Banco de Chile Earnings: Strong Revenue Growth as Outperformance vs. Peers Continues

Narrow-moat-rated Banco de Chile reported solid first-quarter results that were largely in line with our expectations, as lower inflation adjustment income was more than offset by rising net interest income and improving economic conditions in Chile. Net revenue increased 11.1% from last year, though it declined 9.6% from a very strong fourth quarter, to CLP 780 billion. Net income increased 11.9% to CLP 297.7 billion. These results translate to a return on equity of 22.6%, well above the bank’s peers and better than its historical average. As we incorporate these results, we do not plan to materially alter our fair value estimate of $21 per ADR share. We see the shares as roughly fairly valued.