Banco de Chile’s Profit Lead Widens as Loan Growth Falters

Date of Call: Feb 5, 2026

Financials Results

• Revenue: CLP 749 billion in Q4; CLP 3 trillion for full year 2025, relatively stable vs 2024
• EPS: Net income CLP 266 billion in Q4; CLP 1.2 trillion for full year 2025, maintaining historical leadership
• Gross Margin: Not applicable/mentioned
• Operating Margin: Not explicitly stated; margins remain differentiated and ahead of peers

Guidance:

• Return on average capital expected in range of 19% to 21% for 2026.
• Efficiency ratio guided around 39% under normalized revenue conditions.
• Cost of risk projected between 1.1% and 1.2%.
• GDP growth forecast around 2.4% for 2026, with inflation and policy rate expected to converge to 3% and 4.25%, respectively.
• Industry loan growth expected around 4.5% nominally in 2026.
• Retail Banking loan growth forecast around 4.2% year-on-year; SME loans (ex-FOGAP) expected up 9.4%.
• NIM for industry expected to ramp from 3.5% to 3.7%.

Business Commentary:

Financial Performance and Market Leadership:

• Banco de Chile reported a net income of CLP 1.2 trillion for the full year 2025, achieving a return on average assets of 2.2%, significantly above the industry average of 1.3%.
• The strong financial performance was attributed to resilient core revenues, solid customer activity, disciplined balance sheet management, and leadership in net fee income and net interest margin.

Loan Dynamics and Economic Outlook:

• Total loans rose 0.8% year-on-year, reaching CLP 39.2 trillion, with mortgage loans growing 5.3% and consumer loans 3.9%, while commercial loans fell 3%.
• The growth in mortgage and consumer loans was driven by higher inflation, lower interest rates, and improving household consumption indicators, whereas commercial loan decline was due to slower private investment recovery and corporate prepayments.

Capital Management and Risk Metrics:

• Banco de Chile maintained a robust CET1 ratio of 14.5%, well above regulatory requirements, supported by a 223% coverage ratio and CLP 1.5 trillion in provisions.
• This strong capital position and risk management were reinforced by disciplined balance sheet management and a sound risk culture, ensuring resilience in credit risk metrics.

Operating Expenses and Efficiency:

• Operating expenses for the full year were essentially flat at CLP 1.1 trillion, with a real contraction of 3.5% year-on-year.
• The efficiency gains were driven by a digital strategy, higher levels of automation, and the adoption of advanced technologies, enhancing productivity across business processes.

Economic and Political Environment:

• The Chilean economy showed growth of 2.5% year-to-date, driven by domestic demand, particularly a 10% year-on-year increase in gross investment.
• The positive economic outlook for 2026 is supported by strong domestic demand, improving consumer confidence, and expected further normalization of monetary policy.

Sentiment Analysis:

Overall Tone: Positive

• "Banco de Chile delivered market leadership and superior financial outcomes... We are very proud of the bank's performance this year." "Banco de Chile remains the most highly capitalized bank..." "Our strong performance has been widely recognized..." "We remain confident in our ability to continue positioning Banco de Chile as the most profitable investment in the Chilean banking industry over the long term."

Q&A:

• Question from Ernesto María Gabilondo Márquez (BofA Securities): Concerns about economic and political outlook, specifically on reducing statutory tax rate and credit card limits, and loan growth expectations by segment.
  Response: Economic outlook is positive with GDP growth of 2.4% expected, driven by domestic demand. Political agenda includes potential corporate tax rate reduction. Loan growth expectations: Corporate Banking to improve, Consumer loans ~6%, Mortgage ~5%, Commercial (SME) ~8%.

• Question from Ernesto María Gabilondo Márquez (BofA Securities): Capital allocation strategy given high CET1 ratio and shareholder-approved 85% dividend payout.
  Response: Aims to use favorable capital gaps to take market share and grow above industry, targeting capital ratios at least 1% above regulatory limits.

• Question from Andres Soto (Santander Investment Securities Inc.): Timing of loan growth pickup and medium-term expectations post-2027.
  Response: Loan growth likely more in second half of 2026, dependent on government policies post-March 11. Medium-term expects better growth, targeting 1.4x-1.5x loan elasticity relative to GDP.

• Question from Andres Soto (Santander Investment Securities Inc.): Drivers behind 39% efficiency ratio guidance.
  Response: Cost improvements from optimization projects largely implemented; expense growth in line with inflation. Fee income expected high single/low double digits from transactional revenues and Banchile Pagos.

• Question from Unknown Analyst (Goldman Sachs): Updates on Banchile Pagos operations and earnings contribution, and upside risks to GDP and loan growth.
  Response: Banchile Pagos customer base growing well, targeting 160,000 SMEs, contributing to fee growth. Upside GDP risks exist from higher copper prices, improved confidence, and potential government reforms, but loan cycle may lag.

• Question from Unknown Analyst (CrediCorp Capital): Long-term return on average capital targets and how to expand profitability.
  Response: Aims to be #1 in return on average capital; guidance of 19-21% for 2026. Aspires to align return on average capital with leadership in return on average assets by deploying capital and growing organically/inorganically.

• Question from Neha Agarwala (HSBC Global Investment Research): Evolution of cost of risk and potential upside to ROA guidance.
  Response: Cost of risk guided 1.1-1.2%, higher than recent lows but in line with long-term norms. Upside possible if economy improves; downside if inflation or unemployment worsens. ROA guidance reflects these balances.

Contradiction Point 1

Loan Growth Distribution Across 2026

Q4 projects growth concentrated in second half; Q3 indicated more even growth.

How will loan growth be distributed across the year, and what factors drive the 2026 efficiency ratio guidance of around 39%? - Andres Soto (Santander Investment Securities)

2025Q4: Loan growth is expected to be more pronounced in the second half of 2026, aligning with potential policy changes after the new government takes office. - [Pablo Ricci](CFO)

What is the expected loan growth for 2026 and the key earnings drivers next year considering potential NIM pressure from easing inflation? - Neha Agarwala (HSBC)

2025Q3: For 2026, the main driver of growth will be loan expansion, particularly in commercial loans (SMEs, large corporates) and consumer loans as economic confidence improves. - [Pablo Ricci](CFO)

Contradiction Point 2

Macroeconomic Outlook and Loan Growth Correlation

Q4 implies lag between GDP recovery and loan growth; Q3 suggests simultaneous pickup.

What updates are available on Banchile Pagos operations and their future earnings impact? Have upside risks to local GDP growth been considered in loan growth estimates? - Unknown Analyst (Goldman Sachs)

2025Q4: There is an upside risk to GDP growth ... however, there is typically a lag between GDP recovery and loan growth acceleration, so the full impact on loans may be seen in subsequent years. - [Rodrigo Aravena](CEO)

How could the upcoming presidential elections affect the macroeconomic outlook and Banco de Chile's profitability? - Daer Labarta (Goldman Sachs)

2025Q3: A more stable and growth-oriented environment should lead to stronger loan demand across all segments (SMEs, corporates, consumers), driving better banking sector performance and ROE, especially as Banco de Chile is capitalized to support growth. - [Pablo Ricci](CFO)

Contradiction Point 3

Timeline for Loan Growth Recovery

Inconsistent timeline for when loan growth will accelerate relative to economic recovery.

How is loan growth expected to be distributed across the year, and could the new government's regulatory agenda lead to accelerated lending by 2027 despite Q4 2025 deceleration? Additionally, what drives the 39% efficiency ratio guidance for 2026? - Andres Soto (Santander Investment Securities)

2025Q4: Loan growth is expected to be more pronounced in the second half of 2026, aligning with potential policy changes after the new government takes office. - [Pablo Ricci](CFO)

1) Why is the loan growth outlook modest (~4%) despite higher GDP, and when is stronger loan growth expected? 2) What is the outlook for fee growth (8% y/y), especially regarding mutual fund fees outpacing AUM and checking fees exceeding client growth? 3) Can you comment on the credit card loyalty fee campaigns and the overall credit card strategy? - Yuri Rocha Fernandes (JPMorgan Chase & Co)

2025Q2: A recovery is expected as economic conditions improve, with a long-term elasticity of loans to GDP around 1.5x. For example, with 2%-2.5% real GDP growth and 3%-3.5% inflation, nominal loan growth could be in the high single digits. - [Rodrigo Aravena](CEO)

Contradiction Point 4

Medium-Term Cost of Risk Outlook

Contradiction on whether cost of risk is expected to remain stable or increase to a normalized level.

How do you expect the cost of risk and asset quality to evolve, and is there upside risk to the ROAC figure based on your guidance? - Neha Agarwala (HSBC Global Investment Research)

2025Q4: The 2026 guidance of 1.1%-1.2% is higher than recent lows and aligns with a more normalized, long-term level, considering the ongoing credit cycle and economic recovery. - [Pablo Ricci](CFO)

Given the high CET1 ratio well above the 1% buffer target and substantial provisions, could an extraordinary dividend be considered, and might additional reserves be released gradually or used for dividends? - Andres Soto (Santander Investment Securities Inc.)

2025Q2: The guidance is: ROAE ~21%, NIM ~4.7%, efficiency ratio ~38%, cost of risk ~1%. - [Pablo Camilo Mejia Ricci](CFO)

Contradiction Point 5

Macroeconomic Outlook and Loan Growth Expectations

Contradiction in GDP growth forecast and its linkage to loan growth.

1) What are your views on reducing the statutory tax rate and credit card limits? 2) Can you break down loan growth expectations by segment? 3) How do you plan to allocate capital over the next few years, and will you leverage your strong balance sheet to gain market share? - Ernesto María Gabilondo Márquez (BofA Securities)

2025Q4: The economic forecast for 2026 is for around 2.4% GDP growth... there is upside risk to GDP growth... there is typically a lag between GDP recovery and loan growth acceleration, so the full impact on loans may be seen in subsequent years. - [Rodrigo Aravena](CFO)

How could the upcoming Chilean local elections affect loan growth? With accumulated capital, what is the outlook for dividends or M&A? - Yuri Fernandes (JPMorgan)

2024Q2: The economy is currently growing above its 10-year average (~2.4% in 2024 vs. 1.9% average), providing a positive backdrop for activity. - [Rodrigo Aravena](CFO)