Banco de Chile (NYSE:BCH) Q3 2019 Earnings Conference Call - Final Transcript

Nov 07, 2019 • 11:30 am ET


Banco de Chile (NYSE:BCH) Q3 2019 Earnings Conference Call - Final Transcript


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Hello everyone, and welcome to, Banco de Chile's 3Q '19 Financial Results Conference call. If you need a copy of the press release, it is available on the company's website. Today with us we have Mr. Rodrigo Aravena, Chief Economist, and Senior Vice President of Institutional Relations; Mr. Pablo Mejia, Head of Investor Relations; and Daniel Galarce, Head of Financial Control. Before, we begin I would like to remind you that this call is being recorded and that information discussed today may include forward-looking statements regarding the company's financial and operating performance. All projections are subject to risks and uncertainties and actual results may differ materially. Please refer to the detailed note in the company's press release, regarding forward-looking statements.

I will now turn the call over to Mr. Rodrigo Aravena. Please, you may proceed.

Rodrigo Aravena

Good afternoon everyone and thank you for attending this conference call. Today I'll begin with an overview of recent trends observed in both the Chilean economy and banking industry and then Pablo here our Head of Investor Relations will provide a deeper analysis of the performance of Banco de Chile during the last quarter. Please turn to slide number three. The annual GDP growth rate has a positive evolution this year increasing from a weak 1.6% in the first quarter to 3.3% in the last quarter. This reflected an important resilience relative to the rest of the world where the GDP growth decreased in most countries. The softer performance of Chile relative to other OE3 countries can be seen in the table chart. On a sequential basis, the economy grew 2.9% annualized in the last quarter even though the lower-than-expected growth in September. Additionally, this rise has been boosted by the weak comparison base from 2018 causing a positive statistical effect.

As Chile is a most open Latin American country to the global economy it's worth to understand how the recovering took place. The answer to this question is simply the result of our policy framework. Thanks to the low and stable inflation the Chilean Central Bank has been able to reduce the monetary policy rate this year from 3% to 1.75% which is one of the lowest rates in the world. In the bottom left chart, you can see how expansionary the momentary policy rate in Chile is compared to other countries in the region. It's interesting to see that Chile is the only country with a negative interest rate in the region. The shipment inflation has remained below the target of 3% since late 2016 as a consequence of their below trend GDP growth despite the recovery in the last quarter and the stable growth in real wages. As it's a part of knowledge since mid-October in Chile we have seen a social unrest that, leading the MS in Fastrack and lower activity in different sectors mainly those related to consumption and services. In this context, we think it's important to analyze the potential impact in both the overall economy and in the banking