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Financial Assets at Fair Value Through Other Comprehensive Income
 12 Months Ended
Dec. 31, 2023
Financial Assets 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, 
   2023   2022 
   MCh$   MCh$ 
Debt financial instruments        
Chilean Central Bank and Government securities   3,024,700    4,074,413 
Other Chilean debt financial securities   6,656    9,898 
Foreign financial debt securities   1,504,669    1,796,422 
Subtotal   4,536,025    5,880,733 
Other financial instruments          
Commercial loans   105,257    142,306 
Subtotal   105,257    142,306 
           
Total   4,641,282    6,023,039 

 

a.As of December 31, 2023 and 2022 detail of financial debt instruments is as follows:

 

   As of December 31, 
   2023   2022 
   MCh$   MCh$ 
Chilean Central Bank and Government securities        
Chilean Central Bank financial instruments   2,286,541    3,331,264 
Chilean Treasury bonds and notes   737,705    742,717 
Other Chilean government financial instruments   454    432 
Subtotal   3,024,700    4,074,413 
of which sold under repurchase agreement   362,893    207,280 
Other Chilean debt financial securities          
Chilean Bank debt financial instruments   6,656    9,891 
Other Chilean financial instruments   
-
    7 
Subtotal   6,656    9,898 
of which sold under repurchase agreement   77    91 
Foreign financial debt securities          
Foreign Central Banks debt financial instruments   1,238,866    1,668,670 
Other foreign financial instruments   265,803    127,752 
Subtotal   1,504,669    1,796,422 
of which sold under repurchase agreement   
-
    127,752 
Total   4,536,025    5,880,733 

 

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, 2023 and 2022 for an amount of Ch$224,680 and Ch$133,480, respectively, while “Foreign financial debt securities” guarantee derivatives transactions through London Clearing House (LCH) as of December 31, 2023 and 2022 for an amount of Ch$71,705 and Ch$69,666, respectively. Additionally, the Bank maintains guarantees with Euroclear as of December 31, 2023 and 2022 for an amount of Ch$564,020 and Ch$590,466, respectively, to comply with the initial margin required by European EMIR Standard.

 

As of December 31, 2023, changes in fair value of financial assets measured at FVCO included a cumulative net unrealized loss of MCh$89,748, recorded as “valuation adjustment” in OCI, where MCh$91,596 (loss) are attributable to shareholders equity and MCh$1,848 (profit) to non-controlling interest.

 

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.

 

The changes in the fair value and the corresponding ECL as of December 31, 2023 is as follows:

 

   Stage 1   Stage 2   Stage 3   TOTAL 
Gross carrying amount at January 1, 2023  5,880,733  
-
  
-
   5,880,733 
New financial assets purchased   41,150,092    
-
    
-
    41,150,092 
Transfers to stage 1   
-
    
-
    
-
    
-
 
Transfers to stage 2   
-
    
-
    
-
    
-
 
Transfers to stage 3   
-
    
-
    
-
    
-
 
Assets derecognised or matured (excluding write-off)   (42,616,549)   
-
    
-
    (42,616,549)
Changes in measument of financial assets   121,749    
-
    
-
    121,749 
Other adjustments   -    -    -    - 
At December 31, 2023   4,536,025    
-
    
-
    4,536,025 

 

   Stage 1   Stage 2   Stage 3   TOTAL 
ECL at January 1, 2023   877    
-
    
-
    877 
New financial assets purchased   9,051    
-
    
-
    9,051 
Transfers to stage 1   
-
    
-
    
-
    
-
 
Transfers to stage 2   
-
    
-
    
-
    
-
 
Transfers to stage 3   
-
    
-
    
-
    
-
 
Assets derecognised or matured (excluding write-off)   (9,174)   
-
    
-
    (9,174)
Changes due to changes in credit risk   33    
-
    
-
    33 
Write-off   
-
    
-
    
-
    
-
 
Other adjustments   
-
    
-
    
-
    
-
 
At December 31, 2023   787    
-
    
-
    787 

  

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 

 

Gross profits and losses realized on the sale of available for sale investments as of December 31, 2023, 2022 and 2021 is as follows:

 

   As of December 31, 
   2023   2022   2021 
   MCh$   MCh$   MCh$ 
Sale of debt financial instruments at FVOCI generating realized profits   6,837,112    452,668    1,728,731 
Realized profits   392    121    28,131 
Sale of debt financial instruments at FVOCI generating realized losses   1,605,762    1,122,222    1,247,044 
Realized losses   134,485    22,195    4,944 

 

The Bank evaluated those instruments with unrealized losses as of December 31, 2023 and 2022 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, 2023 and 2022 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, 2023, is as follows:

 

   Stage 1   Stage 2   Stage 3   TOTAL 
   MCh$   MCh$   MCh$   MCh$ 
Gross carrying amount at January 1, 2023   142,632    
          -
    
          -
    142,632 
New financial assets originated   85,533    
 
    
 
    85,533 
Transfers to stage 1   
-
    
-
    
-
    
-
 
Transfers to stage 2   
-
    
-
    
-
    
-
 
Transfers to stage 3   
-
    
-
    
-
    
-
 
Assets derecognised or matured (excluding write-off)   (138,700)   
-
    
-
    (138,700)
Changes in measument of financial assets   15,916    
-
    
-
    15,916 
Write-off   
-
    
-
    
-
    
-
 
Other adjustments   
-
    
-
    
-
    
-
 
At December 31, 2023   105,381    
-
    
-
    105,381 

 

   Stage 1   Stage 2   Stage 3   TOTAL 
   MCh$   MCh$   MCh$   MCh$ 
ECL allowance at January 1, 2023   326    
          -
    
          -
    326 
New financial assets originated   162    
 
    
 
    162 
Transfers to stage 1   
-
    
-
    
-
    
-
 
Transfers to stage 2   
-
    
-
    
-
    
-
 
Transfers to stage 3   
-
    
-
    
-
    
-
 
Assets derecognised or matured (excluding write-off)   (313)   
-
    
-
    (313)
Changes due to changes un credit risk   (50)   
-
    
-
    (50)
Write-off   
-
    
-
    
-
    
-
 
Other adjustments   
-
    
-
    
-
    
-
 
At December 31, 2023   125    
-
    
-
    125 

 

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 following charts show debt instruments at fair value through other comprehensive income cumulative unrealized losses, as of December 31, 2023:

 

   Less than 12 months   More than 12 months   Total 
2023  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   2,286,208    2,286,541    417    (84)   
-
    
-
    
-
    
-
    2,286,208    2,286,541    417    (84)
Chilean Treasury bonds and notes   801,738    737,705    24,466    (88,499)   
            -
    
     -
    
         -
    
           -
    801,738    737,705    24,466    (88,499)
Other Chilean government financial instruments   444    454    10    
-
    
-
    
-
    
-
    
-
    444    454    10    
-
 
Subtotal   3,088,390    3,024,700    24,893    (88,583)   
-
    
-
    
-
    
-
    3,088,390    3,024,700    24,893    (88,583)
                                                             
Other Chilean debt financial securities                                                            
Chilean Bank debt financial instruments   7,858    6,656    23    (1,225)   
-
    
-
    
-
    
-
    7,858    6,656    23    (1,225)
Other Chilean financial instruments   -    -    
-
    
-
    
-
    
-
    
-
    
-
    -    -    
-
    
-
 
Subtotal   7,858    6,656    23    (1,225)   
-
    
-
    
-
    
-
    7,858    6,656    23    (1,225)
                                                             
Foreign financial debt securities                                                            
Foreign Central Banks financial instruments   1,264,768    1,238,866    18,330    (44,232)   
-
    
-
    
-
    
-
    1,268,492    1,238,866    14,606    (44,232)
Other foreign debt financial instruments   260,401    265,803    6,966    (1,564)   
-
    
-
    
-
    
-
    260,401    265,803    6,966    (1,564)
Subtotal   1,525,169    1,504,669    25,296    (45,796)   
-
    
-
    
-
    
-
    1,528,893    1,504,669    21,572    (45,796)
Loans and account receivable from customer                                                            
Commercial loans   109,613    105,257    
-
    (4,356)   
-
    
-
    
-
    
-
    109,613    105,257    
-
    (4,356)
Subtotal   109,613    105,257    
-
    (4,356)   
-
    
-
    
-
    
-
    109,613    105,257    
-
    (4,356)
                        -    -    -    -                     
Total   4,731,030    4,641,282    50,212    (139,960)   
-
    
-
    
-
    
-
    4,734,754    4,641,282    46,488    (139,960)

 

The following charts show debt instruments at fair value through other comprehensive income cumulative unrealized losses, 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)