SANTIAGO, Chile, Feb. 1, 2012 /PRNewswire/ — Banco Santander Chile (NYSE: SAN; SSE: Bsantander) announced today its unaudited results for the fourth quarter and full year 2011. These results are reported on a consolidated basis in accordance with Chilean GAAP in nominal Chilean pesos.
In 2011, Santander Chile’s ROE reached 23.0% with an efficiency ratio of 38.4%
In 2011 (12M11), Net income attributable to shareholders(1) totaled Ch$435,084 million (Ch$2.31 per share and US$4.60/ADR (2) and decreased 8.8% compared to net income achieved in 2010. ROE reached 23.0% in 12M11, among the highest returns in the Chilean financial system. The Efficiency ratio in 12M11 reached 38.4%, one of the best in Chile.
4Q11: Net income up 35.9% QoQ, driven by solid operating trends
In 4Q11, Net income attributable to shareholders totaled Ch$102,121 million (Ch$0.54 per share and US$1.08/ADR). Compared to 3Q11 (from now on QoQ) Net income increased 35.9%. Compared to 4Q10 (from now on YoY) net income increased 8.8%. During the quarter, the Bank saw an important QoQ improvement in margins and profitability. Gross income net of provisions and costs, a good proxy for recurrent earnings growth, increased 27.1% QoQ and 24.6% YoY in 4Q11. ROE in the quarter reached 20.8% compared to 15.8% in 3Q11.
Our outlook for Chile in 2012 continues to be positive, with GDP expected to grow between 3.8 – 4.0% and inflation to be close to 2.8%. Nonetheless, the Bank has been taking actions on 4 main points during the second half of 2011 in order to maintain sustainable levels of high profitability and efficiency in 2012 even if the external situation has a larger impact on this central scenario: (i) selective loan growth and spreads, (ii) prudent risk policies, (iii) high liquidity, and (iv) strong capital.
I. Net interest margin reached 5.3%, increasing 70bp QoQ
The Bank‘s Net interest margin reached 5.3% in 4Q11, increasing 70 basis points compared to the net interest margin reached in 3Q11. Net interest income increased 13.8% QoQ and 13.9% YoY in 4Q11. The higher quarterly Net interest income and NIM was mainly due to higher inflation rates in the quarter, since the Bank has more assets than liabilities linked to inflation. Inflation, measured as the variation of the Unidad de Fomento (an inflation indexed currency unit), increased 1.28% in 4Q11 compared to 0.56% in 3Q11 and 0.54% in 4Q10. Higher loan spreads (excluding the impacts of mismatches in inflation indexed assets and liabilities) also helped to boost the Bank’s NIM in the quarter. Loan spreads in the quarter went up following the stricter pricing policy implemented in 3Q11 by the Bank.
Selective loan growth led by lending to individuals and SMEs
In 4Q11, total loans decreased 1.9% QoQ and increased 10.8% YoY. The Bank has been following a more selective approach to loan growth in recent quarters. In the quarter, the Bank focused on expanding its higher yielding credit card loan portfolio that increased 1.6% QoQ and 15.9% YoY. Lending to SMEs led growth in the loan book and expanded 1.4% QoQ (7.9% YoY), reflecting the Bank’s consistent focus on this expanding segment. Relatively low yielding corporate loans decreased 18.5% QoQ.
II. Lower provision expense in the quarter and a stable evolution of the Bank’s Risk Index
Provision for loan losses in the quarter decreased 4.2% QoQ and 13.8% YoY. For the full year, net provision expense increased 0% compared to a 10.8% rise in loans. In addition, during the quarter, the Bank upgraded its provisioning model for loans to SMEs (See Annex 1). This signified a one-time charge of Ch$16bn in 4Q11. This concluded the process started in 2010 of overhauling our retail banking credit risk models. This should permit the credit risk areas to increase feedback regarding potential growth opportunities to commercial teams and allow the Bank to allocate capital more efficiently among business segments.
The Risk Index, which measures the percentage of loans for which the Bank must set aside loan loss allowances, based on our internal models and Superintendency of Banks guidelines, remained stable at approximately 3% throughout 2011 (3.02% in 4Q11). The Bank’s Non-performing loans ratio (NPL) increased from 2.8% in 3Q10 to 3.0% in 4Q11. This was mainly due to the fall in large corporate loans and higher growth of the Banks’ retail activities. The Coverage ratio of total NPLs (loan loss allowances over non-performing loans) reached 102.4% as of December 2011.
III. Solid growth of core deposits in the quarter
Customer funds (deposits + mutual funds) decreased 2.8% QoQ and increased 10.8% in the year. Core deposits (deposits from non-institutional clients) increased 2.8% QoQ and 29.2% YoY. As of December 2011, core deposits represented 74.6% of our total deposits compared to 67.0% as of December 2010. Our strategy of focusing on liquidity and core deposits in 2011 has resulted in an improved funding mix. The Bank’s loan to deposit ratio (measured as loans minus marketable securities that fund mortgage portfolio over total deposits) improved to 95.4% as of December 2011 compared to 99.8% as December 2010.
IV. Core capital at 11.0% in 4Q11, increasing 80bp QoQ
Shareholders’ equity totaled Ch$2,001,222 million (US$3.8 billion) as of December 2011. The Bank’s BIS ratio reached 14.7% as of December 31, 2011 compared to 13.9% as of September 2011 and 14.5% as of December 2010. The Bank’s core capital ratio reached 11.0% as of December 2011 compared to 10.2% at the end of 3Q11 and 10.6% in December 2010. Voting common shareholders’ equity is the sole component of our Tier I capital.
Institutional Background
As per the latest public records published by the Superintendency of Banks of Chile for December 2011, Banco Santander Chile was the second largest bank in terms of loans and deposits. The Bank has among the highest credit ratings among all Latin American companies, with an A+ rating from Standard and Poor’s and Fitch and Aa3 by Moody’s, which are the same ratings assigned to the Republic of Chile. The stock is traded on the New York Stock Exchange (NYSE: SAN – News) and the Santiago Stock Exchange (SSE: Bsantander). The Bank’s main shareholder is Santander, which controls 67% of Banco Santander Chile.
For more information see www.santander.cl
(1) The results in this report are unaudited and are reported according to Chilean Bank GAAP.
(2) Earnings per ADR was calculated using the Observed Exchange Rate of Ch$521.46 per US$ as of December 31, 2011.
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2012年1月20日星期五
European banks prepare for worst, hoard cash
Jan 20 (IFR) – European banks are preparing for a potential worsening of the region’s sovereign and banking crisis, with many firms stockpiling cash and cutting back on loans to new clients as they seek to protect themselves against a possible seizing-up of financial markets.
Faced with 650 billion euros of debt coming due this year – almost 40 percent of which matures before the end of March – lenders are choosing to build up a cash cushion to ensure they can cover redemptions, creating a squeeze on the wider economy in the process.
Such hoarding illustrates the nervousness of lenders even after the European Central Bank injected 489 billion euros of cash into the banking system in December. Cash deposits at the ECB have ballooned since then, reaching a record 528 billion euros this week – higher than after the Lehman Brothers collapse.
“The big concern is that things might get worse,” said Bernd Hartwig, treasury manager at Nord/LB. “Political decisions are taking too long and most banks are building up liquidity just in case something happens. They are very worried that a new crisis could be a bigger than 2008.”
System-wide hoarding is the reverse of what happened the last time central banks injected hundreds of billions of long-term money into the system. Then, banks moved quickly to put the money to work and generate returns, sparking bond and equity market rallies – and economic growth.
The US Federal Reserve almost trebled the size of its balance sheet to more than $2 trillion in the months after the collapse of Lehman Brothers, pumping cash into the banking system through programs such as the Term Auction Facility. The ECB grew its balance sheet by about a quarter in that time.
WAIT AND SEE
But this time round, many banks have taken the decision to wait. While some have paid off interbank loans – so boosting the cash reserves of creditor banks – and a handful have bought some domestic government paper, most are choosing not to commit new cash to assets or to lending.
“For many banks it’s all about survival and they have just bought more time for themselves with the ECB money,” said the treasurer of one of Europe’s largest banks. “None of the fundamentals have been addressed. People are in standby mode – you might need lots of liquidity at short notice.”
There are other factors at work, too. Banks face strict new capital and liquidity rules, and many are planning to shrink their balance sheets in order to meet those targets – not buy more. They also do not want to commit to new assets because selling out could prove difficult should conditions worsen.
“The problem is completely different from 2009,” said Elie el Hayek, global head of interest rates at HSBC. “Back then, a big proportion of the money went into assets. This time, banks cannot do that simply because they need to protect their capital and liquidity. They know any mark-to-mark losses will eat into those buffers so they don’t want to take the risk.”
PREMATURE OPTIMISM?
Recent market optimism might also be premature. Although recent sovereign bond deals have been well bid, bankers say buying in secondary markets has been weak, and that there are few signs of banks using fresh cash to buy up European government bonds.
The lack of demand in secondary markets is partly due to the stigma now attached to peripheral bonds. Investors and regulators have started to ask more questions about such exposures, with the European Banking Authority penalizing banks for holding Spanish and Italian bonds during recent stress tests. Italian 10-year bond yields have fallen slightly in recent weeks, but have not dropped below 6.3 percent since early December.
“Banks are coming under political pressure to buy in the primary market,” said Pavan Wadhwa, head of global interest rate strategy at JP Morgan. “Given the lack of demand in the secondary market for peripheral paper, we estimate the ECB would need to more than double its current pace of purchases of Italian and Spanish paper to stabilize markets at the longer end.”
On the funding side, a recent fillip in bank bond deals also masks deep underlying problems. Banks have raised more through unsecured bond issues in January than they did in the whole of the second half of 2011. But only the highest rated banks have been able to get deals done.
That leaves hundreds of other firms with debts coming due and no prospect of tapping private investors. At the ECB’s first three-year long-term refinancing operation in December, 523 banks collectively borrowed 489 billion euros. Bankers expect the February three-year LTRO to be popular too.
“The concurrent increase in deposits at the ECB is consistent with banks building up funds to replace maturing debt,” Fitch Ratings said in a report this week. “We expect the next three-year funding round in February to see a similarly high level of take-up.”
NEGATIVE CARRY
Although banks earn little by depositing cash at the ECB – a measly 0.25 percent – and so effectively lose money because they are paying a much higher rate to borrow the cash in the first place either from the central bank or privately, treasury officials and CFOs feel justified making those losses.
“Running a liquidity position is a cost,” said the treasurer at a bank facing one of the highest refinancing hurdles this year, who confirmed that the bank had tapped the ECB in December only to deposit the money right back there. “But taking cheap money from the ECB is going to increase your liquidity and placate investors and shareholders.”
High deposits at the ECB are not necessarily being made by the same banks borrowing from the central bank – although there is some anecdotal evidence of a handful doing that. Rather, high deposits are indicative of cash being hoarded on a system-wide basis.
For now, banks say they will sit on the cash until the larger problems are sorted. “Do I want new customers with high risk and low rates? I don’t think so,” said one treasurer.
If, however, confidence returns to the markets and banks become less fearful, a huge bounce in asset prices is possible. Some believe that the slow build-up of cash at the ECB creates the potential for a massive asset binge should nervousness ease and bank funding stabilize. The ECB balance sheet recently reached a record 2.7 trillion euros, the highest in its short history.
(This story will appear in the January 21 issue of the International Financing Review, a Thomson Reuters Publication. www.ifre.com )
http://tourism9.com/ http://vkins.com/
Faced with 650 billion euros of debt coming due this year – almost 40 percent of which matures before the end of March – lenders are choosing to build up a cash cushion to ensure they can cover redemptions, creating a squeeze on the wider economy in the process.
Such hoarding illustrates the nervousness of lenders even after the European Central Bank injected 489 billion euros of cash into the banking system in December. Cash deposits at the ECB have ballooned since then, reaching a record 528 billion euros this week – higher than after the Lehman Brothers collapse.
“The big concern is that things might get worse,” said Bernd Hartwig, treasury manager at Nord/LB. “Political decisions are taking too long and most banks are building up liquidity just in case something happens. They are very worried that a new crisis could be a bigger than 2008.”
System-wide hoarding is the reverse of what happened the last time central banks injected hundreds of billions of long-term money into the system. Then, banks moved quickly to put the money to work and generate returns, sparking bond and equity market rallies – and economic growth.
The US Federal Reserve almost trebled the size of its balance sheet to more than $2 trillion in the months after the collapse of Lehman Brothers, pumping cash into the banking system through programs such as the Term Auction Facility. The ECB grew its balance sheet by about a quarter in that time.
WAIT AND SEE
But this time round, many banks have taken the decision to wait. While some have paid off interbank loans – so boosting the cash reserves of creditor banks – and a handful have bought some domestic government paper, most are choosing not to commit new cash to assets or to lending.
“For many banks it’s all about survival and they have just bought more time for themselves with the ECB money,” said the treasurer of one of Europe’s largest banks. “None of the fundamentals have been addressed. People are in standby mode – you might need lots of liquidity at short notice.”
There are other factors at work, too. Banks face strict new capital and liquidity rules, and many are planning to shrink their balance sheets in order to meet those targets – not buy more. They also do not want to commit to new assets because selling out could prove difficult should conditions worsen.
“The problem is completely different from 2009,” said Elie el Hayek, global head of interest rates at HSBC. “Back then, a big proportion of the money went into assets. This time, banks cannot do that simply because they need to protect their capital and liquidity. They know any mark-to-mark losses will eat into those buffers so they don’t want to take the risk.”
PREMATURE OPTIMISM?
Recent market optimism might also be premature. Although recent sovereign bond deals have been well bid, bankers say buying in secondary markets has been weak, and that there are few signs of banks using fresh cash to buy up European government bonds.
The lack of demand in secondary markets is partly due to the stigma now attached to peripheral bonds. Investors and regulators have started to ask more questions about such exposures, with the European Banking Authority penalizing banks for holding Spanish and Italian bonds during recent stress tests. Italian 10-year bond yields have fallen slightly in recent weeks, but have not dropped below 6.3 percent since early December.
“Banks are coming under political pressure to buy in the primary market,” said Pavan Wadhwa, head of global interest rate strategy at JP Morgan. “Given the lack of demand in the secondary market for peripheral paper, we estimate the ECB would need to more than double its current pace of purchases of Italian and Spanish paper to stabilize markets at the longer end.”
On the funding side, a recent fillip in bank bond deals also masks deep underlying problems. Banks have raised more through unsecured bond issues in January than they did in the whole of the second half of 2011. But only the highest rated banks have been able to get deals done.
That leaves hundreds of other firms with debts coming due and no prospect of tapping private investors. At the ECB’s first three-year long-term refinancing operation in December, 523 banks collectively borrowed 489 billion euros. Bankers expect the February three-year LTRO to be popular too.
“The concurrent increase in deposits at the ECB is consistent with banks building up funds to replace maturing debt,” Fitch Ratings said in a report this week. “We expect the next three-year funding round in February to see a similarly high level of take-up.”
NEGATIVE CARRY
Although banks earn little by depositing cash at the ECB – a measly 0.25 percent – and so effectively lose money because they are paying a much higher rate to borrow the cash in the first place either from the central bank or privately, treasury officials and CFOs feel justified making those losses.
“Running a liquidity position is a cost,” said the treasurer at a bank facing one of the highest refinancing hurdles this year, who confirmed that the bank had tapped the ECB in December only to deposit the money right back there. “But taking cheap money from the ECB is going to increase your liquidity and placate investors and shareholders.”
High deposits at the ECB are not necessarily being made by the same banks borrowing from the central bank – although there is some anecdotal evidence of a handful doing that. Rather, high deposits are indicative of cash being hoarded on a system-wide basis.
For now, banks say they will sit on the cash until the larger problems are sorted. “Do I want new customers with high risk and low rates? I don’t think so,” said one treasurer.
If, however, confidence returns to the markets and banks become less fearful, a huge bounce in asset prices is possible. Some believe that the slow build-up of cash at the ECB creates the potential for a massive asset binge should nervousness ease and bank funding stabilize. The ECB balance sheet recently reached a record 2.7 trillion euros, the highest in its short history.
(This story will appear in the January 21 issue of the International Financing Review, a Thomson Reuters Publication. www.ifre.com )
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2012年1月17日星期二
Analysis: China's bad debt risks expose systemic shortcomings
BEIJING (Reuters) – Bad debts in China’s banks painfully expose the shortcomings of an archaic financial system geared to lend to the beck and call of government economic policy, rather than when it is profitable.
The crux of the problem is rising distrust of official appraisals of China’s 10.7 trillion yuan ($1.7 trillion) local government loans, which surged on the orders of government as it rolled out a 4 trillion yuan economic stimulus program at the end of 2008.
Banks say less than 1 percent of the loans are in trouble, a number some investors say is too low to be real as lending unleashed to spur economic growth at its weakest point implies a rising risk of bad debt as the economy slows again.
“I talk to so many people and they say the same thing: they do not trust the data coming from Chinese banks,” said James Antos, a bank analyst at Mizuho Securities Asia in Hong Kong.
China’s state audit office said earlier this month it had uncovered 530 billion yuan worth of irregularities with local government debt, leaving investors wondering how much clean-up work remains to be done.
Lacking information, investors are jumping to conclusions. Some think all local government loans are bad. More sober guesstimates assume 2-3 trillion are sour and banks’ non-performing ratios may quadruple to 5 percent, from an average 1.1 percent.
Investors’ worst fears are a cover-up that threatens financial stability in the world’s No. 2 economy.
This is especially so if Beijing orders banks to lend aggressively this year to support the economy and counter Europe’s slowdown, fuelling a vicious cycle of state-directed lending with poor credit judgment that leads to bad loans.
More immediately, the risk is that rising loan losses hit banks’ net profits and capital bases, forcing another government-led bailout like that a decade ago when Beijing spent billions on capital injections to shore up state-backed lenders.
OPTIMISTS EYE REPAYMENT
Optimists say Beijing will pay the debt, or let local governments sell bonds to repay loans used mainly for building infrastructure. Investors like the former option as it is clean and fast, but Beijing is non-committal.
Markets hate that uncertainty, which is one reason why Chinese bank shares have underperformed.
Their average price-to-book ratio of 1.3 is half that of Indonesian banks, according to Reuters data, after the Shanghai financial index plunged some 37 percent in the last two years.
“Certainly a good number of loans made in the last three years will go bad,” said David Madden, a managing partner at DAC Financial Management, a $425 million private equity firm in Hong Kong focused on trading Chinese bad debt.
“They weren’t necessarily made with the highest levels of credit analysis.”
China’s cumulative loan growth is the second fastest in the world’s emerging economies at around 55 percent, after Belarus, and a third faster than India’s 40 percent, Fitch Ratings said.
Yet Chinese banks insist bad loans are falling, not rising.
Their weighted-average non-performing loan ratio dipped 0.1 percent in the third quarter from the previous three months, Citi data showed. In contrast, Indian banks’ weighted-average ratio rose 7.5 percent, hurt in part by a falling rupee.
Non-performing loans are those where borrowers have not made payments for at least 90 days and are in or close to default.
Investors suspect banks are concealing bad loans by adamantly refusing to label them as non-performing when cash-strapped governments cannot repay.
Instead, analysts say banks have — or will — quietly restructure loans by extending maturities, violating best practice where loans are marked non-performing before being restructured.
China’s top state-owned banks declined to comment.
CONSTRAINED BY ACCOUNTING RULES
“The market does not like the fact that you are trying to hide loans which do not meet current terms,” said an analyst at a foreign bank in Hong Kong who declined to be identified.
That Chinese banks are concealing bad debt would be even more apparent if they continue to report enviably low non-performing loans in their 2011 results in March, analysts said, since a fifth of all local government loans matured last year.
In banks’ defense, they could argue their provision coverage of 190 percent is among the highest in Asia, meaning they have put aside 1.9 yuan for every yuan of dud loan — although this ratio looks good when banks recognize lower levels of bad debt.
Margarita Ho at PricewaterhouseCoopers in Beijing said banks are also constrained by China’s accounting rules.
“The accounting rules do not permit banks to provide reserves for losses based on future events, regardless of how probable they are,” she said.
But some investors argue the economic reality is that China has more bad loans than it is admitting to, especially with its economy now slowing, and so its financial stability is at stake if Beijing does not act more forcefully.
“You kind of let the bad news ride until you are forced to accept it,” said Madden from DAC. “But I don’t think kicking the can down the road is, ultimately, a smart thing to do.” ($1 = 6.3095 Chinese yuan)
(Reporting by Koh Gui Qing; Editing by Nick Edwards & Kim Coghill)
http://tourism9.cm/ http://vkins.com/
The crux of the problem is rising distrust of official appraisals of China’s 10.7 trillion yuan ($1.7 trillion) local government loans, which surged on the orders of government as it rolled out a 4 trillion yuan economic stimulus program at the end of 2008.
Banks say less than 1 percent of the loans are in trouble, a number some investors say is too low to be real as lending unleashed to spur economic growth at its weakest point implies a rising risk of bad debt as the economy slows again.
“I talk to so many people and they say the same thing: they do not trust the data coming from Chinese banks,” said James Antos, a bank analyst at Mizuho Securities Asia in Hong Kong.
China’s state audit office said earlier this month it had uncovered 530 billion yuan worth of irregularities with local government debt, leaving investors wondering how much clean-up work remains to be done.
Lacking information, investors are jumping to conclusions. Some think all local government loans are bad. More sober guesstimates assume 2-3 trillion are sour and banks’ non-performing ratios may quadruple to 5 percent, from an average 1.1 percent.
Investors’ worst fears are a cover-up that threatens financial stability in the world’s No. 2 economy.
This is especially so if Beijing orders banks to lend aggressively this year to support the economy and counter Europe’s slowdown, fuelling a vicious cycle of state-directed lending with poor credit judgment that leads to bad loans.
More immediately, the risk is that rising loan losses hit banks’ net profits and capital bases, forcing another government-led bailout like that a decade ago when Beijing spent billions on capital injections to shore up state-backed lenders.
OPTIMISTS EYE REPAYMENT
Optimists say Beijing will pay the debt, or let local governments sell bonds to repay loans used mainly for building infrastructure. Investors like the former option as it is clean and fast, but Beijing is non-committal.
Markets hate that uncertainty, which is one reason why Chinese bank shares have underperformed.
Their average price-to-book ratio of 1.3 is half that of Indonesian banks, according to Reuters data, after the Shanghai financial index plunged some 37 percent in the last two years.
“Certainly a good number of loans made in the last three years will go bad,” said David Madden, a managing partner at DAC Financial Management, a $425 million private equity firm in Hong Kong focused on trading Chinese bad debt.
“They weren’t necessarily made with the highest levels of credit analysis.”
China’s cumulative loan growth is the second fastest in the world’s emerging economies at around 55 percent, after Belarus, and a third faster than India’s 40 percent, Fitch Ratings said.
Yet Chinese banks insist bad loans are falling, not rising.
Their weighted-average non-performing loan ratio dipped 0.1 percent in the third quarter from the previous three months, Citi data showed. In contrast, Indian banks’ weighted-average ratio rose 7.5 percent, hurt in part by a falling rupee.
Non-performing loans are those where borrowers have not made payments for at least 90 days and are in or close to default.
Investors suspect banks are concealing bad loans by adamantly refusing to label them as non-performing when cash-strapped governments cannot repay.
Instead, analysts say banks have — or will — quietly restructure loans by extending maturities, violating best practice where loans are marked non-performing before being restructured.
China’s top state-owned banks declined to comment.
CONSTRAINED BY ACCOUNTING RULES
“The market does not like the fact that you are trying to hide loans which do not meet current terms,” said an analyst at a foreign bank in Hong Kong who declined to be identified.
That Chinese banks are concealing bad debt would be even more apparent if they continue to report enviably low non-performing loans in their 2011 results in March, analysts said, since a fifth of all local government loans matured last year.
In banks’ defense, they could argue their provision coverage of 190 percent is among the highest in Asia, meaning they have put aside 1.9 yuan for every yuan of dud loan — although this ratio looks good when banks recognize lower levels of bad debt.
Margarita Ho at PricewaterhouseCoopers in Beijing said banks are also constrained by China’s accounting rules.
“The accounting rules do not permit banks to provide reserves for losses based on future events, regardless of how probable they are,” she said.
But some investors argue the economic reality is that China has more bad loans than it is admitting to, especially with its economy now slowing, and so its financial stability is at stake if Beijing does not act more forcefully.
“You kind of let the bad news ride until you are forced to accept it,” said Madden from DAC. “But I don’t think kicking the can down the road is, ultimately, a smart thing to do.” ($1 = 6.3095 Chinese yuan)
(Reporting by Koh Gui Qing; Editing by Nick Edwards & Kim Coghill)
http://tourism9.cm/ http://vkins.com/
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