Exhibit 99.1
Exhibit 99.1 Itaú Corpbanca Announces Second Quarter 2021 Management Discussion & Analysis Report SANTIAGO, Chile, July 30, 2021 (GLOBE NEWSWIRE) -- ITAÚ CORPBANCA (NYSE: ITCB; SSE: ITAUCORP) announced today its Management Discussion & Analysis Report (“MD&A Report”) for the second quarter ended June 30, 2021. For the full MD&A Report, please refer to the following link: https://ir.itau.cl/files/doc_financials/2021/q2/Itaú-CorpBanca-2Q21-MD-A.pdf On Monday, August 2, 2021, at 11:00 A.M. Santiago time (11:00 A.M. ET), the Company’s management team will host a conference call to discuss the financial results. The call will be hosted by Gabriel Moura, Itaú Corpbanca’s Chief Executive Officer, Rodrigo Couto, Itaú Corpbanca’s Chief Financial Officer and Claudia Labbé, Itaú Corpbanca’s Head of Investor Relations. Conference Call Details: Participant registration: http://www.directeventreg.com/registration/event/1980768 Phone registration: +1 (800) 585-8367 or +1 (416) 621-4642 Upon registering, each participant will be provided with call details and a registrant ID used to track attendance on the conference call (Access Code: 1980768#). Reminders will also be sent to registered participants via email. Please provide this registration information to those participants that you would like to attend your conference call. Telephone and Virtual Q&A session: Telephone Q&A session will be available as well as written Q&A through a box on the console, where attendees can type in their questions. We will read and answer selected questions verbally. Slides and Audio Webcast: There will also be a live, and then archived, webcast of the conference call, available through the Company’s website. Participants in the live webcast should register on the website approximately 10 minutes prior to the start of the webcast. The webcast can be found at: https://event.on24.com/wcc/r/3190605/DC0B3B48B840850B2484628E038A56F3 Webcast will be available on-demand via the same address as the live event afterwards. About Itaú Corpbanca ITAÚ CORPBANCA (NYSE: ITCB; SSE: ITAUCORP) is the entity resulting from the merger of Banco Itaú Chile with and into Corpbanca on April 1, 2016. The current ownership structure is: 39.22% owned by Itaú Unibanco, 27.16% owned by the Saieh Family and 33.29% owned by minority shareholders. Itaú Unibanco is the sole controlling shareholder of the merged bank. Within this context and without limiting the above, Itaú Unibanco and CorpGroup have signed a shareholders’ agreement relating to corporate governance, dividend policy (based on performance and capital metrics), transfer of shares, liquidity and other matters. The bank is the fifth largest private bank in Chile and as per its mandate is the banking platform for future expansion in Latin America, specifically in Chile, Colombia and Peru. Itaú Corpbanca is a commercial bank based in Chile with additional operations in Colombia and Panama. In addition, Itaú Corpbanca has a branch in New York and a representative office in Lima. Focused on large and medium sized companies and individuals, Itaú Corpbanca offers universal banking products. In 2012, the bank initiated a regionalization process and as of the date hereof has acquired two banks in Colombia ‒Banco Corpbanca Colombia and Helm Bank‒ becoming the first Chilean bank with banking subsidiaries abroad. The merger with Banco Itaú Chile and the business combination of our two banks in Colombia, represent the continued success of our regionalization process. As of May 31, 2021, according to the Chilean Financial Market Commission, Itaú Corpbanca was the fifth largest private bank in Chile in terms of the overall size of its customer loan portfolio, equivalent to 9.8% market share. As the same date, according to the Colombian Superintendency of Finance, Itaú Corpbanca Colombia was the eighth largest bank in Colombia in terms of total loans and tenth in terms of total deposits, as reported under local regulatory and accounting principles. As of April 30, 2020, its market share by loans reached 4.0%. Investor Relations – Itaú Corpbanca +56 (2) 2660-1701 / IR@itau.cl / ir.itau.cl |
Management Discussion & Analysis 2Q21 ir.itau.cl /Itaú Chile facebook.com/itauchile @itauchile |
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CONTENTS Table of Contents Management Discussion & Analysis Page 5 7 Executive Summary 17 Income Statement and Balance Sheet Analysis Managerial results - Breakdown by country 19 Managerial results - Breakdown for Chile 21 41 Managerial results - Breakdown for Colombia 31 Balance Sheet 47 Risk and Capital Management 49 Additional Information Complete Financial Statements Access here 54 Report of Independent Auditors |
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Management Discussion & Analysis Management Discussion & Analysis |
6 This report is based on Itaú Corpbanca reviewed financial statements for 2Q21, 1Q21 and 2Q20 prepared in accordance with the Compendium of Accounting Standards issued by the Chilean Commission for the Financial Market (Comisión para el Mercado Financiero, or “CMF”) pursuant to Chilean Generally Accepted Accounting Principles (Chilean GAAP), which conform with the International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) to the extent that there are not specific instructions or regulations to the contrary issued by the CMF. Solely for the convenience of the reader, U.S. dollar amounts (US$) in this report have been translated from Chilean nominal peso (Ch$) at our own exchange rate as of June 30, 2021 of Ch$731.91 per U.S. dollar. Industry data contained herein has been obtained from the information provided either by the CMF or the Colombian Superintendency of Finance (Superintendencia Financiera de Colombia, or SF). Certain figures included in this Quarterly Report for the three months ended June 30, 2021 and 2020, for the three months ended March 31, 2021 and as of for the six-month periods ended June 30, 2021 and 2020 have been rounded for ease of presentation Percentage figures included in this Quarterly Report have in all cases not been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this Quarterly Report may vary slightly from those obtained by performing the same calculations using the figures in our consolidat- ed financial statements and our managerial information. Certain other amounts that appear in this Quarterly Report may similarly not sum due to rounding. As used in this MD&A Report, the term “billion” means one thousand million (1,000,000,000) and the term “trillion” means one million million (1,000,000,000,000). |
Itaú Corpbanca Executive Summary Management Discussion & Analysis In Ch$ million (except where indicated), end of period 2Q21 1Q21 2Q20 6M21 6M20 Recurring Net Income 70,773 95,128 20,968 165,901 54,765 255,966 316,310 278,947 572,276 538,895 Operating Revenues 1 Managerial Financial Margin 214,459 276,761 240,027 491,221 455,615 Recurring Return on Tangible Avg. assets (RoTAA) 2 3 0.8% 1.1% 0.2% 1.0% 0.3% Recurring Return on Tangible Avg. equity (RoTAE) 2 4 16.0% 21.5% 4.3% 18.7% 5.6% Recurring Return on Avg. assets (RoAA) 2 0.8% 1.1% 0.2% 1.0% 0.3% Recurring Return on Avg. equity (RoAE) 2 5 12.2% 16.4% 2.7% 14.3% 3.4% Risk Index (Loan loss allowances / Total loans) 3.3% 4.0% 3.4% 3.3% 3.4% Non-performing Loans Ratio 90 days overdue (NPL) - Total 2.6% 2.5% 2.4% 2.6% 2.4% Non-performing Loans Ratio 90 days overdue (NPL) - Chile 2.3% 2.3% 2.0% 2.3% 2.0% Non-performing Loans Ratio 90 days overdue (NPL) - Colombia 3.9% 3.6% 4.0% 3.9% 4.0% Coverage Ratio (Loan Losses/NPL 90 days overdue) - Total 127.0% 159.1% 141.4% 127.0% 141.4% Efficiency Ratio (Non-interest expenses / Operating revenues) 58.4% 49.8% 56.8% 53.7% 58.2% Risk-Adjusted Efficiency Ratio (RAER) 6 68.6% 62.1% 90.0% 65.0% 89.5% Total Assets 34,402,380 33,614,855 38,969,389 Gross Total Credit Portfolio 22,872,905 22,716,573 24,288,823 Total Deposits 16,820,482 16,655,391 18,235,232 Loan Portfolio / Total Deposits 135.98% 136.39% 133.20% Shareholders Equity 2,297,933 2,320,111 2,530,802 Tangible Equity 4 1,750,136 1,768,349 1,966,960 Headcount 7 8,200 8,316 8,878 Chile 5,187 5,249 5,581 Colombia 3,013 3,067 3,297 Branches 8 297 300 317 Chile 189 191 190 Colombia 108 109 127 ATM – Automated Teller Machines 525 531 550 Chile 402 406 408 Colombia 123 125 142 Notes: (1) Operating revenues = Managerial financial Margin + Commissions and fees. (2) Annualized figures when appropriate. (3) Total tangible assets = Total assets excluding goodwill and intangi- bles from business combination. (4) Tangible equity = Shareholders equity - goodwill - intangibles from business combination - related deferred tax liabilities; for further details see page 47 of this report. (5) Equity = Shareholders equity. (6) Starting 3Q19 we are adding the cost of credit to the non-interest expenses for the calculation of the risk-adjusted efficiency ratio, instead of deducting it from the operating revenues. Previous quarters have been recalculated for comparison purposes. (7) Headcount for Chile includes employees of our New York branch and since 1Q18 also from our RepOffice in Lima and also in Madrid until 2Q19; and headcount for Colombia includes employees of Itaú (Panamá). (8) Branches for Chile include one branch in New York and branches for Colombia include one office in Panama. 7 Results Performance Balance Sheet Other Itaú Corpbanca Financial Information The financial information included in this Management Discussion & Analysis Report (“MD&A Report”) is based on our managerial model that we adjust for non-recurring events and for additional reclassifications of P&L lines in order to provide a better understanding of our performance. Please refer to pages 9, 10 and 11 of this report for further details on our managerial model. We present below selected consolidated managerial financial information and operating information of Itaú Corpbanca for the three months ended June 30, 2021 and 2020, for the three months ended March 31, 2021 and as of June 30, 2021 and 2020. Financial Highlights |
Itaú Corpbanca Executive Summary Management Discussion & Analysis 8 Highlights Indicators In Ch$ million (except where indicated), end of period 2Q21 1Q21 2Q20 6M21 6M20 Total Outstanding shares (Thousands) 512,406.76 512,406.76 512,406.76 512,406.76 512,406.76 Book Value per share (Ch$) 4.485 4.528 4.939 4.485 4.939 Diluted Recurring Earnings per share (Ch$) 0.138 0.186 0.041 0.324 0.107 Accounting Diluted Earnings per share (Ch$) 0.132 0.176 -1.463 0.308 -1.410 Diluted Recurring Earnings per ADR (US$) 0.283 0.387 0.075 0.664 0.195 Accounting Diluted Earnings per ADR (US$) 0.271 0.367 -2.670 0.632 -2.573 Dividend (Ch$ million) n.a. n.a. n.a. n.a. 127,065 Dividend per share (Ch$) n.a. n.a. n.a. n.a. 0.2480 Gross Dividend per ADS (US$) n.a. n.a. n.a. n.a. 0.4316 Market capitalization (Ch$ billion) 1,040.70 1,414.24 1,137.03 1,040.70 1,137.03 Market capitalization (US$ billion) 1.4 2.0 1.4 1.4 1.4 Solvency Ratio - BIS Ratio 9 13.13% 13.24% 12.63% 13.13% 12.63% Shareholders' equity / Total assets 6.68% 6.90% 6.49% 6.68% 6.49% Shareholders' equity / Total liabilities 7.17% 7.43% 6.96% 7.17% 6.96% Ch$ exchange rate for US$1.0 731.91 720.19 821.83 731.91 821.83 COP exchange rate for Ch$1.0 0.1949 0.1962 0.2182 0.1949 0.2182 Monetary Policy Interest Rate - Chile 10 0.5% 0.5% 0.5% 0.5% 0.5% Monetary Policy Interest Rate - Colombia 10 1.8% 1.8% 2.8% 1.8% 2.8% Quarterly UF variation - Chile 11 1.1% 1.1% 0.3% 2.2% 1.3% Quarterly CPI variation - Chile 0.7% 1.3% -0.2% 2.0% 1.2% Quarterly CPI variation - Colombia 1.5% 1.6% -0.5% 3.1% 1.1% Indicators Highlights Notes: (9) BIS Ratio= Regulatory capital / RWA, according to CMF current definitions. (10) End of each period. (11) UF (Unidad de Fomento) is an official unit of account in Chile that is constantly adjusted for inflation and widely used in Chile for pricing several loans and contracts. |
Itaú Corpbanca Executive Summary Management Discussion & Analysis 9 In Ch$ million 2Q21 1Q21 2Q20 6M21 6M20 Net Income Attributable to Shareholders (Accounting) 67,671 90,222 (749,546) 157,893 (722,416) Non-Recurring Events 3,102 4,906 770,514 8,008 777,181 (a) Transaction Costs 148 0 (6) 148 49 (b) Goodwill impairment and amortization/impairment of intangible generated through business combinations 5,424 5,424 803,196 10,848 813,499 (c) Provisions, impairment and accelerated depreciation (3) 1,296 - 1,294 - (d) Other Contingencies 1,738 - - 1,738 (698) Tax Effects (4,204) (1,814) (32,676) (6,019) (35,669) Recurring Net Income Attributable to Shareholders (Managerial) 70,773 95,128 20,968 165,901 54,765 Non-Recurring Events Net Income and Recurring Net Income Events that we have considered non-recurring and at the same time not part of our business are the following: (a) Transaction cost: Costs related to the closing of the merger between Banco Itaú Chile and Corpbanca, such as investment banks, legal advisors, auditors and other related expenses. (b) Goodwill impairment and amortization/impairment of intangible generated through business combinations: Amortization of intangibles arising from business combination, such as customer relationships. (c) Provisions, impairment and accelerated depreciation: Considers (i) provisions for physical structure restructuring; (ii) impairment of intangible technolo- gy assets related to the systems consolidation process; and (iii) impairment and accelerated depreciation of fixed assets related to footprint revision and migration to a Remote First working model. (d) Other Contingencies: Mainly due to provisions related to the systems consolidation process generated in the Itaú - Corpbanca integration. Our recurring net income attributable to shareholders totaled Ch$70,773 million in the second quarter of 2021 from an accounting net income of Ch$67,671 million for the period, as a result of the elimination of non-recurring events, which are presented in the table below: |
Itaú Corpbanca Executive Summary Management Discussion & Analysis 10 Managerial Income Statement U.S. dollar Colombian peso Ch$ 731.91 Ch$ 0.1949 1.6% (2Q21/2Q20) -10.9% -0.7% (2Q21/1Q21) (2Q21/2Q20) -10.7% Our managerial financial model reflects how management measures and analyzes financial performance by disaggregating commercial performance, financial risk manage- ment, credit risk and costs control. For our managerial results, we adjust for non-recurring events that affect accounting net income (as detailed on the previous page) and apply managerial criteria to disclose our income statements. Regarding the latter, our managerial criteria affects the breakdown of our income statement but does not impact our net income. Among the managerial adjustments, we highlight the tax effects of the hedge of our investments abroad – originally accounted for as income tax expense on our Net Income and subsequently reclassified as financial margin, the reclassification of foreign exchange hedge positions of US dollars denominated provisions, the reclassification of country-risk provisions; the provisions for assets received in lieu of payment; provisions and write-off of assets received in lieu of payment, and the reclassification of provisions for our credit card loyalty program. These reclassifications enable us to carry out a business analysis from management’s perspective. Beginning with the first quarter of 2019 we have been disclosing our income statement in the same manner as we do internally, incorporating additional P&L reclassifi- cations. One important change to highlight would be the Managerial Financial Margin disclosure as it is shown in the table on page 11 (Accounting and Managerial Statements Reconciliation) of this report together with our previous P&L reclassifications. With regards to the hedging of investments abroad, our strategy for foreign exchange risk management is aimed at mitigating t he effects of foreign exchange variations through financial instruments and includes the impact of all tax effects. As the consolidated financial statements for Itaú Corpbanca uses the Chilean peso as its functional currency, foreign currenc ies are translated into Chilean peso. For our investment in Colombia, we have decided to hedge this translation risk effect in our income statement. In the second quarter of 2021, the Chilean peso appreciated 0.7% against the Colombian peso, compared to an appreciation of 5.6% in the previous quarter. In addition, the Chilean peso depreciated 1.6% against the U.S. dollar in the second quarter of 2021. Approximately 31% of our loan portfolio is denominated in, or indexed to, foreign currencies. We present below the foreign exchange variation of the Chilean peso agains t the U.S. dollar and the Colombian peso: For tax purposes, the Chilean Internal Revenue Service (“Servicio de Impuestos Internos” or SII) considers that our investment in Colombia is denominated in U.S. dollars, which based on the exchange rates of each of disbursements (not current exchange rates) is US$1,792 million. This amount considers the acquisition of shares of Itaú Corpbanca Colombia from Helm LLC and Kresge Stock Holding Company announced to the market in December 3, 2019 for approximately US$334 million. As we have to translate the valuation of this investment from U.S. dollar to Chilean peso in our books each month, the volatility of the exchange rate generates an impact in the net income attributable to shareholders. In order to limit that effect, management has decided to hedge this exposure with derivatives to be analyzed along with income tax expenses. In addition to the New York Branch, in the first quarter of 2020, management has decided to consider other investments in its hedge strategy with derivatives, also to be analyzed along with income tax expenses (total exposure US$179 million). (2Q21/1Q21) Main foreign exchange variations of the Chilean peso |
Itaú Corpbanca Executive Summary Management Discussion & Analysis 11 Managerial Income Statement in Ch$ million 2Q21 in Ch$ million 2Q21 1 Interest Income 354,478 Operating Revenues 291,832 1 Interest Expense (135,329) 1 Managerial Financial Margin 240,539 Net Interest Income 219,149 Financial Margin with Clients 220,625 2 Fees and commission income 51,293 Financial Margin with the Market 19,914 4 Fees and commission expense (15,515) 2 Commissions and Fees 51,293 Net fee and commission income 35,778 3 Cost of Credit (30,832) 1 Total financial transactions, net 8,994 Provision for Loan Losses (44,565) 1 Other operating income 13,113 Recoveries from Loans written-off as losses 13,733 Total operating income 277,034 Credit Value Adjustment (or “CVA”; ratings and colla-- 3 Provision for Loan Losses (44,565) 4 Non-interest Expenses (183,593) 3 Recoveries from loans written-off as losses 13,733 Personnel Expenses (71,148) Net operating income 246,202 Administrative Expenses (87,817) 4 Personnel expenses (71,148) Depreciation, Amortization and Impairment (24,628) 4 Administrative expenses (60,014) Income before Tax and Minority Interests 77,407 4 Depreciation and amortization (24,627) 5 Income tax expense (9,689) 4 Impairments (1) 6 Minority Interests in Subsidiaries (47) 4 Other operating expenses (12,288) Net Income attributable to Shareholders 67,671 Total operating expenses (168,078) Operating Income 78,124 1 Income from investments in other companies (717) Income before taxes 77,407 5 Income tax expense (9,689) Net Income 67,718 6 Minority interests (47) Net Income attributable to Shareholders 67,671 We present below a detailed reconciliation from our accounting income statements to our managerial income statements before adding/deducting non-recurring events as previously described. Even though the example below has been prepared with 2Q21 figures, it can be used to replicate any period: |
Itaú Corpbanca Executive Summary Management Discussion & Analysis 12 Accounting and Managerial Income Statements Reconciliation Accounting and Managerial Income Statements Reconciliation | 1st Quarter of 2021 In Ch$ million Accounting Managerial Reclas- sifications Tax Effect of Hedge Non-recurring Events Managerial Operating Revenues 348,946 (24,710) (7,926) 0 316,310 Managerial Financial Margin 296,786 (12,099) (7,926) 0 276,761 Financial Margin with Clients 204,197 (8,646) - - 195,551 Financial Margin with the Market 92,589 (3,452) (7,926) 0 81,211 Commissions and Fees 52,160 (12,611) - - 39,549 Cost of Credit (39,385) 590 - - (38,795) Provision for Loan Losses (54,357) 1,856 - - (52,501) Recovery of Loans Written Off as Losses 14,972 437 - - 15,409 Credit Value Adjustment (or “CVA”; ratings and collaterals effects) - (1,703) - - (1,703) Non-interest Expenses (188,406) 24,084 - 6,720 (157,602) Personnel Expenses (72,236) 1,634 - - (70,602) Administrative Expenses (91,595) 14,912 - 1,057 (75,626) Depreciation, Amortization and Impairment (24,575) 7,538 - 5,663 (11,374) Income before Tax and Minority Interests 121,155 (36) (7,926) 6,720 119,913 Income Tax Expense (29,476) 36 7,926 (1,815) (23,328) Minority Interests in Subsidiaries (1,457) - - - (1,457) Recurring Net Income 90,222 - - 4,906 95,128 In Ch$ million Accounting Managerial Reclas- sifications Tax Effect of Hedge Non-recurring Events Managerial Operating Revenues 291,832 (33,182) (4,331) 1,647 255,966 Managerial Financial Margin 240,539 (23,395) (4,331) 1,647 214,459 Financial Margin with Clients 220,625 (20,482) - 1,738 201,880 Financial Margin with the Market 19,914 (2,913) (4,331) (91) 12,579 Commissions and Fees 51,293 (9,787) - - 41,506 Cost of Credit (30,832) 4,801 - - (26,031) Provision for Loan Losses (44,565) 3,922 - - (40,643) Recovery of Loans Written Off as Losses 13,733 709 - - 14,442 Credit Value Adjustment (or “CVA”; ratings and collaterals effects) - 170 - - 170 Non-interest Expenses (183,593) 28,352 - 5,660 (149,581) Personnel Expenses (71,148) (164) - - (71,312) Administrative Expenses (87,817) 21,683 - (50) (66,184) Depreciation, Amortization and Impairment (24,628) 6,834 - 5,710 (12,084) Income before Tax and Minority Interests 77,407 (28) (4,331) 7,307 80,354 Income Tax Expense (9,689) 28 4,331 (4,204) (9,534) Minority Interests in Subsidiaries (47) - - - (47) Recurring Net Income 67,671 - - 3,102 70,773 Accounting and Managerial Income Statements Reconciliation | 2nd Quarter of 2021 |
Itaú Corpbanca Executive Summary Management Discussion & Analysis 13 We present below the managerial income statements with the reclassification and non-recurring adjustments described above: 2nd quarter of 2021 Income Statement In Ch$ million 2Q21 1Q21 change 2Q20 change 6M21 6M20 change Operating Revenues 255,966 316,310 -19.1% (60,344) 278,947 -8.2% (22,981) 572,276 538,895 6.2% 33,381 Managerial Financial Margin 214,459 276,761 -22.5% (62,302) 240,027 -10.7% (25,567) 491,221 455,615 7.8% 35,606 Financial Margin with Clients 201,880 195,551 3.2% 6,330 205,700 -1.9% (3,819) 397,431 412,684 -3.7% (15,253) Financial Margin with the Market 12,579 81,211 -84.5% (68,632) 34,327 -63.4% (21,748) 93,790 42,930 118.5% 50,860 Commissions and Fees 41,506 39,549 4.9% 1,958 38,920 6.6% 2,586 81,055 83,281 -2.7% (2,225) Cost of Credit (26,031) (38,795) -32.9% 12,764 (92,463) -71.8% 66,432 (64,826) (168,261) -61.5% 103,435 Provision for Loan Losses (40,643) (52,501) -22.6% 11,857 (106,171) -61.7% 65,528 (93,144) (196,853) -52.7% 103,708 Recovery of Loans Written Off as Losses 14,442 15,409 -6.3% (967) 13,094 10.3% 1,348 29,851 28,139 6.1% 1,712 Credit Value Adjustment (or “CVA”; ratings and collaterals effects) 170 (1,703) - 1,873 614 -72.2% (443) (1,532) 453 - (1,986) Non-interest Expenses (149,581) (157,602) -5.1% 8,021 (158,469) -5.6% 8,888 (307,183) (313,856) -2.1% 6,673 Personnel Expenses (71,312) (70,602) 1.0% (710) (77,154) -7.6% 5,842 (141,914) (148,143) -4.2% 6,229 Administrative Expenses (66,184) (75,626) -12.5% 9,441 (67,953) -2.6% 1,769 (141,810) (139,253) 1.8% (2,557) Depreciation. Amortization and Impairment (12,084) (11,374) 6.2% (710) (13,362) -9.6% 1,278 (23,459) (26,460) -11.3% 3,002 Income before Tax and Minority Interests 80,354 119,913 -33.0% (39,559) 28,014 186.8% 52,340 200,267 56,778 252.7% 143,489 Income Tax Expense (9,534) (23,328) -59.1% 13,795 (6,404) 48.9% (3,129) (32,862) (389) 8351.3% (32,473) Minority Interests in Subsidiaries (47) (1,457) -96.8% 1,410 (642) -92.7% 595 (1,504) (1,624) -7.4% 120 Recurring Net Income 70,773 95,128 -25.6% (24,354) 20,968 237.5% 49,805 165,901 54,765 202.9% 111,136 |
Itaú Corpbanca Executive Summary Management Discussion & Analysis 14 Net income analysis presented below is based on the Managerial Income Statement with the adjustments shown on pages 9 and 10: Return on Average Tangible Equity1 Recurring Net Income Results Ch$ 70.8 billion for the 2Q21 Highlights in 2Q21 For further details by country see page 40 Highlights in the quarter The recurring net income in the second quarter of 2021 amounted to Ch$70.8 billion, a 25.6% decrease from the previous quarter and when compared with the second quarter of 2020 a Ch$49.8 billion increase. The managerial return on average tangible equity was 16.0% as of June 30, 2021, compared to the 4.3% reported in June 30, 2020. In Chile, Recurring Net Income in the second quarter of 2021 reached Ch$68.3 billion, an 18.6% decrease when compared to the first quarter of 2021. This reduction related to a 92.5% decrease in Financial Margin with the Market, partially offset by an increase in revenues (both in Financial Margin with Clients and in Commissions and Fees), by lower Cost of Credit mainly related to the Retail portfolio, and by a 4.4% decrease in Non-interest Expenses during this period. In Colombia, the Recurring Net Income in the second quarter of 2021 decreased 78.0% when compared to the first quarter of 2021, mainly due to a 16.4% decrease in Operating Revenues, primarily related to a decrease in Financial Margin with the Market, and to a 24.1% increase in Cost of Credit. These impacts were partially offset by a 3.2% decrease in Non-interest Expenses. 16.0% The annualized recurring return on average tangible equity reached 16.0% in the second quarter of 2021, 5.5 percentage points lower when compared to the previous quarter and 11.7 percentage points higher when compared to the same period in 2020. Average tangible shareholders equity totaled Ch$1,767.3 billion, a 0.3% decrease compared to the last quarter and a 9.2% decrease compared to the second quarter of 2020. Annualized recurring return on average assets ex-goodwill and ex-intangibles from business combinations reached 0.8% in the second quarter of 2021, a 28 basis points decrease when compared to the previous quarter and a 62 basis points increase when compared to the second quarter of 2020. For further details by country see page 47 (1) Tangible Equity: Shareholders equity net of goodwill, intangibles from business combination and related deferred tax liabilities. Ch$ million |
Itaú Corpbanca Executive Summary Management Discussion & Analysis Financial Margin with Clients Cost of Credit Ch$ 201.9 billion For further details by country see pages 22 and 33 Ch$ 26.0 billion For further details by country see pages 25 and 36 Commissions and Fees Efficiency Ratio and Risk-Adjusted Efficiency Ratio1 For further details by country see pages 24 and 35 58.4% Financial Margin with Clients increased 3.2% compared to the previous quarter, primarily due to an increase in commercial portfolio spreads and increased activity in derivatives and FX transactions with clients during this quarter. In addition, Financial Margin with Clients in Colombia decreased 0.8% as compared to the first quarter of 2021 as a result of the 0.7% depreciation of the Colombian peso. When compared to the second quarter of 2020, our Financial Margin with Clients decreased by 1.9%. In the second quarter of 2021, our efficiency ratio increased by 8.61 percent- age points compared to the previous quarter, mainly due to the 19.1% decrease in Operating Revenues. When compared to the second quarter of 2020, the efficiency ratio increased 1.63 percentage points, mainly due to the 8.2% decrease in Operating Revenues. The risk-adjusted efficiency ratio, which also includes the Cost of Credit, reached 68.6%, an increase of 6.5 percentage points from the previous quarter and a 21.3 percentage points decrease from the second quarter of 2020. Cost of Credit in the second quarter of 2021 decreased 32.9% compared to the previous quarter, primarily due to lower provisioning level for the portfolio both in Chile and Colombia. When compared to the second quarter of 2020, Cost of Credit decreased by 71.8%. Ch$ 41.5 billion Commissions and Fees increased by 4.9% when compared to the first quarter of 2021, mainly due to higher Credit Operations and Guarantees Provided commissions in Chile and Financial Advisory fees in Colombia and Chile. When compared to the second quarter of 2020, Commissions and Fees increased by 6.6%, primarily due to higher Insurance Brokerage fees in Chile and higher Financial Advisory fees in Colombia. 15 1 Starting 3Q19, we are adding the cost of credit to the non-interest expenses for the calculation of the risk-adjusted efficiency ratio, instead of deducting it from the operating revenues. Previous quarters have been recalculated for comparative purposes. For further details by country see pages 29 and 40 Ch$ million 205.700 190.356 199.120 195.551 201.880 412.684 397.431 2,70 2,47 2,66 2,73 2,76 2,80 2,74 - 0,5000 1,0000 1,5000 2,0000 2,5000 3,0000 100.000 150.000 200.000 250.000 300.000 350.000 400.000 450.000 500.000 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 6M20 6M21 Financial Margin with Clients Financial margin with clients (annualized average rate) 5.8bp - 6.4bp 3.3bp Ch$ million Ch$ million |
Itaú Corpbanca Executive Summary Management Discussion & Analysis 16 2021 Forecast Although the growth plans and projections of results presented above are based on management assumptions and information avai lable in the market at the beginning of 2021, these expectations involve inaccuracies and risks that are difficult to anticipate and there may be, therefore, resu lts or consequences that differ from those anticipated. This information is not a guarantee of future performance. The use of these expectations should take into consid eration the risks and uncertainties that involve any activities and that are beyond our control. These risks and uncertainties include, but are not limited to, our ab ility to perceive the dimension of the syner- gies projected and their timing, political and economic changes, volatility in interest and foreign exchange rates, technolog ical changes, inflation, financial disinterme- diation, competitive pressures on products, prices and changes in tax legislation, among others. We present below the guidance for 2021 disclosed in the 4th quarter 2020 earnings release. 1– Retail refers to our retail bank, which serves individuals and SMEs in all their financial services needs; 2 – Net provision for credit & counterparty risks below inflation mid single digit retail1 segments Loan Growth Growth focus Cost of credit Risk2 Adjusted Non-Interest Expenses Expected range from 1.0% to 1.3% |
Income Statement and Balance Sheet Analysis Management Discussion & Analysis |
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Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis In this section, we present and analyze our results from the operations in Chile and in Colombia separately for 2Q21, 1Q21 and 2Q20: Managerial Results | Breakdown by Country The financial results of Itaú Corpbanca in Chile include some expenses associated with our Colombian operations. To provide a clear view of the contribution of each operation to the consolidated financial results we have reclassified from Chile to Colombia: • the cost of derivative structures used to hedge the investment and its related tax effects; and • other results and overhead costs from Colombia in Chile. For more details on managerial information, please refer to pages 9, 10 and 11 of this report. Highlights 1In nominal currency 2Q21 1Q21 Change In Ch$ million Consolidated Chile Colombia1 Consolidated Chile Colombia1 Consolidated Chile Colombia1 Operating Revenues 255,966 195,268 60,372 316,310 241,266 74,981 -19.1% -19.1% -19.5% Managerial Financial Margin 214,459 160,696 53,438 276,761 208,179 68,519 -22.5% -22.8% -22.0% Financial Margin with Clients 201,880 156,171 45,709 195,551 147,704 47,846 3.2% 5.7% -4.5% Financial Margin with the Market 12,579 4,524 7,729 81,211 60,475 20,672 -84.5% -92.5% -62.6% Commissions and Fees 41,506 34,572 6,934 39,549 33,087 6,462 4.9% 4.5% 7.3% Cost of Credit (26,031) (9,341) (16,690) (38,795) (24,800) (13,995) -32.9% -62.3% 19.3% Provision for Loan Losses (40,643) (19,451) (21,193) (52,501) (34,239) (18,261) -22.6% -43.2% 16.1% Recovery of Loans Written Off as Losses 14,442 9,940 4,502 15,409 11,143 4,266 -6.3% -10.8% 5.5% Credit Value Adjustment (or “CVA”; ratings and collaterals effects) 170 170 - (1,703) (1,703) - -110.0% -110.0% - Non-interest Expenses (149,581) (110,199) (39,382) (157,602) (115,215) (42,387) -5.1% -4.4% -7.1% Personnel Expenses (71,312) (51,812) (19,500) (70,602) (48,094) (22,509) 1.0% 7.7% -13.4% Administrative Expenses (66,184) (49,412) (16,772) (75,626) (58,282) (17,344) -12.5% -15.2% -3.3% Depreciation, Amortization and Impairment (12,084) (8,975) (3,110) (11,374) (8,840) (2,534) 6.2% 1.5% 22.7% Income before Tax and Minority Interests 80,354 75,729 4,300 119,913 101,251 18,599 -33.0% -25.2% -76.9% Income Tax Expense (9,534) (7,397) (2,049) (23,328) (17,267) (6,044) -59.1% -57.2% -66.1% Minority Interests in Subsidiaries (47) (2) (45) (1,457) (11) (1,446) -96.8% -79.7% -96.9% Costs of hedge positions - - 238 - - 46 - - 411.6% Recurring Net Income 70,773 68,330 2,444 95,128 83,972 11,155 -25.6% -18.6% -78.1% Recurring Return on Managerial Tangible Equity 16.0% 19.8% 2.5% 21.5% 25.4% 9.9% -546 bps -561 bps -738 bps 2Q21 2Q20 Change In Ch$ million Consolidated Chile Colombia1 Consolidated Chile Colombia1 Consolidated Chile Colombia1 Operating Revenues 255,966 195,268 60,372 278,947 214,044 74,203 -8.2% -8.8% -18.6% Managerial Financial Margin 214,459 160,696 53,438 240,027 182,469 66,858 -10.7% -11.9% -20.1% Financial Margin with Clients 201,880 156,171 45,709 205,700 152,490 53,210 -1.9% 2.4% -14.1% Financial Margin with the Market 12,579 4,524 7,729 34,327 29,979 13,648 -63.4% -84.9% -43.4% Commissions and Fees 41,506 34,572 6,934 38,920 31,575 7,345 6.6% 9.5% -5.6% Cost of Credit (26,031) (9,341) (16,690) (92,463) (73,655) (18,808) -71.8% -87.3% -11.3% Provision for Loan Losses (40,643) (19,451) (21,193) (106,171) (85,045) (21,126) -61.7% -77.1% 0.3% Recovery of Loans Written Off as Losses 14,442 9,940 4,502 13,094 10,776 2,319 10.3% -7.8% 94.2% Credit Value Adjustment (or “CVA”; ratings and collaterals effects) 170 170 - 614 614 - -72.2% -72.2% - Non-interest Expenses (149,581) (110,199) (39,382) (158,469) (111,915) (46,555) -5.6% -1.5% -15.4% Personnel Expenses (71,312) (51,812) (19,500) (77,154) (51,399) (25,755) -7.6% 0.8% -24.3% Administrative Expenses (66,184) (49,412) (16,772) (67,953) (50,277) (17,676) -2.6% -1.7% -5.1% Depreciation, Amortization and Impairment (12,084) (8,975) (3,110) (13,362) (10,239) (3,124) -9.6% -12.3% -0.4% Income before Tax and Minority Interests 80,354 75,729 4,300 28,014 28,474 8,841 186.8% 166.0% -51.4% Income Tax Expense (9,534) (7,397) (2,049) (6,404) (5,763) (3,152) 48.9% 28.3% -35.0% Minority Interests in Subsidiaries (47) (2) (45) (642) (4) (638) -92.7% -46.7% -93.0% Costs of hedge positions - - 238 - - (6,789) - - -103.5% Recurring Net Income 70,773 68,330 2,444 20,968 22,707 (1,739) 237.5% 200.9% -240.5% Recurring Return on Managerial Tangible Equity 16.0% 19.8% 2.5% 4.3% 6.6% -1.2% 1171 bps 1323 bps 376 bps 19 |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis 20 The Accounting and Managerial Net Income Statement Reconciliation for 2Q21, 1Q21 and 2Q20 is presented below: Managerial reclassifications: (a) Other results and overhead costs from Colombia in Chile: other results and overhead costs incurred by the administration in Chile and managerially assigned to Colombia. (b) Cost of Economic Hedge: carry cost of the derivatives used for the economic hedge of the investment in Colombia, booked in Chile. (c) Cost of Fiscal Hedge: cost of the derivative structure used for the fiscal hedge of the investment in Colombia, currently booked in Chile . Accounting and Managerial Net Income Statement Reconciliation In Ch$ million 2Q21 1Q21 2Q20 6M21 6M20 Net Income Attributable to Shareholders (Accounting) 67,373 80,469 (682,698) 147,841 (658,866) (+) Non-recurring events 3,102 4,906 699,333 8,008 702,861 (+) Other results and overhead costs from Colombia in Chile (a) (1,908) (1,356) (717) (3,264) (1,508) (+) Costs of fiscal and economic hedges of the investment in Colombia (b) (c) (238) (46) 6,789 (284) 9,686 Recurring Net Income 68,330 83,972 22,707 152,302 52,172 In Ch$ million 2Q21 1Q21 2Q20 6M21 6M20 Net Income Attributable to Shareholders (Accounting) 298 9,753 (66,848) 10,052 (63,550) (+) Non-recurring events 0 (0) 71,181 (0) 74,320 (+) Other results and overhead costs from Colombia in Chile (a) 1,908 1,356 717 3,264 1,508 (+) Costs of fiscal and economic hedges of the investment in Colombia (b) (c) 238 46 (6,789) 284 (9,686) Recurring Net Income 2,444 11,155 (1,739) 13,599 2,593 |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis 21 Managerial Results | Breakdown for Chile Net Income analysis for Chile presented below is based on the Managerial Income Statement with the adjustments shown on pages 19 and 20: change change change In Ch$ million 2Q21 1Q21 % $ 2Q20 % $ 6M21 6M20 % $ Operating Revenues 195,268 241,266 -19.1% (45,998) 214,044 -8.8% (18,776) 436,534 400,087 9.1% 36,447 Managerial Financial Margin 160,696 208,179 -22.8% (47,483) 182,469 -11.9% (21,773) 368,875 332,662 10.9% 36,213 Financial Margin with Clients 156,171 147,704 5.7% 8,467 152,490 2.4% 3,681 303,876 299,396 1.5% 4,479 Financial Margin with the Market 4,524 60,475 -92.5% (55,950) 29,979 -84.9% (25,455) 64,999 33,266 95.4% 31,733 Commissions and Fees 34,572 33,087 4.5% 1,485 31,575 9.5% 2,997 67,659 67,425 0.3% 234 Cost of Credit (9,341) (24,800) -62.3% 15,459 (73,655) -87.3% 64,315 (34,140) (129,272) -73.6% 95,132 Provision for Loan Losses (19,451) (34,239) -43.2% 14,789 (85,045) -77.1% 65,594 (53,690) (151,676) -64.6% 97,985 Recovery of Loans Written Off as Losses 9,940 11,143 -10.8% (1,203) 10,776 -7.8% (836) 21,082 21,950 -4.0% (868) Credit Value Adjustment (or “CVA”; ratings and collaterals effects) 170 (1,703) - 1,873 614 -72.2% (443) (1,532) 453 - (1,986) Non-interest Expenses (110,199) (115,215) -4.4% 5,017 (111,915) -1.5% 1,716 (225,414) (221,018) 2.0% (4,396) Personnel Expenses (51,812) (48,094) 7.7% (3,718) (51,399) 0.8% (414) (99,906) (99,184) 0.7% (722) Administrative Expenses (49,412) (58,282) -15.2% 8,870 (50,277) -1.7% 865 (107,694) (101,571) 6.0% (6,122) Depreciation. Amortization and Impairment (8,975) (8,840) 1.5% (134) (10,239) -12.3% 1,264 (17,815) (20,263) -12.1% 2,448 Income before Tax and Minority Interests 75,729 101,251 -25.2% (25,522) 28,474 166.0% 47,254 176,980 49,797 255.4% 127,183 Income Tax Expense (7,397) (17,267) -57.2% 9,871 (5,763) 28.3% (1,634) (24,664) 2,407 - (27,071) Minority Interests in Subsidiaries (2) (11) -79.7% 9 (4) -46.7% 2 (14) (32) -57.1% 18 Recurring Net Income 68,330 83,972 -18.6% (15,643) 22,707 200.9% 45,623 152,302 52,172 191.9% 100,130 |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis 22 Managerial Financial Margin Assets financial margin (+Ch$3,442 million): mainly due an increase in commercial portfolio spreads. • Financial Margin with Clients is higher by 5.7% than in the previous quarter, mainly due to an increase in commercial portfolio spreads, higher commercial spreads on derivates and FX transactions with clients and a positive impact of one more calendar day. • Financial Margin with the Market reached Ch$4.5 billion in the second quarter of 2021, lower by 92.5% compared to the previous quarter, mainly due to lower gains from trading desk, from asset and liability management due to a decrease in inflation-linked income driven by a lower variation of the UF in the quarter and higher provisions related to the credit value adjustment (CVA). Highlights Managerial Financial Margin Financial Margin with Clients Ch$ 156.2 million - 92.5% (2Q21/1Q21) - 84.9% (2Q21/2Q20) Financial Margin with the Market Ch$ 4.5 million + 5.7% (2Q21/1Q21) + 2.4% (2Q21/2Q20) Financial Margin with Clients Change in the Financial Margin with Clients Breakdown Financial Margin with Clients comprises our spread-sensitive operations, working capital and others. Spread-sensitive operations are: (i) the assets margin, which is the difference between the amount received in loan operations and the cost of money charged by treasury banking and (ii) the liabilities margin, which is the difference between the cost of funding and the amount received from treasury banking. Working capital margin is the interest on working capital at the TPM interest rate (monetary policy rate of Chile). Liabilities financial margin (+Ch$373million): mainly due to higher growth in deposits and other demand liabilities. 1 2 Ch$ million 3 1 2 Commercial spreads on derivatives and FX transactions with clients (+Ch$1,943 million): related to an increase in derivatives and FX transactions with wholesale clients impacting the Financial Margin with Clients. 3 4 Capital financial margin and others (+Ch$2,709 million): mainly due to one more calendar day and higher revenues associated with monetary correction of tax credits. 4 152,490 140,789 150,130 147,704 156,171 29,979 18,847 39,348 60,475 4,524 182,469 159,635 189,478 208,179 160,696 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Financial Margin with Clients Financial Margin with the Market Assets financial margin Liabilities financial margin |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis UF — Unidad de Fomento (variation value) UF net exposure (Ch$ trillion) Risk-Adjusted Financial Margin with Clients: +34 bp • Improvement driven by a 62.3% decrease in Cost of Credit, supported by the lower delin- quency of the retail portfolio. 23 Financial Margin with the Market Annualized average rate of financial margin with clients Financial Margin with the Market includes (i) treasury banking, which manages mismatches of assets and liabilities (ALM – Assets and Liability Management), tenors, currencies and interest rates and (ii) treasury trading, which manages proprietary portfolios and may as sume directional positions, in compliance with the limits established by our risk appetite. Financial Margin with the Market decreased 92.5% in 2Q21 compared to 1Q21. This reduction was mainly due to lower trading gains and to lower gains from asset and liability management due to a decrease in inflation-linked income and to and rising interest rates. 2Q21 1Q21 In Ch$ millions, end of period Average Balance Average Rate Financial Margin Average Balance Average Rate Financial Margin Financial Margin with Clients 24,105,107 2.6% 156,171 23,665,082 2.5% 147,704 Cost of Credit (9,341) (24,800) Risk-Adjusted Financial Margin with Clients 24,105,107 2.4% 146,831 23,665,082 2.1% 122,905 Ch$ million 2.5% 2.2% 2.5% 2.5% 2.6% 1.3% 0.8% (1.3%) 2.1% 2.4% 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 -0.02 0.00 0.02 0.04 Financial margin with clients Risk-adjusted financial margin with clients 2.5 2.9 2.1 1.6 1.5 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 0.3% 0.1% 1.3% 1.1% 1.1% 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 29,979 18,847 39,348 60,475 4,524 25,855 25,304 22,865 37,162 30,799 - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Financial Margin with the Market 1-year moving average Financial Margin with Clients: +7 bp • Increase primarily due to improvement in spreads and increased activity of client derivatives. |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis 24 Commissions and Fees • In the second quarter of 2021, Commissions and Fees amounted to Ch$34.6 billion, a 4.5% increase mainly from the student loan portfolio. • When compared to the same quarter of 2020, commissions and fees increased 9.5%, mainly due to higher Insurance Brokerage fees related to consumer portfolio, which were negatively impacted by the COVID-19 Pandemic in the second quarter of 2020. Highlights Commissions and Fees Breakdown 2Q21 In Ch$ million 2Q21 1Q21 change 2Q20 change 6M21 6M20 change Insurance Brokerage 8,051 8,255 (205) -2.5% 6,430 1,620 25.2% 16,306 13,983 2,323 16.6% Credit Operations and Guarantees Provided 7,375 6,921 454 6.6% 7,532 (156) -2.1% 14,296 14,952 (656) -4.4% Current Account Services and Overdraft Fees 7,282 7,753 (471) -6.1% 7,227 55 0.8% 15,036 16,513 (1,478) -8.9% Asset Management 3,136 3,143 (7) -0.2% 3,087 49 1.6% 6,279 6,717 (438) -6.5% Financial Advisory 1,025 672 353 52.5% 962 63 6.5% 1,697 2,231 (534) -23.9% Other 7,703 6,342 1,361 21.5% 6,337 1,367 21.6% 14,045 13,029 1,017 7.8% Total Commissions and Fees 34,572 33,087 1,485 4.5% 31,575 2,997 9.5% 67,659 67,425 234 0.3% 23% 21% 21% 9% 3% 22% Insurance Brokerage Credit Operations and Guarantees Provided Current Account Services and Overdraft Fees Asset Management Financial Advisory Other 25% 21% 23% 9% 2% 19% Insurance Brokerage Credit Operations and Guarantees Provided Current Account Services and Overdraft Fees Asset Management Financial Advisory Other 1Q21 |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis 25 The provisions from loan losses reached Ch$19.5 billion in the second quarter of 2021, a decrease of 43.2% compared to the previous quarter. When compared to the same period last year, there was a decrease of 77.1%. At the end of the second quarter of 2021, our net provisions for loan losses over loan portfolio decreased to 0.2% from 0.5% compared to the previous quarter. When compared to the second quarter of 2020, this ratio decreased 1.33 percentage points. Allowance for Loan Losses and Loan Portfolio Cost of Credit and Loan Portfolio In the second quarter of 2021, Cost of Credit amounted to Ch$9.3 billion, a 62.3% decrease compared to the previous quarter and an 87.3% decrease when compared to the same period in 2020. This decrease in Cost of Credit is mainly related to lower delinquency ratio of the retail portfolio this quarter, positively affected by the economic support measures applied by the central authority. Additionally, in the second quarter of 2021, Cost of Credit was positively impacted by lower cost of Credit Value Adjustment (or “CVA”) associated with specific cases of the wholesale portfolio. As of June 30, 2021, the total allowance for loan losses, including additional provisions, decreased 19.7% in the quarter, totaling Ch$589.6 billion, whereas our loan portfolio increased 0.7% when compared to the second quarter of 2021, reaching Ch$18.6 trillion. As a result, the ratio of total allowance for loan losses, including additional provisions, over loan portfolio decreased in the second quarter of 2021, from 4.00% to 3.18% compared with the previous quarter. It is important to mention that, in the second quarter of 2021, the total amount of additional provisions remained unchanged. The decrease in the stock of credit provisions is mainly related to the sale of two wholesale credits that had a positive net impact in the Cost of Credit in 2Q21. Cost of Credit In Ch$ million 2Q21 1Q21 change 2Q20 change 6M21 6M20 change Net Provision for Loan Losses (9,511) (23,097) 13,586 -58.8% (74,269) 64,758 -87.2% (32,608) (129,725) 97,117 -74.9% Provision for Loan Losses (19,451) (34,239) 14,789 -43.2% (85,045) 65,594 -77.1% (53,690) (151,676) 97,985 -64.6% Recovery of Loans Written Off as Losses 9,940 11,143 (1,203) -10.8% 10,776 (836) -7.8% 21,082 21,950 (868) -4.0% Credit Value Adjustment (or “CVA”; ratings and collaterals effects) 170 (1,703) 1,873 - 614 (443) -72.2% (1,532) 453 (1,986) - Cost of Credit (9,341) (24,800) 15,459 -62.3% (73,655) 64,315 -87.3% (34,140) (129,272) 95,132 -73.6% 85,045 104,808 236,735 34,239 19,451 73,655 88,903 231,448 24,800 9,341 1.5 1.9 5.0 0.5 0.2 -2.0 -1.6 -1.2 -0.8 -0.4 0.0 0.4 0.8 1.2 1.6 2.0 2.4 2.8 3.2 3.6 4.0 4.4 4.8 5.2 - 50,000 100,000 150,000 200,000 250,000 300,000 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Provision from loan losses (Ch$ million) Cost of credit (Ch$ million) Cost of credit / Loan portfolio* - Annualized (%) (*) Average Loan Portfolio 418,106 424,424 509,277 550,716 555,209 544,910 638,892 655,971 511,402 6,742 12,742 19,500 64,500 104,600 78,211 78,211 424,848 437,166 509,277 550,716 574,709 609,410 743,492 734,182 589,613 2.48 2.48 2.81 2.98 3.00 3.20 3.99 4.00 3.18 - 0.1 0.1 0.2 0.2 0.3 0.3 0.4 0.4 0.5 0.5 0.6 0.6 0.7 0.7 0.8 0.8 0.9 0.9 1.0 1.0 1.1 1.1 1.2 1.2 1.3 1.3 1.4 1.4 1.5 1.5 1.6 1.6 1.7 1.7 1.8 1.8 1.9 1.9 2.0 2.0 2.1 2.1 2.2 2.2 2.3 2.3 2.4 2.4 2.5 2.5 2.6 2.6 2.7 2.7 2.8 2.8 2.9 2.9 3.0 3.0 3.1 3.1 3.2 3.2 3.3 3.3 3.4 3.4 3.5 3.5 3.6 3.6 3.7 3.7 3.8 3.8 3.9 3.9 4.0 4.0 4.1 4.1 4.2 4.2 4.3 4.3 4.4 - 600,000 1,200,000 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Allowances for loan losses (Ch$ million) - Chile Additional provisions (Ch$ million) - Chile Allowances for loan losses / Loan portfolio (%) |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis Delinquency Ratios Non-Performing Loans NPL Ratio (%) by Segments | over 90 days Coverage Ratio1 (%) | 90 days Ch$ million In the second quarter of 2021, the total NPL portfolio increased from 2.25% to 2.33% compared to the first quarter of 2021. The NPL ratio over 90 days for consumer loans decreased from 1.75% to 1.62% in the second quarter of 2021. The NPL ratio for mortgage loans decreased from 1.07% to 0.99% in the second quarter of 2021. The NPL ratio increased 0.19 percentage points for commercial loans com- pared to the previous quarter, mainly related to a specific client of the whole- sale segment. When excluding student loans from this portfolio, the commer- cial loans NPL reached 2.63%, increasing 0.23 percentage points compared to the previous quarter. As of June 30, 2021, the 90-day coverage ratio reached 136%, a 40 percentage points decrease from the previous quarter, mainly as result of an increase in Non-Performing Loans. Compared with June 30, 2020, the coverage ratio decreased by 14 percent- age points, mainly due to the increase in Non-Performing Loans during this quarter. In the second quarter of 2021, the portfolio of credits 90-days overdue increased Ch$17.4 billion or 4.2% compared to previous quarter, primarily driven by an increase of 6.6% in our commercial loans NPLs and slight decrease in the commercial loan portfolio. This increase is mainly related to a specific client of the wholesale segment. NPLs for the consumer portfolio decreased 9.3% in the quarter, while mortgage loans decreased 3.7% in the quarter. When compared to the same quarter of the previous year, this portfolio presented an increase of 13.1%, which considers an increase of 35% in commercial portfolio, partially offset by decreases of 42.8% in consumer loans and 30.9% in the mortgage portfolio. NPL Ratio (%) | over 90 days The NPL ratio of credits 90-day overdue increased from 2.25% to 2.33% compared to the previous quarter. Compared to the same period of 2020, the ratio increased 0.35 percentage points. Credit Quality 26 1 Coverage Ratio includes additional provisions. 324,753 321,412 449,438 477,240 382,804 344,973 341,037 415,576 432,944 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Non-performing Loans over 90 days - Chile 1.97% 1.84% 2.76% 2.83% 2.01% 2.11% 2.20% 2.79% 2.99% 1.82% 1.38% 2.26% 2.33% 1.49% 1.71% 1.69% 2.40% 2.63% 1.67% 1.61% 1.70% 1.65% 1.60% 1.26% 1.12% 1.07% 0.99% 1.72% 2.03% 2.22% 2.47% 2.62% 1.22% 1.66% 1.75% 1.62% 1.88% 1.80% 2.46% 2.52% 1.97% 1.82% 1.87% 2.25% 2.33% 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 Commercial Comm. ex-Students loans Mortgage Consumer Total 131 136 113 115 150 177 218 177 136 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Chile 1.88 1.80 2.46 2.52 1.97 1.82 1.87 2.25 2.33 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Chile |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis 27 Recovery of Loans Written-off as Losses In the second quarter of 2021, NPL creation reached Ch$62.4 billion, a decrease of Ch$48.5 billion compared to the previous quarter, mainly due to higher NPLs 90-days overdue. * Loan portfolio average balance of the two previous quarters. NPL Creation In the second quarter of 2021, the loan portfolio write-off totaled Ch$45.0 bil- lion, a 23.8% increase compared to the previous quarter. The ratio of written-off operations to loan portfolio average balance increased 18 basis points, reaching 0.97%, compared to the first quarter of 2021 and decreased 16 basis points when compared to the same period of the previous year. The income from the recovery of loans written-off decreased Ch$1.2 billion, or 10.8%, from the previous quarter, primarily due to lower recoveries from com- mercial and consumer loans. When compared to the second quarter of 2020, the income from recovery of loans written-off decreased by 7.8%. In the second quarter of 2021, total NPL Creation coverage reached 31%, mainly due to lower provisions and the increase in NPLs related to a specific client of the wholesale segment in the period. Ch$ million NPL Creation Coverage Loan Portfolio Write-Off Ch$ billion 36.2 65.7 53.0 50.6 54.4 49.7 47.7 36.3 45.0 0.85 1.49 1.17 1.09 1.13 1.04 1.02 0.79 0.97 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30 1.40 1.50 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Write-off (Ch$ billion) -Chile Write-off / Loan Portfolio* - Annualized (%) 36.7 62.3 181.0 78.4 -40.0 11.8 43.8 110.9 62.4 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Chile -213 885 541 31 31 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Chile (%) 10,776 14,254 13,257 11,143 9,940 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Recovery of Loan Written-off as Losses (Ch$ million) - Chile |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis 28 Personnel Expenses Administrative Expenses Administrative Expenses in the second quarter of 2021 amounted to Ch$49.4 billion, a 15.2% decrease compared to the previous quarter. This reduction in expenses is mainly related to higher expenses for contingen- cies in the previous quarter. When compared to the second quarter of 2020, Administrative Expenses decreased 1.7%. Depreciation, Amortization and Impairment Depreciation, Amortization and Impairment expenses totaled Ch$9.0 billion in the second quarter of 2021, a 1.5% increase when compared to the previous quarter. Compared to the same period in 2020, these expenses presented a de- crease of 12.3%, mainly due to lower volumes of intangible assets. Non-interest Expenses • Non-interest Expenses amounted to Ch$110.2 billion in the quarter, a 4.4% decrease from the previous quarter, mainly due to a decrease in Administrative Expenses mainly related to contingencies in this quarter. This was partially offset by higher Personnel Expenses in the quarter. • When compared to the second quarter of 2020, Non-interest Expenses decreased 1.5% mainly due to lower Depreciation, Amortization and Impairment. Highlights Personnel Expenses in the second quarter of 2021 increased 7.7% when compared to the first quarter of 2021, primarily due to higher provisions for employees vacations and an increase in severance costs in this quarter. When compared to the same period of 2020, total expenses increased 0.8% due to higher severance costs, partially offset by headcount reduction. Headcount The total number of employees including the Itaú Corpbanca New York branch was 5,187 at the end of the second quarter of 2021 compared to 5,249 in the previous quarter and 5,581 at the end of the second quarter of 2020, a decrease of 7.1% in headcount in the twelve-month period. 5,187 Headcount in Chile and New York at the end of the 2Q21 - 1.2% (2Q21/1Q21) - 7.1% (2Q21/2Q20) In Ch$ million 2Q21 1Q21 change 2Q20 change 6M21 6M20 change Personnel Expenses (51,812) (48,094) (3,718) 7.7% (51,399) (414) 0.8% (99,906) (99,184) (722) 0.7% Administrative Expenses (49,412) (58,282) 8,870 -15.2% (50,277) 865 -1.7% (107,694) (101,571) (6,122) 6.0% Personnel and Administrative Expenses (101,224) (106,375) 5,151 -4.8% (101,676) 452 -0.4% (207,599) (200,755) (6,844) 3.4% Depreciation, Amortization and Impairment (8,975) (8,840) (134) 1.5% (10,239) 1,264 -12.3% (17,815) (20,263) 2,448 -12.1% Total Non-interest Expenses (110,199) (115,215) 5,017 -4.4% (111,915) 1,716 -1.5% (225,414) (221,018) (4,396) 2.0% 5,510 5,538 5,661 5,599 5,581 5,331 5,266 5,249 5,187 -0.8% 0.5% 2.2% -1.1% -0.3% -4.5% -1.2% -0.3% -1.2% -10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 4,500 4,700 4,900 5,100 5,300 5,500 5,700 5,900 6,100 6,300 6,500 6,700 6,900 7,100 jun-19 sept-19 dec-19 mar-20 jun-20 sept-20 dec-20 mar-21 jun-21 Chile Δ% QoQ |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis 29 Efficiency Ratio In the second quarter of 2021, our Efficiency Ratio reached 56.4%, an in- crease of 8.7 percentage points when compared to the previous quarter. This was mainly related to a lower Operating Revenues in the quarter. When compared to the second quarter of 2020, the Efficiency Ratio increased 4.1 percentage points, primarily due to a lower Operating Revenues in the quarter. Risk-Adjusted Efficiency Ratio1 The Risk-Adjusted Efficiency Ratio, which also includes the Cost of Credit, reached 61.2% in the second quarter of 2021, an increase of 3.2 percentage points compared to the previous quarter, mainly as a result of lower Operating Revenues, partially offset by the lower Cost of Credit. When compared to the second quarter of 2020, the Risk-Adjusted Efficiency Ratio decreased by 25.5 percentage points, primarily due to a lower Cost of Credit. Efficiency Ratio and Risk-Adjusted Efficiency Ratio Non-interest Expenses (Personnel + Administrative + Depreciation & Amortization + Impairment) + Cost of Credit Managerial Financial Margin + Commission and Fees = Risk-Adjusted Efficiency Ratio We present the efficiency ratio and the risk-adjusted efficiency ratio, which includes the Cost of Credit. 1 Starting 3Q19, we are adding the cost of credit to the non-interest expenses for the calculation of the risk-adjusted efficiency ratio, instead of deducting it from the operating revenues. Previous quarters have been recalculated for comparative purposes. 52.3% 62.3% 52.8% 47.8% 56.4% 86.7% 109.6% 158.5% 58.0% 61.2% 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Efficiency ratio Risk Adjusted Efficiency ratio Points of Service in Chile Automated Teller Machines (ATMs) | Chile Our distribution network provides integrated financial services and products to our customers through diverse channels, inclu ding ATMs, branch offices (physical and digital), mobile banking, internet banking and telephone banking. As of June 30, 2021, we had 189 branches, a decrease of 1.0% com- pared to the previous quarter and 2 branches or 0.5% less compared to the second quarter of 2020. Distribution Network Branches | Chile and New York By the end of the second quarter of 2021, the number of ATMs totaled 402 in Chile, 4 ATMs less when compared to the first quarter of 2021 and a 1.5% reduction as compared to the same period last year. Additionally, our customers had access to over 7,000 ATMs in Chile through our agreement with Redbanc. 139 139 140 140 136 135 136 137 135 55 55 54 54 54 52 53 54 54 -4.0% 0.0% 0.0% 0.0% -2.1% -1.6% 1.1% 1.1% -1.0% -20% -15% -10% -5% 0% 5% - 50 100 150 200 250 300 350 400 jun-19 sept-19 dec-19 mar-20 jun-20 sept-20 dec-20 mar-21 jun-21 Itaú Banco Condell* Δ% Branches Chile QoQ 452 446 413 403 398 396 398 397 393 12 12 11 10 10 10 10 9 9 0.2% -1.3% -7.4% -2.6% -1.2% -0.5% 0.5% -0.5% -1.0% -20% -15% -10% -5% 0% 5% - 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 850 jun-19 sept-19 dec-19 mar-20 jun-20 sept-20 dec-20 mar-21 jun-21 Itaú Banco Condell* Δ% ATMs Chile QoQ |
Itaú Corpbanca Balance Sheet Management Discussion & Analysis 30 In the following table, the loan portfolio is split into two groups: wholesale lending and retail lending. For a better under standing of the performance of these portfolios, the main product groups of each segment are presented below: Credit Portfolio by Products The second quarter of 2021 began with an increase in daily cases of COVID- 19 and with it, the tightening of restriction measures. By the end of 2Q21, the benefits of the lockdown and swift advancement of vaccination (with 70% of the adult population fully vaccinated) have started to materialize, leading to a swift loosening of mobility restrictions. With tight mobility restrictions in April, activity declined from March, but rebounded in May as restrictions were eased and payments for the third pension withdrawal started materializing. The monthly GDP proxy (IMACEC) posted a 18.1% YoY increase in May. While retail continues to drive the recovery, services are improving too. Employment remains around 10% below pre-pandemic levels, but formal salaried jobs have been less affected (down 7% in the private sector and 1% in the public sector). Annual inflation increased to 3.8% in June (2.9% in March), while after excluding volatile items annual inflation ended the 2Q at 3.2% (3.0% in March). During the second quarter of 2021, the government and congress agreed to significantly increase fiscal aid by expanding the scope and value of direct transfers to the Chilean population. In this context, the Central Bank changed tone in June, indicating that the favorable global environment, increased fiscal expansion and buoyant consumption make up a macroeconomic scenario that no longer requires the current level of monetary stimulus. Our portfolio in Chile increased 0.7% in the quarter and decreased 4.1% when compared to the second quarter of 2020. The Wholesale portfolio decreased 0.3% when compared to the previous quarter, mainly due to lower volumes in the Wholesale segment, which were partially offset by an improvement in the activity related to FOGAPE Reactiva operations and and an increase in Foreign trade loans. The Retail portfolio totaled Ch$ 6.7 trillion in the second quarter of 2021, a 2.5% growth when compared to last quarter. Consumer loans maintains the downward trend that has marked the performance at the industry level. Our mortgage portfolio increased 4.0% in the quarter and 11.1% when com- pared to the second quarter of 2020. Our 12-month growth continues to outpace the industry growth. Credit Portfolio • The consolidated credit portfolio in Chile reached Ch$18.6 trillion at the end of the second quarter of 2021, a increase of 0.7% from the previous quarter and a decrease of 4.1% from the second quarter of 2020. Highlights In Ch$ million, end of period 2Q21 1Q21 change 2Q20 change Wholesale lending - Chile 11,937,309 11,976,134 -0.3% 13,108,831 -8.9% Commercial loans 10,291,962 10,451,819 -1.5% 11,060,008 -6.9% Foreign trade loans 965,877 868,404 11.2% 1,366,568 -29.3% Leasing and factoring 679,470 655,911 3.6% 682,255 -0.4% Retail lending - Chile 6,656,117 6,491,998 2.5% 6,286,125 5.9% Residential Mortgage loans 4,988,799 4,795,445 4.0% 4,490,031 11.1% Consumer loans 1,667,318 1,696,553 -1.7% 1,796,094 -7.2% Consumer installment loans 1,219,717 1,220,803 -0.1% 1,300,052 -6.2% Current account overdrafts 102,988 117,453 -12.3% 146,655 -29.8% Credit card debtors 344,148 357,959 -3.9% 348,897 -1.4% Other loans and receivables 465 338 37.6% 490 -5.1% TOTAL LOANS 18,593,426 18,468,132 0.7% 19,394,956 -4.1% |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis 31 Managerial Results | Breakdown for Colombia Net Income analysis for Colombia presented below is based on the Managerial Income Statement with the adjustments shown on pa ges 19 and 20: (1) Refers to the elimination of the impact of the foreign exchange rate variation, by converting all figures from each of the periods analyzed at a single foreign exchange rate: Ch$0.1949 per COP as of June 30, 2021. 2Q21 1Q21 % 2Q20 % In Ch$ million Nominal Currency Exchange Rate Effect1 Constant Currency Nominal Currency Exchange Rate Effect1 Constant Currency Change in Constant Currency Nominal Currency Exchange Rate Effect1 Constant Currency Change in Constant Currency Operating Revenues 60,372 618 60,990 74,981 (2,027) 72,954 -16.4% 74,203 (7,066) 67,137 -9.2% Managerial Financial Margin 53,438 569 54,007 68,519 (1,840) 66,678 -19.0% 66,858 (6,373) 60,485 -10.7% Financial Margin with Clients 45,709 441 46,150 47,846 (1,305) 46,541 -0.8% 53,210 (5,056) 48,153 -4.2% Financial Margin with the Market 7,729 128 7,857 20,672 (536) 20,137 -61.0% 13,648 (1,317) 12,331 -36.3% Commissions and Fees 6,934 48 6,982 6,462 (187) 6,275 11.3% 7,345 (693) 6,652 5.0% Cost of Credit (16,690) (269) (16,959) (13,995) 329 (13,666) 24.1% (18,808) 1,746 (17,062) -0.6% Provision for Loan Losses (21,193) (303) (21,495) (18,261) 443 (17,819) 20.6% (21,126) 1,970 (19,156) 12.2% Recovery of Loans Written Off as Losses 4,502 34 4,536 4,266 (114) 4,153 9.2% 2,319 (224) 2,095 116.6% Non-interest Expenses (39,382) (408) (39,790) (42,387) 1,300 (41,086) -3.2% (46,555) 4,456 (42,098) -5.5% Personnel Expenses (19,500) (206) (19,706) (22,509) 760 (21,749) -9.4% (25,755) 2,458 (23,298) -15.4% Administrative Expenses (16,772) (167) (16,940) (17,344) 470 (16,874) 0.4% (17,676) 1,700 (15,976) 6.0% Depreciation, Amortization and Impairment (3,110) (34) (3,144) (2,534) 70 (2,464) 27.6% (3,124) 299 (2,825) 11.3% Income before Tax and Minority Interests 4,300 (59) 4,241 18,599 (397) 18,201 -76.7% 8,841 (864) 7,977 -46.8% Income Tax Expense (2,049) 23 (2,026) (6,044) 130 (5,914) -65.7% (3,152) 306 (2,846) -28.8% Minority Interests in Subsidiaries (45) 6 (39) (1,446) 26 (1,419) -97.3% (638) 63 (575) -93.2% Costs of hedge positions 238 (15) 223 46 (17) 29 663.9% (6,789) 610 (6,179) -103.6% Recurring Net Income 2,444 (46) 2,398 11,155 (258) 10,897 -78.0% (1,739) 115 (1,624) -247.7% 6M21 6M20 % In Ch$ million Nominal Currency Exchange Rate Effect1 Constant Currency Nominal Currency Exchange Rate Effect1 Constant Currency Change in Constant Currency Operating Revenues 135,353 (1,409) 133,943 152,076 (17,735) 134,341 -0.3% Managerial Financial Margin 121,957 (1,271) 120,686 136,220 (15,888) 120,332 0.3% Financial Margin with Clients 93,555 (864) 92,692 113,288 (13,187) 100,101 -7.4% Financial Margin with the Market 28,402 (407) 27,994 22,932 (2,701) 20,232 38.4% Commissions and Fees 13,396 (138) 13,258 15,856 (1,847) 14,009 -5.4% Cost of Credit (30,685) 60 (30,625) (38,989) 3,941 (35,048) -12.6% Provision for Loan Losses (39,454) 140 (39,314) (45,177) 4,711 (40,466) -2.8% Recovery of Loans Written Off as Losses 8,769 (80) 8,689 6,188 (770) 5,418 60.4% Non-interest Expenses (81,769) 893 (80,876) (92,838) 10,756 (82,083) -1.5% Personnel Expenses (42,008) 553 (41,455) (48,959) 5,636 (43,323) -4.3% Administrative Expenses (34,116) 303 (33,813) (37,682) 4,398 (33,283) 1.6% Depreciation. Amortization and Impairment (5,644) 36 (5,608) (6,198) 721 (5,477) 2.4% Income before Tax and Minority Interests 22,898 (457) 22,442 20,249 (3,039) 17,210 30.4% Income Tax Expense (8,093) 153 (7,940) (6,378) 968 (5,410) 46.8% Minority Interests in Subsidiaries (1,490) 32 (1,458) (1,593) 244 (1,349) 8.1% Costs of hedge positions 284 (32) 252 (9,686) 1,092 (8,593) - Recurring Net Income 13,599 (304) 13,295 2,593 (734) 1,859 615.2% |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis Managerial Financial Margin • In the second quarter of 2021, the Financial Margin with Clients decrease 0.8% when compared to the previous quarter, as a result to lower results in Working capital in the quarter, which was partially offset by an improvement in the activity in derivatives and FX transactions with clients. • Financial Margin with the Market decreased 61.0% when compared to the first quarter of 2021, mainly due to lower gains from trading desk. Highlights Managerial Financial Margin Financial Margin with Clients Ch$ 46.2 billion - 0.8% (2Q21/1Q21) - 4.2% (2Q21/2Q20) Financial Margin with the Market Ch$ 7.9 billion Ch$ million Financial Margin with Clients Change in the Financial Margin with Clients Breakdown Financial Margin with Clients comprises our spread-sensitive operations, working capital and others. Spread-sensitive operations are: (i) the assets margin, that is the difference between the amount received in loan operations and the cost of money charged by treasury banking and (ii) the liabilities margin, which is the difference between the cost of funding and the amount received from treasury banking. Working capital margin is the interest on working capital at the TPM interest rate (monetary policy rate of Colombia). Higher number of calendar days (+Ch$157 million) 5 - 61.0% (2Q21/1Q21) - 36.3% (2Q21/2Q20) 32 Note: Figures are expressed in constant currency, thus all figures from each of the periods analyzed were converted into Chilean peso at a single foreign exchange rate of Ch$0.1949 per COP as of June 30, 2021. Note: Figures are expressed in constant currency, thus all figures from each of the periods analyzed were converted into Chilean pe so at a single foreign exchange rate of Ch$0.1949 per COP as of June 30, 2021. 1 3 2 Loan portfolio mix (+Ch$61 million): mainly due to an increase of retail loans portfolio as a percentage of total average balance. 1 Average asset portfolio, assets spreads and liabilities margin (-Ch$560 million): mainly due to lower spreads of the Wholesale and Retail portfolio in the quarter, partially offset by growth in the loan portfolio. 2 Working capital and others (-Ch$1,367 million): mainly due to higher results in Working capital in the first quarter of 2021, referred to results of investments in other companies. 4 3 Commercial spreads on derivatives and FX transactions with clients (+Ch$1,317 million): mainly due to higher activity level in derivatives and FX transactions with wholesale clients. 4 5 48,153 47,097 46,081 46,541 46,150 12,331 12,526 8,566 20,137 7,857 60,485 59,623 54,648 66,678 54,007 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Financial Margin with Clients Financial Margin with the Market |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis 33 Financial Margin with the Market Financial margin with the market includes (i) treasury banking, which manages mismatches of assets and liabilities (ALM – Assets and Liability Management), tenors and interest, foreign exchange and other rates and (ii) treasury trading which manages proprietary portfolios and may assume directional positions, in compliance with the limits established by our risk appetite. Financial Margin with the Market reached Ch$7.9 billion, a 61.0% decrease when compared to the previous quarter, mainly due to lower gains from trading desk. Note: Figures are expressed in constant currency, thus all figures from each of the periods analyzed were converted into Chilean peso at a single foreign exchange rate of Ch$0.1949 per COP as of June 30, 2021. Annualized average rate of financial margin with clients 3.5% 3.5% 3.6% 3.6% 3.5% 2.2% 3.1% -2.1% 2.6% 2.2% 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 -0.04 -0.02 0.00 0.02 0.04 Financial margin with clients Risk-adjusted financial margin with clients 2Q21 1Q21 In Ch$ millions, end of period Average Balance Financial Margin Average Rate Average Balance Financial Margin Average Rate Financial Margin with Clients 5,249,392 46,150 3.5% 5,197,067 46,541 3.6% Cost of Credit (16,959) (13,666) Risk-Adjusted Financial Margin with Clients 5,249,392 29,191 2.2% 5,197,067 32,875 2.6% Financial Margin with Clients: - 11 bp • Decrease originated in one-off income related to investments in other companies in the first quarter 2021 and the growth of the loan portfolio. Risk-Adjusted Financial Margin with Clients: - 34 bp • This decrease is mainly due to higher Cost of Credit in the quarter. 12,331 12,526 8,566 20,137 7,857 8,787 9,512 10,331 13,390 12,272 - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Financial Margin with the Market 1-year moving average Ch$ million Note: Figures are expressed in constant currency, thus all figures from each of the periods analyzed were converted into Chilean pe so at a single foreign exchange rate of Ch$0.1949 per COP as of June 30, 2021. |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis 34 • In the second quarter of 2021, Commissions and Fees amounted to Ch$6.9 billion, a 11.3% increase from the previous quarter, mainly due to higher Financial Advisory commissions. • When compared to the same quarter of 2020, Commissions and Fees increased 5.0%, mainly due to higher Financial Advisory commissions and Cash Management fees. Highlights Note: Commissions and Fees for Colombia are expressed in constant currency in order to eliminate the impact of the foreign exchange rate variation, thus all figures from each of the periods analyzed were converted into Chilean peso at a single foreign exchange rate of Ch$0.1949 per COP as of June 30, 2021. Commissions and Fees Commissions and Fees Breakdown 2Q21 In Ch$ million 2Q21 1Q21 change 2Q20 change 6M21 6M20 change Insurance Brokerage 1,677 1,637 40 2.4% 1,638 40 2.4% 3,315 3,217 97 3.0% Credit Operations and Guarantees Provided 655 721 (67) -9.3% 566 88 15.6% 1,376 1,475 (100) -6.8% Asset Management 2,187 2,244 (57) -2.6% 2,445 (258) -10.6% 4,431 4,781 (350) -7.3% Financial Advisory 1,467 940 527 56.1% 581 886 152.6% 2,407 1,535 872 56.8% Cash Management 1,337 1,391 (54) -3.9% 1,112 225 20.2% 2,727 2,508 220 8.8% Others (340) (658) 318 -48.3% 311 (651) -209.2% (998) 492 (1,491) -302.8% Total Commissions and Fees 6,982 6,275 707 11.3% 6,652 330 5.0% 13,258 14,009 (751) -5.4% 24% 9% 31% 21% 19% -5% Insurance Brokerage Credit Operations and Guarantees Provided Asset Management Financial Advisory Cash Management Other 26% 11% 36% 15% 22% -10% Insurance Brokerage Credit Operations and Guarantees Provided Asset Management Financial Advisory Cash Management Other 1Q21 |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis 35 Allowance for Loan Losses and Loan Portfolio Cost of Credit and Loan Portfolio As of June 30, 2021, the total allowance for loan losses, including additional provisions, increased 0.2% in the quarter, totaling Ch$273.7 billion whereas our loan portfolio increased 1.4% when compared to the first quarter of 2021, reaching Ch$4.3 trillion. As a result, the ratio of total allowance for loan losses, including additional provisions, over loan portfolio decreased in the second quarter of 2021 from 6.56% to 6.43% when compared to the last quarter. In the second quarter of 2021, Cost of Credit amounted to Ch$17.0 billion, a 24.1% increase from the previous quarter. This increase is mainly due to adjustments to provisions recognized during the second quarter of 2021 related to specific cases of the Wholesale segment, partially offset by an improvement in the dynamics of results of assets received in lieu of payment. The Cost of Credit decreased 0.6% when compared to the second quarter of 2020, primarily due to adjustments to provisions recognized during the second quarter of 2021, offset by to higher Recovery of Loans Written Off as Losses related to the sale of assets received in lieu of payment. Cost of Credit Note: Cost of credit for Colombia is expressed in constant currency in order to eliminate the impact of the foreign exchange rate variation, thus all figures from each of the periods analyzed were converted into Chilean peso at a single foreign exchange rate of Ch$0.1949 per COP as of June 30, 2021. Note: Allowance for loan losses for Colombia is expressed in constant currency in order to eliminate the impact of the foreign exchange rate variation, thus all figures from each of the periods analyzed were converted into Chilean peso at a single foreign exchange rate of Ch$0.1949 per COP as of June 30, 2021. At the end of the second quarter of 2021, our provision for loan losses was Ch$21.5 billion, a 20.6% increase when compared to the last quarter. The Cost of Credit over loan portfolio increased 0.22 percentage points in the second quarter of 2021 compared to the previous quarter, and decreased 0.16 percentage points when compared to the second quarter of 2020. Note: Provision from loan losses and cost of credit for Colombia is expressed in constant currency in order to eliminate the impact of the foreign exchange rate variation, thus all figures from each of the periods analyzed were converted into Chilean peso at a single In Ch$ million 2Q21 1Q21 change 2Q20 change 6M21 6M20 change Provision for Loan Losses (21,495) (17,819) (3,677) 20.6% (19,156) (2,339) 12.2% (39,314) (40,466) 1,152 -2.8% Recovery of Loans Written Off as Losses 4,536 4,153 383 9.2% 2,095 2,442 116.6% 8,689 5,418 3,271 60.4% Cost of Credit (16,959) (13,666) (3,293) 24.1% (17,062) 103 -0.6% (30,625) (35,048) 4,423 -12.6% 19,156 8,357 79,186 17,819 21,495 17,062 4,711 74,140 13,666 16,959 1.7 0.5 7.3 1.3 1.6 -3.0 -2.6 -2.2 -1.8 -1.4 -1.0 -0.6 -0.2 0.2 0.6 1.0 1.4 1.8 2.2 2.6 3.0 3.4 3.8 4.2 4.6 5.0 5.4 5.8 6.2 6.6 7.0 7.4 - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Provision from loan losses (Ch$ million) Cost of credit (Ch$ million) Cost of credit / Loan portfolio* - Annualized (%) (*) Average Loan Portfolio 236,587 232,063 231,376 234,568 235,956 221,964 248,480 245,843 248,085 31,186 27,283 25,590 236,587 232,063 231,376 234,568 235,956 221,964 279,665 273,127 273,675 5.43 5.34 5.37 5.59 5.43 5.12 6.64 6.56 6.43 - 0.1 0.1 0.2 0.2 0.3 0.3 0.4 0.4 0.5 0.5 0.6 0.6 0.7 0.7 0.8 0.8 0.9 0.9 1.0 1.0 1.1 1.1 1.2 1.2 1.3 1.3 1.4 1.4 1.5 1.5 1.6 1.6 1.7 1.7 1.8 1.8 1.9 1.9 2.0 2.0 2.1 2.1 2.2 2.2 2.3 2.3 2.4 2.4 2.5 2.5 2.6 2.6 2.7 2.7 2.8 2.8 2.9 2.9 3.0 3.0 3.1 3.1 3.2 3.2 3.3 3.3 3.4 3.4 3.5 3.5 3.6 3.6 3.7 3.7 3.8 3.8 3.9 3.9 4.0 4.0 4.1 4.1 4.2 4.2 4.3 4.3 4.4 4.4 4.5 4.5 4.6 4.6 4.7 4.7 4.8 4.8 4.9 4.9 5.0 5.0 5.1 5.1 5.2 5.2 5.3 5.3 5.4 5.4 5.5 5.5 5.6 5.6 5.7 5.7 5.8 5.8 5.9 5.9 6.0 6.0 6.1 6.1 6.2 6.2 6.3 6.3 6.4 6.4 6.5 6.5 6.6 6.6 6.7 6.7 6.8 6.8 6.9 6.9 7.0 7.0 7.1 7.1 - 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Allowances for loan losses (Ch$ million) - Colombia Additional provisions (Ch$ million) - Colombia Allowances for loan losses / Loan portfolio (%) |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis 36 Delinquency Ratios NPL Ratio (%) | over 90 days Non-Performing Loans NPL Ratio (%) by Segments | over 90 days Coverage Ratio (%) | 90 days The portfolio of credits 90 days overdue increased 9.03% in the second quarter of 2021 compared to the previous quarter, mainly due to an increase in NPLs for commercial and consumer loans. When compared to the second quarter of 2020, the portfolio of credits 90 days overdue decreased 6.06% mainly driven by a decrease in the commercial and mortgage loans NPLs. In June 30, 2021, the total NPL ratio over 90 days increased 0.27 percentage points when compared to the previous quarter, mainly driven by an increase in commercial loans NPLs. Total NPL ratio over 90 days decreased from 4.01% to 3.85% on a 12-month comparison, mainly driven by a decrease in mortgage loans NPLs, partially offset by the 2.1% decrease in the credit portfolio. The NPL ratio of credits 90 days overdue increased 0.27 percentage points in the second quarter of 2021 when compared to the previous quarter, and reached 3.85% by the end of June 30, 2021. When compared to the same period of 2020, the ratio decreased 0.16 percentage points. As of June 30, 2021, the 90-day coverage ratio reached 150%, a decrease of 12.1 percentage points when compared to the previous quarter. On a 12- month comparison, the total 90-day coverage ratio increased 16.0 percent- age points. Note: NPLs for Colombia is expressed in constant currency in order to eliminate the impact of the foreign exchange rate variation, thus all figures from each of the periods analyzed were converted into Chilean peso at a single foreign exchange rate of Ch$0.1949 per COP as of June 30, 2021. Credit Quality Ch$ million 3.39% 3.67% 4.64% 4.59% 4.61% 3.88% 4.08% 4.21% 4.62% 4.31% 4.35% 4.64% 4.67% 4.54% 4.23% 3.98% 3.27% 3.09% 1.89% 2.02% 2.02% 2.05% 1.05% 1.33% 2.13% 1.53% 1.78% 3.23% 3.47% 4.17% 4.16% 4.01% 3.50% 3.71% 3.58% 3.85% 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 Commercial Mortgage Consumer Total 141,359 151,542 174,276 179,498 175,490 149,671 152,745 151,199 164,849 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Non-performing Loans over 90 days - Colombia 3.23 3.47 4.17 4.16 4.01 3.50 3.71 3.58 3.85 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Colombia 167 153 133 131 134 148 163 163 150 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Colombia |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis 37 In the quarter under analysis, NPL Creation reached Ch$36.7 billion, a 141.6% increase compared to the previous quarter. NPL Creation In this quarter, income from recovery of loans written-off as losses increased Ch$0.38 billion, or 9.2% from the previous quarter. When compared to the same quarter in 2020, the income from recovery of loans written-off as losses increased by Ch$2.44 billion or 116.6%. In the second quarter of 2021, total NPL Creation coverage reached 59%, a decrease of 58 percentage points when compared to the previous quarter, explained, mainly by growth in NPLs for commercial and consumer loans. When compared to the second quarter of 2020, the NPL creation coverage decreased 43 percentage points. Note: NPL creation for Colombia is expressed in constant currency in order to eliminate the impact of the foreign exchange rate variation, thus all figures from each of the periods analyzed were converted into Chilean peso at a single foreign exchange rate of Ch$0.1949 per COP as of June 30, 2021. Note: Recovery of loans written-off as losses for Colombia is expressed in constant currency in order to eliminate the impact of the foreign exchange rate variation, thus all figures from each of the periods analyzed were converted into Chilean peso at a single foreign exchange rate of Ch$0.1949 per COP as of June 30, 2021. Ch$ billion * Loan portfolio average balance of the two previous quarters. Note: Write-off for Colombia is expressed in constant currency in order to eliminate the impact of the foreign exchange rate variation, thus all figures from each of the periods analyzed were converted into Chilean peso at a single foreign exchange rate of Ch$0.1949 per COP as of June 30, 2021. In the second quarter of 2021, the loan portfolio write-off totaled Ch$23.0 billion, a 37.6% increase when compared to the previous quarter, mainly due to higher write-offs in consumer portfolios. The ratio of written-off operations to loan portfo- lio average balance reached 2.15%, a 0.58 percentage points increase when compared to the first quarter of this year and a 5 basis points increase on a 12- month comparison. 2,095 3,645 5,045 4,153 4,536 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Recovery of Loan Written-off as Losses (Ch$ million) - Colombia Ch$ million Recovery of Loans Written-off as Losses NPL Creation Coverage Loan Portfolio Write-Off 102 101 432 117 59 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Colombia (%) 21.8 20.1 23.6 15.9 22.7 34.1 15.3 16.7 23.0 1.99 1.85 2.24 1.53 2.10 3.12 1.48 1.57 2.15 -0.50 -0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30 1.40 1.50 1.60 1.70 1.80 1.90 2.00 2.10 2.20 2.30 2.40 2.50 2.60 2.70 2.80 2.90 3.00 3.10 3.20 3.30 3.40 3.50 3.60 3.70 3.80 3.90 4.00 4.10 4.20 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Write-off (Ch$ billion) - Colombia Write-off / Loan Portfolio* - Annualized (%) 27.1 30.3 46.4 21.2 18.7 8.2 18.3 15.2 36.7 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Colombia Note: The ratio NPL Creation and Provision for Loan Losses in constant currency. |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis 38 Personnel Expenses Administrative Expenses Depreciation and Amortization Depreciation, Amortization and impairment expenses totaled Ch$3.1 billion in the second quarter of 2021, a 27.6% increase when compared to the last quarter. When compared to the second quarter of 2020, there was a 11.3% increase. Non-interest Expenses • Non-interest Expenses amounted Ch$39.8 billion in the quarter, a 3.2% decrease when compared to the previous quarter and a 5.5% decrease when compared to the second quarter of 2020. Highlights Note: Managerial results for Colombia are expressed in constant currency in order to eliminate the impact of the foreign exchange r ate variation, thus all figures from each of the periods analyzed were converted into Chilean peso at a single foreign exchange rate: Ch$0.1949 per COP as of June 30, 2021. Personnel Expenses reached Ch$19.7 billion in the second quarter of 2021, a 9.4% decrease when compared to the previous quarter, mainly due to lower provisions for severance expenses in this quarter. On a 12-month comparison, this expenses decreased a 15.4%, mainly due to headcount reduction. Headcount The total number of employees including Itaú (Panama) was 3,013 at the end of the second quarter of 2021, compared to 3,067 in the first quarter of 2021 and 3,297 at the end of the second quarter of 2020, a 8.6% re- duction in headcount for the 12-month period ended in June 30, 2021. 3,013 Headcount in Colombia and Panamá at the end of the 2Q21 - 1.8% (2Q21/1Q21) - 8.6% (2Q21/2Q20) Administrative Expenses amounted Ch$16.9 billion in the second quarter of 2021, with no significant change from the previous period; however, com- pared to the same quarter of 2020, an increase of 6.0% is observed as a result of the recognition, in the second quarter of 2020, of reversal of provi- sion related to changes in Colombian tax regulations. In Ch$ million 2Q21 1Q21 change 2Q20 change 6M21 6M20 change Personnel Expenses (19,706) (21,749) 2,043 -9.4% (23,298) 3,591 -15.4% (41,455) (43,323) 1,867 -4.3% Administrative Expenses (16,940) (16,874) (66) 0.4% (15,976) (964) 6.0% (33,813) (33,283) (530) 1.6% Personnel and Administrative Expenses (36,646) (38,623) 1,977 -5.1% (39,274) 2,628 -6.7% (75,268) (76,606) 1,338 -1.7% Depreciation, Amortization and Impairment (3,144) (2,464) (680) 27.6% (2,825) (319) 11.3% (5,608) (5,477) (131) 2.4% Total Non-interest Expenses (39,790) (41,086) 1,297 -3.2% (42,098) 2,309 -5.5% (80,876) (82,083) 1,206 -1.5% 3,430 3,417 3,327 3,309 3,297 3,115 3,098 3,067 3,013 -1.6% -0.4% -2.6% -0.5% -0.4% -5.5% -0.5% -1.0% -1.8% -10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 2,500 2,700 2,900 3,100 3,300 3,500 3,700 3,900 4,100 4,300 4,500 4,700 4,900 jun-19 sept-19 dec-19 mar-20 jun-20 sept-20 dec-20 mar-21 jun-21 Colombia Δ% QoQ |
Itaú Corpbanca Income Statement Analysis Management Discussion & Analysis 39 Efficiency Ratio In the second quarter of 2021, our efficiency ratio reached 65.2%, an increase of 8.7 percentage points when compared to the first quarter of 2021. This is mainly due to lower Operating Revenues in addition to lower Non-interest Ex- penses. When compared to the second quarter of 2020, the efficiency ratio increased 2.5 percentage points. This was primarily due to lower Operating Revenues. Risk-Adjusted Efficiency Ratio1 The risk-adjusted efficiency ratio, which also includes the Cost of Credit, reached 92.9% in the second quarter of 2021, a 18 percentage points in- crease when compared to the previous quarter, mainly due to higher Cost of Credit and lower Operating Revenues in the period. When compared to the second quarter of 2020, the risk-adjusted efficiency ratio increased by 4.8 percentage points, primarily due to lower Operating Revenues. We present the efficiency ratio and the risk-adjusted efficiency ratio, which includes Cost of Credit. Efficiency Ratio and Risk-Adjusted Efficiency Ratio Note: Managerial results for Colombia are expressed in constant currency in order to eliminate the impact of the foreign exchange rate variation, thus all figures from each of the periods analyzed were converted into Chilean peso at a single foreign exchange rate: Ch$0.1949 per COP as of June 30, 2021. Non-interest Expenses (Personnel + Administrative + Depreciation & Amortization + Impairment) + Cost of Credit Managerial Financial Margin + Commissions and Fees = Risk-Adjusted Efficiency Ratio 1 Starting 3Q19, we are adding the cost of credit to the non-interest expenses for the calculation of the risk-adjusted efficiency ratio, instead of deducting it from the operating revenues. Previous quarters have been recalculated for comparison purposes. Points of Service in Colombia Automated Teller Machines (ATMs) | Colombia Our distribution network provides integrated financial services and products to our customers through diverse channels, inclu ding ATMs, branch offices, internet banking and telephone banking. As of June 30, 2021, we had 108 branches in both Colombia and Pana- ma under the brand “Itaú”, 1 branches or 0.9% less compared to the previous quarter. Distribution Network Branches | Colombia and Panama 169 170 147 142 142 125 125 125 123 -1.7% 0.6% -13.5% -3.4% 0.0% -12.0% 0.0% 0.0% -1.6% -30% -25% -20% -15% -10% -5% 0% 5% 100 150 200 jun-19 sept-19 dec-19 mar-20 jun-20 sept-20 dec-20 mar-21 jun-21 Colombia Δ% ATMs Colombia QoQ By the end of the second quarter of 2021, the number of ATMs totaled 123 in Colombia, showing a decrease of 1.6% compared to the previous quarter and 13.4% on a 12-month comparison, which is related to the footprint optimization implemented in the last year. Our customers contin- ue to have access to over 16,000 ATMs in Colombia through Colombia’s financial institutions. 157 153 127 128 127 111 111 109 108 -2.5% -2.5% -17.0% 0.8% -0.8% -12.6% 0.0% -1.8% -0.9% -35% -30% -25% -20% -15% -10% -5% 0% 5% - 50 100 150 200 250 300 jun-19 sept-19 dec-19 mar-20 jun-20 sept-20 dec-20 mar-21 jun-21 Colombia Δ% Branches Colombia QoQ 62.7% 62.6% 68.9% 56.5% 65.2% 88.1% 69.7% 182.2% 75.2% 92.9% 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 Efficiency ratio Risk Adjusted Efficiency ratio |
Itaú Corpbanca Balance Sheet Management Discussion & Analysis 40 In the following table, the loan portfolio is split into two groups: wholesale lending and retail lending. For a better under standing of the performance of these portfolios, the main product groups of each segment are presented below: Credit Portfolio by Products The wholesale loan portfolio did not change significantly in the second quarter of the year, totaling Ch$2.82 trillion. Our retail loan portfolio reached Ch$1.46 trillion at the end of the second quarter of 2021, an increase of 4.3% compared to the previous quarter. Residential mortgage loans reached Ch$644.1 billion at the end of the second quarter of 2021, an increase of 3.0% compared to the previous quarter and an increase of 11.6% compared to June 30, 2020. Credit Portfolio • Excluding the effect of the foreign exchange variation, at the end of the second quarter of 2021, the Colombian portfolio increased 1.4% and reached Ch$4.28 trillion when compared to the previous quarter and decreased 2.1% compared to the second quarter of 2020. Highlights Note: The loan portfolio for Colombia is expressed in constant currency in order to eliminate the impact of the foreign exchange rate variation, thus all figures from each of the periods analyzed were converted into Chilean peso at a single foreign exchange rate of Ch$0.1949 per COP as of June 30, 2021. In Ch$ million, end of period 2Q21 1Q21 change 2Q20 change Wholesale lending 2,824,324 2,824,864 0.0% 3,075,732 -8.2% Commercial loans 2,421,288 2,414,264 0.3% 2,655,848 -8.8% Current account overdrafts 1,654 3,144 -47.4% 3,793 -56.4% Leasing and factoring 395,844 401,965 -1.5% 410,005 -3.5% Other loans and receivables 5,538 5,491 0.9% 6,086 -9.0% Retail lending 1,455,155 1,395,022 4.3% 1,295,817 12.3% Residential Mortgage loans 644,108 625,436 3.0% 576,929 11.6% Housing leasing 286,309 285,474 0.3% 290,309 -1.4% Other mortgage loans 357,799 339,962 5.2% 286,620 24.8% Consumer loans 811,047 769,586 5.4% 718,888 12.8% Consumer loans 648,534 622,831 4.1% 576,174 12.6% Current account overdrafts 1,431 1,397 2.5% 1,427 0.3% Credit card debtors 129,857 113,924 14.0% 104,076 24.8% Leasing consumer 535 733 -27.0% 1,610 -66.8% Other loans and receivables 30,690 30,701 0.0% 35,602 -13.8% TOTAL LOANS 4,279,479 4,219,886 1.4% 4,371,549 -2.1% During the second quarter of 2021, Colombia suffered a record number of COVID-19 cases, while mobility restrictions remained lax due to public fatigue. However, the vaccination rate is picking up speed, with new cases and ICU rates started dropping at the end of the quarter. The pandemic and one of the longest lockdowns in the region exacerbated social problems, with protests unfolding across the country during the quarter. While the May protests caused a 6% drop in economic activity, the lifting of the blockades suggests that the slowdown will be transitory. Private wage employ- ment in May was 7% below pre-pandemic levels. Year-on-year inflation rose to 3.63% in June, dragged up by rising energy prices. The central bank continued to keep the policy rate at 1.75%, but the behavior of inflation expectations was pointed to as a key factor to monitor in the coming months to determine when to start withdrawing some of the stimulus. |
Itaú Corpbanca Balance Sheet Management Discussion & Analysis 41 Assets Balance Sheet Chile and Colombia The chart below shows the contribution of Chile and Colombia to the total consolidated assets. Ch$ 28.7 trillion Ch$ 5.7 trillion Ch$ billion + 2.2% (Jun-21 vs. Mar-21) - 11.4% (Jun-21 vs. Jun-20) + 3.2% (Jun-21 vs. Mar-21) - 13.5% (Jun-21 vs. Jun-20) In Ch$ million, end of period 2Q21 1Q21 change 2Q20 change Cash and deposits in banks 2,875,942 3,291,402 -12.6% 2,129,179 35.1% Cash items in process of collection 442,662 434,518 1.9% 279,417 58.4% Trading investments 300,424 439,171 -31.6% 431,128 -30.3% Investments under resale agreements 122,998 68,731 79.0% 86,118 42.8% Financial derivatives contracts 2,588,103 2,814,421 -8.0% 5,419,649 -52.2% Interbank loans, net 57,489 15,800 263.9% 69,585 -17.4% Loans and accounts receivable from customers, net of loan loss allowances 22,113,418 21,813,095 1.4% 23,469,466 -5.8% Available-for-sale investments 3,907,850 2,804,647 39.3% 4,697,096 -16.8% Held-to-maturity investments 173,232 100,338 72.6% 170,013 1.9% Investments in associates and other companies 12,035 11,966 0.6% 15,478 -22.2% Intangible assets1 702,939 709,597 -0.9% 778,459 -9.7% Property, plan and equipment 201,596 214,411 -6.0% 248,574 -18.9% Current taxes 100,123 77,755 28.8% 50,692 97.5% Deferred taxes 275,276 303,519 -9.3% 246,720 11.6% Other assets 528,293 515,484 2.5% 877,815 -39.8% Total Assets 34,402,380 33,614,855 2.3% 38,969,389 -11.7% 1– Includes right-of-use assets under lease agreements arisen from IFRS 16 adoption since January 1, 2019. Compared to the previous year, total assets decreased by Ch$4,567 billion or 11.7%. The main changes are presented below: At the end of the second quarter of 2021, our assets totaled Ch$34.4 trillion, an increase of Ch$788 billion or 2.3% from previous quarter, as presented below: * Securities Investment portfolio: Trading investments, available-for-sale investments and held-to-maturity investments. ** Total other assets: Investments in other companies, Intangible assets, Property, plant and equipment, Current taxes, Deferred taxes and Other assets. Ch$ billion Ch$ billion + 2.3% (Jun-21 vs. Mar-21) - 11.7% (Jun-21 vs. Jun-20) Ch$ 34.4 trillion Asset Breakdown June 30, 2021 79% 81% 81% 82% 83% 83% 83% 84% 83% 21% 19% 19% 18% 17% 17% 17% 16% 17% 31,163 32,477 33,740 38,416 38,969 36,732 35,639 33,615 34,402 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Chile Colombia Total 66.5% 8.5% 12.7% 7.5% 0.4% 2.0% 2.3% Loans Cash, deposits in banks and interbank loans Financial investments Financial derivatives contracts Repos Intangible assets Other assets |
Itaú Corpbanca Balance Sheet Management Discussion & Analysis 42 Liabilities In Ch$ million, end of period 2Q21 1Q21 change 2Q20 change Deposits and other demand liabilities 6,550,657 6,121,358 7.0% 5,676,353 15.4% Cash items in process of being cleared 420,259 397,802 5.6% 271,467 54.8% Obligations sold under repurchase agreements 483,241 344,587 40.2% 612,950 -21.2% Time deposits and other time liabilities 10,269,825 10,534,033 -2.5% 12,558,879 -18.2% Financial derivatives contracts 2,377,921 2,534,562 -6.2% 5,055,485 -53.0% Interbank borrowings 4,453,688 3,894,846 14.3% 4,434,197 0.4% Issued debt instruments 6,335,525 6,266,274 1.1% 6,686,772 -5.3% Other financial liabilities 29,163 23,393 24.7% 9,214 216.5% Current taxes 344 1617 -78.7% 14,529 -97.6% Deferred taxes 102 120 -15.0% 260 -60.8% Provisions 296,499 278,681 6.4% 160,679 84.5% Other liabilities1 818,188 827,939 -1.2% 876,764 -6.7% Total Liabilities 32,035,412 31,225,212 2.6% 36,357,549 -11.9% Attributable to Shareholders 2,297,933 2,320,111 -1.0% 2,530,802 -9.2% Non-controlling interest 69,035 69,532 -0.7% 81,038 -14.8% Total Equity and Liabilities 34,402,380 33,614,855 2.3% 38,969,389 -11.7% * Total other liabilities: Cash items in process of being cleared, interbank borrowings, other financial liabilities, current taxes, deferred taxes, provisions, other liabilities (including lease liabilities arising from IFRS 16 adoption since January 2019), capital, reserves, valuation adjustment, income for the period, minus: provision for mandatory dividend and non-controlling interest. 1– Includes lease liabilities arisen from IFRS 16 adoption since January1, 2019. The main changes in liabilities at the end of the second quarter of 2021, compared to the previous quarter, are presented in the chart below: Compared to the previous year, the main changes in liabilities are highlighted as follows: Ch$ billion Ch$ billion |
Itaú Corpbanca Balance Sheet by Currency Management Discussion & Analysis 43 Assets | June 30, 2021 Liabilities | June 30, 2021 Balance Sheet by Currency In Ch$ million, end of period Consolidated* Business in Chile Ch$ UF FX Business in Colombia Cash and deposits in banks 2,875,942 2,471,279 1,161,055 - 1,310,224 404,663 Cash items in process of collection 442,662 442,141 209,815 - 232,326 521 Trading investments 300,424 88,044 87,997 47 - 212,380 Investments under resale agreements 122,998 116,606 116,606 - - 6,392 Financial derivatives contracts 2,588,103 2,495,053 1,665,777 192,406 636,870 93,050 Interbank loans, net 57,489 14,627 - - 14,627 42,862 Loans and accounts receivable from customers, net of loan loss allowances 22,113,418 18,082,024 6,056,743 9,213,984 2,811,297 4,031,394 Available-for-sale investments 3,907,850 3,402,139 2,590,963 654,995 156,181 505,711 Held-to-maturity investments 173,232 - - - - 173,232 Investments in associates other companies 12,035 8,460 8,460 - - 3,575 Intangible assets 702,939 668,864 668,694 - 170 34,075 Property, plant and equipment 201,596 158,297 151,203 - 7,094 43,299 Current taxes 100,123 74,506 72,444 - 2,062 25,617 Deferred taxes 275,276 224,735 206,803 - 17,932 50,541 Other assets 528,293 458,417 162,407 5,299 290,711 69,876 Total Assets 34,402,380 28,705,192 13,158,967 10,066,731 5,479,494 5,697,188 In Ch$ million, end of period Consolidated* Business in Chile Ch$ UF FX Business in Colombia Deposits and other demand liabilities 6,550,657 4,566,185 3,719,593 22,757 823,835 1,984,472 Cash items in process of being cleared 420,259 420,259 231,149 - 189,110 - Obligations sold under repurchase agreements 483,241 142,737 142,737 - - 340,504 Time deposits and other time liabilities 10,269,825 8,920,893 6,659,095 417,581 1,844,217 1,348,932 Financial derivatives contracts 2,377,921 2,301,356 1,432,527 219,838 648,991 76,565 Interbank borrowings 4,453,688 3,976,708 3,007,416 - 969,292 476,980 Issued debt instruments 6,335,525 5,588,827 683,062 4,905,765 - 746,698 Other financial liabilities 29,163 29,163 29,163 - - - Current taxes 344 219 219 - - 125 Deferred taxes 102 - - - - 102 Provisions 296,499 201,261 201,213 - 48 95,238 Other liabilities 818,188 717,950 225,748 363,039 129,163 100,238 Total Liabilities 32,035,412 26,865,558 16,331,922 5,928,980 4,604,656 5,169,854 Capital 1,862,826 1,785,576 1,785,576 - - 77,250 Reserves 470,873 (216,932) (216,932) - - 687,805 Valuation adjustment (146,291) (153,290) (153,290) - - 6,999 Retained Earnings: 110,525 356,139 123,176 152,878 80,085 (245,614) Retained earnings or prior years - 251,516 251,516 - - (251,516) Income for the period 157,893 146,339 (86,624) 152,878 80,085 11,554 Minus: Provision for mandatory dividend (47,368) (41,716) (41,716) - - (5,652) Equity attributable to shareholders 2,297,933 1,771,493 1,538,530 152,878 80,085 526,440 Non-controlling interest 69,035 68,141 68,141 - - 894 Total Equity 2,366,968 1,839,634 1,606,671 152,878 80,085 527,334 Total Liabilities and Equity 34,402,380 28,705,192 17,938,593 6,081,858 4,684,741 5,697,188 * Consolidated data not only considers Chile and Colombia but also adjustments related to intercompany and minority shareholder s. |
Itaú Corpbanca Balance Sheet Management Discussion & Analysis 44 Loan Portfolio - Breakdown • By the end of the second quarter of 2021, our total credit portfolio reached Ch$22.9 trillion, increasing 0.7% from the previous quarter and a decrease of 5.8% from the same period of the previous year. The increase was mainly driven by a higher performance in the Chilean and Colombia retail portfolio in the quarter. • In constant currency, total loans in Colombia increased 1.4% in the second quarter of 2021 and decreased 2.1% in the 12-month period ended June 30, 2021. The increase in the second quarter of 2021 was mainly driven by the retail segment with a 4.3% increase (see details on page 40). Considering the 0.7% depreciation of the exchange rate of the Colombian peso, the loan portfolio for Colombia increased 0.7% in the second quarter and decreased 12.6% in the 12-month period ended June 30, 2021. Highlights Credit Portfolio Credit Portfolio - Currency Breakdown Ch$ billion 6,049 6,101 6,219 6,269 6,765 6,620 6,464 6,579 6,557 8,302 8,578 8,749 8,819 8,979 8,995 8,959 9,033 9,214 7,707 7,821 8,186 8,531 8,545 7,787 7,166 7,105 7,101 22,058 22,499 23,154 23,620 24,289 23,402 22,589 22,717 22,873 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Ch$ UF FX As of June 30, 2021, Ch$7,101 billion of our total credit portfolio was denominated in, or indexed to, foreign currencies. This portion decreased 0.05% in this quarter and represents approximately 31% of our total foreign currency loans. In the second quarter of 2021, the U.S. dollar variation was 1.6% or approximately Ch$12 per dollar. In Ch$ million, end of period 2Q21 1Q21 change 2Q20 change Wholesale lending 14,761,633 14,820,113 -0.4% 16,552,055 -10.8% Chile 11,937,309 11,976,134 -0.3% 13,108,831 -8.9% Commercial loans 10,291,962 10,451,819 -1.5% 11,060,008 -6.9% Foreign trade loans 965,877 868,404 11.2% 1,366,568 -29.3% Leasing and Factoring 679,470 655,911 3.6% 682,255 -0.4% Colombia 2,824,324 2,843,979 -0.7% 3,443,224 -18.0% Commercial loans 2,428,480 2,439,294 -0.4% 2,984,231 -18.6% Leasing and Factoring 395,844 404,685 -2.2% 458,993 -13.8% Retail lending 8,111,272 7,896,460 2.7% 7,736,768 4.8% Chile 6,656,117 6,491,998 2.5% 6,286,125 5.9% Consumer loans 1,667,318 1,696,553 -1.7% 1,796,094 -7.2% Residential mortgage loans 4,988,799 4,795,445 4.0% 4,490,031 11.1% Colombia 1,455,155 1,404,462 3.6% 1,450,643 0.3% Consumer loans 811,047 774,794 4.7% 804,782 0.8% Residential mortgage loans 644,108 629,668 2.3% 645,861 -0.3% TOTAL LOANS 22,872,905 22,716,573 0.7% 24,288,823 -5.8% Chile 18,593,426 18,468,132 0.7% 19,394,956 -4.1% Colombia 4,279,479 4,248,441 0.7% 4,893,867 -12.6% Consumer 19% Mortgage 15% Commercial 66% Colombia 19% Consumer 7% Mortgage 22% Commercial 52% Chile 81% |
Itaú Corpbanca Balance Sheet Management Discussion & Analysis 45 By the end of the second quarter of 2021, our total consolidated NPL ratio for operations 90 days overdue reached 2.61%, an increase of 0.11 percentage points from the previous quarter and when compared to the same period of 2020, a 0.23 percentage points increase. The NPL ratio for commercial loans increased from 3.06% to 3.30% compared to the previous quarter. When excluding the student loans, the commercial loans NPL ratio reached 3.03%, a 0.86 percentage points increase when compared to the second quarter of 2020. For consumer loans, the NPL ratio decreased 0.01 percentage points and mortgage loans decreased 0.10 percentage points in the quarter, reaching 1.67% and 1.23% respectively. NPL Ratio (90 days overdue) by segment The chart below shows the calculation of the average tangible Shareholders Equity or “Managerial Equity”, which we use to determine the RoTAE. Tangible Equity Breakdown 2Q21 Average Balance (Ch$ billion) 2.28% 2.23% 3.17% 3.19% 2.55% 2.46% 2.57% 3.06% 3.30% 1.93% 1.90% 2.80% 2.81% 2.17% 2.16% 2.19% 2.76% 3.03% 2.03% 1.96% 2.11% 2.02% 1.97% 1.61% 1.46% 1.33% 1.23% 1.77% 2.02% 2.16% 2.34% 2.14% 1.26% 1.81% 1.68% 1.67% 2.17% 2.15% 2.82% 2.84% 2.38% 2.15% 2.23% 2.50% 2.61% 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 Commercial Comm. ex-Students loans Mortgage Consumer Total All other Assets: Ch$ 33,575 Ch$ 28,103 Ch $ 5,472 All other Liabilities: Ch$ 31,739 Ch$ 26,722 Ch$ 5,018 Asociado a Intangibles PPA: Ch$ 40 Minority Interest ex GW and PPA Intangibles: Ch$ 69 Assets: 34,146 Liabilities: 31,760 Minority Interest: 69 Managerial Tang. Equity: Ch$ 1,767 Ch$ 1,380 Ch$ 387 Shareholders’ Equity: 2,317 Managerial Tang. Equity: Recurring Results: Recurring RoTE: Ch$ 1,767 Ch$ 1,380 Ch$ 387 Ch$ 70.8 Ch$ 68.3 Ch$ 2.4 ÷ ÷ ÷ 16.0% 19.8% 2.5% = = = Goodwill: Ch$ 493 Ch$ 493 Ch$ - Intangibles from PPA: Ch$ 78 Ch$ 78 Ch$ - Deferred taxes asociated with intangibles from PPA: Ch$ 21 Ch$ 21 Ch$ - Asociated w/ PPA Intang.: Ch$ - GW and PPA Intangibles: Ch$ 550 Ch$ 550 Ch$ - |
Itaú Corpbanca Balance Sheet Management Discussion & Analysis 46 Funding • Total funding amounted to Ch$28.1 trillion by the end of the second quarter of 2021, a 3.4% decrease compared to the previous quarter and a 6.2% decrease compared with the same period of 2020. The change against the first quarter of 2021 was primarily due to: (i) time deposits decrease (-2.5%), partly offset by bond issuance (1.1%) and interbank borrowing increase (14.3%) since we continued to access the Central Bank liquidity lines priced at monetary policy rate. The change against the second quarter of 2020 was primarily due to the fact that deposits have decreased by 18.2% due to low interest rates and also that bonds have decreased by 6.2%; on the other hand, demand deposits continued to grow, increasing 15.4%, and interbank borrowings have expanded by 0.4%. • Our funding strategy is to optimize all sources of funding in accordance with their costs, their availability, and our general asset and liability management strategy. In this context, long-term funding needs during 2021 were mostly obtained from bond issuances. These amounted to UF 2.0 million (Ch$59,420 million) in the 2Q 2021. • Our strategy in terms of bond issuances is to seek longer maturity tenor and maintain comfortable liquidity levels under BIS III standards. In addition, the spreads vs. peers obtained in these issuances have remained below 10bp, benefiting our the cost of funds. In 2021, as of the date of this report, we have issued bonds for UF 7.0 million (equivalent to Ch$207,969 million or US$283 million). Highlights In Ch$ million, end of period 2Q21 1Q21 change 2Q20 change Funding from Clients (A) 17,303,723 16,999,978 303,745 1.8% 18,848,182 -1,544,459 -8.2% Deposits and other demand liabilities 6,550,657 6,121,358 429,299 7.0% 5,676,353 874,304 15.4% Time deposits and saving accounts 10,269,825 10,534,033 -264,208 -2.5% 12,558,879 -2,289,054 -18.2% Investments sold under repurchase agreements 483,241 344,587 138,654 40.2% 612,950 -129,709 -21.2% Other Funding (B) 10,818,376 10,184,513 633,863 6.2% 11,130,183 -311,807 -2.8% Letters of credit 26,656 28,683 -2,027 -7.1% 35,542 -8,886 -25.0% Bonds 5,212,869 5,157,982 54,887 1.1% 5,555,942 -343,073 -6.2% Subordinated bonds 1,096,000 1,079,609 16,391 1.5% 1,095,288 712 0.1% Interbank borrowings 4,453,688 3,894,846 558,842 14.3% 4,434,197 19,491 0.4% Other financial liabilities 29,163 23,393 5,770 24.7% 9,214 19,949 216.5% Total Funding (A) + (B) 28,122,099 27,184,491 937,608 3.4% 29,978,365 -1,856,266 -6.2% Loans and Funding Loan portfolio / Funding from clients and other funding Loan portfolio Funding from clients and other funding The ratio between (i) the loan portfolio and (ii) the funds raised from clients and other funding reached 81.3% in the second quarter of 2021: |
Itaú Corpbanca Risk and Capital Management Management Discussion & Analysis 47 Risk and Capital Management We believe risk management is an essential tool to optimize the use of resources and select the best business opportunities to maximize value creation for share- holders. In this context, the risk appetite defines the nature and the level of risks acceptable and the risk culture guides the attitudes required to manage them. We have established a risk and capital commission to assist our board and management in their assessment and management of market and liquidity risks, P&L, and capital adequacy, in accordance with both economic principles and the rules set forth by local regulation and those of Basel I, II, and III. These principles and rules are applied to provide oversight and management of market and liquidity risks, P&L, and economic capital principles, to review the effectiveness of those relat- ed policies and limits and to review the adherence to market and liquidity risk and capital policies and procedures throughout the Bank. We take a prospective stance in relation to capital management and, through our Internal Capital Adequacy Assessment Process (ICAAP), we assess the adequacy of our capital to face the incurred risks, composed by credit, market, operational and other material risks. Liquidity Coverage Ratio (LCR) Net Stable Funding Ratio (NSFR) In Ch$ million 2Q21 1Q21 High Quality Liquid Assets 3,230,891 4,133,668 Net Potential Cash Outflows 2,303,185 2,131,205 LCR (%) 151.6% 179.5% In Ch$ million 2Q21 1Q21 High Quality Liquid Assets 622,248 909,724 Net Potential Cash Outflows 779,708 553,616 LCR (%) 112.4% 116.7% In Ch$ million 2Q21 1Q21 Available Stable Funding 17,473,058 16,535,204 Required Stable Funding 15,901,821 16,113,567 NSFR (%) 108.4% 104.0% In Ch$ million 2Q21 1Q21 Available Stable Funding 3,380,618 3,354,941 Required Stable Funding 3,480,408 3,600,661 NSFR (%) 93.9% 96.4% • Identification and measurement of exis- ting and potential risks in our operations. • Alignment of institutional policies for risk management control, procedures and methodologies according to the guidelines of the Board of Directors and our corporate strategies. • Management of our portfolio seeking optimal risk-return ratios. Our risk management process includes: Starting in April 2019, Chilean banks began reporting their local LCR figures with a minimum level set by CMF at 60%.This minimum will gradually rise to 100% by 2023. Our internal minimum limit for LCR set by our board of directors is 100%. Note: Figures for Colombia are expressed in constant currency, thus all figures from each of the periods analyzed were converted into Chilean peso at a single foreign exchange rate: Ch$0.1949 per COP as of June 30, 2021. Note: Figures for Colombia are expressed in constant currency, thus all figures from each of the periods analyzed were converted into Chilean peso at a single foreign exchange rate: Ch$0.1949 per COP as of June 30, 2021. • In line with international risk management practices, we use the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) to manage liquidity risk. • The methodology used to estimate LCR and NSFR consists of liquidity ratios proposed by the Basel III Committee on Banking Supervision (BIS III), which were adopted by the CMF and the Brazilian Central Bank (BACEN). Highlights Our current internal minimum limit for NSFR, set by the board of directors, is 90% in Chile and 85% for Colombia. Note: NSFR data considers consolidated information for Chile and its subsidiaries and for Colombia and its subsidiaries . In this report, we have changed “Potential Cash Outflows” data included in 3Q19, for “Net Potential Cash Outflows” since 4Q19. Liquidity Ratios |
Itaú Corpbanca Risk and Capital Management Management Discussion & Analysis 48 Our minimum capital requirements are set by the Comisión para el Mercado Financiero (CMF) which follows the Chilean banking law capital require- ments. On January 12, 2019, a new banking law was enacted for purposes of adopting Basel III and replaced the SBIF with CMF, as of June 1, 2019. With this milestone the process of implementing Basel III in Chile started. During 2020, the CMF issued regulations for several key definitions for the implementation of Basel III, such as the exact ca pital deductions to be taken from regulatory capital, specific buffer sizes, changes in credit RWA as well as the definitive models for market and o perational risks, among other aspects. The regulatory adjustments and exclusions will be applied progressively during a 5 -year term, without discounts in 2021 and with progressive yearly increases until reaching 100% on December 1, 2025. Currently, our minimum capital requirement is expressed as a ratio of regulatory capital, stated by the referential equity or total capital, composed of Tier I capital and Tier II capital, and the risk-weighted assets, or RWA. Our minimum total capital requirement corresponds to 10.0%. Itaú Corpbanca targets an optimal capital ratio based on the greater of 120% of the minimum regulatory capital requirement or the average regulato- ry capital ratio of the three largest private banks in Chile and Colombia. Minimum Capital Requirement Capital • At the end of the second quarter of 2021, our regulatory capital ratio reached 13.03%, a decrease of 21 basis points when compared to th e previous quarter. Highlights In Ch$ millions, end of period 2Q21 1Q21 Core capital 1 2,297,933 2,320,111 (-) Goodwill (492,512) (492,512) (+) Subordinated debt 997,885 981,343 (+) Additional provisions 103,801 105,679 (+) Minority interest 69,035 69,531 = Regulatory capital (Core capital + Tier II capital) 2,976,143 2,984,152 Risk-Weighted assets (RWA) 22,840,956 22,542,346 BIS (Regulatory capital / Risk-weighted assets) 2 13.03% 13.24% Core capital ratio 1 (ex-goodwill) 7.90% 8.11% Ratios (%) Main changes in the 2Q21 Note: (1) Core Capital = Capital básico according to CMF current definitions; (2) BIS Ratio = Regulatory capital / RWA, according to CMF current definitions. Solvency Ratios The BIS ratio decreased 21 basis point, from 13.24% to 13.03%, mainly due to an increase in risk weighted assets and the other com- prehensive income (OCI) of the period and its effect on core capital. This was partially offset by the results of the period and an increase in computable subordinated debt (FX effect) from Itaú Corpbanca. 13.24% 13.03% -10 bp 7 bp -17 bp -1 bp 1Q21 Core Capital (1) Subordinated Bonds RWA Other 2Q21 |
Additional Information Management Discussion & Analysis |
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Itaú Corpbanca Our Shares Management Discussion & Analysis Our Shares 51 Itaú Corpbanca capital stock is composed of 512,406,760,091 common shares traded on the Santia- go Stock Exchange (ITAUCORP). Shares are also traded as American Depositary Receipts (“ADR”) on the New York Stock Exchange (ITCB). Dividends Charge to Fiscal Year Year paid Net Income (Ch$ mn)1 % Distributed Dividend per Share (Ch$) 2016 2017 2,059 30% 0.001205475 2017 2018 57,447 40% 0.044844689 2018 2019 172,047 30% 0.100728627 2019 2020 127,065 100% 0.2479770771 2020 2021 (925,479) 0% 0.0000000000 The Itaú CorpGroup Shareholders’ Agreement (ShA) provides for the distribu- tion of 100% of the annual net income net of the necessary reserves to comply with capital ratios defined as "Optimal Regulatory Capital" in the “Shareholders Agreement” (whose terms are part of the "Transaction Agree- ment" executed on January 29, 2014). In accordance with the ShA, at our ordinary shareholders’ meeting held on March 18, 2020, our shareholders approved a dividend payout ratio of 100% of 2019 net income. As a result, in 2020, we paid an annual dividend of Ch$0.2479770771/share, equivalent to a dividend yield of 7.8%. In addition, since we reported a net loss of Ch$925,479 million for the year ended December 31, 2020, no dividends could be dis- tributed at our ordinary shareholder’s meeting held on March 18, 2021 in accordance with the provisions set forth in Article 78 of Law No. 18,046. Divi- dends can be paid exclusively from the net income for the year, after absorb- ing accumulated losses, if any. For purposes of capital requirements, annual dividends are provisioned at 30%. The following table shows dividends per share distributed during the past five years: Ch$1.0 trillion | US$1.4 billion Market Capitalization Corporate Structure Chart Performance in the Capital Markets Sell-side ratings 3 6 1 Buy Hold Sell Source: Sell-side reports. As of June 30, 2021, our shareholders structure was as follows: Shareholder Base and Ratios 2Q21 1Q21 2Q20 Number of outstanding shares (million) 512,406.8 512,406.8 512,406.8 Recurring Diluted Earnings per share in the quarter (Ch$) 0.14 0.19 0.04 Accounting Diluted Earnings per share in the quarter (Ch$) 0.13 0.18 -1.46 Recurring Diluted Earnings per ADR in the quarter (US$) 0.28 0.39 0.07 Accounting Diluted Earnings per ADR in the quarter (US$) 0.27 0.37 -2.67 Book value per share in the quarter (Ch$) 4.48 4.53 4.94 Price* / Earnings (P/E) 3.84 3.92 -0.38 Price*/ Tangible Book Value (P/B) 0.45 0.61 0.45 ITAUCORP ITCB Price and Volume (Common shares) (ADR) Ch$ US$ Closing Price at 06/30/2021 2.03 4.23 Maximum price in the quarter 2.88 6.22 Average Price in the quarter 2.45 5.17 Minimum price in the quarter 2.03 4.23 Closing Price at 03/31/2021 2.76 5.86 Closing Price at 06/30/2020 2.22 3.85 Change in 2Q'21 -26.41% -27.82% Change in LTM -8.47% 9.87% Average daily trading volume LTM (million) 1,535.68 0.31 Average daily trading volume in 2Q'21 (million) 1,604.76 0.16 * Closing price on the last trading day of each period. 1- Net Income Attributable to Shareholders (Accounting) Average daily traded volumes for the 12-month period ended June 30, 2021 (US$ million) Strengths of our structure • Itaú Corpbanca is controlled by Itaú Unibanco. • Itaú Unibanco and the Saieh Family appoint the majority of the board of directors. • Pursuant to the Shareholders Agreement, the directors appointed by Itaú Unibanco and the Saieh Family shall vote together as a single block according to Itaú Unibanco recommendation. • Professional and experienced management team. 1– Includes 36,000,000 shares owned by Corp Group Banking S.A. that are under custody |
Itaú Corpbanca Ratings Management Discussion & Analysis 52 Credit Risk Ratings On a global scale, Itaú Corpbanca is rated by two internationally recognized agencies: Moody´s Investors Service (‘Moody’s’) and Standard & Poor´s Glob- al Ratings (‘Standard & Poor’s’ or ‘S&P’). Detailed international ratings are presented below: International Credit Risk Rating Moody´s Rating Long term Counterparty Risk Rating (CRR) A2 Long-term foreign currency deposits A3 Long-term foreign currency debt A3 Short-term foreign currency deposits Prime-2 Outlook Negative On a national scale, Itaú Corpbanca is rated by Feller Rate Clasificadora de Riesgo Ltda. (‘Feller Rate’) and by Clasificadora de Riesgo Humphreys Ltda. (‘Humphreys’). Detailed local ratings are presented below: Standard & Poor´s Rating Long-term issuer credit rating BBB Senior unsecured bonds BBB Short-term issuer credit rating A-2 Outlook Negative Local Credit Risk Rating Feller Rate Rating Long-term issuer credit rating AA Senior unsecured bonds AA Letter of credit AA Long-term deposits AA Subordinated bonds AA- Short-term deposits Nivel 1+ Shares 1ª Clase Nivel 1 Outlook Stable Humphreys Rating Long-term issuer credit rating AA Senior unsecured bonds AA Letter of credit AA Long-term deposits AA Subordinated bonds AA- Short-term deposits Nivel 1+ Shares 1ª Clase Nivel 1 Outlook Stable |
Itaú Corpbanca Executive Summary Management Discussion & Analysis 53 |
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Itaú Corpbanca 55 CAUTION REGARDING FORWARD-LOOKING STATEMENTS Certain statements in this Report may be considered as forward-looking statements. Forward-looking information is often, but not always, identified by the use of words such as "anticipate", "believe", "expect", "plan", "intend", "forecast", "target", "project", "may", "will", "should", "could", "estimate", "predict" or similar words suggesting future outcomes or language suggesting an outlook. These forward-looking statements include, but are not limited to, statements regarding expected benefits and synergies from the recent merger of Banco Itaú Chile with and into Corpbanca, the integration process of both banks, the expected timing of completion of the transaction, anticipated future financial and operating performance and results, including estimates for growth, as well as risks and benefits of changes in the laws of the countries we operate, including the Tax Reform in Chile. These statements are based on the current expectations of Itaú Corpbanca’ s management. There are risks and uncertainties that could cause actual results to differ mate- rially from the forward-looking statements included in this communication. For example, (1) problems that may arise in successfully integrating the businesses of Banco Itaú Chile and Corpbanca, which may result in the combined company not operating as effectively and efficiently as expected; (2) the combined company may be unable to achieve cost-cutting synergies or it may take longer than expected to achieve those synergies; (3) the credit ratings of the combined company or its subsidiaries may be different from what Itaú Corpbanca or its controlling shareholders expect; (4) the business of Itaú Corpbanca may suffer as a result of uncertainty surrounding the merger; (5) the industry may be subject to future regulatory or legislative actions that could adversely affect Itaú Corpbanca; and (6) Itaú Corpbanca may be adversely affected by other economic, business, and/or competitive factors. Forward-looking statements and information are based on current beliefs as well as assumptions made by and information currently available to Itaú Corpbanca’ s ma- nagement. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution readers not to place undue reliance on these statements as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and intentions expressed in such forward-looking statements. More information on potential factors that could affect Itaú Corpbanca’ s financial results is included from time to time in the “Risk Factors” section of Itaú Corpbanca’ s Annual Report on Form 20-F for the fiscal year ended December 31, 2020, filed with the SEC. Furthermore, any forward-looking statement contained in this Report speaks only as of the date hereof and Itaú Corpbanca does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this Report are expressly qualified by this cautionary statement. CONTACT INFORMATION: Gabriel Moura CEO. Itaú Corpbanca Santiago. Chile Phone: (562) 2686-0558 IR@corpbanca.cl Rodrigo Couto CFO. Itaú Corpbanca Santiago. Chile Phone: (562) 2834-6067 rodrigo.couto@itau.cl Claudia Labbé Head of Investor Relations. Itaú Corpbanca Santiago. Chile Phone: (562) 2660-1751 claudia.labbe@itau.cl |