Banco de Chile's Q3 2025: Contradictions Emerge on Loan Growth, Economic Outlook, and Inflation Expectations

Date of Call: November 7, 2025

Financials Results

• Revenue: CLP 736 billion, up 2.1% YOY
• Operating Margin: 6.4%, well above industry average and peers

Guidance:

• Full-year 2025 ROAC expected around 22.5%.
• Efficiency expected near 37% (cost-to-income target).
• Cost of risk guided close to 0.9% for 2025.
• Macro/outlook: 2025 GDP revised to 2.5% and expected one more Central Bank cut to ~4.5% by year-end.

Business Commentary:

• Strong Financial Performance:
• Banco de Chile reported net income of CLP 927 million for Q3 2025, reflecting a 1.9% year-on-year growth, resulting in an ROAC of 22.3%.

• This performance was driven by robust customer income, improved asset quality, and ongoing efficiency improvements.

  

• Macroeconomic Outlook and Economic Recovery:

• The Chilean economy showed signs of recovery, with GDP growth maintaining an upward trajectory since the second half of 2024, supported by a rebound in domestic demand.

• The recovery was driven by significant improvements in consumption and investments, particularly in machinery and equipment.

• Inflation and Interest Rates:

• Inflation remained above the Central Bank target, with headline inflation increasing to 4.4% in September from 4.1% in June.

• The Central Bank maintained the interest rate at 4.75%, acknowledging some inflationary risks but noting improvements in macro conditions.

• Digital Transformation and Operational Efficiency:

• The bank's successful integration of its former collection services subsidiary, SOCOFIN, generated operational synergies and improved customer experience.
• Productivity increased through technological innovation and digital solutions, with consumer loan originations rising by 13% in operations and 11% in amounts sold compared to the previous year.

Sentiment Analysis:

Overall Tone: Positive

• Management: "Banco de Chile has once again delivered strong results, reaffirming our solid market position." Reported CLP 927 billion net income (as of Sept) with CET1 at 14.2% and ROA 2.3%. Repeated emphasis on superior asset quality, highest coverage (234%) and efficiency gains supports a positive tone.

Q&A:

• Question from Daniel Vaz (Banco Safra): How will you achieve top-1 market share in commercial and consumer loans given your focus on profitability and disciplined underwriting—are you targeting the same customers, moving into different segments versus competitors, or using other approaches?
  Response: Pursue selective, profitable growth via digital transformation and AI, focus on high-potential segments (SMEs and middle/upper-income consumer), and drive operational productivity while using excess capital to capture opportunities.

• Question from Daer Labarta (Goldman Sachs): With the upcoming presidential election, how might different electoral outcomes impact the macro outlook for next year and the bank's profitability?
  Response: Elections create uncertainty but current proposals show consensus on pro-growth measures and limited tax increases, so management expects domestic demand recovery to support loan growth and profitability.

• Question from Neha Agarwala (HSBC): What pickup in loan growth should we expect in 2026 and what will drive earnings given potential NIM pressure from easing inflation?
  Response: No formal 2026 guidance yet; management said loan growth will be the main earnings driver, expects only modest interest-rate moves and limited NIM compression, and the bank has capital capacity to grow.

• Question from Andres Soto (Santander Investment Securities Inc.): Which segments do you expect to see faster loan growth next year and what is missing for a stronger consumer lending rebound?
  Response: Main growth drivers will be commercial loans—large corporates and SMEs—with consumer loans recovering more slowly tied to unemployment; digital personalization and better macro confidence are needed to accelerate consumer lending.

• Question from Andres Soto (Santander Investment Securities Inc.): On capital: with CET1 ~400bp above peers, what level do you see as appropriate long term and how will capital normalize?
  Response: Capital normalization depends on loan growth mix; expect buffers to normalize over ~3 years and aim to remain about 1–2 percentage points above regulatory minimums.

Contradiction Point 1

Loan Growth Expectations

It involves differing expectations for loan growth, which are crucial for understanding the bank's growth strategy and financial projections.

What loan growth pickup can we expect in 2026, and what are the earnings drivers? - Neha Agarwala (HSBC Global Investment Research)

2025Q3: We expect better overall outlook for Chile, driving loan growth as the main growth driver. Inflation and interest rate adjustments minimal. - Pablo Ricci(CRO)

Why don't you expect higher loan growth, and how do you see fee growth sustaining despite outpacing loan growth? - Yuri Rocha Fernandes (JPMorgan Chase & Co)

2025Q2: There's a decoupling between loan growth and GDP due to higher interest rates and weak investment growth. We expect normalization in the future with potential loan growth in the mid-high single digits. - Rodrigo Aravena(CEO)

Contradiction Point 2

Economic Recovery and Loan Growth Strategy

It highlights differing perspectives on the alignment of the bank's loan growth strategy with the anticipated economic recovery.

How will you maintain leading market share for commercial and consumer loans given the improved economic outlook? - Daniel Vaz (Banco Safra)

2025Q3: Our growth strategy focuses on digital transformation, high-value segments, and operational productivity. Digital initiatives enhance customer experience and operational efficiencies. - Pablo Ricci(CRO)

What is the short-term loan growth strategy, and how will it evolve with economic recovery? - Unidentified Analyst (CrediCorp)

2025Q2: Our focus is on high-potential segments like SMEs and consumer loans, leveraging digitalization and relationship management. As the economy improves, we expect gradual recovery in these segments. - Pablo Camilo Mejia Ricci(CIO)

Contradiction Point 3

Economic Growth Outlook

It involves differing perspectives on the economic growth outlook, which can impact the bank's financial performance and strategic decisions.

How will you achieve leading market share in commercial and consumer loans given the improved economic outlook? - Daniel Vaz (Banco Safra)

2025Q3: We expect better economic growth due to domestic demand, especially investment, supported by public spending and private capital. - Rodrigo Aravena(CEO)

What are Banco de Chile's loan growth expectations for the coming years? How does commercial loan growth compare to prior expectations? - Daer Labarta (Goldman Sachs)

2024Q2: In Q2, GDP grew 1.3% quarter-over-quarter and 1.1% year-over-year. The average annual growth rate during the first half of 2024 was 0.8%. - Pablo Mejia(CIO)

Contradiction Point 4

Inflation and Interest Rate Expectations

It involves differing expectations for inflation and interest rates, which can impact the bank's interest margin and pricing strategy.

What loan growth pickup should we expect in 2026, and what are the drivers of earnings? - Neha Agarwala (HSBC Global Investment Research)

2025Q3: Central Bank likely to reduce interest rates by 25 basis points by Q1 2026, with inflation convergence to 3% expected. - Rodrigo Aravena(CEO)

What's Banco de Chile's projected loan growth for the coming years? How does current commercial loan growth compare to prior expectations? - Daer Labarta (Goldman Sachs)

2024Q2: As to the interest rate scenario, we expect the policy rate to end the year at 8.75%, aligned with the regulatory central bank estimate. - Pablo Mejia(CIO)

Contradiction Point 5

Loan Growth Expectations (Historical Perspective)

It pertains to changes in historical expectations for loan growth, affecting investor perceptions of the bank's performance trajectory.

What loan growth can we expect in 2026, and what are the earnings drivers? - Neha Agarwala (HSBC Global Investment Research)

2025Q3: We expect better overall outlook for Chile, driving loan growth as the main growth driver. - Pablo Ricci(CFO)

What's the potential for loan growth, particularly in consumer lending? - Ernesto Gabilondo (Bank of America)

2023Q4: Loan growth is expected to be around 5% to 6% in nominal terms, driven by retail segments. - Pablo Mejia(Head of IR)