BCH Banco de Chile

1. Q1 2026 — Beat / Miss Summary

2. Key Drivers Behind the Print

(a) NIM 4.10% — the headline miss

NIM compressed 80 bps QoQ (Q4'25A 4.91% → Q1'26A 4.10%) and undershot mgmt's guide of ~4.6% by 50 bps. Drivers:

• Higher cost of funds: TPM held at 4.50% kept commercial deposit costs elevated.
• Weak UF asset re-pricing: April CPI 2.8% YoY is moderate vs the high-inflation regime that drove 2025 NIM (4.91%).
• Mix drag: loan-book growth concentrated in lower-yielding mortgage and corporate vs higher-yielding consumer.
• Q1 seasonality (summer in Chile, fewer business days for fees) compounded the NIM optics.

(b) Provisions +26.6% YoY — credit cycle is turning

CLE of Ch$114.2 bn vs Ch$90.2 bn in Q1'25. Run-rate cost of risk implied at 1.30–1.40% annualized (vs FY25A 0.85% and mgmt FY26 guide 1.1–1.2%). Some of the YoY delta reflects a low Q1'25 base, but the structural read is that the credit cycle is rolling over — consistent with IMACEC contraction (-0.34% YoY in April).

(c) Loan growth +2.6% QoQ — at high end of cycle range

Loans CLP 40.2 trn, up from CLP 39.2 trn in Q4'25. Annualized run-rate is ~10.4% nominal — consistent with mgmt's 7% FY guide if Q2/Q3 moderate. But IMACEC contraction puts the 2H trajectory at risk; we trim FY26E loan growth to 5.0% nominal (between Q1 implied trajectory and 7% guide).

(d) CET1 13.3% post-div — fortress capital intact

Reported 13.3% reflects the April 25 dividend payment ($2.08/ADR, 84.7% payout). Pre-dividend CET1 was ~14.5%, in line with FY25A. Capital position remains the strongest in the Chilean banking sector and gives BCH room to absorb 2026 weakness without strain. Pillar 2 (Fortress Capital) remains On Track.

3. Management Guidance Status

Mgmt reaffirmed FY26 guidance on the May 1 call — a deliberate signal that Q1 is the trough, not the run rate. Track record of guidance credibility is good (under-promised and over-delivered through 2024–2025), but the May 1 reaffirmation is a credibility test the market will judge in Q2.

* Estimated from CLE of Ch$114.2 bn / avg loan book.

4. Estimate Revisions: FY2026E / FY2027E

5. Target Price Bridge: USD 39.50 → USD 38.00

Blended valuation (50% 2-stage DDM, 25% P/BV–ROE, 25% P/E relative). Net change is -USD 1.50 (-3.8%) — the NIM/COR/ROE deterioration outweighs Ke and FX tailwinds. We give partial credit (+USD 0.30) to mgmt guidance for 2H NIM recovery.

Method-Level Fair Values

6. Thesis Pillar Review

Pillar 1 (Profitability) downgrades from On Track to At Risk on Q1 ROE 18.2% (vs target >19%). Pillar 5 (Macro) stays At Risk from the prior macro snapshot. Two pillars now At Risk — the framework guidance is to monitor closely; a third At Risk or one Broken would trigger SELL consideration.

7. Scenarios (Updated)

8. What Would Change Our View

• Upgrade to BUY: Q2 NIM ≥ 4.5% AND Q2 ROE ≥ 19% AND mgmt FY guide reaffirmed AND NPL stable.

• Downgrade to SELL: Q2 NIM ≤ 4.0% OR NPL > 2.2% OR mgmt cuts FY guide OR Pillar 2/3 deterioration.

• Stay HOLD: Q2 NIM 4.2–4.4% AND COR ≤ 1.3% AND loan growth tracking 5–7% — fair value $36–40.

9. Watch Items / Catalysts

• BCCh meeting 2026-05-29: 25 bps cut now consensus base case → cost of funds relief.
• April CPI release (mid-May): re-acceleration toward 4% would boost UF NIM thesis.
• May IMACEC release (mid-June): does -0.34% become a trend or noise?
• Q2 2026 earnings (early August): the credibility test for mgmt's FY guide.
• Open Finance Phase 1 launch 2026-07-04: BCH digital readiness vs BSAC/BCI.
• NPL trajectory: Q1 print not yet disclosed; watch the next investor materials.

AgenticFinanceChile — Investigación con fines educativos e informativos. No constituye recomendación, asesoramiento financiero ni oferta para comprar o vender valores. Las tesis y precios objetivo reflejan estimaciones del autor sujetas a cambios sin previo aviso. Q1 2026 figures sourced from BCH press release dated 2026-04-30 and SEC Form 6-K filings.