Banco Santander Chile Earnings: Net Income Spikes From Higher Inflation Readjustment Income

Narrow-moat-rated Banco Santander Chile reported solid fourth-quarter results as falling interest rates reduced pressure on the bank’s funding costs while a higher inflation adjustment led to higher interest income. Net revenue increased 23.4% from last year and 30.6% from last quarter to CLP 556 billion. Net income increased 73.8% from last year and more than tripled from a weak third quarter to CLP 176.9 billion, which translates to a return on equity of 16.6%. As we incorporate these results, we do not plan to alter our fair value estimate of $18 per ADR share.