November 7, 2018
A diverse portfolio, sustained income growth and a robust digital presence
keep the bank at the top of its game
In part, Sebastian Piñera’s run-off victory in the December 2017 presidential election has unlocked the Chilean economy. GDP growth reached 5.3% in the second quarter of 2018, having averaged just 1.7% for four years. But the transition has also brought challenges. As a president from a minority party, congressional opposition is high, inequality remains disproportionate to other OECD countries and Chile’s workforce has shrunk.
By March 2018, Chile’s debt had grown to 23.5% of GDP, a 18.6% increase since 2008, triggering a rating agency downgraded over the past 18 months.
Meanwhile, the Chilean subsidiary of the Spanish bank Santander has sustained an A rating thanks to a diverse portfolio with solid asset quality. It leads Chile’s loans market with a 17.6% market share, with only 2.19% of its loans marked as past due. It also ranks third in deposits with a market share of 15.9%. The bank posted an ROA of 10.5%.
While Santander’s primary focus has been on growth as Chile’s macroeconomic environment improves, the bank has also spearheaded digital initiatives, including the Santander Life program, launched in October 2017. Its Meritolife program recognizes positive financial behavior with rewards such as lower interest rates. Santander’s continued investment in its digitalization strategy has given the bank one third of total internet banking in Chile, almost 10% more than the second-leading bank. LF