Exhibit 99.1
F-1
Contents | Page | |||
F-3 | ||||
F-4 | ||||
Consolidated Statements of Other Comprehensive Income for the Period | F-5 | |||
F-6 | ||||
F-7 | ||||
F-9 |
Ch$ | = | Figures expressed in Chilean pesos. | ||
MCh$ | = | Figures expressed in millions of Chilean pesos. | ||
US$ | = | Figures expressed in US dollars. | ||
ThUS$ | = | Figures expressed in thousands of US dollars. | ||
MUS$ | = | Figures expressed in millions of US dollars. | ||
COP$ | = | Figures expressed in Colombian pesos. | ||
MCOP$ | = | Figures expressed in millions of Colombian pesos. | ||
UF | = | Figures expressed in Unidades de Fomento (a Chilean inflation-indexed, peso-denominated monetary unit that is set daily based on changes in the Chilean Consumer Price Index). |
F-2
ITAU CORPBANCA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
For the periods ended June 30, 2016 and December 31, 2015
(Figures in millions of Chilean pesos - MCh$)
Normal | Pro Forma | |||||||||||||||||||
Restated (*) See Note 2 | See Note 2 | |||||||||||||||||||
Note | 06.30.2016 | 12.31.2015 | 06.30.2015 | 12.31.2015 | ||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and due from banks | 5 | 1,854,662 | 477,809 | 1,731,347 | 1,482,566 | |||||||||||||||
Transactions pending settlement | 5 | 495,915 | 62,095 | 461,039 | 238,596 | |||||||||||||||
Trading securities | 343,832 | 17,765 | 411,093 | 341,664 | ||||||||||||||||
Receivables from repurchase agreements and securities borrowing | 94,448 | 10,293 | 72,604 | 34,967 | ||||||||||||||||
Financial derivative instruments | 1,365,315 | 227,984 | 1,106,766 | 1,236,899 | ||||||||||||||||
Loans and advances to banks | 6 | 853,773 | 99,398 | 513,943 | 551,227 | |||||||||||||||
Loans to customers | 7 | 21,034,749 | 6,713,983 | 20,647,410 | 21,168,340 | |||||||||||||||
Financial assets available for sale | 1,638,245 | 512,510 | 2,009,539 | 2,437,298 | ||||||||||||||||
Financial assets held to maturity | 330,588 | — | 281,195 | 170,191 | ||||||||||||||||
Investments in other companies | 8 | 15,727 | 2,475 | 18,032 | 17,123 | |||||||||||||||
Intangible assets | 9 | 1,586,744 | 51,809 | 775,852 | 717,073 | |||||||||||||||
Property, plant and equipment | 121,021 | 33,970 | 125,700 | 125,600 | ||||||||||||||||
Current tax assets | 114,200 | 7,732 | 27,926 | 12,179 | ||||||||||||||||
Deferred tax assets | 236,022 | 110,044 | 242,274 | 228,171 | ||||||||||||||||
Other assets | 627,615 | 137,454 | 455,826 | 600,058 | ||||||||||||||||
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TOTAL ASSETS | 30,712,856 | 8,465,321 | 28,880,546 | 29,361,952 | ||||||||||||||||
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LIABILITIES | ||||||||||||||||||||
Current accounts and other demand deposits | 10 | 5,054,222 | 981,349 | 5,025,740 | 5,412,968 | |||||||||||||||
Transactions pending settlement | 5 | 421,293 | 26,377 | 351,145 | 131,818 | |||||||||||||||
Payables from repurchase agreements and securities lending | 332,494 | 43,727 | 670,066 | 304,358 | ||||||||||||||||
Savings accounts and time deposits | 12,095,024 | 3,952,573 | 12,009,658 | 12,448,176 | ||||||||||||||||
Financial derivative instruments | 1,156,671 | 253,183 | 902,797 | 984,297 | ||||||||||||||||
Borrowings from financial institutions | 2,259,906 | 658,600 | 1,957,171 | 2,187,185 | ||||||||||||||||
Debt instruments issued | 11 | 5,095,875 | 1,504,335 | 4,483,504 | 4,731,889 | |||||||||||||||
Other financial liabilities | 28,537 | 20,733 | 31,842 | 35,208 | ||||||||||||||||
Current tax liabilities | — | — | — | — | ||||||||||||||||
Deferred tax liabilities | 140,897 | 96,448 | 288,540 | 242,188 | ||||||||||||||||
Provisions | 158,556 | 82,954 | 218,270 | 310,040 | ||||||||||||||||
Other liabilities | 519,492 | 52,480 | 636,015 | 283,684 | ||||||||||||||||
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TOTAL LIABILITIES | 27,262,967 | 7,672,759 | 26,574,748 | 27,071,811 | ||||||||||||||||
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EQUITY | ||||||||||||||||||||
Attributable to owners of the bank: | ||||||||||||||||||||
Capital | 13 | 1,862,826 | 781,559 | (*) | 1,862,826 | 1,862,826 | ||||||||||||||
Reserves | 13 | 1,294,108 | (40,280 | )(*) | 44,739 | (38,710 | ) | |||||||||||||
Valuation accounts | 13 | 10,395 | (944 | ) | 384 | (944 | ) | |||||||||||||
Retained earnings: | 17,341 | 52,168 | 69,464 | 153,053 | ||||||||||||||||
Retained earnings from prior periods | 13 | — | — | 26,448 | — | |||||||||||||||
Profit for the period | 13 | 34,682 | 104,336 | 138,926 | 306,107 | |||||||||||||||
Less: Provision for minimum dividends | (17,341 | ) | (52,168 | ) | (95,910 | ) | (153,054 | ) | ||||||||||||
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3,184,670 | 792,503 | 1,977,413 | 1,976,225 | |||||||||||||||||
Non-controlling interest | 13 | 265,219 | 59 | 328,385 | 313,916 | |||||||||||||||
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TOTAL EQUITY | 3,449,889 | 792,562 | 2,305,798 | 2,290,141 | ||||||||||||||||
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TOTAL LIABILITIES AND EQUITY | 30,712,856 | 8,465,321 | 28,880,546 | 29,361,952 | ||||||||||||||||
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The attached notes 1-25 are an integral part of these consolidated financial statements.
F-3
ITAU CORPBANCA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME FOR THE PERIOD
For the periods ended June 30, 2016 and 2015
(Figures in millions of Chilean pesos - MCh$)
For the quarter ended June 30, | For the six months ended June 30, | Pro Forma See Note 2 | ||||||||||||||||||||||||
Note | 2016 | 2015 | 2016 | 2015 | 06.30.2015 | 12.31.2015 | ||||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||
Interest and indexation income | 14 | 472,297 | ) | 136,589 | 594,075 | 227,696 | 849,247 | 1,796,420 | ||||||||||||||||||
Interest and indexation expenses | 14 | (277,228 | ) | (75,830 | ) | (345,657 | ) | (120,481 | ) | (442,334 | ) | (957,593 | ) | |||||||||||||
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Net interest and indexation income | 195,069 | 60,759 | 248,418 | 107,215 | 406,913 | 838,827 | ||||||||||||||||||||
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Fee and commission income | 15 | 61,136 | ) | 18,663 | 78,757 | 40,312 | 140,260 | 281,776 | ||||||||||||||||||
Fee and commission expenses | 15 | (14,379 | ) | (2,402 | ) | (16,933 | ) | (4,953 | ) | (28,278 | ) | (57,841 | ) | |||||||||||||
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Net fee and commission income | 46,757 | 16,261 | 61,824 | 35,359 | 111,982 | 223,935 | ||||||||||||||||||||
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Net financial operating income (loss) | 16 | 36,247 | ) | 7,247 | 43,708 | (4,092 | ) | 116,546 | 309,676 | |||||||||||||||||
Net foreign exchange transactions | 17 | (16,650 | ) | 4,323 | (21,409 | ) | 23,433 | (15,971 | ) | (74,909 | ) | |||||||||||||||
Other operating income | 6,415 | ) | 2,789 | 8,060 | 4,433 | 18,572 | 34,156 | |||||||||||||||||||
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Total operating income | 267,838 | 91,379 | 340,601 | 166,348 | 638,042 | 1,331,685 | ||||||||||||||||||||
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Credit risk provisions | 18 | (61,215 | ) | (12,968 | ) | (75,859 | ) | (23,411 | ) | (106,316 | ) | (209,783 | ) | |||||||||||||
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OPERATING INCOME, NET OF | 206,623 | 78,411 | 264,742 | 142,937 | 531,726 | 1,121,902 | ||||||||||||||||||||
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Payroll and personnel expenses | 19 | (74,894 | ) | (21,090 | ) | (97,062 | ) | (39,844 | ) | (140,941 | ) | (289,465 | ) | |||||||||||||
Administrative expenses | 20 | (62,823 | ) | (15,670 | ) | (84,762 | ) | (37,921 | ) | (140,679 | ) | (300,199 | ) | |||||||||||||
Depreciation and amortization | 21 | (19,005 | ) | (2,115 | ) | (21,848 | ) | (4,478 | ) | (26,137 | ) | (52,690 | ) | |||||||||||||
Impairment | 21 | (34 | ) | — | (34 | ) | — | (34 | ) | (332 | ) | |||||||||||||||
Other operating expenses | (9,579 | ) | (3,106 | ) | (13,649 | ) | (6,602 | ) | (18,869 | ) | (35,687 | ) | ||||||||||||||
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TOTAL OPERATING EXPENSES | (166,335 | ) | (41,981 | ) | (217,355 | ) | (88,845 | ) | (326,660 | ) | (678,373 | ) | ||||||||||||||
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NET OPERATING INCOME | 40,288 | 36,430 | 47,387 | 54,092 | 205,066 | 443,529 | ||||||||||||||||||||
Income attributable to investments in other companies | 8 | 348 | 152 | 348 | 164 | 1,424 | 1,526 | |||||||||||||||||||
Profit before taxes | 40,636 | 36,582 | 47,735 | 54,256 | 206,490 | 445,055 | ||||||||||||||||||||
Income tax expense | (10,720 | ) | (7,860 | ) | (11,679 | ) | (11,543 | ) | (53,118 | ) | (115,837 | ) | ||||||||||||||
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PROFIT FOR THE PERIOD | 29,916 | 28,722 | 36,056 | 42,713 | 153,372 | 329,218 | ||||||||||||||||||||
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Attributable to: | ||||||||||||||||||||||||||
Owners of the bank | 28,544 | 28,720 | 34,682 | 42,709 | 138,926 | 306,107 | ||||||||||||||||||||
Non-controlling interest | 13 | 1,372 | 2 | 1,374 | 4 | 14,446 | 23,111 | |||||||||||||||||||
Earnings per share attributable to owners of the bank: (expressed in Chilean pesos) | ||||||||||||||||||||||||||
Basic earnings per share | 13 | 0.07 | 0.250 | 0.101 | 0.371 | 0.271 | 0.597 | |||||||||||||||||||
Diluted earnings per share | 13 | 0.07 | 0.250 | 0.101 | 0.371 | 0.271 | 0.597 |
The attached notes 1-25 are an integral part of these consolidated financial statements.
F-4
ITAU CORPBANCA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME FOR THE PERIOD
For the periods ended June 30, 2016 and 2015
(Figures in millions of Chilean pesos - MCh$)
Note | 06.30.2016 | 06.30.2015 | ||||||||||
MCh$ | MCh$ | |||||||||||
PROFIT FOR THE PERIOD | 36,056 | 42,713 | ||||||||||
OTHER COMPREHENSIVE INCOME (LOSS) THAT WILL BE | ||||||||||||
RECLASSIFIED TO PROFIT IN SUBSEQUENT PERIODS | ||||||||||||
Financial assets available for sale | 11,438 | 2,394 | ||||||||||
Gain from currency translation of Colombian investment and New York | ||||||||||||
Branch | 10,259 | — | ||||||||||
Loss from hedge of net investment in foreign operation | (4,162 | ) | — | |||||||||
Loss from cash flow hedge | (2,209 | ) | — | |||||||||
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Other comprehensive income before taxes | 15,326 | 2,394 | ||||||||||
Income taxes on investments available for sale | (4,123 | ) | (620 | ) | ||||||||
Income taxes on variation in hedge of net investment in foreign operation | 1,338 | |||||||||||
Income taxes on variation in cash flow hedge | 580 | |||||||||||
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Income taxes related to other comprehensive income | (2,205 | ) | (620 | ) | ||||||||
Total other comprehensive income that will be reclassified to profit in subsequent periods | 13,121 | 1,774 | ||||||||||
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OTHER COMPREHENSIVE INCOME THAT WILL NOT BE RECLASSIFIED TO PROFIT IN SUBSEQUENT PERIODS | — | — | ||||||||||
TOTAL OTHER COMPREHENSIVE INCOME | 13,121 | 1,774 | ||||||||||
COMPREHENSIVE INCOME FOR THE PERIOD | 49,177 | 44,487 | ||||||||||
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Attributable to: | ||||||||||||
Owners of the bank | 46,021 | 44,483 | ||||||||||
Non-controlling interest | 13 | 3,156 | 4 |
The attached notes 1-25 are an integral part of these consolidated financial statements.
F-5
ITAU CORPBANCA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the periods ended June 30, 2016 and 2015 and December 31, 2015
(Figures in millions of Chilean pesos—MCh$—except for the number of shares)
Valuation Accounts | Retained Earnings | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of Shares | Capital | Reserves | Financial Assets Available for Sale | Hedge of Net Investment in Foreign Operation | Cash Flow Hedge | Income Taxes Related to Other Comprehensive Income (Loss) | Translation Adjustment | Subtotal Valuation Accounts | Retained Earnings from Prior Periods | Profit for the Period | Provision for Minimum Dividends | Total Attributable to Owners of the Bank | Non- Controlling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||
In millions | MCh$ | MCh$ | MCh$ | MCh$ |
| MCh$ | MCh$ |
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Equity as of January 1, 2015 | 115,040 | 344,569 | 337,837 | (1,834 | ) | — | — | 444 | — | (1,390 | ) | — | 85,693 | (42,847 | ) | 723,862 | 50 | 723,912 | ||||||||||||||||||||||||||||||||||||||||||
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(a) Adjustment for Banco Itaú Chile-CorpBanca | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination. Elimination of legal capital | — | (344,569 | ) | 344,569 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Banco Itaú | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) Adjustment for Banco Itaú Chile-CorpBanca | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination. Recognition of legal capital | — | 781,559 | (781,559 | ) | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
CorpBanca | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Increase or decrease in capital and reserves | — | — | 59,246 | — | — | — | — | — | — | — | (85,693 | ) | — | (26,447 | ) | — | (26,447 | ) | ||||||||||||||||||||||||||||||||||||||||||
Profit distribution | — | — | — | — | — | — | — | — | — | 26,448 | — | 26,448 | — | 26,448 | ||||||||||||||||||||||||||||||||||||||||||||||
Provision for minimum dividends | — | — | — | — | — | — | — | — | — | — | — | (4,955 | ) | (4,955 | ) | — | (4,955 | ) | ||||||||||||||||||||||||||||||||||||||||||
Adjustment for IFRS adoption by subsidiary | — | — | (373 | ) | — | — | — | — | — | — | (373 | ) | — | (373 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income for the period | — | — | — | 2,394 | — | — | (620 | ) | — | 1,774 | — | 42,709 | — | 44,483 | 4 | 44,487 | ||||||||||||||||||||||||||||||||||||||||||||
Movements generated by non-controlling interest | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
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Equity as of June 30, 2015 | 115,040 | 781,559 | (40,280 | ) | 560 | — | — | (176 | ) | — | 384 | 26,448 | 42,709 | (47,802 | ) | 763,018 | 54 | 763,072 | ||||||||||||||||||||||||||||||||||||||||||
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Equity as of January 1, 2015 | 115,040 | 344,569 | 337,837 | (1,834 | ) | — | — | 444 | — | (1,390 | ) | — | 85,693 | (42,847 | ) | 723,862 | 50 | 723,912 | ||||||||||||||||||||||||||||||||||||||||||
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(a) Adjustment for Banco Itaú Chile-CorpBanca | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination. Elimination of legal capital | — | (344,569 | ) | 344,569 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Banco Itaú | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) Adjustment for Banco Itaú Chile-CorpBanca | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination. Recognition of legal capital | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CorpBanca | — | 781,559 | (781,559 | ) | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Increase or decrease in capital and reserves | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Profit distribution | — | — | 59,245 | — | — | — | — | — | — | — | (59,245 | ) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Dividends paid | — | — | — | — | — | — | — | — | — | — | (26,448 | ) | 42,847 | 16,399 | — | 16,399 | ||||||||||||||||||||||||||||||||||||||||||||
Provision for minimum dividends | — | — | — | — | — | — | — | — | — | — | — | (52,168 | ) | (52,168 | ) | — | (52,168 | ) | ||||||||||||||||||||||||||||||||||||||||||
Adjustment for IFRS adoption by subsidiary | — | — | (372 | ) | — | — | — | — | — | — | (372 | ) | — | (372 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income for the period | — | — | — | 664 | — | — | (218 | ) | — | 446 | — | 104,336 | — | 104,782 | 9 | 104,791 | ||||||||||||||||||||||||||||||||||||||||||||
Movements generated by non-controlling interest | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
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Equity as of December 31, 2015 | 115,040 | 781,559 | (40,280 | ) | (1,170 | ) | — | — | 226 | — | (944 | ) | — | 104,336 | (52,168 | ) | 792,503 | 59 | 792,562 | |||||||||||||||||||||||||||||||||||||||||
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Equity as of January 1, 2016 | 115,040 | 781,559 | (40,280 | ) | (1,170 | ) | — | — | 226 | — | (944 | ) | — | 104,336 | (52,168 | ) | 792,503 | 59 | 792,562 | |||||||||||||||||||||||||||||||||||||||||
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Increase or decrease in capital and reserves | 57,009 | 392,813 | 52,168 | — | — | — | — | — | — | — | — | — | 444,981 | — | 444,981 | |||||||||||||||||||||||||||||||||||||||||||||
Itaú—CorpBanca business combination c) | 340,358 | | 688,454 1,282,220 | | — | — | — | — | — | — | — | — | — | 1,970,674 | 262,709 | 2,233,383 | ||||||||||||||||||||||||||||||||||||||||||||
Profit distribution | — | — | — | — | — | — | — | — | — | — | (104,336 | ) | 52,168 | (52,168 | ) | — | (52,168 | ) | ||||||||||||||||||||||||||||||||||||||||||
Provision for minimum dividends | — | — | — | — | — | — | — | — | — | — | — | (17,341 | ) | (17,341 | ) | — | (17,341 | ) | ||||||||||||||||||||||||||||||||||||||||||
Comprehensive income for the period | — | — | — | 8,241 | (4,609 | ) | (2,209 | ) | (919 | ) | 10,835 | 11,339 | — | 34,682 | — | 46,021 | 3,156 | 49,177 | ||||||||||||||||||||||||||||||||||||||||||
Movements generated by non-controlling interest | — | — | — | — | — | — | — | — | — | — | — | — | — | (705 | ) | (705 | ) | |||||||||||||||||||||||||||||||||||||||||||
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Equity as of June 30, 2016 | 512,407 | 1,862,826 | 1,294,108 | 7,071 | (4,609 | ) | (2,209 | ) | (693 | ) | 10,835 | 10,395 | — | 34,682 | (17,341 | ) | 3,184,670 | 265,219 | 3,449,889 | |||||||||||||||||||||||||||||||||||||||||
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(a) | Given the business combination (reverse acquisition under IFRS 3), the legal capital of the legal acquirer must be reflected retroactively and, therefore, this adjustment reflects the elimination for presentation purposes of the legal capital of Banco Itaú Chile (See Note 2). |
(b) | This adjustment is to recognize the legal capital of CorpBanca, for presentation purposes, thus fulfilling the information requirements in IFRS 3 described in letter a) above. |
(c) | For more information on the transaction, see Note 2, section “Business Combination of Banco Itaú Chile and CorpBanca”. |
The attached notes 1-25 are an integral part of these consolidated financial statements.
F-6
ITAU CORPBANCA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the periods ended June 30, 2016 and 2015
(Figures in millions of Chilean pesos - MCh$)
Note | 06.30.2016 | 06.30.2015 | ||||||||||
MCh$ | MCh$ | |||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Profit for the period before taxes | 47,735 | 42,709 | ||||||||||
Charges (credits) to income that do not represent cash flows: | ||||||||||||
Depreciation and amortization | 21 | 21,848 | 4,478 | |||||||||
Credit risk provisions | 18 | 84,762 | 27,574 | |||||||||
Provisions and write-offs for assets received in lieu of payment | 674 | — | ||||||||||
Impairment | 21 | 34 | — | |||||||||
Adjustment to market value of investments and derivatives | (80,569 | ) | 27 | |||||||||
Net interest and indexation income | (248,418 | ) | 6,726 | |||||||||
Net fee and commission income | (61,824 | ) | — | |||||||||
Net foreign exchange transactions | 21,409 | — | ||||||||||
Changes in foreign exchange rates of assets and liabilities | (35,656 | ) | — | |||||||||
Other charges (credits) that do not represent cash flows | 1,374 | (4,228 | ) | |||||||||
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Subtotal | (248,631 | ) | 77,286 | |||||||||
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Loans to customers and banks | (651,886 | ) | (99,875 | ) | ||||||||
Receivables from repurchase agreements and securities borrowing | 45,113 | 62,649 | ||||||||||
Trading securities | 277,699 | 30,093 | ||||||||||
Financial assets available for sale | 474,997 | (128,908 | ) | |||||||||
Financial assets held to maturity | (164,193 | ) | — | |||||||||
Other assets and liabilities | 206,671 | 8,902 | ||||||||||
Savings accounts and time deposits | (118,026 | ) | (215,378 | ) | ||||||||
Current accounts and other demand deposits | (187,079 | ) | 126,377 | |||||||||
Payables from repurchase agreements and securities lending | (469,851 | ) | — | |||||||||
Dividends received from investments in other companies | 348 | 24 | ||||||||||
Foreign borrowings obtained | 1,361,106 | (78,762 | ) | |||||||||
Repayment of foreign borrowings | (1,372,700 | ) | (74,982 | ) | ||||||||
Interest paid | (356,744 | ) | — | |||||||||
Interest earned | 586,638 | — | ||||||||||
Income taxes | (11,679 | ) | — | |||||||||
Repayment of other borrowings | (5,356 | ) | (1,483 | ) | ||||||||
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Net cash flows used in operating activities | (633,573 | ) | (294,057 | ) | ||||||||
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F-7
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Purchase of property, plant and equipment and intangible assets | (47,702 | ) | (7,070 | ) | ||||||||
Investments in other companies | 43 | — | ||||||||||
Proceeds from sale of assets received in lieu of payment | 1,277 | 472 | ||||||||||
Cash and cash equivalents from CorpBanca integration | 2 | 1,694,231 | — | |||||||||
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Net cash flows provided by (used in) investing activities | 1,647,849 | (6,598 | ) | |||||||||
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CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Debt instruments issued | 241,178 | 285,196 | ||||||||||
Redemption of debt issued | (5,233 | ) | (3,112 | ) | ||||||||
Capital increase | 13 | 392,813 | — | |||||||||
Dividends paid | 13 | (52,168 | ) | — | ||||||||
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Net cash flows provided by financing activities | 576,590 | 282,084 | ||||||||||
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Effect of changes in exchange rates | (8,339 | ) | — | |||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 1,582,527 | (18,571 | ) | |||||||||
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Cash and cash equivalents at beginning of period | 625,608 | 650,577 | ||||||||||
Cash and cash equivalents at end of period | 2,208,135 | 632,006 | ||||||||||
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Net increase (decrease) in cash and cash equivalents | 1,582,527 | (18,571 | ) | |||||||||
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The attached notes 1-25 are an integral part of these consolidated financial statements.
F-8
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
CONTENTS
F-9
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
NOTE 1 - GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Information – ITAU CORPBANCA and Subsidiaries
ITAU CORPBANCA is a corporation incorporated under the laws of the Republic of Chile and regulated by the Superintendency of Banks and Financial Institutions (SBIF). It was formed on April 1, 2016, from the merger of Banco Itaú Chile and CorpBanca (the latter is the legal successor)1.
After the merger, the ownership structure was as follows: Itaú Unibanco (33.58%), CorpGroup and subsidiaries (33.13%) and minority shareholders (33.29%). Itaú Unibanco is the Bank’s sole controlling shareholder. In this context, and notwithstanding the foregoing, Itaú Unibanco and CorpGroup signed a shareholder agreement that regulates aspects such as corporate governance, dividends, share transfers, liquidity and other matters.
ITAU CORPBANCA is headquartered in Chile, and it also has operations in Colombia and Panama. In addition, it has a branch in New York and a representation office in Madrid2. It has total consolidated assets of MCh$30,712,856 (MUS$46,566) and capital of MCh$3,449,889 (MUS$5,231). ITAU CORPBANCA offers universal banking products targeted toward large and medium-sized companies and retail customers. The merged bank is the fourth largest private bank in Chile, and a banking platform for future expansion throughout Latin America, specifically in Chile, Colombia, Peru and Central America.
The legal domicile of ITAU CORPBANCA is Rosario Norte N° 660, Las Condes, Santiago, Chile and its website iswww.itau.cl.
The consolidated financial statements for the year ended June 30, 2016, were approved by the Board of Directors on July 28, 2016.
i) History of the Merged Banks:
Banco Itaú Chile
Banco Itaú Chile was a banking corporation formed by public instrument on November 8, 2006, signed before Santiago notary José Musalem Saffie under the name BankBoston (Chile).
1 | The business combination was a “reverse acquisition” as established in IFRS 3, in which Banco Itaú Chile is the successor for accounting purposes and CorpBanca is the legal successor. For more information on the transaction, see Note 2, Section 2. |
2 | None of the markets where ITAU CORPBANCA and its subsidiaries operate have a hyperinflationary economy. |
F-10
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
BankBoston (Chile)‘s banking license was granted by the Superintendency of Banks and Financial Institutions in ruling 140 dated November 15, 2006, which also approved its bylaws and operations. The banking and operating license and a summary of its bylaws issued by the SBIF were recorded in the Santiago Commerce Registry in 2006 on page 47,742, number 34050 and published in Official Gazette No. 38,626 on November 29, 2006.
The entity’s name was changed from BankBoston (Chile) to Banco Itaú Chile, as recorded in a public instrument dated February 26, 2007, signed before Santiago notary José Musalem Saffie and approved by Ruling 14 dated February 26, 2007, from the Superintendency of Banks and Financial Institutions, which was recorded in the Santiago Commerce Registry in 2007 on page 8952, number 6551 and published in the Official Gazette on February 28, 2007.
CorpBanca
CorpBanca, the oldest private bank in Chile, was founded as Banco de Concepción in 1871 by a group of residents of the city of Concepción led by Aníbal Pinto, who would later become President of Chile. In 1971, control of the Bank was transferred to the Chilean Development Corporation (Corporación de Fomento de la Producción or CORFO). That same year, it acquired Banco Francés and Banco Italiano in Chile, which enabled it to expand to Santiago. Between 1972 and 1975, the Bank acquired Banco de Chillán and Banco de Valdivia. In November 1975, CORFO sold its shares of the Bank to private investors, who took control of the Bank in 1976. In 1980, its name changed to Banco Concepción.
In 1983, Banco Concepción came under the control of the Chilean Superintendency of Banks, until 1986 when it was acquired by the National Mining Society (Sociedad Nacional de Minería or SONAMI). At this point, the Bank took a special interest in financing small and medium-sized mining interests, increasing its capital and selling part of its high-risk portfolio to the Chilean Central Bank.
In 1996, a group of investors led by Álvaro Saieh Bendeck acquired a majority interest in Banco Concepción. Following this change of ownership, the new controller took significant measures to improve risk management, enhance operating efficiency and expand operations. These measures included strict provisioning, cost reductions, technological enhancements and increases in productivity. As part of these efforts, the Bank changed its name to “CorpBanca” and assembled a team of directors and executives with broad experience in the Chilean financial services industry.
Since 1998, the Bank has considerably expanded its operations both through organic growth and by acquiring the consumer loan divisions of Corfinsa de Banco Sud Americano (presently Scotiabank Chile) and Financiera Condell S.A. In this context, it also began international expansion efforts in 2009 by opening a branch in New York, followed by a representation office in Madrid in 2011. It then acquired the Colombian banking subsidiary of Banco Santander España during the first half of 2012, which is now called Banco CorpBanca Colombia S.A.
F-11
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
In 2012, CorpBanca began a regional expansion process by acquiring the Colombian banking subsidiary of Banco Santander España (completed in the first half of 2012), currently known as Banco CorpBanca Colombia S.A. and later in 2013 by acquiring Helm Bank, making it the first Chilean bank with foreign banking subsidiaries. This process was furthered by the recent merger of CorpBanca and Banco Itaú Chile and the upcoming business combination of its Colombian banking operations.
In line with its growth and international expansion strategies, CorpBanca Colombia merged with Helm Bank S.A. on June 1, 2014, taking control of the bank and its subsidiaries. In addition to acquiring up to 100% of the shares of Helm Bank and its controlled subsidiaries, this transaction also involved the direct acquisition by CorpBanca (Chile) of an 80% interest in Helm Corredor de Seguros S.A.
Since 2004, CorpBanca has been regulated by the United States Securities and Exchange Commission (“SEC”) because it is listed on the New York Stock Exchange (“NYSE”) through an American Depository Shares (“ADS”) program.
ii) ITAU CORPBANCA Today
As of May 31, 2016, according to the Chilean Superintendency of Banks and Financial Institutions, ITAU CORPBANCA was the fourth largest private bank in Chile in terms of loans, with a market share of 12.1%.
As of May 31, 2016, according to the Colombian Financial Superintendency, CorpBanca Colombia was the sixth largest bank in Colombia in terms of total loans and total deposits, as reported under local accounting and regulatory requirements. As of that date, it had market share in loans of 5.9%.
F-12
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
iii) ITAU CORPBANCA and Subsidiaries.
ITAU CORPBANCA must prepare consolidated financial statements that include its subsidiaries and its foreign branch, as well as investments in banking support subsidiaries, among others.
The Bank does business in the following domestic and foreign markets:
F-13
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
a) Accounting Periods Covered
These consolidated financial statements cover the periods ended June 30, 2016 and 2015 and December 31, 2015.
b) Basis of Preparation of the Consolidated Financial Statements
These consolidated financial statements have been prepared in accordance with the Compendium of Accounting Standards issued by the SBIF. The SBIF is the regulator that, in accordance with Article No. 15 of the General Banking Law, establishes that banks must use the accounting principles mandated by it and any matter not addressed therein, as long as it does not contradict its instructions, should adhere to international accounting standards and international financial reporting standards (IFRS) as agreed upon by the International Accounting Standards Board (IASB). Should any discrepancies arise between these accounting principles and the accounting criteria issued by the SBIF (Compendium of Accounting Standards), the latter shall take precedence.
The notes to the consolidated financial statements contain information in addition3 to that presented in the Consolidated Statements of Financial Position, the Consolidated Statements of Income for the Period, the Consolidated Statements of Other Comprehensive Income for the Period, the Consolidated Statements of Changes in Equity and the Consolidated Statements of Cash Flows. These notes provide clear, relevant, reliable and comparable narrative descriptions and details on these statements.
In accordance with Chapter C-2Interim Statements of Financial Position of the SBIF Compendium of Accounting Standards, the notes contained in these financial statements have been prepared in accordance with International Accounting Standard No. 34 Interim Financial Reporting, issued by the International Accounting Standards Board (IASB).
IAS 34 establishes that interim financial reporting is prepared mainly with the intent to update the contents of the most recent annual consolidated financial statements, placing emphasis on the new activities, events and circumstances that have occurred during the six-month period following the most recent period-end and not duplicating the information published previously in the most recent consolidated financial statements.
As a result, these financial statements do not include all of the information required in the complete consolidated financial statements prepared in accordance with international accounting and financial reporting standards issued by the IASB. Therefore, to properly understand the information included in these financial statements, they should be read together with the annual consolidated financial statements of Banco Itaú Chile and subsidiaries and of CorpBanca and subsidiaries for the immediately preceding period4.
3 | Note 2 “Financial Statement Presentation, Business Combination and Accounting Changes” includes a detailed explanation of accounting information for the current and comparative periods, as well as pro forma information to better understand and compare the merged banks. |
4 | Information available atwww.itau.cl. |
F-14
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
c) Consolidation Criteria
These consolidated financial statements include the preparation of the separate (individual) financial statements of the Bank and the diverse companies (controlled entities and subsidiaries) that are consolidated as of June 30, 2016 and 2015, and December 31, 2015, and include any adjustments and reclassifications necessary to standardize the accounting policies and valuation criteria applied by the Bank in accordance with the standards stipulated by the SBIF Compendium of Accounting Standards.
Intercompany balances and any unrealized income or expenses that arise from group intercompany transactions are eliminated in preparing the consolidated financial statements.
The same accounting policies, presentation and calculation methods applied in preparing the Group’s financial statements for the year ended December 31, 2015, were used in these consolidated interim financial statements, except for any possible amendments to the standards in letter tt) below.
For consolidation purposes, the financial statements of the New York companies have been converted to Chilean pesos at the exchange rate of Ch$659.55 per US$1 as of June 30, 2016 (Ch$638.47 per US$1 as of June 30, 2015, and Ch$710.32 per US$1 as of December 31, 2015). The Colombian subsidiaries have used the exchange rate of Ch$0.2262 per COP$1 as of June 30, 2016, (Ch$0.2454 per COP$1 as of June 30, 2015 and Ch$0.2266 per COP$1 as of December 31, 2015) in accordance with International Accounting Standard 21, regarding the valuation of foreign investments in economically stable countries.
The assets, liabilities, operating income and expenses of subsidiaries net of consolidation adjustments represent 26%, 29%, 36% and 52%, respectively, of the total assets, liabilities, income and expenses of consolidated operations as of June 30, 2016 (0%, 0%, 8% and 16% in December 2015 and 0%, 0%, 8% and 17% in June 2015).
Controlled Entities
Regardless of the nature of its involvement in an entity (the investee), ITAU CORPBANCA will determine whether it is a controller by assessing its control over the investee.
F-15
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
The Bank controls an investee when it has exposure, or rights, to variable returns from the investor’s involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor’s returns.
Therefore, the Company controls an investee if and only if it has all of the following elements:
a) | Power over the investee, i.e. existing rights that give it the ability to direct the relevant activities of the investee (the activities that significantly affect the investee’s returns); |
b) | Exposure, or rights, to variable returns from its involvement with the investee; |
c) | The ability to use its power over the investee to affect the amount of the investor’s returns. |
When the Bank has less than the majority of voting rights in an investee, but these voting rights are sufficient to give it the practical ability to unilaterally direct the investee’s relevant activities, the Bank is determined to have control. The Bank considers all relevant factors and circumstances in evaluating whether voting rights are sufficient to obtain control, including:
• | The size of the Bank’s holding of voting rights relative to the size and dispersion of holdings of other vote holders. |
• | Potential voting rights held by the investor, other vote holders or other parties. |
• | Rights from other contractual agreements. |
• | Any additional facts and circumstances that indicate that the investor has, or does not have, the current ability to direct the relevant activities when decisions need to be made, including voting behavior patterns in prior shareholder meetings. |
The Bank reevaluates whether or not it has control in an investee if the facts and circumstances indicate that there have been changes in one or more of the elements of control listed above.
The financial statements of controlled companies are consolidated with those of the Bank using the global integration method (line by line). Using this method, all balances and transactions between consolidated companies have been eliminated upon consolidation. The consolidated financial statements include all assets, liabilities, equity, income, expenses, and cash flows from the controller and its subsidiaries presented as if they were one sole economic entity. A controller prepares consolidated financial statements using uniform accounting policies for similar transactions and other events under equivalent circumstances.
F-16
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
CorpBanca also presents non-controlling interests in the Consolidated Statement of Financial Position, within the equity item “non-controlling interest”, separately from the equity of the Bank’s owners. Changes in a parent’s ownership interest in a subsidiary that do not result in a loss of control are equity transactions (i.e. transactions with the owners in their role as such).
An entity shall attribute profit for the period and each component of other comprehensive income to the owners of the parent company and the non-controlling interests.
The entity shall also attribute total comprehensive income to the owners of the parent company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
The following table details the entities over which ITAU CORPBANCA has the ability to exercise control and, therefore, the entities that it consolidates:
Ownership Interest | ||||||||||||||||||||||||||||||||||||||||
As of June 30, 2016 | As of December 31, 2015 | As of June 30, 2015 | ||||||||||||||||||||||||||||||||||||||
Country | Functional | Direct | Indirect | Total | Direct | Indirect | Total | Direct | Indirect | Total | ||||||||||||||||||||||||||||||
Currency | % | % | % | % | % | % | % | % | % | |||||||||||||||||||||||||||||||
Itaú Chile Corredora de Seguros Ltda. (5) | Chile | Ch$ | 99.900 | — | 99.900 | 99.900 | — | 99.900 | 99.900 | — | 99.900 | |||||||||||||||||||||||||||||
Itaú Chile Administradora General de Fondos S.A. (5) | Chile | Ch$ | 99.990 | — | 99.990 | 99.990 | — | 99.990 | 99.990 | — | 99.990 | |||||||||||||||||||||||||||||
Itaú BBA Corredor de Bolsa Ltda. (5) | Chile | Ch$ | 99.980 | — | 99.980 | 99.980 | — | 99.980 | 99.980 | — | 99.980 | |||||||||||||||||||||||||||||
CorpBanca Corredores de Bolsa S.A. (5) | Chile | Ch$ | 99.990 | 0.010 | 100.000 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
CorpBanca Administradora General de Fondos S.A. (5) | Chile | Ch$ | 99.996 | 0.004 | 100.000 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
CorpBanca Corredores de Seguros S.A. (5) | Chile | Ch$ | 99.990 | 0.010 | 100.000 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Itaú Asesorías Financieras S.A. (6) (10) | Chile | Ch$ | 99.990 | 0.010 | 100.000 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
CorpLegal S.A. (6) | Chile | Ch$ | 99.990 | 0.010 | 100.000 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Recaudaciones y Cobranzas S.A. (6) | Chile | Ch$ | 99.990 | 0.010 | 100.000 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
SMU CORP S.A. (6) | Chile | Ch$ | 51.000 | — | 51.000 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
CorpBanca New York Branch (6) | U.S. | US$ | 100.000 | — | 100.000 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Corpbanca Securities INC-NY (6) | U.S. | US$ | 100.000 | — | 100.000 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Banco CorpBanca Colombia S.A. (7) | Colombia | COP$ | 66.279 | — | 66.279 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Helm Corredor de Seguros S.A (7) | Colombia | COP$ | 80.000 | — | 80.000 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
CorpBanca Investment Trust Colombia S.A. (7) | Colombia | COP$ | 5.499 | 62.634 | 68.133 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Helm Comisionista de Bolsa S.A. (formerly CIVAL) (7) | Colombia | COP$ | 2.219 | 62.944 | 65.163 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Helm Fiduciaria S.A (7) | Colombia | COP$ | — | 62.944 | 62.944 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Helm Bank (Panamá) S.A. (8) | Panama | US$ | — | 66.279 | 66.279 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Helm Casa de Valores (Panama) S.A. (9) | Panama | US$ | — | 66.276 | 66.276 | — | — | — | — | — | — |
Associates and Banking Support Companies
Associates are entities over which the Bank has the capacity to exercise significant influence, but not control or joint control. Usually, this capacity manifests itself through an ownership interest equal to or greater than 20% of the entity’s voting rights and is valued using the equity method. According to the equity method, investments are initially recorded at cost and subsequently increased or decreased to reflect the Bank’s share of the company’s net profit or loss and other movements in the investee’s equity. Any goodwill arising from the acquisition of a company is included in the investment’s book value, net of accumulated impairment losses.
5 | Companies regulated by the Chilean Superintendency of Securities and Insurance (SVS). |
6 | Companies regulated by the Superintendency of Banks and Financial Institutions (SBIF). |
7 | Companies regulated by the Colombian Financial Superintendency, which has a supervision agreement with the SBIF. |
8 | Company regulated by the Superintendency of Banks of Panama. |
9 | Company regulated by the Superintendency of the Securities Market of Panama. |
10 | On April 21, 2016, the corporate name of Corpbanca Asesorías Financieras S.A. was changed to Itaú Asesorías Financieras S.A. (See Note 3 Material Events). |
F-17
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Other factors considered in determining whether there is significant influence over an entity include representation on the Board of Directors and the existence of material transactions. Such factors could determine the existence of significant influence over an entity, despite holding less than 20% of the voting rights.
Investments in Other Companies
Shares or rights in other companies are those in which the Bank does not have control or significant influence. These interests are recorded at purchase value (historical cost).
Joint Arrangements
Joint arrangements are contractual agreements through which two or more parties undertake an economic activity that is subject to joint control. Joint control exists when decisions about the relevant activities require the unanimous consent of the parties sharing control.
In accordance with IFRS 11“Joint Arrangements”, an entity shall determine the type of joint arrangement in which it is involved by classifying it as either:
• | a joint operation, or |
• | a joint venture |
A joint operation is a joint arrangement where the parties that have joint control over the arrangement have rights to assets, and obligations for liabilities, related to the arrangement. These parties are called joint operators.
A joint venture is a joint arrangement where the parties that have joint control of the arrangement have rights to the net assets of the arrangement. These parties are called joint venturers.
As of June 30, 2016 and 2015 and December 31, 2015, the Bank does not participate in any joint arrangements.
Structured Entities
In accordance with current regulations, the Bank must continuously analyze its consolidation perimeter, bearing in mind that the key criteria is the degree of control that the Bank has over a given entity, and not its ownership interest in its equity.
As of June 30, 2016 and 2015, and December 31, 2015, the Bank does not control and has not created any structured entities.
F-18
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Asset Management, Trust Business and Other Related Businesses
CorpBanca and its subsidiaries manage assets held in common investment funds and other investment products on behalf of investors and receive market-rate compensation for services provided. The resources managed belong to third parties and, therefore, are not included in the Statement of Financial Position.
In accordance with IFRS 10Consolidated Financial Statements, for consolidation purposes, the role of the Bank and its subsidiaries with respect to the managed funds must be evaluated to determine whether it is acting as Agent11 or Principal. This evaluation must take into account the following elements:
• | Scope of its decision-making authority over the investee. |
• | Rights held by other parties. |
• | Remuneration it is entitled to in accordance with the remuneration agreement. |
• | Decision-maker’s exposure to variability of returns from other interests that it holds in the investee. |
The Bank does not control or consolidate any trust businesses or other entities related to this type of business. ITAU CORPBANCA and its subsidiaries manage funds on behalf of and for the benefit of investors, acting solely as an Agent. The assets managed by Itaú Chile Administradora General de Fondos S.A., CorpBanca Administradora General de Fondos S.A., CorpBanca Investment Trust Colombia S.A. and Helm Fiduciaria are owned by third parties. Under this category, and in accordance with the aforementioned standard, they do not control these funds when they exercise their decision-making authority. Therefore, as of March 31, 2016 and 2015, and December 31, 2015, they act as agents and, therefore, no funds are consolidated.
d) Non-Controlling Interest
This represents the portion of the profits and net assets not owned by the Bank, directly or indirectly. It is shown as a separate item in the Consolidated Statements of Income and Comprehensive Income and within equity in the Consolidated Statement of Financial Position, separately from equity attributable to the Bank’s owners.
Non-controlling interest that corresponds to equity, which includes profit for the period and comprehensive income, of subsidiaries and controlled entities not directly or indirectly attributable to the controller.
11 | According to IFRS 10, an agent is a party primarily engaged to act on behalf of and for the benefit of another party or parties (the principal or principals) and, therefore, does not control the investee when it exercises decision-making authority. |
F-19
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
e) Goodwill
Business combinations are accounted for using the purchase method. The cost of an acquisition is measured as the sum of the consideration transferred, measured at fair value as of the acquisition date, and any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at its fair value or on the basis of its proportionate interest in the identifiable net assets of the acquiree. Acquisition costs incurred are charged to profit or loss and include administrative expenses.
When ITAU CORPBANCA and its controlled entities or subsidiaries (the Group) acquires a business, they evaluate the identifiable assets acquired and the liabilities assumed to determine proper classification and designation on the basis of the contractual conditions, economic circumstances and other pertinent conditions as of the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.
If business combinations are achieved in stages (which is not the case for ITAU CORPBANCA and subsidiaries), the acquirer’s preexisting interest in the acquiree measured at fair value as of the respective acquisition date, is remeasured at fair value as of the acquisition date on which control is obtained and the resulting gain or loss is recorded in earnings.
Any contingent consideration to be transferred by the acquirer shall be recognized at fair value as of the acquisition date.
Subsequent changes in the fair value of a contingent consideration that are not the result of measurement period adjustments will be accounted for as follows:
(a) | If the contingent consideration is classified as an equity instrument, it should not be remeasured and its final liquidation should be recorded in equity. |
(b) | Other contingent considerations that: |
(i) | are within the scope of IAS 39Financial Instruments: Recognition and Measurement should be measured at fair value as of the presentation date and any changes in fair value should be recognized in profit or loss for the year in accordance with IAS 39. |
(ii) | do not fall within the scope of IAS 39 should be measured at fair value as of the presentation date and any changes in fair value should be recognized in profit or loss for the year. |
Goodwill, defined as the difference between the consideration transferred and the amount recognized for the non-controlling interest in the net identifiable assets acquired and liabilities assumed, is measured initially at cost. If this consideration is less than the fair value of the net assets of the acquired subsidiary, the difference is recognized directly in profit or loss as of the acquisition date.
F-20
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
After initial recognition, goodwill is measured at cost less any accumulated impairment loss. After testing for impairment, goodwill acquired in a business combination is allocated, as of the acquisition date, to each of the Group’s cash generating units (CGU) that are expected to benefit from the combination, regardless of whether other of the acquiree’s assets or liabilities are allocated to these units.
When goodwill is allocated to a CGU and an operation within that unit is sold, the goodwill associated with that operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill that is derecognized under such circumstances is measured on the basis of the relative values of the operation disposed of and the retained portion of the CGU.
See Note 2 “Business Combination of Banco Itaú Chile and CorpBanca”.
f) Functional and Presentation Currency
The Bank and its Chilean subsidiaries have defined the Chilean peso, which is the currency of the primary economic environment in which they operate, as their functional and presentation currency. Therefore, balances and transactions denominated in currencies other than the Chilean peso are considered “foreign currency”.
The Bank converts the accounting records of its companies in New York and its Colombian subsidiaries from U.S. dollars and Colombian pesos, respectively, to Chilean pesos in accordance with SBIF instructions, which are consistent with IAS 21The Effects of Changes in Foreign Exchange Rates. All amounts in the Statements of Income, Comprehensive Income and Financial Position are converted to Chilean pesos using the exchange rate indicated in letter g) below.
The presentation currency for the consolidated financial statements is the Chilean peso, expressed in millions of Chilean pesos (MCh$),
g) Foreign Currency
The consolidated financial statements of ITAU CORPBANCA are presented in Chilean pesos, which is the Bank’s functional currency. Each subsidiary determines its own functional currency and the items included in the consolidated financial statements of each entity are measured using that functional currency. As a result, all balances and transactions denominated in a currency other than the Chilean peso are considered to be denominated in “foreign currency”.
Transactions in foreign currency are initially recorded by the Bank’s entities at the exchange rates of their respective functional currencies as of the date that these transactions first meet the conditions for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate of the functional currency as of the reporting date.
F-21
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
All differences that arise from settling or translating monetary items are recognized in the Statement of Income, except for monetary items that form part of the hedge for a net investment in a foreign operation. The accumulated difference is reclassified from equity to profit or loss when the hedge is settled.
The tax effects attributable to exchange differences on these monetary items are also recognized in other comprehensive income.
Non-monetary items in foreign currency that are measured on a historical cost basis are translated using the exchange rate as of the transaction date. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was measured. Gains or losses that arise from translating non-monetary items measured at fair value are recognized in the same way as gains or losses from the change in the fair value of the item. In other words, if recognized in other comprehensive income or in the income statement, the gain or loss will also be recognized in that respective statement, in accordance with IAS 21.
The Bank provides loans and receives deposits in amounts denominated in foreign currency, mainly U.S. dollars and Colombian pesos.
Balances in the financial statements of consolidated entities whose functional currency is not the Chilean peso are translated to the presentation currency as follows:
• | Assets and liabilities using the closing exchange rates for the financial statements. |
• | Income and expenses and cash flows using the exchange rate on the date of each transaction. |
Exchange differences produced from translating balances to Chilean pesos from the functional currency of consolidated entities whose functional currency is different than the Chilean peso are recorded as “translation adjustment” within the equity account “valuation accounts” until the corresponding item is derecognized, at which time they are recorded in profit or loss.
Net foreign exchange gains and losses include recognition of the effects of variations in the exchange rate of assets and liabilities denominated in foreign currency and exchange gains or losses for current or future transactions carried out by the Bank.
Assets and liabilities in foreign currency are shown at their equivalent in Chilean pesos, calculated using the following exchange rates: Ch$659.55 per US$1 as of June 30, 2016 (Ch$638.47 as of June 30, 2015, and Ch$710.32 as of December 31, 2015) for US dollars and Ch$0.2262 per COP$1 as June 30, 2016 (Ch$0,2454 as of June 30, 2015, and Ch$0.2266 as of December 31, 2015) for Colombian pesos.
F-22
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
The net foreign exchange loss of MCh$21,409 for the period ended June 30, 2016 (net gain of MCh$23,433 in June 2015) shown in the Consolidated Statement of Income, includes the effects of exchange rate variations on assets and liabilities in foreign currency or indexed to exchange rates, and the result of foreign exchange transactions conducted by the Bank and its subsidiaries.
h) Key Definitions and Classifications
For presentation purposes, assets are classified by nature in the consolidated financial statements into the following groups:
Cash and due from banks.Cash on hand and balances in current accounts and demand deposits with the Chilean Central Bank and other domestic and foreign financial entities. Amounts in overnight transactions will continue to be reported in this account as well as in the corresponding line items. If no special item is indicated for these transactions, they will be included in accounts that are reported.
Transactions pending settlement.Documents and balances in the course of collection for transactions for which, as agreed, payment is deferred for asset purchases or delivery is deferred for currency acquired.
Trading securities.The portfolio of trading securities and mutual fund investments that must be adjusted to fair value just like instruments acquired for trading.
Payables from buyback agreements and securities lending.Balances receivable from repurchase agreements and securities borrowing from transactions with domestic banks or other entities.
Derivative instruments. Financial derivative contracts with positive fair values, including independent contracts as well as derivatives that can and must be separated from a host contract. These may be for trading or hedge accounting purposes, defined as follows:
• | Trading derivatives.Derivatives that do not form part of a given hedge relationship where special hedge accounting is applied. |
• | Hedge accounting derivatives.Derivatives to which special hedge accounting is applied. |
Loans and advances to banks.Balances from transactions with domestic and foreign banks, including the Chilean Central Bank, other than those detailed above. This does not include debt instruments acquired from third parties for trading or investing.
F-23
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Loans to customers.Loans, leases and receivables arising from banking operations owed by persons other than banks, excluding receivables from repurchase agreements and securities borrowing and financial derivative contracts. This also excludes debt instruments acquired from third parties for trading or investing. It also includes provisions for loans and receivables from customers. These provisions are addressed in Chapter B-1 “Credit Risk Provisions” of the SBIF Compendium of Accounting Standards. The credit risk provisions referred to in Chapter B-6 “Country Risk Provisions” are included in liabilities (as are country risk provisions on assets other than loans to customers). Special provisions on foreign loans referred to in Chapter B-7 “Special Provisions on Foreign Loans” are also included in liabilities since, given their nature, they cannot be treated as complementary asset valuation accounts. “Foreign” loans refers to loans to direct debtors that do not reside in Chile.
Investment securities.These are classified into two categories: a) financial assets available for sale and b) financial assets held to maturity. The latter category only includes instruments which the entity has the ability and intent to hold to maturity. All remaining instruments are included in the available-for-sale portfolio.
Investments in other companies.Investments at equity method value and other non-consolidated investments, in accordance with letter c) “Consolidation Criteria”.
Intangible assets.Goodwill and identifiable intangible assets, net of accumulated amortization and adjustments.
Property, plant and equipment.All real estate and chattel property that have been acquired or built for CorpBanca to operate or provide services, including those acquired through lease agreements. This also includes leasehold improvements that should be capitalized.
Current tax assets.Provisional tax payments that exceed the income tax provision or other income tax credits such as training expenses or donations to universities. It also includes recoverable monthly provisional payments (PPM) for absorbed profits for tax losses.
Deferred tax assets.Debtor balances from the tax effect of temporary differences between the timing of book and tax basis recognition of income.
Other assets.Leased assets, assets received in lieu of payment or other assets not included in the line items described above.
For presentation purposes,liabilities are classified by nature in the consolidated financial statements into the following groups:
Current accounts and other demand deposits.All demand liabilities, except for term savings accounts, which are not considered demand accounts because of their special characteristics. Demand liabilities are defined as those whose payment may be required during the year (i.e. not including transactions that become payable the day following year end.)
F-24
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Transactions pending settlement.All balances for asset purchase transactions that are not settled on the same day and sales of currency that has not been delivered.
Payables from buyback agreements and securities lending.Balances payable from buyback agreements and securities lending from transactions with domestic banks or other entities.
Savings accounts and time deposits.Deposit balances for which a term has been established at which point they become payable. Time deposits that have matured and have not been paid or renewed are presented in current accounts and other demand deposits. Non-transferable time deposits in favor of banks are included in borrowings from financial institutions.
Derivative instruments. Financial derivative contracts with negative fair values, including independent contracts as well as derivatives that can and must be separated from a host contract. These may be for trading or hedge accounting purposes, defined as follows:
• | Trading derivatives.Derivatives that do not form part of a given hedge relationship where special hedge accounting is applied. |
• | Hedge accounting derivatives.Derivatives to which special hedge accounting is applied. |
Borrowings from financial institutions.Obligations with other domestic or foreign banks or the Chilean Central Bank, except for the obligations included in the accounts above.
Debt issued.Obligations with a) letters of credit, b) subordinated bonds or c) senior bonds.
Other financial obligations.Loan obligations with persons other than domestic or foreign banks or the Chilean Central Bank corresponding to financing or banking transactions.
Current tax liabilities.The income tax provision calculated based on the tax results for the year, less mandatory or voluntary provisional payments and other applicable credits. When the net balance is a debtor balance, it is included in assets.
Deferred tax liabilities.Creditor balances from the tax effect of temporary differences between the timing of book and tax basis recognition of income.
Provisions.This account includes: a) provisions for employee benefits and compensation, b) minimum dividend provisions, c) risk provisions for contingent loans and d) contingent and country-risk provisions.
Other liabilities.The Bank’s liabilities not specified above, including: a) accounts and notes payable, b) agreed-upon dividends payable, c) prepaid income, d) valuation adjustments for macrohedges and e) other liabilities not included above.
F-25
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For presentation purposes, equity is classified by nature in the consolidated financial statements into the following groups:
Capital.Paid-in capital, divided into a) paid-in capital and b) treasury stock.
Reserves.This account includes a) share premium paid, b) other reserves not from earnings and c) reserves from earnings.
Valuation accounts.Adjustments for valuations of available-for-sale investments, cash flow hedge derivatives, hedges of net investments in foreign operations and translation adjustments of foreign subsidiaries, including deferred taxes arising from those adjustments.
Retained earnings.Profits from prior years that have not been distributed and may be distributed as future dividends, profit for the year and minimum dividends (recorded within liabilities).
For presentation purposes, income and expenses are classified by nature in the consolidated financial statements into the following groups:
Interest and indexation income.Interest income and indexation of assets except for indexation to variations in exchange rates. Interest and indexation of instruments held for trading are included in net financial operating income.
Interest and indexation expense.Financial expenses for the year for interest and indexation (except indexation to variations in exchange rates) generated by the Bank’s operations.
Fee and commission income.Financial income for the year from commissions generated by services provided by the Bank.
Fee and commission expense. Expenses for commissions accrued during the year.
Net financial operating income.Gains or losses from financial transactions other than those included as interest, commissions and foreign exchange transactions.
Net foreign exchange transactions.Gains or losses accrued during the year on assets and liabilities in foreign currency or indexed units, gains or losses realized for purchases or sales of currency and gains or losses from derivatives used to hedge foreign currency.
Other operating income.Other income not included in the items above, except for those comprising the net balance of “income (loss) attributable to investments in other companies” or “income taxes”.
F-26
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Credit risk provisions.The net gain or loss from establishing and releasing provisions on the loan portfolios (loans and advances to banks and loans to customers) and contingent loans, as well as income from recovering previously charged-off loans. Charge-offs, even when they are not for the same reason for which the provision was established (debtor default), are always charged to established provisions and, therefore, are not reflected separately in an item.
Personnel expenses.Expenses accrued during the year for remunerations and compensation of employees and other expenses derived from the employee-employer relationship.
Administrative expenses.This item includes: a) general administrative expenses, b) outsourced services, c) expenses of the Board of Director, d) Advertising and e) Taxes, property taxes and other such contributions.
Depreciation and amortization.Includes depreciation of property, plant and equipment and amortization of intangible assets.
Impairment.Losses from impairment of financial instruments, property, plant and equipment and intangible assets. Impairment of loans is reflected in “credit risk provisions” while impairment of investments in other companies is included in “income (loss) attributable to investments in other companies”.
Other operating expenses.Other expenses not included in the items above, except for those comprising the net balance of “income (loss) attributable to investments in other companies” or “income taxes”.
Income (loss) attributable to investments in other companies.Income or losses recognized by investments in other companies, gains or losses on the sale of interests in these companies and the potential impairment of these assets.
Income taxes.The net expense or income generated by: income tax determined in accordance with current tax laws in the countries where the consolidated companies do business, recognition of deferred tax assets and liabilities and benefits from applying tax losses.
i) Operating Segments
ITAU CORPBANCA provides financial information by operating segment in conformity with IFRS 8Operating Segments in order to make disclosures that enable financial statement users to evaluate the nature and financial effects of the business activities in which the Bank engages and the economic environments in which it operates and to allow them to:
• | Better understand the Bank’s performance; |
• | Better evaluate its future cash flow projections; |
• | Form better opinions regarding the Bank as a whole. |
F-27
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
To comply with IFRS 8, ITAU CORPBANCA identifies operating segments used by senior management to analyze and make decisions regarding operating, financing and investment decisions, based on the following elements:
i. | The nature of the products and services; |
ii. | The nature of the production processes; |
iii. | The type of class of customer for their products and services; |
iv. | The methods used to distribute their products or provide their services; and |
v. | If applicable, the nature of the regulatory environment, for example, banking, insurance or public utilities. |
The Bank reports separately for each operating segment that reaches one of the following quantitative thresholds:
(i) Its reported revenue, including sales to external customers as well as inter-segment sales or transfers, is 10% or more of the combined internal and external revenue of all operating segments.
(ii) The absolute value of its reported profit is 10% or more of the larger of (i) the combined reported profit of all operating segments that did not report a loss; (ii) the combined reported loss of all operating segments that reported a loss.
(iii) It has 10% or more of the combined assets of all operating segments.
The Bank has determined that its operating segments are its reporting segments. The Bank’s non-operating segments have not been added to complete the reporting segments.
The segments are grouped mainly by banks and related businesses, as follows:
a) | Wholesale Banking |
• | Corporate, Real Estate and Construction |
• | Large Companies |
b) | Retail Banking |
• | Small and Medium-sized Companies |
• | Traditional Banking |
• | Preferential Banking |
• | Banco Condell Consumer Division |
c) | International and Treasury |
d) | Other Financial Services |
e) | Colombia |
F-28
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
The board of directors manages these operating segments using an in-house system of internal profitability reports and reviews its segments on the basis of the gross operating margin and only uses average balances to evaluate performance and allocate resources. The Bank has also included geographic disclosures on its operations in New York and Colombia, the latter of which resulted from its acquisition of Banco CorpBanca Colombia and subsidiaries.
Regarding foreign markets, Colombia has been identified as a separate segment based on the business activities described. Its operating results are reviewed regularly by the entity’s highest decision-making authority for operating decisions, to decide about resource allocation for the segment and evaluate its performance, and separate financial information is available for it.
More information on each segment is presented in Note 4Segment Reporting.
j) Operations with Repurchase/Buyback Agreements and Securities Borrowing/Lending
Operations with repurchase agreements are used as an investment tool. Under these agreements, financial instruments are purchased and included as assets in “operations with repurchase agreements and securities borrowing”, which are valued based on the interest rate in the agreement.
Operations with buyback agreements are used as a funding tool. Investments that are sold with a buyback obligation and that serve as a guarantee for the loan are included within “trading securities” or “financial assets available for sale”. A buyback obligation is classified in liabilities as “payables from buyback agreements and securities lending”, including interest and indexation accrued as of year end.
k) Asset and Liability Valuation Criteria
Measurement or valuation of assets and liabilities is the process of determining the monetary amounts at which the elements of the financial statements are to be recognized and carried in the Statement of Financial Position and the Statement of Comprehensive Income. This involves selecting the particular basis or method of measurement.
Financial assets and liabilities are recorded initially at fair value which, unless there is evidence otherwise, is the transaction price. Instruments not valued at fair value through profit and loss are adjusted to subtract transaction costs.
Financial assets, except for investments held to maturity and loans, are valued at fair value without subtracting any transaction costs for their sale.
F-29
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Financial liabilities are valued generally at amortized cost, except for financial liabilities designated as hedged items (or hedging instruments) and financial liabilities held for trading, which are valued at fair value.
The following measurement criteria are used for assets and liabilities recorded in the Consolidated Statement of Financial Position:
Financial assets and liabilities measured at amortized cost:
The amortized cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial recognition plus or minus the cumulative amortization of any difference between that initial amount and the maturity amount.
In the case of financial assets, amortized cost also includes corrections for any impairment that may have occurred.
In the case of financial liabilities, cumulative amortization is recorded using the effective interest rate method. The effective interest rate is the discount rate that sets the cash flows receivable or payable estimated over the expected life of the financial instrument (or, when appropriate, over a shorter period) exactly equal to the net carrying amount of the financial asset or liability. To calculate the effective interest rate, the Bank determines cash flows by taking into account all contractual conditions of the financial instrument, excluding future credit losses.
The effective interest rate calculation includes all fees and other amounts paid or received that form part of the effective interest rate. Transaction costs include incremental costs that are directly attributable to the purchase or issuance of a financial asset or liability.
Fair value measurements of assets and liabilities:
Fair value is defined as the price that will be received for the sale of an asset or paid for the transfer of a liability in an orderly transaction on the main (or most advantageous) market as of the measurement date under current market conditions (i.e. exit price) regardless of whether that price is directly observable or estimated using another valuation technique.
Fair value is a market-based measurement, not an entity-specific measurement. For some assets and liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable market transactions or market information might not be available. However, the objective of a fair value measurement in both cases is the same — to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions (i.e. an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).
F-30
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
When a price for an identical asset or liability is not observable, the Bank will measure the fair value using another valuation technique that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. As fair value is a market-based measurement, it should be determined using the assumptions that market participants would use in pricing the asset or liability, including risk assumptions.
These valuation techniques include the use of recent market transactions between knowledgeable, willing parties in an arm’s length transaction, if available, as well as references to the fair value of other instruments that are substantially the same, discounted cash flows and options pricing models. As a result, the Bank’s intention to hold an asset or to settle or otherwise fulfill a liability is not relevant when measuring fair value.
A fair value measurement is for a particular asset or liability. Thus, when measuring fair value, the Bank takes into account the same characteristics of the asset or liability that market participants would consider in pricing that asset or liability on the measurement date.
To increase the consistency and comparability of fair value measurements and related disclosures, the Bank uses and discloses a fair value hierarchy that categorizes into three levels the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets and liabilities (Level 1 inputs) and lowest priority to unobservable inputs (Level 3 inputs). Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.
When the fair value of a financial asset or liability cannot be determined, it is valued at amortized cost.
Also, in accordance with Chapter A-2 “Limitations or Specifications on the Use of General Criteria” of the Compendium of Accounting Standards, banks may not designate assets or liabilities for fair value measurement instead of general amortized cost criteria.
The consolidated financial statements have been prepared using general amortized cost criteria except for:
• | Derivative financial instruments are measured at fair value. |
• | Assets available for sale are measured at fair value. |
• | Assets held for trading are measured at fair value |
F-31
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Financial assets and liabilities that are part of accounting hedges are measured at fair value.
Assets valued at purchase cost:
Purchase cost is defined as the cost of the transaction to acquire the asset, less any impairment losses that may exist.
l) Trading Securities
Trading securities are securities, which are either acquired for generating a profit from short-term fluctuations in price or dealer’s margin, or are securities included in a portfolio in which a pattern of short-term profit making exists.
Trading securities are valued at fair value based on market prices or valuations obtained using models as of the close of the Statement of Financial Position. Gains or losses that have resulted from adjustments in fair value as well as gains or losses from trading activities and accrued interest and indexation are reported as net financial operating income within the Consolidated Statement of Income.
All purchases or sales of trading securities that must be delivered within a period of time established by regulations or market conventions are recognized on the trading date, which is the date on which the purchase or sale of the asset is committed. Any other purchase or sale is treated as a derivative (forward) until settlement occurs.
m) Investment Securities
Investment securities are classified into two categories: held to maturity and available for sale.
Investment securities held to maturity are those instruments that the Bank has the ability and intent to hold to maturity. All other investment securities are considered available for sale.
Investment securities are initially measured at cost, including transaction costs.
Available-for-sale instruments are subsequently recorded at fair value based on market prices or valuations obtained using models, less impairment losses. Unrealized gains or losses arising from changes in its fair value are recognized with a charge or credit to equity accounts. When these investments are disposed of or impaired, the amount of the fair value adjustments accumulated in equity is transferred to profit or loss and reported within “net financial operating income”.
Investments held to maturity are recorded at cost plus accrued interest and indexation, less impairment provisions established when the amount recorded is greater than the estimated recoverable amount.
F-32
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Interest and indexation on held-to-maturity and available-for-sale instruments are included within “interest and indexation income”.
Investment securities that are used as accounting hedges are adjusted using accounting hedge rules (see letter n) of this note).
All purchases or sales of investment securities that must be delivered within a period of time established by regulations or market conventions are recognized on the trading date, which is the date on which the purchase or sale of the asset is committed.
Investment instruments must be continuously evaluated to opportunely detect any evidence of impairment that may result in a loss.
The Bank has conducted impairment tests on its portfolios classified as held to maturity and available for sale. These tests include economic analysis, the credit ratings of debt issuers and the intent and ability of management to hold the investments to maturity. Based on management’s evaluation, these investments do not present any evidence of impairment.
n) Financial Derivative Instruments
Derivative instruments, which include foreign currency and U.F. forwards, interest rate futures, currency and interest rate swaps and other financial derivative instruments, are recorded initially in the Statement of Financial Position at their cost (including transactions costs) and subsequently measured at fair value Fair value is obtained from market quotes, discounted cash flow models and options valuation models, as appropriate. Derivative instruments are reported as an asset when their fair value is positive and as a liability when negative under the item “derivative instruments”. The fair value of derivatives also includes the credit valuation adjustment so that the fair value of each instrument includes counterparty credit risk.
Certain embedded derivatives in other financial instruments are treated as separate derivatives when their risk and characteristics are not closely related to those of the main contract and if the contract in its entirety is not recorded at its fair value with its unrealized gains and losses included in profit or loss.
At inception, a derivative contract must be designated by the Bank as a derivative instrument for trading or hedging purposes.
Changes in fair value of derivative contracts held for trading purpose are included under “net financial operating income”, in the consolidated statement of comprehensive income.
F-33
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
If a derivative instrument is classified as a hedging instrument, it can be:
1) | A hedge of the fair value of existing assets or liabilities or firm commitments, or |
2) | A hedge of cash flows related to existing assets or liabilities or forecasted transactions. |
3) | A hedge of a net investment in a foreign operation as defined in IAS 21. |
A hedge relationship for hedge accounting purposes must comply with all of the following conditions:
a) | At its inception, the hedge relationship has been formally documented; |
b) | It is expected that the hedge will be highly effective; |
c) | The effectiveness of the hedge can be measured in a reasonable manner; and |
d) | The hedge is highly effective with respect to the hedged risk on an ongoing basis and throughout the entire hedge relationship. |
Certain derivatives transactions that do not qualify for hedge accounting are treated and reported as derivatives for trading purposes even though they provide an effective hedge on the risk of net positions.
When a derivative instrument hedges the risk of changes in the fair value of an existing asset or liability, the asset or liability is recorded at its fair value with respect to the specific hedged risk. Gains or losses from fair value adjustments, of both the hedged item and the derivative instrument, are recognized in profit or loss for the year.
Should the hedged item in a fair value hedge be a firm commitment, changes in the fair value of the commitment with respect to the hedged risk are recorded as an asset or liability against profit for the year. Gains or losses from fair value adjustments of the derivative instrument are recognized in profit or loss. When an asset or liability is acquired as a result of the commitment, the initial recognition of the asset or liability acquired is adjusted to incorporate the accumulated effect of the valuation at fair value of the firm commitment, which was previously recorded in the Statement of Financial Position.
When a derivative hedges the risk of changes in the cash flows of existing assets or liabilities or forecasted transactions, the effective portion of changes in the fair value related to the hedged risk is recorded in equity. Any ineffective portion is directly recorded in profit or loss. The accumulated amounts recorded in equity are transferred to profit or loss at the moment that the hedged item affects profit or loss.
When an interest rate fair value hedge is performed on a portfolio basis and the hedged item is an amount instead of individualized assets or liabilities, gains or losses from fair value adjustments, for both the hedged portfolio and the derivative instrument, are recorded in profit or loss, but the fair value adjustment of the hedged portfolio is reported in “other assets” or “other liabilities”, according to the position of the portfolio hedged at this moment.
F-34
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Derivative instruments are offset (i.e. are presented net in the Statement of Financial Position) when the dependent entities have the legally enforceable right to set off the recognized amounts as well as the intent to settle on a net basis, or to realize the asset and settle the liability simultaneously.
o) Recognition of Income and Expenses
The following section summarizes the most important criteria used by the Bank to recognize income and expenses:
Interest and indexation income and expense and similar concepts
Interest income and expenses and similar concepts are generally recognized on an accrual basis using the effective interest rate method.
However, when a given transaction is 90 or more days past due or when, in the Bank’s opinion, the debtor has a high risk of default, the interest and indexations for these transactions are not recognized in the Consolidated Statement of Income unless they are actually received.
This interest and indexation is generally known as “suspended interest and indexation” and is recorded in memorandum accounts that are not part of the Consolidated Statement of Financial Position. They are instead disclosed as complementary information.
This interest is recognized in profit or loss when it is effectively received.
The Bank must cease to recognize income on an accrual basis in the Statement of Income for loans included in the impaired portfolio (see accounting policy v)) as indicated in the chart, related to individual and group evaluations in accordance with SBIF provisions: Suspension occurs in the following cases:
Loans subject to suspension: | Suspended: | |
Individual evaluation: | ||
Loans classified in C5 and C6 | For simply being in the impaired portfolio. | |
Individual evaluation: | ||
Loans classified in C3 and C4 | For having been in the impaired portfolio for three months. | |
Group evaluation: | ||
Any loan, except those with real guarantees for at least 80%. | When the loan or one of its installments is six months past due. |
F-35
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
These classifications are analyzed in the policy indicated in letter u) “Provisions for at-risk assets”.
However, with respect to individually evaluated loans, income can continue to be recognized for accrued interest and indexation when such loans are paid normally and correspond to obligations with independent cash flows, as may occur in the case of project financing.
Suspending recognition on an accrual basis means that while loans are in the impaired portfolio, the respective assets included in the Consolidated Statement of Financial Position will not accrue interest, undergo indexation or incur commissions and no income will be recorded for these concepts in the Consolidated Statement of Income unless it is effectively received.
Dividends received
Dividends received from investments in other companies are recognized when the right to receive them arises and are recorded within “income (loss) from investments in other companies.”
Commissions, fees and similar concepts
Income and expenses from fees and commissions are recognized in the Consolidated Statement of Income using different criteria based on the nature of the income or expense. The most significant criteria include:
• | Fees earned from transactions or services provided over a longer period of time are recognized over the life, effective period or maturity of the transactions or services. |
• | Fees earned from an individual act are recognized once the act has taken place. |
• | Those related to financial assets and liabilities, when appropriate, are recognized using their effective interest rate over the life of the transaction. |
Fees and expenses related to financial assets and liabilities measured at fair value through profit and loss are recognized, as appropriate, when received or paid.
Non-financial income and expenses
These are accounted for on an accrual basis.
Loan commitment fees
Loan commitment fees, mainly for opening, analyzing and gathering information for the loan process, are accrued and recognized in profit or loss throughout the life of the loan. The portion of loan commitment fees that corresponds to costs directly related to granting the loan are recorded immediately in profit or loss
F-36
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
p) Impairment
Assets are acquired for the benefit they will produce. Therefore, impairment occurs whenever their book value exceeds their recoverable amount; assets are tested for impairment to demonstrate how the initially invested amount is equivalent to the benefit that is expected to be obtained.
The Bank and its subsidiaries use the following criteria to test for impairment, if any:
Financial assets
A financial asset that is not recorded at fair value through profit and loss is evaluated at each reporting date in order to determine whether there is objective evidence of impairment. As of each reporting date, the Bank assesses whether there is objective evidence that a financial asset or a group of financial assets may be impaired.
Financial assets or asset groups are considered impaired only if there is objective evidence of impairment as a result of one or more loss events that occurred after the initial recognition of the asset and the loss event(s) had an impact on the estimated future cash flows of the financial asset or asset group that can be reliably estimated. It may not be possible to identify a single loss event that individually caused the impairment.
An impairment loss for financial assets recorded at amortized cost is calculated as the difference between the asset’s carrying amount and the present value of the estimated future cash flows (excluding unincurred future loan losses), discounted using the original effective interest rate of the financial asset. In other words, the effective interest rate calculated upon initial recognition.
Losses expected as the result of future events, whatever their probability, are not recognized. Objective evidence that an asset or group of assets is impaired includes observable data that comes to the attention of the asset holder about the following loss events: (i) significant financial difficulties of the issuer or the debtor; (ii) breach of contract; (iii) granting of a concession by the lender to the issuer or the borrower, for economic or legal reasons relating to the borrower’s financial difficulty, that the lender would not otherwise consider; (iv) high probability of bankruptcy or other financial reorganization; (v) disappearance of an active market for a given financial asset due to financial difficulties; or (vi) evidence that there has been a measurable reduction in the estimated future cash flows from a group of financial assets since initial recognition, even if it cannot yet be identified with individual financial assets, including data such as: (a) adverse changes in the status of payments by borrowers included in the group; or (b) local or national economic conditions that are linked to delinquency for group assets).
Individually significant financial assets are examined individually to determine impairment. Remaining financial assets are evaluated collectively in groups that share similar credit risk characteristics.
F-37
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
An impairment loss on an available-for-sale financial asset is calculated as the difference between the asset’s purchase cost (net of any principal repayment or amortization) and the current fair value less any impairment loss on that financial asset previously recognized in profit or loss.
In the case of capital investments classified as available-for-sale assets, objective evidence includes a significant and prolonged drop in the fair value of the investment below the original investment cost. In the case of debt investments classified as available-for-sale assets, the Bank evaluates whether objective evidence of impairment exists based on the same criteria used to evaluate loans.
If evidence of impairment exists, any amount previously recognized in equity, net gains (losses) not recognized in the Consolidated Statement of Comprehensive Income for the Year are removed from equity and recognized in the Statement of Income for the Year, presented as net gains (losses) related to available-for-sale financial assets. This amount is determined as the difference between the purchase cost (net of any principal repayment or amortization) and the current fair value of the asset less any impairment loss on that investment previously recognized in the Consolidated Statement of Income.
When the fair value of available-for-sale debt instruments recover to at least their amortized cost, they are no longer considered impaired instruments and subsequent changes in fair value are recorded in equity.
All impairment losses are recognized in the income statement. Any cumulative loss related to available-for-sale financial assets recognized previously in equity is transferred to profit or loss.
An impairment loss can only be reversed if it can be related objectively to an event occurring after the impairment loss was recognized. Reversal of financial assets recorded at amortized cost and those classified as available-for-sale is recorded in profit or loss.
Non-financial assets
The carrying amounts of the Bank’s non-financial assets, excluding investment property and deferred taxes, are reviewed regularly, or at least every reporting period, to determine whether indications of impairment exist. If such indication exists, the recoverable amount of the asset is then estimated. The recoverable amount of an asset is the greater of the fair value less costs to sell, whether for an asset or a cash generating unit, and its value in use. That recoverable amount will be determined for an individual asset, unless the asset does not generate cash flows that are largely independent from the cash flows of other assets or asset groups.
When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered to be impaired and its value is reduced to its recoverable amount.
F-38
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Upon assessing the value in use of an individual asset or CGU, estimated future cash flows are discounted to present value using a before-tax discount rate that reflects current market assessments of the time value of money and the specific risks that an asset may have.
As of each reporting period, the Bank will evaluate whether there is any indication that an impairment loss recognized in prior years for an asset other than goodwill no longer exists or could have decreased. If such indication exists, the entity will once again estimate the asset’s recoverable amount. In evaluating whether indications that an impairment loss recognized in prior years for an asset other than goodwill no longer exist or may have decreased in value, the entity will consider at least external sources (significant increase in market value of the asset; significant changes in technological, market, economic or legal environment affecting the asset; decrease in market interest rates or other investment rates of return which are likely to affect the discount rate used in calculating the asset’s value in use, resulting in higher recoverable amount) and internal sources during the year (in the immediate future, significant favorable changes in the manner in which the asset is used or is expected to be used; and available evidence from internal reporting indicating that the economic performance of the asset is or will be better than expected, including costs incurred during the year to improve or enhance the asset’s performance or restructure the operation to which the asset belongs). In the case of goodwill and intangible assets with indefinite useful lives or that are still not available for use, recoverable amounts are estimated at each reporting date.
Impairment losses recognized in prior years are assessed at each reporting date in search of any indication that the loss has decreased or disappeared. An impairment loss will be reversed only to the extent that the carrying amount of the asset does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
Goodwill
Goodwill is tested annually to determine whether impairment exists and when circumstances indicate that its carrying amount may be impaired. Impairment of goodwill is determined by evaluating the recoverable amount of each CGU (or group of CGUs) to which goodwill is allocated. Where the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized.
Goodwill acquired in a business combination shall be distributed as of the acquisition date among the CGUs (or group of CGUs) of the acquirer that are expected to benefit from the synergies of the business combination, regardless of whether other of the acquiree’s assets or liabilities are allocated to these units. Impairment losses relating to goodwill cannot be reversed in future years.
In accordance with IAS 36Impairment of Assets, annual impairment testing is permitted for a CGU to which goodwill has been allocated, or at any time for intangible assets with indefinite useful lives, as long as they are carried out at the same time each year. Different cash generating units and different intangible assets can be tested for impairment at different times during the year.
F-39
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
q) Property, Plant and Equipment
Items of property, plant and equipment are measured at cost minus accumulated depreciation and impairment losses.
This cost includes expenses that have been directly attributed to the acquisition of these assets. Construction phase costs include costs of materials and direct labor, and any other cost directly attributable to the process so that the asset is in condition to be operated.
If part of an item of property, plant and equipment has a different useful life, they will be recorded as separate items (important components of property, plant and equipment).
Depreciation is recognized in the Consolidated Statement of Income on a straight-line basis over the useful lives of each part of an item of property, plant and equipment. Assets associated with leased assets are amortized over the shortest period between the lease term and their useful lives, unless it is certain that the Bank will acquire the property at the end of the lease period.
This includes real estate, land, furnishings, vehicles, IT equipment and other facilities owned by the consolidated entities or acquired under a finance lease. Assets are classified based on their use:
Property, plant and equipment held for own use
Property, plant and equipment held for own use (including, among others, tangible assets received by consolidated entities as full or partial settlement of financial assets representing receivables from third parties and those assets expected to be held for continuing use, as well as those acquired under a finance lease) are presented at purchase cost less accumulated depreciation and, if appropriate, estimated impairment losses that result from comparing the net value of each item with its corresponding recoverable amount.
For these purposes, the purchase cost of assets received in lieu of payment is similar to the net amount of financial assets in exchange for which they are received.
Depreciation is determined using the straight-line method over the purchase cost of the asset less its residual value. The land on which buildings are other facilities are located is considered to have an infinite useful life and, therefore, is not depreciated.
At period end, the consolidated entities analyze whether there is any indication that the net value of the assets exceed their corresponding recoverable amount, in which case they reduce the carrying amount of the asset until that recoverable amount and adjust future depreciation charges in proportion to the adjusted carrying amount and the new remaining useful life, which is re-estimated if necessary.
F-40
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Likewise, when indications exist that an asset has recovered in value, the consolidated entities reverse the impairment loss recorded in prior years and adjust future depreciation charges accordingly. In no case may the reversal of an impairment loss increase the carrying amount above the asset’s original value if no impairment losses had been recorded in prior periods.
Likewise, at least at year end, the estimated useful life of property, plant and equipment held for own use must be reviewed to detect significant changes. Should any arise, they will be adjusted with a charge to the consolidated profit or loss account in future years due to the recalculation of depreciation as a result of the new useful lives.
Upkeep and maintenance costs for tangible assets held for own use are charged to profit or loss as incurred.
For lease transactions, see accounting policy in letter ii) Leases.
r) Loans
Loans to customers and loans and advances to banks, both originally granted by the Bank and acquired, are non-derivative financial assets with fixed or defined charges that are not quoted on an active market and that the Bank has no intention of selling immediately or in the short term; they are measured at amortized cost using the effective interest rate method, less any impairment.
When the Bank is the lessor in a lease agreement and transfers substantially all incidental risks and rewards over the leased asset, the transaction is presented within loans.
s) Factored Receivables
The Bank engages in factoring transactions with its customers, by which they receive invoices and other commercial instruments representative of credit, with or without recourse, and in exchange give the customer a percentage of the total amounts receivable from the debtor of the transferred documents. They are valued based on the disbursement by the Bank in exchange for the invoices or other commercial instruments representative of credit that the assignor hands over to the Bank. The difference between the disbursement and the real nominal value of the loans is recorded in the Consolidated Statement of Income as interest revenue using the effective interest rate method over the financing period. The assignor is liable for repaying the loans.
t) Lease Receivables
Lease receivables, included in “loans to customers”, are periodic payments from lease agreements that meet certain requirements to qualify as finance leases and are presented at nominal value net of unaccrued interest as of year end.
Assets leased among consolidated companies are treated as assets held for own use in the financial statements.
F-41
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
u) Provisions for At-Risk Assets
The Bank has established provisions for probable losses on loans to customers and loans and advances to banks based on instructions from the SBIF and scoring models and credit risk evaluations approved by the Bank’s Corporate Governance. These practices are designed to opportunely record sufficient provisions to cover expected losses related to the characteristics of the debtors and their loans, which are indicative of payment behavior and subsequent recovery.
The Bank has established provisions for probable losses on loans to customers based on instructions from the SBIF, including modifications introduced by Ruling 3573 as of January 1, 2016, which establishes the standard method for residential mortgage loans and complements and specifies instructions on provisions and loans in the impaired portfolio and their subsequent modifications (see Note 3 of these financial statements).
Models have been constructed for determining appropriate credit risk provisions based on the type of portfolio or transaction. For this, loans to customers and loans and advances to banks are divided into three categories:
• | Consumer loans, |
• | Mortgage loans and |
• | Commercial loans. |
In order to calculate credit risk provisions, loans to customers and loans and advances to banks are evaluated as follows:
Individual debtor evaluation. An individual evaluation is performed when a debtor is considered individually significant for one of the following reasons: it has significant levels of debt, it cannot be classified within a group of financial assets with similar credit risk characteristics or given its size, complexity or level of exposure it must be analyzed in detail.
Group debtor evaluations. Group evaluations are used to deal with a large number of transactions with small individual amounts loaned to individuals or small companies.
The following section describes the models used to determine credit risk provisions:
Individual and group provisions. The provisions necessary to properly cover risks of losses on assets, loans and exposure from contingent loans must be calculated and established on a monthly basis, considering the types of provisions existing, the evaluation models used and the type of transactions covered.
Evaluation models, criteria and procedures for comprehensively evaluating credit risk and determining the amounts to provision are approved by the Bank’s Corporate Governance, in accordance with SBIF standards and instructions.
F-42
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Processes and policy compliance are evaluated and supervised using internal control procedures in order to assure compliance and ensure a suitable level of provisions in order to deal with losses from expected and incurred deterioration.
Provisions are considered “individual” when they are for individually evaluated debtors that, given their size, complexity or level of exposure for the Bank, must be analyzed in detail, while “group” provisions are for a large number of transactions similar in nature for small individual amounts loaned to individuals or small companies. Provisions are classified as:
The following types of provisions are used for both loans and contingent loans:
• | Individual provisions on the normal portfolio |
• | Individual provisions on the substandard portfolio |
• | Individual provisions on the default portfolio |
• | Group provisions on the normal portfolio |
• | Group provisions on the default portfolio |
i) Individual Provisions
An individual debtor evaluation is used when the Bank needs to understand and analyze a customer in detail because of its size, complexity or exposure level.
The scoring and provisioning methodology is based on SBIF standards for those purposes, assigning each debtor to one of the following risk categories:
Normal Portfolio. This is for debtors with payment capacity to comply with their obligations and commitments whose economic and financial situation shows no signs that this may change. Loans in this portfolio are classified in categories A1 through A6. Nevertheless, the Bank must maintain a minimum provision of 0.5% over loans and contingent loans in the Normal Portfolio.
Substandard Portfolio It includes debtors with financial difficulties or significant decline in their payment capacity and about which there are reasonable doubts regarding repayment of all principal and interest in the contractually agreed-upon terms, showing little room to meet its financial obligations in the short term. This portfolio includes debtors with recent balances more than 30 days past due. Loans in this portfolio are classified in categories B1 through B4.
Default Portfolio. It includes debtors and their loans for which recovery is considered remote as they show impaired or no payment capacity. This portfolio consists of debtors that have ceased to pay creditors (in default) or with evident indication that they will do so, those for which a forced restructuring of debt is necessary to reduce the obligation or delay principal or interest payments, and any debtor with interest or principal balances more than 90 days past due for any loan. Loans in this portfolio are classified in categories C1 through C6. All loans held by these same debtors, including 100% of contingent loan amounts, are classified within this portfolio.
F-43
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
As part of the individual debtor evaluation, the Bank classifies debtors into the three aforementioned categories, assigning them provision percentages as instructed by the SBIF to be applied to each of the individual categories, detailed as follows:
Portfolio Type | Debtor Category | Probability of Default (%) | Loss Given Default (%) | Expected Loss (% Provision) | ||||||||||||
Normal Portfolio | A1 | 0.04 | 90.0 | 0.03600 | ||||||||||||
A2 | 0.10 | 82.5 | 0.08250 | |||||||||||||
A3 | 0.25 | 87.5 | 0.21875 | |||||||||||||
A4 | 2.00 | 87.5 | 1.75000 | |||||||||||||
A5 | 4.75 | 90.0 | 4.27500 | |||||||||||||
A6 | 10.00 | 90.0 | 9.00000 | |||||||||||||
Substandard Portfolio | B1 | 15.00 | 92.5 | 13.87500 | ||||||||||||
B2 | 22.00 | 92.5 | 20.35000 | |||||||||||||
B3 | 33.00 | 97.5 | 32.17500 | |||||||||||||
B4 | 45.00 | 97.5 | 43.87500 |
For calculation purposes, the following must be considered:
B-1 Provision debtor (PE-GE)* (PDdebtor /100)* (LGDdebtor /100)+ PE*(PDguarantor /100)* (LGDguarantor /100)
Where:
PE = Provisioned exposure
GE = Guaranteed exposure
PE = (Loans + Contingent Loans) – Financial or real guarantees
For the default portfolio, the Bank, as instructed by the SBIF, must maintain the following reserves:
Portfolio Type | Scale of Risk | Range of Expected Loss | Provision (%) | |||||
Default Portfolio | C1 | Up to 3% | 2 | % | ||||
C2 | More than 3% up to 20% | 10 | % | |||||
C3 | More than 20% up to 30% | 25 | % | |||||
C4 | More than 30 % up to 50% | 40 | % | |||||
C5 | More than 50% up to 80% | 65 | % | |||||
C6 | More than 80% | 90 | % |
F-44
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For calculation purposes, the following must be considered:
Rate of Expected Loss = (E-R)/E
Provision = E × (PP/100)
Where:
E = Amount of exposure
R = Recoverable amount
PP = Percentage of provision (based on category of Rate of Expected Loss)
ii) Group Provisions
Group evaluations are used for a large number of transactions for small individual amounts loaned to individuals or small companies and require loans to be grouped based on similar characteristics such as type of debt and lending conditions in order to determine the group’s payment behavior and recovery trends for delinquent loans.
The methodology for establishing provisions is based on the payment behavior of each homogeneous group of debtors and recovery of guarantees and collections efforts, in order to directly estimate a percentage of expected losses that can be applied to the loans of the respective group.
Standard Method for Provisions for Residential Mortgage Loans
In accordance with SBIF Ruling 3,573, the Bank began to apply the standard provisioning method for residential mortgage loans starting January 1, 2016. According to this method, the applicable provision factor, represented by the expected loss (EL) over the amount of residential mortgage loans, will depend on the delinquency of each loan and the ratio, at each month end, between the outstanding principal on each loan and the value of the collateral (PVG) guaranteeing the loan, as indicated in the following table:
Provision factor applicable based on delinquency and PVG
PVG = Outstanding principal on loan/Value of collateral
PVG Segment | Days Past | 0 | 1 - 29 | 30 - 59 | 60 - 89 | Default Portfolio | ||||||||||||||||
PD (%) | 1.0916 | 21.3407 | 46.0536 | 75.1614 | 100 | |||||||||||||||||
PVG< 40% | LGD (%) | 0.0225 | 0.0441 | 0.0482 | 0.0482 | 0.0537 | ||||||||||||||||
EL (%) | 0.0002 | 0.0094 | 0.0222 | 0.0362 | 0.0537 | |||||||||||||||||
PD (%) | 1.9158 | 27.4332 | 52.0824 | 78.9511 | 100 | |||||||||||||||||
40% < PVG< 80% | LGD (%) | 2.1955 | 2.8233 | 2.9192 | 2.9192 | 3.0413 | ||||||||||||||||
EL (%) | 0.0421 | 0.7745 | 1.5204 | 2.3047 | 3.0413 |
F-45
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
80% < PVG< 90% | PD (%) | 2.5150 | 27.9300 | 52.5800 | 79.6952 | 100 | ||||||||||||||||
LGD (%) | 21.5527 | 21.6600 | 21.9200 | 22.1331 | 22.2310 | |||||||||||||||||
EL (%) | 0.5421 | 6.0496 | 11.5255 | 17.639 | 22.2310 | |||||||||||||||||
PVG > 90% | PD (%) | 2.7400 | 28.4300 | 53.0800 | 80.3677 | 100 | ||||||||||||||||
LGD (%) | 27.2000 | 29.0300 | 29.5900 | 30.1558 | 30.2436 | |||||||||||||||||
EL (%) | 0.7453 | 8.2532 | 15.7064 | 24.2355 | 30.2436 |
If the same debtor has more than one mortgage loan with the Bank and one loan is more than 90 days past due, all loans will be classified within the default portfolio and provisions will be calculated for each loan based on its respective PVG percentages.
F-46
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For residential mortgage loans linked to Chilean government housing programs or subsidies, provided that they are covered by government foreclosure insurance, the provision percentage may be weighted by a loss mitigation factor (LM), which depends on the PVG percentage and the price of the property in the deed of sale (V). The LM factors to apply to the corresponding provision percentage are presented in the following table:
LM factor (loss mitigation) for loans with government foreclosure insurance
PVG Segment | V Segment Price of Property in Deed of Sale (UF) | |||||||
V<1,000 | 1,000 < V < 2,000 | |||||||
PVG< 40% | 100% | |||||||
40% < PVG< 80% | ||||||||
80% < PVG< 90% | 95 | % | 96 | % | ||||
PVG > 90% | 84 | % | 89 | % |
Default Portfolio
The default portfolio includes all loans and 100% of contingent loans of debtors with interest or principal payments more than 90 days past due as of month end. It also includes debtors to which loans were made to cover other loans more than 60 days past due, as well as debtors that have undergone forced restructuring or received partial debt relief.
The following may be excluded from the default portfolio: a) residential mortgage loans that are less than 90 days past due unless the debtor has another loan of the same type that is more days past due and b) student loans (Law 20,027) that do not yet present the default conditions contained in Ruling N° 3.454 December 10, 2008.
All of the debtor’s loans shall remain in the impaired portfolio until payment capacity or behavior has returned to normal. However, the Bank will continue to charge off individual loans that comply with the conditions in Title II of Chapter B-2. In order to remove a debtor from the default portfolio, once the circumstances that led it to be classified as such according to these rules no longer exist, at least the following copulative conditions must be met:
i) | None of the debtor’s obligations is more than 30 calendar days past due. |
ii) | The debtor has not been granted any new refinancing to pay his obligations. |
iii) | At least one of the payments made was on the principal. |
iv) | If the debtor has any loan with partial payments within a period of less than six months, it has already made two payments. |
v) | If the debtor must pay monthly installments for one or more loans, it has paid four consecutive installments. |
F-47
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
vi) | The debtor does not appear with direct outstanding debt in the information disclosed by the SBIF, except for insignificant amounts. |
Condition number iii) does not apply for debtors that only have student loans in accordance with Law 20,027.
Guarantees
Guarantees may be considered in calculating provisions only if they are legally established and meet all conditions for their potential enforcement or liquidation in favor of the creditor bank.
In any case, for the purposes of provisioning rules issued by the SBIF, the Bank must be able to demonstrate the mitigating effect of these guarantees on the credit risk inherent to the expositions they are intended to back. In order to calculate these provisions, guarantees will be treated as follows:
a) Guarantors and pledges
They may be considered to the extent that the documentation establishing the guarantee refers explicitly to the given loans so that the scope of the guarantee is clearly defined and the right against the guarantor or co-signer is unquestionable.
b) Real guarantees
For the purposes of applying the deduction method or determining recovery rates, the valuation of real guarantees (mortgages or pledges) must reflect the net flow that would be obtained from selling the assets, debt or equity instruments if the debtor fails to comply with his obligations and the Bank must turn to the second source of payment. The amount that can be recovered by enforcing guarantees shall correspond to the present value of the amount that would be obtained from the sale under the conditions in which the sale will probably occur, considering the state of the assets at the time of liquidation, less estimated expenses that would be incurred to maintain and dispose of them, all in accordance with the Bank’s policies on such matters and the time frames set forth by law for liquidating assets.
(c) Financial guarantees
The adjusted fair value of this type of guarantee may be deducted from the amount of the credit risk exposure, provided that the guarantee has been established with the sole purpose of guaranteeing payment of the loans in question.
F-48
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Leased assets
Estimated losses calculated to record provisions using the evaluation method that is appropriate for the debtor shall take into account the value that would be obtained from disposing of the leased assets, considering the probable impairment that the assets would present in the event of default by the lessor and the expenses related to its redemption and liquidation or potential replacement.
Factored receivables
Provisions for factored receivables must consider the counterparty to be the transferor of the documents sold to the Bank when the transferor retains liability, and the debtor of the invoices when the transferor does not retain liability.
Additional provisions
The Bank may establish additional provisions that arise from applying its portfolio evaluation models in accordance with Chapter B-1 section 9 of the SBIF Compendium of Accounting Standards, recorded in liabilities (see letter z) within “provisions and contingent liabilities”. These provisions may be established to safeguard the Bank against the risk of macroeconomic fluctuations, in order to anticipate reversal of expansionary economic cycles that, in the future, may translate into worsened economic conditions, thereby functioning as an anti-cyclical mechanism to accumulate additional provisions when the scenario is favorable and to release or allocate specific provisions when conditions deteriorate.
As a result, additional provisions must always correspond to general provisions on commercial, mortgage or consumer loans, or on identified segments, and in no case may they be used to offset deficiencies in the models used by the Bank.
For these provisions, the Bank must have a board-approved policy that covers the following aspects:
• | criteria for recording provisions, which must be based solely on exposures that have already been taken on; |
• | criteria for allocating or releasing provisions; and, |
• | definitions of specific minimum and maximum limits for this type of provision. |
As of June 30, 2016 and December 31, 2015, the Bank did not have any additional provisions for its commercial, consumer or mortgage loan portfolios.
v) Impaired Loans and Charge-offs
The concept of Impaired Portfolio includes loans of debtors (loans to customers and loans and advances to banks) for which concrete evidence exists that the borrowers will not meet some of their obligations in the agreed upon payment terms, regardless of the possibility of recovering amounts owed through legal collections or by negotiating different terms.
F-49
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
The following situations are evidence that debtors will not comply with their obligations as agreed with the Bank and that their loans are impaired:
i) | Evident financial difficulties of the debtor or significant worsening of their credit quality. |
ii) | Evident indication that the debtor will go into bankruptcy or into a forced restructuring of debts or that effectively bankruptcy or a similar measure has been filed in relation to their payment obligations, including delaying or non-payment of obligations. |
iii) | Forced restructuring of a loan due to economic or legal factors related to the debtor, whether by decreasing the payment obligation or delaying the principal, interest or commissions. |
iv) | The obligations of the debtor are negotiated with a significant loss due to the vulnerability of the debtor’s payment capacity. |
v) | Adverse changes produced in the technological, market, economic or legal area in which the debtor operates, which potentially compromise the debtor’s payment capacity. |
However, when dealing with debtors subject to individual evaluations, all loans of debtors classified in any of the default portfolio categories, as well as categories B3 and B4 of substandard portfolio, must be included in the impaired portfolio. When dealing with debtors subject to group evaluations, the impaired portfolio includes all loans in the default portfolio.
Within this context, the Bank will keep these loans within the deteriorated portfolio until payment capacity or behavior has returned to normal: However, the Bank will continue to charge off individual loans that comply with the conditions in the following section “Charge-offs”.
Impairment is identified in a centralized manner on a monthly basis by the Risk Provision and Rating System, which is defined in the Credit Policy and is consistent with SBIF standards and instructions.
Charge-offs
Generally, charge-offs are produced when contractual rights to cash flows end. In the case of loans, even if the above does not happen, the Bank will proceed to charge off the respective asset balances as indicated in section II of Chapter B-2Loan impairment and charge-offs of the SBIF Compendium of Accounting Standards.
Charge-off refers to derecognition of the asset related to the respective transaction in the Consolidated Statement of Financial Position, therefore including any part that may not be past due if a loan is payable in installments, or a lease (partial charge-offs do not exist).
Charge-offs must be charged to credit risk provisions established in accordance with Chapter B-1 of the Compendium of Accounting Standards, whatever the cause for which the charge-off was produced
F-50
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Loans and receivables must be charged off under the following circumstances, based on which happens first:
a) | The Bank, based on all available information, concludes that it will not obtain any cash flows from the loan recorded in assets. |
b) | When debt without an enforceable title reaches 90 days from the day it was recorded in assets. |
c) | Once the statute of limitations has lapsed for suing to collect through summary proceedings or when enforcement is rejected or withdrawn in a final court judgment. |
d) | When the days past due reaches the charge-off deadline in the table below: |
Type of Loan | Deadline | |||
Consumer loans with or without collateral | 6 months | |||
Consumer leases | 6 months | |||
Other non-real estate lease transactions | 12 months | |||
Other transactions without collateral | 24 months | |||
Commercial loans with collateral | 36 months | |||
Real estate leases (commercial and residential) | 36 months | |||
Residential mortgage loans | 48 months |
The term represents the time elapsed since the date on which payment of all or part of the obligation in default became due.
Recovery of charged-off assets
Subsequent payments on charged-off loans are recorded in profit or loss as loan loss recoveries within “credit risk provisions”, netting the provision expense for the year.
In the event that recoveries are in assets, income is recognized in profit or loss for the amount at which the asset is recorded, in accordance with Chapter B-5Assets received or awarded in lieu of payment of the Compendium of Accounting Standards. The same criteria will be followed if the leased assets are recovered after the charge-off of a lease transaction once the asset is recorded in the Statement of Financial Position.
Renegotiation of charged-off transactions
Any renegotiation of a loan already charged-off will not give rise to income while the operation continues to be considered impaired. Actual payments received can be treated as amounts recovered on charged-off loans.
F-51
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
The renegotiated loan can only be added back to assets if the loan ceases to be impaired, also recognizing the capitalization income as amounts recovered on charged-off loans. The same approach should be followed in the event that a loan is granted to pay a charged-off loan.
Recoveries on previously charged-off loans
Recoveries on previously charged-off loans are recorded in the Consolidated Statement of Income, subtracted from credit risk provisions.
F-52
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
w) Contingent Assets and Liabilities
Contingent loans are defined as transactions or commitments in which the Bank assumes a credit risk by committing to make a payment or disbursement, upon occurrence of a future event, to third parties that must be recovered from its customer.
A contingent asset or liability is any right or obligation arisen from past events whose existence will be confirmed only if one or more uncertain future event occurs not within the control of the Bank.
The Bank and its subsidiaries record the following balances related to such commitments and responsibilities, which fall within its line of business, in memorandum accounts.
a) | Guarantors and pledges: Comprises guarantors, pledges and standby letters of credit referred to in Chapter 8-10 of the Updated Standards (RAN in Spanish). It also includes payment guarantees for buyers in factoring transactions, as indicated in Chapters 8-38 of the RAN. |
b) | Confirmed foreign letters of credit: This includes foreign letters of credit confirmed by the Bank. |
c) | Documentary letters of credit:This includes documentary letters of credit issued by the Bank that have not yet been negotiated. |
d) | Performance and bid bonds: Comprises performance and bid bonds with promissory notes referred to in Chapter 8-11 of the RAN. |
e) | Unrestricted lines of credit: The unused amount of credit lines from which customers may draw without prior approval by the Bank (for example, credit cards or checking account overdrafts). |
f) | Other loan commitments: Amounts not yet lent under committed loans, which must be disbursed at an agreed-upon future date when events contractually agreed upon with the customer occur, such as in the case of lines of credit linked to the progress of a project or student loans (Law 20,027). |
g) | Other contingent loans: Includes any other kind of commitment by the Bank which may exist and give rise to lending when certain future events occur. In general, this includes unusual transactions such as pledges made to secure the payment of loans among third parties or derivative contracts made by third parties that may result in a payment obligation and are not covered by deposits. |
F-53
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
The balances of contingent loans are considered each reporting period in order to determine the credit risk provisions required by Chapter B-1Credit Risk Provisions in the SBIF Compendium of Accounting Standards. The amounts must be calculated based on a risk exposure factor, using the following table:
Type of Contingent Loan | Exposure | |||
a) Guarantors and pledges | 100 | % | ||
b) Confirmed foreign letters of credit | 20 | % | ||
c) Issued documentary letters of credit | 20 | % | ||
d) Performance and bid bonds | 50 | % | ||
e) Unrestricted lines of credit | 35 | % | ||
f) Other loan commitments: | ||||
- Student loans (Law No. 20,027) | 15 | % | ||
- Other | 100 | % | ||
g) Other contingent loans | 100 | % |
Nevertheless, for transactions with customers that have loans in default, as indicated in Chapter B-1, that exposure will always be equivalent to 100% of their contingent loans.
x) Provisions for Contingent Loans
The Bank records the following balances related to such commitments and responsibilities, which fall within its line of business, in memorandum accounts: Guarantors and pledges, documentary letters of credit, performance and bid bonds, unrestricted lines of credit, other loan commitments and other contingent loans.
The balances of contingent loans are considered each reporting period in order to determine the credit risk provisions required by Chapter B-1 in the Compendium of Accounting Standards using the methodology detailed in Note 1, letter u).
y) Current and Deferred Income Taxes
The Bank and its subsidiaries have recorded income tax expense for each reporting period in accordance with current tax laws in each country where they operate.
The tax expense on profit for the year includes the sum of current taxes that result from applying current tax rates to the taxable basis for the year (after legally admissible deductions) and the variation in deferred tax assets and liabilities recognized in consolidated profit or loss. The Bank and its subsidiaries recognize, when appropriate, deferred tax assets and liabilities for future estimates of tax effects attributable to differences between the book and tax values of assets and liabilities. Deferred tax assets and liabilities are determined based on the tax rate applicable in the year that deferred tax assets and liabilities are recovered or settled. The effects of future
F-54
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
changes in tax legislation or tax rates are recognized in deferred taxes starting on the date of publication of the law approving such changes. The effects of deferred taxes for temporary differences between the tax and book basis are recorded on an accrual basis in accordance with IAS 12Income Taxes.
Tax Reforms
Chile
On September 29, 2014, Law 20,780 was published in the Official Gazette. The law introduces modifications designed to increase revenue collection, finance education reform, make taxation more equitable and improve the current tax system.
As of year end, the deferred taxes of the Bank and its Chilean subsidiaries have been adjusted based on the corporate income tax rates contained in Law 20,780, published September 29, 2014. The law progressively increases the tax rate to 22.5% for commercial year 2015, 24% for 2016 and 25% for 2017 and beyond for taxpayers applying the Attributed Income System. Taxpayers applying the Semi-Integrated System will have a rate of 25.5% in 2017 and 27% in 2018 and beyond.
Colombia
The deferred taxes of the Colombian subsidiaries have been adjusted based on the new income tax rates introduced by Law 1,739 published December 23, 2014, which modified the Colombian tax statutes and incorporated mechanisms to fight tax evasion.
This modification to Colombian tax regulations raises tax rates to 39% for commercial year 2015, 40% for 2016, 42% for 2017, 43% for 2018 and then returns to 34% for 2019 and beyond. In light of these modifications, the deferred taxes of the Chilean companies have been recorded at a maximum recovery or settlement rate of 27%. The maximum tax rate applied on temporary differences of companies operating in Colombia is 43% for temporary differences to be reversed in 2018.
z) Provisions and Contingent Liabilities
Provisions are reserves involving uncertainty about their amount or maturity. They are recorded in the Consolidated Statement of Financial Position when the following copulative requirements are met:
a present (legal or implicit) obligation has arisen from a past event and,
F-55
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
as of the date of the consolidated financial statements it is likely that the Bank and/or its controlled entities have to disburse resources to settle the obligation and the amount can be reliably measured.
A contingent liability is any obligation that arises from past events whose existence will be confirmed only if one or more uncertain future event occurs not within the control of the Bank and its controlled entities.
Contingent liabilities include: guarantors and pledges, confirmed foreign letters of credit, documentary letters of credit, performance and bid bonds, unrestricted lines of credit, other loan commitments and other contingent loans.
The annual consolidated financial statements include all material provisions with respect to which it is considered more likely than not that the obligation will have to be settled.
Provisions—which are quantified on the basis of the best available information regarding the consequences of the event that gives rise to them, and are re-estimated at the end of each accounting period—are used to cover the specific obligations for which they were originally recognized, and are reversed in full or in part when those obligations cease to exist or are reduced.
Provisions are classified into the following groups in the Consolidated Statement of Financial Position based on the obligations they cover:
• | Employee benefits and compensation |
• | Minimum dividends |
• | Contingent loan risk |
• | Contingencies (including country risk, additional provisions and others) |
aa) Derecognition of Financial Assets and Liabilities
Accounting for transfers of financial assets is based on the degree and way in which the risks and rewards associated with the transferred assets are transferred:
1. | If the risks and rewards are substantially transferred to third parties (e.g. unconditional sales, sales with repurchase agreements at fair value as of the date of repurchase, sales of financial assets with a purchase option deemed deep-out-of-the-money, use of assets in which the transferor does not retain subordinate financing or transfer any type of credit enhancement to the new holders and other similar cases), the transferred asset is derecognized from the balance sheet and any rights or obligations retained or created upon transfer are simultaneous recognized. |
F-56
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
2. | If the risks and rewards of the transferred financial asset are substantially retained (e.g. sales of financial assets with repurchase agreements at fixed prices or for the sales price plus interest, securities lending agreements where the borrower has the obligation to return the securities or similar assets and other similar cases) the transferred asset is not derecognized from the balance sheet and will continue to be valued using the same criteria used before the transfer. Otherwise, the following is recorded in accounting: |
a) | A financial liability for an amount equal to the consideration received, which is subsequently valued at amortized cost. |
b) | Both the income from the transferred financial asset (but not derecognized) and the expenses for the new financial liability. |
3. | If the risks and rewards of the transferred financial asset are not substantially transferred or retained (e.g. sales of financial assets with a purchase option deemed not deep-in-the-money or deep-out-of-the-money, use of assets in which the transferor assumes subordinate financing or another type of credit enhancement for part of the transferred asset and other similar cases), the following will be analyzed: |
a) | If the transferor has not retained control of the transferred financial asset, it will be derecognized, and any rights or obligations created or retained upon transfer will be recognized. |
b) | If the transferor has retained control of the transferred financial asset, it will continue to be recognized in the Statement of Financial Position for an amount equal to its exposure to the changes in value that it may experience and a financial liability will be recognized for the financial asset transferred. The net amount of the transferred asset and the associated liability will be the amortized cost of the rights and obligations retained if the transferred asset is measured at amortized cost, or the fair value of the rights and obligations retained if the transferred asset is measured at fair value. |
As a result, financial assets will only be derecognized in the Statement of Financial Position when the rights over the cash flows have been extinguished or when substantially all implicit rights and rewards have been transferred to third parties. Likewise, financial liabilities are only derecognized from the Statement of Financial Position when the obligations they generate have been extinguished or when they are acquired with the intention to settle them or place them once again.
F-57
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
bb) Employee Benefits
Short-term benefits
Short-term employee benefits are employee benefits (other than termination benefits) that are due to be fully settled within 12 months after the end of the reporting period in which the employees render the related services.
When an employee has rendered service to an entity during an accounting period, the entity shall recognize the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service:
a) | as a liability (accrued expense), after deducting any amount already paid. If the amount already paid exceeds the undiscounted amount of the benefits, an entity shall recognize that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund. |
b) | as an expense, unless another IFRS requires or permits the inclusion of the benefits in the cost of an asset. |
Vacation accrual
The annual cost of personnel vacation and benefits is recorded on an accrual basis.
Post-employment benefits
Post-employment benefits are employee benefits (other than termination benefits and short-term employee benefits) which are payable after the completion of employment. Post-employment benefit plans are formal or informal arrangements under which an entity provides post-employment benefits for one or more employees. Post-employment benefit plans are classified as either defined contribution plans or defined benefit plans, depending on the economic substance of the plan as derived from its principal terms and conditions.
Other long-term benefits
Other long-term employee benefits include all employee benefits other than short-term employee benefits, post-employment benefits and termination benefits.
The standard requires a simplified method of accounting for other long-term employee benefits. In contrast to the accounting required for post-employment benefits, this method does not recognize new measurements in other comprehensive income.
Termination benefits
Termination benefits are employee benefits payable as a result of either:
a) | an entity’s decision to terminate an employee’s employment before the normal retirement date; or |
b) | an employee’s decision to accept voluntary redundancy in exchange for those benefits. |
F-58
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
An entity shall recognize termination benefits as a liability and an expense at the first of the following dates:
i. | when the entity no longer has a realistic possibility of withdrawal; and |
ii. | when the entity recognizes restructuring costs that fall within the scope of IAS 37 and involve the payment of termination benefits. |
cc) Debt Instruments Issued
The financial instruments issued by the Bank and subsidiaries are classified in the Consolidated Statement of Financial Position within “debt issued”, where the Bank has an obligation either to deliver cash or another financial asset to the holder, or to satisfy the obligation by the exchange of a fixed amount of cash or other financial asset for a fixed number of shares, if the case.
After initial measurement, debt issued is subsequently measured at amortized cost using the effective interest rate. Amortized cost is calculated by taking into account any discount, premium or cost related directly to the issuance.
dd) Intangible Assets
Intangible assets are identified as non-monetary assets (separately identifiable from other assets) without physical substance which arise as a result of a legal transaction or are developed internally by the consolidated entities, or generated in business combinations. They are assets whose cost can be estimated reliably and from which the consolidated entities consider it probable that future economic benefits will be generated. The cost of intangible assets acquired in a business combination is their fair value as of the date of acquisition.
These intangible assets are recorded initially at acquisition or production cost and are subsequently measured at cost less any accumulated amortization or any accumulated impairment losses.
An entity will evaluate whether the useful life of an intangible asset is finite or indefinite and, if finite, will evaluate the duration or number of units of production or other similar units that make up its useful life. The entity will consider an intangible asset to have an indefinite useful life when, on the basis of an analysis of all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity.
F-59
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
An intangible asset is accounted for based on its useful life. An intangible asset with a finite useful life is amortized over its economic useful life and reviewed to determine whether any indication of impairment may exist. The amortization period and method are reviewed at least once every reporting period. An intangible asset with an indefinite useful life is not amortized and the entity will determine if it has experienced an impairment loss by comparing its recoverable amount to its carrying amount on a yearly basis and at any time during the year in which there is an indication that its value may be impaired.
i) Software
Computer software acquired by the Bank is accounted for at cost less accumulated amortization and impairment losses.
Expenses for internally developed software are recognized as an asset when the Bank is able to demonstrate its intent and ability to complete development and use it internally to generate future economic benefits and can reliably measure the costs of completing development. Capitalized costs of internally developed software include all costs directly attributable to developing the software and are amortized over their useful lives. Internally developed software is accounted for at capitalized cost less accumulated amortization and impairment losses.
Subsequent expenses for the recognized asset are capitalized only when they increase the future economic benefit for the specific assets. All other expenses are recognized in profit or loss.
Amortization is recorded in profit or loss on a straight-line basis using the estimated useful life of the software, from the date on which it is available for use. The estimated useful life of software is between three and six years, depending on the type of software and amount of the investment.
ii) Arising from business combinations
In accordance with IFRS 3, when intangible assets are acquired and/or generated in a business combination, their cost is the fair value as of the date of acquisition. The fair value of an intangible asset must reflect the expectations of market participants as of the acquisition date regarding the likelihood that the future economic benefits incorporated into the asset will flow to the entity. In other words, the entity expects an inflow of economic benefits, even if there is uncertainty regarding the date or amount.
In accordance with IAS 38 and IFRS 3, the acquirer shall recognize an intangible asset from the acquiree on the date of acquisition separately from goodwill, regardless of whether the asset had been recognized by the acquiree before the business combination.
The business combination between Banco Itaú Chile and CorpBanca gave rise to intangible assets and goodwill as indicated in Note 2 below.
F-60
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
iii) Other identifiable intangible assets
This item applies to intangible assets that qualify as identifiable, which means it is controlled by the Bank, the cost can be reliably measured and it is likely to generate future economic benefits.
ee) Cash and Cash Equivalents
The indirect method has been used to prepare the Consolidated Statement of Cash Flows, which shows the changes in cash and cash equivalents derived from operating activities, investment activities and financing activities during the year.
For the purpose of the cash flow statement cash and cash equivalents are defined as the account “cash and due from banks”, plus (minus) the net balance of transactions pending settlement that are shown in the Consolidated Statement of Financial Position, plus highly-liquid trading and available-for-sale securities with insignificant risk of changing value, maturing in no more than three months from the date of acquisition and repurchase agreements with similar conditions.
It also includes investments in fixed-income mutual funds that are presented together with trading securities in the Consolidated Statement of Financial Position. Balances of cash and cash equivalents and their reconciliation with the Consolidated Statement of Cash Flows are detailed in Note 5 Cash and Cash Equivalents.
The following concepts have been used in preparing the Statement of Cash Flows:
a) | Cash flows:Inflows and outflows of cash and cash equivalents, understood as short-term, highly-liquid investments with insignificant risk of changing value such as deposits in the Chilean Central Bank and deposits in other domestic and foreign banks. |
b) | Operating activities: corresponds to normal activities of banks and their controlled entities, as well as other activities that cannot classified as investing or financing activities. |
c) | Investing activities: corresponds to activities that involve acquiring, selling or otherwise disposing of long-term assets and other investments not included in cash and cash equivalents. |
d) | Financing activities: activities that bring about changes in the size and composition of net equity and liabilities that are not considered operating or investing activities. |
ff) Use of Estimates and Judgment
In preparing these consolidated financial statements, the Company’s management has made certain estimates, judgments and assumptions that affect the application of accounting policies and reported balances of assets and liabilities, disclosures of contingent assets and liabilities as of period end, and reported values of income and expenses during the period. Real results could differ from these estimated amounts.
F-61
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Relevant estimates and assumptions are reviewed regularly by management in order to quantify certain assets, liabilities, income and expenses. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future period that is affected.
In certain cases, SBIF Standards and generally accepted accounting principles require assets and liabilities to be recorded and/or disclosed at fair value. Fair value is the amount at which an asset can be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. When market prices in active markets are available, they have been used as a valuation basis. When market prices in active markets are not available, the Bank estimates these values based on the best information available, including the use of models or other valuation techniques.
The Bank has established provisions to cover possible loan losses in accordance with SBIF regulations. In estimating provisions, these regulations require provisions to be regularly evaluated, taking into consideration factors such as changes in the nature and size of the loan portfolio, forecasted portfolio trends, loan quality and economic conditions that may affect debtor payment capacity. Changes in loan loss allowances are presented as “Credit Risk Provisions” in the Consolidated Statement of Income.
Loans are charged off when management determines that the loan or a portion of the loan cannot be collected in accordance with SBIF regulations in Chapter B-2 “Impaired or Charged-Off Loans.” Credit risk provisions are reduced to record charge-offs.
In particular, information regarding more significant areas of estimates of uncertainties and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are described in the following notes:
• | Useful life of material and intangible assets (Notes 9 and 21) |
• | Valuation of goodwill (Notes 8, 9 and 21) |
• | Credit risk provisions (Notes 6, 7 and 18) |
• | Fair value of financial assets and liabilities (Note 23) |
• | Contingencies and commitments (Note 12). |
• | Impairment losses for certain assets (Notes 6, 7 and 21) |
• | Current and deferred taxes. |
• | Consolidation perimeter and evaluation of control (Note 1, letter c)). |
F-62
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
During the six-month period ended June 30, 2016, there have been no significant changes in the estimates made as of year-end 2015 that differ from those included in these consolidated financial statements.
gg) Minimum Dividends
The Bank records within liabilities (as a provision) the portion of profit for the year that should be distributed to comply with the Corporations Law (30%) or its bylaws. For the years 2015 and 2014, the Bank provisioned 50% of profit for the year. This provision is recorded within “provision for minimum dividends” by reducing “retained earnings” within the Consolidated Statement of Changes in Equity.
Although Banco Itaú Chile had a policy to not distribute dividends, in the agreement signed for the merger with CorpBanca it agreed to distribute 50% of profit for the 2015 period and the year 2014. However, at an Extraordinary Shareholders’ Meeting on June 11, 2015, shareholders agreed to reduce the amount of the dividends for the year 2014 to MCh$26,448. See Note 13.
Title VII of the bylaws of ITAU CORPBANCA establishes that the Bank must distribute an annual cash dividend to its shareholders, as proposed by the Board and pro rated based on their shareholdings, of at least thirty (30%) of profit for each year. In any event, no dividends may be distributed if there are any capital losses until those losses have been remedied, nor if any distribution causes the Bank to breach any of the capital requirements in the General Banking Law.
hh) Assets Received or Awarded in Lieu of Payment
Assets received or awarded in lieu of payment of loans to customers are recorded, in the case of assets received in lieu of payment, at the price agreed-upon by the parties, or otherwise, when the parties do not reach an agreement, at the amount at which the Bank is awarded those assets at a court-ordered auction. In both cases, an independent assessment of the market value of the assets is performed based on the state in which they are acquired.
If the value of loans to customers exceeds the fair value of the asset received or awarded in lieu of payment less disposal costs, it is recognized in the Consolidated Statement of Income as other operating expenses.
Assets received or awarded in lieu of payment are valued at the lower of its initial value and the net realizable value (i.e. its independently assessed fair value less maintenance or disposal costs and regulatory charge-offs.) The SBIF requires regulatory charge-offs if the asset is not sold within a one year of foreclosure.
This net realizable value is determined based on current market conditions and should correspond to its fair value less necessary maintenance and disposal costs.
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
In general, it is believed that these assets will be disposed of within one year of being awarded. However, in justified cases the SBIF may give the Bank an additional term of up to 18 months to dispose of the assets. To take advantage of this extension, the asset must have been written off in accounting in compliance with article 84 of the General Banking Law.
ii) Leases
Finance leases
This corresponds to leases that transfer substantially all risks and rewards from the owner of the leased asset to the lessee. When consolidated entities act as lessors of an asset, the aggregate present value of minimum lease payments plus the guaranteed residual value—normally the exercise price of the lessee’s purchase option at the end of the contract—will be recorded as third-party financing within “loans to customers” in the Consolidated Statement of Financial Position. Assets acquired under operating leases are presented within “other assets” at purchase cost.
When consolidated entities act as lessees of an asset, the Bank records the cost of the leased assets in the Consolidated Statement of Financial Position based on the nature of the asset in the contract and, simultaneously, a liability for the same amount (which will be the lesser of the fair value of the leased asset and the aggregate present values of the lease payments due the lessor plus, if appropriate, the exercise price of the purchase option).
These assets are depreciated using criteria similar to those applied to property, plant and equipment held for own use. In both cases, finance income and expenses arising from these contracts are credited and charged, respectively to the Consolidated Statement of Income as “interest income” and “interest expenses” in order to obtain a constant rate of return over the term of the lease.
Operating leases
Leases in which the lessor conserves ownership of the leased asset as well as a significant part of the risks and rewards of ownership are classified as operating leases. When the consolidated entities act as lessor, the purchase cost of the leased assets will be recorded in “property, plant and equipment”. These assets are depreciated in accordance with the policies for property, plant and equipment (see letter q “property, plant and equipment) and income from the lease agreements is recognized in the Consolidated Statement of Income on a straight-line basis within “other operating income”.
When the consolidated entities act as lessee, lease expenses including any incentives given by the lessor are charged on a straight-line basis to consolidated profit or loss in “other general administrative expenses” within the Consolidated Statement of Income.
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
jj) Fiduciary Activities
The Bank and its subsidiaries provide trust and other fiduciary services that result in the holding or investing of assets on behalf of customers. Assets held in a fiduciary capacity are not reported in the consolidated financial statements, as they are not the assets of the Bank. Contingencies and commitments arising from this activity are disclosed in Note 19Contingencies, Commitments and Responsibilities, letter a)Commitments and responsibilities accounted for in off-balance-sheet memorandum accounts.
kk) Customer Loyalty Program
The Bank and its subsidiaries maintain a customer loyalty program as an incentive to their customers. Through this program, customers can acquire goods and/or services based on purchases made primarily with credit cards issued by the Bank and by meeting certain conditions established in the program for that purpose.
The Bank has established provisions to reflect the expense related to these awards.
ll) Non-Current Assets Held for Sale
Non-current assets (or disposal groups made up of assets and liabilities) that are expected to be recovered primarily through sale instead of through continued use are classified as held for sale. Immediately before being classified as such, the assets (or elements of a disposal group) are remeasured in accordance with the Bank’s accounting policies. From this time forward, assets (or disposal groups) are measured at the lesser of carrying amount and fair value less costs to sell.
Impairment losses after the initial classification of assets held for sale and gains and losses after revaluation are recognized in profit or loss. Gains are not recognized if they exceed any accumulated loss.
As of June 30, 2015, the Bank includes the values related to the investment in SMU CORP S.A. in “Non-current assets classified as held for sale” and “Liabilities directly associated with non-current assets held for sale” (in other assets and liabilities), after evaluating the requirements in IFRS 5 for classifying it as a non-current asset available for sale. This company is a subsidiary that was acquired exclusively for resale. Its assets and liabilities are valued at MCh$18,317 and MCh$17,426, respectively.
The investment is available for immediate sale in its current condition and the sale is considered highly likely as the Bank’s senior management is committed to the sale. The Bank has no intention of changing its mind regarding this sale and, therefore, has already begun the process of identifying a buyer, which it expects to conclude within a year.
As of December 31, 2015, the Bank did not have any non-current assets held for sale.
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
mm) Earnings per Share
Basic earnings per share is determined by dividing net income (loss) for the year attributable to the Bank by the average weighted number of shares in circulation during that year.
Diluted earnings per share is determined in a similar manner as basic earnings per share, but the average weighted number of shares in circulation is adjusted to account for the dilutive effect of stock options, warrants and convertible debt.
As of June 30, 2016 and 2015, and December 31, 2015, the Bank has no instruments that generate dilutive effects on equity.
nn) Securitization
The Bank does not have any securitized financial liabilities or equity instruments.
oo) Consolidated Statement of Changes in Equity
This part of the Statement of Changes in Equity presents all movements in net equity, including those arising from changes in accounting policies and correction of errors. As a result, this statement reconciles the carrying amount at the beginning and end of the year of all items within consolidated net equity, grouping movements as follows based on their nature:
a) | Adjustments due to changes in accounting policies and correction of errors: this includes changes in consolidated net equity that arise as a result of the retroactive restatement of balances in the consolidated financial statements arising from changes in accounting policies or the correction of errors. |
b) | Income and expenses recognized during the period: this shows the aggregate of all income and expense items recorded in the Consolidated Statement of Income. |
c) | Other changes in equity, including profit distributions, capital increases, provisions for minimum dividends, dividends paid, and other increases or decreases in equity. |
This information is presented in two statements: the Consolidated Statement of Comprehensive Income and the Consolidated Statement of Changes in Equity.
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
pp) Consolidated Statement of Comprehensive Income
This part of the Consolidated Statement of Comprehensive Income presents the income and expenses generated by the Bank as a result of its activity during the period, distinguishing between those recorded in consolidated profit or loss for the year and those recorded directly in consolidated net equity.
Therefore, this statement presents:
a) | Consolidated profit for the year. |
b) | The net amount of income and expenses temporarily recognized in equity as adjustments recorded as “valuation accounts”. |
c) | Deferred income taxes arising from the concepts in letters a) and b) above, except for translation adjustments and hedges of net investments in foreign operations. |
Aggregate consolidated income and expenses recognized, calculated as the sum of the preceding letters, is divided between the amount attributed to the Bank and that attributed to non-controlling interests.
qq) Relative Importance
In determining disclosures about different financial statement items and other matters, in accordance with IAS 34Interim Financial Reporting, the Bank has considered the relative importance of these items with respect to the financial statements for the period.
rr) Seasonal or Cyclical Nature of Interim Transactions
The activities carried out by the Bank and its subsidiaries are not seasonal or cyclical in nature. As a result, no specific disclosures have been included in the notes to the consolidated financial statements for the period ended June 30, 2016.
ss) Uniformity
The accounting policies used in preparing these financial statements are materially consistent with the audited annual financial statements as of December 31, 2015, except for the adoption of any amended standards (see letter tt) below).
tt) New Accounting Pronouncements
• | SBIF Rulings |
Between January 1, 2016, and the date of issuance of these consolidated financial statements, the following new accounting or related pronouncements have been issued by the SBIF:
F-67
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Ruling No. 3573 of December 30, 2014. Establishes standard method for residential mortgage loans to be applied beginning in 2016.
The SBIF published changes to standards regarding credit risk provisions contained in Chapter B-1 of the SBIF Compendium of Accounting Standards. With these changes, the SBIF aims to ensure that provisions established by banks appropriately reflect the credit risk in their loan portfolios and to provide guidelines that promote best practices in risk evaluation and management.
Currently, banks calculate provisions on “group portfolios” using their own methodologies (internal models). The SBIF has determined that these models have not always prospectively identified portfolio impairment. Therefore, in some cases, provisions may be insufficient and reactionary. As a result, the SBIF has deemed it necessary to create standards for each type of portfolio to be used as a minimum benchmark in designing provisioning methodologies. However, banks are responsible for establishing their own methodologies for calculating provisions. The SBIF may allow provisioning based on the outcomes of internal models when they have been duly approved as part of an entity’s normal review process.
The regulatory enhancements being introduced at this time involve the following matters:
• | Standard Method for Provisions for Mortgage Loans. |
• | Treatment of Guarantees. |
• | Substitution of Issuer for Debtor in Factoring Transactions. |
• | Other specifications for greater clarity on the scope of the regulations. |
The SBIF has set an effective date for this standard of January 1, 2016, in order to provide sufficient time for implementation.
The Bank’s management analyzed these amendments in detail and concluded that they have not significantly impacted the financial statements for the period. (See Note 2 Accounting Changes)
Bank Ruling No. 3583 of May 25, 2015. Monthly statements of financial position for SBIF.
The accounting information sent monthly to the SBIF includes higher education loans regulated by Law 20,027 as one item within commercial loans and all other student loans within consumer loans, without differentiating them from other loans. In order to apply the same treatment to all loans granted to finance higher education, the SBIF issued Ruling 3,583 on May 25, 2015, and modified the corresponding texts in Chapter C-3 of the Compendium of Accounting Standards, requiring all student loans to be reported within Commercial Loans. The amendments in this ruling take effect for information as of January 1, 2016.
The Bank’s management analyzed these amendments in detail and concluded that they have not significantly impacted the financial statements for the period. (See Note 2 Accounting Changes)
F-68
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Bank Ruling No. 3,604 of March 29, 2016. Modifies the credit-equivalent percentage for unrestricted lines of credit.
The SBIF analyzed standards regarding credit risk provisions and concluded that the credit equivalent forunrestricted lines of credit for debtors with no loan defaults can be set at 35% of the amount available. To reflect this change, it modified Chapter B-3 of the Compendium of Accounting Standards, substituting the figure “35%” for “50%” in No. 3 letter e) Unrestricted lines of credit, Exposure.
This amendment will take effect in May 2016.
The Bank’s management analyzed these amendments in detail and concluded that they have not significantly impacted the financial statements for the period. (See Note 2 Accounting Changes)
• | Accounting Standards Introduced by the International Accounting Standards Board (IASB) |
a) | The following new standards and interpretations have been adopted in these consolidated financial statements. |
New IFRS | Mandatory Effective Date | |
IFRS 14Regulatory Deferral Accounts | Annual periods beginning on or after January 1, 2016 |
IFRS 14Regulatory Deferral Accounts
On January 30, 2014, the IASB issued IFRS 14Regulatory Deferral Accounts. This standard is applicable to first-time adopters of IFRS and for entities which are involved in rate-regulated activities and recognized regulatory deferral account balances under its previous generally accepted accounting principles. This standard requires separate presentation of regulatory deferral account balances in the statement of financial position and statement of comprehensive income. The effective date for adopting IFRS 14 is January 1, 2016.
The Bank’s management analyzed these amendments in detail, which are effective for entities applying IFRS for the first time for periods beginning on or after January 1, 2016, and therefore they did not significantly impact the financial statements for the period.
Amendments to IFRS | Mandatory Effective Date | |
Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11) | Annual periods beginning on or after January 1, 2016 | |
Clarification of Acceptable Methods of Depreciation and Amortization (Amendments to IAS 16 and IAS 38) | Annual periods beginning on or after January 1, 2016 | |
Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) | Annual periods beginning on or after January 1, 2016 | |
Equity Method in Separate Financial Statements (Amendments to IAS 27) | Annual periods beginning on or after January 1, 2016 | |
Disclosure Initiative (Amendments to IAS 1) | Annual periods beginning on or after January 1, 2016 | |
Annual Improvements Cycle 2012-2014 - Amendments to Four IFRS. | Annual periods beginning on or after January 1, 2016 |
F-69
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11)
On May 6, 2014, the IASB issuedAccounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11). These amendments clarify the accounting for acquisitions of an interest in a joint operation when the operation constitutes a business.
It amends IFRS 11Joint Arrangements to require an acquirer of an interest in a joint operation in which the activity constitutes a business (as defined in IFRS 3 Business Combinations) to:
• | Apply all of the business combinations accounting principles in IFRS 3 and other IFRS, except for those principles that conflict with the guidance in IFRS 11; |
• | Disclose the information required by IFRS 3 and other IFRS for business combinations. |
The amendments are effective for annual periods beginning on or after January 1, 2016. Earlier application is permitted but corresponding disclosures are required. The amendments apply prospectively.
The Bank’s management analyzed these amendments in detail and concluded that they have not significantly impacted the financial statements for the period.
Clarification of Acceptable Methods of Depreciation and Amortization (Amendments to IAS 16 and IAS 38)
On May 12, 2014, the IASB publishedClarification of Acceptable Methods of Depreciation and Amortization (Amendments to IAS 16 and IAS 38). The amendments provide additional guidance on how the depreciation or amortization of property, plant and equipment and intangible assets should be calculated. They are effective for annual periods beginning on or after January 1, 2016, with early adoption permitted.
The Bank’s management analyzed these amendments in detail and concluded that they have not significantly impacted the financial statements for the period.
Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41)
On June 30, 2014, the IASB publishedAgriculture: Bearer Plants (Amendments to IAS 16 and IAS 41). The amendments bring bearer plants, which are used solely to grow produce, into the scope of IAS 16 so that they are accounted for in the same way as property, plant and equipment. The amendments are effective for annual periods beginning on or after January 1, 2016, with earlier application permitted.
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
It amends IAS 16Property, Plant and Equipment and IAS 41Agriculture to:
• | Include ‘bearer plants’ within the scope of IAS 16 rather than IAS 41, allowing such assets to be accounted for a property, plant and equipment and measured after initial recognition on a cost or revaluation basis in accordance with IAS 16; |
• | Introduce a definition of ‘bearer plants’ as a living plant that is used in the production or supply of agricultural produce, is expected to bear produce for more than one period and has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales; |
• | Clarify that produce growing on bearer plants remains within the scope of IAS 41. |
The Bank’s management analyzed these amendments in detail and concluded that they have not significantly impacted the financial statements for the period.
Equity Method in Separate Financial Statements (Amendments to IAS 27)
On August 12, 2014, the IASB publishedEquity Method in Separate Financial Statements (Amendments to IAS 27). The amendments restore the option to use the equity method of accounting in separate financial statements for investments in subsidiaries, joint ventures and associates.
The amendments allow the entity to account for investments in subsidiaries, joint ventures and associates in their separate financial statements:
• | at cost, |
• | in accordance with IFRS 9Financial Instruments: (or IAS 39Financial Instruments: Recognition and Measurement of entities that have not yet adopted IFRS 9), or |
• | using the equity method as described in IAS 28Investments in Associates and Joint Ventures. |
The accounting option must be applied by investment category.
In addition to the modifications to IAS 27, modifications were made to IAS 28 to avoid a possible conflict with IFRS 10Consolidated Financial Statements and IFRS 1First-time Adoption of International Financial Reporting Standards.
The amendments are effective for annual periods beginning on or after January 1, 2016. Early adoption is allowed. The amendments must be applied retroactively in accordance with IAS 8Accounting Policies, Changes in Accounting Estimates and Errors.
The Bank’s management analyzed these amendments in detail and concluded that they have not significantly impacted the financial statements for the period.
Disclosure Initiative (Amendments to IAS 1)
On December 18, 2014, the IASB added an initiative on disclosure to its work program in 2013 to complement the work done in the Conceptual Framework project. The initiative is made up of a number of smaller projects that aim at exploring opportunities to see how presentation and disclosure principles and requirements in existing standards can be improved.
F-71
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
These amendments are effective for annual periods beginning on or after January 1, 2016, with earlier application permitted.
The Bank’s management analyzed these amendments in detail and concluded that they have not significantly impacted the financial statements for the period.
Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28).
On December 18, 2014, the IASB published Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10Consolidated Financial Statements, IFRS 12Disclosure of Interests in Other Entitiesand IAS 28Investments in Associates and Joint Ventures (2011) to address issues that have arisen in the context of applying the consolidation exception for investment entities.
These amendments are effective for annual periods beginning on or after January 1, 2016, with early adoption permitted.
The Bank’s management analyzed these amendments in detail and concluded that they have not significantly impacted the financial statements for the period.
Annual Improvements Cycle 2012 - 2014
Standard | Topic | Amendments | ||
IFRS 5Non-current Assets Held for Sale and Discontinued Operations | Changes in methods of disposal. | Adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to held for distribution to owners or vice versa and cases in which held-for-distribution accounting is discontinued. The amendments are effective for annual periods beginning on or after January 1, 2016, and early adoption is permitted. |
F-72
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
IFRS 7Financial Instruments: Disclosures: (with consequential amendments to IFRS 1) | Servicing contracts | Adds additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset for the purpose of determining the disclosures required.
Applicability of the amendments to IFRS 7 to condensed interim financial statements.
Clarifies the applicability of the amendments to IFRS 7 on offsetting disclosures to condensed interim financial statements. The amendments are effective for annual periods beginning on or after January 1, 2016, and early adoption is permitted. | ||
IAS 19Employee Benefits | Discount rate | Clarifies that the high quality corporate bonds used in estimating the discount rate for post-employment benefits should be denominated in the same currency as the benefits to be paid (thus, the depth of the market for high quality corporate bonds should be assessed at currency level). The amendments are effective for annual periods beginning on or after January 1, 2016, and early adoption is permitted. | ||
IAS 34Interim Financial Reporting | Disclosure of information ‘elsewhere in the interim financial report’ | Clarifies the meaning of ‘elsewhere in the interim report’ and requires a cross-reference. The amendments are effective for annual periods beginning on or after January 1, 2016, and early adoption is permitted. |
The Bank’s management analyzed these amendments in detail and concluded that they have not significantly impacted the financial statements for the period.
F-73
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
b) | New and Revised IFRS Issued but not yet Effective: |
New IFRS | Mandatory Effective Date | |
IFRS 9Financial Instruments | Annual periods beginning on or after January 1, 2018 | |
IFRS 15Revenue from Contracts with Customers | Annual periods beginning on or after January 1, 2018 | |
IFRS 16 Leases | Annual periods beginning on or after January 1, 2019 | |
Amendment to IFRS | Mandatory Effective Date | |
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) | Effective date deferred indefinitely. | |
Recognition of Deferred Tax Assets for Unrealized Losses (Amendments to IAS 12) | Annual periods beginning on or after January 1, 2017 | |
Disclosure Initiative (Amendments to IAS 7) | Annual periods beginning on or after January 1, 2017 |
IFRS 9Financial Instruments
IFRS 9Financial Instruments. On November 12, 2009, the International Accounting Standards Board (IASB) issued IFRS 9 Financial Instruments. This standard introduces new requirements for classifying and measuring financial assets. It is effective for annual periods beginning on or after January 1, 2013, allowing early adoption. IFRS 9 specifies how an entity should classify and measure its financial assets. This standard requires that all financial assets be classified on the basis of an entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset. Financial assets are either measured at amortized cost or at fair value. Only those financial assets measured at amortized cost are tested for impairment. On October 28, 2010, the IASB published a revised version of IFRS 9Financial Instruments.
This revised standard retains the requirements for classifying and measuring financial assets that were published in November 2009, but adds guidance on classifying and measuring financial liabilities. As part of the restructuring of IFRS 9, the IASB has also copied the guidance on derecognition of financial instruments and related implementation guidance from IAS 39 to IFRS 9. This new guidance concludes the first phase of the IASB’s project to replace IAS 39. The other phases (impairment and hedge accounting) have not yet been finalized.
The guidance included in IFRS 9 regarding the classification and measurement of financial assets has not changed from that in IAS 39. In other words, financial liabilities will continue to be measured at either amortized cost or fair value through profit and loss. The concept of bifurcating derivatives incorporated in a contract for a financial asset has also not changed. Financial liabilities held for trading will continue to be measured at fair value through profit and loss and all other financial assets will be measured at amortized cost unless the fair value option is applied using the criteria currently existing in IAS 39.
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Nevertheless, there are two differences with respect to IAS 39:
• | The presentation of the effects of changes in the fair value attributable to the credit risk of a liability; and |
• | The elimination of the cost exemption for derivative liabilities to be settled by delivery of unquoted equity instruments. |
On December 16, 2011, the IASB issuedMandatory Effective Date and Transition Disclosures (Amendments to IFRS 9), deferring the effective date of the 2009 and 2010 versions to annual periods beginning on or after January 1, 2015. Prior to the amendments, application of IFRS 9 was mandatory for annual periods that began on or after 2013. The amendments change the requirements for the transition from IAS 39Financial Instruments: Recognition and Measurement to IFRS 9. Furthermore, the amendments also modify IFRS 7Financial Instruments: Disclosures to add certain requirements in the reporting period in which the effective date of IFRS 9 is included.
IFRS 9Financial Instruments (Hedge Accounting and Amendments to IFRS 9, IFRS 7 and IAS 32). On November 19, 2013, the IASB issued this amendment, which includes a new general model for hedge accounting. This new model is more closely aligned with risk management activities, resulting in more useful information for financial statement users. It also changes the requirements for applying the fair value option for financial liabilities in order to address own credit risk. The improvement establishes that the effects of changes in a liability’s credit risk should not affect profit or loss for the period unless the liability is held for trading; this amendment may be adopted early without applying the other provisions of IFRS 9. It also makes the effective date conditional upon the completion of the IFRS 9 project but allows early adoption.
IFRS 9 Financial Instruments. On July 24, 2014, the IASB issued the final version of IFRS 9, which contains the accounting requirements for financial instruments and supersedes IAS 39Financial Instruments: Recognition and Measurement. The standard contains requirements in the following areas:
Classification and Measurement: Financial assets are classified on the basis of the business model in which they are held and contractual cash flow characteristics. The 2014 version of IFRS 9 introduces a measurement category known as “fair value through other comprehensive income” for certain debt instruments. Financial liabilities are classified similarly to IAS 39Financial Instruments: Recognition and Measurement, but there are differences in the requirements applicable to the measurement of an entity’s own credit risk.
Impairment: The 2014 version of IFRS 9 introduces an “expected credit losses” model for measuring financial asset impairment. Therefore, a credit loss event does not need to occur before credit losses can be recognized.
Hedge Accounting: It introduces a new model that is designed to align hedge accounting more closely with risk management activities when they hedge exposure to financial and non-financial risk.
F-75
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Derecognition: The requirements for derecognizing financial assets and liabilities are the same as the existing requirements in IAS 39Financial Instruments: Recognition and Measurement.
IFRS 9 is effective for all annual periods beginning on or after January 1, 2018. Early adoption is allowed.
In accordance with SBIF instructions in section 12 of Chapter A-2 Limits or Specifications on the Use of General Criteria of the Compendium of Accounting Standards, this standard cannot be adopted early and, moreover, must not be applied until the SBIF makes use mandatory for all banks.
IFRS 15Revenue from Contracts with Customers
On May 28, 2014, the IASB has published its new standard, IFRS 15Revenue from Contracts with Customers. At the same time, the Financial Accounting Standards Board (FASB) has published its equivalent revenue standard, ASU 2014-09.
The new standard provides a single, principles based five-step model to be applied to all contracts with customers: i) Identify the contract with the customer, ii) identify the performance obligations in the contract, iii) determine the transaction price, iv) allocate the transaction price to the performance obligations in the contracts, v) recognize revenue when (or as) the entity fulfills a performance obligation.
IFRS 15 must be applied in an entity’s first annual IFRS financial statements for periods beginning on or after January 1, 2017. Application of the standard is mandatory and early adoption is allowed. An entity that chooses to apply IFRS 15 earlier than January 1, 2016 must disclose this fact.
Management is still in the process of evaluating the potential impact of these amendments / new pronouncements.
IFRS 16 Leases
On January 13, 2016, the IASB published a new standard, IFRS 16Leases. The new standard will bring most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. Lessor accounting however remains largely unchanged and the distinction between operating and finance leases is retained. IFRS 16 supersedes IAS 17Leases and related interpretations and is effective for periods beginning on or after January 1, 2019, with early adoption permitted if IFRS 15Revenue from Contracts with Customers has also been applied.
Management is still in the process of evaluating the potential impact of these amendments / new pronouncements.
F-76
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)
On September 11, 2014, the IASB publishedSale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28). The amendments address the conflict between the requirements of IAS 28Investments in Associates and Joint Ventures and IFRS 10Consolidated Financial Statements and clarify the accounting for the sale or contribution of assets by an investor to its associate or joint venture, as follows:
• | they require full recognition in the investor’s financial statements of gains and losses arising from the sale or contribution of assets that constitute a business (based on the definition in IFRS 3Business Combinations), |
• | they require the partial recognition of gains and losses where the assets do not constitute a business, i.e. a gain or loss is recognized only to the extent of the unrelated investors’ interests in that associate or joint venture. |
On December 17, 2015, the IASB published the final amendments toSale or Contribution of Assets between an Investor and its Associate or Joint Venture. The amendments defer the effective date until the research project on equity accounting has concluded.
The Bank’s management analyzed these amendments in detail and concluded that they have not significantly impacted the financial statements for the period.
Recognition of Deferred Tax Assets for Unrealized Losses (Amendments to IAS 12)
On January 19, 2016, the IASB published final amendments to IAS 12Income Taxes.
The amendments clarify the following aspects:
• | Unrealized losses on debt instruments measured at fair value and measured at cost for tax purposes give rise to a deductible temporary difference regardless of whether the debt instrument’s holder expects to recover the carrying amount of the debt instrument by sale or by use. |
• | The carrying amount of an asset does not limit the estimation of probable future taxable profits. |
• | Estimates for future taxable profits exclude tax deductions resulting from the reversal of deductible temporary differences |
• | An entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law restricts the utilization of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assets of the same type. |
The amendments are effective for annual periods beginning on or after January 1, 2017. Early adoption is allowed.
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Management is still in the process of evaluating the potential impact of these amendments / new pronouncements.
Disclosure Initiative (Amendments to IAS 7)
The amendments are part of the IASB’s disclosure initiative project and introduce additional requirements intended to address investors’ concerns that financial statements currently do not provide an understanding of an entity’s cash flows; particularly regarding the management of financing activities. The amendments require disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities. Although no specific format is required to comply with the new requirements, the amendments include illustrative examples to show how an entity can fulfill the objective of these amendments.
The amendments are effective for annual periods beginning on or after January 1, 2017. Early adoption is allowed.
Management is still in the process of evaluating the potential impact of these amendments / new pronouncements.
NOTE 2 – FINANCIAL STATEMENT PRESENTATION, BUSINESS COMBINATION AND ACCOUNTING CHANGES
1. | Financial Statement Presentation |
1.1 | Consolidated Financial Statements |
a. | Banco Itaú and CorpBanca completed a business combination on April 1, 2016 (reverse acquisition), which is described in detail in Section 2 “Business Combination of Banco Itaú Chile and CorpBanca” of this note. |
b. | The consolidated financial statements prepared after the reverse acquisition (from April 1, 2016 forward) will be issued under the name of the legal controller (the acquiree for accounting purposes, or CorpBanca, the merged entity, which will take the name Itaú-CorpBanca), but they will be described in these notes as a continuation of the financial statements of the legal subsidiary (the acquirer for accounting purposes, or Banco Itaú) for comparative figures from 2015, and for the current period’s comprehensive income for the period and other related items for the months January-March 2016, but for the April-June period those generated by Itaú-CorpBanca, with an adjustment that will be made retroactively (see figure 2) to the legal capital of the acquirer for accounting purposes that reflects the legal capital of the acquiree for accounting purposes. That adjustment is required to reflect the capital of the legal controller (the acquiree for accounting purposes). This situation is detailed as follows (figure 1): |
F-78
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Figure 1: Equity of Merged Entity – Post Business Combination
CorpBanca | Banco Itaú | Itaú-CorpBanca | ||||||||||||||||||||||||||
Carrying Amount | IFRS 3 | Fair Value | Carrying Amount | Adjustments | Merger | |||||||||||||||||||||||
03.31.2016 | 03.31.2016 | 03.31.2016 | 03.31.2016 | 01.04.2016 | 01.04.2016 | |||||||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||
(a) | (b) | (a) + (b) = (c) | (d) | (e) | (c) + (d) + (e) = (f) | Note | ||||||||||||||||||||||
EQUITY | ||||||||||||||||||||||||||||
Attributable to owners of the bank: | ||||||||||||||||||||||||||||
Capital | 781.559 | 1.189.115 | 1.970.674 | 737.382 | (845.230 | ) | 1.862.826 | (g) | ||||||||||||||||||||
Reserves | 515.618 | (515.618 | ) | — | 448.878 | 845.230 | 1.294.108 | (h) | ||||||||||||||||||||
Valuation Accounts | (220.896 | ) | 220.896 | — | 80 | — | 80 | (i) | ||||||||||||||||||||
Retained earnings: | 71.622 | (71.622 | ) | — | 3.069 | — | 3.069 | (i) | ||||||||||||||||||||
Retained earnings from prior periods | 97.689 | (97.689 | ) | — | — | — | — | |||||||||||||||||||||
Profit for the period | (26.067 | ) | 26.067 | — | 6.138 | — | 6.138 | (i | ) | |||||||||||||||||||
Less: Provision for minimum dividends | — | — | — | (3.069 | ) | — | (3.069 | ) | (i | ) | ||||||||||||||||||
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1.147.903 | 822.771 | 1.970.674 | 1.189.409 | — | 3.160.083 | |||||||||||||||||||||||
Non-controlling interest | 308.045 | (45.336 | ) | 262.709 | 61 | — | 262.770 | (j) | ||||||||||||||||||||
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TOTAL EQUITY | 1.455.948 | 777.435 | 2.233.383 | 1.189.470 | — | 3.422.853 | ||||||||||||||||||||||
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(a) : | Corresponds to Consolidated Financial Statements of CorpBanca and Subsidiaries (accounting acquiree, legal acquirer) as of March 31, 2016, basis for acquisition method under IFRS 3. |
(b) : | Corresponds to adjustments made in accordance with IFRS 3 to establish the fair value of the accounting acquiree. |
(c) : | Corresponds to the fair value of the accounting acquiree, detailed in section 2. |
(d) : | Corresponds to Consolidated Financial Statements of Banco Itaú and Subsidiaries (accounting acquirer, legal acquiree) as of March 31, 2016. |
(e) : | Corresponds to accounting reclassifications to establish the share capital of the merged entity. |
(f) : | Corresponds to the equity of the merged bank, which includes the fair value of the acquiree, the book value equity of the acquirer, and new share capital as explained in letter g) below. |
(g) : | Corresponds to new capital of the merged entity, which is comprised of 512,406,760,091 common shares with no par value that have been issued, subscribed and paid and total Ch$1,862,826,231,184. Accordingly, the total prior capital of Banco Itaú Chile and CorpBanca should be adjusted. The adjustments are made against Reserves, in other reserves not from profit. |
(h) : | CorpBanca’s equity and comprehensive income items must be de-recognized, adjusted against Reserves, in other reserves not from profit. This account also includes the items in letter e) above. |
(i) : | Corresponds to the accounting balances generated by Banco Itaú as of the date of the business combination, which shall remain the initial balances generated by Itaú-CorpBanca, because it is the accounting acquirer. From April 1 to June 30, 2016, it will also include the comprehensive income generated by the merged entity. |
(j) : | Corresponds to non-controlling interests of Itaú-CorpBanca, after the business combination and merger. |
The comparative information will also be adjusted retroactively (in some equity accounts) presented in the consolidated financial statements to reflect mainly the capital of the legal controller (the acquiree for accounting purposes). This effect is presented below with the comparative as of December 2015:
F-79
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Figure 2: Equity of Merged Entity – Business Combination – Comparative
Carrying Amount | Restated Carrying Amount | |||||||||||||||||||
CorpBanca | Banco Itaú | Adjustments | Itaú- CorpBanca | |||||||||||||||||
12.31.2015 | 12.31.2015 | 12.31.2015 | 12.31.2015 | |||||||||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||||||||||
(a) | (b) | (c) | (b) + (c) = (d) | Note | ||||||||||||||||
EQUITY | ||||||||||||||||||||
Attributable to owners of the bank: | ||||||||||||||||||||
Capital | 781,559 | 344,569 | 436,990 | 781,559 | (e) | |||||||||||||||
Reserves | 515,618 | 396,710 | (436,990 | ) | (40,280 | ) | (f) | |||||||||||||
Valuation Accounts | (214,340 | ) | (944 | ) | — | (944 | ) | (g) | ||||||||||||
Retained earnings: | 100,885 | 52,168 | — | 52,168 | (g) | |||||||||||||||
Retained earnings from prior periods | — | — | — | — | ||||||||||||||||
Profit for the period | 201,771 | 104,336 | — | 104,336 | ||||||||||||||||
Less: Provision for minimum dividends | (100,886 | ) | (52,168 | ) | — | (52,168 | ) | |||||||||||||
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1,183,722 | 792,503 | — | 792,503 | |||||||||||||||||
Non-controlling interest | 313,857 | 59 | — | 59 | (g) | |||||||||||||||
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TOTAL EQUITY | 1,497,579 | 792,562 | — | 792,562 | ||||||||||||||||
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(a) : | Corresponds to Consolidated Financial Statements of CorpBanca and Subsidiaries (accounting acquiree, legal acquirer) as of December 31, 2015. |
(b) : | Corresponds to Consolidated Financial Statements of Banco Itaú and Subsidiaries (accounting acquirer, legal acquiree) as of December 31, 2015. |
(c) : | Corresponds to retroactive accounting adjustments for presentation purposes for comparative financial statements. |
(d) : | Corresponds to Consolidated Financial Statements of Banco Itaú and Subsidiaries (currently Itaú-CorpBanca) restated in accordance with IFRS 3. |
(e) : | Share capital of Banco Itaú and Subsidiaries adjusted to reflect the capital of CorpBanca as of that date. |
(f) : | Accounting adjustments (reclassifications) described above made against Reserves. |
(g) : | The remaining lines must correspond to those generated by Banco Itaú and Subsidiaries without changing the Bank’s total equity as of that date (MCh$792,562). |
c. | Since these consolidated financial statements represent the continuation of the financial statements of the legal subsidiary (i.e. Banco Itaú and Subsidiaries from January to March 2016 and 2015 for comparative purposes, with the modification to Itaú-CorpBanca from April 1, 2016) except for its capital structure (described above), these consolidated financial statements will reflect: |
(i) | The assets and liabilities of the legal subsidiary (the acquirer for accounting purposes, Banco Itaú and Subsidiaries as of March 31, 2016) recognized and measured at their book value prior to the combination (information included in Figure 1 above). |
F-80
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
(ii) | The assets and liabilities of the legal successor (the acquiree for accounting purposes, CorpBanca and Subsidiaries as of March 31, 2016) will be recognized and measured in accordance with IFRS 3 under the acquisition method (information included in Section 2 “Itaú-CorpBanca Business Combination”). |
(iii) | Retained earnings and other equity balances of the legal subsidiary (the acquirer for accounting purposes, Banco Itaú and Subsidiaries as of March 31, 2016) before the business combination (information included in Figure 1 above). |
(iv) | The amount recognized as issued equity interests in the consolidated financial statements, determined by adding the equity interests issued by the legal subsidiary (the acquirer for accounting purposes, Banco Itaú and Subsidiaries) outstanding immediately before the business combination at the fair value of the legal controller (the acquiree for accounting purposes, CorpBanca and Subsidiaries) (this information is detailed in Figures 1 and 2 above). |
However, the equity structure (i.e. the number and type of equity interests issued) will reflect the equity structure of the legal controller (the acquiree for accounting purposes, CorpBanca and Subsidiaries), including the equity interests that the legal controller issued for the purposes of the business combination. Therefore, the equity structure of the legal subsidiary (the acquirer for accounting purposes, Banco Itaú and Subsidiaries) will be restated using the exchange ratio established in the acquisition agreement to reflect the number of shares of the legal controller (the acquiree for accounting purposes, CorpBanca and Subsidiaries) issued in the reverse acquisition (information included in Figure 3 below).
(v) | The non-controlling interest’s share of the pre-combination book value of the retained earnings of the legal subsidiary (the acquirer for accounting purposes, Banco Itaú and Subsidiaries) and other equity interests (book value). |
Non-controlling interest
In a reverse acquisition, some owners of the legal acquiree (accounting acquirer) may choose not to exchange their equity interests for those of the legal successor (accounting acquiree), but this did not occur in this business combination. These owners are treated like non-controlling interests in the consolidated financial statements after the reverse acquisition. This is because the owners of the legal acquiree that do not exchange their equity interests for those of the legal acquirer only have an interest in the results and net assets of the legal acquiree, but not in the results and net assets of the combined entity. On the contrary, when the legal acquirer is the acquiree for accounting purposes, the owners of the legal acquirer have an interest in the results and net assets of the combined entity (information included in Figure 1 above).
The assets and liabilities of the legal acquiree will be measured and recognized in the consolidated financial statements at their book values prior to the combination. Therefore, in a reverse acquisition, the non-controlling interest reflects the proportional interest of the non-controlling shareholders in the pre-combination book values of the net assets of the legal acquiree, even when the non-controlling interests in other acquisitions are measured at their fair values as of the date of acquisition (information included in Figure 1 above).
F-81
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Earnings per share
The equity structure (see Figure 1 above) of the consolidated financial statements prepared after the reverse acquisition (from April 1, 2016 forward), will reflect the equity structure of the legal acquirer (accounting acquiree, or CorpBanca and Subsidiaries, but the merged entity will take the name Itaú-CorpBanca), including the equity interests issued by the legal acquirer in order to complete the business combination.
In order to calculate the average weighted number of outstanding common shares (the denominator in the calculation of earnings per share) for the period in which the reserve acquisition has occurred:
a. | the number of outstanding common shares from the beginning of that period until the date of acquisition (i.e. January 1 to March 31, 2016) must be calculated on the basis of the average weighted number of outstanding common shares of the legal acquiree (accounting acquirer, Banco Itaú and Subsidiaries) during the period multiplied by the exchange ratio established in the merger agreement; and |
b. | the number of outstanding common shares from the date of acquisition until the end of that period (i.e. April 1 to June 30, 2016) must be the real number of common shares that the legal acquirer (accounting acquiree, CorpBanca and Subsidiaries, but the merged entity will take the name ITAU CORPBANCA) has had outstanding during that period. |
Basic earnings per share for each comparative year prior to the date of the acquisition presented in the consolidated financial statements after a reverse acquisition must be calculated by dividing:
a. | the profit of the legal acquiree (Banco Itaú and Subsidiaries) attributable to the common shareholders in each of those periods by |
b. | the historical weighted average of the number of common shares outstanding of the legal acquiree multiplied by the exchange ratio established in the acquisition agreement. |
The results of these transactions are as follows:
F-82
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Figure 3: Calculation of Earnings per Share – Restated
Banco Itaú Chile | ||||||||||
03.31.2016 | 06.30.2015 | |||||||||
(a) | (b) | |||||||||
Common shares | (i) | 2,144,167 | 1,433,690 | |||||||
Exchange ratio | (ii) | 80,240.28252 | 80,240.28252 | |||||||
Shares of merged bank | (i)*(ii) = (iii) | 172,048,565,857 | 115,039,690,651 | |||||||
Itaú-CorpBanca | ||||||||||
06.30.2016 | 06.30.2015 | |||||||||
Number of shares considered to be outstanding for the period from 01/01/16 until the acquisition date 03/31/16 [Number of common shares issued by CorpBanca (legal controller, accounting acquiree) in the reverse acquisition] | (iii) | 172,048,565,857 | 115,039,690,651 | |||||||
Number of shares outstanding from the acquisition date 04/01/2016 until 06/30/2016. | (iv) | 512,406,760,091 | — | |||||||
Weighted average number of common shares outstanding [(iii) x 3/6) + (iv) x 3/6)] | (v) | 342,227,662,974 | 115,039,690,651 | |||||||
Profit attributable to owners of the bank - MCh$ | (vi) | 34,682 | 42,709 | |||||||
Earnings per share attributable to owners of the bank | (vi)/(v) = (vii) | 0.101 | 0.371 |
Pro Forma Financial Statements
1.1.1 | Pro Forma Financial Statements |
In order to improve understanding of these consolidated financial statements, they will also include pro forma financial statements for comparison purposes (statement of financial position and income statement).
The assumptions and adjustments used in preparing the pro forma information are described in the notes in that section, which is only presented for information purposes and does not purport to represent the real consolidated results of the operations of Itaú and CorpBanca as if the acquisition had taken place in the periods presented, nor is it necessarily indicative of the consolidated future results of the operations of the merged entities.
The information presented does not include cost reductions forecasted as a result of any operating efficiency, synergy or restructuring resulting from the integration of Banco Itaú and CorpBanca and does not include any liabilities it may incur as a result of the business combination and any related restructuring.
F-83
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
This information must be read together with the complementary explanatory notes on the business combination.
The pro forma statements of financial position and income were prepared as follows:
a. | Using the quarterly and annual historical consolidated financial statements of the merged banks. |
b. | These financial statements were prepared in accordance with the Compendium of Accounting Standards issued by the SBIF, using the accounting principles mandated by it. Any matter not addressed therein, as long as it does not contradict the SBIF’s instructions, should adhere to international financial reporting standards (IFRS) as agreed upon by the IASB. Should any discrepancies arise between these accounting principles and the accounting criteria issued by the SBIF, the latter took precedence. |
c. | The historical information was not modified by applying the acquisition method (results detailed in Section 2 of this note). This was done mainly because such valuations correspond to different times and economic circumstances and are not comparable in terms of net assets or comprehensive income produced by the current business combination. Section 1.2.2 below presents pro forma combined financial statements that show the effects of the business combination as if it had taken place on January 1, 2016. |
d. | Accounting reclassifications were made for presentation purposes without altering historical information. Therefore, intercompany transactions between Itaú and CorpBanca were not eliminated. |
e. | Accounting reclassifications were made against reserves to establish the share capital of the merged entity for the 2016 period (MCh$1,862,826). |
f. | Accounting reclassifications were made against reserves for equity items of CorpBanca and Subsidiaries (accounting de-recognition). |
g. | Neither profit for the period nor the minimum dividends generated historically by the banks were adjusted in order to consistently present historical dividend policies and separately generated results. |
h. | The shares outstanding since the business combination (512,406,760,091) were used as the basis for calculating earnings per share. |
F-84
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
The following sections contain the pro forma financial statements:
Pro Forma Combined Statements of Financial Position – June 2015.
Merged | ||||||||||||||||||||
Banco Itaú | Adjustments and/or | Pro Forma | ||||||||||||||||||
06.30.2015 | 06.30.2015 | Reclassifications | 06.30.2015 | Note | ||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||
(i) | (ii) | (iii) | (i)+(ii)+(iii)=(iv) | |||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and due from banks | 1,214,736 | 516,611 | — | 1,731,347 | ||||||||||||||||
Transactions pending settlement | 366,284 | 94,755 | — | 461,039 | ||||||||||||||||
Trading securities | 405,981 | 5,112 | ��� | 411,093 | ||||||||||||||||
Receivables from repurchase agreements and securities borrowing | 72,393 | 211 | — | 72,604 | ||||||||||||||||
Financial derivative instruments | 869,711 | 237,055 | — | 1,106,766 | ||||||||||||||||
Loans and advances to banks | 479,725 | 34,218 | — | 513,943 | 6 | |||||||||||||||
Loans to customers | 14,398,111 | 6,249,299 | — | 20,647,410 | 7 | |||||||||||||||
Financial assets available for sale | 1,517,812 | 491,727 | — | 2,009,539 | ||||||||||||||||
Financial assets held to maturity | 281,195 | — | — | 281,195 | ||||||||||||||||
Investments in other companies | 15,616 | 2,416 | — | 18,032 | ||||||||||||||||
Intangible assets | 727,277 | 48,575 | — | 775,852 | ||||||||||||||||
Property, plant and equipment | 91,968 | 33,732 | — | 125,700 | ||||||||||||||||
Current tax assets | 29,480 | — | (1,554 | ) | 27,926 | |||||||||||||||
Deferred tax assets | 122,461 | 119,813 | — | 242,274 | ||||||||||||||||
Other assets | 330,333 | 125,493 | — | 455,826 | ||||||||||||||||
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TOTAL ASSETS | 20,923,083 | 7,959,017 | (1,554 | ) | 28,880,546 | |||||||||||||||
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LIABILITIES | ||||||||||||||||||||
Current accounts and other demand deposits | 4,068,518 | 957,222 | — | 5,025,740 | 11 | |||||||||||||||
Transactions pending settlement | 291,266 | 59,879 | — | 351,145 | ||||||||||||||||
Payables from repurchase agreements and securities lending | 591,079 | 78,987 | — | 670,066 | ||||||||||||||||
Savings accounts and time deposits | 8,299,949 | 3,709,709 | — | 12,009,658 | 11 | |||||||||||||||
Financial derivative instruments | 635,197 | 267,600 | — | 902,797 | ||||||||||||||||
Borrowings from financial institutions | 1,488,340 | 468,831 | — | 1,957,171 | ||||||||||||||||
Debt instruments issued | 3,142,314 | 1,341,190 | — | 4,483,504 | ||||||||||||||||
Other financial liabilities | 14,572 | 17,270 | — | 31,842 | ||||||||||||||||
Current tax liabilities | — | 1,554 | (1,554 | ) | — | |||||||||||||||
Deferred tax liabilities | 186,551 | 101,989 | — | 288,540 | ||||||||||||||||
Provisions | 147,520 | 70,750 | — | 218,270 | ||||||||||||||||
Other liabilities | 515,051 | 120,964 | — | 636,015 | ||||||||||||||||
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TOTAL LIABILITIES | 19,380,357 | 7,195,945 | (1,554 | ) | 26,574,748 | |||||||||||||||
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EQUITY | ||||||||||||||||||||
Attributable to owners of the bank: | ||||||||||||||||||||
Capital | 781,559 | 344,569 | 736,698 | 1,862,826 | ||||||||||||||||
Reserves | 515,618 | 396,710 | (867,589 | ) | 44,739 | |||||||||||||||
Valuation Accounts | (130,891 | ) | 384 | 130,891 | 384 | |||||||||||||||
Retained earnings: | 48,109 | 21,355 | — | 69,464 | ||||||||||||||||
Retained earnings from prior periods | — | 26,448 | — | 26,448 | ||||||||||||||||
Profit for the period | 96,217 | 42,709 | — | 138,926 | ||||||||||||||||
Less: Provision for minimum dividends | (48,108 | ) | (47,802 | ) | — | (95,910 | ) | |||||||||||||
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1,214,395 | 763,018 | — | 1,977,413 | |||||||||||||||||
Non-controlling interest | 328,331 | 54 | — | 328,385 | ||||||||||||||||
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TOTAL EQUITY | 1,542,726 | 763,072 | — | 2,305,798 | ||||||||||||||||
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TOTAL LIABILITIES AND EQUITY | 20,923,083 | 7,959,017 | (1,554 | ) | 28,880,546 | |||||||||||||||
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F-85
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Pro Forma Combined Statements of Financial Position – December 2015.
Merged | ||||||||||||||||||||
Banco Itaú | Adjustments and/or | Pro Forma | ||||||||||||||||||
12.31.2015 | 12.31.2015 | Reclassifications | 12.31.2015 | Note | ||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||
(i) | (ii) | (iii) | (i)+(ii)+(iii)=(iv) | |||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and due from banks | 1,004,757 | 477,809 | — | 1,482,566 | ||||||||||||||||
Transactions pending settlement | 176,501 | 62,095 | — | 238,596 | ||||||||||||||||
Trading securities | 323,899 | 17,765 | — | 341,664 | ||||||||||||||||
Receivables from repurchase agreements and securities borrowing | 24,674 | 10,293 | — | 34,967 | ||||||||||||||||
Financial derivative instruments | 1,008,915 | 227,984 | — | 1,236,899 | ||||||||||||||||
Loans and advances to banks | 451,829 | 99,398 | — | 551,227 | ||||||||||||||||
Loans to customers | 14,454,357 | 6,713,983 | — | 21,168,340 | 6 | |||||||||||||||
Financial assets available for sale | 1,924,788 | 512,510 | — | 2,437,298 | 7 | |||||||||||||||
Financial assets held to maturity | 170,191 | — | — | 170,191 | ||||||||||||||||
Investments in other companies | 14,648 | 2,475 | — | 17,123 | ||||||||||||||||
Intangible assets | 665,264 | 51,809 | — | 717,073 | ||||||||||||||||
Property, plant and equipment | 91,630 | 33,970 | — | 125,600 | ||||||||||||||||
Current tax assets | 4,447 | 7,732 | — | 12,179 | ||||||||||||||||
Deferred tax assets | 118,127 | 110,044 | — | 228,171 | ||||||||||||||||
Other assets | 462,604 | 137,454 | — | 600,058 | ||||||||||||||||
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TOTAL ASSETS | 20,896,631 | 8,465,321 | — | 29,361,952 | ||||||||||||||||
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LIABILITIES | ||||||||||||||||||||
Current accounts and other demand deposits | 4,431,619 | 981,349 | — | 5,412,968 | ||||||||||||||||
Transactions pending settlement | 105,441 | 26,377 | — | 131,818 | 11 | |||||||||||||||
Payables from repurchase agreements and securities lending | 260,631 | 43,727 | — | 304,358 | ||||||||||||||||
Savings accounts and time deposits | 8,495,603 | 3,952,573 | — | 12,448,176 | ||||||||||||||||
Financial derivative instruments | 731,114 | 253,183 | — | 984,297 | 11 | |||||||||||||||
Borrowings from financial institutions | 1,528,585 | 658,600 | — | 2,187,185 | ||||||||||||||||
Debt instruments issued | 3,227,554 | 1,504,335 | — | 4,731,889 | ||||||||||||||||
Other financial liabilities | 14,475 | 20,733 | — | 35,208 | ||||||||||||||||
Current tax liabilities | — | — | — | — | ||||||||||||||||
Deferred tax liabilities | 145,740 | 96,448 | — | 242,188 | ||||||||||||||||
Provisions | 227,086 | 82,954 | — | 310,040 | ||||||||||||||||
Other liabilities | 231,204 | 52,480 | — | 283,684 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
TOTAL LIABILITIES | 19,399,052 | 7,672,759 | — | 27,071,811 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
EQUITY | ||||||||||||||||||||
Attributable to owners of the bank: | ||||||||||||||||||||
Capital | 781,559 | 344,569 | 736,698 | 1,862,826 | ||||||||||||||||
Reserves | 515,618 | 396,710 | (951,038 | ) | (38,710 | ) | ||||||||||||||
Valuation Accounts | (214,340 | ) | (944 | ) | 214,340 | (944 | ) | |||||||||||||
Retained earnings: | 100,885 | 52,168 | — | 153,053 | ||||||||||||||||
Retained earnings from prior periods | — | — | — | — | ||||||||||||||||
Profit for the period | 201,771 | 104,336 | — | 306,107 | ||||||||||||||||
Less: Provision for minimum dividends | (100,886 | ) | (52,168 | ) | — | (153,054 | ) | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
1,183,722 | 792,503 | — | 1,976,225 | |||||||||||||||||
Non-controlling interest | 313,857 | 59 | — | 313,916 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
TOTAL EQUITY | 1,497,579 | 792,562 | — | 2,290,141 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
TOTAL LIABILITIES AND EQUITY | 20,896,631 | 8,465,321 | — | 29,361,952 | ||||||||||||||||
|
|
|
|
|
|
|
|
F-86
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Pro Forma Combined Statements of Income – June 2015.
Merged | ||||||||||||||||
CorpBanca | Banco Itaú | Pro Forma | ||||||||||||||
06.30.2015 | 06.30.2015 | 06.30.2015 | Note | |||||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||||||
(i) | (ii) | (i)+(ii)=(iii) | ||||||||||||||
Interest and indexation income | 621,551 | 227,696 | 849,247 | 15 | ||||||||||||
Interest and indexation expenses | (321,853 | ) | (120,481 | ) | (442,334 | ) | 15 | |||||||||
|
|
|
|
|
| |||||||||||
Net interest and indexation income | 299,698 | 107,215 | 406,913 | |||||||||||||
|
|
|
|
|
| |||||||||||
Fee and commission income | 99,948 | 40,312 | 140,260 | 16 | ||||||||||||
Fee and commission expenses | (23,325 | ) | (4,953 | ) | (28,278 | ) | 16 | |||||||||
|
|
|
|
|
| |||||||||||
Net fee and commission income | 76,623 | 35,359 | 111,982 | |||||||||||||
|
|
|
|
|
| |||||||||||
Net financial operating income | 120,638 | (4,092 | ) | 116,546 | 17 | |||||||||||
Net foreign exchange transactions | (39,404 | ) | 23,433 | (15,971 | ) | 18 | ||||||||||
Other operating income | 14,139 | 4,433 | 18,572 | |||||||||||||
|
|
|
|
|
| |||||||||||
Total operating income | 471,694 | 166,348 | 638,042 | |||||||||||||
|
|
|
|
|
| |||||||||||
Credit risk provisions | (82,905 | ) | (23,411 | ) | (106,316 | ) | 19 | |||||||||
|
|
|
|
|
| |||||||||||
OPERATING INCOME, NET OF CREDIT RISK PROVISIONS | 388,789 | 142,937 | 531,726 | |||||||||||||
|
|
|
|
|
| |||||||||||
Payroll and personnel expenses | (101,097 | ) | (39,844 | ) | (140,941 | ) | 20 | |||||||||
Administrative expenses | (102,758 | ) | (37,921 | ) | (140,679 | ) | 21 | |||||||||
Depreciation and amortization | (21,659 | ) | (4,478 | ) | (26,137 | ) | 23 | |||||||||
Impairment | (34 | ) | — | (34 | ) | 22 | ||||||||||
Other operating expenses | (12,267 | ) | (6,602 | ) | (18,869 | ) | ||||||||||
|
|
|
|
|
| |||||||||||
TOTAL OPERATING EXPENSES | (237,815 | ) | (88,845 | ) | (326,660 | ) | ||||||||||
|
|
|
|
|
| |||||||||||
NET OPERATING INCOME | 150,974 | 54,092 | 205,066 | |||||||||||||
Income attributable to investments in other companies | 1,260 | 164 | 1424 | |||||||||||||
Profit before taxes | 152,234 | 54,256 | 206,490 | |||||||||||||
Income tax expense | (41,575 | ) | (11,543 | ) | (53,118 | ) | ||||||||||
|
|
|
|
|
| |||||||||||
PROFIT FOR THE PERIOD | 110,659 | 42,713 | 153,372 | |||||||||||||
|
|
|
|
|
| |||||||||||
Attributable to: | ||||||||||||||||
Owners of the bank | 96,217 | 42,709 | 138,926 | |||||||||||||
Non-controlling interest | 14,442 | 4 | 14,446 | |||||||||||||
Earnings per share attributable to owners of the bank: (expressed in Chilean pesos) | ||||||||||||||||
Basic earnings per share | 0.271 | |||||||||||||||
Diluted earnings per share | 0.271 |
F-87
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Pro Form a Consolidated Statements of Income – December 2015.
Merged | ||||||||||||||||
CorpBanca | Banco Itaú | Pro Forma | ||||||||||||||
12.31.2015 | 12.31.2015 | 12.31.2015 | Note | |||||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||||||
(i) | (ii) | (i)+(ii)=(iii) | ||||||||||||||
Interest and indexation income | 1,299,480 | 496,940 | 1,796,420 | 15 | ||||||||||||
Interest and indexation expenses | (678,901 | ) | (278,692 | ) | (957,593 | ) | 15 | |||||||||
|
|
|
|
|
| |||||||||||
Net interest and indexation income | 620,579 | 218,248 | 838,827 | |||||||||||||
|
|
|
|
|
| |||||||||||
Fee and commission income | 200,401 | 81,375 | 281,776 | 16 | ||||||||||||
Fee and commission expenses | (47,554 | ) | (10,287 | ) | (57,841 | ) | 16 | |||||||||
|
|
|
|
|
| |||||||||||
Net fee and commission income | 152,847 | 71,088 | 223,935 | |||||||||||||
|
|
|
|
|
| |||||||||||
Net financial operating income | 338,698 | (29,022 | ) | 309,676 | 17 | |||||||||||
Net foreign exchange transactions | (149,370 | ) | 74,461 | (74,909 | ) | 18 | ||||||||||
Other operating income | 24,590 | 9,566 | 34,156 | |||||||||||||
|
|
|
|
|
| |||||||||||
Total operating income | 987,344 | 344,341 | 1,331,685 | |||||||||||||
|
|
|
|
|
| |||||||||||
118,165 | ||||||||||||||||
Credit risk provisions | (166,190 | ) | (43,593 | ) | (209,783 | ) | 19 | |||||||||
|
|
|
|
|
| |||||||||||
OPERATING INCOME, NET OF CREDIT RISK PROVISIONS | 821,154 | 300,748 | 1,121,902 | |||||||||||||
|
|
|
|
|
| |||||||||||
Payroll and personnel expenses | (202,754 | ) | (86,711 | ) | (289,465 | ) | 20 | |||||||||
Administrative expenses | (233,368 | ) | (66,831 | ) | (300,199 | ) | 21 | |||||||||
Depreciation and amortization | (42,905 | ) | (9,785 | ) | (52,690 | ) | 23 | |||||||||
Impairment | (332 | ) | — | (332 | ) | 22 | ||||||||||
Other operating expenses | (19,236 | ) | (16,451 | ) | (35,687 | ) | ||||||||||
|
|
|
|
|
| |||||||||||
TOTAL OPERATING EXPENSES | (498,595 | ) | (179,778 | ) | (678,373 | ) | ||||||||||
|
|
|
|
|
| |||||||||||
NET OPERATING INCOME | 322,559 | 120,970 | 443,529 | |||||||||||||
Income attributable to investments in other companies | 1,300 | 226 | 1,526 | |||||||||||||
Profit before taxes | 323,859 | 121,196 | 445,055 | |||||||||||||
Income tax expense | (98,986 | ) | (16,851 | ) | (115,837 | ) | ||||||||||
|
|
|
|
|
| |||||||||||
PROFIT FOR THE PERIOD | 224,873 | 104,345 | 329,218 | |||||||||||||
|
|
|
|
|
| |||||||||||
Attributable to: | ||||||||||||||||
Owners of the bank | 201,771 | 104,336 | 306,107 | |||||||||||||
Non-controlling interest | 23,102 | 9 | 23,111 | |||||||||||||
Earnings per share attributable to owners of the bank: (expressed in Chilean pesos) | ||||||||||||||||
Basic earnings per share | 0.597 | |||||||||||||||
Diluted earnings per share | 0.597 |
F-88
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
1.1.2 | Pro Forma Financial Statements, Beginning of 2016 Period |
These pro forma financial statements are based on our historical consolidated financial statements (March 2016), and are intended to illustrate the effects of the acquisition, business combination and subsequent merger between Banco Itaú and CorpBanca.
The pro forma financial information presented below shows the operating results for the period ended June 30, 2016, as if the acquisition had taken place on January 1, 2016.
The assumptions and adjustments used in preparing this pro forma information are described in the notes included with that information. It is presented for information purposes and does not purport to represent the real consolidated results of the operations of Itaú-CorpBanca as if the acquisition had taken place on January 1, 2016, nor is it necessarily indicative of the consolidated future results of the operations of the merged entities.
The information presented does not include cost reductions forecasted as a result of any operating efficiency, synergy or restructuring resulting from the integration of Banco Itaú with CorpBanca and does not include any liabilities it may incur as a result of the business combination and any related restructuring. Lastly, intercompany transactions between Itaú and CorpBanca have been eliminated.
This information must be read together with the complementary explanatory notes on the business combination. The pro forma information should not be understood to be an indication of:
a. | the combined results of the operations that would have been attained if the acquisition of CorpBanca had taken place on January 1, 2016; or |
b. | our consolidated operating results for Itaú-CorpBanca after the transaction was complete. |
For more information on the business combination, see Section 2 of this explanatory note for details on the provisional purchase price allocation as well as the fair value of assets and liabilities. Given the provisional nature of the amounts and the nature of the given assets and liabilities, their useful lives have also been evaluated provisionally. The final purchase price allocation is expected to be completed when the Bank issues its financial statements as of December 31, 2016, or otherwise within the measurement period established by IFRS 3.
F-89
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Consolidated Statements of Income – Pro Forma
CorpBanca | Banco Itaú | Itaú-CorpBanca | Adjustments | Pro Forma | ||||||||||||||||
04.01.2016 to | 01.01.2016 to | |||||||||||||||||||
03.31.2016 | 03.31.2016 | 06.30.2016 | 03.31.2016 | 06.30.2016 | ||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||
(a) | (b) | (c) | (d) | (a)+...+(d)=(e) | ||||||||||||||||
Interest and indexation income | 323,660 | 121,778 | 472,297 | — | 917,735 | |||||||||||||||
Interest and indexation expenses | (188,914 | ) | (68,429 | ) | (277,228 | ) | 1,950 | (d.1) | (532,621 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net interest and indexation income | 134,746 | 53,349 | 195,069 | 1,950 | 385,114 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Fee and commission income | 40,243 | 17,621 | 61,136 | — | 119,000 | |||||||||||||||
Fee and commission expenses | (11,283 | ) | (2,554 | ) | (14,379 | ) | — | (28,216 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net fee and commission income | 28,960 | 15,067 | 46,757 | — | 90,784 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net financial operating income | (45,441 | ) | 7,461 | ) | 36,247 | 9 | (d.1) | (1,724 | ) | |||||||||||
Net foreign exchange transactions | 40,677 | (4,759 | ) | (16,650 | ) | — | 19,268 | ) | ||||||||||||
Other operating income | 3,557 | 1,645 | 6,415 | — | 11,617 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total operating income | 162,499 | 72,763 | 267,838 | 1,959 | 505,059 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
5,722 | ||||||||||||||||||||
Credit risk provisions | (102,575 | ) | (14,644 | ) | (61,215 | ) | — | (178,434 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
OPERATING INCOME, NET OF CREDIT RISK PROVISIONS | 59,924 | 58,119 | 206,623 | 1,959 | 326,625 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Payroll and personnel expenses | (50,146 | ) | (22,168 | ) | (74,894 | ) | — | (147,208 | ) | |||||||||||
Administrative expenses | (56,962 | ) | (21,939 | ) | (62,823 | ) | — | (141,724 | ) | |||||||||||
Depreciation and amortization | (10,119 | ) | (2,843 | ) | (19,005 | ) | (8,103 | ) (d.2) | (40,070 | ) | ||||||||||
Impairment | (17 | ) | — | (34 | ) | — | (51 | ) | ||||||||||||
Other operating expenses | (7,505 | ) | (4,070 | ) | (9,579 | ) | — | (21,154 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
TOTAL OPERATING EXPENSES | (124,749 | ) | (51,020 | ) | (166,335 | ) | (8,103 | ) | (350,207 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
NET OPERATING INCOME (LOSS) | (64,825 | ) | 7,099 | 40,288 | (6,144 | ) | (23,582 | ) | ||||||||||||
Income attributable to investments in other companies | 518 | — | 348 | — | 866 | |||||||||||||||
Profit (loss) before taxes | (64,307 | ) | 7,099 | 40,636 | (6,144 | ) | (22,716 | ) | ||||||||||||
Income tax benefit (expense) | 38,499 | (959 | ) | (10,720 | ) | 2,095 | (d.3) | 28,915 | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
PROFIT (LOSS) FOR THE PERIOD | (25,808 | ) | 6,140 | 29,916 | (4,049 | ) | 6,199 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Attributable to: | ||||||||||||||||||||
Owners of the bank | (26,067 | ) | 6,138 | 28,544 | (3,261 | ) | 5,354 | |||||||||||||
Non-controlling interest | 259 | 2 | 1,372 | (788 | ) | 845 | ||||||||||||||
Weighted average number of common shares outstanding (millions) | — | — | — | 342,228 | (e.1) | |||||||||||||||
Earnings per share attributable to owners of the bank: (expressed in Chilean pesos) | ||||||||||||||||||||
Basic earnings per share | 0.016 | (e.1) | ||||||||||||||||||
Diluted earnings per share | 0.016 | (e.1) |
(a) : | Corresponds to Consolidated Statements of Income of CorpBanca and Subsidiaries (accounting acquiree, legal acquirer) as of March 31, 2016, basis for acquisition method under IFRS 3. |
(b) : | Corresponds to Consolidated Statements of Income of Banco Itaú and Subsidiaries (accounting acquirer, legal acquiree) as of March 31, 2016. |
F-90
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
(c) : | Corresponds to Consolidated Statements of Income of Itaú-CorpBanca and Subsidiaries (merged entity) from April 1, 2016 to June 30, 2016. |
(d) : | Corresponds to charges and credits for amortization of assets and liabilities generated in business combination. Includes only the effect of three months (January to March), because the following quarter is accounted for in the results of the merged entity (included in column c). |
(d.1) : | The credits to income are generated by an increase in financial liabilities based on their market values. This amount has been calculated based on a provisional purchase price allocation. Therefore, there is still uncertainty regarding the useful life of those liabilities and the final purchase price allocation that could arise in accordance with IFRS 3. That amount is calculated using the fair value of liabilities with defined useful lives, detailed as follows (initial balances): |
(1) Debt instruments issued and others: MCh$102,910 (average useful life of 5 years).
(d.2) : | The increase in amortization expenses of MCh$8,103 is related to the generation of intangible assets in the business combination. This amount has been calculated based on a provisional purchase price allocation. Therefore, there is still uncertainty regarding the useful life of those assets and the final purchase price allocation that could arise in accordance with IFRS 3. That amount is calculated using the fair value of assets with defined useful lives, detailed as follows (initial balances): |
(1) Customer Relationships and Core Deposits: MCh$336,853 (average useful lives of 9 and 11 years, respectively).
(2) Trademarks and Other: MCh$51,448 (average useful life of 10 years).
For more information, see Note 12 “Intangible Assets” to these financial statements.
(d.3) : | The increase in income from deferred taxes of MCh$2,095 is related to the tax effects of points (d.1) and (d.2) above, calculated at an average tax rate (mainly Chile and Colombia) of 32%. As indicated above, the amounts are provisional and, therefore, the deferred tax calculations are also provisional. |
(e) : | Corresponds to Pro Forma Consolidated Statements of Income of Itaú-CorpBanca and Subsidiaries, including the adjustments explained above. |
(e.1) : | The calculation of earnings per share is based on the pro forma consolidated profit and the average number of common shares determined in the figure. |
F-91
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
2. Business Combination of Banco Itaú Chile and CorpBanca
The scope of each section is summarized briefly below:
Introduction and Important Information. General summary of the main points of the business combination between the banks.
General Operating Aspects.Events in chronological order from the beginning until the merger was completed.
Description of Accounting Acquiree. Main qualitative and quantitative points regarding CorpBanca and Subsidiaries.
Main Reasons for the Purchase. Main reasons for the transaction between the banks.
Important Accounting Aspects. Accounting analysis of the transactions carried out for the business combination in accordance with international accounting standards.
Detail of Assets Acquired and Liabilities Assumed.Qualitative and quantitative evaluation of the net assets acquired from CorpBanca and Subsidiaries in accordance with applicable international accounting standards.
Reconciliation of Carrying Amount of Goodwill.Events related to goodwill generated.
The following sections are designed to provide information regarding the business combination between CorpBanca and Banco Itaú Chile (Itaú) that took place on April 1, 2016.
1. Introduction and Important Information
• | Itaú and CorpBanca contributed their banking businesses in Chile and Colombia to create an Andean banking platform. The shareholders of CorpBanca up to March 31, 2016, own 66.42% of the Bank (Itaú-CorpBanca) resulting from the merger of CorpBanca and Itaú Chile, while Itaú owns the remaining 33.58%. Before the merger, Itaú Unibanco injected US$652 million into Itaú Chile (See Note 20 “Equity”). |
• | On January 29, 2014, Itaú Unibanco (Brazil), Banco Itaú (Chile), CorpBanca (Chile) and CorpGroup (Chile) signed an agreement establishing the main provisions of the merger: |
• | The merger of CorpBanca and Banco Itaú Chile will take place by the former incorporating the latter and the merged entity will be called “Itaú- CorpBanca”. |
• | Itaú Unibanco will control Itaú-CorpBanca. |
• | Itaú Unibanco and CorpGroup will sign a shareholder agreement. |
• | Itaú-CorpBanca will control the Colombian entities of CorpBanca and Itaú Unibanco. |
• | CorpBanca will be the surviving legal entity. |
F-92
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
• | On June 26 and 30, 2015, at extraordinary shareholders’ meetings, shareholders of CorpBanca and Banco Itaú approved the proposed merger and agreed to modify the aforementioned provisions as follows: |
• | An additional dividend for the current shareholders of CorpBanca. |
• | A reduced dividend for Banco Itaú. |
• | A new dividend policy for the 2015 fiscal year (see accounting policy “gg”). |
• | An extended deadline for the purchase of Corp Group’s interest in CorpBanca Colombia. |
• | The proposed merger will take effect no earlier than January 1, 2016, and no later than May 2, 2016. |
• | On April 1, 2016, the merger by incorporation of Banco Itaú Chile and CorpBanca took place. The merged bank’s new legal name is “Itaú-CorpBanca”, which is the legal successor of Banco Itaú Chile, which is dissolved, all effective as of that date. |
• | For the purposes of completing the merger, Itaú-CorpBanca issued 172,048,565,857 new shares12, which correspond to 33.58% of its share capital. These shares were distributed on April 1, 2016, to shareholders of Banco Itaú Chile in exchange for their shares of that company. |
• | The shareholders of the merged bank will receive 80,240.28252 shares of the merged bank (Itaú-CorpBanca) in exchange for each share of the absorbed bank held, according to the Shareholder Registry, as of midnight on March 31, 2016. |
• | Therefore, Itaú Unibanco Holding S.A. took control of Itaú-CorpBanca on April 1, 2016. |
• | FRS 3Business Combinations requires the acquirer to be identified using the concept of control, as established in IFRS 10Consolidated Financial Statements. The following must be evaluated: |
• | Power over the investee (to direct relevant activities). |
• | Exposure, or rights, to variable returns from its involvement with the investee. |
• | The ability to use its power over the investee to affect the amount of the investor’s returns. |
In addition, since this transaction is a reverse acquisition, CorpBanca must maintain control of tax values, in conformity with Article No. 64 of the Tax Code and Ruling No. 45 issued by the Chilean Internal Revenue Service on July 16, 2001.
12 | The new capital of the merged entity is comprised of 512,406,760,091 common shares with no par value that have been issued, subscribed and paid and total MCh$1,862,826. |
F-93
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
• | Accordingly, the following conclusions can be drawn: |
• | Legally CorpBanca will purchase Banco Itaú (Chile) by issuing shares. |
• | There is a Shareholder Agreement between Itaú and CorpGroup, which establishes that together they hold 66.7% of the merged company “Itaú-CorpBanca”. |
• | Joint control does not exist because CorpGroup only has protective rights. |
• | Although CorpBanca is larger in size than Banco Itaú (Chile), CorpBanca issued capital on the basis of the Shareholder Agreement between Itaú and CorpGroup, and, therefore, Itaú (as a group) will control Itaú-CorpBanca mainly through voting rights. |
• | Itaú will appoint a simple majority of the directors of ITAU CORPBANCA as well as the Chief Executive Officer. |
• | Appointment of an absolute majority of members on each Board committee, which direct the respective relevant activities of Itaú-CorpBanca. |
• | The preceding points are consistent with the commercial purpose of this transaction, which, from CorpBanca’s perspective, is to partner with a leading regional institution and, from Itaú’s perspective, is to expand and strengthen its banking business in Chile and Colombia. |
• | The previous shareholders of CorpBanca as a group (CorpGroup and minority shareholders) lost control over the previously controlled entity. |
• | Although Itaú does not have an absolute majority of the voting rights, it will control Itaú-CorpBanca through the Shareholder Agreement, since this agreement grants Itaú the power to make decisions regarding relevant activities. |
2. General Operating Aspects
On January 29, 2014, a “Transaction Agreement”13 (hereinafter “TA”) was signed by CorpBanca, Inversiones Corp Group Interhold Limitada, Inversiones Saga Limitada (these last two together “CorpGroup”), Itaú-Unibanco Holding, S.A. (“Itaú-Unibanco”) and Banco Itaú Chile, by virtue of which these parties have agreed to a strategic partnership of their operations in Chile and Colombia, subject to prior authorization from the corresponding regulators and the shareholders of CorpBanca and Banco Itaú Chile, as indicated below.
13 | The signing of the TA and its subsequent amendments was approved by the Board of Directors of both banks, based on a favorable report from the Directors’ Committee, complying with the other requirements established in Section XVI “On Operations with Related Parties Involving Publicly-Held Corporations and their Subsidiaries” in Law 18,046 on Corporations. |
F-94
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
This strategic partnership will be structured as a merger of CorpBanca and Banco Itaú Chile in conformity with the aforementioned TA, detailed as follows:
1. | Prior Acts. CorpGroup will dispose of the shares it directly or indirectly holds in CorpBanca, equivalent to 1.53% of the share capital14 of that bank and Banco Itaú Chile will increase its capital by US$652 million, by issuing shares that will be fully subscribed and paid by a fully-owned (direct or indirect) subsidiary of Itaú-Unibanco. |
2. | Merger. The merger of CorpBanca and Banco Itaú Chile, by which CorpBanca will absorb Banco Itaú Chile to form an entity called “Itaú-CorpBanca” will be submitted for approval from the shareholders of both entities at extraordinary shareholders’ meetings. If the merger is approved, 172,048,565,857 shares of CorpBanca will be issued, representing 33.58% of the share capital of the merged bank, which will be distributed among the shareholders of Banco Itaú Chile. The current shareholders of CorpBanca will maintain 66.42% of the share capital of the merged bank. Thus, the number of shares will increase from 340,358,194,234 to 512,406,760,091 shares, which will be fully subscribed and paid. |
3. | Control. As a result of the merger, Itaú-Unibanco will become a shareholder of CorpBanca and as a result of the exchange of shares applicable to this merger, will acquire control of the merged bank in accordance with Articles 97 and 99 of Law 18,045 on Securities Markets, with CorpGroup conserving a considerable interest in the merged entity with 32.92% (rectified 33.13%) of the share capital and 33.5% (rectified 33.29%) of that capital in the market. |
4. | Colombia. In order to strengthen and consolidate the Bank’s operations in Colombia, subject to applicable restrictions under Colombian law, the merged bank will own 66.28% of the shares of Banco CorpBanca Colombia S.A., and will make an offer to acquire the remaining 33.72% of the shares that it does not own. This portion includes 12.36% currently owned indirectly by CorpGroup, which has committed to selling those shares. The price per share to be offered by Itaú-CorpBanca will be equal for all shareholders and correspond to the valuation given to Banco CorpBanca Colombia S.A. for the share exchange for the merger. The price for the 33.72% interest in Banco CorpBanca Colombia S.A., in the event it is sold, will be US$894 million. With the same objective, Itaú-CorpBanca will acquire Itaú BBA Colombia S.A., Corporación Financiera, the entity through which Itaú-Unibanco does business in that country. The price to be paid will be carrying amount, based on the most recent financial statements reported to the banking regulator in Colombia. |
14 | On March 3, 2015, points 1 and 3 are rectified as follows: the rectification correctly reported that, after disposing of those shares and once the transaction is complete, CorpGroup would have a 33.13% interest. The relative interests in the merged bank will be as follows: (a) Itaú-Unibanco: 33.58%;(b) CorpGroup: 33.13%; and (c) Market (float): 33.29%. |
F-95
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
5. | Course of Business. Between the signing of the TA and the execution of the merger, the parties have agreed that both CorpBanca and Banco Itaú Chile have certain restrictions during that period, which consist fundamentally of continuing to conduct business in a way substantially similar to how they have been conducting business up to this point. |
6. | Shareholder Agreement. The TA contemplates, likewise, that when the transaction is closed in Chile, CorpGroup and Itaú-Unibanco will sign a shareholder agreement to regulate certain matters regarding the exercise of their political rights in Itaú-CorpBanca and matters regarding the transfer of shares: |
• | It will establish that the board of directors of the merged bank has 11 standing members and 2 alternates. Of the directors that may be elected by the shareholders agreement between CorpGroup and Itaú-Unibanco, the majority will be proposed by Itaú-Unibanco, based on its shareholding and the remaining directors will be proposed by CorpGroup. The Chairman will be proposed by CorpGroup and the CEO by Itaú-Unibanco. Most committees with directors will be proposed by Itaú-Unibanco, based on its shareholding. |
• | Likewise, subject to current regulations, CorpGroup undertakes to exercise its political rights in alignment with Itaú-Unibanco. CorpGroup will grant in favor of Itaú-Unibanco a pledge over 16% of the assets of the merged bank to guarantee the obligations undertaken in the shareholder agreement, with CorpGroup maintaining the right to exercise its political and economic rights that emanate from the pledged shares. |
• | It will reflect the intention of the parties in the sense that the merged bank will distribute all available profits for each year after ensuring certain capital adequacy levels so that Itaú-CorpBanca complies fully with regulatory requirements and industry best practices. |
• | It will also impose certain non-complete obligations on CorpGroup and Itaú-Unibanco with respect to the merged bank. |
• | Lastly, regarding the share transfer, it will establish a right of first offer, a right to join third-party sales and the obligation to join third-party sales. It will also establish in favor of CorpGroup a sale and purchase right over 6.6% of the shares of the merged bank as a short-term liquidity mechanism, and a sale right as an alternative to keeping its interest in the merged bank. In both cases, the price will be market price with no premium, and will favor, as a first option, sales on the market through the Santiago Stock Exchange. |
The transaction close contemplated in the TA is subject to obtaining the relevant regulatory authorizations as well as approval of the merger from shareholders of CorpBanca and Banco Itaú Chile in the respective extraordinary shareholders’ meetings that will be called to approve the merger. The main approvals and/or amendments are detailed as follows:
F-96
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Date | Event | |
October 15, 2014 | Itaú Unibanco reported in Brazil that the Brazilian Central Bank had authorized the transaction to merge with CorpBanca. | |
December 26, 2014 | The Colombian Financial Superintendency (SFC) approved the merger, conditional upon approval from the shareholders of Banco Itaú Chile and CorpBanca, as well as regulatory approval in Chile from the SBIF, in Panama from the Banking Superintendency (SBP) and the Securities Market Superintendency (SMV) and in Colombia from the Colombian Stock Exchange (BVC). | |
January 6, 2015 | The SBP approved the merger of Itaú-Corpbanca. Integration of these banks remains conditional upon approval from the shareholders of both entities as well as regulatory approval in Chile from the SBIF, in Panama from the SMV and in Colombia from the BVC. | |
June 2, 2015 | In an extraordinary meeting the Board of Corpbanca agreed to amend the TA in the terms indicated below (only points related to TA):
• Purchase of Banco CorpBanca Colombia. The close of the sale of 12.36% of this entity belonging to CorpGroup to the merged bank is postponed from the originally agreed-upon date of August 4, 2015, to a date no later than January 29, 2017. From August 4, 2015, until the date of close, the price agreed in the TA will accrue annual interest at Libor + 2.7%. Banco CorpBanca Colombia will not distribute dividends until the sale is closed.
• Deadline. The final deadline for completing the merger is May 2, 2016. | |
June 26/30, 2015 | At extraordinary shareholders’ meetings, shareholders of both banks approved the merger with certain conditions precedent, such as:
• Realization of capital increases as promised.
• SBIF approval.
• Deadlines for completing merger.
• Number of directors.
• Etc. | |
September 4, 2015 | The SBIF approved the merger agreed upon by CorpBanca and Itaú Chile. |
In accordance with current Chilean law, SBIF authorization must be issued after the shareholders of CorpBanca and Banco Itaú Chile approve the merger at extraordinary shareholders’ meetings. The SBIF reported in ruling No. 409 dated September 4, 2015, that it had approved the merger under the following terms:
• | The merger of CorpBanca and Banco Itaú Chile shall take place through the incorporation of the latter by the former, which for the purpose of this merger shall acquire all assets, rights, authorizations, permits, obligations and liabilities of the absorbed bank, and CorpBanca shall become the legal successor. |
• | The merger shall not take place before January 1, 2016, nor after May 2, 2016, and the exact date shall be determined by the boards of both banks. |
F-97
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
• | The resulting Bank shall maintain regulatory capital of not less than 10% of its risk-weighted assets. |
• | As a result of the merger, Itaú-Unibanco will acquire control of the merged bank in accordance with Articles 97 and 99 of Law 18,045 on Securities Markets. |
• | The modifications to the bylaws of CorpBanca, which will be called ITAU CORPBANCA, were approved and will take effect from the date of the merger. These modifications include: |
• | Share capital was increased to MCh$1,862, representing 512,406,760,091 shares. |
• | The Bank’s name was changed to ITAU CORPBANCA and it can do business as “Banco Itaú” or “Itaú”. |
• | The number of directors was increased from 9 to 11 standing members and the number of alternates remained at 2. |
• | The new text of the bylaws of the merged bank was approved, which includes the referenced modifications. |
With this SBIF ruling, the banks have obtained all authorizations needed from regulators in Chile, Colombia, Panama and Brazil in order to complete the merger in the terms indicated.
3. Description of Accounting Acquiree: CorpBanca Chile
• | Corporation incorporated under the laws of the Republic of Chile and regulated by the SBIF. The Bank’s objective is to execute and enter into all acts, contracts, transactions or businesses permitted by the General Banking Law, notwithstanding its ability to broaden or restrict its sphere of action, without modifying its bylaws, based on legal provisions issued in the future. This basis ranges from individuals to large corporations. |
• | Since 2004, CorpBanca has been regulated by the United States Securities and Exchange Commission (“SEC”) because it is listed on the New York Stock Exchange (“NYSE”) through an American Depository Shares (“ADS”) program. |
• | Founded in 1871, the entity is the oldest private bank operating in Chile. The Bank is headquartered in Chile, and it also has operations in Colombia and Panama. In addition, it has a branch in New York and a representation office in Madrid. As of the date of the business combination, it has total consolidated assets of MCh$21,064,559 and equity of MCh$1,455,948. CorpBanca offers universal banking products targeted toward large and medium-sized companies and retail customers. Its outstanding performance over the last 20 years has made it Chile’s fourth largest private bank today. |
F-98
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
• | In 2012, CorpBanca began a regional expansion process with the purchase of two banks in Colombia (Banco CorpBanca Colombia and Helm Bank), making it the first Chilean bank with foreign banking subsidiaries. |
• | According to the SBIF, in February 2016 it was the fourth largest private bank in Chile in terms of loans, with a market share of 7.1%. |
• | According to the SFC, in January 2016 CorpBanca Colombia was the sixth largest bank in Colombia in terms of assets, total loans and total deposits, as reported under local accounting and regulatory requirements. As of that date, it had market share in loans of 6.1%. |
• | The acquiree and its subsidiaries offer commercial and consumer banking services as well as other services, including factoring, collections, leasing, insurance and securities brokerage, mutual funds and asset management and related transactions in Chile and Colombia. The following section briefly summarizes the history of its subsidiaries and/or branches in Chile and abroad: |
a. Chilean Operations
CorpBanca Corredores de Bolsa S.A. This subsidiary is engaged mainly in securities brokerage transactions.
CorpBanca Administradora General de Fondos S.A. This subsidiary is engaged exclusively in managing third-party resources mainly in mutual funds, private investment funds and individual third-party portfolios.
CorpBanca Asesorías Financieras S.A.This subsidiary provides financial advisory services that complement the banking business.
F-99
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
CorpBanca Corredores de Seguros S.A. This subsidiary is engaged in commissioned brokerage of general and life insurance contracts and is solely excluded from brokering social security insurance, with any national insurance company located in the country and providing advisory and consulting services related to insurance and real estate and property investment.
CorpLegal S.A. This subsidiary is engaged in providing all types of professional advisory services on legal matters to the Bank, its subsidiaries and/or their customers related to transactions involving these parties.
SMU Corp S.A.This subsidiary is engaged in issuing, operating and managing credit cards to be used to grant credit to customers of the Unimarc supermarket chain in its own stores.
Recaudaciones y Cobranzas S.A.This subsidiary is engaged primarily as a collections agency, providing pre-legal, legal and/or out-of-court collections services for any type of loans, titles or notes on its own behalf or on behalf of third parties, and also entering into settlement agreements and providing preventative portfolio management services.
b. Overseas Operations
CorpBanca New York Branch. This branch has a banking license in the State of New York. It is focused on commercial banking, providing banking services in the United States for customers of its parent company, CorpBanca, as well as providing working capital and financing to corporations in Latin America.
CorpBanca Securities INC. This subsidiary is a broker-dealer (based in New York). Its mission is to enhance the value offering for customers of the Bank and its subsidiaries.
Banco CorpBanca Colombia S.A. Headquartered in Bogota, Colombia, this subsidiary is engaged in raising funds through checking account, demand and time deposits in order to provide loans and carry out other activities authorized for banking establishments.
Helm Comisionista de Bolsa S.A. This subsidiary is engaged in investment banking and securities brokerage activities, domiciled in Bogota.
CorpBanca Investment Trust Colombia S.A. Sociedad Fiduciaria. This subsidiary (domiciled in Bogota, Colombia) is mainly engaged in acts, contracts and transactions involving investment, management, guarantee and real estate trusts.
Helm Fiduciaria S.A. This subsidiary is a financial services corporation that is engaged in providing trust services authorized in Colombia.
Helm Corredor de Seguros S.A. This subsidiary operates in the Colombian insurance market, focused on structuring and managing insurance programs.
Helm Bank S.A. This subsidiary is headquartered in Panama and has an international license granted in Panama to conduct banking business abroad.
Helm Casa de Valores.This subsidiary is domiciled in Panama and is engaged in securities brokerage transactions and other related activities.
F-100
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
4. Main Reasons for the Purchase
• | To strengthen Chile’s fourth largest private bank by total loans, which has a true potential to become the third largest. |
• | Complementary segments, products and business lines. |
• | Sound capital bases and an improved funding profile. |
• | Potential for generating important synergies. |
• | Solid brand for attaining a stronger position in the Colombian market. |
• | The merged bank in Chile would serve as a platform for both groups to expand into the region, excluding Brazil and Mexico. |
5. Important Accounting Aspects
The following section shows the main terms established in the transaction agreement (TA) and complementary events, which establish the guidelines for the aforementioned strategic business combination through the following points (focused mainly on accounting aspects):
1. | Capital increase by Itaú Chile15 (US$100 million and US$552 million). |
2. | The merger of Itaú Chile and CorpBanca with the latter as the legal surviving entity. |
3. | After the Colombian Financial Superintendency (SFC) approves or rejects the merger of CorpBanca Colombia-Helm16, either through the acquisition of Itaú Colombia by CorpBanca or the merger of Itaú Colombia with CorpBanca Colombia, with CorpBanca Colombia as the surviving entity, and |
4. | The purchase by CorpBanca of the shares of CorpBanca Colombia held by the parent company of Corp Group and the offer by CorpBanca to purchase the shares of CorpBanca Colombia held by other minority shareholders that are part of the Shareholder Agreement signed on July 31, 2013, among certain shareholders of CorpBanca Colombia (as amended, the “CorpBanca Colombia Shareholder Agreement”). |
15 | On February 24, 2014, a capital increase of MCh$53,872 was agreed, which was paid in full in April of that same year through a rights issue of 130,016 shares. On March 22, 2016, capital was increased by MCh$392,813, through the subscription of 710,477 of the Bank’s single-series shares with no par value, which were subscribed and paid by ITB Holding Brasil Participações Ltda., a wholly owned subsidiary of Itaú Unibanco Holding S.A., within the framework of the merger of Banco Itaú Chile and CorpBanca. |
16 | On July 1, 2014, the merger between Banco CorpBanca Colombia S.A., (absorbing entity) and Helm Bank S.A. (absorbed entity, was formalized. As a result, Helm Bank S.A. is dissolved without being liquidated and all of its assets, rights and obligations are transferred fully to the absorbing entity. |
F-101
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Based on the preceding points, the following important matters must be evaluated in order to determine what is considered part of the business combination transaction:
a. | The acquirer (Banco Itaú) and the acquiree (CorpBanca Chile) can have a preexisting relationship or other agreement before the negotiations to begin the business combination, or |
b. | they can carry out an agreement during the negotiations that is separate from the business combination. |
In either of the two situations, Banco Itaú must identify all amounts that are not part of what the acquirer and the acquiree (or their former owners) exchanged in the business combination (i.e. amounts that are not part of the exchange by CorpBanca Chile). Banco Itaú will only recognize the consideration transferred by CorpBanca Chile and the assets acquired and liabilities assumed in the exchange as part of applying the purchase method (outlined in IFRS 3). If separate transactions exist, they should be accounted for in accordance with the applicable international standards17. Accordingly, the following was concluded:
a. Important Points about Chile
• | In accordance with IFRS 3, a reverse acquisition occurs when the entity that issues securities (the legal acquirer; in our case CorpBanca Chile) is identified as the acquiree for accounting purposes and the legal acquiree must be the acquirer for accounting purposes (in our case Banco Itaú), illustrated as follows: |
Acquirer | Acquiree | Observations | ||||||||
Legal | Accounting | Legal | Accounting | |||||||
CorpBanca | “X” | — | — | “X” | Issuance of Shares | |||||
Banco Itaú (Chile) | — | “X” | “X” | — | Takes Control |
• | At the acquisition date, the acquirer shall recognize, separately from goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. |
• | CorpBanca merged with Banco Itaú (Chile) in a reverse acquisition, which means that the shareholders of the latter entity will take control of “Itaú-CorpBanca”, and CorpBanca will be the legal successor. Therefore, the assets and liabilities of Banco Itaú (Chile) are incorporated at their carrying amount (book value) while the assets and liabilities of CorpBanca are recorded at market or accounting value, as appropriate based on applicable accounting standards. The following table shows the book values of both banks before the business combination: |
17 | The evaluation is necessary because it is likely that a transaction carried out by the acquirer or on behalf of it or mainly for its benefit or that of the combined entity (resulting from the business combination) and not fundamentally in benefit of the acquiree (or its prior owners) before the combination is a separate transaction. |
F-102
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
CorpBanca MCh$ | Banco Itaú Chile MCh$ | |||||||
Total net identifiable assets | 527,748 | 1,176,148 | ||||||
Non-controlling interest | 308,045 | 61 | ||||||
Goodwill arising in prior acquisitions | 338,909 | — | ||||||
Intangible assets arising in prior acquisitions | 269,971 | — | ||||||
Contingent liabilities arising in prior acquisitions | — | — | ||||||
Net deferred taxes | 11,275 | 13,261 | ||||||
|
|
|
| |||||
Net asset before business combination | 1,455,948 | 1,189,470 | ||||||
|
|
|
|
• | CorpBanca will issue new shares in exchange for all assets and liabilities of Banco Itaú (Chile). These new shares will be handed over to Itaú Unibanco. As a result, a capital increase was approved for CorpBanca that calls for the issuance of 172,048,565,857 shares that were given in exchange to shareholders of Banco Itaú (Chile) in the merger. |
• | Before this, Itaú Unibanco will inject MUS$652 in capital into Banco Itaú. |
• | Regarding the above points, the exchange ratio for the net assets of Banco Itaú (Chile) will result in the following post-merger ownership structure: |
• | Itaú Unibanco: 33.58% (majority shareholder). |
• | CorpGroup: 33.13% |
• | Minority shareholders: 33.29% |
• | From an accounting perspective, the transaction described above is considered a reverse acquisition under IFRS 3 Business Combination. |
b. Important Points about Colombia
• | ITAU CORPBANCA will offer to purchase the 33.72% interest held by the minority shareholders of CorpBanca Colombia (entity controlled by CorpBanca Chile before and after the business combination discussed above). The purchase offer should include the other minority shareholders that are part of the CorpBanca Colombia Shareholder Agreement (except for the parent company of CorpGroup) for 100% of the outstanding shares belonging to the minority shareholders at a price of US$3.5367 per share (which totals US$564 million for the minority shareholders as a whole). |
• | CorpGroup is contractually bound to sell its 12.36% interest in CorpBanca Colombia to ITAU CORPBANCA. CorpGroup will sell 93.306,684 shares (all shares of that entity as of the date of this amendment to the TA) no later than January 29, 2017, conditional upon approval from the Government Authorities required under applicable Law. This sale shall take place within 10 days of receipt of the last approval. The price of US$3.5367 per share, which totals US$330 million including the interest that will accrue from August 4, 2015, until the date of payment, at an annual rate of LIBOR plus 270 basis points, calculated using a 30/360 convention. |
F-103
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
• | Itaú-Corpbanca will directly or indirectly own: |
• | Between 66.28% and 100% of CorpBanca Colombia, depending on whether the minority shareholders in Colombia decide to sell their interest to Itaú-CorpBanca. |
• | 100.00% of Itaú Colombia. |
• | The purchases must be authorized by the government before being carried out18. |
Accordingly, the offer to purchase these shares is considered a separate transaction from the business combination between Banco Itaú and CorpBanca, and is recorded in the financial statements, as appropriate, as established by IFRS 10.
6. Detail of Assets Acquired and Liabilities Assumed
The fair value of the identifiable assets and liabilities of CorpBanca as of the date of acquisition (April 1, 2016) was as follows:
CorpBanca | Purchase | CorpBanca | ||||||||||
Consolidated | Method | Fair Value | ||||||||||
03.31.2016 | Adjustments | 03.31.2016 | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
ASSETS | ||||||||||||
Intangible assets | 687,542 | 874,324 | 1,561,866 | |||||||||
|
|
|
|
|
| |||||||
Software and other | 78,662 | (29,904 | ) | 48,758 | ||||||||
Arising in M&A | 608,880 | 904,228 | 1,513,108 | |||||||||
|
|
|
|
|
| |||||||
Core deposit and customer relationships | 222,591 | 114,262 | 336,853 | |||||||||
Trademarks and other | 47,380 | 4,068 | 51,448 | |||||||||
Goodwill | 338,909 | 785,898 | 1,124,807 | |||||||||
|
|
|
|
|
| |||||||
Remaining assets | 20,377,017 | 14,304 | 20,391,321 | |||||||||
|
|
|
|
|
| |||||||
TOTAL ASSETS | 21,064,559 | 888,628 | 21,953,187 | |||||||||
|
|
|
|
|
| |||||||
Deposits and other financial liabilities | 14,222,806 | (12,399 | ) | 14,210,407 | ||||||||
Debt instruments issued | 3,181,811 | 115,309 | 3,297,120 | |||||||||
Remaining liabilities | 2,203,994 | 8,283 | 2,212,277 | |||||||||
|
|
|
|
|
| |||||||
TOTAL LIABILITIES | 19,608,611 | 111,193 | 19,719,804 | |||||||||
|
|
|
|
|
| |||||||
EQUITY | ||||||||||||
Attributable to owners of the bank: | 1,147,903 | 822,771 | 1,970,674 | |||||||||
Non-controlling interest | 308,045 | (45,336 | ) | 262,709 | ||||||||
|
|
|
|
|
| |||||||
TOTAL LIABILITIES AND EQUITY | 21,064,559 | 888,628 | 21,953,187 | |||||||||
|
|
|
|
|
|
18 | Some examples of such authorizations include: In Colombia, government bodies must evaluate the authorization for CorpBanca Colombia to purchase all shares of Itaú BBA Colombia or, otherwise, for these two companies to merge (absorption of the former by the latter). In Chile, regarding limits on activities authorized for foreign subsidiaries, article 76 et seq of the General Banking Law establishes that the Central Bank and the SBIF must authorize a foreign investment by a Chilean financial entity. |
F-104
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
MCh$ | ||||
Total net identifiable assets at fair value | 439,731 | |||
Non-controlling interest at fair value | 262,709 | |||
Goodwill arising in acquisition | 1,124,807 | |||
Intangible assets | 388,301 | |||
Contingent liabilities | (8,031 | ) | ||
Net deferred taxes | 25,866 | |||
|
| |||
Total Consideration Transferred | 2,233,383 | |||
|
| |||
Controlling interest | 1,970,674 | |||
Non-controlling interest | 34,682 | |||
Total cash and cash equivalents received with accounting acquiree | 1,694,231 | |||
Cash payment | — | |||
|
| |||
Total cash and cash equivalents | 1,694,231 | |||
|
|
Important Matters Regarding the Acquisition
6.1 | The fair values presented here were calculated on a provisional basis determined by professionals that were independent from Itaú-CorpBanca and Subsidiaries (the Group) and its external auditors, as well as independent among themselves. Accordingly, the Bank would like to point out the following considerations: |
a) | Banco Itaú acquires 33.58% of the shares of CorpBanca, whose majority shareholder is Corp Group Interhold Limitada, for a total of MCh$1,970,674. |
The transaction was carried out through a capital increase by Itaú Chile, which made way for the merger of Itaú Chile and CorpBanca.
In determining the consideration transferred (price paid), one must take into account that the transaction is a reverse acquisition where the price is determined based on an exchange ratio where the stock of one of the banks is listed (CorpBanca), and the other is not (Itaú Chile).
International accounting standards indicate that the “most reliable” measurement should be used to determine the transferred consideration. In this case, a reliable, significant market value existed for one of the parties to the transaction, giving a total of MCh$2,233,383 as of the valuation date.
b) | If a business combination is accounted for incompletely, at the end of the accounting period in which the combination takes place the Group should report the provisional amounts of the incomplete items in its financial statements. During the measurement period, Itaú-CorpBanca will retroactively adjust the provisional amounts recognized as of the date of acquisition to reflect the new information |
F-105
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
obtained regarding the facts and circumstances that existed as of the date of acquisition that, had they been known, would have affected the measurement of the amounts recognized as of that date. During the measurement period, the acquirer will also recognize additional assets or liabilities if new information is obtained regarding facts and circumstances that existed as of the date of acquisition that, had they been known, would have resulted in recognition of these assets and liabilities as of that date. The measurement period will end as soon as the Group receives the information that it was looking for regarding the facts and circumstances that existed as of the date of acquisition or concludes that no more information can be obtained. However, the measurement period shall not exceed one year from the date of acquisition described above. |
c) | This business combination will be accounted for using the acquisition method as of the purchase date, which is the date on which control is transferred to Grupo Itaú Unibanco. Control is obtained when an investor has exposure, or rights, to variable returns from the investor’s involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor’s returns. Potential voting rights that are currently enforceable or convertible were considered when evaluating control. Itaú Unibanco has the following substantive rights: |
• | Voting rights in proportion to its interest in the companies. |
• | The right to name or remove key members of management of the investees that have the ability to direct relevant activities. |
• | The right to assign or unassign investees so that they direct relevant activities. |
• | The right to direct the activities of subordinates for the benefit of the Bank. |
d) | The Group valued goodwill as of the acquisition date, taking into account the following factors: |
• | Fair value of the consideration transferred; |
• | The recoverable amount of any non-controlling interest in the acquiree, plus |
• | If the business combination is performed in phases, the fair value of the existing interests in the equity of the acquiree; |
• | Less the net amount recognized (generally the fair value) of the identifiable assets acquired and the identifiable liabilities assumed. |
e) | Regarding the preceding point, when the excess is negative, a gain on sale with advantageous conditions is recognized immediately in profit and loss (such was not the case with this business combination). |
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
f) | The fair value of intangible assets and their respective deferred taxes (mainly core deposits MCh$240,463, customer relationships MCh$96,390, trademarks and other MCh$51,448) has been determined provisionally pending an independent valuation, which gave a balance of MCh$308,301. See Note 12 “Intangible Assets” to these financial statements. |
g) | As of the date of acquisition, a contingent liability with a fair value of MCh$8,031 was determined as a result of legal contingencies. The resources are expected to be disbursed in around two years and as of the date of the evaluation, no related reimbursements are expected. As of the date of the reporting period, the Bank reevaluated that contingent liability and determined no variations in its value. |
An onerous contract is any contract in which the unavoidable costs of performing the obligations undertaken exceed the economic benefits expected to be received.
h) | As of the date of acquisition, the fair value of loans and receivables (including loans and advances to banks) totaled MCh$14,412,154 and their gross amount was MCh$14,825,458. None of these debtors are impaired and the Bank expects to collect the full amounts. In accordance with IFRS, the fair value of loans should be shown net of credit risk provisions. However, as of the date of acquisition of CorpBanca, the fair value of those provisions was MCh$413,304, contained in Notes 8 and 9 letter c) provisions, and presented separately in accordance with the SBIF Compendium of Accounting Standards. |
i) | The goodwill of MCh$1,124,807 (preceding table) recognized as of the date of acquisition was attributed to expected synergies and other benefits arising from the combination of the assets and activities of CorpBanca and Subsidiaries together with Itaú and Subsidiaries (described in section 4 “Main Reasons for the Purchase”). Goodwill was not expected to be tax deductible. The amount of goodwill determined can be modified only during the measurement period established in international standards (i.e. one year from the acquisition date). |
j) | Deferred tax assets and/or liabilities that arise from the assets acquired and liabilities assumed will be recorded in accordance with IAS 12 Income Taxes. The potential tax effects of temporary differences and tax compensations of the acquirees that existed as of the acquisition date will also be recorded. |
k) | If new information is obtained within a year from the date of acquisition regarding facts and circumstances that existed as of the acquisition date, amounts previously presented are adjusted or if there is any additional information as of the acquisition date, the acquisition accounting will be reviewed. |
l) | ITAU CORPBANCA decided to preliminarily measure the non-controlling interest in the acquiree at fair value. |
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
6.2 | The following is related to the results generated by the accounting acquiree: |
• | the revenue and results of CorpBanca since the acquisition date, together with Banco Itaú, form part of the consolidated statement of comprehensive income of Itaú-CorpBanca for the reporting period19. |
• | To provide additional information for financial statement readers, pro forma financial statements are presented to explain the operations of the merged bank (revenue and results of the combined entity for the current reporting period), as if the acquisition date for the business combination had been the beginning of the annual period (January 1, 2016). This information was presented in the preceding pro forma note, and is summarized as follows: If the combination had occurred at the beginning of the period (January 1, 2016), net interest and adjustment income would have been MCh$917,735 and the loss before taxes for the period would have been MCh$(22,716). In determining these amounts, management has assumed that the provisional fair value adjustments originated on the date of acquisition would have been the same had the acquisition occurred on January 1, 2016. |
6.3 | The acquisition-related transaction costs, mainly for external legal fees and due diligence costs, are charged to administrative expenses in the Consolidated Statement of Income and included within cash flows from operating activities in the Statement of Cash Flows. |
6.4 | The total consideration transferred for the transaction involved issuing 172,048,565,857 shares that were given to shareholders of Itaú, equivalent to 33.58% of the total shares of the merged bank. |
6.5 | The transaction did not include any agreements involving contingent considerations. |
6.6 | Both the goodwill that arose from the acquisition of a foreign business as well as the fair value adjustments made to the carrying amount of the assets and liabilities must be treated as assets and liabilities of the same entity as a result of the acquisition of this business. In other words, they will be expressed in the same functional currency of the company and will be converted at the closing exchange rate. |
7. Reconciliation of Carrying Amount of Goodwill
Goodwill is tested annually to determine whether impairment exists (as of December 31, of each year) and when circumstances indicate that its carrying amount may be impaired. This impairment is determined by evaluating the recoverable amount of each cash generating unit (or group of cash generating units) to which goodwill is allocated. Where the recoverable amount of the cash generating unit is less than its carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.
19 | In terms of the reverse acquisition, comprehensive income for the period (2016) as well as revenue is generated as follows as of June: From January 1 to March 31 (generated by Banco Itaú), plus those generated by Itaú-CorpBanca from April 1 to June 30 (comprehensive income of CorpBanca from January 1 to March 31 is included in the purchase method methodology and from an accounting perspective cannot be transferred to the merged bank). These amounts are not presented separately since the date of control, since both banks merged to give rise to a new entity. |
F-108
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
3. Accounting Changes
a. | SBIF Ruling No. 3,583 issued May 25, 2015, takes effect on January 1, 2016. This ruling calls for the same treatment to be given to all loans granted to finance higher education by presenting all student loans within commercial loans. As of January 31, 2016, applying the new standard involved reclassifying loans from the consumer portfolio to the commercial portfolio, detailed as follows: |
01.31.2016 | ||||||||
CorpBanca | Banco Itaú | |||||||
MCh$ | MCh$ | |||||||
Commercial loans | 4,487 | 5,802 | ||||||
Consumer loans | (4,487 | ) | (5,802 | ) |
b. | Ruling No. 3573 on the Compendium of Accounting Standards Chapters B-1, B-2 and E issued by the SBIF on December 30, 2014, took effect on January 1, 2016. This ruling establishes the standard (minimum) method for establishing provisions on residential mortgage loans, and also complements and specifies instructions on provisions and loans in the impaired portfolio. |
As of January 30, 2016, applying the new provisioning standard involved a charge to profit or loss for the period of the following gross amounts:
January 2016 | ||||||||
CorpBanca | Banco Itaú | |||||||
MCh$ | MCh$ | |||||||
Mortgage loan provisions | 4,194 | 2,780 |
c. | Beginning May 2016, Bank Ruling 3,604 (issued March 29, 2016) takes effect and modifies the credit-equivalent percentage for unrestricted lines of credit. |
The SBIF analyzed standards regarding credit risk provisions and concluded that the credit equivalent for unrestricted lines of credit for debtors with no loan defaults can be set at 35% of the amount available.
To reflect this change, it modified Chapter B-3 of the Compendium of Accounting Standards, substituting the figure “35%” for “50%” in No. 3 letter e) Unrestricted lines of credit, Exposure.
Applying this new standard led to a credit to profit (loss) of MCh$1,345 gross.
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
As of June 30, 2016, the following material events affecting the operations of the Bank and its subsidiaries or the consolidated financial statements have occurred:
ITAU CORPBANCA
a) Merger20 Completion and Change of Control.
Merger Completion
On April 1, 2016, the merger by incorporation of Banco Itaú Chile and CorpBanca took place. The merged bank’s new legal name is “ITAU CORPBANCA”, which is the legal successor of Banco Itaú Chile, which is dissolved, all effective as of this date.
Change of Control
For the purposes of completing the merger, ITAU CORPBANCA issued 172,048,565,857 new shares, which correspond to 33.58% of its share capital. These shares were distributed on this date to shareholders of Banco Itaú Chile in exchange for their shares of that company.
By virtue of the merger, and in accordance with articles 97 and 99 of the Securities Market Law, from this date control of ITAU CORPBANCA.
b) Election of Full Board of Directors
At an extraordinary shareholders’ meeting of ITAU CORPBANCA held April 11, 2016, the shareholders elected the following individuals (11 directors and 2 alternates) to the Board of Directors: Number established in ITAU CORPBANCA’s bylaws:
Directors:
Jorge Andres Saieh Guzman
Ricardo Villela Marino
Jorge Selume Zaror
Fernando Aguad Dagach
Gustavo Arriagada Morales
Candido Botelho Bracher
Boris Buvinic Guerovich
Héctor Valdés Ruiz
Fernando Concha Ureta
Joao Lucas Duchene
20 | Note 2 explains in detail the main material events related to the business combination between the banks. |
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Alternate Directors:
José Luis Mardones Santander
Camilo Morales Riquelme
The directors Gustavo Arriagada Morales, Hector Valdes Ruiz, Fernando Concha Ureta and Joao Lucas Duchene were appointed as independent directors, in conformity with article 50 Bis of Law 18,046.
Jose Luis Mardones Santander was appointed as an independent alternate director.
c) Extraordinary Board Meeting
At an extraordinary meeting of the Board of ITAU CORPBANCA held April 14, 2016, the following individuals were elected chairman and vice chairman of the Board:
Chairman:
Jorge Andres Saieh Guzman
Vice Chairman:
Ricardo Villela Marino
d) Other Information
In order to enhance our readers’ understanding of these financial statements, the material events of both Banco Itaú Chile and CorpBanca until March 31, 2016, are included herein.
Material Events - Banco Itaú Chile.
• | Extraordinary Board Meeting - March 23, 2016. |
In an extraordinary meeting held March 23, 2016, the Board of Directors of Banco Itaú Chile agreed to communicate the following essential event:
In accordance with Articles 9 and 10 of the Securities Market Law 18,045 and Chapter 18-10 of the Standards of the Superintendency of Banks and Financial Institutions, Banco Itaú Chile hereby reports as an ESSENTIAL EVENT that on this date the Board of BANCO ITAU CHILE (hereinafter the “Bank” or the “Absorbed Bank”) held an extraordinary meeting to vote on the merger by incorporation of Banco Itaú Chile and Corpbanca (hereinafter the “Merger”), and came to the following agreements (summarized):
• | Having verified the conditions precedent for the merger approved at the extraordinary shareholders’ meeting of Corpbanca (hereinafter also the “Absorbing Bank” or the “Merged Bank”) on June 26, 2015 and at the extraordinary shareholders’ meeting of Banco Itaú Chile on June 30, 2015; and in compliance with SBIF Ruling No. 409 dated September 4, 2015, to set April 1, 2016, as the date for the merger to take place. |
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
• | As a result, beginning April 1, 2016, the merger would take effect and CorpBanca would absorb Banco Itaú Chile, which would then be dissolved. The Absorbing Bank would be the successor company, assuming the rights and obligations and incorporating all shareholders and equity of the Bank. |
• | The amended bylaws of the Merged Bank, approved at the shareholders’ meeting of the Absorbing Bank where the merger was approved, will take effect starting April 1, 2016. From that date, among other modifications, the Merged Bank’s legal name will be “ITAU CORPBANCA”, and it may indistinctly do business as “BANCO ITAU” and “ITAU” for commercial and advertising purposes. The number of directors of the Merged Bank will increase from 9 to 11 standing members and the number of alternates will remain at 2. The new text of the bylaws of the Merged Bank approved by shareholders will also take effect, fully replacing the prior text. |
• | The Merged Bank will be controlled by Itaú Unibanco Holding S.A. |
• | The shareholders of the Absorbed Bank will receive 80,240,28252 shares of the Merged Bank in exchange for each share of the Absorbed Bank held, according to the Shareholder Registry, as of midnight on March 31, 2016. |
• | Capital Increase - March 22, 2016. |
On March 22, 2016, capital was increased by MCh$392,813, through the subscription of 710,477 of the Bank’s single-series shares with no par value, which were subscribed and paid by ITB Holding Brasil Participações Ltda., a wholly owned subsidiary of Itaú Unibanco Holding S.A., within the framework of the merger of Banco Itaú Chile and CorpBanca and in compliance with the “Transaction Agreement” signed on January 29, 2014.
• | Board Meeting - February 24, 2016. |
At a board meeting on February 24, 2016, the Board of Banco Itaú Chile agreed, among other matters, to call an ordinary shareholders’ meeting for March 11, 2016, in order to conduct routine business such as approving the 2015 financial statements, approving the external auditors’ report and deciding on the distribution of 2015 profits and dividends.
Afterwards, on March 11, 2016, shareholders unanimously approved the proposal to distribute dividends equivalent to 50% of distributable profit for the year ended December 31, 2015, to be distributed as a dividend among all issued, subscribed and paid shares, amounting to Ch$36,387.3792382 per share.
• | Extraordinary Board Meeting - February 11, 2016. |
The Board of Banco Itaú Chile, at an extraordinary meeting held February 11, 2016, among other matters, agreed to leave record that ITB Holding Brasil Participações Ltda., a wholly owned subsidiary of Itaú Unibanco Holding S.A., will subscribe all or part of the shares agreed to issue in order to cover the cash requirements needed to complete the Bank’s merger with Corpbanca and comply with the “Transaction Agreement” signed on January 29, 2014.
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Material Events - Banco CorpBanca.
1. General Shareholders’ Meeting
In a general shareholders’ meeting held March 11, 2016, shareholders agreed to the following, among other matters:
i.- Electing the following individuals to the Board of Directors:
Directors
• | Jorge Andrés Saieh Guzmán |
• | Fernando Aguad Dagach |
• | Jorge Selume Zaror |
• | Francisco Mobarec Asfura |
• | Anita Holuigue Barros |
• | Julio Barriga Silva |
• | Gustavo Arriagada Morales (independent) |
• | Hugo Verdegaal (independent) |
• | José Luis Mardones Santander (independent) |
Alternate Directors
• | María Catalina Saieh Guzmán |
• | Alvaro Barriga Oliva |
ii.-Dividend distributions
To distribute a dividend of MCh$104,082, equivalent to Ch$0.34580171 per share.
2. | Board Meeting |
• | At a board meeting on March 11, 2016, the Board of Directors agreed the following: |
• | To designate Jorge Andrés Saieh Guzmán as chairman of the Board. Fernando Aguad Dagach as first vice chairman and Jorge Selume Zaror as second vice chairman. |
• | To report that Fernando Massú Taré will resign from the position of Chief Executive Officer of CorpBanca, effective March 28, 2016. |
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
• | At an extraordinary board meeting on March 23, 2016, the Board agreed the following: |
• | Having verified the conditions precedent for the merger between CorpBanca and Banco Itaú Chile approved at the extraordinary shareholders’ meetings on June 26, 2015 and June 30, 2015, respectively, and in compliance with SBIF Ruling No. 409 dated September 4, 2015, to set April 1, 2016, as the date for the merger to take place. |
• | As a result, beginning April 1, 2016, the merger would take effect and CorpBanca would absorb Banco Itaú Chile, which would then be dissolved. CorpBanca would be the successor company, assuming the rights and obligations and incorporating all shareholders and equity of the absorbed bank. |
• | The amended bylaws of the merged bank, approved at the meeting where the merger was approved, will take effect starting April 1, 2016. From that date, among other modifications, the Bank’s legal name will be “ITAÚ CORPBANCA”, and it may indistinctly do business as “BANCO ITAÚ” and “ITAÚ” for commercial and advertising purposes. The number of directors will increase from 9 to 11 standing members and the number of alternates will remain at 2. The new text of the bylaws of the merged bank approved by shareholders will also take effect, fully replacing the prior text. |
• | The merged bank will be controlled by Itaú Unibanco Holding S.A. |
• | The shareholders of the merged bank will receive 80,240.28252 shares of ITAU CORPBANCA in exchange for each share of the absorbed bank held, according to the Shareholder Registry, as of midnight on March 31, 2016. |
• | The shares of the merged bank will be physically exchanged on April 1, 2016; a notice to this effect will be published on March 29, 2016, in the newspapers Diario Financiero and Diario Pulso. |
• | Milton Maluhy Filho will be appointed Chief Executive Officer of the merged bank as of April 1, 2016. |
• | Lastly, Cristian Canales Palacios will be appointed Interim Chief Executive Officer of the Bank for the period from March 28 to March 31, 2016, inclusive. |
3. Fine for Exceeding Credit Margins
Via Ruling No. 16191 dated December 30, 2015, the SBIF fined CorpBanca MCh$21,765 (see Note 12 Contingencies, Commitments and Responsibilities) for violations of credit margins established in articles 84-1 and 85 of the General Banking Law (“GBL”) related to chapter 12-3 of the SBIF’s Updated Standards. On January 18, 2016, CorpBanca filed an appeal with the Santiago Court of Appeals to challenge the fine in conformity with the GBL. The appeal, number 644-2016, is pending judgment.
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
CORPBANCA ADMINISTRADORA GENERAL DE FONDOS S.A.
a. Profit Distribution
At a board meeting on March 1, 2016, by virtue of article 18 of Law 20,712 on Management of Third-Party Funds and Individual Portfolios, and articles 9 and 10 of Law 18,045 on the Securities Market, and in light of the fact that the Corp EMEA Mutual Fund does not have the minimum equity required by law, and in conformity with SVS Ordinary Ruling No. 4968 dated February 23, 2016, the company decided to liquidate that fund. The liquidation procedure will be communicated to fund unitholders and published on the company’s website. It will last 90 days from the date of this meeting.
At the thirty-first ordinary general shareholders’ meeting held on March 23, 2016, the shareholders approved the financial statements and annual report as of December 31, 2015. At the same meeting, the chairman proposed to shareholders that all profits for the year ended 2015, totaling MCh$4,096, be distributed as dividends. The proposal was unanimously approved by those shareholders present, who agreed to authorize the Board of Directors to decide when these dividends will be paid during 2016.
Shareholders also agreed to elect a new board of directors, in conformity with paragraph 4 of article 32 of Law No. 18,045 on Corporations. The following directors were elected:
• | Gustavo Arriagada Morales |
• | Cristián Canales Palacios |
• | Jorge Hechenleitner Adams |
• | Eugenio Gigogne Miqueles |
• | Felipe Hurtado Arnolds |
b. Board of Directors
The chairman of the board proposed appointing the external auditors PricewaterhouseCoopers Consultores, Auditores y Compañía Limitada for the year ended December 31, 2016. After brief debate, the shareholders unanimously agreed to hire PriceWaterhouseCoopers Consultores, Auditores y Compañía Limitada for the period from January-December 2016.
At ordinary board meeting No. 304 on March 23, 2016, the Board appointed Gustavo Arriagada Morales as chairman and Cristián Canales Palacios as vice chairman.
At that meeting, the Board was briefed on the situation of the real estate fund “Corp Inmobiliario I”, indicating that the partners of this fund, Empresas Armas and BICE AGF, were contacted to propose prepaying the loan from Scotiabank. The fund is awaiting the partners’ decisions as to whether or not to prepay the loan.
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
In the event that the fund unitholders choose not to participate in the capital call, the Board agreed that the subsidiary would subscribe up to UF 6,000 in fund units in order to raise the resources needed to pay the Scotiabank loan. The Board left record that these units would not be subscribed for investment purposes, but rather to prevent customers’ investments from continuing to deteriorate because of interest payments to that bank. The Board agreed to record a provision for an amount equivalent to the investment that would be made.
In accordance with its risk policy, any investments made by the subsidiary in real estate investment funds must be approved by the Executive Committee. Therefore, approval must be obtained before subscribing these units.
Similarly, in order to complete this investment, the Board agreed to call an extraordinary meeting of the unitholders of Corp Inmobiliario I FIP for April 18, 2016, at 10:00 a.m. in the subsidiary’s offices at Rosario Norte 660, Las Condes, in order to:
• | Report on the status of the project |
• | Capital call |
• | Capital increase of up to UF 6,000, if necessary. |
In accordance with the third paragraph of article 48 of the Corporations Law, the directors present at the meeting unanimously voted to carry out these agreements without waiting for the respective minutes to be approved, all of which will be recorded in a special document to be signed by the directors in attendance and the board secretary.
At an extraordinary board meeting held on March 29, 2016, director Eugenio Gigogne Miqueles submitted his resignation, which was accepted by the Board.
On April 18, 2016, a meeting of the investors of Corp Inmobiliario I Fund was held, at which they approved a capital increase and the subscription by CorpBanca AGF of up to 20% of the fund. The transaction was approved as established by the Board on March 23, 2016.
At an extraordinary board meeting on June 10, 2016, the directors present unanimously agreed the following:
a) | To call an extraordinary shareholders’ meeting to be held June 30, 2016, at 5:00 p.m. at Rosario Norte 660, Las Condes, in order to vote on the merger of the subsidiaries of “ITAU CORPBANCA”, Itaú Chile Administradora General de Fondos S.A. with Corpbanca Administradora General de Fondos S.A, by which the latter would incorporate the former. The decision at this meeting is conditional upon authorization from the SBIF to proceed with the merger. |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
b) | This means that if the Board’s proposals are approved, and once the conditions established for completing the merger have occurred, which may not occur before December 1, 2016 or after December 31, 2017, Corpbanca Administradora General de Fondos S.A will absorb the assets and liabilities of Itaú Chile Administradora General de Fondos S.A., and the absorbing company will manage all of the third-party funds and individual portfolios currently managed by Itaú Chile Administradora General de Fondos S.A. in conformity with Law No. 20,712. |
c) | This essential event does not have any consequences for the third-party funds and individual portfolios managed by Corpbanca Administradora General de Fondos S.A. in conformity with Law No. 20,712. |
At an ordinary board meeting held on June 22, 2016, director Cristian Canales Palacios submitted his resignation, which was accepted by the Board.
In an extraordinary shareholders’ meeting of Corpbanca Administradora General de Fondos S.A. held June 30, 2016, shareholders agreed to the following:
a) | To approve the merger of the subsidiaries of “ITAU CORPBANCA”, Itaú Chile Administradora General de Fondos S.A. (absorbed company) and Corpbanca Administradora General de Fondos S.A. (absorbing company), by which the latter would incorporate the former. |
b) | The merger shall not take place before November 1, 2016, nor after October 31, 2017, once the conditions agreed at the meeting have been met. |
c) | The modifications to and the amended text of the bylaws of CorpBanca Administradora General de Fondos S.A. were approved and will take effect from the date of the merger. Among other modifications, it was agreed to increase share capital by MCh$6,374 by issuing 976,576 new shares and to change the legal name to ITAU CORPBANCA Administradora General de Fondos S.A. |
c. Approval from Superintendency of Banks and Financial Institutions (SBIF)
On June 28, 2016, the SBIF authorized the request to merge the subsidiaries Corpbanca Administradora General de Fondos S.A. and Itaú Administradora General de Fondos S.A., by which the latter would incorporate the former, which would be the legal successor for all purposes. It also authorized the modifications to the surviving company’s bylaws.
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
ITAÚ CHILE ADMINISTRADORA GENERAL DE FONDOS S.A.
a. Extraordinary Shareholders’ Meeting
In an extraordinary shareholders’ meeting of Itaú Chile Administradora General de Fondos S.A. held June 30, 2016, shareholders agreed to the following:
a) To approve the merger of the subsidiaries of “ITAU CORPBANCA”, Itaú Chile Administradora General de Fondos S.A. (absorbed company) and Corpbanca Administradora General de Fondos S.A. (absorbing company), by which the latter would incorporate the former.
b. Approval from Superintendency of Banks and Financial Institutions (SBIF)
On June 28, 2016, the SBIF authorized the request to merge the subsidiaries Corpbanca Administradora General de Fondos S.A. and Itaú Administradora General de Fondos S.A., by which the latter would incorporate the former, which would be the legal successor for all purposes. It also authorized the modifications to the surviving company’s bylaws.
ITAU CORPBANCACORREDORA DE BOLSA S.A
a. Board of Directors
At an extraordinary meeting of the Board of Corpbanca Corredores de Bolsa S.A, on June 14, 2016, the directors present unanimously agreed the following:
To call an extraordinary shareholders’ meeting to be held June 30, 2016, at 5:00 p.m. at Rosario Norte 660, Las Condes, in order to vote on the merger of the subsidiaries of “ITAU CORPBANCA”, Itaú BBA Corredor de Bolsa Limitada with Corpbanca Corredores de Bolsa S.A., by which the latter would incorporate the former. The decision at this meeting is conditional upon authorization from the SBIF to proceed with the merger.
This means that if the Board’s proposals are approved, and once the conditions established for completing the merger have occurred, which may not occur before December 1, 2016 or after December 31, 2017, Corpbanca Corredores de Bolsa S.A. will absorb the assets and liabilities of Itaú BBA Corredor de Bolsa Limitada.
In an extraordinary shareholders’ meeting of Corpbanca Corredores de Bolsa S.A. held June 30, 2016, shareholders agreed to the following:
a) To approve the merger of the subsidiaries of “ITAU CORPBANCA”, Itaú BBA Corredor de Bolsa Limitada (absorbed company) and Corpbanca Corredores de Bolsa S.A. (absorbing company), by which the latter would incorporate the former.
b) The merger shall not take place before June 30, 2016, nor after June 30, 2017, once the conditions agreed at the meeting have been met.
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
c) The modifications to and the amended text of the bylaws of CorpBanca Corredores de Bolsa S.A., were approved and will take effect from the date of the merger. Among other modifications, it was agreed to increase share capital by MCh$374. by issuing 10,000 new shares and to change the legal name to ITAU CORPBANCA Corredores de Bolsa S.A.
b. Approval from Superintendency of Banks and Financial Institutions (SBIF)
On June 28, 2016, the SBIF authorized the request to merge the subsidiaries Corpbanca Corredores de Bolsa S.A. and Itaú BBA Corredor de Bolsa Ltda., by which the latter would incorporate the former, which would be the legal successor for all purposes. It also authorized the modifications to the surviving company’s bylaws.
ITAÚ BBA CORREDOR DE BOLSA LTDA.
a.By public instrument granted June 30, 2016, signed before Santiago notary public Félix Jara Cadot, the following was agreed:
a) To approve the merger of the subsidiaries of “ITAU CORPBANCA”, ITAÚ BBA CORREDOR DE BOLSA LIMITADA (absorbed company) and CORPBANCA CORREDORES DE BOLSA S.A. (absorbing company), by which the latter would incorporate the former.
b) The merger shall not take place before June 30, 2016, nor after June 30, 2017, once the conditions agreed at the meeting have been met.
c) The modifications to the bylaws of CorpBanca Corredores de Bolsa S.A. were acknowledged and the amended text of the bylaws was approved and will take effect from the date of the merger. Among other modifications, it was agreed to increase share capital by MCh$374. by issuing 10,000 new shares and to change the legal name to ITAU CORPBANCA CORREDORES DE BOLSA S.A.
b. Approval from Superintendency of Banks and Financial Institutions (SBIF)
On June 28, 2016, the SBIF authorized the request to merge the subsidiaries Corpbanca Corredores de Bolsa S.A. and Itaú BBA Corredor de Bolsa Ltda., by which the latter would incorporate the former, which would be the legal successor for all purposes. It also authorized the modifications to the surviving company’s bylaws.
F-119
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
CORPBANCA CORREDORES DE SEGUROS S.A.
a. Board of Directors
At board meeting No. 206 on March 15, 2016, the Board agreed to terminate the employment of Chief Executive Officer César Galdames Díaz as of April 5, 2016, and to replace him with Maria Dolores Minoletti Sazo as Interim CEO. This situation was reported to the SVS as an essential event.
At board meeting No. 206 on March 15, 2016, director Richard Kouyoumdjian Inglis submitted his resignation. His resignation was accepted by the Board of the brokerage subsidiary, which deferred his replacement to shareholders at the next ordinary shareholders’ meeting when the entire Board will be renewed.
At board meeting No. 206 on April 12, 2016, Maria Dolores Minoletti Sazo submitted her resignation from the position of Chief Executive Officer effective April 15, 2016. The Board accepted her resignation and appointed Steffhanie Elizabeth Pía Silva Aguero to replace her as Interim CEO effective April 18, 2016. This situation was reported to the SVS as an essential event.
At the nineteenth ordinary general shareholders’ meeting held April 29, 2016, shareholders unanimously approved the annual report, balance sheet and attached notes and the external auditors’ report and also agreed to distribute profit for the year 2015, of MCh$8,759, which will be prorated among shareholders based on their ownership interests. The board of the brokerage subsidiary was authorized to determine the dates on which the dividends will be paid.
At the nineteenth ordinary general shareholders’ meeting held April 29, 2016, the chairman stated that given the resignation of several board members during the year 2015, in accordance with current regulations, a new full board must be elected by shareholders. After debating the proposals presented to shareholders, they unanimously appointed the following directors:
Pablo de la Cerda Merino
Américo Becerra Morales
Alvaro Wrobbel Mauriz
Juan Pablo Pastorino Valdés
Patricia Venegas Rivera
CORPLEGAL S.A.
a. Board of Directors
On March 29, 2016, director Eugenio Gigogne Miqueles submitted his resignation.
On March 31, 2016, director Hector Neira Torres also submitted his resignation.
Both resignations were presented to Cristian Canales Palacios, Chairman of the Board of CorpLegal S.A.
F-120
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
ASESORIAS FINANCIERAS S.A.
a. Board of Directors
At an extraordinary shareholders’ meeting on April 21, 2016, the corporate name of Corpbanca Asesorías Financieras S.A. was changed to Itaú Asesorías Financieras S.A.
The fifth article of its bylaws was also modified to reduce the number of directors from four to three, leaving the Board as follows: José Francisco Sánchez Figueroa (Chairman), Rodrigo Oyarzo Brncic and Pablo de la Cerda Merino.
F-121
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
SMU CORP S.A.
a. Capital Increase
On January 31, 2016, CorpBanca paid for 89 shares, equivalent to MCh$71, and SMU S.A. paid for 86 shares, equivalent to MCh$69, as part of the capital increase agreed upon at the extraordinary general shareholders’ meeting held July 31, 2014, which was recorded in public instrument on September 13, 2014, granted before Santiago Notary Public José Musalem Saffie.
On February 29, 2016, CorpBanca paid for 83 shares, equivalent to MCh$66, and SMU S.A. paid for 79 shares, equivalent to MCh$63, as part of the capital increase agreed upon at the extraordinary general shareholders’ meeting held July 31, 2014, which was recorded in public instrument on September 13, 2014, granted before Santiago Notary Public José Musalem Saffie.
On April 28, 2016, director Fernando Massú Taré submitted his resignation effective April 27, 2016.
At an ordinary shareholders’ meeting on April 28, 2016, the shareholders elected the following seven individuals, as established by the company’s by-laws, to the Board of Directors:
• | Jorge Andrés Saieh Guzmán |
• | Milton Maluhy Filho |
• | Gerardo Schlotfeldt Leighton |
• | Gabriel Moura |
• | Pilar Dañobeitía Estades |
• | Marcelo Gálvez Saldías |
• | Arturo Silva Ortíz |
On May 31, 2016, Itaú-CorpBanca paid for 32 shares, equivalent to MCh$26, and SMU S.A. paid for 30 shares, equivalent to MCh$24, as part of the capital increase agreed upon at the extraordinary general shareholders’ meeting held July 31, 2014, which was recorded in public instrument on September 13, 2014, granted before Santiago Notary Public José Musalem Saffie.
On June 30, 2016, Itaú-CorpBanca paid for 165 shares, equivalent to MCh$132, and SMU S.A. paid for 158 shares, equivalent to MCh$126, as part of the capital increase agreed upon at the extraordinary general shareholders’ meeting held July 31, 2014, which was recorded in public instrument on September 13, 2014, granted before Santiago Notary Public José Musalem Saffie.
F-122
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
BANCO CORPBANCA COLOMBIA S.A. AND SUBSIDIARIES
a) Profit Distribution
In March 2016, shareholders of Banco CorpBanca Colombia and the other companies within the CorpBanca Colombia Group met and agreed to distribute profits as follows:
BANCO CORPBANCA COLOMBIA | ||||||||
MCOP$ | MCh$ | |||||||
Profit for the period | 319,241 | 72,212 | ||||||
Release of fiscal reserve | — | — | ||||||
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Total available to shareholders | 319,241 | 72,212 | ||||||
Dividend payments | — | — | ||||||
To increase legal reserve | 319,241 | 72,212 | ||||||
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For subsidiaries:
CorpBanca Investment Trust Colombia | ||||||||
MCOP$ | MCh$ | |||||||
Profit for the period | 3,149 | 712 | ||||||
Release of fiscal reserve | 40 | 9 | ||||||
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Total available to shareholders | 3,189 | 721 | ||||||
To maintain in retained earnings | 1,575 | 356 | ||||||
Dividend payments | — | — | ||||||
To increase legal reserve | 1,614 | 365 | ||||||
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F-123
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
HELM COMISIONISTA | ||||||||
MCOP$ | MCh$ | |||||||
Profit for the period | 8,952 | 2,025 | ||||||
Retained earnings from prior years | 2,056 | 465 | ||||||
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Total available to shareholders | 11,008 | 2,490 | ||||||
To maintain in retained earnings | 4,464 | 1,010 | ||||||
Fiscal reserve | 12 | 3 | ||||||
Dividend payments | — | — | ||||||
To increase legal reserve | 6,532 | 1,477 | ||||||
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HELM FIDUCIARIA | ||||||||
MCOP$ | MCh$ | |||||||
Profit for the period | 11,388 | 2576 | ||||||
Release of fiscal reserve | 400 | 90 | ||||||
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Total available to shareholders | 11,788 | 2,666 | ||||||
To maintain in retained earnings | 5,894 | 1,333 | ||||||
Dividend payments | — | — | ||||||
To increase legal reserve | 5,894 | 1,333 | ||||||
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b) Investments
In February 2016, Banco CorpBanca signed an agreement with TransUnion Netherlands II B.V., to sell one hundred percent (100%) of its shareholding in the corporation CIFIN S.A., which is authorized as a technical and administrative services company and accredited as a provider of financial, credit and commercial information and services.
On May 31, 2016, BANCO CORPBANCA COLOMBIA announced that on that date it had completed the process of selling 100% of the minority interest it held in CIFIN S.A. This was part of the transaction entered into by several financial entities, including BANCO CORPBANCA COLOMBIA, as sellers, and TransUnion Netherlands II B.V., as buyer, which was reported to the market last February 8, 2016.
F-124
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
The sale price was COP$626,655.19 per share.
b) Legal Merger of Parent Company
The legal merger of the banks CorpBanca e Itaú Chile was completed in Chile on April 1, 2016, as published on March 28, 2016.
c) Mutual Rescission of Sublicense Agreement with ITAU CORPBANCA
At a general shareholders’ meeting on June 29th, the shareholders agreed to rescind the sublicense agreement signed with Itau CorpBanca by approving the rescission of the agreement: “Transfer of Agreement for Sublicense of Software and Other Services”.
This agreement was entered into by CorpBanca (Parent Company), a corporation formed in Chile and Banco CorpBanca Colombia S.A., for the sum of eighteen thousand eight hundred forty-five million, thirty-eight thousand four hundred sixty-six Chilean pesos (MCh$18,845), through which CorpBanca transferred to Banco CorpBanca Colombia S.A. all rights and obligations it held in their state as of that date, regarding the licensing agreement for the IBS system. By virtue of this rescission, the parties’ obligations cease and the appropriate reimbursements shall be made.
This agreement was approved by shareholders at a general shareholders’ meeting on December 18, 2015.
Appointment of Vice-Chairman and Legal Representatives:
a. Appointments:
Edson Silva was appointed Vice President of Risk and named one of the Bank’s Legal Representatives to replace Javier Salguero.
Derek Sassoon was appointed Vice President of Treasury and named one of the Bank’s Legal Representatives to replace Javier Barrenechea.
Juan Ignacio Castro was appointed Controller to replace Eduardo Ruíz.
b. Change of Names of Vice President Positions:
The position of Vice President of Retail and SME Banking was changed to Vice President of Retail Banking and Claudia Patricia Vélez was confirmed as Vice President of Retail Banking.
F-125
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
c. Dismissals:
Alfredo Botta Espinosa was dismissed as Vice President of Subsidiaries and one of the Bank’s Legal Representatives.
Juan Antonio Montoya was dismissed as Vice President of Special Business (previously Vice President of Corporate, Commercial and Institutional Banking) and one of the Bank’s Legal Representatives.
Javier Barrenechea was dismissed as Vice President of Treasury and one of the Bank’s Legal Representatives.
In light of Javier Salguero’s new position, he was dismissed as Vice President of Risk and one of the Bank’s Legal Representatives. He changed positions but continues to be employed by the entity.
d) Setting Annual Fees and Allowances for the Fiscal Reviewer.
A modification of the annual fees and allowances for the Fiscal Reviewer Fiscal (PricewaterhouseCoopers) of BANCO CORPBANCA COLOMBIA S.A. was approved for the 2016-2017 period.
e) Appointment of Board of Directors
On May 25, at an extraordinary general meeting of the shareholders of CorpBanca Colombia S.A., shareholders approved the appointment of Milton Maluhy Filho to the Board of Directors to replace Fernando Massú for the remainder of the 2016-2017 period.
F-126
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Segment reporting is determined by the Bank on the basis of its operating segments, which are differentiated mainly by the risks and returns that affect them21.
Reporting segments and the criteria used for reporting to the Bank’s chief operating decision maker are in accordance with IFRS 8Operating Segments. Management reviews its segments on the basis of gross operating margin and uses average balances to evaluate performance and allocate resources.
The Bank’s commercial activities take place mainly in the domestic market. It has strategically aligned its operations into four divisions for its four commercial segments based on market segmentation and the needs of its customers and commercial partners. The five commercial segments are: 1) Wholesale Banking (a) Corporate, Real Estate and Construction and (b) Large Companies; 2) Retail Banking (a) SME Banking, (b) Traditional Banking, c) Preferential Banking and d) Condell Consumer Banking Division; 3) International and Treasury Division; 4) Other Financial Services and 5) Colombia. The Bank manages these commercial segments using an information system on internal profitability. The Bank has also included geographic disclosures on its operations in Colombia and New York through the acquisition of Banco CorpBanca Colombia and Subsidiaries as detailed above.
No single customer is solely responsible for 10% or more of the Bank’s total revenue during the periods ended June 30, 2016 and 2015.
Each commercial segment is described below:
Segments for Chile and the United States
Wholesale Banking
• | The Corporate Banking Division consists of companies that belong to major economic groups, specific industries and companies with sales greater than US$100 million, including international business and the representation office in Spain. The Real Estate and Construction Division works with companies within these industries that operate in both Santiago and other areas of Chile. |
21 | The segments presented here correspond to the segments used by the merged bank. Information for 2015 (referring to Banco Itaú Chile) was presented using the current segmenting criteria. |
F-127
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
• | The Large Companies Division includes a wide range of financial products and services for companies with annual sales of between US$3 and US$100 million. The leasing and factoring departments have been included in this segment. |
Retail Banking
• | The SME Division serves companies with annual sales of less than US$3 million. |
• | The Traditional Banking (serves individuals) and Preferential Banking (legal entities) Divisions serve medium- to high-income customers, offering current accounts, consumer loans, credit cards and mortgage loans, among other products. |
• | The Condell Consumer Banking Division offers consumer loans to individuals with income up to ThCh$600 (this group arose from the combination of Banco Itaú and CORPBANCA). |
International and Treasury
• | This segment mainly includes treasury activities such as financial management, funding and liquidity as well as international commercial activities. |
Financial Services
• | These are services provided by our subsidiaries that include insurance brokerage, financial advisory services, asset management and securities brokerage. |
Colombia
The commercial activities of this segment are carried out by Banco CorpBanca Colombia S.A. and its subsidiaries.
These correspond to operations and business carried out by these entities in that country, primarily related directly to the needs of their customers and the Bank’s strategy, grouped as follows: Commercial Banking, Retail Banking, Treasury Operations and International Business or Operations. They offer additional products and other financial services through their different subsidiaries in order to provide comprehensive service to their current and potential customers.
This segment is determined by the Bank on the basis of its operating segments, which are differentiated mainly by the risks and returns that affect them. Colombia has been identified as a separate operating segment based on the business activities described above. Its operating results are reviewed regularly by the entity’s highest decision-making authority for operating decisions as one single cash generating unit, to decide about resource allocation for the segment and evaluate its performance, and separate financial information is available for it.
F-128
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Segment information regarding assets, liabilities and income or expenses for the period are presented in accordance with the SBIF Compendium of Accounting Standards.
1. Geographic Information
ITAU CORPBANCA reports revenue by segment from external customers that is:
(i) | attributed to the entity’s country of domicile and |
(ii) | attributed, in aggregate, to all foreign countries where the entity obtains revenue. |
When revenue from external customers attributed to a particular foreign country is significant, it is disclosed separately.
In line with this, the Group operates in three main geographic areas: Chile, Colombia22 and the United States.
Net Interest and Indexation Income | ||||||||
As of June 30, | As of June 30, | |||||||
2016 | 2015 | |||||||
MCh$ | MCh$ | |||||||
Chile | 184,253 | 107,215 | ||||||
Colombia | 55,739 | — | ||||||
New York | 8,426 | — | ||||||
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248,418 | 107,215 | |||||||
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22 | This segment includes operations carried out by Helm Bank (Panamá) S.A., and Helm Casa de Valores (Panamá). |
F-129
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
The following table details non-segmented assets associated with each geographic area:
As of June | As of December | |||||||||||||||||||||||||||||||||||
Non-Segmented Assets | Chile | Colombia | New York | 30, 2016 | Chile | Colombia | New York | 31, 2015 | ||||||||||||||||||||||||||||
Note | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||
Cash and due from banks | 5 | 852,249 | 570,970 | 431,443 | 1,854,662 | 477,809 | — | — | 477,809 | |||||||||||||||||||||||||||
Transactions pending settlement | 5 | 487,624 | 8,291 | — | 495,915 | 62,095 | — | — | 62,095 | |||||||||||||||||||||||||||
Investments in other companies | 11 | 12,257 | 3,470 | — | 15,727 | 2,475 | — | — | 2,475 | |||||||||||||||||||||||||||
Intangible assets(*) | 12 | 1,366,868 | 219,823 | 53 | 1,586,744 | 51,809 | — | — | 51,809 | |||||||||||||||||||||||||||
Property, plant and equipment | 13 | 71,342 | 48,781 | 898 | 121,021 | 33,970 | — | — | 33,970 | |||||||||||||||||||||||||||
Current tax assets | 54,536 | 57,258 | 2,406 | 114,200 | 7,732 | — | — | 7,732 | ||||||||||||||||||||||||||||
Deferred tax assets | 169,594 | 49,333 | 17,095 | 236,022 | 110,044 | — | — | 110,044 | ||||||||||||||||||||||||||||
Other assets | 14 | 548,884 | 77,799 | 932 | 627,615 | 137,454 | — | — | 137,454 | |||||||||||||||||||||||||||
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3,563,354 | 1,035,725 | 452,827 | 5,051,906 | 883,388 | — | — | 883,388 | |||||||||||||||||||||||||||||
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* | This includes goodwill generated in business combinations between Banco Itaú Chile and CorpBanca totaling MCh$1,124,80723 as of June 30, 2016 (no amounts were booked for this concept in 2015). |
23 | For impairment testing purposes, goodwill acquired in a business combination shall be distributed as of the acquisition date among each of the cash generating units (CGUs) or group of CGUs of the acquirer that are expected to benefit from the synergies of the business combination, regardless of whether other of the acquiree’s assets or liabilities are allocated to these units or groups of units. In the Bank’s case, this is mainly: Chile and Colombia. If the initial distribution of goodwill acquired in a business combination cannot be completed before the end of the year in which the business combination took place, which is the case for ITAU CORPBANCA, that initial distribution must be completed before the close of the first annual period beginning after the acquisition date. |
F-130
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
2. The information in this note was prepared based on an analysis of:
a) Profit or Loss:
As of June 30, 2016 | ||||||||||||||||||||||||||||||||
Commercial Banking | Retail Banking | |||||||||||||||||||||||||||||||
Banco | ||||||||||||||||||||||||||||||||
Corporate, Real | Traditional and | Condell | International | Other | ||||||||||||||||||||||||||||
Estate and | Large | Preferential | Consumer | and Treasury | Financial | |||||||||||||||||||||||||||
Construction | Companies | Banking | Division | Division | Services | Colombia | Total | |||||||||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||
Net interest and indexation income | 44,645 | 21,127 | 86,559 | 9,983 | 20,535 | 9,830 | 55,739 | 248,418 | ||||||||||||||||||||||||
Net fee and commission income | 16,721 | 13,165 | 49,490 | 2,137 | 566 | (36,748 | ) | 16,493 | 61,824 | |||||||||||||||||||||||
Net financial operating income (loss) | (87 | ) | — | (17 | ) | — | (4,660 | ) | 18,685 | 29,787 | 43,708 | |||||||||||||||||||||
Net foreign exchange transactions | 9,261 | 2,810 | 2,101 | 1 | 26,803 | (53,393 | ) | (8,992 | ) | (21,409 | ) | |||||||||||||||||||||
Other operating income | 31 | 262 | 328 | — | — | 4,567 | 2,872 | 8,060 | ||||||||||||||||||||||||
Credit risk provisions | (5,747 | ) | (8,437 | ) | (27,379 | ) | (1,620 | ) | 175 | (4,016 | ) | (28,835 | ) | (75,859 | ) | |||||||||||||||||
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Gross operating margin | 64,824 | 28,927 | 111,082 | 10,501 | 43,419 | (61,075 | ) | 67,064 | 264,742 | |||||||||||||||||||||||
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Income attributable to investments in other companies | — | — | — | — | — | 219 | 129 | 348 | ||||||||||||||||||||||||
Operating expenses | (5,304 | ) | (9,418 | ) | (60,018 | ) | (7,078 | ) | (5,947 | ) | (73,565 | ) | (56,025 | ) | (217,355 | ) | ||||||||||||||||
Profit before taxes | 59,520 | 19,509 | 51,064 | 3,423 | 37,472 | (134,421 | ) | 11,168 | 47,735 | |||||||||||||||||||||||
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Average loans | 7,872,681 | 2,405,425 | 6,232,951 | 167,068 | — | — | 5,233,288 | 21,527,280 | ||||||||||||||||||||||||
Average investments | — | — | — | — | 922,618 | — | 1,281,906 | 1,907,871 | ||||||||||||||||||||||||
As of June 30, 2015 | ||||||||||||||||||||||||||||||||
Commercial Banking | Retail Banking | |||||||||||||||||||||||||||||||
Banco | ||||||||||||||||||||||||||||||||
Corporate, Real | Traditional and | Condell | International | Other | ||||||||||||||||||||||||||||
Estate and | Large | Preferential | Consumer | and Treasury | Financial | |||||||||||||||||||||||||||
Construction | Companies | Banking | Division | Division | Services | Colombia | Total | |||||||||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||
Net interest and indexation income | 13,490 | 18,964 | 61,100 | — | 11,802 | 1,859 | 107,215 | |||||||||||||||||||||||||
Net fee and commission income | 13,041 | 4,291 | 16,315 | — | 1,712 | — | 35,359 | |||||||||||||||||||||||||
Net financial operating income (loss) | — | — | — | (14,788 | ) | 10,696 | — | (4,092 | ) | |||||||||||||||||||||||
Net foreign exchange transactions | 2,880 | 661 | 145 | — | 19,279 | 467 | — | 23,433 | ||||||||||||||||||||||||
Other operating income | 2,657.68 | 2,754 | 2,774.54 | — | — | (3,753 | ) | — | 4,433 | |||||||||||||||||||||||
Credit risk provisions | 1,807 | (6,553 | ) | (18,722 | ) | — | 19.61 | 76 | — | (23,411 | ) | |||||||||||||||||||||
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Gross operating margin | 33,876 | 20,118 | 61,613 | 16,274 | 11,056 | 142,937 | ||||||||||||||||||||||||||
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Income attributable to investments in other companies | — | 164 | — | 164 | ||||||||||||||||||||||||||||
Operating expenses | (11,251 | ) | (10,306 | ) | (47,922 | ) | — | (4,620 | ) | (14,746 | ) | (88,845 | ) | |||||||||||||||||||
Profit before taxes | 22,626 | 9,812 | 13,691 | 11,653 | (3,526 | ) | 54,256 | |||||||||||||||||||||||||
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Average loans | 1,793,065 | 941,749 | 3,093,562 | — | 420,624 | — | 6,249,000 | |||||||||||||||||||||||||
Average investments | 534,000 | — | — | 534,000 |
F-131
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
b) Assets and Liabilities
As of June 30, 2016 | ||||||||||||||||||||||||||||||||
Commercial Banking | Retail Banking | |||||||||||||||||||||||||||||||
Corporate, Real Estate and Construction | Large Companies | Traditional and Preferential Banking | Banco Condell Consumer Division | International and Treasury Division | Other Financial Services | Colombia | Total | |||||||||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||||
Mortgage | — | 10,451 | 3,289,439 | 3,558 | 31 | — | 511,442 | 3,814,921 | ||||||||||||||||||||||||
Consumer | 21,354 | 91,026 | 1,018,038 | 161,625 | — | 6 | 1,137,219 | 2,429,268 | ||||||||||||||||||||||||
Commercial | 7,693,924 | 2,238,477 | 2,376,301 | 528 | 152,123 | 1,520 | 3,734,142 | 16,197,015 | ||||||||||||||||||||||||
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Loans, before provisions | 7,715,278 | 2,339,954 | 6,683,778 | 165,711 | 152,154 | 1,526 | 5,382,803 | 22,441,204 | ||||||||||||||||||||||||
Credit risk provisions | (74,398 | ) | (63,791 | ) | (108,497 | ) | (11,338 | ) | (88 | ) | (43,716 | ) | (250,854 | ) | (552,682 | ) | ||||||||||||||||
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| |||||||||||||||||
Loans, net of provisions (*) | 7,640,880 | 2,276,163 | 6,575,281 | 154,373 | 152,066 | (42,190 | ) | 5,131,949 | 21,888,522 | |||||||||||||||||||||||
Trading securities | — | — | — | — | 95,454 | — | 248,378 | 343,832 | ||||||||||||||||||||||||
Receivables from repurchase agreements and securities borrowing | — | — | — | — | 25,797 | — | 68,651 | 94,448 | ||||||||||||||||||||||||
Financial derivative instruments | — | — | — | — | 1,223,517 | — | 141,798 | 1,365,315 | ||||||||||||||||||||||||
Financial assets available for sale | — | — | — | — | 933,872 | — | 704,373 | 1,638,245 | ||||||||||||||||||||||||
Financial assets held to maturity | — | — | — | — | 201,627 | — | 128,961 | 330,588 | ||||||||||||||||||||||||
Non-segmented assets (**) | — | — | — | — | — | — | — | 5,051,906 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total assets | 7,640,880 | 2,276,163 | 6,575,281 | 154,373 | 2,632,333 | (42,190 | ) | 6,424,110 | 30,712,856 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Current accounts | 779,558 | 375,824 | 921,205 | 6,129 | — | 418,905 | 2,552,601 | 5,054,222 | ||||||||||||||||||||||||
Deposits and borrowings | 1,858,079 | 726,318 | 2,144,455 | 12,285 | 4,548,281 | — | 2,805,606 | 12,095,024 | ||||||||||||||||||||||||
Payables from repurchase agreements and securities lending | — | — | — | — | 207,505 | (26,614 | ) | 151,603 | 332,494 | |||||||||||||||||||||||
Financial derivative instruments | — | — | — | — | 1,078,557 | — | 78,114 | 1,156,671 | ||||||||||||||||||||||||
Borrowings from financial institutions | — | — | — | — | 1,752,952 | — | 506,954 | 2,259,906 | ||||||||||||||||||||||||
Debt instruments issued | — | — | — | — | 4,690,202 | — | 405,673 | 5,095,875 | ||||||||||||||||||||||||
Non-segmented | — | — | — | — | — | — | 1,268,775 | |||||||||||||||||||||||||
Equity | — | — | — | — | — | — | 3,449,889 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total liabilities and equity | 2,637,637 | 1,102,142 | 3,065,660 | 18,414 | 12,277,497 | 392,291 | 6,500,551 | 30,712,856 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-132
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
As of December 31, 2015 | ||||||||||||||||||||||||||||||||
Commercial Banking | Retail Banking | |||||||||||||||||||||||||||||||
Corporate, | Traditional | Banco | ||||||||||||||||||||||||||||||
Real Estate | and Private | Condell | International | Other | ||||||||||||||||||||||||||||
and | Large | Banking | Consumer | and Treasury | Financial | |||||||||||||||||||||||||||
Construction | Companies | Division | Division | Division | Services | Colombia | Total | |||||||||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||||
Mortgage | — | 7,127 | 1,526,721 | — | — | — | — | 1,533,848 | ||||||||||||||||||||||||
Consumer | 69 | 155 | 706,336 | — | — | — | — | 706,560 | ||||||||||||||||||||||||
Commercial | 2,844,415 | 938,003 | 812,706 | — | 87,913 | — | — | 4,683,037 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Loans, before provisions | 2,844,484 | 945,284 | 3,045,764 | — | 87,913 | — | — | 6,923,445 | ||||||||||||||||||||||||
Credit risk provisions | (24,016 | ) | (32,435 | ) | (53,482 | ) | — | (61 | ) | — | — | (109,994 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Loans, net of provisions (*) | 2,820,468 | 912,849 | 2,992,281 | — | 87,852 | — | — | 6,813,451 | ||||||||||||||||||||||||
Trading securities | — | — | — | — | 17,765 | — | — | 17,765 | ||||||||||||||||||||||||
Receivables from repurchase agreements and securities borrowing | — | — | — | — | 10,293 | — | — | 10,293 | ||||||||||||||||||||||||
Financial derivative instruments | — | — | — | — | 227,984 | — | — | 227,984 | ||||||||||||||||||||||||
Financial assets available for sale | — | — | — | — | 512,510 | — | — | 512,510 | ||||||||||||||||||||||||
Financial assets held to maturity | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Assets not incorporated in segments | — | — | — | — | — | — | — | 883,318 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total assets | 2,820,468 | 912,849 | 2,992,281 | — | 856,404 | — | — | 8,465,321 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Current accounts | 365,169 | 117,031 | 499,149 | — | — | — | — | 981,349 | ||||||||||||||||||||||||
Deposits and borrowings | 201,700 | 70,644 | 525,268 | — | 3,154,961 | — | — | 3,952,573 | ||||||||||||||||||||||||
Payables from repurchase agreements and securities lending | — | — | — | — | 43,727 | — | — | 43,727 | ||||||||||||||||||||||||
Financial derivative instruments | — | — | — | — | 253,183 | — | — | 253,183 | ||||||||||||||||||||||||
Borrowings from financial institutions | — | — | — | — | 658,600 | — | — | 658,600 | ||||||||||||||||||||||||
Debt instruments issued | — | — | — | — | 1,504,335 | — | — | 1,504,335 | ||||||||||||||||||||||||
Liabilities not incorporated in segments | — | — | — | — | — | — | — | 278,992 | ||||||||||||||||||||||||
Equity | — | — | — | — | — | — | — | 792,562 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total liabilities and equity | 566,869 | 187,675 | 1,024,417 | — | 5,614,806 | — | — | 8,465,321 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) | Loans net of provisions include loans and advances to banks as of June 30, 2016 and December 31, 2015. |
F-133
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
(**) | Non-segmented assets and liabilities as of June 30, 2016 and December 31, 2015, are detailed as follows: |
The following assets have not been segmented:
As of June | As of | |||||||||||
Note | 30, | December 31, | ||||||||||
2016 | 2015 | |||||||||||
MCh$ | MCh$ | |||||||||||
ASSETS | ||||||||||||
Cash and due from banks | 5 | 1,854,662 | 477,809 | |||||||||
Transactions pending settlement | 5 | 495,915 | 62,095 | |||||||||
Investments in other companies | 8 | 15,727 | 2,475 | |||||||||
Intangible assets | 9 | 1,586,744 | 51,809 | |||||||||
Property, plant and equipment | 121,021 | 33,970 | ||||||||||
Current tax assets | 114,200 | 7,732 | ||||||||||
Deferred tax assets | 236,022 | 110,044 | ||||||||||
Other assets | 627,615 | 137,454 | ||||||||||
|
|
|
| |||||||||
5,051,906 | 883,388 | |||||||||||
|
|
|
|
The following liabilities have not been segmented:
As of June | As of | |||||||||||
Note | 30, | December 31, | ||||||||||
2016 | 2015 | |||||||||||
MCh$ | MCh$ | |||||||||||
LIABILITIES | ||||||||||||
Transactions pending settlement | 5 | 421,293 | 26,377 | |||||||||
Other financial liabilities | 28,537 | 20,733 | ||||||||||
Current tax liabilities | — | — | ||||||||||
Deferred tax liabilities | 140,897 | 96,488 | ||||||||||
Provisions | 158,556 | 82,954 | ||||||||||
Other liabilities | 519,492 | 52,480 | ||||||||||
|
|
|
| |||||||||
1,268,775 | 279,032 | |||||||||||
|
|
|
|
The percentage of assets and liabilities not included in any segment is 16.4% and 4.1%, respectively, as of June 30, 2016 (10.4% and 3.3% as of December 31, 2015).
F-134
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
NOTE 5 - CASH AND CASH EQUIVALENTS
a. Detail of Cash and Cash Equivalents
The following table details cash and cash equivalents:
As of | ||||||||||||
As of June | December | As of June | ||||||||||
30, | 31, | 30, | ||||||||||
2016 | 2015 | 2015 | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Cash and due from banks | ||||||||||||
Cash | 261,246 | 35,708 | 33,520 | |||||||||
Deposits in the Chilean Central Bank | 180,193 | 277,602 | 240,476 | |||||||||
Deposits in domestic banks | 9,842 | 5,409 | 1,748 | |||||||||
Deposits in foreign banks | 1,403,381 | 159,090 | 240,867 | |||||||||
|
|
|
|
|
| |||||||
Subtotal cash and due from banks | 1,854,662 | 477,809 | 516,611 | |||||||||
|
|
|
|
|
| |||||||
Transactions pending settlement, net | 74,622 | 35,718 | 34,876 | |||||||||
Highly liquid financial instruments (1) | 184,403 | 101,788 | 80,308 | |||||||||
Repurchase agreements (2) | 94,448 | 10,293 | 211 | |||||||||
|
|
|
|
|
| |||||||
Total cash and cash equivalents | 2,208,135 | 625,608 | 632,006 | |||||||||
|
|
|
|
|
|
(1) | This corresponds to trading instruments, available-for-sale investments and fixed income mutual funds maturing in less than three months from the date of acquisition. |
(2) | This corresponds to repurchase agreements maturing in less than three months from the date of acquisition, which are presented in the line item “Repurchase Agreements and Securities Borrowing” in the Statement of Financial Position. |
Funds in cash deposits in the Chilean Central Bank and the Bank of the Republic of Colombia (included in foreign deposits) are in response to monthly average matching regulations that the Bank must meet.
F-135
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Items (1) and (2) are detailed as follows:
As of June | As of | As of June | ||||||||||||||
Note | 30, | December 31, | 30, | |||||||||||||
2016 | 2015 | 2015 | ||||||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||||||
Highly Liquid Financial Instruments (1) | ||||||||||||||||
Trading securities | 6 | 24,451 | 35,718 | 34,876 | ||||||||||||
Financial assets available for sale | 10 | 184,403 | 101,788 | 80,308 | ||||||||||||
|
|
|
|
|
| |||||||||||
Total | 208,854 | 137,506 | 115,184 | |||||||||||||
|
|
|
|
|
| |||||||||||
Repurchase agreements (2) | 7 | 94,448 | 10,293 | 211 |
b. Transactions pending settlement
Transactions pending settlement consist of transactions awaiting settlement to increase or decrease funds in the Chilean Central Bank or foreign banks, normally within 12 to 24 business hours following period end, and are detailed as follows:
As of | ||||||||||||
As of June | December | As of June | ||||||||||
30, | 31, | 30, | ||||||||||
2016 | 2015 | 2015 | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Assets | ||||||||||||
Outstanding notes from other banks | 61,025 | 36,185 | 43,858 | |||||||||
Funds receivable | 434,890 | 25,910 | 50,897 | |||||||||
|
|
|
|
|
| |||||||
Subtotal assets | 495,915 | 62,095 | 94,755 | |||||||||
|
|
|
|
|
| |||||||
Liabilities | ||||||||||||
Funds payable | (421,293 | ) | (26,377 | ) | (59,879 | ) | ||||||
|
|
|
|
|
| |||||||
Subtotal liabilities | (421,293 | ) | (26,377 | ) | (59,879 | ) | ||||||
|
|
|
|
|
| |||||||
Transactions pending settlement, net | 74,622 | 35,718 | 34,876 | |||||||||
|
|
|
|
|
|
F-136
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
NOTE 6 - LOANS AND ADVANCES TO BANKS
As of June 30, 2016 and December 31, 2015, loans and advances to banks are detailed as follows:
As of June 30, 2016 | ||||||||||||
Unimpaired | Impaired | |||||||||||
Portfolio | Portfolio | Total | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Chilean Banks | ||||||||||||
Loans to Chilean banks | 3,994 | — | 3,994 | |||||||||
Provisions and impairment for loans to Chilean banks | (3 | ) | (3 | ) | ||||||||
|
|
|
|
|
| |||||||
Subtotal | 3,991 | — | 3,991 | |||||||||
|
|
|
|
|
| |||||||
Foreign Banks | ||||||||||||
Loans to foreign banks | 281,060 | — | 281,060 | |||||||||
Other advances to foreign banks | — | — | — | |||||||||
Provisions and impairment for loans to foreign banks | (278 | ) | — | (278 | ) | |||||||
|
|
|
|
|
| |||||||
Subtotal | 280,782 | — | 280,782 | |||||||||
|
|
|
|
|
| |||||||
Chilean Central Bank | ||||||||||||
Restricted deposits in the Chilean Central Bank | 569,000 | — | 569,000 | |||||||||
|
|
|
|
|
| |||||||
Subtotal | 569,000 | — | 569,000 | |||||||||
|
|
|
|
|
| |||||||
Total | 853,773 | — | 853,773 | |||||||||
|
|
|
|
|
|
F-137
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
As of December 31, 2015 | ||||||||||||
Unimpaired | Impaired | |||||||||||
Portfolio | Portfolio | Total | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Chilean Banks | ||||||||||||
Loans to Chilean banks | 40,665 | — | 40,665 | |||||||||
Provisions and impairment for loans to Chilean banks | (17 | ) | — | (17 | ) | |||||||
|
|
|
|
|
| |||||||
Subtotal | 40,648 | — | 40,648 | |||||||||
|
|
|
|
|
| |||||||
Foreign Banks | ||||||||||||
Loans to foreign banks | 58,803 | — | 58,803 | |||||||||
Other advances to foreign banks | — | — | — | |||||||||
Provisions and impairment for loans to foreign banks | (53 | ) | — | (53 | ) | |||||||
|
|
|
|
|
| |||||||
Subtotal | 58,750 | — | 58,750 | |||||||||
|
|
|
|
|
| |||||||
Chilean Central Bank | ||||||||||||
Restricted deposits in the Chilean Central Bank | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Subtotal | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | 99,398 | — | 99,398 | |||||||||
|
|
|
|
|
|
Movements of loans and advances to banks as of June 30, 2015 and December 31, 2015, are detailed as follows:
Pro Forma as of June 30, 2015 | ||||||||||||||||||||||||||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||||||||||||||||||||||||||
Unimpaired | Impaired | Unimpaired | Impaired | Unimpaired | Impaired | |||||||||||||||||||||||||||||||
Portfolio | Portfolio | Total | Portfolio | Portfolio | Total | Portfolio | Portfolio | Total | ||||||||||||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||
Chilean Banks | ||||||||||||||||||||||||||||||||||||
Loans to Chilean banks | 1,924 | — | 1,924 | — | — | 1,924 | — | 1,924 | ||||||||||||||||||||||||||||
Provisions and impairment for loans to Chilean banks | (2 | ) | (2 | ) | (2 | ) | (2 | ) | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Subtotal | 1,922 | — | 1,922 | — | — | — | 1,922 | — | 1,922 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Foreign Banks | ||||||||||||||||||||||||||||||||||||
Loans to foreign banks | 32,323 | — | 32,323 | 132,945 | — | 132,945 | 165,268 | — | 165,268 | |||||||||||||||||||||||||||
Other advances to foreign banks | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Provisions and impairment for loans to foreign banks | (27 | ) | — | (27 | ) | (220 | ) | — | (220 | ) | (247 | ) | — | (247 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Subtotal | 32,296 | — | 32,296 | 132,725 | — | 132,725 | 165,021 | — | 165,021 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Chilean Central Bank | ||||||||||||||||||||||||||||||||||||
Restricted deposits in the Chilean Central Bank | — | — | — | 347,000 | — | 347,000 | 347,000 | — | 347,000 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Subtotal | — | — | — | 347,000 | — | 347,000 | 347,000 | — | 347,000 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total | 34,218 | — | 34,218 | 479,725 | — | 479,725 | 513,943 | — | 513,943 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-138
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Pro Forma as of December 31, 2015 | ||||||||||||||||||||||||||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||||||||||||||||||||||||||
Unimpaired Portfolio MCh$ | Impaired Portfolio MCh$ | Total MCh$ | Unimpaired Portfolio MCh$ | Impaired Portfolio MCh$ | Total MCh$ | Unimpaired Portfolio MCh$ | Impaired Portfolio MCh$ | Total MCh$ | ||||||||||||||||||||||||||||
Chilean Banks | ||||||||||||||||||||||||||||||||||||
Loans to Chilean banks | 40,665 | — | 40,665 | — | — | 40,665 | — | 40,665 | ||||||||||||||||||||||||||||
Provisions and impairment for loans to Chilean banks | (17 | ) | (17 | ) | (17 | ) | (17 | ) | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Subtotal | 40,648 | — | 40,648 | — | — | — | 40,648 | — | 40,648 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Foreign Banks | ||||||||||||||||||||||||||||||||||||
Loans to foreign banks | 58,803 | — | 58,803 | 144,041 | — | 144,041 | 202,844 | — | 202,844 | |||||||||||||||||||||||||||
Other advances to foreign banks | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Provisions and impairment for loans to foreign banks | (53 | ) | — | (53 | ) | (240 | ) | — | (240 | ) | (293 | ) | — | (293 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Subtotal | 58,750 | — | 58,750 | 143,801 | — | 143,801 | 202,551 | — | 202,551 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Chilean Central Bank | ||||||||||||||||||||||||||||||||||||
Restricted deposits in the Chilean Central Bank | — | — | — | 308,028 | — | 308,028 | 308,028 | — | 308,028 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Subtotal | — | — | — | 308,028 | — | 308,028 | 308,028 | — | 308,028 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total | 99,398 | — | 99,398 | 451,829 | — | 451,829 | 551,227 | — | 551,227 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-139
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Movements in provisions and impairment for loans with domestic and foreign banks during the first six months of 2016 and 2015 and the full year in 2015, are detailed as follows:
Chilean Banks | Foreign Banks | Total | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Balances as of January 1, 2016 | (17 | ) | (53 | ) | (70 | ) | ||||||
Charge-offs | — | |||||||||||
Provisions recorded | (29 | ) | (179 | ) | (208 | ) | ||||||
Acquisition of CorpBanca | — | (120 | ) | (120 | ) | |||||||
Provisions released | 43 | 76 | 119 | |||||||||
Impairment | — | — | — | |||||||||
Exchange differences | — | (2 | ) | (2 | ) | |||||||
|
|
|
|
|
| |||||||
Balances as of June 30, 2016 | (3 | ) | (278 | ) | (281 | ) | ||||||
|
|
|
|
|
| |||||||
Chilean Banks | Foreign Banks | Total | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Balances as of January 1, 2015 | (38 | ) | (15 | ) | (53 | ) | ||||||
Charge-offs | ||||||||||||
Provisions recorded | (183 | ) | (72 | ) | (255 | ) | ||||||
Provisions released | 204 | 34 | 238 | |||||||||
Impairment | ||||||||||||
Exchange differences | — | |||||||||||
|
|
|
|
|
| |||||||
Balances as of December 31, 2015 | (17 | ) | (53 | ) | (70 | ) | ||||||
|
|
|
|
|
| |||||||
Chilean Banks | Foreign Banks | Total | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Balances as of January 1, 2015 | (38 | ) | (15 | ) | (53 | ) | ||||||
Charge-offs | ||||||||||||
Provisions recorded | (78 | ) | (27 | ) | (105 | ) | ||||||
Provisions released | 114 | 15 | 129 | |||||||||
Impairment | ||||||||||||
Exchange differences | ||||||||||||
|
|
|
|
|
| |||||||
Balances as of June 30, 2015 | (2 | ) | (27 | ) | (29 | ) | ||||||
|
|
|
|
|
|
F-140
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
NOTE 7 - LOANS TO CUSTOMERS, NET
a) Loans to customers
As of June 30, 2016 and December 31, 2015, the loan portfolio is detailed as follows:
As of June 30, 2016 | Gross Assets | Provisions | ||||||||||||||||||||||||||
Unimpaired Portfolio MCh$ | Impaired Portfolio MCh$ | Total MCh$ | Individual Provisions MCh$ | Group Provisions MCh$ | Total MCh$ | Net Assets MCh$ | ||||||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||||||
Commercial loans | 11,813,246 | 514,524 | 12,327,770 | 292,447 | 31,068 | 323,515 | 12,004,255 | |||||||||||||||||||||
Foreign trade loans | 848,809 | 32,232 | 881,041 | 26,724 | 339 | 27,063 | 853,978 | |||||||||||||||||||||
Current account overdrafts | 157,237 | 5,272 | 162,509 | 2,629 | 2,626 | 5,255 | 157,254 | |||||||||||||||||||||
Factored receivables | 68,076 | 1,785 | 69,861 | 2,232 | 377 | 2,609 | 67,252 | |||||||||||||||||||||
Student loans | 728,590 | 22,888 | 751,478 | — | 12,479 | 12,479 | 738,999 | |||||||||||||||||||||
Lease transactions | 1,032,325 | 87,333 | 1,119,658 | 24,716 | 3,920 | 28,636 | 1,091,022 | |||||||||||||||||||||
Other loans and receivables | 27,662 | 2,985 | 30,647 | 1,529 | 983 | 2,512 | 28,135 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 14,675,945 | 667,019 | 15,342,964 | 350,277 | 51,792 | 402,069 | 14,940,895 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Mortgage loans: | ||||||||||||||||||||||||||||
Loans funded with mortgage bonds | 61,499 | 2,688 | 64,187 | — | 132 | 132 | 64,055 | |||||||||||||||||||||
Loans funded with own resources | 155,552 | 5,252 | 160,804 | — | 1,305 | 1,305 | 159,499 | |||||||||||||||||||||
Other mortgage loans | 3,180,367 | 94,960 | 3,275,327 | — | 23,187 | 23,187 | 3,252,140 | |||||||||||||||||||||
Lease transactions | 277,491 | 6,376 | 283,867 | 8,546 | 8,546 | 275,321 | ||||||||||||||||||||||
Other loans and receivables | 29,586 | 1,150 | 30,736 | 319 | 319 | 30,417 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 3,704,495 | 110,426 | 3,814,921 | — | 33,489 | 33,489 | 3,781,432 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Consumer loans: | ||||||||||||||||||||||||||||
Consumer installment loans | 1,676,824 | 53,783 | 1,730,607 | — | 86,938 | 86,938 | 1,643,669 | |||||||||||||||||||||
Current account overdrafts | 160,402 | 5,879 | 166,281 | — | 6,974 | 6,974 | 159,307 | |||||||||||||||||||||
Credit card debtors | 414,648 | 10,767 | 425,415 | — | 16,258 | 16,258 | 409,157 | |||||||||||||||||||||
Consumer lease transactions | 18,245 | 372 | 18,617 | — | 564 | 564 | 18,053 | |||||||||||||||||||||
Other loans and receivables | 85,597 | 2,751 | 88,348 | — | 6,112 | 6,112 | 82,236 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 2,355,716 | 73,552 | 2,429,268 | — | 116,846 | 116,846 | 2,312,422 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 20,736,156 | 850,997 | 21,587,153 | 350,277 | 202,127 | 552,404 | 21,034,749 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease transactions (commercial, mortgage and consumer) are presented net and total MCh$1,384,396 and MCh$1,433,373 as of June 30, 2016 and 2015 (pro forma).
Unimpaired Portfolio:
This includes individual debtors in the Normal Portfolio (A1 to A6) or the Substandard Portfolio (B1 to B2). For group evaluations, it includes the Normal Portfolio.
F-141
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Impaired Portfolio:
This includes individual debtors in the Substandard Portfolio (B3 to B4). For group evaluations, it includes the Default Portfolio.
As of December 31, 2015 | Gross Assets | Provisions | ||||||||||||||||||||||||||
Unimpaired Portfolio MCh$ | Impaired Portfolio MCh$ | Total MCh$ | Individual Provisions MCh$ | Group Provisions MCh$ | Total MCh$ | Net Assets MCh$ | ||||||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||||||
Commercial loans | 3,518,844 | 85,677 | 3,604,521 | 34,894 | 6,550 | 41,444 | 3,563,077 | |||||||||||||||||||||
Foreign trade loans | 410,561 | 18,759 | 429,320 | 16,806 | 33 | 16,839 | 412,481 | |||||||||||||||||||||
Current account overdrafts | 37,180 | 1,934 | 39,114 | 1,063 | 1,277 | 2,340 | 36,774 | |||||||||||||||||||||
Factored receivables | 56,486 | 746 | 57,232 | 1,169 | 142 | 1,311 | 55,921 | |||||||||||||||||||||
Student loans | 189,346 | 10583 | 199,929 | — | 4,264 | 4,264 | 195,665 | |||||||||||||||||||||
Lease transactions | 226,148 | 22,607 | 248,755 | 4,728 | 162 | 4,890 | 243,865 | |||||||||||||||||||||
Other loans and receivables | 10,409 | 92 | 10,501 | 100 | 205 | 305 | 10,196 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 4,448,974 | 140,398 | 4,589,372 | 58,760 | 12,633 | 71,393 | 4,517,979 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Mortgage loans: | ||||||||||||||||||||||||||||
Loans funded with mortgage bonds | 15,673 | 853 | 16,526 | — | 52 | 52 | 16,474 | |||||||||||||||||||||
Loans funded with own resources | 8,124 | 629 | 8,753 | — | 38 | 38 | 8,715 | |||||||||||||||||||||
Other mortgage loans | 1,445,704 | 62,865 | 1,508,569 | — | 6,977 | 6,977 | 1,501,592 | |||||||||||||||||||||
Lease transactions | — | — | — | — | — | — | — | |||||||||||||||||||||
Other loans and receivables | — | — | — | — | — | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 1,469,501 | 64,347 | 1,533,848 | — | 7,067 | 7,067 | 1,526,781 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Consumer loans: | ||||||||||||||||||||||||||||
Consumer installment loans | 358,288 | 31,068 | 389,356 | — | 21,579 | 21,579 | 367,777 | |||||||||||||||||||||
Current account overdrafts | 110,277 | 3,390 | 113,667 | — | 4,368 | 4,368 | 109,299 | |||||||||||||||||||||
Credit card debtors | 194,064 | 3,361 | 197,425 | — | 5,586 | 5,586 | 191,839 | |||||||||||||||||||||
Consumer lease transactions | 307 | 2 | 309 | — | 1 | 1 | 308 | |||||||||||||||||||||
Other loans and receivables | — | — | — | — | — | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 662,936 | 37,821 | 700,757 | — | 31,534 | 31,534 | 669,223 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 6,581,411 | 242,566 | 6,823,977 | 58,760 | 51,234 | 109,994 | 6,713,983 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantees taken by the Bank to secure collections of rights reflected in its loan portfolios are real mortgage-type guarantees (urban and rural property, farm land, ships and aircraft, mining claims and other assets) and pledges (inventory, farm assets, industrial assets, plantings and other pledged assets).
The Bank finances its customers’ purchases of assets, including real estate and other personal property, through finance lease agreements that are presented within this item.
F-142
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
The pro forma detail as of June 30, 2016 and December 31, 2015, is as follows:
REQUEST NOTE FROM ITAU AS OF JUNE 2015
Itaú | ||||||||||||||||||||||||||||
As of June 30, 2015 | Gross Assets | Provisions | ||||||||||||||||||||||||||
Unimpaired Portfolio MCh$ | Impaired Portfolio MCh$ | Total MCh$ | Individual Provisions MCh$ | Group Provisions MCh$ | Total MCh$ | Net Assets MCh$ | ||||||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||||||
Commercial loans | 3,133,869 | 79,876 | 3,213,745 | 29,910 | 5,963 | 35,873 | 3,177,872 | |||||||||||||||||||||
Foreign trade loans | 399,341 | 16,608 | 415,949 | 18,657 | 28 | 18,685 | 397,264 | |||||||||||||||||||||
Current account overdrafts | 50,410 | 2,322 | 52,732 | 1,686 | 1,427 | 3,113 | 49,619 | |||||||||||||||||||||
Factored receivables | 59,423 | 781 | 60,204 | 701 | 109 | 810 | 59,394 | |||||||||||||||||||||
Student loans | 212,520 | 9904 | 222,424 | — | 4,506 | 4,506 | 217,918 | |||||||||||||||||||||
Lease transactions | 234,373 | 25,066 | 259,439 | 5,394 | 238 | 5,632 | 253,807 | |||||||||||||||||||||
Other loans and receivables | 8,923 | 455 | 9,378 | 87 | 194 | 281 | 9,097 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 4,098,859 | 135,012 | 4,233,871 | 56,435 | 12,465 | 68,900 | 4,164,971 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Mortgage loans: | ||||||||||||||||||||||||||||
Loans funded with mortgage bonds | 18,076 | 923 | 18,999 | — | 54 | 54 | 18,945 | |||||||||||||||||||||
Loans funded with own resources | 9,552 | 688 | 10,240 | — | 40 | 40 | 10,200 | |||||||||||||||||||||
Other mortgage loans | 1,372,187 | 55,693 | 1,427,880 | — | 6,023 | 6,023 | 1,421,857 | |||||||||||||||||||||
Lease transactions | — | — | — | — | — | — | — | |||||||||||||||||||||
Other loans and receivables | — | — | — | — | — | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 1,399,815 | 57,304 | 1,457,119 | — | 6,117 | 6,117 | 1,451,002 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Consumer loans: | ||||||||||||||||||||||||||||
Consumer installment loans | 333,287 | 34,633 | 367,920 | — | 22,684 | 22,684 | 345,236 | |||||||||||||||||||||
Current account overdrafts | 106,330 | 3,477 | 109,807 | — | 4,416 | 4,416 | 105,391 | |||||||||||||||||||||
Credit card debtors | 184,413 | 3,630 | 188,043 | — | 5,678 | 5,678 | 182,365 | |||||||||||||||||||||
Consumer lease transactions | 332 | 3 | 335 | — | 1 | 1 | 334 | |||||||||||||||||||||
Other loans and receivables | — | — | — | — | — | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 624,362 | 41,743 | 666,105 | — | 32,779 | 32,779 | 633,326 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 6,123,036 | 234,059 | 6,357,095 | 56,435 | 51,361 | 107,796 | 6,249,299 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-143
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
CorpBanca | ||||||||||||||||||||||||||||
As of June 30, 2015 | Gross Assets | Provisions | ||||||||||||||||||||||||||
Unimpaired Portfolio MCh$ | Impaired Portfolio MCh$ | Total MCh$ | Individual Provisions MCh$ | Group Provisions MCh$ | Total MCh$ | Net Assets MCh$ | ||||||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||||||
Commercial loans | 8,333,244 | 288,876 | 8,622,120 | 164,562 | 19,507 | 184,069 | 8,438,051 | |||||||||||||||||||||
Foreign trade loans | 584,000 | 17,731 | 601,731 | 18,247 | 375 | 18,622 | 583,109 | |||||||||||||||||||||
Current account overdrafts | 39,893 | 3,518 | 43,411 | 1,108 | 1,406 | 2,514 | 40,897 | |||||||||||||||||||||
Factored receivables | 56,363 | 246 | 56,609 | 1,560 | 200 | 1,760 | 54,849 | |||||||||||||||||||||
Student loans | 449,746 | 6468 | 456,214 | 5,852 | 5,852 | 450,362 | ||||||||||||||||||||||
Lease transactions | 842,884 | 48,503 | 891,387 | 13,353 | 3,224 | 16,577 | 874,810 | |||||||||||||||||||||
Other loans and receivables | 18,784 | 1,856 | 20,640 | 1,213 | 736 | 1,949 | 18,691 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 10,324,914 | 367,198 | 10,692,112 | 200,043 | 31,300 | 231,343 | 10,460,769 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Mortgage loans: | ||||||||||||||||||||||||||||
Loans funded with mortgage bonds | 57,127 | 2,152 | 59,279 | — | 180 | 180 | 59,099 | |||||||||||||||||||||
Loans funded with own resources | 166,180 | 4,889 | 171,069 | — | 880 | 880 | 170,189 | |||||||||||||||||||||
Other mortgage loans | 1,680,598 | 24,303 | 1,704,901 | — | 10,428 | 10,428 | 1,694,473 | |||||||||||||||||||||
Lease transactions | 286,953 | 5,070 | 292,023 | — | 7,668 | 7,668 | 284,355 | |||||||||||||||||||||
Other loans and receivables | 32,719 | 1,060 | 33,779 | — | 203 | 203 | 33,576 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 2,223,577 | 37,474 | 2,261,051 | — | 19,359 | 19,359 | 2,241,692 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Consumer loans: | ||||||||||||||||||||||||||||
Consumer installment loans | 1,318,910 | 38,921 | 1,357,831 | — | 69,169 | 69,169 | 1,288,662 | |||||||||||||||||||||
Current account overdrafts | 48,253 | 1,486 | 49,739 | — | 2,065 | 2,065 | 47,674 | |||||||||||||||||||||
Credit card debtors | 239,612 | 5,440 | 245,052 | — | 12,585 | 12,585 | 232,467 | |||||||||||||||||||||
Consumer lease transactions | 20,200 | 574 | 20,774 | — | 707 | 707 | 20,067 | |||||||||||||||||||||
Other loans and receivables | 111,087 | 3,034 | 114,121 | — | 7,341 | 7,341 | 106,780 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 1,738,062 | 49,455 | 1,787,517 | — | 91,867 | 91,867 | 1,695,650 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 14,286,553 | 454,127 | 14,740,680 | 200,043 | 142,526 | 342,569 | 14,398,111 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-144
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Proforma | ||||||||||||||||||||||||||||
Al 30 de Junio 2015 | Activos antes de provisiones | Provisiones Constituidas | ||||||||||||||||||||||||||
Cartera sin deterioro MM$ | Cartera Deteriorada MM$ | Total MM$ | Provisiones Individuales MM$ | Provisiones Globales MM$ | Total MM$ | Activo Neto MM$ | ||||||||||||||||||||||
Colocaciones comerciales: | ||||||||||||||||||||||||||||
Préstamos comerciales | 11.467.113 | 368.752 | 11.835.865 | 194.472 | 25.470 | 219.942 | 11.615.923 | |||||||||||||||||||||
Créditos de comercio exterior | 983.341 | 34.339 | 1.017.680 | 36.904 | 403 | 37.307 | 980.373 | |||||||||||||||||||||
Deudores en cuentas corrientes | 90.303 | 5.840 | 96.143 | 2.794 | 2.833 | 5.627 | 90.516 | |||||||||||||||||||||
Operaciones de factoring | 115.786 | 1.027 | 116.813 | 2.261 | 309 | 2.570 | 114.243 | |||||||||||||||||||||
Operaciones Estudiantes | 662.266 | 16.372 | 678.638 | — | 10.358 | 10.358 | 668.280 | |||||||||||||||||||||
Operaciones de leasing | 1.077.257 | 73.569 | 1.150.826 | 18.747 | 3.462 | 22.209 | 1.128.617 | |||||||||||||||||||||
Otros créditos y cuentas por cobrar | 27.707 | 2.311 | 30.018 | 1.300 | 930 | 2.230 | 27.788 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Sub totales | 14.423.773 | 502.210 | 14.925.983 | 256.478 | 43.765 | 300.243 | 14.625.740 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Colocaciones para vivienda: | ||||||||||||||||||||||||||||
Préstamos con letras de crédito | 75.203 | 3.075 | 78.278 | — | 234 | 234 | 78.044 | |||||||||||||||||||||
Préstamos con mutuos hipotecarios endosables | 175.732 | 5.577 | 181.309 | — | 920 | 920 | 180.389 | |||||||||||||||||||||
Otros créditos con mutuos para vivienda | 3.052.785 | 79.996 | 3.132.781 | — | 16.451 | 16.451 | 3.116.330 | |||||||||||||||||||||
Operaciones de leasing | 286.953 | 5.070 | 292.023 | — | 7.668 | 7.668 | 284.355 | |||||||||||||||||||||
Otros créditos y cuentas por cobrar | 32.719 | 1.060 | 33.779 | — | 203 | 203 | 33.576 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Sub totales | 3.623.392 | 94.778 | 3.718.170 | 25.476 | 25.476 | 3.692.694 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Colocaciones de consumo: | ||||||||||||||||||||||||||||
Créditos de consumo en cuotas | 1.652.197 | 73.554 | 1.725.751 | — | 91.853 | 91.853 | 1.633.898 | |||||||||||||||||||||
Deudores en cuentas corrientes | 154.583 | 4.963 | 159.546 | — | 6.481 | 6.481 | 153.065 | |||||||||||||||||||||
Deudores por tarjetas de crédito | 424.025 | 9.070 | 433.095 | — | 18.263 | 18.263 | 414.832 | |||||||||||||||||||||
Operaciones de leasing de consumo | 20.532 | 577 | 21.109 | — | 708 | 708 | 20.401 | |||||||||||||||||||||
Otros créditos y cuentas por cobrar | 111.087 | 3.034 | 114.121 | — | 7.341 | 7.341 | 106.780 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Sub totales | 2.362.424 | 91.198 | 2.453.622 | — | 124.646 | 124.646 | 2.328.976 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Totales | 20.409.589 | 688.186 | 21.097.775 | 256.478 | 193.887 | 450.365 | 20.647.410 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-145
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Pro Forma | ||||||||||||||||||||||||||||
As of June 30, 2015 | Gross Assets | Provisions | ||||||||||||||||||||||||||
Unimpaired Portfolio MCh$ | Impaired Portfolio MCh$ | Total MCh$ | Individual Provisions MCh$ | Group Provisions MCh$ | Total MCh$ | Net Assets MCh$ | ||||||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||||||
Commercial loans | 11,467,113 | 368,752 | 11,835,865 | 194,472 | 25,470 | 219,942 | 11,615,923 | |||||||||||||||||||||
Foreign trade loans | 983,341 | 34,339 | 1,017,680 | 36,904 | 403 | 37,307 | 980,373 | |||||||||||||||||||||
Current account overdrafts | 90,303 | 5,840 | 96,143 | 2,794 | 2,833 | 5,627 | 90,516 | |||||||||||||||||||||
Factored receivables | 115,786 | 1,027 | 116,813 | 2,261 | 309 | 2,570 | 114,243 | |||||||||||||||||||||
Student loans | 662,266 | 16,372 | 678,638 | — | 10,358 | 10,358 | 668,280 | |||||||||||||||||||||
Lease transactions | 1,077,257 | 73,569 | 1,150,826 | 18,747 | 3,462 | 22,209 | 1,128,617 | |||||||||||||||||||||
Other loans and receivables | 27,707 | 2,311 | 30,018 | 1,300 | 930 | 2,230 | 27,788 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 14,423,773 | 502,210 | 14,925,983 | 256,478 | 43,765 | 300,243 | 14,625,740 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Mortgage loans: | ||||||||||||||||||||||||||||
Loans funded with mortgage bonds | 75,203 | 3,075 | 78,278 | — | 234 | 234 | 78,044 | |||||||||||||||||||||
Loans funded with own resources | 175,732 | 5,577 | 181,309 | — | 920 | 920 | 180,389 | |||||||||||||||||||||
Other mortgage loans | 3,052,785 | 79,996 | 3,132,781 | — | 16,451 | 16,451 | 3,116,330 | |||||||||||||||||||||
Lease transactions | 286,953 | 5,070 | 292,023 | — | 7,668 | 7,668 | 284,355 | |||||||||||||||||||||
Other loans and receivables | 32,719 | 1,060 | 33,779 | — | 203 | 203 | 33,576 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 3,623,392 | 94,778 | 3,718,170 | — | 25,476 | 25,476 | 3,692,694 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Consumer loans: | ||||||||||||||||||||||||||||
Consumer installment loans | 1,652,197 | 73,554 | 1,725,751 | — | 91,853 | 91,853 | 1,633,898 | |||||||||||||||||||||
Current account overdrafts | 154,583 | 4,963 | 159,546 | — | 6,481 | 6,481 | 153,065 | |||||||||||||||||||||
Credit card debtors | 424,025 | 9,070 | 433,095 | — | 18,263 | 18,263 | 414,832 | |||||||||||||||||||||
Consumer lease transactions | 20,532 | 577 | 21,109 | — | 708 | 708 | 20,401 | |||||||||||||||||||||
Other loans and receivables | 111,087 | 3,034 | 114,121 | — | 7,341 | 7,341 | 106,780 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 2,362,424 | 91,198 | 2,453,622 | — | 124,646 | 124,646 | 2,328,976 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 20,409,589 | 688,186 | 21,097,775 | 256,478 | 193,887 | 450,365 | 20,647,410 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-146
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Itaú | ||||||||||||||||||||||||||||
As of December 31, 2015 | Gross Assets | Provisions | ||||||||||||||||||||||||||
Unimpaired Portfolio MCh$ | Impaired Portfolio MCh$ | Total MCh$ | Individual Provisions MCh$ | Group Provisions MCh$ | Total MCh$ | Net Assets MCh$ | ||||||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||||||
Commercial loans | 3,518,844 | 85,677 | 3,604,521 | 34,894 | 6,550 | 41,444 | 3,563,077 | |||||||||||||||||||||
Foreign trade loans | 410,561 | 18,759 | 429,320 | 16,806 | 33 | 16,839 | 412,481 | |||||||||||||||||||||
Current account overdrafts | 37,180 | 1,934 | 39,114 | 1,063 | 1,277 | 2,340 | 36,774 | |||||||||||||||||||||
Factored receivables | 56,486 | 746 | 57,232 | 1,169 | 142 | 1,311 | 55,921 | |||||||||||||||||||||
Student loans | 189,346 | 10,583 | 199,929 | — | 4,264 | 4,264 | 195,665 | |||||||||||||||||||||
Lease transactions | 226,148 | 22,607 | 248,755 | 4,728 | 162 | 4,890 | 243,865 | |||||||||||||||||||||
Other loans and receivables | 10,409 | 92 | 10,501 | 100 | 205 | 305 | 10,196 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 4,448,974 | 140,398 | 4,589,372 | 58,760 | 12,633 | 71,393 | 4,517,979 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Mortgage loans: | ||||||||||||||||||||||||||||
Loans funded with mortgage bonds | 15,673 | 853 | 16,526 | — | 52 | 52 | 16,474 | |||||||||||||||||||||
Loans funded with own resources | 8,124 | 629 | 8,753 | — | 38 | 38 | 8,715 | |||||||||||||||||||||
Other mortgage loans | 1,445,704 | 62,865 | 1,508,569 | — | 6,977 | 6,977 | 1,501,592 | |||||||||||||||||||||
Lease transactions | — | — | — | — | — | — | — | |||||||||||||||||||||
Other loans and receivables | — | — | — | — | — | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 1,469,501 | 64,347 | 1,533,848 | — | 7,067 | 7,067 | 1,526,781 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Consumer loans: | ||||||||||||||||||||||||||||
Consumer installment loans | 358,288 | 31,068 | 389,356 | — | 21,579 | 21,579 | 367,777 | |||||||||||||||||||||
Current account overdrafts | 110,277 | 3,390 | 113,667 | — | 4,368 | 4,368 | 109,299 | |||||||||||||||||||||
Credit card debtors | 194,064 | 3,361 | 197,425 | — | 5,586 | 5,586 | 191,839 | |||||||||||||||||||||
Consumer lease transactions | 307 | 2 | 309 | — | 1 | 1 | 308 | |||||||||||||||||||||
Other loans and receivables | — | — | — | — | — | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 662,936 | 37,821 | 700,757 | — | 31,534 | 31,534 | 669,223 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 6,581,411 | 242,566 | 6,823,977 | 58,760 | 51,234 | 109,994 | 6,713,983 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-147
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
CorpBanca | ||||||||||||||||||||||||||||
As of December 31, 2015 | Gross Assets | Provisions | ||||||||||||||||||||||||||
Unimpaired Portfolio MCh$ | Impaired Portfolio MCh$ | Total MCh$ | Individual Provisions MCh$ | Group Provisions MCh$ | Total MCh$ | Net Assets MCh$ | ||||||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||||||
Commercial loans | 8,641,018 | 290,066 | 8,931,084 | 180,531 | 23,911 | 204,442 | 8,726,642 | |||||||||||||||||||||
Foreign trade loans | 502,287 | 19,052 | 521,339 | 15,803 | 653 | 16,456 | 504,883 | |||||||||||||||||||||
Current account overdrafts | 25,717 | 3,208 | 28,925 | 816 | 1,558 | 2,374 | 26,551 | |||||||||||||||||||||
Factored receivables | 61,581 | 432 | 62,013 | 1,185 | 375 | 1,560 | 60,453 | |||||||||||||||||||||
Student loans | 348,486 | 12,729 | 361,215 | — | 6,918 | 6,918 | 354,297 | |||||||||||||||||||||
Lease transactions | 834,412 | 53,777 | 888,189 | 16,637 | 3,691 | 20,328 | 867,861 | |||||||||||||||||||||
Other loans and receivables | 16,278 | 2,230 | 18,508 | 1,364 | 791 | 2,155 | 16,353 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 10,429,779 | 381,494 | 10,811,273 | 216,336 | 37,897 | 254,233 | 10,557,040 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Mortgage loans: | ||||||||||||||||||||||||||||
Loans funded with mortgage bonds | 52,522 | 1,850 | 54,372 | — | 123 | 123 | 54,249 | |||||||||||||||||||||
Loans funded with own resources | 156,942 | 4,496 | 161,438 | — | 759 | 759 | 160,679 | |||||||||||||||||||||
Other mortgage loans | 1,693,373 | 23,527 | 1,716,900 | — | 9,964 | 9,964 | 1,706,936 | |||||||||||||||||||||
Lease transactions | 274,144 | 4,738 | 278,882 | — | 7,708 | 7,708 | 271,174 | |||||||||||||||||||||
Other loans and receivables | 31,234 | 1,120 | 32,354 | — | 181 | 181 | 32,173 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 2,208,215 | 35,731 | 2,243,946 | — | 18,735 | 18,735 | 2,225,211 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Consumer loans: | ||||||||||||||||||||||||||||
Consumer installment loans | 1,301,765 | 33,492 | 1,335,257 | — | 62,730 | 62,730 | 1,272,527 | |||||||||||||||||||||
Current account overdrafts | 51,308 | 1,344 | 52,652 | — | 1,848 | 1,848 | 50,804 | |||||||||||||||||||||
Credit card debtors | 248,295 | 4,915 | 253,210 | — | 11,582 | 11,582 | 241,628 | |||||||||||||||||||||
Consumer lease transactions | 18,475 | 316 | 18,791 | — | 538 | 538 | 18,253 | |||||||||||||||||||||
Other loans and receivables | 92,317 | 2,690 | 95,007 | — | 6,113 | 6,113 | 88,894 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 1,712,160 | 42,757 | 1,754,917 | — | 82,811 | 82,811 | 1,672,106 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 14,350,154 | 459,982 | 14,810,136 | 216,336 | 139,443 | 355,779 | 14,454,357 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-148
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Pro Forma | ||||||||||||||||||||||||||||
As of December 31, 2015 | Gross Assets | Provisions | ||||||||||||||||||||||||||
Unimpaired Portfolio MCh$ | Impaired Portfolio MCh$ | Total MCh$ | Individual Provisions MCh$ | Group Provisions MCh$ | Total MCh$ | Net Assets MCh$ | ||||||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||||||
Commercial loans | 12,159,862 | 375,743 | 12,535,605 | 215,425 | 30,461 | 245,886 | 12,289,719 | |||||||||||||||||||||
Foreign trade loans | 912,848 | 37,811 | 950,659 | 32,609 | 686 | 33,295 | 917,364 | |||||||||||||||||||||
Current account overdrafts | 62,897 | 5,142 | 68,039 | 1,879 | 2,835 | 4,714 | 63,325 | |||||||||||||||||||||
Factored receivables | 118,067 | 1178 | 119,245 | 2,354 | 517 | 2,871 | 116,374 | |||||||||||||||||||||
Student loans | 537,832 | 23312 | 561,144 | — | 11,182 | 11,182 | 549,962 | |||||||||||||||||||||
Lease transactions | 1,060,560 | 76,384 | 1,136,944 | 21,365 | 3,853 | 25,218 | 1,111,726 | |||||||||||||||||||||
Other loans and receivables | 26,687 | 2,322 | 29,009 | 1,464 | 996 | 2,460 | 26,549 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 14,878,753 | 521,892 | 15,400,645 | 275,096 | 50,530 | 325,626 | 15,075,019 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Mortgage loans: | ||||||||||||||||||||||||||||
Loans funded with mortgage bonds | 68,195 | 2,703 | 70,898 | — | 175 | 175 | 70,723 | |||||||||||||||||||||
Loans funded with own resources | 165,066 | 5,125 | 170,191 | — | 797 | 797 | 169,394 | |||||||||||||||||||||
Other mortgage loans | 3,139,077 | 86,392 | 3,225,469 | — | 16,941 | 16,941 | 3,208,528 | |||||||||||||||||||||
Lease transactions | 274,144 | 4,738 | 278,882 | — | 7,708 | 7,708 | 271,174 | |||||||||||||||||||||
Other loans and receivables | 31,234 | 1,120 | 32,354 | — | 181 | 181 | 32,173 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 3,677,716 | 100,078 | 3,777,794 | — | 25,802 | 25,802 | 3,751,992 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Consumer loans: | ||||||||||||||||||||||||||||
Consumer installment loans | 1,660,053 | 64,560 | 1,724,613 | — | 84,309 | 84,309 | 1,640,304 | |||||||||||||||||||||
Current account overdrafts | 161,585 | 4,734 | 166,319 | — | 6,216 | 6,216 | 160,103 | |||||||||||||||||||||
Credit card debtors | 442,359 | 8,276 | 450,635 | — | 17,168 | 17,168 | 433,467 | |||||||||||||||||||||
Consumer lease transactions | 18,782 | 318 | 19,100 | — | 539 | 539 | 18,561 | |||||||||||||||||||||
Other loans and receivables | 92,317 | 2,690 | 95,007 | — | 6,113 | 6,113 | 88,894 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Subtotal | 2,375,096 | 80,578 | 2,455,674 | — | 114,345 | 114,345 | 2,341,329 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 20,931,565 | 702,548 | 21,634,113 | 275,096 | 190,677 | 465,773 | 21,168,340 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-149
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
b) Provisions
Movements in provisions during the first six months of 2016 and 2015 and the full year in 2015, are detailed as follows:
Individual Provisions | Group Provisions | Total | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Balances as of January 1, 2016 | 58,760 | 51,234 | 109,994 | |||||||||
Portfolio charge-offs | ||||||||||||
Commercial loans | (18,957 | ) | (10,300 | ) | (29,257 | ) | ||||||
Mortgage loans | — | (1,065 | ) | (1,065 | ) | |||||||
Consumer loans | — | (35,378 | ) | (35,378 | ) | |||||||
|
|
|
|
|
| |||||||
Total charge-offs | (18,957 | ) | (46,743 | ) | (65,700 | ) | ||||||
Provisions recorded | 134,234 | 111,685 | 245,919 | |||||||||
Provisions released | (93,874 | ) | (60,516 | ) | (154,390 | ) | ||||||
Acquisition of CorpBanca | 268,085 | 143,377 | 411,462 | |||||||||
Impairment | — | — | — | |||||||||
Provisions used | (207 | ) | (285 | ) | 492 | |||||||
Exchange differences | 2,236 | 3,375 | 5,611 | |||||||||
|
|
|
|
|
| |||||||
Balances as of June 30, 2016 | 350,277 | 202,127 | 552,404 | |||||||||
|
|
|
|
|
|
F-150
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Individual Provisions | Group Provisions | Total | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Balances as of January 1, 2015 | 58,536 | 46,989 | 105,525 | |||||||||
Portfolio charge-offs | ||||||||||||
Commercial loans | (10,485 | ) | (5,340 | ) | (15,825 | ) | ||||||
Mortgage loans | — | (424 | ) | (424 | ) | |||||||
Consumer loans | — | (32,110 | ) | (32,110 | ) | |||||||
|
|
|
|
|
| |||||||
Total charge-offs | (10,485 | ) | (37,874 | ) | (48,359 | ) | ||||||
Provisions recorded | 79,183 | 116,044 | 195,227 | |||||||||
Provisions released | (67,690 | ) | (73,206 | ) | (140,896 | ) | ||||||
Acquisition of CorpBanca | — | — | — | |||||||||
Impairment | — | — | — | |||||||||
Provisions used | (784 | ) | (719 | ) | (1,503 | ) | ||||||
Exchange differences | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Balances as of December 31, 2015 | 58,760 | 51,234 | 109,994 | |||||||||
|
|
|
|
|
| |||||||
Individual Provisions | Group Provisions | Total | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Balances as of January 1, 2015 | 58,536 | 46,989 | 105,525 | |||||||||
Portfolio charge-offs | ||||||||||||
Commercial loans | (7,765 | ) | (2,667 | ) | (10,432 | ) | ||||||
Mortgage loans | — | (255 | ) | (255 | ) | |||||||
Consumer loans | — | (14,972 | ) | (14,972 | ) | |||||||
|
|
|
|
|
| |||||||
Total charge-offs | (7,765 | ) | (17,894 | ) | (25,659 | ) | ||||||
Provisions recorded | 37,739 | 58,683 | 96,422 | |||||||||
Provisions released | (32,018 | ) | (36,421 | ) | (68,439 | ) | ||||||
Acquisition of CorpBanca | — | — | — | |||||||||
Impairment | — | |||||||||||
Provisions used | (54 | ) | — | (54 | ) | |||||||
Exchange differences | ||||||||||||
|
|
|
|
|
| |||||||
Balances as of June 30, 2015 | 56,438 | 51,357 | 107,795 | |||||||||
|
|
|
|
|
|
F-151
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
c) Sale of Portfolio
As of December 31, 2015, the Bank and its subsidiaries engaged in portfolio purchases and sales. The effect on income of these transactions as a whole does not exceed 5% of before tax profit for the period, and is recorded within net gains from trading and brokerage activities in the Consolidated Statement of Income for the Period, disclosed in Note 16 within “Other Instruments at Fair Value through Profit and Loss”.
F-152
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
NOTE 8 - INVESTMENTS IN OTHER COMPANIES
a) Investments in Other Companies
The Bank’s investments in other companies as of June 30, 2016 and December 31, 2015 are detailed as follows:
As of June 30, 2016 | As of December 31, 2015 | |||||||||||||||
% | % | |||||||||||||||
Ownership Interest | MCh$ | Ownership Interest | MCh$ | |||||||||||||
Company | ||||||||||||||||
Nexus S.A. | 12.9000 | 1,057 | — | — | ||||||||||||
Transbank S.A. | 8.7200 | 3,265 | 0.000002 | 16 | ||||||||||||
Combanc S.A. | 8.2300 | 274 | 2.890000 | 86 | ||||||||||||
Redbanc S.A. | 2.5000 | 110 | 0.001580 | — | ||||||||||||
Sociedad Interbancaria de Depósitos de Valores S.A. | 34,682.0000 | 132 | 5.492524 | 57 | ||||||||||||
Imerc OTC S.A. | 6.6700 | 1,012 | 1.160000 | 147 | ||||||||||||
Deceval S.A. | 10.7600 | 3,950 | (i) | — | — | |||||||||||
A.C.H Colombia | 4.2100 | 355 | (i) | — | — | |||||||||||
Redeban Multicolor S.A. | 1.6000 | 233 | (i) | — | — | |||||||||||
Cámara de Compensación Divisas de Col. S.A. | 3.7200 | 53 | (i) | — | — | |||||||||||
Cámara de Riesgo Central de Contraparte S.A. | — | 170 | (i) | — | — | |||||||||||
Servibanca - Tecnibanca | 4.5300 | 999 | (i) | — | — | |||||||||||
Shares or rights in other companies | ||||||||||||||||
Share of Bolsa de Comercio de Santiago | 4.1666 | 3,257 | 2.083300 | 2,169 | ||||||||||||
Share of Bolsa Electrónica de Chile | 2.4390 | 211 | — | — | ||||||||||||
Bolsa de Valores de Colombia | 0.6700 | 581 | (i) | — | — | |||||||||||
Fogacol | 150,000 units | 68 | (i) | — | — | |||||||||||
|
|
|
| |||||||||||||
Total | 15,727 | 2,475 | ||||||||||||||
|
|
|
|
(i) | This corresponds to investments in other companies made by its Colombian subsidiaries. |
For the periods ended June 30, 2016 and 2015, the Bank received dividends from the following companies:
As of June 30, 2016 MCh$ | As of June 30, 2015 MCh$ | |||||||
Dividends received | 348 | 164 | ||||||
|
|
|
| |||||
Total | 348 | 164 | ||||||
|
|
|
|
F-153
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Movements in these investments for the periods ended June 30, 2016 and December 31, 2015, are detailed as follows:
As of 2016 MCh$ | As of December 31, 2015 MCh$ | |||||||
Opening carrying amount as of January 1 | 2,475 | 2,923 | ||||||
Investments acquired | 14,243 | 2 | ||||||
Investments sold | (17 | ) | — | |||||
PPA valuation | (1,296 | ) | — | |||||
Reclassifications | — | — | ||||||
Exchange differences | 290 | — | ||||||
Change for fair value adjustment with effect on equity | 32 | (450 | ) | |||||
|
|
|
| |||||
Total | 15,727 | 2,475 | ||||||
|
|
|
|
F-154
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
a) As of June 30, 2016 and December 31, 2015, this account is detailed as follows:
As of June 30, 2016 | Useful Life (Years) | Remaining Life (Years) | Net Assets as of 01/01/2016 | Gross Assets | Accumulated Amortization | Net Assets | ||||||||||||||||||
Item | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||
Integrated banking system | 15 | 2 | — | 9,843 | (8,042 | ) | 1,801 | |||||||||||||||||
Computer software or systems | 5 | 1 | 49,960 | 92,412 | (57,106 | ) | 35,306 | |||||||||||||||||
IT projects and licenses | 7 | 6 | — | 63,955 | (18,708 | ) | 45,247 | |||||||||||||||||
Arising from business combination | 899 | 1,514,393 | (10,905 | ) | 1,503,488 | |||||||||||||||||||
-Goodwill | 1,124,807 | — | 1,124,807 | |||||||||||||||||||||
-Trademarks | 10 | 10 | — | 51,448 | (1,276 | ) | 50,172 | |||||||||||||||||
-Customer relationships | 11 | 11 | 899 | 97,675 | (659 | ) | 97,016 | |||||||||||||||||
-Core deposit | 9 | 9 | — | 240,463 | (8,970 | ) | 231,493 | |||||||||||||||||
Other projects | 10 | 2 | 950 | 3,301 | (2,399 | ) | 902 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 51,809 | 1,683,904 | (97,160 | ) | 1,586,744 | |||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
As of December 31, 2015 | Useful Life (Years) | Remaining Life (Years) | Net Assets as of 01/01/2015 | Gross Assets | Accumulated Amortization | Net Assets | ||||||||||||||||||
Item | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ||||||||||||||||||||
Integrated banking system | — | — | — | |||||||||||||||||||||
Computer software or systems | 61 | 42,830 | 73,554 | (23,594 | ) | 49,960 | ||||||||||||||||||
IT projects and licenses | — | — | — | |||||||||||||||||||||
Arising from business combination | 989 | 1,284 | ( 385 | ) | 899 | |||||||||||||||||||
-Goodwill | — | — | ||||||||||||||||||||||
-Licenses | — | — | — | |||||||||||||||||||||
-Trademarks | — | — | — | |||||||||||||||||||||
-Customer relationships | — | — | — | |||||||||||||||||||||
-Other intangible assets | 14 | 10 | 989 | 1,284 | (385 | ) | 899 | |||||||||||||||||
Other projects | 6 | 2 | 1,102 | 1,520 | (570 | ) | 950 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 44,921 | 76,358 | (24,549 | ) | 51,809 | |||||||||||||||||||
|
|
|
|
|
|
|
|
F-155
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
b) | Movements of gross intangible assets as of June 30, 2016 and December 31, 2015, are detailed as follows: |
Integrated Banking System | Computer Software or Systems | IT Projects and Licenses | Arising from Business Combination | Other Projects | Total | |||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||
January 1, 2016 | — | 73,554 | — | 1,284 | 1,520 | 76,358 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Acquisitions | 501 | 22,736 | 22,241 | — | 579 | 46,057 | ||||||||||||||||||
Integration Itau-Corpbanca | 9,342 | 81,446 | 41,714 | 658,642 | 2,239 | 793,383 | ||||||||||||||||||
Additions resulting from business combination | — | — | — | 1,513,108 | — | 1,513,108 | ||||||||||||||||||
Retirements | — | (86,679 | ) | — | (658,642 | ) | (1,036 | ) | (746,357 | ) | ||||||||||||||
Exchange differences | — | 1,355 | — | — | — | 1,355 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balances as of June 30, 2016 | 9,843 | 92,412 | 63,955 | 1,514,392 | 3,302 | 1,683,904 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Integrated Banking System | Computer Software or Systems | IT Projects and Licenses | Arising from Business Combination | Other Projects | Total | |||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||
January 1, 2015 | — | 61,285 | — | 1,284 | 1,520 | 64,089 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Acquisitions | — | 12,269 | — | — | — | 12,269 | ||||||||||||||||||
Retirements | — | — | — | — | — | — | ||||||||||||||||||
Exchange differences | — | — | — | — | — | — | ||||||||||||||||||
Other | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balances as of December 31, 2015 | — | 73,554 | — | 1,284 | 1,520 | 76,358 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
c) | Movements of accumulated amortization of intangible assets as of June 30, 2016 and December 31, 2015, are detailed as follows: |
2016 | Integrated Banking System | Computer Software or Systems | IT Projects and Licenses | Arising from Business Combination | Other Projects | Total | ||||||||||||||||||||||
January 1, 2016 | — | (23,594 | ) | — | (385 | ) | (570 | ) | (24,549 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Amortization for the period | (287 | ) | (4,328 | ) | (1,256 | ) | (10,520 | ) | (141 | ) | (16,532 | ) | ||||||||||||||||
Integration Itau-Corpbanca | (7,755 | ) | (29,184 | ) | (17,452 | ) | (49,762 | ) | (1,688 | ) | (105,841 | ) | ||||||||||||||||
Retirements | — | — | — | 49,762 | — | 49,762 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balances as of June 30, 2016 | (8,042 | ) | (57,106 | ) | (18,708 | ) | (10,905 | ) | (2,399 | ) | (97,160 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balance of note | (8,042 | ) | (57,165 | ) | (18,711 | ) | (10,843 | ) | (2,399 | ) | (97,160 | ) |
F-156
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
2015 | Integrated Banking System | Computer Software or Systems | IT Projects and Licenses | Arising from Business Combination | Other Projects | Total | ||||||||||||||||||||||
January 1, 2015 | (18,455 | ) | — | (295 | ) | (418 | ) | (19,168 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Amortization for the period | — | (5,139 | ) | — | (90 | ) | (152 | ) | (5,381 | ) | ||||||||||||||||||
Exchange differences | — | — | — | — | — | — | ||||||||||||||||||||||
Other | — | — | — | — | — | — | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balances as of December 31, 2015 | — | (23,594 | ) | — | (385 | ) | (570 | ) | (24,549 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
d) | Impairment |
At each reporting date, ITAU CORPBANCA will evaluate whether there is any indication of impairment of any asset. Should any such indication exist, or when impairment testing is required, the entity will estimate the asset’s recoverable amount.
The entity will conduct impairment testing on an annual basis for intangible assets with indefinite useful lives, as well as intangible assets that are not yet available for use, by comparing their carrying amount with their recoverable amount. Impairment testing can be carried out at any time during the year, as long as it takes place at the same time each year. Impairment testing of different intangible assets can take place on different dates. However, if that intangible asset had been recognized initially during the current period, it will be tested for impairment before the year ends.
Impairment of goodwill is determined by evaluating the recoverable amount of each cash generating unit (or group) to which goodwill is allocated. Where the recoverable amount of the cash generating unit is less than its carrying amount, an impairment loss is recognized; goodwill acquired in a business combination shall be distributed as of the acquisition date among the CGUs or group of CGUs of the acquirer that are expected to benefit from the synergies of the business combination, regardless of whether other of the acquiree’s assets or liabilities are allocated to these units. Impairment losses relating to goodwill cannot be reversed in future periods.
In accordance with IAS 36 “Impairment of Assets”, annual impairment testing is permitted for a CGU to which goodwill has been allocated, or at any time for intangible assets with indefinite useful lives, as long as they are carried out at the same time each year. Different cash generating units and different intangible assets can be tested for impairment at different times during the year.
e) | Restrictions |
As of June 30, 2016 and December 31, 2015, CorpBanca and its subsidiaries have no restrictions on intangible assets. In addition, no intangible assets have been given in guarantee for performance of any obligations. There are also no amounts owed by the Bank on intangible assets as of the aforementioned dates.
F-157
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
NOTE 10 - DEPOSITS AND OTHER DEMAND OBLIGATIONS AND BORROWINGS
As of June 30, 2016 and December 31, 2015, this account is detailed as follows:
As of June 30, | As of December 31, | |||||||
2015 | 2015 | |||||||
MCh$ | MCh$ | |||||||
a) Current accounts and other demand deposits | ||||||||
Current accounts | 2,390,789 | 2,603,004 | ||||||
Other demand deposits and accounts | 2,115,202 | 2,467,485 | ||||||
Payments in advance from customers | 272,228 | 179,422 | ||||||
Other demand balances payable | 247,521 | 163,057 | ||||||
|
|
|
| |||||
Total | 5,025,740 | 5,412,968 | ||||||
|
|
|
| |||||
b) Savings accounts and time deposits | ||||||||
Time deposits | 11,862,670 | 12,416,276 | ||||||
Term savings accounts | 31,868 | 31,573 | ||||||
Other term balances payable | 115,120 | 327 | ||||||
|
|
|
| |||||
Total | 12,009,658 | 12,448,176 | ||||||
|
|
|
|
F-158
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
As of June 30, 2015 and December 31, 2015, this account is detailed as follows:
As of June 30, | ||||||||||||
ITAU | CORPBANCA | PROFORMA | ||||||||||
2015 | 2015 | 2015 | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
a) Current accounts and other demand deposits | ||||||||||||
Current accounts | 741,685 | 1,649,104 | 2,390,789 | |||||||||
Other demand deposits and accounts | 80,859 | 2,034,343 | 2,115,202 | |||||||||
Payments in advance from customers | 69,123 | 203,105 | 272,228 | |||||||||
Other demand balances payable | 65,555 | 181,966 | 247,521 | |||||||||
|
|
|
|
|
| |||||||
Total | 957,222 | 4,068,518 | 5,025,740 | |||||||||
|
|
|
|
|
| |||||||
b) Savings accounts and time deposits | ||||||||||||
Time deposits | 3,709,709 | 8,152,961 | 11,862,670 | |||||||||
Term savings accounts | — | 31,868 | 31,868 | |||||||||
Other term balances payable | — | 115,120 | 115,120 | |||||||||
|
|
|
|
|
| |||||||
Total | 3,709,709 | 8,299,949 | 12,009,658 | |||||||||
|
|
|
|
|
|
As of December 31, | ||||||||||||
ITAU | CORPBANCA | PRO FORMA | ||||||||||
2015 | 2015 | 2015 | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
a) Current accounts and other demand deposits | ||||||||||||
Current accounts | 769,258 | 1,833,746 | 2,603,004 | |||||||||
Other demand deposits and accounts | 76,054 | 2,391,431 | 2,467,485 | |||||||||
Payments in advance from customers | 68,036 | 111,386 | 179,422 | |||||||||
Other demand balances payable | 68,001 | 95,056 | 163,057 | |||||||||
|
|
|
|
|
| |||||||
Total | 981,349 | 4,431,619 | 5,412,968 | |||||||||
|
|
|
|
|
| |||||||
b) Savings accounts and time deposits | ||||||||||||
Time deposits | 3,952,573 | 8,463,703 | 12,416,276 | |||||||||
Term savings accounts | — | 31,573 | 31,573 | |||||||||
Other term balances payable | — | 327 | 327 | |||||||||
|
|
|
|
|
| |||||||
Total | 3,952,573 | 8,495,603 | 12,448,176 | |||||||||
|
|
|
|
|
|
F-159
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
NOTE 11 - DEBT INSTRUMENTS ISSUED AND OTHER FINANCIAL OBLIGATIONS
As of June 30, 2016 and December 31, 2015, this account is detailed as follows:
As of | ||||||||
As of June | December | |||||||
30, | 31, | |||||||
2016 | 2015 | |||||||
MCh$ | MCh$ | |||||||
Debt instruments issued | ||||||||
Letters of credit | 92,202 | 25,261 | ||||||
Senior bonds | 3,925,311 | 1,382,976 | ||||||
Subordinated bonds | 1,078,362 | 96,098 | ||||||
|
|
|
| |||||
Subtotal | 5,095,875 | 1,504,335 | ||||||
|
|
|
| |||||
Other financial liabilities | ||||||||
Public-sector obligations | 9,347 | 7,722 | ||||||
Other Chilean obligations | 17,823 | 13,011 | ||||||
Foreign obligations | 1,367 | — | ||||||
|
|
|
| |||||
Subtotal | 28,537 | 20,733 | ||||||
|
|
|
| |||||
Total | 5,124,412 | 1,525,068 | ||||||
|
|
|
|
NOTE 12 - CONTINGENCIES, COMMITMENTS AND RESPONSIBILITIES
a) Commitments and responsibilities accounted for in off-balance-sheet memorandum accounts:
The Bank, its subsidiaries and its foreign branch record the following balances related to commitments and responsibilities that fall within its line of business in off-balance-sheet memorandum accounts:
F-160
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
As of | ||||||||
As of June | December | |||||||
30, | 31, | |||||||
2016 | 2015 | |||||||
MCh$ | MCh$ | |||||||
CONTINGENT LOANS | 5,349,717 | 2,292,081 | ||||||
Guarantees and surety bonds | 229,662 | 79,511 | ||||||
Guarantees and surety bonds in Chilean currency | — | — | ||||||
Guarantees and surety bonds in foreign currency | 229,662 | 79,511 | ||||||
Confirmed foreign letters of credit | 1,337 | 2,573 | ||||||
Issued documentary letters of credit | 60,566 | 33,081 | ||||||
Bank guarantees | 1,127,874 | 264,080 | ||||||
Immediately available credit lines | 2,605,464 | 1,041,226 | ||||||
Other loan commitments | 1,324,814 | 871,610 | ||||||
Other contingent loans | — | — | ||||||
TRANSACTIONS ON BEHALF OF THIRD PARTIES | 2,040,711 | 240,343 | ||||||
Collections | 37,657 | 23,389 | ||||||
Collections in foreign countries | 15,420 | 22,640 | ||||||
Collections in Chile | 22,237 | 749 | ||||||
Placement or sale of financial instruments | — | — | ||||||
Placement of publicly-traded securities | — | — | ||||||
Sale of letters of credit for bank operations | — | — | ||||||
Sale of other instruments | — | — | ||||||
Transferred financial assets managed by the bank | 732,058 | 216,954 | ||||||
Assets ceded to insurance companies | 34,235 | 4,276 | ||||||
Securitized assets | — | — | ||||||
Other assets ceded to third parties | 697,823 | 212,678 | ||||||
Third-party resources managed by the bank | 1,270,996 | — | ||||||
Financial assets managed on behalf of third parties | 1,270,996 | — | ||||||
Other assets managed on behalf of third parties | — | — | ||||||
Financial assets acquired in bank’s name | — | — | ||||||
Other assets acquired in bank’s name | — | — | ||||||
SECURITIES CUSTODY | 5,631,165 | 4,457,653 | ||||||
Securities in custody held by the bank | 5,181,794 | 4,369,300 | ||||||
Securities deposited in other entities | 253,661 | — | ||||||
Instruments issued by the bank | 195,710 | 88,353 | ||||||
Time deposit promissory notes | 92,896 | — | ||||||
Letters of credit for sale | — | — | ||||||
Other documents | 102,814 | 88,353 | ||||||
COMMITMENTS | ||||||||
Guarantees for underwriting transactions | — | — | ||||||
Commitments to acquire assets | — | — | ||||||
|
|
|
| |||||
Total | 13,021,593 | 6,990,077 | ||||||
|
|
|
|
The preceding table only includes the most significant balances.
F-161
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
b) Pending Litigation
b.1) ITAU CORPBANCA
As of the date of issuance of these financial statements, there are lawsuits pending against the Bank related to loans and other matters, most of which, according to the Bank’s Legal and Compliance Division, present no risk of significant loss. Nevertheless, as of June 30, 2016, it has recorded provisions of MCh$21,813 (MCh$21,765 as of December 31, 2015) for the SBIF fine.
As of June | As of | |||||||
30, | December 31, | |||||||
2016 | 2015 | |||||||
MCh$ | MCh$ | |||||||
Opening balance | 21,765 | 207 | ||||||
Provisions recorded | 48 | 21,765 | ||||||
Provisions released | — | (207 | ) | |||||
|
|
|
| |||||
Closing balance | 21,813 | 21,765 | ||||||
|
|
|
|
Other legal actions have been filed against the Bank involving its normal operations. The Bank’s maximum exposure for these lawsuits amounts to approximately MCh$24,000. However, in management’s opinion, based on reports from the Legal Division as of year-end 2015, it is not very likely that these lawsuits result in significant losses not foreseen by the Bank in these financial statements and, therefore, management has not recorded any provisions for them.
b.2) CorpBanca Corredores de Bolsa S.A.
According to the Bank’s Legal Services Division, as of June 30, 2016, the brokerage subsidiary does not have any pending lawsuits that represent a risk of significant loss for the subsidiary.
As of June 30, 2016, the subsidiary had MCh$195 in doubtful accounts related to customer management. In the opinion of the Bank’s general counsel, not recovering the amounts owed could result in a loss for the subsidiary. Therefore, the subsidiary has recorded a provision in its financial statements of 100% of the amounts owed.
Before the Fifth Criminal Court of Santiago, in fraud case No. 149913-7, as part of a criminal suit filed by Banco del Estado de Chile, to which CorpBanca Corredores de Bolsa S.A. is not party, the court seized (in the subsidiary’s opinion, improperly) Time Deposit No. 00243145 for MCh$43 (historical pesos) that Concepción S.A. Corredores de Bolsa, now CorpBanca Corredores de Bolsa S.A., had acquired from its initial beneficiary, because it was consideredcorpus delicti. This time deposit is fully provisioned in the subsidiary’s financial statements and is presented net of the provision in notes and accounts receivable.
F-162
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
b.3) Banco CorpBanca Colombia S.A.
The bank and its subsidiaries are involved in civil, labor and administrative proceedings. Of the 159 outstanding civil and administrative proceedings, 101 are related to banking operations and 58 to ownership of leased assets. Compensation sought amounts to approximately MCh$15,875. Of these proceedings, the probability of loss is possible in 134 cases, remote in 8 cases and likely in 17 cases. Provisions for those proceedings classified as likely in accordance with IAS 37 total MCh$801.
The proceedings classified as likely include one class action suit from 2010 that affects the entire financial sector. No court proceedings, adverse rulings or complaints were filed that, given their amount, might materially affect the Bank’s capital. The common legal proceedings or processes that affect most of the financial sector will not necessarily be ruled on in 2016, but perhaps in subsequent years. Particularly because of the portfolio sales by Banco CorpBanca Colombia, which make its particular situation different from other banks that are party to the lawsuit, it is difficult to quantify the status of these proceedings and impossible to determine the financial implications.
There are 120 labor proceedings seeking a total of MCh$1,617, for which MCh$1,020 has been provisioned, equivalent to 70%. Of these, the probability of loss is remote in 56 cases and likely in 64 cases.
b.4) Other Companies Included in Consolidation
As of June 30, 2016, the other companies do not have any pending lawsuits that represent a risk of significant loss for the Bank.
• | CorpBanca Asesorías Financieras S.A. |
• | CorpBanca Administradora General de Fondos S.A. |
• | CorpBanca Corredores de Seguros S.A. |
• | CorpLegal S.A. |
• | CorpBanca New York Branch. |
• | SMU CORP S.A. |
• | CorpBanca Investment Trust Colombia S.A. |
• | CorpBanca Securities Inc. |
• | Recaudaciones y Cobranzas S.A. |
• | Helm Corredor de Seguros S.A. |
• | Itaú Chile Corredora de Seguros Ltda. |
• | Itaú Chile Administradora General de Fondos S.A. |
• | Itaú BBA Corredor de Bolsa Ltda. |
F-163
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
c) Contingent Loans
The following table contains the amounts for which the Bank is contractually obliged to provide loans and the amount of credit risk provisions established:
As of June 30, | As of December 31, | |||||||
2016 | 2015 | |||||||
MCh$ | MCh$ | |||||||
Guarantees and surety bonds | 229,662 | 79,511 | ||||||
Documentary letters of credit | 60,566 | 33,081 | ||||||
Confirmed foreign letters of credit | 1,337 | 2,573 | ||||||
Performance and bid bonds | 1,127,874 | 264,078 | ||||||
Available credit on lines of credit and credit cards | 2,605,464 | 1,041,226 | ||||||
Student loans (Law No. 20,027) | 766,339 | 546,681 | ||||||
Other | 558,475 | 324,929 | ||||||
|
|
|
| |||||
Subtotal (Note 19 a) | 5,349,717 | 2,292,079 | ||||||
Provisions for contingent loans | (31,982 | ) | (5,515 | ) | ||||
|
|
|
| |||||
Total | 5,317,735 | 2,286,564 | ||||||
|
|
|
|
d) Responsibilities
d.1) ITAU CORPBANCA
The Bank and its subsidiaries have the following responsibilities arising from the normal course of business:
As of June 30, | As of December 31, | |||||||
2016 | 2015 | |||||||
MCh$ | MCh$ | |||||||
Documents in collections | 37,657 | 23,389 | ||||||
Transferred financial assets managed by the bank | 732,058 | 216,954 | ||||||
Third-party resources managed by the bank | 1,270,996 | — | ||||||
Securities custody | 5,631,165 | 4,457,653 | ||||||
|
|
|
| |||||
Total | 7,671,876 | 4,697,996 | ||||||
|
|
|
|
F-164
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
d.2) CorpBanca Corredores de Bolsa
The subsidiary CorpBanca Corredores de Bolsa S.A. presents the following information regarding securities in custody:
As of June 30, 2016
Domestic | Foreign | |||||||||||||||||||||||||||
Variable Income | Fixed & Money Mkt | Other | Variable Income | Fixed & Money Mkt | Other | Total | ||||||||||||||||||||||
Custody services for unrelated third parties | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||
Custody without asset management | 320,033 | 113,873 | — | 446 | — | — | 434,352 | |||||||||||||||||||||
Portfolio management | 1,728 | — | — | — | — | — | 1,728 | |||||||||||||||||||||
Voluntary pension savings management | — | — | — | — | — | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 321,761 | 113,873 | — | 446 | — | — | 436,080 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Percentage in custody of CSD (%) | 95.60 | % | 98.79 | % | — | 100.00 | % | — | — | 96.35 | % | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2015
Domestic | Foreign | |||||||||||||||||||||||||||
Fixed & | ||||||||||||||||||||||||||||
Variable | Fixed & | Variable | Money | |||||||||||||||||||||||||
Income | Money Mkt | Other | Income | Mkt | Other | Total | ||||||||||||||||||||||
Custody services for unrelated third parties | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||
Custody without asset management | 58,978 | 62,616 | — | 334 | — | — | 121,928 | |||||||||||||||||||||
Portfolio management | 2,079 | — | — | — | — | — | 2,079 | |||||||||||||||||||||
Voluntary pension savings management | — | — | — | — | — | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 61,057 | 62,616 | — | 334 | — | — | 124,007 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Percentage in custody of CSD (%) | 97.96 | % | 100.00 | % | — | 0.00 | % | — | — | 98.73 | % | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2016
Domestic | Foreign | |||||||||||||||||||||||||||
Fixed & | ||||||||||||||||||||||||||||
Variable | Fixed & | Variable | Money | |||||||||||||||||||||||||
Income | Money Mkt | Other | Income | Mkt | Other | Total | ||||||||||||||||||||||
Custody services for related third parties | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||
Custody without asset management | 4,806 | 13,457 | — | — | — | 18,262 | ||||||||||||||||||||||
Portfolio management | — | — | — | — | — | — | — | |||||||||||||||||||||
Voluntary pension savings management | — | — | — | — | — | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 4,806 | 13,457 | — | — | — | — | 18,262 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Percentage in custody of CSD (%) | 100.00 | % | — | — | — | 100.00 | % | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2015
Domestic | Foreign | |||||||||||||||||||||||||||
Fixed & | ||||||||||||||||||||||||||||
Variable | Fixed & | Variable | Money | |||||||||||||||||||||||||
Income | Money Mkt | Other | Income | Mkt | Other | Total | ||||||||||||||||||||||
Custody services for related third parties | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||
Custody without asset management | 6 | 4,219 | — | — | — | — | 4,225 | |||||||||||||||||||||
Portfolio management | — | — | — | — | — | — | — | |||||||||||||||||||||
Voluntary pension savings management | — | — | — | — | — | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | 6 | 4,219 | — | — | — | — | 4,225 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Percentage in custody of CSD (%) | 100.00 | % | 100.00 | % | — | — | — | — | 100.00 | % | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-165
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
As of June 30, 2016
Custody services for unrelated third parties | Domestic | Foreign | Total | |||||||||||||||||||||||||
Variable Income | Fixed & Money Mkt | Other | Variable Income | Fixed & Money Mkt | Other | |||||||||||||||||||||||
ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ||||||||||||||||||||||
Custody without asset management | 214,543,191 | 65,827,990 | — | 554 | — | — | 280,371,735 | |||||||||||||||||||||
Portfolio management | — | — | — | — | — | — | — | |||||||||||||||||||||
Voluntary pension savings management | — | — | — | — | — | — | — | |||||||||||||||||||||
Total | 214,543,191 | 65,827,990 | — | 554 | — | — | 280,371,735 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Percentage in custody of CSD (%) | 95.60 | % | 98.79 | % | — | 100.00 | % | — | — | 96.35 | % | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Custody services for related third parties | Domestic | Foreign | Total | |||||||||||||||||||||||||
Variable Income | Fixed & Money Mkt | Other | Variable Income | Fixed & Money Mkt | Other | |||||||||||||||||||||||
ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ||||||||||||||||||||||
Custody without asset management | 291,082 | — | — | — | — | — | 291,082 | |||||||||||||||||||||
Portfolio management | — | — | — | — | — | — | — | |||||||||||||||||||||
Voluntary pension savings management | — | — | — | — | — | — | — | |||||||||||||||||||||
Total | 291,082 | — | — | — | — | — | 291,082 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Percentage in custody of CSD (%) | 100.00 | % | — | — | — | — | — | 100.00 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
d.3) CorpBanca Corredores de Seguros
In order to comply with Art. 58, letter d) of DFL 251 of 1930, which states, “Insurance Brokers, in order to conduct business, must comply with the requirement of contracting insurance policies as determined by the Superintendency of Securities and Insurance, in order to correctly and fully comply with the obligations arising from its activities and especially regarding damages that may be incurred by insured parties that contract policies through the brokerage house”, the brokerage subsidiary renewed the following policies, taking effect April 15, 2016, and expiring April 14, 2016, through Consorcio Nacional de Seguros S.A.:
F-166
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Policy | Insured Item | Amount Insured (UF) | ||||
10027833 | Civil liability | 60.000 | ||||
10027843 | Guarantee | 500 |
Guarantees Furnished
e.1) ITAU CORPBANCA
Assets provided as guarantees
As of | ||||||||
As of June | December | |||||||
30, | 31, | |||||||
2016 | 2015 | |||||||
MCh$ | MCh$ | |||||||
Assets provided as guarantees | 12,222 | — | ||||||
|
|
|
| |||||
Total | 12,222 | — | ||||||
|
|
|
|
e.2) CorpBanca Corredores de Bolsa S.A.
Direct Commitments.
As of June 30, 2016, the subsidiary does not have any direct commitments.
Real Guarantees in Assets Established in Favor of Third-Party Obligations.
With the exception of guarantees that must be established in the normal course of business in accordance with securities laws or regulations, as of June 30, 2016, the subsidiary does not have any real guarantees involving Bank assets established in favor of third parties.
Personal Guarantees.
As of December 31, 2016, the subsidiary has not granted any personal guarantees.
Operating Guarantees.
In compliance with articles 30 and 31 of Law No. 18,045 (Securities Market Law), the subsidiary has established a guarantee of UF 4,000 expiring on April 22, 2018, through Mapfre Compañía de Seguros Generales de Chile S.A., designating the Santiago Stock Exchange as the creditors’ representative.
On December 29, 2015, an employee dishonesty insurance policy with US$10,000,000 in coverage was purchased from Orión Seguros Generales, expiring December 29, 2016.
F-167
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
This subsidiary maintains shares in the stock exchanges to guarantee simultaneous operations for MCh$8,931.
The Bank has established guarantees for US$100,000 equivalent to MCh$66 and US$30,137.69 equivalent to MCh$20 to guarantee transactions with foreign traders Pershing and Corp FX, respectively. The latter is a Chilean broker engaged primarily in purchasing and selling financial assets on its own or on behalf of third parties and, in general, carrying out any type of purchase and sale transaction, arbitrage and/or any transaction or operation involving any monetary and/or financial assets, expressly including derivative contracts (swaps, forwards, options and/or arbitrage) for any type of underlying asset, in addition to receiving guarantees for the contracts and operations mentioned above, and accepting any type of mandate for these transactions involving any type of asset over which these guarantees are established.
As of June 30, 2015, the brokerage subsidiary has fixed income instruments and cash deposits in Santiago Exchange to guarantee transactions in the Securities Settlement and Clearing House (CCLV) that totaled MCh$5,055.
e.3) CorpBanca Administradora General de Fondos S.A
Commitments
As of June 30, 2016 and December 31, 2015, the Company does not have any legal contingencies.
Guarantees Established in Favor of Third-Party Obligations
On December 29, 2015, CorpBanca Administradora General de Fondos S.A. purchased a bankers blanket bond with Compañía Orion Seguros Generales, to insure itself against employee dishonesty, expiring December 29, 2016. The policy provides coverage of US$ 5,000,000 per claim and an annual aggregate of US$ 10,000,000.
On February 1, 2016, this subsidiary renewed a performance bond from Banco Santander originally expiring March 31, 2016, that CorpBanca Administradora General de Fondos S.A: took out on behalf of the Chilean Development Corporation (CORFO) to guarantee faithful and timely performance of portfolio management obligations and payment of employment and social security obligations for the contracting party’s employees, expiring March 31, 2017. The amount of the guarantee is UF 15,000.0000, equivalent in pesos to the total in UF as of the date of payment and without interest in favor of the Chilean Development Corporation, Taxpayer ID 60,706,000-2.
At an ordinary meeting held March 23, 2016, the company’s Board authorized the subscription of units issued by the fund it manages known as Corp Inmobiliario I Private Investment Fund for up to 6,000 UF in order to complete the resources needed to pay, at maturity, the bank loan taken out by the operating company to acquire the property.
F-168
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
e.4)Itaú BBA Corredor de Bolsa Ltda.
To comply with article 30 of Law 18,045, the subsidiary has a performance bond in favor of Bolsa Electrónica de Chile (the Chilean Electronic Stock Exchange) to ensure correct and complete performance of all obligations as a securities intermediary. The beneficiaries of this guarantee are its present or future creditors as a result of its brokerage operations.
The performance bond is detailed as follows:
Bank | Date Initial | Date Maturity | Amount | Beneficiary | ||||||||||||
UF | ||||||||||||||||
Banco Itaú Chile | 06/30/2016 | 06/30/2017 | 20,000 | Bolsa Electrónica de Chile |
The subsidiary also has a comprehensive insurance policy to comply with Ruling No. 52 from Bolsa Electrónica de Chile.
The comprehensive insurance policy is detailed as follows:
Company | Initial Date | Maturity Date | Amount | Beneficiary | ||||||||||||
ThUS$ | ||||||||||||||||
Orion Seguros | ||||||||||||||||
Generales S.A. | 04/01/2016 | 12/29/2016 | 5,000 and 10,000 | Bolsa Electrónica de Chile |
The subsidiary established a pledge on its shares of Bolsa de Comercio de Santiago (Santiago Exchange) in favor of that company to guarantee compliance with its obligations arising from transactions carried out with other brokers.
As of June 30, 2016, a fixed income instrument totaling MCh$3,303 has been furnished as a guarantee to CCLV, Contraparte Central S.A.
The subsidiary has a performance bond as a representative of the beneficiaries of the guarantee in articles 98 and 99 of Law No. 20,172, in order to guarantee faithful and full compliance of our obligations as a Portfolio Manager.
The performance bond is detailed as follows:
Bank | Initial Date | Maturity Date | Amount | Beneficiary | ||||||||||||
UF | ||||||||||||||||
Banco Itaú Chile | 06/14/2016 | 16/06/2017 | 10,000 | Banco Itaú Chile |
F-169
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
e.5) Other Companies Included in Consolidation
As of June 30, 2016 and December 31, 2015, the following companies have not granted any guarantees that must be disclosed in these financial statements: .
• | CorpBanca Asesorías Financieras S.A. |
• | CorpBanca Corredores de Seguros S.A. |
• | CorpLegal S.A. |
• | CorpBanca New York Branch. |
• | SMU CORP S.A. |
• | Banco CorpBanca Colombia and Subsidiaries. |
• | CorpBanca Securities Inc. |
• | Recaudaciones y Cobranzas S.A. |
• | Helm Corredor de Seguros S.A. |
• | Itaú Chile Administradora General de Fondos S.A. |
• | Itaú Chile Corredora de Bolsa S.A |
• | Itaú Chile Corredora de Seguros S.A |
Other obligations
f.1) ITAU CORPBANCA
• | The Bank is authorized to transfer to its customers any obligations for deferred customs duties arising from imports of leased assets. These transfers take place with prior authorization from the National Customs Service. As of June 30, 2016 and December 31, 2015, the Bank has not transferred any customs duties obligations to its customers. |
f.2) CorpBanca Administradora General de Fondos S.A
On December 19, 2013, the Chilean Treasury seized the funds deposited in account No. 1244905 at CorpBanca that the Company had in that bank for a past due tax debt for MCh$22, according to Administrative File 10305-2013 (Las Condes). The debt arose because of an error by the entity responsible for sending the tax payment charged by the Internal Revenue Service.
On December 27, 2013, the debt was paid and the Company filed a motion to release the seized assets.
On February 7, 2014, the seized assets were released into account No. 1244905 at CorpBanca.
f.3) Other Companies Included in Consolidation
As of June 30, 2016 and December 31, 2015, the following companies have no other obligations that must be disclosed in these financial statements: .
• | CorpBanca Corredores de Bolsa S.A. |
• | CorpBanca Asesorías Financieras S.A. |
F-170
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
• | CorpBanca Corredores de Seguros S.A. |
• | CorpLegal S.A. |
• | CorpBanca New York Branch. |
• | SMU CORP S.A. |
• | Banco CorpBanca Colombia and Subsidiaries. |
• | CorpBanca Securities Inc. |
• | Recaudaciones y Cobranzas S.A. |
• | Helm Corredor de Seguros S.A. |
• | Itaú Chile Administradora General de Fondos S.A. |
• | Itaú Chile Corredora de Bolsa S.A |
• | Itaú Chile Corredora de Seguros S.A |
Penalties
g.1) CorpBanca Corredores de Bolsa S.A.
During the three months ended June 30, 2016, the Company, its Chief Executive Officer and/or directors have not received any penalties or fines.
F-171
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
The business combination24 (reverse acquisition) completed as established in IFRS 3 calls for the consolidated financial statements after the merger (from April 1, 2016 forward) to be prepared under the name of the legal controller (the acquiree for accounting purposes, or CorpBanca, the merged entity, which will take the name ITAU CORPBANCA), but they are described in these notes as a continuation of the financial statements of the legal subsidiary (the acquirer for accounting purposes, or Banco Itaú Chile), for comparative figures from 2015, and for the period from January-March 2016, but for the April-June period those generated by ITAU CORPBANCA), with an adjustment that will be made retroactively in the legal capital of the acquirer for accounting purposes (Banco Itaú Chile) that reflects the legal capital of the acquiree for accounting purposes (CorpBanca). That adjustment is required to reflect the capital of the legal controller (the acquiree for accounting purposes).
24 | (*) For more information on the transaction, see Note 2, Section 2. |
F-172
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
a. Movements in capital and reserve accounts (attributable to Bank shareholders)
The information for the year 2015 for comparative purposes corresponds to the information disclosed by Banco Itaú Chile, which has been restated by the exchange ratio for the business combination of 80,240 shares of the merged bank for every 1 share of Banco Itaú Chile.
As described above, as of June 30, 2016 and December 31, 2015, the Bank’s paid in capital is represented by common shares with no par value, all of which are fully subscribed and paid, detailed as follows:
Common | Common | |||||||
Shares | Shares | |||||||
2016 | 2015 (*) | |||||||
(number) | (number) | |||||||
Issued as of January 1 | 115,039,690,651 | 115,039,690,651 | ||||||
Issuance of paid shares | 57,008,875,206 | — | ||||||
Issuance of shares payable | — | — | ||||||
Share buyback | — | — | ||||||
Sale of treasury shares | — | — | ||||||
Increase in shares for Itaú-CorpBanca business combination | 340,358,194,234 | |||||||
|
|
|
| |||||
Total | 512,406,760,091 | 115,039,690,651 | ||||||
|
|
|
|
F-173
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
i. | Subscribed and Paid shares |
June 2016
As of June 30, 2016, the Bank’s paid capital is represented by 512,406,760,091 subscribed and paid common shares with no par value, totaling MCh$1,862,826.
On March 22, 2016, Banco Itaú Chile’s capital was increased by MCh$392,813, through the subscription of 710,477 of the bank’s single-series shares with no par value (equivalent to 57,008,875,206 shares of the merged bank based on the exchange ratio for the business combination), which were subscribed and paid by ITB Holding Brasil Participações Ltda., a wholly owned subsidiary of Itaú Unibanco Holding S.A., within the framework of the merger of Banco Itaú Chile and CorpBanca and in compliance with the “Transaction Agreement” signed on January 29, 2014.
2015
As of December 31, 2015, the Bank’s paid-in capital is represented by 115,039,690,651 common shares with no par value, subscribed and paid, for a total of MCh$781,559. It is important to note that the number of shares has been restated based on the exchange ratio for the business combination and the value in MCh$ is restated to reflect the legal capital of the legal acquirer as established in IFRS 3 for a reverse acquisition.
ii. | Purchases and Sales of Bank Shares |
As of June 30, 2016 and December 31, 2015, there were no purchase or sale transactions by the Bank involving its own shares.
iii. | Profit Distribution |
2016
• | At an ordinary meeting of the shareholders of Banco Itaú Chile on March 11, 2016, shareholders agreed to distribute MCh$52,168 in earnings, representing 50% of profit for the year 2015. |
2015
• | At an extraordinary meeting of the shareholders of Banco Itaú Chile on June 11, 2015, shareholders agreed to reduce the profits for the year 2014 that they had agreed to distribute as dividends at the ordinary meeting on March 12, 2015, totaling Ch$42,847 million, to Ch$26,448 million, corresponding to 30.86% of distributable profits for the year ended December 31, 2014. |
• | At an ordinary general meeting of the shareholders of Banco Itaú Chile on March 12, 2015, shareholders agreed to distribute MCh$42,847 in earnings, representing 50% of profit for the year ended December 31, 2014. |
F-174
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Main Shareholders
For the periods ended June 30, 2016 and December 31, 2015, the Bank’s main shareholders were:
Common Shares | ||||||||
2016 | ||||||||
No. of Shares | % Ownership Interest | |||||||
CORP GROUP BANKING SA | 148,835,852,909 | 29.05000 | %(**) | |||||
ITAU UNIBANCO HOLDING SA | 115,039,610,411 | 22.45000 | %(*) | |||||
ITB HOLDING BRASIL PARTICIPACOES LTDA | 57,008,875,206 | 11.13000 | %(*) | |||||
BANCO DE CHILE ON BEHALF OF NON-RESIDENT THIRD PARTIES | 35,048,206,495 | 6.84000 | % | |||||
BANCO SANTANDER ON BEHALF OF FOREIGN INVESTORS | 24,578,978,479 | 4.80000 | % | |||||
COMPANIA INMOBILIARIA Y DE INVERSIONES SAGA SPA | 20,918,245,555 | 4.08000 | %(**) | |||||
BANCO ITAU CORPBANCA ON BEHALF OF FOREIGN INVESTORS | 17,064,350,875 | 3.33000 | % | |||||
DEUTSCHE BANK TRUST COMPANY AMERICAS (ADRS) | 14,029,250,000 | 2.74000 | % | |||||
SIERRA NEVADA INVESTMENTS CHILE DOS LTDA | 9,817,092,180 | 1.92000 | % | |||||
MONEDA SA AFI FOR PIONERO INVESTMENT FUND | 6,627,908,000 | 1.29000 | % | |||||
SANTANDER CORREDORES DE BOLSA LIMITADA | 4,981,485,307 | 0.97000 | % | |||||
CORPBANCA CORREDORES DE BOLSA SA | 4,263,866,576 | 0.83000 | % | |||||
BTG PACTUAL CHILE S A C DE B | 3,720,157,608 | 0.73000 | % | |||||
BCI C DE B S A | 3,470,254,820 | 0.68000 | % | |||||
CIA DE SEGUROS DE VIDA CONSORCIO NACIONAL DE SEGUROS SA | 3,385,042,102 | 0.66000 | % | |||||
BOLSA DE COMERCIO DE SANTIAGO BOLSA DE VALORES | 2,952,955,120 | 0.58000 | % | |||||
VALORES SECURITY S A C DE B | 2,908,776,664 | 0.57000 | % | |||||
COMPANIA DE SEGUROS CONFUTURO S.A. | 2,654,626,747 | 0.52000 | % | |||||
BANCHILE C DE B S A | 2,586,271,959 | 0.50000 | % | |||||
INMOB E INVERSIONES BOQUINENI LTDA | 2,353,758,526 | 0.46000 | % | |||||
CONSORCIO C DE B S A | 2,269,471,585 | 0.44000 | % | |||||
LARRAIN VIAL S A CORREDORA DE BOLSA | 2,048,344,612 | 0.40000 | % | |||||
INV LAS NIEVES S A | 1,890,725,224 | 0.37000 | % | |||||
CRN INMOBILIARIA LIMITADA | 1,535,239,055 | 0.30000 | % | |||||
CREDICORP CAPITAL SA CORREDORES DE BOLSA | 1,266,838,417 | 0.25000 | % | |||||
OTHER SHAREHOLDERS | 21,150,575,659 | 4.13000 | % | |||||
|
|
|
| |||||
TOTAL | 512,406,760,091 | 100.00000 | % | |||||
|
|
|
|
(*) | The controlling group Itaú Unibanco Holding S.A. has a total interest of 33.58%. |
(**) | CorpGroup has an interest of 33.13%, which includes 802,125,023 shares of Saga under custody. |
Common Shares | ||||||||
2015 (*) | ||||||||
No. of Shares | % Ownership Interest | |||||||
ITAU UNIBANCO HOLDING S.A. | 115,039,610,411 | 99.99993 | %(*) | |||||
BORIS BUVINIC G. | 80,240 | 0.00007 | % | |||||
|
|
|
| |||||
TOTAL | 115,039,690,651 | 100.00000 | % | |||||
|
|
|
|
(*) | The number of shares for the year 2015 (1,433,689 of Itaú Unibanco Holding and 1 of Boris Buvinic G.) are restated based on the exchange ratio for the business combination that gave rise to ITAU CORPBANCA, in accordance with current international standards. |
F-175
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
b. Dividends
Dividends distributed by the entity are detailed as follows:
Period | Profit Attributable to Owners of the Bank | Allocated to Reserves or Retained Earnings | Allocated as Dividends | Percent Distributed | No. of Shares | No. of Shares Restated (*) | Dividend per Share (Ch$) | |||||||||||||||||||||
MCh$ | MCh$ | MCh$ | % | |||||||||||||||||||||||||
2015 (Shareholders’ Meeting March 2016) | 104,336 | 52,168 | 52,168 | 50 | % | 1,433,690 | 115,039,690,651 | 36,387 | ||||||||||||||||||||
2014 (Shareholders’ Meeting June 2015) | 85,693 | 59,245 | 26,448 | 30.86 | % | 1,433,690 | 115,039,690,651 | 18,448 |
(*) | This corresponds to the total number of shares of Banco Itaú Chile restated based on the exchange ratio for the business combination that gave rise to ITAU CORPBANCA. |
c. Diluted and Basic Earnings
The equity structure of the consolidated financial statements prepared after the reverse acquisition (from April 1, 2016), will reflect the equity structure of the legal acquirer, including the equity interests issued by the legal acquirer in order to complete the business combination.
The average weighted number of outstanding common shares (the denominator in the calculation of earnings per share) for the period in which the reserve acquisition has occurred is calculated as follows:
a. the number of outstanding common shares from the beginning of that period until the date of acquisition (i.e. January 1 to March 31, 2016) must be calculated on the basis of the average weighted number of outstanding common shares of the legal acquiree (accounting acquirer, Banco Itaú) during the period multiplied by the exchange ratio established in the merger agreement; and
b. the number of outstanding common shares from the date of acquisition until the end of that period (i.e. April 1 to June 30, 2016) must be the real number of common shares that the legal acquirer (accounting acquiree, CorpBanca) has had outstanding during that period.
Basic earnings per share for each comparative year prior to the date of the acquisition presented in the consolidated financial statements after a reverse acquisition must be calculated by dividing:
a. the profit of the legal acquiree (Banco Itaú) attributable to the common shareholders in each of those periods by
b. the historical weighted average of the number of common shares outstanding of the legal acquiree multiplied by the exchange ratio established in the acquisition agreement.
Therefore, in order to calculate basic and diluted earnings, the values for number of shares as of December 2015 and June 2015 for Banco Itaú Chile have been restated based on the exchange ratio for the business combination.
F-176
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For the six-month periods ended June 30, 2016 and 2015, the Bank’s diluted and basic earnings are detailed as follows:
As of June 30, | As of December 31, | As of June 30, | ||||||||||||||||||||||
2016 | 2015 | 2015 | ||||||||||||||||||||||
No. of Shares | Amount | No. of Shares (*) | Amount | No. of Shares (*) | Amount | |||||||||||||||||||
Millions | MCh$ | Millions | MCh$ | Millions | MCh$ | |||||||||||||||||||
Diluted and Basic Earnings | ||||||||||||||||||||||||
Basic earnings per share | ||||||||||||||||||||||||
Profit (loss) for the period | — | 34,682 | — | 104,336 | — | 42,709 | ||||||||||||||||||
Weighted average number of shares outstanding | 342,228 | — | 115,040 | — | 115,040 | — | ||||||||||||||||||
Assumed conversion of convertible debt | — | — | — | — | — | — | ||||||||||||||||||
Adjusted number of shares | 342,228 | — | 115,040 | — | 115,040 | — | ||||||||||||||||||
Basic earnings per share (Chilean pesos) | — | 0.101 | — | 0.907 | — | 0.371 | ||||||||||||||||||
Diluted earnings per share | ||||||||||||||||||||||||
Profit (loss) for the period | — | 34,682 | — | 104,336 | — | 42,709 | ||||||||||||||||||
Weighted average number of shares outstanding | 342,228 | 115,040 | — | 115,040 | — | |||||||||||||||||||
Dilutive effect of: | ||||||||||||||||||||||||
Assumed conversion of convertible debt | — | — | — | — | — | — | ||||||||||||||||||
Conversion of common shares | — | — | — | — | — | — | ||||||||||||||||||
Options rights | — | — | — | — | — | — | ||||||||||||||||||
Adjusted number of shares | 342,228 | 115,040 | — | 115,040 | — | |||||||||||||||||||
Diluted earnings per share (Chilean pesos) | 0.101 | — | 0.907 | — | 0.371 |
d. Valuation Accounts
Fair Value Reserve. This includes accumulated net changes in the fair value of investments available for sale until the investment is recognized or the need to make impairment provisions exists.
Translation Reserves. This includes the effects of converting the financial statements of the New York Branch and Colombian subsidiaries, whose functional currencies are the US dollar and Colombian peso, respectively, to the presentation currency of Banco CorpBanca (the Chilean peso).
Cash Flow Hedge Reserves.This includes the effects of hedges on the Bank’s exposure to variations in cash flows that are attributed to a particular risk related to a recognized asset and/or liability, which can affect profit and loss for the period.
Foreign Investment Accounting Hedge Reserve. Corresponds to adjustments for hedges of net investments in foreign operations, mentioned above.
F-177
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
e. Reserves
The values presented in this account correspond to adjustments made as a result of the business combination between Banco Itaú Chile and CorpBanca, as well as retroactive adjustments required by international standards (IFRS/IAS).
NOTE 14 - INTEREST AND INDEXATION INCOME AND EXPENSES
This account includes interest accrued during the period on all financial assets whose implicit or explicit return is obtained by applying the effective interest rate method independent of whether they are valued at fair value, as well as rectifications of products as a result of accounting hedges, which forms part of interest and indexation income and expenses as shown in the Statement of Income for the Period. Interest and indexation is recognized as received for the past-due portfolio, as well as the amount that was not recognized in the Statement of Income for the Year because recognition was suspended on an accrual basis.
F-178
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
a. | For the three months ended June 30, 2016 and 2015, interest and indexation income is detailed as follows: |
For the quarter ended June 30, | ||||||||||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||||||||||
Interest | Indexation | Prepayment Fees | Total | Interest | Indexation | Prepayment Fees | Total | |||||||||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||
Normal Portfolio | ||||||||||||||||||||||||||||||||
Repurchase agreements | 2,102 | 1 | — | 2,103 | 137 | — | — | 137 | ||||||||||||||||||||||||
Loans and advances to banks | 3,395 | — | — | 3,395 | 410 | — | — | 410 | ||||||||||||||||||||||||
Commercial loans | 236,125 | 38,738 | 897 | 275,760 | 50,461 | 22,190 | 119 | 72,770 | ||||||||||||||||||||||||
Mortgage loans | 45,399 | 30,135 | 5 | 75,539 | 14,433 | 20,426 | 7 | 34,866 | ||||||||||||||||||||||||
Consumer loans | 83,828 | 9 | 461 | 84,298 | 24,569 | 31 | 412 | 25,012 | ||||||||||||||||||||||||
Investment securities | 24,160 | 6,557 | — | 30,717 | 2,525 | 4,250 | — | 6,775 | ||||||||||||||||||||||||
Other interest or indexation income | 2,961 | 198 | — | 3,159 | 1,119 | 35 | — | 1,154 | ||||||||||||||||||||||||
Gain (loss) from accounting hedges | (2,674 | ) | — | — | (2,674 | ) | (4,535 | ) | — | — | (4,535 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 395,296 | 75,638 | 1,363 | 472,297 | 89,119 | 46,932 | 538 | 136,589 |
For the six months ended June 30, | ||||||||||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||||||||||
Interest | Indexation | Prepayment Fees | Total | Interest | Indexation | Prepayment Fees | Total | |||||||||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||
Normal Portfolio | ||||||||||||||||||||||||||||||||
Repurchase agreements | 2,296 | 1 | — | 2,297 | 250 | — | — | 250 | ||||||||||||||||||||||||
Loans and advances to banks | 3,657 | — | — | 3,657 | 724 | — | — | 724 | ||||||||||||||||||||||||
Commercial loans | 288,427 | 51,151 | 970 | 340,548 | 97,555 | 22,360 | 196 | 120,111 | ||||||||||||||||||||||||
Mortgage loans | 60,553 | 40,804 | 7 | 101,364 | 28,444 | 20,290 | 12 | 48,746 | ||||||||||||||||||||||||
Consumer loans | 107,613 | 23 | 736 | 108,372 | 49,305 | 28 | 754 | 50,087 | ||||||||||||||||||||||||
Investment securities | 27,299 | 9,155 | — | 36,454 | 4,695 | 4,295 | — | 8,990 | ||||||||||||||||||||||||
Other interest or indexation income | 4,840 | 207 | — | 5,047 | 1,832 | 214 | — | 2,046 | ||||||||||||||||||||||||
Gain (loss) from accounting hedges | 3,664 | — | (3,664 | ) | (3,258 | ) | — | — | (3,258 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 491,021 | 101,341 | 1,713 | 594,075 | 179,547 | 47,187 | 962 | 227,696 |
F-179
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
a.1) For the six months ended June 30, 2015, pro forma interest and indexation income is detailed as follows:
Banco Itaú Chile | For the quarter ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||||||||||
2015 | 2015 | |||||||||||||||||||||||||||||||
Interest | Indexation | Prepayment Fees | Total | Interest | Indexation | Prepayment Fees | Total | |||||||||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||
Normal Portfolio | ||||||||||||||||||||||||||||||||
Repurchase agreements | 137 | — | — | 137 | 250 | — | — | 250 | ||||||||||||||||||||||||
Loans and advances to banks | 410 | — | — | 410 | 724 | — | — | 724 | ||||||||||||||||||||||||
Commercial loans | 50,461 | 22,190 | 119 | 72,770 | 97,555 | 22,360 | 196 | 120,111 | ||||||||||||||||||||||||
Mortgage loans | 14,433 | 20,426 | 7 | 34,866 | 28,444 | 20,290 | 12 | 48,746 | ||||||||||||||||||||||||
Consumer loans | 24,569 | 31 | 412 | 25,012 | 49,305 | 28 | 754 | 50,087 | ||||||||||||||||||||||||
Investment securities | 2,525 | 4,250 | — | 6,775 | 4,695 | 4,295 | — | 8,990 | ||||||||||||||||||||||||
Other interest or indexation income | 1,119 | 35 | — | 1,154 | 1,832 | 214 | — | 2,046 | ||||||||||||||||||||||||
Gain (loss) from accounting hedges | (4,535 | ) | — | — | (4,535 | ) | (3,258 | ) | — | — | (3,258 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 89,119 | 46,932 | 538 | 136,589 | 179,547 | 47,187 | 962 | 227,696 |
CorpBanca CorpBanca | For the quarter ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||||||||||
2015 | 2015 | |||||||||||||||||||||||||||||||
Interest | Indexation | Prepayment Fees | Total | Interest | Indexation | Prepayment Fees | Total | |||||||||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||
Normal Portfolio | ||||||||||||||||||||||||||||||||
Repurchase agreements | 2,239 | 4 | — | 2,243 | 9,048 | 4 | — | 9,052 | ||||||||||||||||||||||||
Loans and advances to banks | 2,174 | — | — | 2,174 | 5,347 | — | — | 5,347 | ||||||||||||||||||||||||
Commercial loans | 162,024 | 31,695 | 227 | 193,946 | 320,600 | 31,345 | 805 | 352,750 | ||||||||||||||||||||||||
Mortgage loans | 30,669 | 24,971 | — | 55,640 | 60,820 | 24,684 | — | 85,504 | ||||||||||||||||||||||||
Consumer loans | 63,530 | 92 | 186 | 63,808 | 128,516 | 89 | 353 | 128,958 | ||||||||||||||||||||||||
Investment securities | 20,972 | 7,491 | — | 28,463 | 27,306 | 7,557 | — | 34,863 | ||||||||||||||||||||||||
Other interest or indexation income | 2,082 | 305 | — | 2,387 | 3,635 | 476 | — | 4,111 | ||||||||||||||||||||||||
Gain (loss) from accounting hedges | 3,914 | — | — | 3,914 | 966 | — | — | 966 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 287,604 | 64,558 | 413 | 352,575 | 556,238 | 64,155 | 1,158 | 621,551 |
Pro Forma Pro Forma Itau CorpBanca | For the quarter ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||||||||||
2015 | 2015 | |||||||||||||||||||||||||||||||
Interest | Indexation | Prepayment Fees | Total | Interest | Indexation | Prepayment Fees | Total | |||||||||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||
Normal Portfolio | ||||||||||||||||||||||||||||||||
Repurchase agreements | 2,376 | 4 | — | 2,380 | 9,298 | 4 | — | 9,302 | ||||||||||||||||||||||||
Loans and advances to banks | 2,584 | — | — | 2,584 | 6,071 | — | — | 6,071 | ||||||||||||||||||||||||
Commercial loans | 212,485 | 53,885 | 346 | 266,716 | 418,155 | 53,705 | 1,001 | 472,861 | ||||||||||||||||||||||||
Mortgage loans | 45,102 | 45,397 | 7 | 90,506 | 89,264 | 44,974 | 12 | 134,250 | ||||||||||||||||||||||||
Consumer loans | 88,099 | 123 | 598 | 88,820 | 177,821 | 117 | 1,107 | 179,045 | ||||||||||||||||||||||||
Investment securities | 23,497 | 11,741 | — | 35,238 | 32,001 | 11,852 | — | 43,853 | ||||||||||||||||||||||||
Other interest or indexation income | 3,201 | 340 | — | 3,541 | 5,467 | 690 | — | 6,157 | ||||||||||||||||||||||||
Gain (loss) from accounting hedges | (621 | ) | — | — | (621 | ) | (2,292 | ) | — | — | (2,292 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 376,723 | 111,490 | 951 | 489,164 | 735,785 | 111,342 | 2,120 | 849,247 |
F-180
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
a.2) For the year ended December 31, 2015, pro forma interest and indexation income is detailed as follows:
Banco Itaú Chile | For the quarter ended December 31, | For the year ended December 31, | ||||||||||||||||||||||||||||||
2015 | 2015 | |||||||||||||||||||||||||||||||
Interest | Indexation | Prepayment Fees | Total | Interest | Indexation | Prepayment Fees | Total | |||||||||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||
Normal Portfolio | ||||||||||||||||||||||||||||||||
Repurchase agreements | 338 | — | — | 338 | 916 | — | — | 916 | ||||||||||||||||||||||||
Loans and advances to banks | 415 | — | — | 415 | 1,459 | — | — | 1,459 | ||||||||||||||||||||||||
Commercial loans | 49,099 | 19,089 | 103 | 68,291 | 196,396 | 67,261 | 425 | 264,082 | ||||||||||||||||||||||||
Mortgage loans | 15,040 | 16,481 | 6 | 31,527 | 58,224 | 57,834 | 23 | 116,081 | ||||||||||||||||||||||||
Consumer loans | 23,860 | 141 | 327 | 24,328 | 97,194 | 195 | 1,468 | 98,857 | ||||||||||||||||||||||||
Investment securities | 2,707 | 2,375 | — | 5,082 | 9,576 | 11,305 | — | 20,881 | ||||||||||||||||||||||||
Other interest or indexation income | 1,306 | 1,216 | — | 2,522 | 4,557 | 1,488 | — | 6,045 | ||||||||||||||||||||||||
Gain (loss) from accounting hedges | (4,431 | ) | — | (4,431 | ) | (11,381 | ) | — | — | (11,381 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 88,334 | 39,302 | 436 | 128,072 | 356,941 | 138,083 | 1,916 | 496,940 |
CorpBanca CorpBanca | For the quarter ended December 31, | For the year ended December 31, | ||||||||||||||||||||||||||||||
2015 | 2015 | |||||||||||||||||||||||||||||||
Interest | Indexation | Prepayment Fees | Total | Interest | Indexation | Prepayment Fees | Total | |||||||||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||
Normal Portfolio | ||||||||||||||||||||||||||||||||
Repurchase agreements | 2,232 | — | — | 2,232 | 13,985 | 4 | — | 13,989 | ||||||||||||||||||||||||
Loans and advances to banks | 2,236 | — | — | 2,236 | 10,009 | — | — | 10,009 | ||||||||||||||||||||||||
Commercial loans | 168,519 | 25,368 | 2,177 | 196,064 | 651,916 | 88,960 | 3,403 | 744,279 | ||||||||||||||||||||||||
Mortgage loans | 30,096 | 19,095 | — | 49,191 | 120,501 | 68,635 | — | 189,136 | ||||||||||||||||||||||||
Consumer loans | 62,447 | 57 | 179 | 62,683 | 253,138 | 221 | 719 | 254,078 | ||||||||||||||||||||||||
Investment securities | 18,198 | 5,735 | — | 23,933 | 59,497 | 17,989 | — | 77,486 | ||||||||||||||||||||||||
Other interest or indexation income | 1,852 | 226 | — | 2,078 | 7,737 | 1,057 | — | 8,794 | ||||||||||||||||||||||||
Gain (loss) from accounting hedges | 433 | — | — | 433 | 1,709 | — | — | 1,709 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 286,013 | 50,481 | 2,356 | 338,850 | 1,118,492 | 176,866 | 4,122 | 1,299,480 |
Pro Forma Pro Forma Itau CorpBanca | For the quarter ended December 31, | For the year ended December 31, | ||||||||||||||||||||||||||||||
2015 | 2015 | |||||||||||||||||||||||||||||||
Interest | Indexation | Prepayment Fees | Total | Interest | Indexation | Prepayment Fees | Total | |||||||||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||
Normal Portfolio | ||||||||||||||||||||||||||||||||
Repurchase agreements | 2,570 | — | — | 2,570 | 14,901 | 4 | — | 14,905 | ||||||||||||||||||||||||
Loans and advances to banks | 2,651 | — | — | 2,651 | 11,468 | — | — | 11,468 | ||||||||||||||||||||||||
Commercial loans | 217,618 | 44,457 | 2,280 | 264,355 | 848,312 | 156,221 | 3,828 | 1,008,361 | ||||||||||||||||||||||||
Mortgage loans | 45,136 | 35,576 | 6 | 80,718 | 178,725 | 126,469 | 23 | 305,217 | ||||||||||||||||||||||||
Consumer loans | 86,307 | 198 | 506 | 87,011 | 350,332 | 416 | 2,187 | 352,935 | ||||||||||||||||||||||||
Investment securities | 20,905 | 8,110 | — | 29,015 | 69,073 | 29,294 | — | 98,367 | ||||||||||||||||||||||||
Other interest or indexation income | 3,158 | 1,442 | — | 4,600 | 12,294 | 2,545 | — | 14,839 | ||||||||||||||||||||||||
Gain (loss) from accounting hedges | (3,998 | ) | — | — | (3,998 | ) | (9,672 | ) | — | — | (9,672 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 374,347 | 89,783 | 2,792 | 466,922 | 1,475,433 | 314,949 | 6,038 | 1,796,420 |
F-181
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
b. | For the six months ended June 30, 2016 and 2015, interest and indexation expenses are detailed as follows: |
For the quarter ended June 30, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
Interest | Indexation | Total | Interest | Indexation | Total | |||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||
Demand deposits | (30,535 | ) | (83 | ) | (30,618 | ) | — | — | — | |||||||||||||||
Repurchase agreements | (12,921 | ) | — | (12,921 | ) | (429 | ) | — | (429 | ) | ||||||||||||||
Savings accounts and time deposits | (126,637 | ) | (15,261 | ) | (141,898 | ) | (30,333 | ) | (13,756 | ) | (44,089 | ) | ||||||||||||
Borrowings from financial institutions | (13,689 | ) | — | (13,689 | ) | (4,231 | ) | — | (4,231 | ) | ||||||||||||||
Debt instruments issued | (45,647 | ) | (30,477 | ) | (76,124 | ) | (10,574 | ) | (15,581 | ) | (26,155 | ) | ||||||||||||
Other financial liabilities | (101 | ) | (86 | ) | (187 | ) | (58 | ) | (86 | ) | (144 | ) | ||||||||||||
Other interest or indexation expense | (394 | ) | (899 | ) | (1,293 | ) | — | (782 | ) | (782 | ) | |||||||||||||
Gain (loss) from accounting hedges | (498 | ) | — | (498 | ) | — | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total interest or indexation expense | (230,422 | ) | (46,806 | ) | (277,228 | ) | (45,625 | ) | (30,205 | ) | (75,830 | ) |
For the six months ended June 30, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
Interest | Indexation | Total | Interest | Indexation | Total | |||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||
Demand deposits | (30,535 | ) | (83 | ) | (30,618 | ) | — | — | — | |||||||||||||||
Repurchase agreements | (13,156 | ) | — | (13,156 | ) | (784 | ) | — | (784 | ) | ||||||||||||||
Savings accounts and time deposits | (156,732 | ) | (22,759 | ) | (179,491 | ) | (61,833 | ) | (13,098 | ) | (74,931 | ) | ||||||||||||
Borrowings from financial institutions | (20,275 | ) | — | (20,275 | ) | (7,852 | ) | — | (7,852 | ) | ||||||||||||||
Debt instruments issued | (58,786 | ) | (40,896 | ) | (99,682 | ) | (20,196 | ) | (15,404 | ) | (35,600 | ) | ||||||||||||
Other financial liabilities | (164 | ) | (133 | ) | (297 | ) | (108 | ) | (90 | ) | (198 | ) | ||||||||||||
Other interest or indexation expense | (394 | ) | (1,246 | ) | (1,640 | ) | — | (1,116 | ) | 1,116 | ||||||||||||||
Gain (loss) from accounting hedges | (498 | ) | — | (498 | ) | — | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total interest or indexation expense | (280,540 | ) | (65,117 | ) | (345,657 | ) | (90,773 | ) | (29,708 | ) | (120,481 | ) |
F-182
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
b.1) For the six months ended June 30, 2015, pro forma interest and indexation expenses are detailed as follows:
Banco Itaú Chile | For the quarter ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
2015 | 2015 | |||||||||||||||||||||||
Interest | Indexation | Total | Interest | Indexation | Total | |||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||
Demand deposits | — | — | — | |||||||||||||||||||||
Repurchase agreements | (429 | ) | — | (429 | ) | (784 | ) | (784 | ) | |||||||||||||||
Savings accounts and time deposits | (30,333 | ) | (13,756 | ) | (44,089 | ) | (61,833 | ) | (13,098 | ) | (74,931 | ) | ||||||||||||
Borrowings from financial institutions | (4,231 | ) | (4,231 | ) | (7,852 | ) | (7,852 | ) | ||||||||||||||||
Debt instruments issued | (10,574 | ) | (15,581 | ) | (26,155 | ) | (20,196 | ) | (15,404 | ) | (35,600 | ) | ||||||||||||
Other financial liabilities | (58 | ) | 86 | (144 | ) | (108 | ) | (90 | ) | (198 | ) | |||||||||||||
Other interest or indexation expense | — | 782 | (782 | ) | — | (1,116 | ) | (1,116 | ) | |||||||||||||||
Gain (loss) from accounting hedges | — | — | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total interest or indexation expense | (45,625 | ) | (30,205 | ) | (75,830 | ) | (90,773 | ) | (29,708 | ) | (120,481 | ) |
CorpBanca | For the quarter ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
2015 | 2015 | |||||||||||||||||||||||
Interest | Indexation | Total | Interest | Indexation | Total | |||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||
Demand deposits | (19,168 | ) | (139 | ) | (19,307 | ) | (38,538 | ) | (137 | ) | (38,675 | ) | ||||||||||||
Repurchase agreements | (9,663 | ) | (1 | ) | (9,664 | ) | (21,881 | ) | (5 | ) | (21,886 | ) | ||||||||||||
Savings accounts and time deposits | (74,905 | ) | (9,835 | ) | (84,740 | ) | (149,329 | ) | (10,320 | ) | (159,649 | ) | ||||||||||||
Borrowings from financial institutions | (5,076 | ) | — | (5,076 | ) | (11,161 | ) | — | (11,161 | ) | ||||||||||||||
Debt instruments issued | (33,497 | ) | (24,478 | ) | (57,975 | ) | (66,216 | ) | (24,350 | ) | (90,566 | ) | ||||||||||||
Other financial liabilities | (48 | ) | (83 | ) | (131 | ) | (95 | ) | (109 | ) | (204 | ) | ||||||||||||
Other interest or indexation expense | (357 | ) | (386 | ) | (743 | ) | (665 | ) | (576 | ) | (1,241 | ) | ||||||||||||
Gain (loss) from accounting hedges | (443 | ) | — | (443 | ) | 1,529 | — | 1,529 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total interest or indexation expense | (143,157 | ) | (34,922 | ) | (178,079 | ) | (286,356 | ) | (35,497 | ) | (321,853 | ) |
Pro Forma Itau CorpBanca | For the quarter ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||
2015 | 2015 | |||||||||||||||||||||||
Interest | Indexation | Total | Interest | Indexation | Total | |||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||
Demand deposits | (19,168 | ) | (139 | ) | (19,307 | ) | (38,538 | ) | (137 | ) | (38,675 | ) | ||||||||||||
Repurchase agreements | (10,092 | ) | (1 | ) | (10,093 | ) | (22,665 | ) | (5 | ) | (22,670 | ) | ||||||||||||
Savings accounts and time deposits | (105,238 | ) | (23,591 | ) | (128,829 | ) | (211,162 | ) | (23,418 | ) | (234,580 | ) | ||||||||||||
Borrowings from financial institutions | (9,307 | ) | — | (9,307 | ) | (19,013 | ) | — | (19,013 | ) | ||||||||||||||
Debt instruments issued | (44,071 | ) | (40,059 | ) | (84,130 | ) | (86,412 | ) | (39,754 | ) | (126,166 | ) | ||||||||||||
Other financial liabilities | (106 | ) | (169 | ) | (275 | ) | (203 | ) | (199 | ) | (402 | ) | ||||||||||||
Other interest or indexation expense | (357 | ) | (1,168 | ) | (1,525 | ) | (665 | ) | (1,692 | ) | -2,357 | |||||||||||||
Gain (loss) from accounting hedges | (443 | ) | — | (443 | ) | 1,529 | — | 1,529 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total interest or indexation expense | (188,782 | ) | (65,127 | ) | (253,909 | ) | (377,129 | ) | (65,205 | ) | (442,334 | ) |
F-183
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
b.2) For the year ended December 31, 2015, pro forma interest and indexation expenses are detailed as follows:
Banco Itaú Chile | For the quarter ended December 31, | For the year ended December 31, | ||||||||||||||||||||||
2015 | 2015 | |||||||||||||||||||||||
Interest | Indexation | Total | Interest | Indexation | Total | |||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||
Demand deposits | — | — | — | — | — | — | ||||||||||||||||||
Repurchase agreements | (478 | ) | — | (478 | ) | (1,772 | ) | (1,772 | ) | |||||||||||||||
Savings accounts and time deposits | (29,703 | ) | (11,754 | ) | (41,457 | ) | (122,326 | ) | (38,575 | ) | (160,901 | ) | ||||||||||||
Borrowings from financial institutions | (4,938 | ) | (4,938 | ) | (16,790 | ) | (16,790 | ) | ||||||||||||||||
Debt instruments issued | (12,969 | ) | (15,515 | ) | (28,484 | ) | (45,468 | ) | (50,274 | ) | (95,742 | ) | ||||||||||||
Other financial liabilities | (54 | ) | 99 | (153 | ) | (204 | ) | (291 | ) | (495 | ) | |||||||||||||
Other interest or indexation expense | — | 1,002 | (1,002 | ) | — | (2,992 | ) | (2,992 | ) | |||||||||||||||
Gain (loss) from accounting hedges | — | — | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total interest or indexation expense | (48,142 | ) | (28,370 | ) | (76,512 | ) | (186,560 | ) | (92,132 | ) | (278,692 | ) |
CorpBanca | For the quarter ended December 31, | For the year ended December 31, | ||||||||||||||||||||||
2015 | 2015 | |||||||||||||||||||||||
Interest | Indexation | Total | Interest | Indexation | Total | |||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||
Demand deposits | (24,966 | ) | (102 | ) | (25,068 | ) | (83,278 | ) | (372 | ) | (83,650 | ) | ||||||||||||
Repurchase agreements | (7,485 | ) | — | (7,485 | ) | (36,468 | ) | (16 | ) | (36,484 | ) | |||||||||||||
Savings accounts and time deposits | (79,398 | ) | (6,259 | ) | (85,657 | ) | (304,121 | ) | (25,487 | ) | (329,608 | ) | ||||||||||||
Borrowings from financial institutions | (5,221 | ) | — | (5,221 | ) | (22,027 | ) | — | (22,027 | ) | ||||||||||||||
Debt instruments issued | (36,215 | ) | (19,209 | ) | (55,424 | ) | (136,686 | ) | (68,300 | ) | (204,986 | ) | ||||||||||||
Other financial liabilities | (43 | ) | (39 | ) | (82 | ) | (180 | ) | (212 | ) | (392 | ) | ||||||||||||
Other interest or indexation expense | (760 | ) | (415 | ) | (1,175 | ) | (2,157 | ) | (1,349 | ) | (3,506 | ) | ||||||||||||
Gain (loss) from accounting hedges | (174 | ) | — | (174 | ) | 1,752 | 1,752 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total interest or indexation expense | (154,262 | ) | (26,024 | ) | (180,286 | ) | (583,165 | ) | (95,736 | ) | (678,901 | ) |
Pro Forma Itau CorpBanca | For the quarter ended December 31, | For the year ended December 31, | ||||||||||||||||||||||
2015 | 2015 | |||||||||||||||||||||||
Interest | Indexation | Total | Interest | Indexation | Total | |||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||
Demand deposits | (24,966 | ) | (102 | ) | (25,068 | ) | (83,278 | ) | (372 | ) | (83,650 | ) | ||||||||||||
Repurchase agreements | (7,963 | ) | — | (7,963 | ) | (38,240 | ) | (16 | ) | (38,256 | ) | |||||||||||||
Savings accounts and time deposits | (109,101 | ) | (18,013 | ) | (127,114 | ) | (426,447 | ) | (64,062 | ) | (490,509 | ) | ||||||||||||
Borrowings from financial institutions | (10,159 | ) | — | (10,159 | ) | (38,817 | ) | — | (38,817 | ) | ||||||||||||||
Debt instruments issued | (49,184 | ) | (34,724 | ) | (83,908 | ) | (182,154 | ) | (118,574 | ) | (300,728 | ) | ||||||||||||
Other financial liabilities | (97 | ) | (138 | ) | (235 | ) | (384 | ) | (503 | ) | (887 | ) | ||||||||||||
Other interest or indexation expense | (760 | ) | (1,417 | ) | (2,177 | ) | (2,157 | ) | (4,341 | ) | 6,498 | |||||||||||||
Gain (loss) from accounting hedges | (174 | ) | — | (174 | ) | 1,752 | — | 1,752 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total interest or indexation expense | (202,404 | ) | (54,394 | ) | (256,798 | ) | (769,725 | ) | (187,868 | ) | (957,593 | ) |
F-184
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
NOTE 15 - INCOME AND EXPENSES FROM FEES AND COMMISSIONS
This account includes all commissions accrued and paid during the period, except those included in the effective interest rate of financial instruments. They consist primarily of:
a) Fee and commission income:
This account includes financial income for the period from commissions generated by services provided by the Bank and its subsidiaries, mainly for:
For the quarter ended June 30, | For the six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||
Fee and commission income | ||||||||||||||||
Lines of credit and overdrafts | 2,245 | 367 | 2,595 | 840 | ||||||||||||
Guarantees and letters of credit | 4,245 | 1,245 | 5,557 | 2,580 | ||||||||||||
Credit card services | 15,399 | 5,945 | 21,369 | 11,889 | ||||||||||||
Account management | 3,316 | 497 | 3,847 | 996 | ||||||||||||
Collections, billing and payments | 10,274 | 541 | 10,928 | 1,072 | ||||||||||||
Securities brokerage and management | 4,114 | 1,936 | 5,577 | 3,558 | ||||||||||||
Mutual funds and other investments | 6,993 | 3,098 | 9,600 | 5,793 | ||||||||||||
Insurance brokerage | 5,465 | 1,514 | 7,124 | 2,817 | ||||||||||||
Financial consulting services | 3,228 | 850 | 3,927 | 1,550 | ||||||||||||
Other fees for services provided | 4,522 | 1,055 | 5,853 | 3,391 | ||||||||||||
Other commissions earned | 1,335 | 1,615 | 2,380 | 5,826 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total fee and commission income | 61,136 | 18,663 | 78,757 | 40,312 | ||||||||||||
|
|
|
|
|
|
|
|
a.1) For the six months ended June 30, 2015, pro forma fee and commission income is detailed as follows:
For the quarter ended June 30, | ||||||||||||
2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Fee and commission income | ||||||||||||
Lines of credit and overdrafts | 367 | 2,349 | 2,716 | |||||||||
Guarantees and letters of credit | 1,245 | 2,808 | 4,053 | |||||||||
Credit card services | 5,945 | 9,816 | 15,761 | |||||||||
Account management | 497 | 2,701 | 3,198 | |||||||||
Collections, billing and payments | 541 | 9,297 | 9,838 | |||||||||
Securities brokerage and management | 1,936 | 3,051 | 4,987 | |||||||||
Mutual funds and other investments | 3,098 | 4,907 | 8,005 | |||||||||
Insurance brokerage | 1,514 | 4,787 | 6,301 | |||||||||
Financial consulting services | 850 | 8,246 | 9,096 | |||||||||
Other fees for services provided | 1,055 | 3,755 | 4,810 | |||||||||
Other commissions earned | 1,615 | 445 | 2,060 | |||||||||
|
|
|
|
|
| |||||||
Total fee and commission income | 18,663 | 52,162 | 70,825 | |||||||||
|
|
|
|
|
|
F-185
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For the six months ended June 30, | ||||||||||||
2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Fee and commission income | ||||||||||||
Lines of credit and overdrafts | 840 | 4,267 | 5,107 | |||||||||
Guarantees and letters of credit | 2,580 | 5,613 | 8,193 | |||||||||
Credit card services | 11,889 | 19,189 | 31,078 | |||||||||
Account management | 996 | 5,404 | 6,400 | |||||||||
Collections, billing and payments | 1,072 | 17,189 | 18,261 | |||||||||
Securities brokerage and management | 3,558 | 5,387 | 8,945 | |||||||||
Mutual funds and other investments | 5,793 | 10,491 | 16,284 | |||||||||
Insurance brokerage | 2,817 | 8,731 | 11,548 | |||||||||
Financial consulting services | 1,550 | 15,057 | 16,607 | |||||||||
Other fees for services provided | 3,391 | 7,747 | 11,138 | |||||||||
Other commissions earned | 5,826 | 873 | 6,699 | |||||||||
|
|
|
|
|
| |||||||
Total fee and commission income | 40,312 | 99,948 | 140,260 | |||||||||
|
|
|
|
|
|
a.2) For the year ended December 31, 2015, pro forma fee and commission income is detailed as follows:
For the quarter ended December 31, | ||||||||||||
2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Fee and commission income | ||||||||||||
Lines of credit and overdrafts | 350 | 3,552 | 3,902 | |||||||||
Guarantees and letters of credit | 1,240 | 2,936 | 4,176 | |||||||||
Credit card services | 6,189 | 9,724 | 15,913 | |||||||||
Account management | 508 | 2,952 | 3,460 | |||||||||
Collections, billing and payments | 637 | 9,263 | 9,900 | |||||||||
Securities brokerage and management | 1,777 | 2,271 | 4,048 | |||||||||
Mutual funds and other investments | 2,876 | 4,465 | 7,341 | |||||||||
Insurance brokerage | 1,725 | 4,411 | 6,136 | |||||||||
Financial consulting services | 2,709 | 7,031 | 9,740 | |||||||||
Other fees for services provided | 1,300 | 6,626 | 7,926 | |||||||||
Other commissions earned | 1,284 | 486 | 1,770 | |||||||||
|
|
|
|
|
| |||||||
Total fee and commission income | 20,595 | 53,717 | 74,312 | |||||||||
|
|
|
|
|
|
F-186
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For the year ended December 31, | ||||||||||||
2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Fee and commission income | ||||||||||||
Lines of credit and overdrafts | 1,537 | 10,962 | 12,499 | |||||||||
Guarantees and letters of credit | 5,228 | 10,458 | 15,686 | |||||||||
Credit card services | 24,296 | 38,461 | 62,757 | |||||||||
Account management | 2,014 | 11,012 | 13,026 | |||||||||
Collections, billing and payments | 2,271 | 35,987 | 38,258 | |||||||||
Securities brokerage and management | 6,940 | 9,986 | 16,926 | |||||||||
Mutual funds and other investments | 11,760 | 19,471 | 31,231 | |||||||||
Insurance brokerage | 6,230 | 17,788 | 24,018 | |||||||||
Financial consulting services | 5,389 | 23,986 | 29,375 | |||||||||
Other fees for services provided | 6,532 | 20,473 | 27,005 | |||||||||
Other commissions earned | 9,178 | 1,817 | 10,995 | |||||||||
|
|
|
|
|
| |||||||
Total fee and commission income | 81,375 | 200,401 | 281,776 | |||||||||
|
|
|
|
|
|
b) Fee and commission expenses:
This account includes expenses for commissions accrued during the period, mainly for:
For the quarter ended June 30, | For the six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||
Fee and commission expenses | ||||||||||||||||
Credit card transactions | (8,537 | ) | (1,793 | ) | (10,536 | ) | (3,772 | ) | ||||||||
Securities transactions | (979 | ) | — | (979 | ) | — | ||||||||||
Commissions paid through Chilean clearing house (ACC) | — | — | — | |||||||||||||
Foreign trade transactions | — | — | — | |||||||||||||
CorpPuntos loyalty program | — | — | — | |||||||||||||
CorpPuntos loyalty program benefits | — | — | — | |||||||||||||
Loan services to customers | — | — | — | |||||||||||||
Fees for payroll deduction agreements | — | — | — | |||||||||||||
Other commissions paid | (4,863 | ) | (609 | ) | (5,418 | ) | (1,181 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total fee and commission expenses | (14,379 | ) | (2,402 | ) | (16,933 | ) | (4,953 | ) | ||||||||
|
|
|
|
|
|
|
|
Commissions earned for transactions with letters of credit are presented in the Statement of Income within “interest and indexation income”.
F-187
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
b.1) For the six months ended June 30, 2015, pro forma fee and commission expenses are detailed as follows:
For the quarter ended June 30, | ||||||||||||
2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Fee and commission expenses | ||||||||||||
Credit card transactions | (1,793 | ) | (7,117 | ) | (8,910 | ) | ||||||
Securities transactions | — | (983 | ) | (983 | ) | |||||||
Commissions paid through Chilean clearing house (ACC) | — | (1,322 | ) | (1,322 | ) | |||||||
Foreign trade transactions | — | (114 | ) | (114 | ) | |||||||
CorpPuntos loyalty program | — | (270 | ) | (270 | ) | |||||||
CorpPuntos loyalty program benefits | — | (247 | ) | (247 | ) | |||||||
Loan services to customers | — | (909 | ) | (909 | ) | |||||||
Fees for payroll deduction agreements | — | 122 | 122 | |||||||||
Other commissions paid | (609 | ) | (1,278 | ) | (1,887 | ) | ||||||
|
|
|
|
|
| |||||||
Total fee and commission expenses | (2,402 | ) | (12,118 | ) | (14,520 | ) | ||||||
|
|
|
|
|
|
For the six months ended June 30, | ||||||||||||
2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Fee and commission expenses | ||||||||||||
Credit card transactions | (3,772 | ) | (12,280 | ) | (16,052 | ) | ||||||
Securities transactions | — | (1,916 | ) | (1,916 | ) | |||||||
Commissions paid through Chilean clearing house (ACC) | — | (2,565 | ) | (2,565 | ) | |||||||
Foreign trade transactions | — | (229 | ) | (229 | ) | |||||||
CorpPuntos loyalty program | — | (538 | ) | (538 | ) | |||||||
CorpPuntos loyalty program benefits | — | (548 | ) | (548 | ) | |||||||
Loan services to customers | — | (1,826 | ) | (1,826 | ) | |||||||
Fees for payroll deduction agreements | — | (1,280 | ) | (1,280 | ) | |||||||
Other commissions paid | (1,181 | ) | (2,143 | ) | (3,324 | ) | ||||||
|
|
|
|
|
| |||||||
Total fee and commission expenses | (4,953 | ) | (23,325 | ) | (28,278 | ) | ||||||
|
|
|
|
|
|
F-188
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
b.2) For the year ended December 31, 2015, pro forma fee and commission expenses are detailed as follows:
For the quarter ended December 31, | ||||||||||||
2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Fee and commission expenses | ||||||||||||
Credit card transactions | (1,888 | ) | (6,352 | ) | (8,240 | ) | ||||||
Securities transactions | — | (1,369 | ) | (1,369 | ) | |||||||
Commissions paid through Chilean clearing house (ACC) | — | (1,603 | ) | (1,603 | ) | |||||||
Foreign trade transactions | — | (627 | ) | (627 | ) | |||||||
CorpPuntos loyalty program | — | (219 | ) | (219 | ) | |||||||
CorpPuntos loyalty program benefits | — | (479 | ) | (479 | ) | |||||||
Loan services to customers | — | (964 | ) | (964 | ) | |||||||
Fees for payroll deduction agreements | — | (641 | ) | (641 | ) | |||||||
Other commissions paid | (609 | ) | 65 | (544 | ) | |||||||
|
|
|
|
|
| |||||||
Total fee and commission expenses | (2,497 | ) | (12,189 | ) | (14,686 | ) | ||||||
|
|
|
|
|
|
For the year ended December 31, | ||||||||||||
2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Fee and commission expenses | ||||||||||||
Credit card transactions | (8,021 | ) | (24,727 | ) | (32,748 | ) | ||||||
Securities transactions | — | (4,554 | ) | (4,554 | ) | |||||||
Commissions paid through Chilean clearing house (ACC) | — | (5,610 | ) | (5,610 | ) | |||||||
Foreign trade transactions | — | (996 | ) | (996 | ) | |||||||
CorpPuntos loyalty program | — | (969 | ) | (969 | ) | |||||||
CorpPuntos loyalty program benefits | — | (1,466 | ) | (1,466 | ) | |||||||
Loan services to customers | — | (3,934 | ) | (3,934 | ) | |||||||
Fees for payroll deduction agreements | — | (2,517 | ) | (2,517 | ) | |||||||
Other commissions paid | (2,266 | ) | (2,781 | ) | (5,047 | ) | ||||||
|
|
|
|
|
| |||||||
Total fee and commission expenses | (10,287 | ) | (47,554 | ) | (57,841 | ) | ||||||
|
|
|
|
|
|
F-189
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
NOTE 16 - NET FINANCIAL OPERATING INCOME
This account includes adjustments for variations in financial instruments except those attributable to interest accrued using the effective interest rate method on value corrections of assets, as well as gains or losses obtained from sales and purchases.
Net financial operating income contained in the Statement of Income consists of the following concepts:
For the quarter ended June 30, | For the six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||
Trading securities | 12,972 | 349 | 13,236 | 450 | ||||||||||||
Trading derivatives | 20,345 | 6,536 | 27,163 | (6,089 | ) | |||||||||||
Other assets at fair value through profit and loss | 485 | 136 | 485 | 164 | ||||||||||||
Financial assets available for sale | 1,898 | 226 | 2,277 | 1,383 | ||||||||||||
Other | 547 | — | 547 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 36,247 | 7,247 | 43,708 | (4,092 | ) | |||||||||||
|
|
|
|
|
|
|
|
• | For the six months ended June 30, 2015, pro forma net financial operating income is detailed as follows: |
For the quarter ended June 30, | ||||||||||||
2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Trading securities | 349 | 4,620 | 4,969 | |||||||||
Trading derivatives | 6,536 | 52,184 | 58,720 | |||||||||
Other assets at fair value through profit and loss | 136 | 1,058 | 1,194 | |||||||||
Financial assets available for sale | 226 | (4,807 | ) | (4,581 | ) | |||||||
Gain on repurchase of bank-issued time deposit | — | 10 | 10 | |||||||||
Loss on repurchase of bank-issued time deposit | — | (30 | ) | (30 | ) | |||||||
Other | — | 75 | 75 | |||||||||
|
|
|
|
|
| |||||||
Total | 7,247 | 53,110 | 60,357 | |||||||||
|
|
|
|
|
|
F-190
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For the six months ended June 30, | ||||||||||||
2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Trading securities | 450 | 11,823 | 12,273 | |||||||||
Trading derivatives | (6,089 | ) | 98,287 | 92,198 | ||||||||
Other assets at fair value through profit and loss | 164 | 1,276 | 1,440 | |||||||||
Financial assets available for sale | 1,383 | 9,235 | 10,618 | |||||||||
Gain on repurchase of bank-issued time deposit | — | 15 | 15 | |||||||||
Loss on repurchase of bank-issued time deposit | — | (161 | ) | (161 | ) | |||||||
Other | — | 163 | 163 | |||||||||
|
|
|
|
|
| |||||||
Total | (4,092 | ) | 120,638 | 116,546 | ||||||||
|
|
|
|
|
|
• | For the year ended December 31, 2015, pro forma net financial operating income is detailed as follows: |
For the quarter ended December 31, | ||||||||||||
2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Trading securities | 838 | 11,355 | 12,193 | |||||||||
Trading derivatives | (1,607 | ) | 83,354 | 81,747 | ||||||||
Other assets at fair value through profit and loss | 14,911 | 1,281 | 16,192 | |||||||||
Financial assets available for sale | (334 | ) | (765 | ) | (1,099 | ) | ||||||
Gain on repurchase of bank-issued time deposit | — | 37 | 37 | |||||||||
Loss on repurchase of bank-issued time deposit | — | (2 | ) | (2 | ) | |||||||
Other | — | 319 | 319 | |||||||||
|
|
|
|
|
| |||||||
Total | 13,808 | 95,579 | 109,387 | |||||||||
|
|
|
|
|
|
For the year ended December 31, | ||||||||||||
2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Trading securities | 1,762 | 19,354 | 21,116 | |||||||||
Trading derivatives | (47,769 | ) | 286,168 | 238,399 | ||||||||
Other assets at fair value through profit and loss | 15,802 | 22,285 | 38,087 | |||||||||
Financial assets available for sale | 1,183 | 10,406 | 11,589 | |||||||||
Gain on repurchase of bank-issued time deposit | — | 58 | 58 | |||||||||
Loss on repurchase of bank-issued time deposit | — | (172 | ) | (172 | ) | |||||||
Other | — | 599 | 599 | |||||||||
|
|
|
|
|
| |||||||
Total | (29,022 | ) | 338,698 | 309,676 | ||||||||
|
|
|
|
|
|
F-191
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
NOTE 17 - NET FOREIGN EXCHANGE TRANSACTIONS
This includes the gain or loss from purchases and sales of currency, differences that arise from translating monetary items in foreign currency to the functional currency and from non-monetary assets in foreign currency upon disposal. Net foreign exchange transactions are detailed as follows:
For the quarter ended June 30, | For the six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||
Net foreign exchange transactions | ||||||||||||||||
Net losses on currency positions | (6,955 | ) | 4,773 | (11,714 | ) | 23,883 | ||||||||||
Other currency gains (losses) | 576 | (450 | ) | 576 | (450 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Subtotal | (6,379 | ) | 4,323 | (11,138 | ) | 23,433 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net gain (loss) for exchange rate adjustments | ||||||||||||||||
Adjustments to loans to customers | (9 | ) | — | (9 | ) | — | ||||||||||
Adjustments to investment securities | (208 | ) | — | (208 | ) | — | ||||||||||
Net loss on hedging derivatives | (10,054 | ) | — | (10,054 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Subtotal | (10,271 | ) | — | (10,271 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | (16,650 | ) | 4,323 | (21,409 | ) | 23,433 | ||||||||||
|
|
|
|
|
|
|
|
• | For the six months ended June 30, 2015, pro forma net financial operating income is detailed as follows: |
F-192
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For the quarter ended June 30, | ||||||||||||
2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Net foreign exchange transactions | ||||||||||||
Net gains (losses) on currency positions | 4,773 | (30,376 | ) | (25,603 | ) | |||||||
Gain on purchase and sale of currency | — | 445 | 445 | |||||||||
Other currency gains (losses) | (450 | ) | 8,876 | 8,426 | ||||||||
|
|
|
|
|
| |||||||
Subtotal | 4,323 | (21,055 | ) | (16,732 | ) | |||||||
|
|
|
|
|
| |||||||
Net gain (loss) for exchange rate adjustments | ||||||||||||
Adjustments to loans to customers | — | 23 | 23 | |||||||||
Adjustments to investment securities | — | 237 | 237 | |||||||||
Adjustments to deposits and borrowings | — | 1 | 1 | |||||||||
Adjustments to other liabilities | — | 5 | 5 | |||||||||
Net gain (loss) on hedging derivatives | — | (822 | ) | (822 | ) | |||||||
|
|
|
|
|
| |||||||
Subtotal | — | (556 | ) | (556 | ) | |||||||
|
|
|
|
|
| |||||||
Total | 4,323 | (21,611 | ) | (17,288 | ) | |||||||
|
|
|
|
|
| |||||||
For the six months ended June 30, | ||||||||||||
2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Net foreign exchange transactions | ||||||||||||
Net gains (losses) on currency positions | 23,883 | (51,632 | ) | (27,749 | ) | |||||||
Gain on purchase and sale of currency | — | 1,025 | 1,025 | |||||||||
Other currency gains (losses) | (450 | ) | 8,955 | 8,505 | ||||||||
|
|
|
|
|
| |||||||
Subtotal | 23,433 | (41,652 | ) | (18,219 | ) | |||||||
|
|
|
|
|
| |||||||
Net gain (loss) for exchange rate adjustments | ||||||||||||
Adjustments to loans to customers | — | 369 | 369 | |||||||||
Adjustments to investment securities | — | 554 | 554 | |||||||||
Adjustments to deposits and borrowings | — | 1 | 1 | |||||||||
Adjustments to other liabilities | — | (1 | ) | (1 | ) | |||||||
Net gain (loss) on hedging derivatives | — | 1,325 | 1,325 | |||||||||
|
|
|
|
|
| |||||||
Subtotal | — | 2,248 | 2,248 | |||||||||
|
|
|
|
|
| |||||||
Total | 23,433 | (39,404 | ) | (15,971 | ) | |||||||
|
|
|
|
|
|
F-193
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
• | For the year ended December 31, 2015, pro forma net financial operating income is detailed as follows: |
For the quarter ended December 31, | ||||||||||||
2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Net foreign exchange transactions | ||||||||||||
Net gains (losses) on currency positions | 9,354 | (30,196 | ) | (20,842 | ) | |||||||
Gain on purchase and sale of currency | — | 501 | 501 | |||||||||
Other currency gains | 239 | 1,593 | 1,832 | |||||||||
|
|
|
|
|
| |||||||
Subtotal | 9,593 | (28,102 | ) | (18,509 | ) | |||||||
|
|
|
|
|
| |||||||
Net gain (loss) for exchange rate adjustments | ||||||||||||
Adjustments to loans to customers | — | 2 | 2 | |||||||||
Adjustments to investment securities | — | 75 | 75 | |||||||||
Net gain (loss) on hedging derivatives | — | (32,067 | ) | (32,067 | ) | |||||||
|
|
|
|
|
| |||||||
Subtotal | — | (31,990 | ) | (31,990 | ) | |||||||
|
|
|
|
|
| |||||||
Total | 9,593 | (60,092 | ) | (50,499 | ) | |||||||
|
|
|
|
|
| |||||||
For the year ended December 31, | ||||||||||||
2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Net foreign exchange transactions | ||||||||||||
Net gains (losses) on currency positions | 75,873 | (156,444 | ) | (80,571 | ) | |||||||
Gain on purchase and sale of currency | — | 1,835 | 1,835 | |||||||||
Other currency gains (losses) | (1,412 | ) | 9,023 | 7,611 | ||||||||
|
|
|
|
|
| |||||||
Subtotal | 74,461 | (145,586 | ) | (71,125 | ) | |||||||
|
|
|
|
|
| |||||||
Net gain (loss) for exchange rate adjustments | ||||||||||||
Adjustments to loans to customers | — | 488 | 488 | |||||||||
Adjustments to investment securities | — | 1,739 | 1,739 | |||||||||
Adjustments to other liabilities | — | (1 | ) | (1 | ) | |||||||
Net gain (loss) on hedging derivatives | — | (6,010 | ) | (6,010 | ) | |||||||
|
|
|
|
|
| |||||||
Subtotal | — | (3,784 | ) | (3,784 | ) | |||||||
|
|
|
|
|
| |||||||
Total | 74,461 | (149,370 | ) | (74,909 | ) | |||||||
|
|
|
|
|
|
F-194
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
NOTE 18 - CREDIT RISK PROVISIONS AND IMPAIRMENT
Movements in credit risk provisions and impairment during the six-month periods ended June 30, 2016 and 2015 and the year ended December 31, 2015, are detailed as follows:
For the quarter ended June 30, 2016 | ||||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage Loans MCh$ | Consumer Loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | (177 | ) | (118,071 | ) | — | — | (5,382 | ) | — | — | (123,630 | ) | ||||||||||||||||||||
Group provisions | — | (16,347 | ) | (6,615 | ) | (55,250 | ) | (2,035 | ) | — | — | (80,247 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | (177 | ) | (134,418 | ) | (6,615 | ) | (55,250 | ) | (7,417 | ) | — | — | (203,877 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 54 | 80,007 | — | — | 10,584 | — | — | 90,645 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Group provisions | — | 8,126 | 6,366 | 27,184 | 2,822 | — | — | 44,498 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 54 | 88,133 | 6,366 | 27,184 | 13,406 | — | — | 135,143 | ||||||||||||||||||||||||
Recovery of charged-off assets | — | 3,049 | 463 | 3,958 | — | — | — | 7,470 | ||||||||||||||||||||||||
Exchange differences | (1 | ) | 17 | — | (17 | ) | 50 | — | — | 49 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | (124 | ) | (43,236 | ) | 214 | (24,108 | ) | 5,989 | — | — | (61,215 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2016 | ||||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage Loans MCh$ | Consumer Loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | (208 | ) | (134,234 | ) | — | — | (6,376 | ) | — | — | (140,818 | ) | ||||||||||||||||||||
Group provisions | (21,035 | ) | (15,163 | ) | (75,487 | ) | (3,157 | ) | — | — | (114,842 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | (208 | ) | (155,269 | ) | (15,163 | ) | (75,487 | ) | (9,533 | ) | — | — | (255,660 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 119 | 93,874 | — | — | 12,037 | — | 392 | 106,422 | ||||||||||||||||||||||||
Group provisions | — | 10,054 | 11,873 | 38,589 | 3,960 | — | — | 64,476 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 119 | 103,928 | 11,873 | 38,589 | 15,997 | — | 392 | 170,898 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Recovery of charged-off assets | — | 3,301 | 480 | 5,073 | — | — | — | 8,854 | ||||||||||||||||||||||||
Exchange differences | (1 | ) | 17 | — | (17 | ) | 50 | — | — | 49 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | (90 | ) | (48,040 | ) | (2,810 | ) | (31,825 | ) | 6,464 | — | 392 | (75,859 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-195
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For the quarter ended June 30, 2015 | ||||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage loans MCh$ | Consumer loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | (42 | ) | (23,617 | ) | — | — | (897 | ) | — | (392 | ) | (24,948 | ) | |||||||||||||||||||
Group provisions | — | (5,035 | ) | (2,514 | ) | (20,467 | ) | (1,151 | ) | — | — | (29,167 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | (42 | ) | (28,652 | ) | (2,514 | ) | (20,467 | ) | (2,048 | ) | — | (392 | ) | (54,115 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 107 | 21,218 | — | — | 2,162 | — | — | 23,487 | ||||||||||||||||||||||||
Group provisions | — | 3,507 | 2,308 | 12,895 | 1,609 | — | — | 20,319 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 107 | 24,725 | 2,308 | 12,895 | 3,771 | — | 43,806 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Recovery of charged-off assets | — | 618 | 126 | 1,506 | — | — | — | 2,250 | ||||||||||||||||||||||||
Exchange differences | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | 65 | (3,309 | ) | (80 | ) | (6,066 | ) | 1,723 | — | (392 | ) | (8,059 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2015 | ||||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage Loans MCh$ | Consumer Loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | (255 | ) | (79,183 | ) | — | — | (6,385 | ) | — | (392 | ) | (86,215 | ) | |||||||||||||||||||
Group provisions | — | (20,630 | ) | (10,287 | ) | (85,127 | ) | (5,551 | ) | — | — | (121,595 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | (255 | ) | (99,813 | ) | (10,287 | ) | (85,127 | ) | (11,936 | ) | — | (392 | ) | (207,810 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 238 | 67,690 | — | — | 9,354 | — | — | 77,282 | ||||||||||||||||||||||||
Group provisions | — | 12,556 | 7,938 | 52,712 | 5,424 | — | — | 78,630 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 238 | 80,246 | 7,938 | 52,712 | 14,778 | — | 155,912 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Recovery of charged-off assets | — | 1,871 | 616 | 5,818 | — | — | — | 8,305 | ||||||||||||||||||||||||
Exchange differences | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | (17 | ) | (17,696 | ) | (1,733 | ) | (26,597 | ) | 2,842 | — | (392 | ) | (43,593 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-196
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For the quarter ended June 30, 2015 | ||||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage loans MCh$ | Consumer loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | (57 | ) | (17,145 | ) | — | — | (1,357 | ) | — | — | (18,559 | ) | ||||||||||||||||||||
Group provisions | — | (5,903 | ) | (2,374 | ) | (21,988 | ) | (1,903 | ) | — | — | (32,168 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | (57 | ) | (23,048 | ) | (2,374 | ) | (21,988 | ) | (3,260 | ) | — | — | (50,727 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 78 | 12,765 | — | — | 2,260 | — | — | 15,103 | ||||||||||||||||||||||||
Group provisions | — | 3,049 | 1,771 | 14,125 | 1,556 | — | — | 20,501 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 78 | 15,814 | 1,771 | 14,125 | 3,816 | — | 35,604 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Recovery of charged-off assets | — | 373 | 213 | 1,569 | — | — | — | 2,155 | ||||||||||||||||||||||||
Exchange differences | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | 21 | (6,861 | ) | (390 | ) | (6,294 | ) | 556 | — | — | (12,968 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, 2015 | ||||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage loans MCh$ | Consumer loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | (105 | ) | (37,739 | ) | — | — | (4,072 | ) | — | — | (41,916 | ) | ||||||||||||||||||||
Group provisions | — | (10,452 | ) | (4,780 | ) | (43,451 | ) | (2,985 | ) | — | — | (61,668 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | (105 | ) | (48,191 | ) | (4,780 | ) | (43,451 | ) | (7,057 | ) | — | — | (103,584 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 130 | 32,018 | — | — | 4,831 | — | — | 36,979 | ||||||||||||||||||||||||
Group provisions | — | 5,926 | 3,550 | 26,945 | 2,610 | — | — | 39,031 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 130 | 37,944 | 3,550 | 26,945 | 7,441 | — | 76,010 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Recovery of charged-off assets | — | 940 | 411 | 2,812 | — | — | — | 4,163 | ||||||||||||||||||||||||
Exchange differences | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | 25 | (9,307 | ) | (819 | ) | (13,694 | ) | 384 | — | — | (23,411 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) | Consolidated Statement of Cash Flows, June 2016 for MCh$84,762 and June 2015 for MCh$27,574. |
In management’s opinion, the credit risk provisions established cover all potential losses that may arise from not recovering assets, based on the information examined by the Bank and its subsidiaries.
F-197
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
The proforma values for the six months ended June 30, 2015 and the year ended December 31, 2015, are as follows:
For the quarter ended December 31, 2015 | ||||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage loans MCh$ | Consumer loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | (42 | ) | (23,617 | ) | — | — | (897 | ) | — | (392 | ) | (24,948 | ) | |||||||||||||||||||
Group provisions | — | (5,035 | ) | (2,514 | ) | (20,467 | ) | (1,151 | ) | — | — | (29,167 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | (42 | ) | (28,652 | ) | (2,514 | ) | (20,467 | ) | (2,048 | ) | — | (392 | ) | (54,115 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 107 | 21,218 | — | — | 2,162 | — | — | 23,487 | ||||||||||||||||||||||||
Group provisions | — | 3,507 | 2,308 | 12,895 | 1,609 | — | — | 20,319 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 107 | 24,725 | 2,308 | 12,895 | 3,771 | — | 43,806 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Recovery of charged-off assets | — | 618 | 126 | 1,506 | — | — | — | 2,250 | ||||||||||||||||||||||||
Exchange differences | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | 65 | (3,309 | ) | (80 | ) | (6,066 | ) | 1,723 | — | (392 | ) | (8,059 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CorpBanca | For the quarter ended December 31, 2015 | |||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage loans MCh$ | Consumer loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | 48 | (61,479 | ) | — | — | (3,643 | ) | — | — | (65,074 | ) | |||||||||||||||||||||
Group provisions | — | (15,193 | ) | (2,392 | ) | (31,903 | ) | (793 | ) | — | — | (50,281 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | 48 | (76,672 | ) | (2,392 | ) | (31,903 | ) | (4,436 | ) | — | — | (115,355 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 19 | 43,183 | — | — | 1,583 | — | — | 44,785 | ||||||||||||||||||||||||
Group provisions | — | 4,155 | 1,328 | 16,274 | (877 | ) | 4,000 | — | 24,880 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 19 | 47,338 | 1,328 | 16,274 | 706 | 4,000 | 69,665 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Recovery of charged-off assets | — | 945 | 503 | 3,198 | — | — | — | 4,646 | ||||||||||||||||||||||||
Exchange differences | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | 67 | (28,389 | ) | (561 | ) | (12,431 | ) | (3,730 | ) | 4,000 | — | (41,044 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-198
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
ProForma | For the quarter ended December 30, 2015 | |||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage Loans MCh$ | Consumer Loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | 6 | (85,096 | ) | — | — | (4,540 | ) | — | (392 | ) | (90,022 | ) | ||||||||||||||||||||
Group provisions | — | (20,228 | ) | (4,906 | ) | (52,370 | ) | (1,944 | ) | — | — | (79,448 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | 6 | (105,324 | ) | (4,906 | ) | (52,370 | ) | (6,484 | ) | — | (392 | ) | (169,470 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 126 | 64,401 | — | — | 3,745 | — | — | 68,272 | ||||||||||||||||||||||||
Group provisions | — | 7,662 | 3,636 | 29,169 | 732 | 4,000 | — | 45,199 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 126 | 72,063 | 3,636 | 29,169 | 4,477 | 4,000 | 113,471 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Recovery of charged-off assets | — | 1,563 | 629 | 4,704 | — | — | — | 6,896 | ||||||||||||||||||||||||
Exchange differences | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | 132 | (31,698 | ) | (641 | ) | (18,497 | ) | (2,007 | ) | 4,000 | (392 | ) | (49,103 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banco Itau Chile | For the year ended December 31, 2015 | |||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage Loans MCh$ | Consumer Loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | (255 | ) | (79,183 | ) | — | — | (6,385 | ) | — | (392 | ) | (86,215 | ) | |||||||||||||||||||
Group provisions | — | (20,630 | ) | (10,287 | ) | (85,127 | ) | (5,551 | ) | — | — | (121,595 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | (255 | ) | (99,813 | ) | (10,287 | ) | (85,127 | ) | (11,936 | ) | — | (392 | ) | (207,810 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 238 | 67,690 | — | — | 9,354 | — | — | 77,282 | ||||||||||||||||||||||||
Group provisions | — | 12,556 | 7,938 | 52,712 | 5,424 | — | — | 78,630 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 238 | 80,246 | 7,938 | 52,712 | 14,778 | — | 155,912 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Recovery of charged-off assets | — | 1,871 | 616 | 5,818 | — | — | — | 8,305 | ||||||||||||||||||||||||
Exchange differences | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | (17 | ) | (17,696 | ) | (1,733 | ) | (26,597 | ) | 2,842 | — | (392 | ) | (43,593 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-199
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
CorpBanca | For the year ended December 31, 2015 | |||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage Loans MCh$ | Consumer Loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | (121 | ) | (203,482 | ) | — | — | (9,120 | ) | — | (212,723 | ) | |||||||||||||||||||||
Group provisions | — | (41,465 | ) | (15,019 | ) | (138,651 | ) | (1,429 | ) | — | — | (196,564 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | (121 | ) | (244,947 | ) | (15,019 | ) | (138,651 | ) | (10,549 | ) | — | — | (409,287 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 180 | 115,698 | — | — | 8,305 | — | — | 124,183 | ||||||||||||||||||||||||
Group provisions | — | 12,401 | 15,396 | 65,430 | 1,436 | 4,000 | — | 98,663 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 180 | 128,099 | 15,396 | 65,430 | 9,741 | 4,000 | 222,846 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Recovery of charged-off assets | — | 7,271 | 1,875 | 11,105 | — | — | — | 20,251 | ||||||||||||||||||||||||
Exchange differences | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | 59 | (109,577 | ) | 2,252 | (62,116 | ) | (808 | ) | 4,000 | — | (166,190 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ProForma | For the year ended December 31, 2015 | |||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage Loans MCh$ | Consumer Loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | (376 | ) | (282,665 | ) | — | — | (15,505 | ) | — | (392 | ) | (298,938 | ) | |||||||||||||||||||
Group provisions | — | (62,095 | ) | (25,306 | ) | (223,778 | ) | (6,980 | ) | — | — | (318,159 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | (376 | ) | (344,760 | ) | (25,306 | ) | (223,778 | ) | (22,485 | ) | — | (392 | ) | (617,097 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 418 | 183,388 | — | — | 17,659 | — | — | 201,465 | ||||||||||||||||||||||||
Group provisions | — | 24,957 | 23,334 | 118,142 | 6,860 | 4,000 | — | 177,293 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 418 | 208,345 | 23,334 | 118,142 | 24,519 | 4,000 | 378,758 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Recovery of charged-off assets | — | 9,142 | 2,491 | 16,923 | — | — | — | 28,556 | ||||||||||||||||||||||||
Exchange differences | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | 42 | (127,273 | ) | 519 | (88,713 | ) | 2,034 | 4,000 | (392 | ) | (209,783 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-200
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Banco Itau Chile | For the quarter ended June 30, 2015 | |||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage loans MCh$ | Consumer loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | (57 | ) | (17,145 | ) | — | — | (1,357 | ) | — | — | (18,559 | ) | ||||||||||||||||||||
Group provisions | — | (5,903 | ) | (2,374 | ) | (21,988 | ) | (1,903 | ) | — | — | (32,168 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | (57 | ) | (23,048 | ) | (2,374 | ) | (21,988 | ) | (3,260 | ) | — | — | (50,727 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 78 | 12,765 | — | — | 2,260 | — | — | 15,103 | ||||||||||||||||||||||||
Group provisions | — | 3,049 | 1,771 | 14,125 | 1,556 | — | — | 20,501 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 78 | 15,814 | 1,771 | 14,125 | 3,816 | — | — | 35,604 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Recovery of charged-off assets | — | 373 | 213 | 1,569 | — | — | — | 2,155 | ||||||||||||||||||||||||
Exchange differences | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | 21 | (6,861 | ) | (390 | ) | (6,294 | ) | 556 | — | — | (12,968 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CorpBanca | For the quarter ended June 30, 2015 | |||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage loans MCh$ | Consumer loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | 51 | (54,325 | ) | — | — | (1,380 | ) | — | — | (55,654 | ) | |||||||||||||||||||||
Group provisions | — | (9,049 | ) | (2,743 | ) | (38,950 | ) | (197 | ) | — | — | (50,939 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | 51 | (63,374 | ) | (2,743 | ) | (38,950 | ) | (1,577 | ) | — | — | (106,593 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 103 | 31,609 | — | — | 3,174 | — | — | 34,886 | ||||||||||||||||||||||||
Group provisions | — | 3,920 | 970 | 17,257 | (343 | ) | — | — | 21,804 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 103 | 35,529 | 970 | 17,257 | 2,831 | — | 56,690 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Recovery of charged-off assets | — | 2,763 | 459 | 2,746 | — | — | — | 5,968 | ||||||||||||||||||||||||
Exchange differences | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | 154 | (25,082 | ) | (1,314 | ) | (18,947 | ) | 1,254 | — | — | (43,935 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-201
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Pro Forma | For the quarter ended June 30, 2015 | |||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage Loans MCh$ | Consumer Loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | (6 | ) | (71,470 | ) | — | — | (2,737 | ) | — | — | (74,213 | ) | ||||||||||||||||||||
Group provisions | — | (14,952 | ) | (5,117 | ) | (60,938 | ) | (2,100 | ) | — | — | (83,107 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | (6 | ) | (86,422 | ) | (5,117 | ) | (60,938 | ) | (4,837 | ) | — | — | (157,320 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 181 | 44,374 | — | — | 5,434 | — | — | 49,989 | ||||||||||||||||||||||||
Group provisions | — | 6,969 | 2,741 | 31,382 | 1,213 | — | — | 42,305 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 181 | 51,343 | 2,741 | 31,382 | 6,647 | — | 92,294 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Recovery of charged-off assets | — | 3,136 | 672 | 4,315 | — | — | — | 8,123 | ||||||||||||||||||||||||
Exchange differences | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | 175 | (31,943 | ) | (1,704 | ) | (25,241 | ) | 1,810 | — | — | (56,903 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banco Itau Chile | For the six months ended June 30, 2015 | |||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage Loans MCh$ | Consumer Loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | (105 | ) | (37,739 | ) | — | — | (4,072 | ) | — | — | (41,916 | ) | ||||||||||||||||||||
Group provisions | — | (10,452 | ) | (4,780 | ) | (43,451 | ) | (2,985 | ) | — | — | (61,668 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | (105 | ) | (48,191 | ) | (4,780 | ) | (43,451 | ) | (7,057 | ) | — | — | (103,584 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 130 | 32,018 | — | — | 4,831 | — | — | 36,979 | ||||||||||||||||||||||||
Group provisions | — | 5,926 | 3,550 | 26,945 | 2,610 | — | — | 39,031 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 130 | 37,944 | 3,550 | 26,945 | 7,441 | — | — | 76,010 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Recovery of charged-off assets | — | 940 | 411 | 2,812 | — | — | — | 4,163 | ||||||||||||||||||||||||
Exchange differences | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | 25 | (9,307 | ) | (819 | ) | (13,694 | ) | 384 | — | — | (23,411 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-202
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
CorpBanca | For the six months ended June 30, 2015 | |||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage Loans MCh$ | Consumer Loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | (119 | ) | (94,226 | ) | — | — | (2,451 | ) | — | (96,796 | ) | |||||||||||||||||||||
Group provisions | — | (16,472 | ) | (11,456 | ) | (73,913 | ) | (388 | ) | — | — | (102,229 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | (119 | ) | (110,698 | ) | (11,456 | ) | (73,913 | ) | (2,839 | ) | — | — | (199,025 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 174 | 49,497 | — | — | 3,716 | — | — | 53,387 | ||||||||||||||||||||||||
Group provisions | — | 5,669 | 13,168 | 33,212 | 34 | — | — | 52,083 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 174 | 55,166 | 13,168 | 33,212 | 3,750 | — | 105,470 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Recovery of charged-off assets | — | 4,662 | 878 | 5,110 | — | — | — | 10,650 | ||||||||||||||||||||||||
Exchange differences | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | 55 | (50,870 | ) | 2,590 | (35,591 | ) | 911 | — | — | (82,905 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma | For the six months ended June 30, 2015 | |||||||||||||||||||||||||||||||
Loans to Customers | ||||||||||||||||||||||||||||||||
Loans and Advances to Banks MCh$ | Commercial Loans MCh$ | Mortgage Loans MCh$ | Consumer Loans MCh$ | Contingent Loans MCh$ | Additional Provisions MCh$ | Minimum Provision Adjustment MCh$ | Total MCh$ | |||||||||||||||||||||||||
Provisions recorded | ||||||||||||||||||||||||||||||||
Individual provisions | (224 | ) | (131,965 | ) | — | — | (6,523 | ) | — | — | (138,712 | ) | ||||||||||||||||||||
Group provisions | — | (26,924 | ) | (16,236 | ) | (117,364 | ) | (3,373 | ) | — | — | (163,897 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions recorded, net | (224 | ) | (158,889 | ) | (16,236 | ) | (117,364 | ) | (9,896 | ) | — | — | (302,609 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released | ||||||||||||||||||||||||||||||||
Individual provisions | 304 | 81,515 | — | — | 8,547 | — | — | 90,366 | ||||||||||||||||||||||||
Group provisions | — | 11,595 | 16,718 | 60,157 | 2,644 | — | — | 91,114 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Provisions released, net | 304 | 93,110 | 16,718 | 60,157 | 11,191 | — | 181,480 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Recovery of charged-off assets | — | 5,602 | 1,289 | 7,922 | — | — | — | 14,813 | ||||||||||||||||||||||||
Exchange differences | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Credit risk provisions, net | 80 | (60,177 | ) | 1,771 | (49,285 | ) | 1,295 | — | — | (106,316 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-203
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
NOTE 19 - PAYROLL AND PERSONNEL EXPENSES
Payroll and personnel expenses for the periods ended June 30, 2016 and 2015, are detailed as follows:
For the quarter ended June 30, | For the six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||
Personnel compensation | (43,408 | ) | (13,819 | ) | (54,919 | ) | (26,235 | ) | ||||||||
Bonuses | (17,618 | ) | (5,126 | ) | (25,269 | ) | (9,766 | ) | ||||||||
Employee termination benefits | (8,145 | ) | (410 | ) | (9,170 | ) | (525 | ) | ||||||||
Training expenses | (248 | ) | (185 | ) | (321 | ) | (294 | ) | ||||||||
Other personnel expenses | (5,475 | ) | (1,550 | ) | (7,383 | ) | (3,024 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | (74,894 | ) | (21,090 | ) | (97,062 | ) | (39,844 | ) | ||||||||
|
|
|
|
|
|
|
|
F-204
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For the six months ended June 30, 2015, pro forma payroll and personnel expenses are detailed as follows:
For the quarter ended June 30, 2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Personnel compensation | (13,819 | ) | (32,930 | ) | (46,749 | ) | ||||||
Bonuses | (5,126 | ) | (13,996 | ) | (19,122 | ) | ||||||
Employee termination benefits | (410 | ) | (965 | ) | (1,375 | ) | ||||||
Training expenses | (185 | ) | (145 | ) | (330 | ) | ||||||
Life and health insurance | — | (431 | ) | (431 | ) | |||||||
Other personnel expenses | (1,550 | ) | (2,428 | ) | (3,978 | ) | ||||||
|
|
|
|
|
| |||||||
Total | (21,090 | ) | (50,895 | ) | (71,985 | ) | ||||||
|
|
|
|
|
| |||||||
For the six months ended June 30, 2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Personnel compensation | (26,235 | ) | (63,246 | ) | (89,481 | ) | ||||||
Bonuses | (9,766 | ) | (27,598 | ) | (37,364 | ) | ||||||
Employee termination benefits | (525 | ) | (1,960 | ) | (2,485 | ) | ||||||
Training expenses | (294 | ) | (350 | ) | (644 | ) | ||||||
Life and health insurance | — | (869 | ) | (869 | ) | |||||||
Other personnel expenses | (3,024 | ) | (7,074 | ) | (10,098 | ) | ||||||
|
|
|
|
|
| |||||||
Total | (39,844 | ) | (101,097 | ) | (140,941 | ) | ||||||
|
|
|
|
|
|
F-205
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For the year ended December 31, 2015, pro forma payroll and personnel expenses are detailed as follows:
For the quarter ended December 31, 2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Personnel compensation | (14,089 | ) | (31,991 | ) | (46,080 | ) | ||||||
Bonuses | (7,129 | ) | (13,307 | ) | (20,436 | ) | ||||||
Employee termination benefits | (2,712 | ) | (1,589 | ) | (4,301 | ) | ||||||
Training expenses | (71 | ) | 23 | (48 | ) | |||||||
Other personnel expenses | (1,446 | ) | (3,739 | ) | (5,185 | ) | ||||||
|
|
|
|
|
| |||||||
Total | (25,447 | ) | (50,603 | ) | (76,050 | ) | ||||||
|
|
|
|
|
| |||||||
For the year ended December 31, 2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Personnel compensation | (54,129 | ) | (126,933 | ) | (181,062 | ) | ||||||
Bonuses | (22,660 | ) | (54,864 | ) | (77,524 | ) | ||||||
Employee termination benefits | (3,458 | ) | (4,220 | ) | (7,678 | ) | ||||||
Training expenses | (543 | ) | (416 | ) | (959 | ) | ||||||
Other personnel expenses | (5,921 | ) | (16,321 | ) | (22,242 | ) | ||||||
|
|
|
|
|
| |||||||
Total | (86,711 | ) | (202,754 | ) | (289,465 | ) | ||||||
|
|
|
|
|
|
F-206
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
NOTE 20 - ADMINISTRATIVE EXPENSES
For the six months ended June 30, 2016 and 2015, administrative expenses are detailed as follows:
For the quarter ended June 30, | For the six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||
Maintenance and repair of property, plant and equipment | (6,242 | ) | (1,380 | ) | (7,616.0 | ) | (2,699 | ) | ||||||||
Office leases | (8,456 | ) | (1,742 | ) | (10,300.0 | ) | (3,491 | ) | ||||||||
Equipment leases | (922 | ) | (123 | ) | (929.0 | ) | (249 | ) | ||||||||
Insurance premiums | (4,764 | ) | (357 | ) | (5,335.0 | ) | (683 | ) | ||||||||
Office supplies | (529 | ) | (210 | ) | (629.0 | ) | (436 | ) | ||||||||
IT and communications expenses | (5,513 | ) | (3,511 | ) | (10,253.0 | ) | (6,767 | ) | ||||||||
Lighting, heating and other utilities | (2,033 | ) | (248 | ) | (2,416.0 | ) | (479 | ) | ||||||||
Security and transportation of valuables | (624 | ) | (219 | ) | (811.0 | ) | (439 | ) | ||||||||
Travel and entertainment expenses | (899 | ) | (338 | ) | (1,266.0 | ) | (632 | ) | ||||||||
Court and notary expenses | (1,503 | ) | (262 | ) | (2,047.0 | ) | (512 | ) | ||||||||
Fees for technical reports | (2,757 | ) | — | (2,757.0 | ) | — | ||||||||||
Professional service fees | (553 | ) | (143 | ) | (626.0 | ) | (290 | ) | ||||||||
Securities rating fees | (145 | ) | (145 | ) | (302.0 | ) | (297 | ) | ||||||||
SBIF fines | — | — | — | — | ||||||||||||
Other regulatory fines | (676 | ) | (4 | ) | (678.0 | ) | (4 | ) | ||||||||
Other general administrative expenses | (7,231 | ) | (3,607 | ) | (13,682.0 | ) | (13,458 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Subtotal | (42,847 | ) | (12,289 | ) | (59,647 | ) | (30,436 | ) | ||||||||
Outsourced services | (7,488 | ) | (1,669 | ) | (9,800 | ) | (3,203 | ) | ||||||||
Data processing | (4,005 | ) | (909 | ) | (4,858.0 | ) | (1,688 | ) | ||||||||
Product sales | (144 | ) | — | (144.0 | ) | — | ||||||||||
Credit assessments | (482 | ) | — | (482.0 | ) | — | ||||||||||
Other | (2,857 | ) | (760 | ) | (4,316.0 | ) | (1,515 | ) | ||||||||
Board expenses | (372 | ) | (27 | ) | (396 | ) | (38 | ) | ||||||||
Directors’ fees | (372 | ) | (27 | ) | (396 | ) | (38 | ) | ||||||||
Other board expenses | — | — | — | — | ||||||||||||
Advertising | (1,319 | ) | (602 | ) | (2,160 | ) | (1,406 | ) | ||||||||
Taxes, property taxes and contributions | (10,797 | ) | (1,083 | ) | (12,759 | ) | (2,838 | ) | ||||||||
Property taxes | (140 | ) | (107 | ) | (140 | ) | (127 | ) | ||||||||
Municipal business permits | (303 | ) | (68 | ) | (749 | ) | (530 | ) | ||||||||
Other taxes (*) | (8,801 | ) | (334 | ) | (9,720 | ) | (1,026 | ) | ||||||||
Contribution to SBIF | (1,553 | ) | (574 | ) | (2,150 | ) | (1,155 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | (62,823 | ) | (15,670 | ) | (84,762 | ) | (37,921 | ) | ||||||||
|
|
|
|
|
|
|
|
(*) | This amount corresponds primarily to taxes other than income taxes that affect CorpBanca Colombia and its subsidiaries (Colombian segment). They are taxes on local financial transactions, ongoing performance of commercial activities or services, non-discountable value added tax and equity tax, among others. |
F-207
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For the six months ended June 30, 2015, pro forma administrative expenses are detailed as follows:
For the quarter ended June 30, 2015 | ||||||||||||
Itaú MCh$ | CorpBanca MCh$ | Pro Forma MCh$ | ||||||||||
Maintenance and repair of property, plant and equipment | (1.380 | ) | (3.485 | ) | (4.865 | ) | ||||||
Office leases | (1.742 | ) | (5.464 | ) | (7.206 | ) | ||||||
Equipment leases | (123 | ) | (1.047 | ) | (1.170 | ) | ||||||
Insurance premiums | (357 | ) | (4.414 | ) | (4.771 | ) | ||||||
Office supplies | (210 | ) | (404 | ) | (614 | ) | ||||||
IT and communications expenses | (3.511 | ) | (2.925 | ) | (6.436 | ) | ||||||
Lighting, heating and other utilities | (248 | ) | (1.495 | ) | �� | (1.743 | ) | |||||
Security and transportation of valuables | (219 | ) | (401 | ) | (620 | ) | ||||||
Travel and entertainment expenses | (338 | ) | (617 | ) | (955 | ) | ||||||
Court and notary expenses | (262 | ) | (859 | ) | (1.121 | ) | ||||||
Fees for technical reports | — | (7.690 | ) | (7.690 | ) | |||||||
Professional service fees | (143 | ) | (374 | ) | (517 | ) | ||||||
Securities rating fees | (145 | ) | (81 | ) | (226 | ) | ||||||
SBIF fines | — | — | — | |||||||||
Other regulatory fines | (4 | ) | (32 | ) | (36 | ) | ||||||
Comprehensive management of ATMs | — | (543 | ) | (543 | ) | |||||||
Management of outsourced temp services | — | (179 | ) | (179 | ) | |||||||
Postage and mailing expenses | — | (120 | ) | (120 | ) | |||||||
Internal events | — | (181 | ) | (181 | ) | |||||||
Donations | — | (683 | ) | (683 | ) | |||||||
Contracted services | — | (170 | ) | (170 | ) | |||||||
Miscellaneous contributions | — | (111 | ) | (111 | ) | |||||||
CCA transfer services | — | (106 | ) | (106 | ) | |||||||
Credit card miles | — | (493 | ) | (493 | ) | |||||||
Credit card management | — | (254 | ) | (254 | ) | |||||||
CorpBanca loyalty points | — | 451 | 451 | |||||||||
Other general administrative expenses | (3.607 | ) | (1.621 | ) | (5.228 | ) | ||||||
|
|
|
|
|
| |||||||
Subtotal | (12.289 | ) | (33.298 | ) | (45.587 | ) | ||||||
Outsourced services | (1.669 | ) | (5.405 | ) | (7.074 | ) | ||||||
Data processing | (909 | ) | (3.320 | ) | (4.229 | ) | ||||||
Product sales | — | (188 | ) | (188 | ) | |||||||
Credit assessments | — | (119 | ) | (119 | ) | |||||||
Other | (760 | ) | (1.778 | ) | (2.538 | ) | ||||||
Board expenses | (27 | ) | (375 | ) | (402 | ) | ||||||
Directors’ fees | (27 | ) | (375 | ) | (402 | ) | ||||||
Other board expenses | — | — | — | |||||||||
Advertising | (602 | ) | (1.638 | ) | (2.240 | ) | ||||||
Taxes, property taxes and contributions | (1.083 | ) | (10.481 | ) | (11.564 | ) | ||||||
Property taxes | (107 | ) | (109 | ) | (216 | ) | ||||||
Municipal business permits | (68 | ) | (185 | ) | (253 | ) | ||||||
Other taxes (*) | (334 | ) | (8.817 | ) | (9.151 | ) | ||||||
Contribution to SBIF | (574 | ) | (1.370 | ) | (1.944 | ) | ||||||
|
|
|
|
|
| |||||||
Total | (15.670 | ) | (51.197 | ) | (66.867 | ) | ||||||
|
|
|
|
|
|
F-208
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For the six months ended June 30, 2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Maintenance and repair of property, plant and equipment | (2,699 | ) | (6,213 | ) | (8,912 | ) | ||||||
Office leases | (3,491 | ) | (10,689 | ) | (14,180 | ) | ||||||
Equipment leases | (249 | ) | (1,945 | ) | (2,194 | ) | ||||||
Insurance premiums | (683 | ) | (8,783 | ) | (9,466 | ) | ||||||
Office supplies | (436 | ) | (763 | ) | (1,199 | ) | ||||||
IT and communications expenses | (6,767 | ) | (5,723 | ) | (12,490 | ) | ||||||
Lighting, heating and other utilities | (479 | ) | (2,896 | ) | (3,375 | ) | ||||||
Security and transportation of valuables | (439 | ) | (884 | ) | (1,323 | ) | ||||||
Travel and entertainment expenses | (632 | ) | (1,358 | ) | (1,990 | ) | ||||||
Court and notary expenses | (512 | ) | (1,216 | ) | (1,728 | ) | ||||||
Fees for technical reports | — | (15,077 | ) | (15,077 | ) | |||||||
Professional service fees | (290 | ) | (738 | ) | (1,028 | ) | ||||||
Securities rating fees | (297 | ) | (96 | ) | (393 | ) | ||||||
SBIF fines | — | — | — | |||||||||
Other regulatory fines | (4 | ) | (65 | ) | (69 | ) | ||||||
Comprehensive management of ATMs | — | (1,111 | ) | (1,111 | ) | |||||||
Management of outsourced temp services | — | (392 | ) | (392 | ) | |||||||
Postage and mailing expenses | — | (239 | ) | (239 | ) | |||||||
Internal events | — | (357 | ) | (357 | ) | |||||||
Donations | — | (1,231 | ) | (1,231 | ) | |||||||
Contracted services | — | (271 | ) | (271 | ) | |||||||
Miscellaneous contributions | — | (220 | ) | (220 | ) | |||||||
CCA transfer services | — | (203 | ) | (203 | ) | |||||||
Credit card miles | — | (1,596 | ) | (1,596 | ) | |||||||
Credit card management | — | (753 | ) | (753 | ) | |||||||
CorpBanca loyalty points | — | (248 | ) | (248 | ) | |||||||
Other general administrative expenses | (13,458 | ) | (4,338 | ) | (17,796 | ) | ||||||
|
|
|
|
|
| |||||||
Subtotal | (30,436 | ) | (67,405 | ) | (97,841 | ) | ||||||
Outsourced services | (3,203 | ) | (10,658 | ) | (13,861 | ) | ||||||
Data processing | (1,688 | ) | (6,629 | ) | (8,317 | ) | ||||||
Product sales | — | (375 | ) | (375 | ) | |||||||
Credit assessments | — | (228 | ) | (228 | ) | |||||||
Other | (1,515 | ) | (3,426 | ) | (4,941 | ) | ||||||
Board expenses | (38 | ) | (611 | ) | (649 | ) | ||||||
Directors’ fees | (38 | ) | (611 | ) | (649 | ) | ||||||
Other board expenses | — | — | — | |||||||||
Advertising | (1,406 | ) | (3,039 | ) | (4,445 | ) | ||||||
Taxes, property taxes and contributions | (2,838 | ) | (21,045 | ) | (23,883 | ) | ||||||
Property taxes | (127 | ) | (197 | ) | (324 | ) | ||||||
Municipal business permits | (530 | ) | (402 | ) | (932 | ) | ||||||
Other taxes (*) | (1,026 | ) | (17,704 | ) | (18,730 | ) | ||||||
Contribution to SBIF | (1,155 | ) | (2,742 | ) | (3,897 | ) | ||||||
|
|
|
|
|
| |||||||
Total | (37,921 | ) | (102,758 | ) | (140,679 | ) | ||||||
|
|
|
|
|
|
F-209
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For the six months ended December 31, 2015, pro forma administrative expenses are detailed as follows:
For the quarter ended December 31, 2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Maintenance and repair of property, plant and equipment | (1,285 | ) | (4,714 | ) | (5,999 | ) | ||||||
Office leases | (1,783 | ) | (5,368 | ) | (7,151 | ) | ||||||
Equipment leases | (104 | ) | (975 | ) | (1,079 | ) | ||||||
Insurance premiums | (374 | ) | (4,307 | ) | (4,681 | ) | ||||||
Office supplies | (61 | ) | (382 | ) | (443 | ) | ||||||
IT and communications expenses | (3,865 | ) | (3,302 | ) | (7,167 | ) | ||||||
Lighting, heating and other utilities | (216 | ) | (1,629 | ) | (1,845 | ) | ||||||
Security and transportation of valuables | (253 | ) | (488 | ) | (741 | ) | ||||||
Travel and entertainment expenses | (65 | ) | (617 | ) | (682 | ) | ||||||
Court and notary expenses | (1,027 | ) | (672 | ) | (1,699 | ) | ||||||
Fees for technical reports | — | (9,048 | ) | (9,048 | ) | |||||||
Professional service fees | (109 | ) | (439 | ) | (548 | ) | ||||||
Securities rating fees | (127 | ) | (5 | ) | (132 | ) | ||||||
SBIF fines | — | (21,723 | ) | (21,723 | ) | |||||||
Other regulatory fines | (2 | ) | (69 | ) | (71 | ) | ||||||
Comprehensive management of ATMs | — | (713 | ) | (713 | ) | |||||||
Management of outsourced temp services | — | (105 | ) | (105 | ) | |||||||
Postage and mailing expenses | — | (114 | ) | (114 | ) | |||||||
Internal events | — | (202 | ) | (202 | ) | |||||||
Donations | — | (501 | ) | (501 | ) | |||||||
Contracted services | — | (296 | ) | (296 | ) | |||||||
Miscellaneous contributions | — | (112 | ) | (112 | ) | |||||||
CCA transfer services | — | (118 | ) | (118 | ) | |||||||
Credit card miles | — | (725 | ) | (725 | ) | |||||||
Credit card management | — | (446 | ) | (446 | ) | |||||||
Other general administrative expenses | (3,075 | ) | (1,976 | ) | (5,051 | ) | ||||||
|
|
|
|
|
| |||||||
Subtotal | (12,346 | ) | (59,046 | ) | (71,392 | ) | ||||||
Outsourced services | (961 | ) | (5,836 | ) | (6,797 | ) | ||||||
Data processing | (618 | ) | (3,420 | ) | (4,038 | ) | ||||||
Product sales | — | (185 | ) | (185 | ) | |||||||
Credit assessments | — | (120 | ) | (120 | ) | |||||||
Other | (343 | ) | (2,111 | ) | (2,454 | ) | ||||||
Board expenses | (17 | ) | (438 | ) | (455 | ) | ||||||
Directors’ fees | (17 | ) | (438 | ) | (455 | ) | ||||||
Advertising | (1,348 | ) | (2,040 | ) | (3,388 | ) | ||||||
Taxes, property taxes and contributions | (985 | ) | (11,250 | ) | (12,235 | ) | ||||||
Property taxes | (47 | ) | (103 | ) | (150 | ) | ||||||
Municipal business permits | 164.0 | (181 | ) | (17 | ) | |||||||
Other taxes (*) | (555 | ) | (9,543 | ) | (10,098 | ) | ||||||
Contribution to SBIF | (547 | ) | (1,423 | ) | (1,970 | ) | ||||||
|
|
|
|
|
| |||||||
Total | (15,657 | ) | (78,610 | ) | (94,267 | ) | ||||||
|
|
|
|
|
|
F-210
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For the year ended December 31, 2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Maintenance and repair of property, plant and equipment | (5,209 | ) | (14,382 | ) | (19,591 | ) | ||||||
Office leases | (6,987 | ) | (21,238 | ) | (28,225 | ) | ||||||
Equipment leases | (461 | ) | (3,943 | ) | (4,404 | ) | ||||||
Insurance premiums | (1,373 | ) | (17,143 | ) | (18,516 | ) | ||||||
Office supplies | (663 | ) | (1,478 | ) | (2,141 | ) | ||||||
IT and communications expenses | (14,354 | ) | (12,059 | ) | (26,413 | ) | ||||||
Lighting, heating and other utilities | (935 | ) | (6,064 | ) | (6,999 | ) | ||||||
Security and transportation of valuables | (916 | ) | (1,810 | ) | (2,726 | ) | ||||||
Travel and entertainment expenses | (973 | ) | (2,573 | ) | (3,546 | ) | ||||||
Court and notary expenses | (1,899 | ) | (2,583 | ) | (4,482 | ) | ||||||
Fees for technical reports | — | (30,908 | ) | (30,908 | ) | |||||||
Professional service fees | (434 | ) | (1,616 | ) | (2,050 | ) | ||||||
Securities rating fees | (561 | ) | (114 | ) | (675 | ) | ||||||
SBIF fines | — | (21,790 | ) | (21,790 | ) | |||||||
Other regulatory fines | (8 | ) | (94 | ) | (102 | ) | ||||||
Comprehensive management of ATMs | — | (2,422 | ) | (2,422 | ) | |||||||
Management of outsourced temp services | — | (678 | ) | (678 | ) | |||||||
Postage and mailing expenses | — | (469 | ) | (469 | ) | |||||||
Internal events | — | (747 | ) | (747 | ) | |||||||
Donations | — | (3,369 | ) | (3,369 | ) | |||||||
Contracted services | — | (729 | ) | (729 | ) | |||||||
Miscellaneous contributions | — | (535 | ) | (535 | ) | |||||||
CCA transfer services | — | (422 | ) | (422 | ) | |||||||
Credit card miles | — | (3,065 | ) | (3,065 | ) | |||||||
Credit card management | — | (1,155 | ) | (1,155 | ) | |||||||
Other general administrative expenses | (19,050 | ) | (8,326 | ) | (27,376 | ) | ||||||
|
|
|
|
|
| |||||||
Subtotal | (53,823 | ) | (159,712 | ) | (213,535 | ) | ||||||
Outsourced services | (5,332 | ) | (21,913 | ) | (27,245 | ) | ||||||
Data processing | (3,153 | ) | (13,250 | ) | (16,403 | ) | ||||||
Product sales | — | (718 | ) | (718 | ) | |||||||
Credit assessments | — | (482 | ) | (482 | ) | |||||||
Other | (2,179 | ) | (7,463 | ) | (9,642 | ) | ||||||
Board expenses | (72 | ) | (1,493 | ) | (1,565 | ) | ||||||
Directors’ fees | (72 | ) | (1,493 | ) | (1,565 | ) | ||||||
Advertising | (2,586 | ) | (6,938 | ) | (9,524 | ) | ||||||
Taxes, property taxes and contributions | (5,018 | ) | (43,312 | ) | (48,330 | ) | ||||||
Property taxes | (228 | ) | (391 | ) | (619 | ) | ||||||
Municipal business permits | (805 | ) | (829 | ) | (1,634 | ) | ||||||
Other taxes (*) | (1,720 | ) | (36,501 | ) | (38,221 | ) | ||||||
Contribution to SBIF | (2,265 | ) | (5,591 | ) | (7,856 | ) | ||||||
|
|
|
|
|
| |||||||
Total | (66,831 | ) | (233,368 | ) | (300,199 | ) | ||||||
|
|
|
|
|
|
F-211
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
NOTE 21 - DEPRECIATION, AMORTIZATION AND IMPAIRMENT
a) | Amounts charged to profit and loss for depreciation, amortization and impairment during the periods ended June 30, 2016 and 2015, are detailed as follows: |
For the quarter ended June 30, | For the six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||
Depreciation and amortization | ||||||||||||||||
Depreciation of PP&E | (4,172 | ) | (1,077 | ) | (5,316 | ) | (2,182 | ) | ||||||||
Amortization of intangible assets | (14,833 | ) | (1,038 | ) | (16,532 | ) | (2,296 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Balances | (19,005 | ) | (2,115 | ) | (21,848 | ) | (4,478 | ) | ||||||||
|
|
|
|
|
|
|
|
Pro forma balances for the periods ended June 30, 2015 and December 31, 2015, are detailed as follows:
For the quarter ended June 30, 2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Depreciation and amortization | ||||||||||||
Depreciation of PP&E | (1,077 | ) | (2,910 | ) | (3,987 | ) | ||||||
Amortization of intangible assets | (1,038 | ) | (7,943 | ) | (8,981 | ) | ||||||
|
|
|
|
|
| |||||||
Balances | (2,115 | ) | (10,853 | ) | (12,968 | ) | ||||||
|
|
|
|
|
| |||||||
For the six months ended June 30, 2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Depreciation and amortization | ||||||||||||
Depreciation of PP&E | (2,182 | ) | (5,744 | ) | (7,926 | ) | ||||||
Amortization of intangible assets | (2,296 | ) | (15,915 | ) | (18,211 | ) | ||||||
|
|
|
|
|
| |||||||
Balances | (4,478 | ) | (21,659 | ) | (26,137 | ) | ||||||
|
|
|
|
|
|
F-212
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For the quarter ended December 31, 2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Depreciation and amortization | ||||||||||||
Depreciation of PP&E | (1,149 | ) | (2,964 | ) | (4,113 | ) | ||||||
Amortization of intangible assets | (1,428 | ) | (7,708 | ) | (9,136 | ) | ||||||
|
|
|
|
|
| |||||||
Balances | (2,577 | ) | (10,672 | ) | (13,249 | ) | ||||||
|
|
|
|
|
| |||||||
For the year ended December 31, 2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Depreciation and amortization | ||||||||||||
Depreciation of PP&E | (4,452 | ) | (11,667 | ) | (16,119 | ) | ||||||
Amortization of intangible assets | (5,333 | ) | (31,238 | ) | (36,571 | ) | ||||||
|
|
|
|
|
| |||||||
Balances | (9,785 | ) | (42,905 | ) | (52,690 | ) | ||||||
|
|
|
|
|
|
b) Impairment:
For the six months ended June 30, 2016 and 2015, impairment expenses are detailed as follows:
For the quarter ended June 30, | For the six months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||
Impairment of financial assets available for sale | — | — | — | — | ||||||||||||
Impairment of financial assets held to maturity | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Subtotal financial assets | — | — | — | — | ||||||||||||
Impairment of property, plant and equipment (1) | (34 | ) | — | (34 | ) | — | ||||||||||
Impairment of intangible assets | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Subtotal non-financial assets | (34 | ) | (34 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | (34 | ) | — | (34 | ) | — | ||||||||||
|
|
|
|
|
|
|
|
(1) | Impairment for technological obsolescence as a result of new regulations on ATMs (decree 222 dated October 30, 2013 from the Ministry of Internal Affairs and Public Safety), accounted for in accordance with IAS 36Impairment of Assets. |
F-213
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
At each reporting date, ITAU CORPBANCA and its subsidiaries (the Group) will evaluate whether there is any indication of impairment of any asset. Should any such indication exist, or when impairment testing is required, the entity will estimate the asset’s recoverable amount.
Pro forma balances for the periods ended June 30, 2015 and December 31, 2015, are detailed as follows:
For the quarter ended June 30, 2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Impairment of financial assets available for sale | — | — | — | |||||||||
Impairment of financial assets held to maturity | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Subtotal financial assets | — | — | — | |||||||||
Impairment of property, plant and equipment (1) | — | (23 | ) | (23 | ) | |||||||
Impairment of intangible assets | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Subtotal non-financial assets | — | (23 | ) | (23 | ) | |||||||
|
|
|
|
|
| |||||||
Total | — | (23 | ) | (23 | ) | |||||||
|
|
|
|
|
| |||||||
For the six months ended June 30, 2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Impairment of financial assets available for sale | — | — | — | |||||||||
Impairment of financial assets held to maturity | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Subtotal financial assets | — | — | — | |||||||||
Impairment of property, plant and equipment (1) | — | (34 | ) | (34 | ) | |||||||
Impairment of intangible assets | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Subtotal non-financial assets | — | (34 | ) | (34 | ) | |||||||
|
|
|
|
|
| |||||||
Total | — | (34 | ) | (34 | ) | |||||||
|
|
|
|
|
|
F-214
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For the quarter ended December 31, 2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
�� | MCh$ | MCh$ | MCh$ | |||||||||
Impairment of financial assets available for sale | — | — | — | |||||||||
Impairment of financial assets held to maturity | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Subtotal financial assets | — | — | — | |||||||||
Impairment of property, plant and equipment (1) | — | (114 | ) | (114 | ) | |||||||
Impairment of intangible assets | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Subtotal non-financial assets | — | (114 | ) | (114 | ) | |||||||
|
|
|
|
|
| |||||||
Total | — | (114 | ) | (114 | ) | |||||||
|
|
|
|
|
| |||||||
For the year ended December 31, 2015 | ||||||||||||
Itaú | CorpBanca | Pro Forma | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Impairment of financial assets available for sale | — | — | — | |||||||||
Impairment of financial assets held to maturity | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Subtotal financial assets | — | — | — | |||||||||
Impairment of property, plant and equipment (1) | — | (332 | ) | (332 | ) | |||||||
Impairment of intangible assets | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Subtotal non-financial assets | — | (332 | ) | (332 | ) | |||||||
|
|
|
|
|
| |||||||
Total | — | (332 | ) | (332 | ) | |||||||
|
|
|
|
|
|
a) Financial Assets
As of each reporting date, ITAU CORPBANCA and its subsidiaries assess whether there is objective evidence that a financial asset or a group of financial assets may be impaired. Financial assets or asset groups are considered impaired only if there is objective evidence of impairment as a result of one or more loss events that occurred after the initial recognition of the asset and the loss event had an impact on the estimated future cash flows of the financial asset or asset group that can be reliably estimated. Evidence of impairment may include, among other examples, debtors or a group of debtors with significant financial difficulties, non-compliance or delinquency in principal or interest payments, the potential to declare bankruptcy or undergo another form of financial reorganization, or observable data that indicate a measurable reduction in estimated future cash flows.
B) Non-Financial Assets
The carrying amounts of these assets, evaluated in accordance with IAS 36Impairment of Assets, are reviewed regularly, or at least every reporting period, to determine whether indications of impairment exist. If such indication exists, the recoverable amount of the asset is then estimated. The recoverable amount of an asset is the greater of the fair value less costs to sell, whether for an asset or a cash generating unit, and its value in use. That recoverable amount is determined for an individual asset, unless the asset does not generate cash flows that are largely independent from the cash flows of other assets or asset groups.
F-215
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
The above also includes conducting impairment testing on an annual basis for intangible assets with indefinite useful lives, as well as intangible assets that are not yet available for use, by comparing their carrying amount with their recoverable amount. Impairment testing can be carried out at any time during the year, as long as it takes place at the same time each year, in accordance with IAS 36. Impairment testing of different intangible assets can take place on different dates. However, if that intangible asset had been recognized initially during the current period, it will be tested for impairment before the year ends.
Similarly, impairment of goodwill is determined by evaluating the recoverable amount of each CGU (or group of CGUs) to which goodwill is allocated. Where the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized; goodwill acquired (generated) in a business combination shall be distributed as of the acquisition date among the CGUs or group of CGUs of the acquirer that are expected to benefit from the synergies of the business combination, regardless of whether other of the acquiree’s assets or liabilities are allocated to these units. Impairment losses relating to goodwill cannot be reversed in future periods.
Upon evaluating whether any indication of impairment exists for an asset, the entity shall consider at least the following factors:
External sources of information:
(a) during the period, an asset’s market value has declined significantly more than would be expected as a result of the passage of time or normal use.
(b) adverse conditions in the technological, market, economic or legal environment.
(c) increase in interest rates.
(d) market value of equity lower than carrying amount.
Internal sources of information:
(a) evidence of obsolescence of physical damage of an asset.
(b) plans to discontinue or restructure the operation to which an asset belongs, plans to dispose of an asset before the previously expected date, and reassessing the useful life of an asset as finite rather than indefinite.
(c) decrease or expected decrease in an asset’s performance.
In the event of objective impairment, the carrying amount of an asset will be reduced until the recoverable amount if, and only if, the recoverable amount is less than the carrying amount. This reduction is an impairment loss.
Impairment losses are recognized immediately in the Statement of Income unless the asset is accounted for at revalued value in accordance with other standard. Any impairment loss in revalued assets is treated as a decrease in the revaluation made in accordance with that standard. When the estimated amount of an impairment loss is greater than the carrying amount of the asset to which it is related, the entity will recognize a liability if, and only if, it were obligated to do so by another standard. After recognizing an impairment loss, charges for depreciating the asset are adjusted for future periods in order to distribute the asset’s revised carrying amount, less its potential residual value, systematically over the remaining useful life.
F-216
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
If an impairment loss is recognized, the deferred tax assets and liabilities related to it will also be determined by comparing the asset’s revised carrying amount to its tax basis in accordance with IAS 12Income Taxes.
NOTE 22 - RELATED PARTY TRANSACTIONS
In conformity with the General Banking Law the instructions issued by the SBIF, a related party is defined as an individual or legal entity related to the property or management of an institution, either directly or through a third party.
Article 89 of the Corporations Law, which also applies to banks, establishes that any transaction with a related party must take place under arm’s length conditions similar to those prevailing in the market.
For publicly-held corporations and their subsidiaries, transaction with related parties is defined as any negotiation, act, contract or transaction in which the company must intervene, while related party is defined as the entities of the corporate group to which the company belongs; the legal entities that, with regard to the company, are considered its parent company, affiliate, subsidiary, associate; individuals that are directors, managers, administrators, key executives or liquidators of the company, on their own behalf or in representation of persons other than the company and their respective spouses until a second degree blood relationship, as well as any entity controlled directly or indirectly through any of them; and any person that alone or with other persons through an agreement of joint action can designate at least one member of the company’s management or control 10% or more of its capital, with voting rights, if the company has shares; those that establish the company’s bylaws or are justifiably identified by the directors’ committee; and those in which he has performed the function of director, manager, administrator, key executive or liquidator of the company within the last 18 months. Article 147 of the Corporations Law sets forth that a publicly held corporation may only carry out transactions with related parties when they are intended to contribute to the corporate interest and are adjusted in price, terms and conditions to those prevailing in the market at the time of their approval and that meet the requirements and procedures indicated in that standard. Moreover, Article 84 of the General Banking Law establishes limits on loans granted to related parties and prohibits the granting of loans to the Bank’s directors, managers and general representatives.
F-217
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
a. Loans to Related Parties
As of June 30, 2016 and 2015 and December 31, 2015, loans to related parties are detailed as follows:
Producers of | ||||||||||||
Goods and | Holding | |||||||||||
June 30, 2016 | Services | Companies | Individuals | |||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Loans and receivables: | ||||||||||||
Commercial loans | 76,621 | 95,711 | 903 | |||||||||
Mortgage loans | — | — | 10,468 | |||||||||
Consumer loans | — | — | 3,428 | |||||||||
|
|
|
|
|
| |||||||
Gross loans | 76,621 | 95,711 | 14,799 | |||||||||
Credit risk provisions | (1,892 | ) | (387 | ) | (98 | ) | ||||||
|
|
|
|
|
| |||||||
Net loans | 74,729 | 95,324 | 14,701 | |||||||||
|
|
|
|
|
| |||||||
Contingent loans | 22,752 | 1,493 | 15,353 | |||||||||
Provisions for contingent loans | (54 | ) | (23 | ) | (21 | ) | ||||||
|
|
|
|
|
| |||||||
Net contingent loans | 22,698 | 1,470 | 15,332 | |||||||||
|
|
|
|
|
| |||||||
Producers of | ||||||||||||
Goods and | Holding | |||||||||||
December 31, 2015 | Services | Companies | Individuals | |||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Loans and receivables: | ||||||||||||
Commercial loans | 40 | — | 831 | |||||||||
Mortgage loans | — | — | 5,209 | |||||||||
Consumer loans | — | — | 1,245 | |||||||||
|
|
|
|
|
| |||||||
Gross loans | 40 | — | 7,285 | |||||||||
Credit risk provisions | — | — | (11 | ) | ||||||||
|
|
|
|
|
| |||||||
Net loans | 40 | — | 7,274 | |||||||||
|
|
|
|
|
| |||||||
Contingent loans | 5 | 1,000 | 1,187 | |||||||||
Provisions for contingent loans | — | (1 | ) | (1 | ) | |||||||
|
|
|
|
|
| |||||||
Net contingent loans | 5 | 999 | 1,186 | |||||||||
|
|
|
|
|
| |||||||
Producers of | ||||||||||||
Goods and | Holding | |||||||||||
June 30, 2015 | Services | Companies | Individuals | |||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Loans and receivables: | ||||||||||||
Commercial loans | 43 | — | 762 | |||||||||
Mortgage loans | — | — | 5,221 | |||||||||
Consumer loans | — | — | 1,107 | |||||||||
|
|
|
|
|
| |||||||
Gross loans | 43 | — | 7,090 | |||||||||
Credit risk provisions | — | — | (8 | ) | ||||||||
|
|
|
|
|
| |||||||
Net loans | 43 | — | 7,082 | |||||||||
|
|
|
|
|
| |||||||
Contingent loans | 5 | 1,000 | 1,127 | |||||||||
Provisions for contingent loans | — | (1 | ) | (1 | ) | |||||||
|
|
|
|
|
| |||||||
Net contingent loans | 5 | 999 | 1,126 | |||||||||
|
|
|
|
|
|
F-218
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Pro forma values of loans to related parties as of June 30, 2015 and December 31, 2015, are detailed as follows:
As of December 31, 2015:
Producers of | ||||||||||||
Goods and | Holding | |||||||||||
Banco Itaú Chile as of December 31, 2015 | Services | Companies | Individuals | |||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Loans and receivables: | ||||||||||||
Commercial loans | 40 | — | 831 | |||||||||
Mortgage loans | — | — | 5,209 | |||||||||
Consumer loans | — | — | 1,245 | |||||||||
|
|
|
|
|
| |||||||
Gross loans | 40 | — | 7,285 | |||||||||
Credit risk provisions | — | — | (11 | ) | ||||||||
|
|
|
|
|
| |||||||
Net loans | 40 | — | 7,274 | |||||||||
|
|
|
|
|
| |||||||
Contingent loans | 5 | 1,000 | 1,187 | |||||||||
Provisions for contingent loans | — | (1 | ) | (1 | ) | |||||||
|
|
|
|
|
| |||||||
Net contingent loans | 5 | 999 | 1,186 | |||||||||
|
|
|
|
|
| |||||||
Producers of | ||||||||||||
Goods and | Holding | |||||||||||
CorpBanca as of December 31, 2015 | Services | Companies | Individuals | |||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Loans and receivables: | ||||||||||||
Commercial loans | 86,595 | 24,406 | 3,863 | |||||||||
Mortgage loans | — | — | 16,451 | |||||||||
Consumer loans | — | — | 2,362 | |||||||||
|
|
|
|
|
| |||||||
Gross loans | 86,595 | 24,406 | 22,676 | |||||||||
Credit risk provisions | (1,731 | ) | (6 | ) | (82 | ) | ||||||
|
|
|
|
|
| |||||||
Net loans | 84,864 | 24,400 | 22,594 | |||||||||
|
|
|
|
|
| |||||||
Contingent loans | 29,002 | 679 | 2,911 | |||||||||
Provisions for contingent loans | (30 | ) | (5 | ) | (1 | ) | ||||||
|
|
|
|
|
| |||||||
Net contingent loans | 28,972 | 674 | 2,910 | |||||||||
|
|
|
|
|
| |||||||
Producers of | ||||||||||||
Goods and | Holding | |||||||||||
Pro Forma as of December 31, 2015 | Services | Companies | Individuals | |||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Loans and receivables: | ||||||||||||
Commercial loans | 86,635 | 24,406 | 4,694 | |||||||||
Mortgage loans | — | — | 21,660 | |||||||||
Consumer loans | — | — | 3,607 | |||||||||
|
|
|
|
|
| |||||||
Gross loans | 86,635 | 24,406 | 29,961 | |||||||||
Credit risk provisions | (1,731 | ) | (6 | ) | (93 | ) | ||||||
|
|
|
|
|
| |||||||
Net loans | 84,904 | 24,400 | 29,868 | |||||||||
|
|
|
|
|
| |||||||
Contingent loans | 29,007 | 1,679 | 4,098 | |||||||||
Provisions for contingent loans | (30 | ) | (6 | ) | (2 | ) | ||||||
|
|
|
|
|
| |||||||
Net contingent loans | 28,977 | 1,673 | 4,096 | |||||||||
|
|
|
|
|
|
F-219
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
As of June 30, 2015:
Producers of | ||||||||||||
Goods and | Holding | |||||||||||
Banco Itaú Chile as of June 30, 2015 | Services | Companies | Individuals | |||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Loans and receivables: | ||||||||||||
Commercial loans | 43 | — | 762 | |||||||||
Mortgage loans | — | — | 5,221 | |||||||||
Consumer loans | — | — | 1,107 | |||||||||
|
|
|
|
|
| |||||||
Gross loans | 43 | — | 7,090 | |||||||||
Credit risk provisions | — | — | (8 | ) | ||||||||
|
|
|
|
|
| |||||||
Net loans | 43 | — | 7,082 | |||||||||
|
|
|
|
|
| |||||||
Contingent loans | 5 | 1,000 | 1,127 | |||||||||
Provisions for contingent loans | — | (1 | ) | (1 | ) | |||||||
|
|
|
|
|
| |||||||
Net contingent loans | 5 | 999 | 1,126 | |||||||||
|
|
|
|
|
| |||||||
Producers of | ||||||||||||
Goods and | Holding | |||||||||||
CorpBanca as of June 30, 2015 | Services | Companies | Individuals | |||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Loans and receivables: | ||||||||||||
Commercial loans | 174,694 | 87,617 | 1,759 | |||||||||
Mortgage loans | — | — | 15,903 | |||||||||
Consumer loans | — | — | 2,806 | |||||||||
|
|
|
|
|
| |||||||
Gross loans | 174,694 | 87,617 | 20,468 | |||||||||
Credit risk provisions | (1,999 | ) | (748 | ) | (254 | ) | ||||||
|
|
|
|
|
| |||||||
Net loans | 172,695 | 86,869 | 20,214 | |||||||||
|
|
|
|
|
| |||||||
Contingent loans | 100,077 | 1,380 | 3,787 | |||||||||
Provisions for contingent loans | (136 | ) | (6 | ) | (1 | ) | ||||||
|
|
|
|
|
| |||||||
Net contingent loans | 99,941 | 1,374 | 3,786 | |||||||||
|
|
|
|
|
| |||||||
Producers of | ||||||||||||
Goods and | Holding | |||||||||||
Pro Forma as of June 30, 2015 | Services | Companies | Individuals | |||||||||
MCh$ | MCh$ | MCh$ | ||||||||||
Loans and receivables: | ||||||||||||
Commercial loans | 174,737 | 87,617 | 2,521 | |||||||||
Mortgage loans | — | — | 21,124 | |||||||||
Consumer loans | — | — | 3,913 | |||||||||
|
|
|
|
|
| |||||||
Gross loans | 174,737 | 87,617 | 27,558 | |||||||||
Credit risk provisions | (1,999 | ) | (748 | ) | (262 | ) | ||||||
|
|
|
|
|
| |||||||
Net loans | 172,738 | 86,869 | 27,296 | |||||||||
|
|
|
|
|
| |||||||
Contingent loans | 100,082 | 2,380 | 4,914 | |||||||||
Provisions for contingent loans | (136 | ) | (7 | ) | (2 | ) | ||||||
|
|
|
|
|
| |||||||
Net contingent loans | 99,946 | 2,373 | 4,912 | |||||||||
|
|
|
|
|
|
F-220
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
b. Other Related Party Transactions
For the periods ended June 30, 2016 and 2015, and December 31, 2015, the Bank has carried out the following transactions with related parties for amounts greater than 1,000 UF.
As of June 30, 2016 | ||||||||||||||
Balances | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||||
Transbank S.A. | Credit card management | 5,805 | ||||||||||||
Inmobiliaria Edificio CorpGroup S.A. | Office lease and building fees | 1,916 | ||||||||||||
Fundación CorpGroup Centro Cultural | Donations | 865 | ||||||||||||
Recaudaciones y Cobranzas S.A. | Office lease and collections services | 1,515 | ||||||||||||
Inversiones Corp Group Interhold Ltda. | Administrative consulting | 1,177 | ||||||||||||
SMU S.A., Rendic Hnos S.A. | Lease ATM space | 11,096 | — | 536 | ||||||||||
Redbanc S.A. | ATM management | 1,555 | ||||||||||||
Promoservice S.A. | Promotional services | 777 | ||||||||||||
Operadora de Tarjeta de Crédito Nexus S.A. | Credit card management | 479 | ||||||||||||
Pulso Editorial S.A | Advertising services | 442 | ||||||||||||
Fundación de Inclusión Social Aprendamos | Donations | — | ||||||||||||
Corp Research S.A | Advisory services | — | ||||||||||||
Corp Group Holding Inversiones Limitada | Advisory services | 197 | ||||||||||||
Fundación Descúbreme | Donations | 144 | ||||||||||||
Grupo de Radios Dial S.A. | Advertising | 53 | ||||||||||||
Compañía de Seguros Vida Corp S.A. | Brokerage of insurance premiums and office lease | 325 | ||||||||||||
Hotel Corporation of Chile S.A. | Lodging, events | 24 | ||||||||||||
Corp Imagen y Diseños S.A. | Other services | — | — | 30 | ||||||||||
CAI Gestion Inmobiliaria S.A | Department stores | — | — | 20 | ||||||||||
Asesorias e Inversiones Rapelco Limitada S.A | Other services | — | — | 24 | ||||||||||
Combanc S.A. | Data transmission services | 17 | ||||||||||||
Itaú Chile Compañía de Seguro | Insurance | 1,246 | ||||||||||||
Recuperadora de créditos S.A. | Collections services | 357 | ||||||||||||
Itaú Chile Inv. Serv. y Administración S.A. | Leases | 281 | ||||||||||||
Fundación Itaú | Donations | 200 | ||||||||||||
As of December 31, 2015 | ||||||||||||||
Balances | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||||
Transbank S.A. | Credit card management | 5,572 | ||||||||||||
Redbanc S.A. | ATM management | 888 | ||||||||||||
Combanc S.A. | Data transmission services | 164 | ||||||||||||
Itaú Chile Compañía de Seguro | Insurance | 2,168 | ||||||||||||
Recuperadora de créditos S.A. | Collections services | 1,030 | ||||||||||||
Itaú Chile Inv. Serv. y Administración S.A. | Leases | 587 | ||||||||||||
Fundación Itaú | Donations | 336 |
F-221
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
As of June 30, 2015 | ||||||||||||||
Balances | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||||
Transbank S.A. | Credit card management | 3,357 | ||||||||||||
Redbanc S.A. | ATM management | 369 | ||||||||||||
Combanc S.A. | Data transmission services | 67 | ||||||||||||
Itaú Chile Compañía de Seguro | Insurance | 1,013 | ||||||||||||
Recuperadora de créditos S.A. | Collections services | 313 | ||||||||||||
Itaú Chile Inv. Serv. y Administración S.A. | Leases | 290 | ||||||||||||
Fundación Itaú | Donations | 228 |
These transactions were carried out under normal market conditions prevailing when the contracts were signed.
The pro forma values as of December 31, 2015 and June 30, 2015, are as follows:
Banco Itaú Chile as of December 31, 2015 | ||||||||||||||
Balances | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||||
Transbank S.A. | Credit card management | 5,572 | ||||||||||||
Redbanc S.A. | ATM management | 888 | ||||||||||||
Combanc S.A. | Data transmission services | 164 | ||||||||||||
Itaú Chile Compañía de Seguro | Insurance | 2,168 | ||||||||||||
Recuperadora de créditos S.A. | Collections services | 1,030 | ||||||||||||
Itaú Chile Inv. Serv. y Administración S.A. | Leases | 587 | ||||||||||||
Fundación Itaú | Donations | 336 | ||||||||||||
Banco CorpBanca as of December 31, 2015 | ||||||||||||||
Balances | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||||
Transbank S.A. | Credit card management | 5,469 | ||||||||||||
Redbanc S.A. | ATM management | 2,028 | ||||||||||||
Inmobiliaria Edificio CorpGroup S.A. | Office lease and building fees | 4,298 | ||||||||||||
Fundación CorpGroup Centro Cultural | Donations | 3,550 | ||||||||||||
Inversiones Corp Group Interhold Ltda. | Administrative consulting | 2,289 | ||||||||||||
SMU S.A., Rendic Hnos S.A. | Lease ATM space | 16,805 | — | 2,054 | ||||||||||
Promoservice S.A. | Promotional services | 1,677 | ||||||||||||
Operadora de Tarjeta de Crédito Nexus S.A. | Credit card management | 1,018 | ||||||||||||
Pulso Editorial S.A | Advertising services | 697 | ||||||||||||
Corp Research S.A | Advisory services | 426 | ||||||||||||
Corp Group Holding Inversiones Limitada | Advisory services | 375 | ||||||||||||
Fundación Descúbreme | Donations | 193 | ||||||||||||
Grupo de Radios Dial S.A. | Advertising | 189 | ||||||||||||
Compañía de Seguros Vida Corp S.A. | Brokerage of insurance premiums and office lease | 160 | ||||||||||||
Hotel Corporation of Chile S.A. | Lodging, events | 160 | ||||||||||||
Corp Imagen y Diseños S.A. | Other services | — | — | 89 | ||||||||||
CAI Gestion Inmobiliaria S.A | Department stores | — | — | 58 | ||||||||||
Asesorias e Inversiones Rapelco Limitada S.A | Other services | — | — | 53 |
F-222
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Pro Forma as of December 31, 2015 | ||||||||||||||
Balances | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||||
Transbank S.A. | Credit card management | 11,041 | ||||||||||||
Redbanc S.A. | ATM management | 2,916 | ||||||||||||
Combanc S.A. | Data transmission services | 164 | ||||||||||||
Itaú Chile Compañía de Seguro | Insurance | 2,168 | ||||||||||||
Recuperadora de créditos S.A. | Collections services | 1,030 | ||||||||||||
Itaú Chile Inv. Serv. y Administración S.A. | Leases | 587 | ||||||||||||
Fundación Itaú | Donations | 336 | ||||||||||||
Inmobiliaria Edificio CorpGroup S.A. | Office lease and building fees | 4,298 | ||||||||||||
Fundación CorpGroup Centro Cultural | Donations | 3,550 | ||||||||||||
Inversiones Corp Group Interhold Ltda. | Administrative consulting | 2,289 | ||||||||||||
SMU S.A., Rendic Hnos S.A. | Lease ATM space | 16,805 | — | 2,054 | ||||||||||
Promoservice S.A. | Promotional services | 1,677 | ||||||||||||
Operadora de Tarjeta de Crédito Nexus S.A. | Credit card management | 1,018 | ||||||||||||
Pulso Editorial S.A | Advertising services | 697 | ||||||||||||
Corp Research S.A | Advisory services | 426 | ||||||||||||
Corp Group Holding Inversiones Limitada | Advisory services | 375 | ||||||||||||
Fundación Descúbreme | Donations | 193 | ||||||||||||
Grupo de Radios Dial S.A. | Advertising | 189 | ||||||||||||
Compañía de Seguros Vida Corp S.A. | Brokerage of insurance premiums and office lease | 160 | ||||||||||||
Hotel Corporation of Chile S.A. | Lodging, events | 160 | ||||||||||||
Corp Imagen y Diseños S.A. | Other services | — | — | 89 | ||||||||||
CAI Gestion Inmobiliaria S.A | Department stores | — | — | 58 | ||||||||||
Asesorias e Inversiones Rapelco Limitada S.A | Other services | — | — | 53 | ||||||||||
Banco Itaú Chile as of June 30, 2015 | ||||||||||||||
Balances | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||||
Transbank S.A. | Credit card management | 3,357 | ||||||||||||
Redbanc S.A. | ATM management | 369 | ||||||||||||
Combanc S.A. | Data transmission services | 67 | ||||||||||||
Itaú Chile Compañía de Seguro | Insurance | 1,013 | ||||||||||||
Recuperadora de créditos S.A. | Collections services | 313 | ||||||||||||
Itaú Chile Inv. Serv. y Administración S.A. | Leases | 290 | ||||||||||||
Fundación Itaú | Donations | 228 |
F-223
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Banco CorpBanca as of June 30, 2015 | ||||||||||||||
Balances | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||||
Transbank S.A. | Credit card management | 2,570 | ||||||||||||
Redbanc S.A. | ATM management | 929 | ||||||||||||
Inmobiliaria Edificio CorpGroup S.A. | Office lease and building fees | 2,022 | ||||||||||||
Inversiones Corp Group Interhold Ltda. | Administrative consulting | 1,127 | ||||||||||||
Promoservice S.A. | Promotional services | 1,016 | ||||||||||||
Operadora de Tarjeta de Crédito Nexus S.A. | Credit card management | 410 | ||||||||||||
Corp Group Holding Inversiones Limitada | Advisory services | 185 | ||||||||||||
Corp Research S.A | Advisory services | 210 | ||||||||||||
Fundación Descúbreme | Donations | 71 | ||||||||||||
Fundación CorpGroup Centro Cultural | Donations | 1,075 | ||||||||||||
Grupo de Radios Dial S.A. | Advertising | 102 | ||||||||||||
Compañía de Seguros Vida Corp S.A. | Brokerage of insurance premiums and office lease | 79 | ||||||||||||
Hotel Corporation of Chile S.A. | Lodging, events | 101 | ||||||||||||
Pulso Editorial S.A | Advertising services | 617 | ||||||||||||
Corp Imagen y Diseños S.A. | Other services | — | — | 46 | ||||||||||
CAI Gestion Inmobiliaria S.A | Department stores | — | — | 29 | ||||||||||
Asesorias e Inversiones Rapelco Limitada S.A | Other services | — | — | 26 | ||||||||||
SMU S.A., Rendic Hnos S.A. | Lease ATM space | 17,400 | — | 1,008 | ||||||||||
Pro Forma as of June 30, 2015 | ||||||||||||||
Balances | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
MCh$ | MCh$ | MCh$ | ||||||||||||
Transbank S.A. | Credit card management | 5,927 | ||||||||||||
Redbanc S.A. | ATM management | 1,298 | ||||||||||||
Combanc S.A. | Data transmission services | 67 | ||||||||||||
Itaú Chile Compañía de Seguro | Insurance | 1,013 | ||||||||||||
Recuperadora de créditos S.A. | Collections services | 313 | ||||||||||||
Itaú Chile Inv. Serv. y Administración S.A. | Leases | 290 | ||||||||||||
Fundación Itaú | Donations | 228 | ||||||||||||
Inmobiliaria Edificio CorpGroup S.A. | Office lease and building fees | 2,022 | ||||||||||||
Inversiones Corp Group Interhold Ltda. | Administrative consulting | 1,127 | ||||||||||||
Promoservice S.A. | Promotional services | 1,016 | ||||||||||||
Operadora de Tarjeta de Crédito Nexus S.A. | Credit card management | 410 | ||||||||||||
Corp Group Holding Inversiones Limitada | Advisory services | 185 | ||||||||||||
Corp Research S.A | Advisory services | 210 | ||||||||||||
Fundación Descúbreme | Donations | 71 | ||||||||||||
Fundación CorpGroup Centro Cultural | Donations | 1,075 | ||||||||||||
Grupo de Radios Dial S.A. | Advertising | 102 | ||||||||||||
Compañía de Seguros Vida Corp S.A. | Brokerage of insurance premiums and office lease | 79 | ||||||||||||
Hotel Corporation of Chile S.A. | Lodging, events | 101 | ||||||||||||
Pulso Editorial S.A | Advertising services | 617 | ||||||||||||
Corp Imagen y Diseños S.A. | Other services | — | — | 46 | ||||||||||
CAI Gestion Inmobiliaria S.A | Department stores | — | — | 29 | ||||||||||
Asesorias e Inversiones Rapelco Limitada S.A | Other services | — | — | 26 | ||||||||||
SMU S.A., Rendic Hnos S.A. | Lease ATM space | 17,400 | — | 1,008 |
F-224
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
c. Donations
As of June 30, 2016 | ||||||||||||||
Balances | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
Fundación CorpGroup Centro Cultural | Donations | - | - | 865 | ||||||||||
Fundación Descúbreme | Donations | - | - | 144 | ||||||||||
Fundación Itaú | Donations | - | - | 200 | ||||||||||
As of December 31, 2015 | ||||||||||||||
Balances | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
Fundación Itaú | Donations | - | - | 336 | ||||||||||
As of June 30, 2015 | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
Fundación Itaú | Donations | - | - | 228 |
The pro forma values as of December 31, 2015 and June 30, 2015, are as follows:
F-225
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Banco Itaú Chile as of December 31, 2015 | ||||||||||||||
Balances | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
Fundación Itaú | Donations | — | — | 336 | ||||||||||
Banco CorpBanca as of December 31, 2015 | ||||||||||||||
Balances | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
Fundación CorpGroup Centro Cultural | Donations | — | — | 3,550 | ||||||||||
Fundación Descúbreme | Donations | — | — | 193 | ||||||||||
Fundación de Inclusión Social Aprendamos | Donations | — | — | 5 | ||||||||||
Pro Forma as of December 31, 2015 | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
Fundación Itaú | Donations | — | — | 336 | ||||||||||
Fundación CorpGroup Centro Cultural | Donations | — | — | 3,550 | ||||||||||
Fundación Descúbreme | Donations | — | — | 193 | ||||||||||
Fundación de Inclusión Social Aprendamos | Donations | — | — | 5 | ||||||||||
Banco Itaú Chile as of June 30, 2015 | ||||||||||||||
Balances | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
Fundación Itaú | Donations | — | — | 228 | ||||||||||
Banco CorpBanca as of June 30, 2015 | ||||||||||||||
Balances | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
Fundación CorpGroup Centro Cultural | Donations | — | — | 1,075 | ||||||||||
Fundación Descúbreme | Donations | — | — | 71 | ||||||||||
Pro Forma as of June 30, 2015 | ||||||||||||||
Receivable | Effect on Profit (Loss) | |||||||||||||
Name or Corporate Name | Description | (Payable) | Income | Expenses | ||||||||||
Fundación Itaú | Donations | — | — | 228 | ||||||||||
Fundación CorpGroup Centro Cultural | Donations | — | — | 1,075 | ||||||||||
Fundación Descúbreme | Donations | — | — | 71 |
F-226
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
NOTE 23 - FAIR VALUE ASSETS AND LIABILITIES
This disclosure was prepared based on the guidelines in Chapter 7-12 from the SBIF and IFRS 13, always taking care to comply with both standards. This standard applies to both financial assets and non-financial assets measured at fair value (recurring and non-recurring).
The following section details the main guidelines and definitions used by the Group:
Fair value. The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price). The transaction is carried out in the principal25 or most advantageous26 market and is not forced (i.e. it does not consider factors specific to the Group that may influence a real transaction).
Market participants. Buyers and sellers in the principal (or most advantageous) market for the asset or liability that have all of the following characteristics:
a. | They are independent of each other, i.e. they are not related parties as defined in IAS 24 “Related Party Disclosures”, although the price in a related party transaction may be used as an input to a fair value measurement if the entity has evidence that the transaction was entered into at market terms. |
b. | They are knowledgeable, having a reasonable understanding about the asset or liability and the transaction using all available information, including information that might be obtained through due diligence efforts that are usual and customary. |
c. | They are able to enter into a transaction for the asset or liability. |
d. | They are willing to enter into a transaction for the asset or liability (i.e. they are motivated, but not forced or otherwise compelled, to do so). |
Fair value measurement. When measuring fair value, the Group takes into account the same characteristics of the asset or liability that market participants would consider in pricing that asset or liability on the measurement date.
Aspects of the transaction. A fair value measurement assumes that the asset or liability is exchanged in an orderly transaction between market participants to sell the asset or transfer the liability at the measurement date under current market conditions. The measurement assumes that the transaction to sell the asset or transfer the liability takes place: (a) on the principal market for the asset or liability; or (b) in the absence of a principal market, on the most advantageous market for the asset or liability.
Market participants. The fair value measurement measures the fair value of the asset or liability using the assumptions that the market participants would use in pricing the asset or liability, assuming that the participants act in their best economic interest.
25 | The market with the greatest volume and level of activity for the asset or liability. |
26 | The market that maximizes the amount that would be received to sell the asset or minimizes the amount that would be paid to transfer the liability, after taking into account transaction costs and transport costs. |
F-227
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Prices. Fair value is the price that will be received for the sale of an asset or paid for the transfer of a liability in an orderly transaction on the main (or most advantageous) market as of the measurement date under current market conditions (i.e. exit price) regardless of whether that price is directly observable or estimated using another valuation technique.
Highest and best use of non-financial assets. The fair value measurement of these assets takes into account the market participant’s ability to generate economic benefits through the highest and best use of the asset or through the sale of the asset to another market participant that would maximize the value of the asset.
Group’s own liabilities and equity instruments. The fair value measurement assumes that these items are transferred to a market participant on the date of measurement. The transfer of these items assumes that:
a. | A liability would remain outstanding and the market participant transferee would be required to fulfill the obligation. The liability would not be settled with the counterparty or otherwise extinguished on the measurement date. |
b. | An entity’s own equity instrument would remain outstanding and the market participant transferee would take on the rights and responsibilities associated with the instrument. The instrument would not be canceled or otherwise extinguished on the measurement date. |
Default risk. The fair value of a liability reflects the effect of the default risk. This risk includes, but is not limited to, the entity’s own credit risk. This risk is assumed to be the same before and after the liability is transferred.
Initial recognition. When an asset is acquired or a liability assumed in an exchange transaction involving that asset or liability, the transaction price is the price paid to acquire the asset or received to assume the liability (the entry price). In contrast, the fair value of the asset or liability is the price received to sell the asset or paid to transfer the liability (the exit price). Entities do not necessarily sell assets at the prices paid to acquire them. Likewise, they do not necessarily transfer liabilities at the price received to assume them.
Valuation techniques. The Bank will use techniques that are appropriate for the circumstances and for which sufficient data is available to measure the fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. The following approaches deserve mention. The first two are the most frequently used by the Group:
a. | Market approach. Uses prices and other relevant information generated by market transactions involving identical or comparable (similar) assets, liabilities, or a group of assets and liabilities (e.g. a business). |
b. | Income approach. Converts future amounts (cash flows or income and expenses) to a single current (discounted) amount, reflecting current market expectations about those future amounts. The fair value measurement is determined based on the value indicated by the current market expectations about those future amounts. |
F-228
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
c. | Cost approach. Reflects the amount that would be required currently to replace the service capacity of an asset (current replacement cost). |
Present value techniques. Technique to adjust the discount rate and expected cash flows (expected present value). The present value technique used to measure the fair value will depend on the specific facts and circumstances of the asset or liability being measured and the availability of sufficient data.
Components of the present value measurement. Present value is the tool used to link future amounts (e.g. cash flows or values) to a present amount using a discount rate. A fair value measurement of an asset or a liability using a present value technique captures all the following elements from the perspective of market participants at the measurement date:
a. | An estimate of future cash flows for the asset or liability being measured. |
b. | Expectations about possible variations in the amount and timing of the cash flows representing the uncertainty inherent in the cash flows. |
c. | The time value of money, represented by the rate on risk-free monetary assets that have maturity dates or durations that coincide with the period covered by the cash flows and pose neither uncertainty in timing nor risk of default to the holder (i.e. a risk-free interest rate). |
d. | The price for bearing the uncertainty inherent in the cash flows (i.e. a risk premium). |
e. | Other factors that market participants would take into account in the circumstances. |
f. | For a liability, the non-performance risk relating to that liability, including the entity’s (i.e. the debtor’s) own credit risk. |
Fair value hierarchy It gives the highest priority to quoted prices (unadjusted) in active markets for identical assets and liabilities (Level 1 inputs) and lowest priority to unobservable inputs (Level 3 inputs). Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Determination of fair value
The following table summarizes the fair values of the Bank’s main financial assets and liabilities as of June 2016 and December 2015, including those that are not recorded at fair value in the Consolidated Statement of Financial Position.
F-229
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
As of June 30, | As of December 31, | |||||||||||||||||||
2016 | 2015 | |||||||||||||||||||
Carrying | Estimated | Carrying | Estimated | |||||||||||||||||
Note | Amount | Fair Value | Amount | Fair Value | ||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and due from banks | 5 | 1,854,662 | 1,854,662 | 477,809 | 477,809 | |||||||||||||||
Transactions pending settlement | 5 | 495,915 | 495,915 | 62,095 | 62,086 | |||||||||||||||
Trading securities | 343,832 | 343,832 | 17,765 | 17,765 | ||||||||||||||||
Receivables from repurchase agreements and securities borrowing | 94,448 | 94,448 | 10,293 | 10,291 | ||||||||||||||||
Financial derivative instruments | 1,365,315 | 1,365,315 | 227,984 | 227,984 | ||||||||||||||||
Loans and advances to banks | 6 | 853,773 | 853,773 | 99,398 | 99,493 | |||||||||||||||
Loans to customers | 7 | 21,034,749 | 21,345,684 | 6,713,983 | 7,228,761 | |||||||||||||||
Financial assets available for sale | 1,638,245 | 1,638,245 | 512,510 | 512,510 | ||||||||||||||||
Financial assets held to maturity | 330,588 | 317,801 | — | — | ||||||||||||||||
LIABILITIES | ||||||||||||||||||||
Current accounts and other demand deposits | 10 | 5,054,222 | 5,054,222 | 981,349 | 981,998 | |||||||||||||||
Transactions pending settlement | 421,293 | 421,293 | 26,377 | 26,298 | ||||||||||||||||
Payables from repurchase agreements and securities lending | 332,494 | 332,494 | 43,727 | 46,933 | ||||||||||||||||
Savings accounts and time deposits | 12,095,024 | 12,147,907 | 3,952,573 | 4,069,435 | ||||||||||||||||
Financial derivative instruments | 1,156,671 | 1,156,671 | 253,183 | 253,183 | ||||||||||||||||
Borrowings from financial institutions | 2,259,906 | 2,212,071 | 658,600 | 660,721 | ||||||||||||||||
Debt instruments issued | 11 | 5,095,875 | 5,282,465 | 1,504,335 | 1,723,689 | |||||||||||||||
Other financial liabilities | 28,537 | 28,537 | 20,733 | 21,457 |
In addition, the fair value estimates presented above do not attempt to estimate the value of the Group’s profits generated by its business, nor future business activities, and, therefore, do not represent the value of the Group as a going concern.
F-230
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
The following section describes the methods used to estimate fair value:
1.1.1 | Fair Value Measurement of Assets and Liabilities Only for Disclosure Purposes (Non-Recurring) |
Non-Recurring Fair Value | ||||||||||||
Measurement of Items | ||||||||||||
As of June | As of December | |||||||||||
Note | 30, 2016 | 31, 2015 | ||||||||||
MCh$ | MCh$ | |||||||||||
ASSETS | ||||||||||||
Cash and due from banks | 5 | 1,854,662 | 477,809 | |||||||||
Transactions pending settlement | 5 | 495,915 | 62,086 | |||||||||
Receivables from repurchase agreements and securities borrowing | 94,448 | 10,291 | ||||||||||
Loans and advances to banks | 6 | 853,773 | 99,493 | |||||||||
Loans to customers | 7 | 21,345,684 | 7,228,761 | |||||||||
Financial assets held to maturity | 317,801 | — | ||||||||||
|
|
|
| |||||||||
24,962,283 | 7,878,441 | |||||||||||
LIABILITIES | ||||||||||||
Current accounts and other demand deposits | 10 | 5,054,222 | 981,998 | |||||||||
Transactions pending settlement | 421,293 | 26,298 | ||||||||||
Payables from repurchase agreements and securities lending | 332,494 | 46,933 | ||||||||||
Savings accounts and time deposits | 12,147,907 | 4,069,435 | ||||||||||
Borrowings from financial institutions | 2,212,071 | 660,721 | ||||||||||
Debt instruments issued | 11 | 5,282,465 | 1,723,689 | |||||||||
Other financial liabilities | 28,537 | 21,457 | ||||||||||
|
|
|
| |||||||||
25,478,989 | 7,530,531 |
Cash, short-term assets and short-term liabilities
The fair value of these items approximates their carrying amount given their short-term nature.
These items include:
• | Cash and due from banks |
• | Transactions pending settlement |
• | Receivables/payables from repurchase agreements and securities borrowing/lending |
• | Current accounts and other demand deposits |
• | Other financial obligations |
F-231
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Loans
The fair value of loans is determined using a discounted cash flow analysis, using the Group’s cost of funds rate in the different countries where it does business, adjusted for expected losses from debtors based on their credit quality. The credit risk adjustment is based on observed market variables and the Group’s qualitative and quantitative credit risk methodologies in accordance with internal policy. The line items include:
• | Loans and advances to banks |
• | Loans to customers |
In comparing the market value as of June 30, 2016 and December 31, 2015, it is important to note that the instruments were valued in December using a rate free of liquidity and credit risk.
Financial instruments held to maturity
The estimated fair value of these financial instruments is determined using quotes and transactions observed in the main market for identical instruments, or in their absence, for similar instruments. Fair value estimates of debt instruments or securities representative of debt take into account additional variables and inputs to the extent that they apply, including estimates of prepayment rates and the credit risk of issuers.
Medium and long-term liabilities
The fair value of medium and long-term liabilities is determined using a discounted cash flow analysis, using a cost of funds rate curve that reflects current market conditions at which the entity’s debt instruments are traded. Medium and long-term liabilities include:
• | Savings accounts and time deposits |
• | Borrowings from financial institutions |
• | Debt instruments issued |
F-232
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
1.1.2 | Fair Value Measurement of Assets and Liabilities for Accounting Purposes (Recurring) |
Recurring Fair Value | ||||||||||||
Measurement of Items | ||||||||||||
As of June 30, | As of December | |||||||||||
Note | 2016 | 31, 2015 | ||||||||||
MCh$ | MCh$ | |||||||||||
ASSETS | ||||||||||||
|
|
|
| |||||||||
Trading securities | 6 | 343,832 | 17,765 | |||||||||
|
|
|
| |||||||||
From the Chilean government and Central Bank | 15,586 | 6,411 | ||||||||||
Other instruments issued in Chile | 48,456 | — | ||||||||||
Foreign government and central bank instruments | 227,248 | — | ||||||||||
Other instruments issued abroad | 12,792 | — | ||||||||||
Mutual fund investments | 39,750 | 11,354 | ||||||||||
|
|
|
| |||||||||
Financial assets available for sale | 11 | 1,638,245 | 512,510 | |||||||||
|
|
|
| |||||||||
From the Chilean government and Central Bank | 821,434 | 250,743 | ||||||||||
Other instruments issued in Chile | 111,327 | 261,767 | ||||||||||
Foreign government and central bank instruments | 481,633 | — | ||||||||||
Other instruments issued abroad | 223,851 | — | ||||||||||
|
|
|
| |||||||||
Financial derivative instruments | 1,365,315 | 227,984 | ||||||||||
|
|
|
| |||||||||
Forwards | 361,551 | 35,873 | ||||||||||
Swaps | 1,001,254 | 192,111 | ||||||||||
Call options | 911 | — | ||||||||||
Put options | 1,599 | — | ||||||||||
Other | — | — | ||||||||||
|
|
|
| |||||||||
Total | 3,347,392 | 758,259 | ||||||||||
LIABILITIES | ||||||||||||
|
|
|
| |||||||||
Financial derivative instruments | 1,156,671 | �� | 253,183 | |||||||||
|
|
|
| |||||||||
Forwards | 348,576 | 54,016 | ||||||||||
Swaps | 805,070 | 199,167 | ||||||||||
Call options | 678 | — | ||||||||||
Put options | 2,076 | — | ||||||||||
Other | 271 | — | ||||||||||
|
|
|
| |||||||||
Total | 1,156,671 | 253,183 |
F-233
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Financial instruments
The estimated fair value of these financial instruments is determined using quotes and transactions observed in the main market for identical instruments, or in their absence, for similar instruments. Fair value estimates of debt instruments or securities representative of debt take into account additional variables and inputs to the extent that they apply, including estimates of prepayment rates and the credit risk of issuers. These financial instruments are classified as follows:
• | Trading securities |
• | Financial assets available for sale |
Financial derivative instruments
The estimated fair value of derivative instruments is calculated using prices quoted on the market for financial instruments of similar characteristics. The methodology, therefore, recognizes the credit risk of each counterparty. The adjustments are known internationally as the counterparty value adjustment (CVA) and debit value adjustment (DVA). The sum of these adjustments gives the effective counterparty risk that the derivative contract must have. These adjustments are recorded periodically in the financial statements. As of June 2016, the portfolio of derivative contracts in both Chile and Colombia had an aggregate effect of MCh$(11,650), detailed as follows:
F-234
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
As of June 30, 2016 | As of December 31, 2015 | |||||||||||||||
CVA | DVA | CVA | DVA | |||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||
Hedge accounting derivatives | 2 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Fair value | 1 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Currency forwards | — | — | — | — | ||||||||||||
Cross currency swaps | (2 | ) | — | — | — | |||||||||||
Interest rate swaps | 3 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Cash flow | 1 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Currency forwards | 0 | — | — | — | ||||||||||||
Cross currency swaps | — | — | — | — | ||||||||||||
Interest rate swaps | 1 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Foreign investment | 0 | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Currency forwards | 0 | — | — | — | ||||||||||||
Cross currency swaps | — | — | — | — | ||||||||||||
Interest rate swaps | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Trading derivatives | (11,652 | ) | 1 | (97 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Currency forwards | (1,547 | ) | 1 | (477 | ) | — | ||||||||||
Interest rate swaps | (7,026 | ) | — | 537 | — | |||||||||||
Cross currency swaps | (3,062 | ) | — | (157 | ) | — | ||||||||||
Currency call options | (17 | ) | — | — | — | |||||||||||
Currency put options | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total financial derivatives | (11,650 | ) | 1 | (97 | ) | — | ||||||||||
|
|
|
|
|
|
|
|
F-235
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
1.2 Fair value hierarchy
IFRS 13 establishes a fair value hierarchy that classifies assets and liabilities based on the characteristics of the data that the technique requires for its valuation.
• | Level 1: inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Entity can access at the measurement date. The inputs needed to value the instruments in this category are available daily and used directly. |
In the case of currency, shares and mutual funds, prices are observed directly in over-the-counter markets and the stock exchange. These prices correspond to the values at which the exact same assets are traded. As a result, the portfolio valuation does not require assumptions or models of any type.
For instruments issued by the Chilean Central Bank and the Chilean Treasury, benchmark prices are used. Benchmark prices are defined using similar durations, type of currency and are traded the equivalent of every day. The valuation of these instruments is identical to the Santiago Stock Exchange, which is a standard international methodology. This methodology uses the internal rate of return to discount the instrument’s cash flows.
• | Level 2: the specific instrument does not have daily quotes. However, similar instruments can be observed (e.g. same issuer, different maturity; or different issuer, same maturity and risk rating). In general, they are diverse combinations of pseudo-arbitration. Although the inputs are not directly observable, observable inputs are available with the needed periodicity. |
In this category, instruments are valued by discounting contractual cash flows based on a zero-coupon curve determined through the price of instruments with similar characteristics and a similar issuer risk. The income approach is used, which converts future amounts to present amounts.
For derivative instruments within this category, quotes from other-the-counter transactions reported by the most important brokers in the Chilean market and the Bloomberg platform are used. The inputs observed include forward prices, interest rates and volatilities. Based on these inputs, market curves are modeled. They are a numerical representation of the opportunity costs of the instrument’s cash flows or the price volatility of an asset. Finally, cash flows are discounted.
The Black and Scholes model is used for options based on prices of brokers in the OTC market.
For money market instruments, prices of transactions on the Santiago Stock Exchange are observed and used to model market curves.
F-236
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
For corporate or bank bonds, given the lack of market depth, the Bank uses transactions (if any) in the Chilean market, on foreign markets, zero-coupon curves of risk-free instruments, adjustment curves, spread modeling, correlation with similar financial instruments, etc. and gives market curves as the final result. These market curves are provided by a pricing supplier and are widely accepted by the market, regulators and scholars.
• | Level 3: this is used when prices, data or necessary inputs are not directly or indirectly observable for similar instruments for the asset or liability as of the valuation date. These fair value valuation models are subjective in nature. Therefore, they base their estimate of prices on a series of assumptions that are widely accepted by the market. The Group has two products in this category: |
Due to the lack of liquidity in the basis of the active banking rate (TAB) over the chamber rate (cámara), the price is not observable and, therefore, models must be used to estimate the future cash flows of the contract. This spread is calculated on a historical basis using the IRS with the greatest market depth, which is the chamber swap.
In addition, the Bank offers American forwards to meet its customers’ needs. They do not have a secondary market and, therefore, their value is estimated using an extension of the Hull-White model, used widely by the financial services industry.
None of these products generate significant impacts on the Bank’s results as a result of recalibration. The TAB swap does not have significant impacts on the valuation as the parameters are stable and the reversal to a historic average is empirically quick, which this model reflects correctly. On the other hand, the American forward behaves like a traditional forward when there is an important curve differential, which is the case between the Chilean peso-US dollar curve. Also, the model’s parameters are very stable.
The table below summarizes the impacts on the portfolio of a recalibration of the models based on a stress scenario, recalibrating parameters with the shock incorporated.
F-237
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
As of June 30, 2016 | ||||||||||||||||||||||||
Impact of Calibration in MCh$ | Total | USD/CLP Exchange Rate Volatility | TAB 30 | TAB 90 | TAB 180 | TAB 360 | ||||||||||||||||||
American forward USD-CLP | — | — | — | — | — | — | ||||||||||||||||||
Basis TAB CLP | 597 | — | 297 | 97 | 190 | 13 | ||||||||||||||||||
Basis TAB CLF | 104 | — | — | — | 62 | 42 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 701 | — | 297 | 97 | 253 | 55 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
As of December 31, 2015 | ||||||||||||||||||||||||
Impact of Calibration in MCh$ | Total | USD/CLP Exchange Rate Volatility | TAB 30 | TAB 90 | TAB 180 | TAB 360 | ||||||||||||||||||
Basis TAB CLP | 48 | — | — | — | 46 | 2 | ||||||||||||||||||
Basis TAB CLF | 5 | — | — | — | 5 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 53 | — | — | — | 51 | 2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes the fair value hierarchy for the Group’s recurring valuation of financial instruments:
Level | Instrument | Issuer | Price Source | Model | ||||
I | Currency | N/A | OTC, Bloomberg | Directly observable price. | ||||
Shares | Various | Santiago Exchange | Directly observable price. | |||||
Mutual Funds | Asset Managers | SVS | Directly observable price. | |||||
Bonds | Chilean Central Bank and Chilean Treasury | Santiago Exchange | Internal rate of return (IRR) based on prices. | |||||
II | Derivatives | N/A | OTC (brokers), Bloomberg | Interest rate curves based on forward prices and coupon rates. | ||||
Money Market Instruments | Chilean Central Bank and Chilean Treasury | Santiago Exchange | Interest rate curves based on prices. | |||||
Money Market Instruments | Banks | Santiago Exchange | Interest rate curves based on prices. |
F-238
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Bonds | Companies, banks | Pricing supplier | Interest rate curves based on correlations, spreads, extrapolations, etc. | |||||
III | Derivatives, active banking rate (TAB) | N/A | OTC (brokers) | Interest rate curves based on modeling of TAB-Chamber spread. | ||||
Derivatives, American forwards | N/A | Bloomberg | Black and Scholes with inputs from European options. |
F-239
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
The following table classifies assets and liabilities measured at fair value on a recurring basis, in accordance with the fair value hierarchy established in IFRS 13 for period-end in June 2016 and year-end in December 2015.
Recurring Fair Value Measurement of Items Using | ||||||||||||||||||||
June 30, 2016 | Note | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||
ASSETS | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Trading securities | 6 | 343,832 | 334,721 | 9,111 | — | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
From the Chilean government and Central Bank | 15,586 | 15,586 | — | — | ||||||||||||||||
Other instruments issued in Chile | 48,456 | 47,470 | 986 | — | ||||||||||||||||
Foreign government and central bank instruments | 227,248 | 227,248 | — | — | ||||||||||||||||
Other instruments issued abroad | 12,792 | 4,667 | 8,125 | — | ||||||||||||||||
Mutual fund investments | 39,750 | 39,750 | — | — | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Financial assets available for sale | 11 | 1,638,245 | 1,366,740 | 271,505 | — | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
From the Chilean government and Central Bank | 821,434 | 821,331 | 103 | — | ||||||||||||||||
Other instruments issued in Chile | 111,327 | (2 | ) | 111,329 | — | |||||||||||||||
Foreign government and central bank instruments | 481,633 | 481,633 | — | — | ||||||||||||||||
Other instruments issued abroad | 223,851 | 63,778 | 160,073 | — | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Financial derivative instruments | 1,365,315 | — | 1,316,979 | 48,336 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Forwards | 361,551 | — | 361,473 | 78 | ||||||||||||||||
Swaps | 1,001,254 | — | 952,996 | 48,258 | ||||||||||||||||
Call options | 911 | — | 911 | — | ||||||||||||||||
Put options | 1,599 | — | 1,599 | — | ||||||||||||||||
Other | — | — | — | — | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | 3,347,392 | 1,701,461 | 1,597,595 | 48,336 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
LIABILITIES | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Financial derivative instruments | 1,156,671 | — | 1,156,025 | 646 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Forwards | 348,576 | — | 348,576 | — | ||||||||||||||||
Swaps | 805,070 | — | 804,424 | 646 | ||||||||||||||||
Call options | 678 | — | 678 | — | ||||||||||||||||
Put options | 2,076 | — | 2,076 | — | ||||||||||||||||
Other | 271 | — | 271 | — | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | 1,156,671 | — | 1,156,025 | 646 |
F-240
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Recurring Fair Value Measurement of Items Using | ||||||||||||||||||||
December 31, 2015 | Note | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||
ASSETS | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Trading securities | 6 | 17,765 | 17,765 | — | — | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
From the Chilean government and Central Bank | 6,411 | 6,411 | — | — | ||||||||||||||||
Other instruments issued in Chile | — | — | — | — | ||||||||||||||||
Foreign government and central bank instruments | — | — | — | — | ||||||||||||||||
Other instruments issued abroad | — | — | — | — | ||||||||||||||||
Mutual fund investments | 11,354 | 11,354 | — | — | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Financial assets available for sale | 11 | 512,510 | 512,510 | — | — | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
From the Chilean government and Central Bank | 250,743 | 250,743 | — | — | ||||||||||||||||
Other instruments issued in Chile | 261,767 | 261,767 | — | — | ||||||||||||||||
Foreign government and central bank instruments | — | — | — | — | ||||||||||||||||
Other instruments issued abroad | — | — | — | — | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Financial derivative instruments | 227,984 | — | 227,230 | 754 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Forwards | 35,873 | — | 35,873 | — | ||||||||||||||||
Swaps | 192,111 | — | 191,357 | 754 | ||||||||||||||||
Call options | — | — | — | — | ||||||||||||||||
Put options | — | — | — | — | ||||||||||||||||
Other | — | — | — | — | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | 758,259 | 530,275 | 227,230 | 754 | ||||||||||||||||
LIABILITIES | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Financial derivative instruments | 253,183 | — | 253,183 | — | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Forwards | 54,016 | — | 54,016 | — | ||||||||||||||||
Swaps | 199,167 | — | 199,167 | — | ||||||||||||||||
Call options | — | — | — | — | ||||||||||||||||
Put options | — | — | — | — | ||||||||||||||||
Other | — | — | — | — | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | 253,183 | — | 253,183 | — |
F-241
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
1.2.1 Transfers Between Level 1 and Level 2
The following table details transfers of assets and liabilities between Level 1 and Level 2 during 2016.
Recurring Fair Value Measurement of Items | ||||||||||||||||
June 30, 2016 | Note | Fair Value | Level 1 to 2 | Level 2 to 1 | ||||||||||||
ASSETS | ||||||||||||||||
Trading securities | 343,832 | — | — | |||||||||||||
Financial assets available for sale | 1,638,245 | — | — | |||||||||||||
Financial derivative instruments | 1,365,315 | — | — | |||||||||||||
|
|
|
|
|
| |||||||||||
Total | 3,347,392 | — | — | |||||||||||||
LIABILITIES | ||||||||||||||||
Financial derivative instruments | 1,156,671 | — | — | |||||||||||||
|
|
|
|
|
| |||||||||||
Total | 1,156,671 | — | — | |||||||||||||
Recurring Fair Value Measurement of Items | ||||||||||||||||
December 31, 2015 | Note | Fair Value | Level 1 to 2 | Level 2 to 1 | ||||||||||||
ASSETS | ||||||||||||||||
Trading securities | 17,765 | — | — | |||||||||||||
Financial assets available for sale | 512,510 | — | — | |||||||||||||
Financial derivative instruments | 227,984 | — | — | |||||||||||||
|
|
|
|
|
| |||||||||||
Total | 758,259 | — | — | |||||||||||||
LIABILITIES | ||||||||||||||||
Financial derivative instruments | 253,183 | — | — | |||||||||||||
|
|
|
|
|
| |||||||||||
Total | 253,183 | — | — |
During 2016 and 2015, no assets were transferred between levels 1 and 2.
F-242
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
1.2.2 Disclosures Regarding Level 3 Assets and Liabilities
Level 3 assets and liabilities are valued using techniques that require inputs that are not observable on the market, for which the income approach is used to convert future amounts to present amounts.
This category includes:
• | Derivative financial instruments indexed to the TAB rate. This rate is comprised of an interbank rate and a liquidity premium charged to financial institutions and is determined using a short-rate model with mean reversion. |
• | American forward options. |
As none of these products has a market, the Bank uses financial engineering valuation techniques that use unobservable variables.
These techniques use the following inputs: transaction prices from the main financial instrument markets and assumptions that are widely accepted by the financial services industry. Using this information, unobservable variables are constructed such as: adjustment curves, spreads, volatilities and other variables necessary for the valuation. Lastly, all of the models are subject to internal contrasts by independent areas and have been reviewed by internal auditors and regulators.
None of these products generate significant impacts on the Bank’s results as a result of recalibration. The American forward is only offered for the US dollar-Chilean peso market and until now, given the important differential between these interest rates, the product behaves like a traditional forward. The TAB swap does not have significant impacts on the valuation as the modeled liquidity premiums have a quick mean reversion for the short part and low volatility for the long part, concentrating on the book’s sensitivity in the longest part of the curve. The following table reconciles assets and liabilities measured at fair value on a recurring basis as of period-end in June 2016 and year-end in December 2015.
F-243
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Level 3 Reconciliation | ||||||||||||||||||||||||
June 30, 2016 | Opening Balance | Gain (Loss) Recognized in Profit or Loss | Gain (Loss) Recognized in Equity | Net of Purchases, Sales and Agreements | Transfers between Level 1 and Level 2 | Closing Balance | ||||||||||||||||||
MCh$ | MCh$ | |||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Trading securities | — | — | — | — | — | — | ||||||||||||||||||
Financial assets available for sale | — | — | — | — | — | — | ||||||||||||||||||
Financial derivative instruments | 754 | 4,198 | — | 43,384 | — | 48,336 | ||||||||||||||||||
Forwards | — | 189 | — | (111 | ) | — | 78 | |||||||||||||||||
Swaps | 754 | 4,009 | — | 43,495 | — | 48,258 | ||||||||||||||||||
Call options | — | — | — | — | — | — | ||||||||||||||||||
Put options | — | — | — | — | — | — | ||||||||||||||||||
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Total | 754 | 4,198 | — | 43,384 | — | 48,336 | ||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||
Financial derivative instruments | — | 909 | — | (263 | ) | — | 646 | |||||||||||||||||
Forwards | — | 96 | — | (96 | ) | — | — | |||||||||||||||||
Swaps | — | 813 | — | (167 | ) | — | 646 | |||||||||||||||||
Call options | — | — | — | — | — | — | ||||||||||||||||||
Put options | — | — | — | — | — | — | ||||||||||||||||||
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Total | — | 909 | — | (263 | ) | — | 646 | |||||||||||||||||
Level 3 Reconciliation | ||||||||||||||||||||||||
December 31, 2015 | Opening Balance | Gain (Loss) Recognized in Profit or Loss | Gain (Loss) Recognized in Equity | Net of Purchases, Sales and Agreements | Transfers between Level 1 and Level 2 | Closing Balance | ||||||||||||||||||
MCh$ | MCh$ | |||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Trading securities | — | — | — | — | — | — | ||||||||||||||||||
Financial assets available for sale | — | — | — | — | — | — | ||||||||||||||||||
Financial derivative instruments | 173 | 581 | — | — | — | 754 | ||||||||||||||||||
Forwards | — | — | — | — | — | — | ||||||||||||||||||
Swaps | 173 | 581 | — | — | — | 754 | ||||||||||||||||||
Call options | — | — | — | — | — | — | ||||||||||||||||||
Put options | — | — | — | — | — | — | ||||||||||||||||||
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Total | 173 | 581 | — | — | — | 754 | ||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||
Financial derivative instruments | — | — | — | — | — | — | ||||||||||||||||||
Forwards | — | — | — | — | — | — | ||||||||||||||||||
Swaps | — | — | — | — | — | — | ||||||||||||||||||
Call options | — | — | — | — | — | — | ||||||||||||||||||
Put options | — | — | — | — | — | — | ||||||||||||||||||
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Total | — | — | — | — | — | — |
F-244
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
1.2.3 Hierarchy for Remaining Assets and Liabilities
The following table classifies assets and liabilities not measured at fair value on a recurring basis, in accordance with the fair value hierarchy as of period end in June 2016 and year end in December 2015.
Non-Recurring Fair Value Measurement of Items | ||||||||||||||||||||
As of June 30, 2016 | Note | Estimated Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and due from banks | 5 | 1,854,662 | 1,854,662 | — | — | |||||||||||||||
Transactions pending settlement | 5 | 495,915 | 495,915 | — | — | |||||||||||||||
Receivables from repurchase agreements and securities borrowing |
| 94,448 | 94,448 | — | — | |||||||||||||||
Loans and advances to banks | 6 | 853,773 | 853,773 | — | — | |||||||||||||||
Loans to customers | 7 | 21,345,684 | — | — | 21,345,684 | |||||||||||||||
Financial assets held to maturity | 317,801 | — | 317,801 | — | ||||||||||||||||
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24,962,283 | 3,298,798 | 317,801 | 21,345,684 | |||||||||||||||||
LIABILITIES | ||||||||||||||||||||
Current accounts and other demand deposits | 10 | 5,054,222 | 5,054,222 | — | — | |||||||||||||||
Transactions pending settlement | 421,293 | 421,293 | — | — | ||||||||||||||||
Payables from repurchase agreements and securities lending | 332,494 | 332,494 | — | — | ||||||||||||||||
Savings accounts and time deposits | 12,147,907 | — | 12,147,907 | — | ||||||||||||||||
Borrowings from financial institutions | 2,212,071 | 2,212,071 | — | — | ||||||||||||||||
Debt instruments issued | 11 | 5,282,465 | — | 5,282,465 | — | |||||||||||||||
Other financial liabilities | 28,537 | 28,537 | — | — | ||||||||||||||||
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25,478,989 | 8,048,617 | 17,430,372 | — |
F-245
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Non-Recurring Fair Value Measurement of Items | ||||||||||||||||||||
As of December 31, 2015 | Note | Estimated Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and due from banks | 5 | 477,809 | 477,809 | — | — | |||||||||||||||
Transactions pending settlement | 5 | 62,086 | 62,086 | — | — | |||||||||||||||
Receivables from repurchase agreements and securities borrowing |
| 10,291 | 10,291 | — | — | |||||||||||||||
Loans and advances to banks | 6 | 99,493 | 99,493 | — | — | |||||||||||||||
Loans to customers | 7 | 7,228,761 | — | — | 7,228,761 | |||||||||||||||
Financial assets held to maturity | — | — | — | — | ||||||||||||||||
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7,878,441 | 649,679 | — | 7,228,761 | |||||||||||||||||
LIABILITIES | ||||||||||||||||||||
Current accounts and other demand deposits | 10 | 981,998 | 981,998 | — | — | |||||||||||||||
Transactions pending settlement | 26,298 | 26,298 | — | — | ||||||||||||||||
Payables from repurchase agreements and securities lending | 46,933 | 46,933 | — | — | ||||||||||||||||
Savings accounts and time deposits | 4,069,435 | — | 4,069,435 | — | ||||||||||||||||
Borrowings from financial institutions | 660,721 | 660,721 | — | — | ||||||||||||||||
Debt instruments issued | 11 | 1,723,689 | — | 1,723,689 | — | |||||||||||||||
Other financial liabilities | 21,457 | 21,457 | — | — | ||||||||||||||||
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7,530,531 | 1,737,408 | 5,793,123 | — |
F-246
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
1. Introduction:
As a result of its activities, the Bank is exposed to several types of risks mainly related to its loan portfolio and financial instruments.
Risk management policies are established with the objective of identifying and analyzing the risks faced by the Bank, setting adequate limits and controls and monitoring risks and compliance with limits. Risk management policies and structures are reviewed regularly so that they reflect changes in the Bank’s activities. The Bank, through its standards and procedures, aims to develop an appropriate control environment in which all employees understand their roles and responsibilities.
The following sections describe the Bank’s main business activities and policies as they relate to risk management.
Risk Management Structure:
Board of Directors
At ITAU CORPBANCA, the Board of Directors plays a leading role in corporate governance. It is responsible for establishing and monitoring the Bank’s risk management structure, for which it has a corporate governance system aligned with international best practices and Chilean regulations, mainly from the SBIF. One of the principal functions of the Board of Directors is to ensure that measures are in place to monitor, evaluate and guide senior management to ensure that their actions are in line with best practices. To accomplish this, various committees, support areas, codes and manuals have been developed, which lay out behavioral guidelines for the Bank’s associates and assist them in carrying out their functions related to controlling and managing the Bank’s risks.
Audit Committee
The Audit Committee’s objective is to monitor the efficiency of the Bank’s internal control systems and compliance with regulations and other internal standards. It is also responsible for supervising the different aspects of maintenance, application and functioning of the Bank’s internal controls, closely monitoring compliance with standards and procedures regulating its practices, and having a clear understanding of the risks that can arise from the business conducted by the Bank.
The committee is linked to the Board through the participation of at least two board members named by the Board itself. These members must report to the Board situations and events analyzed by the Committee, thus holding the Board responsible for complying with both self-control policies established and practiced by the entity as well as laws and regulations to which it is subject.
F-247
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
The Audit Committee must reinforce and support both the function of the Bank’s Office of the Comptroller and its independence from management and serve, at the same time, as a link between the internal audit department and the independent auditors as well as between these two groups and the Board of Directors.
Directors’ Committee
The Directors’ Committee’s objective is to strengthen the self-regulation of the Bank and other entities under its control, making the Board’s work more efficient through increased oversight of management’s activities.
It is also responsible for making the agreements necessary to protect shareholders, especially minority shareholders, examining executive compensation systems and approving related-party transactions.
In its role as overseer of corporate activity, the committee must inform the market of any violations or major corporate events as well as transactions that the company carries out with related parties of the controlling shareholder or takeovers of any form.
Corporate Governance Committee
For the purposes of this committee, which is aware of how difficult it is to bring together all aspects of good corporate governance under one definition, corporate governance shall be defined as the set of bodies and institutional practices that impact a company’s decision making process, contributing to sustainable value creation in a framework of transparency, proper management, risk control and corporate responsibility towards the market.
Therefore, appropriate corporate governance in a bank must align organizational incentives and promote the rights of shareholders and other direct or indirect stakeholders.
The Corporate Governance Committee is a consultation body of the Board of Directors whose mission is to ensure the existence and development within the Bank of the best corporate governance practices for financial entities. To this end, it will evaluate the current practices and policies, propose and make recommendations to the Board of Directors on improvements, reforms and adjustments that it deems appropriate and work to ensure proper implementation and application of these corporate governance practices and policies defined by the Bank’s Board.
Executive Loan Committees
The Executive Loan Committee’s objective is to approve transactions and matters submitted to it in accordance with defined limits and procedures, ensuring application and compliance of credit risk policies defined by the Bank and in strict adherence of current regulations.
F-248
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Asset-Liability Committee (ALCO)
After the Board and its specialized committees, the Asset-Liability Committee (hereinafter also “ALCO”) is the next highest body involved in managing the institution’s financial policies.
The committee’s main purpose is to comply with the financial guidelines set by the Board. In this spirit, it must approve and monitor the financial strategies that guide the Bank with respect to the composition of its assets and liabilities, cash inflows and outflows and transactions with financial instruments.
It will consider the diverse alternatives available to make decisions that ensure the highest and most sustainable returns with financial risk levels that are compatible with the business, current regulations and internal standards.
Asset Laundering, Terrorism Financing and Bribery Prevention Committee
This committee’s main purpose is to plan and coordinate activities to comply with policies and procedures to prevent asset laundering, terrorism financing and bribery, to maintain itself informed of the work carried out by the Compliance Officer, who has also been designated as the head of prevention in conformity with Law No. 20,393, as well as to adopt agreements to improve prevention and control measures proposed by the Compliance Officer.
Operational Risk Committee
This committee’s objective is to evaluate the status of critical processes that are directly related to the Bank’s Operational Risk and Internal Controls, in accordance with current SBIF standards in order to improve any weaknesses that the Bank may present and ensure proper implementation of regulatory changes. It is also responsible for attaining critical processes under an internal control environment that enables the Bank to operate stably and consistently, thus procuring desired levels of reliability, integrity and availability for information resources.
Compliance Committee
The Compliance Committee’s main purpose is to define, promote and ensure that the conduct of all ITAU CORPBANCA employees meets the highest possible standards of personal and professional excellence. Employee conduct should, at all times, be guided by the principles and values that embody our organization’s spirit, philosophy and good business practices. It is also responsible for ensuring that the Regulatory Compliance Model is properly applied in accordance with definitions set by this committee, and for maintaining itself informed of the work carried out by the Compliance Officer on such matters, as well as adopting agreements to improve control measures proposed by the Compliance Officer.
F-249
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Office of the Controller
The main function of the Office of the Controller is to support the Board of Directors and senior management to ensure maintenance, application and proper functioning of the Bank’s internal control system, which also entails supervising compliance with rules and procedures.
Code of Conduct and Market Information Manual
The objective is to continue progressing to become the best bank and have first-rate human capital. All associates, directors and subsidiaries must adhere to ethical standards based on principles and values designed to guide and maintain the highest possible standards.
In response to our clients’ trust and recognition, which are vital to our success, all associates and directors should strive to retain this trust, strictly complying with the General Code of Conduct.
2. Main Risks Affecting the Bank:
Credit risk is the risk of potential loss faced by the Company if a customer or counterparty in a financial instrument does not comply with its contractual obligations to the Bank.
The Corporate Risk Division is responsible for identifying, analyzing and monitoring risk at the Bank.
2.1 Quantitative and Qualitative Disclosures about Credit Risk
For ITAU CORPBANCA, proper risk management in all areas, particularly regarding credit risk, is one of the core pillars of the Bank’s portfolio management efforts, striving to maintain a proper risk/return ratio.
The Bank’s risk philosophy outlines three lines of defense: first, its business areas; second, the credit risk areas and third, the Internal Auditing Area.
The credit risk areas are fully autonomous from the business areas. Their size and organizational structure are in accordance with the size of their portfolio and the complexity of their transactions.
Each credit risk area uses tools and methodologies tailored to the particular segments it serves to manage and monitor credit risk. This allows them to properly control risk based on the size and complexity of the transactions carried out by the Bank.
Credit risk management is based on the following key elements:
• | Loan policies. |
• | Loan approval processes. |
• | Sound risk culture that is consistent with the Bank’s strategy. |
• | Regulatory and preventative outlook on risk. |
• | Human resources with considerable expertise in loan-related decision making. |
F-250
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
• | Active participation from Credit Risk Division in the approval process, using a market segmented structure. |
• | Defined monitoring and collections processes with involvement from the Commercial and Risk Areas. |
• | Dissemination of a risk culture throughout the Bank with internal and external training programs for the Commercial and Risk Areas. |
The Bank also has Credit Committees, which include Risk Managers, that determine debtor risk ratings. The Bank also has Credit Committees, which include Risk Managers, that determine debtor risk ratings.
These committees define individual and group exposure levels with customers as well as mitigating conditions such as collateral, loan agreements, etc. As part of the policies it defines that all customers must be analyzed at least once a year when the credit line is renewed or when a warning is activated, whichever occurs first.
The Bank’s risk management tool divides its portfolio into the following categories:
Normal Risk Portfolio
Substandard Portfolio
Default Portfolio
Normal Risk Portfolio
• | This includes debtors with payment capacity to comply normally with their obligations and commitments whose economic and financial situation shows no signs that this may change. |
• | They are evaluated by analyzing a general parametric model with three qualitative factors (industry, shareholders and access to credit) and three quantitative financial rating parameters, which are weighted based on the Company’s total sales. |
Substandard Portfolio
It includes debtors with financial difficulties that significantly affect their payment capacity and about which there are reasonable doubts regarding repayment of all principal and interest in the contractually agreed-upon terms, showing little room to meet its financial obligations in the short term. Among other customers, this portfolio includes debtors with recent balances between 30 and 89 days past due that can be attributed to the company’s performance.
They are evaluated by analyzing a default parametric model that includes payment behavior and also considers the impact of negative results (losses).
F-251
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Default Portfolio
This portfolio consists of debtors managed by the Normalization Area, including customers with individual default ratings and all customers that have defaulted on any loan as a result of payment capacity problems, regardless of their rating.
The Rating and Asset Control Area reviews compliance with this provision on a monthly basis.
Contingent Commitments
The Bank operates with diverse instruments that, although they are exposed to credit risk, are not reflected in the balance sheet. These include guarantors and pledges, documentary letters of credit, performance and bid bonds and commitments to grant loans.
Cosignatories and sureties represent an irrevocable payment obligation. In the event that a customer with a co-signer does not fulfill its obligations with third parties guaranteed by the Bank, this will affect the corresponding payments so that these transactions represent the same exposure to credit risk as a common loan.
Documentary letters of credit are commitments documented by the Bank on behalf of a customer that are guaranteed by merchandise on board, which therefore have less risk than direct indebtedness. Performance and bid bonds are contingent commitments that take effect only if the customer does not comply with a commitment made with a third party, guaranteed by them.
Financial Instruments
For this type of asset, the Bank measures the probability of not being able to collect from issuers using internal and external ratings such as risk rating agencies that are independent from the Bank.
Guarantees
In order to mitigate credit risk, guarantees have been established in the Bank’s favor. The main guarantees provided by customers are detailed as follows:
• | For loans to companies, the main guarantees are: |
• | Machinery and/or equipment |
• | Projects under construction, buildings with specific purposes and |
• | urban plots or land. |
• | For loans to individuals, the main guarantees are: |
• | Houses |
• | Apartments |
F-252
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Credit Quality by Financial Asset Class
The credit quality of financial assets is described in conformity with the SBIF Compendium of Accounting Standards. The following table summarizes financial assets by credit quality:
Normal Portfolio | Substandard Portfolio | Default Portfolio | Group Portfolio | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jun-16 | Normal | Default Portfolio | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A1 | A2 | A3 | A4 | A5 | A6 | Subtotal | B1 | B2 | B3 | B4 | Subtotal | C1 | C2 | C3 | C4 | C5 | C6 | Subtotal | Total | Portfolio | Subtotal | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and advances to banks | 746,143 | 59,252 | 48,659 | — | — | — | 854,054 | — | — | — | — | — | — | — | — | — | — | — | — | 854,054 | — | — | — | 854,054 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial | 32,301 | 350,954 | 3,201,127 | 4,890,788 | 2,962,039 | 676,337 | 12,113,546 | 194,612 | 137,996 | 62,743 | 116,859 | 512,210 | 65,666 | 9,822 | 64,733 | 18,801 | 33,136 | 151,359 | 343,517 | 12,969,273 | 2,229,791 | 143,899 | 2,373,691 | 15,342,964 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consumer | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 2,346,417 | 82,851 | 2,429,268 | 2,429,268 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 3,704,496 | 110,425 | 3,814,921 | 3,814,921 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Loans to customers | 32,301 | 350,954 | 3,201,127 | 4,890,788 | 2,962,039 | 676,337 | 12,113,546 | 194,612 | 137,996 | 62,743 | 116,859 | 512,210 | 65,666 | 9,822 | 64,733 | 18,801 | 33,136 | 151,359 | 343,517 | 12,969,273 | 8,280,705 | 337,175 | 8,617,880 | 21,587,153 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment securities | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Normal Portfolio | Substandard Portfolio | Default Portfolio | Group Portfolio | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dic-15 | Normal | Default Portfolio | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A1 | A2 | A3 | A4 | A5 | A6 | Subtotal | B1 | B2 | B3 | B4 | Subtotal | C1 | C2 | C3 | C4 | C5 | C6 | Subtotal | Total | Portfolio | Subtotal | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and advances to banks | 35,505 | 60,395 | 3,568 | — | — | — | 99,468 | — | — | — | — | — | — | — | — | — | — | — | — | 99,468 | — | — | — | 99,468 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial | 17,768 | 253,560 | 1,562,263 | 1,237,065 | 203,112 | 271,722 | 3,545,490 | 19,534 | 38,156 | 1,003 | 5,284 | 63,977 | 14,607 | 9,679 | 13,030 | 7,339 | 7,946 | 21,394 | 73,995 | 3,683,462 | 840,014 | 60,093 | 900,107 | 4,583,569 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consumer | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 668,718 | 37,842 | 706,560 | 706,560 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 1,469,502 | 64,346 | 1,533,848 | 1,533,848 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Loans to customers | 17,768 | 253,560 | 1,562,263 | 1,237,065 | 203,112 | 271,722 | 3,545,490 | 19,534 | 38,156 | 1,003 | 5,284 | 63,977 | 14,607 | 9,679 | 13,030 | 7,339 | 7,946 | 21,394 | 73,995 | 3,683,462 | 2,978,234 | 162,281 | 3,140,515 | 6,823,977 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment securities | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
F-253
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
FINANCIAL RISK MANAGEMENT
I) Definition and Principles of Financial Risk Management
While there is no single definition of financial risk, the Bank defines this risk as the possibility of an event having unexpected financial consequences on the institution. Although this definition involves a strong adversity component, it also involves an important opportunity component. Therefore, the purpose of financial risk management is not to eliminate this risk, but rather to limit its exposure to negative events in line with the risk appetite of the Bank’s shareholders and the regulations that govern the institution. The main financial risks to which the Bank is exposed are: Market Risk, Liquidity Risk and Counterparty Risk.
I.1) Market Risk
Market risk is the exposure to economic gains or losses caused by movements in prices and market variables. This risk stems from the activities of the trading and banking books. In the first case, it comes from activities intended to obtain short-term gains and from the intensive use of fair value instruments. In the second case, with a more long-term vision, it stems from commercial activities with products valued at amortized cost. The following section describes the main market risk factors to which the Bank and its subsidiaries are exposed:
I.1.a) Exchange Rate Risk
Foreign exchange risk is the exposure to adverse movements in the exchange rates of currencies other than the base currency for all balance sheet and off-balance sheet positions. The main sources of foreign exchange risk are:
• | Positions in foreign currency (FX) within the trading book. |
• | Currency mismatches between assets and liabilities in the banking book. |
• | Cash flow mismatches in different currencies. |
• | Structural positions produced from consolidating assets and liabilities from our foreign branches and subsidiaries denominated in currencies other than the Chilean peso. As a result, movements in exchange rates can generate volatility within the Bank’s income statement and equity. This effect is known as “translation risk”. |
I.1.b) Indexation Risk
Indexation risk is the exposure to changes in indexed units (e.g. UF, UVR or others) linked to domestic or foreign currency in which any instruments, contracts or other transactions recorded in the balance sheet may be denominated.
F-254
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
I.1.c) Interest Rate Risk
Interest rate risk is the exposure to movements in market interest rates. Changes in market interest rates can affect both the price of instruments recorded at fair value and the financial margin and other gains from the banking book such as fees. Fluctuations in interest rates also affect the Bank’s economic value.
Interest rate risk can be represented by sensitivities to parallel and/or non-parallel yield shifts with the effects reflected in the prices of instruments, the financial margin, equity and economic value.
Movements in interest rates can be explained by at least the following risk factors:
• | Systemic risk |
• | Funding liquidity risk |
• | Credit risk |
• | Specific risk |
I.1.d) Prepayment or Call Risk
This risk arises from the possible prepayment (partial or full) of any transaction before its contractual maturity, generating the need to reinvest the freed cash flows at a different rate than that of the prepaid transaction.
I.1.e) Underwriting Risk
This risk arises as a result of the Bank underwriting a placement of bonds or other debt instruments, taking on the risk of coming to own the portion of the issuance that could not be placed among potential interested parties.
I.1.f) Correlation Risk
Correlation risk is the exposure to changes in estimated correlations between the relative value of two or more assets, or a difference between the effective and estimated correlation over the life of the transaction.
I.1.g) Market Liquidity Risk
Market liquidity risk is the exposure to losses as a result of the potential impact on transaction prices or costs in the sale or closure of a position. This risk is related to the particular market’s degree of depth.
F-255
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
I.1.h) Volatility Risk
In addition to the exposure related to the underlying asset, issuing options has other risks. These risks arise from the non-linear relationship between the gain generated by the option and the price and level of the underlying factors, as well as the exposure to changes in the perceived volatility of these factors.
I.2) Funding Liquidity Risk
Funding liquidity risk is the exposure of the Bank and its subsidiaries to events that affect their ability to meet, in a timely manner and at reasonable costs, cash payment obligations arising from maturities of time deposits that are not renewed, withdrawals from demand accounts, maturities or settlements of derivatives, liquidations of investments or any other payment obligation.
Financial institutions are exposed to funding liquidity risk that is intrinsic to the role of intermediary that they play in the economy. In general, in financial markets demand for medium or long-term financing is usually much greater than the supply of funds for those terms while short-term financing is in considerable supply. In this sense, the role of intermediary played by financial institutions, which assume the risk of satisfying the demand for medium and long-term financing by brokering short-term available funds, is essential for the economy to function properly.
Appropriately managing funding liquidity risk not only allows contractual obligations to be met in a timely manner, but also enables:
• | the liquidation of positions, when it so decides, to occur without significant losses. |
• | the commercial and treasury activities of the Bank and its subsidiaries to be financed at competitive rates. |
• | the Bank to avoid fines or regulatory penalties for not complying with regulations. |
I.3) Counterparty Risk
Credit default risk is the risk of loss arising from non-compliance by a given counterparty, for whatever reason, in paying all or part of its obligations with the Bank under contractually agreed-upon conditions. This risk also includes a given counterparty’s inability to comply with obligations to settle derivative operations with bilateral risk.
The Bank diversifies credit risk by placing limits on the concentration of this risk in any one individual debtor, debtor group, product, industry segment or country. Such risks are continuously monitored and the limits by debtor, debtor group, product, industry and country are reviewed at least once per year and approved by the respective committee.
Exposure to credit risk is evaluated using an individual analysis of the payment capacity of debtors and potential debtors to meet their obligations on time and as agreed.
Furthermore, the Bank has strict controls for derivative contracts negotiated directly with its counterparties. This exposure is managed using limits per customer based on a risk methodology equivalent to credit risk exposure. Lastly, the values of derivatives are adjusted to reflect the expected loss from the counterparty.
F-256
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
II) Financial Risk Management
The process of managing financial risks is an ongoing, interlinked process that begins by identifying the risks to which the institution is exposed. After that, the Bank calculates the potential impact of that exposure on its profit or loss and limits it to a desired level. This involves actively monitoring risk and studying how it evolves over time. The risk management process can be subdivided into the following stages:
II.1) Identification of Financial Risks
The Financial Risk Division has a highly technical team that is constantly monitoring the activities of the Bank and its subsidiaries to search for potential risks that have not been quantified and controlled. ITAU CORPBANCA has a structure that facilitates this role of identifying risks by preserving the division’s independence and ensuring active participation from management in creating/modifying products. After a risk is identified, it is quantified to see the potential impact on value creation within the institution.
II.2) Quantification and Control of Financial Risk Exposure
Once a risk has been identified, the Financial Risk Division is responsible for mapping the risk using the appropriate quantification metrics. The Board and senior management are aware of the methods used to measure exposure and are responsible for setting the institution’s desired risk appetite levels (by business unit, associate, risk factor, area, etc.), always taking care to adhere to current regulations. The limit setting process is the instrument used to establish the equity available to each activity. Limit determination is, by design, a dynamic process that responds to the risk level considered acceptable by senior management.
The Financial Risk Division requests and proposes a system of quantitative and qualitative limits and warning levels that affect liquidity and market risk; this request must be authorized by the ALCO and the Board. It also regularly measures risk incurred, develops valuation tools and models, performs periodic stress testing, measures the degree of concentration with interbank counterparties, drafts policy and procedure handbooks and monitors authorized limits and warning levels, which are reviewed at least once per year.
The limit structure requires the division to carry out a process that includes the following steps:
• | Efficiently and comprehensively identify and outline the main types of financial risks incurred so that they are consistent with the running of the business and the defined strategy. |
• | Quantify and communicate to business areas the risk levels and profile that senior management considers acceptable in order to avoid incurring undesired risks. |
F-257
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
• | Give business areas flexibility to take on financial risks in an efficient and timely manner based on changes in the market and business strategies, and always within the risk levels considered acceptable by the entity. |
• | Enable business generators to take on a cautious yet sufficient level of risk in order to achieve budgeted results. |
• | Outline the range of products and underlying assets with which each treasury unit can operate, based on characteristics like the model, valuation systems and liquidity of the instruments involved, among other factors. |
The metrics, by type of risk, used to quantify exposure or demonstrate that a risk has been materialized are detailed below:
II.2.a) Market Risk Metrics
Given the complexity and relevance of the portfolios managed by ITAU CORPBANCA, the following instruments have been chosen to control market risk based on the characteristics of the trading and banking book portfolios:
Value at Risk (VaR) Calculation
Given the complexity and relevance of the portfolios managed by ITAU CORPBANCA, the following instruments have been chosen to control market risk based on the characteristics of the trading and banking book portfolios:
• | Calculation of Historical Value at Risk (non-parametric): this measurement provides the maximum potential economic loss at a certain confidence level and a given time horizon. Historical VaR, as opposed to Statistical or Parametric VaR, is based on the observed distribution of past returns, does not need to make assumptions of probability distributions (frequently normal distribution) and, therefore, does not need a mean (assumed 0), standard deviation and correlations across returns (parameters). The Bank uses a 99% confidence level and a time horizon of 1 day. |
• | Calculation of volatility-adjusted Historical Value at Risk (non-parametric): this measurement is based on the above and the P&L vector is adjusted according to whether it is facing a period of greater or less volatility. |
The Board defines limits on the Value at Risk (as of the end of the first half of 2016 it uses the volatility-adjusted Historical VaR method) that can be maintained, which is monitored on a daily basis. The measurement is also subjected to backtesting to verify that the daily losses that
F-258
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
effectively occurred do not exceed VaR more than once every 100 days. The result is monitored daily to confirm the validity of the assumptions, hypothesis and the adequacy of the parameters and risk factors used in the VaR calculation. The Bank in turn calculates VaR for subportfolios and risk factors, which allows it to quickly detect pockets of risk. Since VaR does not consider stress scenarios, they are complemented by stress testing, which is detailed below.
Stress Scenarios
The Bank uses the following methodologies to quantify its exposure to stress scenarios.
• | New Worst Scenario: This metric consists of the three worst submetrics, the first of which is a 10-day VaR, the second is standard shocks of 10% to the different risk factors to which the Bank is exposed and the last is similar to the second but with shocks from a risk factor voting process involving different areas (local and overseas) and with dynamic weighting based on the degree of “success” attained in the prior votes. |
• | Worst Combination: This is based on the last of the three preceding metrics but includes the mega-pessimistic scenario and looks for the worst result by risk factor. |
• | Accounting Worst Combination: This is also based on the same three metrics in the first point but includes the position mapping is done from a perspective of accounting exposure. |
• | Historical Scenarios: Quantification of loss in value in stress situations experienced in the past (subprime crisis, September 11th, etc.). |
Sensitivity Measurements
• | Gap Analysis: Representation by risk factor of cash flows expressed in fair value, assigned at the maturity date and by currency. It facilitates the detection of concentrations of interest rate risk over different time frames. All balance sheet and off-balance sheet positions must be ungrouped into cash flows and placed at the repricing / maturity point. For those accounts that do not have contractual maturities, an internal model is used to analyze and estimate their durations and sensitivities. |
F-259
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
• | Quantification of currency positions other than CLP and exposure to indexation: The sum of the positions detailed above are classified by book and by their effect on the Bank’s financial statements, reflecting the spot exposure to each risk factor. It is important to highlight the impact of structural exchange rate risk arising from the Bank’s positions in currencies other than the Chilean peso related primarily to the consolidation of investments in subsidiaries or affiliates and the results and hedges of these investments. The process of managing structural exchange rate risk is dynamic and attempts to limit the impact of currency depreciation, thus optimizing the financial cost of hedges. The general policy for managing this risk is to finance them in the currency of the investment provided that the depth of the market so allows and the cost is justified by the expected depreciation. One-time hedges are also taken out when the Bank considers that any currency may weaken beyond market expectations with respect to the Chilean peso. As of June 30, 2016, greater ongoing exposure was concentrated in Colombian pesos (approximately US$1.0 billion). The Bank hedges part of these positions on a permanent basis using currency derivatives. The Bank’s current exposure to USDCLP, EURUSD and CLFCLP risk on P&L is detailed as follows. |
F-260
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
• | Sensitivity (DV01): Measure of sensitivity of portfolio results if the zero coupon interest rate of the risk factor increases by 1 basis point (0.01%) for different maturities and in annualized terms. |
Regulatory Risk Measurements
The standardized methodology provided by the Chilean Central Bank (Chapter III-B-2.2 of the Compendium of Financial Standards) and complemented by the SBIF (RAN 12-21), is a risk measurement based on the standard methodology of the Basel Committee, which is designed to determine exposure to market risks for the Banking and Trading Books using adjustment and sensitivity factors.
The Chilean Central Bank establishes a regulatory limit for the sum of all interest rate risk in trading positions (including derivatives) and currency risk. The Bank, on an individual level, must continuously observe those limits and report to the SBIF on a weekly basis regarding its positions at risk and compliance with those limits. It must also inform the SBIF each month on the consolidated positions at risk of subsidiaries and foreign subsidiaries. The regulatory limit establishes that regulatory capital must be adequate enough to cover the sum of 8% of credit and market-risk weighted assets.
F-261
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Risk Measurements for Options
Options are products with special features, such as having non-linear exposure with respect to the price of the underlying asset. This is why the Bank measures each of “the Greeks” of the options, mainly delta, gamma and vega. The first Greek is part of the Bank’s currency position that has limits for each of the related books. The other two measurements have independent limits and are also monitored on a daily basis.
Other Internal Risk Measurements
• | Measuring Positions: An important part of management control is the daily monitoring of positions, performing an exhaustive analysis of the changes that take place in portfolios in order to detect any possible incidences for immediate correction. |
• | Measuring Volatility: Analysis of volatilities by maturity and risk factor in order to observe market movements. This complements the VaR analysis by enabling the Bank to understand the movements that are generated. |
F-262
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Use of Limits and Market Risk Positions
As of period-end 2016 and 2015, the main market risks are concentrated in interest rate risk in the Trading Book and interest rate and indexation risk in the Banking Book as a result of the Bank’s structural position. The uses of the main market risk limits as of June 30, 2016 and 2015, are:
Chile:
% Limit Use | ||||||||
06-30-16 | 06-30-15 | |||||||
VaR | ||||||||
Proprietary trading | 27% | 21% | ||||||
Market making trading | 24% | 67% | ||||||
Banking | 29% | 17% | ||||||
VaR Stress - New Worst | ||||||||
Proprietary trading | 34% | 49% | ||||||
Market making trading | 32% | 32% | ||||||
Banking | 28% | 18% | ||||||
VaR Stress - Worst Combination | ||||||||
Proprietary trading | 16% | 9% | ||||||
Market making trading | 16% | 7% | ||||||
Banking | 10% | 26% | ||||||
Options Risk | ||||||||
Gamma risk | 0% | Not applicable. | ||||||
Vega risk | 45% | Not applicable. |
Exposure MCh$ | ||||||||
2016 | 2015 | |||||||
C41 | 224,950 | 37,195 | ||||||
Interest rate risk | 115,018 | 37,057 | ||||||
Currency risk | 109,932 | 138 | ||||||
C40 Short-term | 70,304 | 45,830 | ||||||
Short-term exposure to interest rate risk (STE) | 35,123 | 25,246 | ||||||
Exposure to indexation risk (IR) | 30,753 | 20,124 | ||||||
Reduced fee revenue due to interest rate sensitivity (RFR) | 4,428 | 460 | ||||||
C40 Long-term | 303,147 | 36,936 | ||||||
Long-term exposure to interest rate risk (LTE) | 303,147 | 36,936 |
Note:comparative basis for 2015 is only Itaú Chile
F-263
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Colombia:
The regulatory model for market risk in Colombia is based on the standard Basel model, separated into risk factors (i.e. interest rate, exchange rate and stock price). The volatilities applied to each of the factors are established by regulators. This result is used to calculate the solvency margin, to which a factor equivalent to 100/9 is applied.
Risk-weighted assets (RWA) | 31-12-2013 | 31-03-2016 | ||||||
Market risk | 295,835 | 2,433,053 | ||||||
Trading | 295,835 | 2,433,053 | ||||||
Structural (currency) | ||||||||
Credit risk | 6,024,691 | 25,335,542 | ||||||
Total RWA | 6,320,526 | 27,768,595 | ||||||
Regulatory capital | 804,713 | 3,568,254 | ||||||
Basel index | 13.36 | % | 14.08 | % | ||||
Basel index (includes ERM) | 12.73 | % | 12.85 | % | ||||
Net interest income | 235,866 | 1,104,523 | ||||||
% Consumption | 70.69 | % | 69.05 | % | ||||
Figures in millions of Colombian pesos |
Consolidated:
With respect to the consumption of consolidated limits from a stress perspective and classified based on its impact on the financial statements, we have the following uses:
% Limit Use | ||||
06-30-16 | ||||
VaR Stress - New Worst | ||||
P&L | 24 | % | ||
Equity | 21 | % | ||
Economic value | 49 | % |
The consumption of P&L with a stress outlook is MCh$9,027, which is equivalent to a VaR of MCh$1,805.
F-264
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
II.2.b) Liquidity Risk Metrics
Liquidity risk measurements are focused mainly on quantifying whether the institution has sufficient resources to meet its intraday and interday obligations under both normal and stress conditions. They also include a framework of indicators to forecast the materialization of liquidity stress scenarios and clarity as to the steps to follow once the risk has materialized.
Liquidity Gap - Chile
The liquidity gap provides information regarding contractual cash inflows and outflows expected for a given period in each of the currencies in which the Group operates. It measures the need or the net excess funds at a given date and reflects the level of liquidity maintained under normal market conditions. Two types of liquidity gap analyses are performed based on the balance sheet item in question:
• | Contractual liquidity gap: In accordance with SBIF chapter 12-20, all on and off-balance-sheet cash flows are analyzed provided that they contribute cash flows at their contractual maturity point. For assets without contractual maturities, it uses an internal analysis model based on a study of the statistical behavior of products and it determines the stable and unstable balance for liquidity purposes. A similar methodology is used to analyze the loan portfolio in order to determine the gap between the assets and their contractual cash flows as a result of payment delinquency. |
• | Adjusted liquidity gap: local regulations establish that, with prior authorization from the regulator, cash outflows to retail counterparties may be assigned a different maturity than their contractual maturity based on their statistical behavior. However, at least 25% of obligations with retailers in local currency should be maintained within contractual maturities and 40% for foreign currency obligations. |
The limits that govern the Bank are:
• | Foreign Currency Gap - 30 Days (adjusted): The sum of the maturity mismatches for local and foreign currency, corresponding to the maturity tranches up to 30 days may not exceed core capital. |
• | Total Gap - 30 Days (adjusted): This requirement must also be met for the sum of foreign currency mismatches for those maturity tranches. |
• | Total Gap - 90 Days (adjusted): The sum of the maturity mismatches for tranches up to 90 days in both local and foreign currency may not exceed twice core capital. |
The following table shows the use of regulatory maturity mismatches with respect to the adjusted consolidated “Liquidity Situation”:
F-265
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
As of June 30, 2016 | ||||||||
Measurement | 2016 Use | 2015 Use | ||||||
30 days foreign currency | -6 | % | -18 | % | ||||
30 days foreign and local currency | 11 | % | 61 | % | ||||
90 days foreign and local currency | 14 | % | 47 | % |
2016 Adjusted Basis MCh$ | ||||||||||||
Consolidated currency | Up to 7 Days | From 8 to 30 Days | From 31 to 90 Days | |||||||||
Cash flows receivable (assets) and income | 3,528,299 | 5,125,687 | 5,053,017 | |||||||||
Cash flows payable (liabilities) and expenses | 3,805,939 | 5,197,732 | 5,569,744 | |||||||||
Mismatches | 277,640 | 72,045 | 516,727 | |||||||||
Mismatches subject to limits | 349,685 | 866,412 | ||||||||||
Limits | ||||||||||||
Capital x1 | 3,177,583 | |||||||||||
Capital x2 | 6,355,166 | |||||||||||
Available margin | 2,827,898 | 5,488,754 | ||||||||||
Foreign currency | ||||||||||||
Cash flows receivable (assets) and income | 766,792 | 397,719 | 270,034 | |||||||||
Cash flows payable (liabilities) and expenses | 501,486 | 486,864 | 558,527 | |||||||||
Mismatches | 265,306 | 89,146 | 288,493 | |||||||||
Mismatches subject to limits | 176,160 | 112,332 | ||||||||||
Limit | ||||||||||||
Capital x1 | 3,177,583 | |||||||||||
Capital x2 | ||||||||||||
Available margin | 3,353,743 | |||||||||||
2015 Contractual Basis MCh$ | ||||||||||||
Consolidated currency | Up to 7 Days | From 8 to 30 Days | From 31 to 90 Days | |||||||||
Cash flows receivable (assets) and income | 1,220,465 | 402,100 | 637,434 | |||||||||
Cash flows payable (liabilities) and expenses | 1,388,731 | 695,381 | 896,305 | |||||||||
Mismatches | 168,265 | 293,281 | 258,871 | |||||||||
Mismatches subject to limits | 461,546 | 720,417 | ||||||||||
Limits | ||||||||||||
Capital x1 | 759,108 | |||||||||||
Capital x2 | 1,518,217 | |||||||||||
Available margin | 297,562 | 797,799 | ||||||||||
Foreign currency | ||||||||||||
Cash flows receivable (assets) and income | 384,310 | 85,617 | 181,662 | |||||||||
Cash flows payable (liabilities) and expenses | 167,304 | 165,136 | 233,951 | |||||||||
Mismatches | 217,006 | 79,519 | 52,290 | |||||||||
Mismatches subject to limits | 137,487 | 85,197 | ||||||||||
Limit | ||||||||||||
Capital x1 | 759,108 | |||||||||||
Capital x2 | ||||||||||||
Available margin | 896,595 |
Note:comparative basis for 2015 is only Itaú Chile
F-266
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Liquidity Gap - Colombia
In the Colombian market, the regulatory measurement known as the standard LRI model measures 7 and 30-day liquidity gaps. It allows entities to quantify the level of minimum liquid assets, in domestic and foreign currency, that they should maintain each day in order to, at a minimum, meet their payment obligations fully and on time. Entities must be capable of measuring and forecasting the cash flows of their assets, liabilities, off-balance sheet positions and derivative instruments for different time horizons in both normal scenarios and crisis scenarios where cash flows vary significantly from expectations as a result of unforeseen changes in markets, the entity or both.
The following tables show the evolution of the 7 and 30 day LRI in Colombia in 2016.
CONSOLIDATED 7-DAY AND 30-DAY LRI - COLOMBIA
Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR)
These are liquidity ratios proposed by the “Basel III Committee on Banking Supervision” (“BIS III”) that were adopted by the Chilean Central Bank and the SBIF with some minor local adjustments. The LCR aims to measure the sufficiency of high-quality assets to face a 30-day funding stress scenario. At a minimum, the institution must survive until the thirtieth day of the stress scenario with funding from liquid assets in its portfolio because, as described in the standard, managers and/or supervisors would have been able to establish timely corrective measures. On the other hand, the NSFR focuses on maintaining sufficient stable funding to meet (long-term) stable funding needs. The Bank calculates LCR and NSFR using the methodologies defined by the local regulator and the Brazilian regulator. In both cases, LCR has a limit of 100%.
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
In addition to calculating the daily LCR, the Bank forecasts the indicator under different assumptions and considering the maturity structure. This tool enables the ratio to be effectively managed by providing evidence of potential maturity concentrations.
Liquidity Warning Levels
Warning levels seek to provide evidence or signs of potential adverse liquidity events. The most relevant warning levels include:
• | Counterparty and maturity concentration: Maps are used to monitor counterparty deposit resources and maturities in order to detect concentrations that can commit minimum cash levels. |
• | Currency concentration: The preceding concentration is also analyzed by currency to identify any currency mismatch that cannot be covered due to a tight currency market. |
• | Product concentration: The Bank also studies the concentration of deposits by product and the evolution of this type of funding. Monitoring product concentration enables us to further diversify our funding sources and focus strategies to improve the quality and quantity of the resources obtained. Studying stocks also enables us to both identify abnormal volatilities in these funding sources that can quickly become possible undesired liquidity problems and also to suggest action plans for managing them. The following figure shows the composition of the main funding sources: |
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ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
• | Reserve Management: Accumulated reserves (surplus or deficit) must be compared with reserve requirements for the full remainder of the period. In addition to preventing regulatory violations, it aims to optimize resources. |
• | Evolution of funding rates: The Bank’s cost of funding is studied by segment and is also compared with industry figures. This indicator enables us to demonstrate any rise in the cost of funding for the market or a relative rise in the Bank’s cost of funding and, based on this, to identify the reasons underlying this rise and take the proper corrective actions. |
• | Diversification of liquid assets: the Bank continuously monitors the composition and amount of its liquid assets in order to maintain a balanced composition to better meet its liquidity needs. The following table details the composition and amount of our liquid assets as defined by the Chilean Central Bank: |
F-269
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Stress Tests
Stress testing is a tool that complements the analysis of liquidity risk management as it enables the Bank to know its ability to respond in the event of extreme illiquid conditions and to trigger its contingency plans, if necessary, to address such conditions.
In particular, three types of scenarios are modeled:
• | Individual Crisis: the financial system losses confidence in the Bank, which translates into important withdrawals from demand accounts, decreases in deposits and bond investments by customers and penalties to its funding rates. |
• | Systemic Crisis: The weakening (whether local, global or both) of financial, economic and credit conditions that causes the market to seek refuge in the U.S. dollar, greater restrictions on access to credit from abroad, massive outflows of capital, increases in the use of lines of credit, decreases in credit risk exposure (which is replaced by sovereign risk) and downward adjustments in expectations for the monetary policy rate. |
• | Systemic Crisis combined with Individual Crisis: situation that combines characteristics of an individual crisis and a systemic crisis. In this situation, the Bank would be in an even more difficult situation since, for example, the system would take conservative positions and that would decrease the resources obtained from selling loan portfolios with high credit quality. |
F-270
ITAU CORPBANCA AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Contingency Plan
Liquidity management at ITAU CORPBANCA is focused on taking all measures necessary to prevent a crisis. The causes of a liquidity crisis cannot always be predicted. As a result, contingency plans focus on modeling actions to be taken in the event of potential crisis by analyzing different scenarios, identifying types of crises, designing internal and external communication plans and assigning individual responsibilities. At the first sign of crisis, it specifies clear lines of communication and suggests a broad range of responses to different severity levels. Since crises can evolve locally and/or globally, each local unit must prepare a funding contingency plan that details the amount of assistance or funding it might potentially need from the central unit during a crisis. The contingency plan must be presented to the ALCO Committee at least twice a year in order to be reviewed and updated. However, these plans must be updated more frequently if the need is suggested by market circumstances.
II.3) Monitoring and Governance of Financial Risks
The Board is the body in charge of the Bank’s management. Its duties include defining the institution’s strategic guidelines and supervising its risk management structure.
Risk management policies are established with the objective of identifying and analyzing the risks faced by the Bank, setting adequate limits and controls and monitoring risks and compliance with limits. Risk management policies and structures are reviewed regularly so that they reflect changes in the Bank’s activities. The Bank, through its standards and procedures, aims to develop an appropriate control environment in which all employees understand their roles and responsibilities.
The Audit Committee supervises the way in which the Bank monitors and manages risk and compliance with the Bank’s risk management policies and procedures and checks that the risk management framework is appropriate for the risks faced by the Bank. This committee is assisted by the Internal Audit Department in its supervisory role. Internal Audit performs regular and special reviews of risk management controls and procedures, whose results are reported to the Audit Committee, in accordance with the Bank’s governance outlook. The Risk Division is responsible for identifying, analyzing, controlling and monitoring risk at the Bank and is comprised of the Financial Risk Division and the Operational Risk and Control Division. The Credit Risk Division is responsible for managing credit risk for the Corporate Banking, Treasury, Companies and Retail divisions.
The Treasury Division is charged with managing financial risk in the Bank’s trading and banking books. In the banking book, this consists of managing inflation, interest rate and liquidity risk in the Bank’s balance sheet in order to maximize returns in compliance with corporate policies and current laws and regulations. The trading book refers to the portfolio of financial instruments acquired to obtain short-term gains from increases in fair value arising
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As of June 30, 2016 and 2015 and December 31, 2015
from changes in the values of underlying variables. This book is responsible for managing currency risk for the entire balance sheet. Management of the Bank’s funding structure is an important component of managing liquidity and interest rate risk within the banking book or balance sheet.
The Financial Risk Division is independent from the business areas and is responsible for controlling and measuring the Bank’s financial risks (market and liquidity risk) as well as supplying the ALCO Committee with the limits for those risks, which are established in the respective policies.
The Bank’s financial management is framed within the following policies:
• | Financial Risk Policy, which is comprised of the Liquidity Management Policy, the Market Risk Management Policy and the Valuation Policy. |
• | Financial Investment Policy (referring to the Bank’s current non-derivative financial instruments and their classification and management). |
• | Derivative Policy (referring to the Bank’s current derivative instruments and their classification and management). |
Financial Risk Management Principles
• | Risk is monitored and controlled by parties independent from those managing risk, thus correctly aligning incentives. |
• | Management efforts should be flexible, within the framework permitted by policies, rules and current regulations. |
• | Senior management establishes the guidelines for risk appetite, and |
• | is informed periodically on risk levels assumed, contingencies and instances when limits are exceeded. |
Financial Risk Management Committees
In order to guarantee the flexibility of management efforts and communication of risk levels to senior management, the following network of committees has been established:
Daily Commission: Meets daily to review financial conditions and the latest market movements. This committee reviews the relevance of positions on a daily basis in order to detect in advance any scenarios that could negatively impact returns and liquidity. It also monitors the performance of strategies used for each of the portfolios.
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As of June 30, 2016 and 2015 and December 31, 2015
Market and Proprietary Trading Committee: Meets biweekly to analyze management of positions. This committee reviews local and global economic conditions and projections in order to analyze the potential benefits and risks of the strategies executed and evaluate new strategies.
ALM Committee: Meets biweekly to analyze management of structural interest rate and indexation risk in the banking book.
Liquidity and Market Committee: Meets biweekly to analyze management of funding liquidity risk.
Asset-Liability Committee (ALCO): Meets biweekly to analyze economic and financial conditions and inform senior management of market and liquidity risk levels assumed by presenting indexes of market and funding liquidity risk, limit consumption and results of stress tests.
Board of Directors The Board of Directors is informed each quarter of the market and funding liquidity risk levels assumed by presenting established risk indexes, limit consumption and results of stress tests.
Instrument Strategy
Derivatives: The strategies that govern the use of derivatives are defined in the Derivative Policy, which states that derivatives can be classified as:
• | Trading: This is used to classify derivatives entered into for trading and with customers and, therefore, they belong to the Trading Book. |
• | Accounting hedges: This classification is for derivatives entered into to hedge any balance sheet item and, therefore, they belong to the Banking Book. Its framework of action is defined in the Accounting Hedge Policy. |
Non-Derivative Financial Investments: The strategies that govern the use of these instruments are defined in the Investment Policy, which states that derivatives can be classified as:
• | Held for Trading: This is used to classify instruments acquired to obtain short-term gains from changes in market conditions that are part of the Trading Book. |
• | Held to Maturity: These are investments that will be held to maturity. |
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As of June 30, 2016 and 2015 and December 31, 2015
• | Available for Sale: This portfolio is used to classify instruments that do not fall within the other categories. This portfolio is part of the Banking Book and is used to manage the Bank’s structural positions and liquidity. |
CAPITAL REQUIREMENTS
The primary objectives of capital management are to ensure compliance with regulatory requirements and to maintain a solid risk rating and healthy capital ratios. During 2016, the Bank has complied fully with all capital requirements.
The Bank maintains and actively manages core capital to cover the risks inherent to its business. The Bank’s capital adequacy is monitored using, among other measures, indices and rules established by the SBIF.
In accordance with the General Banking Law, the Bank must maintain a minimum ratio of Regulatory Capital to Consolidated Risk-Weighted Assets of 8%, net of required provisions, and a minimum ratio of Core Capital to Total Consolidated Assets of 3%, net of required provisions. For this purpose, Regulatory Capital is determined based on Capital and Reserves or Core Capital, adjusted by:
a. | adding subordinated bonds limited to 50% of Core Capital and, |
b. | subtracting the asset balance of goodwill and unconsolidated investments in companies. |
Assets are weighted using risk categories, which are assigned a risk percentage based on the capital needed to back each asset. There are 5 risk categories (0%, 10%, 20%, 60% and 100%). For example, cash, due from banks and financial instruments issued by the Chilean Central Bank have 0% risk, which means that, in accordance with current standards, no capital is required to back these assets. Property, plant and equipment have 100% risk, which means that minimum capital equivalent to 8% of the value of these assets is needed.
All derivative instruments traded off-market are taken into account to determine risk assets using conversion factors over notional values, thus calculating the value of the credit risk exposure (or “credit equivalent”). For weighting purposes, “credit equivalent” also considers contingent loans not recorded in the consolidated statement of financial position.
As instructed in Chapter 12-1 “Equity for Legal and Regulatory Purposes” of the SBIF RAN, beginning in January 2010, a regulatory change was implemented that made effective Chapter B-3 of the Compendium of Accounting Standards and its subsequent amendments, which changed the risk exposures of contingent loans, passing from 100% to the percentages indicated below:
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
Type of Contingent Loan | Exposure | |||
a) Guarantors and pledges | 100 | % | ||
b) Confirmed foreign letters of credit | 20 | % | ||
c) Issued documentary letters of credit | 20 | % | ||
d) Bank guarantees | 20 | % | ||
e) Interbank guarantee letters | 100 | % | ||
f) Unrestricted lines of credit: | 35 | % | ||
g) Other loan commitments: | ||||
- Student loans (Law No. 20,027) | 15 | % | ||
- Other | 100 | % | ||
h) Other contingent loans | 100 | % |
As of year-end, the ratio of assets to risk-weighted assets is as follows:
Amount | Amount | Ratio | Ratio | |||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Determination according to Capital 12-1 RA | MCh$ | MCh$ | ||||||||||||||
Total Assets | 33,965,614 | 9,767,118 | ||||||||||||||
Risk- weighted assets | 24,885,151 | 7,338,585 | ||||||||||||||
Basic Capital | 3,184,670 | a | 792,503 | 9.38 | %c | 8.11 | % | |||||||||
Regulatory Capitaly | 3,292,840 | b | 871,029 | 13.23 | %d | 11.87 | % |
(a) | Core capital is defined as the net amount that should be shown in the consolidated financial statements as “equity attributable to equity holders of the Bank” as indicated in the Compendium of Accounting Standards. |
(b) | Regulatory capital is equal to core capital plus subordinated bonds, additional provisions, and non-controlling interest as indicated in the Compendium of Accounting Standards; however, if that amount is greater than 20% of core capital, only the amount equivalent to that percentage will be added; goodwill is subtracted and if the sum of the assets corresponding to minority investments in subsidiaries other than banking support companies is greater than 5% of core capital, the amount that the sum exceeds that percentage will also be subtracted. |
(c) | The consolidated core capital ratio is equal to core capital divided by total assets. |
(d) | The consolidated solvency ratio is equal to the ratio of regulatory capital to weighted assets. |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
As of year-end 2016, the Bank includes the following information within its management objectives, policies and processes:
• | In accordance with the SBIF’s authorization of the business combination, it determined that the resulting bank (from April 1, 2016 onward) shall maintain regulatory capital of not less than 10% of its risk-weighted assets. |
• | The shareholder agreement established “Optimum Regulatory Capital” for Itaú CorpBanca (Chilean Bank) or CorpBanca Colombia (Colombian Bank), as appropriate, (a) of the greater of (i) 120% of the minimum regulatory Capital Ratio required by applicable law in the respective country; and (ii) the average minimum regulatory Capital Ratio of the three largest private banks (excluding the Chilean Bank and/or the Colombian Bank (measured in terms of the assets of the Chilean Bank and/or the Colombian Bank (measured in terms of assets) in Chile or Colombia, as appropriate, in each case the last day of the most recent fiscal year multiplied by (b) the risk-weighted assets (which include the risk-weighted assets of the Subsidiaries that are consolidated for the purpose of calculating the minimum regulatory Capital Ratio in each country) of the Chilean Bank or the Colombian Bank, as appropriate, as of the date one year after the last day of the most recent fiscal year, presuming that the risk-weighted assets grow during that year at a rate equal to the Minimum Growth Rate. |
• | The Bank, in consolidated terms (the owners of the Bank), has total equity of MCh$3,184,670 (MCh$792,503 in 2015). |
In terms of regulatory ratios, the Bank closed the 2016 period with a ratio of core capital to total assets of 9.38% (8.11% in 2015), while the Basel Index (regulatory capital to total risk-weighted assets was 13.23% (11.87% in 2015).
OPERATIONAL RISK
(a) | Definition |
The Bank and its subsidiaries define operational risk as the possibility of losses resulting from failures, weaknesses or inadequacy of internal processes, staff, and systems or from external events. This definition includes legal risk but excludes strategic and reputation risk. Operational risk is recognized as a manageable risk and, therefore, the Bank has designated an area within its corporate structure that is in charge of this task.
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As of June 30, 2016 and 2015 and December 31, 2015
(b) | Structure |
In line with its business strategy, Banco Itaú-Corpbanca has assigned operational risk management to the Operational Risk Division, which acts according to an annual plan based on the strategic plan for the business areas, support areas and the Parent Company. This plan includes its own activities and others agreed with the Parent Company to comply with regulatory requirements. Time and available resources are distributed based on the organization’s objectives and size. This Division reports to the Risk Division, which in turn reports to the Bank’s Chief Executive Officer.
In the Bank’s corporate governance structure, managing operational risk is of strategic importance to its business processes. Operational risk management is based on financial industry best practices, international standards (most importantly the Basel standards) and local standards, especially Chapter 1-13 of the SBIF regulations on operational risk management.
Banco Itaú-Corpbanca has adopted a model with three lines of defense as the primary means of implementing its operational risk management, internal control and compliance structure, ensuring that corporate guidelines are followed. It establishes that the business and support areas (first line of defense) are responsible for managing risks related to their processes. To accomplish this, they must establish and maintain a risk management program that ensures effective controls. The risk management program calls for all relevant risk matters to be reported to higher levels and to the Operational Risk Committee. According to Bank policy, this operational risk management program is implemented at all personnel levels and for all types of products, activities, processes and systems. Business and support units are responsible for playing an active and primary role in identifying, measuring, controlling and monitoring these risks and for understanding and managing their risks in compliance with policies.
Our methodology consists of evaluating the risks and controls of a business from a broad perspective and includes a plan to monitor the effectiveness of those controls and identify potential weaknesses. This perspective considers, among other factors, the volume and complexity of activities and the potential impact of the related operational losses and the control environment. The stages and main activities of our methodology are:
1. Identifying risks:
a. | Mapping processes. |
b. | Identifying risks and controls associated with processes, products, projects. |
c. | Identifying internal and external rules and regulations. |
d. | Recording operating losses. |
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As of June 30, 2016 and 2015 and December 31, 2015
2. Measuring and evaluating each risk identified:
a. | Evaluating events. |
b. | Evaluating internal and external rules and regulations. |
c. | Walkthroughs and tests. |
d. | Classifying controls (SOX). |
e. | Evaluating business impacts of contingencies (BIA). |
f. | Corporate and regulatory self-assessment. |
3. Mitigation and control:
a. | Defining the risk response (WT, tests, action plans). |
b. | Mitigating and controlling crisis situations. |
c. | Monitoring the internal control environment. |
d. | Defining and implementing risk indicators |
e. | Monitoring indicators and controls. |
f. | Assisting with implementation of actions plans to mitigate audit comments and risk events. |
4. Reporting
a. | Management reports to the Bank’s senior management and committees. |
b. | Coordinating operational risk, IT security, continuity and crisis management committees. |
c. | Management reports to parent company. |
(c) | Objectives |
The main objectives of the Bank and its subsidiaries in managing operational risk are to:
• | Identify, evaluate, report, manage and monitor operational risk of activities, products and processes carried out or sold by the Bank and its subsidiaries; |
• | Build a strong culture of operational risk management and internal controls with responsibilities clearly defined and duties properly segregated among business and support functions, whether developed internally or outsourced to third parties; |
• | Generate effective internal reports on matters related to operational risk management, with scaling; |
• | Control the design and application of effective plans for facing contingencies that ensure business continuity and limit loss. |
In terms of training and awareness, the Bank continues to reinforce a risk culture through classroom training sessions on operational risk, internal controls and external and internal fraud prevention; to carry out the yearly program “more security” for all associates and to provide orientation programs for new employees.
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As of June 30, 2016 and 2015 and December 31, 2015
Lastly, it continues to apply the Sarbanes-Oxley (SOX) methodologies for its main products and processes, which is certified each year by an external consultant.
NOTE 25 - EVENTS AFTER THE REPORTING PERIOD
ITAU CORPBANCA CORREDORA DE BOLSA S.A
In an extraordinary shareholders’ meeting held July 19, 2016, shareholders agreed to elect the following directors:
• | José Francisco Sánchez Figueroa |
• | José Manuel Garrido Bouzo |
• | Pablo De la Cerda Merino |
• | Américo Becerra Morales |
• | Christian Tauber Domíngue |
The matters described above do not involve any adjustments to the financial statements as of June 30, 2016.
CORPLEGAL S.A
In an extraordinary shareholders’ meeting held July 19, 2016, shareholders agreed to elect the following directors to the Board of Corplegal: Cristián Toro Cañas, Rogerio Braga, José Francisco Sánchez Figueroa, Pablo de la Cerda Merino and Víctor Orellana Angel.
The chairman of the board will be elected at the next board meeting.
The matters described above do not involve any adjustments to the financial statements as of June 30, 2016.
ITAÚ CHILE ADMINISTRADORA GENERAL DE FONDOS S.A.
On July 22, 2016, the General Fund Regulations of Itaú Chile Administradora General de Fondos S.A. was amended in the SVS registry in compliance with the observations contained in OFORD No. 17721 dated July 19, 2016. These amendments take force beginning August 3, 2016.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2016 and 2015 and December 31, 2015
In an extraordinary shareholders’ meeting held July 25, 2016, the shareholders of Itaú Chile Administradora General de Fondos S.A. agreed to elect the following directors:
• | Fernando Beyruti |
• | Rogerio Carvalho Braga |
• | Gabriel Amado de Moura |
• | Victor Orellana Angel |
• | Thomas Olivera |
The matters described above do not involve any adjustments to the financial statements as of June 30, 2016.
ITAÚ BBA CORREDOR DE BOLSA LTDA.
On July 19, 2016, in compliance with articles 9 and 10 of Law No. 18,045 on the Securities Market, and as duly authorized by the partners of Itaú BBA Corredor de Bolsa Limitada, the company communicated that by agreement between Itaú Corpbanca and Boris Buvinic Guerovich, the only current partners of Itaú BBA Corredor de Bolsa Limitada, all of the members of the Management Council were removed from their positions and the following new members were designated in their place: Rodrigo Letelier Villaroel, Rodrigo Oyarzo Brncic and Rodrigo Montero Atria.
The matters described above do not involve any adjustments to the financial statements as of June 30, 2016.
Between January 1, 2013, and July 28, 2016, the date of issuance of these consolidated financial statements, there have been no other events after the reporting period that could affect the presentation and/or results of the financial statements.
Juan Vargas Matta | Milton Maluhy Filho | |
Chief Accountant | Chief Executive Officer |
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