Transcript Banco Estado is Counter-Cyclical

BancoEstado
Commercial Management
with Social Impact
Fernando Ochoa Castillo
Quito, Ecuador
March 2012
AGENDA
I.
Institutional and macroeconomic framework
II. Institutional design
III. BancoEstado: its financial inclusion strategy
IV. BancoEstado: its counter-cyclic strategy
V. Strategic guidelines 2012 -2014
V. Final Conclusion
2
Chilean Economy:
Fundamentals (I)
GDP Growth
Fiscal Surplus (% of GDP)
6,2%
7,7 %
5,2%
8,2 %
4,0% - 4,5%
3,7 %
4,3%
1,4%
-1,7%
-4,5%
-0,4 %
2008
2009
2010
2011
2012 E
2006
Anual inflation rate
2007
2008
2009
2010
2011 Q3
Unemployment rate (average)
11,0%
7,1%
8,3%
7,9%
4,4%
7,2%
7,0%
2011
3
2012 E
3,2%
3,0%
-1,4%
2008
2009
2010
2011
2012 E
2008
2009
2010
Chilean Economy:
Fundamentals (II)
Current Account (% of GDP)
Gross Debt Central Government (% of GDP)
184
1,6%
Countries selected from
lOECD, (dec. 2010)
5,2%
6161
20
39 40 42 43
44
66 67
74 75
81
3,75%-5,25%
3,7 %
86 88
50 5252
-1,9%
-1,5%
-1,7%
9 10 11
ESTONIA
CHILE
LUXEMBOURG
AUSTRALIA
SWITZERLAND
NORWAY
MEXICO
NEW ZEALAND
KOREA
SWEDEN
SLOVENIA
CANADA
CZECH REP.
SLOVAK REP.
DENMARK
FINLAND
TURKEY
GERMANY
POLAND
SPAIN
NETHERLANDS
IRELAND
USA
AUSTRIA
FRANCE
HUNGARY
ISRAEL
ICELAND
U.K.
PORTUGAL
BELGIUM
ITALY
GREECE
JAPAN
1
33 34 36 3637
6,2%
148
109
97
26 27 30
1,9%
INR and Sovereign Funds (US$ Billions)
-3,3%
2008
2008
2009
2009
2010
2010
2011
2011
2012
2012 E
International Financial Position (% of GDP)
4
Financial
Development
Appropriated level of financial development, although
there are still sectors of the population without access
(as % GDP)
1990
2000
2010
Bank Credits
52
69
72
Bank Productive Assets
78
87
87
Pension Fund Assets
25
48
67
Equity Securities
57
88
154
Insurance Company Assets
7
16
19
Company Bonds Stock
5
7
15
5
Bank Industry:
Competition
Competitive local banking industry, with high
participation of foreign banks
Number of Institutions 1974 - 2011
6
Bank Industry: Institutionality
and Resilience
Positive institutional conditions that
contribute to the resilience of local banks
 Pro-Market financial regulation and risk based
supervision
 Diversified financial system, highly integrated to global
markets
 Leveled play field  public banks operate under the
same rules as private, except taxation
 Efficient corporate governance with
professional
management
 Prevalence of "traditional“ banking business
 Solvent Banks with adequate liquidity
7
Bank Industry:
Positive Results
Risk Index
Operative Efficiency
2,5%
2,4%
2,4%
49,9%
48,0%
1,8%
46,0%
44,6%
2008
2009
2010
2011
2008
2009
12,2%
12,2%
2007
2008
2011
ROE
Basilea Index
14,3%
2010
21,9%
14,1%
21,8%
20,8%
13,7%
18,9%
2009
2010
2011
2008
2009
2010
8
2011
AGENDA
I. Institutional and macroeconomic framework
II. Institutional design
III. BancoEstado: its financial inclusion strategy
IV. BancoEstado: its counter-cyclic strategy
V. Strategic guidelines 2012 -2014
V. Final Conclusion
9
Central Features
of BE
Unique state commercial bank,
with almost 160 years of history
Social responsibility without
granting subsidies 
"efficiently banking”
Ranked third in
total bank credit, with
the most extensive
coverage in the
country
Market lider in
deposits, saving and
microfinance
Independence to set policies
and allocate credit
International Risk
Classification: A +
Profitable and high
potential for sustained
growth of assets and profits
10
Mision, Vision
and Positioning
11
Activos y Canales
BancoEstado is a lider institution in Chile...
Ranking
Category
Level (US$)
#1
Savings
MM 5.247
#2
Mortgage Credits
MM 10.000
#3
Total Assets
MM 43.203
#3
Total Allocations
MM 26.041
#4
Effective Equity
MM 3.308
#4
Profit before taxes
MM 338
...with an unparalleled distribution network nationalwide
Ranking
Category
#1
Geographical coverage:
- Offices
- Special service centers
- Remote service centers
- ATMs
#1
Clients Base
#1
Service supplier to:
- Goverrnment sector
- Low income sector
- Middle income sector
Level
341
86
7.130
1.981
MM 8,5
12
Segments, products
and client base
Comprehensive platform of services
for all sizes of business and people
BancoEstado service delivery to following segments
Products
Government
Cash management,
treasury services,
payments (salaries,
pensions, suppliers)
Corporate
Credit, treasury services,
commerce financing,
payments
Middle size
companies
Retail
Commercial credits,
commerce financing
Personal Banking,
consumer credits,
insurances, mortgage
credits, TCR and TD,
student credits, microcredits,
mutual funds, accounts
payment
Clients Base
Main competitors
Full matrix of public
companies
• Large banks
• Middle size foreign
banks
750 Corporative
clients
• Large banks
• Middle size foreign
banks
2.700 middle size
company clients
• Large banks
• Middle size local banks
• MM 8,5 people
• 428.000
microbusiness clients
• 25.700 small
company clients
• 473.000 mortgage
debtors
• Large banks
• Middle size foreign and
local banks
13
Subsidiaries
Provide financial services that complement
the extensive menu offered by the bank
Banco del Estado de Chile
50.1%
100%
50.01%
100%
BancoEstado Centro de
Servicios S.A.
100%
100%
BancoEstado Contacto 24
Horas S.A.
100%
100%
BancoEstado
Sucursal Nueva York
100%
BancoEstado Corredores
de Seguros S.A.
BancoEstado S.A.
Administradora General
de Fondos
BancoEstado Servicios de
Cobranzas S.A.
BancoEstado
Microempresas S.A.
Asesorías Financieras
BancoEstado S.A.
Corredores de Bolsa
Sociedad de Servicios
Transaccionales
Cajavecina S.A.
14
AGENDA
I. Institutional and macroeconomic framework
II. Institutional design
III. BancoEstado: its financial inclusion strategy
IV. BancoEstado: its counter-cyclic strategy
V. Strategic guidelines 2012 -2014
V. Final Conclusion
15
Inclusive Strategy:
Family Saving
We promote the family saving
Saving accounts (aug.2011)
Number of active clients: 7.6 millons
16
Inclusive Strategy:
Payment Systems
We provide modern payment systems for
all the chileans and small companies
Active Rut Accounts (thousands)
Caja Vecina Accounts (thousands)
5.000
10.000
4.204
7.130
2.881
2.262
4.564
3.327
1.236
2.000
612
1.003
19
2006
2007
2008
2009
2010
2011
2012 *
2007
2008
2009
2010
2011
2012 *
17
Inclusive Strategy: Family
Assets Accumulation
We finance the purchase of popular houses
Debtors distribution (dec.2011)
Debtors BE:
526.611
Amounts distribution (dec. 2011)
Stock: MM US$ 10.000
Average Debt:
Subsidized
Non Subsidized
: US$ 10.700
: US$ 42.500
18
Inclusive Strategy: Human
Capital Accumulation
We support the investment in human
capital for low income families
Clients Distribution (jun.2011)
Amounts Distribution (jun.2011)
Market: 400.000 clients
Stock: MM US$ 2.850
19
Inclusive Strategy:
Business Development
We promote entrepreneurshipment
and business development
Credits to Small Companies
Credits to Micro Companies
20
Inclusive Strategy:
Risk Transfer
We provide convenient insurance for
families to transfer their principal risks
Number of current insurance policies (thousands)
4.998
4.532
4.186
3.739
3.088
2006
3.328
2007
2008
2009
2010
2011
21
Inclusive Strategy:
Complementing Markets
We serve markets without
alternative private suppliers
Access to Bank Offices (% of districts total country)
22
Inclusive Strategy:
Competition
We promote competition through continuous
promotional campaigns widely publicized
Consume Credit Rate
40
SANTANDER
30
BCI
CHILE
20
BANCOESTADO
10
sep-08 nov-08 ene-09 mar-09 may-09
jul-09
ago-09
23
Inclusive Strategy:
Transfers to the Treasury
We make significant transfers to fund
the Social Security Budget
(In MMUS$)
24
Inclusive Strategy:
Impact Synthesis
In short, millions of customers served, with diverse products,
accessible to all families and businesses of all sizes











7.6 mm with savings accounts
4.2 mm with Rut accounts (debit)
2.1 mm in internet
1.6 mm receive their salary payments, pensions and
scholarships
828 m current credit cards
527 m with housing credits
464 m micro and small companies
450 m with consume or university credits
320 m with current account
108 m in mobile site
675 Public Institutions
AGENDA
I. Institutional and macroeconomic framework
II. Institutional design
III. BancoEstado: its financial inclusion strategy
IV. BancoEstado: its counter-cyclic strategy
V. Strategical guidelines 2012 -2014
V. Final reflexion
26
Counter-Cyclic Strategy:
Base Diagnosis
The “sudden stop” of private offer of credit
Net Total Credit Flow Private Banking and BE (in MMUS$)
27
Counter-Cyclic Strategy:
Capital Constraint
During capital constraint BE contributed to unlock the credit
channel, while Private Banking increased capital gaps
Monthly real growth in bank credit and Basel Index
Source: SBIF
28
Counter-Cyclic Strategy:
Relative Momentum (I)
BE also acted in line with the regional public banks
to keep lending channel transmission
29
Counter-Cyclic Strategy:
Relative Momentum (II)
Other internal and external credit suppliers
validated the credit risk strategy of BE
Financiamiento Empresas
Corporative Bonds traded in Chile
(flujos netos en millones de US$ a mayo 2009)
(in Billion $)
4.000
3.000
2.000
1.000
0
2007
2008
2009
1.242
1.918
3.639
A) Includes private and public companies debt
B) Includes short-term and long-term debt of non-financial companies plus accrued
interest to April 2009
30
Counter-Cyclic Strategy:
Specific Actions
We design and apply an innovative strategy
to address the uncertain economic situation
Attractive credit offer at very competitive prices, anticipating even
the Monetary Policy Rate reductions;
Unique focus in loan growth;
 We provide financial support to viable businesses of all sizes and
people of all levels;
We work closely with customers by establishing alliances with real
estate agents (72 hours) and unions;
We use all available state guarantees, and
 We carry out campaigns, fairs and open on Saturdays
31
Counter-Cyclic Strategy:
Overall goals
Strategic Priorities
• Increase credits in 11%  additional offer of US$
2.000 millons respect to 2008
• Increase our market share in 1%
• Maintain the level of credit risk under control via
intensive relievers
32
Counter-Cyclic Strategy: Credit
guarantees for companies
The “FOGAPE” Fund (Small business guarantee fund)
grew at record level, led by BE
Participation in number of operations, december 2009
Rebate in fees: 50%
33
Counter-Cyclic Strategy:
Home credit guarantees
Largest percentage of guarantees, grants offer, and
lower prices resulted in an increase of demand for these
loans, concentrating supply in small size ones
Participation by debt segment(%)
34
Counter-Cyclic Strategy:
Signals to the market
We were aggressive in the supply of credit to
SMEs and send clear signals to the competence
35
Counter-Cyclic Strategy:
Supply growth (I)
Counter-Cyclic supply in all the products……
Counter-Cyclic Strategy:
Supply growth (II)
We met the growth targets in all segments
37
Counter-Cyclic Strategy:
Credit Risk
The maintenance of standards and use of
guarantees keep risk under control
Loan loss provisions / Operational Income
(%)
28%
23,7%
23%
20,4%
21,2%
18%
16,6%
14,9%
13,7%
15,2%
13%
ESTADO
SISTEMA
10,4%
8%
Jun08
Dic08
Jun09
Dic09
Jun10
Dic10
Jun11
Dic11
Source: SBIF and BancoEstado
38
Counter-Cyclic Strategy:
Profitability
Limited profitability sacrifice with high growth
ROE
(results / capital plus reservs)
28,0%
SISTEMA
25%
24,4%
23,2%
20,3%
17,7%
15%
15,9%
14,8%
BANCOESTADO
11,2%
Jun08
Dic09
5%
Dic08
Jun09
Jun10
Source: SBIF and BancoEstado
Dic10
Jun11
Dic11
39
Counter-Cyclic Strategy:
Solvency
The Capital injection in BE helped ensure
its solvency and boost lending channel
Basel Index
14,3%
BancoEstado
Sistema
13,7%
Actualizar 2010 y
2011
12,5%
11,1%
14,1%
Dic-06
12,5%
12,2%
10,8%
Dic-07
12,4%
12,6%
12,1%
10,9%
Dic-08
Dic-09
Dic-10
Dic-11
40
Counter-Cyclic Strategy
High historical importance of housing and the recent
increase of Agriculture in BancoEstado portfolio
Credit Distribution by Economic Activity
(stocks in %)
41
AGENDA
I. Institutional and macroeconomic framework
II. Institutional design
III. BancoEstado: its financial inclusion strategy
IV. BancoEstado: its counter-cyclic strategy
V. Strategic guidelines 2012 -2014
V. Final Conclusion
42
2012 Challenges
 Extending and deepening
bankarization
 Keep long term
relationships with clients
 Increase efficiency and
keep risk controlled
 Improve continuously
critical internal processes
 Increase transparency to
our clients
Strategic Map 2012-2014
Strategic Map focused in commercial
management with high social impact
44
AGENDA
I. Institutional and macroeconomic framework
II. Institutional design
III. BancoEstado: its financial inclusion strategy
IV. BancoEstado: its counter-cyclic strategy
V. Strategical guidelines 2012 -2014
V. Final Conclusion
45
Final Conclusion
¿Why a Public Bank is necessary?
• To promote the financial inclusion of the people
• To play a counter-cyclical role and introduce more
competition in the industry
• To support public policies and contribute to the
modernization of the State
• To promote entrepreneurship and business
development
• To mobilize family savings
• To improve the financial education of the population
46
Final Conclusion
BancoEstado experience in Chile, as well as other public
banks, shows that these institutions can play an important
role in times of crisis, ensuring the credit transmission
channel, and helping to minimize the socio-economic
impact resulting from these recurring events
Risk perception and strategies implemented by BE in the
global financial crisis was validated by other internal and
external suppliers of credit and, most importantly, its
management strengthened the public confidence in general,
and clients in particular in BE and the local banking system
as a whole.
In the future, to be effective in its role in the process of
"credit easing", a public bank solvent (well capitalized) is a
must, with market relevance, managed efficiently (profitable)
47
and able to keep the risk controlled
THANKS
ANNEX
“CajaVecina”: A small electronic channel
operating in isolated locations or stores suburbs
CLIENT
BANK
STORE
Electronic
Device
Operations
•
•
•
•
•
Deposits
Transfers
Balance information
Payment of credits
Payment of services
Advantages
• Time saving
• Extended hours service
• Increased security
Is our direct supplier of
financial services
Advantages
• Commissions
• Increase of sales
• Local differentiation
• Client fidelization
POS
• On line operations
• Receipts delivery
• Effective control on line
50
In BancoEstado 85% transaction is
effected through Electronic Channels
Attendance Channels
15% (7.201.057 tx/month)
The Client choose where,
how and when served
Electronic Channels *
85% (47.307.531 tx/month)
Internet
Mail
Cajsh
SMS
Table
Buzoneras
Attendance Models
Value offer
Ejxecutive
KioscoWeb
Specialized
Platforms
Information
Dispenser
Automatic
Phone
(IVR)
FAX
Assisted Phone
* Canales soportados en tecnología
POS
Caja
Vecina
51