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Debt Instruments at Fair Value Through Other Comprehensive Income

12 Months Ended

Dec. 31, 2019

Debt Instruments At Fair Value Through Other Comprehensive Income

DEBT INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

NOTE 11

DEBT INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

As of December 31, 2019 detail of debt instruments is as follows:

	As of December 31,
	2019		2018
	MCh$		MCh$
Chilean central bank and government securities
Chilean central bank bonds		272,802		657,096
Chilean central bank notes		1,186,724		56,719
Other Chilean central bank and government securities		1,908,031		1,207,221
Subtotal		3,367,557		1,921,036
of which sold under repurchase agreement		379,294		16,109
Other Chilean securities
Time deposits in Chilean financial institutions		398		2,693
Mortgage finance bonds of Chilean financial institutions		16,748		19,227
Other instruments issued in the country		2,410		2,907
Subtotal		19,556		24,827
of which sold under repurchase agreement		131		128
Foreign financial securities
Foreign Central Banks and Government securities		197,685		280,622
Other foreign financial securities		425,474		167,838
Subtotal		623,159		448,460
of which sold under repurchase agreement		-		-
Total		4,010,272		2,394,323

As of December 31, 2019 "Chilean central bank and government securities" guarantee derivatives transactions through Comder Contraparte Central S,A, in the local market as of December 31, 2019 and 2018 Ch$65,140 and Ch$42,910, while "Foreign financial securities" guarantee derivatives transactions through London Clearing House (LCH) as of December 31, 2019 and 2018 Ch$73,109 and Ch$58,892. Additionally, the Bank maintains guarantees with Euroclear as of December 31, 2019 and 2018 Ch$390,954 and Ch$98,832 to comply with the initial margin required by European EMIR standard.

As of December 31, 2019 fair value through OCI included a cumulative net unrealised income of Ch$29,184 million, recoded as "valuation adjustment" in OCI, of which Ch$28,135 million are attributable to shareholders and Ch$1,049 million to non-controlling interest.

An analysis of changes in the fair value and the corresponding ECL as of December 31, 2019 is as follows:

	Stage1			Stage2		Stage3
	Collective			Collective		Collective		TOTAL
Gross carrying amount at January 1, 2019		2,394,323			-		-		2,394,323
New assets purchased		7,573,665			-		-		7,573,665
Transfers to stage 1		-			-		-		-
Transfers to stage 2		-			-		-		-
Transfers to stage 3		-			-		-		-
Assets derecognised or matured (excluding write offs)		(5,694,456	)		-		-		(5,694,456	)
Changes due to modifications not derecognised		394,648			-		-		394,648
Write-off		-			-		-		-
Foreign Exchange adjustments and others		(657,908	)		-		-		(657,908	)
At December 31, 2019		4,010,272			-		-		4,010,272

	Stage1			Stage2		Stage3
	Collective			Collective		Collective		TOTAL
ECL at January 1, 2019		258			-		-		258
New assets purchased		816			-		-		816
Transfers to stage 1		-			-		-		-
Transfers to stage 2		-			-		-		-
Transfers to stage 3		-			-		-		-
Assets derecognised or matured (excluding write offs)		(614	)		-		-		(614	)
Changes due to modifications not derecognised		67			-		-		67
Write-off		-			-		-		-
Foreign Exchange adjustments and others		(71	)		-		-		(71	)
At December 31, 2019		456			-		-		456

An analysis of changes in the fair value and the corresponding ECL as of December 31, 2018 is as follows:

	Stage1			Stage2		Stage3
	Collective			Collective		Collective		TOTAL
Gross carrying amount at January 1, 2018		2,574,546			-		-		2,574,546
New assets purchased		5,037,857			-		-		5,037,857
Transfers to stage 1		-			-		-		-
Transfers to stage 2		-			-		-		-
Transfers to stage 3		-			-		-		-
Assets derecognised or matured (excluding write offs)		(5,604,114	)		-		-		(5,604,114	)
Changes due to modifications not derecognised		-			-		-		-
Write-off		-			-		-		-
Foreign Exchange adjustments and others		386,034			-		-		386,034
At December 31, 2018		2,394,323			-		-		2,394,323

	Stage1			Stage2		Stage3
	Collective			Collective		Collective		TOTAL
ECL at January 1, 2018		324			-		-		324
New assets purchased		634			-		-		634
Transfers to stage 1		-			-		-		-
Transfers to stage 2		-			-		-		-
Transfers to stage 3		-			-		-		-
Assets derecognised or matured (excluding write offs)		(705	)		-		-		(705	)
Changes due to modifications not derecognised		-			-		-		-
Write-off		-			-		-		-
Foreign Exchange adjustments and others		5			-		-		5
At December 31, 2018		258			-		-		258

Gross profits and losses realized on the sale of available for sale investments as of December 31, 2019, 2018 and 2017 is as follows:

	As of December 31,
	2019		2018		2017
	MCh$		MCh$		MCh$
Sale of available for sale investments generating realized profits		5,781,636		3,505,266		6,469,344
Realized profits		63,828		8,802		4,867
Sale of available for sale investments generating realized losses		607,349		709,371		466,732
Realized losses		156		6,004		3

The Bank evaluated those instruments with unrealized losses as of December 31, 2019 and 2018 and concluded they were not impaired. This review consisted of evaluating the economic reasons for any declines, the credit ratings of the securities' issuers, and the Bank's intention and ability to hold the securities until the unrealized loss is recovered. Based on this analysis, the Bank believes that there were no significant or prolonged declines nor changes in credit risk which would cause impairment in its investment portfolio, since most of the decline in fair value of these instruments was caused by market conditions which the Bank considers to be temporary. All of the instruments that have unrealized losses as of December 31, 2019 and 2018, were not in a continuing unrealized loss position for more than one year.

The following charts show debt instruments at fair value through other comprehensive income cumulative unrealized profit and loss, as of December 31, 2019:

	Less than 12 months									More than 12 months								Total
	Amortized cost		Fair value		Unrealized profit		Unrealized loss			Amortized cost		Fair value		Unrealized profit		Unrealized loss		Amortized cost		Fair value		Unrealized profit		Unrealized loss
	MCh$		MCh$		MCh$		MCh$			MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Chilean central bank and government securities
Chilean central bank Bonds		270,979		272,802		3,600		(1,777	)		-		-		-		-		270,979		272,802		3,600		(1,777	)
Chilean central bank notes		1,186,487		1,186,724		237		-			-		-		-		-		1,186,487		1,186,724		237		-
Other Chilean central bank and government securities		1,895,367		1,908,031		38,002		(25,338	)		-		-		-		-		1,895,367		1,908,031		38,002		(25,338	)
Subtotal		3,352,833		3,367,557		41,839		(27,115	)		-		-		-		-		3,352,833		3,367,557		41,839		(27,115	)

Other Chilean securities
Time deposits in Chilean financial institutions		398		398		-		-			-		-		-		-		398		398		-		-
Mortgage finance bonds of Chilean financial institutions		15,962		16,748		786		-			-		-		-		-		15,962		16,748		786		-
Chilean financial institution bonds		-		-		-		-			-		-		-		-		-		-		-		-
Chilean corporate bonds		-		-		-		-			-		-		-		-		-		-		-		-
Other Chilean securities		407		2,410		2,003		-			-		-		-		-		407		2,410		2,003		-
Subtotal		16,767		19,556		2,789		-			-		-		-		-		16,767		19,556		2,789		-

Foreign financial securities
Foreign central banks and government securities		198,020		197,685		11,110		(11,445	)		-		-		-		-		198,020		197,685		11,110		(11,445	)
Other foreign financial securities		413,468		425,474		13,080		(1,074	)		-		-		-		-		413,468		425,474		13,080		(1,074	)
Subtotal		611,488		623,159		24,190		(12,519	)		-		-		-		-		611,488		623,159		24,190		(12,519	)

Total		3,981,088		4,010,272		68,818		(39,634	)		-		-		-		-		3,981,088		4,010,272		68,818		(39,634	)

The following charts show debt instruments at fair value through other comprehensive income cumulative unrealized profit and loss, as of December 31, 2018:

	Less than 12 months									More than 12 months				Total
	Amortized cost		Fair value		Unrealized profit		Unrealized los			Amortized cost	Fair value	Unrealized profit	Unrealized loss	Amortized cost		Fair value		Unrealized profit		Unrealized loss
	MCh$		MCh$		MCh$		MCh$			MCh$	MCh$	MCh$	MCh$	MCh$		MCh$		MCh$		MCh$

Chilean central bank and government securities
Chilean central bank Bonds		658,013		657,096		3,698		(4,615	)						658,013		657,096		3,698		(4,615	)
Chilean central bank notes		56,737		56,719		10		(27	)						56,737		56,719		10		(27	)
Other Chilean central bank and government securities		1,196,819		1,207,220		10,689		(262	)						1,196,819		1,207,220		10,689		(262	)
Subtotal		1,911,569		1,921,035		14,397		(4,904	)						1,911,569		1,921,035		14,397		(4,904	)

Other Chilean securities
Time deposits in Chilean financial institutions		2,691		2,693		1		-							2,691		2,693		1		-
Mortgage finance bonds of Chilean financial institutions		19,010		19,227		426		(209	)						19,010		19,227		426		(209	)
Chilean financial institution bonds		-		-		-		-							-		-		-		-
Chilean corporate bonds		-		-		-		-							-		-		-		-
Other Chilean securities		220		2,907		2,687		-							220		2,907		2,687		-
Subtotal		21,921		24,827		3,114		(209	)						21,921		24,827		3,114		(209	)

Foreign financial securities
Foreign central banks and government securities		280,021		280,622		602		-							280,021		280,622		602		-
Other foreign financial securities		174,387		167,837		-		(6,575	)						174,387		167,837		-		(6,575	)
Subtotal		454,408		448,459		602		(6,575	)						454,408		448,459		602		(6,575	)

Total		2,387,898		2,394,322		18,112		(11,688	)						2,387,898		2,394,322		18,112		(11,688	)