Bank Of Chile (BCH)

Price$42.69Cached quoteAs of 2026-09-04 16:23 UTC

AI: Overvalued

Price checkThe shares look expensive because investors already pay heavily for today’s unusually strong returns.

At the observed market level, the American depositary share trades at about 16 times trailing earnings and roughly 3.4 times book value, meaning shareholders’ net assets. The same ratios were about 9.5 and 2.0 in 2024. Using management’s 21%-22% expected return on shareholder capital and 4% long-run growth, 3.4 times book implies investors accept only about a 9% required return. At an 11% required return, the same assumptions support roughly 2.5 times book. That gap is too wide for a value-style margin of safety. StockAnalysis.com+1

Big pictureProfits remain strong, but recent gains lean partly on inflation rather than faster core growth.

Supplied SEC-derived figures show net income easing from CLP 1.45 trillion in 2022 to CLP 1.25 trillion in 2024, while earnings per local share fell from 14.31 to 12.36. First-half 2026 profit recovered only 4%, even though second-quarter profit rose 28.1%; the quarter benefited heavily from higher inflation on indexed assets. Free cash flow—cash left after running and investing in a business—is not a clean bank measure. Operating cash flow reached CLP 3.69 trillion in 2024 but has been very volatile as deposits and loans move. SEC+1

Business strengthA cheap deposit base, strong capital, and low bad-loan levels make the franchise unusually resilient.

Equity rose from CLP 5.43 trillion in 2022 to CLP 6.50 trillion in 2024. By June 2026, core common equity equaled 13.9% of risk-weighted assets and total capital was 17.6%. Loans more than 90 days late were 1.65% of total loans versus 2.39% for the industry. Demand deposits were CLP 14.50 trillion, equal to 36% of loans, supporting low funding costs. Shares stayed at 101.017 billion from 2023 through June 2026, so dilution has been absent; the bank instead distributed 84.7% of 2025 profit. SEC+4SEC+4SEC+4

What could change the storyThe valuation works only if high returns persist while credit costs stop worsening.

The bull case is durable 21%-22% returns on shareholder capital, roughly 6% loan growth, a net interest margin—a bank’s interest profit relative to earning assets—near 4.6%, and continued deposit leadership. The bear case is visible too: management raised expected credit-loss costs to 1.2%-1.3% of average loans from 1.1%-1.2%, while retail loans more than 90 days late rose to 2.01% from 1.83%. If inflation normalizes, a key second-quarter profit tailwind fades. A return toward earlier valuation multiples would materially reduce the shares’ value. SEC+1

AI: News

Strong quarter, softer outlookSecond-quarter profit jumped, but management also trimmed loan growth and raised expected credit costs.

On July 31, Banco de Chile reported second-quarter net income of CLP 390.6 billion, up 28.1%, and operating income of CLP 922.0 billion, up 20.9%. First-half profit, however, rose only 4%. The bank also booked CLP 50 billion of extra credit allowances, cut expected 2026 loan growth to about 6% from 7%, and raised its expected credit-loss ratio. The shares fell about 2% that session, but timing alone does not prove the results caused the move. SEC+2SEC+2

Large dividend approvedShareholders approved a very large payout, supporting income but leaving less profit to compound inside the bank.

On March 26, shareholders approved a dividend of CLP 9.9976 per local share, equal to 84.7% of 2025 profit. Each New York depositary share represents 200 local shares, so the gross payout was worth roughly 5% of the observed market value using the June exchange rate, before taxes and depositary fees. That supports income investors and confirms management is returning capital rather than issuing stock, but it also leaves a smaller retained-profit buffer for compounding and future loan growth. SEC+1

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Financial statements

	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
Revenue	$2.99T	$3.07T	$3.01T	$3.14T	$2.22T	$1.92T	$2.01T	$1.85T	$1.69T	$1.72T	$1.66T
Operating expenses	—	$1.13T	$1.12T	$992.34B	$873.41B	$870.35B	$902.25B	$839.71B	$784.36B	$787.05B	$726.28B
Operating income	—	$1.58T	$1.70T	$1.74T	$1.33T	$504.85B	$771.37B	$756.59B	$681.93B	$671.25B	$688.98B
Operating margin	—	51.58%	56.27%	55.26%	59.88%	26.26%	38.47%	40.98%	40.41%	39.08%	41.47%
EBITDA	—	$1.68T	$1.79T	$1.82T	$1.41T	$578.21B	$841.91B	$794.27B	$719.47B	$706.82B	$720.80B
EBITDA margin	—	54.66%	59.33%	57.95%	63.33%	30.08%	41.99%	43.03%	42.63%	41.15%	43.38%
Net income	$1.19T	$1.25T	$1.37T	$1.45T	$1.06T	$401.63B	$603.75B	$603.63B	$572.08B	$575.05B	$609.90B
Net profit margin	39.62%	40.70%	45.59%	46.05%	47.48%	20.89%	30.11%	32.70%	33.90%	33.48%	36.71%
Basic EPSper basic share	CLP 2,360.00	CLP 12.36	CLP 13.60	CLP 14.31	CLP 10.46	CLP 3.98	CLP 5.98	CLP 5.98	CLP 5.66	CLP 5.69	CLP 6.13
Diluted EPSper diluted share	CLP 2,360.00	CLP 12.36	CLP 13.60	CLP 14.31	CLP 10.46	CLP 3.98	CLP 5.98	CLP 5.98	CLP 5.66	CLP 5.69	CLP 6.13