FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of October, 2016
Commission File Number 001-15266
BANK OF CHILE
(Translation of registrant’s name into English)
Paseo Ahumada 251
Santiago, Chile
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):o
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes o No x
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-
BANCO DE CHILE
REPORT ON FORM 6-K
Attached Banco de Chile’s Consolidated Financial Statements with notes as of September 30, 2016.
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| |
|
|
BANCO DE CHILE AND SUBSIDIARIES
CONSOLIDATED INTERMEDIATE
FINANCIAL STATEMENTS
For the periods ended as of September 30, 2016 and 2015 and December 31, 2015. |
BANCO DE CHILE AND SUBSIDIARIES
INDEX
|
|
MCh$ |
= |
Millions of Chilean pesos |
|
|
ThUS$ |
= |
Thousands of U.S. dollars |
|
|
UF or CLF |
= |
Unidad de Fomento |
|
|
|
|
(The Unidad de Fomento is an inflation-indexed, Chilean peso denominated monetary unit set daily in advance on the basis of the previous month’s inflation rate). |
|
|
Ch$ or CLP |
= |
Chilean pesos |
|
|
US$ or USD |
= |
U.S. dollars |
|
|
JPY |
= |
Japanese yen |
|
|
EUR |
= |
Euro |
|
|
HKD |
= |
Hong Kong dollars |
|
|
PEN |
= |
Peruvian nuevo sol |
|
|
CHF |
= |
Swiss franc |
|
|
|
|
|
|
|
IFRS |
= |
International Financial Reporting Standards |
|
|
IAS |
= |
International Accounting Standards |
|
|
RAN |
= |
Compilation of Norms of the Chilean Superintendency of Banks |
|
|
IFRIC |
= |
International Financial Reporting Interpretations Committee |
|
|
SIC |
= |
Standards Interpretation Committee |
BANCO DE CHILE AND SUBSIDIARIES
|
|
|
Page | ||
|
Interim Condensed Consolidated Statement of Financial Position |
|
4 | ||
|
Interim Condensed Consolidated Statements of Income |
|
5 | ||
|
Interim Condensed Consolidated Statements of Comprehensive Income |
|
6 | ||
|
Interim Condensed Consolidated Statement of Changes in Equity |
|
7 | ||
|
|
8 | |||
|
|
|
9 | ||
|
|
Legal regulations, basis of preparation and other information: |
|
9 | |
|
|
|
13 | ||
|
|
|
16 | ||
|
|
|
17 | ||
|
|
|
20 | ||
|
|
|
23 | ||
|
|
|
24 | ||
|
|
Cash collateral on securities borrowed and reverse repurchase agreements: |
|
25 | |
|
|
|
27 | ||
|
|
|
32 | ||
|
|
|
33 | ||
|
|
|
40 | ||
|
|
|
42 | ||
|
|
|
44 | ||
|
|
|
46 | ||
|
|
|
49 | ||
|
|
|
53 | ||
|
|
|
54 | ||
|
|
|
54 | ||
|
|
|
55 | ||
|
|
|
56 | ||
|
|
|
60 | ||
|
|
|
60 | ||
|
|
|
64 | ||
|
|
|
65 | ||
|
|
|
70 | ||
|
|
|
74 | ||
|
|
|
76 | ||
|
|
|
77 | ||
|
|
|
77 | ||
|
|
|
78 | ||
|
|
|
79 | ||
|
|
|
80 | ||
|
|
|
81 | ||
|
|
|
82 | ||
|
|
|
83 | ||
|
|
|
84 | ||
|
|
|
90 | ||
|
|
|
104 | ||
|
|
|
106 | ||
BANCO DE CHILE AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
For the periods ended September 30, 2016 and December 31, 2015
(Free translation of financial statements originally issued in Spanish)
(Expressed in million of Chilean pesos)
|
|
|
Notes |
|
September |
|
December |
|
|
ASSETS |
|
|
|
|
|
|
|
|
Cash and due from banks |
|
7 |
|
1,161,938 |
|
1,361,222 |
|
|
Transactions in the course of collection |
|
7 |
|
485,580 |
|
526,046 |
|
|
Financial assets held-for-trading |
|
8 |
|
1,411,245 |
|
866,654 |
|
|
Cash collateral on securities borrowed and reverse repurchase agreements |
|
9 |
|
46,534 |
|
46,164 |
|
|
Derivative instruments |
|
10 |
|
1,055,574 |
|
1,127,122 |
|
|
Loans and advances to banks |
|
11 |
|
1,081,945 |
|
1,395,195 |
|
|
Loans to customers, net |
|
12 |
|
24,414,881 |
|
23,956,275 |
|
|
Financial assets available-for-sale |
|
13 |
|
399,517 |
|
1,000,001 |
|
|
Financial assets held-to-maturity |
|
13 |
|
— |
|
— |
|
|
Investments in other companies |
|
14 |
|
31,815 |
|
28,126 |
|
|
Intangible assets |
|
15 |
|
28,170 |
|
26,719 |
|
|
Property and equipment |
|
16 |
|
217,213 |
|
215,671 |
|
|
Current tax assets |
|
17 |
|
1,939 |
|
3,279 |
|
|
Deferred tax assets |
|
17 |
|
286,758 |
|
255,972 |
|
|
Other assets |
|
18 |
|
395,729 |
|
484,498 |
|
|
TOTAL ASSETS |
|
|
|
31,018,838 |
|
31,292,944 |
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Current accounts and other demand deposits |
|
19 |
|
7,629,008 |
|
8,327,048 |
|
|
Transactions in the course of payment |
|
7 |
|
297,673 |
|
241,842 |
|
|
Cash collateral on securities lent and repurchase agreements |
|
9 |
|
221,271 |
|
184,131 |
|
|
Savings accounts and time deposits |
|
20 |
|
10,572,835 |
|
9,907,692 |
|
|
Derivative instruments |
|
10 |
|
1,067,561 |
|
1,127,927 |
|
|
Borrowings from financial institutions |
|
21 |
|
1,123,190 |
|
1,529,627 |
|
|
Debt issued |
|
22 |
|
6,165,344 |
|
6,102,208 |
|
|
Other financial obligations |
|
23 |
|
165,436 |
|
173,081 |
|
|
Current tax liabilities |
|
17 |
|
6,437 |
|
27,993 |
|
|
Deferred tax liabilities |
|
17 |
|
27,114 |
|
32,953 |
|
|
Provisions |
|
24 |
|
580,122 |
|
639,043 |
|
|
Other liabilities |
|
25 |
|
309,670 |
|
259,312 |
|
|
TOTAL LIABILITIES |
|
|
|
28,165,661 |
|
28,552,857 |
|
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
27 |
|
|
|
|
|
|
Attributable to Bank’s Owners: |
|
|
|
|
|
|
|
|
Capital |
|
|
|
2,138,047 |
|
2,041,173 |
|
|
Reserves |
|
|
|
486,083 |
|
390,616 |
|
|
Other comprehensive income |
|
|
|
1,894 |
|
57,709 |
|
|
Retained earnings: |
|
|
|
|
|
|
|
|
Retained earnings from previous periods |
|
|
|
16,060 |
|
16,060 |
|
|
Income for the period |
|
|
|
428,215 |
|
558,995 |
|
|
Less: |
|
|
|
|
|
|
|
|
Provision for minimum dividends |
|
|
|
(217,123 |
) |
(324,469 |
) |
|
Subtotal |
|
|
|
2,853,176 |
|
2,740,084 |
|
|
Non-controlling interests |
|
|
|
1 |
|
3 |
|
|
TOTAL EQUITY |
|
|
|
2,853,177 |
|
2,740,087 |
|
|
TOTAL LIABILITIES AND EQUITY |
|
|
|
31,018,838 |
|
31,292,944 |
|
The accompanying notes 1 to 41 are an integral part of these interim condensed consolidated financial statements
BANCO DE CHILE AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the nine-month ended September 30, 2016 and 2015
(Free translation of financial statements originally issued in Spanish)
(Expressed in million of Chilean pesos)
|
|
|
Notes |
|
September |
|
September |
|
|
|
|
|
|
|
|
|
|
|
Interest revenue |
|
28 |
|
1,446,143 |
|
1,396,266 |
|
|
Interest expense |
|
28 |
|
(530,885 |
) |
(489,714 |
) |
|
Net interest income |
|
|
|
915,258 |
|
906,552 |
|
|
|
|
|
|
|
|
|
|
|
Income from fees and commissions |
|
29 |
|
327,648 |
|
320,520 |
|
|
Expenses from fees and commissions |
|
29 |
|
(87,501 |
) |
(97,361 |
) |
|
Net fees and commission income |
|
|
|
240,147 |
|
223,159 |
|
|
|
|
|
|
|
|
|
|
|
Net financial operating income |
|
30 |
|
128,574 |
|
36,923 |
|
|
Foreign exchange transactions, net |
|
31 |
|
7,131 |
|
44,598 |
|
|
Other operating income |
|
36 |
|
23,474 |
|
20,742 |
|
|
Total operating revenues |
|
|
|
1,314,584 |
|
1,231,974 |
|
|
|
|
|
|
|
|
|
|
|
Provisions for loan losses |
|
32 |
|
(222,454 |
) |
(229,051 |
) |
|
|
|
|
|
|
|
|
|
|
OPERATING REVENUES, NET OF PROVISIONS FOR LOAN LOSSES |
|
|
|
1,092,130 |
|
1,002,923 |
|
|
|
|
|
|
|
|
|
|
|
Personnel expenses |
|
33 |
|
(311,234 |
) |
(278,386 |
) |
|
Administrative expenses |
|
34 |
|
(237,653 |
) |
(214,171 |
) |
|
Depreciation and amortization |
|
35 |
|
(24,915 |
) |
(21,999 |
) |
|
Impairment |
|
35 |
|
(4 |
) |
(144 |
) |
|
Other operating expenses |
|
37 |
|
(23,614 |
) |
(23,591 |
) |
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING EXPENSES |
|
|
|
(597,420 |
) |
(538,291 |
) |
|
|
|
|
|
|
|
|
|
|
NET OPERATING INCOME |
|
|
|
494,710 |
|
464,632 |
|
|
|
|
|
|
|
|
|
|
|
Income attributable to associates |
|
14 |
|
3,373 |
|
2,705 |
|
|
Income before income tax |
|
|
|
498,083 |
|
467,337 |
|
|
|
|
|
|
|
|
|
|
|
Income tax |
|
17 |
|
(69,868 |
) |
(48,439 |
) |
|
|
|
|
|
|
|
|
|
|
NET INCOME FOR THE PERIOD |
|
|
|
428,215 |
|
418,898 |
|
|
Attributable to: |
|
|
|
|
|
|
|
|
Bank’s Owners |
|
|
|
428,215 |
|
418,897 |
|
|
Non-controlling interests |
|
|
|
— |
|
1 |
|
|
|
|
|
|
Ch$ |
|
Ch$ |
|
|
Net income per share attributable to Bank’s Owners: |
|
|
|
|
|
|
|
|
Basic net income per share |
|
27 |
|
4.39 |
|
4.29 |
|
|
Diluted net income per share |
|
27 |
|
4.39 |
|
4.29 |
|
The accompanying notes 1 to 41 are an integral part of these interim condensed consolidated financial statements
BANCO DE CHILE AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the nine-month ended September 30, 2016 and 2015
(Free translation of financial statements originally issued in Spanish)
(Expressed in million of Chilean pesos)
|
|
|
Notes |
|
September |
|
September |
|
|
|
|
|
|
|
|
|
|
|
NET INCOME FOR THE PERIOD |
|
|
|
428,215 |
|
418,898 |
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income that will be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in unrealized gains (losses) on available for sale instruments |
|
13 |
|
(50,830 |
) |
3,527 |
|
|
Gains and losses on derivatives held as cash flow hedges |
|
10 |
|
(22,535 |
) |
(5,122 |
) |
|
Cumulative translation adjustment |
|
27 |
|
(59 |
) |
1 |
|
|
Subtotal Other comprehensive income before income taxes |
|
|
|
(73,424 |
) |
(1,594 |
) |
|
|
|
|
|
|
|
|
|
|
Income tax |
|
|
|
17,609 |
|
359 |
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income items that will be reclassified subsequently to profit or loss |
|
|
|
(55,815 |
) |
(1,235 |
) |
|
|
|
|
|
|
|
|
|
|
Other comprehensive income that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss in defined benefit plans |
|
|
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
Subtotal other comprehensive income before income taxes |
|
|
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
Income taxes |
|
|
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income items that will not be reclassified subsequently to profit or loss |
|
|
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
TOTAL CONSOLIDATED COMPREHENSIVE INCOME FOR THE PERIOD |
|
|
|
372,400 |
|
417,663 |
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
Bank’s Owners |
|
|
|
372,400 |
|
417,662 |
|
|
Non-controlling interests |
|
|
|
— |
|
1 |
|
|
|
|
|
|
Ch$ |
|
Ch$ |
|
|
Net income per share attributable to Bank’s Owners: |
|
|
|
|
|
|
|
|
Basic net income per share |
|
|
|
3.81 |
|
4.28 |
|
|
Diluted net income per share |
|
|
|
3.81 |
|
4.28 |
|
The accompanying notes 1 to 41 are an integral part of these interim condensed consolidated financial statements
BANCO DE CHILE AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the nine-month ended September 30, 2016 and 2015
(Free translation of financial statements originally issued in Spanish)
(Expressed in millions of Chilean pesos)
|
|
|
|
|
|
|
Reserves |
|
Other comprehensive income |
|
Retained earnings |
|
|
|
|
|
|
| ||||||||||
|
|
|
Notes |
|
Paid-in |
|
Other |
|
Reserves |
|
Unrealized |
|
Derivatives |
|
Cumulative translation |
|
Retained |
|
Income (losses) |
|
Provision for |
|
Attributable |
|
Non- |
|
Total |
|
|
|
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
Balances as of December 31, 2014 |
|
|
|
1,944,920 |
|
31,834 |
|
231,424 |
|
33,962 |
|
10,086 |
|
57 |
|
16,379 |
|
591,080 |
|
(324,588 |
) |
2,535,154 |
|
2 |
|
2,535,156 |
|
|
Capitalization of retained earnings |
|
|
|
96,253 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(96,253 |
) |
— |
|
— |
|
— |
|
— |
|
|
Income retention (released) according to law |
|
27 |
|
— |
|
— |
|
127,383 |
|
— |
|
— |
|
— |
|
— |
|
(127,383 |
) |
— |
|
— |
|
— |
|
— |
|
|
Dividends distributions and paid |
|
27 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(367,444 |
) |
324,588 |
|
(42,856 |
) |
(1 |
) |
(42,857 |
) |
|
Other comprehensive income: |
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustment |
|
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
1 |
|
— |
|
— |
|
— |
|
1 |
|
— |
|
1 |
|
|
Derivatives cash flow hedge, net |
|
|
|
— |
|
— |
|
— |
|
— |
|
(3,970 |
) |
— |
|
— |
|
— |
|
— |
|
(3,970 |
) |
— |
|
(3,970 |
) |
|
Valuation adjustment on available-for-sale instruments (net) |
|
|
|
— |
|
— |
|
— |
|
2,734 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
2,734 |
|
— |
|
2,734 |
|
|
Income for the period 2015 |
|
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
418,897 |
|
— |
|
418,897 |
|
1 |
|
418,898 |
|
|
Equity adjustment investment in other companies |
|
|
|
— |
|
(1 |
) |
— |
|
— |
|
— |
|
— |
|
(319 |
) |
— |
|
— |
|
(320 |
) |
— |
|
(320 |
) |
|
Provision for minimum dividends |
|
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(241,823 |
) |
(241,823 |
) |
— |
|
(241,823 |
) |
|
Balances as of September 30, 2015 |
|
|
|
2,041,173 |
|
31,833 |
|
358,807 |
|
36,696 |
|
6,116 |
|
58 |
|
16,060 |
|
418,897 |
|
(241,823 |
) |
2,667,817 |
|
2 |
|
2,667,819 |
|
|
Dividends distribution and paid |
|
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
1 |
|
1 |
|
|
Defined benefit plans adjustment |
|
|
|
— |
|
(24 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(24 |
) |
— |
|
(24 |
) |
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustment |
|
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
1 |
|
— |
|
— |
|
— |
|
1 |
|
— |
|
1 |
|
|
Derivatives cash flow hedge, net |
|
|
|
— |
|
— |
|
— |
|
— |
|
11,698 |
|
— |
|
— |
|
— |
|
— |
|
11,698 |
|
— |
|
11,698 |
|
|
Valuation adjustment on available-for-sale instruments (net) |
|
|
|
— |
|
— |
|
— |
|
3,140 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
3,140 |
|
— |
|
3,140 |
|
|
Income for the period 2015 |
|
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
140,098 |
|
— |
|
140,098 |
|
— |
|
140,098 |
|
|
Provision for minimum dividends |
|
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(82,646 |
) |
(82,646 |
) |
— |
|
(82,646 |
) |
|
Balances as of December 31, 2015 |
|
|
|
2,041,173 |
|
31,809 |
|
358,807 |
|
39,836 |
|
17,814 |
|
59 |
|
16,060 |
|
558,995 |
|
(324,469 |
) |
2,740,084 |
|
3 |
|
2,740,087 |
|
|
Capitalization of retained earnings |
|
|
|
96,874 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(96,874 |
) |
— |
|
— |
|
— |
|
— |
|
|
Income retention (released) according to law |
|
27 |
|
— |
|
— |
|
95,467 |
|
— |
|
— |
|
— |
|
— |
|
(95,467 |
) |
— |
|
— |
|
— |
|
— |
|
|
Dividends distributions and paid |
|
27 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(366,654 |
) |
324,469 |
|
(42,185 |
) |
(2 |
) |
(42,187 |
) |
|
Other comprehensive income: |
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustment |
|
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
(59 |
) |
— |
|
— |
|
— |
|
(59 |
) |
— |
|
(59 |
) |
|
Derivatives cash flow hedge, net |
|
|
|
— |
|
— |
|
— |
|
— |
|
(17,127 |
) |
— |
|
— |
|
— |
|
— |
|
(17,127 |
) |
— |
|
(17,127 |
) |
|
Valuation adjustment on available-for-sale instruments (net) |
|
|
|
— |
|
— |
|
— |
|
(38,629 |
) |
— |
|
— |
|
— |
|
— |
|
— |
|
(38,629 |
) |
— |
|
(38,629 |
) |
|
Income for the period 2016 |
|
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
428,215 |
|
— |
|
428,215 |
|
— |
|
428,215 |
|
|
Provision for minimum dividends |
|
27 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(217,123 |
) |
(217,123 |
) |
— |
|
(217,123 |
) |
|
Balances As of September 30, 2016 |
|
|
|
2,138,047 |
|
31,809 |
|
454,274 |
|
1,207 |
|
687 |
|
— |
|
16,060 |
|
428,215 |
|
(217,123 |
) |
2,853,176 |
|
1 |
|
2,853,177 |
|
The accompanying notes 1 to 41 are an integral part of these interim condensed consolidated financial statements
BANCO DE CHILE AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine-month ended September 30, 2016 and 2015
(Free translation of financial statements originally issued in Spanish)
(Expressed in million of Chilean pesos)
|
|
|
|
|
September |
|
September |
|
|
|
|
Notes |
|
MCh$ |
|
MCh$ |
|
|
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net income for the period |
|
|
|
428,215 |
|
418,898 |
|
|
Items that do not represent cash flows: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
35 |
|
24,915 |
|
21,999 |
|
|
Impairment of intangible assets and property and equipment |
|
35 |
|
4 |
|
144 |
|
|
Provision for loan losses |
|
32 |
|
211,572 |
|
232,686 |
|
|
Provision of contingent loans |
|
32 |
|
(8,382 |
) |
5,055 |
|
|
Additional provisions |
|
32 |
|
52,075 |
|
30,921 |
|
|
Fair value adjustment of financial assets held-for-trading |
|
|
|
(1,995 |
) |
215 |
|
|
(Gain) loss attributable to investments in other companies |
|
14 |
|
(2,934 |
) |
(2,337 |
) |
|
(Gain) loss from sales of assets received in lieu of payment net |
|
36 |
|
(3,698 |
) |
(2,568 |
) |
|
(Gain) loss on sales of property and equipment |
|
36-37 |
|
(101 |
) |
(124 |
) |
|
(Increase) decrease in other assets and liabilities |
|
|
|
109,553 |
|
(216,911 |
) |
|
Charge-offs of assets received in lieu of payment |
|
37 |
|
2,935 |
|
1,220 |
|
|
Other charges (credits) to income that do not represent cash flows |
|
|
|
(13,102 |
) |
(873 |
) |
|
Net changes from foreign exchange transactions of other assets and other liabilities |
|
|
|
38,362 |
|
(519,370 |
) |
|
Net interest variation, readjustment and accrued fees on assets and liabilities |
|
|
|
(119,886 |
) |
178,213 |
|
|
|
|
|
|
|
|
|
|
|
Changes in assets and liabilities that affect operating cash flows: |
|
|
|
|
|
|
|
|
(Increase) decrease in loans and advances to banks, net |
|
|
|
312,463 |
|
(406,619 |
) |
|
(Increase) decrease in loans to customers |
|
|
|
(580,338 |
) |
(2,202,521 |
) |
|
(Increase) decrease in financial assets held-for-trading, net |
|
|
|
(352,907 |
) |
57,098 |
|
|
(Increase) decrease in deferred taxes, net |
|
17 |
|
(24,424 |
) |
(37,985 |
) |
|
Increase (decrease) in current account and other demand deposits |
|
|
|
(696,892 |
) |
357,618 |
|
|
Increase (decrease) in payables from repurchase agreements and security lending |
|
|
|
31,169 |
|
21,018 |
|
|
Increase (decrease) in savings accounts and time deposits |
|
|
|
661,175 |
|
601,165 |
|
|
Proceeds from sale of assets received in lieu of payment |
|
|
|
8,601 |
|
5,775 |
|
|
Total cash flows from operating activities |
|
|
|
76,380 |
|
(1,457,283 |
) |
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
(Increase) decrease in financial assets available-for-sale, net |
|
|
|
425,730 |
|
98,172 |
|
|
Purchases of property and equipment |
|
16 |
|
(19,754 |
) |
(23,098 |
) |
|
Proceeds from sales of property and equipment |
|
|
|
122 |
|
191 |
|
|
Purchases of intangible assets |
|
15 |
|
(7,905 |
) |
(5,751 |
) |
|
Purchases of investments in other companies |
|
14 |
|
(1,129 |
) |
(314 |
) |
|
Dividends received from investments in other companies |
|
14 |
|
640 |
|
632 |
|
|
Total cash flows from investing activities |
|
|
|
397,704 |
|
69,832 |
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Redemption of mortgage finance bonds |
|
|
|
(6,330 |
) |
(10,248 |
) |
|
Proceeds from bond issuances |
|
22 |
|
1,196,672 |
|
1,839,964 |
|
|
Redemption of bond issuances |
|
|
|
(1,085,078 |
) |
(788,049 |
) |
|
Subscription and payment of shares |
|
|
|
— |
|
— |
|
|
Dividends paid |
|
27 |
|
(366,654 |
) |
(367,444 |
) |
|
Increase (decrease) in borrowings from foreign financial institutions |
|
|
|
(406,248 |
) |
469,802 |
|
|
Increase (decrease) in other financial obligations |
|
|
|
(5,121 |
) |
(31,205 |
) |
|
Increase (decrease) in borrowings from Central Bank of Chile |
|
|
|
(2 |
) |
(2 |
) |
|
Other borrowings long-term |
|
|
|
17,796 |
|
13,764 |
|
|
Payment of other borrowings long-term |
|
|
|
(20,035 |
) |
(16,255 |
) |
|
Total cash flows from financing activities |
|
|
|
(675,000 |
) |
1,110,327 |
|
|
|
|
|
|
|
|
|
|
|
TOTAL NET POSITIVE (NEGATIVE) CASH FLOWS FOR THE PERIOD |
|
|
|
(200,916 |
) |
(277,124 |
) |
|
|
|
|
|
|
|
|
|
|
Net effect of exchange rate changes on cash and cash equivalents |
|
|
|
(38,362 |
) |
67,539 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year |
|
|
|
2,093,908 |
|
1,825,578 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
7 |
|
1,854,630 |
|
1,615,993 |
|
|
|
|
|
|
September |
|
September |
|
|
|
|
|
|
MCh$ |
|
MCh$ |
|
|
Operational Cash flow interest: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest received |
|
|
|
1,366,028 |
|
1,255,570 |
|
|
Interest paid |
|
|
|
(570,656 |
) |
(170,805 |
) |
The accompanying notes 1 to 41 are an integral part of these interim condensed consolidated financial statements
BANCO DE CHILE AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Banco de Chile is authorized to operate like a commercial bank since June 17, 1996, in conformity with the Article 25 of Law No, 19,396, Banco de Chile, resulting from the merger of Banco Nacional de Chile, Banco Agrícola and Banco de Valparaíso, was formed on October 28, 1893 in the city of Santiago, in the presence of the Notary Eduardo Reyes Lavalle.
Banco de Chile (“Banco de Chile” or the “Bank”) is a Corporation organized under the laws of the Republic of Chile, regulated by the Superintendency of Banks and Financial Institutions (“SBIF” or “Superintendency”). Since 2001, - when the bank was first listed on the New York Stock Exchange (“NYSE”), in the course of its American Depository Receipt (“ADR”) program — Banco de Chile additionally follows the regulations published by the United States Securities and Exchange Commission (“SEC”).
Banco de Chile offers a broad range of banking services to its customers, ranging from individuals to large corporations. The services are managed in large corporate banking, middle and small corporate banking, personal banking services and retail. Additionally, the Bank offers international as well as treasury banking services. The Bank’s subsidiaries provide other services including securities brokerage, mutual fund and investment management, insurance brokerage, financial advisory and securitization.
Banco de Chile’s legal address is Paseo Ahumada 251, Santiago, Chile and its website is www.bancochile.cl.
The Interim Condensed Consolidated Financial Statements of Banco de Chile, for the period ended September 30, 2016 were approved for issuance in accordance with the directors on October 27, 2016.
2. Legal regulations, basis of preparation and other information:
(a) Legal regulations:
The General Banking Law in its Article No. 15 authorizes the Chilean Superintendency of Banks (SBIF) to issue generally applicable accounting standards for entities it supervises. The Corporations Law, in turn, requires generally accepted accounting principles to be followed.
Based on the aforementioned laws, banks should use the criteria provided by the Superintendency in accordance with the Compendium of Accounting Standards (“Compendium”), and any matter not addressed therein, as long as it does not contradict its instructions, should adhere to generally accepted accounting principles in technical standards issued by the Chilean Association of Accountants, that coincide with international accounting standards and international financial reporting standards agreed upon by the International Accounting Standards Board (IASB). Should there be discrepancies between these generally accepted accounting principles and the accounting criteria issued by the SBIF, the latter shall prevail.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, continued
2. Legal regulations, basis of preparation and other information, continued:
(b) Basis of preparation:
(b.1) These Interim Condensed Consolidated Financial Statements are presented according to Chapter C-2 of the Compendium of Accounting Standards, issued by the Superintendency of Banks and Financial Institutions (SBIF).
(b.2) The following table details the entities in which the Bank has controlling interest and that are therefore consolidated in these financial statements:
|
|
|
|
|
|
|
|
|
Interest Owned |
| ||||||||||
|
|
|
|
|
|
|
|
|
Direct |
|
Indirect |
|
Total |
| ||||||
|
|
|
|
|
|
|
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
|
|
|
|
|
|
|
Functional |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
RUT |
|
Subsidiaries |
|
Country |
|
Currency |
|
% |
|
% |
|
% |
|
% |
|
% |
|
% |
|
|
44,000,213-7 |
|
Banchile Trade Services Limited (*) |
|
Hong Kong |
|
US$ |
|
100.00 |
|
100.00 |
|
— |
|
— |
|
100.00 |
|
100.00 |
|
|
96,767,630-6 |
|
Banchile Administradora General de Fondos S.A. |
|
Chile |
|
Ch$ |
|
99.98 |
|
99.98 |
|
0.02 |
|
0.02 |
|
100.00 |
|
100.00 |
|
|
96,543,250-7 |
|
Banchile Asesoría Financiera S.A. |
|
Chile |
|
Ch$ |
|
99.96 |
|
99.96 |
|
— |
|
— |
|
99.96 |
|
99.96 |
|
|
77,191,070-K |
|
Banchile Corredores de Seguros Ltda. |
|
Chile |
|
Ch$ |
|
99.83 |
|
99.83 |
|
0.17 |
|
0.17 |
|
100.00 |
|
100.00 |
|
|
96,571,220-8 |
|
Banchile Corredores de Bolsa S.A. |
|
Chile |
|
Ch$ |
|
99.70 |
|
99.70 |
|
0.30 |
|
0.30 |
|
100.00 |
|
100.00 |
|
|
96,932,010-K |
|
Banchile Securitizadora S.A. |
|
Chile |
|
Ch$ |
|
99.01 |
|
99.01 |
|
0.99 |
|
0.99 |
|
100.00 |
|
100.00 |
|
|
96,645,790-2 |
|
Socofin S.A. |
|
Chile |
|
Ch$ |
|
99.00 |
|
99.00 |
|
1.00 |
|
1.00 |
|
100.00 |
|
100.00 |
|
|
96,510,950-1 |
|
Promarket S.A. |
|
Chile |
|
Ch$ |
|
99.00 |
|
99.00 |
|
1.00 |
|
1.00 |
|
100.00 |
|
100.00 |
|
(*) On May 29, 2014 the Board of Directors of Banco de Chile agreed to dissolve liquidate and terminate the Society, after ending all the administrative processes required by regulators, the dissolution was formally declared on July 5th, 2016. (See Note No.5 (i)).
(c) Use of estimates and judgments:
Preparing financial statements requires management to make judgments, estimations and assumptions that affect the application of accounting policies and the valuation of assets, liabilities, income and expenses presented. Real results could differ from these estimated amounts. Details on the use of estimates and judgment and their effect on the amounts recognized in the Interim Condensed Consolidated Financial Statement are included in the following notes:
1. Useful lives of intangible assets and property and equipment (Notes No.15 and No.16);
2. Income taxes and deferred taxes (Note No. 17);
3. Provisions (Note No. 24);
4. Contingencies and Commitments (Note No. 26);
5. Provision for loan losses (Note No. 11. No. 12 and No. 32);
6. Fair value of financial assets and liabilities (Note No. 39).
Estimates and relevant assumptions are regularly reviewed by the management of the Bank, according to quantify certain assets, liabilities, gains, loss and commitments. Estimates reviewed are registered in income in the period that the estimate is reviewed.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, continued
2. Legal regulations, basis of preparation and other information, continued:
(c) Use of estimates and judgments, continued:
During year 2016 it was implemented rules changes related to Compendium of Accounting Rules of Superintendency of Banks and Financial Institutions (SBIF), established in Circulars No. 3,573, No. 3,584 and 3,604. The net effect of these changes on results meant a credit for Ch$653 million, according to the following detail:
a) It enlarges risk classifications until A3 for guarantees with the objective of replace the credit quality of the debtor by the guarantee at the moment to make the provision. This impacted in a provision release of Ch$2,125 million.
b) New rule to specific provisions for factoring operations, that allows the substitution of the credit quality of the grantor by the bill acceptor, as long as this is classified in a category up to A3 or major. This impacted in a provision release of Ch$2,420 million.
c) New definition of non-complying, according the Circular No. 3,584 of June 22nd, 2015, which requested calibration of models of group provision (specifically the probability of non-complying and the loss produced by the non-complying). The above implied a charge to income of Ch$13,443 million.
d) Changes in the percentage of credit equivalent for the free disposition credit lines, which decreased from 50% to 35%. This change implied a credit to income for Ch$9,551 million.
During the period of September 30, 2016, there have not been others significant changes in the estimates.
(d) Seasonality or Cyclical Character of the Transactions of the Intermediate Period:
Due to the nature of its business, the Bank and its subsidiaries’ activities do not have a cyclical or seasonal character. Accordingly, no specific details have been included on the notes to this Interim Condensed Consolidated Financial Statements with the information regarding the period of nine-month ended September 30, 2016.
(e) Relative Importance:
When determining the information to present on the different items from the financial statements or other subjects, the Bank has considered the relative importance in relation to the Interim Condensed Consolidated financial statements of the period.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, continued
2. Legal regulations, basis of preparation and other information, continued:
(f) Reclassifications:
On May 25, 2015 the Superintendency of Banks and Financial Institutions issued a Circular No. 3,583; which it modifies the Chapter C-3 of Compendium of Accounting Rules establishing a new opening for classification of credits for higher education inside of Commercial Loans, effective January 1, 2016.
This modification implied the reclassification of higher education loans from “Consumer Loans” to “Commercial Loans” by an amount of Ch$42,970 million, as of September 30, 2016. See Note No. 12 (a.i).
There have not been others significant reclassifications at the end of this period 2016.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, continued
3. New Accounting Pronouncements:
The following is a summary of new standards, interpretations and improvements to the International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) that it is not effective as of September 30, 2016:
IFRS 9 Financial Instruments
The July 24, 2014, IASB completed its upgrade project about accounting for financial instruments with the publication of IFRS 9 Financial Instruments.
This standard includes new requirements based on new principles for the classification and measurement; it introduces a “prospective” model of expected credit losses on impairment accounting and changes in hedge accounting.
The classification determines how financial assets and liabilities are accounted in financial statements and, in particular, how they are measured. IFRS 9 introduces a new approach for the classification of financial assets, based in the business model of the entity for the management of financial assets and the characteristic of its contractual flows.
In terms of impairment standard establishes a single model that applies to all financial instruments, thus eliminating a source of complexity associated with previous accounting requirements, which require a timely recognition of expected credit losses.
IFRS 9 introduces changes to the requirements for accounting hedge, and also new alternatives of strategies to use. The amendments means a substantial overhaul of hedge accounting that aligns the accounting treatment with risk management activities, enabling entities to better reflect these activities in their financial statements. In addition, as a result of these changes, users of the financial statements will be provided with better information about risk management and the effect of hedge accounting on the financial statements.
IFRS 9 established that the fair value of credit risk of the entity shall be recognized in Other Comprehensive Income, allowing decrease any eventual volatility that would be generated in the income of the entity, because its recognition. IFRS 9 permits early application of this improvement, before any other requirement of IFRS 9.
Mandatory adoption date is January 1, 2018. Early application is permitted.
Banco de Chile and its subsidiaries are assessing the possible impact of adoption of these changes on the consolidated financial statements. The Superintendency of Banks and Financial Institutions has not approved this rule. This event is required to its application.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, continued
3. New Accounting Pronouncements, continued:
IFRS 15 — Revenue from Contracts with Customers
In May 2014 was issued IFRS 15, which it has like purpose established the principles that will apply an entity to present util information to users of financial statements about the nature, amount, opportunity and uncertainty of the income for ordinaries activities and cash flows that it is related to a contract with a client.
This new rule replace the following current rules and interpretations: IAS 18 — Revenue, IAS 11 — Construction contracts, IFRIC 13 — Customer Loyalty Programmes, IFRIC 15 — Agreements for the Construction of Real State, IFRIC 18 — Transfers of Assets from Customers and SIC 31 — Revenue: Barter Transactions involving.
The new model will apply to all contracts with customers, except those that are inside to the scope of the others IFRS, such as leases, insurance contracts and financial instruments.
On April 12, 2016, IASB issued amendments to IFRS 15, clarifying requirements and providing a temporary relief to companies that are implementing the new standard.
In short the amendments clarify how:
a) Identify a performance obligation (the promise to transfer a good or service to a customer) in a contract;
b) Determining whether a company is the principal (the provider of a good or service) or an agent (the organization responsible for the good or service provided); and
c) Determine whether the product of a license must be recognized at a point in time or over time.
The date of application of this new standard starts in January 1, 2018, earlier application is permitted.
Banco de Chile and its subsidiaries are assessing the impact of the adoption of this rule.
IFRS 16 Leases
On January 2016 was issued IFRS 16, which has as purpose to stablish principles to recognize, measurement, presentation and disclosure of leases contracts, for both lessee and lessor.
This new rule is no different to the previous rule, IAS 17 — Leases, related to the accounting treatment for the lessor. However, related to the lessee, the new rule requires recognize the assets and liabilities, so eliminate the differences between financial and operating lease.
The effective date of application is beginning January 1, 2019. It is permitted its early application but, only if it is applied IFRS 15 also.
Banco de Chile and its subsidiaries are assessing the impact of this rule.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, continued
3. New Accounting Pronouncements, continued:
IAS 7 Statement of Cash Flows
On January 2016, the IASB has published amendments to IAS 7, which has as objective that entities shall provide additional disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including changes from financing cash flows and other changes that are not cash flows.
The amendments are effective for annual periods beginning on or after 1 January 2017, earlier application is permitted.
Banco de Chile and its subsidiaries will host and apply these provisions, as long as the issuing date of the financial statements these changes in liabilities have existed, and that deserve to be disclosed in accordance with the new requirements.
IAS 12 Income Taxes
On January 2016, the IASB has published amendments to IAS 12, to clarify the recognition of deferred tax assets on debt instruments measured at fair value, assessing if the Bank has probability to generate futures fiscal income for use the deductible temporary difference.
The amendments are effective for annual periods beginning on or after 1 January 2017, earlier application is permitted.
This standard will not impact financial statements of Banco de Chile and its subsidiaries.
IAS 28 — Investments in Associates and Join Venture and IFRS 10 - Consolidated Financial Statements
In September 2014, the IASB issued this amendment, which clarifies the scope of recognized gains and losses in a transaction involving an associate or joint venture, and this depends on whether the asset sold or contribution is a business. Therefore, IASB concluded that all of the profit or loss should be recognized against loss of control of a business. Likewise, gains or losses resulting from the sale or contribution of a subsidiary that is not a business (definition of IFRS 3) to an associate or joint venture should be recognized only to the extent of unrelated interests in the associate or joint venture.
On December 2015, the IASB agreed that the amendments should apply in the future, and its early application is permitted.
This amendment will not impact financial statements of Banco de Chile and its subsidiaries.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, continued
3. New Accounting Pronouncements, continued:
IFRS 2 Share-based payments
In June 2016, the IASB made amendments to IFRS 2 related to the classification and measurement of transactions of share-based payment.
The amendments address the following areas:
· Compliance conditions when share-based payments are settled in cash.
· Classification of share-based transactions, net of withholding of income tax.
· Accounting for changes made to the terms of the contracts which modify the classification of cash-settled payments or settled in equity shares.
The date of application of these amendments is from January 1, 2018, earlier application is permitted.
Banco de Chile and its subsidiaries will have no impact on the consolidated financial statements result of the adoption of this legislation.
IFRS 4 Insurance contracts
In September 2016, the IASB issued an amendment to IFRS 4 Insurance Contracts to address concerns arising from the application of new pronouncements included in IFRS 9, before implementing the new standard insurance contracts.
The amendments introduce the following two approaches to those entities that issue insurance contracts:
· An overlay approach, will give to all companies that issue insurance contracts the option to recognize in other comprehensive income rather than profit or loss, the volatility that could arise when IFRS 9 is applied before the new contract insurance norm is issued; and
· A postponement approach, will give to companies whose activities are largely connected with insurances an optional temporary exemption to the application of IFRS 9 until 2021. The Entities who defer the application of IFRS 9 will continue applying the existing financial instruments norm.
Banco de Chile and its subsidiaries will have no impact on the consolidated financial statements result of the adoption of this legislation.
4. Changes in Accounting policies and Disclosures:
During the period ended September 30, 2016, changes have occurred in accounting estimates result of instructions issued by the Superintendency of Banks and Financial Institutions. See Note No. 2 c).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, continued
a) On January 28, 2016, in the Ordinary Meeting No. BCH 2832, the Board of Directors of Banco de Chile resolved to call an Ordinary Shareholders Meeting to be held on March 24th, 2016, with the objective of proposing, among other matters, the distribution of the Dividend number 204 of $3.37534954173 per each of the 96,129,146,433 shares, which will be payable at the expense of the distributable net income obtained during the fiscal year ending on December 31st, 2015, corresponding to the 70% of such income.
Likewise, the Board of Directors resolved to call an Extraordinary Shareholders Meeting to be held on the same date in order to propose, among other matters, the capitalization of the 30% of the distributable net income of the Bank obtained during the fiscal year ending on December 31st, 2015, through the issuance of fully paid-in shares, of no par value, with a value $64.79 per share, which will be distributed among the shareholders in the proportion of 0.02232718590 shares for each share and to adopt the necessary agreements subject to the exercise of the options established in article 31 of Law 19,396.
Moreover, the Board, according to the established in No. 3.2 Chapter B4 of Compendium of Accounting Standards of the Superintendency of Banks and Financial Institutions, about minimum dividends provision, agreed to establish that since January 2016 it will constitute provision by the 60% of distributable net income that it will be accumulating during the each period.
b) The Board of Directors of Banco de Chile, in Meeting No. BCH 2,835 held on March 24, 2016, agreed to accept the resignation of the CEO Mr. Arturo Tagle Quiroz, effective April 30, 2016.
Likewise, in the above referred Meeting the Board appointed Mr. Eduardo Ebensperger Orrego as CEO of Banco de Chile, effective May 1, 2016.
Lastly, Mr. Arturo Tagle Quiroz was appointed as advisor to the Board of Directors effective May 1, 2016.
c) On March 29, 2016 Banco de Chile informed as Essential Information that Central Bank of Chile has communicated to Banco de Chile that the Board of such institution, in Special Session No 1967E, held on March 28, 2016, considering the resolutions adopted by the shareholders’ meetings of Banco de Chile of March 24, 2016, regarding distribution of dividends and the increase of capital through the issuance of fully paid-in shares corresponding to the 30% of the net income obtained during the fiscal year ending on December 31, 2015, resolved to take the option that the entirety of its corresponding surplus, including the part of the profits proportional to the agreed capitalization, be paid to the Central Bank of Chile in cash currency, according to the letter b) of the article 31 of the law No 19,396, regarding a modification of the way of payment of the subordinated obligation and other applicable legislation.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, continued
5. Relevant Events, continued:
d) The board meeting held on May 19, 2016, the Board of the subsidiary Banchile Corredores de Bolsa S.A. accepted the resignation of General Manager, Mr. Andrés Bucher Cepeda, presented on May 5, 2016. The Board also agreed to appoint as Interim General Manager to Mr. Andrés Ergas Heller.
e) The board meeting held on May 20, 2016, the Board of Directors of the subsidiary Banchile Asesoría Financiera S.A. accepted the resignation presented by director Mr. Arturo Tagle Quiroz, proceeding to appoint Mr. José Miguel Quintana Malfantia as replacement until the next Ordinary Shareholders Meeting. Additionally, in that board meeting was agreed to appoint Mr. Alfonso Yáñez Fernández as General Manager of Banchile Asesoría Financiera S.A., replacing to Mr. Jorge Muñoz Apara, who submitted his resignation as General Manager on May 5, 2016.
f) The board meeting held on May 23, 2016, the Board of the subsidiary Socofin S.A. accepted the resignation of the Director Arturo Tagle Quiroz, proceeding to appoint as his replacement Mr. Eduardo Ebensperger Orrego.
g) On June 23, 2016, Banco de Chile reported in connection with the capitalization of 30% of the net profit for distributable the year 2015, by issuing bonus shares agreed at an Extraordinary Meeting of Shareholders held on 24 March 2016, the following:
· In the aforementioned Extraordinary Shareholders Meeting, agreed to increase the Bank’s capital in the amount of 96,874,072,595 by issuing 1,495,200,997 bonus shares with no nominal value, payable under the distributable net income for the year 2015 which was not distributed as dividend as agreed at the Ordinary Shareholders’ Meeting held on the same day.
The Superintendency of Banks and Financial Institutions (SBIF) approved the amendment of the by-laws, through Resolution No.162 of May 13 this year, which was registered in the Registry of Commerce of Santiago fs. 35.404 No.19,610 of 2016 and published in the Official Journal on May 20, 2016.
The issue of bonus shares was registered in the Securities Registry of the aforementioned Superintendency under No. 4/2016, dated June 16, 2016.
· The board of Banco de Chile, in Session No. BCH 2,840, dated June 23, 2016, agreed to set a date for the issuance and distribution of bonus shares on July 7, 2016.
· They will be entitled to receive the new shares at the rate of bonus shares 0.02232718590 per share, shareholders who are registered in the Register of Shareholders of the company at 1st July 2016.
· The respective titles will be properly allocated to each shareholder, and will only be printed for those who henceforth request by written at the Department of Shares of Banco de Chile.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, continued
5. Relevant Events, continued:
· As a result of the issuance of bonus shares, the Bank’s capital is divided into 97,624,347,430 shares with no nominal value, fully subscribed and paid.
h) During this period it took place the process of Collective Bargaining between the subsidiary Socofin and the Socofin Company Union S.A., signing a Collective Bargaining Agreement for four years (2016-2020).
i) On July 8, 2016 it is reported that Banco de Chile has learned that the Registrar of Companies of Hong Kong said, from 5 July 2016, formally dissolved the company Banchile Trade Services Limited, which was wholly owned by Banco de Chile and developed support activities to foreign trade with Asian markets.
j) On July 14, 2016 it was reported that Banco de Chile signed with Citigroup Inc. an extension to the contract entitled Master Services Agreement held on September 25, 2009. The referred extension lasts six months from July 1, 2016, expiring consequently on January 1, 2017.
k) The board meeting held on July 22, 2016, the Board of the subsidiary Socofin S.A. accepted the resignation of the Director Mauricio Baeza Letelier, proceeding to appoint as his replacement Mr. Héctor Castagnoli Aracena.
l) During the month of August 2016 it was carried out the processes of collective bargaining between the subsidiary Banchile Administradora General de Fondos and the trade union of Banchile ADM General de Fondos S.A., underwriting with them a collective agreement for a period of three years (2016-2019).
m) During the current exercise was carried out the processes of collective bargaining between the subsidiary Banchile Corredores de Bolsa S.A. and the trade union of Banchile Corredores de Bolsa S.A., underwriting with them a collective agreement for a period of three years (2016-2019).
n) On September 1, 2016, the Extraordinary Shareholders’ Meeting of the subsidiary Socofin S.A. agreed: 1) the increase capital of two billion pesos through the issue of shares for payment; 2) the amendment of Article 5 of the corporate bylaws about share capital; and 3) the incorporation of a transitional article over payment method of capital. The capital increase was fully subscribed and paid by its shareholders on September 29, 2016.
o) The board meeting held on September 26, 2016, the Board of the subsidiary Banchile Corredores de Bolsa S.A. appointed as new General Manager to Mr. Hernán Arellano Salas.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, continued
For management purposes, the Bank has organized its operations and commercial strategies into four business segments, which are defined in accordance with the type of products and services offered to target customers. These business segments are currently defined as follows:
Retail: This segment focuses on individuals and small and medium-sized companies with annual sales up to 70,000UF, where the product offering focuses primarily on consumer loans, commercial loans, checking accounts, credit cards, credit lines and mortgage loans.
Wholesale: This segment focused on corporate clients and large companies, whose annual revenue exceed 70,000UF, where the product offering focuses primarily on commercial loans, checking accounts and liquidity management services, debt instruments, foreign trade, derivative contracts and leases.
Treasury and money market operations:
This segment includes revenue associated with managing the Bank’s balance sheet (currencies, maturities and interest rates) and liquidity, including financial instrument and currency trading on behalf of the Bank itself.
Transactions on behalf of customers carried out by the Treasury are reflected in the respective aforementioned segments. These products are highly transaction-focused and include foreign exchange transactions, derivatives and financial instruments in general.
Subsidiaries: Corresponds to companies and corporations controlled by the Bank, where income is obtained individually by the respective subsidiary. The companies that comprise this segment are:
Entity
· Banchile Administradora General de Fondos S.A.
· Banchile Asesoría Financiera S.A.
· Banchile Corredores de Seguros Ltda.
· Banchile Corredores de Bolsa S.A.
· Banchile Securitizadora S.A.
· Banchile Trade Services Limited (*)
· Socofin S.A.
· Promarket S.A.
(*) See Note No. 5 (i).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, continued
6. Segment Reporting, continued:
The financial information used to measure the performance of the Bank’s business segments is not necessarily comparable with similar information from other financial institutions because it is based on internal reporting policies. The accounting policies used to prepare the Bank’s operating segment information are similar as those described in “Summary of Significant Accounting Principles”. The Bank obtains the majority of its income from: interest, revaluations and fees, discounted the credit cost and expenses. Management is mainly based on these concepts in its evaluation of segment performance and decision-making regarding goals, allocation of resources for each unit individually. Although the results of the segments reconcile with those of the Bank at total level, it is not thus necessarily concerning the different concepts, since the management is measured and controls in individual form and applying the following criteria:
· The net interest margin of loans and deposits is obtained aggregating the net financial margins of each individual operation of credit and uptake made by the bank. For these purposes is considered the volume of each operation and its contribution margin, stemming from the difference between the effective customer rate and the related Bank’s fund transfer price in terms of maturity and currency.
· The internal performance profitability system considers capital allocation in each segment in accordance to the Basel guidelines.
· Operating expenses are distributed at each area level. The Bank allocates all of its indirect operating costs to each business segment by utilizing a different cost driver in order to allocate such costs to the specific segment.
The Bank did not enter into transactions with a particular customer or third parties that exceed 10% or more of its total income during the nine-month period ended September 30, 2016 and 2015.
Taxes are managed at a corporate level and are not allocated to business segments.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, continued
6. Segment Reporting, continued:
The following table presents the income by segment for the periods ended September 2016 and 2015 for each of the segments defined above:
|
|
|
Retail |
|
Wholesale |
|
Treasury |
|
Subsidiaries |
|
Subtotal |
|
Consolidation |
|
Total |
| ||||||||||||||
|
|
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
September |
|
|
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
649,518 |
|
623,657 |
|
254,312 |
|
264,922 |
|
13,853 |
|
21,724 |
|
(3,203 |
) |
(5,048 |
) |
914,480 |
|
905,255 |
|
778 |
|
1,297 |
|
915,258 |
|
906,552 |
|
|
Net fees and commissions income (loss) |
|
123,635 |
|
109,284 |
|
30,588 |
|
33,617 |
|
(1,775 |
) |
(1,608 |
) |
101,000 |
|
94,064 |
|
253,448 |
|
235,357 |
|
(13,301 |
) |
(12,198 |
) |
240,147 |
|
223,159 |
|
|
Other operating income |
|
80,866 |
|
17,691 |
|
26,632 |
|
48,744 |
|
36,124 |
|
19,882 |
|
18,231 |
|
19,071 |
|
161,853 |
|
105,388 |
|
(2,674 |
) |
(3,125 |
) |
159,179 |
|
102,263 |
|
|
Total operating revenue |
|
854,019 |
|
750,632 |
|
311,532 |
|
347,283 |
|
48,202 |
|
39,998 |
|
116,028 |
|
108,087 |
|
1,329,781 |
|
1,246,000 |
|
(15,197 |
) |
(14,026 |
) |
1,314,584 |
|
1,231,974 |
|
|
Credit risk provisions (*) |
|
(213,428 |
) |
(179,129 |
) |
(8,936 |
) |
(50,033 |
) |
— |
|
— |
|
(90 |
) |
111 |
|
(222,454 |
) |
(229,051 |
) |
— |
|
— |
|
(222,454 |
) |
(229,051 |
) |
|
Depreciation and amortization |
|
(18,131 |
) |
(15,832 |
) |
(4,302 |
) |
(4,046 |
) |
(188 |
) |
(196 |
) |
(2,294 |
) |
(1,925 |
) |
(24,915 |
) |
(21,999 |
) |
— |
|
— |
|
(24,915 |
) |
(21,999 |
) |
|
Other operating expenses |
|
(377,998 |
) |
(343,206 |
) |
(114,233 |
) |
(105,123 |
) |
(4,762 |
) |
(4,396 |
) |
(90,709 |
) |
(77,593 |
) |
(587,702 |
) |
(530,318 |
) |
15,197 |
|
14,026 |
|
(572,505 |
) |
(516,292 |
) |
|
Income attributable to associates |
|
2,293 |
|
1,955 |
|
638 |
|
386 |
|
56 |
|
15 |
|
386 |
|
349 |
|
3,373 |
|
2,705 |
|
— |
|
— |
|
3,373 |
|
2,705 |
|
|
Income before income taxes |
|
246,755 |
|
214,420 |
|
184,699 |
|
188,467 |
|
43,308 |
|
35,421 |
|
23,321 |
|
29,029 |
|
498,083 |
|
467,337 |
|
— |
|
— |
|
498,083 |
|
467,337 |
|
|
Income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(69,868 |
) |
(48,439 |
) |
|
Income after income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
428,215 |
|
418,898 |
|
(*) At 30 September 2016, the retail and wholesale segments include additional provisions assigned according to their risk-weighted assets.
The following table presents assets and liabilities of the period ended September 30, 2016 and December 31, 2015 by each segment defined above:
|
|
|
Retail |
|
Wholesale |
|
Treasury |
|
Subsidiaries |
|
Subtotal |
|
Consolidation |
|
Total |
| ||||||||||||||
|
|
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
September |
|
December |
|
|
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
14,973,021 |
|
14,431,003 |
|
11,417,546 |
|
11,866,488 |
|
3,942,164 |
|
4,362,051 |
|
544,953 |
|
523,080 |
|
30,877,684 |
|
31,182,622 |
|
(147,543 |
) |
(148,929 |
) |
30,730,141 |
|
31,033,693 |
|
|
Current and deferred taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
288,697 |
|
259,251 |
|
|
Total assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,018,838 |
|
31,292,944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||