Banco de Chile

Banco de Chile reported second-quarter operating revenues of CLP 922 billion, up 20.9% year over year, versus CLP 749 billion in the prior quarter. Net income was CLP 391 billion, with return on average capital of 29.1% and ROE of 27.9%; NIM was 5.8% and fee income grew 10.7% year over year. Cost of risk was 1.65% in the quarter, including CLP 50 billion of additional provisions; excluding those, cost of risk would have been 1.15%. Total loans reached CLP 40.3 trillion, up 2.3% year over year, and CET1 was 13.9%. For 2026, management now expects nominal loan growth of around 6%, NIM of approximately 4.6% by year-end, cost of risk of 1.2% to 1.3%, efficiency ratio of around 37%, and return on average capital and reserves of 21% to 22%.

Rodrigo Aravena described the quarter as outstanding and emphasized that the bank is performing well in profitability, local-currency demand deposit share, and asset quality, while maintaining the strongest coverage ratio and soundest capital adequacy among peers. Strategically, he stressed the bank’s resilience in a weak macro backdrop and its progress in digital adoption, commercial alliances, productivity, and ESG. His tone was cautiously constructive on the economy: he called first-half GDP weakness temporary, expects recovery from the third quarter, and sees 2027 growth approaching 3%.

Daniel Galarce focused on the tax reform and capital implications. He said the lower corporate tax rate should benefit the bank over the long run by about CLP 40 billion per year from the third year onward, while the first year should bring a one-time negative impact of around CLP 69 billion to CLP 70 billion in income tax; he also said the effective tax rate could be around 19% to 20% in the long run if inflation normalizes around 3%. On capital allocation, he noted the bank normally works with a long-run dividend payout assumption of around 60% and expects to use capital as business growth reaccelerates, targeting to operate about 100 to 200 basis points above regulatory limits when capital is deployed. He also said a separate market-risk regulatory proposal could add roughly 25 basis points to capital ratios once finalized.

Analysts focused on three themes: the tax reform, why ROE guidance was lowered despite better macro expectations, and how much capital could be released or absorbed by regulatory changes. Management said the lower tax rate is a long-run positive, but the first year will carry a one-time hit, and the effective tax rate could settle around 19% to 20% in a normalized inflation environment. On the ROE guide, they pointed to higher expected cost of risk and lower inflation as the main reasons for the reduction, while saying long-term profitability should depend on the cycle, loan growth, and capital deployment. On additional provisions, management said they were a cautious response to uncertain macro conditions and could be reassessed if the external and domestic backdrop improves.