-- Net income for the third quarter 2010 reached Ch$36 billion, an
increase of 20% when compared to the prior quarter and 48% when
compared to 3Q 2009.
-- Total loans (excluding interbank and contingent loans) reached
Ch$5,347 billion as of September, 2010, leaving CorpBanca with a market
share of 7.34%, 8 bps lower than last quarter.
-- Fees and income from services increased 7%.
-- Provision for loan losses decreased in 8%.
-- Total operating expenses decreased 7.6% and total fees increased 7%
when compared to the prior quarter.
Mario Chamorro, CEO
"During the third quarter of 2010, CorpBanca had the highest net income
ever, reaching Ch$ 36 billion, an increase of more than 20% compared to
previous quarter".
"The consolidation of our corporate division (both large cap and SME)
together with our treasury department and our subsidiaries under a
wholesale business model has been a key driver that explains our third
quarter results. We have been remodeling our retail business in terms of
strategies and employees during 2010 that should have an important impact
in the short term, so we expect to continue with positive results in the
future."
General Information
Market Share
2006 2007 2008 2009 Mar-10 Jun-10 Sep-10
------- ------- ------- ------- ------- ------- -------
Total Loans 3,556 4,317 4,944 5,012 5,053 5,323 5,347
Market Share 6,31% 6,82% 7,04% 7,27% 7,29% 7,42% 7,34%
Despite the last quarter decrease, it is possible to appreciate a positive
trend of growth during the last four years, and this year has not been the
exception.
Our market share maintained with a slight decreased of 8 bps compared to
the previous quarter, besides the increase in total loans.
Net Income (12 months trailing)
Dec-06 Dec-07 Dec-08 Dec-09 Mar-10 Jun-10 Sep-10 -------- -------- -------- -------- -------- -------- -------- 39.104 51.049 56.310 85.109 97.391 34.059 30.221The bank net income has strongly increased since the beginning of 2009. These results come from designing and implementing strategies that we consider consistent with future growth and earnings. Our net income for the third quarter 2010 was Ch$ 36 billion. YTD the bank has Ch$ 92 billion, higher than the total net income of 2009. The chart shows our 12-month trailing net income evolution. ROE - ROA
ROE
2006 2007 2008 2009 Mar-10 Jun-10 Sep-10
------- ------- ------- ------- ------- ------- -------
CorpBanca 9,9 11,8 12,4 18,5 21,9 23,8 26,3
Industry 18,6 16,2 14,2 16,5 20,3 22,0 22,1
ROA
2006 2007 2008 2009 Mar-10 Jun-10 Sep-10
------- ------- ------- ------- ------- ------- -------
CorpBanca 1,07 1,10 0,91 1,33 1,50 1,57 1,77
Industry 1,26 1,12 0,96 1,20 1,60 1,62 1,60
Our ROE and ROA have been continuously improving in recent years. We have
been ahead of the industry average since last year and we continued in that
trend during 2010.
Our annualized ROE reached the highest figure ever in the history of
CorpBanca. The same is the case with our ROA.
The success of our corporate wholesale model, improvements in our retail
segments and better economic conditions are the principal reasons
explaining this year's positive numbers.
Risk Index
Dec 08 Dec 09 Mar-10 Jun-10 Sep-10
------- ------- ------- ------- -------
CorpBanca 1,46 1,91 1,93 1,87 1,94
Industry 1,79 2,43 2,6 2,58 2,58
As one of our core strategies, CorpBanca continues with one of the lowest
risk index (Provision for loan losses/Total loans) of the industry.
A small increase in our retail loans as a percentage of our total portfolio
is one of the reasons of the increase in our risk index compared to
previous quarter.
Efficiency Index
Dec 08 Dec 09 Mar-10 Jun-10 Sep-10
------- ------- ------- ------- -------
CorpBanca 46,09 38,96 36,77 36,88 35,87
Industry 49,87 44,58 41,7 42,46 43,57
Our efficiency ratio has been also a core strategy for CorpBanca. The chart
illustrates how our efficiency ratio has been improving -- a leader in the
Chilean market.
Our low operational cost is based on a cost control culture that allows the
bank to compete in the Chilean market with high profits.
Basel Index
Dec-08 Dec-09 Mar-10 Jun-10 Sep-10
------- ------- ------- ------- -------
Basel I 10,8 13,9 13,2 12,7 12,8
Tier one 9,1 9,5 9,0 8,6 8,8
In November 2009, we issued subordinated bonds that increased our Basel I
index, leaving us with a Basel I index in excess of 13%. During 2010 we
have maintained our index over 12.5% and we expect to continue the trend
for the remainder of the year. The slight decrease is explained by an
increase in our loans.
We believe that our current Basel index will permit us to grow without
solvency pressure for 2011.
Branches - ATM - Employees
2006 2007 2008 2009 Sep-10
------- ------- ------- ------- -------
Branches 92 101 106 107 107
ATM 102 102 205 324 366
Employees 2,389 3,116 3,083 3,311 3,482
We have continued to increase the number of our traditional banking
branches, while decreasing our branches of Banco Condell.
The total number of ATMs increased 13% in 2010, mainly due to the
installation of ATMs in SMU supermarkets. SMU is the third most important
supermarket chain in Chile and it is owned by the Saieh family.
Our number of employees has increased in 5% for 2010. This follows our
strategy of focusing on customer satisfaction and in offering more
sophisticated products to our clients.
Management's Discussion and Analysis
I) Financial Performance Review
For three-month period
ended (Ch$ million)
-------------------------
Jun-10 Sep-10 Change
Net interest revenue 61,609 53,415 (8,194)
Fees and income from services, net 14,112 15,105 993
Treasury business 10,906 18,643 7,737
Other revenue 644 1,418 774
Total operating revenue 87,271 88,581 1,310
Provision for loan losses (15,592) (14,070) 1,522
Operating expenses (35,942) (33,219) 2,723
Income attributable to investments in other
companies 261 - (261)
Net Income before taxes 35,999 41,292 5,294
Income taxes (6,224) (5,299) 925
Net Income 29,775 35,993 6,219
Net interest revenues
Total operating revenue increased Ch$ 1.3 billion during the third quarter.
This was offset by the net interest revenues decreased of Ch$8.2 billion or
13.3% as compared to the prior quarter. This is mainly a result of a lower
increase in the UF (an inflation indexed unit of accounts) during the third
quarter of 2010 of 0.65%, compared with an increase in the second quarter
of 2010 of 1%. This lower interest revenue is explained by benefits we
received from a long position in UF-denominated assets funded with
peso-denominated liabilities.
The increase in total operating revenue is explained by an increase in fees
and treasury business that will be explained in more detail below. A
reduction in provision for loan losses and operating expenses also explains
the increase of our net income of 20% as compared to the prior quarter.
Fees and income from services
For three-month period
ended (Ch$ million)
--------------------------
Jun - 10 Sep - 10 Change
Banking services(*) 7,035 9,118 2,084
Mutual fund management and securities
brokerage services 2,707 3,287 580
Insurance brokerage 2,335 2,055 (280)
Financial advisory services 1,687 222 (1,465)
Legal advisory services 349 422 73
Total 14,113 15,105 992
(*) includes consolidation adjustments
The increase of Ch$2 billion in fee revenues from banking operations during
the third quarter of 2010 was concentrated in our corporate segment, mainly
because of an increase of up-front fees. Our retail segment increased its
total fees from mortgage loans, ATM and other services. Most of our fees
came from sales of new products than from transactions.
Fees from securities brokerage services increased 94% as compared to the
previous quarter, explained by an important increase in the number of
customers during the quarter, the launching of Pershing to allow clients to
invest abroad and other new services focus on corporate needs; meanwhile
fees from mutual fund management remained the same.
Insurance brokerage fees decreased by 12% during the third quarter of 2010.
Our products and strategies helped the bank to capture the higher demand of
insurance during the last quarter, which was explained by the recent
earthquake and better economic outlook. That demand decreased in the third
quarter. If we compare 3Q 2010 with 3Q 2009 our fees increased 61%. In the
Chilean insurance industry (banks in Chile are not allowed to have an
insurance company, only an insurance brokerage), the life insurance
companies inflows increased 25% for the first 9 months of this year, mainly
explained by higher prices in the stock market that increased the amount
that the life insurance companies received from pension funds. Also flows
from earthquake insurances increase 24.7% during this year because of the
earthquake of February 27.
Our financial advisory services fees decreased by Ch$1,465 million during
the third quarter of 2010 because this business has an important cyclical
behaviour if you contrast quarter to quarter results.
Legal advisory fees increased 20% compared to the previous quarter,
although it continues representing less than 3% of our total fees.
Trading and investment
For three-month period
ended (Ch$ million)
-------------------------
Jun - 10 Sep - 10 Change
Trading and investment income:
Trading securities 190 1,151 961
Derivatives held-for-trading 18,091 (17,975) (36,066)
Available-for-sale investments and other (3,322) 870 4,193
Total trading and investment income 14,959 (15,953) (30,912)
Net foreign exchange transactions (4,053) 34,598 38,651
Net gains (losses) from treasury business 10,906 18,645 7,739
Total income from our treasury business during the third quarter of 2010 increased by Ch$7.7 billion as compared to the prior quarter. The positive number of our treasury department is mainly related to transactions and products that the bank offers to our corporate clients through our wholesale model. CorpBanca covers through derivatives all its positions in foreign currency to avoid any currency risk, so the final number of foreign exchange transactions will be mainly offset by the number of derivatives held for trading. Derivatives and financial securities that may provide effective economic hedges for managing risk positions are treated and reported as trading, due to local regulatory restrictions. Trading and investment income primarily includes the results from our trading portfolio financial assets (marked-to-market adjustments, gains and losses from sales), gains and losses from our derivative trading portfolio, and gains and losses from financial investments available-for-sale. Net foreign exchange gains and losses include both the results of foreign exchange transactions as well as the recognition of the effect of exchange rate fluctuations on assets and liabilities stated in foreign currencies and loans and deposits in Chilean pesos indexed to foreign currencies. Provision for loan losses
For three-month period ended
(Ch$ million)
-----------------------------
Jun - 10 Sep - 10 Change
Commercial, net 7,598 7,564 (34)
Mortgage, net 657 206 (451)
Consumer, net 6,720 5,965 (755)
Net charge to income 14,980 13,727 (1,253)
Our provision for loan losses during the third quarter of 2010 was Ch$13.7
billion, a decrease of 8% as compared to the prior quarter.
An improvement in asset quality explains why total provision for loan
losses decreased despite the increase in total loans. This is especially
significant in our mortgage loans, which increased 9% on a
quarter-on-quarter basis, and the provision for loan losses related to
mortgages decreased by 11%.
Operating expenses
For three-month period ended
(Ch$ million)
-----------------------------
Jun - 10 Sep - 10 Change
Personnel salaries expenses 17,454 17,643 189
Administrative and other expenses 12,709 11,867 (842)
Depreciation, amortization and impairment 1,721 1,796 75
Other operating expenses 4,058 1,913 (2,145)
Total operating expenses 35,942 33,219 (2,723)
Total operating expenses decreased by 7.6% during the third quarter as
compared to the prior quarter. Personnel salaries remained almost the same
as previous quarter. Administrative and other expenses decreased by Ch$842
million, mainly as a result of a decrease in advertisement, computer
services and ATMs.
The decrease of other operating expenses is explained by a decrease in
additional provisions for loan losses.
II) Assets and liabilities
Loan portfolio
Ch$million Jun-10 Sep - 10 Change
--------- --------- --------
Wholesale 4,056,251 4,001,617 (54,634)
Commercial 3,429,845 3,398,647 (31,198)
Foreign trade 281,004 270,396 (10,608)
Leasing and factoring 345,402 332,574 (12,828)
Retail 1,266,636 1,345,513 78,877
Consumer 406,599 406,302 (297)
Mortgage loans 860,037 939,211 79,174
Total loans 5,322,887 5,347,130 24,243
Over a quarter-on-quarter basis our total loans portfolio remained similar
to that of the previous quarter, increasing only by 0.5%. This increase is
primarily a result of mortgage loans, which increased Ch$79 billion,
despite the decrease in commercial loans.
Our market share slightly decreased by 8 bps during the third quarter, from
7.42% in June 2010 to 7.34% in September 2010. For corporate and commercial
loans, our market share at the end of June 2010 was 8.96%, 16 bps lower
than our market share at the end of June 2010.
This quarter's increase in retail loans was due to mortgages loans that
increased by 9.2. The small decrease in consumer loans is related to Banco
Condell, our low income retail bank, and is consistent with our strategy of
increasing our profits in a reduced controlled portfolio with higher
returns.
Securities Portfolio
Ch$million Jun - 10 Sep - 10 Change
--------- --------- --------
Trading portfolio financial assets 111,714 152,263 40,549
Financial investments available-for-sale 863,443 676,159 (187,284)
Financial investments held-to-maturity - - -
Total financial investments 975,157 828,422 (146,735)
Our investment portfolio consists of trading and available-for-sale
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 a pattern 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 which the Bank has the capacity
and intent to hold until maturity. We currently do not have
held-to-maturity investment. 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.
Funding strategy
Ch$million Jun-10 Sep - 10 Change
--------- --------- --------
Checking accounts 368,363 373,441 5,078
Other non-interest bearing deposits 199,431 215,315 15,884
Time deposits and savings accounts 3,609,853 3,507,104 (102,749)
Repurchase agreements 622,908 146,668 (476,240)
Mortgages bonds 251,278 241,174 (10,104)
Banking bonds 449,822 505,285 55,463
Subordinated bonds 254,320 254,291 (29)
Domestic borrowings 30,889 138,720 107,831
Foreign borrowings 385,401 474,853 89,452
Our current funding strategy is to continue to utilize all sources of
funding in accordance with their costs, their availability and our general
asset and liability management strategy. During the fourth quarter of 2009
we increased our amount of subordinated bonds. During the third quarter
CorpBanca entered into a Senior Unsecured Term Loan Facility that amounted
USD$ 167 million. This loan has an ending date of two years and it was
coordinated by BNP Paribas. Citibank, Commerzbank, Standard Chartered and
Wells Fargo participated among others. This explains the increase in the
category banking bonds.
Shareholders' Equity
We are the 4th largest private bank in Chile, based on our shareholders'
equity of Ch$ 515 billion and our loans of Ch$ 5,347 billion as of
September 30, 2010. 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 June 30, 2010.
III) Other Related Information
Potential Equity Investment by Banco do Brasil
On September 29, 2010, Corp Group Interhold S.A., as shareholder and in its
capacity as indirect controller of CorpBanca, informed us that it had
entered into informal and preliminary discussions with representatives of
Banco do Brazil in connection with the potential acquisition of up to a 10%
equity interest in CorpBanca, by means of a capital increase. On the same
day, we informed the Chilean local authorities of the potential equity
investment by Banco do Brasil by filing a Notice of Material Event with the
Superintendency of Securities and Insurance. To date, there is no
definitive agreement with Banco do Brazil or information that is not
disclosed to the public regarding such potential investment. In any event,
if a final agreement is reached among the parties, it will be subject to
the applicable approvals set forth under Chilean Law.
CorpBanca's Conference Call on Third quarter 2010 Results on Friday,
November 19, 2010
You are invited to participate in CorpBanca's (NYSE: BCA, Santiago:
CORPBANCA) conference call to discuss the Third quarter 2010 Results and
respond to investor questions.
Time: 12:00 am (Santiago, Chile)
10:00 am EST (US)
15:00 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 Monday, November 22,
2010.
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
"THIRD QUARTER 2010 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) Jun-10 Sep-10
OPERATING INCOME
Interest revenue 102,874 99,158
Interest expense (41,265) (45,743)
Net interest revenue 61,609 53,415
Fees and income from services, net 14,112 15,105
Trading and investment income, net 14,959 (15,954)
Foreign exchange gains (losses), net (4,053) 34,597
Other operating revenue 644 1,418
Operating revenues 87,271 88,581
Provisions for loan losses (15,592) (14,070)
Net operating revenues 71,679 74,511
Personnel salaries and expenses (17,454) (17,643)
Administration expenses (12,709) (11,867)
Depreciation, amortization and impairment (1,721) (1,796)
Other operating expenses (4,058) (1,913)
Net operating income 35,737 41,292
Income attributable to investments in other companies 261 -
Net loss from price-level restatement - -
Income before income taxes 35,998 41,292
Income taxes (6,224) (5,299)
Income for the period 29,774 35,993
Consolidated Balance Sheets (unaudited)
(Expressed in millions of Chilean pesos) Jun-10 Sep-10
Assets
Cash and due from banks 166,772 112,680
Items in course of collection 213,171 263,280
Trading portfolio financial assets 111,714 152,263
Financial investments available-for-sale 863,443 676,159
Financial investments held-to-maturity - -
Investments purchased under agreements to resell 38,286 25,764
Derivative financial instruments 160,856 200,451
Loans and receivables to banks 126,266 42,967
Loans and receivables to customers 5,322,886 5,347,129
Allowance for loan losses (99,582) (103,993)
--------- ---------
Loans and receivables to customers, net 5,223,304 5,243,136
Investments in other companies 3,583 3,583
Intangibles 12,149 12,596
Premises and equipment, net 53,812 54,009
Income tax provision - current 458 805
Deferred income taxes 18,835 19,611
Other assets 93,285 94,673
Total Assets 7,085,934 6,901,977
Liabilities:
Deposits and other sight liabilities 567,794 588,756
Items in course of collection 191,769 238,918
Securities sold under agreements to resell 622,908 146,668
Deposits and other term liabilities 3,609,853 3,507,104
Derivative financial instruments 120,298 169,817
Borrowings from financial institutions 390,434 588,484
Debt instruments 955,420 1,000,750
Other financial obligations 25,856 25,089
Income tax provision - current 8,785 10,695
Deferred income taxes 16,309 16,539
Provisions 54,330 72,483
Other liabilities 21,131 21,619
Total Liabilities
Shareholders' equity: 6,584,887 6,386,922
Capital
Reserves 342,379 342,379
Valuation gains (losses) 14,868 26,406
Retained earnings: (3,220) (7,190)
Retained earnings from prior years 116,445 104,907
Profit for the period 56,310 92,340
Less: Accrual for mandatory dividends (28,155) (46,170)
Minority Interest 2,420 2,383
Total Shareholders' Equity 501,047 515,055
Total equity and liabilities 7,085,934 6,901,977
Selected Performance Ratios (unaudited)
As of or for the three month
period ended
----------------------------
Jun-10 Sep-10
Solvency indicators
Basle index(5) 12.68% 12.82%
Shareholders' equity / total assets 7.07% 7.46%
Shareholders' equity / total liabilities 7.61% 8.06%
Credit quality ratios
Risk index (Allowances / total loans ) 1.87% 1.94%
Provisions for loan losses / Total loans(1) 1.17% 1.05%
Provisions for loan losses / Total assets(1) 0.88% 0.82%
Provisions for loan losses / Gross operating
income 17.9% 15.9%
Provisions for loan losses / Net income 52.4% 39.1%
Profitability ratios
Net interest revenue / Interest-earning
assets(1)(2) 3.88% 3.51%
Gross operating income / Total assets(1) 4.93% 5.13%
Gross operating income / Interest-earning
assets(1)(2) 5.50% 5.82%
ROA (before taxes), over total assets(1) 2.03% 2.39%
ROA (before taxes), over interest-earning
assets(1)(2) 2.27% 2.71%
ROE (before taxes)(1) 28.7% 32.1%
ROA, over total assets(1) 1.68% 2.09%
ROA, over interest-earning assets(1)(2) 1.88% 2.36%
ROE(1) 25.18% 30.71%
Efficiency ratios
Operating expenses / Total assets(1) 2.03% 1.93%
Operating expenses/ Total loans(1) 2.70% 2.48%
Operating expenses / Operating revenues 36.5% 35.3%
Earnings
Diluted Earnings per share before taxes
(Chilean pesos per share) 0.1586 0.1820
Diluted Earnings per ADR before taxes (U.S.
dollars per ADR) 1.4499 1.8648
Diluted Earnings per share (Chilean pesos per
share) 0.1312 0.1586
Diluted Earnings per ADR (U.S. dollars per
ADR) 1.1992 1.6255
Total Shares Outstanding (Thousands)(4) 226,909,290.6 226,909,290.6
Peso exchange rate for US$1 547.10 547.10
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.
*Risk Index: Provision for loan losses/Total loans
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