SANTIAGO, CHILE--(Marketwire - May 16, 2011) - CORPBANCA (NYSE: BCA), a Chilean financial institution offering a wide variety of corporate and retail financial products and services, today announced its financial results for the first quarter ended March 31, 2011. This report is based on unaudited consolidated financial statements and prepared in accordance with Chilean generally accepted accounting principles. Solely for the convenience of the reader, U.S. dollar amounts in this report have been translated from Chilean nominal pesos at our March 31, 2011 exchange rate of Ch$477.18 per U.S. dollar.
Financial Highlights
-- Net income for the first quarter 2011 reached Ch$29 billion, an
increase of 9.6% when compared to the fourth quarter 2010 and an
increase of 12.5% when compared to the first quarter 2010.
-- Total loans (excluding interbank and contingent loans) reached
Ch$5,455 billion as of March 31, 2011, leaving CorpBanca with a market
share of 7.02%, which was a slight decrease compared to the fourth
quarter 2010.
-- During the first quarter 2011:
-- Provision for loan losses increased by Ch$5,186 million from the fourth
quarter 2010,
-- Total operating revenue increased by 9.4% from the fourth quarter 2010;
and
-- Total operating expenses decreased by 10.0% from the fourth quarter
2010.
Mario Chamorro, CEO
"In 2008, we strategically changed our focus and the manner in which we conduct business in order to become the Best Bank in Chile.
"With great satisfaction, we received news that the British magazine World Finance chose us as the Best Bank in Chile, showing that the market is beginning to see the results of the exceptional work we have done since 2008.
"This positive trend has continued during the first quarter 2011, but we still have to work harder to achieve the goals that we set for ourselves this year."
General Information
Market Share
2007 2008 2009 2010 Mar-11
--------- --------- --------- --------- ---------
Total Loans 4,317 4,944 5,012 5,469 5,455
Market Share 6,82% 7,04% 7,27% 7,30% 7,02%
Despite the decrease in market share during the first quarter 2011, we experienced a positive growth trend during the last four years, and we expect this positive trend to continue in 2011.
The decrease in our market share is mainly due to a decrease in commercial loans (as discussed below).
Net Income (12 months trailing)
Dec-07 Dec-08 Dec-09 Dec-10 Mar-11
---------- ---------- ---------- ---------- ----------
51.049 56.310 85.109 119.043 122.330
Our net income has significantly increased since the beginning of 2009. This is as a result of the design and implementation of strategies that we consider consistent with future growth and earnings.
Our net income for the first quarter 2011 was Ch$29 billion.
The chart shows the trend in our 12-month trailing net income. For the 12 months trailing, our net income as of March 31, 2011 is the highest we have ever earned.
ROE - ROA
ROE
2007 2008 2009 2010 Mar-11
------ ------ ------ ------ ------
CorpBanca 11,8 12,4 18,5 25,0 24,6
Industry 16,2 14,2 16,5 20,7 20,3
ROA
2007 2008 2009 2010 Mar-10
------ ------ ------ ------ ------
CorpBanca 1,10 0,91 1,33 1,67 1,64
Industry 1,12 0,96 1,20 1,45 1,55
Our ROE and ROA have continuously improved in recent years. We have been ahead of the industry average since 2009 and that trend continued in 2010 and during the first quarter 2011.
Our annualized ROE and ROA for the first quarter 2011 was similar to the year ended December 31, 2010.
The success of our corporate wholesale model, improvements in our retail segments and better economic conditions are the principal reasons for our positive numbers.
Risk Index
2008 2009 2010 Mar-11
------ ------ ------ ------
CorpBanca 1,46 1,91 1,95 1,87
Industry 1,79 2,43 2,52 2,58
Consistent with one of our core strategies, CorpBanca has one of the lowest risk indices (Provision for loan losses/Total loans) in the industry.
Despite an increase in the industry's risk index, we were able to decrease our risk index during the first quarter 2011. This is consistent with our risk control strategy.
Efficiency Index
2008 2009 2010 Mar-11
------ ------ ------ ------
CorpBanca 46,09 38,96 38,10 38,60
Industry 49,87 44,58 45,90 46,50
Operational efficiency is also a core strategy for CorpBanca. The chart illustrates how our efficiency ratio is better than the industry average in Chile.
Our low operational cost is based on a cost control culture that allows the bank to compete in the Chilean market and realize high profits.
Basel Index
2008 2009 2010 Mar-11
-------- -------- -------- --------
10,8 13,9 13,4 12,3
9,1 9,5 8,9 8,2
Our Basel Index decreased by 1.11% in the first quarter 2011. The main reason for the decrease was our shareholders decision at the ordinary shareholders' meeting to pay dividends representing 100% of the 2010 net income.
The increase of capital that the bank is planning for 2011 will strengthen our capital position and significantly increase our Basel Index.
Branches - ATM - Employees
2007 2008 2009 2010 Mar-11
------ ------ ------ ------ ------
Branches 101 106 107 113 114
ATM 102 205 324 382 407
Employees 3,116 3,083 3,311 3,440 3,269
We have continued to increase the number of our branches, as part of our strategy to increase our volume in the retail market.
The total number of ATMs increased by 6.5% in the first quarter 2011, mainly due to the installation of ATMs in Unimarc supermarkets. Unimarc is owned by SMU S.A., a retail business holding company owned by our principal shareholder. Unimarc is the third largest supermarket chain in Chile in terms of total sales and the largest in terms of food sales.
The number of our employees has decreased by 5.0% in the first quarter 2011. This follows our strategy of maximizing efficiency as we continue to grow our portfolio and increase the products we offer to our customers.
Management's Discussion and Analysis
I) Financial Performance Review
For the three-month period ended
(Ch$ million)
----------------------------------
Dec-10 Mar-11 Change
Net interest revenue 55,502 46,606 (8,896)
Fees and income from services, net 13,883 13,170 (713)
Treasury business (711) 20,059 20,770
Other revenue 5,223 1,066 (4,157)
Total operating revenue 73,897 80,901 7,004
Provision for loan losses (6,184) (11,370) (5,186)
Operating expenses (38,338) (34,362) 3,976
Income attributable to investments in
other companies 12 - (12)
Net Income before taxes 29,807 35,513 5,706
Income taxes (3,104) (6,240) (3,136)
Net Income 26,703 29,273 2,570
Net interest revenue
Net interest revenue decreased by 16.0%. The decrease is mainly a result of the following:
-- A smaller increase in the UF (an inflation indexed unit of account).
The UF increased by 0.57% in the first quarter 2011 compared to a 0.65%
increase during the fourth quarter 2010.
-- An Increase in our funding cost as a result of an increase in the
Central Banks' interest rate from 3.25% in the fourth quarter 2010 to
4.00% in the first quarter 2011.
-- A decrease in our assets, particularly in the amount of commercial
loans.
-- As part of the financial hedge strategies used by CorpBanca a
significant portion of this reduction
Fees and income from services
For the three-month period ended
(Ch$ million)
-----------------------------------
Dec - 10 Mar - 11 Change
Banking services(*) 7,907 6,121 (1,786)
Mutual fund management and securities
brokerage services 2,123 2,781 658
Insurance brokerage 1,771 1,872 101
Financial advisory services 1,574 1,962 388
Legal advisory services 509 433 (76)
Total 13,884 13,170 (714)
(*) includes consolidation adjustments
The decrease of Ch$1.7 billion in fee revenues from banking operations during the first quarter 2011 is mainly due to a decrease in fees from foreign trade loans, lower use of ATM's and a decrease in the collection of up-front fees. This decrease was partially offset by an increase in fees from prepaid loans during the quarter.
Fees from securities brokerage services increased by Ch$268 million as compared to the fourth quarter 2010, which is explained by a significant increase in operations through Pershing and business with clients from our wholesale banking operations.
Insurance brokerage fees increased by 5.7% during the first quarter 2011. This is mainly explained by an increase of products attributed to our mid-sized commercial banking segment, especially our leasing products. This increase is also attributed to the success of our product offered by Banco Condell called "consumo+banlinea."
Our financial advisory services fees increased by 25.0% during the first quarter 2011 due to our participation in major projects during the first quarter 2011.
Trading and investment
For the three-month period ended
(Ch$ million)
----------------------------------
Dec - 10 Mar - 11 Change
Trading and investment income:
Trading securities 1,665 4,193 2,528
Derivatives held-for-trading (20,049) 22,448 42,497
Available-for-sale investments and
other (1,340) 2,426 3,765
Total trading and investment income (19,724) 29,066 48,790
Net foreign exchange transactions 19,012 (11,909) (30,921)
Net gains (losses) from treasury
business (712) 17,157 17,869
Total income from our treasury business during the first quarter 2011 increased by Ch$17.8 billion as compared to the fourth quarter 2010. The gain from our treasury business is mainly related to transactions and products that the bank offers to our corporate clients through our wholesale model and strategies related to market opportunities. In March, the bank sold a part of its available for sale portfolio, which resulted in Ch$1.6 billion of income.
CorpBanca hedges all its positions in foreign currency through derivatives to avoid any currency risk, so the final number of foreign exchange transactions will be mainly offset by the number of derivatives held for trading. Also, these results includes MZM profits/loss related to Swap contracts (Interest Rate Swaps and Cross Currency Interest Rate Swaps) used for managing ALM risk positions
Derivatives and financial securities that may provide effective economic hedges for managing risk positions are treated and reported as trading, due to local regulatory restrictions.
Trading and investment income primarily includes the results from our trading portfolio financial assets (marked-to-market adjustments, gains and losses from sales), gains and losses from our derivative trading portfolio, and gains and losses from financial investments available-for-sale.
Net foreign exchange gains and losses include both the results of foreign exchange transactions as well as the recognition of the effect of exchange rate fluctuations on assets and liabilities stated in foreign currencies, and loans and deposits in Chilean pesos indexed to foreign currencies.
Provision for loan losses (for Commercial and Retail loans)
For the three-month period ended
(Ch$ million)
----------------------------------
Dec - 10 Mar - 11 Change
Commercial, net (6,958) (3,223) 3,734
Mortgage, net (1,036) (1,137) (101)
Consumer, net (6,303) (6,514) (211)
Net charge to income (14,472) (10,822) 3,650
Our provision for loan losses for commercial and retail loans decreased by 25.0% during the first quarter 2011 as compared to the fourth quarter 2010.
An improvement in asset quality in addition to a decrease in our commercial loans explains the decrease of our total provision for loan losses (for commercial and retail loans) during the first quarter 2011.
Operating expenses
For the three-month period ended
(Ch$ million)
-----------------------------------
Dec - 10 Mar - 11 Change
Personnel salaries expenses 19,336 19,170 (166)
Administrative and other expenses 11,843 11,384 (459)
Depreciation, amortization and
impairment 1,865 1,832 (33)
Other operating expenses 5,294 1,976 (3,318)
Total operating expenses 38,338 34,362 (3,976)
Total operating expenses decreased by 10.0% during the first quarter 2011 as compared to the fourth quarter 2010 primarily as a result of a decrease in our other operating expenses. Personnel salaries decreased slightly as compared to the fourth quarter 2010. Administrative and other expenses decreased by Ch$459 million, mainly as a result of a decrease in advertisement expenses of Ch$ 500 million, as well as a decrease in computer service expenses and cash distributions. The decrease in administrative and other expenses was partially offset by an increase insurance premium expenses.
During the first quarter 2011, our other operating expenses decreased by Ch$3,318 million or 62.7%, which is the result of a decrease in additional provisions related to general litigation arising in the ordinary course of our business.
II) Assets and liabilities
Loan portfolio
As of the month ended (Ch$ million)
-----------------------------------
Dec -10 Mar - 11 Change
Wholesale 4,029,231 3,987,046 (42,185)
Commercial 3,421,104 3,309,099 (112,005)
Foreign trade 260,976 321,185 60,209
Leasing and factoring 347,151 356,762 9,611
Retail 1,439,954 1,467,993 28,039
Consumer 407,315 406,003 (1,312)
Mortgage loans 1,032,639 1,061,990 29,351
Total loans 5,469,185 5,455,039 (14,146)
On a quarter-by-quarter basis, our total loans portfolio remained steady as compared to the fourth quarter 2010, decreasing by only Ch$14,146. This decrease is primarily the result of commercial loans, which decreased by Ch$42 billion.
Our market share decreased by 0.28% during the first quarter 2011, from 7.30% in December 2010 to 7.02% in March 2011. For corporate and commercial loans, our market share at the end of March 2011 was 8.39%, 44 bps lower than our market share at the end of December 2010. During the first quarter 2011, we experienced an increase in prepaid loans, which explains the decrease in our commercial loans.
This quarter's increase in retail loans was due to a 2.8% increase in mortgage loans. The small decrease in consumer loans is related to our low income consumer division, called Banco Condell, which is going through the process of restructuring its portfolio with higher quality loans and a greater concentration on lower risk clients. In fact our risk index for this portfolio has been decreasing significantly in the past 12 months.
Securities Portfolio
As of the month ended(Ch$ million)
-----------------------------------
Dec - 10 Mar - 11 Change
Trading portfolio financial assets 197,580 194,006 (3,574)
Financial investments
available-for-sale 746,248 530,278 (215,970)
Financial investments held-to-maturity - 12,025 12,025
Total financial investments 943,828 736,309 (207,519)
Our investment portfolio consists of trading, available-for-sale and held-to-maturity securities. Trading instruments correspond to financial instruments acquired to generate gains from short-term price fluctuations, brokerage margins, or that are included in a portfolio with the purpose of gaining profit in the short-term. Trading instruments are stated at fair value.
Investment instruments are classified in two categories: held-to-maturity investments and instruments available-for-sale. Held-to-maturity investments include only those instruments for which the bank has the capacity and intent to hold until maturity. We currently have a small amount of held-to-maturity investments. All other investment instruments are considered available-for-sale. Investment instruments are initially recognized at cost, which includes transaction costs. Instruments available-for-sale at each subsequent period-end are valued at their fair value according to market prices or based on valuation models. Unrealized gains or losses arising from changes in the fair value are charged or credited to equity accounts.
Our available for sale portfolio decreased by 29.0% during the first quarter 2011. This is explained mainly by the proactive administration of our portfolio, which was restructured with the aim of searching for new opportunities in the market. In addition, a portion of the portfolio was sold, which explains part of the income earned by our financial division.
Funding strategy
As of the month ended(Ch$ million)
-----------------------------------
Dec-10 Mar - 11 Change
Checking accounts 405,301 430,467 25,166
Other non-interest bearing deposits 206,763 193,435 (13,328)
Time deposits and savings accounts 3,700,454 3,649,582 (50,872)
Repurchase agreements 189,350 131,789 (57,561)
Mortgages bonds 226,451 212,988 (13,463)
Banking bonds 700,570 802,577 102,007
Subordinated bonds 288,414 287,810 (604)
Domestic borrowings 66,800 24,397 (42,403)
Foreign borrowings 460,552 554,353 93,801
Our current funding strategy is to continue utilizing all sources of funding in accordance with their costs, their availability and our general asset and liability management strategy. During the fourth quarter 2009, we increased the amount of our subordinated bonds. In 2010, CorpBanca entered into a Senior Unsecured Term Loan Facility in the amount of US$167.5 million, and we issued US$178.1 million in Reg S notes in the international market. During 2011, we plan to continue to increase the amount of funding from checking accounts and diversifying our funding mainly through bonds.
Shareholders' Equity
We are the 4th largest private bank in Chile, based on our shareholders' equity of Ch$496 billion and loans of Ch$5,455 billion as of March 31, 2011. We have 226,909,291 thousand shares outstanding and a market capitalization of Ch$1,634 billion (based on a share price of Ch$7.2 pesos per share) as of March 31, 2011.
III) Other Related Information
Increase of CorpBanca Equity
As we mentioned in our previous release, at the extraordinary shareholders meeting held on January 27, 2010, our shareholders approved the proposal of the Board to make a capital increase which will occur through the issuance of 40,042,815,984 shares for payment, representing 15.0% of the total new equity, to be subscribed and paid at the price, terms and other conditions determined by the Board.
The Board adopted the agreement in question in order to strengthen our plan for growth and investment in the bank and take advantage of future commercial opportunities.
CorpBanca's Conference Call on First quarter 2011 Results on Tuesday, May 17, 2011
You are invited to participate in CorpBanca's (NYSE: BCA, Santiago: CORPBANCA) conference call to discuss the First quarter 2011 Results and respond to investor questions.
Time: 11:00 am (Santiago, Chile)
11:00 am EDT (US)
16:00 pm (UK)
Call Numbers: U.S.A. participants please dial 1866 819 7111
Outside the US please dial +44 1452 542 301
UK participants please dial 0800 953 0329
Chairperson: John Paul Fischer, Head of Investor Relations You should
dial in 10 minutes prior to the commencement of the call.
For your convenience, a 24 hour instant replay facility will be available, following the completion of the conference call, until Wednesday, May 18, 2011.
Slides and audio webcast:
There will also be a live -- and then archived -- webcast of the conference call with PowerPoint slides through the internet accessible through the website of Capital Link at www.capitallink.com. Please click on the button "FIRST QUARTER 2011 FINANCIAL RESULTS WEBCAST". The webcast will also be available on the company's website at www.corpbanca.cl. Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
To listen to the replay, please call:
Instant Replay Number U.S.A.: 1866 247 4222 Access Code: 2339939#
Instant Replay Number OTHER: +44 1452 550 000 Access Code: 2339939#
Instant Replay Number U.K.: 0800 953 1533 Access Code: 2339939#
Consolidated Statements of Income (unaudited)
For the three months ended
--------------------------
(Expressed in millions of Chilean pesos) Dec-10 Mar-11
OPERATING INCOME
Interest revenue 102,239 107,405
Interest expense (46,737) (60,799)
Net interest revenue 55,502 46,606
Fees and income from services, net 13,883 13,170
Trading and investment income, net (19,725) 29,066
Foreign exchange gains (losses), net 19,014 (9,007)
Other operating revenue 5,223 1,066
Operating revenues 73,897 80,901
Provisions for loan losses (6,184) (11,370)
Net operating revenues 67,713 69,531
Personnel salaries and expenses (19,336) (19,170)
Administration expenses (11,843) (11,384)
Depreciation, amortization and impairment (1,865) (1,832)
Other operating expenses (5,294) (1,976)
Net operating income 29,375 35,169
Income attributable to investments in other
companies 12 -
Non-controlling interest 420 344
Income before income taxes 29,807 35,513
Income taxes (3,104) (6,240)
Income for the period 26,703 29,273
Consolidated Balance Sheets (unaudited)
(Expressed in millions of Chilean pesos) Dec-10 Mar-11
Assets
Cash and deposits in banks 202,339 220,987
Items in course of collection 79,680 132,012
Trading portfolio financial assets 197,580 194,006
Financial investments available-for-sale 746,248 530,278
Financial investments held-to-maturity - 12,025
Investments purchased under agreements to
resell 75,676 65,340
Derivative financial instruments 204,067 197,368
Loans and receivables to banks 63,998 210,193
Loans and receivables to customers 5,469,184 5,455,038
Allowance for loan losses (106,606) (104,124)
------------ ------------
Loans and receivables to customers, net 5,362,578 5,350,914
Investments in other companies 3,583 3,583
Intangibles 13,096 12,948
Premises and equipment, net 53,430 54,872
Income tax provision - current 131 188
Deferred income taxes 25,417 25,778
Other assets 98,266 148,752
Total Assets 7,126,089 7,159,244
Liabilities:
Deposits and other demand liabilities 612,064 623,902
Items in course of collection 41,525 122,449
Securities sold under agreements to resell 189,350 131,789
Deposits and other term liabilities 3,700,454 3,649,582
Derivative financial instruments 175,261 145,150
Borrowings from financial institutions 503,692 555,785
Debt instruments 1,215,435 1,303,375
Other financial obligations 23,660 22,965
Income tax provision - current 7,299 9,389
Deferred income taxes 21,244 21,263
Provisions 79,747 26,926
Other liabilities 20,998 49,757
Total Liabilities 6,590,729 6,662,332
Shareholders' equity:
Capital 342,379 449,248
Reserves 26,406 26,406
Valuation gains (losses) (2,758) (2,178)
Retained earnings:
Retained earnings from prior years 106,869 346
Profit for the period 119,043 29,273
Less: Accrual for mandatory dividends (59,522) (8,782)
Minority Interest 2,943 2,599
Total Shareholders' Equity 535,360 496,912
Total equity and liabilities 7,126,089 7,159,244
Selected Performance Ratios (unaudited)
As of or for the three month
period ended
----------------------------
Dec-10 Mar-11
Solvency indicators
Basel index 13.43% 11.41%
Shareholders' equity / total assets 7.51% 6.94%
Shareholders' equity / total liabilities 8.12% 7.46%
Credit quality ratios
Risk index (Allowances / total loans ) 1.95% 1.91%
Provisions for loan losses / Total loans 0.45% 0.83%
Provisions for loan losses / Total assets 0.35% 0.64%
Provisions for loan losses / Gross operating
income 8.4% 14.1%
Provisions for loan losses / Net income 23.2% 38.8%
Profitability ratios
Net interest revenue / Interest-earning
assets 3.49% 2.98%
Gross operating income / Total assets 4.15% 4.52%
Gross operating income / Interest-earning
assets 4.65% 5.17%
ROA (before taxes), over total assets 1.67% 1.98%
ROA (before taxes), over interest-earning
assets 1.88% 2.27%
ROE (before taxes) 22.3% 28.6%
ROA, over total assets 1.50% 1.64%
ROA, over interest-earning assets 1.68% 1.87%
ROE 22.45% 23.99%
Efficiency ratios
Operating expenses / Total assets 2.15% 1.92%
Operating expenses / Total loans 2.80% 2.52%
Operating expenses / Operating revenues 44.7% 40.0%
Earnings
Diluted Earnings per share before taxes
(Chilean pesos per share) 0.1314 0.1565
Diluted Earnings per ADR before taxes (U.S.
dollars per ADR) 1.4041 1.6399
Diluted Earnings per share (Chilean pesos per
share) 0.1177 0.1290
Diluted Earnings per ADR (U.S. dollars per
ADR) 1.2579 1.3518
Total Shares Outstanding (Thousands) 226,909,290.6 226,909,290.6
Peso exchange rate for US$1 467.78 477.18
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements, Forward-looking information is often, but not always, identified by the use of words such as "anticipate", "believe", "expect", "plan", "intend", "forecast", "target", "project", "may", "will", "should", "could", "estimate", "predict" or similar words suggesting future outcomes or language suggesting an outlook. Forward-looking statements and information are based on current beliefs as well as assumptions made by and information currently available to CorpBanca concerning anticipated financial performance, business prospects, strategies and regulatory developments. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution readers not to place undue reliance on these statements as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and intentions expressed in such forward-looking statements. Furthermore, the forward-looking statements contained in this press release are made as of the date of this press release and Corp Banca does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
Contact Information:
CONTACTS:
Eugenio Gigogne
CFO, CorpBanca
Santiago, Chile
Phone: (562) 660-2559
investorrelations@corpbanca.cl
John Paul Fischer
Investor Relations, CorpBanca
Santiago, Chile
Phone: (562) 660-2141
john.fischer@corpbanca.cl
Nicolas Bornozis
President, Capital Link
New York, USA
Phone: (212) 661-7566
nbornozis@capitallink.com