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v3.19.1

Fair Value of Financial Assets and Liabilities (Tables) | 12 Months Ended
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Dec. 31, 2018
Financial instrument disclosures |
Summary of valuation techniques and inputs |
Type of Financial Instrument |  | Valuation Method |  | Description: Inputs and Sources
Local Bank and Corporate Bonds |  | Discounted cash flows model |  | Prices are provided by third party price providers that are widely used in the Chilean market. Model is based on a Base Yield (Central Bank Bonds) and issuer spread. The model is based on daily prices and risk/maturity similarities between Instruments.
Offshore Bank and Corporate Bonds |  |  |  | Prices are provided by third party price providers that are widely used in the Chilean market. Model is based on daily prices.
Local Central Bank and Treasury Bonds |  |  |  | Prices are provided by third party price providers that are widely used in the Chilean market. Model is based on daily prices.
Mortgage Notes |  |  |  | Prices are provided by third party price providers that are widely used in the Chilean market. Model is based on a Base Yield (Central Bank Bonds) and issuer spread. The model takes into consideration daily prices and risk/maturity similarities between instruments.
Time Deposits |  |  |  | Prices are provided by third party price providers that are widely used in the Chilean market. Model is based on daily prices and considers risk/maturity similarities between instruments.
Cross Currency Swaps, Interest Rate Swaps, FX Forwards, Inflation Forwards |  |  |  | Forward Points, Inflation forecast and local swap rates are provided by market brokers that are widely used in the Chilean market Offshore rates and spreads are obtained from third party price providers that are widely used in the Chilean market. Zero Coupon rates are calculated by using the bootstrapping method over swap rates.
FX Options |  | Black-Scholes Model |  | Prices for volatility surface estimates are obtained from market brokers that are widely used in the Chilean market.
Schedule of fair value of Financial Assets/Liabilities on the balance sheet |
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | 2017 |  | 2018 |  | 2017 |  | 2018 |  | 2017 |  | 2018 |  | 2017 |  | 2018
|  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$
Financial Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets held-for-trading |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
From the Chilean government and Central Bank |  | 623,276 |  | 178,692 |  | 693,888 |  | 1,344,780 |  | — |  | — |  | 1,317,164 |  | 1,523,472
Mutual fund investments |  | ― |  | 87,841 |  | ― |  | ― |  | — |  | — |  | ― |  | 87,841
Other instruments issued in Chile |  | 714 |  | 1,663 |  | 212,366 |  | 107,078 |  | 8,012 |  | 20,866 |  | 221,092 |  | 129,607
Instruments issued abroad |  | 322 |  | 4,446 |  | ― |  | ― |  | — |  | — |  | 322 |  | 4,446
Subtotal |  | 624,312 |  | 272,642 |  | 906,254 |  | 1,451,858 |  | 8,012 |  | 20,866 |  | 1,538,578 |  | 1,745,366
Derivative contracts for trading purposes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forwards |  | — |  | — |  | 506,614 |  | 735,444 |  | — |  | — |  | 506,614 |  | 735,444
Swaps |  | — |  | — |  | 710,123 |  | 738,130 |  | — |  | — |  | 710,123 |  | 738,130
Call options |  | — |  | — |  | 514 |  | 4,839 |  | — |  | — |  | 514 |  | 4,839
Put options |  | — |  | — |  | 2,841 |  | 120 |  | — |  | — |  | 2,841 |  | 120
Futures |  | — |  | — |  | ― |  | ― |  | — |  | — |  | ― |  | ―
Subtotal |  | — |  | — |  | 1,220,092 |  | 1,478,533 |  | — |  | — |  | 1,220,092 |  | 1,478,533
Hedge derivative contracts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value hedge (Swaps) |  | — |  | — |  | 277 |  | 1,116 |  | — |  | — |  | 277 |  | 1,116
Cash flow hedge (Swaps) |  | — |  | — |  | 27,572 |  | 34,298 |  | — |  | — |  | 27,572 |  | 34,298
Subtotal |  | — |  | — |  | 27,849 |  | 35,414 |  | — |  | — |  | 27,849 |  | 35,414
Total |  | — |  | — |  | 1,247,941 |  | 1,513,947 |  | — |  | — |  | 1,247,941 |  | 1,513,947
Financial assets available-for-sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
From the Chilean government and Central Bank |  | 229,296 |  | — |  | 127,072 |  | — |  | — |  | — |  | 356,368 |  | —
Other instruments issued in Chile |  | ― |  | — |  | 1,122,648 |  | — |  | 46,265 |  | — |  | 1,168,913 |  | —
Instruments issued abroad |  | 984 |  | — |  | ― |  | — |  | 50 |  | — |  | 1,034 |  | —
Subtotal |  | 230,280 |  | — |  | 1,249,720 |  | — |  | 46,315 |  | — |  | 1,526,315 |  | —
Financial assets at fair value through other comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt instruments (1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
From the Chilean government and Central Bank |  | — |  | 99,132 |  | — |  | 65,090 |  | — |  | — |  | — |  | 164,222
Instruments issued in Chile |  | — |  | ― |  | — |  | 747,653 |  | — |  | 23,021 |  | — |  | 770,674
Instruments issued abroad |  | — |  | ― |  | — |  | 108,544 |  | — |  | ― |  | — |  | 108,544
Subtotal |  | — |  | 99,132 |  | — |  | 921,287 |  | — |  | 23,021 |  | — |  | 1,043,440
Equity instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Instruments issued in Chile |  | — |  | ― |  | — |  | 8,939 |  | — |  | — |  | — |  | 8,939
Instruments issued abroad |  | — |  | 723 |  | — |  | ― |  | — |  | 89 |  | — |  | 812
Subtotal |  | — |  | 723 |  | — |  | 8,939 |  | — |  | 89 |  | — |  | 9,751
Total |  | 230,280 |  | 99,855 |  | 1,249,720 |  | 930,226 |  | 46,315 |  | 23,110 |  | 1,526,315 |  | 1,053,191
Other assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mutual fund investments |  | 78,069 |  | — |  | — |  | — |  | — |  | — |  | 78,069 |  | —
Subtotal |  | 78,069 |  | — |  | — |  | — |  | — |  | — |  | 78,069 |  | —
Total |  | 932,661 |  | 372,497 |  | 3,403,915 |  | 3,896,031 |  | 54,327 |  | 43,976 |  | 4,390,903 |  | 4,312,504
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative contracts for trading purposes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forwards |  | — |  | — |  | 575,137 |  | 631,089 |  | — |  | — |  | 575,137 |  | 631,089
Swaps |  | — |  | — |  | 727,765 |  | 854,708 |  | — |  | — |  | 727,765 |  | 854,708
Call options |  | — |  | — |  | 472 |  | 2,921 |  | — |  | — |  | 472 |  | 2,921
Put options |  | — |  | — |  | 3,403 |  | 1,534 |  | — |  | — |  | 3,403 |  | 1,534
Futures |  | — |  | — |  | ― |  | ― |  | — |  | — |  | — |  | ―
Subtotal |  | — |  | — |  | 1,306,777 |  | 1,490,252 |  | — |  | — |  | 1,306,777 |  | 1,490,252
Hedge derivative contracts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value hedge (Swaps) |  | — |  | — |  | 5,330 |  | 6,164 |  | — |  | — |  | 5,330 |  | 6,164
Cash flow hedge (Swaps) |  | — |  | — |  | 80,888 |  | 31,818 |  | — |  | — |  | 80,888 |  | 31,818
Subtotal |  | — |  | — |  | 86,218 |  | 37,982 |  | — |  | — |  | 86,218 |  | 37,982
Total |  | — |  | — |  | 1,392,995 |  | 1,528,234 |  | — |  | — |  | 1,392,995 |  | 1,528,234
| (1) |  | As of December 31, 2018, 80% of instruments of level 3 has denomination “Investment Grade”. Also, 100% of total of these financial instruments correspond to domestic issuers.
Schedule of reconciliation between the beginning and ending balances of instruments classified as Level 3, whose fair value is reflected in the financial statements |
|  | 2017
|  |  |  | Gain (Loss) |  | Gain (Loss) |  |  |  |  |  |  |  |  |  | Balance as of
|  | Balance as of |  | Recognized in |  | Recognized in |  |  |  |  |  | Transfer from |  | Transfer to |  | December
|  | January 1, 2017 |  | Income (1) |  | Equity (2) |  | Purchases |  | Sales |  | Level 1 and 2 |  | Level 1 and 2 |  | 31, 2017
|  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$
Financial Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets held-for-trading: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other instruments issued in Chile |  | 8,960 |  | (7) |  | — |  | 7,446 |  | (10,772) |  | 2,385 |  | — |  | 8,012
Subtotal |  | 8,960 |  | (7) |  | — |  | 7,446 |  | (10,772) |  | 2,385 |  | — |  | 8,012
Financial assets available-for-sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other instruments issued in Chile |  | 76,005 |  | (4,186) |  | 1,137 |  | 4,922 |  | (28,604) |  | 2,672 |  | (5,681) |  | 46,265
Instruments issued abroad |  | 54 |  | — |  | (4) |  | — |  | — |  | — |  | — |  | 50
Subtotal |  | 76,059 |  | (4,186) |  | 1,133 |  | 4,922 |  | (28,604) |  | 2,672 |  | (5,681) |  | 46,315
Total |  | 85,019 |  | (4,193) |  | 1,133 |  | 12,368 |  | (39,376) |  | 5,057 |  | (5,681) |  | 54,327
|  | 2018
|  |  |  | Gain (Loss) |  | Gain (Loss) |  |  |  |  |  |  |  |  |  | Balance as of
|  | Balance as of |  | Recognized in |  | Recognized in |  |  |  |  |  | Transfer from |  | Transfer to |  | December 31,
|  | January 1, 2018 |  | Income (1) |  | Equity (2) |  | Purchases |  | Sales |  | Level 1 and 2 |  | Level 1 and 2 |  | 2018
|  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$
Financial Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets held-for-trading: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other instruments issued in Chile |  | 8,012 |  | 176 |  | — |  | 48,740 |  | (36,062) |  | — |  | — |  | 20,866
Subtotal |  | 8,012 |  | 176 |  | — |  | 48,740 |  | (36,062) |  | — |  | — |  | 20,866
Financial assets at fair value through OCI: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Instruments issued in Chile |  | 46,265 |  | 2,539 |  | (292) |  | — |  | (20,520) |  | — |  | (4,971) |  | 23,021
Equity instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Instruments issued abroad |  | 50 |  | — |  | 39 |  | — |  | — |  | — |  | — |  | 89
Subtotal |  | 46,315 |  | 2,539 |  | (253) |  | — |  | (20,520) |  | — |  | (4,971) |  | 23,110
Total |  | 54,327 |  | 2,715 |  | (253) |  | 48,740 |  | (56,582) |  | — |  | (4,971) |  | 43,976
| (1) |  | It is recorded in the income statement under “Net financial operating income”
| (2) |  | It is recorded in Equity under “Other Comprehensive Income”
Schedule of transfers between levels for financial assets and liabilities whose fair value is recorded in the consolidated financial statements |
|  | Transfers from
|  | level 1 to level 2
|  | 2017
Financial assets |  | MCh$
Financial assets held-for-trading instruments |  |
From the Chilean Government and Central Bank |  | 4,688
Instruments issued abroad |  |
From the Chilean Government and Central Bank |  | —
|  | Transfers from
|  | level 2 to level 1
|  | 2017
Financial assets |  | MCh$
Financial assets held-for-trading instruments |  |
From the Chilean Government and Central Bank |  | 3,498
Instruments issued abroad |  |
From the Chilean Government and Central Bank |  | 4,373
|  | Transfers from
|  | level 1 to level 2
|  | 2018
Financial assets |  | MCh$
Financial assets held-for-trading instruments |  | 496
From the Chilean Government and Central Bank |  |
Financial assets at fair value through OCI |  |
From the Chilean Government and Central Bank |  | 9,444
|  | Transfers from
|  | level 2 to level 1
|  | 2018
Financial assets |  | MCh$
Financial assets held-for-trading instruments |  |
From the Chilean Government and Central Bank |  | —
Financial assets at fair value through OCI |  |
From the Chilean Government and Central Bank |  | —
Schedule of impact on the fair value of Level 3 financial instruments using alternative assumptions that are reasonably possible |
|  | As of December 31, 2017 |  | As of December 31, 2018
|  |  |  | Sensitivity to |  |  |  | Sensitivity to
|  |  |  | changes in key |  |  |  | changes in key
|  |  |  | assumptions of |  |  |  | assumptions of
|  | Level 3 |  | models |  | Level 3 |  | models
Financial Assets |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$
Financial assets held-for-trading |  |  |  |  |  |  |  |
Other instruments issued in Chile |  | 8,012 |  | (26) |  | 20,866 |  | (26)
Subtotal |  | 8,012 |  | (26) |  | 20,866 |  | (26)
Financial assets available-for-sale |  |  |  |  |  |  |  |
Other instruments issued in Chile |  | 46,265 |  | (417) |  | — |  | —
Instruments issued abroad |  | 50 |  | — |  | — |  | —
Subtotal |  | 46,315 |  | (417) |  | — |  | —
Financial assets at fair value through OCI |  |  |  |  |  |  |  |
Debt instrument: |  |  |  |  |  |  |  |
Other instruments issued in Chile |  | — |  | — |  | 23,021 |  | (195)
Equity instrument: |  |  |  |  |  |  |  |
Instruments issued abroad |  | — |  | — |  | 89 |  | —
Subtotal |  | — |  | — |  | 23,110 |  | (195)
Total |  | 54,327 |  | (443) |  | 43,976 |  | (221)
Schedule of fair values of the financial assets and liabilities that are not recorded at fair value in the Statement of Financial Position |
|  | Book Value |  | Fair Value
|  | 2017 |  | 2018 |  | 2017 |  | 2018
|  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$
Assets |  |  |  |  |  |  |  |
Cash and due from banks |  | 1,057,393 |  | 880,081 |  | 1,057,393 |  | 880,081
Transactions in the course of collection |  | 255,968 |  | 289,194 |  | 255,968 |  | 289,194
Cash collateral on securities borrowed and reverse repurchase agreements |  | 91,641 |  | 97,289 |  | 91,641 |  | 97,289
Subtotal |  | 1,405,002 |  | 1,266,564 |  | 1,405,002 |  | 1,266,564
Loans and advances to banks |  |  |  |  |  |  |  |
Domestic banks |  | 119,998 |  | 99,776 |  | 119,998 |  | 99,776
Chilean Central Bank |  | 350,916 |  | 1,100,831 |  | 350,916 |  | 1,100,831
Foreign banks |  | 289,107 |  | 293,777 |  | 289,107 |  | 286,063
Subtotal |  | 760,021 |  | 1,494,384 |  | 760,021 |  | 1,486,670
Loans to customers, net |  |  |  |  |  |  |  |
Commercial loans |  | 13,739,589 |  | 15,209,534 |  | 13,477,466 |  | 14,949,852
Residential mortgage loans |  | 7,445,221 |  | 8,017,743 |  | 7,769,694 |  | 8,451,099
Consumer loans |  | 3,770,882 |  | 4,113,977 |  | 3,773,005 |  | 4,116,261
Subtotal |  | 24,955,692 |  | 27,341,254 |  | 25,020,165 |  | 27,517,212
Total |  | 27,120,715 |  | 30,102,202 |  | 27,185,188 |  | 30,270,446
Liabilities |  |  |  |  |  |  |  |
Current accounts and other demand deposits |  | 8,915,706 |  | 9,584,488 |  | 8,915,706 |  | 9,584,488
Transactions in the course of payment |  | 29,871 |  | 44,436 |  | 29,871 |  | 44,436
Cash collateral on securities lent and reverse repurchase agreements |  | 195,392 |  | 303,820 |  | 195,392 |  | 303,820
Saving accounts and time deposits |  | 10,067,778 |  | 10,656,174 |  | 10,073,030 |  | 10,632,350
Borrowings from financial institutions |  | 1,195,028 |  | 1,516,759 |  | 1,188,943 |  | 1,506,940
Other financial obligations |  | 137,163 |  | 118,014 |  | 137,163 |  | 119,024
Subtotal |  | 20,540,938 |  | 22,223,691 |  | 20,540,105 |  | 22,191,058
Debt issued |  |  |  |  |  |  |  |
Letters of credit for residential purposes |  | 21,059 |  | 15,040 |  | 22,542 |  | 15,982
Letters of credit for general purposes |  | 2,365 |  | 1,328 |  | 2,532 |  | 1,411
Bonds |  | 5,769,334 |  | 6,772,990 |  | 5,896,424 |  | 6,897,317
Subordinated bonds |  | 696,217 |  | 686,194 |  | 699,926 |  | 732,611
Subtotal |  | 6,488,975 |  | 7,475,552 |  | 6,621,424 |  | 7,647,321
Total |  | 27,029,913 |  | 29,699,243 |  | 27,161,529 |  | 29,838,379
Schedule of figures by hierarchy, for financial assets/liabilities not measured at fair value on the balance sheet |
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | Estimated Fair Value |  | Estimated Fair Value |  | Estimated Fair Value |  | Estimated Fair Value
|  | 2017 |  | 2018 |  | 2017 |  | 2018 |  | 2017 |  | 2018 |  | 2017 |  | 2018
|  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from banks |  | 1,057,393 |  | 880,081 |  | — |  | — |  | — |  | — |  | 1,057,393 |  | 880,081
Transactions in the course of collection |  | 255,968 |  | 289,194 |  | — |  | — |  | — |  | — |  | 255,968 |  | 289,194
Receivables from repurchase agreements and security borrowing |  | 91,641 |  | 97,289 |  | — |  | — |  | — |  | — |  | 91,641 |  | 97,289
Subtotal |  | 1,405,002 |  | 1,266,564 |  | — |  | — |  | — |  | — |  | 1,405,002 |  | 1,266,564
Loans and advances to banks |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Domestic banks |  | 119,998 |  | 99,776 |  | — |  | — |  | — |  | ― |  | 119,998 |  | 99,776
Central bank |  | 350,916 |  | 1,100,831 |  | — |  | — |  | — |  | ― |  | 350,916 |  | 1,100,831
Foreign banks |  | 289,107 |  | — |  | — |  | — |  | — |  | 286,063 |  | 289,107 |  | 286,063
Subtotal |  | 760,021 |  | 1,200,607 |  | — |  | — |  | — |  | 286,063 |  | 760,021 |  | 1,486,670
Loans to customers, net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  | — |  | — |  | — |  | — |  | 13,477,466 |  | 14,949,852 |  | 13,477,466 |  | 14,949,852
Residential mortgage loans |  | — |  | — |  | — |  | — |  | 7,769,694 |  | 8,451,099 |  | 7,769,694 |  | 8,451,099
Consumer loans |  | — |  | — |  | — |  | — |  | 3,773,005 |  | 4,116,261 |  | 3,773,005 |  | 4,116,261
Subtotal |  | — |  | — |  | — |  | — |  | 25,020,165 |  | 27,517,212 |  | 25,020,165 |  | 27,517,212
Total |  | 2,165,023 |  | 2,467,171 |  | — |  | — |  | 25,020,165 |  | 27,803,275 |  | 27,185,188 |  | 30,270,446
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current accounts and other demand deposits |  | 8,915,706 |  | 9,584,488 |  | — |  | — |  | — |  | — |  | 8,915,706 |  | 9,584,488
Transactions in the course of payment |  | 29,871 |  | 44,436 |  | — |  | — |  | — |  | — |  | 29,871 |  | 44,436
Payables from repurchase agreements and security lending |  | 195,392 |  | 303,820 |  | — |  | — |  | — |  | — |  | 195,392 |  | 303,820
Savings accounts and time deposits |  | — |  | — |  | — |  | — |  | 10,073,030 |  | 10,632,350 |  | 10,073,030 |  | 10,632,350
Borrowings from financial institutions |  | — |  | — |  | — |  | — |  | 1,188,943 |  | 1,506,940 |  | 1,188,943 |  | 1,506,940
Other financial obligations |  | 137,163 |  | — |  | — |  | — |  | ― |  | 119,024 |  | 137,163 |  | 119,024
Subtotal |  | 9,278,132 |  | 9,932,744 |  | — |  | — |  | 11,261,973 |  | 12,258,314 |  | 20,540,105 |  | 22,191,058
Debt Issued |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Letters of credit for residential purposes |  | — |  | — |  | 22,542 |  | 15,982 |  | — |  | ― |  | 22,542 |  | 15,982
Letters of credit for general purposes |  | — |  | — |  | 2,532 |  | 1,411 |  | — |  | ― |  | 2,532 |  | 1,411
Bonds |  | — |  | — |  | 5,896,424 |  | 6,897,317 |  | — |  | ― |  | 5,896,424 |  | 6,897,317
Subordinate bonds |  | — |  | — |  | — |  | ― |  | 699,926 |  | 732,611 |  | 699,926 |  | 732,611
Subtotal |  | — |  | — |  | 5,921,498 |  | 6,914,710 |  | 699,926 |  | 732,611 |  | 6,621,424 |  | 7,647,321
Total |  | 9,278,132 |  | 9,932,744 |  | 5,921,498 |  | 6,914,710 |  | 11,961,899 |  | 12,990,925 |  | 27,161,529 |  | 29,838,379
Schedule of offsetting of financial assets and liabilities |
|  | Effect of offsetting on balance sheet |  | Related amount not offset
|  |  |  |  |  | Net amounts reported |  |  |  |  |  |
|  | Gross amount |  | Amounts offset |  | on the balance sheet |  | Financial Instruments |  | Financial Collateral |  | Net amount
As of December 31, 2017 |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$
Derivative financial assets |  | 1,247,941 |  | — |  | 1,247,941 |  | (600,439) |  | (34,212) |  | 613,290
Derivative financial liabilities |  | 1,392,995 |  | — |  | 1,392,995 |  | (600,439) |  | (83,523) |  | 709,033
|  | Effect of offsetting on balance sheet |  | Related amount not offset
|  |  |  |  |  | Net amounts reported |  |  |  |  |  |
|  | Gross amount |  | Amounts offset |  | on the balance sheet |  | Financial Instruments |  | Financial Collateral |  | Net amount
As of December 31, 2018 |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$ |  | MCh$
Derivative financial assets |  | 1,513,947 |  | — |  | 1,513,947 |  | (1,007,130) |  | (30,036) |  | 476,781
Derivative financial liabilities |  | 1,528,234 |  | — |  | 1,528,234 |  | (1,007,130) |  | (233,450) |  | 287,654
Fair Value - not measured at fair value |
Financial instrument disclosures |
Summary of valuation techniques and inputs |
Type of Financial Instrument |  | Valuation Method |  | Description: Inputs and Sources
Local Bank and Corporate Bonds |  | Discounted cash flows model |  | Since inputs for these types of securities are not observable by the market, we model interest rate of returns for them based on a Base Yield (Central Bank Bonds) and issuer spread. These inputs (base yield and issuer spread) are provided on a daily basis by third party price providers that are widely used in the Chilean market.
Offshore Bank and Corporate Bonds |  | Discounted cash flows model |  | Since inputs for these types of securities are not observable by the market, we model interest rate of returns for them based on a Base Yield (US-Libor) and issuer spread. These inputs (base yield and issuer spread) are provided on a weekly basis by third party price providers that are widely used in the Chilean market.

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