Banco Santander - Chile ADS

Ladies and gentlemen, thank you for standing by, and I would like to welcome you to Banco Santa del Chile's first quarter 2026 earnings conference call on the 6th of May, 2026. Please note, at this point, all participant lines are on listen-only mode. After the call, there will be an opportunity to ask questions. So with this, I would now like to pass the line to Ms. Patricia Perez, Chief Financial Officer. Please go ahead, ma'am.

Good morning, everyone, and thank you for joining us today. I am Patricia Perez, I'm joined today by Cristian Vicuña, Head of Strategy and Investor Relations, and Andres Sanzone, Chief Economist. We'll begin with Andres, who will provide an overview of the economic and political environment. Cristian will then walk you through our strategy priorities and review our first quarter results in more detail. We will conclude with a Q&A session. With that, I will now turn the call over Andrés.

Thanks Patricia. Let me start with the big picture. Since our last webcast, the global battle has become more challenging and more uncertain. The main change has been the geopolitical shock in the Middle East and its effects on energy markets. Our baseline scenario assumes that the conflict gradually decalates but leaves lasting damage, which means oil prices do not return to the levels prevailing before the conflict. At the same time, risks remain purely due to more adverse scenarios, especially if supply disruptions persist for longer or if infrastructure damage proves more permanent. This matters for Chile through several channels. First, higher oil prices raise imported inflation and worsen terms of trade outside copper. Second, the external environment becomes less supportive for monetary easing globally, as energy prices have lifted inflation expectations and reduced the room for central banks to cut rates. And third, even though financial markets have shown resilience, especially in equities, long-term rates remain elevated and global uncertainty is still high. For Chile, this means that even if copper remains relatively supported, the net external backdrop is no longer clearly denied. Turning to domestic activity, the most recent relevant information is the March monthly economic activity indicator. Based on the preliminary IMASET readings, we estimate that the economy contracted 0.3% year on year in the first quarter of 2026, or minus 0.2% quarter on quarter, making this the first quarterly setback since early 2023. The non-mining sector would have grown only 0.1% year on year, and being flat sequentially. All together, from our perspective, the growth outlook for 2036 became more challenging and more dependent on the evolution of the external scenario. In our reference scenario, we assume that WTI oil remains around $100 per barrel during the second quarter of this year, and then gradually declines ending the year around 80, 85% dollars per barrel, without returning to pre-conflict levels. Under this assumption, Chile's economic will still grow 2% in 2026, but of course, risk until to the downside. The main impact is on prices rather than activity. In our base case, inflation will end in 2026, between four and four, And given that the inflation shock would be viewed as temporary and activity will slowly, slow only moderately, the central bank will keep the policy rate unchanged at 4.5% through 2026. And in this same baseline scenario, we expect the exchange rate to close the year around $890 per PES. So going to the next slide, we can see the current regulatory and policy environment. The main development so far has been the announcement of the National Reconstruction and Economic Development Plan, which is centered on measures aimed at improving competitiveness, supporting private investment, and reducing environmental permanence bottlenecks. Its core components include the reduction in the corporate tax rate from 37 to 23%, full reinvestment of the tax system, tax stability incentive for a strategic sector such as mining, technology, and energy, and target measures to support formal employment, construction, and housing activities. In our view, the project is positive in direction, particularly in its core components and at improving competitiveness, lowering the corporate tax burden and streamlining permits, all of which should be supportive of investment and medium-term growth. In that sense, the plan helps accept part of the weak cyclical starting point that we are seeing in early 2026, And it is consistent with a more favorable medium terms supply side story for Chile. When the direction of this initiative is positive for growth, their credibility will also depend on the existence of a clear fiscal roadmap. While higher growth should eventually generate additional revenues, the project still requires a clear fiscal roadmap especially during the transition period. We see a policy mix that is more supportive of growth, but where a fiscal anchor remains an important issue to monitor. With that, let me hand over to Cristian.