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Banco de Chile (BCH) Q2 2026 Earnings Call Transcript

Image source: The Motley Fool. DATE Friday, July 31, 2026 at 9:00 a.m. ET CALL PARTICIPANTS Chief Economist and Institutional Relations Officer - Rodrigo AravenaHead of Investor Relations - Pablo RicciHead of Financial Control and Capital - Daniel Galarce TAKEAWAYS Net Income -- CLP 391 billion for the second quarter, representing a 28.1% increase year over year driven by higher inflation and sustained customer income.Return on Average Equity -- 27.9% for the quarter, compared to the industry average of 21.0% for the same period.Operating Revenues -- CLP 922 billion in the second quarter, increasing 20.9% year over year due to net interest margin expansion and a 10.7% rise in net fee income.Net Interest Margin -- 5.8% for the second quarter, reflecting the positive impact of higher inflation on assets and optimized gap management.Total Loans -- CLP 40.3 trillion as of June 2026, increasing 2.3% year over year or 2.9% on a pro forma basis when excluding a one-time credit card processing migration effect.Consumer Loan Growth -- 5.3% on a pro forma basis year over year, supported by enhanced value propositions for targeted individual segments.Commercial Loans -- CLP 13.8 trillion, increasing 2.0% year over year as corporate lending operations began to recover in the second quarter.Residential Mortgage Loans -- CLP 12.8 trillion, growing 3.4% year over year as the bank focused on improving lending margins in specific housing segments.Efficiency Ratio -- 31.3% for the second quarter, representing an improvement from 36.8% in the same period last year due to firm cost discipline.Cost of Risk -- 1.65% for the quarter, including CLP 50 billion in additional provisions established to address external macroeconomic uncertainty.Underlying Cost of Risk -- 1.15% when excluding additional provisions, remaining flat compared to the first quarter of 2026.Non-Performing Loan Ratio -- 1.6% as of June 2026, the lowest among main competitors and reflecting stable portfolio quality despite weak local activity.Basel III Ratio -- 17.6% as of June 30, 2026, providing significant financial flexibility to support future business growth.Common Equity Tier 1 Ratio -- 13.9%, positioning the bank as one of the best-capitalized institutions in the Chilean banking industry.Digital Account Expansion -- 34% year-over-year growth in digital current accounts and a 12% rise in FAN Emprende openings for the first half of the year.FY 2026 GDP Forecast -- 1.3%, revised downward from 2.1% due to negative growth in the first half led by supply-side sectors like mining.FY 2026 Loan Guidance -- approximately 6% nominal growth, lowered from the previous forecast of 7% to reflect the subdued macroeconomic environment.FY 2026 Efficiency Guidance -- approximately 37%, an improvement from the prior estimate of 38% based on ongoing productivity gains.FY 2026 ROAC Guidance -- 21% to 22%, incorporating the impact of additional allowances established in the second quarter.Tax Reform Long-Term Benefit -- CLP 40 billion annually from the third year onward following the reduction of the corporate income tax rate from 27% to 23%.One-Time Tax Impact -- approximately CLP 70 billion negative impact expected in the first year the new tax law is enacted.Copper Price Average -- $5.92 per pound in the first half of 2026, contributing to a narrowing current account deficit.Operating Expenses -- CLP 288.7 billion, rising 2.8% year over year, which was below the rate of inflation for the same period. Need a quote from a Motley Fool analyst? Email pr@fool.com RISKS Aravena stated, "The main risk to our scenario comes from the external environment, particularly the evolution of the geopolitical conflict and its implications for both global GDP growth and inflation," specifically referencing uncertainty in the Middle East.Ricci noted, "delinquency in consumer loans moved from 1.8% to 2.1% over the last 12 months, tracking the gradual deterioration in unemployment," as a domestic factor affecting