A Decent Q1 for Banco Santander Chile but Slower Economic Growth Begins to Take a Toll on Results

Narrow-moat-rated Banco Santander Chile reported decent first-quarter results as rising noninterest income and strong cost management were offset by a drop in net interest margin and lower loan growth. Banco Santander Chile reported earnings per share of $1.25 CLP, 29.5% higher than the prior-year quarter. These results translate to an impressive return on average equity of 25.6% for the quarter. While the bank continues to enjoy the benefit of high inflation on the value of its inflation indexed assets, the economic impact of rising interest rates and slowing growth is starting to appear in the bank’s results. As we incorporate these results, we do not expect to change our fair value estimate of $23 per ADR share though we do note that Banco Santander Chile is entering a period of increased economic uncertainty.