Banco Santander-Chile (NYSE:BSAC) Q2 2020 Earnings Conference Call - Final Transcript
Jul 30, 2020 • 11:00 am ET
Ladies and gentlemen, thank you for standing by, and welcome to Banco Santander Chile Second Quarter 2020 Earnings Conference Call. [Operator Instructions]
I would now like to hand the conference over to your speaker today, Chief Financial Officer, Emiliano Muratore.
Good morning, everyone. Welcome to Banco Santander Chile's second quarter 2020 results webcast and conference call. This is Emiliano Muratore, CFO, and I'm joined today by Robert Moreno, Managing Director of Investor Relations; and our Chief Economist, Claudio Soto.
Thank you for attending today's conference call. We hope you are all safe and healthy during these times. As we are working remotely, please bear with us if we experience any technical difficulties during the call.
In Chile, after a spike in the COVID-19 cases, we are slowly beginning the reopening process. A lot of water still must flow under the bridge, but we hope the worst is past us in terms of health and economic issues. We have a lot to discuss today with various important messages, but given the uncertainty of the ongoing crisis, we have removed our guidance for 2020. We will not be -- we would appreciate to keep this in mind for our Q&A session.
Claudio will start with an update on the measures our government and local regulators have taken during the months to minimize the impact of COVID-19 on the economy. Then we will go into the results of the Bank during the quarter. And finally, we will explain how we continue to progress with our strategy and our investment in innovations.
So now, we will hand over to Claudio.
Thank you. Please turn to Slide 4. The pandemic has had a significant impact on the economy. In May, the monthly indicator of economic activity fell 15.3% year-on-year, and for June, we expect a similar contraction. As a result, unemployment has gone up drastically. The official unemployment rate in the quarter finishing May rose to 11.2%. Employment, in turn, fell more than 15% with respect to the previous year. Weak activity and the lagging effect of past oil price falls have pushed inflation below 3%. We expect it will remain below the Central Bank target for some quarters ahead. In this context, the Central Bank has kept its policy rate at 0.5%, and I think that it will keep it at this low for at least two years.
On Slide 5, we show how despite the severe impact of COVID-19 around the world, external demand for Chile has been resilient. The country has benefited from high copper prices, supported by the fast recovery of China, our main trading partner. While export have been sluggish, they have not suffered a sharp contraction as seen in imports. As a result, the balance of trade has improved in the last few months.
On Slide 6, we show how during the second quarter, the pandemic expanded quickly in Chile. Daily infections went from about 500 cases at the end of April to up to more than 6,000 cases by