Banco De Chile (NYSE:BCH) used its fourth-quarter 2025 earnings call to emphasize market leadership in profitability, strong capital levels, and continued progress on efficiency and digital initiatives, while outlining expectations for improving macro conditions and a gradual reactivation in loan growth during 2026.
Full-year profitability and industry positioning
Management said the bank finished 2025 ranked first among peer banks in Chile in several key metrics, including net income, return on average assets, net fee income, and net interest margin. For the full year, Banco de Chile reported net income of CLP 1.2 trillion, which the bank said translated into a 2.2% return on average assets, compared with 1.3% for the industry.
Macroeconomic backdrop and management’s baseline scenario
Chief Economist Rodrigo Aravena described Chile’s growth as “above trend,” highlighting a shift toward stronger domestic demand. He noted the economy expanded 1.6% year-over-year in Q3, averaging 2.5% year-to-date, and said domestic demand rose 5.8% in Q3, led by a 10% increase in gross investment and a 22% rise in machinery and equipment.
On inflation and rates, Aravena said the 12-month CPI rate ended 2025 at 3.5%, down from 4.4% in September and 4.5% in 2024. He noted the central bank reduced the policy rate by 25 basis points in December to 4.5%, with further cuts expected toward a neutral rate of 4.25%.
Looking ahead, management’s baseline scenario calls for around 2.4% GDP growth in 2026, with inflation converging toward the 3% target and the policy rate moving to 4.25%. Aravena also flagged upside factors, including improving consumer and business confidence, higher copper prices, and higher capital goods imports, while stressing that external conditions and domestic policy developments remain important variables.
Revenue mix, margins, and loan trends
Head of Investor Relations Pablo Mejia said operating revenues were resilient as inflation normalized and “non-customer income” declined. Total operating revenues were CLP 749 billion in Q4, while full-year operating revenues totaled CLP 3 trillion, described as relatively stable versus 2024. The bank said full-year customer income increased 4.2%, supported by retail loan-related revenues, lending spreads, and fee generation across transactional services and mutual fund management.
On balance sheet trends, total loans rose 0.8% year-on-year to CLP 39.2 trillion as of December 2025. Management attributed the modest growth to divergent dynamics across portfolios:
- Mortgage loans grew 5.3% year-on-year, which the bank linked to lower rates, inflation dynamics, a stable housing market, and public programs supporting the sector.
- Consumer loans increased 3.9% year-on-year, consistent with improving consumption indicators and the central bank’s credit survey signals.
- Commercial loans declined 3% year-on-year, which management tied to slower recovery in private investment, conservative behavior by large corporates, and prepayments.
The bank said retail banking represented 67.5% of total loans and grew 4.2% year-on-year. It also highlighted that SME loans grew 3.3%, but excluding amortization of FOGAPE loans, SME loans rose 9.4% year-on-year. Wholesale banking loans fell 5.5%, with corporate banking down 8.8%.
Capital, funding, and asset quality
Management reiterated that Banco de Chile remains highly capitalized, citing a CET1 ratio of 14.5% and a total capital ratio of 18.3% as of December 2025. The bank also noted a regulatory update: on January 16, 2026, the CMF removed a 0.13% Pillar II charge previously assigned to Banco de Chile, reducing that requirement to zero.
On funding, the bank said demand deposits represented 26.8% of total liabilities, and its demand deposit-to-loan ratio stood at 37%, which management characterized as the highest among major peers. The bank also discussed its inflation-index exposure in the banking book, stating its net asset exposure to UF reached CLP 8.8 trillion in December 2025, up from Q3, reflecting growth in UF assets and amortization of previously issued UF-denominated bonds.
In credit quality, the bank reported expected credit losses of CLP 116 billion in Q4 and CLP 382 billion for the full year, down 2.5% versus the prior year. Cost of risk improved to 0.97% in 2025. Management said past-due loans stood at 1.7%, below the industry, and highlighted a 223% coverage ratio, with total provisions of CLP 1.5 trillion including additional provisions.
Efficiency efforts, digital initiatives, and 2026 guidance
The bank said operating expenses declined in Q4, with total operating expenses of CLP 293 billion, down 3.5% nominal and 6.7% in real terms year-on-year. For the full year, operating expenses were CLP 1.1 trillion, essentially flat nominally and down 3.5% in real terms. The bank reported a 37.4% efficiency ratio for 2025.
Management pointed to continued progress in digital banking, including 2.4 million FAN digital accounts as of December 2025, up 25% year-on-year, and said balances per account rose 32%. The bank also highlighted the launch of Banchile Pagos, its acquiring and payment processing subsidiary, describing it as a driver of fee-based income. In the Q&A, Mejia said Banchile Pagos began operations in Q4 2025 and had reached a level where roughly 4% of the bank’s SME-equivalent customer base were Banchile Pagos customers.
For 2026, management provided full-year guidance calling for:
- Return on average capital: 19% to 21%
- Efficiency ratio: around 39% under normalized revenue conditions
- Cost of risk: 1.1% to 1.2%
Executives said loan growth could be more weighted to the second half of the year, citing recent softness in demand and corporate prepayments, as well as the timing of potential policy changes after a new government takes office on March 11. On capital allocation, management said it intends to use its capital strength to grow faster than the industry and regain market share, while describing a long-run preference to operate with capital ratios at least about 1% above regulatory limits.
About Banco De Chile (NYSE:BCH)
Banco de Chile (NYSE: BCH) is a leading Chilean financial institution headquartered in Santiago. Founded in 1893, the bank is one of the country’s oldest and most established banking groups, serving a broad spectrum of individual, corporate and institutional clients. It is publicly listed and operates under Chilean banking regulations while participating in international capital markets.
The bank’s core businesses include retail banking, commercial and corporate banking, and investment banking.
