Banco de Chile SA :BCH-US: Earnings Analysis: Q3, 2017 By the Numbers : November 8, 2017

Banco de Chile SA reports financial results for the quarter ended September 30, 2017.

We analyze the earnings along side the following peers of Banco de Chile SA – Banco Bilbao Vizcaya Argentaria, S.A. Sponsored ADR, Banco Santander-Chile Sponsored ADR, Citigroup Inc, Banco Santander S.A. Sponsored ADR and Bancolombia S.A. Sponsored ADR Pfd (BBVA-US, BSAC-US, C-US, SAN-US and CIB-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 623.61 million, Net Earnings of USD 208.80 million.
  • Net interest income margins widened from 68.80% to 70.94% compared to the same period last year.
  • Net loan assets changed 5.56% compared to same period last year and 7.26% from previous period, total deposits changed 4.57% compared to same period last year and 2.83% from previous period.
  • Year-on-year change in operating cash flow of -29.09% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings decline because of narrowing of operating margins, despite positive contribution from one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-09-30 2017-06-30 2017-03-31 2016-12-31 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 623.61 699 662.98 678.72 704.99
Revenue Growth (%YOY) -11.54 -6.51 -11.09 2.91 -1.42
Earnings (mil) 208.8 239.73 214.19 186.05 218.5
Earnings Growth (%YOY) -4.44 6.56 11.46 -6.48 11.85
Net Margin (%) 33.48 34.3 32.31 27.41 30.99
EPS 1.26 1.44 1.28 1.11 1.31
Return on Equity (%) 4.53 5.42 4.94 4.31 5.11
Return on Assets (%) 1.7 1.99 1.8 1.58 1.86

Access our Ratings and Scores for Banco de Chile SA

Market Share Versus Profits

Revenues History
Earnings History

BCH-US’s change in revenue this period compared to the same period last year of -11.54% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that BCH-US is holding onto its market share. Also, for comparison purposes, revenues changed by -10.79% and earnings by -12.90% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year earnings decline has not come as a result of decline in net interest income margins or because of any loan loss provisions. Both net interest income margins and net interest income after provisions margins have actually improved. In fact, net interest income margins went from 68.80% to 70.94% and net interest income after provisions margins improved from 54.95% to 58.33% over this period. In addition, loan loss provisions as a percentage of net interest income were 17.79% this period , and 20.14% a year ago.

Net Interest Income Margin Versus Loan Loss Provisions Margin

Quadrant label definitions. Hover to know more

High Risk; High Reward Loans, Risky Loan Portfolio, Conservative Loan Portfolio, Safer Loan Portfolio
Net Interest Income Margin History
Loan Loss Provisions Margin History

Net Loans and Total Deposits

A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.

Loan Assets Growth Rate History (Qtr YOY)
Total Deposits Growth Rate History (Qtr YOY)

BCH-US’s improvement in net interest income margins came in spite of relative drops in the levels of net loan assets and total deposits. On an absolute basis, net loan assets changed 5.56% compared to the same period last year and 7.26% from the previous period. Total deposits changed 4.57% compared to the same period last year and 2.83% from the previous period.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

BCH-US’s change in operating cash flow of -29.09% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The drop in operating margins was a main factor in the company’s earnings decline. Operating margins slid from 35.18% to 30.90%. The earnings decline appears to be impacted by one-time items, whose presence contributed to pretax margins equal to last year’s at around 39.16%.

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

Access our Ratings and Scores for Banco de Chile SA

Company Profile

Banco de Chile SA engages in the provision of banking services. It operates through the following segments: Retail Banking; Wholesale Banking; Treasury and Money Market Operations; and Operations through Subsidiaries. The Retail Banking segment consists of consumer loans, commercial loans, current accounts, credit cards, credit lines and residential mortgage loans. The Wholesale Banking segment includes corporate clients and large companies where the product offering focuses on commercial loans, current accounts, cash management services, debt instruments, foreign trade, derivative contracts and leases, as well as corporate finance transactions. The Treasury and Money Market Operations segment comprises of the securities portfolio, derivatives positions, and currency trading. The Operations through Subsidiaries segment corresponds to companies and corporations controlled by the bank. The company was founded on October 28, 1893 and is headquartered in Santiago, Chile.

CapitalCube does not own any shares in the stocks mentioned and focuses solely on providing unique fundamental research and analysis on approximately 50,000 stocks and ETFs globally. Try any of our analysis, screener or portfolio premium services free for 7 days. To get a quick preview of our services, check out our free quick summary analysis of BCH-US.


The information presented in this report has been obtained from sources deemed to be reliable, but AnalytixInsight does not make any representation about the accuracy, completeness, or timeliness of this information. This report was produced by AnalytixInsight for informational purposes only and nothing contained herein should be construed as an offer to buy or sell or as a solicitation of an offer to buy or sell any security or derivative instrument. This report is current only as of the date that it was published and the opinions, estimates, ratings and other information may change without notice or publication. Past performance is no guarantee of future results. Prior to making an investment or other financial decision, please consult with your financial, legal and tax advisors. AnalytixInsight shall not be liable for any party’s use of this report. AnalytixInsight is not a broker-dealer and does not buy, sell, maintain a position, or make a market in any security referred to herein. One of the principal tenets for us at AnalytixInsight is that the best person to handle your finances is you. By your use of our services or by reading any of our reports, you’re agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that AnalytixInsight, its directors, its employees, and its agents will not be liable for any investment decision made or action taken by you and others based on news, information, opinion, or any other material generated by us and/or published through our services. For a complete copy of our disclaimer, please visit our website