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Financial Assets at Fair Value Through Other Comprehensive Income
 12 Months Ended
Dec. 31, 2022
Disclosure Of Fair Value Of Investments In Equity Instruments Designated At Fair Value Through Other Comprehensive Income [Abstract]  
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

NOTE 06 – FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

 

The financial assets at fair value through other comprehensive income is as follows:

 

   As of December 31, 
   2022   2021 
   MCh$   MCh$ 
Debt financial instruments        
Chilean Central Bank and Government securities   4,074,413    4,240,356 
Other Chilean debt financial securities   9,898    11,774 
Foreign financial debt securities   1,796,422    1,549,249 
Subtotal   5,880,733    5,801,379 
Other financial instruments          
Commercial loans   142,306    99,375 
Subtotal   142,306    99,375 
           
Total   6,023,039    5,900,754 

 

a.As of December 31, 2022 and 2021 detail of financial debt instruments is as follows:

 

   As of December 31, 
   2022   2021 
   MCh$   MCh$ 
Chilean Central Bank and Government securities        
Chilean Central Bank financial instruments   3,331,264    3,258,417 
Chilean Treasury bonds and notes   742,717    981,939 
Other Chilean government financial instruments   432    
-
 
Subtotal   4,074,413    4,240,356 
of which sold under repurchase agreement   207,280    86,554 
Other Chilean debt financial securities          
Chilean Bank debt financial instruments   9,891    11,774 
Other Chilean financial instruments   7    
-
 
Subtotal   9,898    11,774 
of which sold under repurchase agreement   91    80 
Foreign financial debt securities          
Foreign Central Banks financial instruments   1,668,670    1,438,155 
Other foreign debt financial instruments   127,752    111,094 
Subtotal   1,796,422    1,549,249 
of which sold under repurchase agreement   127,752    - 
Total   5,880,733    5,801,379 

 

The Bank holds instruments, within “Chilean Central Bank and government securities”, which guarantee derivatives transactions through Comder Contraparte Central S.A., in the local market as of December 31, 2022 and 2021 for an amount of Ch$133,480 and Ch$115,680, respectively, while “Foreign financial debt securities” guarantee derivatives transactions through London Clearing House (LCH) as of December 31, 2022 and 2021 for an amount of Ch$69,666 and Ch$83,673, respectively. Additionally, the Bank maintains guarantees with Euroclear as of December 31, 2022 and 2021 for an amount of Ch$590,466 and Ch$461,419, respectively, to comply with the initial margin required by European EMIR Standard.

 

As of December 31, 2022, changes in fair value of financial assets measured at FVCO included a cumulative net unrealized loss of MCh$109,392, recorded as “valuation adjustment” in OCI, where MCh$110,130 (loss) are attributable to shareholders equity and MCh$738 (profit) to non-controlling interest.

 

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.

 

The changes in the fair value and the corresponding ECL as of December 31, 2022 is as follows:

 

   Stage 1   Stage 2   Stage 3   TOTAL 
Gross carrying amount at January 1, 2022   5,803,139    
-
    
-
    5,801,379 
New financial assets purchased   31,456,434    
-
    
-
    31,456,434 
Transfers to stage 1   
-
    
-
    
-
    
-
 
Transfers to stage 2   
-
    
-
    
-
    
-
 
Transfers to stage 3   
-
    
-
    
-
    
-
 
Assets derecognised or matured (excluding write-off)   (31,248,163)   
-
    
-
    (31,248,163)
Changes in measument of financial assets   (130,677)   
-
    
-
    (128,917)
Other adjustments   
-
    
-
    
-
    
-
 
At December 31, 2022   5,880,733    
-
    
-
    5,880,733 

 

   Stage 1   Stage 2   Stage 3   TOTAL 
ECL at January 1, 2022   703    
-
    
-
    703 
New financial assets purchased   5,627    
-
    
-
    5,627 
Transfers to stage 1   
-
    
-
    
-
    
-
 
Transfers to stage 2   
-
    
-
    
-
    
-
 
Transfers to stage 3   
-
    
-
    
-
    
-
 
Assets derecognised or matured (excluding write-off)   (5,553)   
-
    
-
    (5,553)
Changes due to changes in credit risk   100    
-
    
-
    100 
Write-off   
-
    
-
    
-
    
-
 
Other adjustments   
-
    
-
    
-
    
-
 
At December 31, 2022   877    -    -    877 

 

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

 

   Stage 1   Stage 2   Stage 3   TOTAL 
Gross carrying amount at January 1, 2021   7,162,542    
-
    
-
    7,162,542 
New financial assets purchased   22,610,556    
-
    
-
    22,610,556 
Transfers to stage 1   
-
    
-
    
-
    
-
 
Transfers to stage 2   
-
    
-
    
-
    
-
 
Transfers to stage 3   
-
    
-
    
-
    
-
 
Assets derecognised or matured (excluding write-off)   (23,770,174)   
-
    
-
    (23,770,174)
Changes in measument of financial assets   (201,143)   
-
    
-
    (201,143)
Other adjustments   1,358    
-
    
-
    (402)
At December 31, 2021   5,803,139    
-
    
-
    5,801,379 

 

   Stage 1   Stage 2   Stage 3   TOTAL 
ECL at January 1, 2021   1,138    
-
    
-
    1,138 
New financial assets purchased   3,293    
-
    
-
    3,293 
Transfers to stage 1   
-
    
-
    
-
    
-
 
Transfers to stage 2   
-
    
-
    
-
    
-
 
Transfers to stage 3   
-
    
-
    
-
    
-
 
Assets derecognised or matured (excluding write-off)   (3,608)   
-
    
-
    (3,608)
Changes due to changes in credit risk   (120)   
-
    
-
    (120)
Write-off   
-
    
-
    
-
    
-
 
Other adjustments   
-
    
-
    
-
    
-
 
At December 31, 2021   703    
-
    
-
    703 

 

Gross profits and losses realized on the sale of available for sale investments as of December 31, 2022, 2021 and 2020 is as follows:

 

   As of December 31, 
   2022   2021   2020 
   MCh$   MCh$   MCh$ 
Sale of debt financial instruments at FVOCI generating realized profits   452,668    1,728,731    3,696,791 
Realized profits   121    28,131    82,925 
Sale of debt financial instruments at FVOCI generating realized losses   1,122,222    1,247,044    379,046 
Realized losses   22,195    4,944    2,246 

 

The Bank evaluated those instruments with unrealized losses as of December 31, 2022 and 2021 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, 2022 and 2021 were not in a continuing unrealized loss position for more than one year.

 

b.Other financial instruments

 

The Bank classifies certain loans and account receivables at fair value through other comprehensive income (FVOCI), when a credit operation exceeds single client exposure under the Bank’s credit risk policy. Initially, the risk committee approves the full operation but with the condition to sell a portion of the loan in the medium term.

 

Additionally, the Bank includes operations that expect to sell, for which an increase of the credit risk has been identified.

 

This portfolio is measured at fair value, recognising the adjustment in other comprehensive income. The portfolio is assessed for impairment loss under the ECL model, same as loans at amortised cost.

 

The changes in the gross carrying amount and the corresponding ECL allowance as of December 31, 2022, is as follows:

 

   Stage1   Stage2   Stage3   TOTAL 
   MCh$   MCh$   MCh$   MCh$ 
Gross carrying amount at January 1, 2022   99,643    
-
    
-
    99,643 
New financial assets originated   72,745    
 
    
 
    72,745 
Transfers to stage 1   
-
    
-
    
-
    
-
 
Transfers to stage 2   
-
    
-
    
-
    
-
 
Transfers to stage 3   
-
    
-
    
-
    
-
 
Assets derecognised or matured (excluding write-off)   (24,835)   
-
    
-
    (24,835)
Changes in measument of financial assets   (4,921)   
-
    
-
    (4,921)
Write-off   
-
    
-
    
-
    
-
 
Other adjustments   
-
    
-
    
-
    
-
 
At December 31, 2022   142,632    
-
    
-
    142,632 

 

   Stage 1   Stage 2   Stage 3   TOTAL 
   MCh$   MCh$   MCh$   MCh$ 
ECL allowance at January 1, 2022   268    
-
    
-
    268 
New financial assets originated   76    
 
    
 
    76 
Transfers to stage 1   
-
    
-
    
-
    
-
 
Transfers to stage 2   
-
    
-
    
-
    
-
 
Transfers to stage 3   
-
    
-
    
-
    
-
 
Assets derecognised or matured (excluding write-off)   (110)   
-
    
-
    (110)
Changes due to changes un credit risk   92    
-
    
-
    92 
Write-off   
-
    
-
    
-
    
-
 
Other adjustments   
-
    
-
    
-
    
-
 
At December 31, 2022   326    -    
-
    326 

 

The changes in the gross carrying amount and the corresponding ECL allowance, as of December 31, 2021, is as follows:

 

   Stage1   Stage2   Stage3   TOTAL 
   MCh$   MCh$   MCh$   MCh$ 
Gross carrying amount at January 1, 2021   70,685    
-
    
-
    70,685 
New financial assets originated   69,180    
-
    
-
    69,180 
Transfers to stage 1   
-
    
-
    
-
    
-
 
Transfers to stage 2   
-
    
-
    
-
    
-
 
Transfers to stage 3   
-
    
-
    
-
    
-
 
Assets derecognised or matured (excluding write-off)   (35,570)   
-
    
-
    (35,570)
Changes in measument of financial assets   2,819    
 
    
 
    2,819 
Write-off   
-
    
-
    
-
    
-
 
Other adjustments   (7,471)   
-
    
-
    (7,471)
At December 31, 2021   99,643    
-
    
-
    99,643 

 

   Stage 1     Stage 2   Stage 3   TOTAL 
   MCh$   MCh$   MCh$   MCh$ 
ECL allowance at January 1, 2021   1,354    
-
    
-
    1,354 
New financial assets originated   84    
-
    
-
    84 
Transfers to stage 1   
-
    
-
    
-
    
-
 
Transfers to stage 2   
-
    
-
    
-
    
-
 
Transfers to stage 3   
-
    
-
    
-
    
-
 
Assets derecognised or matured (excluding write-off)   (1,391)   
 
    
 
    (1,391)
Changes due to changes in credit risk   221    
-
    
-
    221 
Write-off   
-
    
-
    
-
    
-
 
Other adjustments   
-
    
-
    
-
    
-
 
At December 31, 2021   268    
-
    
-
    268 

 

The following charts show debt instruments at fair value through other comprehensive income cumulative unrealized profit and loss, as of December 31, 2022:

 

   Less than 12 months   More than 12 months   Total 
2022  Amortised
cost		   Fair
value		  

Unrealized
profit

   Unrealized
loss		   Amortised
cost		   Fair
value		  

Unrealized
profit

   Unrealized
loss		   Amortised
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 financial instruments   3,331,635    3,331,264    2,270    (2,641)        -    -        -        -    3,331,635    3,331,264    2,270    (2,641)
Chilean Treasury bonds and notes   834,935    742,717    27    (92,218)   -    -    -    -    834,935    742,717    27    (92,218)
Other Chilean government financial instruments   407    432    25    -    -    -    -    -    407    432    25    - 
Subtotal   4,166,977    4,074,413    2,322    (94,859)   -    -    -    -    4,166,977    4,074,413    2,322    (94,859)
                                                             
Other Chilean debt financial securities                                                            
Chilean Bank debt financial instruments   10,082    9,891    17    (207)   -    -    -    -    10,082    9,891    17    (207)
Other Chilean financial instruments   6    7    -    -    -    -    -    -    6    7    -    - 
Subtotal   10,088    9,898    17    (207)   -    -    -    -    10,088    9,898    17    (207)
                                                             
Foreign financial debt securities                                                            
Foreign Central Banks financial instruments   1,683,052    1,668,670    39,210    (53,592)   -    -    -    -    1,683,052    1,668,670    39,210    (53,592)
Other foreign debt financial instruments   116,351    127,752    11,401    -    -    -    -    -    116,351    127,752    11,401    - 
Subtotal   1,799,403    1,796,422    50,611    (53,592)   -    -    -    -    1,799,403    1,796,422    50,611    (53,592)
Loans and account receivable from customer                                                            
Commercial loans   155,990    142,306    -    (13,684)   -    -    -    -    155,990    142,306    -    (13,684)
Subtotal   155,990    142,306    -    (13,684)   -    -    -    -    155,990    142,306    -    (13,684)
                        -    -    -    -                     
Total   6,132,458    6,023,039    52,950    (162,342)   -    -    -    -    6,132,458    6,023,039    52,950    (162,342)

 

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 
2021  Amortised
cost		   Fair
value		  

Unrealized
profit

   Unrealized
loss		   Amortised
cost		   Fair
value		  

Unrealized
profit

   Unrealized
loss		   Amortised
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 financial instruments   3,257,912    3,258,417    515    (10)        -         -         -          -    3,257,912    3,258,417    515    (10)
Chilean Treasury bonds and notes   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 debt financial securities                                                            
Chilean Bank debt financial instruments   11,713    11,773    98    (38)   -    -    -    -    11,713    11,773    98    (38)
Other Chilean financial instruments   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 debt securities                       -    -    -    -                     
Foreign Central Banks financial instruments   1,442,753    1,438,155    1,145    (5,743)   -    -    -    -    1,442,753    1,438,155    1,145    (5,743)
Other foreign debt financial instruments   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)
Loans and account receivable from customer                                                            
Commercial loans   105,480    99,418    -    (6,062)   -    -    -    -    105,480    99,418    -    (6,062)
Subtotal   105,480    99,418    -    (6,062)   -    -    -    -    105,480    99,418    -    (6,062)
                        -    -    -    -                     
Total   6,020,842    5,902,557    770    (119,055)   -    -    -    -    6,020,842    5,902,557    770    (119,055)