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Business Segment
 12 Months Ended
Dec. 31, 2023
Business Segment [Abstract]  
Business Segment
6.Business Segment:

 

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 (SMEs) with annual sales up to UF 70,000, 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 UF 70,000, where the product offering focuses primarily on commercial loans, checking accounts and liquidity management services, debt instruments, foreign trade, derivative contracts and leases.

 

Treasury:This segment includes the associated revenues to the management of the investment portfolio and the business of financial transactions and currency trading.

 

Transactions with 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, among others.

 

Subsidiaries:Corresponds to the businesses generated by the companies controlled by the Bank, which carry out activities complementary to the bank business. The companies that comprise this segment are:

 

●Banchile Administradora General de Fondos S.A.

 

●Banchile Asesoría Financiera S.A.

 

●Banchile Corredores de Seguros Ltda.

 

●Banchile Corredores de Bolsa S.A.

 

●Socofin S.A.

 

The financial information used to measure the performance of the Bank’s business segments is not comparable with similar information from other financial institutions because each institution relies on its own definitions. The accounting policies applied to the segments is the same as those described in the summary of accounting principles. The Bank obtains the majority of the results from: interest, indexation and commissions and financial operations and changes, discounting provisions for credit risk and operating expenses. Management relies mainly on these concepts to evaluate the performance of the segments and make decisions about the goals and allocations of resources of each unit. Although the results of the segments reconcile with those of the Bank at the total level, this is not necessarily the case in terms of the different concepts, given that management is measured and controlled individually and not on a consolidated basis, 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, the volume of each operation and its contribution margin are considered, which in turn corresponds to the difference between the effective rate of the customer and the internal transfer price established according to the term and currency of each operation. Additionally, the net margin includes the result of interest and indexation from the accounting hedges.

 

●Provisions for credit risk are determined at the customer and counterparty level based on the characteristics of each of their operations.

 

●The capital and financial impacts on outcome have been assigned to each segment based on the risk-weighted assets.

 

●Operational expenses are recognized at the level of the different functional areas of the Bank. Then, for the business segment purposes, the allocation of expenses from functional areas is done using different allocation criteria, at the level of the different concepts and expense items.

 

Taxes are managed at the consolidated level and are not allocated to business segments.

 

For the years ended December 31, 2023 and 2022 there was no income from transactions with a customer or counterparty that accounted for 10% or more of the Bank’s total revenues.

 

The following table presents the income, and assets and liabilities by segment for the year ended December 31, 2023 for each of the segments defined above:

 

   As of December 31, 2023 
   Retail   Wholesale   Treasury   Subsidiaries   Subtotal   Reclassifications and
adjustments to
conform IFRS		     Total 
   MCh$   MCh$   MCh$   MCh$   MCh$   MCh$   Note  MCh$ 
Net interest income and UF indexation   1,412,392    780,957    (292,471)   (11,162)   1,889,716    31,076       1,920,792 
Net commissions income   326,857    80,056    (2,235)   173,227    577,905    (43,873)      534,032 
Net financial income   10,771    54,902    336,515    66,521    468,709    844       469,553 
Other income   56,597    25,995    —    3,400    85,992    (7,190)      78,802 
Income attributable to investments in other companies   9,624    3,366    342    1,100    14,432    (1,023)      13,409 
Operating income, before expected credit losses   1,816,241    945,276    42,151    233,086    3,036,754    (20,166)  (1)   3,016,588 
Expenses for expected credit losses   (373,448)   9,443    2,754    —    (361,251)   159,307   (2)   (201,944)
Total operating income, after expected credit losses   1,442,793    954,719    44,905    233,086    2,675,503    139,141       2,814,644 
Expenses from salaries and employee benefits   (375,654)   (115,731)   (2,558)   (88,761)   (582,704)   20       (582,684)
Administrative expenses   (330,287)   (76,104)   (1,904)   (39,037)   (447,332)   38,488       (408,844)
Depreciation and amortization   (76,899)   (8,476)   (309)   (6,624)   (92,308)   —       (92,308)
Impairment of non-financial assets   (1,773)   (5)   —    16    (1,762)   —       (1,762)
Other operating expenses   (23,879)   (8,390)   (3)   (1,603)   (33,875)   970       (32,905)
Total operating expenses   (808,492)   (208,706)   (4,774)   (136,009)   (1,157,981)   39,478   (3)   (1,118,503)
Net operating income   634,301    746,013    40,131    97,077    1,517,522    178,619       1,696,141 
Income taxes                       (273,887)   (48,227)  (4)   (322,114)
Net income after taxes                       1,243,635    130,392       1,374,027 
                                       
Assets   22,920,254    13,226,319    18,215,123    986,697    55,348,393    (91,952)      55,256,441 
Current and deferred taxes                       681,012    (219,412)      461,600 
Total assets                       56,029,405    (311,364)  (5)   55,718,041 
                                       
Liabilities   18,650,882    10,357,679    21,005,581    777,170    50,791,312    (1,156,024)      49,635,288 
Current and deferred taxes                       808    —       808 
Total liabilities                       50,792,120    (1,156,024)  (6)   49,636,096 

 

Reclassifications and adjustments to conform IFRS

 

(1)The total effect due to the consolidation adjustments to conform the total operating revenue is MCh$(39,478). In addition, the total effect of IFRS adjustments is MCh$19,312, which mainly stems from the recognition of interest income on accrual basis.

 

(2)The total effect relates to IFRS adjustments of MCh$159,307, which mainly stems from differences in the calculation model of allowances for ECL.

 

(3)The total effect due to the consolidation adjustments to conform total operating expenses is MCh$39,478.

 

(4)The total effect relates to IFRS adjustments of MCh$(48,227), which stems from deferred taxes.

 

(5)The total effect due to the consolidation adjustments to conform the consolidated financial position data in assets is MCh$(236,853). In addition, the total effect of IFRS adjustments in assets is MCh$(74,511), which mainly stems from differences in the calculation model for ECL and deferred taxes effects.

 

(6)The total effect due to the consolidation adjustments to conform the consolidated financial position data in liabilities is MCh$(236,853). In addition, the total effect of IFRS adjustments in liabilities is MCh$(919,171), which mainly stems from provision for minimum dividends and differences in the calculation model of allowances for ECL.

 

The following table presents the income, and assets and liabilities by segment for the year ended December 31, 2022 for each of the segments defined above:

 

   As of December 31, 2022 
   Retail   Wholesale   Treasury   Subsidiaries   Subtotal   Reclassifications and
adjustments to
conform IFRS		     Total 
   MCh$   MCh$   MCh$   MCh$   MCh$   MCh$   Note  MCh$ 
Net interest income and UF indexation   1,446,658    863,104    (60,758)   (13,592)   2,235,412    30,717       2,266,129 
Net commissions income   301,587    73,259    (2,280)   174,246    546,812    (24,680)      522,132 
Net financial income   8,248    57,389    172,949    64,933    303,519    3,305       306,824 
Other income   22,506    11,816    —    3,530    37,852    (3,345)      34,507 
Income attributable to investments in other companies   9,471    3,180    279    650    13,580    (549)      13,031 
Operating income, before expected credit losses   1,788,470    1,008,748    110,190    229,767    3,137,175    5,448   (1)   3,142,623 
Expenses for expected credit losses   (323,364)   (103,745)   (8,009)   —    (435,118)   22,988   (2)   (412,130)
Total operating income, after expected credit losses   1,465,106    905,003    102,181    229,767    2,702,057    28,436       2,730,493 
Expenses from salaries and employee benefits   (339,850)   (102,395)   (2,644)   (83,356)   (528,245)   19       (528,226)
Administrative expenses   (272,748)   (66,547)   (1,771)   (34,474)   (375,540)   20,266       (355,274)
Depreciation and amortization   (69,100)   (8,540)   (424)   (6,141)   (84,205)   —       (84,205)
Impairment of non-financial assets   (9)   (122)   —    54    (77)   —       (77)
Other operating expenses   (17,095)   (10,202)   —    (1,501)   (28,798)   1,097       (27,701)
Total operating expenses   (698,802)   (187,806)   (4,839)   (125,418)   (1,016,865)   21,382   (3)   (995,483)
Net operating income   766,304    717,197    97,342    104,349    1,685,192    49,818       1,735,010 
Income taxes                       (275,757)   (13,452)  (4)   (289,209)
Net income after taxes                       1,409,435    36,366       1,445,801 
                                       
Assets   21,676,597    13,576,675    18,587,455    925,064    54,765,791    (212,524)      54,553,267 
Current and deferred taxes                       726,910    (171,323)      555,587 
Total assets                       55,492,701    (383,847)  (5)   55,108,854 
                                       
Liabilities   17,586,680    10,151,503    22,167,730    727,529    50,633,442    (956,957)      49,676,485 
Current and deferred taxes                       932    —       932 
Total liabilities                       50,634,374    (956,957)  (6)   49,677,417 

 

Reclassifications and adjustments to conform IFRS

 

(1)The total effect due to the consolidation adjustments to conform the total operating revenue is MCh$(21,382). In addition, the total effect of IFRS adjustments is MCh$26,830, which mainly stems from the recognition of interest income on accrual basis.

 

(2)The total effect relates to IFRS adjustments of MCh$22,988, which mainly stems from differences in the calculation model of allowances for ECL.

 

(3)The total effect due to the consolidation adjustments to conform total operating expenses is MCh$21,382.

 

(4)The total effect relates to IFRS adjustments of MCh$(13,452), which stems from deferred taxes.

 

(5)The total effect due to the consolidation adjustments to conform the consolidated financial position data in assets is MCh$(237,339). In addition, the total effect of IFRS adjustments in assets is MCh$(146,508), which mainly stems from differences in the calculation model for ECL and deferred taxes effects.

 

(6)The total effect due to the consolidation adjustments to conform the consolidated financial position data in liabilities is MCh$(237,339). In addition, the total effect of IFRS adjustments in liabilities is MCh$(719,618), which mainly stems from provision for minimum dividends and differences in the calculation model of allowances for ECL.

 

The following table presents the income, and assets and liabilities by segment for the year ended December 31, 2021 for each of the segments defined above:

 

   As of December 31, 2021 
   Retail   Wholesale   Treasury   Subsidiaries   Subtotal   Reclassifications and
adjustments to
conform IFRS		     Total 
   MCh$   MCh$   MCh$   MCh$   MCh$   MCh$   Note  MCh$ 
Net interest income and UF indexation   1,083,179    472,520    (1,416)   (847)   1,553,436    20,586       1,574,022 
Net commissions income   260,416    67,343    (2,288)   159,628    485,099    (30,071)      455,028 
Net financial income   15,211    49,864    51,918    34,070    151,063    19,916       170,979 
Other income   16,653    9,456    —    3,075    29,184    (6,135)      23,049 
Income attributable to investments in other companies   (452)   2,075    118    499    2,240    (447)      1,793 
Operating income, before expected credit losses   1,375,007    601,258    48,332    196,425    2,221,022    3,849   (1)   2,224,871 
Expenses for expected credit losses   (257,547)   (98,516)   (1,002)   —    (357,065)   337,893   (2)   (19,172)
Total operating income, after expected credit losses   1,117,460    502,742    47,330    196,425    1,863,957    341,742       2,205,699 
Expenses from salaries and employee benefits   (289,103)   (82,706)   (2,156)   (77,004)   (450,969)   17       (450,952)
Administrative expenses   (252,858)   (58,940)   (1,360)   (30,559)   (343,717)   19,092       (324,625)
Depreciation and amortization   (62,728)   (8,107)   (365)   (5,598)   (76,798)   —       (76,798)
Impairment of non-financial assets   (30)   (1,169)   —    (223)   (1,422)   (268)      (1,690)
Other operating expenses   (13,776)   (5,073)   (21)   (1,709)   (20,579)   1,231       (19,348)
Total operating expenses   (618,495)   (155,995)   (3,902)   (115,093)   (893,485)   20,072   (3)   (873,413)
Net operating income   498,965    346,747    43,428    81,332    970,472    361,814       1,332,286 
Income taxes                       (178,280)   (97,689)  (4)   (275,969)
Net income after taxes                       792,192    264,125       1,056,317 
                                       
Assets   20,515,244    12,806,409    17,412,551    958,447    51,692,651    (543,103)      51,149,548 
Current and deferred taxes                       435,123    (158,723)      276,400 
Total assets                       52,127,774    (701,826)  (5)   51,425,948 
                                       
Liabilities   16,779,925    10,530,749    19,640,221    770,228    47,721,123    (1,226,430)      46,494,693 
Current and deferred taxes                       113,129    (846)      112,283 
Total liabilities                       47,834,252    (1,227,276)  (6)   46,606,976 

 

Reclassifications and adjustments to conform IFRS

 

(1)The total effect due to the consolidation adjustments to conform the total operating revenue is MCh$(21,998). In addition, the total effect of IFRS adjustments and reclassifications is MCh$25,847, which difference mainly stems from the recognition of interest income on accrual basis and reclassification of FX indexation.

 

(2)The total effect relates to IFRS adjustments and reclassifications of MCh$337,893, which mainly stems from differences in the calculation model of allowances for ECL.

 

(3)The total effect due to the consolidation adjustments to conform total operating expenses is MCh$21,998. In addition, the total effect of other reclassifications is MCh$(1,926).

 

(4)The total effect relates to IFRS adjustments of MCh$(97,689), which stems from deferred taxes.

 

(5)The total effect due to the consolidation adjustments to conform the consolidated financial position data in assets is MCh$(369,448). In addition, the total effect of IFRS adjustments in assets is MCh$(332,378), which mainly stems from differences in the calculation model of ECL, deferred taxes effects and settlement of transactions in the course of collection.

 

(6)The total effect due to the consolidation adjustments to conform the consolidated financial position data in liabilities is MCh$(369,448). In addition, the total effect of IFRS adjustments in liabilities is MCh$(857,828), which mainly stems from provision for minimum dividends and differences in the calculation model of allowances for ECL.