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Debt Instruments at Fair Value Through Other Comprehensive Income

12 Months Ended

Dec. 31, 2021

Disclosure of available-for-sale financial assets [text block] [Abstract]

DEBT INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

NOTE 11

DEBT INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

As of December 31, 2021 and 2020 detail of debt instruments is as follows:

	As of December 31,
	2021		2020
	MCh$		MCh$
Chilean central bank and government securities
Chilean Central Bank bonds		-		-
Chilean Central Bank notes		3,258,417		1,008,450
Other Chilean Central Bank and government securities (*)		981,939		5,344,910
Subtotal		4,240,356		6,353,360
of which sold under repurchase agreement		86,554		969,508
Other Chilean securities
Time deposits in Chilean financial institutions		952		492
Mortgage finance bonds of Chilean financial institutions		10,821		14,022
Other instruments issued in the country		1,761		2,217
Subtotal		13,534		16,731
of which sold under repurchase agreement		80		399
Foreign financial securities
Foreign Central Banks and Government securities		1,438,155		269,803
Other foreign financial securities		111,094		522,648
Subtotal		1,549,249		792,451
of which sold under repurchase agreement		-		-
Total		5,803,139		7,162,542

(*) Includes Treasury bonds in Chilean pesos and UF.

The Bank holds instruments, belonging to “Chilean Central Bank and government securities”, which guarantee derivatives transactions through Comder Contraparte Central S,A, in the local market as of December 31, 2021 and 2020 for an amount of Ch$115,680 and Ch$158,600, while “Foreign financial securities” guarantee derivatives transactions through London Clearing House (LCH) as of December 31, 2021 and 2020 Ch$83,673 and Ch$67,685. Additionally, the Bank maintains guarantees with Euroclear as of December 31, 2021 and 2020 Ch$461,419 and Ch$258,183 to comply with the initial margin required by European EMIR standard.

As of December 31, 2021, debt instruments at FVOCI included a cumulative net unrealized loss of MCh$112,223, recorded as “valuation adjustment” in OCI, where MCh$112,993 (loss) are attributable to shareholders equity and MCh$770 (profit) to non-controlling interest.

As of December 31, 2020, debt instruments at FVOCI included a cumulative net unrealized profit of MCh$102,855, recorded as “valuation adjustment” in OCI, where MCh$159,535 are attributable to shareholders equity and MCh$56,680 to non-controlling interest

F - 67

An analysis of changes in the fair value and the corresponding ECL as of December 31, 2021 is as follows:

	Stage1			Stage2		Stage3		TOTAL
Gross carrying amount at January 1, 2021		7,162,542			-		-		7,162,542
New assets purchased		22,610,556			-		-		22,610,556
Transfers to stage 1		-			-		-		-
Transfers to stage 2		-			-		-		-
Transfers to stage 3		-			-		-		-
Assets derecognized or matured (excluding write-off)		(23,770,174	)		-		-		(23,770,174	)
Changes due to modifications not derecognized		(201,143	)		-		-		(201,143	)
Other adjustments		-			-		-		-
At December 31, 2021		1,358			-		-		1,358

	Stage1			Stage2		Stage3		TOTAL
ECL at January 1, 2021		1,138			-		-		1,138
New assets purchased		3,293			-		-		3,293
Transfers to stage 1		-			-		-		-
Transfers to stage 2		-			-		-		-
Transfers to stage 3		-			-		-		-
Assets derecognized or matured (excluding write-off)		(3,608	)		-		-		(3,608	)
Changes due to modifications not derecognized		(120	)		-		-		(120	)
Write-off		-			-		-		-
Other adjustments		-			-		-		-
At December 31, 2021		703			-		-		703

An analysis of changes in the fair value and the corresponding ECL as of December 31, 2020 is as follows:

	Stage1			Stage2		Stage3		TOTAL
Gross carrying amount at January 1, 2020		4,010,272			-		-		4,010,272
New assets purchased		14,708,776			-		-		14,708,776
Transfers to stage 1		-			-		-		-
Transfers to stage 2		-			-		-		-
Transfers to stage 3		-			-		-		-
Assets derecognized or matured (excluding write-off)		(11,440,253	)		-		-		(11,440,253	)
Changes due to modifications not derecognized		100,401			-		-		100,401
Other adjustments		(216,654	)		-		-		(216,654	)
At December 31, 2020		7,162,542			-		-		7,162,542

	Stage1			Stage2		Stage3		TOTAL
ECL at January 1, 2020		456			-		-		456
New assets purchased		1,965			-		-		1,965
Transfers to stage 1		-			-		-		-
Transfers to stage 2		-			-		-		-
Transfers to stage 3		-			-		-		-
Assets derecognized or matured (excluding write-off)		(1,501	)		-		-		(1,501	)
Changes due to modifications not derecognized		219			-		-		219
Write-off		-			-		-		-
Other adjustments		(1	)		-		-		(1	)
At December 31, 2020		1,138			-		-		1,138

Gross profits and losses realized on the sale of available for sale investments as of December 31, 2021, 2020 and 2019 is as follows:

	As of December 31,
	2021		2020		2019
	MCh$		MCh$		MCh$
Sale of available for sale investments generating realized profits		1,728,731		3,696,791		5,781,636
Realized profits		28,131		82,925		63,828
Sale of available for sale investments generating realized losses		1,247,044		379,046		607,349
Realized losses		4,944		2,246		156

The Bank evaluated those instruments with unrealized losses as of December 31, 2021 and 2020 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, 2021 and 2020, 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, 2021:

	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
2021	MCh$		MCh$		MCh$			MCh$			MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$			MCh$

Chilean central bank and government securities											-		-		-		-
Chilean central bank Bonds		-		-		-			-			-		-		-		-		-		-		-			-
Chilean central bank notes		3,257,912		3,258,417		515			(10	)		-		-		-		-		3,257,912		3,258,417		515			(10	)
Other Chilean central bank and government securities		1,088,090		981,939		1,051			(107,202	)		-		-		-		-		1,088,090		981,939		1,051			(107,202	)
Subtotal		4,346,002		4,240,356		1,566			(107,212	)		-		-		-		-		4,346,002		4,240,356		1,566			(107,212	)

Other Chilean securities												-		-		-		-
Time deposits in Chilean financial institutions		967		952		-			(15	)		-		-		-		-		967		952		-			(15	)
Mortgage finance bonds of Chilean financial institutions		10,746		10,821		98			(23	)		-		-		-		-		10,746		10,821		98			(23	)
Chilean financial institution bonds		-		-		-			-			-		-		-		-		-		-		-			-
Chilean corporate bonds		-		-		-			-			-		-		-		-		-		-		-			-
Other Chilean securities		4,993		1,761		(3,232	)		-			-		-		-		-		4,993		1,761		(3,232	)		-
Subtotal		16,706		13,534		(3,134	)		(38	)		-		-		-		-		16,706		13,534		(3,134	)		(38	)

Foreign financial securities												-		-		-		-
Foreign central banks and government securities		1,442,753		1,438,155		1,145			(5,743	)		-		-		-		-		1,442,753		1,438,155		1,145			(5,743	)
Other foreign financial securities		109,901		111,094		1,193			-			-		-		-		-		109,901		111,094		1,193			-
Subtotal		1,552,654		1,549,249		2,338			(5,743	)		-		-		-		-		1,552,654		1,549,249		2,338			(5,743	)

Total		5,915,362		5,803,139		770			(112,993	)		-		-		-		-		5,915,362		5,803,139		770			(112,993	)

The following charts show debt instruments at fair value through other comprehensive income cumulative unrealized profit and loss, as of December 31, 2020:

	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
2020	MCh$		MCh$		MCh$		MCh$			MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Chilean central bank and government securities
Chilean central bank Bonds		-		-		-		-			-		-		-		-		-		-		-		-
Chilean central bank notes		1,008,450		1,008,450		-		-			-		-		-		-		1,008,450		1,008,450		-		-
Other Chilean central bank and government securities		5,288,189		5,344,910		96,180		(36,739	)		-		-		-		-		5,288,189		5,344,910		96,180		(36,739	)
Subtotal		6,296,639		6,353,360		96,180		(36,739	)		-		-		-		-		6,296,639		6,353,360		96,180		(36,739	)

Other Chilean securities
Time deposits in Chilean financial institutions		299		299		-		-			-		-		-		-		299		299		-		-
Mortgage finance bonds of Chilean financial institutions		13,293		14,022		729		-			-		-		-		-		13,293		14,022		729		-
Chilean financial institution bonds		-		-		-		-			-		-		-		-		-		-		-		-
Chilean corporate bonds		-		-		-		-			-		-		-		-		-		-		-		-
Other Chilean securities		305		2,410		2,105		-			-		-		-		-		305		2,410		2,105		-
Subtotal		13,897		16,731		2,834		-			-		-		-		-		13,897		16,731		2,834		-

Foreign financial securities
Foreign central banks and government securities		269,477		269,803		20,267		(19,941	)		-		-		-		-		269,477		269,803		20,267		(19,941	)
Other foreign financial securities		482,394		522,648		40,254		-			-		-		-		-		482,394		522,648		40,254		-
Subtotal		751,871		792,451		60,521		(19,941	)		-		-		-		-		751,871		792,451		60,521		(19,941	)

Total		7,062,407		7,162,542		159,535		(56,680	)		-		-		-		-		7,062,407		7,162,542		159,535		(56,680	)