Business Strategy and Outlook| Michael Miller |
Banco Santander Chile is the largest bank by assets in the Chilean market. This scale has afforded the bank the second-cheapest deposit base in the country, significantly contributing to Santander Chile’s impressive returns on equity, which are typically in the upper teens. The bank has benefited from the introduction of the "Superdigital" and "Santander Life" accounts that are part of a larger trend toward increased adoption of digital banking in Chile. The bank’s digital offerings are tailored to reach an estimated population of 4.5 million unbanked Chilean citizens and led Banco Santander Chile to receive more new demand deposit accounts in 2020 than the rest of the Chilean banking system combined. As a result, Santander has benefited from a lower cost of deposits, seeing more noninterest-bearing deposit accounts than time deposits for the first time in the bank's history in 2020. Moreover, the bank benefits from high inflation Chile through its inflation-indexed loans, though this tailwind has been offset in recent quarters by higher funding costs, which have risen as Chile's central bank rapidly increased interest rates to fight inflation.