Executives: Rodrigo Aravena - Chief Economist and SVP Institutional Relations Pablo Mejia - Head of Investor Relations Isabel Allendes - Investor

Relations
Analysts: Guilherme Costa - Itau BBA Carlos Macedo - Goldman Sachs Tito Labarta - Deutsche Bank Domingos Falavina - JP Morgan Ernesto Gabilondo - Bank of America Merrill Lynch Carlos Gomez - HSBC Sebastian Diego - Credicorp

Capital
Operator: Good morning everyone and welcome to Banco de Chile’s Third Quarter 2016 Results Conference Call. If you need a copy of the press release issued on Tuesday, it is available on the Company’s website. Today with us, we have Mr. Rodrigo Aravena, Chief Economist and Senior Vice President of Institutional Relations; Mr. Pablo Mejia, Head of Investor Relations; Ms.

Isabel Allendes, Investor Relations; and Daniel Galarce, Head of Financial Control. Before we begin, I’d like to remind you that this call is being recorded, and that 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 on the Company’s press release regarding forward-looking statements. I will now like to turn the call over to Ms.

Isabel Allendes. Please go ahead.

Isabel Allendes: Good morning, everyone. Thank you for joining our call today, where we will share with you our comments on Banco de Chile third quarter 2016 financial results. We will begin with the brief overview of the economic environment and our corporate strategy, followed by an analysis of Banco de Chile’s third quarter 2016 results.

I will now turn the call over to Rodrigo Aravena.

Rodrigo Aravena: Good morning, everyone. It’s a pleasure for me to share with you my comments on the Chilean economy and our consistent long term strategy. I would like to start with the macro analysis. Please turn to slide number 3.

GDP continues growing slower than Chile’s potential rate. After GDP was up 1.5% in the second quarter, it would likely expand 1.7% in the third quarter. That said, the economy is expected to grow by 1.6% this year, below the 2.1% of service in 2015. On the supply side, as seen on the upper left chart, the mining sector has led the slowdown, while the rest economy mainly services has remained growing on average 2%. The demand side breakdown shows that investment remains weak, while consumption is still supporting the GDP growth, in part of the consequence of the Chilean labor market.

As seen on the other right chart, the employment rate has remained stable around 7%, low level relative to prior year. In the last month, most of the macro analysis have been centered on two issues. First, the fall in the annual inflation rate, which dropped to 3.1% in September, as a consequence of the lower than expected 0.2% inflation in that month. As you can see in the bottom left chart, both headlines and core inflation has decreased. We think it has been a consequence of both the below trend GDP growth and the stability in the exchange rate as the weaker currency lift the CPI in the last two years.

The second issue is the reduction in the fiscal spending growth analysis for 2017, which is expected to fall to 2.7%. It will be the third adjustment in a row as seen on the bottom right chart. This cut aims to offset lower total revenues as a consequence of the decrease in potential GDP growth and copper prices. The government expects only a slight increase in the fiscal deficit from 3.1% of the GDP to 3.3% in 2017, resulting in a net fiscal debt still close to 0%. Therefore, Chile’s government maintained a strong financial position.

I’d like to share with you our baseline scenario for the next year. Please turn to Slide number 4. On activity, we expect a modest recovery next year. We estimate GDP to increase to 2% in 2017, and a convergence to 3% in the following year as seen on the other right chart. Most part of this estimate is explained by the expected better dynamism in the global economy, as seen on the top left chart, where you can see IMF estimate released in the last world economic outlook.

Additionally, the persistent weaker exchange rate can provide a further support to the GDP. On inflation, we see the excitement of two opposite forces; persistent below trend growth that can lead to a higher output gap and therefore lower CPI. On the other hand, we see risks in traditional inflation, as we expect a slight depreciation in the exchange rates. In all, we estimate the inflation to remain hovering around the Central Bank target; 3.2% this year and 3% in 2016. Due to this, we see room for monetary policy rate cuts in 2017.

Although the Central Bank has maintained the overnight rate of 3.5% since January of this year, we think that we can drop inflation and the persistent below trend growth will leave a space for an expansionary monetary policy. Please turn to Slide 6. Despite the weak economic environment that have perceived during the last few years, we have consistently posted excellent returns in terms of return, return on other equity and return on other assets. As you can see on the slide, we have managed to maintain and in certain years even widen the gap with the industry. In terms of ROE, we surpassed the industry by 1.6 times and ROA, we exceeded the industry by 1.8 times.

These consistent, high levels of profitability are a result of our superior competitive advantages as you can see on the next slide, Number 7. First, we consider that we have the best brand in the Chilean banking industry. Year-after-year, we have consistently outperformed our competition in many different attributes including Top of Mind; when customers are asked if they were to switch to another bank, which bank would they choose; and Security and Solvency. Thanks to our strong brand and excellent customer service, we attract customers more easily and they stay with us longer than our competition. Second, we are Number 1 or Number 2 in most of the products and services that we offer.

We are the second largest bank in total loans, the largest in commercial loans, second in mortgage loans, excluding Banco Estado, and second in consumer loans. We also have the best fee based business in the industry with the market share of more than 20%, thanks strongly to our ability to generate solid relationship with customers into our wide range of products and services. This means, that we have the scale, branch network, customer base and customer knowledge to continue growing with an adequate risk return relationship, and that our customers choose us for more than just debt products, but for other services as well such as insurance brokerage, mutual fund management, among orders. Third, we have the best funding structure in the industry. Non-interest bearing deposits represent almost 25% of our total sources of funds with the highest market share of 23%.

Additionally, it is important to point out that over 50% of this figure is from retail customers. This is very significant and no banking still has this advantage. Moreover, our excellent risk rating of A+ from Standard and Poor’s and Aa3 from Moody’s provide us with better spreads when issuing bonds. Both these, among other advantages, provide us with this very low cost of funds of only 3.3%. Another very important competitive advantage is our superior risk management.

As you can see, we have consistently recorded low delinquency ratios and we have maintained high coverage ratios in both significantly better than our peers and the system. Over the last 10 years, this solid track record has resulted, on average, in a lower loan loss provision ratio when compared to our peers. For each 10 basis point change in our loan loss provision ratio represent CLP25 billion in the P&L, given our loan book size. Another important element is our strong corporate governance practices, which played a tactical role in setting, controlling, and obtaining long term objectives. As you can see, we have many committees and meetings in order to achieve these goals and keep our Board members well informed to make the best decisions for our Bank and our stakeholders.

Now, I would like to share with you our main strategic focus going forward. Please turn to Slide 8. We are a universal bank that provides our customers with a wide range of products and services to meet their financial needs. Our clients lend from the largest multinational corporation to consumer finance. For this reason, we try to develop differentiated value offerings in tailored banking solutions in order to be the best bank for our customers.

Accordingly, the customer is solely at the center of our decisions. We pursue to establish long term commercial relationship primarily based on trust and service quality, while accompanying them through their whole lifetime. In these efforts, efficiency and productivity are crucial matters. Nowadays, customers not only demand high quality standards but also timely services and responses. These trends motivate us for both world class processes and IT platform in order to maintain our customer loyalty in the long run while optimizing our cost base.

On that hand, we want to be the best place to work and the best investment for our stakeholders while maintaining sustainable interaction with all of our stakeholders. We believe that strengthening corporate sustainability will be a key success factor in banking business. In order to achieve this objective, collaboration is crucial. For that reason, we have continued to bring forward our corporate values and teamwork culture. All of these actions reflect our commitment to our strategic decision and customer satisfaction.

Now, I will pass the call over to Pablo Mejia who will discuss in greater detail the results this quarter.

Pablo Mejia: Please turn to slide 10. We had another solid quarter of earnings, reaching a return average equity of 20%, which is equal to CLP145 billion. Only CLP6 billion below the level recorded last quarter and up CLP11 billion year-on-year. This excellent result has been met with in an environment of lower inflation and weaker economy.

As you’ll see on the following slides, operating income amounted to CLP428 billion, 10% lower than the previous quarter due to certain extraordinary revenues and flat year-on-year. Operating income and fees continued growing both quarter-on-quarter and year-on-year terms, while NPLs improved. Efficiency ratio rose to 46% in the quarter, mainly due to lower inflation year-on-year and extraordinary operating revenues when compared to the prior quarter. We are also very proud to say that we continue leading profitability in the industry this quarter and we have the highest market share and net income of 27% in the quarter and year-to-date. Please turn to Slide eleven.

As mentioned, operating revenues were down 1% year-on-year due to lower inflation revenues recorded under non-customer income. Inflation, as measured by the U.S. reached only 0.7% in the third quarter of 2016 versus 1.5% in the third quarter of 2015. More importantly, total customer income grew 6.9% year-on-year. This expansion in customer interest income of 7.1% was led by a 4.1% year-on-year growth in loans, mainly related to retail banking together with DDA growth by almost 5% year-on-year.

Additionally, in spite of the high competition and overall slowdown in loan growth, we continue to improve lending spreads this year, ending the quarter at 2.96%, or 9 basis points above the same period last year. In terms of fees, this line item grew 6.5% year-on-year, with the greatest dynamism concentrated in the retail segment. In particular, we experienced growth in fees from credit cards, insurance brokerage, stock brokerage, and to lesser degree, mutual fund management. However, I should point out that the increase in net credit card fees was due to the effect of exchange rate on our premium dollars program, which impacted us negatively in the third quarter of 2015 and positively in the third quarter of 2016. Please turn to slide twelve, on retail banking front.

As we’ve mentioned in prior calls, our focus in the retail segment has been on improving customer experience through all of our contact channels, as well as benefits. This quarter, we launched the new retail banking website for individual customers. It was implemented smoothly and we are very confident that this improved channel should provide our customers with a better and more simple, but complete platform to manage all of their financial needs. In addition, this should lead to improvements in efficiency in the future. Thanks to many initiatives, our retail loan book continues to expand at double-digit pace.

As you can see on the chart on the right, this was driven by credit cards, up 19% year-on-year, thanks to the improvement of benefits we provide customers, such as recent new loyalty programs associated with local and international airlines. Retail commercial loans up 11.2% year-on-year as SME continued to have good demand for loans and low risk and mortgage loans, up 10.6% year-on-year. And finally, consumer loans to the middle and upper-income individuals up 8.8% year-on-year. Our forecast is not only on the asset side of our retail business, but also on the liability management. As such, we have successfully continued to grow our retail base in both current account deposits and time deposits.

As you can see on the chart in the bottom, current account deposits grew 8% year-on-year and time deposits grew 10% year-on-year. Please turn to Slide 13. We are the largest retail debtor customer base in Chile with almost 1.2 million personal banking clients. These and other potential customers navigate our website far more than any other bank in Chile. This is a huge advantage in order to capture new customers and bank our current customers better.

As such, we have made important initiatives to improve customer experience on our contact channels. We have driven online sales by implementing world-class mobile apps and we have recently launched a new online banking web platform for personal banking, which should help continue to drive online sales and transactions. These results of these initiatives are shown on the chart on the right. As you can see, online banking monetary transactions grew 40% and consumer loans, sales from alternate channels has grown today to represent nearly 50% of all transactions. It’s also important to mention that we have one of the largest ATM networks in Chile with an impressive uptime of 99% and they are substantially more productive than our peers.

Please turn to Slide 14 on wholesale banking trends. In the wholesale banking, the less dynamic economy, together with low confidence levels and the end of the commodity cycle, have delayed investments and in turn reduced demand for loans by companies. This lower demand for loans and the focus on managing good relationship of risk and return has translated to a year-on-year decrease of 4%. As you can see on the chart on the right, this occurs in all products. However, it’s important to remind you that we acquired a portfolio in the third quarter of 2015, that was mainly related to the wholesale segment.

Isolating this effect, wholesale loans would have grown slightly by 0.5% year-on-year. Finally, in line with Rodrigo’s comments earlier in the presentation, we are confident that we should begin to see a better economic activity and this should help loan growth. Please turn to Slide 15. Loan loss provisions this quarter reached CLP65 billion, down 38% year-on-year. This drop was due to the establishment of additional allowances amounting to CLP31 billion in the third quarter of 2015 and the positive effect of the appreciation of the Chilean peso against the US dollar this quarter and the strong depreciation in the third quarter of 2015, which benefited allowances for loan losses denominated in US dollars.

Aside from this, we continue to see good credit behavior in both retail and wholesale lending. Even when adjusting these credit factors, our loan loss provisions remained basically flat year-on-year. In addition, we recorded improvement of 8 basis points in NPL year-on-year and quarter-on-quarter. If you break these figures down by segments, retail loan loss provisions deteriorated slightly in the quarter, but remains flat year-to-date when compared to last year. On the other hand, the wholesale segment improved during the quarter and year-to-date.

This improvement was associated to higher provisions in the 2015 of a specific customer having some difficulties. As shown on Slide 16, operating expenses increased only 6% from a year earlier. This more gradual increase was driven by a variety of factors including less non-recurring items. Specifically, personnel expenses increased by approximately CLP10 billion or 11% year-on-year. On a recurrent basis, salaries rose nearly CLP4 billion, due primarily to the effect of inflation on our payroll.

We also recorded non-recurring personnel expenses from special bonuses granted to the start of two of our subsidiaries, Banchile stock brokerage and Banchile Mutual fund management companies, for the successful completion of the collective bargaining processes, which amounted to CLP2 billion. And finally, variable compensation and other benefits accounted for about CLP2 billion. In terms of administrative expenses, this line item grew only 7% year-on-year or CLP5 billion. The rise was mainly associated to higher expenses in IT items, building-related expenses, and marketing. Other operating expenses rose by CLP5 billion year-on-year, mainly due to non-credit contingency provisions in the third quarter of 2015.

We are confident that our permanent focus on cost control and new projects are aimed at improving customer service and optimizing internal processes should bear fruit, maintaining expense growth lower than customer income and in the medium term improve efficiency levels. Please turn to the last slide of our presentation on recent achievements. Before moving on to questions, I want to go over a series of recent achievements and recognitions we have received, which have certainly been a result of our consistent long-term strategy, which relies heavily on putting the customer at the center of our decisions and continuously searching for new ways in improving productivity and efficiency. As you can see on the slide, we have a huge list of recent achievements. First, we received numerous recognitions from prestigious international entities, such as Global Finance, The Banker and Latin Finance.

More importantly, the market also recognized their solid performance and their confidence in the bank through the successful issues of over $250 million in senior and subordinated funds, at very attractive spreads in the Japanese and local markets. Second, we made significant efforts and investments in innovation, in line with our strategy of improving efficiency and productivity. We launched a personal banking platform, integrating the latest technologies available and providing a service that is faster and more stable. We also implemented a new foreign currency platform for buying and selling dollars online, breaking the past schemes and offering something completely new and modern. These innovations along with new apps for mobile banking premiered us to be recognized as the best consumer digital bank in Chile by Global Finance.

Third, throughout our history, we have provided -- we have prided ourselves for being committed to our employees. We successfully negotiated three collective bargaining agreements with the unions and their subsidiaries and in the second quarter, we are recognized by MERCO, a prestigious corporate reputation monitoring company from Spain as the best financial institution that attracts and retain talent in the country. We are certain that both of these matters demonstrate the relationship and capacity of our employees. Without dedicated and motivated employees, we cannot be the bank that we are today. On the commercial front, we increased the retail customer base opening more than 28,400 current accounts in the third quarter, equal to an impressive increase of almost 30% over the same quarter last year and at the same time improving significantly our attrition rates.

Lastly, we continue to demonstrate excellent customer service during the quarter, which is especially relevant, with customers are increasingly more demanding than in the past. These are just a few of our accomplishments that we have realized during this year. We’ve demonstrated that we are capable of providing attractive and stable returns to our shareholders despite more difficult and challenging economic times. In fact, despite the harder environment, we grew accumulated net income by almost CLP10 billion when compared to the same nine month period last year. We also strive to provide better service and financial products to our customers and we are continually trying to evolve to deliver these services through channels like customers’ demand.

Thank you. If you have questions, we’ll be happy to answer them.

Operator: Thank you. [Operator Instructions] And our first questioner today is Guilherme Costa from Itau BBA.

Guilherme Costa: My first question is regarding your expectation for the Bank in 2017.

Given the expectations of an improvement in the economy, how much we are expecting total loans could expand in 2017 and what segment should drive for growth next year? And my second question is about asset quality. We saw a good improvement in your NPL ratio, which is at the lowest level in the last quarter in addition to a material contraction in your cost of risk. So, I’m guessing what are you imagining for those lines in 2017? Thank you.

Pablo Mejia: For the first question for banking loan growth for next year, in line with Rodrigo’s comments, we are expecting GDP to grow around 2% next year and that should be equivalent to around 4% real growth terms of total loans, in nominal terms around 6% to 7%. The segment should drive loan growth will continue be in the retail segment, specifically in mortgage loans and upper income individuals as well as SMEs.

And could you repeat the second question?

Guilherme Costa: My second question is about your trend for the NPL ratio and cost of risk in the next year.

Pablo Mejia: Okay. And one last thing I forgot to mention is companies could be larger companies around 6%, maybe a little bit higher if things continue going a little bit better than we’ve seen in the past. In terms of NPLs, again going back to the Rodrigo’s comments, we’re expecting that next year, we should continue seeing a below trend growth, but and this should translate a little bit higher unemployment levels. So we’re expecting the NPL should rise moderately, but it shouldn’t be anything in the baseline scenario significant for now.

But it depends on how we continue to stay in the country evolve in the next few months.

Operator: Our next question today is Carlos Macedo from Goldman Sachs. Please go ahead. Please go ahead.

Carlos Macedo: Thanks.

Good morning, gentlemen. Couple of questions. The first is a follow-up of that one, NPLs go up a little bit, where do you see your cost of risk going? Is it going to stay kind of where it’s been adjusting for the additional provisions or should we expect the cost of risk to increase next year as a result of higher NPLs? Second question, talk a little bit of competitive environment. I mean, we always hear about how everyone is gaining market share and nobody seems to ever lose market share in Chile. Could you talk a little bit about how you see the competitive environment for your main markets, the ones you focus on and whether you think that could be a headwind for the recovery and profitability over the next few quarters?

Pablo Mejia: In terms of NPLs, probably the main thing that we should take into consideration that this year has been very good for large companies.

We’ve had very low NPL levels for large companies and that could change next year. For cost of risk for next year, we should expect -- we have to take into consideration as I mentioned that we are still in a below trend growth and the employment rates are rising, we’ve had very good levels of risk in larger companies. So, it should be similar level without taking into consideration additional provisions next year the level of loan loss provisions that we have this year. Additional provisions are generally something that’s taken into consideration at the Board level as you saw earlier this year and it’s something that takes into consideration what’s currently happening in the economy. So, we’d have to sit back to put the cursor back.

And the second question, can you repeat again?

Carlos Macedo: The second question is just wondering what the competitive environment is your main focus markets just because it seems everybody is focusing the same thing and everybody is gaining market share.

Pablo Mejia: I think in the competitive environment, what we see is certain areas in the country that have available space to continue banking. One of the areas that we see that has significant room to continue growing is asset base and the middle and upper-income individuals. And how we’ve been doing that, well, first, SME is very low penetrated in Chile. If you look at loans to GDP, it’s something less than 10%.

So, it has very low penetration. It’s something that there is a huge advantage in the future. In the middle and upper-income segment, you have consumer installment loans, you have credit card loans, and really we have a very large customer base, which we are growing through these customers currently, and always taken into consideration a good risk and return relationship in this growth. And in terms of wholesale, what’s happening in the wholesale, we’ve lost the market share in that segment, again related to risk and return. The levels of competition there are very high and the demand for loans is very weak.

So, we’ve seen a low spread, which have made it not attractive for us to enter into those deals at this time and last time we have seen a little bit of a loss in market share in wholesale.

Carlos Macedo: Okay. But generally when you talk about upper-income, you see there is potential and you’ve been doing a great job, you’ve been able to maintain your market share and actually push through in that segment. Did I understand correctly?

Pablo Mejia: We have continued growing in that market. A lot has been with the cross-selling.

A lot of our growth is through pre-approved loans. Products that we have with customers well above 50% is with loans to our current customer base.

Carlos Macedo: Okay. All right. Perfect.

Thanks, Pablo.

Pablo Mejia: We also have the largest market share in the upper-income individuals segment in Chile with one of the largest branch networks in Chile. So, we have the scale and we are where the customers are.

Operator: Our next is from Tito Labarta from Deutsche Bank. Please go ahead.

Tito Labarta: Hi, good morning, Rodrigo and Pablo. Thanks for the call. My question is in terms of your outlook for margins. You mentioned just like the inflation around 3% and there is room to cut rates. Just want to get a sense of how you think that’s going to impact your margins going forward, also kind of following up on Carlos question about competition, how competition crossover impact spread? So, if we take all those things together, what should we expect for margins going into next year? Thank you.

Pablo Mejia: For the net interest margin, we’re expecting something probably similar to what will end this year. It should be around the level of 4.3% this year. It’s important to mention that this year we had an early redemption of bonds, which affected net interest margin. So that could partially, at least partially offset the effects of the slightly lower inflation and the slightly negative effect of lower overnight rate on margins. But one of the main things that we’ve mentioned in the presentation and as you can see on one of the slides, we’re always, we’re being very focused and continuing to try to improve spread.

So, as you see year-on-year basis, we’ve increased the spread about 9 basis points and we expect that we can continue our, we would like to continue improving the levels of spreads, especially in order to compensate these negative effects of lower inflation and the lower overnight rate.

Tito Labarta: Okay, great. That’s helpful. And then just a separate question in terms of the expenses, kind of growing in the high-single digits, what kind of growth are you expecting in expenses?

Pablo Mejia: For next year, we’re expecting, the goals or the targets for expense growth is to maintain expense control pretty fast, would be in the lower single-digits, so 3%, 4%, 5% is reasonable.

Operator: The next questioner today is Domingos Falavina from JP Morgan.

Please go ahead.

Domingos Falavina: Thank you, gentlemen for taking my call. And I think I have also an additional question on asset quality. Numbers were at least in my view surprisingly good and we do see you increasing the coverage ratio, and when we look at your allowance to past due, it’s at 1.95 times. My question is up to which point are you going to increase the coverage ratio? When are you comfortable to then provision less sort of letting this flow through to earnings?

Pablo Mejia: The coverage ratio, we don’t have a target for coverage ratio.

The coverage ratio is a product of our model. So, if you look at our history, we’ve been relatively stable around the 2 times. And one of the things that we saw this year is that we’ve had a very good performance of our Company segments, large Company segments.

Domingos Falavina: So basically you believe that credit costs should remain relatively stable, because you anticipate a little bit of a wholesale duration next year and for semester is strong?

Pablo Mejia: The wholesale, there should be a little bit -- it’s difficult to see next year that had such good levels in the wholesale segment and we should expect in line with higher unemployment rates and NPLs should also increase something next year for the retail segment moderately.

Domingos Falavina: So and then you bring down a little bit of coverage, because you said I think that credit risk should be flat year-on-year, so if you have a deterioration on NPLs, you coverage should slightly go down next year.

Pablo Mejia: The thing is that the coverage ratio, NPL, non-performing loans is like a lag indicator. So, our provision models taken more into considerations than just overdue loans. So, sometimes it can be a little bit of an effect because of that.

Operator: Our next questioner today is Ernesto Gabilondo from Bank of America Merrill Lynch. Please go ahead.

Ernesto Gabilondo: We’re looking of what happened to other countries in the region, it appears that every time, there are presidential elections, there are some delays in projects. Now, if you add to this context lower government investments to commit with the fiscal deficit, do you think that that will have an impact in the credit demand of large corporates next year? And on the other hand, are you expecting for the Chilean peso next year considering potentially lower interest rates, while the Fed will be moving in a different direction?

Pablo Mejia: One second, please.

Rodrigo Aravena: So, first of all, it is very important to highlight here that we are expecting an improvement for the next year but still bit we’d have below trend growth. It is impact of basically the main element behind this more constructive view for the plan [indiscernible] for the next year is based on the improvement in the current scenario, mainly in Latin America. So, in other words, we are comfortable if Latin America we’re similar next year relative to this year.

We would fail in, I think, for example the 2% growth in Chilean economy next year. I think it is perhaps one of the more important factors behind our more constructive view of the Chilean economy for the next year. In terms of the Chilean peso, we expect a weaker currency for the next year, its performance [ph] between 680 to 687 [ph] mainly because we are expecting our reduced monetary policy in the next year. Basically, we would expect the Central Bank to begin a decent cycle in the first quarter of the next year after the Fed to resume the pricing cycle, particularly we are expecting the Central Bank of Chile to reduced interest rate by 25 basis points in January, February next year and more 25 basis points in the second quarter. And at the same time, we are expecting that the Federal Reserve to continue the tightened cycle.

So, I would hope -- we expect a weaker currency for the next year.

Operator: Our next questioner today is Carlos Gomez from HSBC. Please go ahead.

Carlos Gomez: Can you walk us in [ph] terms of tax rate this year and next year? Thank you.

Pablo Mejia: The effective tax rate this year is about 14% and probably we will have something like 15% next year.

Operator: [Operator Instructions] Our next question today is Sebastian Diego from Credicorp Capital. Please go ahead.

Sebastian Diego: My question is related SM Chile. Do we have any additional information regarding the proposal to the Central Bank? Can we expect a new proposal or a new offer or is there any new caller on that front? Thank you.

Pablo Mejia: In terms of SM Chile, we can’t really give much guidance about it because it’s something related to one of our shareholders at the Board level.

So there hasn’t been any new information and material fact published in the superintendence. So right now, all the information that’s public is what we know.

Operator: It looks like we have no further questions. So, this will conclude our question and answer session. At this time, I would like to turn the floor back to Banco de Chile for any closing remarks.

Pablo Mejia: Well, thank you for joining our call today and we look forward to having you in the next results for the yearend. Thanks. Bye.

Operator: Thank you. This concludes today’s presentation.

You may disconnect your line at this time and have a nice day.