Banco Santander Chile Earnings: Dramatic Net Interest Margin Expansion Drives Net Income Higher

Narrow-moat-rated Banco Santander Chile reported strong second-quarter earnings as falling interest rates led to significant net interest margin expansion. Net revenue increased 36.6% from last year and 19.4% from last quarter to CLP 653.8 billion. Unlike last quarter, the sharp increase in revenue translated to higher net income, which rose 71.2% from last year to CLP 217.7 billion. These results translate to a return on equity of 20.7%. Despite the dramatic increase in net income, we do not plan to materially alter our fair value estimate of $20 per ADR share, as we had expected the bank's results to improve from its poor performance last year and a recovery was already a part of our projections.