Banco de Chile (ADR)(NYSE:BCH) has reported its F3Q2015. The results are a mixed bag explained by sharp topline growth and negative bottom-line growth. However, the management remains confident that the future is bright because the company endured much pressure in the quarter. A number of one-time adverse effects choked bottom-line numbers.

Topline performance

Banco de Chile (ADR)(NYSE:BCH)generated operating revenue of Ch$432 billion in F3Q2015, which rose 11.9% over a similar quarter a year ago. The company explained that a series of factors contributed to the revenue gain in the quarter. Higher than expected inflation, 17% uptick in fee-based income and Ch$3.8 billion benefit from positive forex impact support the topline improvement in the quarter. Sales of loans also generated more in income in F3Q2015 than a year ago.

It is also worth pointing out at this juncture that Banco’s growth was also boosted by Ch$564 billion loan portfolio acquisition. That’s why loans in the quarter rose 12.3% YoY and 6% QoQ. With the impact of the loan acquisition, organic loan growth would have been 9.7% YoY and 3.6% QoQ.


Banco de Chile (ADR)(NYSE:BCH)’s bottom-line was a mixed bag, largely leaning on the negative but not quiet alarming. Profit of Ch$134 billion in F3Q2015 descended 20% from the previous quarter and also dropped from the year-ago quarter by 15.7%. However, the management was quick to explain what transpired that led to weak profit metric. According to Banco, headwinds from a number of one-time shocks took the glory out of the bottom-line number. One of the waves that hit Banco’s bottom-line in 3Q was increase in loan loss provisions. The bank had boosted its allowances reserve as a measure to enable it cope with unforeseen economic shocks.

The other adverse impacts on the bottom-line were contributed to by higher income tax and a spike in operating expenses, mainly because of inflation that increased salary burden.

Strong topline growth supports bottom-line

Banco’s bottom-line could have been hit harder by the one-time effects had it not been for the decent topline growth in the quarter.

Having outperformed its expectations in 3Q despite the many challenges, Banco de Chile (ADR)(NYSE:BCH)is confident of hitting more milestones in 2016.