Chile’s economy is growing around 2.5% per year, or merely half of its potential, according to Claudio Melandri Hinojosa, the country head of Grupo Santander in Chile. Banco Santander Chile is growing slightly faster than its competitors, but it is also positioning itself for when the economy picks up pace again by cutting costs and putting funding in place
“There is a great opportunity to grow the pie,” Melandri says, pointing out that 4 million Chilean workers do not have checking accounts and 600,000 small businesses lack access to formal credit markets.
Santander Chile recorded net income of 250 billion Chilean pesos ($377 million) in the first half of this year, up 6% on the same period last year. The bank expanded its loan portfolio 8% year-on-year in the first six months of 2016, with retail banking loans rising 12.7%.
To support loan growth, Santander Chile plans to raise at least $400 million from local bond sales and international private placements before the end of 2016, says chief financial officer Emiliano Muratore. “The local market will be the most important but the rest will come from private placements,” Muratore says. “Europe and Japan are the most convenient markets.”
Santander Chile could raise more funding, possibly somewhere between $500 million and $600 million, but a benchmark bond in dollars is too big for a bank its size, he says. Santander Chile raised $3.08 billion in the capital markets, both at home and abroad, through the end of the third quarter this year, including €74 million ($82.9 million) in euros, $30 million in dollars and ¥3 billion ($29.1 million) in yen. “We have a very comfortable funding level,” Melandri says.
The bank has also implemented cost-cutting schemes, investing $100 million in its ATM network over three years and is looking to open all-electronic branches around the country. “The most important thing is service,” Melandri says. LF
WINNER: Santander Chile