Banco Santander-Chile's Q2 2025: Contradictions in Consumer Lending, Loan Growth, and NPL Normalization

Consumer lending growth expectations, loan growth expectations post-elections, long-term ROE expectations, loan growth expectations, and NPL normalization timeline are the key contradictions discussed in Banco Santander-Chile's latest 2025Q2 earnings call.



Economic Environment and Macroeconomic Developments:
- Chile's economic growth is projected at 2.1% for 2025, with GDP growth of 2.9% year-on-year in the second quarter.
- The economic outlook is influenced by trade tensions, a volatile peso (around CLP 970 per dollar), and a declining long-term interest rate environment.

Operating Performance and Profitability:
- Banco Santander Chile reported an ROE of 25.1% in the first half of 2025 and 24.5% in the second quarter.
- Strong profitability is attributed to sustained fee generation, cost control, and efficient branch operations.

Asset Quality and Cost of Risk:
- The cost of credit was higher than historical levels, with a year-to-date cost of risk of 1.39%.
- Efforts to stabilize NPLs and impaired loans, particularly in the mortgage and commercial loan portfolios, are showing positive trends.

Digital Transformation and Strategic Initiatives:
- The bank completed the migration of its legacy mainframe service to the cloud, operating fully on cloud infrastructure since Q1 2025.
- Initiatives like enhanced POS functionality and new transactional hubs have expanded the bank's reach and increased transactionality.

Regulatory Framework and Tax Proposals:
- The government proposed fiscal reform focusing on SMEs, extending tax benefits and increasing personal income tax rates.
- The housing subsidy bill aims to activate the real estate market by offering mortgage rate subsidies and state guarantees.