For three-month period ended
-------------------------------
Mar-10 Jun-10 Change
Net interest revenue 53,884 61,609 7,725
Fees and income from services, net 15,121 14,112 (1,009)
Treasury business 6,363 10,906 4,543
Other revenue 1,547 644 (903)
Total operating revenue 76,915 87,271 10,356
Provision for loan losses (15,341) (15,592) (251)
Operating expenses (30,573) (35,942) (5,369)
Income attributable to investments in
other companies 23 261 238
Net Income before taxes 31,024 35,999 4,975
Income taxes (5,008) (6,224) (1,216)
Net Income 26,016 29,775 3,759
Net interest revenues
Net interest revenues increased by Ch$7.7 billion or 14% as compared to the
prior quarter. This is mainly a result of a higher increase in the UF (an
inflation indexed unit of accounts) during the second quarter of 2010 of
1%, compared with an increase in the first quarter of 2010 of 0.27%. This
highest interest revenue is explained by benefits from a long position in
UF-denominated assets funded with peso-denominated liabilities. Other
important issues that explain these results are the increase in 5% of total
loans and an improved funding mix with lower funding cost related to the
increase in non-interest bearing demand deposits as a percentage of our
total liabilities that increased from 7.3% in March to 8.6% in June. This
was offset by an increase of 100 bps in the Central Bank interest rate
during the second quarter.
Our return on equity (ROE) for the first half of the year 2010 was 23.8%.
This has been our highest ROE in the past years. The ROE of 2010 is as
follows:
Jan Feb Mar Apr May Jun
------ ------ ------ ------ ------ ------
Net Income (in millions of
Chilean pesos) 7,447 15,995 26,016 35,648 45,256 56,310
ROE 19.0% 20.3% 21.8% 22.6% 22.9% 23.8%
Fees and income from services
Net fees and income from services for the second quarter of 2010 totalled
Ch$14.1 billion, a Ch$1 billion decrease compared to the prior quarter. The
following table is a summary of our fees and income from services for the
three-month periods ended March 31 and June 30, 2010 expressed in millions
of Chilean pesos:
For three-month period ended
-------------------------------
Mar - 10 Jun - 10 Change
Bank(*) 7,957 7,035 (922)
Mutual Fund Management and Securities
Brokerage Services 2,964 2,707 (257)
Insurance Brokerage 1,737 2,335 599
Financial Advisory Services 2,104 1,687 (417)
Legal Advisory Services 359 349 (10)
Total 15,120 14,113 (1,007)
(*) includes consolidation adjustments
The decrease of Ch$0.9 billion in fee revenues from banking operations
during the second quarter of 2010 was concentrated in the corporate
segment, mainly because a decrease in up-front fees. Our retail segment
increased its total fees by 10%, mainly explained by credit cards, ATM and
consumer loans.
Insurance brokerage fees increased by 34% during the quarter. Our products
and strategies helped the bank to capture the higher demand of insurances,
which is explained by the recent earthquake and better economic outlook.
Our financial advisory services fees decreased by Ch$417 million during the
second quarter of 2010 due the conclusion of large operations, some of them
over USD$ 200 million, during the last quarter. Besides this decrease, our
strategy of focusing on clients in a global way through our wholesale
structure and analyzing the potential industries where our Financial
Advisory Service team could add value continues in the same path. This
explains why the fees from financial services are 6 times bigger than the
same period a year ago.
Our legal advisory services area was created in January 2007 and its
principal purpose is to provide legal advisory services related to our
businesses. Legal advisory fees almost remained the same during the second
quarter of 2010 as compared to the previous quarter.
Trading and investment income - Net Foreign exchange gains and losses
Trading and investment income primarily includes the results from our
trading portfolio financial assets (interest, 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.
Derivatives and financial securities that may provide effective economic
hedges for managing risk positions are treated and reported as trading.
The following table is a summary of our trading and investment income and
net foreign exchange gains and losses for the three-month periods ending
March 31 and June 30, 2010, expressed in million of Chilean pesos:
For three-month period ended
-------------------------------
Mar - 10 Jun - 10 Change
Trading and investment income:
Trading securities 3,849 190 (3,659)
Derivatives held-for-trading 5,606 18,091 12,485
Available-for-sale investments and other 1,854 (3,322) (5,176)
Total trading and investment income 11,309 14,959 3,650
Net foreign exchange transactions (4,947) (4,053) 893
Net gains (losses) from treasury business 6,363 10,906 4,543
Total income from our treasury business during the second quarter of 2010
increased by Ch$4.5 billion as compared to the prior quarter. This increase
is explained by higher income from our trading instruments, which was
partially offset by a decrease in our trading instruments and available for
sale investments. The negative number in net foreign exchange transactions
is mainly as a result of the change in the Chilean/USD exchange rate from
Ch$523.86 to Ch$547.40. It is important to mention that CorpBanca covers
through derivatives all its positions in foreign currency to avoid any
currency risk, so the negative number of foreign exchange transactions if
offset by a positive number explained by derivatives.
However, the previous chart does not reflect the entire result of our
trading investments, which impacts other parts of the financial statements.
For example our income from interest of the portfolio of available for sale
investments doesn't appear in the chart.
For three-month period ended
-------------------------------
Mar - 10 Jun - 10 Change
Commercial, net (4,997) (7,598) (2,601)
Mortgage, net (1,233) (657) 577
Consumer, net (8,650) (6,720) 1,930
Net charge to income (14,888) (14,980) (92)
Our provision for loan losses during the second quarter of 2010 was Ch$15
billion, almost the same when compared to the prior quarter.
The increase in provision for loan losses in commercial loans and the
decrease in consumer loans is explained as a consequence of the
increase/decrease of our loan portfolio structure during the second
quarter. The improvement in asset quality explains why total provision for
loan losses remained the same besides the increase in total loans. Also,
but in a lesser extent, the increase in the exchange rate also explains the
increase in the commercial loans.
For three-month period ended
-------------------------------
Mar - 10 Jun - 10 Change
Personnel salaries expenses 16,601 17,454 853
Administrative and other expenses 10,374 12,709 2,335
Depreciation, amortization and impairment 1,735 1,721 (14)
Other operating expenses 1,863 4,058 2,195
Total operating expenses 30,573 35,942 5,369
Total operating expenses increased by 18% during the second quarter when
compared to the last quarter. Personnel salaries expenses increased by
Ch$853 million. This is explained by an increase in our number of employees
of 4.5% during the second quarter and an increase in compensation payments.
This was offset by a decrease in bonuses paid during this quarter.
Administrative and other expenses also increased by Ch$2.3 billion, mainly
as a result of an increase in advertisement.
The increase of other operating expenses is because of an increase in
additional provisions for loan losses.
As part of our strategy, we continue to maintain our efficiency leadership
through our cost control culture. Our consolidated efficiency ratio
(operating expenses / operating revenues) for the second quarter of 2010
was 36.8%, the same as previous quarter.
II) Assets and liabilities
Loan portfolio
Our total loan portfolio (excluding loans and receivables to banks)
totalled Ch$5,322 billion as of June 30, 2010, representing an increase of
5% when compared to the prior quarter.
The following table provides comparative information related to our loan
portfolio for March 31 and June 30, 2010, expressed in millions of Chilean
nominal pesos:
Mar-10 Jun - 10 Change
---------- ---------- ---------
Wholesale 3,822,183 4,056,251 234,068
Commercial 3,240,901 3,429,845 188,944
Foreign trade 234,967 281,004 46,037
Leasing and factoring 346,315 345,402 (913)
Retail 1,230,947 1,266,636 35,689
Consumer 414,081 406,599 (7,482)
Mortgage loans 816,866 860,037 43,171
Total loans 5,053,130 5,322,887 269,757
Mar - 10 Jun - 10 Change
---------- ---------- ---------
Trading portfolio financial assets 91,153 111,714 20,561
Financial investments available-for-sale 880,956 863,443 (17,513)
Financial investments held-to-maturity - - -
Total financial investments 972,109 975,157 3,048
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
The International and Treasury Division is responsible for providing
liquidity, determining the funding gaps, managing the investment portfolio
and foreign currency positions.
The following table summarizes our funding structure as of March 31 and
June 30, 2010, in million Chilean nominal pesos:
Mar-10 Jun - 10 Change
---------- ---------- ---------
Checking accounts 327,037 368,363 41,326
Other non-interest bearing deposits 147,651 199,431 51,780
Time deposits and savings accounts 3,590,544 3,609,853 19,309
Repurchase agreements 736,041 622,908 (113,133)
Mortgages bonds 261,231 251,278 (9,953)
Banking bonds 415,909 449,822 33,913
Subordinated bonds 252,213 254,320 2,107
Domestic borrowings 43,401 30,889 (12,512)
Foreign borrowings 352,548 385,401 32,853
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 second quarter of
2010 our funding strategy was mainly driven by increasing our checking
accounts and other non-interest bearing deposits, decreasing our funding
cost. The increase in these two items relies on our strategy focused on in
increasing our non interest bearing funding through cash management
services in order to straighten our economic capital position and higher
income clients' checking accounts in the retail world.
Shareholders' Equity
We are the 4th largest private bank in Chile, based on our shareholders'
equity of Ch$ 501 billion and our loans of Ch$ 5,322 billion as of June 30,
2010. We have 226,909,291 thousand shares outstanding and a market
capitalization of Ch$1,203 billion (based on a share price of Ch$5.3 pesos
per share) as of June 30, 2010.
III) Other Related Information
Senior Unsecured Term Loan Facility
In July 2010, CorpBanca entered into a Senior Unsecured Term Loan Facility
that amounted USD$ 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 transaction has
re-opened this market to Chilean banking institutions.
Ratings
In June 2010, Feller-Rate published CorpBanca's local rating, increasing
its classification from AA- to AA. On the other hand, Fitch-Ratings
improved CorpBanca's outlook from negative to stable.
If you are interested in more information you may find the final reports in
our web page.
CorpBanca's Conference Call on Second quarter 2010 Results on Monday,
August 30th, 2010
You are invited to participate in CorpBanca's (
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: Mr. Eugenio Gigogne, Chief Financial Officer
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, September
6th, 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
"SECOND 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) Mar-10 Jun-10
OPERATING INCOME
Interest revenue 83,368 102,874
Interest expense (29,484) (41,265)
Net interest revenue 53,884 61,609
Fees and income from services, net 15,121 14,112
Trading and investment income, net 11,310 14,959
Foreign exchange gains (losses), net (4,947) (4,053)
Other operating revenue 1,547 644
Operating revenues 76,915 87,271
Provisions for loan losses (15,341) (15,592)
Net operating revenues 61,574 71,679
Personnel salaries and expenses (16,601) (17,454)
Administration expenses (10,374) (12,709)
Depreciation, amortization and impairment (1,735) (1,721)
Other operating expenses (1,863) (4,058)
Net operating income 31,001 35,737
Income attributable to investments in other
companies 23 261
Net loss from price-level restatement 0 -
Income before income taxes 31,024 35,998
Income taxes (5,008) (6,224)
Income for the period 26,016 29,774
Consolidated Balance Sheets (unaudited)
(Expressed in millions of Chilean pesos) Mar-10 Jun-10
Assets
Cash and due from banks 149,179 166,772
Items in course of collection 171,188 213,171
Trading portfolio financial assets 91,153 111,714
Financial investments available-for-sale 880,956 863,443
Financial investments held-to-maturity - -
Investments purchased under agreements to resell 107,277 38,286
Derivative financial instruments 129,014 160,856
Loans and receivables to banks 289,559 126,266
Loans and receivables to customers 5,053,129 5,322,886
Allowance for loan losses (97,400) (99,582)
--------- ---------
Loans and receivables to customers, net 4,955,729 5,223,304
Investments in other companies 3,583 3,583
Intangibles 12,858 12,149
Premises and equipment, net 54,898 53,812
Income tax provision - current - 458
Deferred income taxes 17,760 18,835
Other assets 87,415 93,285
Total Assets 6,950,569 7,085,934
Liabilities:
Deposits and other sight liabilities 474,688 567,794
Items in course of collection 144,101 191,769
Securities sold under agreements to resell 736,041 622,908
Deposits and other term liabilities 3,590,544 3,609,853
Derivative financial instruments 112,971 120,298
Borrowings from financial institutions 368,163 390,434
Debt instruments 929,353 955,420
Other financial obligations 27,786 25,856
Income tax provision - current 9,898 8,785
Deferred income taxes 16,087 16,309
Provisions 35,118 54,330
Other liabilities 16,008 21,131
Total Liabilities
Shareholders' equity: 6,460,758 6,584,887
Capital
Reserves 342,371 342,379
Valuation gains (losses) 14,865 14,868
Retained earnings: 1,123 (3,220)
Retained earnings from prior years 116,445 116,445
Profit for the period 26,016 56,310
Less: Accrual for mandatory dividends (13,008) (28,155)
Minority Interest 1,999 2,420
Total Shareholders' Equity 489,811 501,047
Total equity and liabilities 6,950,569 7,085,934
Selected Performance Ratios (unaudited)
As of or for the three month
period ended
----------------------------
Mar-10 Jun-10
Solvency indicators
Basle index(5) 13.28% 12.68%
Shareholders' equity / total assets 7.02% 7.07%
Shareholders' equity / total liabilities 7.55% 7.61%
Credit quality ratios
Risk index (Allowances / total loans ) 1.93% 1.87%
Provisions for loan losses / Total loans(1) 1.21% 1.17%
Provisions for loan losses / Total assets(1) 0.88% 0.88%
Provisions for loan losses / Gross operating
income 19.9% 17.9%
Provisions for loan losses / Net income 59.0% 52.4%
Profitability ratios
Net interest revenue / Interest-earning
assets(1)(2) 3.40% 3.88%
Gross operating income / Total assets(1) 4.43% 4.93%
Gross operating income / Interest-earning
assets(1)(2) 4.86% 5.50%
ROA (before taxes), over total assets(1) 1.79% 2.03%
ROA (before taxes), over interest-earning
assets(1)(2) 1.96% 2.27%
ROE (before taxes)(1) 25.4% 28.7%
ROA, over total assets(1) 1.50% 1.68%
ROA, over interest-earning assets(1)(2) 1.64% 1.88%
ROE(1) 21.92% 25.18%
Efficiency ratios
Operating expenses / Total assets(1) 1.76% 2.03%
Operating expenses/ Total loans(1) 2.42% 2.70%
Operating expenses / Operating revenues 39.7% 36.5%
Earnings
Diluted Earnings per share before taxes
(Chilean pesos per share) 0.1367 0.1586
Diluted Earnings per ADR before taxes (U.S.
dollars per ADR) 1.3052 1.4499
Diluted Earnings per share (Chilean pesos per
share) 0.1147 0.1312
Diluted Earnings per ADR (U.S. dollars per
ADR) 1.0945 1.1992
Total Shares Outstanding (Thousands)(4) 226,906,772.0 226,909,290.6
Peso exchange rate for US$1 523.86 547.10
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 CorpBanca
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