card limit discussion, we believe that, that's going to take longer to get discussed in Congress. So we don't expect anything going on in 2026 regarding that change. It will be welcome news for the industry and for the bancarization of the Chilean economy in general terms, but I believe it's going to take a while for that to get discussed.

Ernesto, regarding the loan growth for this year, as Cristian mentioned, our guidance for this year is to be around mid-single digits, both for the industry and our bank. Assumptions behind this guidance are consistent with a macro that improves gradually within the year. First of all, on the consumer side, we are seeing steady growth in auto lending. The weaker demand still for installment loans that we are expecting to improve during the year.

Regarding commercial portfolio, we already have seen a reactivation in investment in mining and better investment cycle together with recent improvements in confidence, as Lorena showed us. However, this has not yet translated into stronger growth. But during the year, this should boost commercial lending, especially in large companies and other parts of the economy as well and also help to drive higher consumer lending.

And finally, regarding mortgages, we have also seen gradual improvement in the demand during the year, in line with better conditions in the Construction segment, also the mortgage subsidy launched in May last year. And going forward, we are expecting better trends, especially in the affluent segment. All in all, we think we are well positioned in terms of liquidity and capital as well to support a higher growth scenario. And in addition, we also think we benefit from the scale and synergy generated by being part of Santander Group, leveraging shared platforms and international market expertise from the global and local teams as well.

Thanks. And regarding the Getnet question, so we had a shareholders meeting last week that considered an offer from Getnet Payments to acquire the minority stake of Getnet Chile in order to formalize a strategic partnership. The main goal is to strengthen the Getnet Chile position in a payments market that we believe is increasingly competitive, both technologically and requiring global integration. Bringing in a large international player will allow us to access those capabilities such as continuous innovation, scale, globally proven functions and the international network that opens new business opportunity for our acquiring operation.

It's very relevant that we are keeping control and the majority of the Board, ensuring business continuity, indebtedness, strategic continuity while managing the business. And at the same time, we are adding a partner that accelerates growth and strengthen the efficiency and leadership for the next stage that we're seeing on the market. So we think this is a decision to strengthen Getnet's future and create value that will benefit all shareholders.

Regarding the Construction, included an initial payment of CLP 68 billion and a service agreement under which Banco Santander provides infrastructure, staff equipment and data processing to sell Getnet solutions. And Santander will receive -- Santander Chile will receive the equivalent of 10% of the net operating revenues for the next year with an automatic extension of that contract for additional 3 years. So all in all, we assess about 65% to 70% of the total net income of Getnet will go straight to Banco Santander Chile. So the impact in terms of P&L is negligible.

And well, we had the meeting last week. So the transaction was approved with -- the quorum was very close to 95% of total shares, and it was approved by close to 87% of the participant. Out of those, 29% were minority shareholders and the majority of the minority shareholders voted in favor of the transaction. Change in regulation requires that all shareholders must vote on the shareholders' meeting to achieve the quorum required by the law. So that's why the group also was forced to vote, but we had a very strong support from the minority base of shareholders.

So that's pretty much regarding Getnet.

Our next question is from Lindsey Shema from Goldman Sachs.

Cristian and Lorena, just first, your 2026 guidance implies a slight improvement in cost of risk. Just want to hear where you see that coming from and your projections for asset quality throughout the year? And then my second question is just we saw expenses falling year-over-year in this fourth quarter. And you mentioned some efficiency improvements you've been doing that can lower your efficiency ratio long term. So just wanted to get some more color on improvements you've been making there and how you see expense growth progressing going forward?

Thank you, Lindsey, for your questions. Regarding risk, well, 2025 was on the neighborhood of the 1.4% cost of risk for this operation, and we are expecting that to improve to levels of 1.3% area. We did a relevant job in terms of improving NPLs in the commercial portfolio last year. And apart from the agro sector, we don't expect many, many new pieces of information from that part of the portfolio. So all in all, we are seeing a more sustainable and controlled cost of risk looking forward.

In terms of -- we saw a slight pickup, as I already mentioned, in December figures due more to seasonality and the start of the summer holidays that put some pressure on the collection teams by contactability, but nothing that we are seeing a very concerning. And at the same time, the mortgage portfolio, which has been increasing in [indiscernible] is not going to pass through as cost of risk, and we expect this to start improving this year gradually. It's going to take a while because the judicial process of collections is taking longer. But all in all, we don't expect this to pass through to cost of risk. So that's why we are more comfortable guiding a slight improvement this year.

And to your question on expenses, the way to look at this is that we aim to control the growth in our expense base by trying to deliver inflation expansion or inflation plus 1%. That's what we're seeing in the long term as an internal target. We are addressing this through a strong transformation in our technological platforms, improving efficiency, getting rid of routinary tasks that can be avoided and implementing new solutions and new technologies, and we are delivering some initial things on artificial intelligence that are probably going to allow us to sustain on these trends.

We are not expecting very relevant changes in the network size of us. So just slight modifications, maybe opening 1 or 2 new formats with Work Cafe and renovating some part of the legacy branch that we still have some 90 branches over there. But to your point regarding the improvement in the final part of the year, well, there was a relevant peso appreciation. And about 25% of our administrative expenses are linked to euro and U.S. dollar currencies. So that's also explaining a little, but it's also part of the whole story of how we are trying to achieve the best levels of efficiency in the industry. So thank you.

Our next question is from Yuri Fernandes from JPMorgan.

A quick one, just on the guidance, just checking if the guidance includes the reduction on Getnet stake. I know it's small, but if you can remind us what is the relevance for ROE and especially for the non-NII guidance this year, I guess you grew your fees closer to high single. I think the guidance shows a little bit of a slowdown, but not sure if this is Getnet or maybe [ mutual ] funds that were also very strong, maybe being a little bit more normalized. So just trying to understand if the guidance reflects Getnet. I understand you still need to deconsolidate. So maybe you still consolidate 10% of Getnet for a few more quarters, but just trying to get some color on this. And on your presentation -- go ahead, and I can ask another one later.

Okay. So well, regarding your questions, and thank you for that. In terms of the fee figures, you're not going to see any changes. Well, you're going to see an increase in the final part of the P&L in the minority stake in the net income assigned to minority shareholders, right? So that's where you're going to see an increase in that line that will be an effect that it's less than 1% of the total P&L of the company through the sale of this subsidiary. So it's nothing that's going to be seen as material in terms of ROE. Well, consistently, this should be on the neighborhood of 20 bps of ROE. So we are not changing guidance for this matter. It's included in the 22% to 24% range.

So do you have another question, Yuri?

Yes. No, no, that's clear. So basically, it's -- and sorry for that, it should be a minority interest, the delta here. I have just another follow-up on the SME business. On Slide 13, Cristian, you showed the EPS of SMEs and you point to 37. And you are the first here, probably you are the best one. But 37% looks a little bit low for NPS. So just checking if the number is correct and if this is the real number, if you're happy with this number or if you are working to improve, that would be...

No, in general terms, SME NPS in the local industry, it's slower, slower and it's in the area of the 33% to 37% range for most of our peers. We track this with the same methodology consistently along the years. So nothing has changed on that side. We are trying to get to levels closer to 50%, but the reality of the industry here in Chile is that, all in all, NPSs in the SME area are to be lower.

Okay. And my final one here, just a broad one regarding the parent company and Santander Chile. Do you see any other business area where there could be synergies and optionalities similar to Getnet? Just trying to understand if we could see further partnerships like on investment bank. We already have, I guess, insurance, right, and asset management. But just trying to understand if there are other areas that could be synergies with the parent.

So all in all, as a group and their operations in Chile, I think pretty much most of the pieces are in place. So you mentioned Santander Asset Management. We already have and we acquired from a previous partner a couple of years ago. And actually, we control, too, the Santander Consumer Finance operation. That's another subsidiary of the bank. We, of course, lever the partnership with the Santander Group through all the alliances that we can show as a very, very effective and with great results in terms of the amount of new brands that we cover through the auto lender. So that's a good example of one area where we are tapping into the group resources.

And the other part is a direct acquisition that the Santander Group did in Chile and that was announced in January where the group purchased an annuities company from principal. This is subject to regulatory approvals, and we expect those to -- that operation to be fulfilled by mid this year, so very close to third quarter. And well, there are some natural components between annuities companies in the Chilean market and banks as we banks tend to originate longer. We have a very good capability of originate longer assets, but it's getting more expensive for us to store them. And those assets are quite interesting for companies like the one that was recently announced to be acquired.

So I think that's pretty much the state of the art. We don't expect many moving parts going forward and the group needs to integrate this new acquired operation into the area of control. So that's what I...

No, no, that's clear. On annuities, can the local banks on annuity companies in Chile or you can't...

No, no. Capital from banks have not been completely isolated from annuities companies. So we have to remain -- we have to control those business completely separate, and that's why it was the Santander Group that purchased that company.

Our next question is from Neha Agarwala from HSBC.

We are hearing about some discussions around removing interest rate caps for consumer lending. And given that you've been historically very strong in the mass market segment, how do you weigh that opportunity? And also if you have any clarity as per that discussions? And how could that impact Santander Chile? I'll ask my next question later.

Thank you for the question. Interest rate caps have relevant limits on the ability in Chilean banks to charge interest rates to customers. So credit cards are capped at 40%, and the typical auto lender will be lending on the area of 20% to 22% and so on. So it's a sign on different sorts of products, sizes of the credit and durations. There is an early discussion regarding whether the system needs amendments on the definition of interest rate caps. But it's too early to say when this discussion is going to go from the government to the economic commissions in Congress to be discussed.

So we don't expect pretty much this thing getting approved this year. We think it's too early to tell. We need first for the Kast administration to take office. And then they will announce what the schedule is going to be like and what their priorities are going to be. We believe that it will be or it would be good news in terms of general bancarization access, especially for the part of the mass market. But we don't expect news to come on that front too soon.

Perfect. Very clear. And regarding your loan growth expectation, we are expecting the Kast administration to take office. And after that, maybe we could see a pickup in investments in general, which could improve the sentiment and the loan growth. Is that scenario already incorporated into your guidance? Or could that pose a little bit of upside risk, mostly in the second half?

So pretty much what we're seeing is a low 2% year, so something 2.3% in that area. So 1x that plus inflation places you on the low 5% area. We're expecting something between 5% and 6% for the year. Remember that Kast administration will take office in March 11. So we don't expect structural changes to be made at least until the second quarter, maybe more skewed to the final part of the year. So the pickup that we are expecting in terms of growth for the economy in general are more skewed to the final part of 2026 and into 2027.

And you account for that in your forecast, right?

Yes. Yes. That's what we are considering in the forecast.

[Operator Instructions]Our next question is from Ewald Stark from BICE.

I have 2 questions. The first one is if you can provide any details regarding your expectations for risk-weighted assets density for the year-end? And the second is regarding sensitivity to inflation. It seems like sensitivity to inflation has decreased based on monthly financial results. Those are my 2 questions. Well, what do you expect going forward regarding net income from indexation units relative to inflation?

Okay. Thanks, Ewald, for your question. Regarding the risk-weighted assets for this year and the density with a mid-single-digit growth in loans during this year, we are expecting consistent with that scenario, a growth in risk-weighted assets around 2% for this year. That will keep the density within this level, assuming that the proportion of the growth is what we already mentioned in our loan growth projections, right? So that is our base scenario for RWAs.

Regarding inflation for this year, we are considering an average exposure to inflation of around CLP 8.5 billion, which means around 15 basis points of sensitivity to every 100 basis point inflation, right? So it is true that by the end of the year, last year, we reduced our exposure given the low CPI rate that we have. The average for this year will be around CLP 8.5 billion in our base scenario.

Could you clarify what you mean by the net income from indexation?

Well, if you decompose net interest margin -- well, the NII, the NII is composed of 2 main elements, interest and the component of inflation, yes.

Yes. So regarding the readjustment part of the NII that you're mentioning, as Patricia already mentioned, we are carrying about a 15 basis point sensitivity per 100 percentage -- 100 basis points of inflation movement, right? So that's pretty much in the area of the CLP 8 billion along inflation. So pretax, it will mean about $80 million per 100 basis points of inflation.

Perfect. And let me check if I got this right. So you expect risk-weighted assets density to mildly decrease throughout the year because they are going to increase by 2%, while assets will be growing by close to 5%, given your expectations for loan growth?

Yes, right. If we assume that -- if we assume that our density maintained during the year, an increase of 5% in loan portfolio will imply around 2.5% of risk-weighted assets growth during the year.

We have a follow-up from Yuri from JPMorgan.

Just going back to the Getnet, a curiosity I have here regarding the appraisal report, and I know it's not the company, right? But some of the appraisals, they had a little bit -- in our view, a little bit conservative revenue CAGRs ahead, right? I guess revenue for Getnet should be growing 5% until 2035, like net income decreasing minus 15% CAGR until 2035. Just to understand like is this the view of the company? Like should we -- when we see your fee guidance and this thinking about the total for Getnet, should we assume like even more competitive environment, changing industry, this is the reality, like should Getnet grow revenues at 5% going forward?

So well, you mentioned -- well, that's for the long run, in terms of whatever was in the different documents displayed some stronger still growth in the first 2 years. But actually, to your point, we believe that the industry is facing relevant transformations, right? So on the one side, some very -- some recent news have talked about how Transbank now can renegotiate all the fees structure that were locked in by some court rulings. So that will create a relevant pickup in terms of competition from the largest player in the industry.

At the same time, we've seen some M&A happening of Itau and the initiation of the acquiring operation of Banco de Chile. And as such -- and we also saw the Chilean Central Bank authorizing the chamber of payments that will provide functionality for instant payments in a similar way to PI for the start-up environment. And all of this is on the umbrella of upcoming changes in the regulation that are already approved such as the open finance law.

So we are seeing a super intensive change in the way the industry is configurated. We are seeing a relevant increase in competition. And as such, we expect that the economic drivers that were part of the success of the growth of Getnet for the last 4 years are changing as we speak in terms of -- now we'll be competing with more and more relevant competitors and not only an incumbent that had the hands locked by some court rulings.

This is why we believe that it was the right time to incorporate the strategic partnership with PagoNxt to support the efficiency and the growth prospects of Getnet through the capability to enter into some cross-border transactions that we can get through this partnership. So that's pretty much the main key beliefs that are behind the transactions. And that we have been seeing materializing in the last 2 to 3 months. Thank you, Yuri.

No, no, that's a good answer, Cristian. So basically, maybe the near term is still doing fine, but competition is building up. So who knows what's going to happen, but it's likely that maybe we're going to see a more challenging environment for Getnet. I guess that's the summary, right?

Yes. Yes. That's it.

It looks like we have no further questions. I will now hand it back to the Santander Chile for the closing remarks.

Thank you all very much for taking the time to participate in today's call. We look forward to speaking with you again soon.

We'll now be closing all the lines. Thank you, and have a nice day.

Thank you.

Thank you.

Ladies and gentlemen, thank you for standing by. I'd like to welcome you to Banco Santander-Chile's Third Quarter 2025 Earnings Conference Call on the 5th of November 2025. [Operator Instructions] So with this, I would now like to pass the line to Patricia Perez, the Chief Financial Officer. Please go ahead.

Good morning, everyone. Welcome to Banco Santander-Chile's Third Quarter 2025 Results Webcast and Conference Call. This is Patricia Perez, CFO, and I'm joined today by Cristian Vicuña, Head of Strategy and IR; and Lorena Palomeque, our Economist.

Thank you, everyone, for joining us today for the review of our performance and results in the third quarter. Today, Lorena will start with an overview of the economic environment, and then Cristian will go through the key strategy points and the results of the bank in the third quarter of the year. After that, we will have a Q&A session where we will be happy to answer your questions. So let me hand over to Lorena.

Thanks, Patricia. During the third quarter of 2025, we observed positive economic indicators in the Chilean economy. Preliminary market figures suggest GDP grew around 2% year-on-year in Q2 or almost 3% when excluding mining. While we await the full national accounts report on November 18, which will also include Q1 and Q2 revisions, we estimate GDP growth of 2.4% by the end of this year and close to 2% for next year.

We are now just a few days away from the presidential and congressional elections in Chile. Also, the outcome is still uncertain, polls suggest that a change in the government administration with an opposition candidate is the most likely scenario, which could generate stronger tailwinds for the economy next year.

In terms of inflation, also moderation is already evident, it remains above the 3 target -- the 3% target with core inflation now below 4%. Limited second round effects, anchor expectations and a narrow output gap will allow inflation to converge to below 4% by the end of this year. We expect this inflation process to continue given the softer demand environment, both globally and domestically.

In this context, we maintain our forecast for the U.S. of 3.6% for the end of this year, converging to 3% next year. Regarding the monetary policy rate, during the third quarter, the Central Bank of Chile maintaining the policy rate at 4.75%, responding to an inflation environment that continues to ease. Nevertheless, the bank will emphasize that it will closely monitor the evolution of core inflation, which remains higher than expected as well as domestic demand before considering a new rate cut. We expect another reduction in the last quarter of the year, bringing the rate to 4.5% by year-end and followed by an additional cut during the course of next year.

On Slide 5, we present recent developments in the regulatory framework. Regarding the mortgage subsidy law, which was approved in May of this year, its implementation has continued within the framework of the allocation of the funds awarded in the first auction held in June. Under the law, 50,000 subsidies will be provided with almost 18,000 already authorized by banks. This has provided some momentum to the housing sector, whose growth is expected to become increasingly evident in the coming months.

With respect to the interchange fee, the second rate cap reduction remains on hold and under review by the commission, and we are awaiting further updates on this matter. Open Finance system of FinTech law established an implementation schedule that begins with a collateral submission of information that banks and payment card issuers must share in July 2026. However, the system's technical definition remains under consultation, while costs and other operation details are still pending.

This has prompted calls to review the implementation time lines, a request the [ FMC ] is currently analyzing. During September, the framework law on sectoral authorization for permits related to productive, energy and mining initiatives was approved. This will enable the development of tools for the simultaneous processing of permits streamlining the approval of low-risk projects, which should in turn accelerate investment in these sectors.

As we mentioned before, there are only a few days left until the presidential and congressional elections in Chile, which will be held on November 16 with a potential runoff on December 14. According to the latest current polls, left wing candidate, Jeannette Jara leads the presidential race with 27% support, followed by right candidate, Jose Antonio Kast with 20%.

While the presidential race has gained visibility, we must not overlook the parliamentary elections where the entire Lower House and nearly half of the senate, 23 out of 50 seats will be renewed. Polls show that Chileans remain highly concerned with crime, security and the economic growth. Simulation suggests that right wing candidates may gain ground in Congress, driven by local campaigns emphasizing security. This implies that even if the left wing candidate wins the presidency, Congress could lean right, potentially moderating more vital policy initiatives. As such, while some [ electoral ] related volatility is likely in the near term, we believe the longer-term market impact will be limited. And with that, I will now pass over to Cristian.

Thanks, Lorena. On Slide 7, we show our value creation strategy for our stakeholders through our vision to become a digital bank with Work/Café. Our focus is on attracting and activating new clients, understanding their needs and deepening engagement. We aim to surpass 5 million clients by 2026 while continuing to grow our base of active customers.

Next, we are building a global platform that leverages artificial intelligence and process automation to scale efficiently. It's about reducing the cost per active client and driving operational excellence. Our target is to maintain an efficiency ratio in the mid-30s or better, a reflection of a bank that is both digital and disciplined.

We are focusing on broadening transactional and noncredit fee-generating services. Through this, we aim to grow our fee generation in double digits and ensuring best-in-class in recurrence, our income fees divided by our structural operating expenses. Our growing client base means more activity, and we are seeing increasing transactional volumes, especially in payments.

Our digital ecosystem encourages clients to transact more frequently and seamlessly, driving engagement and loyalty. Finally, this is underpinned by strong CET1 levels, ensuring that our expansions remain sound, responsible and aligned with regulatory expectations. All of this leads to a strategy where we are capable of attracting value creation with ROEs above 20% and a dividend payout of 60% to 70%.

On Slide 8, we can already see how our strategy over the last few years has succeeded in changing our income mix and creating a more efficient and profitable bank. Our key measure of value creation has been the strong growth in ROE achieved while maintaining solid capital ratios during the implementation of Basel III. Our ROE has increased more than 6 percentage points, more than double the increase in the rest of the industry. This has been supported by a 5 percentage point improvement in our efficiency versus a 2% improvement in the industry, demonstrating our consistent cost control and the success in the implementation of our digital transformation.

We are particularly proud of successfully migrating our legacy mainframe systems to the cloud earlier this year under Project Gravity. On the other hand, we have been transforming the composition of our income revenue streams with fee generation increasing from 15% of our revenues to 20%, reflecting the success of the expansion of our client base and noncredit-related services through our digital accounts and card payments as well as other services such as asset management, brokerage and our acquiring business.

Meanwhile, the composition of the industry revenues has remained stable. This mix is driving our revenues ratio to the best-in-class in the industry. This ratio, which shows how much of our costs are paid by our fee generation now stands at above 60%, far above for the rest of the industry. We are very proud of the success of our strategy has had so far. And as you will see later on, we are enthusiastic about the evolution of our results in the coming year.

Now in Slide 10, we will take a closer look at the results this year. As of September, the bank generated a net income of CLP 798 billion, a 37% year-over-year increase resulting in a return on average equity of 24% and an efficiency of 35.9%. Growth was supported by an 8% rise in fee income and a 19% increase in financial transactions. Mutual funds grew 15%, and our recurrence ratio reached 62% year-to-date. Our net interest income, which includes our readjustment income increased 17% year-over-year, and our net interest margin remained at 4%.

Furthermore, currently, we are provisioning a dividend payout of 60% of this year's income to be paid in April next year. This year, we have also been highly recognized on several fronts. We are proud to have been recognized by several institutions. Euromoney named us Best Bank in Chile, Latin Finance recognized us as Best Bank and Global Finance awarded as the Best Bank for SMEs. This year, we have improved our sustainability rankings with our MSCI ESG rating improving from A to AA and our Sustainalytics grade improving to 15.4 points.

On Slide 11, we can see the evolution of our quarterly return over equity, where we can see that we have maintained our ROEs above 21% even in quarters with lower inflation such as this recent quarter, where the UF Variation was 0.56%, and we reached an ROE of 21.8%. On a yearly basis, our NII has improved 16.6% with a strong increase from net interest income as a result of a lower cost of funding, which improved some 100 basis points year-over-year. With this, our year-to-date NIM reached 4%. And given our current macro expectations, we expect our NIMs to stay around the 4% area for what is left of 2025.

On Slide 12, we can see how our rapidly expanding client base is leading to a higher fee generation. We currently have 4.6 million clients, of which around 59% actively engaged with us and some 2.3 million are digital accessing the online platforms on a monthly basis. The number of current accounts is increasing 10% year-on-year, driving the 5% and 4% growth of our active clients and digital clients, respectively.

The growing client base has led to a 12% annual increase in credit card transactions and a 15% rise in mutual fund volumes that we brokered. Overall, our clients maintain high satisfaction levels with the bank and our product offering. Furthermore, we continue to expand our footprint among companies, where we have increased the number of business current accounts by 23% in the last 12 months. This is explained by the simple business accounts we offer to smaller companies and the integrated payments offered through Getnet.

As we can see in the table on the right, the increase in our client base and product usage is translating into high fees and results from financial transactions, growing 11.5% year-over-year. Our main products such as cards, Getnet, account fees and mutual fund fees continue to show strong trends, with cards and account fees registering a higher expense in the quarter related to certain campaigns in our loyalty programs during the quarter.

On Slide 13, we can see how our recovery of income generation and tight cost control has improved our key performance metrics. Our efficiency ratio reached 35.9%, the best in the Chilean industry in 2025 so far, and our recurrence ratio reached 62%, meaning that over 60% of our expenses were financed by our fee generation.

In early 2025, operating expenses rose temporarily due to the cloud migration costs, mainly reflected in higher administrative expenses during the first quarter. However, overall, our operating costs grew below inflation in the year so far. In the quarter, our total core expenses decreased 3.4%, mainly due to lower personnel expenses related to the seasonality caused by the winter holidays and national holidays in September.

Overall, we have maintained our best-in-class levels of efficiency and recurrence compared to our peers. Furthermore, we continue to innovate in our branch network to align with our Work/Café format, improving both efficiency and customer experience. It is thanks to these adjustments to our contact points with clients along with the evolution of our digital platforms that we have been able to achieve these impressive levels of operating performance.

On Slide 14, we show an overview of our cost of risk and asset quality. As in prior quarters, cost of credit has remained above historical average, reflecting elevated nonperforming loans earlier in the year. From the graphs, you can see that our NPL and impaired portfolio have shown some improvement in recent quarters with a slight pickup in September due to some seasonality related to collections in the month caused by the national holidays. However, our initial data for October is showing better performance. And over the last few months, we have seen tangible improvements in our asset quality that we expect these trends to continue in the coming quarters.

On Slide 15, we can see that the CET1 ratio reached 10.8% in September '25, far above our minimum requirement of 9.08% for December 2025 and demonstrating some 45 basis points of capital creation since December 2024. This was driven by our income generation in 2025 and considers a 60% dividend provision for our 2025 profits accumulated so far and a 4% increase in risk-weighted assets. As noted in our previous call, we have a 25 basis point Pillar 2 capital charge, of which 50% was made by June 2025, in line with regulatory requirements.

So on Slide 16, we show our guidance for what's left of 2025 and our initial guidance for 2026. Regarding our 2025 forecast, we are well on track to meeting our guidance with NIMs around 4% and efficiency in the mid-30s. Overall, we expect ROE to finish the year slightly above 23%. For next year, we're expecting GDP growth of 2% with a UF variation just below 2.9% and an average monetary policy rate of around 4.4%.

With the upcoming elections in just 2 weeks, we expect a more favorable business environment next year, supporting mid-single-digit loan growth. Despite the slightly lower inflation, the loan growth and slightly lower rates should help to sustain our NIMs around 4%, while our fees on financial transactions should grow mid- to high single digits. This does not include any impact for a further interchange fee reduction, which is yet to be defined by the interchange fee commission.

Our efficiencies should remain around the mid-30s, while our cost of credit should continue to improve gradually to reach around 1.3% for the year. With all of this, our initial expectations for 2026 are for an ROE within the range of 22% to 24%, underscoring the high ROE potential of Santander-Chile.

With this, I finish my presentation, and we can start the Q&A session.

[Operator Instructions] Our first question is from Lindsey Shema from Goldman Sachs.

Congrats on the results. Looking ahead to 2026, it seems like ROE might be a little better, a little worse, but somewhat the same. Just wondering here on our end, what are the main upside and downside risks for your ROE estimate? And then on that note, does it factor in an unfavorable election result? Or could there be further downside there?

Well, so thank you for the question, Lindsey. I'm going to hand over the first part because we assess that some of the most beneficial potential scenarios of next year are related to the change in political cycle. And we are not actually considering most of those effects into our guidance -- our current guidance.

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Well, to provide some perspective, we are not considering in the potential scenario of growth for next year, the benefits of a political change that could trigger further growth in the commercial part of the loan portfolio. So we are thinking of mid-single digits, but a more benign scenario will probably make the commercial portfolio of the middle market companies grow stronger than this, maybe even going to figures of 7% to 8%, probably very skewed to the second part of next year and more into 2027 because of the delay of some projects to get approved and passed through to the practical part of the investment.

So that's one of the things that's not actually considered on our guidance. The main risks that we have seen so far this year and next year are coming from the external part of the macro scenario. You have seen the volatility in terms of assets and commodity prices and all the effects that have come from all the discussions from international trade effects of the U.S. policies and the consequences of this. So that's a source of uncertainty that's also not considered in the central part of our scenario. But all in all, I think that we are favorable of the upcoming quarters in 2026 and that in general terms the more adverse scenarios are considered within our guidance.

Yes. And maybe to complement the answer, our base case scenario considers a lower inflation, but partially offset by a lower monetary policy rate on average for next year. And also offset by better growth dynamics in terms of loans. So that could be better -- even better depending on the political landscape for next year. And we think for both scenarios, we are well prepared in our targets and guidance.

Our next question is from Daniel Mora Ardila from CrediCorp.

I have 2 questions. The first one is regarding loan growth. Can you provide further color of what do you expect about loan growth in 2026 by segment? If we can have the guidance by segment would be great. And I would like also to know if you can comment about the competitive pressures in loan growth, especially considering that there is one key competitor that is showing very high figures of loan growth in Chile. I would like to know if you feel the pressures, especially in the commercial segment. That will be my first question.

And the second one is regarding NPLs and cost of risk. I would like to know, considering the slight deterioration of NPL in the consumer segment and mortgage segment, what will be the path or the evolution of asset quality indicators in 2026, given that you are guiding for a reduction of the cost of risk next year?

Thanks, Daniel, for your questions. I will take the first one and Cristian will take the second one. So regarding the composition of loan growth for next year, we are seeing like a quite homogenic growth composition [ in segments ]. So regarding consumer loans, we continue to see growing at a healthy pace in that product. Regarding the mortgage portfolio, we also -- during this last quarter, we are seeing better dynamics leveraged by the government support or stimulus coming from the subsidies. So we are seeing good dynamics for next year as well.

And regarding the commercial loans, that will be like the question mark, but we are also seeing better dynamics for next year, especially leveraged by the political landscape, right? And if we have the right changes in the regulation that we have already seen as part of the transition we will have growth in our guidance for next year.

So within the commercial portfolio, to give you a little more flavor, we are expecting for the retail part, SMEs to grow mid-single digits as within our general guidance. But as I mentioned earlier, the question mark is what will happen with the large corporates and the investment decisions that they might trigger because of the political landscape. This is what we are not seeing yet in terms of market dynamics.

And it's probably related to the part of your question about the competitive pressure, right? So I think that in terms of the commercial part of the portfolio, we are seeing some players growing, but we don't assess it on the local part of the portfolio. And we believe that this is set to improve by the second half of next year. And turning to your credit cost of risk and risk in general performance. So, so far this year, we are showing closer to 1.4% cost of risk year-to-date.

We have some seasonal effects on September in terms of the absolute movements of the portfolio, especially in the NPL part, we are seeing it's pretty stable. Most of the increase in cost of risk is coming from the improvement that we have been displaying in the commercial NPLs. So these commercial NPLs are coming down from levels of 4.1% 12 months ago to levels of 3.4%. So we've been doing some write-offs of some nonperforming loans there, and that's explaining most of the pickup that we are seeing in terms of cost of risk. We know that's not going to continue for the upcoming quarters. So that's what makes us believe that the total cost of risk is set to improve in the next periods.

Our next question is from Neha Agarwala from HSBC.

My first question is on the interchange fee. Could you remind us what are the current levels for the interchange fee? And what is the risk that the second caps actually go through next year? What is your expectation in that regard?

So just a reminder, like we had a committee that was in charge of assessing the rate fees for the card business in general. So they implemented the first part of their reduction from levels of around 1.4% in credit to levels of 1.14%, which is the current rate and from levels of 0.6% in debit to levels of 0.5%, which is the current rate. So the second rate cut, which was suspended, it was set to decrease credit fees to levels of around 0.8% and debit to levels of around 0.35% and prepaid also to levels of around -- similar to credit of 0.8%.

So that's the part of the decision that's being reviewed. The committee is expected to come to a decision by the final months of this year or early next year. Our initial assessment was that the total reform will mean an impact in our credit card fees of around $50 million, half and half in both impacts. So the second part is expected to come next year. We don't know. But the impact will be in the neighborhood of the $20 million in fees in the card impact if the committee comes to the decision to implement the second cut.

Very clear. So if the second cut actually happens, which is not in your guidance, the impact would be between $20 million to $25 million for 2026.

Yes.

Super. And my second question is, again, going back to the cost of risk. I know you talked about it. But this year was -- we saw the NPLs coming down. You had to do some write-offs, there were one-off cases. But 2026, the asset quality should perform better than what we had this year. So why isn't cost of risk coming down, even more in the initial targets?

I think 10 basis points, it's a good range to start because we are still not seeing the full effects of the projects that we've been implementing to improve the collection cycle. So we are still -- and I agree with you, which might sound a little conservative, but we are comfortable guiding some conservative improvements and leaving some room there.

[Operator Instructions] Okay. It looks like we have no further questions. I will now hand it back to the Santander-Chile team for the closing remarks.

Thank you all very much for taking the time to participate in today's call, and we look forward to speaking with you again very soon.

That concludes the call for today. Thank you, and have a nice day.