LatinFinance - November/December 2014 - 43

For the Aa3/A/A+ rated bank, the
two elements - growing strength and a
diversified funding program - go hand in
hand. It is the lender's healthy business
model that allows it to secure funding
at tight rates worldwide, chief executive
Claudio Melandri tells LatinFinance.
"We have good ratings with all the
agencies," he says. "We will always make
use of that competitive advantage to issue
at lower rates than our biggest competitors
- even considering that the banking sector
in Chile is a very strong one."
Helped by a marked increase in client
numbers, Banco Santander Chile's loan
book rose 10.2% in the year to June,
building on 7.6% growth in the previous
12 months. Meanwhile, return on equity
stood at 25.1%, up sharply from the 15.7%
and 20.3% ratios recorded in the previous
two periods.
The bank aims to keep things simple
for its customers, and focuses on their
needs first, he says. It has slashed the
number of retail products it offers from
around 1,200 a few years ago to 112 today.
And staff in branches are trained to offer
products carefully tailored to customers'
requirements.
"We sell to each client the products that
they need, it's not a case of selling just to
sell," he says.
In the debt markets, Santander Chile has
led the way for Chilean banks, and for the
region.
It was the first institution to take
advantage of Chile's new framework for
covered bonds, which allows banks to
offer instruments with recourse both
to the issuer and a pool of home loans.
The mortgages must have a loan to value
ratio of less than 80% under Chilean

regulations, while Santander Chile also
requires that repayments equal less than
25% of a borrower's net income.
Santander Chile sold a UF1.5 million ($67
million) 15-year covered bond in August
2013 at a 3.39% yield, and has already
returned to the market to issue more.
"This has given us an important
advantage, in the sense of lowering the cost
of funds," says Melandri.
CLAUDIO MELANDRI
SANTANDER CHILE

"WE HAVE GOOD
RATINGS WITH ALL
THE AGENCIES. WE
WILL ALWAYS USE
THAT COMPETITIVE
ADVANTAGE TO ISSUE
AT LOWER RATES
THAN OUR BIGGEST
COMPETITORS"

The bank led the way for Latin America
borrowers in April this year in the Japanese
market. It sold a 27.3 billion yen ($268
million) triple-tranche bond in Tokyo probond format, a structure that targets the
Samurai investor base but which is lighter in
its documentation demands.
The Japanese bond sale came shortly
after issuing a $500 million three-year
floating rate note in the US market, paying
a skinny 90 basis points over Libor for
the debt. Also in the mix, the bank made
its third outing to the Swiss franc market
in September 2013 to
borrow 150 million francs
Demonstrating results
($159 million). It raised 125
Santander Chile, total clients (thousands)
million Australian dollars
($114 million) in March,
Launching of new customer
and dabbled in liability
relationship management system
3,486
management by buying
3,437
back most of a 2020 global3,365
peso bond in February.
3,344 3,325
+5%
Looking forward,
3,290 3,301
3,251 3,240
Santander Chile will keep
+2%
issuing in international
markets when it sees
opportunities, says
Melandri, in a bid to
maintain a comfortable
Dec-12 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13
base of liquidity, and to keep
Source: Santander Chile
funding rates down. LF

BANK OF THE YEAR ECUADOR

BANCO PICHINCHA

This bank has led the way
amid a rebound in profitability among Ecuadorian
banks, after setbacks over
the previous two years
New regulations that barred Ecuadorian
lenders from doing business outside the
financial sector, and forced them to sell
many of their assets, hit banks hard in 2012
and 2013.
Institutions were forced to streamline
their operations, reduce costs and make
a push for organic growth to regain lost
ground. Banking profits shrank 14.7% in
2013, according to the regulator.
They rebounded this year, growing
18.8% in the first six months of 2014, to
reach $148 million. That was also fueled
by strong growth in the Andean country,
where the economy expanded 4.6% in
2013 and is expected to grow 4% this year,
according to central bank data.
During the period of these awards,
however, Banco Pichincha's rebound
has been particularly impressive. The
bank's assets increased by 8.6% to $9.14
billion in the first half of 2014. Despite a
dip in profitability during the previous 12
months, Banco Pichincha's net income
rose 36%, to an equivalent of just under
$60 million, in the year to June 2014.
The loan portfolio rose 9.8% to $5.62
billion - slightly below the 11.1% average
growth seen in the market, partly because
Pichincha wanted to increase its liquidity
ratios, the bank said, but also because it is
growing from a bigger base.
Indeed, in absolute terms, Pichincha
beat its rivals in the net increase in its loan
portfolio, taking $502 million in new loans,
followed by Banco Guayaquil with $289
million and Banco Internacional with $257
million.
Pichincha's microcredit portfolio grew
fastest, at 12.5%, with consumer lending
increasing by 6.6%. The bank says that this
success is in part due to its new "Pichincha
Mi Vecino" program, under which it has
provided training and technology to 8,000
local businesses so clients can carry out
basic banking transactions with them.

November/December 2014 - L ATINFINA NCE.COM 43
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