Banco Santander Chile Earnings: Strong Net Interest Income Is Offset by Higher Costs

Narrow-moat-rated Banco Santander Chile reported first-quarter earnings that were a bit weaker than what we had expected, as higher-than-anticipated operating expenses offset good net interest income growth. Net revenue increased 11.3% from last year but fell 2% from last quarter to CLP 547.6 billion. Despite strong annual revenue growth, net income fell 12% from last year to CLP 123 billion, which translates to a return on equity of 11.2%. As we incorporate these results, we do not plan to materially alter our fair value estimate of $19 per ADR share. We view the shares as fairly valued at the current price.