Chile's largest bank, Santander Chile (NYSE: SAN), is aiming to increase revenues coming from the non-lending side of the corporate business as a way to further boost its profitability, the bank's strategic planning director, Raimundo Monge, told a conference call.
Non-lending activities such as cash management, advisory services, derivatives and others account for 78% of gross revenues in the corporate business, Monge said.
Hence, they have allowed the bank to expand its profitability in this line of business, as these activities tend to use zero capital and loan margins in this segment are very lean, he said.
The bank saw a strong increase in corporate loans in 2Q11 as other big international banks retreated from lending to large local borrowers, given the problems in their domestic markets, Monge noted.
This allowed Santander Chile to gain 170 basis points of market share in the corporate segment as of end-June compared to the same time in 2010, and narrow the gap with the top player in this segment, the country's second largest bank, Banco de Chile (NYSE: BCH).
SOLID OUTLOOK FOR RETAIL LENDING
The Santander unit is expecting the consumer loan portfolio - its main strategic focus - to grow at 18-22% over the next 12 months, Monge said.
Non-performing loans (NPLs) could increase slightly as a results of this, but they will be offset by higher intermediation spreads, which are expected to improve in the coming quarters, he added.
The bank reported a stronger than expected net income of 142bn pesos (US$307mn) in 2Q11, equal to a 30.5% ROE, as it benefited from lower taxes.
Santander Chile is 75% owned by Spain's Santander (NYSE: STD).
To read the bank's full earnings release, go to this link