Pillar III Annual Report
Banco Santander
Chile / 2023
santander.cl
Pillar III Annual Report / 2023
Introduction
Capital
Consolidation Perimeter
Overview of risk management
Credit risk
Riesgo de mercado
Riesgo operacional
Liquidity risk
Remunerations
Índice
1
Introduction
- Corporate culture
- The Business
- Regulatory framework
- Pilar III
2
Capital
- Capital Management & Solvency
- Regulatory Capital
3
Consolidation Perimeter
- Santander Chile Consolidation
- Comparison Between Accounting and Regulatory Perimeter
4
Overview of risk management
- Business Model & Risk Management
- Risk management and control tools
- Governance Structure
5
Credit risk
- Credit Risk Management Model
- Governance Structure
- Credit Risk Management Process
- General Mitigation Tools
-
Classification of Transactions
Based on Credit Risk - Provision Estimation
- Distribution of exhibitions
- Credit Loss Management
- Credit Risk Recovery Management
-
Credit Risk Reduction
Techniques - Standard Method
- Counterparty credit risk
6
Market Risk
Market Risk Model
- Governance and organizational structure
- Management and mitigation tools
- Risk Measurement and Information Systems
7
Operational risk
Operational Risk
Management Model
- Governance and organizational structure
- Mitigation Scoping and Tools
- Capital Requirements for Operational Risk
8
Liquidity risk
Liquidity risk management model
- Funding strategy
- Governance and organizational structure
- Mitigation tools
9
Remunerations
General features of the Policy
- Governance Structure
- Identification of collectives
- Application criteria for remuneration
- Remuneration awarded
2
Pillar III Annual Report / 2023
Introduction
Capital
Consolidation Perimeter
Overview of risk management
Credit risk
Market Risk
Operational risk
Liquidity risk
Remunerations
1
Introduction
Corporate culture
The Business
Regulatory framework
Pilar III
3
Pillar III Annual Report / 2023
Introduction
Capital
Consolidation Perimeter
Overview of risk management
Credit risk
Market Risk
Operational risk
Liquidity risk
Remunerations
Banco Santander Chile is part of Grupo Santander, a global financial institution. This group provides financial services on three continents, serving an extensive customer base of 165 million. With 3.7 million shareholders and
a workforce of more than 212,000 employees, Grupo Santander stands out for its global presence and its impact on the financial sector.
As for Santander Chile's presence, it is present throughout the national territory through its extensive network of branches and physical spaces of different kinds.
Main achievements - Chile First Strategy | Financial Information |
Largest bank in terms of loans and deposits
17.4%
market share according to the latest information from the FMC.
More than
167,000
people banked through the Life account and Más Lucas in 2023.
TSR1 of
35.8%
in 2023, the highest among Chilean banks.
Recognized as
Best
Bank
in Chile in 2023 by The Banker and Euromoney.
The only
Chilean bank included in the DJSI for emerging markets.
A total of
91Workcafés
in Chile, serving our customers and the community in their different formats.
First
JPY 8
billion green bond, equivalent to US$ 53 million, to finance green mortgages.
More than
US$ 450
million was committed to invest in infrastructure and technology between 2023 and 2026.
Balance Sheet ($ millions) | Dec-23 | Dec-22 | % Change |
Total Assets | 70,857,888 | 68,164,604 | 4.0% |
Total gross loans1 | 40,917,143 | 38,871,708 | 5.3% |
Demand deposits | 13,537,826 | 14,086,226 | (3.9%) |
Time Deposits | 16,137,942 | 12,978,790 | 24.3% |
Assets attributable to owners | 4,367,158 | 4,128,808 | 5.8% |
of the Bank | |||
YTD Results | Dec-23 | Dec-22 | % Change |
Net interest income and | 1,121,438 | 1,598,345 | (29.8%) |
adjustments | |||
Net fee income | 502,640 | 407,269 | 23.4% |
Net Financial Result | 300,239 | 217,653 | 37.9% |
Total operating income2 | 1,950,445 | 2,245,340 | (13.1%) |
Operating expenses3 | (909,698) | (961,326) | (5.4%) |
Operating income before credit | 1,040,747 | 1,284,014 | (18.9%) |
losses | |||
Credit Loss Expense | (473,593) | (370,727) | 27.7% |
Operating profit before tax | 567,155 | 913,287 | (37.9%) |
Net income attributable to | 496,404 | 808,651 | (38.6%) |
owners of the Bank | |||
- Total shareholder return, in CLP as of 31.12.2023 and based on the last 12 months.
- Total operating income: Net interest income + income net of adjustments + net income from fees and commissions + net financial result + income from investments in companies + result from non-current assets and groups disposed of for sale not eligible as discontinued operations + other operating income.
- Operating expenses: Employee benefit expense + administrative expenses + depreciation and amortization + other operating expenses + impairment of non-financial assets
4
Pillar III Annual Report / 2023
Introduction
Capital
Consolidation Perimeter
Overview of risk management
Credit risk
Market Risk
Operational risk
Liquidity risk
Remunerations
Priority in Regulatory Policies
The Bank advocates for the implementation of robust and high-quality regulation that reinforces the strength and solvency of banking institutions. To this end, it sets rigorous standards of consumer protection and market stability to promote transparency in relation to risks, both for investors and supervisors. Santander Chile is firmly committed to constructive and transparent collaboration with regulators regarding the objectives, design and implementation of regulations and policy frameworks that impact its banking activity and, therefore, the interests of its customers.
Banking & Capital Resilience
The reforms carried out over the last decade at the global level have contributed to increasing the strength of financial institutions in terms of capital. However, economic instability has raised some questions about the functioning of the regulatory framework that need to
be carefully addressed. In this case, Banco Santander Chile aligns itself with the challenges of Santander Group in the adapting to the European regulatory foundations regarding the implementation of the new Basel IV standards by 2025.
Main results
Banco Santander Chile
ROAE* accumulated 12M 2023
11.9%
*Net income attributable to owners of the bank annualized divided by the average equity attributable to equity holders
Net income attributable to owners of the owners of the bank totaled
$496 billion
($2.63 per share and $1.20 per share of ADR).
5
Pillar III Annual Report / 2023
Introduction
Capital
Consolidation Perimeter
Overview of risk management
Credit risk
Market Risk
Operational risk
Liquidity risk
Remunerations
Executive Summary
MainCapital ratios
Ch$mn | Phased in | ||||||
2021 | 2022 | 2023 | Change 2022/2023 | ||||
CET1 | 3,494,580 | 4,212,691 | 4,397,824 | 185,134 | |||
AT1 | 972,124 | 779,845 | 608,720 | -171,125 | |||
Tier I | 4,466,704 | 4,992,535 | 5,006,544 | 14,009 | |||
Risk-Weighted Assets | 37,965,517 | 38,026,915 | 39,552,228 | 1,525,313 | |
CET1 | 9.20% | 11.08% | 11.12% | 0.04% | |
AT1 | 2.56% | 2.05% | 1.54% | -0.51% | |
Tier I | 11.77% | 13.13% | 12.66% | -0.47% | |
Tier II | 3.45% | 4.62% | 4.98% | 0.36% | |
Total Ratio | 15.22% | 17.75% | 17.64% | -0.11% | |
6
Pillar III Annual Report / 2023
Introduction
Capital
Consolidation Perimeter
Overview of risk management
Credit risk
Market Risk
Operational risk
Liquidity risk
Remunerations
Corporate culture
"The Santander Way" is the name given to Santander's corporate culture. It establishes how things are done, and guides people to continue to progress as a team.
This corporate culture encompasses the mission, vision, values, risk culture and behaviors that must prevail in each of the Group's entities. Santander is confident that a company with
a strong internal culture attracts and retains talent, fostering a fruitful work environment and improved performance throughout the Bank's operations.
Our Corporate Culture:
The Santander Way
The Santander Way has been the guide of the organization, encompassing the mission, vision, values, risk culture and behaviors. Santander is confident that a Company with a strong internal culture attracts and retains talent, fostering a positive labor climate and improved performance throughout Bank's organization.
A
consolidated and talented team
which motivates | generates |
Support | We create value | Clients |
to our | for everyone | |
communities | loyalty |
offering | which drives |
Solid results | |
to our | |
shareholders |
Mission | Vision |
To contribute to the progress of people and companies. | To be the best open platform for financial services, acting |
responsibly and earning the trust of our employees, customers, | |
shareholders and society. |
Values
Everything we do must be simple, personal and fair.
Simple: Santander seeks to offer efficient and easy-to-understand products that meet the needs of customers. For this reason, it designs systems and processes that are simple to operate, which facilitates a clear and agile response from its collaborators.
Personal: SA priority is to have different service channels, which offer each customer a service and response tailored to their needs. This also refers to our commitment to the personal development of each employee, through the fulfillment of their professional goals.
Fair: Above all Santander advocates transparency in its relations with its various stakeholders and to promote the progress of the community.
7
Pillar III Annual | Introduction | Capital | Consolidation | Overview of risk | ||||
Report / 2023 | Perimeter | management |
Business
Credit risk
Market Risk
Operational risk
Liquidity risk
Remunerations
Santander Chile seeks to be the best open financial services platform to contribute to the progress of companies and individuals, through a wide range of products with a high level of service for its customers.
The Bank focuses its business on a wide range of commercial and retail banking services for its clients in Chile. These include lines of credit, current account plans, loans in Chilean pesos and foreign currencies, mortgage loans, and various other types of financing for clients. In recent years, mortgage loans for sustainable housing and financing for renewable energy projects have also been included. In conjunction with the above, it offers financial services such as financial advisory, mutual fund management, securities and insurance brokerage, and leasing.
The business areas by which Santander segments its operations are as follows:
Retail Banking:
Retail Banking's customers are individuals and SMEs with sales of less than Ch$3 billion annually. For all of them, it has a differentiated value proposition. In turn, retail banking is subdivided into:
- Personal Banking: Medium, high-, and mass-income customers are served.
- SME Banking: Focuses on providing financial services based on plans to accompany small and medium-sized enterprises in their growth.
- Santander Consumer: Offers financial solutions with greater flexibility for vehicle purchases.
- Select Private Banking: Aimed at high- net-worthclients, through personalized attention, which includes a wealth manager and the support of specialized advisors.
Middle Market:
The middle-market offers products and services to medium and large companies with annual sales of over Ch$3 billion to Ch$15 billion and includes the following subsegments:
- Companies: Companies with annual sales from Ch$3 billion to Ch$15 billion.
- Large Companies: Companies with annual sales greater than Ch$15 billion.
- Real Estate: Companies that execute projects for third parties and construction companies, with annual sales of more than Ch$800 million.
- Institutions: Organizations such as municipalities, regional governments, government agencies, and universities.
Santander Corporate and Investment
Banking (CIB):
CIB focuses on companies with sales above Ch$10 billion, whether they are foreign or Chilean multinationals. This segment has four specialized units:
-
Corporate Finance: The Corporate Finance team provides global advice and execution in Mergers and Acquisitions
(M&A) and Capital Markets (DCM). - Global Transaction Banking: This team provides tailor-madebanking solutions for some of the world's largest and most demanding clients. All of their products are designed to fit your business.
-
Global Debt Financing: Global Debt Financing combines knowledge, experience and in-depthunderstanding of the financial markets to provide its clients with tailor-madeaccess to all sources
of solutions to help them achieve their capital structure and financing objectives. - Global Markets: The Global Markets team provides risk management
solutions, investment products, and execution services to a wide range of clients, including corporate clients, financial institutions, financial sponsors, and individuals.
Wealth Management & Insurance
Attends clients are those who wish to make investments through the bank. To this end, a homogeneous and consistent model of products is generated with different advice and contracting according to the needs of the clients.
All this is supported by a solid and capable governance structure, together with
the approach of strategic pillars aimed at meeting goals with a focus on the customer and promoting the processes of digital transformation, sustainability, and cybersecurity.
As for Santander Chile's strategy, the concept "Chile First: together, with you" was implemented as an action plan that will be the roadmap to help build a great country and a better Banco Santander. Each letter represents a central concept that should guide the Bank's work for a better future.
8
Pillar III Annual Report / 2023
Introduction
Capital
Consolidation Perimeter
Overview of risk management
Credit risk
Market Risk
Operational risk
Liquidity risk
Remunerations
Business segments
Retail Banking (Individuals &
SMEs)
It comprises individuals and small companies with annual sales of less than Ch$3 billion. This segment offers a variety of services to customers including consumer loans, credit cards, auto credit, business loans, foreign trade, mortgage loans, debit cards, checking accounts, savings products, securities brokerage, securities, and insurance. SME clients are also offered state-guaranteed loans, leasing and factoring.
Middle-market
It includes companies and large companies with annual sales of over Ch$3 billion institutional organizations such as universities, government agencies, municipalities and regional governments, and companies in
the real estate sector that execute projects to sell to third parties and all construction companies with annual sales in excess of $800 million without cap. A wide variety of products are offered to this segment, including commercial loans, leasing, factoring, foreign trade, credit cards, mortgage loans, checking accounts, transactional services, treasury services, financial consulting, savings products, securities brokerage and insurance. In addition to companies in the real estate sector, specialized services are offered for the financing of mainly residential projects, with the intention of increasing the sale of mortgage loans.
Corporate Investment
Banking (CIB)
It comprises foreign multinational companies or Chilean multinational companies that have sales above Ch$10 billion. This segment offers a wide variety of products, including commercial loans, leasing, factoring, foreign trade, credit cards, mortgage loans, checking accounts, transactional services, treasury services, financial consulting, investment banking, savings products, securities brokerage, and insurance. This segment has
a Treasury Division that provides sophisticated financial products mainly to companies in the Wholesale Banking and Corporate areas. Products such as derivatives, securitization, and other products designed according to the needs of customers are included. The treasury area also handles the brokerage of positions, as well as the portfolio of own investments.
+r71100r+100+r+2210+ | ||||
71% | 22% | 8% | ||
48% | 26% | 26% | ||
% of loans | % of loans | % of loans | ||
% of net income from operating segments | % of net income from operating segments | % of net income from operating segments | ||
9
Pillar III Annual Report / 2023
Introduction
Capital
Consolidation Perimeter
Overview of risk management
Credit risk
Market Risk
Operational risk
Liquidity risk
Remunerations
Regulatory framework
The regulatory framework under which Banco Santander Chile operates includes:
- the General Banking Law, (ii) the Updated Compilation of Rules (UCR) of the Financial Market Commission (FMC), (iii) the Securities Markets Law 18,045 and (iv) the Groups Law 18,046.
The bank's three regulatory entities are: the
Financial Market Commission (FMC), the
Financial Analysis Unit, and the Chilean Internal Revenue Service.
During the year 2023, a series of modifications were made to the regulatory framework that had an effect on the bank's activities.
For more details on these, visit the bank's 2023 report, available on the website.
The regulatory framework under which | Securities Markets Law 18,045 and (iv) the | the Financial Analysis Unit, and the Chilean |
Banco Santander Chile operates includes: | Groups Law 18,046. | Internal Revenue Service. |
(i) the General Banking Law, (ii) the | The bank's three regulatory entities are: | The changes in the regulatory frameworks |
Updated Compilation of Rules (UCR) of the | the Financial Market Commission (FMC), | during 2022 that impact and could impact |
Financial Market Commission (FMC), (iii) the | Banco Santander's activity are: |
Regulations | Description |
Financial | New financial services are created: platforms for |
Innovation Law | crowdfunding, alternative systems of transaction, |
intermediation of financial instruments, order | |
routing, credit advisory, investment advice and | |
custody of financial instruments. In addition, the | |
basis for creating an "Open Finance" system, which | |
will allow for greater transparency in the use of | |
financial information and improve targeted customer | |
offerings of financial products. | |
"Fintech" | It regulates the individual and collective contracting |
of insurance associated with mortgage loans under | |
article 40 of the Insurance Act No. 251. This includes | |
establishing the minimum conditions which must | |
be included in the bidding rules and the information | |
to be provided to the bidders, insured debtors, and | |
the FMC. | |
NCG N°469 FMC | It regulates and sets out the requirements to be |
met by the banks for the collection of commissions | |
from customers in the framework of a money loan | |
operation. | |
NCG N°484 FMC | Article 85 bis of the Tax Code is incorporated into |
the obliges banks to report annually to the Service | |
of Internal Revenue the balances of products or | |
fundraising, investment or investment instruments | |
or custody, the sum of which has been credited or | |
the balance of which is daily, weekly, or monthly | |
equal to or greater to UF 1,500. | |
Law 21,453 | Modifies the Guarantee Fund for Small and Medium- |
sized Enterprises (FOGAPE). For Banks this Act | |
expands access to credit in the system to micro- | |
entrepreneurs, with a guarantee of the FOGAPE, also | |
creating the new FOGAPE Chile Apoya, which allows | |
access to new loans with the guarantee and under | |
the conditions of the Fund. | |
The Bank also operates with an internal regulatory framework based on a series of policies, codes and strategies that establish the criteria and methodologies that guide each of the Bank's procedures.
Regulations | Description |
Law 21,389 | Creates the National Registry of Alimony Debtors, |
in order to improve the payment of alimony. This | |
imposes on all Financial Service Providers the duty | |
to consult the Alimony Registry when approving all | |
loan operations of 50 UF or more and withhold up | |
to 50% of the loan (or a lower amount if it covers | |
the alimony debt) in the event that the applicant is in | |
that Registry. | |
Law 21,484 | On "Parental Responsibility and Effective Payment |
of Alimony Debts" states that the payment of | |
the debt may be made with the funds that the | |
supporter has in their bank or other accounts. The | |
obligation of the Bank shall be to retain the funds. | |
Exempt | It regulates good practices in the field of advertising |
Resolution | for the due protection of the rights and guarantees |
N°534 SERNAC | of the Consumers in local advertising and activities |
deployed by influencers. | |
Compendium | New Chapter III.E.1 of the Compendium of |
of Standard | Standards for Financial Institutions of the |
Financial | Central Bank of Chile that digitizes and makes |
Institutions | the opening time savings accounts easier by |
Central Bank of | eliminating limits on withdrawals and improves |
Chile | communication channels with the customer. |
Circular N°2317 | Establishes the obligation for the Bank to have |
FMC | an internal policy on security and management |
of debtor information (PISMID), which complies | |
with international principles and best practices on | |
processing of personal data. This refers to quality, | |
security, access and limits, and the guidelines set | |
forth in RAN 20-10. | |
Circular N°2316 | Amends Chapters 18-5 and 20-6 of the Digest |
FMC | Updated Standards for Banks, eliminating the |
Requirement to have an enforceable title for | |
the report. | |
10
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Banco Santander-Chile published this content on 15 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 May 2024 18:43:39 UTC.