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Santander Chile's Q4'16 profit buoyed by 41.6% decline in provisions

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Santander Chile's Q4'16 profit buoyed by 41.6% decline in provisions

Banco Santander Chile booked a 29.7% annual increase in its fourth-quarter 2016 profit, helped by a 41.6% decline in provisions for loan losses.

The Santiago, Chile-based company reported net income attributable to shareholders of about 108.63 billion Chilean pesos for the 2016 fourth quarter, up from 83.78 billion pesos earned in the year-ago period.

Net interest income remained relatively flat at about 316.65 billion pesos, down just 0.6% from 318.67 billion pesos in the fourth quarter of 2015. Net fee and commission income, meanwhile, grew 6.7% year over year to 63.14 billion pesos.

Santander Chile's net interest margin was 4.2% in the three-month period, compared to 4.5% in the linked quarter and 4.7% a year earlier.

The bank recorded 87.71 billion pesos in provisions for loan losses in the quarter, down from 150.26 billion pesos a year ago. The bank noted that the prior-year figure included nonrecurring, pretax provisions of 35.00 billion pesos directly related to a regulatory change regarding provisioning models for mortgage loans and substandard consumer and commercial loans analyzed on a collective basis. Excluding this impact, provision expenses fell 23.9% year over year in the fourth quarter of 2016.

Operating expenses, excluding impairment and other operating costs, ticked 1.2% lower on a yearly basis to 178.02 billion pesos. The lender said it closed 8% of its branch network and eliminated 16% of its ATMs during 2016.

Total loans expanded 7.5% annually to reach about 27.206 trillion pesos. The bank's 90-day NPL ratio was 2.1%, unchanged from the prior quarter but down from 2.5% a year earlier.

The company's annualized return on equity improved to 15.3% from 12.4% a year ago.

The fourth-quarter 2016 results brought the bank's full-year 2016 profit to 472.35 billion pesos, 5.2% higher than the 448.88 billion pesos earned in 2015.

As of Jan. 30, US$1 was equivalent to 649.24 Chilean pesos.