Banco Santander Chile (NYSE:BSAC) expects loan growth to accelerate and returns to remain above 20% in 2027, even as lower inflation weighs on lending margins, executives said on the bank’s third-quarter earnings call.
The bank reported third-quarter net income attributable to shareholders of CLP 237.1 billion, down 38% from the second quarter and 4% from a year earlier. Cristian Vicuña, head of strategy and investor relations, attributed the sequential decline to the normalization of inflation following an exceptionally high variation in Chile’s inflation-linked UF unit in the previous quarter.
For the first nine months of 2026, attributable net income rose 12% year over year to CLP 892.8 billion. Return on average equity was 19.1% in the third quarter and 24.5% for the nine-month period.
2027 outlook and tax impact
Vicuña reaffirmed the bank’s target for return on average equity above 24% in 2026. That forecast includes an expected one-time expense of approximately CLP 40 billion from revaluing deferred tax assets following a change in Chile’s corporate tax rate.
For 2027, the bank issued initial return on equity guidance of 22% to 24%, based on expectations for 3.5% economic growth, a 3.1% UF variation and a monetary policy rate of 4.5%. Its outlook also includes:
- Loan growth of 6% to 7%, led by commercial lending.
- A net interest margin of approximately 4%.
- Mid- to high-single-digit growth in non-interest income.
- An efficiency ratio in the low 30s and a stable cost of risk.
CFO Patricia Pérez said expected loan growth should help offset the effect of lower inflation on the margin. She said the bank’s sensitivity would remain at approximately 15 basis points of net interest margin for every 100-basis-point change in inflation.
Vicuña said the fourth-quarter tax charge would be a non-cash accounting effect. Chile’s statutory corporate tax rate is scheduled to fall from 27% to 25.5% in 2027 and gradually to 23% in 2029. He said the lower rate and a milder inflation scenario should largely offset each other in the bank’s effective tax rate next year.
Commercial lending picks up
Total loans reached CLP 48.8 trillion, up 2.3% from the second quarter and 3.9% year to date. Commercial loans grew 4% in the quarter and 5.2% in the first nine months. Mortgage loans rose 1.8% sequentially, while auto loans increased 1.3%.
Consumer lending was weaker: total consumer loans fell 0.5% from the prior quarter, mainly because credit card balances declined 3.5%. Pérez said the bank expects commercial lending to continue leading a gradual recovery in loan growth.
Asked about competition, Vicuña said weak demand and tight spreads had characterized the commercial lending market for the past two years. He expects economic growth and investment projects to generate enough demand for the industry to grow, with slightly less competition than in the past two years.
Total deposits rose 2.8% in the quarter to CLP 33.3 trillion. Mutual funds reached CLP 16.8 trillion, up 5.5% from the prior quarter, bringing total customer funds to CLP 50.1 trillion.
Margins, fees and asset quality
The bank’s third-quarter net interest margin fell to 3.8% from 4.7% in the second quarter as UF variation slowed. For the first nine months, the margin was 4.1%, up 10 basis points from a year earlier. Net interest income from interest and readjustments rose 7% year over year to CLP 1.62 trillion for the nine-month period.
Year-to-date fees fell 3% to CLP 422 billion. Vicuña said pressure was concentrated in payment-related transactions, with weaker consumer demand affecting the card business and intense price and customer competition in merchant acquiring. He said the bank’s Getnet payments business had nearly 300,000 point-of-sale terminals and more than 240,000 merchants, and that management did not expect most of the current impact to persist next year.
Operating expenses declined 4.2% year over year, and the nine-month efficiency ratio improved by 290 basis points to 33%. The bank’s cost of risk was 1.4%, compared with 1.39% a year earlier. Its nonperforming loan ratio stood at 3.5%, and its impaired loan ratio was 7.4%.
Vicuña said the bank expects some improvement in nonperforming loans next year but is planning for a cost of risk around 1.35% to 1.4%. He said a more retail-oriented portfolio would structurally require a somewhat higher cost of risk than in earlier years.
Capital adequacy was 16.3% and the common equity Tier 1 ratio was 10.9% at the end of September, including a provision to distribute 70% of 2026 earnings as dividends.
Economic recovery expected
Chief Economist Andrés Sansone said the bank expects Chile’s economy to be flat in 2026 before growing 3.5% in 2027, supported by a recovery in mining and investment. He expects mining output to contract 6% to 8% this year, compared with the 2% growth forecast at the start of the year.
Sansone expects headline inflation to reach about 5.5% at the end of 2026 before returning to target during 2027. He said persistent energy shocks or a drift in inflation expectations could lead to tighter monetary policy than the bank’s forecast.
Vicuña identified high oil prices, international long-term rates and the effects of El Niño as risks to the outlook. He said earlier momentum in mortgages, real estate or economic reforms could provide upside to growth and lending beyond the bank’s initial assumptions.
About Banco Santander Chile (NYSE:BSAC)
Banco Santander Chile (NYSE: BSAC) is a commercial bank headquartered in Santiago, Chile. It provides banking and financial services to individuals, small and midsize businesses, corporations, and institutional clients throughout Chile. The bank operates as part of the global Santander Group, headquartered in Spain.
Its products and services include checking and savings accounts, credit and debit cards, consumer and residential mortgage loans, commercial lending, working-capital financing, and other forms of credit.
