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Fair Value of Financial Assets and Liabilities (Tables)
 12 Months Ended
Dec. 31, 2019
Fair Value of Financial Assets and Liabilities [Abstract]  
Schedule of financial assets and liabilities

Below is a comparison between the value at which the Bank's financial assets and liabilities are recorded and their fair value as of December 31, 2019 and 2018:

 

   As of December 31, 
   2019   2018 
   Book value   Fair value   Book value   Fair value 
   MCh$   MCh$   MCh$   MCh$ 
Assets                
Financial derivative contracts   8,148,608    8,148,608    3,100,635    3,100,635 
Financial assets held for trading   270,204    270,204    77,041    77,041 
Loans and accounts receivable at amortised cost, net   31,775,420    34,602,793    29,331,001    30,505,023 
Loans and accounts receivable at FVOCI, net   66,065    66,065    68,588    68,588 
Debt instrument at FVOCI   4,010,272    4,010,272    2,394,323    2,394,323 
Guarantee deposits (margin accounts)   314,616    314,616    170,232    170,232 
                     
Liabilities                    
Deposits and interbank borrowings   26,010,067    26,200,921    23,597,863    23,770,106 
Financial derivative contracts   7,390,654    7,390,654    2,517,728    2,517,728 
Issued debt instruments and other financial liabilities   9,727,081    10,718,997    8,330,633    8,605,135 
Guarantees received (margin accounts)   994,714    994,714    371,512    371,512 
Schedule of assets and liabilities on recurrent basis

The following table presents the assets and liabilities that are measured at fair value on a recurrent basis:

 

   Fair value measurement 
As of December 31,  2019   Level 1   Level 2   Level 3 
   MCh$   MCh$   MCh$   MCh$ 
                 
Assets                
Financial assets held for trading   270,204    270,204    -    - 
Loans and accounts receivable at FVOCI, net   66,065    -    -    66,065 
Debt instruments at FVOCI   4,010,272    3,992,421    17,146    705 
Derivatives   8,148,608    -    8,133,700    14,908 
Guarantee deposits (margin accounts)   314,616    -    314,616    - 
Total   12,809,765    4,262,625    8,465,462    81,678 
                     
Liabilities                    
Derivatives   7,390,654    -    7,387,704    2,950 
Guarantees received (margin accounts)   994,714    -    994,714    - 
Total   8,385,368    -    8,382,418    2,950 

 

 

   Fair value measurement 
As of December 31,  2018   Level 1   Level 2   Level 3 
   MCh$   MCh$   MCh$   MCh$ 
                 
Assets                
Financial assets held for trading   77,041    71,158    5,883    - 
Loans and accounts receivable at FVOCI, net   68,588    -    -    68,588 
Debt instruments at FVOCI   2,394,323    2,368,768    24,920    635 
Derivatives   3,100,635    -    3,089,077    11,558 
Guarantee deposits (margin accounts)   170,232    -    170,232    - 
Total   5,810,819    2,439,926    3,290,112    80,781 
                     
                     
Liabilities                    
Derivatives   2,517,728    -    2,516,933    795 
Guarantees received (margin accounts)   371,512    -    371,512    - 
Total   2,889,240    -    2,888,445    795 
Schedule of assets or liabilities which are not measured at fair value

The following table presents assets or liabilities which are not measured at fair value in the statements of financial position but for which the fair value is disclosed:

 

   Fair value measurement 
As of December 31,  2019   Level 1   Level 2   Level 3 
   MCh$   MCh$   MCh$   MCh$ 
Assets                
Loans and accounts receivable at amortised cost, net   34,602,793    -    -    34,602,793 
Total   34,602,793    -    -    34,602,793 
Liabilities                    
Deposits and interbank borrowings   26,200,921    -    15,903,489    10,297,432 
Issued debt instruments and other financial liabilities   10,718,997    -    10,718,997    - 
Total   36,919,918    -    26,622,486    10,297,432 

 

 

   Fair value measurement 
As of December 31,  2018   Level 1   Level 2   Level 3 
   MCh$   MCh$   MCh$   MCh$ 
                 
Assets                
Loans and accounts receivable at amortised cost, net   30,505,023    -    -    30,505,023 
Total   30,505,023    -    -    30,505,023 
Liabilities                    
Deposits and interbank borrowings   23,770,106    -    15,028,689    8,741,417 
Issued debt instruments and other financial liabilities   8,605,135    -    8,605,135    - 
Total   32,375,241    -    23,633,824    8,741,417 
Schedule of financial instruments classified as Level 3

The table below shows the effect, at December 31, 2019 and 2018, on the fair value of the main financial instruments classified as Level 3 of a reasonable change in the assumptions used in the valuation. This effect was determined by a sensitivity analysis under a 1bp scenario, detailed in the following table:

 

As of December 31, 2019
Instrument Level 3 Valuation technique Main unobservable
inputs		 Impacts
(in MCh$)
Sens, -1bp Unfavorable
scenario		 Impacts
(in MCh$)
Sens, +1bp
Favorable
scenario
Derivatives Present Value method Curves on TAB (1) (2,3) 2,3
Debt instruments at FVOCI Internal rate of return method BR UF (2) - -

 

 

As of December 31, 2018
Instrument Level 3 Valuation technique Main unobservable
inputs		 Impacts
(in MCh$)
Sens, -1bp Unfavorable
scenario		 Impacts
(in MCh$)
Sens, +1bp
Favorable
scenario
Derivatives Present Value method Curves on TAB (1) (1,3) 1,3
Available for sale investments Internal rate of return method BR UF (2) - -

 

(1)TAB: "Tasa Activa Bancaria" (Active Bank Rate). Average interest rates on 30, 90, 180 and 360 day deposits published by the Chilean Association of Banks and Financial Institutions (ABIF) in nominal currency (Chilean peso) and in real terms, adjusted for inflation (in Chilean unit of account (Unidad de Fomento - UF)).

(2)BR: "Bonos de Reconocimiento" (Recognition Bonds). The Recognition Bond is an instrument of money provided by the State of Chile to workers who joined the new pension system, which began operating since 1981.
Schedule of assets and liabilities measured at fair value on a recurrent basis using unobserved significant entries (Level 3)

The following table presents the Bank's activity for assets and liabilities measured at fair value on a recurrent basis using unobserved significant inputs (Level 3) as of December 31, 2019 and 2018:

 

    Assets     Liabilities  
    MCh$     MCh$  
             
As of January 1, 2019     80,781       795  
                 
Total realized and unrealized profits (losses)                
Included in statements of income     827       2,155  
Included in other comprehensive income     70       -  
Purchases, issuances, and loans (net)     -       -  
As of December 31, 2019     81,678       2,950  
                 
Total profits or losses included in comprehensive income for 2019 that are attributable to change in unrealized profit (losses) related to assets or liabilities as of December 31, 2018     897       2,155  

 

    Assets     Liabilities  
    MCh$     MCh$  
             
As of January 1, 2018     22,987       7  
                 
Total realized and unrealized profits (losses)                
Included in statements of income     57,769       (802 )
Included in other comprehensive income     25       -  
Purchases, issuances, and loans (net)     -       -  
As of December 31, 2018     80,781       (795 )
                 
Total profits or losses included in comprehensive income for 2018 that are attributable to change in unrealized profit (losses) related to assets or liabilities as of December 31, 2017     57,794       (802 )
Schedule of financial instruments subject to compensation

The following tables show the financial instruments subject to compensation in accordance with IAS 32, for 2019 and 2018:

 

As of December 2019

   Linked financial instruments, compensated in balance         
Financial instruments  Gross amounts   Compensated in balance   Net amount presented in balance   Remains of unrelated and / or unencumbered financial instruments   Amount in Statements of Financial Position 
Assets  Ch$ Million   Ch$ Million   Ch$ Million   Ch$ Million     
Financial derivative contracts   8,148,151    -    8,148,151    457    8,148,608 
Investments under resale agreements   -    -                
Loans and accounts receivable at amortised cost, net        -         31,775,420    31,775,420 
Loans and accounts receivable at FVOCI, net   66,065         -    66,065    66,065 
Total   8,214,216    -    8,148,151    31,841,942    39,990,093 
Liabilities                         
Financial derivative contracts   7,388,145    -    7,388,145    2,509    7,390,654 
Investments under resale agreements   380,055    -    380,055    -    380,055 
Deposits and interbank borrowings   -    -    -    26,010,067    26,010,067 
Total   7,768,200    -    7,768,200    26,012,576    33,780,776 

 

As of December 2018
   Linked financial instruments, compensated in balance         
Financial instruments  Gross
amounts		   Compensated in
balance		   Net amount presented
in balance		   Remains of unrelated
and / or unencumbered
financial instruments		   Amount in
Statements of
Financial Position		 
Assets  Ch$ Million   Ch$ Million   Ch$ Million   Ch$ Million     
Financial derivative contracts   1,947,726    -    1,947,726    1,152,909    3,100,635 
Obligations under repurchase agreements   -    -    -    -    - 
Loans and accounts receivable at amortised cost, net   -    -    -    29,331,001    29,331,001 
Loans and accounts receivable at FVOCI, net   68,588    -    -    68,588    68,588 
Total   2,016,314    -    1,947,726    30,552,498    32,500,224 
Liabilities                         
Financial derivative contracts   1,735,555    -    1,735,555    782,173    2,517,728 
Investments under resale agreements   48,545    -    48,545    -    48,545 
Deposits and interbank borrowings   -    -    -    23,597,862    23,597,862 
Total   1,784,100    -    1,784,100    24,380,035    26,164,135 
Schedule of credit exposure in its financial derivative operations

The Bank, in order to reduce its credit exposure in its financial derivative operations, has entered into collateral contracts with its counterparties, in which it establishes the terms and conditions under which they operate. In terms collateral (received/delivered) operates when the net of the fair value of the financial instruments held exceed the thresholds defined in the respective contracts.

 

   As of December 31, 2019   As of December 31, 2018 
Financial derivative contracts  Assets   Liability   Assets   Liability 
   MM$   MM$   MM$   MM$ 
                 
Financial derivative contracts with collateral agreement threshold equal to zero   7,478,837    6,748,219    2,639,835    2,133,149 
Financial derivative contracts with non-zero threshold collateral agreement   532,298    517,814    344,520    262,683 
Financial derivative contracts without collateral agreement   137,472    124,621    116,280    121,896 
Total   8,148,607    7,390,654    3,100,635    2,517,728