Banco de Chile - Earnings Call - Q4 2024

Transcript

Operator (participant)

Good afternoon, everyone, and welcome to Banco de Chile's Fourth Quarter 2024 Results Conference Call. If you need a copy of the Management Financial Review, it is available on the company's website. With us today, we have Mr. Rodrigo Aravena, Chief Economist and Institutional Relations Officer; Mr. Pablo Mejia, Head of Investor Relations; and Daniel Galarce, Head of Financial Control at Banco de Chile. Before we begin, I would like to remind you that this call is being recorded, and the information discussed today may include forward-looking statements regarding the company's financial and operating performance. All projections are subject to risks and uncertainties, and actual results may differ materially. Please refer to the detailed note in the company's press release regarding forward-looking statements. I will now turn the call over to Mr. Rodrigo Aravena. Please go ahead, sir.

Rodrigo Aravena (Chief Economist and VP of Institutional Relations and Public Policy Officer)

Good afternoon. Thank you for attending this conference call. Today, we will present the overall performance of Banco de Chile during the fourth quarter and, consequently, the full year 2024. We are proud of the overall performance of Banco de Chile in the last year. The strong financial results and significant advances in several key areas reaffirm the unquestionable leadership that our bank has had over time. As we highlight in slide number two, in 2024, we managed to outperform our main peers in many dimensions. On the financial side, we led the banking industry by posting a net income of CLP 1,207 billion, equivalent to a return on average capital of 23.1%, well above the 15.8% achieved by the local industry. This outstanding result was explained by positive figures for margins, asset quality, and efficiency. We also have important accomplishments and results in several non-financial aspects.

Some of them include further advances in digital banking, the creation of a new subsidiary that will compete in the acquiring business while keeping our leading position in key areas contributing to our strategy, such as service quality and mutual funds. Our positive performance was recognized by several institutions, as can be seen on the right of this slide. In the rest of the webcast, we will present a deep analysis of the performance of our bank during the last quarter and the full year. Before that, I'd like to share a brief analysis of the macroeconomic and business environment. Please go to slide number four. The Chilean economic growth continues improving, as you can see in the slide on the left. According to the monthly GDP index, the economy expanded by 2.5% in 2024 after the weak 0.2% expansion posted one year ago.

The chart shows a sequential improvement in activity during the last year when the GDP growth rate went up from 2% year-on-year in the first half to 3% year-on-year in the second half, which was partially attributable to the gradual normalization in deflation and the important reduction in the overnight rate, among other factors. In fact, as you can see from the chart on the other right, faster growth has been led by the acceleration in commerce, reflecting the gradual improvement in domestic demand. In the fourth quarter, commerce activity, according to the monthly GDP breakdown, went up by 7.4% year-on-year, posting the highest expansion in almost three years. Consequently, commerce expanded by 3.8% in 2024, well above the 3.5% contraction seen in 2023. Mining also had an important recovery, as it grew by 7.5% year-on-year in the fourth quarter and 6.2% in the full year.

Service growth has been more stable, as they have already improved during previous years. The slight recovery in the activity has also been seen in the labor market. In the fourth quarter, the unemployment rate was 8.1%, declining 40 basis points compared to the rate seen one year ago due to the 0.9% year-on-year increase in total employment, while the labor force went up by 0.5%. It is worth highlighting that employment was driven by wage workers, a category that increased by 2.7% year-on-year in the quarter. Because of these figures, the unemployment rate decreased from an average of 8.6% in 2023 to 8.5% in 2024. Please go to slide number five to analyze the evolution of price and rates and their impact in the overall economy. We've seen a higher-than-expected persistence in the overall CPI.

In December 2024, the CPI posted a 12-month increase of 4.5%, a figure that stood well above the expectations held a few months ago. This situation has been a consequence of two main factors. First, the rise in electricity bills, which, according to Central Bank estimates, should have a total impact of nearly 150 basis points in inflation. Second, the unexpected weakness in the Chilean peso, a factor that is especially relevant for an open country as Chile, where more than half of the CPI basket is composed of tradable goods. Given these trends, the Central Bank has acknowledged the existence of upward risk in inflation. In this environment, the board decided to maintain the interest rate at 5% in its last monetary policy meeting held in January of this year.

Nevertheless, it's important to mention that the board reduced the rate by 625 basis points between July 2023 and December of 2024, as seen in the upper right chart. Consequently, the Central Bank of Chile has been one of the most active globally in reducing reference interest rates. The Chilean peso weakened significantly in 2024, as seen in the chart on the bottom left. Specifically, the exchange rate averaged 944 pesos per dollar in the full year, rising 13% when compared to 2023 and posting the weakest figure historically. Nevertheless, it's worth mentioning this depreciation has been explained, apart from the easing cycle in local monetary policy, by the strengthening in the U.S. dollar globally, which has been reflected in the upward trend shown by the DXY line in the chart.

In this context, it's important to be aware of the positive influence that the weaker peso has had on the external account, since the trade balance reached a historical surplus of $22 billion, which helped to narrow the current account deficit. I would like now to share our baseline scenario for this year. Please move to the next slide, number six. We expect the economy to expand by 2% this year. This expansion will be driven by a still positive dynamism in export, which should be positively influenced by the weak exchange rate and persistent high copper price. Nevertheless, we acknowledge the negative bias in our GDP forecast as a consequence of several measures, such as import tariffs implemented by the U.S. and other countries.

We also expect the domestic demand to improve because of the slight recovery that we would see in investment, driven by better expectations and lower levels of interest rates. After the temporary rise in inflation, we expect gradual normalization this year. This forecast is based on three main factors. First, the absence of adjustment in regulated price comparable to the magnitude of electricity bills last year. Second, the expected appreciation in the Chilean peso should contribute to reduced pressures at the tradable level. Finally, the slight reduction in the GDP growth should also contribute in the margin to reduce inflationary pressures. However, these factors will not be enough to take the CPI variation back to the 3% target midpoint this year. Overall, we expect 3.8% inflation this year with an upward bias.

In this environment, we do not expect changes in the reference interest rate, at least in the first half of this year, and reduction by the end of this year towards 4.5% only if inflation expectations decline to 3% in the two-year policy timeframe without second-round effects. As we mentioned in previous webcasts, these forecasts are subject to risk. The evolution of the global environment is extremely important for Chile, given its integration into the rest of the world. In this regard, factors such as the GDP of China and the U.S., geopolitical tensions, and the new measures to be implemented by the new authorities, such as in the U.S., in crucial respects such as tariffs and migration policies, are factors to watch.

On the local side, it's important to analyze the evolution of inflation, especially considering potential second-round effects, as well as the leading indicators of gross investment, since it is the main concern on local growth. Finally, monitoring the discussion in the political agenda is also relevant, considering this year there will be presidential and Congress elections. Before moving to the bank, I'd like to present briefly the main trends observed in the banking industry. Please move to the next slide, number seven. Despite the slow economy, banking profitability remains strong. The return on average capital was 15.4% this quarter, slightly below the previous quarter and last year, as shown in the top-left graph. This stability in profitability can be attributed to diverse factors, including efficient cost management, income diversification, market factors that have gently returned to normal levels, and robust risk mitigation strategies.

Financial institutions have managed to maintain their performance despite global economic challenges, demonstrating resilience and adaptability in a changing environment. Additionally, technological and digital innovation are playing a crucial role in optimizing operations, reducing costs, and improving customer experience, thus positively contributing to overall financial performance. In terms of business volumes, as illustrated by the chart on the right, the weak economic environment resulted in modest loan growth for the industry in 2024, with a nominal expansion rate of 4% year-on-year in total loans. Mortgages have been the primary driver of this growth by increasing 6.2% year-on-year, while consumer loans have risen by 4.6% over the same period. Instead, commercial loans experienced a slower growth by rising only 2.4% year-on-year. The persistent weak growth, particularly in commercial loans, has led to a significant shift in portfolio mix when compared to pre-pandemic levels.

Currently, as depicted in the chart on the bottom left, mortgages represent 35% of total loans, an increase from 29% in 2019. During the same period, commercial loans have decreased from 56% to 52%, and the consumer portfolio has declined from 15% to 12%. Accordingly, without taking into consideration the fact of higher-than-normal inflation during this period and higher-than-neutral overnight rate, net interest margin would be lower than in 2019 due to portfolio rebalance, all things equal. Next, Pablo will provide more details about Banco de Chile's progress and financial performance.

Pablo Mejia (Head of Investor Relations)

Thank you, Rodrigo. Let's start with an overview of our strategic progress. Please go to slide number nine. We are successfully executing our strategy that is focused on customer satisfaction, efficiency, and sustainability. Our advances are driven by six main priorities shown at the center of the slide, and on the right are our midterm targets.

Our main priority in this regard is to be not only the most profitable, but also the most sustainable bank among our peers. As such, we are aspiring for a long-term Return on Average Capital of around 18%, assuming positively sloped yield curves and inflation returning to the Central Bank target. If yield curves begin to steepen, inflation remains above neutral levels in the short run, and we recover our pre-pandemic mix of loans, this level could possibly be higher. In line with this, our cost-to-income performance in recent periods has consistently surpassed our long-term targets. For 2024, in particular, this has been attributable to strong top-line growth resulting from increased customer revenue and temporary extraordinary effects post-pandemic, as well as effective cost control initiatives. We are confident that our long-term productivity levels will continue to improve through ongoing and forthcoming operating improvements, which we'll discuss later in the presentation.

In terms of market share, our aspiration is to be the leading bank in commercial and consumer loans, as well as demand deposits in local currency. Throughout the year, we have increased our market share in high-margin lending products, such as consumer installment loans, by maintaining an appropriate risk-return balance based on responsible credit risk management practices. Additionally, we have regained leadership in local currency demand deposits, a traditional competitive advantage that has provided us with both competitive funding and a stable source of funds. We are also dedicated in providing high-quality customer experience and contributing positively to society. The result of this is reflected in a remarkable Net Promoter Score and corporate reputation ranking, where we're positioned in second place.

We have achieved this by actively investing in resources, in comprehensive training programs for our employees to ensure they deliver exceptional service, continuously reviewing customer satisfaction levels, making relevant adjustments to improve contact channels, processes, and product offerings, and actively engaging with the community in diverse areas such as volunteering, education, and entrepreneurship, among others. In the next slide, number 10, we'll cover the highlights of our advances in digital banking, efficiency, and ESG. In terms of digital banking, we are pleased to report continued growth in our main digital account, FAN, achieving 1.7 million customers last year. We have further expanded our customer base with the introduction of new digital accounts such as FAN Aurora and the current account for university students. We have also enhanced our main banking application by adding new features to ensure seamless experience to our customers.

A key milestone was the integration of the insurance platform, which allows customers to manage their policies directly within the app instead of using a separate application. For companies, we remain committed in innovation, delivering enhanced financial solutions. In 2024, we launched many initiatives, including Pago Fácil, a tool designed to simplify mass payment services for customers and streamline their financial operations. Additionally, we announced a new subsidiary focused on expanding our role in payment processing, which will be providing businesses, especially SMEs and the middle market clients, with a flexible and efficient payment solution. On the efficiency and productivity front, we continued implementing diverse initiatives to position ourselves as a fast, secure, and fully digital bank. As part of our optimization plan, we have digitalized our branch sales and service processes, creating a more seamless customer experience that encourages greater adoption of online channels.

These enhancements have allowed us to reduce our branch network by 12% year-on-year, and headcount declined 5% year-on-year, reflecting our commitment to efficiency while providing customers with the tools and incentives to manage their banking needs digitally. On another front, we have worked closely with our subsidiaries to generate corporate-level synergies, optimizing resource allocation and space usage. Additionally, we're optimizing technology-related expenses by renegotiating key contracts, consolidating IT, and some back-office processes, and enhancing cloud and data center infrastructure. In marketing, we have prioritized digital strategies, reducing traditional marketing costs and optimizing loyalty program expenses. Importantly, all these initiatives have been accompanied by high customer satisfaction and an outstanding organizational climate, reinforcing our strong relationship with our clients and employees. Our commitment to becoming a more efficient bank has been driven by significant advances, including expenses growing below inflation while maintaining a solid cost-to-income ratio.

While there is still room for improvement, we are confident in our ability to achieve even better long-term goals. Finally, in 2024, we remain committed to being a sustainable and responsible bank. At Banco de Chile, we recognize that entrepreneurs are a key force for the development of the country, which is why we actively support them through diverse programs. For example, we led by far the market in financing SMEs through the FOGAPE Chile Apoya Program. Additionally, we organize various contests such as the Entrepreneur Challenge and Women Who Inspire, fostering innovation and inclusion in the business landscape. Last year, we also continued boosting our volunteering program, covering areas such as financial education, technical professional education, entrepreneurship, environmental care, and inclusion.

Finally, for the 11th year in a row, we were named the Best Company for Attracting and Retaining Talent in Chile, demonstrating our positive impact on the community and our employees. Please turn to slide 12 so we can begin discussing the key highlights of our financial results for the quarter and the full year. We have once again demonstrated our capabilities of achieving a strong quarterly and annual results despite the challenging environment, sustaining our track record of success. Our net income for the quarter reached CLP 298 billion, representing an increase of 3.5% to the previous quarter. For the full year, our results amounted to CLP 1.2 trillion, with a return on average capital of 23.1%. Furthermore, when comparing our results with those of our peers, we consistently achieved a superior performance across all metrics throughout the year.

As illustrated in the accompanying charts, we not only maintain a significant year-to-date lead in net income, but also continue to deliver an exceptional return on average assets that almost doubles our closest competitor. These achievements underscore our competitive edge in the market, demonstrating our sustained leadership in the sector and the effective implementation of our strategic initiatives. Please turn to slide 13. Regarding operating revenues, we posted a 10% decline in quarter-on-quarter growth and an annual increase of 1.9% full-year figures. This performance was driven by steady growth in customer income, which showed a quarterly rise of 3% and an annual increase of 9% given the recovery in certain commercial products. Nevertheless, this was counterbalanced by a quarterly reduction of 38% and an annual decrease of 19% in non-customer income.

This decline was primarily attributable to the maturity of the FCIC program across the industry, which had provided a low-cost funding source, and also the effect of lower inflation on our revenues. It's important to note that the main drivers that expanded customer income on a yearly basis were income from loans up CLP 107 billion, higher contributions from both demand deposits and time deposits growing CLP 70 billion, and fees rising CLP 26 billion in 2024 when compared to 2023. The core of our commercial strategy is long-term sustainability. This means avoiding unnecessary short-term risks and focusing on long-term growth by managing all business units responsibly. This emphasis has gradually allowed us to increase average spreads as well as to expand loan volumes in target segments and products. Consequently, the growth in income from loans was largely due to consumer loans and, to a lesser degree, residential mortgages.

The consumer loan book balances and spreads grew 4.6% and 164 basis points, accounting for over 90% of the total rise in loan income. Mortgage loans also contributed significantly, with average balances increasing by 7.4% year-on-year. In contrast, commercial loans rose by only 0.6%, with SME segments growing 2.6%, while wholesale business remained flat, reflecting the different dynamics affecting the banking segments. In terms of funding, we benefited from higher contribution from total deposits driven by a 6.8% expansion in DDA average volumes, particularly over the second half of the year, and improved margins on time deposits. The expansion in time deposit contribution has primarily been the result of proactive and targeted pricing strategy, which has been deployed across all business segments. Finally, the yearly 4.8% increase in net fees was concentrated in three income streams. First, revenues from mutual and investment fund management grew by 20% year-on-year.

This was driven by a significant expansion in assets under management that rose 38% year-on-year on the grounds of the launch of a new series of funds offered to our customers. Second, fees from credits and contingent loans rose 20% year-on-year. This was supported by both greater fees from layers of credit, guarantees, and collaterals, which is aligned with a positive trend posted by trade finance loans and the annual increase in loan prepayments, primarily attributable to greater prepayments in consumer loans and, to a lesser degree, by commercial loans due to some wholesale banking operations that were repaid in advance or restructured, all in line with the reduction of the interest rates throughout the year. Finally, cash management services and wire transfer payments orders rose CLP 11 billion due to the renegotiated interbank clearance fees and greater transactions in foreign currency payments orders requested by our customers.

The charts on the right show how we perform compared to our competitors. We continued our trend of outpacing our peers in all the main profitability ratios. Net interest margin stood at 4.9% for the year, while fees margin and operating margin posted solid levels of 1.2% and 6.6%, respectively. This positive performance stems from the successful implementation of our business strategy and the dedication to providing an enhanced value proposition to customers through both the lending and non-lending products and services by leveraging both our banking capabilities and the specialized services provided by our subsidiaries. Please turn to slide 14. The breakdown of our loan portfolio is distributed across different business segments, providing stability and revenue-generating capacity. Currently, our retail loan portfolio represents 65% of the total loan book, while wholesale commercial loans account for 35% of the overall loan portfolio.

Additionally, as illustrated in the charts on the bottom right, commercial loans are well-diversified across different economic sectors. This distribution is important because during economic cycles, like the ones we have been experiencing in recent years, one sector can outperform another, helping to support our bottom line on average while avoiding results in volatility. The sluggish performance of the local activity during the last years has impacted loan growth across the industry. A lack of private investment, coupled with low business and consumer confidence, has hindered growth. Consequently, total loans grew moderately in nominal terms of 3.4% and decreased 1% in real terms. As mentioned earlier, the main drivers of this growth came from the retail segment, as illustrated in the chart on the bottom left. Instead, the wholesale banking segment was affected by the market dynamics that led to subdued demand for loans from both corporations and SMEs.

For 2025, we anticipate a reversal of this trend, with commercial loans gaining momentum versus the low expansion in 2024, primarily driven by lower inflation, reduced political and economic uncertainties, and lower short-term interest rates. These factors should also enhance dynamism in retail products. As a result, we expect the industry to grow by approximately 4.5% in nominal terms, with Banco de Chile outperforming this, particularly in our target segments. Please move to slide 15 to review the structure of our balance sheet. As shown on the slide, our balance sheet is returning to the structure of assets and liabilities that we had before the pandemic. On the asset side, government-backed low-interest loans extended to SMEs during the pandemic have predominantly matured.

Additionally, the ratio of total loans to total assets has returned to levels of almost 75%, consistent with the important reduction in financial securities that were utilized to fully repay the Central Bank FCIC in April and July of 2024. As shown on the chart on the top left, the effect of the FCIC repayment is evident in all the asset line items associated with the fixed income securities and loans and advances to banks, which include overnight deposits in the Central Bank. Also, the table on the bottom left indicates that despite repaying this large debt to the Central Bank, primarily with financial instruments, the liquidity levels have remained strong and well above the regulatory requirements.

As of December 2024, the liquidity coverage ratio was 214%, exceeding the regulatory minimum by 114 percentage points, while the net stable funding ratio was 120%, surpassing the required level by 40 percentage points. It's also worth discussing the evolution of our deposits, as shown in the chart on the top right and in the table in the middle of this slide. Demand deposits have returned to pre-pandemic trends by currently representing nearly half of total deposits and 31% of total liabilities, which is slightly above our historical average and well above the average of the industry. On the other hand, we observed an 8% year-on-year decrease in customer time deposits, well aligned with the Chilean Central Bank rate cut from 8.25%-5% in 2024, together with the inflation rate that has remained above the Central Bank target range, reducing the real profitability of these savings instruments.

Consequently, customers are looking for investments with higher returns. This is one of the key factors behind our strong results in mutual fund management, which saw nearly 40% year-on-year growth in AUM. Before moving to the next slide, I want to share with you our UF GAP progression, as shown on the bottom right, reflecting our proactive asset and liability management. Effective management over recent years has allowed us to capitalize on short-term inflation fluctuations as well as to protect our shareholders' equity real value in the long run. As of December 2024, our position is CLP 9 trillion, meaning that a 1% change in inflation generates a sensitivity in income of approximately CLP 90 billion. Please turn to slide 16. From the capital adequacy perspective, we maintain a leading position in capitalization among our peers.

As depicted in the chart on the left, our CET1 ratio attained the 14.4% level in December 2024, consistently exceeding that of our peers while remaining well above the regulatory thresholds. A similar trend can be seen in our total capital adequacy ratio, as depicted in the chart located on the bottom left. These levels allow us to be well prepared for both the final stages of Basel III implementation and the expected recovery in the banking business that should translate into balance sheet growth in the medium term. Along these lines, the CMF has proposed modifications to the current Basel III regulations in Chile, focusing on changes related to capital requirements concerning Pillar II risks, particularly associated with interest rate risk in the banking book IRRBB and the definition of outlier banks.

The proposed ruling was available for public comment until November 8, 2024, and the final set of rules has not yet been published. However, it's important to note that in January 2025, under the current standards, the CMF reduced our Pillar II charge from 0.5% to 0.13%. This reduction was possible on the grounds of the important decrease we recorded in the current long-term IRRBB metric, or Delta EVE. It's important to note that this does not account for changes proposed by the CMF regarding Pillar II, which should be announced in the near future. Please turn to slide number 17. Expected credit losses reached CLP 103 billion in the fourth quarter of 2024, down 19% from a year earlier. The reduction is due to higher-than-normal provision expenses in the fourth quarter of 2023 as a result of two factors.

First, adjustment in provision models in December 2023 focused on personal banking, and second, a temporary rise in 30-day NPLs in that period. On a yearly basis, expected credit losses posted an 8.4% increase equal to CLP 31 billion. This led to a slight increase in our cost of risk ratio from a low level of 0.98% in 2023 to a still low level of 1.03% in 2024. The rise was the result of opposite forces. First, wholesale banking annual expected credit losses expanded CLP 36 billion in 2024, supported by a lower-than-normal comparison base in the prior period and a deterioration in the risk profile of certain customers belonging to the real estate and transportation industries in 2024. On the other hand, the cost of risk in the retail banking segment declined CLP 25 billion when compared to 2023.

This decrease was mainly related to the previously mentioned revised parameters for provisioning models in 2023, together with stabilized NPLs during 2024 after a period of steady growth in 2023. As of December 2024, our total NPLs decreased from the third quarter 2024 from 1.5% to 1.4%, as illustrated in the top right chart, and we have performed exceptionally well when compared to our peers. The delinquency ratio in consumer loans has returned to the pre-pandemic levels of 1.9%, as indicated in the chart on the bottom right. We have also observed a slight uptick in mortgage loans during this period, which aligned with the broader industry trends and the weak economy. NPLs for commercial loans have decreased 1.4% from the 1.5% posted a year earlier. We expect NPLs to continue stabilizing and to begin to show signs of improvement as the economy gradually recovers in the coming quarters.

As shown on the chart on the bottom left, our loan portfolio has the highest quality with a coverage ratio of 265%, supported by additional provisions totaling CLP 700 billion as of December 2024, which are by far above that of our peers. This position allows us to manage potential risk deterioration or face regulatory changes in risk provisioning models, such as the new CMF's standard model for consumer loan provisioning, which took effect in January 2025 and resulted in a one-time impact of CLP 69 billion. As reported in 2024, we used our additional provisions to address the impact of this model. Please turn to slide 18. Regarding operating expenses, our cost base totaled CLP 303 billion in the fourth quarter of 2024, down 4.9% from the level posted in the fourth quarter of 2023.

The reduction was a result of strict cost control measures implemented throughout 2024, which coupled with a high comparison base in the fourth quarter of 2023 due to one-time expenses incurred due to the renegotiation of our collective bargaining agreements with our staff. This was partially offset by an annual increase in severance payments in the fourth quarter of 2024 related to organizational restructuring. On a yearly basis, operating expenses amounted to CLP 1.2 trillion in 2024, which is only 1.5% above the figure posted in 2023 and well below inflation of the period of 4.4%. The slight nominal growth was mainly driven by higher admin and other expenses, as shown in the chart at the top right. This was mainly the result of IT-related costs related to updates of software licenses, support services, and cloud usage expenses that stem from internal developments aimed at supporting our digital channels.

This was also partially mitigated by a CLP 5.7 billion reduction in advertising and marketing expenses, along with various other cost items compared to the previous year, which aligned with our cost control initiatives that pursue to improve productivity across all operational and administrative processes. In terms of efficiency, we recorded a ratio of 39% for the quarter and 37% for the year, better than our peers, as shown on the chart on the bottom of this slide. We are confident that the progress we have made in efficiency and productivity will help us ensure that our long-term efficiency levels continue to be below 42% in the long term and around 40% in 2025. Please turn to slide 19. Before moving on to questions, I want to highlight key points from this presentation. We expect a 2% GDP growth in 2025 with a recovery in the domestic demand.

Inflation and interest rates are expected to remain above their long-term levels. Given the economic factors, we are confident that our long-term strategy and our strong risk culture will keep us leading in profitability and asset quality. We aim for a sustainable long-term return on average capital of around 18%, potentially higher if market conditions like inflation and overnight rates stay high. We hold the strongest capital base among peers, which makes us well equipped to seize emerging business opportunities and drive future growth. Finally, we continue to consistently outperform our peers in profitability and net income with lower levels of risk, as shown in the chart to the left. Thank you for listening. We're happy to answer any questions you may have.

Operator (participant)

Thank you very much for the presentation. We'll now be moving to the Q&A part of the call.

If you're dialed in via the telephone, please press Star 2 on your keypad. That's Star 2 on your keypad for voice questions. You may also ask a voice question if you are dialed in via the web. Okay, our first question comes from Mr. Ernesto Gabilondo from Bank of America. Please go ahead and turn your lines open. Hi Ernesto, just in case your line, just in case you are muted, please note that your line is open now. Can you hear me now? Okay, we'll come back. Yes, we can hear you now. Please go ahead.

Ernesto Gabilondo (Financial Equity Analyst)

Sorry, thank you. Hi, good morning, Rodrigo, Pablo, and Daniel. Thanks for the opportunity to ask questions. My first question will be on the political side. Chile has midterm elections last year. I believe presidential polls are pointing for center-right candidates. So whom does management believe could be the leading potential candidates?

I'm seeing Matthei, Kast, Kaiser, or Bachelet. Can you give us some color on the background of these candidates and what are the chances of having them in the last round? And considering this scenario, how should we think about Congress? Should it be with majority, divided? What should be your best-case scenario? And what do you think are the two key reforms that Chile needs to return to its growth potential? So that will be my first question. And for my second question is on your non-interest income growth expectations for this year, given that fees could experience another cap on the merchandise discount rate, how should we think for the non-interest income growth in 2025? Thank you.

Pablo Mejia (Head of Investor Relations)

Thank you, Ernesto. Rodrigo, we'll go ahead. This is Pablo Mejia with the first part of your questions.

Rodrigo Aravena (Chief Economist and VP of Institutional Relations and Public Policy Officer)

Hi Ernesto, and this is Rodrigo Aravena.

Thank you very much for the question. I'm going to take the question related with the political environment and the challenge that we have in Chile. First of all, I think it's very important to mention that elections will be held by November of this year. However, we don't have the final candidate yet, so it's very complicated to have a more accurate estimate in terms of the final results for coalitions, for the candidates, etc. However, I think it's very important as well to mention that the main challenge for the Chilean economy towards the future is to increase the capacity of growth. During the last 10 years, the average growth in Chile has been around 2%, which is consistent with our potential capacity of growth according to the Central Bank and the Finance Ministry coming as well.

So I think that it's reasonable to expect an economic growth of around 2% for at least the next few years. It is also important to be aware about the several challenges from the rest of the world. Today, what we've seen is an important increase in geopolitical risk in different countries in the world, and also more pressures for global inflation, higher interest rates, etc. However, it's also worth mentioning that Chile has very strong fundamentals to face more challenging environments. For example, Chile remains the country with the best sovereign rating in Latin America, and also we have a very strong political system based on counterweights and very strong institutions as well.

That's why we remain very confident about the ability of Chile to be the best country in terms of the level of risk, in terms of the capacity to have a more stable growth in the future. With respect to your question about the key factors that could increase the capacity to grow in Chile, I think that there are different discussions related to and different initiatives as well with a broad consensus between different political parties in Chile related to, for example, to reduce the red tape, the bureaucracy, and the new investment projects in Chile. Also important to mention that the country was able to approve a new pension reform, which in the long term would be positive in the case that Chile could raise the internal savings in order to provide more liquidity and business to the capital market as well.

So all in all, we remain confident about both the country and the financial system in Chile, the banking system, as to face the different challenges because at the end of the day, what we've seen is the existence of important long-term fundamentals in the country beyond the short-term political cycle.

Pablo Mejia (Head of Investor Relations)

Okay. So in terms of fees, I think one of the things to remind everyone is that one of the key points and the drivers of fee growth for Banco de Chile is customer growth. So the proportion of fees that are generated from retail customers is quite high at Banco de Chile and very stable, and customer growth is one of the key drivers, so if we look at the last years, Banco de Chile is growing in the mid-single-digit range, around 6% in current accounts for retail, so that's the main driver.

Looking forward for 2025 and the future, the growth in customers should be the main line item that you should be looking at to determine the growth for us. We're seeing a level around the mid-high single-digit range for 2025 and beyond. What are the drivers that we're seeing? Still good growth from mutual fund management. The interest rates have come down. Customers are looking for more attractive rates in their deposits. One of the reasons why we've seen our deposits changing recently from time deposits and a strong growth of mutual funds. Also, current accounts and credit cards are important for this growth. You mentioned the merchant fee discount. That was delayed or postponed, suspended for now. There were, as you know, three reductions that were going to take place in February 2023, October 2023, and now just recently, October 2024, but that was suspended.

The rates that remain today are the ones in October 2023, which are for debit cards, 0.5%, credit cards, 1.14%, and prepaid cards at 0.94%. There's no news right now on what will happen with that. That would be one of the key factors to take into consideration if something changes this year to take into account. I think that answers your question.

Ernesto Gabilondo (Financial Equity Analyst)

Yes. Thank you very much, Rodrigo and Pablo. Just to follow up on the political question, you were mentioning that it will be key to reduce bureaucracy in Chile to probably have a much higher potential economic growth, but as a best-case scenario, you continue to see around 2% GDP growth over the next years. Then I don't know if you mentioned a little bit about the color on Congress. How can we expect Congress to support these structural reforms?

Could it have majority or is it still too soon to tell? Or do you think it could be divided given that maybe the left wing still has a lot of votes?

Rodrigo Aravena (Chief Economist and VP of Institutional Relations and Public Policy Officer)

Okay. There is a broad consensus in Chile about the main challenge to increase investment in the future. In fact, when we take the breakdown, right, of the supply potential GDP growth in Chile, we can see that the highest contribution to the potential growth in Chile has been because of the labor force, then capital. But unfortunately, we haven't had important advances in terms of the aggregate productivity. So that's why in Chile, we've been discussing different proposals. In Spanish, in Chile, it's called Permisología. That's the name of the main proposal, which basically aims to reduce different red tape to improve all the mechanisms and the system of different environmental licenses, approvals, etc.

So we need to build, as a country, a new deal with political support, but there is probably it will be discussed in the next government. In Chile, as you mentioned, we have different coalitions, different parties, but at the same time, we can see that the existence of important counterweights from the Congress to with respect to the president, the central government, is a positive aspect in the long term because when you have different ideas, when you have different coalitions as the main counterweight of the central government, it is positive in terms of the need to build consensus and long-term view, as it was the case, for example. And actually, it's been the case in the last government in Chile. So we think that we have all the conditions to improve the productivity in the future.

It will be likely the main challenge to be addressed in the next government, but again, we don't have so far information related to the names of the final candidates to run the presidential election in the country, and also, it's not clear how will be the coalition between the left and the right parties, so we need more information. Probably in the next quarter, we are going to have more information, but I think that so far, given the current fundamentals, it's reasonable to suspect a growth between 2% and 2.5%. It could be higher in the future, probably, if we improve the red tape and bureaucracy in the Permisología in Spanish in Chile, but it will be discussed probably in the next government. Perfect.

Ernesto Gabilondo (Financial Equity Analyst)

Thank you very much, Rodrigo.

Rodrigo Aravena (Chief Economist and VP of Institutional Relations and Public Policy Officer)

You're welcome. Thanks.

Operator (participant)

Thank you very much. Our next question comes from Tito Labarta from Goldman Sachs. Please go ahead so your line is open.

Tito Labarta (VP)

Hi, Pablo. Rodrigo. Thanks for the call. Take my question. My question is on your ROE guidance of 18%. Did you expect to sort of get to your sustainable levels this year? I know you expect lower inflation, but just to understand, it seems a little conservative. I mean, for us to get to that number, you'd probably have to be at the low end of your margin guidance and at the high end of your cost of risk guidance. Is that sort of how we should think about it? And I ask if you look, you mentioned one of your goals is to be the most profitable bank in Chile. Your main peer is guiding for ROE above 20%.

Now, I know there's difference from a capital perspective because your ROE is much higher, but you also have a much higher capital base. So I guess my second question related to that is you increased the payout this year above 80%. Could you continue to pay 80% or even more? I mean, as you showed, you have a very strong capital base, very strong ROE. So what's the right capital level? Given that your peers' capital seems so much lower, could you try to reduce that capital to deliver perhaps a higher ROE? Just want to understand how you think about that. Thank you.

Pablo Mejia (Head of Investor Relations)

Hi, Tito. Yes. In terms of our guidance that we've been giving in terms of return on average capital, it's around the 18% level. This takes into consideration the levels of capital that we had at the end of 2024.

You have to take into consideration that that level, we also paid out higher than what our dividend policy or what we pay or provision in the balance sheet of 60%. So that would adjust a little bit. Also, it's important to take into consideration that the guidance is around, and a lot of those figures around the 18%, around 1.0%-1.2% cost of risk. So it's a conservative level of ROE, which has upside risks. Today, there's discussions in terms of where the interest rates could be in Chile as inflation returns in because of global market factors in terms of inflation rates. So that will all play into effect in ROE going forward. Today, with our current levels of expectations for the economy for how we close the end of the year of capital, it's 18%.

But we have to take into consideration that we paid out higher than the 60%. So that adjusts that number a little bit.

Tito Labarta (VP)

Okay. thanks, Pablo. That's helpful. Sorry.

Pablo Mejia (Head of Investor Relations)

And Daniel Galarce will take your second question on capital.

Daniel Galarce (Head of Financial Control and Capital)

Hi, Tito. Well. Regarding capital, as you said, we have a very strong capital base, probably the strongest among the main peers of the Chilean industry. And well, the payout this year has to do basically with the result we obtained over the last year, but also we want to be prepared for the taking off of the economy in the future and in order to have enough capital to grow as well and to address the final stages of Basel III implementation. So we want to be prepared for that. And in order to do that, we need to have enough capital in order to cope with that.

Rodrigo Aravena (Chief Economist and VP of Institutional Relations and Public Policy Officer)

Okay. No, thanks, Daniel. Thanks, Pablo. But I guess in terms of to cope with that, I mean, there's 14% Core Tier 1. Do you think is that the right level? I mean, it still seems pretty high compared to your peers. So just to understand, what do you think is that right level just to deal with potential challenges or?

Daniel Galarce (Head of Financial Control and Capital)

We basically want to be above, of course, the regulatory limits and our internal limits as well. So in the long run, basically, we want to be floating two or three percentage points over the regulatory limits in order to have enough capital to grow as long as the economy continues to grow.

Tito Labarta (VP)

Okay. Great. Thanks, Daniel.

Operator (participant)

Okay. Thank you very much. Our next question comes from Mr. Yuri Fernandes from JP Morgan. Please go ahead till your line is open.

Yuri Fernandes (Executive Director of Equity Research)

Hey, everybody. Congrats for another good year, 2024. I had just a follow-up on Tito's question on your ROE, actually your return on capital guidance, the 18%. Can you repeat what would be the adjusted on the new capital base? And a very simple calculation here. You paid 82% payouts, right? And if you assume you are retaining, I don't know, 18% of your capital, your average book, your average equity should increase a little bit, right? Like on 2025 versus 2024 on average. For us to have your return on average capital coming from 23% this year to 18%, if you don't do any adjustment here, it implies a big earnings decrease.

So, just trying to understand if that's right, if we should expect an earnings decrease for you in 2025 versus 2024, and happy to hear what will drive these, FC, lower inflation, what is behind, or if there's something wrong in my calculation because just with the drop from, again, from 23% return on average capital to 18%, it seems that that should be some earnings pressure for you. Thank you.

Pablo Mejia (Head of Investor Relations)

Hi, Yuri. Well, you have to take into consideration as well that our guidance is based on our expectations for the economy, which may be a little bit different from yours. Growth of 2%, CPI inflation, 3.8%. Some peers have higher than those levels and an overnight rate of 4.5%. So that obviously will have an effect in terms of these market factors, in terms of our bottom line.

Some of these levels are being discussed today in the economy. Rodrigo can maybe go over that, what's occurring in terms of inflation and rates.

Rodrigo Aravena (Chief Economist and VP of Institutional Relations and Public Policy Officer)

Yeah. Hi, Yuri. This is Rodrigo Aravena. So when we built that baseline scenario, we considered some important assumptions. One of them was related with the level of the exchange rate, right? We are expecting the strengthening of the Chilean peso, which, of course, it has an impact on inflation. And just to have an idea, per each 10% depreciation of the exchange rate, the expected impact on inflation is between 100-120 basis points on inflation. So that's why, given the recent development during the last month, we acknowledge our bias in our forecast of CPI.

In fact, if you analyze the recent evolution of the breakdown in the financial market today, according to the financial prices, the interest rate, the breakdown in the interest rate, the market today expects an inflation rate slightly higher than the 4%, and the same in terms of economic growth. In the last quarter, the economy had an important surprise because there was an important acceleration in the economy. In fact, we were expecting a 2.2% growth in the last year, but the final number was 2.5%, so what I'm trying to say is that today we've seen a higher than expected dynamism in different activity numbers, especially in domestic demand, and the same for inflation. What does this mean? That we can rule out that the final average inflation for this year and the same for interest rate would be a bit higher compared to our expectations.

At the end of the day, we acknowledge that the ROE would be higher than ours. We acknowledge that bias, sorry.

Pablo Mejia (Head of Investor Relations)

Maybe to add, in that number, you have to take into consideration as well that last year was the end of the FCIC program from the Central Bank that provided us with a very good source of funding for the banking industry at a low cost. That ended all in the first half, basically, of last year. We don't have that. Rates are lower this year than last year. Inflation expectations on our budget is lower. Also, in terms of risk, we ended the year at a very good level of just over 1%. The expectations is a range between 1% and 1.2%, which can also push that number a little bit down.

But the most important thing, I think, to take into consideration that there's some market factors which could change, like Rodrigo mentioned. But the core of the business is also growing. So if you look on slide 13, you can see how the core of the business is growing, where customer income is growing by 9%. Our net interest margins are very strong. We expect the net interest margins because if we look at where the rates were prior to the pandemic, where we see the rates after the pandemic, they should be higher, probably steeper. Maybe they'll be a little bit more inflation. So net interest margins in the medium-long term, there's good reasons to believe that net interest margins should be similar to what we're guiding for this year in the medium term. So there's good news in that figure.

And also, the ROE in the long term, our idea is to be our return on average capital, which is a level that we discuss internally to be more precise and more consistent with internal documents. But it's around the same. Nothing has changed. In terms of our long-term view of Banco de Chile's profitability, it should be around the 18% or could even be higher based on market factors. If inflation, if rates are higher, it's steeper. All these factors are very important for us, digitalization. This is all important to take into consideration in the future and to have a capital that grows in line with the level of loan growth. So obviously, you can't have capital growing forever, reaching very, very high levels. It has to be the payout will always take this into consideration, the growth of the business.

Yuri Fernandes (Executive Director of Equity Research)

No, no. Okay.

Rodrigo Aravena (Chief Economist and VP of Institutional Relations and Public Policy Officer)

I guess the bottom line is that you have some conservative assumptions here. I was asking this, Pablo, because just simple math here, 23% ROE going to 18%, it was implying, I don't know, mid-18s earnings decrease for you. This year was at 3%. When I looked at your guidance, as you said, loan growth above industry, margins, some pressure, but minimal pressure on margins, cost of risk a little bit higher. So I think when I looked at the ROE versus the other inputs, I don't have this impression that your earnings will decrease, I don't know, 10%, 15% whatever, maybe even earnings growth. So I guess, correct me if I'm wrong, maybe the guidance was a little bit more conservative on the ROE. That's the bottom line, right?

Pablo Mejia (Head of Investor Relations)

The ROE as well, return on average capital ROE, it also takes into consideration the 60% payout.

So that will rise it. Also, you have to take into consideration that FCIC is about CLP 190.1 billion, which we don't have anymore. The 20 basis point rise, if you take into consideration 20 basis point rise in cost of risk, is also a level that's very important around those levels as well, around CLP 80 billion. If you also look at the level of inflation that was projected, it is 4.6% versus 4.5% versus 3.8%. So you have another there you have around CLP 50 billion or so. So there's a lot of market factors, but the important part is that the rest of the operations are growing. And as Rodrigo mentioned, there's improvements. And another area that's important to mention is efficiency. Our costs are relatively flat.

We have efficiency ratio guidance of 40%, but obviously, if these other market factors change, that will have to adjust as well. So it's true. It's on the conservative side as these are around these levels, around 18%. But we have to take into consideration that this is based on a 60% payout, not the 83% payout that we did, or 82%, 83%.

Yuri Fernandes (Executive Director of Equity Research)

No, super clear. Thank you. And I guess you have the same. In 2023, I think the ROEs were also the guidance was lower than the final numbers you had. If I may just have a second one here, guys, on margins, it has been super resilient. And you comment on mix and better loan yields, offsetting some of the pressure you see. When we go back to 2018, 2019, the Chilean banks, they had much lower margins than what you have.

Should we think about these 4.5%, 4.6%, 4.7% as the new normal, or should we see lower margins going forward for you?

Pablo Mejia (Head of Investor Relations)

So it's important to mention that if we look at prior to the pandemic in 2010-2020, there is a strong mix in the loan portfolio. There is very strong growth in mortgage loans, for instance. And there was a period of globally of very low interest rates and flatter yield curves. So there's pressures, continuous pressures in terms of NIMs during that period. But today, what we have is much higher NIMs no, sorry, much higher interest rates versus prior to the pandemic and probably will stay higher than prior to the pandemic. This should probably be steeper.

So that's why we're saying that in the medium term, longer term, it's reasonable to assume net interest margins in line with our guidance for this year for the longer term as well. So with these market factors, it's much more attractive for the banking industry than prior to the pandemic when rates were very low, which is more challenging to be a more profitable bank. And also very important is that we're leaders in terms of demand deposits. And this is a very good source of funding. It costs us to give a very good customer service, but our brand, the quality of our service brings customers to Banco de Chile, and we manage a very high level of demand deposits. So that also gives us a lead in terms of other banks, in terms of our net interest margins because of this low-cost interest, low-cost funding base.

Yuri Fernandes (Executive Director of Equity Research)

No, super clear, Pablo. Thank you. I'm not sure if Rodrigo wants to comment. Sorry for interrupting.

Rodrigo Aravena (Chief Economist and VP of Institutional Relations and Public Policy Officer)

No worries, no worries. So I think that just let me reinforce one idea that Pablo already mentioned. So the main source of uncertainty related with the evolution of margins and return in the future is related with macro factors. So as Pablo said, the strategy of the bank, the fundamentals remain the same, very strong. But it's not clear, for example, what will be the terminal interest rate in Chile in the current easing cycle in monetary policy. The Central Bank said, for example, in the last monetary policy report that the neutral interest rate was a number between 3.5%-4.7%. But given the current discussion, the higher-than-expected persistence in inflation, we cannot rule out that the final terminal rate in Chile would be a bit higher.

For example, also we've seen a very important correlation between the Chilean rate with the U.S. rate more recently. So we can rule out that overseas, the long-term interest rate will be a bit higher as well. So in terms of inflation, for example, the inflation rate will be above the upper bound of the monetary policy range over the last four years. So that's why, at the end of the day, the key source of uncertainty for the evolution of margins return is related with macro factors. So that's why most of the changes in our guidance and forecast are related and based in a different view of the economy rather than different things in the bank. It's a matter of macro factors.

Pablo Mejia (Head of Investor Relations)

Yeah. So those will also influence the ROE, return on average capital for the future, the market factors. They're higher, the industry will be higher.

Yuri Fernandes (Executive Director of Equity Research)

No, perfect. Thank you very much, Pablo and Rodrigo.

Operator (participant)

Perfect. Thank you very much. Our final question for today is from Ms. Neha Agarwala from HSBC. Please go ahead, ma'am. Your line is open.

Neha Agarwala (SVP of LatAm Financials Analyst)

Hi. Thank you so much for taking my question. A quick one on costs. So you had very good cost control this year. What should we expect for 2025 going in line with inflation, above inflation? I mean, efficiency ratio obviously depends upon how the revenues also evolve. So it will be good to understand how do you expect the cost growth to be and what would be the main drivers for an increase or decrease in terms of costs. And sorry to go back again on capital. I mean, you want to be 7 basis points above the regulatory minimum, but even with the dividend payout, your core equity Tier 1 is above 14%.

Your total Tier 1 is above 18%. You remain at around 18%. So you remain quite well above your peers. Why not consistently pay for a year or two a higher dividend, commit to a higher dividend payout, or is that something you will only evaluate as you get closer to the end of this year? Thank you so much.

Pablo Mejia (Head of Investor Relations)

Hi, Neha. The first question I'll take is Pablo Mejia. So in terms of operating expenses and efficiency, we're seeing levels in the guidance around 40%, flattish expense growth. Obviously, the efficiency ratio is you have to take into consideration operating income. And there's some, as we mentioned, market factors which could be changing, which could influence the top-line growth. So that will influence the operating efficiency level.

Some of the things that we've been doing, the bank has been very proactive in terms of cost management across the bank. We've been streamlining the business and searching for different operational improvements. There are incremental changes, improvements across different areas. We have a specialized area which is looking at improving the efficiency, how we use our resources better, using different platforms in order to reduce those costs even more. We're continually implementing new products and tools to automate processes and provide digital solutions to customers, which is twofold. It's better for the customer. They have a better operating experience. And we also have a more efficient productive bank. We've also optimized our branch network and resource allocation. We've actually closed around 31 branches in the last year, 226 branches we're at today. The banking industry globally is changing towards an industry which is more digital.

Customers are going less and less to branches, so we have to offer the same solutions that we had before, and digitally, this again gives a better experience to the customer, but also provides us with a more productive bank, and we've been doing other things such as improving the marketing, changing how we do marketing using other online platforms, which have improved the expenses there. Also, software licensing, looking at ways to improve on how we're managing our licensing, so there's a lot of incremental changes across the bank, which are managing to control expenses and maintain our cost base relatively flat, so with the top-line growing more, if it grows more, obviously, it will change the efficiency ratio, but the goal or the guidance, the target of the bank is a relatively flat cost base for this year, 2025, and going forward is the 42%.

And obviously, market factors, etc. Obviously, that can change the efficiency ratio. But the goal is a level below 42%.

Neha Agarwala (SVP of LatAm Financials Analyst)

I mean, that's quite commendable.

Pablo Mejia (Head of Investor Relations)

Sorry. Sorry?

Neha Agarwala (SVP of LatAm Financials Analyst)

Just continuing on the cost factors, it's quite commendable. I mean, you had almost no growth in 2024, and you expect another year of almost no growth in terms of costs. Should we see more branch closures this year as well?

Pablo Mejia (Head of Investor Relations)

It's a continual process that we're looking at optimizing the footprint of Banco de Chile and where we need to have those resources allocated. So if we look back, we reached a level of around 450 branches. So most of the reduction or the optimization of the branch network has been done. So it's a continual process to see where that number will be in the future. In terms of capital, Daniel Galarce will take that question.

Daniel Galarce (Head of Financial Control and Capital)

Hi, Neha. As I mentioned earlier, we have today a 14% CET1 ratio. That's true. Basically, in the future, we want to have enough capital buffers in order to address and afford potential growth of our balance sheet. As long as we believe that as long as the economy retakes some momentum over the next two years, three years, we will need capital in order to afford that and in order to address the final stages of Basel III implementation as well. Basel III implementation is still in progress. It's finalizing in 2015. However, we are a prudent bank in terms of how we face the future and, in this case, how we face the growth of our business, particularly in terms of loans, as long as the economy retakes some momentum, as I said before.

Neha Agarwala (SVP of LatAm Financials Analyst)

Do you have any estimates on what could be the potential impact of the final stages of Basel III implementation?

Daniel Galarce (Head of Financial Control and Capital)

I'm sorry. Can you repeat? The final what?

Neha Agarwala (SVP of LatAm Financials Analyst)

Do you have an estimate on what could be the potential impact in terms of basis points of capital from the final stages of Basel III implementation that you're mentioning?

Daniel Galarce (Head of Financial Control and Capital)

Well, still, there are some things that need to be clear. Today, we have a Pillar II charge that has been decreased in the recent months. However, in the future, we don't know what kind of charges can be imposed by the Chilean regulator. And since it's a regulation that is still in progress, and since there are some things that need to be cleared by the regulator, we need to afford some possible charges such as Pillar II charges or also more requirements associated with countercyclical buffers.

So in order to address that and in order to face that, of course, we need to have enough capital buffers in the future. But more importantly, I would say that we want to have enough capital in order to grow in the future since over the last three years, basically, the commercial business has been quite decelerated. And we expect to have more dynamism in the future as long as the economy retakes some growth.

Neha Agarwala (SVP of LatAm Financials Analyst)

Perfect. Thank you so much for the answers. Congratulations on the results.

Daniel Galarce (Head of Financial Control and Capital)

You're welcome.

Operator (participant)

Thank you very much for the question. We have no further questions at this point. I'll be passing the line back to the management team for the concluding remarks.

Pablo Mejia (Head of Investor Relations)

Well, thanks for listening to our conference call. And we'll be happy to host you again in the next one. Thanks.

Operator (participant)

Thank you very much. This concludes today's conference call. We'll now be closing all the lines. Thank you and goodbye.