FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of October, 2017
Commission File Number 001-15266
BANK OF CHILE
(Translation of registrants name into English)
Paseo Ahumada 251
Santiago, Chile
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(1): o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(7): o
Indicate by check mark whether by furnishing the information contained in this Form, the
registrant is also thereby furnishing the information to the Commission pursuant to Rule
12g3-2(b) under the Securities Exchange Act of 1934.
Yes o No x
If Yes is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-
BANCO DE CHILE
REPORT ON FORM 6-K
Attached Banco de Chiles Interim Consolidated Financial Statements with notes as of September 30, 2017.
|
BANCO DE CHILE AND SUBSIDIARIES
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the periods ended as of September 30, 2017 and 2016 and December 31, 2016. |
BANCO DE CHILE AND SUBSIDIARIES
(Free translation of interim consolidated financial statements originally issued in Spanish)
INDEX
Interim Consolidated Statements of Other Comprehensive Income | |
MCh$ |
= |
Millions of Chilean pesos |
ThUS$ |
= |
Thousands of U.S. dollars |
UF or CLF |
= |
Unidad de Fomento |
|
|
(The UF is an inflation-indexed, Chilean peso denominated monetary unit set daily in advance on the basis of the previous months inflation rate). |
Ch$ or CLP |
= |
Chilean pesos |
US$ or USD |
= |
U.S. dollar |
JPY |
= |
Japanese yen |
EUR |
= |
Euro |
HKD |
= |
Hong Kong dollar |
PEN |
= |
Peruvian Sol |
CHF |
= |
Swiss Franc |
|
|
|
IFRS |
= |
International Financial Reporting Standards |
IAS |
= |
International Accounting Standards |
RAN |
= |
Compilation of Standards of the Chilean Superintendency of Banks (SBIF) |
IFRIC |
= |
International Financial Reporting Interpretations Committee |
SIC |
= |
Standards Interpretation Committee |
BANCO DE CHILE AND SUBSIDIARIES
|
|
Page | |
|
| ||
1 | |||
2 | |||
Interim Consolidated Statements of Other Comprehensive Income |
3 | ||
4 | |||
5 | |||
6 | |||
Legal regulations, basis of preparation and other information: |
7 | ||
9 | |||
14 | |||
15 | |||
18 | |||
21 | |||
22 | |||
Cash collateral on securities borrowed and reverse repurchase agreements: |
23 | ||
25 | |||
30 | |||
31 | |||
37 | |||
39 | |||
41 | |||
43 | |||
46 | |||
50 | |||
51 | |||
51 | |||
52 | |||
53 | |||
57 | |||
57 | |||
61 | |||
62 | |||
67 | |||
71 | |||
73 | |||
74 | |||
74 | |||
75 | |||
76 | |||
77 | |||
78 | |||
79 | |||
80 | |||
81 | |||
87 | |||
101 | |||
103 | |||
BANCO DE CHILE AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
For the periods ended September 30, 2017 and December 31, 2016
(Free translation of interim financial statements originally issued in Spanish)
(Expressed in million of Chilean pesos)
|
|
|
|
September |
|
December |
|
|
|
Notes |
|
MCh$ |
|
MCh$ |
|
ASSETS |
|
|
|
|
|
|
|
Cash and due from banks |
|
7 |
|
1,200,281 |
|
1,408,167 |
|
Transactions in the course of collection |
|
7 |
|
519,833 |
|
376,252 |
|
Financial assets held-for-trading |
|
8 |
|
1,184,531 |
|
1,405,781 |
|
Cash collateral on securities borrowed and reverse repurchase agreements |
|
9 |
|
65,761 |
|
55,703 |
|
Derivative instruments |
|
10 |
|
1,087,557 |
|
939,634 |
|
Loans and advances to banks |
|
11 |
|
592,767 |
|
1,172,917 |
|
Loans to customers, net |
|
12 |
|
24,883,557 |
|
24,775,543 |
|
Financial assets available-for-sale |
|
13 |
|
1,309,061 |
|
367,985 |
|
Financial assets held-to-maturity |
|
13 |
|
|
|
|
|
Investments in other companies |
|
14 |
|
36,437 |
|
32,588 |
|
Intangible assets |
|
15 |
|
33,925 |
|
29,341 |
|
Property and equipment |
|
16 |
|
215,898 |
|
219,082 |
|
Current tax assets |
|
17 |
|
22,184 |
|
6,792 |
|
Deferred tax assets |
|
17 |
|
297,237 |
|
306,030 |
|
Other assets |
|
18 |
|
494,114 |
|
462,185 |
|
TOTAL ASSETS |
|
|
|
31,943,143 |
|
31,558,000 |
|
LIABILITIES |
|
|
|
|
|
|
|
Current accounts and other demand deposits |
|
19 |
|
8,150,505 |
|
8,321,148 |
|
Transactions in the course of payment |
|
7 |
|
334,535 |
|
194,982 |
|
Cash collateral on securities lent and repurchase agreements |
|
9 |
|
192,295 |
|
216,817 |
|
Savings accounts and time deposits |
|
20 |
|
10,395,287 |
|
10,552,901 |
|
Derivative instruments |
|
10 |
|
1,208,223 |
|
1,002,087 |
|
Borrowings from financial institutions |
|
21 |
|
1,242,438 |
|
1,040,026 |
|
Debt issued |
|
22 |
|
6,351,278 |
|
6,177,927 |
|
Other financial obligations |
|
23 |
|
117,840 |
|
186,199 |
|
Current tax liabilities |
|
17 |
|
2,462 |
|
135 |
|
Deferred tax liabilities |
|
17 |
|
28,515 |
|
24,317 |
|
Provisions |
|
24 |
|
609,436 |
|
662,024 |
|
Other liabilities |
|
25 |
|
272,933 |
|
292,026 |
|
TOTAL LIABILITIES |
|
|
|
28,905,747 |
|
28,670,589 |
|
EQUITY |
|
27 |
|
|
|
|
|
Attributable to Banks Owners: |
|
|
|
|
|
|
|
Capital |
|
|
|
2,271,401 |
|
2,138,047 |
|
Reserves |
|
|
|
563,069 |
|
486,208 |
|
Other comprehensive income |
|
|
|
(10,748 |
) |
(19,921 |
) |
Retained earnings: |
|
|
|
|
|
|
|
Retained earnings from previous years |
|
|
|
16,060 |
|
16,060 |
|
Income for the period |
|
|
|
433,660 |
|
552,249 |
|
Less: |
|
|
|
|
|
|
|
Provision for minimum dividends |
|
|
|
(236,047 |
) |
(285,233 |
) |
Subtotal |
|
|
|
3,037,395 |
|
2,887,410 |
|
Non-controlling interests |
|
|
|
1 |
|
1 |
|
TOTAL EQUITY |
|
|
|
3,037,396 |
|
2,887,411 |
|
TOTAL LIABILITIES AND EQUITY |
|
|
|
31,943,143 |
|
31,558,000 |
|
The accompanying notes 1 to 41 are an integral part of these interim consolidated financial statements
BANCO DE CHILE AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF INCOME
For the nine-month ended September 30, 2017 and 2016
(Free translation of interim financial statements originally issued in Spanish)
(Expressed in million of Chilean pesos)
|
|
|
|
September |
|
September |
|
|
|
|
|
2017 |
|
2016 |
|
|
|
Notes |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
Interest revenue |
|
28 |
|
1,401,571 |
|
1,446,143 |
|
Interest expense |
|
28 |
|
(491,007 |
) |
(530,885 |
) |
Net interest income |
|
|
|
910,564 |
|
915,258 |
|
|
|
|
|
|
|
|
|
Income from fees and commissions |
|
29 |
|
350,554 |
|
327,648 |
|
Expenses from fees and commissions |
|
29 |
|
(89,354 |
) |
(87,501 |
) |
Net fees and commission income |
|
|
|
261,200 |
|
240,147 |
|
|
|
|
|
|
|
|
|
Net financial operating income |
|
30 |
|
23,886 |
|
128,574 |
|
Foreign exchange transactions, net |
|
31 |
|
54,117 |
|
7,131 |
|
Other operating income |
|
36 |
|
25,207 |
|
23,474 |
|
Total operating revenues |
|
|
|
1,274,974 |
|
1,314,584 |
|
|
|
|
|
|
|
|
|
Provisions for loan losses |
|
32 |
|
(175,663 |
) |
(222,454 |
) |
|
|
|
|
|
|
|
|
OPERATING REVENUES, NET OF PROVISIONS FOR LOAN LOSSES |
|
|
|
1,099,311 |
|
1,092,130 |
|
|
|
|
|
|
|
|
|
Personnel expenses |
|
33 |
|
(305,079 |
) |
(311,234 |
) |
Administrative expenses |
|
34 |
|
(236,827 |
) |
(236,802 |
) |
Depreciation and amortization |
|
35 |
|
(26,180 |
) |
(24,915 |
) |
Impairment |
|
35 |
|
(1 |
) |
(4 |
) |
Other operating expenses |
|
37 |
|
(18,671 |
) |
(24,465 |
) |
|
|
|
|
|
|
|
|
TOTAL OPERATING EXPENSES |
|
|
|
(586,758 |
) |
(597,420 |
) |
|
|
|
|
|
|
|
|
NET OPERATING INCOME |
|
|
|
512,553 |
|
494,710 |
|
|
|
|
|
|
|
|
|
Income attributable to associates |
|
14 |
|
4,340 |
|
3,373 |
|
Income before income tax |
|
|
|
516,893 |
|
498,083 |
|
|
|
|
|
|
|
|
|
Income tax |
|
17 |
|
(83,232 |
) |
(69,868 |
) |
|
|
|
|
|
|
|
|
NET INCOME FOR THE PERIOD |
|
|
|
433,661 |
|
428,215 |
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
Banks Owners |
|
27 |
|
433,660 |
|
428,215 |
|
Non-controlling interests |
|
|
|
1 |
|
|
|
|
|
|
|
Ch$ |
|
Ch$ |
|
Net income per share attributable to Banks Owners: |
|
|
|
|
|
|
|
Basic net income per share |
|
27 |
|
4.36 |
|
4.31 |
|
Diluted net income per share |
|
27 |
|
4.36 |
|
4.31 |
|
The accompanying notes 1 to 41 are an integral interim consolidated financial statements
BANCO DE CHILE AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF
OTHER COMPREHENSIVE INCOME
For the nine-month ended September 30, 2017 and 2016
(Free translation of interim financial statements originally issued in Spanish)
(Expressed in million of Chilean pesos)
|
|
|
|
September |
|
September |
|
|
|
Notes |
|
MCh$ |
|
MCh$ |
|
CONSOLIDATED NET INCOME FOR THE PERIOD |
|
|
|
433,661 |
|
428,215 |
|
|
|
|
|
|
|
|
|
Other comprehensive income that will be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on available-for-sale instruments valuation |
|
13 |
|
2,956 |
|
(50,830 |
) |
Net gains (losses) on derivatives held as cash flow hedges |
|
10 |
|
9,354 |
|
(22,535 |
) |
Gains (losses) on cumulative translation adjustment |
|
27 |
|
|
|
(59 |
) |
Subtotal Other comprehensive income before income taxes |
|
|
|
12,310 |
|
(73,424 |
) |
|
|
|
|
|
|
|
|
Income tax relating to the components of other comprehensive income that are reclassified in income for the period |
|
|
|
(3,137 |
) |
17,609 |
|
|
|
|
|
|
|
|
|
Total other comprehensive income items that will be reclassified subsequently to profit or loss |
|
|
|
9,173 |
|
(55,815 |
) |
|
|
|
|
|
|
|
|
Other comprehensive income that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for defined benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal other comprehensive income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax relating to the components of other comprehensive income that will not be reclassified to income for the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED COMPREHENSIVE INCOME FOR THE PERIOD |
|
|
|
442,834 |
|
372,400 |
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
Banks Owners |
|
|
|
442,833 |
|
372,400 |
|
Non-controlling interests |
|
|
|
1 |
|
|
|
|
|
|
|
Ch$ |
|
Ch$ |
|
Net income per share attributable to Banks Owners: |
|
|
|
|
|
|
|
Basic net income per share |
|
|
|
4.45 |
|
3.74 |
|
Diluted net income per share |
|
|
|
4.45 |
|
3.74 |
|
The accompanying notes 1 to 41 are an integral interim consolidated financial statements
BANCO DE CHILE AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the nine-month ended September 30, 2017 and 2016
(Free translation of interim financial statements originally issued in Spanish)
(Expressed in millions of Chilean pesos)
|
|
|
|
|
|
Reserves |
|
Other comprehensive income |
|
Retained earnings |
|
|
|
|
|
|
| ||||||||||||
|
|
|
|
Paid-in |
|
Other |
|
Reserves |
|
Unrealized |
|
Derivatives |
|
Cumulative |
|
Income |
|
Retained |
|
Income |
|
Provision for |
|
Attributable |
|
Non- |
|
Total equity |
|
|
|
Notes |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Tax |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances as of December 31, 2015 |
|
|
|
2,041,173 |
|
31,809 |
|
358,807 |
|
52,418 |
|
22,951 |
|
59 |
|
(17,719 |
) |
16,060 |
|
558,995 |
|
(324,469 |
) |
2,740,084 |
|
3 |
|
2,740,087 |
|
Capitalization of retained earnings |
|
|
|
96,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(96,874 |
) |
|
|
|
|
|
|
|
|
Retention (release) of profits according to bylaws |
|
27 |
|
|
|
|
|
95,467 |
|
|
|
|
|
|
|
|
|
|
|
(95,467 |
) |
|
|
|
|
|
|
|
|
Dividends distributions and paid |
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(366,654 |
) |
324,469 |
|
(42,185 |
) |
(2 |
) |
(42,187 |
) |
Other comprehensive income: |
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
(59 |
) |
|
|
|
|
|
|
|
|
(59 |
) |
|
|
(59 |
) |
Cash flow hedge adjustment, net |
|
27 |
|
|
|
|
|
|
|
|
|
(22,535 |
) |
|
|
5,408 |
|
|
|
|
|
|
|
(17,127 |
) |
|
|
(17,127 |
) |
Valuation adjustment on available-for-sale instruments (net) |
|
27 |
|
|
|
|
|
|
|
(50,830 |
) |
|
|
|
|
12,201 |
|
|
|
|
|
|
|
(38,629 |
) |
|
|
(38,629 |
) |
Income for the period 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
428,215 |
|
|
|
428,215 |
|
|
|
428,215 |
|
Provision for minimum dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(217,123 |
) |
(217,123 |
) |
|
|
(217,123 |
) |
Balances as of September 30, 2016 |
|
|
|
2,138,047 |
|
31,809 |
|
454,274 |
|
1,588 |
|
416 |
|
|
|
(110 |
) |
16,060 |
|
428,215 |
|
(217,123 |
) |
2,853,176 |
|
1 |
|
2,853,177 |
|
Defined benefit plans adjustment |
|
|
|
|
|
124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
124 |
|
|
|
124 |
|
Capital increase in other companies |
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
1 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives cash flow hedge, net |
|
|
|
|
|
|
|
|
|
|
|
(27,946 |
) |
|
|
6,707 |
|
|
|
|
|
|
|
(21,239 |
) |
|
|
(21,239 |
) |
Valuation adjustment on available-for-sale instruments (net) |
|
|
|
|
|
|
|
|
|
(741 |
) |
|
|
|
|
165 |
|
|
|
|
|
|
|
(576 |
) |
|
|
(576 |
) |
Income for the period 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
124,034 |
|
|
|
124,034 |
|
|
|
124,034 |
|
Provision for minimum dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(68,110 |
) |
(68,110 |
) |
|
|
(68,110 |
) |
Balances as of December 31, 2016 |
|
|
|
2,138,047 |
|
31,934 |
|
454,274 |
|
847 |
|
(27,530 |
) |
|
|
6,762 |
|
16,060 |
|
552,249 |
|
(285,233 |
) |
2,887,410 |
|
1 |
|
2,887,411 |
|
Capitalization of retained earnings |
|
|
|
133,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(133,354 |
) |
|
|
|
|
|
|
|
|
Retention (release) of profits according to bylaws |
|
27 |
|
|
|
|
|
76,861 |
|
|
|
|
|
|
|
|
|
|
|
(76,861 |
) |
|
|
|
|
|
|
|
|
Dividends distributions and paid |
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(342,034 |
) |
285,233 |
|
(56,801 |
) |
(1 |
) |
(56,802 |
) |
Other comprehensive income: |
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives cash flow hedge, net |
|
27 |
|
|
|
|
|
|
|
|
|
9,354 |
|
|
|
(2,385 |
) |
|
|
|
|
|
|
6,969 |
|
|
|
6,969 |
|
Valuation adjustment on available-for-sale instruments (net) |
|
27 |
|
|
|
|
|
|
|
2,956 |
|
|
|
|
|
(752 |
) |
|
|
|
|
|
|
2,204 |
|
|
|
2,204 |
|
Income for the period 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
433,660 |
|
|
|
433,660 |
|
1 |
|
433,661 |
|
Provision for minimum dividends |
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(236,047 |
) |
(236,047 |
) |
|
|
(236,047 |
) |
Balances as of September 30, 2017 |
|
|
|
2,271,401 |
|
31,934 |
|
531,135 |
|
3,803 |
|
(18,176 |
) |
|
|
3,625 |
|
16,060 |
|
433,660 |
|
(236,047 |
) |
3,037,395 |
|
1 |
|
3,037,396 |
|
The accompanying notes 1 to 41 are an integral part of these interim consolidated financial statements
BANCO DE CHILE AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine-month ended September 30, 2017 and 2016
(Free translation of interim financial statements originally issued in Spanish)
(Expressed in million of Chilean pesos)
|
|
|
|
September |
|
September |
|
|
|
Notes |
|
MCh$ |
|
MCh$ |
|
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net income for the period |
|
|
|
433,661 |
|
428,215 |
|
Items that do not represent cash flows: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
35 |
|
26,180 |
|
24,915 |
|
Impairment |
|
35 |
|
1 |
|
4 |
|
Provision for loans and accounts receivable from customers and owed by banks |
|
32 |
|
208,947 |
|
211,572 |
|
Provision of contingent loans |
|
32 |
|
1,051 |
|
(8,382 |
) |
Additional provisions |
|
32 |
|
|
|
52,075 |
|
Fair value adjustment of financial assets held-for-trading |
|
|
|
2,878 |
|
(1,995 |
) |
Changes in assets and liabilities by deferred taxes |
|
17 |
|
12,239 |
|
(24,424 |
) |
(Gain) loss attributable to investments in companies with significant influence, net |
|
14 |
|
(3,853 |
) |
(2,934 |
) |
(Gain) loss from sales of assets received in lieu of payment, net |
|
36 |
|
(3,772 |
) |
(3,698 |
) |
(Gain) loss on sales of property and equipment, net |
|
36-37 |
|
(597 |
) |
(101 |
) |
Charge-offs of assets received in lieu of payment |
|
37 |
|
2,453 |
|
2,935 |
|
Other charges (credits) to income that do not represent cash flows |
|
|
|
106 |
|
(12,663 |
) |
Change in the exchange rate of assets and liabilities |
|
|
|
14,866 |
|
38,362 |
|
Net interest variation, readjustment and accrued fees on assets and liabilities |
|
|
|
10,932 |
|
(119,886 |
) |
|
|
|
|
|
|
|
|
Changes in assets and liabilities that affect operating cash flows: |
|
|
|
|
|
|
|
(Increase) decrease in loans and advances to banks, net |
|
|
|
580,146 |
|
312,463 |
|
(Increase) decrease in loans to customers |
|
|
|
(383,672 |
) |
(580,338 |
) |
(Increase) decrease in financial assets held-for-trading, net |
|
|
|
116 |
|
(352,907 |
) |
(Increase) decrease in other assets and liabilities |
|
|
|
489 |
|
108,675 |
|
Increase (decrease) in current account and other demand deposits |
|
|
|
(170,426 |
) |
(696,892 |
) |
Increase (decrease) in payables from repurchase agreements and security lending |
|
|
|
(32,960 |
) |
31,169 |
|
Increase (decrease) in savings accounts and time deposits |
|
|
|
(120,345 |
) |
661,175 |
|
Sale of assets received in lieu of payment or adjudicated |
|
|
|
10,232 |
|
8,601 |
|
Total cash flows from operating activities |
|
|
|
588,672 |
|
75,941 |
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
(Increase) decrease in financial assets available-for-sale, net |
|
|
|
(936,168 |
) |
425,730 |
|
Purchases of property and equipment |
|
16 |
|
(16,242 |
) |
(19,754 |
) |
Sales of property and equipment |
|
|
|
625 |
|
122 |
|
Acquisition of intangible assets |
|
15 |
|
(11,298 |
) |
(7,905 |
) |
Acquisition of investments in companies |
|
14 |
|
|
|
(1,129 |
) |
Dividends received from investments in companies |
|
|
|
921 |
|
1,079 |
|
Total cash flows from investing activities |
|
|
|
(962,162 |
) |
398,143 |
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
Redemption of letters of credit |
|
|
|
(4,466 |
) |
(6,330 |
) |
Issuance of bonds |
|
22 |
|
1,016,532 |
|
1,196,672 |
|
Redemption of bonds |
|
|
|
(832,966 |
) |
(1,085,078 |
) |
Dividends paid |
|
27 |
|
(342,034 |
) |
(366,654 |
) |
Increase (decrease) in borrowings from foreign financial institutions |
|
|
|
202,213 |
|
(406,248 |
) |
Increase (decrease) in other financial obligations |
|
|
|
(66,014 |
) |
(5,121 |
) |
Increase (decrease) in other obligations with Central Bank of Chile |
|
|
|
(2 |
) |
(2 |
) |
Other long-term borrowings |
|
|
|
8 |
|
17,796 |
|
Payment of other long-term borrowings |
|
|
|
(2,079 |
) |
(20,035 |
) |
Total cash flows from financing activities |
|
|
|
(28,808 |
) |
(675,000 |
) |
|
|
|
|
|
|
|
|
TOTAL NET POSITIVE (NEGATIVE) CASH FLOWS FOR THE PERIOD |
|
|
|
(402,298 |
) |
(200,916 |
) |
|
|
|
|
|
|
|
|
Effect of exchange rate changes |
|
|
|
(14,866 |
) |
(38,362 |
) |
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period |
|
|
|
2,096,980 |
|
2,093,908 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
7 |
|
1,679,816 |
|
1,854,630 |
|
|
|
|
|
September |
|
September |
|
|
|
|
|
2017 |
|
2016 |
|
Operational Cash flow interest: |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
Interest received |
|
|
|
1,455,804 |
|
1,366,028 |
|
Interest paid |
|
|
|
(534,308 |
) |
(570,656 |
) |
The accompanying notes 1 to 41 are an integral part of these interim consolidated financial statements
BANCO DE CHILE AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Banco de Chile is authorized to operate as a commercial bank since September 17, 1996, being, in conformity with the stipulations of article 25 of Law No. 19,396, the legal continuation of Banco de Chile resulting from the merger of the Banco Nacional de Chile, Banco Agrícola and Banco de Valparaiso, which was constituted by public deed dated October 28, 1893, granted before the Notary Public of Santiago, Mr. Eduardo Reyes Lavalle, authorized by Supreme Decree of November 28, 1893.
Banco de Chile (or the Bank) is a Corporation organized under the laws of the Republic of Chile, regulated by the Superintendency of Banks and Financial Institutions (SBIF or Superintendency). Since 2001, it is subject to the supervision of the Securities and Exchange Commission of the United States of America (SEC), in consideration of the fact that the Bank is registered on the New York Stock Exchange (NYSE), through a program of American Depositary Receipt (ADR).
Banco de Chile offers a broad range of banking services to its customers, ranging from individuals to large corporations. The services are managed in the areas of corporations and large companies, medium and small companies and personal and consumer banking. Additionally, the Bank offers international as well as treasury banking services, in addition to those offered by subsidiaries that include securities brokerage, mutual fund and investment management, insurance brokerage, financial advisory services and securitization.
Banco de Chiles legal address is Paseo Ahumada 251, Santiago, Chile and its website is www.bancochile.cl.
The Interim Consolidated Financial Statements of Banco de Chile, for the period ended September 30, 2017 were approved by the Directors on October 26, 2017.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
2. Legal regulations, basis of preparation and other information:
(a) Legal regulations:
The General Banking Law in its Article No. 15 authorizes the Chilean Superintendency of Banks (SBIF) to issue generally applicable accounting standards for entities it supervises. The Corporations Law, in turn, requires generally accepted accounting principles to be followed.
Based on the aforementioned laws, banks should use the criteria provided by the Superintendency in accordance with the Compendium of Accounting Standards (Compendium), and any matter not addressed therein, as long as it does not contradict its instructions, should adhere to generally accepted accounting principles in technical standards issued by the Chilean Association of Accountants, that coincide with international accounting standards and international financial reporting standards agreed upon by the International Accounting Standards Board (IASB). Should there be discrepancies between these generally accepted accounting principles and the accounting criteria issued by the SBIF, the latter shall prevail.
(b) Basis of preparation:
(b.1) These Interim Consolidated Financial Statements are presented according to Chapter C-2 of the Compendium of Accounting Standards, issued by the Superintendency of Banks and Financial Institutions (SBIF).
(b.2) The following table details the entities in which the Bank has controlling interest and that are therefore consolidated in these financial statements:
|
|
|
|
|
|
|
|
Interest Owned |
| ||||||||||
|
|
|
|
|
|
|
|
Direct |
|
Indirect |
|
Total |
| ||||||
|
|
|
|
|
|
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
|
|
|
|
|
|
Functional |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
RUT |
|
Subsidiaries |
|
Country |
|
Currency |
|
% |
|
% |
|
% |
|
% |
|
% |
|
% |
|
96,767,630-6 |
|
Banchile Administradora General de Fondos S.A. |
|
Chile |
|
Ch$ |
|
99.98 |
|
99.98 |
|
0.02 |
|
0.02 |
|
100.00 |
|
100.00 |
|
96,543,250-7 |
|
Banchile Asesoría Financiera S.A. |
|
Chile |
|
Ch$ |
|
99.96 |
|
99.96 |
|
|
|
|
|
99.96 |
|
99.96 |
|
77,191,070-K |
|
Banchile Corredores de Seguros Ltda. |
|
Chile |
|
Ch$ |
|
99.83 |
|
99.83 |
|
0.17 |
|
0.17 |
|
100.00 |
|
100.00 |
|
96,571,220-8 |
|
Banchile Corredores de Bolsa S.A. |
|
Chile |
|
Ch$ |
|
99.70 |
|
99.70 |
|
0.30 |
|
0.30 |
|
100.00 |
|
100.00 |
|
96,932,010-K |
|
Banchile Securitizadora S.A. |
|
Chile |
|
Ch$ |
|
99.01 |
|
99.01 |
|
0.99 |
|
0.99 |
|
100.00 |
|
100.00 |
|
96,645,790-2 |
|
Socofin S.A. |
|
Chile |
|
Ch$ |
|
99.00 |
|
99.00 |
|
1.00 |
|
1.00 |
|
100.00 |
|
100.00 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
2. Legal regulations, basis of preparation and other information, continued:
(c) Use of estimates and judgments:
Preparing the Interim Consolidated Financial Statements requires the Banks management to make judgments, estimations and assumptions that affect the application of accounting policies and the valuation of assets, liabilities, income and expenses presented. Actual results could differ from these estimated amounts. These estimates refer to:
1. Useful life of intangible and property and equipment (Notes No.15 and No.16);
2. Income taxes and deferred taxes (Note No. 17);
3. Provisions (Note No. 24);
4. Contingencies and Commitments (Note No. 26);
5. Provision for loan losses (Note No. 11. No. 12 and No. 32);
6. Fair value of financial assets and liabilities (Note No. 39).
Estimates and relevant assumptions are regularly reviewed by the management of the Bank, according to quantify certain assets, liabilities, gains, loss and commitments. Estimates reviewed are registered in income in the period that the estimate is reviewed.
During the period of September 30, 2017 there have been no significant changes in the estimates made.
(d) Seasonality or Cyclical Character of the Transactions of the Intermediate Period:
Given the activities to which the Bank and its subsidiaries are engaged, the transactions of the Bank do not have a cyclical or seasonal nature. For this reason, specific breakdowns in these notes to the Interim Consolidated Financial Statements for the nine-month period ended September 30, 2017 are not included.
(e) Relative Importance:
In determining the information to be disclosed on the different items of the financial statements or other matters, the relative importance in relation to the financial statements of the period has been taken into account.
(f) Reclassifications:
There have not been significant reclassifications at the end of this period 2017.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
3. New Accounting Pronouncements:
3.1 Accounting standards issued by IASB:
The following is a summary of new standards, interpretations and improvements to the International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) which are not effective as of September 30, 2017:
IFRS 9 Financial Instruments.
On July 24, 2014, the IASB concluded its improvement project on the accounting for financial instruments with the publication of IFRS 9 Financial Instruments.
This standard includes new requirements based on principles for the classification and measurement, introduces a prospective model of expected credit losses on impairment accounting and changes in hedge accounting.
The designation of the classification, determining how financial assets and liabilities are accounted for in the financial statements and, in particular, how they are measured. IFRS 9 introduces a new approach to the classification of financial assets, based on the entitys business model for the management of financial assets and the characteristics of contractual flows.
In terms of impairment standard establishes a single model that applies to all financial instruments, thus eliminating a source of complexity associated with previous accounting requirements, which require a timely recognition of expected credit losses.
IFRS 9 introduces changes to the requirements for accounting hedge, and also new alternatives of strategies to use. The amendments means a substantial overhaul of hedge accounting that aligns the accounting treatment with risk management activities, enabling entities to better reflect these activities in their financial statements. In addition, as a result of these changes, users of the financial statements will be provided with better information about risk management and the effect of hedge accounting on the financial statements.
This standard also established that the change in fair value that corresponds to own credit risk will be recorded in Other Comprehensive Income, thus reducing any eventual volatility that would be generated in the income of the entity as a result of its recognition. Earlier application of this improvement is permitted, prior to any other requirement of IFRS 9.
Mandatory adoption date is January 1, 2018. Early adoption is permitted.
Banco de Chile, as a securities issuer on the New York Stock Exchange (NYSE), carried out during the year 2016 an analysis of the conceptual differences between IFRS 9 and the current provisions contained in IAS 39. As a result, during 2017 it has been initiated the execution of a work plan for the implementation of the new standard in order to comply with the required for the preparation and presentation of the annual report 20F to the Securities and Exchange Commission (SEC). The Bank is currently in the process of designing and building impairment models and impact determination.
For the purpose of these financial statements, this rule has not yet been approved by the SBIF, an event that is required for its local application.
As of the date of issuance of these financial statements, has not been quantified the impact that will result from the adoption of this new standard.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
3. New Accounting Pronouncements, continued:
IFRS 15 Revenue from Contracts with Customers.
In May 2014 was issued IFRS 15, which it has like purpose established the principles that will apply an entity to present useful information to users of financial statements about the nature, amount, opportunity and uncertainty of the income for ordinaries activities and cash flows that it is related to a contract with a client.
This new standard replace the following current standard and interpretations: IAS 18 Revenue, IAS 11 Construction contracts, IFRIC 13 Customer Loyalty Programs, IFRIC 15 Agreements for the Construction of Real State, IFRIC 18 Transfers of Assets from Customers and SIC 31 Revenue: Barter Transactions involving.
The new model will apply to all contracts with customers, except those that are inside to the scope of the others IFRS, such as leases, insurance contracts and financial instruments.
On April 12, 2016, IASB issued amendments to IFRS 15, clarifying requirements and providing a temporary relief to companies that are implementing the new standard.
In short the amendments clarify how:
· Identify a performance obligation (the promise to transfer a good or service to a customer) in a contract;
· Determining whether a company is the principal (the provider of a good or service) or an agent (the organization responsible for the good or service provided); and
· Determine whether the product of a license must be recognized at a point in time or over time.
The date of application of this new standard starts in January 1, 2018, early adoption permitted.
Banco de Chile and its subsidiaries are in the process of a detailed review of contracts that generate fee revenues in order to determine the impact of the adoption of IFRS 15. Based on the review process carried out to date, it is estimated that this standard will not have significant impacts.
IFRS 16 - Leases.
On January 2016 was issued IFRS 16, which has as purpose to establish principles to recognize, measurement, presentation and disclosure of leases contracts, for both lessee and lessor.
This new rule is no different to the previous rule, IAS 17 Leases, related to the accounting treatment for the lessor. However, related to the lessee, the new rule requires recognize the assets and liabilities, so eliminate the differences between financial and operating lease.
The effective date of application is beginning January 1, 2019. Early adoption permitted but only if IFRS 15 - Revenue from contracts with customers is also applied.
Banco de Chile and its subsidiaries are in the process of reviewing lease contracts in order to determine the impact of the adoption of this standard.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
3. New Accounting Pronouncements, continued:
IAS 28 Investments in Associates and Join Venture and IFRS 10 - Consolidated Financial Statements.
In September 2014, the IASB issued this amendment, which clarifies the scope of recognized gains and losses in a transaction involving an associate or joint venture, and this depends on whether the asset sold or contribution is a business. Therefore, IASB concluded that all of the profit or loss should be recognized against loss of control of a business. Likewise, gains or losses resulting from the sale or contribution of a subsidiary that is not a business (definition of IFRS 3) to an associate or joint venture should be recognized only to the extent of unrelated interests in the associate or joint venture.
On December 2015 the IASB agreed that the amendments should apply in the future, allowing its immediate application.
This amendment will not impact on the consolidated financial statements of Banco de Chile and its subsidiaries.
IFRS 2 Share-based payments.
In June 2016, the IASB made amendments to IFRS 2 related to the classification and measurement of transactions of share-based payment.
The amendments address the following areas:
· Compliance conditions when share-based payments are settled in cash.
· Classification of share-based transactions, net of withholding of income tax.
· Accounting for changes made to the terms of the contracts which modify the classification of cash-settled payments or settled in equity shares.
The date of application of these amendments is from January 1, 2018, early adoption permitted.
Banco de Chile and its subsidiaries will have no impacts on the consolidated financial statements as a result of the adoption of this standard.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
3. New Accounting Pronouncements, continued:
IFRS 4 Insurance contracts.
In September 2016, the IASB issued an amendment to IFRS 4 Insurance Contracts to address concerns arising from the application of new pronouncements included in IFRS 9.
The amendment introduces the following two approaches to those entities that issue insurance contracts:
· An overlay approach, will give to all companies that issue insurance contracts the option to recognize in other comprehensive income rather than profit or loss, the volatility that could arise when IFRS 9 is applied before the new contract insurance rule is issued; and
· A postponement approach, will give to companies whose activities are mostly connected with insurances an optional temporary exemption to the application of IFRS 9 until 2021. The Entities who defer the application of IFRS 9 will continue applying the existing financial instruments standard.
Banco de Chile and its subsidiaries will have no impact on the consolidated financial statements as a result of the adoption of this standard.
IAS 28 Investments in associates and joint ventures.
In December 2016, the IASB issued the Annual Improvements to IFRS Cycle 2014-2016, which included the amendment to IAS 28. This amended to clarify that a venture capital organization or a mutual fund, investment trust and similar entities may choose to account for their investments in joint ventures and associates at fair value or using the equity method. The amendment also makes it clear that the method chosen for each investment should be made at the initial time.
The date of application of these amendments is from January 1, 2018.
This change has no impact on the Consolidated Financial Statements of Banco de Chile and its subsidiaries.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
3. New Accounting Pronouncements, continued:
IAS 40 Investment Property.
IAS 40 requires that an asset be transferred to (or from), investment property only when there is a change in its use.
The amendment, issued in December 2016, clarifies that a change in managements intentions for the use of a property does not provide, in isolation, evidence of a change in its use. An entity must, therefore, have taken observable actions to support such a change.
The date of application of these amendments is from January 1, 2018.
This change has no significant impact on the Consolidated Financial Statements of Banco de Chile and its subsidiaries.
IFRIC 22 Foreign Currency Transactions and Advance Consideration.
In December 2016, the IASB issued Interpretation IFRIC 22 Foreign Currency Transactions and Advance Consideration.
This Interpretation applies to a foreign currency transaction when an entity recognizes a non-financial asset or non-financial liability arising from the payment or collection of an early consideration before the entity recognizes the related asset, expense or income.
The IFRIC specifies that at the date of the transaction for the purpose of determining the exchange rate to be used in the initial recognition of the related asset, expense or income, it is the date on which the entity initially recognizes the non-monetary asset or non-monetary liability that Arising from the payment or collection of the anticipated consideration. That is, the related income, expenses or assets should not be re-evaluated with changes in the exchange rates between the date of the initial recognition of the early consideration and the date of recognition of the transaction to which said consideration relates.
The date of application of these amendments is from January 1, 2018.
This interpretation has no impact on the Consolidated Financial Statements of Banco de Chile and its subsidiaries.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
3. New Accounting Pronouncements, continued:
IFRS 17 Insurance Contracts.
In May 2017, the IASB issued this new standard for Insurance Contracts that will allow investors to better understand the risk exposure of insurers, their profitability and their financial position.
IFRS 17 solves the comparison problems created by IFRS 4 by requiring that all insurance contracts be accounted for consistently, benefiting both investors and insurance companies. Insurance obligations will be accounted by using current values, rather than historical cost. The information will be updated periodically, providing more useful information to the users of the financial statements
The date of application of these amendments is from January 1, 2021, early adoption permitted.
This standard will not impact on the consolidated financial statements of Banco de Chile and its subsidiaries.
IFRIC 23 - Uncertainty over Income Tax Treatments.
In June 2017, the IASB published IFRIC 23, Uncertainty over Income Tax Treatments, developed by the IFRS Interpretations Committee. This interpretation indicates what disclosures should be made when there is uncertainty about the treatment followed by the entity to determine the income tax payable.
When it is not clear how the tax law applies to a particular transaction or circumstance, or if a tax authority accepts the tax treatment of a company. IAS 12 Income Taxes specifies how to account for current and deferred tax, but not how to reflect the effects of uncertainty. IFRIC 23 provides requirements in addition to the requirements of IAS 12 specifying how to reflect the effects of uncertainty in the accounting of income taxes.
The date of application of this interpretation is from January 1, 2019.
The Bank is evaluating the impact of this new interpretation.
3.2 Accounting standards issued by the Superintendency of Banks and Financial Institutions (SBIF):
On December 12, 2016, the Superintendency of Banks and Financial Institutions (SBIF) issued Circular No. 3,615, which establish that, as from 2017, the financial statements referred to as of June 30 of each year must be delivered to the SBIF with the respective review report of the interim financial information issued by its external auditors in accordance with the Generally Accepted Auditing Standards.
4. Changes in Accounting policies and Disclosures:
During the period ended September 30, 2017, there have been no accounting changes that may significantly affect these interim condensed consolidated financial statements.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
a) On January 26, 2017 in the Ordinary Session No. BCH 2,853, the Board of Directors of the Bank of Chile resolved to call an Ordinary Shareholders Meeting to be held on March 23, 2017 with the purpose of proposing, among other matters, the distribution of the dividend No. 205 of $2.92173783704 pear each of the 97,624,347,430 shares, payable against net distributable income for the year ended December 31, 2016, corresponding to 60% of such income.
In addition, the Board of Directors resolved to convene an Extraordinary Shareholders Meeting to be held on the same date, in order to propose, among other matters, the capitalization of 40% of the Banks net distributable income obtained during the fiscal year ending on December 31st, 2016, through the issuance of fully paid-in shares, without nominal value, determined at a value of $73.28 per share, which will be distributed among the shareholders at the rate of 0.02658058439 shares per share and adopting the necessary agreements subject to the exercise of the options provided for in article 31 of Law No. 19,396.
b) On February 9, 2017 according to articles 19 et seq. of Law 19,913, the Financial Analysis Unit (Unidad de Analisis Financiero) that belongs to the Chilean Ministry of Finance imposed to Banco de Chile an administrative warning and fine of UF 500 on Banco de Chile in relation to the erroneous sending to that Unit, of the information contained in article 5 of the aforementioned law, for the period between April 2011 and June 2012.
c) On March 21, 2017, due to changes in the comprises of the Board of Directors of the subsidiary Banchile Securitizadora S.A. in the course of the last year and in accordance with the law and the bylaws, the Board of Directors was completely renewed.
In accordance with the is established in articles seventh and eighth of the by-laws, the following persons were unanimously elected as Directors: Pablo Granifo Lavín, Juan Alberdi Monforte, Eduardo Ebensperger Orrego, José Miguel Quintana Malfanti and Marcos Frontaura De La Maza, who remains in office for the statutory period of three-years term, that is, until the Ordinary Shareholders Meeting to be held in 2020.
d) On March 23, 2017, the Ordinary Shareholders Meeting approved the dividend No.205 corresponding to CLP$2.92173783704 per share, payable against net distributable income for the year 2016. In addition, at the Extraordinary Shareholders Meeting held on the same date, agreed to capitalize 40% of the net distributable profit for 2016, through the issuance of fully paid-in shares with no par value, with a value of Ch$73.28 per share.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
5. Relevant Events, continued:
e) At the Ordinary Shareholders Meeting of this institution held on March 23, 2017, it was proceeded to the election of the Board of Directors, due to the end of the legal and statutory three years term with respect to the Board of Directors that has ceased in its functions.
After the corresponding voting at the aforesaid meeting, the following persons were appointed as Directors for a new three years term:
Directors: |
|
Andrés Ergas Heymann |
|
|
|
|
Alfredo Ergas Segal |
|
(Independent) |
|
|
Jaime Estévez Valencia |
|
(Independent) |
|
|
Jane Fraser |
|
|
|
|
Pablo Granifo Lavín |
|
|
|
|
Samuel Libnic |
|
|
|
|
Andrónico Luksic Craig |
|
|
|
|
Jean Paul Luksic Fontbona |
|
|
|
|
Gonzalo Menéndez Duque |
|
|
|
|
Francisco Pérez Mackenna |
|
|
|
|
Juan Enrique Pino Visinteiner |
|
|
|
|
|
|
|
First Alternate Director: |
|
Rodrigo Manubens Moltedo |
|
|
Second Alternate Director: |
|
Thomas Fürst Freiwirth |
|
(Independent) |
Moreover, in Ordinary Session No.BCH 2,856 held on March 23, 2017, the Board of Directors of the Bank of Chile agreed the following nominations and appointments:
President: |
|
Pablo Granifo Lavín |
|
|
Vice President: |
|
Andrónico Luksic Craig |
|
|
Vice President: |
|
Jane Fraser |
|
|
Board advisor: |
|
Hernán Büchi Buc |
|
|
f) On March 28, 2017, the Central Bank of Chile has communicated to Banco de Chile that the Board (Consejo) of such institution, in Special Session No 2051E, held on March 27, 2017, considering the resolutions adopted by the shareholders meetings of Banco de Chile of March 23, 2017, regarding distribution of dividends and the increase of capital through the issuance of fully paid-in shares corresponding to the 40% of the net income obtained during the year ending on December 31, 2016, resolved to take the option that the entirety of its corresponding surplus, including the part of the profits proportional to the agreed capitalization, be paid to the Central Bank of Chile in cash currency, according to the letter b) of the article 31 of the law No. 19.396, regarding the modification of the way of payment of the subordinated obligation and other applicable legislation.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
5. Relevant Events, continued:
g) On July 13, 2017, and regarding the capitalization of 40% of the net distributable profit for the 2016 fiscal year, through the issuance of fully paid-in shares agreed at the Extraordinary Shareholders Meeting held on March 23, 2017, Banco de Chile reported as essential fact the following;
(a) At the referred Extraordinary Shareholders Meeting, it was agreed to increase the capital of the Bank in the amount of CLP$133,353,827,359 through the issuance of 1,819,784,762 fully paid-in shares, with no par value, payable against the net distributable profit of the fiscal year 2016 that was not distributed as a dividend, as agreed in the Ordinary Shareholders Meeting held on the same day.
The Superintendency of Banks and Financial Institutions approved the bylaws reform, through Resolution No. 260 of May 25 of this year, which was registered in the Commercial Registry of Santiago to fs.43,218 No. 23,646 of the year 2017 and published in the Diario Oficial of Chile (equivalent to the Federal Register) of June 1, 2017.
The issue of the fully paid-in shares was recorded in the Securities Registry of the aforementioned Superintendence with No. 1/2017, dated July 11, 2017.
(b) The Board of Directors of Banco de Chile, in Session No. BCH 2,862, dated July 13, 2017, agreed to set as the date for issuing and distributing the fully paid-in shares on July 27, 2017.
(c) The shareholders who are registered in the Register of Shareholders of the Company at July 21, 2017 shall be entitled to receive the new shares, at the rate of 0.02658058439 fully paid-in shares for each share.
(d) The respective securities will be duly assigned to each shareholder, and will only be printed for those who subsequently request it in writing in the Stock Department of the Bank of Chile.
(e) As a result of the issue of fully paid-in shares, the Banks capital is divided into 99,444,132,192 nominative shares, with no par value, fully subscribed and paid.
h) On August 24, 2017, Banco de Chile informed that in conjunction with Citigroup Inc. they have agreed to extend the validity of the Cooperation Agreement signed on October 22, 2015. In accordance with said extension, the validity of the Cooperation Agreement extends from 1 January 2018 until 1 January 2020, the parties being entitled to agree before 31 August 2019 an extension for two years from 1 January 2020. If this does not occur, the contract will be extended once for a period of one year from 1 January 2020 until 1 January 2021. The same renewal procedure may be used as often as the parties may agree.
The aforementioned extension also extends to the Global Connectivity Contracts, License and Master Services Agreement that Banco de Chile has signed with Citigroup Inc.
The Board of Directors of Banco de Chile, in session No. BCH 2,865 of August 24, 2017, approved the extension referred to above, in the terms set forth in articles 146 et seq. of the Chilean Corporations Act.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
For management purposes, the Bank is organized into four segments, which are defined based on the types of products and services offered, and the type of client in which focuses as described below:
Retail: This segment focuses on individuals and small and medium-sized companies with annual sales up to UF 70,000, where the product offering focuses primarily on consumer loans, commercial loans, checking accounts, credit cards, credit lines and mortgage loans.
Wholesale: This segment focused on corporate clients and large companies, whose annual revenue exceed UF 70,000, where the product offering focuses primarily on commercial loans, checking accounts and liquidity management services, debt instruments, foreign trade, derivative contracts and leases.
Treasury: This segment includes the associated revenues to the management of the investment portfolio and the business of financial transactions and currency trading.
Transactions with customers carried out by the Treasury are reflected in the respective aforementioned segments. These products are highly transaction-focused and include foreign exchange transactions, derivatives and financial instruments in general.
Subsidiaries: Corresponds to companies and corporations controlled by the Bank, though its management is related to the segments mentioned previously, the income is obtained individually by the respective subsidiary. The companies that comprise this segment are:
Entity |
|
· Banchile Administradora General de Fondos S.A. |
· Banchile Asesoría Financiera S.A. |
· Banchile Corredores de Seguros Ltda. |
· Banchile Corredores de Bolsa S.A. |
· Banchile Securitizadora S.A. |
· Socofin S.A. |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
6. Segment Reporting, continued:
The financial information used to measure the performance of the Banks business segments is not comparable with similar information from other financial institutions because each institution relies on its own definitions. The accounting policies applied to the segments is the same as those described in the summary of accounting principles. The Bank obtains the majority of the results for: interest, indexation and commissions, net of provisions and expenses. Management is mainly based on these concepts to evaluate the performance of the segments and make decisions about the goals and allocations of resources of each unit. Although the results of the segments reconcile with those of the Bank at the total level, this is not necessarily the case in terms of the different concepts, given that management is measured and controlled individually and not on a consolidated basis, applying the following criteria:
· The net interest margin of loans and deposits is obtained aggregating the net financial margins of each individual operation of credit and uptake made by the bank. For these purposes, the volume of each operation and its contribution margin are considered, which in turn corresponds to the difference between the effective rate of the customer and the internal transfer price established according to the term and currency of each operation.
· The capital and its financial impacts on outcome have been assigned to each segment based on the risk-weighted assets.
· Operational expenses are reflected at the level of the different functional areas of the Bank. The allocation of expenses from functional areas to business segments is done using different allocation criteria, at the level of the different concepts and expense items.
Taxes are managed at a corporate level and are not allocated to business segments.
For the periods ended September 30, 2017 and 2016, there was no income from transactions with a customer or counterparty that accounted for 10% or more of the Banks total revenues.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
6. Segment Reporting, continued:
The following table presents the income by segment for the periods ended September 2017 and 2016 for each of the segments defined above:
|
|
Retail |
|
Wholesale |
|
Treasury |
|
Subsidiaries (*) |
|
Subtotal |
|
Consolidation |
|
Total |
| ||||||||||||||
|
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
679,960 |
|
651,288 |
|
237,869 |
|
260,650 |
|
(5,213 |
) |
5,796 |
|
(3,576 |
) |
(3,255 |
) |
909,040 |
|
914,479 |
|
1,524 |
|
779 |
|
910,564 |
|
915,258 |
|
Net commissions income (loss) |
|
139,742 |
|
126,258 |
|
32,719 |
|
30,741 |
|
(3,033 |
) |
(1,721 |
) |
100,359 |
|
90,519 |
|
269,787 |
|
245,797 |
|
(8,587 |
) |
(5,650 |
) |
261,200 |
|
240,147 |
|
Other operating income |
|
26,058 |
|
82,526 |
|
29,236 |
|
21,864 |
|
30,661 |
|
39,322 |
|
20,910 |
|
18,141 |
|
106,865 |
|
161,853 |
|
(3,655 |
) |
(2,674 |
) |
103,210 |
|
159,179 |
|
Total operating revenue |
|
845,760 |
|
860,072 |
|
299,824 |
|
313,255 |
|
22,415 |
|
43,397 |
|
117,693 |
|
105,405 |
|
1,285,692 |
|
1,322,129 |
|
(10,718 |
) |
(7,545 |
) |
1,274,974 |
|
1,314,584 |
|
Provision for loan losses (**) |
|
(196,982 |
) |
(213,428 |
) |
21,398 |
|
(8,936 |
) |
|
|
|
|
(79 |
) |
(90 |
) |
(175,663 |
) |
(222,454 |
) |
|
|
|
|
(175,663 |
) |
(222,454 |
) |
Depreciation and amortization |
|
(20,564 |
) |
(18,798 |
) |
(3,331 |
) |
(3,721 |
) |
(108 |
) |
(131 |
) |
(2,177 |
) |
(2,265 |
) |
(26,180 |
) |
(24,915 |
) |
|
|
|
|
(26,180 |
) |
(24,915 |
) |
Other operating expenses |
|
(380,925 |
) |
(385,467 |
) |
(110,951 |
) |
(110,623 |
) |
(3,931 |
) |
(4,447 |
) |
(75,489 |
) |
(79,513 |
) |
(571,296 |
) |
(580,050 |
) |
10,718 |
|
7,545 |
|
(560,578 |
) |
(572,505 |
) |
Income attributable to associates |
|
2,846 |
|
2,302 |
|
897 |
|
627 |
|
106 |
|
58 |
|
491 |
|
386 |
|
4,340 |
|
3,373 |
|
|
|
|
|
4,340 |
|
3,373 |
|
Income before income taxes |
|
250,135 |
|
244,681 |
|
207,837 |
|
190,602 |
|
18,482 |
|
38,877 |
|
40,439 |
|
23,923 |
|
516,893 |
|
498,083 |
|
|
|
|
|
516,893 |
|
498,083 |
|
Income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(83,232 |
) |
(69,868 |
) |
Income after income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
433,661 |
|
428,215 |
|
(*) On December 30, 2016, it was informed the dissolution and merger of the subsidiary Promarket S.A. Therefore and for purposes of an adequate comparison of this disclosure, the figures for the retail segment for the year 2016 have been restated.
(**) As of September 30, 2016, the Retail and Wholesale segments include additional provisions allocated based on their risk-weighted assets.
The following table presents assets and liabilities of the periods ended September 30, 2017 and December 31, 2016 by each segment defined above:
|
|
Retail |
|
Wholesale |
|
Treasury |
|
Subsidiaries |
|
Subtotal |
|
Consolidation |
|
Total |
| ||||||||||||||
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
15,636,264 |
|
15,427,024 |
|
10,684,975 |
|
11,358,447 |
|
4,863,226 |
|
4,061,181 |
|
588,189 |
|
535,727 |
|
31,772,654 |
|
31,382,379 |
|
(148,932 |
) |
(137,201 |
) |
31,623,722 |
|
31,245,178 |
|
Current and deferred taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
319,421 |
|
312,822 |
|
Total assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,943,143 |
|
31,558,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
10,126,709 |
|
10,249,668 |
|
10,028,271 |
|
10,268,861 |
|
8,434,769 |
|
7,874,356 |
|
433,953 |
|
390,453 |
|
29,023,702 |
|
28,783,338 |
|
(148,932 |
) |
(137,201 |
) |
28,874,770 |
|
28,646,137 |
|
Current and deferred taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,977 |
|
24,452 |
|
Total liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,905,747 |
|
28,670,589 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(a) The detail of the balances included under cash and cash equivalents and their reconciliation with the statement of cash flows at the end of each period is as follows:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
Cash and due from banks: |
|
|
|
|
|
Cash (*) |
|
624,385 |
|
665,464 |
|
Deposit in Chilean Central Bank (*) |
|
356,398 |
|
118,501 |
|
Deposits in other domestic banks |
|
6,701 |
|
8,433 |
|
Deposits abroad |
|
212,797 |
|
615,769 |
|
Subtotal - Cash and due from banks |
|
1,200,281 |
|
1,408,167 |
|
|
|
|
|
|
|
Net transactions in the course of collection |
|
185,298 |
|
181,270 |
|
Highly liquid financial instruments |
|
252,664 |
|
467,593 |
|
Repurchase agreements |
|
41,573 |
|
39,950 |
|
Total cash and cash equivalents |
|
1,679,816 |
|
2,096,980 |
|
(*) Amounts in cash funds and in Central Bank are regulatory reserve deposits that the Bank must maintain as a monthly average.
(b) Transactions in course of settlement:
Transactions in course of settlement are transactions for which the only remaining step is settlement, which will increase or decrease the funds in the Central Bank or in foreign banks, normally occurring within 24 to 48 business hours, and are detailed as follows:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
Assets |
|
|
|
|
|
Documents drawn on other banks (clearing) |
|
171,737 |
|
191,105 |
|
Funds receivable |
|
348,096 |
|
185,147 |
|
Subtotal transactions in the course of collection |
|
519,833 |
|
376,252 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Funds payable |
|
(334,535 |
) |
(194,982 |
) |
Subtotal transactions in the course of payment |
|
(334,535 |
) |
(194,982 |
) |
Net transactions in the course of settlement |
|
185,298 |
|
181,270 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
8. Financial Assets Held-for-trading:
The detail of financial instruments classified as held-for-trading is as follows:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
Instruments issued by the Chilean Government and Central Bank of Chile: |
|
|
|
|
|
Central Bank of Chile bonds |
|
266,987 |
|
30,546 |
|
Central Bank of Chile promissory notes |
|
282,500 |
|
393,019 |
|
Other instruments issued by the Chilean Government and Central Bank |
|
329,197 |
|
58,781 |
|
|
|
|
|
|
|
Other instruments issued in Chile |
|
|
|
|
|
Bonds from other domestic companies |
|
|
|
|
|
Bonds from domestic banks |
|
137 |
|
21 |
|
Deposits in domestic banks |
|
286,690 |
|
896,534 |
|
Other instruments issued in Chile |
|
809 |
|
672 |
|
|
|
|
|
|
|
Instruments issued by foreign institutions |
|
|
|
|
|
Instruments from foreign governments or central banks |
|
|
|
|
|
Other instruments issued abroad |
|
265 |
|
385 |
|
|
|
|
|
|
|
Mutual fund investments: |
|
|
|
|
|
Funds managed by related companies |
|
17,946 |
|
25,823 |
|
Funds managed by third-party |
|
|
|
|
|
Total |
|
1,184,531 |
|
1,405,781 |
|
Under Instruments issued by the Chilean Government and Central Bank of Chile are classified instruments sold under agreements to repurchase to customers and financial instruments, by an amount of Ch$6,568 million as of September 30, 2017 (Ch$21,789 million as of December 31, 2016). Repurchase agreements have an average expiration of 3 days as of period-end (4 days in December 2016). Furthermore, are maintained instruments that guarantee margins for offset transactions of derivatives through Comder Contraparte Central S.A. for an amount of Ch$20,166 million as of September 30, 2017 (Ch$9,945 million as of December 31, 2016).
Under Other instruments issued in Chile include instruments sold under agreements to repurchase to customers and financial instruments, amounting to Ch$120,056 million as of September 30, 2017 (Ch$159,803 million as of December 31, 2016). The repurchase agreements have an average maturity of 8 days at the end of the period 2017 (10 days in December 2016).
Additionally, the Bank holds financial investments in mortgage finance bonds issued by itself in the amount of Ch$16,110 million as of September 30, 2017 (Ch$19,649 million as of December 31, 2016), which are presented as a reduction of the liability line item Debt issued.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
9. Cash collateral on securities borrowed and reverse repurchase agreements:
(a) Rights for repurchase contracts: The Bank provides financing to its customers through Receivables from Repurchase Agreements and Security Borrowing, in which the financial instrument serves as collateral. As of September 30, 2017 and December 31, 2016, the Bank has the following receivables resulting from such transactions:
|
|
Up to 1 month |
|
Over 1 month and up |
|
Over 3 months and up |
|
Over 1 year and up to |
|
Over 3 years and up |
|
Over 5 years |
|
Total |
| ||||||||||||||
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Instruments issued by the Chilean Governments and Central Bank of Chile |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Bank bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Bank promissory notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other instruments issued by the Chilean Government and Central Bank |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Instruments issued in Chile |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposit promissory notes from domestic banks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage bonds from domestic banks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds from domestic banks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits in domestic banks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds from other Chilean companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other instruments issued in Chile |
|
44,892 |
|
30,963 |
|
15,806 |
|
21,967 |
|
5,063 |
|
2,773 |
|
|
|
|
|
|
|
|
|
|
|
|
|
65,761 |
|
55,703 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Instruments issued by foreign institutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Instruments from foreign governments or Central Bank |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
44,892 |
|
30,963 |
|
15,806 |
|
21,967 |
|
5,063 |
|
2,773 |
|
|
|
|
|
|
|
|
|
|
|
|
|
65,761 |
|
55,703 |
|
Securities received:
The Bank and its subsidiaries have received financial instruments that they can sell or give as collateral in case the owner of these instruments enters into default or in bankruptcy. As of September 30, 2017, the fair value of the instruments received amounts to Ch$68,363 million (Ch$54,499 million as of December, 2016).
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
9. Cash collateral on securities lent and repurchase agreements, continued:
(b) Liabilities for repurchase contracts: The Bank obtains financing by selling financial instruments and committing to purchase them at future dates, plus interest at a prefixed rate. As of September 30, 2017 and December 31, 2016, the Bank has the following payables resulting from such transactions:
|
|
Up to 1 month |
|
Over 1 month and up |
|
Over 3 months and up |
|
Over 1 year and up to |
|
Over 3 years and up |
|
Over 5 years |
|
Total |
| ||||||||||||||
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Instruments issued by the Chilean Governments and Central Bank of Chile |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Bank bonds |
|
20,743 |
|
10,568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,743 |
|
10,568 |
|
Central Bank promissory notes |
|
6,520 |
|
16,165 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,520 |
|
16,165 |
|
Other instruments issued by the Chilean Government and Central Bank |
|
72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Instruments Issued in Chile |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposit promissory notes from domestic banks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage bonds from domestic banks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds from domestic banks |
|
137 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
137 |
|
|
|
Deposits in domestic banks |
|
148,446 |
|
174,078 |
|
|
|
16,006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
148,446 |
|
190,084 |
|
Bonds from other Chilean companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other instruments issued in Chile |
|
16,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Instruments issued by foreign institutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Instruments from foreign governments or central bank |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
192,295 |
|
200,811 |
|
|
|
16,006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
192,295 |
|
216,817 |
|
Securities sold:
The fair value of securities lent and of Payables from Repurchase Agreements and Security Lending as of September 30, 2017 is Ch$192,282 million (Ch$223,721 million in December 2016). The counterparty is allowed to sell or pledge those securities in the absence of default by the Bank.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
10. Derivative Instruments and Accounting Hedges:
(a) As of September 30, 2017 and December 31, 2016, the Banks portfolio of derivative instruments is detailed as follows:
|
|
Notional amount of contract with final expiration date in |
|
Fair value |
| ||||||||||||||||||||||||||||
|
|
Up to 1 month |
|
Over 1 month and up to |
|
Over 3 months and up |
|
Over 1 year and up to 3 |
|
Over 3 year and up to 5 |
|
Over 5 years |
|
Asset |
|
Liability |
| ||||||||||||||||
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Derivatives held for hedging purposes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross currency swap |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,379 |
|
|
|
|
|
16,721 |
|
|
|
|
|
3,991 |
|
4,304 |
|
Interest rate swap |
|
|
|
|
|
|
|
|
|
|
|
10,726 |
|
47,869 |
|
50,213 |
|
13,077 |
|
19,777 |
|
33,588 |
|
41,365 |
|
150 |
|
218 |
|
3,181 |
|
5,989 |
|
Total derivatives held for hedging purposes |
|
|
|
|
|
|
|
|
|
|
|
10,726 |
|
47,869 |
|
50,213 |
|
28,456 |
|
19,777 |
|
33,588 |
|
58,086 |
|
150 |
|
218 |
|
7,172 |
|
10,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives held as cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap and cross currency swap |
|
66,503 |
|
|
|
|
|
|
|
145,423 |
|
203,882 |
|
438,958 |
|
546,729 |
|
30,712 |
|
30,883 |
|
427,836 |
|
416,507 |
|
41,583 |
|
63,482 |
|
61,291 |
|
45,722 |
|
Total derivatives held as cash flow hedges |
|
66,503 |
|
|
|
|
|
|
|
145,423 |
|
203,882 |
|
438,958 |
|
546,729 |
|
30,712 |
|
30,883 |
|
427,836 |
|
416,507 |
|
41,583 |
|
63,482 |
|
61,291 |
|
45,722 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency forward |
|
6,105,200 |
|
5,464,265 |
|
6,996,203 |
|
6,186,901 |
|
13,862,789 |
|
10,373,905 |
|
1,508,089 |
|
740,167 |
|
154,519 |
|
53,336 |
|
6,391 |
|
6,704 |
|
369,427 |
|
163,701 |
|
410,210 |
|
138,574 |
|
Interest rate forward |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap |
|
1,736,417 |
|
1,146,528 |
|
2,705,325 |
|
4,015,500 |
|
15,448,238 |
|
7,430,120 |
|
13,724,320 |
|
10,543,378 |
|
5,236,477 |
|
4,924,193 |
|
7,236,286 |
|
6,837,254 |
|
255,770 |
|
253,307 |
|
252,899 |
|
249,930 |
|
Cross currency swap |
|
140,307 |
|
185,592 |
|
376,282 |
|
563,299 |
|
1,777,227 |
|
1,512,446 |
|
3,238,347 |
|
1,999,817 |
|
2,153,078 |
|
1,641,551 |
|
3,376,796 |
|
3,239,685 |
|
417,544 |
|
455,784 |
|
471,441 |
|
554,722 |
|
Call currency options |
|
43,083 |
|
31,432 |
|
159,794 |
|
51,502 |
|
70,840 |
|
80,547 |
|
2,700 |
|
10,579 |
|
|
|
|
|
|
|
|
|
602 |
|
1,558 |
|
1,549 |
|
1,979 |
|
Put currency options |
|
33,531 |
|
19,175 |
|
132,147 |
|
29,093 |
|
50,250 |
|
63,862 |
|
2,860 |
|
10,579 |
|
|
|
|
|
|
|
|
|
2,481 |
|
1,584 |
|
3,661 |
|
867 |
|
Total trading derivatives |
|
8,058,538 |
|
6,846,992 |
|
10,369,751 |
|
10,846,295 |
|
31,209,344 |
|
19,460,880 |
|
18,476,316 |
|
13,304,520 |
|
7,544,074 |
|
6,619,080 |
|
10,619,473 |
|
10,083,643 |
|
1,045,824 |
|
875,934 |
|
1,139,760 |
|
946,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
8,125,041 |
|
6,846,992 |
|
10,369,751 |
|
10,846,295 |
|
31,354,767 |
|
19,675,488 |
|
18,963,143 |
|
13,901,462 |
|
7,603,242 |
|
6,669,740 |
|
11,080,897 |
|
10,558,236 |
|
1,087,557 |
|
939,634 |
|
1,208,223 |
|
1,002,087 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
10. Derivative Instruments and Accounting Hedges, continued:
(b) Fair value Hedges:
The Bank uses cross-currency swaps and interest rate swaps to hedge its exposure to changes in the fair value of the hedged elements attributable to interest rates in financial instruments. The aforementioned hedge instruments change the effective cost of long-term issuances from a fixed interest rate to a floating rate, decreasing the duration and modifying the sensitivity to the shortest segments of the curve.
Below is a detail of the hedged elements and instruments under fair value hedges as of September 30, 2017 and December 31, 2016:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
Hedge element |
|
|
|
|
|
Commercial loans |
|
15,379 |
|
16,721 |
|
Corporate bonds |
|
94,534 |
|
122,081 |
|
|
|
|
|
|
|
Hedge instrument |
|
|
|
|
|
Cross currency swap |
|
15,379 |
|
16,721 |
|
Interest rate swap |
|
94,534 |
|
122,081 |
|
(c) Cash flow Hedges:
(c.1) The Bank uses cross currency swaps to hedge the risk from variability of cash flows attributable to changes in the interest rates and foreign exchange of foreign banks obligations and bonds issued abroad in US Dollars, Hong Kong dollars, Peruvian Sol, Swiss Franc, Japanese Yens and Euros. The cash flows of the cross currency swaps equal the cash flows of the hedged items, which modify uncertain cash flows to known cash flows derived from a fixed interest rate.
Additionally, these cross currency swap contracts used to hedge the risk from variability of the Unidad de Fomento (CLF) in assets flows denominated in CLF until a nominal amount equal to the portion notional of the hedging instrument CLF, whose readjustment daily impact the item Interest Revenue of the Income Financial Statements.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
10. Derivative Instruments and Accounting Hedges, continued:
(c) Cash flow Hedges, continued:
(c.2) Below are the cash flows from bonds issued abroad objects of this hedge and the cash flows of the asset part of the derivative instrument:
|
|
Up to 1 month |
|
Over 1 month and up to 3 |
|
Over 3 months and up |
|
Over 1 year and up to 3 |
|
Over 3 years and up to |
|
Over 5 years |
|
Total |
| ||||||||||||||
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge element |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outflows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Bond EUR |
|
|
|
|
|
(589 |
) |
|
|
(682 |
) |
(552 |
) |
(2,542 |
) |
(1,105 |
) |
(2,542 |
) |
(1,105 |
) |
(84,610 |
) |
(35,467 |
) |
(90,965 |
) |
(38,229 |
) |
Corporate Bond HKD |
|
(3,945 |
) |
|
|
|
|
|
|
(7,535 |
) |
(12,144 |
) |
(71,293 |
) |
(76,922 |
) |
(15,762 |
) |
(21,084 |
) |
(318,480 |
) |
(338,517 |
) |
(417,015 |
) |
(448,667 |
) |
Corporate Bond PEN |
|
(14,983 |
) |
|
|
|
|
|
|
|
|
(15,614 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(14,983 |
) |
(15,614 |
) |
Corporate Bond CHF |
|
|
|
|
|
(1,979 |
) |
(1,031 |
) |
(167,800 |
) |
(87,308 |
) |
(202,855 |
) |
(370,926 |
) |
(495 |
) |
(495 |
) |
(99,675 |
) |
(99,748 |
) |
(472,804 |
) |
(559,508 |
) |
Obligation USD |
|
(45,035 |
) |
(531 |
) |
|
|
|
|
(654 |
) |
(115,113 |
) |
(96,087 |
) |
(101,478 |
) |
|
|
|
|
|
|
|
|
(141,776 |
) |
(217,122 |
) |
Corporate Bond JPY |
|
|
|
|
|
(156 |
) |
(306 |
) |
(706 |
) |
(623 |
) |
(73,771 |
) |
(46,415 |
) |
(28,996 |
) |
(29,418 |
) |
|
|
(28,866 |
) |
(103,629 |
) |
(105,628 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge instrument |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inflows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross Currency Swap EUR |
|
|
|
|
|
589 |
|
|
|
682 |
|
552 |
|
2,542 |
|
1,105 |
|
2,542 |
|
1,105 |
|
84,610 |
|
35,467 |
|
90,965 |
|
38,229 |
|
Cross Currency Swap HKD |
|
3,945 |
|
|
|
|
|
|
|
7,535 |
|
12,144 |
|
71,293 |
|
76,922 |
|
15,762 |
|
21,084 |
|
318,480 |
|
338,517 |
|
417,015 |
|
448,667 |
|
Cross Currency Swap PEN |
|
14,983 |
|
|
|
|
|
|
|
|
|
15,614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
14,983 |
|
15,614 |
|
Cross Currency Swap CHF |
|
|
|
|
|
1,979 |
|
1,031 |
|
167,800 |
|
87,308 |
|
202,855 |
|
370,926 |
|
495 |
|
495 |
|
99,675 |
|
99,748 |
|
472,804 |
|
559,508 |
|
Cross Currency Swap USD |
|
45,035 |
|
531 |
|
|
|
|
|
654 |
|
115,113 |
|
96,087 |
|
101,478 |
|
|
|
|
|
|
|
|
|
141,776 |
|
217,122 |
|
Cross Currency Swap JPY |
|
|
|
|
|
156 |
|
306 |
|
706 |
|
623 |
|
73,771 |
|
46,415 |
|
28,996 |
|
29,418 |
|
|
|
28,866 |
|
103,629 |
|
105,628 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
10. Derivative Instruments and Accounting Hedges, continued:
(c) Cash flow Hedges, continued:
(c.2) Below are the cash flows from underlying assets and the cash flows of the liability part of the derivative instrument:
|
|
Up to 1 month |
|
Over 1 month and up to |
|
Over 3 months and up |
|
Over 1 year and up to 3 |
|
Over 3 years and up to 5 |
|
Over 5 years |
|
Total |
| ||||||||||||||
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge element |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inflows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows in CLF |
|
71,761 |
|
1,155 |
|
6,901 |
|
2,304 |
|
163,152 |
|
232,833 |
|
476,360 |
|
592,204 |
|
56,945 |
|
54,094 |
|
480,352 |
|
470,207 |
|
1,255,471 |
|
1,352,797 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge instrument |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outflows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross Currency Swap HKD |
|
(3,259 |
) |
|
|
(633 |
) |
|
|
(5,484 |
) |
(9,253 |
) |
(66,453 |
) |
(66,278 |
) |
(16,288 |
) |
(16,091 |
) |
(286,810 |
) |
(288,322 |
) |
(378,927 |
) |
(379,944 |
) |
Cross Currency Swap PEN |
|
(16,525 |
) |
|
|
|
|
|
|
|
|
(16,588 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(16,525 |
) |
(16,588 |
) |
Cross Currency Swap JPY |
|
|
|
|
|
(416 |
) |
(1,043 |
) |
(2,527 |
) |
(1,867 |
) |
(82,211 |
) |
(52,107 |
) |
(32,364 |
) |
(32,878 |
) |
|
|
(30,761 |
) |
(117,518 |
) |
(118,656 |
) |
Cross Currency Swap USD |
|
(51,629 |
) |
|
|
|
|
|
|
(1,002 |
) |
(114,210 |
) |
(108,964 |
) |
(108,690 |
) |
|
|
|
|
|
|
|
|
(161,595 |
) |
(222,900 |
) |
Cross Currency Swap CHF |
|
|
|
(1,155 |
) |
(5,326 |
) |
(1,261 |
) |
(153,268 |
) |
(89,876 |
) |
(215,230 |
) |
(363,045 |
) |
(4,794 |
) |
(3,560 |
) |
(108,486 |
) |
(109,592 |
) |
(487,104 |
) |
(568,489 |
) |
Cross Currency Swap EUR |
|
(348 |
) |
|
|
(526 |
) |
|
|
(871 |
) |
(1,039 |
) |
(3,502 |
) |
(2,084 |
) |
(3,499 |
) |
(1,565 |
) |
(85,056 |
) |
(41,532 |
) |
(93,802 |
) |
(46,220 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
10. Derivative Instruments and Accounting Hedges, continued:
(c) Cash flow Hedges, continued:
Regarding to assets denominated in Unidad de Fomento (UF) hedged; these are revalued monthly according to the variation of the UF, which is equivalent to monthly reinvest the assets until maturity of the hedging relationship.
(c.3) The unrealized results generated during the period 2017 by those derivative contracts that conform the hedging instruments in this cash flow hedging strategy, have been recorded with credit to equity amounting to Ch$9,354 million (charge to equity of Ch$22,535 million in September 2016). The net effect of taxes credit to equity amounts to Ch$6,969 million in 2017 (net charged to equity of Ch$17,127 million during the period September 2016).
The accumulated balance for this concept as of September 30, 2017 corresponds to a charge in equity amounts to Ch$18,176 million (charge to equity of Ch$27,530 million as of December 31, 2016).
(c.4) The effect of the cash flow hedge derivatives that offset the result of the hedged instruments corresponds to a charge to income of Ch$41,311 million during the period 2017 (charge to results for Ch$105,648 million during the period September 2016).
(c.5) As of September 30, 2017 and 2016, does not exist inefficiency in cash flow hedge, because both, hedge item and hedge instruments, are mirrors of each other, it means that all variation of value attributable to rate and revaluation components are netted totally.
(c.6) As of September 30, 2017 and 2016, the Bank does not have hedges of net investments in foreign business.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
11. Loans and advances to Banks:
(a) At the end of each reporting period, the balances presented in the item Loans and advances to Banks are as follows:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
Domestic Banks |
|
|
|
|
|
Interbank loans of liquidity |
|
|
|
200,019 |
|
Interbank loans |
|
|
|
8,384 |
|
Provisions for loans to domestic banks |
|
|
|
(100 |
) |
Subtotal |
|
|
|
208,303 |
|
Foreign Banks |
|
|
|
|
|
Interbank loans |
|
215,923 |
|
129,904 |
|
Credits with third countries |
|
63,076 |
|
77,049 |
|
Chilean exports trade loans |
|
13,884 |
|
57,749 |
|
Provisions for loans to foreign banks |
|
(586 |
) |
(429 |
) |
Subtotal |
|
292,297 |
|
264,273 |
|
Central Bank of Chile |
|
|
|
|
|
Non-available Central Bank deposits |
|
300,000 |
|
700,000 |
|
Other Central Bank credits |
|
470 |
|
341 |
|
Subtotal |
|
300,470 |
|
700,341 |
|
Total |
|
592,767 |
|
1,172,917 |
|
(b) The changes in provisions of the credits owed by the banks, during the periods 2016 and 2017, are summarized as follows:
|
|
Banks Location |
|
|
| ||
|
|
Chile |
|
Abroad |
|
Total |
|
Detail |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2016 |
|
72 |
|
630 |
|
702 |
|
Provisions established |
|
|
|
|
|
|
|
Provisions released |
|
(11 |
) |
(114 |
) |
(125 |
) |
Balance as of September 30, 2016 |
|
61 |
|
516 |
|
577 |
|
Provisions established |
|
39 |
|
|
|
39 |
|
Provisions released |
|
|
|
(87 |
) |
(87 |
) |
Balance as of December 31, 2016 |
|
100 |
|
429 |
|
529 |
|
Provisions established |
|
|
|
157 |
|
157 |
|
Provisions released |
|
(100 |
) |
|
|
(100 |
) |
Balance as of September 30, 2017 |
|
|
|
586 |
|
586 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(a.i) Loans to Customers:
As of September 30, 2017 and December 31, 2016, the composition of the portfolio of loans is the following:
|
|
As of September 30, 2017 |
| ||||||||||||||
|
|
Assets before allowances |
|
Allowances established |
|
|
| ||||||||||
|
|
Normal Portfolio |
|
Substandard |
|
Non-Complying |
|
Total |
|
Individual |
|
Group |
|
Total |
|
Net assets |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Commercial loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans |
|
10,421,373 |
|
61,398 |
|
300,180 |
|
10,782,951 |
|
(108,372 |
) |
(78,393 |
) |
(186,765 |
) |
10,596,186 |
|
Foreign trade loans |
|
1,056,868 |
|
10,551 |
|
47,598 |
|
1,115,017 |
|
(52,333 |
) |
(2,848 |
) |
(55,181 |
) |
1,059,836 |
|
Current account debtors |
|
248,786 |
|
2,698 |
|
2,354 |
|
253,838 |
|
(3,474 |
) |
(6,089 |
) |
(9,563 |
) |
244,275 |
|
Factoring transactions |
|
497,259 |
|
3,151 |
|
686 |
|
501,096 |
|
(9,468 |
) |
(1,698 |
) |
(11,166 |
) |
489,930 |
|
Student loans |
|
44,399 |
|
|
|
1,577 |
|
45,976 |
|
|
|
(1,240 |
) |
(1,240 |
) |
44,736 |
|
Commercial lease transactions (1) |
|
1,339,445 |
|
16,981 |
|
29,022 |
|
1,385,448 |
|
(6,265 |
) |
(8,315 |
) |
(14,580 |
) |
1,370,868 |
|
Other loans and accounts receivable |
|
57,798 |
|
280 |
|
6,602 |
|
64,680 |
|
(817 |
) |
(5,475 |
) |
(6,292 |
) |
58,388 |
|
Subtotal |
|
13,665,928 |
|
95,059 |
|
388,019 |
|
14,149,006 |
|
(180,729 |
) |
(104,058 |
) |
(284,787 |
) |
13,864,219 |
|
Mortgage loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage bonds |
|
29,805 |
|
|
|
2,265 |
|
32,070 |
|
|
|
(25 |
) |
(25 |
) |
32,045 |
|
Transferable mortgage loans |
|
56,105 |
|
|
|
1,827 |
|
57,932 |
|
|
|
(77 |
) |
(77 |
) |
57,855 |
|
Other residential real estate mortgage loans |
|
7,121,943 |
|
|
|
148,348 |
|
7,270,291 |
|
|
|
(33,769 |
) |
(33,769 |
) |
7,236,522 |
|
Credits from ANAP |
|
9 |
|
|
|
|
|
9 |
|
|
|
|
|
|
|
9 |
|
Residential lease transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans and accounts receivable |
|
8,159 |
|
|
|
250 |
|
8,409 |
|
|
|
(333 |
) |
(333 |
) |
8,076 |
|
Subtotal |
|
7,216,021 |
|
|
|
152,690 |
|
7,368,711 |
|
|
|
(34,204 |
) |
(34,204 |
) |
7,334,507 |
|
Consumer loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer loans in installments |
|
2,280,326 |
|
|
|
221,106 |
|
2,501,432 |
|
|
|
(174,532 |
) |
(174,532 |
) |
2,326,900 |
|
Current account debtors |
|
317,507 |
|
|
|
2,543 |
|
320,050 |
|
|
|
(11,448 |
) |
(11,448 |
) |
308,602 |
|
Credit card debtors |
|
1,086,196 |
|
|
|
23,558 |
|
1,109,754 |
|
|
|
(60,780 |
) |
(60,780 |
) |
1,048,974 |
|
Consumer lease transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans and accounts receivable |
|
18 |
|
|
|
797 |
|
815 |
|
|
|
(460 |
) |
(460 |
) |
355 |
|
Subtotal |
|
3,684,047 |
|
|
|
248,004 |
|
3,932,051 |
|
|
|
(247,220 |
) |
(247,220 |
) |
3,684,831 |
|
Total |
|
24,565,996 |
|
95,059 |
|
788,713 |
|
25,449,768 |
|
(180,729 |
) |
(385,482 |
) |
(566,211 |
) |
24,883,557 |
|
(1) In this item, the Bank finances its customers purchases of assets, including real estate and other personal property, through finance lease agreements. As of September 30, 2017 Ch$664,866 million correspond to finance leases for real estate and Ch$720,582 million correspond to finance leases for movable assets.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
12. Loans to Customers net, continued:
(a.i) Loans to Customers, continued:
|
|
As of December 31, 2016 |
| ||||||||||||||
|
|
Assets before allowances |
|
Allowances established |
|
|
| ||||||||||
|
|
Normal Portfolio |
|
Substandard |
|
Non- |
|
Total |
|
Individual |
|
Group |
|
Total |
|
Net assets |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Commercial loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans |
|
10,603,307 |
|
132,308 |
|
296,859 |
|
11,032,474 |
|
(126,704 |
) |
(79,780 |
) |
(206,484 |
) |
10,825,990 |
|
Foreign trade loans |
|
1,167,598 |
|
47,317 |
|
53,702 |
|
1,268,617 |
|
(74,818 |
) |
(3,410 |
) |
(78,228 |
) |
1,190,389 |
|
Current account debtors |
|
209,031 |
|
2,499 |
|
2,291 |
|
213,821 |
|
(2,944 |
) |
(4,467 |
) |
(7,411 |
) |
206,410 |
|
Factoring transactions |
|
507,807 |
|
1,724 |
|
809 |
|
510,340 |
|
(8,671 |
) |
(1,953 |
) |
(10,624 |
) |
499,716 |
|
Student loans |
|
41,738 |
|
|
|
949 |
|
42,687 |
|
|
|
(1,278 |
) |
(1,278 |
) |
41,409 |
|
Commercial lease transactions (1) |
|
1,312,740 |
|
12,549 |
|
25,823 |
|
1,351,112 |
|
(7,062 |
) |
(10,574 |
) |
(17,636 |
) |
1,333,476 |
|
Other loans and accounts receivable |
|
66,050 |
|
418 |
|
5,269 |
|
71,737 |
|
(886 |
) |
(3,712 |
) |
(4,598 |
) |
67,139 |
|
Subtotal |
|
13,908,271 |
|
196,815 |
|
385,702 |
|
14,490,788 |
|
(221,085 |
) |
(105,174 |
) |
(326,259 |
) |
14,164,529 |
|
Mortgage loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Letters of credit |
|
37,355 |
|
|
|
2,874 |
|
40,229 |
|
|
|
(45 |
) |
(45 |
) |
40,184 |
|
Endorsable mortgage loans |
|
66,385 |
|
|
|
2,085 |
|
68,470 |
|
|
|
(95 |
) |
(95 |
) |
68,375 |
|
Other residential lending |
|
6,673,029 |
|
|
|
130,499 |
|
6,803,528 |
|
|
|
(33,551 |
) |
(33,551 |
) |
6,769,977 |
|
Credit from ANAP |
|
13 |
|
|
|
|
|
13 |
|
|
|
|
|
|
|
13 |
|
Residential lease transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans and accounts receivable |
|
7,832 |
|
|
|
114 |
|
7,946 |
|
|
|
(175 |
) |
(175 |
) |
7,771 |
|
Subtotal |
|
6,784,614 |
|
|
|
135,572 |
|
6,920.186 |
|
|
|
(33,866 |
) |
(33,866 |
) |
6,886,320 |
|
Consumer loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer loans in installments |
|
2,266,117 |
|
|
|
222,826 |
|
2,488,943 |
|
|
|
(201,097 |
) |
(201,097 |
) |
2,287,846 |
|
Current account debtors |
|
326,012 |
|
|
|
3,163 |
|
329,175 |
|
|
|
(6,139 |
) |
(6,139 |
) |
323,036 |
|
Credit card debtors |
|
1,131,412 |
|
|
|
24,263 |
|
1,155,675 |
|
|
|
(42,232 |
) |
(42,232 |
) |
1,113,443 |
|
Consumer lease transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans and accounts receivable |
|
9 |
|
|
|
758 |
|
767 |
|
|
|
(398 |
) |
(398 |
) |
369 |
|
Subtotal |
|
3,723,550 |
|
|
|
251,010 |
|
3,974,560 |
|
|
|
(249,866 |
) |
(249,866 |
) |
3,724,694 |
|
Total |
|
24,416,435 |
|
196,815 |
|
772,284 |
|
25,385,534 |
|
(221,085 |
) |
(388,906 |
) |
(609,991 |
) |
24,775,543 |
|
(1) In this item, the Bank finances its customers purchases of assets, including real estate and other personal property, through finance lease agreements. As of December 31, 2016 Ch$631,500 million correspond to finance leases for real estate and Ch$719,612 million correspond to finance leases for movable assets.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
12. Loans to Customers, net, continued:
(a.ii) Impaired Portfolio:
As of September 30, 2017 and December 31, 2016, the Bank presents the following details of normal and impaired portfolio:
|
|
Assets before Allowances |
|
Allowances established |
|
|
|
|
| ||||||||||||||||||||
|
|
Normal Portfolio |
|
Impaired Portfolio |
|
Total |
|
Individual Provisions |
|
Group Provisions |
|
Total |
|
Net assets |
| ||||||||||||||
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Commercial loans |
|
13,757,630 |
|
14,022,176 |
|
391,376 |
|
468,612 |
|
14,149,006 |
|
14,490,788 |
|
(180,729 |
) |
(221,085 |
) |
(104,058 |
) |
(105,174 |
) |
(284,787 |
) |
(326,259 |
) |
13,864,219 |
|
14,164,529 |
|
Mortgage loans |
|
7,216,021 |
|
6,784,614 |
|
152,690 |
|
135,572 |
|
7,368,711 |
|
6,920,186 |
|
|
|
|
|
(34,204 |
) |
(33,866 |
) |
(34,204 |
) |
(33,866 |
) |
7,334,507 |
|
6,886,320 |
|
Consumer loans |
|
3,684,047 |
|
3,723,550 |
|
248,004 |
|
251,010 |
|
3,932,051 |
|
3,974,560 |
|
|
|
|
|
(247,220 |
) |
(249,866 |
) |
(247,220 |
) |
(249,866 |
) |
3,684,831 |
|
3,724,694 |
|
Total |
|
24,657,698 |
|
24,530,340 |
|
792,070 |
|
855,194 |
|
25,449,768 |
|
25,385,534 |
|
(180,729 |
) |
(221,085 |
) |
(385,482 |
) |
(388,906 |
) |
(566,211 |
) |
(609,991 |
) |
24,883,557 |
|
24,775,543 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
12. Loans to Customers, continued:
(b) Credit risk provisions:
The changes in credits risk provisions, during the periods 2017 and 2016, are summarized as follows:
|
|
Allowances |
|
|
| ||
|
|
Individual |
|
Group |
|
Total |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2016 |
|
263,719 |
|
338,047 |
|
601,766 |
|
Charge-offs: |
|
|
|
|
|
|
|
Commercial loans |
|
(9,958 |
) |
(33,218 |
) |
(43,176 |
) |
Mortgage loans |
|
|
|
(3,030 |
) |
(3,030 |
) |
Consumer loans |
|
|
|
(152,960 |
) |
(152,960 |
) |
Total charge-offs |
|
(9,958 |
) |
(189,208 |
) |
(199,166 |
) |
Sales or transfers of credits |
|
(24,925 |
) |
|
|
(24,925 |
) |
Allowances established |
|
|
|
217,522 |
|
217,522 |
|
Allowances released |
|
(5,825 |
) |
|
|
(5,825 |
) |
Balance as of September 30, 2016 |
|
223,011 |
|
366,361 |
|
589,372 |
|
Charge-offs: |
|
|
|
|
|
|
|
Commercial loans |
|
(4,955 |
) |
(11,712 |
) |
(16,667 |
) |
Mortgage loans |
|
|
|
(1,160 |
) |
(1,160 |
) |
Consumer loans |
|
|
|
(60,064 |
) |
(60,064 |
) |
Total charge-offs |
|
(4,955 |
) |
(72,936 |
) |
(77,891 |
) |
Allowances established |
|
3,029 |
|
95,481 |
|
98,510 |
|
Allowances released |
|
|
|
|
|
|
|
Balance as of December 31, 2016 |
|
221,085 |
|
388,906 |
|
609,991 |
|
Charge-offs: |
|
|
|
|
|
|
|
Commercial loans |
|
(10,344 |
) |
(33,427 |
) |
(43,771 |
) |
Mortgage loans |
|
|
|
(3,805 |
) |
(3,805 |
) |
Consumer loans |
|
|
|
(192,036 |
) |
(192,036 |
) |
Total charge-offs |
|
(10,344 |
) |
(229,268 |
) |
(239,612 |
) |
Sales or transfers of credits |
|
(13,058 |
) |
|
|
(13,058 |
) |
Allowances established |
|
|
|
225,844 |
|
225,844 |
|
Allowances released |
|
(16,954 |
) |
|
|
(16,954 |
) |
Balance as of September 30, 2017 |
|
180,729 |
|
385,482 |
|
566,211 |
|
In addition to these credit risk provisions, also provisions are maintained for country risk to cover foreign operations and additional loan provisions agreed upon by the Board of Directors, which are presented in liabilities under the item Provisions (Note No. 24).
Other disclosures:
1. As of September 30, 2017 and December 31, 2016, the Bank and its subsidiaries have made purchases and sales of loan portfolios. The effect in income is no more than 5% of net income before taxes, as described in Note No. 12 (d).
2. As of September 30, 2017 and December 31, 2016 the Bank and its subsidiaries have derecognized 100% of its sold loan portfolio and all risks and benefits related to these financial assets have been transferred all or substantially to it. (See Note No. 12 (e)).
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
12. Loans to Customers, continued:
(c) Finance lease contracts:
The cash flows to be received by the Bank from finance lease contracts have the following maturities:
|
|
Total receivable |
|
Unearned income |
|
Net balance receivable (*) |
| ||||||
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within one year |
|
469,556 |
|
463,296 |
|
(54,017 |
) |
(54,347 |
) |
415,539 |
|
408,949 |
|
From 1 to 2 years |
|
334,070 |
|
325,230 |
|
(39,506 |
) |
(40,166 |
) |
294,564 |
|
285,064 |
|
From 2 to 3 years |
|
230,393 |
|
223,796 |
|
(25,923 |
) |
(26,156 |
) |
204,470 |
|
197,640 |
|
From 3 to 4 years |
|
146,472 |
|
147,047 |
|
(17,557 |
) |
(18,162 |
) |
128,915 |
|
128,885 |
|
From 4 to 5 years |
|
97,751 |
|
99,992 |
|
(12,611 |
) |
(12,698 |
) |
85,140 |
|
87,294 |
|
After 5 years |
|
278,041 |
|
265,660 |
|
(27,774 |
) |
(28,399 |
) |
250,267 |
|
237,261 |
|
Total |
|
1,556,283 |
|
1,525,021 |
|
(177,388 |
) |
(179,928 |
) |
1,378,895 |
|
1,345,093 |
|
(*) The net balance receivable does not include past-due portfolio totaling Ch$6,553 million as of September 30, 2017 (Ch$6,019 million as of December 31, 2016).
The Bank has financial leasing operations associated with real estate, industrial machinery, vehicles and transportation equipment. These leases have an average useful life between 2 and 15 years.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
12. Loans to Customers, continued:
(d) Purchase of loan portfolio:
During the period ended September 30, 2017 portfolio purchases were made, whose nominal value amounted to Ch$1,495 million.
During the year 2016 the Bank acquired loan portfolio, whose nominal value amounted to Ch$54,969 million.
(e) Sale or transfer of loans from the loan portfolio:
During the periods 2017 and 2016 sale operations or assignments of receivables have been carried out from the loan portfolio according to the following:
As of September 30, 2017
|
|
Carrying |
|
|
|
|
|
Effect on income |
|
|
|
amount |
|
Allowances |
|
Sale price |
|
(loss) gain |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
Sale of current loans |
|
32,964 |
|
(13,058 |
) |
23,454 |
|
3,548 |
|
Sale of written off loans |
|
|
|
|
|
23 |
|
23 |
|
Total |
|
32,964 |
|
(13,058 |
) |
23,477 |
|
3,571 |
|
As of September 30, 2016
|
|
Carrying |
|
|
|
|
|
Effect on income |
|
|
|
amount |
|
Allowances |
|
Sale price |
|
(loss) gain |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
Sale of current loans |
|
130,045 |
|
(24,925 |
) |
110,050 |
|
4,930 |
|
Sale of written off loans |
|
|
|
|
|
|
|
|
|
Total |
|
130,045 |
|
(24,925 |
) |
110,050 |
|
4,930 |
|
(g) Securitization of own assets:
During the period 2017 and year 2016, there is no transactions of securitization of own assets.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
As of September 30, 2017 and December 31, 2016, investment securities classified as available-for-sale and held-to-maturity are detailed as follows:
|
|
September 2017 |
|
December 2016 |
| ||||||||
|
|
Available- |
|
Held-to- |
|
Total |
|
Available- |
|
Held-to- |
|
Total |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Instruments issued by the Chilean Government and Central Bank of Chile |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds issued by the Central Bank of Chile |
|
187,134 |
|
|
|
187,134 |
|
20,944 |
|
|
|
20,944 |
|
Promissory notes issued by the Central Bank of Chile |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other instruments of the Chilean Government and the Central Bank of Chile |
|
151,531 |
|
|
|
151,531 |
|
38,256 |
|
|
|
38,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other instruments issued in Chile |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposit promissory notes from domestics banks |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage bonds from domestic banks |
|
101,397 |
|
|
|
101,397 |
|
108,933 |
|
|
|
108,933 |
|
Bonds from domestic banks |
|
7,783 |
|
|
|
7,783 |
|
7,973 |
|
|
|
7,973 |
|
Deposits from domestic banks |
|
736,621 |
|
|
|
736,621 |
|
24,032 |
|
|
|
24,032 |
|
Bonds from other Chilean companies |
|
15,146 |
|
|
|
15,146 |
|
29,525 |
|
|
|
29,525 |
|
Promissory notes issued by other Chilean companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other instruments issued in Chile |
|
109,449 |
|
|
|
109,449 |
|
138,322 |
|
|
|
138,322 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Instruments issued abroad |
|
|
|
|
|
|
|
|
|
|
|
|
|
Instruments from foreign governments or Central Banks |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
1,309,061 |
|
|
|
1,309,061 |
|
367,985 |
|
|
|
367,985 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
13. Investment Securities, continued:
Instruments issued by the Chilean Government and Central Bank include instruments with repurchase agreements sold to clients and financial institutions; totaling Ch$20,706 million as of September 30, 2017 (Ch$4,975 million as of December 31, 2016). The repurchase agreements have an average maturity of 3 days as of September 30, 2017 (7 days in December 2016). Additionally, under the same item, instruments that guarantee margins for offsetting derivative transactions through Comder Contraparte Central S.A. for an amount of Ch$28,201 million as of September 30, 2017 (Ch$2,099 million as of December 2016) are maintained.
Instruments of Foreign Institutions include mainly bank bonds.
As of September 30, 2017, the portfolio of financial assets available-for-sale includes an accumulated unrealized gain of Ch$3,803 million (accumulated unrealized gain of Ch$847 million in December 2016), recorded as an equity valuation adjustment.
During 2017 and 2016, there is no evidence of impairment of financial assets available-for-sale.
Gross profits and losses realized on the sale of available-for-sale investments as of September 30, 2017 and 2016 are shown in Note 30 Net Financial Operating Income. The changes on results at the end of each period are as fallow:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Unrealized (losses) gains |
|
6,378 |
|
12,656 |
|
Realized losses (gains) reclassified to income |
|
(3,422 |
) |
(63,486 |
) |
Subtotal |
|
2,956 |
|
(50,830 |
) |
Income tax on other comprehensive income |
|
(752 |
) |
12,201 |
|
Net effect in equity |
|
2,204 |
|
(38,629 |
) |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
14. Investments in Other Companies:
(a) Investments in other companies include investments of Ch$36,437 million as of September 30, 2017 (Ch$32,588 million as of December 31, 2016), as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Investment |
| ||||||
|
|
|
|
Ownership Interest |
|
Equity |
|
Book Value |
|
Income (Loss) |
| ||||||||
|
|
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
September |
|
|
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Company |
|
Shareholder |
|
% |
|
% |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Associates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transbank S.A. |
|
Banco de Chile |
|
26.16 |
|
26.16 |
|
55,462 |
|
49,518 |
|
14,507 |
|
12,954 |
|
1,555 |
|
955 |
|
Soc. Operadora de Tarjetas de Crédito Nexus S.A. |
|
Banco de Chile |
|
25.81 |
|
25.81 |
|
13,799 |
|
10,809 |
|
3,561 |
|
2,789 |
|
624 |
|
416 |
|
Administrador Financiero del Transantiago S.A. |
|
Banco de Chile |
|
20.00 |
|
20.00 |
|
14,926 |
|
13,907 |
|
2,985 |
|
2,782 |
|
204 |
|
188 |
|
Redbanc S.A. |
|
Banco de Chile |
|
38.13 |
|
38.13 |
|
7,382 |
|
6,422 |
|
2,815 |
|
2,449 |
|
324 |
|
343 |
|
Centro de Compensación Automatizado S.A. |
|
Banco de Chile |
|
33.33 |
|
33.33 |
|
4,600 |
|
3,985 |
|
1,533 |
|
1,328 |
|
180 |
|
133 |
|
Sociedad Imerc OTC S.A. |
|
Banco de Chile |
|
12.33 |
|
12.33 |
|
11,689 |
|
10,991 |
|
1,442 |
|
1,347 |
|
87 |
|
96 |
|
Sociedad Interbancaria de Depósitos de Valores S.A. |
|
Banco de Chile |
|
26.81 |
|
26.81 |
|
3,728 |
|
3,101 |
|
999 |
|
831 |
|
170 |
|
156 |
|
Soc. Operadora de la Cámara de Compensación de Pagos de Alto Valor S.A. |
|
Banco de Chile |
|
15.00 |
|
15.00 |
|
5,939 |
|
5,472 |
|
891 |
|
821 |
|
48 |
|
80 |
|
Subtotal Associates |
|
|
|
|
|
|
|
117,525 |
|
104,205 |
|
28,733 |
|
25,301 |
|
3,192 |
|
2,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint Ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Servipag Ltda. |
|
Banco de Chile |
|
50.00 |
|
50.00 |
|
9,328 |
|
8,596 |
|
4,664 |
|
4,298 |
|
366 |
|
318 |
|
Artikos Chile S.A. |
|
Banco de Chile |
|
50.00 |
|
50.00 |
|
1,535 |
|
1,431 |
|
768 |
|
715 |
|
295 |
|
249 |
|
Subtotal Joint Ventures |
|
|
|
|
|
|
|
10,863 |
|
10,027 |
|
5,432 |
|
5,013 |
|
661 |
|
567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
|
|
|
|
|
|
128,388 |
|
114,232 |
|
34,165 |
|
30,314 |
|
3,853 |
|
2,934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments valued at cost (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bolsa de Comercio de Santiago S.A. (*) |
|
|
|
|
|
|
|
|
|
|
|
1,646 |
|
1,646 |
|
443 |
|
393 |
|
Banco Latinoamericano de Comercio Exterior S.A. (Bladex) |
|
|
|
|
|
|
|
|
|
|
|
309 |
|
309 |
|
44 |
|
46 |
|
Bolsa Electrónica de Chile S.A. |
|
|
|
|
|
|
|
|
|
|
|
257 |
|
257 |
|
|
|
|
|
Sociedad de Telecomunicaciones Financieras Interbancarias Mundiales (Swift) |
|
|
|
|
|
|
|
|
|
|
|
52 |
|
54 |
|
|
|
|
|
CCLV Contraparte Central S.A. |
|
|
|
|
|
|
|
|
|
|
|
8 |
|
8 |
|
|
|
|
|
Subtotal |
|
|
|
|
|
|
|
|
|
|
|
2,272 |
|
2,274 |
|
487 |
|
439 |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
36,437 |
|
32,588 |
|
4,340 |
|
3,373 |
|
(1) Income from investments valorized at cost, corresponds to income recognized on cash basis (dividends).
(*) The exchange of shares informed as essential event dated May 30, 2017, each shareholder of the Stock Exchange received 1,000,000 shares for each share held as of April 20, 2017. At that date, the subsidiary Banchile Corredores de Bolsa S.A. held the ownership of 3 shares, obtaining 3,000,000 shares due to the exchange.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
14. Investments in Other Companies, continued:
(b) The change of investments in companies registered under the equity method in the periods of September 2017 and 2016, are as follows:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Initial book value |
|
32,588 |
|
28,126 |
|
Acquisition of investments in companies |
|
|
|
1,129 |
|
Participation on income in companies with significant influence and joint control |
|
3,853 |
|
2,934 |
|
Dividends receivable |
|
(136 |
) |
(272 |
) |
Dividends Minimum |
|
560 |
|
542 |
|
Dividends received |
|
(434 |
) |
(640 |
) |
Others |
|
6 |
|
(4 |
) |
Total |
|
36,437 |
|
31,815 |
|
(c) During the period ended as of September 30, 2017 and December 31, 2016 no impairment has incurred in these investments.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(a) As of September 30, 2017 and December 31, 2016 intangible assets are detailed as follows:
|
|
Useful Life |
|
Average remaining |
|
Gross balance |
|
Accumulated Amortization |
|
Net balance |
| ||||||||||
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
years |
|
years |
|
years |
|
years |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Intangible Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software or computer programs |
|
6 |
|
6 |
|
5 |
|
5 |
|
119,495 |
|
109,491 |
|
(85,570 |
) |
(80,150 |
) |
33,925 |
|
29,341 |
|
Total |
|
|
|
|
|
|
|
|
|
119,495 |
|
109,491 |
|
(85,570 |
) |
(80,150 |
) |
33,925 |
|
29,341 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
15. Intangible Assets, continued:
(b) The change of intangible assets as of September 30, 2017 and December 31, 2016 are as follows:
|
|
September 2017 |
|
|
|
Software or computer |
|
|
|
MCh$ |
|
Gross Balance |
|
|
|
Balance as of January 1, 2017 |
|
109,491 |
|
Acquisition |
|
11,298 |
|
Disposals/ write-downs |
|
(1,294 |
) |
Impairment loss (*) |
|
|
|
Total |
|
119,495 |
|
|
|
|
|
Accumulated Amortization |
|
|
|
Balance as of January 1, 2017 |
|
(80,150 |
) |
Amortization for the period (*) |
|
(6,714 |
) |
Disposals/ write-downs |
|
1,294 |
|
Total |
|
(85,570 |
) |
Balance as of September 30, 2017 |
|
33,925 |
|
|
|
December 2016 |
|
|
|
Software or computer |
|
|
|
MCh$ |
|
Gross Balance |
|
|
|
Balance as of January 1, 2016 |
|
100,000 |
|
Acquisition |
|
11,248 |
|
Disposals/ write-downs |
|
(1,757 |
) |
Impairment loss |
|
|
|
Total |
|
109,491 |
|
|
|
|
|
Accumulated Amortization |
|
|
|
Balance as of January 1, 2016 |
|
(73,281 |
) |
Amortization for the year |
|
(8,595 |
) |
Disposals/ write-downs |
|
1,726 |
|
Total |
|
(80,150 |
) |
Balance as of December 31, 2016 |
|
29,341 |
|
(*) See Note No. 35 Depreciation, amortization and impairment.
(c) As of September 30, 2017 and December 31, 2016, the Bank maintains the following commitments for technological developments:
|
|
Amount of Commitment |
| ||
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
Detail |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Software and licenses |
|
1,299 |
|
3,024 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(a) The composition of properties and equipment as of September 30, 2017 and December 31, 2016 are as follow:
|
|
Gross balance |
|
Accumulated depreciation |
|
Net Balance |
| ||||||
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Type of property and equipment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land and Buildings |
|
308,664 |
|
302,187 |
|
(140,416 |
) |
(134,900 |
) |
168,248 |
|
167,287 |
|
Equipment |
|
186,457 |
|
180,322 |
|
(149,220 |
) |
(139,277 |
) |
37,237 |
|
41,045 |
|
Others |
|
51,102 |
|
50,404 |
|
(40,689 |
) |
(39,654 |
) |
10,413 |
|
10,750 |
|
Total |
|
546,223 |
|
532,913 |
|
(330,325 |
) |
(313,831 |
) |
215,898 |
|
219,082 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
16. Property and equipment, continued:
(b) The changes in properties and equipment as of September 30, 2017 and December 31, 2016 are as follow:
|
|
September 2017 |
| ||||||
|
|
Land and Buildings |
|
Equipment |
|
Others |
|
Total |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Gross Balance |
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2017 |
|
302,187 |
|
180,322 |
|
50,404 |
|
532,913 |
|
Additions |
|
7,842 |
|
6,309 |
|
2,091 |
|
16,242 |
|
Disposals/write-downs/Sales |
|
(1,365 |
) |
(174 |
) |
(1,392 |
) |
(2,931 |
) |
Impairment losses (*) |
|
|
|
|
|
(1 |
) |
(1 |
) |
Total |
|
308,664 |
|
186,457 |
|
51,102 |
|
546,223 |
|
|
|
|
|
|
|
|
|
|
|
Accumulated Depreciation |
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2017 |
|
(134,900 |
) |
(139,277 |
) |
(39,654 |
) |
(313,831 |
) |
Depreciation charges of the period (*) (**) |
|
(6,688 |
) |
(10,261 |
) |
(2,241 |
) |
(19,190 |
) |
Sales and disposals of the period |
|
1,172 |
|
174 |
|
1,350 |
|
2,696 |
|
Transfers |
|
|
|
144 |
|
(144 |
) |
|
|
Total |
|
(140,416 |
) |
(149,220 |
) |
(40,689 |
) |
(330,325 |
) |
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2017 |
|
168,248 |
|
37,237 |
|
10,413 |
|
215,898 |
|
|
|
December 2016 |
| ||||||
|
|
Land and Buildings |
|
Equipment |
|
Others |
|
Total |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Gross Balance |
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2016 |
|
292,166 |
|
167,874 |
|
47,960 |
|
508,000 |
|
Additions |
|
10,174 |
|
14,105 |
|
3,540 |
|
27,819 |
|
Disposals/write-downs/Sales |
|
(138 |
) |
(1,653 |
) |
(1,070 |
) |
(2,861 |
) |
Impairment losses (***) |
|
(15 |
) |
(4 |
) |
(26 |
) |
(45 |
) |
Total |
|
302,187 |
|
180,322 |
|
50,404 |
|
532,913 |
|
|
|
|
|
|
|
|
|
|
|
Accumulated Depreciation |
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2016 |
|
(126,568 |
) |
(127,644 |
) |
(38,117 |
) |
(292,329 |
) |
Depreciation charges of the year (**) |
|
(8,470 |
) |
(13,268 |
) |
(2,588 |
) |
(24,326 |
) |
Sales and disposals of the year |
|
138 |
|
1,653 |
|
1,033 |
|
2,824 |
|
Transfers |
|
|
|
(18 |
) |
18 |
|
|
|
Total |
|
(134,900 |
) |
(139,277 |
) |
(39,654 |
) |
(313,831 |
) |
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2016 |
|
167,287 |
|
41,045 |
|
10,750 |
|
219,082 |
|
(*) See Note No.35 Depreciation, Amortization and Impairment.
(**) This amount does not include the depreciation of the year of the Investment Properties, amount is included in Other Assets for Ch$276 million (Ch$368 million as of December 31, 2016).
(***) This amount does not include charge-offs provision of Property and Equipment of Ch$229 million as of December 31, 2016.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
16. Property and equipment, continued:
(c) As of September 30, 2017 and 2016, the Bank has operating lease contracts that cannot be terminated unilaterally. The information on future payments are broken down as follows:
|
|
|
|
Lease Contracts |
| ||||||||||||
|
|
Expense |
|
Up to 1 |
|
Over 1 |
|
Over 3 |
|
Over 1 |
|
Over 3 |
|
Over 5 |
|
Total |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 2017 |
|
24,910 |
|
2,788 |
|
5,281 |
|
23,704 |
|
47,161 |
|
35,499 |
|
37,931 |
|
152,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 2016 |
|
24,937 |
|
2,781 |
|
5,569 |
|
19,888 |
|
44,671 |
|
26,996 |
|
41,183 |
|
141,088 |
|
In compliance with IAS 17, these lease contracts are not presented in the Banks Interim Condensed Consolidated Statement of Financial Position, since they are operating leases.
The Bank has commercial leases of investment properties. These leases have an average life of 5 years.
(d) As of September 30, 2017 and December 31, 2016, the Bank does not have financial lease contracts, therefore, there are no property and equipment balances that are in financial lease at the end of both periods.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
17. Current Taxes and Deferred Taxes:
(a) Current Taxes:
The Bank and its subsidiaries at the end of each period and year, have constituted a First Category Income Tax Provision, which was determined based on current tax regulations, and has been reflected in the statement of financial position net of taxes to be recovered or payable, as applicable, as of September 30, 2017 and December 31, 2016, according to the following detail:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Income tax |
|
74,475 |
|
119,123 |
|
Tax on non-deductible expenses |
|
2,157 |
|
3,521 |
|
Less: |
|
|
|
|
|
Monthly prepaid taxes |
|
(94,962 |
) |
(126,266 |
) |
Credit for training expenses |
|
(113 |
) |
(2,031 |
) |
Others |
|
(1,279 |
) |
(1,004 |
) |
Total |
|
(19,722 |
) |
(6,657 |
) |
|
|
|
|
|
|
Tax rate |
|
25.5 |
% |
24.0 |
% |
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Current tax assets |
|
22,184 |
|
6,792 |
|
Current tax liabilities |
|
(2,462 |
) |
(135 |
) |
Total tax receivable |
|
19,722 |
|
6,657 |
|
(b) Income Tax:
The effect of the tax expense during the periods between January 1 and September 30, 2017 and 2016, broken down as follows:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
Income tax expense: |
|
|
|
|
|
Current year tax |
|
72,090 |
|
90,894 |
|
Tax Previous year |
|
(1,401 |
) |
1,051 |
|
Subtotal |
|
70,689 |
|
91,945 |
|
Charge (credit) for deferred taxes: |
|
|
|
|
|
Origin and reversal of temporary differences |
|
16,235 |
|
(17,142 |
) |
Effect of exchange rates on deferred tax |
|
(3,996 |
) |
(7,282 |
) |
Subtotal |
|
12,239 |
|
(24,424 |
) |
Non-deductible expenses (Art. 21 Income Tax Law) |
|
2,157 |
|
2,621 |
|
Others |
|
(1,853 |
) |
(274 |
) |
Net charge to income for income taxes |
|
83,232 |
|
69,868 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
17. Current and Deferred Taxes, continued:
(c) Reconciliation of effective tax rate:
The following is a reconciliation of the income tax rate to the effective rate applied to determine the Banks income tax expense as of September 30, 2017 and 2016:
|
|
September |
|
September |
| ||||
|
|
2017 |
|
2016 |
| ||||
|
|
Tax rate |
|
|
|
Tax rate |
|
|
|
|
|
% |
|
MCh$ |
|
% |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
Income tax calculated on net income before tax |
|
25.50 |
|
131,808 |
|
24.00 |
|
119,540 |
|
Additions or deductions |
|
(0.33 |
) |
(1,707 |
) |
(0.28 |
) |
(1,410 |
) |
Subordinated debt (*) |
|
(5.69 |
) |
(29,417 |
) |
(5.21 |
) |
(25,943 |
) |
Price-level restatement |
|
(2.65 |
) |
(13,675 |
) |
(4.24 |
) |
(21,109 |
) |
Tax Previous year |
|
(0.27 |
) |
(1,401 |
) |
0.21 |
|
1,051 |
|
Non-deductible expenses tax |
|
0.42 |
|
2,157 |
|
0.53 |
|
2,621 |
|
Effect in deferred taxes (changes in tax rate) |
|
(0.77 |
) |
(3,996 |
) |
(1.46 |
) |
(7,282 |
) |
Other |
|
(0.10 |
) |
(537 |
) |
0.48 |
|
2,400 |
|
Effective rate and income tax expense |
|
16.11 |
|
83,232 |
|
14.03 |
|
69,868 |
|
(*) The tax expense related to the subordinated debt held by SAOS, will end once the mentioned debt is completely paid off.
The effective rate for income tax for 2017 is 16.11% (14.03% in September 2016).
On September 29, 2014, Law 20,780 published in the Diario Oficial of Chile (equivalent to the Federal Register), amended the System of Income Taxation and introduces various adjustments in the tax system.
In the same line, on February 8, 2016 Law 20,899 was published, which establishes that open corporations must apply the tax regime of first category with partial deduction of the credit in the final taxes, a regime characterized by the fact that shareholders will only be entitled to allocate against personal taxes (Global Supplementary or Additional), 65% of the first category tax paid by the company.
For this tax regime, the law establishes a gradual increase of first category tax rates according to the following periodicity:
Year |
|
Rate |
|
2014 |
|
21.0 |
% |
2015 |
|
22.5 |
% |
2016 |
|
24.0 |
% |
2017 |
|
25.5 |
% |
2018 |
|
27.0 |
% |
Additionally, according to No. 11 of Article 1 of Law 20,780, as from January 1, 2017, the rate of sole tax has been increased to rejected expenses of article 21 from 35% to 40 %.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
17. Current and Deferred Taxes, continued:
(d) Effect of deferred taxes on income and equity:
The Bank and its subsidiaries have recorded the effects of deferred taxes in their financial statements. The effects of deferred taxes on assets, liabilities and income accounts are detailed as follows:
|
|
Balances |
|
Effect on |
|
Balances |
| ||
|
|
31, 2016 |
|
Income |
|
Equity |
|
30, 2017 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Debit Differences: |
|
|
|
|
|
|
|
|
|
Allowances for loan losses |
|
204,056 |
|
(7,996 |
) |
|
|
196,060 |
|
Personnel provisions |
|
10,948 |
|
(756 |
) |
|
|
10,192 |
|
Staff vacations |
|
6,674 |
|
154 |
|
|
|
6,828 |
|
Accrued interests adjustments from impaired loans |
|
3,355 |
|
242 |
|
|
|
3,597 |
|
Staff severance indemnities provision |
|
970 |
|
(289 |
) |
|
|
681 |
|
Provision of credit cards expenses |
|
12,459 |
|
(3,350 |
) |
|
|
9,109 |
|
Provision of accrued expenses |
|
14,489 |
|
4,771 |
|
|
|
19,260 |
|
Leasing |
|
37,119 |
|
(2,426 |
) |
|
|
34,693 |
|
Other adjustments |
|
15,960 |
|
857 |
|
|
|
16,817 |
|
Total debit differences |
|
306,030 |
|
(8,793 |
) |
|
|
297,237 |
|
|
|
|
|
|
|
|
|
|
|
Credit Differences: |
|
|
|
|
|
|
|
|
|
Depreciation and price-level restatement of property and equipment |
|
11,815 |
|
2,112 |
|
|
|
13,927 |
|
Adjustment for valuation of financial assets available-for-sale |
|
216 |
|
|
|
752 |
|
968 |
|
Transitory assets |
|
3,617 |
|
2,583 |
|
|
|
6,200 |
|
Loans accrued to effective rate |
|
2,252 |
|
(507 |
) |
|
|
1,745 |
|
Other adjustments |
|
6,417 |
|
(742 |
) |
|
|
5,675 |
|
Total credit differences |
|
24,317 |
|
3,446 |
|
752 |
|
28,515 |
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets (liabilities), net |
|
281,713 |
|
(12,239 |
) |
(752 |
) |
268,722 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
17. Current and Deferred Taxes, continued:
(e) Effect of deferred taxes on income and equity, continued:
The effects of deferred taxes on assets, liabilities and income as of September 30, 2016 and December 31, 2016, are as follows:
|
|
Balance as |
|
|
|
Balance as |
|
|
|
Balance as |
| ||||
|
|
December |
|
Effect on |
|
September |
|
Effect on |
|
December |
| ||||
|
|
31, 2015 |
|
Income |
|
Equity |
|
30, 2016 |
|
Income |
|
Equity |
|
31, 2016 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Debit differences: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowances for loan losses |
|
178,168 |
|
15,477 |
|
|
|
193,645 |
|
10,411 |
|
|
|
204,056 |
|
Personnel provisions |
|
7,867 |
|
(411 |
) |
|
|
7,456 |
|
3,492 |
|
|
|
10,948 |
|
Staff vacations |
|
6,268 |
|
498 |
|
|
|
6,766 |
|
(92 |
) |
|
|
6,674 |
|
Accrued interest adjustments from impaired loans |
|
4,024 |
|
(437 |
) |
|
|
3,587 |
|
(232 |
) |
|
|
3,355 |
|
Staff severance indemnities provision |
|
1,352 |
|
1,113 |
|
|
|
2,465 |
|
(1,450 |
) |
(45 |
) |
970 |
|
Provisions of credit card expenses |
|
13,628 |
|
(1,215 |
) |
|
|
12,413 |
|
46 |
|
|
|
12,459 |
|
Provisions of accrued expenses |
|
11,788 |
|
4,226 |
|
|
|
16,014 |
|
(1,525 |
) |
|
|
14,489 |
|
Leasing |
|
18,239 |
|
11,120 |
|
|
|
29,359 |
|
7,760 |
|
|
|
37,119 |
|
Other adjustments |
|
14,638 |
|
415 |
|
|
|
15,053 |
|
907 |
|
|
|
15,960 |
|
Total debit differences |
|
255,972 |
|
30,786 |
|
|
|
286,758 |
|
19,317 |
|
(45 |
) |
306,030 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit differences: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of property and equipment and investment properties |
|
13,163 |
|
1,053 |
|
|
|
14,216 |
|
(2,401 |
) |
|
|
11,815 |
|
Adjustment for valuation financial assets available-for-sale |
|
12,582 |
|
|
|
(12,201 |
) |
381 |
|
|
|
(165 |
) |
216 |
|
Transitory assets |
|
2,640 |
|
2,905 |
|
|
|
5,545 |
|
(1,928 |
) |
|
|
3,617 |
|
Accrued interest to effective rate |
|
2,565 |
|
(299 |
) |
|
|
2,266 |
|
(14 |
) |
|
|
2,252 |
|
Other adjustments |
|
2,003 |
|
2,703 |
|
|
|
4,706 |
|
1,710 |
|
1 |
|
6,417 |
|
Total credit differences |
|
32,953 |
|
6,362 |
|
(12,201 |
) |
27,114 |
|
(2,633 |
) |
(164 |
) |
24,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets (Liabilities) net |
|
223,019 |
|
24,424 |
|
12,201 |
|
259,644 |
|
21,950 |
|
119 |
|
281,713 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(a) Item composition:
At the end of each period, the composition of the item is as follows:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Assets held for leasing (*) |
|
105,109 |
|
103,078 |
|
|
|
|
|
|
|
Assets received or awarded as payment (**) |
|
|
|
|
|
Assets awarded at judicial sale |
|
9,179 |
|
7,282 |
|
Assets received in lieu of payment |
|
6,478 |
|
6,117 |
|
Provision for assets received in lieu of payment or awarded |
|
(2,472 |
) |
(2,104 |
) |
Subtotal |
|
13,185 |
|
11,295 |
|
|
|
|
|
|
|
Other Assets |
|
|
|
|
|
Deposits by derivatives margin |
|
181,538 |
|
178,529 |
|
Other accounts and notes receivable |
|
63,615 |
|
51,626 |
|
Trading and brokerage (***) |
|
27,978 |
|
32,243 |
|
Prepaid expenses |
|
20,215 |
|
10,740 |
|
Recoverable income taxes |
|
19,637 |
|
6,278 |
|
Investment properties |
|
14,398 |
|
14,674 |
|
Servipag available funds |
|
10,339 |
|
14,482 |
|
VAT receivable |
|
9,922 |
|
13,414 |
|
Commissions receivable |
|
6,726 |
|
6,714 |
|
Accounts receivable for sale of assets received in lieu of payment |
|
2,293 |
|
245 |
|
Pending transactions |
|
2,264 |
|
5,070 |
|
Rental guarantees |
|
1,841 |
|
1,815 |
|
Recovered leased assets for sale |
|
1,732 |
|
589 |
|
Materials and supplies |
|
671 |
|
742 |
|
Others |
|
12,651 |
|
10,651 |
|
Subtotal |
|
375,820 |
|
347,812 |
|
Total |
|
494,114 |
|
462,185 |
|
(*) These correspond to property and equipment to be given under finance lease.
(**) Assets received in lieu of payment are assets received as payment of customers past-due debts. The assets acquired must not exceed the aggregate 20% of the Banks effective equity. These assets currently represent 0.1676% (0.1640% as of December 31, 2016) of the Banks effective equity.
The assets awarded at judicial sale are not subject to the aforementioned margin. These properties are assets available for sale and is expected to be completed the sale within one year from the date the asset is received or acquired. In the event that said assets are not sold within one year, it must be written off.
The provision for assets received in lieu of payment or awarded is recorded as indicated in the Compendium of Accounting Standards, Chapter B-5 No.3, which indicates to recognize a provision for the difference between the initial value plus any additions and its realizable value, when the initial is greater.
(***) This item mainly includes simultaneous operations carried out by the subsidiary Banchile Corredores de Bolsa S.A.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
18. Other Assets, continued:
(b) The changes of the provision for assets received in lieu of payment during the nine-month period ended as of September 30, 2017 and 2016 are as follows:
Provision for assets received in lieu of payment |
|
MCh$ |
|
|
|
|
|
Balance as of January 1, 2016 |
|
176 |
|
Provisions used |
|
(483 |
) |
Provisions established |
|
499 |
|
Provisions released |
|
|
|
Balance as of September 30, 2016 |
|
192 |
|
Provisions used |
|
(268 |
) |
Provisions established |
|
2,180 |
|
Provisions released |
|
|
|
Balance as of December 31, 2016 |
|
2,104 |
|
Provisions used |
|
(671 |
) |
Provisions established |
|
1,039 |
|
Provisions released |
|
|
|
Balance as of September 30, 2017 |
|
2,472 |
|
19. Current accounts and Other Demand Deposits:
At the end of each period, the composition of the item is as follows:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Current accounts |
|
6,544,592 |
|
6,907,655 |
|
Other demand deposits |
|
1,053,136 |
|
856,711 |
|
Other demand deposits and sight accounts |
|
552,777 |
|
556,782 |
|
Total |
|
8,150,505 |
|
8,321,148 |
|
20. Savings accounts and Time Deposits:
At the end of each period, the composition of the item is as follows:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Time deposits |
|
10,077,835 |
|
10,277,292 |
|
Term savings accounts |
|
210,383 |
|
208,435 |
|
Other term balances payable |
|
107,069 |
|
67,174 |
|
Total |
|
10,395,287 |
|
10,552,901 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
21. Borrowings from Financial Institutions:
(a) At the end of each period, borrowings from financial institutions are detailed as follows:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Domestic banks |
|
|
|
|
|
Banco do Brasil |
|
2,900 |
|
|
|
|
|
|
|
|
|
Foreign banks |
|
|
|
|
|
Foreign trade financing |
|
|
|
|
|
Citibank N.A. |
|
326,972 |
|
234,629 |
|
Sumitomo Mitsui Banking |
|
182,280 |
|
127,447 |
|
Bank of America |
|
172,494 |
|
169,182 |
|
Wells Fargo Bank |
|
96,849 |
|
67,624 |
|
Commerzbank A.G. |
|
86,674 |
|
3,242 |
|
Standard Chartered Bank |
|
84,487 |
|
20,554 |
|
Bank of Nova Scotia |
|
76,743 |
|
|
|
HSBC Bank |
|
45,024 |
|
114,488 |
|
The Bank of New York Mellon |
|
19,213 |
|
114,096 |
|
Zurcher Kantonalbank |
|
13,456 |
|
14,107 |
|
Mizhuo Bank |
|
|
|
60,340 |
|
Others |
|
136 |
|
482 |
|
Borrowings and other obligations |
|
|
|
|
|
Wells Fargo Bank |
|
96,232 |
|
100,885 |
|
Citibank N.A. |
|
33,629 |
|
7,776 |
|
Deutsche Bank |
|
3,469 |
|
3,411 |
|
Banco Santander Euro |
|
1,207 |
|
1.686 |
|
Bank of America |
|
338 |
|
|
|
Commerzbank A.G. |
|
42 |
|
|
|
Others |
|
292 |
|
74 |
|
Subtotal foreign banks |
|
1,239,537 |
|
1,040,023 |
|
|
|
|
|
|
|
Chilean Central Bank |
|
1 |
|
3 |
|
|
|
|
|
|
|
Total |
|
1,242,438 |
|
1,040,026 |
|
(b) Chilean Central Bank Obligations:
Debts with the Central Bank of Chile include credit lines for the renegotiation of loans and other Central Bank borrowings.
The total amounts of the debt to the Central Bank of Chile are as follows:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Borrowings and other obligations |
|
|
|
|
|
Credit lines for the renegotiation of loans with the Central Bank |
|
1 |
|
3 |
|
Total |
|
1 |
|
3 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
At the end of each period, the composition of the item is as follows:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Mortgage bonds |
|
25,612 |
|
32,914 |
|
Bonds |
|
5,620,277 |
|
5,431,575 |
|
Subordinated bonds |
|
705,389 |
|
713,438 |
|
Total |
|
6,351,278 |
|
6,177,927 |
|
During the period ended as of September 30, 2017, Banco de Chile issued bonds by an amount of Ch$1,016,532 million, from which corresponds to Current Bonds and Short-Term Bonds by an amount of Ch$350,733 million and Ch$665,799 million respectively, according to the following details:
Current Bonds
Serie |
|
Amount |
|
Terms |
|
Annual issue |
|
Currency |
|
Issue date |
|
Maturity date |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BCHIBQ0915 |
|
58,643 |
|
13 |
|
|
3.00 |
|
UF |
|
20/01/2017 |
|
20/01/2030 |
|
BCHIBH0915 |
|
56,338 |
|
9 |
|
|
2.70 |
|
UF |
|
01/02/2017 |
|
01/02/2026 |
|
BCHIBP1215 |
|
58,157 |
|
13 |
|
|
3.00 |
|
UF |
|
06/03/2017 |
|
06/03/2030 |
|
BCHIBC1215 |
|
30,544 |
|
6 |
|
|
2.50 |
|
UF |
|
06/03/2017 |
|
06/03/2023 |
|
BCHIBC1215 |
|
5,554 |
|
6 |
|
|
2.50 |
|
UF |
|
07/03/2017 |
|
07/03/2023 |
|
BCHIBC1215 |
|
19,600 |
|
6 |
|
|
2.50 |
|
UF |
|
12/04/2017 |
|
12/04/2023 |
|
BONO EUR |
|
36,782 |
|
15 |
|
|
1.71 |
|
EUR |
|
26/04/2017 |
|
26/04/2032 |
|
BCHIBG1115 |
|
85,115 |
|
9 |
|
|
2.70 |
|
UF |
|
09/05/2017 |
|
09/05/2026 |
|
Total as of September 30, 2017 |
|
350,733 |
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
22. Debt Issued, continued:
Short Term Bonds
Counterparty |
|
Amount |
|
Annual interest |
|
Currency |
|
Issued date |
|
Maturity date |
| |
Citibank N.A. |
|
13,223 |
|
1.37 |
|
USD |
|
05/01/2017 |
|
05/06/2017 |
| |
Wells Fargo Bank |
|
16,702 |
|
1.50 |
|
USD |
|
06/01/2017 |
|
03/07/2017 |
| |
Wells Fargo Bank |
|
6,681 |
|
1.48 |
|
USD |
|
06/01/2017 |
|
05/07/2017 |
| |
Wells Fargo Bank |
|
3,340 |
|
1.38 |
|
USD |
|
06/01/2017 |
|
05/06/2017 |
| |
Wells Fargo Bank |
|
3,340 |
|
1.27 |
|
USD |
|
06/01/2017 |
|
08/05/2017 |
| |
Wells Fargo Bank |
|
3,340 |
|
1.17 |
|
USD |
|
06/01/2017 |
|
06/04/2017 |
| |
Wells Fargo Bank |
|
24,906 |
|
1.20 |
|
USD |
|
09/01/2017 |
|
10/04/2017 |
| |
Wells Fargo Bank |
|
671 |
|
1.47 |
|
USD |
|
09/01/2017 |
|
10/07/2017 |
| |
Citibank N.A. |
|
2,685 |
|
1.47 |
|
USD |
|
09/01/2017 |
|
28/07/2017 |
| |
Citibank N.A. |
|
67,131 |
|
1.27 |
|
USD |
|
09/01/2017 |
|
12/05/2017 |
| |
Wells Fargo Bank |
|
20,105 |
|
1.36 |
|
USD |
|
10/01/2017 |
|
09/06/2017 |
| |
Bofa Merrill Lynch |
|
16,754 |
|
1.35 |
|
USD |
|
10/01/2017 |
|
09/06/2017 |
| |
Wells Fargo Bank |
|
1,318 |
|
1.23 |
|
USD |
|
13/01/2017 |
|
12/05/2017 |
| |
Wells Fargo Bank |
|
3,295 |
|
1.43 |
|
USD |
|
13/01/2017 |
|
12/07/2017 |
| |
Bofa Merrill Lynch |
|
3,884 |
|
1.70 |
|
USD |
|
07/02/2017 |
|
06/02/2018 |
| |
Bofa Merrill Lynch |
|
4,531 |
|
1.70 |
|
USD |
|
07/02/2017 |
|
06/02/2018 |
| |
Bofa Merrill Lynch |
|
11,017 |
|
1.70 |
|
USD |
|
08/02/2017 |
|
07/02/2018 |
| |
Wells Fargo Bank |
|
12,797 |
|
1.40 |
|
USD |
|
10/02/2017 |
|
01/09/2017 |
| |
Wells Fargo Bank |
|
19,196 |
|
1.40 |
|
USD |
|
10/02/2017 |
|
11/09/2017 |
| |
Wells Fargo Bank |
|
19,284 |
|
1.70 |
|
USD |
|
13/02/2017 |
|
12/02/2018 |
| |
Wells Fargo Bank |
|
1,607 |
|
1.32 |
|
USD |
|
13/02/2017 |
|
14/08/2017 |
| |
Citibank N.A. |
|
10,992 |
|
1.04 |
|
USD |
|
15/02/2017 |
|
15/05/2017 |
| |
Citibank N.A. |
|
15,977 |
|
1.34 |
|
USD |
|
15/02/2017 |
|
15/08/2017 |
| |
Citibank N.A. |
|
4,474 |
|
1.34 |
|
USD |
|
15/02/2017 |
|
15/08/2017 |
| |
Citibank N.A. |
|
4,471 |
|
1.35 |
|
USD |
|
16/02/2017 |
|
08/09/2017 |
| |
Wells Fargo Bank |
|
9,885 |
|
1.40 |
|
USD |
|
21/03/2017 |
|
29/09/2017 |
| |
Bofa Merrill Lynch |
|
33,024 |
|
1.16 |
|
USD |
|
24/03/2017 |
|
23/06/2017 |
| |
Bofa Merrill Lynch |
|
26,419 |
|
1.16 |
|
USD |
|
24/03/2017 |
|
23/06/2017 |
| |
Bofa Merrill Lynch |
|
33,165 |
|
1.42 |
|
USD |
|
30/03/2017 |
|
27/09/2017 |
| |
Wells Fargo Bank |
|
16,651 |
|
1.30 |
|
USD |
|
10/04/2017 |
|
08/08/2017 |
| |
Wells Fargo Bank |
|
13,351 |
|
1.45 |
|
USD |
|
11/04/2017 |
|
10/10/2017 |
| |
Citibank N.A. |
|
33,061 |
|
1.30 |
|
USD |
|
12/06/2017 |
|
12/09/2017 |
| |
Wells Fargo Bank |
|
2,645 |
|
1.48 |
|
USD |
|
12/06/2017 |
|
11/12/2017 |
| |
Bofa Merrill Lynch |
|
7,972 |
|
1.30 |
|
USD |
|
16/06/2017 |
|
15/09/2017 |
| |
Wells Fargo Bank |
|
6,643 |
|
1.75 |
|
USD |
|
16/06/2017 |
|
15/06/2018 |
| |
Wells Fargo Bank |
|
6,786 |
|
1.81 |
|
USD |
|
21/06/2017 |
|
20/06/2018 |
| |
Citibank N.A. |
|
10,418 |
|
1.48 |
|
USD |
|
23/06/2017 |
|
19/12/2017 |
| |
Citibank N.A. |
|
5,960 |
|
1.46 |
|
USD |
|
27/06/2017 |
|
19/12/2017 |
| |
Citibank N.A. |
|
26,487 |
|
1.35 |
|
USD |
|
27/06/2017 |
|
23/10/2017 |
| |
JP.Morgan Chase |
|
33,322 |
|
1.48 |
|
USD |
|
11/07/2017 |
|
08/11/2017 |
| |
Citibank N.A. |
|
32,871 |
|
1.52 |
|
USD |
|
14/07/2017 |
|
12/01/2018 |
| |
Wells Fargo Bank |
|
16,284 |
|
1.55 |
|
USD |
|
31/07/2017 |
|
31/01/2018 |
| |
Wells Fargo Bank |
|
3,257 |
|
1.55 |
|
USD |
|
31/07/2017 |
|
31/01/2018 |
| |
Wells Fargo Bank |
|
6,513 |
|
1.42 |
|
USD |
|
31/07/2017 |
|
31/10/2017 |
| |
Wells Fargo Bank |
|
6,513 |
|
1.42 |
|
USD |
|
31/07/2017 |
|
31/10/2017 |
| |
Wells Fargo Bank |
|
10,952 |
|
1.52 |
|
USD |
|
14/08/2017 |
|
09/02/2018 |
| |
Wells Fargo Bank |
|
12,852 |
|
1.52 |
|
USD |
|
21/08/2017 |
|
16/02/2018 |
| |
Wells Fargo Bank |
|
19,047 |
|
1.47 |
|
USD |
|
25/08/2017 |
|
22/12/2017 |
| |
Total as of September30, 2017 |
|
665,799 |
|
|
|
|
|
|
|
|
| |
During the period ended September 30, 2017, there were no issues subordinated bonds.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
22. Debt Issued, continued:
During the year ended as of December 31, 2016, Banco de Chile issued bonds by an amount of Ch$1,420,037 million, of which corresponds to which correspond to Current Bonds, Short-Term Bonds and Subordinated bonds by an amount of Ch$804,979 million, Ch$532,852 million and Ch$82,206 million respectively, according to the following details:
Current Bonds
Serie |
|
Amount |
|
Terms |
|
Annual issue |
|
Currency |
|
Issue date |
|
Maturity date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BCHIAR0613 |
|
8,497 |
|
10 |
|
3.60 |
|
UF |
|
29/01/2016 |
|
29/01/2026 |
|
BCHIAR0613 |
|
10,869 |
|
10 |
|
3.60 |
|
UF |
|
18/02/2016 |
|
18/02/2026 |
|
BCHIBJ0915 |
|
53,553 |
|
10 |
|
2.90 |
|
UF |
|
25/05/2016 |
|
25/05/2026 |
|
BCHIBF0915 |
|
79,626 |
|
8 |
|
2.70 |
|
UF |
|
25/05/2016 |
|
25/05/2024 |
|
BCHIBK0915 |
|
53,485 |
|
11 |
|
2.90 |
|
UF |
|
25/05/2016 |
|
25/05/2027 |
|
BCHIBL1115 |
|
79,806 |
|
11 |
|
2.90 |
|
UF |
|
25/05/2016 |
|
25/05/2027 |
|
BCHIBA0815 |
|
53,480 |
|
5 |
|
2.50 |
|
UF |
|
29/06/2016 |
|
29/06/2021 |
|
BCHIBI1115 |
|
80,405 |
|
10 |
|
2.90 |
|
UF |
|
29/06/2016 |
|
29/06/2026 |
|
BCHIBB0815 |
|
6,706 |
|
6 |
|
2.50 |
|
UF |
|
05/07/2016 |
|
05/07/2022 |
|
BCHIBB0815 |
|
46,950 |
|
6 |
|
2.50 |
|
UF |
|
06/07/2016 |
|
06/07/2022 |
|
BONO USD |
|
19,705 |
|
5 |
|
1.97 |
|
USD |
|
05/08/2016 |
|
05/08/2021 |
|
BONO USD |
|
68,060 |
|
5 |
|
1.96 |
|
USD |
|
01/09/2016 |
|
01/09/2021 |
|
BCHIBM0815 |
|
85,148 |
|
12 |
|
2.90 |
|
UF |
|
28/09/2016 |
|
28/09/2028 |
|
BONO CHF |
|
101,560 |
|
8 |
|
0.25 |
|
CHF |
|
11/11/2016 |
|
11/11/2024 |
|
BONO JPY |
|
57,129 |
|
5 |
|
0.35 |
|
JPY |
|
21/12/2016 |
|
21/12/2021 |
|
Total as of December 31, 2016 |
|
804,979 |
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
22. Debt Issued, continued:
Short Term Bonds
Counterparty |
|
Amount |
|
Annual interest |
|
Currency |
|
Issued date |
|
Maturity date |
|
Merrill Lynch |
|
14,717 |
|
0.94 |
|
USD |
|
04/01/2016 |
|
05/07/2016 |
|
JP. Morgan Chase |
|
30,879 |
|
0.70 |
|
USD |
|
05/01/2016 |
|
04/04/2016 |
|
Wells Fargo Bank |
|
10,883 |
|
0.62 |
|
USD |
|
14/01/2016 |
|
13/04/2016 |
|
Citibank N.A. |
|
10,810 |
|
0.95 |
|
USD |
|
25/01/2016 |
|
22/07/2016 |
|
Citibank N.A. |
|
10,723 |
|
0.75 |
|
USD |
|
27/01/2016 |
|
23/05/2016 |
|
Citibank N.A. |
|
11,362 |
|
0.95 |
|
USD |
|
28/01/2016 |
|
27/07/2016 |
|
Citibank N.A. |
|
3,551 |
|
0.75 |
|
USD |
|
28/01/2016 |
|
27/05/2016 |
|
Merrill Lynch |
|
3,535 |
|
0.90 |
|
USD |
|
03/02/2016 |
|
02/08/2016 |
|
Merrill Lynch |
|
10,745 |
|
0.68 |
|
USD |
|
03/02/2016 |
|
04/05/2016 |
|
JP. Morgan Chase |
|
19,943 |
|
0.65 |
|
USD |
|
04/04/2016 |
|
01/07/2016 |
|
Merrill Lynch |
|
4,689 |
|
1.25 |
|
USD |
|
04/05/2016 |
|
28/04/2017 |
|
Merrill Lynch |
|
13,296 |
|
0.95 |
|
USD |
|
06/05/2016 |
|
03/11/2016 |
|
Citibank N.A. |
|
12,217 |
|
0.77 |
|
USD |
|
10/05/2016 |
|
08/09/2016 |
|
Wells Fargo Bank |
|
10,181 |
|
1.07 |
|
USD |
|
10/05/2016 |
|
10/02/2017 |
|
Merrill Lynch |
|
10,203 |
|
0.56 |
|
USD |
|
11/05/2016 |
|
12/07/2016 |
|
Citibank N.A. |
|
41,097 |
|
0.59 |
|
USD |
|
12/05/2016 |
|
11/07/2016 |
|
Citibank N.A. |
|
10,274 |
|
0.98 |
|
USD |
|
12/05/2016 |
|
09/11/2016 |
|
Citibank N.A. |
|
18,155 |
|
0.79 |
|
USD |
|
16/05/2016 |
|
16/09/2016 |
|
Citibank N.A. |
|
27,614 |
|
0.59 |
|
USD |
|
18/05/2016 |
|
18/07/2016 |
|
Citibank N.A. |
|
1,990 |
|
0.98 |
|
USD |
|
15/06/2016 |
|
15/11/2016 |
|
Wells Fargo Bank |
|
11,462 |
|
1.25 |
|
USD |
|
22/06/2016 |
|
21/06/2017 |
|
JP. Morgan Chase |
|
10,314 |
|
0.70 |
|
USD |
|
01/07/2016 |
|
03/10/2016 |
|
Merrill Lynch |
|
13,266 |
|
0.71 |
|
USD |
|
05/07/2016 |
|
04/10/2016 |
|
Citibank N.A. |
|
33,133 |
|
1.04 |
|
USD |
|
06/07/2016 |
|
05/01/2017 |
|
Wells Fargo Bank |
|
3,330 |
|
1.02 |
|
USD |
|
07/07/2016 |
|
28/12/2016 |
|
Merrill Lynch |
|
6,660 |
|
1.00 |
|
USD |
|
07/07/2016 |
|
09/01/2017 |
|
Citibank N.A. |
|
3,304 |
|
0.74 |
|
USD |
|
11/07/2016 |
|
19/10/2016 |
|
Merrill Lynch |
|
3,282 |
|
1.02 |
|
USD |
|
13/07/2016 |
|
09/01/2017 |
|
Wells Fargo Bank |
|
1,969 |
|
0.84 |
|
USD |
|
13/07/2016 |
|
10/11/2016 |
|
Wells Fargo Bank |
|
32,548 |
|
1.05 |
|
USD |
|
14/07/2016 |
|
10/01/2017 |
|
Merrill Lynch |
|
9,764 |
|
1.05 |
|
USD |
|
14/07/2016 |
|
11/01/2017 |
|
Merrill Lynch |
|
3,906 |
|
1.30 |
|
USD |
|
14/07/2016 |
|
12/07/2017 |
|
JP. Morgan Chase |
|
12,368 |
|
0.78 |
|
USD |
|
14/07/2016 |
|
14/10/2016 |
|
Citibank N.A. |
|
25,896 |
|
0.83 |
|
USD |
|
15/07/2016 |
|
13/12/2016 |
|
Citibank N.A. |
|
13,410 |
|
0.87 |
|
USD |
|
09/09/2016 |
|
06/12/2016 |
|
Citibank N.A. |
|
6,700 |
|
0.85 |
|
USD |
|
12/09/2016 |
|
06/12/2016 |
|
Merrill Lynch |
|
18,005 |
|
1.26 |
|
USD |
|
07/10/2016 |
|
05/04/2017 |
|
JP. Morgan Chase |
|
12,739 |
|
1.06 |
|
USD |
|
14/10/2016 |
|
15/02/2017 |
|
Citibank N.A. |
|
33,932 |
|
0.91 |
|
USD |
|
18/11/2016 |
|
15/02/2017 |
|
Total as of December 31, 2016 |
|
532,852 |
|
|
|
|
|
|
|
|
|
Subordinated bonds
Serie |
|
Amount |
|
Terms |
|
Annual issue |
|
Currency |
|
Issued date |
|
Maturity date |
|
UCHIG1111 |
|
30,797 |
|
25 |
|
3.75 |
|
UF |
|
18/08/2016 |
|
18/08/2041 |
|
UCHIG1111 |
|
9,258 |
|
25 |
|
3.75 |
|
UF |
|
01/09/2016 |
|
01/09/2041 |
|
UCHIG1111 |
|
42,151 |
|
25 |
|
3.75 |
|
UF |
|
02/09/2016 |
|
02/09/2041 |
|
Total as of December 31, 2016 |
|
82,206 |
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
22. Debt Issued, continued:
During the periods of September 2017 and December 2016, the Bank has not been in default of principal and interest on its debt instruments. Likewise, there have been no breaches of covenants and other commitments associated with the debt instruments issued.
23. Other Financial Obligations:
At the end of each period, the composition of the item is as follows:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Other Chilean obligations |
|
83,589 |
|
149,603 |
|
Public sector obligations |
|
34,251 |
|
36,596 |
|
Total |
|
117,840 |
|
186,199 |
|
(a) At the end of each period, the composition of the item is as follows:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Provisions for minimum dividends (*) |
|
236,047 |
|
285,233 |
|
Provisions for personnel benefits and payroll expenses |
|
76,831 |
|
83,345 |
|
Provisions for contingent loan risks |
|
54,732 |
|
53,681 |
|
Provisions for contingencies: |
|
|
|
|
|
Additional loan provisions (**) |
|
213,252 |
|
213,252 |
|
Country risk provisions |
|
6,783 |
|
4,620 |
|
Other provisions for contingencies |
|
21,791 |
|
21,893 |
|
Total |
|
609,436 |
|
662,024 |
|
(*) See Note No. 27 (d).
(**) During year 2016, was provisioned Ch$52,075 million as additional provisions. See Note No. 24 (b).
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
24. Provisions, continued:
(b) The following table shows the changes in provisions and accrued expenses during the period 2017 and 2016:
|
|
Minimum |
|
Personnel |
|
Contingent |
|
Additional |
|
Country risk |
|
Total |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances as of January 1, 2016 |
|
324,469 |
|
74,791 |
|
59,213 |
|
161,177 |
|
19,393 |
|
639,043 |
|
Provisions established |
|
217,123 |
|
47,564 |
|
|
|
52,075 |
|
8,563 |
|
325,325 |
|
Provisions used |
|
(324,469 |
) |
(51,311 |
) |
|
|
|
|
|
|
(375,780 |
) |
Provisions released |
|
|
|
|
|
(8,382 |
) |
|
|
(84 |
) |
(8,466 |
) |
Balances as of September 30, 2016 |
|
217,123 |
|
71,044 |
|
50,831 |
|
213,252 |
|
27,872 |
|
580,122 |
|
Provisions established |
|
68,110 |
|
20,258 |
|
2,850 |
|
|
|
|
|
91,218 |
|
Provisions used |
|
|
|
(7,957 |
) |
|
|
|
|
|
|
(7,957 |
) |
Provisions released |
|
|
|
|
|
|
|
|
|
(1,359 |
) |
(1,359 |
) |
Balances as of December 31, 2016 |
|
285,233 |
|
83,345 |
|
53,681 |
|
213,252 |
|
26,513 |
|
662,024 |
|
Provisions established |
|
236,047 |
|
48,943 |
|
1,051 |
|
|
|
2,163 |
|
288,204 |
|
Provisions used |
|
(285,233 |
) |
(55,457 |
) |
|
|
|
|
|
|
(340,690 |
) |
Provisions released |
|
|
|
|
|
|
|
|
|
(102 |
) |
(102 |
) |
Balances as of September 30, 2017 |
|
236,047 |
|
76,831 |
|
54,732 |
|
213,252 |
|
28,574 |
|
609,436 |
|
(c) Provisions for personnel benefits and payroll:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Compliance bonuses provision |
|
31,842 |
|
37,868 |
|
Staff accrued vacation provision |
|
25,498 |
|
25,539 |
|
Staff severance indemnities |
|
7,972 |
|
8,851 |
|
Other personnel benefits provision |
|
11,519 |
|
11,087 |
|
Total |
|
76,831 |
|
83,345 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
24. Provisions, continued:
(d) Staff severance indemnities:
(i) Movement in the staff severance indemnities are as follow:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Present value of the obligations at the beginning of the year |
|
8,851 |
|
10,728 |
|
Increase (Decrease) in provision |
|
165 |
|
285 |
|
Benefit paid |
|
(1,044 |
) |
(1,788 |
) |
Effect of change in actuarial factors |
|
|
|
|
|
Total |
|
7,972 |
|
9,225 |
|
(ii) Net benefits expenses:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
(Decrease) Increase in provisions |
|
(170 |
) |
(126 |
) |
Interest cost of benefits obligations |
|
335 |
|
411 |
|
Effect of change in actuarial factors |
|
|
|
|
|
Net benefit expenses |
|
165 |
|
285 |
|
(iii) Factors used in the calculation of the provision:
The main assumptions used in the determination of severance indemnity obligations for the Banks plan are shown below:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
% |
|
% |
|
|
|
|
|
|
|
Discount rate |
|
4.29 |
|
4.29 |
|
Salary increase rate |
|
4.56 |
|
4.56 |
|
Payment probability |
|
99.99 |
|
99.99 |
|
The most recent actuarial valuation of the staff severance indemnities provision was carried out during the year ended December 31, 2016.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
24. Provisions, continued:
(e) Changes in compliance bonuses provision:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Balances as of January 1 |
|
37,868 |
|
34,307 |
|
Provisions established |
|
25,629 |
|
27,669 |
|
Provisions used |
|
(31,655 |
) |
(33,300 |
) |
Provisions release |
|
|
|
|
|
Total |
|
31,842 |
|
28,676 |
|
(f) Changes in staff accrued vacation provision:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Balances as of January 1 |
|
25,539 |
|
25,480 |
|
Provisions established |
|
4,908 |
|
5,100 |
|
Provisions used |
|
(4,949 |
) |
(4,289 |
) |
Provisions release |
|
|
|
|
|
Total |
|
25,498 |
|
26,291 |
|
(g) Employee benefits share-based provision:
As of September 30, 2017 and 2016, the Bank and its subsidiaries do not have a stock-based compensation plan.
(h) Contingent loan provisions:
As of September 30, 2017 and December 31, 2016, the Bank and its subsidiaries maintain contingent loan provisions by an amount of Ch$54,732 million (Ch$53,681 million in December 2016). See Note No. 26 (d).
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
At the end of each period, the composition of the item is as follows:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Accounts and notes payable (*) |
|
157,871 |
|
146,432 |
|
Income received in advance |
|
5,435 |
|
6,077 |
|
Dividends payable |
|
1,280 |
|
1,310 |
|
|
|
|
|
|
|
Other liabilities |
|
|
|
|
|
Documents intermediated (**) |
|
45,829 |
|
52,314 |
|
Cobranding |
|
35,220 |
|
47,462 |
|
VAT debit |
|
11,854 |
|
12,549 |
|
Securities unliquidated |
|
1,302 |
|
12,376 |
|
Insurance payments |
|
737 |
|
163 |
|
Outstanding transactions |
|
485 |
|
757 |
|
Others |
|
12,920 |
|
12,586 |
|
Total |
|
272,933 |
|
292,026 |
|
(*) It comprises obligations that do not correspond to transactions inside the ordinary course of business, such as withholding tax, social security contributions, balances of prices for the purchase of materials and provisions for expenses pending payment.
(**) This item mainly includes financing of simultaneous operations performed by subsidiary Banchile Corredores de Bolsa S.A.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
26. Contingencies and Commitments:
(a) Commitments and responsibilities accounted for in off-balance-sheet accounts:
In order to satisfy its customers needs, the Bank entered into several irrevocable commitments and contingent obligations. Although these obligations are not recognized in the Statement of Financial Position, they contain credit risks and, therefore, form part of the Banks overall risk.
The Bank and its subsidiaries keep recorded in off-balance sheet accounts the main balances related to commitments or with responsibilities inherent to the course of its normal business:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
Contingent loans |
|
|
|
|
|
Guarantees and sureties |
|
313,177 |
|
279,362 |
|
Confirmed foreign letters of credit |
|
54,775 |
|
64,044 |
|
Issued letters of credit |
|
97,312 |
|
152,118 |
|
Bank guarantees |
|
2,180,562 |
|
2,150,307 |
|
Freely disposition credit lines |
|
7,360,721 |
|
7,572,687 |
|
Other credit commitments |
|
76,974 |
|
148,190 |
|
|
|
|
|
|
|
Transactions on behalf of third parties |
|
|
|
|
|
Documents in collections |
|
203,593 |
|
137,259 |
|
Third-party resources managed by the Bank: |
|
|
|
|
|
Financial assets managed on behalf of third parties |
|
7,651 |
|
39,714 |
|
Other assets managed on behalf of third parties |
|
|
|
|
|
Financial assets acquired on its own behalf |
|
178,284 |
|
174,022 |
|
Other assets acquired on its own behalf |
|
|
|
|
|
|
|
|
|
|
|
Custody of securities |
|
|
|
|
|
Securities held in safe custody in the Bank and subsidiaries |
|
12,551,983 |
|
9,586,026 |
|
Securities held in safe custody in other entities |
|
6,819,406 |
|
5,607,815 |
|
Total |
|
29,844,438 |
|
25,911,544 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
26. Contingencies and Commitments, continued:
(b) Lawsuits and legal proceedings:
(b.1) Normal judicial contingencies in the industry:
At the date of issuance of these interim condensed consolidated financial statements, there are legal actions filed against the Bank and its subsidiaries related with the ordinary course operations. As of September 30, 2017 the Bank and its subsidiaries maintain provisions for judicial contingencies amounting to Ch$21,528 million (Ch$21,630 million as of December 31, 2016), which are part of the item Provisions in the Statement of Financial Position.
The most significant lawsuit corresponds to the collective lawsuit filed by the National Consumer Service (Servicio Nacional del Consumidor) in accordance with Law No. 19,496 before the 12th Civil Court of Santiago. This legal action seeks to challenge certain clauses of the Person Products Unified Agreement (Contrato Unificado de Productos de Personas) regarding overdraft fees on credit lines and validity of the tacit consent to changes in rates, charges and other conditions in consumer contracts. To date, the probationary period has been concluded.
The estimated end dates of the respective legal contingencies are as follows:
|
|
As of September 30, 2017 |
| ||||||||
|
|
2017 |
|
2018 |
|
2019 |
|
2020 |
|
Total |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Legal contingencies |
|
|
|
21,456 |
|
72 |
|
|
|
21,528 |
|
(b.2) Contingencies for significant lawsuits in courts:
As of September 30, 2017 and December 31, 2016 there are not significant lawsuits in court that affect or may affect these interim condensed consolidated financial statements.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
26. Contingencies and Commitments, continued:
(c) Guarantees granted by operations:
i. In subsidiary Banchile Administradora General de Fondos S.A.:
In compliance with Article No, 12 of Law No, 20,712, Banchile Administradora General de Fondos S.A., has designated Banco de Chile as the representative of the beneficiaries of the guarantees it has established, and in such role the Bank has issued bank guarantees totaling UF 2,771,700, maturing January 10, 2018 (UF 2,642,000, maturing on January 10, 2017 as of December 31, 2016). The subsidiary took a policy with Mapfre Seguros Generales S.A. for the Real State Funds by a guaranteed amount of UF 342,900.
As of September 30, 2017 and December 31, 2016 the Bank has not guaranteed mutual funds.
In compliance with the stablished by the Superintendence of Securities and Insurance in letter f) of Circular 1,894 of September 24, 2008, the entity has constituted guarantees for the benefit of the investors by portfolio management. This guarantee corresponds to a bank guarantee for UF 372,200, with maturity on January 10, 2018.
ii. In subsidiary Banchile Corredores de Bolsa S.A.:
For the purposes of ensuring correct and complete compliance with all of its obligations as Stock Brokerage entity, in conformity with the provisions from Article 30 and subsequent of Law 18,045 on Securities Markets, the subsidiary established a guarantee in an insurance policy for UF 20,000, insured by HDI Seguros de Garantía y Créditos S.A., that matures April 22, 2018, whereby the Securities Exchange of the Santiago Stock Exchange was appointed as the subsidiarys creditor representative.
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
Guarantees: |
|
MCh$ |
|
MCh$ |
|
Shares delivered to cover simultaneous forward sales transactions: |
|
|
|
|
|
Santiago Securities Exchange, Stock Exchange |
|
21,539 |
|
17,750 |
|
Electronic Chilean Securities Exchange, Stock Exchange |
|
23,534 |
|
22,473 |
|
|
|
|
|
|
|
Fixed income securities to guarantee CCLV system, Santiago Securities Exchange, Stock Exchange |
|
3,977 |
|
2,992 |
|
Fixed income securities to guarantee equity lending, Electronic Chilean Securities Exchange, Stock Exchange |
|
|
|
|
|
Shares delivered to guarantee equity lending, Electronic Chilean Securities Exchange, Stock Exchange |
|
|
|
610 |
|
Santiago Securities Exchange, Stock Exchange |
|
|
|
884 |
|
Total |
|
49,050 |
|
44,709 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
26. Contingencies and Commitments, continued:
(c) Guarantees granted, continued:
ii. In subsidiary Banchile Corredores de Bolsa S.A., continued:
In conformity with the internal regulation of the stock exchange in which this subsidiary participates, and in order to guarantee the correct performance of the stockbroker, the Company established a pledge over 1,000,000 shares of the Santiago Stock Exchange, in favor of that institution, as stated in the Public Deed dated September 13, 1990 before the notary of Santiago Mr. Raul Perry Pefaur, and over a share of the Electronic Chilean Stock Exchange, in favor of that Institution, as stated in a contract signed between both entities dated May 16, 1990.
Banchile Corredores de Bolsa S.A. maintains in force a Comprehensive Securities Insurance Policy with AIG Chile - Compañía de Seguros Generales S.A. with maturity on January 2, 2018, this considers matters of employee fidelity, physical losses, falsification or adulteration, counterfeit currency, for a coverage amount equivalent to US $ 10,000,000.
According to disposition of Chilean Central Bank, it was constituted a bank guarantee corresponding to UF 10,500, with purposes to comply with the requirements of the SOMA contract (Contract for Service of System Open Market Operations) of the Chilean Central Bank. This bank guarantee is readjustable in UF to fixed term, non-endorsable with maturity of July 20, 2018.
It was constituted a bank guarantee No. 358131-4 for UF 229,100, in benefit of the investors with contracts of portfolio management. This bank guarantee is readjustable in UF to fixed term, non-endorsable with maturity of January 10, 2018.
It was constituted a cash guarantee for US$122,494.32, whose purpose is to guarantee compliance with the obligations contracted by operations made through Pershing.
iii. In subsidiary Banchile Corredores de Seguros Ltda.:
According to established in article No. 58, letter D of D.F.L. 251, as of September 30, 2017 the entity maintains two insurance policies which protect it against of possible damages that it could affect it, due to infractions of the law, regulations and complementary rules that regulate insurance brokers, especially when the non-compliance comes from acts, errors or omissions of the broker, its representatives, agents or dependents that participate in the intermediation.
The contracted policies are:
Matter insured |
|
Amount Insured (UF) |
|
|
|
|
|
Errors and omissions liability policy |
|
60,000 |
|
Civil liability policy |
|
500 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
26. Contingencies and Commitments, continued:
(d) Provisions for contingencies loans:
Established provisions for credit risk from contingencies operations are the followings:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Freely disposition credit lines |
|
31,822 |
|
30,799 |
|
Bank guarantees provision |
|
19,421 |
|
19,159 |
|
Guarantees and sureties provision |
|
2,879 |
|
3,028 |
|
Letters of credit provision |
|
336 |
|
509 |
|
Other credit commitments |
|
274 |
|
186 |
|
Total |
|
54,732 |
|
53,681 |
|
(e) On January 30, 2014, the Superintendency of Securities and Insurance of Chile brought administrative charges against Banchile Corredores de Bolsa S.A. for the alleged infringement of the second paragraph of Article 53 of Security Market Law in relation to certain specific transactions performed during the years 2009, 2010 and 2011 related to Sociedad Química y Minera de Chile S.A.s shares (SQM). In relation with the preceding, the second paragraph of Article 53 of Security Market Law states that no person may engage in transactions or induce or attempt to induce the purchase or sale of securities, whether or not governed by this Act, by means of any misleading or deceptive act, practice, mechanism or artifice .
On October 30, 2014, the Superintendency of Securities and Insurance of Chile (SVS) imposed a fine of UF 50,000 on Banchile Corredores de Bolsa S.A., for infraction to de second paragraph of Article 53 of the Securities Market Law in relation to certain transaction of SQM-As shares intermediated by the Company in 2011.
Banchile Corredores de Bolsa S.A., filed before the Eleventh Civil Court of Santiago a claim against Exempt Resolution No. 270 of October 30, 2014 of the Superintendency of Securities and Insurance (SVS), requesting the annulment of the fine. This claim was accrued to the trial due No. 25.795-2014, of the 22nd Civil Court of Santiago. To date the evidence stage has expired and some court proceedings are pending.
According to the provisions policy, the company has not made provisions because in this trial has not been pronounce the judgment, and as well the consideration of the legal advisor in charge of it, believe that there are solid grounds for the claim to be accepted.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(a) Accounting equity:
(i) Authorized, subscribed and paid shares:
As of September 30, 2017, the paid-in capital of Banco de Chile is represented by 99,444,132,192 registered shares (97,624,347,430 shares as of December 31, 2016), with no par value, fully subscribed and paid.
(ii) Shares:
(ii.1) On June 13, 2017, Banco de Chile informs regarding the capitalization of 40% of the distributable net income obtained during the fiscal year ending the 31st of December, 2016, through the issuance of fully paid-in shares, agreed in the Extraordinary Shareholders Meeting held on the 23th of March, 2017, where it was agreed to increase the Bank´s capital in the amount of Ch$133,353,827,359 through the issuance of 1,819,784,762 fully paid-in shares, of no par value, payable through the distributable net income for the year 2016 that was not distributed as dividends, as agreed at the Ordinary Shareholders Meeting held on the same day.
The issuance of fully in paid shares was registered in the Superintendency of Banks and Financial Institutions of Chile (SBIF) with the No.1/2017, on July 11, 2017.
The Board of Directors of Banco de Chile, at the meeting No.2,862, dated July 13, 2017, set July 27, 2017, as the date for issuance and distribution of the fully paid in shares.
(ii.2) The following table shows the changes in share from December 31, 2015 to September 30, 2017:
|
|
Total |
|
|
|
Ordinary |
|
|
|
|
|
Total shares as of December 31, 2015 |
|
96,129,146,433 |
|
|
|
|
|
Capitalization of earning Issue fully paid-in shares |
|
1,495,200,997 |
|
|
|
|
|
Total shares as of September 30, 2016 |
|
97,624,347,430 |
|
|
|
|
|
Total shares as of December 31, 2016 |
|
97,624,347,430 |
|
|
|
|
|
Capitalization of earning Issue fully paid-in shares (*) |
|
1,819,784,762 |
|
|
|
|
|
Total shares as September 30, 2017 |
|
99,444,132,192 |
|
(*) See Note No. 5 (g) (a).
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
27. Equity, continued:
(b) Distributable income:
In accordance with the Bank of Chiles bylaws in which establish that for the purposes of articles 24, 25 and 28 of Law No. 19,396 and the agreement of November 8, 1996, concluded between the Central Bank of Chile and the Parent Company of Banco de Chile S.A., the net distributable profit of Banco de Chile, shall be that which results from lowering or adding to net income for the year, price-Level restatement of the value of paid-in capital and reserves by effects of the variation of the Consumer Price Index between November of the previous year and November of the current year. This transitional article, which was approved at an Extraordinary Shareholders Meeting held on March 25, 2010, will remain in force until the obligation referred in Law 19,396 maintained by the Parent Company of Banco de Chile S.A. is completely paid off directly or indirectly through its subsidiary SAOS S.A.. The above described agreement was submitted under consideration to the Council of the Central Bank of Chile, institution which, in an ordinary session held on December 3, 2009, decided to resolve favorably the proposal.
The distributable income for the period ended as of September 30, 2017 ascend to Ch$393,412 million (Ch$475,388 million as of December 31, 2016).
As stated, the retention of earnings for the year ended December 31, 2016, made in March of 2017 amounted to Ch$76,861 million (the retention of earnings for the year ended December 31, 2015, made in March of 2016 amounted to Ch$95,467 million).
(c) Approval and payment of dividends:
At the Bank Ordinary Shareholders Meeting held on March 23, 2017 it was approved the distribution and payment of dividend No. 205 of Ch$2.92173783704 per share of the Banco de Chile, with charged to the net distributable income for the year ended December 31, 2016. The amount of the dividend paid in year 2017 amounts to Ch$342,034 million.
At the Bank Ordinary Shareholders Meeting held on March 24, 2016 it was approved the distribution and payment of dividend No. 204 of Ch$3.37534954173 per share of Banco de Chile, with charged to the net distributable income for the year ended December 31, 2016. The amount of the dividend paid in year 2016 amounts to Ch$366,654 million.
(d) Provision for minimum dividends:
As of January 2016, the Board of Directors established, for minimum dividend purpose, a 60% provision on net distributable income. Accordingly, the Bank recorded in the liability under the item Provisions an amount of Ch$236,047 million (Ch$285,233 million in December 2016), reflecting as a counterpart an equity reduction for the same amount in the item Retained earnings.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
27. Equity, continued:
(e) Earnings per share:
(i) Basic earnings per share:
Basic earnings per share are determined by dividing the net income attributable to the Bank ordinary equity holders in a period between the weighted average number of shares outstanding during that period, excluding the average number of own shares held throughout the period.
(ii) Diluted earnings per share:
In order to calculate the diluted earnings per share, both the amount of income attributable to common shareholders and the weighted average number of shares outstanding, net of own shares, must be adjusted for all the inherent dilutive effects to the potential common shares (stock options, warrants and convertible debt).
Accordingly, the basic and diluted earnings per share at September 30, 2017 and 2016 were determined as follows:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
Basic earnings per share: |
|
|
|
|
|
Net profits attributable to ordinary equity holders of the bank (in million Chilean pesos) |
|
433,660 |
|
428,215 |
|
Weighted average number of ordinary shares (*) |
|
99,444,132,192 |
|
99,444,132,192 |
|
Earning per shares (in Chilean pesos) |
|
4.36 |
|
4.31 |
|
|
|
|
|
|
|
Diluted earnings per share: |
|
|
|
|
|
Net profits attributable to ordinary equity holders of the bank (in million Chilean pesos) |
|
433,660 |
|
428,215 |
|
Weighted average number of ordinary shares (*) |
|
99,444,132,192 |
|
99,444,132,192 |
|
Assumed conversion of convertible debt |
|
|
|
|
|
Adjusted number of shares |
|
99,444,132,192 |
|
99,444,132,192 |
|
Diluted earnings per share (in Chilean pesos) |
|
4.36 |
|
4.31 |
|
(*) The year 2016, considers the number of fully paid-in shares issued on July 27, 2017.
As of September 30, 2017 and 2016, the Bank does not have instruments that generate dilutive effects.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
27. Equity, continued:
(f) Other comprehensive income:
This item includes the following concepts:
The adjustment of cash flow hedge derivatives comprises the portion of income recorded in hedge instruments equity in a cash flow hedge. During the period 2017 it was made a credit to equity for Ch$9,354 million (charge to equity of Ch$22,535 million during the period 2016). The income tax effect presented a charge to equity of Ch$2,385 million (credit of Ch$5,408 million in September 2016).
The valuation adjustment of investments available for sale originates from fluctuations in the fair value of such portfolio, with a charge or credit to equity. During the period 2017, it was made a credit to equity for Ch$2,956 million (charge of Ch$50,830 million during the period 2016). The deferred tax effect meant a charge to equity of Ch$752 million (credit for Ch$12,201 million in September 2016).
The cumulative translation adjustment is due to the Banks valuation of its permanent investments abroad, since it recognizes the effects of exchange differences on these items in equity. There were no variations for this concept (charge to equity of $59 million during the period 2016).
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
28. Interest Revenue and Expenses:
(a) On the closing date of the Financial Statement, the composition of interest and indexation income, excluding hedge results, are as follows:
|
|
September 2017 |
|
September 2016 |
| ||||||||||||
|
|
Interest |
|
UF |
|
Prepaid |
|
Total |
|
Interest |
|
UF |
|
Prepaid |
|
Total |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans |
|
523,436 |
|
59,403 |
|
5,305 |
|
588,144 |
|
529,760 |
|
118,537 |
|
1,893 |
|
650,190 |
|
Consumer loans |
|
453,767 |
|
832 |
|
7,052 |
|
461,651 |
|
448,396 |
|
1,225 |
|
7,018 |
|
456,639 |
|
Residential mortgage loans |
|
206,653 |
|
82,362 |
|
3,465 |
|
292,480 |
|
194,674 |
|
149,560 |
|
2,992 |
|
347,226 |
|
Financial investment |
|
19,111 |
|
2,106 |
|
|
|
21,217 |
|
20,168 |
|
4,981 |
|
|
|
25,149 |
|
Repurchase agreements |
|
1,230 |
|
|
|
|
|
1,230 |
|
1,161 |
|
|
|
|
|
1,161 |
|
Loans to banks |
|
11,917 |
|
|
|
|
|
11,917 |
|
24,793 |
|
|
|
|
|
24,793 |
|
Other interest and UF indexation revenue |
|
2,822 |
|
963 |
|
|
|
3,785 |
|
1,122 |
|
1,511 |
|
|
|
2,633 |
|
Total |
|
1,218,936 |
|
145,666 |
|
15,822 |
|
1,380,424 |
|
1,220,074 |
|
275,814 |
|
11,903 |
|
1,507,791 |
|
The amount of interest recognized on a received basis for impaired portfolio in the period 2017 amounts to Ch$4,373 million (Ch$3,812 million in September 2016).
(b) At the period end, the stock of interest and UF indexation not recognized in income is the following:
|
|
September 2017 |
|
September 2016 |
| ||||||||
|
|
Interest |
|
UF |
|
Total |
|
Interest |
|
UF |
|
Total |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans |
|
8,132 |
|
1,107 |
|
9,239 |
|
8,019 |
|
1,263 |
|
9,282 |
|
Residential mortgage loans |
|
2,773 |
|
1,393 |
|
4,166 |
|
2,456 |
|
2,056 |
|
4,512 |
|
Consumer loans |
|
48 |
|
16 |
|
64 |
|
70 |
|
14 |
|
84 |
|
Total |
|
10,953 |
|
2,516 |
|
13,469 |
|
10,545 |
|
3,333 |
|
13,878 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
28. Interest Revenue and Expenses, continued:
(c) At each period end, interest and UF indexation expenses excluding hedge results, are detailed as follows:
|
|
September 2017 |
|
September 2016 |
| ||||||||
|
|
Interest |
|
UF |
|
Total |
|
Interest |
|
UF |
|
Total |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings accounts and time deposits |
|
206,785 |
|
19,810 |
|
226,595 |
|
238,660 |
|
47,137 |
|
285,797 |
|
Debt securities issued |
|
138,331 |
|
57,782 |
|
196,113 |
|
139,836 |
|
102,205 |
|
242,041 |
|
Other financial obligations |
|
1,145 |
|
89 |
|
1,234 |
|
1,230 |
|
243 |
|
1,473 |
|
Repurchase agreements |
|
4,070 |
|
|
|
4,070 |
|
4,543 |
|
|
|
4,543 |
|
Obligations with banks |
|
13,947 |
|
|
|
13,947 |
|
10,012 |
|
|
|
10,012 |
|
Demand deposits |
|
150 |
|
3,348 |
|
3,498 |
|
470 |
|
4,930 |
|
5,400 |
|
Other interest and UF indexation expenses |
|
1 |
|
348 |
|
349 |
|
|
|
413 |
|
413 |
|
Total |
|
364,429 |
|
81,377 |
|
445,806 |
|
394,751 |
|
154,928 |
|
549,679 |
|
(d) As of September 30, 2017 and 2016, the Bank uses cross currency and interest rate swaps to hedge its position on movements on the fair value of corporate bonds and commercial loans and cross currency swaps to hedge the risk of variability of obligations flows with foreign banks and bonds issued in foreign currency.
|
|
September 2017 |
|
September 2016 |
| ||||||||
|
|
Income |
|
Expense |
|
Total |
|
Income |
|
Expense |
|
Total |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain from fair value accounting hedges |
|
2,869 |
|
|
|
2,869 |
|
54 |
|
|
|
54 |
|
Loss from fair value accounting hedges |
|
(4,018 |
) |
|
|
(4,018 |
) |
(6,937 |
) |
|
|
(6,937 |
) |
Gain from cash flow accounting hedges |
|
161,383 |
|
120,583 |
|
281,966 |
|
266,092 |
|
285,867 |
|
551,959 |
|
Loss from cash flow accounting hedges |
|
(136,887 |
) |
(165,784 |
) |
(302,671 |
) |
(322,009 |
) |
(267,073 |
) |
(589,082 |
) |
Net gain on hedge items |
|
(2,200 |
) |
|
|
(2,200 |
) |
1,152 |
|
|
|
1,152 |
|
Total |
|
21,147 |
|
(45,201 |
) |
(24,054 |
) |
(61,648 |
) |
18,794 |
|
(42,854 |
) |
(e) At each period end, the summary of interest, is as follows:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Interest revenue |
|
1,380,424 |
|
1,507,791 |
|
Interest expense |
|
(445,806 |
) |
(549,679 |
) |
|
|
|
|
|
|
Subtotal interest income |
|
934,618 |
|
958,112 |
|
|
|
|
|
|
|
Net gain (loss) from accounting hedges |
|
(24,054 |
) |
(42,854 |
) |
|
|
|
|
|
|
Total net interest income |
|
910,564 |
|
915,258 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
29. Income and Expenses from Fees and Commissions:
The income and expenses for commissions that are shown in the Interim Condensed Consolidated Statements of Income for the period correspond to the following items:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
Commission income |
|
|
|
|
|
Card services |
|
115,755 |
|
106,657 |
|
Investments in mutual funds and others |
|
63,660 |
|
59,373 |
|
Collections and payments |
|
37,517 |
|
36,646 |
|
Portfolio management |
|
32,889 |
|
29,811 |
|
Fees for insurance transactions |
|
22,426 |
|
20,754 |
|
Guarantees and letters of credit |
|
18,227 |
|
17,232 |
|
Trading and securities management |
|
13,543 |
|
10,362 |
|
Use of distribution channel |
|
13,521 |
|
13,998 |
|
Brand use agreement |
|
10,869 |
|
10,625 |
|
Financial advisory services |
|
3,853 |
|
3,499 |
|
Lines of credit and overdrafts |
|
3,776 |
|
4,505 |
|
Other commission earned |
|
14,518 |
|
14,186 |
|
Total commissions income |
|
350,554 |
|
327,648 |
|
|
|
|
|
|
|
Commission expenses |
|
|
|
|
|
Credit card transactions |
|
(69,468 |
) |
(72,118 |
) |
Interbank transactions |
|
(9,576 |
) |
(7,282 |
) |
Securities transactions |
|
(4,961 |
) |
(2,540 |
) |
Collections and payments |
|
(4,761 |
) |
(4,759 |
) |
Sales force |
|
(54 |
) |
(442 |
) |
Other commission |
|
(534 |
) |
(360 |
) |
Total commissions expenses |
|
(89,354 |
) |
(87,501 |
) |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
30. Net Financial Operating Income:
The gains (losses) from trading and brokerage activities are detailed as follows:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Financial assets held-for-trading |
|
45,785 |
|
46,461 |
|
Sale of available-for-sale instruments |
|
4,037 |
|
65,226 |
|
Sale of loan portfolios |
|
3,571 |
|
4,930 |
|
Net income on other transactions |
|
289 |
|
1,047 |
|
Trading derivative |
|
(29,796 |
) |
10,910 |
|
Total |
|
23,886 |
|
128,574 |
|
31. Foreign Exchange Transactions, net:
Net foreign exchange transactions are detailed as follows:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Indexed foreign currency |
|
79,082 |
|
83,056 |
|
Exchange difference, net |
|
(4,359 |
) |
(7,400 |
) |
Gain from accounting hedges |
|
(20,606 |
) |
(68,525 |
) |
Total |
|
54,117 |
|
7,131 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
32. Provisions for Loan Losses:
The change registered in income during the periods ended 2017 and 2016 due to provisions, are summarized as follows:
|
|
Loans and advance to |
|
Loans to customers |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
|
banks |
|
Commercial Loans |
|
Mortgage Loans |
|
Consumer Loans |
|
Subtotal |
|
Contingent Loans |
|
Total |
| ||||||||||||||
|
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Provisions established: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Individual provisions |
|
(57 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(57 |
) |
|
|
- Group provisions |
|
|
|
|
|
(32,311 |
) |
(32,388 |
) |
(4,143 |
) |
(2,384 |
) |
(189,390 |
) |
(182,750 |
) |
(225,844 |
) |
(217,522 |
) |
(1,114 |
) |
|
|
(226,958 |
) |
(217,522 |
) |
Provisions established, net |
|
(57 |
) |
|
|
(32,311 |
) |
(32,388 |
) |
(4,143 |
) |
(2,384 |
) |
(189,390 |
) |
(182,750 |
) |
(225,844 |
) |
(217,522 |
) |
(1,114 |
) |
|
|
(227,015 |
) |
(217,522 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions released: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Individual provisions |
|
|
|
125 |
|
16,954 |
|
5,825 |
|
|
|
|
|
|
|
|
|
16,954 |
|
5,825 |
|
63 |
|
2,030 |
|
17,017 |
|
7,980 |
|
- Group provisions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,352 |
|
|
|
6,352 |
|
Provisions realeased, net |
|
|
|
125 |
|
16,954 |
|
5,825 |
|
|
|
|
|
|
|
|
|
16,954 |
|
5,825 |
|
63 |
|
8,382 |
|
17,017 |
|
14,332 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision, net |
|
(57 |
) |
125 |
|
(15,357 |
) |
(26,563 |
) |
(4,143 |
) |
(2,384 |
) |
(189,390 |
) |
(182,750 |
) |
(208,890 |
) |
(211,697 |
) |
(1,051 |
) |
8,382 |
|
(209,998 |
) |
(203,190 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional provision |
|
|
|
|
|
|
|
(52,075 |
) |
|
|
|
|
|
|
|
|
|
|
(52,075 |
) |
|
|
|
|
|
|
(52,075 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recovery of written-off assets |
|
|
|
|
|
8,737 |
|
8,359 |
|
2,070 |
|
1,514 |
|
23,528 |
|
22,938 |
|
34,335 |
|
32,811 |
|
|
|
|
|
34,335 |
|
32,811 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan losses, net |
|
(57 |
) |
125 |
|
(6,620 |
) |
(70,279 |
) |
(2,073 |
) |
(870 |
) |
(165,862 |
) |
(159,812 |
) |
(174,555 |
) |
(230,961 |
) |
(1,051 |
) |
8,382 |
|
(175,663 |
) |
(222,454 |
) |
In the opinion of the Administration, provisions constituting for credit risk cover all possible losses that may arise from the non-recovery of assets, according to the records examined by the Bank.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
The composition of personnel expenses during the periods 2017 and 2016, are as follows:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Salaries |
|
176,479 |
|
171,282 |
|
Bonuses and incentives |
|
31,126 |
|
38,319 |
|
Variable compensation |
|
26,289 |
|
32,306 |
|
Lunch and health benefits |
|
20,162 |
|
21,079 |
|
Gratifications |
|
19,561 |
|
19,406 |
|
Staff severance indemnities |
|
15,165 |
|
12,676 |
|
Training expenses |
|
2,800 |
|
2,137 |
|
Other personnel expenses |
|
13,497 |
|
14,029 |
|
Total |
|
305,079 |
|
311,234 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
The composition of the item, is as follows:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
General administrative expenses |
|
|
|
|
|
Information technology and communications |
|
51,173 |
|
50,677 |
|
Maintenance and repair of property and equipment |
|
25,999 |
|
26,758 |
|
Office rental and equipment |
|
19,475 |
|
19,201 |
|
Surveillance and securities transport services |
|
8,980 |
|
9,802 |
|
Office supplies |
|
6,534 |
|
6,478 |
|
External advisory services and professional services fees |
|
6,375 |
|
6,382 |
|
Rent ATM area |
|
5,435 |
|
5,736 |
|
Energy, heating and other utilities |
|
4,211 |
|
4,316 |
|
Postal box, mail , postage and home delivery services |
|
4,104 |
|
4,908 |
|
Insurance premiums |
|
3,946 |
|
3,050 |
|
External service of financial information |
|
3,503 |
|
2,989 |
|
Representation and travel expenses |
|
2,967 |
|
3,248 |
|
Legal and notary expenses |
|
2,756 |
|
2,411 |
|
External service of custody of documentation |
|
2,406 |
|
2,109 |
|
Donations |
|
1,881 |
|
1,487 |
|
Other general administrative expenses |
|
13,897 |
|
15,520 |
|
Subtotal |
|
163,642 |
|
165,072 |
|
|
|
|
|
|
|
Outsource services |
|
|
|
|
|
Credit pre-evaluation |
|
14,185 |
|
12,188 |
|
Data processing |
|
8,920 |
|
8,047 |
|
External technological developments expenses |
|
7,539 |
|
6,057 |
|
Certification and technology testing |
|
4,532 |
|
4,410 |
|
Other |
|
2,255 |
|
2,476 |
|
Subtotal |
|
37,431 |
|
33,178 |
|
|
|
|
|
|
|
Board expenses |
|
|
|
|
|
Remunerations of the Board of Directors |
|
1,880 |
|
1,867 |
|
Other Board expenses |
|
362 |
|
496 |
|
Subtotal |
|
2,242 |
|
2,363 |
|
|
|
|
|
|
|
Marketing expenses |
|
|
|
|
|
Advertising |
|
22,901 |
|
25,591 |
|
Subtotal |
|
22,901 |
|
25,591 |
|
|
|
|
|
|
|
Taxes, payroll taxes and contributions |
|
|
|
|
|
Contribution to the Superintendency of Banks |
|
6,837 |
|
6,624 |
|
Real estate contributions |
|
2,027 |
|
2,051 |
|
Patents |
|
943 |
|
972 |
|
Other taxes |
|
804 |
|
951 |
|
Subtotal |
|
10,611 |
|
10,598 |
|
Total |
|
236,827 |
|
236,802 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
35. Depreciation, Amortization and Impairment:
(a) The amounts corresponding to charges to results for depreciation and amortization during the periods 2017 and 2016, are detailed as follows:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
Depreciation of property and equipment (Note No. 16 (b)) |
|
19,466 |
|
18,461 |
|
Amortization of intangibles assets (Note No. 15 (b)) |
|
6,714 |
|
6,454 |
|
Total |
|
26,180 |
|
24,915 |
|
(b) As of September 30, 2017 and 2016 the composition of impairment expenses is the following:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Impairment |
|
|
|
|
|
Impairment of financial instruments |
|
|
|
|
|
Impairment of properties and equipment (Note No. 16 (b)) |
|
1 |
|
4 |
|
Impairment of intangible assets (Note No. 15 (b)) |
|
|
|
|
|
Total |
|
1 |
|
4 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
During the periods 2017 and 2016, the Bank and its subsidiaries present other operating income, according to the following:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
Income for assets received in lieu of payment |
|
|
|
|
|
Income from sale of assets received in lieu of payment |
|
3,772 |
|
3,698 |
|
Other income |
|
31 |
|
33 |
|
Subtotal |
|
3,803 |
|
3,731 |
|
|
|
|
|
|
|
Release of provisions for contingencies |
|
|
|
|
|
Country risk provisions |
|
|
|
|
|
Other provisions for contingencies |
|
102 |
|
84 |
|
Subtotal |
|
102 |
|
84 |
|
|
|
|
|
|
|
Other income |
|
|
|
|
|
Rental income |
|
6,653 |
|
6,485 |
|
Credit card income |
|
6,255 |
|
4,898 |
|
Expense recovery |
|
2,927 |
|
2,378 |
|
Correspondent banks reimbursement |
|
2,073 |
|
2,187 |
|
Gain from sale of leased assets |
|
1,133 |
|
399 |
|
Gain on sale of property and equipment |
|
598 |
|
101 |
|
Revaluation of prepaid monthly payments |
|
329 |
|
666 |
|
Fiduciary and trustee commissions |
|
194 |
|
184 |
|
Others |
|
1,140 |
|
2,361 |
|
Subtotal |
|
21,302 |
|
19,659 |
|
|
|
|
|
|
|
Total |
|
21,302 |
|
23,474 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
During the periods 2017 and 2016, the Bank and its subsidiaries present other operating expenses, according to the following:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
Provisions and expenses for assets received in lieu of payment |
|
|
|
|
|
Charge-off assets received in lieu of payment |
|
2,453 |
|
2,935 |
|
Provisions for assets received in lieu of payment |
|
1,156 |
|
695 |
|
Expenses to maintain assets received in lieu of payment |
|
478 |
|
331 |
|
Subtotal |
|
4,087 |
|
3,961 |
|
|
|
|
|
|
|
Provisions for contingencies |
|
|
|
|
|
Country risk provisions |
|
2,163 |
|
1,684 |
|
Other provisions for contingencies |
|
|
|
6,879 |
|
Subtotal |
|
2,163 |
|
8,563 |
|
|
|
|
|
|
|
Other expenses |
|
|
|
|
|
Leasings operational expenses |
|
3,871 |
|
1,334 |
|
Write-offs for operating risks |
|
2,445 |
|
2,375 |
|
Credit cards administration |
|
2,219 |
|
3,160 |
|
Provisions and charge-offs of other assets |
|
1,498 |
|
2,305 |
|
Expenses for charge-off leased assets recoveries |
|
421 |
|
997 |
|
Credit life insurance |
|
212 |
|
187 |
|
Contribution to other organisms |
|
194 |
|
195 |
|
Civil lawsuits |
|
117 |
|
90 |
|
Losses on sale of property and equipment |
|
1 |
|
|
|
Others |
|
1,443 |
|
1,298 |
|
Subtotal |
|
12,421 |
|
11,941 |
|
|
|
|
|
|
|
Total |
|
18,671 |
|
24,465 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
38. Related Party Transactions:
Related parties are considered to be those natural or legal persons who are in positions to directly or indirectly have significant influence through their ownership or management of the Bank and its subsidiaries, as set out in the Compendium of Accounting Standards and Chapter 12-4 of the current Compilation of Standards issued by the Chilean Superintendency of Banks and Financial Institutions (SBIF).
According to the above, the Bank has considered as related parties those natural or legal persons who have a direct participation or through third parties on bank ownership, where such participation exceeds 5% of the shares, and also people who, regardless of ownership, have authority and responsibility for planning, management and control of the activities of the entity or its subsidiaries. There also are considered as related the companies in which the parties related by ownership or management of the bank have a share which reaches or exceeds 5%, or has the position of director, general manager or equivalent.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
38. Related Party Transactions, continued:
(a) Loans to related parties:
The following are the loans and accounts receivable and contingent loans, corresponding to related entities.
|
|
Production |
|
Investment |
|
Individuals (***) |
|
Total |
| ||||||||
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and accounts receivable: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans |
|
287,002 |
|
164,309 |
|
116,239 |
|
151,004 |
|
8,897 |
|
8,296 |
|
412,138 |
|
323,609 |
|
Residential mortgage loans |
|
|
|
|
|
|
|
|
|
33,563 |
|
31,921 |
|
33,563 |
|
31,921 |
|
Consumer loans |
|
|
|
|
|
|
|
|
|
6,055 |
|
6,496 |
|
6,055 |
|
6,496 |
|
Gross loans |
|
287,002 |
|
164,309 |
|
116,239 |
|
151,004 |
|
48,515 |
|
46,713 |
|
451,756 |
|
362,026 |
|
Allowance for loan losses |
|
(1,158 |
) |
(776 |
) |
(381 |
) |
(193 |
) |
(254 |
) |
(293 |
) |
(1,793 |
) |
(1,262 |
) |
Net loans |
|
285,844 |
|
163,533 |
|
115,858 |
|
150,811 |
|
48,261 |
|
46,420 |
|
449,963 |
|
360,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantees |
|
11,780 |
|
12,266 |
|
18,236 |
|
762 |
|
|
|
|
|
30,016 |
|
13,028 |
|
Letters of credits |
|
1,241 |
|
165 |
|
102 |
|
|
|
|
|
|
|
1,343 |
|
165 |
|
Foreign letters of credits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banks guarantees |
|
45,148 |
|
34,821 |
|
12,593 |
|
9,038 |
|
|
|
|
|
57,741 |
|
43,859 |
|
Freely disposition credit lines |
|
29,910 |
|
37,105 |
|
32,699 |
|
31,430 |
|
15,703 |
|
15,897 |
|
78,312 |
|
84,432 |
|
Other contingencies loans |
|
|
|
2,000 |
|
|
|
|
|
|
|
|
|
|
|
2,000 |
|
Total contingent loans |
|
88,079 |
|
86,357 |
|
63,630 |
|
41,230 |
|
15,703 |
|
15,897 |
|
167,412 |
|
143,484 |
|
Provision for contingencies loans |
|
(196 |
) |
(210 |
) |
(79 |
) |
(84 |
) |
(48 |
) |
(32 |
) |
(323 |
) |
(326 |
) |
Contingent loans, net |
|
87,883 |
|
86,147 |
|
63,551 |
|
41,146 |
|
15,655 |
|
15,865 |
|
167,089 |
|
143,158 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount covered by guarantee: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage |
|
14,212 |
|
17,742 |
|
77,885 |
|
82,760 |
|
50,184 |
|
48,272 |
|
142,281 |
|
148,774 |
|
Warrant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pledge |
|
2,021 |
|
2,900 |
|
|
|
|
|
|
|
3 |
|
2,021 |
|
2,903 |
|
Others (****) |
|
51,803 |
|
21,147 |
|
13,853 |
|
13,993 |
|
2,024 |
|
1,743 |
|
67,680 |
|
36,883 |
|
Total collateral |
|
68,036 |
|
41,789 |
|
91,738 |
|
96,753 |
|
52,208 |
|
50,018 |
|
211,982 |
|
188,560 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
38. Related Party Transactions, continued:
(a) Loans with related parties, continued:
(*) For these effects are considered productive companies, those that meet the following conditions:
i) They engage in production activities and generate a separate flow of income.
ii) Less than 50% of their assets are financial assets held-for-trading or investments.
(**) Investment companies include those legal entities that do not meet the conditions for productive companies and are profit-oriented.
(***) Individuals include key members of the management and correspond to those who directly or indirectly have authority and responsibility for planning, administrating and controlling the activities of the organization, including directors. This category also includes their family members who influence or are influenced by such individuals in their interactions with the organization.
(****) These guarantees mainly correspond to shares and other financial guarantees.
(b) Other assets and liabilities with related parties:
|
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
Assets |
|
|
|
|
|
Cash and due from banks |
|
64,632 |
|
51,222 |
|
Transactions in the course of collection |
|
47,987 |
|
7,537 |
|
Financial assets held-for-trading |
|
15 |
|
|
|
Derivative instruments |
|
276,083 |
|
147,046 |
|
Financial assets |
|
7,726 |
|
15,129 |
|
Other assets |
|
71,221 |
|
50,691 |
|
Total |
|
467,664 |
|
271,625 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Demand deposits |
|
153,556 |
|
194,503 |
|
Transactions in the course of payment |
|
64,643 |
|
5,637 |
|
Repurchase agreements |
|
40,942 |
|
34,710 |
|
Savings accounts and time deposits |
|
180,604 |
|
267,925 |
|
Derivative instruments |
|
295,795 |
|
151,398 |
|
Borrowings with banks |
|
360,601 |
|
242,405 |
|
Other liabilities |
|
48,485 |
|
60,307 |
|
Total |
|
1,144,626 |
|
956,885 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
38. Related Party Transactions, continued:
(c) Income and expenses from related party transactions (*):
|
|
September |
|
September |
| ||||
|
|
2017 |
|
2016 |
| ||||
|
|
Income |
|
Expense |
|
Income |
|
Expense |
|
Type of income or expense recognized |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
Profit/loss for interest |
|
14,553 |
|
7,509 |
|
14,510 |
|
10,117 |
|
Profit/loss for commission and services |
|
48,334 |
|
52,059 |
|
47,936 |
|
45,959 |
|
Profit/loss for financial operation |
|
|
|
|
|
|
|
|
|
Derivative instruments (**) |
|
21,549 |
|
49,864 |
|
32,605 |
|
39,118 |
|
Other financial operating |
|
|
|
|
|
|
|
|
|
Released or established of provision for credit risk |
|
|
|
369 |
|
368 |
|
|
|
Operating expenses |
|
|
|
79,159 |
|
|
|
65,925 |
|
Other income and expenses |
|
348 |
|
44 |
|
347 |
|
27 |
|
(*) This detail does not constitute a Statement of Comprehensive Income for related party transactions since the assets with these parties are not necessarily equal to liabilities and each item reflects total income and expense and not those corresponding to exact transactions.
(**) The outcome of derivative operations is presented net at each related counterparty level. Additionally, this line includes operations with local counterpart banks (unrelated) which have been novated by Comder Contraparte Central S.A. (Related entity) for centralized clearing purposes, which generated a net loss of Ch$48,481 million as of September 30, 2017 (net loss of Ch$28,699 million as of September 30, 2016).
(d) Contracts with related parties:
During the period ended September 30, 2017, the Bank has signed, renewed or amended the contractual terms and conditions of the following contracts with related parties that do not correspond to the ordinary transactions with clients in general, for above UF 1.000:
Company name |
|
Concept or description of the service |
Redbanc S.A. |
|
Operations management through ATM for credit and debit card |
Transbank S.A. |
|
Processing operations on credit and debit card transactions |
Plaza Oeste S.A. |
|
Office rentals |
Plaza La Serena S.A. |
|
Office rentals |
Canal 13 |
|
Display of advertisements |
Citigroup Inc. |
|
Provision of banking and financial services |
Servipag S.A. |
|
Collection and payment services |
Nexus S.A. |
|
Processing on credit card services |
Combanc S.A. |
|
Clearing and settlement services for high amounts payments |
Asociación de Bancos e Instituciones Financieras |
|
Membership fee |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
38. Related Party Transactions, continued:
(e) Payments to key management personnel:
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
Remunerations |
|
3,125 |
|
2,921 |
|
Short-term benefits |
|
3,302 |
|
4,422 |
|
Severance pay |
|
|
|
2,434 |
|
Paid based on shares |
|
|
|
|
|
Total |
|
6,427 |
|
9,777 |
|
Composition of key personnel:
|
|
No. of executives |
| ||
|
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
Position |
|
|
|
|
|
CEO |
|
1 |
|
1 |
|
CEOs of subsidiaries |
|
6 |
|
7 |
|
Division Managers |
|
14 |
|
14 |
|
Total |
|
21 |
|
22 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
38. Related Party Transactions, continued:
(e) Directors expenses and remunerations:
|
|
Remunerations |
|
Fees for attending |
|
Fees for attending |
|
Consulting |
|
Total |
| ||||||||||
|
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Name of Directors |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pablo Granifo Lavín |
|
413 |
(*) |
406 |
(*) |
41 |
|
37 |
|
297 |
|
298 |
|
|
|
|
|
751 |
|
741 |
|
Andrónico Luksic Craig |
|
129 |
|
126 |
|
4 |
|
7 |
|
|
|
|
|
|
|
|
|
133 |
|
133 |
|
Jorge Awad Mehech |
|
14 |
|
42 |
|
6 |
|
20 |
|
26 |
|
74 |
|
|
|
|
|
46 |
|
136 |
|
Jaime Estévez Valencia |
|
43 |
|
42 |
|
20 |
|
20 |
|
100 |
|
109 |
|
|
|
|
|
163 |
|
171 |
|
Gonzalo Menéndez Duque |
|
43 |
|
42 |
|
18 |
|
19 |
|
90 |
|
89 |
|
8 |
|
20 |
|
159 |
|
170 |
|
Francisco Pérez Mackenna |
|
43 |
|
42 |
|
17 |
|
14 |
|
60 |
|
47 |
|
|
|
|
|
120 |
|
103 |
|
Rodrigo Manubens Moltedo |
|
43 |
|
42 |
|
20 |
|
18 |
|
39 |
|
34 |
|
|
|
|
|
102 |
|
94 |
|
Thomas Fürst Freiwirth |
|
43 |
|
42 |
|
16 |
|
15 |
|
29 |
|
30 |
|
|
|
|
|
88 |
|
87 |
|
Jorge Ergas Heymann |
|
14 |
|
42 |
|
6 |
|
12 |
|
17 |
|
43 |
|
|
|
|
|
37 |
|
97 |
|
Jean-Paul Luksic Fontbona |
|
43 |
|
42 |
|
6 |
|
5 |
|
|
|
|
|
|
|
|
|
49 |
|
47 |
|
Alfredo Ergas Segal |
|
29 |
|
|
|
13 |
|
|
|
34 |
|
|
|
|
|
|
|
76 |
|
|
|
Andrés Ergas Heymann |
|
29 |
|
|
|
13 |
|
|
|
28 |
|
|
|
|
|
|
|
70 |
|
|
|
Other directors of subsidiaries |
|
|
|
|
|
|
|
|
|
94 |
|
108 |
|
|
|
|
|
94 |
|
108 |
|
Total |
|
886 |
|
868 |
|
180 |
|
167 |
|
814 |
|
832 |
|
8 |
|
20 |
|
1,888 |
|
1,887 |
|
(1) It includes fees paid to members of the Advisory Committee of Banchile Corredores de Seguros Ltda, of Ch$13 million (Ch$12 million in September 2016).
(*) It includes a provision of Ch$283 million (Ch$279 million in 2016) for an incentive subject to achieving the Banks forecasted earnings.
Fees paid for advisory services to the Board of Directors amount to Ch$263 million (Ch$383 million in September 2016).
Travel and other related expenses amount to Ch$83million (Ch$74 million in September 2016).
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
39. Fair Value of Financial Assets and Liabilities:
Banco de Chile and its subsidiaries have defined a corporate framework for valorization and control related with the process to the fair value measurement.
Within the established framework includes the Product Control Unit, which is independent of the business areas and reports to the Financial Management and Control Division Manager. The Financial Risk Management Area is responsible for independent verification of the results of trading and investment operations and all fair value measurements.
To achieve the appropriate measurements and controls, the Bank and its subsidiaries, take into account at least the following aspects:
(i) Industry standard valorization.
To value financial instruments, Banco de Chile uses industry standard modeling; quota value, share price, discounted cash flows and valuation of options through Black-Scholes-Merton, in the case of options. The input parameters for the valuation correspond to rates, prices and levels of volatility for different terms and market factors that are traded in the national and international market.
(ii) Quoted prices in active markets.
The fair value for instruments with quoted prices in active markets is determined using daily quotes from electronic systems information (Bolsa de Comercio de Santiago, Bloomberg, LVA and Risk America, etc). This quote represents the price at which these instruments are regularly traded in the financial markets.
(iii) Valuation techniques.
If no quotes are available for the instrument to be valued, valuation techniques will be used to determine the fair value.
Due to, in general, the valuation models require the entry of market parameters, the aim is to maximize information based on observable or price-related quotations for similar instruments in active markets. In the event that there is no information in active markets, data from external suppliers of market information, prices of similar transactions and historical information are used to validate the valuation parameters.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
39. Fair Value of Financial Assets and Liabilities, continued:
(iv) Fair value adjustments.
As part of the valuation process considers two adjustments to the market value of each instrument calculated based on the market parameters; a liquidity adjustment and a Bid/Offer adjustment. The latter represents the impact on the valuation of an instrument depending on whether corresponds to a long or purchased position or if the position corresponds to a short or sold position. To calculate this adjustment is used the active market prices or indicative prices depending on the instrument, considering the Bid, Mid and Offer, respectively.
On the other hand, the liquidity adjustment calculation considers the size of the position in each factor, the particular liquidity of each factor, the relative size of Banco de Chile in relation to the market and the liquidity observed in recent operations in the market.
(v) Fair value control.
Daily is executed a process of independent verification of prices and rates, in order to control that the market parameters used by Banco de Chile in the valuation of the financial instruments correspond to the current state of the market and the best estimate of the fair value. The objective of this process is to control that the official market parameters provided by the respective business area, before being entered into the valuation, are within acceptable ranges of differences when compared to the same set of parameters prepared independently by the Financial Risk Control and Management Area. As a result, value differences are obtained at the level of currency, product and portfolio, which are compared against specific ranges for each grouping level.
In the case of relevant differences exist, these are scaled according to the amount of individual materiality of each market factor and aggregated at the portfolio level, according to the grouping levels with previously defined ranges. These ranges are approved by the Finance, International and Financial Risk Committee.
In parallel and complementary, the Financial Risk Control and Management Area generates and reports on daily basis P&L and Exposure to Market Risks, which allow the proper control and consistency of the parameters used in the valuation.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
39. Fair Value of Financial Assets and Liabilities, continued:
(vi) Judgmental analysis and information to Management.
In particular cases, where there are no market quotations for the instrument to be valued and there are no prices for similar transactions or indicative parameters, a specific control and a reasoned analysis must be carried out in order to estimate the fair value of the operation. Within the valuation framework described in the Reasonable Value Policy approved by the Board of Directors of Banco de Chile, a required level of approval is set in order to carry out transactions where market information is not available or it is not possible to infer prices or rates from it.
(a) Hierarchy of instrument valued at Fair value:
Banco de Chile and its subsidiaries, classify all the financial instruments among the following levels:
Level 1: These are financial instruments whose fair value is realized at quoted prices (unadjusted) in active markets for identical assets or liabilities. For these instruments there are observable market prices (return internal rates, quote value, price), so that assumptions are not required to value.
In this level, the following instruments are considered: currency futures, Chilean Central Bank and Treasury securities, mutual fund investments and equity shares.
For the instruments of the Central Bank of Chile and the General Treasury of the Republic, all those mnemonics belonging to a Benchmark, in other words corresponding to one of the following categories published by the Santiago Stock Exchange, will be considered as Level 1: Pesos-02, Pesos-03, Pesos-04, Pesos-05, Pesos-07, Pesos-10, UF-02, UF-04, UF-05, UF-07, UF-10, UF-20, UF-30. A Benchmark corresponds to a group of mnemonics that are similar in duration and are traded in an equivalent way, i.e., the price obtained is the same for all the instruments that make up a Benchmark. This feature defines a greater depth of market, with daily quotations that allow classifying these instruments as Level 1.
In the case of debt issued by the Government, the internal rate of return of the market is used to discount all flows to present value. In the case of mutual funds and equity shares, the current market price multiplied by the number of instruments results in the fair value.
The preceding described valuation methodology is equivalent to the one used by the Bolsa de Comercio de Santiago (Santiago Stock Exchange) and correspond to the standard methodology used in the market.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
39. Fair Value of Financial Assets and Liabilities, continued:
Level 2: They are financial instruments whose fair value is made with variables other than the prices quoted in Level 1 that are observable for the asset or liability, directly (ie as prices) or indirectly (that is, derived from prices). These categories include:
a) Quoted prices for similar assets or liabilities in active markets.
b) Quoted prices for identical or similar assets or liabilities in markets that are not active.
c) Inputs data other than quoted prices that are observable for the asset or liability.
d) Inputs data corroborated by the market.
At this level there are mainly derivatives instruments, debt issued by banks, debt issues of Chilean and foreign companies, issued in Chile or abroad, mortgage claims, financial brokerage instruments and some emissions of the Central Bank of Chile and the General Treasury of the Republic.
To value derivatives, it will depend on whether they are impacted by volatility as a relevant market factor in standard valuation methodologies; for options the Black-Scholes-Merton formula is used; for the rest of the derivatives, forwards and swaps, net present value through discounted cash flows is used.
For the rest of the instruments at this level, as for Level 1 debt issues, the valuation is done through the internal rate of return.
In the event that there is no observable price for an instrument in a specific term, the price will be inferred from the interpolation between periods that have observable quoted price in active markets. These models incorporate various market variables, including the credit quality of counterparties, exchange rates and interest rate curves.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
39. Fair Value of Financial Assets and Liabilities, continued:
Valuation Techniques and Inputs:
Type of |
|
Valuation |
|
Description: Inputs and Sources |
Local Bank and Corporate Bonds |
|
Discounted cash flows model |
|
Prices are provided by third party price providers that are widely used in the Chilean market. |
|
|
|
|
|
Offshore Bank and Corporate Bonds |
|
|
|
Prices are provided by third party price providers that are widely used in the Chilean market. |
|
|
|
|
|
Local Central Bank and Treasury Bonds |
|
|
|
Prices are provided by third party price providers that are widely used in the Chilean market. |
|
|
|
|
|
Mortgage Notes |
|
|
|
Prices are provided by third party price providers that are widely used in the Chilean market. |
|
|
|
|
|
Time Deposits |
|
|
|
Prices are provided by third party price providers that are widely used in the Chilean market. |
|
|
|
|
|
Cross Currency Swaps, Interest Rate Swaps, FX Forwards, Inflation Forwards |
|
|
|
Forward Points, Inflation forecast and local swap rates are provided by market brokers that are widely used in the Chilean market. |
|
|
|
|
|
FX Options |
|
Black-Scholes Model |
|
Prices for volatility surface estimates are obtained from market brokers that are widely used in the Chilean market. |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
39. Fair Value of Financial Assets and Liabilities, continued:
Level 3: These are financial instruments whose fair value is determined using non-observable inputs data. An adjustment to an input that is significant to the entire measurement can result in a fair value measurement classified within Level 3 of the fair value hierarchy, if the adjustment uses significant non-observable data entry.
The instruments likely to be classified as level 3 are mainly Corporate Debt by Chilean and foreign companies, issued both in Chile and abroad.
Valuation Techniques and Inputs:
Type of |
|
Valuation |
|
Description: Inputs and Sources |
Local Bank and Corporate Bonds |
|
Offshore Bank and Corporate Bonds |
|
Prices are provided by third party price providers that are widely used in the Chilean market, (input is not observable by the market). |
|
|
|
|
|
Offshore Bank and Corporate Bonds |
|
Offshore Bank and Corporate Bonds |
|
Prices are provided by third party price providers that are widely used in the Chilean market, (input is not observable by the market). |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
39. Fair Value of Financial Assets and Liabilities, continued:
(b) Level chart:
The following table shows the classification by levels, for financial instruments registered at fair value.
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
| ||||||||
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets held-for-trading |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From the Chilean Government and Central Bank |
|
586,035 |
|
82,560 |
|
292,649 |
|
399,786 |
|
|
|
|
|
878,684 |
|
482,346 |
|
Other instruments issued in Chile |
|
808 |
|
673 |
|
286,161 |
|
887,594 |
|
667 |
|
8,960 |
|
287,636 |
|
897,227 |
|
Instruments issued abroad |
|
265 |
|
385 |
|
|
|
|
|
|
|
|
|
265 |
|
385 |
|
Mutual fund investments |
|
17,946 |
|
25,823 |
|
|
|
|
|
|
|
|
|
17,946 |
|
25,823 |
|
Subtotal |
|
605,054 |
|
109,441 |
|
578,810 |
|
1,287,380 |
|
667 |
|
8,960 |
|
1,184,531 |
|
1,405,781 |
|
Derivative contracts for trading purposes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forwards |
|
|
|
|
|
369,427 |
|
163,701 |
|
|
|
|
|
369,427 |
|
163,701 |
|
Swaps |
|
|
|
|
|
673,314 |
|
709,091 |
|
|
|
|
|
673,314 |
|
709,091 |
|
Call Options |
|
|
|
|
|
602 |
|
1,558 |
|
|
|
|
|
602 |
|
1,558 |
|
Put Options |
|
|
|
|
|
2,481 |
|
1,584 |
|
|
|
|
|
2,481 |
|
1,584 |
|
Futures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
|
|
|
|
1,045,824 |
|
875,934 |
|
|
|
|
|
1,045,824 |
|
875,934 |
|
Hedge derivative contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value hedge (Swap) |
|
|
|
|
|
150 |
|
218 |
|
|
|
|
|
150 |
|
218 |
|
Cash flow hedge (Swap) |
|
|
|
|
|
41,583 |
|
63,482 |
|
|
|
|
|
41,583 |
|
63,482 |
|
Subtotal |
|
|
|
|
|
41,733 |
|
63,700 |
|
|
|
|
|
41,733 |
|
63,700 |
|
Financial assets available-for-sale (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From the Chilean Government and Central Bank |
|
222,990 |
|
|
|
115,675 |
|
59,200 |
|
|
|
|
|
338,665 |
|
59,200 |
|
Other instruments issued in Chile |
|
|
|
|
|
908,880 |
|
232,780 |
|
61,516 |
|
76,005 |
|
970,396 |
|
308,785 |
|
Instruments issued abroad |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
222,990 |
|
|
|
1,024,555 |
|
291,980 |
|
61,516 |
|
76,005 |
|
1,309,061 |
|
367,985 |
|
Total |
|
828,044 |
|
109,441 |
|
2,690,922 |
|
2,518,994 |
|
62,183 |
|
84,965 |
|
3,581,149 |
|
2,713,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative contracts for trading purposes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forwards |
|
|
|
|
|
410,210 |
|
138,574 |
|
|
|
|
|
410,210 |
|
138,574 |
|
Swaps |
|
|
|
|
|
724,340 |
|
804,652 |
|
|
|
|
|
724,340 |
|
804,652 |
|
Call Options |
|
|
|
|
|
1,549 |
|
1,979 |
|
|
|
|
|
1,549 |
|
1,979 |
|
Put Options |
|
|
|
|
|
3,661 |
|
867 |
|
|
|
|
|
3,661 |
|
867 |
|
Futures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
|
|
|
|
1,139,760 |
|
946,072 |
|
|
|
|
|
1,139,760 |
|
946,072 |
|
Hedge derivative contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value hedge (Swap) |
|
|
|
|
|
7,172 |
|
10,293 |
|
|
|
|
|
7,172 |
|
10,293 |
|
Cash flow hedge (Swap) |
|
|
|
|
|
61,291 |
|
45,722 |
|
|
|
|
|
61,291 |
|
45,722 |
|
Subtotal |
|
|
|
|
|
68,463 |
|
56,015 |
|
|
|
|
|
68,463 |
|
56,015 |
|
Total |
|
|
|
|
|
1,208,223 |
|
1,002,087 |
|
|
|
|
|
1,208,223 |
|
1,002,087 |
|
(1) As of September 30, 2017, 85% of instruments of level 3 have denomination Investment Grade. Also, 100% of total of these financial instruments correspond to domestic issuers.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
39. Fair Value of Financial Assets and Liabilities, continued:
(c) Level 3 reconciliation:
The following table shows the reconciliation between the balances at the beginning and at the end of period for those instruments classified in Level 3, whose fair value is reflected in the financial statements:
|
|
As of September 30, 2017 |
| ||||||||||||||
|
|
Balance as of |
|
Gain (Loss) |
|
Gain (Loss) |
|
Purchases |
|
Sales |
|
Transfer from |
|
Transfer to |
|
Balance as of |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets held-for-trading: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other instruments issued in Chile |
|
8,960 |
|
|
|
|
|
667 |
|
(10,745 |
) |
1,785 |
|
|
|
667 |
|
Subtotal |
|
8,960 |
|
|
|
|
|
667 |
|
(10,745 |
) |
1.785 |
|
|
|
667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-Sale Instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other instruments issued in Chile |
|
76,005 |
|
(2,141 |
) |
936 |
|
4,922 |
|
(20,878 |
) |
2,672 |
|
|
|
61,516 |
|
Instruments issued abroad |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
76,005 |
|
(2,141 |
) |
936 |
|
4,922 |
|
(20,878 |
) |
2,672 |
|
|
|
61,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
84,965 |
|
(2,141 |
) |
936 |
|
5,589 |
|
(31,623 |
) |
4,457 |
|
|
|
62,183 |
|
|
|
As of December 31, 2016 |
| ||||||||||||||
|
|
Balance as of |
|
Gain (Loss) |
|
Gain (Loss) |
|
Purchases |
|
Sales |
|
Transfer from |
|
Transfer to |
|
Balance as of |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets held-for-trading: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other instruments issued in Chile |
|
18,028 |
|
28 |
|
|
|
8,946 |
|
(18,042 |
) |
|
|
|
|
8,960 |
|
Subtotal |
|
18,028 |
|
28 |
|
|
|
8,946 |
|
(18,042 |
) |
|
|
|
|
8,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-Sale Instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other instruments issued in Chile |
|
96,125 |
|
(5,871 |
) |
818 |
|
19,270 |
|
(31,744 |
) |
111 |
|
(2,704 |
) |
76,005 |
|
Instruments issued abroad |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
96,125 |
|
(5,871 |
) |
818 |
|
19,270 |
|
(31,744 |
) |
111 |
|
(2,704 |
) |
76,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
114,153 |
|
(5,843 |
) |
818 |
|
28,216 |
|
(49,786 |
) |
111 |
|
(2,704 |
) |
84,965 |
|
(1) Recorded in income under item Net financial operating income.
(2) Recorded in equity under item Other Comprehensive Income.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
39. Fair Value of Financial Assets and Liabilities, continued:
(d) Sensitivity of instruments classified in level 3 to changes in key assumptions of models:
The following table shows the sensitivity, by type of instrument, of those instruments classified in Level 3 to changes in key valuation assumptions:
|
|
As of September 30, 2017 |
|
As of December 31, 2016 |
| ||||
Financial Assets |
|
Level 3 |
|
Sensitivity to changes in |
|
Level 3 |
|
Sensitivity to changes in |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Financial assets held-for-trading |
|
|
|
|
|
|
|
|
|
Other instruments issued in Chile |
|
667 |
|
(2 |
) |
8,960 |
|
(176 |
) |
Total |
|
667 |
|
(2 |
) |
8,960 |
|
(176 |
) |
Available-for- Sale Instruments |
|
|
|
|
|
|
|
|
|
Other instruments issued in Chile |
|
61,516 |
|
(854 |
) |
76,005 |
|
(1,255 |
) |
Instruments issued abroad |
|
|
|
|
|
|
|
|
|
Total |
|
61,516 |
|
(854 |
) |
76,005 |
|
(1,255 |
) |
|
|
|
|
|
|
|
|
|
|
Total |
|
62,183 |
|
(856 |
) |
84,965 |
|
(1,431 |
) |
In order to determine the sensitivity of the financial investments to changes in significant market factors, the Bank has made alternative calculations at fair value, changing those key parameters for the valuation and which are not directly observable in screens. In the case of the financial assets listed in the table above, which correspond to Bank Bonds and Corporate Bonds, it was considered that, since there are no current observables prices, the input prices will be based on brokers quotes. The prices are usually calculated as a base rate plus a spread. For Local Bonds it was determined to apply a 10% impact on the price, while for the Off Shore Bonds it was determined to apply a 10% impact only on the spread, since the base rate is covered by interest rate swaps instruments in the so-called accounting hedges. The 10% impact is considered a reasonable move taking into account the market performance of these instruments and comparing it against the bid / offer adjustment that is provisioned by these instruments.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
39. Fair Value of Financial Assets and Liabilities, continued:
(e) Other assets and liabilities:
The following table summarizes the fair values of the main financial assets and liabilities that are not recorded at fair value in the Statement of Financial Position. The values shown in this note are not attempt to estimate the value of the Banks income-generating assets, nor forecast their future behavior. The estimated fair value is as follows:
|
|
Book Value |
|
Estimated Fair Value |
| ||||
|
|
September |
|
December |
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Assets |
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
1,200,281 |
|
1,408,167 |
|
1,200,281 |
|
1,408,167 |
|
Transactions in the course of collection |
|
519,833 |
|
376,252 |
|
519,833 |
|
376,252 |
|
Repurchase agreements and securities lending |
|
65,761 |
|
55,703 |
|
65,761 |
|
55,703 |
|
Subtotal |
|
1,785,875 |
|
1,840,122 |
|
1,785,875 |
|
1,840,122 |
|
Loans and advances to banks |
|
|
|
|
|
|
|
|
|
Domestic banks |
|
|
|
208,303 |
|
|
|
208,303 |
|
Central Bank of Chile |
|
300,470 |
|
700,341 |
|
300,470 |
|
700,341 |
|
Foreign banks |
|
292,297 |
|
264,273 |
|
292,297 |
|
264,273 |
|
Subtotal |
|
592,767 |
|
1,172,917 |
|
592,767 |
|
1,172,917 |
|
Loans to customers, net |
|
|
|
|
|
|
|
|
|
Commercial loans |
|
13,864,219 |
|
14,164,529 |
|
13,657,532 |
|
13,998,477 |
|
Residential mortgage loans |
|
7,334,507 |
|
6,886,320 |
|
7,755,249 |
|
7,313,953 |
|
Consumer loans |
|
3,684,831 |
|
3,724,694 |
|
3,677,862 |
|
3,728,302 |
|
Subtotal |
|
24,883,557 |
|
24,775,543 |
|
25,090,643 |
|
25,040,732 |
|
Total |
|
27,262,199 |
|
27,788,582 |
|
27,469,285 |
|
28,053,771 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Current accounts and other demand deposits |
|
8,150,505 |
|
8,321,148 |
|
8,150,505 |
|
8,321,148 |
|
Transactions in the course of payment |
|
334,535 |
|
194,982 |
|
334,535 |
|
194,982 |
|
Repurchase agreements and securities lending |
|
192,295 |
|
216,817 |
|
192,295 |
|
216,817 |
|
Savings accounts and time deposits |
|
10,395,287 |
|
10,552,901 |
|
10,400,060 |
|
10,563,751 |
|
Borrowings from banks |
|
1,242,438 |
|
1,040,026 |
|
1,237,224 |
|
1,036,091 |
|
Other financial obligations |
|
117,840 |
|
186,199 |
|
117,840 |
|
186,199 |
|
Subtotal |
|
20,432,900 |
|
20,512,073 |
|
20,432,459 |
|
20,518,988 |
|
Debt Issued |
|
|
|
|
|
|
|
|
|
Letters of credit for residential purposes |
|
22,927 |
|
28,893 |
|
24,532 |
|
30,918 |
|
Letters of credit for general purposes |
|
2,685 |
|
4,021 |
|
2,873 |
|
4,303 |
|
Bonds |
|
5,620,277 |
|
5,431,575 |
|
5,777,819 |
|
5,594,748 |
|
Subordinate bonds |
|
705,389 |
|
713,438 |
|
712,294 |
|
720,455 |
|
Subtotal |
|
6,351,278 |
|
6,177,927 |
|
6,517,518 |
|
6,350,424 |
|
Total |
|
26,784,178 |
|
26,690,000 |
|
26,949,977 |
|
26,869,412 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
39. Fair Value of Financial Assets and Liabilities, continued:
(e) Other assets and liabilities, continued:
The other financial assets and liabilities not measured at their fair value, but for which a fair value is estimated, even if not managed based on such value, include assets and liabilities such as placements, deposits and other time deposits, debt issued, and other financial assets and obligations with different maturities and characteristics. The fair value of these assets and liabilities is calculated using the discounted cash flow model and the use of various data sources such as yield curves, credit risk spreads, etc. In addition, due to some of these assets and liabilities are not traded on the market, periodic reviews and analyzes are required to determine the suitability of the inputs and determined fair values.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
39. Fair Value of Financial assets and liabilities, continued:
(f) Levels of other assets and liabilities:
The following table shows the estimated fair value of financial assets and liabilities not valued at their fair value, as of September 30, 2017 and December 31, 2016:
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
| ||||||||
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
1,200,281 |
|
1,408,167 |
|
|
|
|
|
|
|
|
|
1,200,281 |
|
1,408,167 |
|
Transactions in the course of collection |
|
519,833 |
|
376,252 |
|
|
|
|
|
|
|
|
|
519,833 |
|
376,252 |
|
Repurchase agreements and security lending |
|
65,761 |
|
55,703 |
|
|
|
|
|
|
|
|
|
65,761 |
|
55,703 |
|
Subtotal |
|
1,785,875 |
|
1,840,122 |
|
|
|
|
|
|
|
|
|
1,785,875 |
|
1,840,122 |
|
Loans and advances to banks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic banks |
|
|
|
208,303 |
|
|
|
|
|
|
|
|
|
|
|
208,303 |
|
Central Bank |
|
300,470 |
|
700,341 |
|
|
|
|
|
|
|
|
|
300,470 |
|
700,341 |
|
Foreign banks |
|
292,297 |
|
264,273 |
|
|
|
|
|
|
|
|
|
292,297 |
|
264,273 |
|
Subtotal |
|
592,767 |
|
1,172,917 |
|
|
|
|
|
|
|
|
|
592,767 |
|
1,172,917 |
|
Loans to customers, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans |
|
|
|
|
|
|
|
|
|
13,657,532 |
|
13,998,477 |
|
13,657,532 |
|
13,998,477 |
|
Residential mortgage loans |
|
|
|
|
|
|
|
|
|
7,755,249 |
|
7,313,953 |
|
7,755,249 |
|
7,313,953 |
|
Consumer loans |
|
|
|
|
|
|
|
|
|
3,677,862 |
|
3,728,302 |
|
3,677,862 |
|
3,728,302 |
|
Subtotal |
|
|
|
|
|
|
|
|
|
25,090,643 |
|
25,040,732 |
|
25,090,643 |
|
25,040,732 |
|
Total |
|
2,378,642 |
|
3,013,039 |
|
|
|
|
|
25,090,643 |
|
25,040,732 |
|
27,469,285 |
|
28,053,771 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accounts and other demand deposits |
|
8,150,505 |
|
8,321,148 |
|
|
|
|
|
|
|
|
|
8,150,505 |
|
8,321,148 |
|
Transactions in the course of payment |
|
334,535 |
|
194,982 |
|
|
|
|
|
|
|
|
|
334,535 |
|
194,982 |
|
Repurchase agreements and security lending |
|
192,295 |
|
216,817 |
|
|
|
|
|
|
|
|
|
192,295 |
|
216,817 |
|
Savings accounts and time deposits |
|
|
|
|
|
|
|
|
|
10,400,060 |
|
10,563,751 |
|
10,400,060 |
|
10,563,751 |
|
Borrowings from banks |
|
|
|
|
|
|
|
|
|
1,237,224 |
|
1,036,091 |
|
1,237,224 |
|
1,036,091 |
|
Other financial obligations |
|
117,840 |
|
186,199 |
|
|
|
|
|
|
|
|
|
117,840 |
|
186,199 |
|
Subtotal |
|
8,795,175 |
|
8,919,146 |
|
|
|
|
|
11,637,284 |
|
11,599,842 |
|
20,432,459 |
|
20,518,988 |
|
Debt Issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Letters of credit for residential purposes |
|
|
|
|
|
24,532 |
|
30,918 |
|
|
|
|
|
24,532 |
|
30,918 |
|
Letters of credit for general purposes |
|
|
|
|
|
2,873 |
|
4,303 |
|
|
|
|
|
2,873 |
|
4,303 |
|
Bonds |
|
|
|
|
|
5,777,819 |
|
5,594,748 |
|
|
|
|
|
5,777,819 |
|
5,594,748 |
|
Subordinated bonds |
|
|
|
|
|
|
|
|
|
712,294 |
|
720,455 |
|
712,294 |
|
720,455 |
|
Subtotal |
|
|
|
|
|
5,805,224 |
|
5,629,969 |
|
712,294 |
|
720,455 |
|
6,517,518 |
|
6,350,424 |
|
Total |
|
8,795,175 |
|
8,919,146 |
|
5,805,224 |
|
5,629,969 |
|
12,349,578 |
|
12,320,297 |
|
26,949,977 |
|
26,869,412 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
39. Fair Value of Financial Assets and Liabilities, continued:
(f) Levels of other assets and liabilities, continued:
The Bank determines the fair value of these assets and liabilities according to the following:
· Short-term assets and liabilities: For assets and liabilities with short-term maturity (less than 3 months), it is assumed that the book values approximate to their fair value. This assumption is applied to the following assets and liabilities:
Assets |
|
Liabilities |
- Cash and deposits in banks |
|
- Current accounts and other demand deposits |
|
|
|
- Transactions in the course of collection |
|
- Transactions in the course of payments |
|
|
|
- Repurchase agreements and security lending |
|
- Repurchase agreements and security lending |
|
|
|
- Loans and advance to banks |
|
- Other financial obligations |
· Loans to Customers: Fair value is determined by using the discounted cash flow model and internally generated discount rates, based on internal transfer rates derived from our internal transfer price policy. Once the present value is determined, we deduct the related loan loss allowances in order to incorporate the credit risk associated with each contract or loan. As we use internally generated parameters for valuation purposes, we categorize these instruments in Level 3.
· Letters of Credit and Bonds: In order to determine the present value of contractual cash flows, we apply the discounted cash flow model by using market interest rates that are available in the market, either for the instruments under valuation or instruments with similar features that fit valuation needs in terms of currency, maturities and liquidity. The market interest rates are obtained from third party price providers widely used by the market. As a result of the valuation technique and the quality of inputs (observable) used for valuation, we categorize these financial liabilities in Level 2.
· Saving Accounts, Time Deposits, Borrowings from Financial Institutions and Subordinated Bonds: The discounted cash flow model is used to obtain the present value of committed cash flows by applying a bucket approach and average adjusted discount rates that derived from both market rates for instruments with similar features and our internal transfer price policy. As we use internally generated parameters and/or apply significant judgmental analysis for valuation purposes, we categorize these financial liabilities in Level 3.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
39. Fair Value of Financial Assets and Liabilities, continued:
(g) Offsetting of financial assets and liabilities:
The Bank trades financial derivatives with foreign counterparties using ISDA Master Agreement (International Swaps and Derivatives Association, Inc.), under legal jurisdiction of the City of New York USA or London United Kingdom. Legal framework in these jurisdictions, along with documentation mentioned, it allows Banco de Chile the right to anticipate the maturity of the transaction and then, offset the net value of those transactions in case of default of counterparty. Additionally, the Bank has negotiated with these counterparties an additional annex (CSA Credit Support Annex), that includes other credit mitigating, such as entering margins on a certain amount of net value of transactions, early termination (optional or mandatory) of transactions at certain dates in the future, coupon adjustment of transaction in exchange for payment of the debtor counterpart over a certain threshold amount, etc.
Below are detail the contracts susceptible to offset:
|
|
Fair Value |
|
Negative Fair Value of |
|
Positive Fair Value of |
|
Financial Collateral |
|
Net Fair Value |
| ||||||||||
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial assets |
|
1,087,557 |
|
939,634 |
|
(264,144 |
) |
(307,921 |
) |
(499,818 |
) |
(280,439 |
) |
(44,233 |
) |
(54,336 |
) |
279,362 |
|
296,938 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial liabilities |
|
1,208,223 |
|
1,002,087 |
|
(264,144 |
) |
(307,921 |
) |
(499,818 |
) |
(280,439 |
) |
(118,648 |
) |
(164,889 |
) |
325,613 |
|
248,838 |
|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
40. Maturity of Assets and Liabilities:
The table below details the main financial assets and liabilities grouped in accordance with their remaining maturity, including accrued interest as of September 30, 2017 and December 31, 2016, respectively. As these are for trading and available-for-sale instruments are included at their fair value:
|
|
As of September 30, 2017 |
| ||||||||||||||||
|
|
Up to 1 |
|
Over 1 |
|
Over 3 |
|
Subtotal up |
|
Over 1 year |
|
Over 3 year |
|
Over 5 |
|
Subtotal over |
|
Total |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
1,200,281 |
|
|
|
|
|
1,200,281 |
|
|
|
|
|
|
|
|
|
1,200,281 |
|
Transactions in the course of collection |
|
519,833 |
|
|
|
|
|
519,833 |
|
|
|
|
|
|
|
|
|
519,833 |
|
Financial Assets held-for-trading |
|
1,184,531 |
|
|
|
|
|
1,184,531 |
|
|
|
|
|
|
|
|
|
1,184,531 |
|
Repurchase agreements and security lending |
|
44,892 |
|
15,806 |
|
5,063 |
|
65,761 |
|
|
|
|
|
|
|
|
|
65,761 |
|
Derivative instruments |
|
88,097 |
|
105,819 |
|
285,574 |
|
479,490 |
|
228,777 |
|
110,289 |
|
269,001 |
|
608,067 |
|
1,087,557 |
|
Loans and advances to banks (*) |
|
310,627 |
|
26,873 |
|
243,005 |
|
580,505 |
|
12,848 |
|
|
|
|
|
12,848 |
|
593,353 |
|
Loans to customers (*) |
|
3,494,429 |
|
2,293,866 |
|
4,232,438 |
|
10,020,733 |
|
5,256,371 |
|
2,882,433 |
|
7,290,231 |
|
15,429,035 |
|
25,449,768 |
|
Financial assets available-for-sale |
|
2,139 |
|
3,154 |
|
687,763 |
|
693,056 |
|
215,838 |
|
188,730 |
|
211,437 |
|
616,005 |
|
1,309,061 |
|
Financial assets held-to-maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
6,844,829 |
|
2,445,518 |
|
5,453,843 |
|
14,744,190 |
|
5,713,834 |
|
3,181,452 |
|
7,770,669 |
|
16,665,955 |
|
31,410,145 |
|
|
|
As of December 31, 2016 |
| ||||||||||||||||
|
|
Up to 1 |
|
Over 1 |
|
Over 3 |
|
Subtotal up |
|
Over 1 year |
|
Over 3 year |
|
Over 5 |
|
Subtotal over |
|
Total |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
1,408,167 |
|
|
|
|
|
1,408,167 |
|
|
|
|
|
|
|
|
|
1,408,167 |
|
Transactions in the course of collection |
|
376,252 |
|
|
|
|
|
376,252 |
|
|
|
|
|
|
|
|
|
376,252 |
|
Financial Assets held-for-trading |
|
1,405,781 |
|
|
|
|
|
1,405,781 |
|
|
|
|
|
|
|
|
|
1,405,781 |
|
Repurchase agreements and security lending |
|
30,963 |
|
21,967 |
|
2,773 |
|
55,703 |
|
|
|
|
|
|
|
|
|
55,703 |
|
Derivative instruments |
|
43,797 |
|
55,575 |
|
200,634 |
|
300,006 |
|
210,405 |
|
129,277 |
|
299,946 |
|
639,628 |
|
939,634 |
|
Loans and advances to banks (*) |
|
957,451 |
|
84,668 |
|
111,200 |
|
1,153,319 |
|
20,127 |
|
|
|
|
|
20,127 |
|
1,173,446 |
|
Loans to customers (*) |
|
3,644,168 |
|
2,170,725 |
|
4,751,613 |
|
10,566,506 |
|
4,890,508 |
|
2,998,249 |
|
6,930,271 |
|
14,819,028 |
|
25,385,534 |
|
Financial assets available-for-sale |
|
1,955 |
|
3,816 |
|
39,664 |
|
45,435 |
|
100,933 |
|
39,026 |
|
182,591 |
|
322,550 |
|
367,985 |
|
Financial assets held-to-maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
7,868,534 |
|
2,336,751 |
|
5,105,884 |
|
15,311,169 |
|
5,221,973 |
|
3,166,552 |
|
7,412,808 |
|
15,801,333 |
|
31,112,502 |
|
(*) These balances are presented without deduction of their respective provisions, which amount to Ch$566,211 million (Ch$609,991 million in 2016) for loans to customers and Ch$586 million (Ch$529 million in 2016) for borrowings from financial institutions.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
40. Maturity of Assets and Liabilities, continued:
|
|
As of September 30, 2017 |
| ||||||||||||||||
|
|
Up to 1 |
|
Over 1 |
|
Over 3 |
|
Subtotal up |
|
Over 1 year |
|
Over 3 year |
|
Over 5 |
|
Subtotal |
|
Total |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accounts and other demand deposits |
|
8,150,505 |
|
|
|
|
|
8,150,505 |
|
|
|
|
|
|
|
|
|
8,150,505 |
|
Transactions in the course of payment |
|
334,535 |
|
|
|
|
|
334,535 |
|
|
|
|
|
|
|
|
|
334,535 |
|
Repurchase agreements and security lending |
|
192,295 |
|
|
|
|
|
192,295 |
|
|
|
|
|
|
|
|
|
192,295 |
|
Savings accounts and time deposits (**) |
|
4,863,713 |
|
2,553,726 |
|
2,534,559 |
|
9,951,998 |
|
232,476 |
|
252 |
|
178 |
|
232,906 |
|
10,184,904 |
|
Derivative instruments |
|
101,361 |
|
120,107 |
|
269,888 |
|
491,356 |
|
258,428 |
|
116,180 |
|
342,259 |
|
716,867 |
|
1,208,223 |
|
Borrowings from financial institutions |
|
231,192 |
|
50,444 |
|
947,949 |
|
1,229,585 |
|
12,853 |
|
|
|
|
|
12,853 |
|
1,242,438 |
|
Debt issued: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage bonds |
|
1,886 |
|
2,480 |
|
4,519 |
|
8,885 |
|
9,260 |
|
4,687 |
|
2,780 |
|
16,727 |
|
25,612 |
|
Bonds |
|
38,970 |
|
340,573 |
|
526,521 |
|
906,064 |
|
874,849 |
|
881,617 |
|
2,957,747 |
|
4,714,213 |
|
5,620,277 |
|
Subordinate bonds |
|
9,041 |
|
24,576 |
|
19,422 |
|
53,039 |
|
50,835 |
|
36,150 |
|
565,365 |
|
652,350 |
|
705,389 |
|
Other financial obligations |
|
84,873 |
|
5,868 |
|
9,978 |
|
100,719 |
|
14,899 |
|
1,819 |
|
403 |
|
17,121 |
|
117,840 |
|
Total liabilities |
|
14,008,371 |
|
3,097,774 |
|
4,312,836 |
|
21,418,981 |
|
1,453,600 |
|
1,040,705 |
|
3,868,732 |
|
6,363,037 |
|
27,782,018 |
|
|
|
As of December 31, 2016 |
| ||||||||||||||||
|
|
Up to 1 |
|
Over 1 |
|
Over 3 |
|
Subtotal up |
|
Over 1 year |
|
Over 3 year |
|
Over 5 |
|
Subtotal |
|
Total |
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accounts and other demand deposits |
|
8,321,148 |
|
|
|
|
|
8,321,148 |
|
|
|
|
|
|
|
|
|
8,321,148 |
|
Transactions in the course of payment |
|
194,982 |
|
|
|
|
|
194,982 |
|
|
|
|
|
|
|
|
|
194,982 |
|
Repurchase agreements and security lending |
|
200,811 |
|
16,006 |
|
|
|
216,817 |
|
|
|
|
|
|
|
|
|
216,817 |
|
Savings accounts and time deposits (**) |
|
4,843,628 |
|
2,298,731 |
|
3,042,414 |
|
10,184,773 |
|
158,871 |
|
570 |
|
252 |
|
159,693 |
|
10,344,466 |
|
Derivative instruments |
|
40,827 |
|
69,950 |
|
160,377 |
|
271,154 |
|
225,882 |
|
135,192 |
|
369,859 |
|
730,933 |
|
1,002,087 |
|
Borrowings from financial institutions |
|
261,084 |
|
231,987 |
|
526,825 |
|
1,019,896 |
|
20,130 |
|
|
|
|
|
20,130 |
|
1,040,026 |
|
Debt issued: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage bonds |
|
2,438 |
|
2,513 |
|
6,035 |
|
10,986 |
|
11,394 |
|
6,341 |
|
4,193 |
|
21,928 |
|
32,914 |
|
Bonds |
|
92,788 |
|
246,955 |
|
380,774 |
|
720,517 |
|
1,035,241 |
|
792,493 |
|
2,883,324 |
|
4,711,058 |
|
5,431,575 |
|
Subordinate bonds |
|
3,105 |
|
1,914 |
|
47,566 |
|
52,585 |
|
53,903 |
|
39,317 |
|
567,633 |
|
660,853 |
|
713,438 |
|
Other financial obligations |
|
150,574 |
|
2,505 |
|
11,407 |
|
164,486 |
|
18,239 |
|
2,823 |
|
651 |
|
21,713 |
|
186,199 |
|
Total liabilities |
|
14,111,385 |
|
2,870,561 |
|
4,175,398 |
|
21,157,344 |
|
1,523,660 |
|
976,736 |
|
3,825,912 |
|
6,326,308 |
|
27,483,652 |
|
(**) Excludes term saving accounts, which amount to Ch$210,383 million (Ch$208,435 million in 2016).
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
In Managements opinion, there are no significant subsequent events that affect or could affect the Interim Consolidated Financial Statements of Banco de Chile and its subsidiaries between September 30, 2017 and the date of issuance of these Interim Consolidated Financial Statements.
Héctor Hernández G. |
Eduardo Ebensperger O. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: October 30, 2017 |
|
|
|
|
|
|
|
Banco de Chile |
|
|
|
|
|
/S/ Eduardo Ebensperger O. |
|
By: |
Eduardo Ebensperger O. |