Banco de Crédito e Inversiones ($BCI)

Good morning, everyone, and welcome to our first quarter 2026 conference call. I am Andrea Bala, Head of Investor Relations at BCI. It is good to see you all here today to review our progress during the first month of this year. Joining me today are José Ibaibarriaga, BCI CFO; Sergio Lehmann, Chief Economist; and joining us remotely, Mr. Jose Marina, City National Bank's CFO. We look forward to sharing our quarterly results and strategic advancements. In this slide, let me really walk you through today's agenda. We will begin with a macroeconomic overview of the key markets where we operate. We will then move on to review our financial results for the quarter both at the consolidated and local levels, including asset quality trends and risk indicators. Next, we will provide an update on City National Bank of Florida. To conclude with our closing remarks before opening the floor for Q&A. Please save your questions until the end of the presentation. Now I will pass the word to Sergio, who will elaborate on the outlook where BCI operates.

Thank you, Andreas, and welcome, everybody. Good morning. As you know, the global economy entered 2026 facing renewed volatility stemming by geopolitical tensions in the Middle East. This has put upward pressure on energy prices and led to a slight downward revision in growth projection. However, we expect this [indiscernible] to be transitory. The U.S., the economy closed 2025 with an average growth of 2%, and we have initiated this year at a similar written. The 2025 figure reflects an interplay between 2 major forces investment and productivity gains by -- driven by AI and the headwinds from the longest government shutdown in history in the second half of the year. The labor market remains subdued, while the unemployment rate have stable, this is primarily due to a decline in the participation rate over the last 5 months rather than the upgradation. Now that we have covered growth trends, let's discuss inflation and the evolution of U.S. monetary policy. USPI and rate regarding inflation, while headline CPI remained well above 2% due to energy costs, core inflation continued to moderate, providing some relief amid uncertainty. The Federal Reserve currently faces a policy crossroads with completing signals. However, at BCI Studios or research, we contend that the recent spike is mostly energy related and unlikely to [indiscernible] into our inflation to a significant extent. We anticipate the Fed was [indiscernible], is in cycle and adopt cautious wait-and-see approach in the near term. Furthermore, we don't rule out potential rate hikes triggered by a more prolonged inflationary shops as a consequence of higher geopolitical tensions. Now let's some [indiscernible] to key economic indicators for Peru on the next slide. The Peruvian economy delivered a solid performance in 2025 with an expansion of 2.4%, with representing a moderation from previous year due to a hand base of comparison and political uncertainty the overall balance remains positive. During the first quarter of 2026, activity has been hampered by the disruption in energy sector, international conflicts and adverse weather conditions. This factor pushed inflation up to 3.8%. However, we anticipate this to be transitory spiked. Consequently, the Central Bank has maintained the reference rate at 4.25%, a level consistent with the neutral monetary stance. Now let's move to the Chilean economy view. Chile closed 2025 with GDP growth of 2.5%, supported by resilient investment and private consumption. However, we have observed a softening in momentum over recent months. For 2026, we anticipate a slower growth pace contingent on a significant fiscal adjustment and a very weak first quarter, mainly due to supply constraints in primary sectors. Despite this, the domestic demand performance continued to grow near its potential. The labor market remains a key variable to watch as the economic recalibrate to these new fiscal conditions. Now let's consider how these factors are influencing inflation and interest rates. Inflation, which has previously converted to the target, which is 2%, is facing renewed pressure from rising oil prices. We expect inflation to remain above 4% for March of this year. Given this backdrop, the Central Bank of Chile remained cautious, holding the policy rate at 4.5%. We do not anticipate further cuts, antigeopoletical uncertainty, advantages and inflationary pressures stabilize. In the current market, the Chilean peso closed the quarter at 911 per [ dollar -- ] [indiscernible]. Global upward pressures were largely cautioned by copper prices, which are once again approaching to historical heights. We expect inflation to converge back to the target, but the early next year, that mean 2027. Market focus will be on the government's structural reform proposal currently under debate in the Congress. With that, I will now hand over to Jose Luis, who will continue with this presentation. Please, Jose?

Thank you, Sergio. Let's now move to our first quarter 2026 performance. In this first 3 months, we delivered strong fundamentals, highlighted by the consistent execution of our strategy. This quarter, net income reached $311 million, up 5.34% year-over-year, making us the leading banking in Chile in this period. Total assets stood at USD 92.3 billion, positioning NAS as the tenth largest bank in Latin America and the Caribbean. Regarding our financial performance, it's important to note that while our net interest margin has impacted by a lower inflation environment, we successfully mitigate these headwinds through robust growth in net fees. Our efficiency ratio improved by 480 basis points. Simultaneously, our risk model and credit performance continued to deliver strong results, with credit losses, expenses dropping 24.6%, underscoring our gold asset quality and prudent risk management. Moving to the balance sheet. Our loan book was supported by a commercial portfolio and accelerating momentum in the consumer segment. On the funding side, we maintained a healthy liquidity position, ensuring we are well positioned to support future growth. In terms of our strategic progress, we continue to strengthen both our local and international footprints. Assuming -- you are aware, we have taken the transformative step in our corporate structure by creating the new holding company, BCI Group. This the entity has been already legally constituted, and we are moving forward as planned, working closely with the regulatory approval process. Our international strategy is also delivering solid results. At City National Bank of Florida, we continue to make significant progress with project win diversifying our portfolio while improving our results. More broadly, the integrated value proposition across BCI, Miami, BCI Securities and BCI Peru provides a unique competitive advantage towards our clients. We continue to deepen our retail ecosystem through strategic loyalty partnerships, at the same time that [ Match ] Bank successfully escalated to 1.3 million current accounts and [indiscernible] BCI grew its loan portfolio maintaining risk levels. Let's take a closer look to our consolidated financial results for the first quarter 2026 compared to the same period last year. Net interest margin -- excuse me, net income reached $612.7 million, a 7.5% year-over-year contraction primarily driven by lower inflation, 0.29%. Our net fee income grew positively to $140 million. the 14.3% increase was fueled by high transaction volumes, the expansion of our grade and car business and the strong performance of BCI Asset Management. Additionally, we achieved a significant reduction in loyalty program costs following by the successful integration of our benefit programs. Our operating expenses decreased totally $376.8 million. We will address the details later in this presentation. Regarding trade loss expenses, we recorded a 24.6% year-over-year reduction to $75.9 million. This improvement reflects a higher quality loan portfolio. Our tax expenses increased driven by the lower impact of CPI on tax equity monetary correction. Finally, I would like to highlight the 7.1% growth in our total equity, reflecting our continued commitment to maintain a robust capital base. Let's start reviewing our operations in Chile. During the first quarter of 2026, total loans in our local operation grew 6.2% year-over-year. Our commercial portfolio continued to be the primary driver in this expansion, reaching $25.7 billion, up 7% compared to the first quarter 2025. This growth reinforces our strategic focus and consolidate our leadership position in this segment. We highlight our continued market share gain and leadership across key indicators including serving as a primary treasury bank for our clients and for steering long-term relationships. As of February, the bank achieved a 17% market share in commercial loans. We are also pleased to see a strong traction returning to our consumer segment, which grew to USD 3.6 billion. This 8.3% increase was driven by double-digit expansion in Lider Bci and a solid retail banking base, allowing us to place the systems growth while maintaining a healthy risk profile aligned with our appetite. Finally, our mortgage portfolio delivered 3.9% year-over-year growth, in line with current macroeconomic conditions. As shown in the left of the slide, our local NIM was 3.62% in the first quarter 2026. While we experienced compression compared to the same period last year, primarily influenced by lower inflation during the first month of the year, we expect this trend to normalize in the coming months, as Sergio mentioned. This impact was positively offset by a fee generation, a key pillar of our strategy which increased 16.4% year-over-year. This expansion was driven by 3 primary factors. First, we saw higher transaction volumes and solid expansion across our retail base. Second, our core product lines, including credit cards, insurance and account management delivered a sound performance. And finally, it was boosted by a wealth management division BCI Asset management subsidiary, where our unique value proposition continued to capture market share. At the close of the quarter, we had an improvement in our local efficiency ratio, reaching 47.61%. This represents a 400 basis point improvement from the 51.61% we reported in the first quarter of last year. This efficiency gain is reluctantly supported by the following: our local operating expenses decreased by 17.4% year-over-year, benefiting mainly from the normalization of other expenses. Excluding this effect, our cost base still declined 1.5 nominal base, aligning with our efficiency efforts. This is a result of a more efficiency and simplified organizational structure and ongoing integration of major technological and core system projects. This performance validate the front loading strategy we discussed in previous quarter by proactively accelerating key investments and restructuring our cost base last year. we are now capturing operating leverage. Moving to the next slide, we can see our local liquidity and capital ratios, a 7.7% year-over-year growth in local deposits reflects a strategic focus in both retail and wholesale value propositions, strengthening our funding base across all segments. This expansion was primarily led by time deposits, which increased by 9.1% to reach USD 18.5 billion. while demand deposits rose by 5.6% to USD 11.8 billion. Our local liquidity coverage ratio remained strong at 228.8%, maintaining a significant buffer over regulatory requirements. Moving to our capital ratios. Our consolidated CET1 ratio stood at 10.81% as of March 2026. The 22 basis point year-over-year adjustment is mainly driven by robust loan growth and the final phase in the Basel III. While we face a transfer pressure from the market risk-weighted asset and interest rate volatility, we remain committed to our target of CET1 level of 11%. Finally, despite this transitional effects, total equity increased as we mentioned earlier, this performance effectively offset higher regulatory reduction, bringing our total capital ratio to 14.81%. This confirms BCI's solid capital position and sound balance sheet enable us to support our strategy. Now we will move to the risk indicator trends. At the close of March 2026, the total loan portfolio in Chile continued to grow in a healthy way, supported by a proactive risk management. Our local 90-day NPL ratio for the total portfolio stood at 1.82%. The total stock of provisions over loans reached 1.83% as March and 2.47% when we include additional voluntary provisions. This conservative strategy allowed us to maintain lost coverage levels we are well positioned to withstand potential volatility. Overall, the total consolidated portfolio presents stable risk indicators, confirming the high quality of our [indiscernible] underwriting and the strength of our balance sheet. Moving to commercial loans. The nonperforming loans ratio for this segment stood at 1.72%, it is important to note that a risk indicator showed showed improved performance, while we also recorded 2.6% quarter-over-quarter and 6% year-over-year growth. This reflects our conservative risk policy, focusing on clients with strong trade profiles. The total provision ratio for the commercial portfolio stands at 2.23%. This position is backed by higher levels of color litigation with -- which protect us future unseen risk. The nonperforming loan ratio for the mortgage portfolio closed to 2.3%, reflecting a broader industry-wide trend. This derived from the interest rate still remained above 2019 levels, which alongside a macroeconomic environment still on path to fully recover has impacted on activity and appetite. BCI's performance stands out relative to the system as an effect of our proactive risk management and prudent original origination policies. Our portfolio maintained sound loan-to-value ratios, and we continue to monitor this segment closely looking ahead. Moving to the Consumer segment. The 90 days nonperforming loans ratio stood at 2.59%. This portfolio also showed a relative improvement compared to previous quarter supported by healthy portfolio growth. Breaking down the portfolio as of March, the nonperforming loan ratio for Lider Bci is 3.97%, down 2 basis points quarter-over-quarter, while the BCI consumer portfolio remained in 2.37%. At BCI, we are targeting affluent segment via Lider Bci will leverage the new origination model we have implemented. Given the nature of the business, we maintain our most conservative provisioning levels with a total provision to loan ratio of 10% and a nonperforming loan coverage ratio of 28%. This prudent coverage policy provides us with a solid foundation to continue our retail growth program. Also, I would like to quickly address the favorable evolution of an international corridor we have built on the progress we have made. BCI Miami remains as a key enabler between Latin America clients and U.S. assets reached USD 7 billion, up 21% year-over-year, while assets under management grew 31%. BCI Peru, our operation here is scaling rapidly across the corporate and large businesses segment with asset growth growing to USD 1.5 billion. BCI Security, a broker dealer now manage over $2.4 billion in assets, delivering positive results driven by a strong performance in the Institutional and Wealth Management segment. Together, this integrated platform allows us to support a corporate, institutional and high net worth clients across borders, consolidating a unique value proposition in the region. I will now hand it to Jose Marina, City National Bank's CFO to detail the performance of our U.S. subsidiary.

Thank you, Luis. Good morning, everyone. My name is Jose Marina, and I am the CFO of City National Bank. I am pleased to be here this morning to share highlights of our strong first quarter performance. As I will discuss in more detail, our earnings continued their upward trajectory, reflecting disciplined execution of our strategy, including solid loan growth fully funded by robust deposit growth. In particular, I would like to point out the following highlights. Our loan balances increased by $522 million or 3% quarter-over-quarter and by $1.4 billion or 8% year-over-year. We continue to focus on high-quality loans with strong spreads and solid depository relationships. Our client deposits grew by $710 million or 4% quarter-over-quarter and by $842 million or 4% year-over-year, including DDAs, growing $501 million or 10% compared to the previous quarter. It is important to highlight that deposit growth outpaced loan growth this quarter, reinforcing our strategy to position City National as a leading deposit gathering bank in the state of Florida. Our net interest income and margin continued to expand for the ninth consecutive quarter, NIM increased by 42 basis points year-over-year and 8 basis points quarter-over-quarter and is at the highest level in nearly 4 years. Our earnings continued their strong trends, growing $29 million or 52% year-over-year and by $13 million or nearly 18% quarter-over-quarter. Our ROE, excluding goodwill amortization, improved to 11.84% in Q1. These results demonstrate our market reputation built over the last 80 years, our relationship-centric model, strong culture and continued success and executing our key strategic vision. Our client deposits increased by $710 million or 4% in the fourth quarter, including a $501 million or 10% increase in DDA balances. It is important to highlight the deposit growth surpassed the loan growth. Additionally, our client deposit growth outperformed the banking industry by nearly 2x. I would like to highlight that $250 million or about half of our DDA growth for the quarter was due to a temporary inflow at the very end of the quarter that will substantially exit during the second quarter in the ordinary course of business. Our DDA growth, excluding this inflow is still robust at about $250 million or 5% quarter-over-quarter. Our strong client deposit growth enabled us to reduce broker deposits by $581 million in the quarter, reducing reliance on wholesale funding sources. Furthermore, our quarterly cost of client deposits decreased by 15 basis points compared to the previous quarter. Noninterest-bearing deposits represent a healthy 24% of our total deposit base. Our assets exceeded $28 billion mark at the end of the first quarter with a strong loan-to-deposit ratio of 91%. We remain very well capitalized as evidenced by our total risk-based capital ratio and Tier 1 leverage ratio, which were 15.5% and 11.2% as of March 31, respectively. Additionally, the unrealized losses in our investment portfolio remained flat quarter-over-quarter. Total loans increased by $522 million or 3% quarter-over-quarter, as shown on the right-hand side of the slide. we have been highly selective when it comes to lending, not only from a credit risk and spread perspective, but also prioritizing deals with full relationships, which enhances long-term client value and earning sustainability. This quarter, our NPL ratio slightly increased by 8 basis points, reaching 79 basis points, but overall remains well below 1%. The NPL ratio decreased by 8 basis points also well below 1% of total loans. More importantly, our strong credit culture and low-risk appetite are reflected in our minimal net charge-offs of only 8 basis points for the quarter, significantly lower than the 20 basis point average among peers. ACL cartridge remained virtually flat, representing 1.1% of total loans. Turning now to our profitability. I would like to emphasize the positive trend in our net interest income after taxes which increased by $12.6 million or about 17.6% quarter-over-quarter and $28.9 million or 52% year-over-year. This growth was driven primarily by an expansion in net interest margin, which increased by 8 basis points quarter-over-quarter to 2.97% in the quarter, and increased by 42 basis points year-over-year. As a result, net interest income increased by $36.1 million or 22% year-over-year. Fee income also increased by $3.9 million or 13.7% year-over-year, reflecting continued progress in our efforts to diversify and enhance our fee base. These factors contributed to operating income increasing by $40 million or 21% year-over-year. This resulted in an ROA, excluding goodwill amortization, of 1.25% for the quarter, an improvement of 38 basis points year-over-year and an ROE, excluding goodwill amortization of 11.8%, which is 267 basis points higher year-over-year. We have shared with you over the last few calls, we have implemented several strategic actions through Project Win to further strengthen our balance sheet and accelerate earnings growth. Additionally, we are focused on expanding our product offering to increase cross-sell and augment our fee generation. Lastly, we continue to drive organic net interest margin expansion through disciplined pricing across both loans and deposits. On the left side of this slide, you can see our net income increased by $13 million or 18% quarter-over-quarter. This improvement was primarily driven by a $2 million increase in net interest income, reflecting an 8 basis point expansion in our net interest margin as we continue to maintain discipline on both loan pricing and deposit costs. Fee income increased by $3 million quarter-over-quarter, reflecting continued progress in our fee strategy, which we will discuss further shortly. Additionally, noninterest expense declined by $7 million mainly driven by higher professional fees incurred in the prior quarter. Last quarter, we recorded a $5 million loss on the sale of securities associated due to a small repositioning of our investment portfolio. This was offset by $5 million of higher loan loss provisions, primarily reflecting strong loan growth in Q1. On the right side, we show our net income improved by $29 million or 52% year-over-year. This increase was primarily driven by $36 million of additional net interest income as our margin expanded by 42 basis points. Fee income also contributed positively, increasing by $4 million. Loan loss provisions were $6 million lower year-over-year, reflecting the continued strong performance of our loan portfolio. This was partially offset by $4 million of additional expenses particularly driven by investment in personnel as we execute Project win. This slide illustrates the expansion of our net interest income and margin for the last 9 quarters. Our net interest income increased by $2 million or 1% quarter-over-quarter, with our NIM expanding by 8 basis points to 2.97%. This growth was driven by a decline in our cost of funds of 13 basis points, partially offset by 6 basis points decline in the yield on earning assets. This NIM expansion is a result of several strategies executed during the last couple of years, which includes abstaining strong spreads on new loan originations and on renewals with the commercial spreads on new loan originations averaging around 300 basis points the last couple of years. It is also the result of our strong deposit growth, coupled with prudent deposit cost management in this uncertain rate environment. This strong core deposit growth enabled us to reduce our wholesale funding ratio to 18% at the end of the quarter as compared to 19% at the end of the year. One of our key strategic priorities is the expansion and diversification of fee income. This slide demonstrates the strong results we have already delivered in this regard. Non-treasury management fees have grown meaningfully as a share of total fee income increasing from 41% in 2022 to 52% in 2026, reducing reliance on any single category. Nontreasury management fees include services recently launched or currently being implemented such as insurance commissions, our treasury distribution desk, capital markets capabilities for wealth management and the sale of residential and SBA loans. This improved mix is further evidenced by fees as a percentage of average assets rising from 41 basis points to 46 basis points during this period. Overall, these trends demonstrate the successful execution of our strategy to build a larger and more diversified fee income base. As a reminder, Project Win is our 5-year strategic plan designed to deliver profitable, scalable and diversified growth. As this slide highlights, we are now in year 2 of execution, and our results demonstrated strong progress across all 5 strategic objectives. Starting with moderate growth and diversification, we continue to make deposits the centerpiece of our relationship-based strategy. In the first quarter, client deposits grew 15% on an annualized basis, outpacing the industry growth rate of 9%. This performance continues to position us as the leading deposit gathering bank in the state of Florida. Loans are growing at an annualized rate of 11%, fully funded by client deposit growth with improved portfolio diversification as C&I loans now represent 31% of total loans compared to 30% a year ago. Turning to enhanced profitability. Our performance reflects a meaningful progress ROE nearly reached 12%, supported by an 8 basis point expansion in net interest margin during the quarter. Strong DDA growth continued discipline on strong -- on deposit pricing and execution of new fee initiatives have further enhanced earnings diversification and overall profitability. From a scalability and digital experience standpoint, we are working on our enterprise-wide AI strategy. This includes credit delivery optimization, process automation, deployment of agent-enabled solutions to support pre and post client engagement meetings, enhancements of our client concierge Center and continued investment in data and analytics. Culture remains a core strength as we exercise and execute project win. We are seeing high levels of engagement and disciplined execution across the bank, supported by strong leadership. Finally, as we grow, we continue to strengthen our regulatory and risk management framework. Our 3 lines of defense ensure robust internal control that supports sustainable growth. In summary, these results demonstrate the continued momentum and scalability of Project Win and its second year of execution with our first quarter performance, reinforcing confidence in our ability to deliver sustainable, profitable and diversified growth in 2026 and beyond. With that, I will turn it back to the BCI team for additional remarks. Thank you for joining this morning.

Thank you, Jose. This first quarter 2026 has been a period of strong performance for BCI. We delivered a net income of $310 million, solidifying our position as the leading bank in Chile's banking system. Furthermore, with total assets of USD 92.3 billion we have achieved a major milestone by becoming the tenth largest bank in the region. Our balance sheet saw broad loan and deposit growth reflected strong momentum across all our business lines. This diversified model, our retail, wholesale finance division, along with Citi National Bank Insurance, we delivered diversified revenue stream and effective mitigate market volatility, a clear reflection of our strategy is the expansion of our fee income to $140 million, while maintaining some risk indicators. Alongside these efforts, we demonstrate our commitment to efficiency by reducing operational expenses and [indiscernible] 2.8% inflation, ending the quarter with a consolidated efficiency ratio of 46.52%. Ultimately, these financial results are approval of our core strategic pillars. Customer experience, prudent growth and solid copper culture. This focus is yielding tangible results, highlighted this quarter by the Net Promoter Score of 25 points. Lastly, I would like to emphasize how the market has been recognizing the value of our long-term strategy. Our market capitalization has increased to USD 14.7 billion, up 75.1% when compared to the same period of last year. Just before passing to a question-and-answer session, I would like to take a brief moment to announce that this will be my last conference call after 5 -- 15 wonderful years as CFO of BCI. I'm glad to share that I will be retiring next June 30. In BCI, we have a strong succession planning process. And I'm proud to announce that as the result of this process within our organization, [indiscernible] our current corporate financial control manager will be taken over my responsibilities. [indiscernible] has been with BCI since 2007, and brings valuable experience leading teams in accounting process, operational transformation and financial controlling. He possesses a broad integrate strategic vision, and I have no doubt that this deep knowledge of the business will continue to drive BCI's success. It has been a true privilege to interact with all of you through these calls, one-to-one meetings, conference and more. I look forward to this new stage of my life where we'll be able to enjoy more time with my family. Thank you very much. I will now pass to Andre to proceed with the Q&A session.

[Operator Instructions] Thank you, Jose Luis. And that concludes our prepared presentation. We are now ready to take your questions. Please, Ernesto, go ahead with the first one.

Jose, Luis, what are news? I wish you the best. We will miss you. Proverto, welcome. I hope you're the best in your new role, and I hope to see you soon. My first question will be on asset quality. We have seen a good evolution of the cost of risk during the first quarter. So how should we think about this ratio evolving during the next quarters, especially within the context of high inflation and the fiscal adjustment in the country. My second question is on the tax reform. Can you remind us your current expectation for the effective tax rate? And how should we think about it if the tax reform is implemented. And when do you expect the reform to be approved and to take place? And my last question is on your net income growth guidance. If we annualize the CLP 288 billion of the first quarter. I'm getting to around CLP 1.1 trillion. So this is around 16% year-over-year growth. It's above your guidance of 10% to 12%. So you are starting the first quarter with strong earnings. I'm just wondering if that could imply offside risk to your guidance or you feel comfortable getting to the high end of your guidance and maybe you can do an update in the next quarter. Just wanted to touch on that. And also, what will be the key variables behind it? I don't know it's -- the numbers you did in asset quality or the cost control discipline. Any color on that would also be helpful.

Thank you. Ernesto for me has been great to work with you, too. So thank you very much. The tax question will be answered by Sergio. Let me address the 2 that you mentioned. Regarding asset quality, we feel very comfortable with the levels that we are seeing today. We are not seeing any major changes except that in the event that the consumer segment cut and grow faster than expected, we could have more provisions, but these are good expenses. So in commercial mortgages in Retail segment, we feel very comfortable with the models that we have been implementing. The origination process that we have implemented, and we are seeing the impact of that strategy that have had for a couple of years. So -- and regarding the net income, yes, we are seeing that the fundamentals of the bank. The execution of our strategy is paying a lot of dividends. We are we are having a first quarter with strong fundamentals, and we believe that it will continue in the next 3 quarters. Having said that, Ernesto, we are not we are having a lot of volatility. Everyone is aware and said you mentioned what's going on today. So we believe that it's too early to change our guidelines for the net income for the future. But we are seeing strong margin. We have a full clear clearly divisions where we have diversified our revenue stream, our risk stream with retail being one wholesale, all the international division with City National Bank and Wealth Management and the finance division. So we have 4 divisions that created a lot of value. And I think that Roberto will have the responsibility to give you the guidance in June.

Ernesto, regarding to the tax reform, it's important to say, first of all, that it's part of a package that probably in our estimation, [indiscernible] increased the potential growth of the Chilean economy from 2%, which is the current estimation to between 3% and 3.5%. Probably, it's going to be a very good discussion in the Congress. As you know, we have today a very polarized Congress. But anyway, we think that probably we're going to have some political floor to be approved. It could be in the second part of this year. . As I said, it's going to be a very good discussion regarding to the tax reform, it includes basically 2 main elements. First of all, a reduction of the corporate tax from 27% to 23% in a gradual way. That means that probably just in 2029, we're going to have this new corporate tax rate, which is similar to the average of CT countries. And the other pant is to reintegrate the tax system in Chile, which could produce some important incentive for new investment. Today, the investment rate compared to GDP is close to 22%, 23%. But if we integrate the system, we could go to probably 25%, 26%, and this is the main probably driver for having a higher potential growth in the near future. As I said, it's going to be a root discussion. It's just starting. And we hope, and this is the estimation of the [indiscernible] also that in the second part of the year could be implemented, but I insist is going to be implemented in a gradual way.

Next question comes from Neha Agarwala from HSBC. .

Congratulations on the earnings and [indiscernible] will really be really sad to see you go, you really be missed. So as I go to my question, I wanted to understand how you see growth in the country for this year and for next year. I think more -- it's more in terms of the second half of this year and next year. What kind of growth numbers can we expect for the consolidated entity? And for the Chilean operations themselves. And we talked a lot about at the end of last year, [indiscernible] this year about costs and you have been delivering on improving the efficiency ratio. What are the other initiatives that you have in the pipeline for this year, next year? And where could the efficiency ratio going in your view, what is realistically possible for the bank to deliver in the next year or 2 years?

Serge, do you want to make some guidance of what we see the growth in Chile and the loan portfolios?

Sure. For this year, we're expecting growth rate from the economic perspective, I mean GDP, close to 2%, probably a little bit below that, 1.8%. We started the year with a low grow rate even some reduction, but that has been mainly related to primary sectors, I mean, mining and agriculture. . Domestic demand is growing around 2%, which is our current estimation for potential growth. And we're expecting some more dynamic economy in the second part of this year. That means more positive view for the second part and closing the year with, as I said, 1.8% grow rate. For the next year, we're expecting 2.5%. We are expecting that probably given the expectation of approval of this reform that we mentioned before, tax reform and other elements that could produce more solid institutionality for Chile. So we are expecting 2.5%. And even for the coming years, 3%, if their reform is approved as the government presented to the Congress. In terms of loans, given the elasticity and given the view that we have for the coming quarters, it's going to be close to 4% to 5% for the hold the system. And as you have heard, the dynamic from BCI perspective has been a little bit higher than that. So we're expecting an estimation for this year close to -- for total loans to 6% -- around 6%.

Having said that, we are estimating that in Chile, the loan portfolio will be growing around 6% to 7% in the U.S., 8% to 9%. And in Chile, the commercial portfolio is growing around 9 mortgages around 6%. And the consumer, as we mentioned, that is taking traction is going to be around 8%. So overall, 6% to 7% in Chile, 8 to 9 in City National Bank. Regarding the efficiency ratio, as we have been talking in the last conference call, one of the key initiatives, one of the main focus that we are working in BCI is to improve this ratio. We are working basically in every single investment and expenses that we already have, we are reviewing it. We are simplifying our operations. We are simplifying our structure. We are working and viewing all the opportunities that we do have and IT and operations. Actually, we have a complete and digital plan of each of the different opportunities that we are having. If you are seeing now the quick wins of decisions that we took in 2025 that we are capturing now, but you will continue seeing a lot of initiatives that we will continue capturing during this year, and it will continue in '27 and '28. As you are aware, we have a goal of 40% in 2028. The trend that we are having is good. We are in good path, and we continue delivering that. And hopefully, we will go better than that ratio. SP1 Thank you very much, Neha, for being always so active participating in these calls.

Next question comes from Daniel Mora from CrediCorp.

Thank you for the presentation, and thank you, Luis, for everything this year. I wish you the best in your retirement and also for welcome. Good luck and I hope to see you soon. I have just 2 questions. The first one is regarding NIM expectations in Chile, considering the new inflation scenario. And what do you expect to be the ROE for the second quarter, especially considering that it will be the quarter in which will concentrate on the highest impact of inflation. . And if you could provide the impact on the 2026 net income and profitability coming from this inflation -- new inflation scenario, that will be the first group. And the second one is regarding loan growth. You already mentioned the guidance for 2026, but I would like to know do you expect any deceleration or implementing a stricter loan origination policies given the inflation scenario, especially, for example, on leaders of BCI.

Thank you very much, Daniel. The return on equity, we maintained the same guidelines. I will give you the same answer that I gave before to [indiscernible]. It's too soon to change any guidance. There's a lot of things going on. So we will maintain the guidelines that we do have for this year for return on equity. Return on the loan growth for the next couple of years, we we do have a strategic plan for '27, '28. We are expecting loan growth in Chile between 6% to 7%. That could change and it could change regarding the impact and the speed of the reforms that Sergio mentioned, that could, in some way, accelerate the consumer loan portfolio. If that is the case, we will give you a new guidelines as soon as we have some specific of that, Again, it's too soon, we have to go through the reforms. Otherwise, the country will be growing at a potential of 2% and that give us the growth potential that we have been mentioned. The NIM -- the expectation of NIM that we do have is that it will continue with a positive trend. We have an -- we have some specific guidelines that it could be higher than what we have today. We are having a good traction in or fundamentals. But again, we are seeing that it's going to be what we have told to the market with OCD view Again, Daniel, who knows what's going on. We wake up every single day with different news. So too soon to tell you but we are seeing a positive trend from the next 3 quarters.

And next question today is coming from Lindsay Shima from Goldman Sachs.

And also just echoing the sentiments that Jose, Luis, you will be missed and welcome Roberto looking forward to getting to know you over the next couple of years. Just one quick question for me. Trying to understand the movements in capital First, do you still expect that around 100 bps impact after the restructuring when you spin off CNB? And then how quickly do you expect to recoup that? And then second, what is your internal target I believe last time, it was around 11%. So if you do expect the 100 bps, how do you expect to get back up there.

Thank you, Lisa, and thank you for your words. And we will make around with Roberto as soon as possible. The internal target will remain at 11%. As soon as we split City National Bank from BCI is going to have a small decrease in that target. But the the plan that we do have for the next couple of years, the growth of assets in Chile, the net income that we are projecting says that we are going to be generating much more capital than the growth that we are expecting for Chile. So the target will maintain at 11%. We will recover very soon, as soon as 1 year after this split is done. And the only thing that could change, Lindsay, is that as soon as we split the Basel III implementation could have some effect as we will not be as big from a systemic point of view as an complex as et cetera, et cetera, we couldn't have some positive effect, but we are not taking anything of that in consideration, and we believe that by 1 year after the split is done, we will come back with 11% CET1 ratio, we intend, we -- in Chile and in the U.S. So capital is not -- we are not seeing any issue at all for the next couple of years.

Next question today is coming from Jorge Perez from Itau [indiscernible].

Congratulations as always on your time about BCI and the successful track record you have built over the years. We will miss you, and Roberto, congratulations on the new position. So I have 2 questions. The first one is in Chile, specifically in the commercial portfolio. Because when we look at the data, we see BCI that continue to gain market share in the commercial segment. So just I want to understand, what is the reason behind that you keep outpacing the system? Are you growing more in corporate SMEs? How are the margin of this new credits? And my second question is on CMB in -- first, in margins because the first quarter was [indiscernible] 3%. So how much upside do you see for the coming quarters? And on fees because we're in a good acceleration in fees, how much is because of the wind project, how much is organically of the pre wind I would say. So that's all be from side.

In the commercial loan portfolio, first of all, yes, we are leading. We have a 17% market share, and will continue growing. This is basically a result of a strategy that has been executed in a very specific way, where we have been making a lot of investment. And today, we have the -- according to us and according to some analysts, the best website where we do have a strategic. We implemented with CFO app, CFO down, delivering value proposition for those 2 kind of customers, clients -- the basic thing that we are doing is that in the commercial wholesale as a whole, they make a strategic plan starting by Sergio's microeconomic view where the industries are growing, what kind of region they are growing and they go in a specific customer by customers and in order to deliver a strong value proposition that needs that. This is something really normal. What you are hearing is basically the same thing that anyone can tell you, but the detail and the deepness of the execution of this strategy has created that customers are preferring us and that is allowing us to lead the wholesale, the commercial industry and continue growing. We feel very proud of the achievement, and we are working heavily to maintain that leadership, trying to be really close and deliver all the customer needs. I don't know if the secret thing, but that is what the commercial team is doing so is -- we feel very proud about that. Thank you, you want to address the other one? No? Jose?

So regarding the margin, you saw that we had a 7 basis point increase quarter-over-quarter. We finished the first quarter at $297. I think for 2026, we expect to be right around 3%, a little bit above 3%, a few basis points. So we expect to continue to have margin expand that at the same rate that we've seen in the last several quarters. especially with rates not expected to come down the rest of the year. But we will continue to see some modest margin expansion. As I said, we expect to be in the low 3% range, right around 3% this year. As far as fees, a lot of the fee growth is as a result of project win and cross-selling. Obviously, we've been doing very well in treasury management. So whenever we bring in a new client, talk about a new loan. We want to make sure we have a full relationship and we cross-sell treasury management. We've been doing very well with our loan growth in terms of swap fees as well. We brought in a new person about a year ago in order to lead our sales efforts for back-to-back loan swaps, and that has resulted in additional swap fee income, we've been able to recognize. We've also been very active in Wealth Management. Our wealth management fees continue to increase. So there's no one thing is several items that we've been focused on that we've deployed last year or a couple of years ago, such as the origination and sale of SBA loans that has also been very successful for us. And we've also restructured our bank owned life insurance, as you may recall, back in 2024, and that has also helped increase our noninterest income. So it's been several things that we've been working on in order to expand our fee income, and we expect fee income to increase roughly 9%, 10% year-over-year.

So we have time for the last question. It's coming from Yuri Fernandes from JPMorgan.

I was able to mute myself now. So thank you. I'm just going to say thank you to Jose, Luis. It has been a great partnership in those many years. So Jose Luis will be missed. Thank you for all the road shows. We're taking [indiscernible] San Francisco, many good stores in New York, taking drinks. So thank you a lot. Also, Andres and good luck to Roberto for this. So I have a question on [indiscernible] interest. The U.S. GAAP for banks. When I look to BCI here on CMS. There is a 1 outlier here, another peer that had like a very good strong results in U.S. But you are doing almost 3x some of your peers on the large bank side. So my question is, what should we expect now that inflation is moving higher in Chile if the bank is widening the gap for OF, when we try to estimate just the delta of UF versus the results, it implies that your gap is getting wider. So if you can comment on how should we expect the second Q, the third Q? Like what is the strategy of the company to likely benefit from higher inflation in Chile.

Yuri, we have a gap that basically 100 basis point inflation impact around $50 million in the profit and loss statement, the unexpected inflation. So we are seeing that the next couple of -- especially this quarter that is coming will have a significant impact in our margin and the financial margin and the net income. So that is basically what's going on is 100 basis points and expected inflation has $50 million in net income. That is basically what we are seeing, and April was a lot of inflation, May 2. So April and May will be reflected in the net income.

With that, we conclude this conference call. And again, as Luis thank you very much for everything. We know so guys next conference call will be with Roberto [indiscernible] here. So again, thank you very much. Have a good one, and see you next time.

Thank you very much.