Itaú Corpbanca
Q1 2017 Earnings Call Transcript

Published: 2 May 2017

[Operator:]

Good afternoon ladies and gentlemen. Thank you for standing by, and welcome to the Itau CorpBanca Conference Call on the First Quarter 2017 Financial Results. We have with us Mr. Gabriel Moura, Itau CorpBanca's Chief Financial Officer and Ms. Claudia Labbe, Itau CorpBanca's Head of Investor Relations. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advise you that this conference is being recorded today. We now pass the floor to one of your speakers to Ms. Labbe. Please go ahead.

[Claudia Labbe:]

Good morning. Thank you for joining our conference call for our first quarter 2017financial results. I would like to remind you that all figures are presented in Chilean peso unless otherwise stated and that our remarks may include forward-looking information and our actual results could differ materially from what is discussed. In order to allow for comparison with previous periods, historical pro forma data of the consolidated combined results of Itau Chile and CorpBanca deconsolidated in our subsidiary SMU Corp., which was no longer considered strategic as of June 30, 2016, and excluding non-recurring events, is presented in the management discussion and analysis presentation. The pro forma income statement for the period prior to the second quarter of 2016 has been calculated as if the merger occurred on January 1, 2015. The pro forma information presented here is based on the combined consolidated historical analytic financial statement of each of CorpBanca and Itau Chile as filed with the SBIF; the deconsolidation of SMU Corp unaudited financial statement as filed with the SBIF; and the exclusion of non-recurring events. The pro forma combined financial information included in the MD&A presentation is provided for illustrative purposes only and does not purport to represent what the actual combined results of Itau Chile and CorpBanca could have been if the acquisition occurred as of January 1, 2015. Finally, I would like to draw your attention to the changes that were introduced to the managerial income statement since the fourth quarter 2016 to include the adoption of managerial reclassification complementary to the tax effects. Please refer to page 7 of our report for further detail. Now, Mr. Moura will continue with the presentation.

[Gabriel Moura:]

Good morning everyone. Thank you for joining us for this first quarter conference call. Today we will be going through our results for the first three months of the year and I will give you an update on our digital strategy execution and what we plan for Chile and Colombia for this year. So to start let us move to Slide 4, where we begin briefly discussing our macroenvironment and how it affects our results. So as you can see in both Chile and Colombia we have been experiencing a cycle of lower and potential GDP growth. As a result, we have a more challenging environment for credit in both portfolio growth as well as for [Indiscernible]. While we expect a higher marginal GDP growth compared to 2016 we do not foresee any major reversal in credit growth trends. On the other hand our base case scenario for low interest rates have been materializing in the past few months and we expect interest rates to reach levels of 5.5% for Colombia and 2.5% for Chile. In the case of Columbia, we expect to benefit from this scenario as we go into this in the next slide. So if you look to Slide 5, we can see how important the downshift in the yield curve has been for Chile and Colombia in the past few months. As you remember, Colombia interest margins suffered with the rise in interest rates as the bank had a higher sensitivity of interest rates in its balance sheets. Since Legal Day One, we have been reducing interest rate sensitivity in Colombia, especially on the longer part of the yield curve as levels converge to historical levels. On the other hand, we maintained some of the exposure on the short term that we expect to help in recovery of some of the margin we lost in 2016. As we mentioned in previous calls, we have implemented a strong [Indiscernible] with Colombia [Indiscernible] with policies, procedures [Indiscernible] with that of Chile. If you move to the next slide, we can discuss the managerial results for the first quarter. So in Slide 6, we present our consolidated managerial results for the quarter. In the first three months of the year, we had an accounted net income of CLP24.4 billion that corresponds to a CLP26.3 billion of recurring net income, when we adjust for non-recurring events to provide a clear view of the underlying results by excluding some of the effects of the merger process that has recently completed earlier. You can find some of the more details of these events on our MD&A report that is available to you on our investor relations website. So if we move to Slide 7, now we can see how these results breakdown between our operations in Chile and Colombia. Please remember that we assign to our operation in Colombia any revenues or costs incurred by the bank in Chile due to its investment abroad. The main effect as you can see is the cost of hedging our investment in Colombian pesos to Chilean pesos due to the negative carry between the two countries. Therefore in Chile, as a stand-alone operation, we have ended the quarter with a CLP34.3 billion net income and in Colombia CLP7.9 billion net loss, a relevant recovery from the previous quarter in both countries, which was marked by an important adjustment in credit provisions that left us with a stronger balance sheet, as we discussed in our previous conference calls. If you move to Slide 8, we can now see the evolution of our ROE. As you can see, the evolution of our managerial recurring ROE, which we adjust for the exclusion of both goodwills and the other intangibles from business combinations as to improve comparability with our peers in our combined pro forma results. Under this view, we are running at a 6.4% ROE for our consolidated business and a 10.2% ROE for our Chilean operations on a stand-alone basis. We expect this ratio to gradually improve as we consolidate the merger and implement our strategies for the next three years. Going to page 9, we present our P&L of our bank in Chile for the first quarter. Here I would like to highlight that the slow dynamics in volumes still affect our interest rate and commission income as we have a more cyclical business mix than our peers. On the other hand, we had an improvement on financial transactions as we position our balance sheet for a low interest rate scenario that has materialized as we discussed a few moments ago. Moreover, we are beginning to see our loan loss provisions, especially in the large corporate segments, returning to a more normalized level. Finally, we are also seeing the benefit of the merger throughout our lower operating expense growth, especially when you compare to our own historical goals and to that of our peers. If you move to Slide 10 now, we can discuss our current portfolio growth in Chile. Here we see the evolution of our credit portfolio in Chile. Year-over-year we have 2.4% contraction in total loans as a result of diminishing investment projects from our corporate clients as well as a conservative approach to credit quality and price. We expect to enter 2017 with a portfolio growth in line with the overall market, but we do not expect to expand overall market share as we are focusing right now on profitability and value creation. So moving to Slide 11, we can highlight improvements of our underlying net interest margin, excluding volatility from inflation indexation and a gradual convergence to market average. Nonetheless, the main driver of our conversion will be through the changing business mix and deepening our client relationships. Both these movements will take some time and are aligned with the overall strategy. On the next page, we will discuss credit quality and provisions. Here on Slide 12, we do see the gradual normalization of our loan loss provisions to an annualized level of 1% of our average portfolio. Throughout 2016, especially in the fourth quarter, we have adjusted our portfolio to reflect credit events on the corporate segment, a more adverse macroeconomic scenario and a more conservative view on credit provision. We remain cautiously optimistic for loan loss provisions for the remainder of the year and on the next slide we will discuss some credit indicators. On Slide 13, we can see the trends on our main credit quality indicators. We continue to see a comfortably positioned portfolio with a marginal improvement over our ratios for the Cartera Deteriorada, which comprises the riskier part of our portfolio. In terms of NPL, we can see some increase in both our commercial and mortgage portfolio that we will discuss with you in more detail on the next slide. So on Slide 14, we see the evolution of our NPL creation in Chile that is calculated by the change in the balance of the NPL90 days in period plus the write-off to create a same basis comparison. Hence this number shows the net inclusion of NPLs in our balance sheet. Here we present the ratio of NPL creation to loans and give you a comparison of ratio to that of the Chilean financial system. On the commercial portfolio that is inherently more volatile, we saw an increase that is inline with the market and that has already been considered in our expectations and provisions. On the mortgage portfolio on the other hand, we have seen some deterioration that is above market, especially in specific [Indiscernible] that we are working to normalize. If you move to Slide 15, we can now see the evolution of our operating expenses in Chile. As you can see, because of the merger, we were able to reduce headcount by 10% since last year. As a result, personnel expenses have fallen by 8.3% year-over-year. On the other hand, administrative expenses have risen by 11% year-over-year, specifically due to rent expenses as we consolidated our administrative personnel in a new corporate office. Throughout this year, we expect the administrative expenses to grow at a lower pace as we exit and sell several of our old office buildings. In our estimates, we have already captured one third of our target synergies for the merger, and we continue to focus on opportunities to increase our efficiency. On the next slide, we will discuss Colombia’s financial statement. As you can see on Slide 16, our operation in Colombia faced [Indiscernible] an adverse macroeconomic scenario. Like our Chilean operation, Colombian operation is also more cyclical than our peers due to its business mix, and because of low corporate investment we do see a contraction in our credit portfolio that led to our lower net interest income. On the other hand, we do observe a lower level of credit provision expense compared to other quarters. However, due to some corporate events, provisions in the first quarter were marginally higher than our expectation. Moreover, operating expenses were higher in comparison to last year, especially due to Colombia's fiscal reforms and the increased IVA tax. If you move to the Slide 17, we can discuss Colombia’s loan portfolio. I think here the picture is a little different what we saw in our Chilean business is that we decreased the portfolio by 2.4% on a constant currency basis in the last year, and we are losing market share, specifically because as I mentioned before, our business here is more cyclical and we are more focused now on profitability, pricing and also [within] the process of merging the two banks. The expectations here in Columbia are not different from what we talked about in Chile is that we do see us growing as market – or mainly that we are not going to accrue some market share in Colombia this year as we are preparing the bank’s platform for growth now with the merger of our operations of [Indiscernible] and CorpBanca. If you move to Slide 18, we can discuss a little bit Colombia’s net interest margin. In terms of NIM, we are starting to see some improvement as interest rates begin to decline in Colombia and benefit through the repricing of our deposit. It is important to remind that we have been working with low exposure on the long end of the yield curve, but also have less the exposure in the short-term for interest rates as our expectations have decreased and now gradually materialized, we improved margins in our P&L. We do not expect margins to converge to the same levels that we saw in 2014, 2015 as interest rates are still higher than their peers. Nevertheless we do see a pickup in our NIM. If we move to the next slide, we can discuss provision on loan losses in Colombia that now amounted to CLP38.5 billion in the first quarter, or about 3% of our loan portfolio, a level that is still higher than what we expect. We see and expect some deterioration in NPLs for the SME portfolio, but do see a stabilization of both [corporate] levels and expect this to reasonably sustain throughout the year. As I mentioned, we saw some credit corporate advance in the first quarter in Colombia, and although the provisions were lower than the first quarter 2016 in the last quarter it was a little bit higher than what we expected. If you move to Slide 20, now we have a little bit of the next steps for the bank, and I brought you two different slides; one, is our agenda for digital banking and the second one as we always do is a little bit of the next steps of the merger process. So on Slide 21, I would like to share with you an update on our digital banking front that is absolutely central to the point of what we are doing for Itau CorpBanca, limiting how the successfully strategy that Itau CorpBanca implemented in Brazil. Although this is a [Indiscernible] construction that involves investments in its infrastructure systems and processes, we already implemented some first initiatives with some improvements in our digital channels in terms of [Indiscernible] and offers, and have started to see an improvement to use those channels for transaction, the most important part for us. And although, from a low level this is key to improving client relationships in moving the bank towards the levels of client satisfaction and efficiency in order to improve sustainable profitability in earnings. So in the next slide, we have a little bit of the next steps that we have for Chile and Colombia, so this is quite the same slide that we had on our previous conference calls. So you see the major milestones we have for Chile, the completion of the branch migration and client segmentation we expect to finish this in Chile by December 2017. We have roughly completed one third of the migration segmentation, and now by the end of the year we expect to finish it off. We now have [Indiscernible] focus on the top line on revenues and client satisfaction I think in the same way that we have a strong focus on merging the bank, adopting the same governance and risk procedures and policies. We are going to now more focus this year on the top line and growing revenues and also in client satisfaction. [Indiscernible] Chile for many years was a soft bank in terms of client satisfaction in the surveys of the Chilean market. We also are extremely focused on our digital strategy as we saw in the previous slide, [Indiscernible] we are beginning, we can see some low levels of penetration and so with some simple leverage product we were able to ship volume to digital distribution channel with higher satisfaction and also with lower cost. And finally, the implementation of the synergies that we have, I think was very important that we achieved 1/3rd of the milestone as we remember. We said to the market that we are going to generate roughly $100 million in synergies at the end of the third year. So, this is the end of the first year that we are now into, and afford into be our estimate, especially taking consideration the average expense growth of both things and also for the Chilean market. We think that we achieved 1/3rd of the target synergies. And we still continue working on this and is very specially important after the core migration at the end of this year, also to migrate the product session in order to achieve this operational synergies. As per Columbia, I think that we have a very important milestone now this month of May, which is introduction of the Itau brand for the first time in the retail market in Columbia. We are changing all the brands from Chilean to that of the Itau. Itau used to have a presence of Itau BBA in Columbia. But as a corporate investment bank in as our Itau brand. So, this is an important selection to the market. We have also the completion of the systems integration as we move all the clients from the CorpBanca legacy platforms in Columbia, should that have, now we branded to Itau. We expect to achieve that by the end of June 2018. And also, I think a very deep discussion of redefine the business model for wholesale or retail in Columbia, in order to generate a better business needs and used to do strategical strategy so on and so forth. This is given to discussions that we are starting to have. So, this is the presentation we have for you this morning and we would be glad to take in questions you might have.

[Operator:]

Thank you very much, indeed, Sir. [Operator Instructions] And your first question from Scotiabank comes from Jason Mollin. And your line is now open, Sir.

[Jason Mollin:]

Thank you, very much. My first question is related to the cost and the operating admin expenses that you mentioned that you had some additional cost, new corporate offices. What kind of improvement can we expect if you, I guess close or vacate the other offices? And what, you mentioned that the growth rate should be lower in cost going for admin expenses going forward. What kind of range should we have for that?

[Gabriel Moura:]

Hi, Jason.

[Jason Mollin:]

Hi.

[Gabriel Moura:]

I think that in terms of administrative cost, one thing that we did as I mentioned, we shifted everyone to the same building in order to do all the digital strategy, in order to successfully make a discussion, we've all the three, if you remember, Itau in CorpBanca, they upgraded in different and they have mainly four five different there be, why can't we add them. So, we've made an effort to put everybody in the same building, but on the other hand we are seeing we got to buying the beauties that we have. So, we are in the process of reaching out the old spaces that we have or some of them are our own. So, we're on the process of selling them. My expectations for administrative cost will be something along prior to the implementation of the synergies with the something around what is banking inflation in Chile in for this year. That may continue around for up to 5% in both. I think that some of the agenda and would be working with a consulting with an efficiency here, reaching mapping all the opportunities and we do see lot of opportunities in administrative expenses. I can give you an example with that 90% of the providers that we have for Itau or CorpBanca, they are unique. I mean that by have an opportunity there to be both providers in the operation and increasing the efficiency and volume to one of the providers. But this is something that we are able to achieve as we migrate from one platform to the other. So, this is a discussion that we have so far. I think that in terms of the synergies though, we talked about a 1/3rd and we'd seen 2/3rd for the next two years. I do expect that most of the synergies now come from the administrative part. Personal cost are robustly 50% of what we have. So, I think that in terms of the reductions we did a huge effort. And now that if we see from the equation, is all the things that we can do in administrative expenses as we move out of the old one and also to implement unique providers for both of them.

[Jason Mollin:]

Gabriel, thank you. And maybe just a second question on recurring return on equity on a consolidated basis. And perhaps even on Chile which would therefore you'd be telling us what you're saying for Columbia. But we saw 6%, we know that we have another two years to capture at least on your expectations the full amount of the synergies. I mean, what is the you talked about previous range is much higher in terms of target ROEs, are those the same? What's your expectation for long-term returns on a consolidated basis and for Chile?

[Gabriel Moura:]

For Chile, now, we didn’t change our plans in terms of what we do could is possible for our win. So, what we are aiming for Chile, you should take the history of both banks. You're going to see that they achieve those that kind of probability years before. I think that adjusting for good and even tangibles. For Chile, I think it's possible to run the 216 in 18% based on the markup that we now had with the prices that we now had with the amount of capital that we now have. So, on the plain comparison basis, what we have to order then. On a consolidated basis, I think that I do expect Columbia to convert to a lay of what we in the next few years, something around 10% to 12%. Because of the stay of the bank in Columbia do not see the bank running at a much higher pace, especially because I think it would take a little bit more time in order to gain this scale and now so to see all the platforms that we need in Columbia. So, I am thinking about in separate ways. I would say that something what we are aiming for is something around 16% to 18% for Chile and 10% to 12% for Columbia.

[Jason Mollin:]

Very helpful. Thank you, Gabriel.

[Operator:]

Thank you, very much. Now from Scotiabank your next question comes from Diego Ciccone. And your line is now open, Sir.

[Diego Ciccone:]

Hi, good morning. Thanks for the opportunity to ask questions. I just wanted to get a sense of credit quality, the cost of risk has significantly decreased quarter-on-quarter mainly because of the extraordinary provisions that you made in the last quarter. However, it's still a little bit higher than the historical pro forma level. So, I wonder what do you expect to be like a recurring or target level of cost of risk going forward.

[Gabriel Moura:]

Hi, Diego. If we take a look at the portfolio and let's talk about Chile. If you take a look at the portfolio which is historical levels were something around 50 basis point of cost of credit related to portfolio. We ran like last year as you mentioned because of all the credit advance and also the more provision that we did sending around 1.5%. Now we are running at 1%. I do not expect this to return to levels of 0.5%, specifically because of the macro environment that we now have. However, I think I feel that something a little bit lower than the levels that we are now at 1% makes sense for us. We don’t have any specific guidance in terms of long more provision. But I can tell you that it's in our expectations it's not going to be 50 basis points, it's not going to be 150 basis points, perhaps something that neither which is lower than we now, and currently that makes sense for us.

[Diego Ciccone:]

Great, thank you.

[Operator:]

Thank you very much, Sir. Now from Citi, your next question comes from the line of Nicolas Riva. And your line is now open, Sir.

[Nicolas Riva:]

Yes, thanks Gabriel. And thank you for taking my question. Just two questions. The first one on margins. We saw an expansion of then an interest margin both in Chile, despite the lower inflation and also in Columbia, the Central Bank already cutting rate. So, my question is what's your outlook for the net interest margin both in Chile and Columbia because everyone expect in Columbia the Central Bank to continue current rates. And the second one on taxes. So, if we look at the income tax line, it shows our tax benefit on a consolidate basis and it seems to be ruined by Columbia specifically. So, I wanted to ask for the driver, the tax benefit in the first quarter. Thanks.

[Gabriel Moura:]

Hi, Nicolas. Margin fee in Chile, Columbia and they have different readings. You see, Chile that we have increasingly better net interest margins, as we do see our cost of trending, we do see to the LIBOR of all our peers in each union. Now we have between 5 basis points and 10 basis points reigning over our competitors. So, what do you see is our gradually improving and I take a look at net interest range, we doubt inflation. This is something that we have implemented here in the asset liability matching both. Is that I think that we have a lower left expose inflation exposure than our peers. The Chilean financial system is very needed in the margin statistically are very needed and we are more active in terms of managing our inflation GAAP now. We have a lower exposure. So, we do see a pickup on when we will how we build the like to compensate this net interest margin without inflation. So, Chile's driven by our cost of funding. I do expect that this to get a little bit better as we move the mix. But the market is very competitive when we take a look at prices that we charge for the portfolio. They are aligned with the market, so I don’t know which opportunities for pricing on the client level. But we do see as I have a stock in terms of for the deposits that we have come to turn in etcetera. My cost of funding increasingly getting better on a margin. On Columbia, it's a little bit different. I think in Columbia as we discussed exhaustively, we have the exposure in interest rates in Columbia. The scenario that we had for Columbia was for Chile and Columbia, we were more dullish than the market. So, we prepared for a scenario where we had lower interest rates. I think that what we are seeing a front loading in terms of the central banks in Chile and Columbia lowering interest rates. That meets the line with the scenario that we have. We expect interest rates in Columbia to get a little bit better. If you take a look at that, we are now have in around 3.5%, which is in line with what we have on the first quarters of 2015 and at the end of 2015. So, I don’t think that we are going to go back to the LIBORs of 4.70 either what the other banks have in Columbia as our cost of funding Columbia is too higher than our peers. And we still have a mix in the process that costs us more especially on current account deposit to our peers. So, I think it's a gradual gradually improvement in margins but I don’t see a rapid convergence to our competitors levels. And I'm sorry, the second question you had was in taxes?

[Nicolas Riva:]

Taxes, yes.

[Gabriel Moura:]

And yes, taxes as you can see, we have because of the merger of Helm in CorpBanca in Columbia, we have generated the goodwill in other intangibles. And as we remember, this goodwill generated a tax benefit for us in Columbia. So, on that consolidated basis, I have an amortization of the differed tax asset in Columbia that does not affect the consolidated results. So, that was around $10 million for last year, we do expect to have the same benefit for this year. But probably this benefit we will aim by the end of 2018. So, you do see it, we fell lower effective tax rate. For last year, it was a little bit lower, we adjusted by the investment hedging respect which is important to adjust, but we do expect this movement to go throughout 2018, after 2018 probably we will convert to marginal effective tax rate that you have on the market.

[Operator:]

Thank you very much indeed. Now, before we move to the last question just let me pause once more for you. [Operator Instruction] So from Credicorp Capital our next question comes from the line of Sebastian Gallego and your line is now open.

[Sebastian Gallego:]

Hi, good morning. Gabriel and thanks for the presentation. I have three questions if I may. The first one going back to OpEx and the expectation going forward of our cost to income ratio what are your expectations on total OpEx growth for this year? I know you mentioned administrative costs, but I just want to get a sense on the total account. The second question is regarding Columbia. The question is when do you guys expect to see a breakeven in terms of profits within that operation. And the third one is regarding integration cost we saw very different numbers in this MDNA compared to the one released in at the end of 2016 non-recurring events for 2016 was around $62 billion at the end of 2016 and this quarter it appears to be around $23 billion. So I am just trying to get a sense what the integration cost was in 2016 and what can we expect for this year? Thank you.

[Gabriel Moura:]

Hi Sebastian, let me answer you the first question together with the third one. So operating efficiency, in terms of efficiency ratio the main problem we take a look at the efficiency ratio now with the bank is on the side of the revenues. So if you take a look at the revenue growth from the bank as a whole we are behind something around 12% of what we had in 2015. So when taking a look at the efficiency ratio I think that I am more impacted by the following revenues than I am on the size of cost. So at this moment for the bank I would like to take a look at the operating efficiency and also the ratio just taking a look at what is the growth of my expenses. So when you take a look at both numbers combined I think that what we are going to see this year is benefit on the side of the personal expenses so as year saw we have 7% reduction because of the hedge count, the first synergy that we have from the merger is by integrating management teams and taking a little hold of synergies that we have all the – for the different teams that we have so that's what the first part that we tackle. So with that we have ten roughly 7%, 10% less headcount, 7% less expenses. We think that we are going to maintain the trend, I don't see it reducing headcount in the same way the pass, I think we have the first effect of the merger. But now we are focusing as I discussed with Jason prior the administrative costs that we think that we are going to by reducing OpEx [indiscernible] around 4% to 5%. So if we take both numbers combined we kind of have 1% growth on this year. I think that we are going to be on par this year it’s going between 1% to 2%, it’s going to be the solo growth of our operating centers, I believe this is our expectations. But please keep in mind, I think that most important part is that when you take a look at the market as a whole because if you take a look at what was the cager for OpEx growth for the financial system in the last ten years in Chile it was something around 10% for both banks combined was something around 12%. So by growing 1%, 2% compared to 10% on the market, the market not end right now because all the other banks are taking a strong look in efficiency, nevertheless it's something around 5%. So we are gaining about 4% to 5% each year towards the market as we implement this. The integration cost that you mentioned I think this is a difference in criteria by talking to some analysts that he wanted us to be more clear of what their amortization cost that we had for the tangibles that were generated by the business combination. So the difference that what we saw in 2016 and what we are now disclosing is the cost that we had for the amortization of intangibles. So remember by integrating both banks we did the mark to market of the position of cost burns and recognized that as goodwill in other intangibles. Goodwill is not amortized but the other intangibles are. So we have roughly [indiscernible] of expenses in this.

[Sebastian Gallego:]

Sorry the connection is lost.

[Operator:]

Hello sir. Mr. Moura sorry. We won't be able to understand you sir. The line, the sound quality distorted. Could you try again please? Mr. Gallego, sir can you make any…

[Sebastian Gallego:]

Sorry but I can't hear you. The connection is lost.

[Operator:]

Mr. Moura can you hear me sir? Ms. Labbe, can year hear me ma'am? Can you speakers hearing me, turning to Operator. Mr. Moura can you hear me? Ms. Labbe are you still online? Sorry Mr. Gallego sir I don't know, we have lost the speakers. Can you be quiet for a moment please. Okay all standby just a moment. If everybody would please continue to standby. We should dial back up to the speakers for you. Please continue to standby and we will try again for the speakers. Thank you for holding. We are sorry to keep you waiting. We are just trying to reconnect the speakers. So if you could please standby.

[Operator:]

[Audio Gap] Thank you for continuing to hold. We do apologize for the delay. If you could stay connected we hope to have the speakers back with you very, very shortly. Thank you so much for your patience. Speakers will be back with you very, very shortly. Thank you so much. If you could stay connected we hope to have the speakers back with you very, very shortly. Thank you so much for your patience. We do not consider the relations, but these are mainly cash expenses and it's generated by the acquisition, cash acquisition of bank. So they are just based on the integration of both banks. So each of them are non-cash expense that we had through the other bank as [indiscernible] model in order to spend it. But these are not the integration costs also, they are not included within the [indiscernible] of the integration project for both banks. So in general integration cost what we had last year [indiscernible] dollars incubation cost most of them related to the integration of the headcounts that we took out of the back the movement that you saw this year that 60% of the integration costs, [indiscernible] related to personal expenses. We don't view the integration cost of the target that we had [indiscernible] for the merger and in 2017 we have a budget of 15 million probably going to consume this year through the merger. So the main difference here is the amortization of intangible probably of what we are seeing in the disclosure but with that we do not think integration cost. In terms of Columbia achievement, we were expecting Columbia to be up this year. We are going a little bit behind in our expectations in Columbia because of the [indiscernible] and also because of the lower growth than what we expected I think that might be on the negative side but very close to breakeven, I believe this is the expectation that we have for 2017. In order to achieve the target we have for Columbia will take two more years in order for us to just [indiscernible]

[Sebastian Gallego:]

Alright. Thank you Gabriel.

[Operator:]

Thank you very much.

[Gabriel Moura:]

We apologize that it got disconnected.

[Operator:]

And as there are no further questions for you Gabriel, I will pass the floor back to you for closing remarks.

[Gabriel Moura:]

Okay. Thank you so much everyone for one more conference call for Itau Corpbanca. We [indiscernible] more information and being transparent throughout our result. I would calculate on how [indiscernible] that we posted in our website that you’re going to see very detailed information and analysis for the bank and we [indiscernible] that we have on the next three months, on the conference call for the second quarter. So thank you so much for participating in I am sorry again for the disconnecting on the line. I am sorry.

[Operator:]

Thank you very much indeed. And with many thanks to both our speakers today that does conclude our conference. Thank you all for participating and you may now disconnect. Thank you Mr. Moura, Ms. Labbe.

[Claudia Labbe:]

Thank you.

[Operator:]

Thank you everybody for your patience. You have now rejoined by Claudia.

[Claudia Labbe:]

Not again. I cannot hear you anymore.

[Operator:]

No I can hear you loud and clear Claudia.

[Claudia Labbe:]

Okay. That I heard, but not previously.

[Operator:]

But I think your participants will be able to hear you.

[Claudia Labbe:]

Okay.

[Operator:]

Thank you, ma'am.

[Gabriel Moura:]

Hello?

[Operator:]

Yes if you could go ahead with your presentation please.

[Gabriel Moura:]

Yes. Sebastian are you on the line? Sorry we have a problem with our comps.

[Operator:]

[Operator Instruction] Sorry Gabriel I don't know whether he is disconnected but he is not coming back through with his question.

[Gabriel Moura:]

That's okay.

[Operator:]

One minute. He has just come through now. Sebastian your line is reopened. Thank you.

[Sebastian Gallego:]

Hi Gabriel. Sorry for the inconvenience your answer on OpEx was…

[Gabriel Moura:]

No problem. We have had a problem here Sebastian, I will let you…

[Sebastian Gallego:]

Yes. The OpEx question so – can you hear me?

[Gabriel Moura:]

Yes. I can.

[Sebastian Gallego:]

Yes. Sorry. I was saying that the OpEx question was answered, but unfortunately the integration cost that you mentioned, the connection was lost. You were explaining about the more amortization of intangible but the connection then got lost. So here anything…

[Gabriel Moura:]

[Indiscernible] we do not consider the relations, but these are mainly cash expenses and it's generated by the acquisition, cash acquisition of bank. So they are just based on the integration of both banks. So each of them are non-cash expense that we had through the other bank as [indiscernible] model in order to spend it. But these are not the integration costs also, they are not included within the [indiscernible] of the integration project for both banks. So in general integration cost what we had last year [indiscernible] dollars incubation cost most of them related to the integration of the headcounts that we took out of the back the movement that you saw this year that 60% of the integration costs, [indiscernible] related to personal expenses. We don't view the integration cost of the target that we had [indiscernible] for the merger and in 2017 we have a budget of 15 million probably going to consume this year through the merger. So the main difference here is the amortization of intangible probably of what we are seeing in the disclosure but with that we do not think integration cost. In terms of Columbia achievement, we were expecting Columbia to be up this year. We are going a little bit behind in our expectations in Columbia because of the [indiscernible] and also because of the lower growth than what we expected I think that might be on the negative side but very close to breakeven, I believe this is the expectation that we have for 2017. In order to achieve the target we have for Columbia will take two more years in order for us to just [indiscernible]

[Sebastian Gallego:]

Alright. Thank you Gabriel.

[Operator:]

Thank you very much.

[Gabriel Moura:]

We apologize that it got disconnected.

[Operator:]

And as there are no further questions for you Gabriel, I will pass the floor back to you for closing remarks.

[Gabriel Moura:]

Okay. Thank you so much everyone for one more conference call for Itau Corpbanca. We [indiscernible] more information and being transparent throughout our result. I would calculate on how [indiscernible] that we posted in our website that you’re going to see very detailed information and analysis for the bank and we [indiscernible] that we have on the next three months, on the conference call for the second quarter. So thank you so much for participating in I am sorry again for the disconnecting on the line. I am sorry.

[Operator:]

Thank you very much indeed. And with many thanks to both our speakers today that does conclude our conference. Thank you all for participating and you may now disconnect. Thank you Mr. Moura, Ms. Labbe.

[Claudia Labbe:]

Thank you.