Good afternoon, everyone. Thank you very much for attending this conference call today. It is a great honor for us to present the outstanding results posted by Banco de Chile during the first quarter of this year, a period that, once again, we continued leading the industry in different aspects. In order to present these achievements, we have divided the call into three main sections. First, an analysis of the macroeconomic environment that we face, including our forecast for this and the following year. We will review the main accomplishments and advances in our key strategic areas, such as digital banking, efficiency, and sustainability. We will finalize with a deep analysis of financial results. Let me start with a general overview of the Chilean economy. Please go to slide number three.
The economy expanded strongly in 2021 as the GDP went up by 11.7%, achieving the highest figure in our recent history. As we mentioned in previous conference call, this was positively influenced by temporary factors and policies, such as the 33% pickup in fiscal spending and the more than $55 billion withdrawn from pension funds. The sum of these resources represented almost 30% of the GDP, becoming Chile one of the countries with the strongest economic response during the pandemic. Nevertheless, as these factors were only temporary, a slowdown in the overall activity has broadly been expected. In this environment, recent figures have been confirming that the economy began a slowdown in November last year, which has translated into lower expansion rates at the beginning of 2022.
Accordingly, the economy grew 7.9% in the first quarter, 2022 year-on-year, below the 12% seen in the first quarter 2021. The weaker activity is even more evident on a sequential basis as the overall GDP fell by 0.4% in the first quarter, posting the first contraction since the second quarter, 2020. The downward trend of the activity can be seen in the chart on the upper left of this slide. The weaker expansion has been led by the slowdown observed in the commerce sector, which fallen 4.3% during the last three months, as the chart on the upper right displays. Generally, the lower expansion is mainly attributable to the reversal of several temporary factors that positively influenced domestic spending, such as monetary transfers and pension fund withdrawal.
Therefore, the end of these factors, which coupled with the rise in inflation and interest rates, are fostering the slowdown in consumption even more. It is also worth mentioning that the commerce climbed last year, growing at rates near 30%, as the chart shows, which was an unsustainable situation. Overall, the lower consumption is consistent with a normal adjustment of the economy towards its long-term fundamentals. On the other hand, however, services have been recovering ground lost during the pandemic, partially offsetting the sluggish commerce growth. In fact, services went up by 2.6% quarter- on- quarter in the first quarter this year, being the only sector with a positive change during the period. This has been chiefly due to the improved sanitary conditions, which have allowed greater levels of mobility and, consequently, normalization in several activities more intensive in social contact.
The labor market has continued posting better figures. In March, for instance, the unemployment rate was 7.8%, which was 260 basis points below the level posted one year ago and much better than the peak of 13.1% seen in 2020, as the bottom left chart shows. The lower unemployment rate has been due to the partial recovery in employment, which grew 8% year-over-year in the first quarter, which resulted in a total number of jobs that is only 3.5% below its pre-COVID levels, as you can observe in the chart on the bottom right. The labor force has also increased, although the participation rate remains below the level reached before the pandemic.
The positive trend posted by the domestic activity and several external factors have further increased inflationary pressures in the Chilean economy. I will refer to these factors and their implications for interest rates in the next slide. Please go to slide number 4. The headline CPI has soared significantly during the last month, surpassing any expectations held just a few months ago. The overall CPI rose to 9.4% year-on-year in March, reaching the highest figure since 2008. This trend has been accompanied by an important pickup in the core inflation, which rose to 7.4% year-on-year in March. Therefore, as you can see in the chart on the top left, all CPI measures have been diverging from the policy target set at 3%.
Other alternative figures, such as tradable and non-tradable index, have also increased to 11.5% and 6.9% year-on-year respectively. These figures confirm that high inflation has been a multifactorial phenomenon led by different forces, local and external, that have contributed in the same direction. In effect, despite the strengthening seen during the quarter, the Chilean peso remains weak compared to the previous years, contributing to inflation. This evolution can be seen in the chart on the top right. The surge in local inflation has pressured the Central Bank of Chile to continue its tightening process in the monetary policy. In March, the board decided to raise the overnight rate by 150 basis points to 7%.
The Central Bank of Chile has accumulated a total adjustment of 650 basis points since July last year, when the rate was only at 0.5%, becoming Chile one of the countries with the greatest adjustment in the monetary policy rate in the world. This evolution is displayed in the chart on the bottom left. The forward guidance provided by the central bank anticipates further adjustment in the interest rate despite the expected slowdown in the overall activity. Particularly, in the baseline scenario outlined in its March monetary policy report, the central bank signaled an interest rate of 7.5% to 7.75% by the end of the year and the beginning of an easing process only in 2023.
Nevertheless, this guidance of overnight rate was made under the assumption of several factors, such as lower commodity prices, a stronger Chilean peso, and the absence of further fiscal stimulus. Consequently, given the evolution of both Chilean and global scenarios, we acknowledge the possibility of higher than expected increases in the policy rate this year. As the bottom right chart shows, this balance of risk explains the evolution of long-term interest rate in Chile. Now, I'd like to share with you our baseline scenario for this and the following year. Please move to the next slide, 5. We expect the slowdown to continue in the near future. Specifically, the combination between lower fiscal spending, the lagged effect of interest rate tightening, and the weak external growth, among other factors, should lead the economy into slight expansion in the second half of 2022.
We can rule out the possibility of negative annual growth rate for some months during the second half of 2022. We are forecasting a 1.5% expansion rate this year, and in 2023, a level that is slightly above zero. In the long run, we expect a level of around 2%. Therefore, it's reasonable to expect a U-shaped evolution for economic growth. Our baseline scenario considers an inflation rate remaining above the policy target for the next couple of years. Despite the below trend growth, the inflation rate should persist at high levels due to further pressures for commodity prices, global supply chain disruptions, and second round effects, among others. For these reasons, we expect further interest rate hikes this year to reach a level of 8.25%.
Before moving to the banking sector, I like to emphasize the existence of some critical risks that need to be watched. First, since Chile is one of the most integrated countries into the global economy, a negative evolution of external activity could have a material impact in the country, especially if the slowdown occurs in China or in the United States. Therefore, it is important to analyze the evolution of critical factors such as the pandemic and geopolitical conflict in Europe. Second, several political developments are worth monitoring, such as the content to be included in the final draft of the constitution. Also, it is critical to see the result of the exit referendum to be held on September Fourth, which will determine if the Constitutional Convention's proposal become the new constitution.
Additionally, it is essential to pay attention to the implementation of potential reforms that have been announced by the government, especially in areas such as taxes, labor, and pensions. Now, I'd like to discuss briefly the evolution of the banking industry. Please turn to slide number 6. Loans in the Chilean banking industry in the first quarter grew only 1% in nominal terms quarter-on-quarter and showed similar trends by product. Retail loans continued to support growth. Consumer loans grew quarter-on-quarter by 4.2% and mortgage rose 2.4% quarter-on-quarter. This was strongly supported by the steep levels of inflation seen during the quarter. We think that with rising inflation levels coupled with higher interest rate and more uncertainty, mortgage loan expansion should continue showing an important deceleration compared to the figures showed in previous quarters.
Lastly, commercial loans decreased by 0.4% externally due to the current environment. The industry posted a strong result in the quarter associated to the high levels of inflation, which positively benefits operating revenues to together with credit risk charges that remain below historical levels. This was partially offset by higher operating expenses, also due to the record high levels of inflation we have recently seen in Chile. Now I'd like to pass the call to Pablo, who will go into more detail about Banco de Chile advances in the financial performance.
Thank you, Rodrigo. I'd like to begin with our main accomplishments in our key strategic projects. Please go to slide 8. As we have mentioned in previous conference calls, we have developed a strategic project that focuses on three key areas. As you can see in this slide, they are digital transformation of the bank, permanent improvements in efficiency and productivity, and our increasing commitment to ESG. In the next few slides, we will go over the advances of these initiatives, which are already bearing fruit. Let me start with the analysis of digital transformation. Please move to the next slide, 9. Cuenta FAN once again posted strong gains in customer acquisition, closing the period with 844,000 new clients.
Of these, we have cross-sold 24% to other products and services, which include current accounts, insurance products, investment solutions, credit cards, consumer loans, and mortgages. We also reinforced the digital journey to become a Banco de Chile customer by launching our new digital current account that can be opened 100% online in less than 5 minutes in 3 simple steps. This is a full bank account with no limits, with the possibility to open other products such as lines of credit cards, investment products, among others. In line with our goal of building a full digital ecosystem, we released a great new investment app that permits customers to invest not only in local stocks and mutual funds, but also in international ETFs and stocks listed on foreign exchanges.
Additionally, in alliance with Scotiabank, we developed a service that facilitates quickly and easily money transfers between banking customers by only using the mobile telephone number. This service is now available for all banks in Chile at the automated compensation center, which provides payment processing services to all financial institutions registered and supervised by the CMF. Lastly, I want to highlight some key digital advances. As you can see on the right, our customers are using more actively our digital channels. Monetary transactions through the app are up 34% over last year. 50% of consumer loans this quarter were taken online, and we have also had an important increase in digital customers. Please turn to slide 10. Our purpose is to create long-term value for shareholders and to be the best bank for our customers.
For instance, this quarter, we reinforced our efforts to put Banco de Chile at the top of mind by strengthening marketing activities such as supporting the music festival, Lollapalooza. As you can see on the chart on the top left, our top of mind reached 29%, 1/3 higher than our closest competitor. Additionally, through our new customer service model, we have continued to outrank our peers in Net Promoter Score according to Procalidad survey. In addition, we are positioned as the most reliable and preferred bank in Chile according to the latest Adimark survey, as you can see on the chart to the right. By focusing to create the best bank for our customers, we are standing out from other banks. This is generating greater demand for our products and stronger relationships, which means more originations to loyal customers that value and promote our products.
Please turn to slide 11. Our consistent improvements in productivity have been supported through diverse initiatives, which are accelerated when we created the formal productivity and efficiency program. The incremental improvements, together with technological advances and the streamlining of our branch network, have optimized how the bank operates. This quarter, we posted a groundbreaking 34.2% efficiency ratio. On the one hand, this level of efficiency was influenced by the strong top-line growth we posted in the quarter, but on the other hand, we have also been able to continue controlling expense growth in real terms close to zero. We recently implemented a new digital purchasing platform that introduces electronic auctions and tender processes to acquire goods and services for the bank that will further support our cost control management. This is just one more mechanism that we're applying to continue using our resources better.
It is clear that the efficiency we achieved this quarter benefited from the extraordinary items that positively impacted our revenues, but I would like to emphasize that we didn't stand still during this period. We are confident that through the continuous improvement of our efficiency program, increased automation, and the use of new digital tools, we will be able to continue improving our sustainable efficiency indicators by consolidating the trend we have seen in many metrics, such as cost-to-asset ratio, which are not influenced by the effects of inflation and therefore reflects gains in productivities. Please turn to slide 12. This quarter, we made several advances in ESG. We started a new series of our program, Cuentas con Chile, which is a program aimed to educate entrepreneurs, students, and new residents to Chile in financial literacy. This new version of the program will include cybersecurity knowledge and inclusive methodology.
Regarding our diversity inclusion initiatives, we signed an agreement with the nonprofit organization, Women in Finance, that promotes their participation in the banking industry, and we held the 23rd edition of the Chilean Open Copa Banco de Chile wheelchair tennis tournament. In connection with environmental actions, we launched the first national call for local social innovation in alliance with Fundación Sustenta P ucón, which seeks to join entrepreneurs to provide solutions to economic, social, and environmental challenges. We also recently entered into new agreements to consume electricity only from renewable resources through the purchase of energy certificates. This has reduced our carbon footprint by 28%. Moreover, we're especially proud to announce that we have created a sustainability committee composed of senior management and chaired by our CEO. This committee aims to boost our sustainability and strategy, and initiatives, as well as define and monitor ESG KPIs.
Finally, we're glad to mention that we are recognized as the third most responsible company in the country in environmental, social, and governance by Merco, and we improved significantly our Sustainalytics ESG ratings to a low-risk level. This score positions us as leaders in the Chilean banking industry in this matter, with a large gap to our competitors. It's also important to highlight that we have an A rating from MSCI ESG, which is the highest in the Chilean banking industry. Please turn to slide 14 to begin our discussion on our results. The economic scenario continues to surprise. This quarter, we witnessed another period of high inflation of 2.4%.
This, together with sound business strategy that leveraged diverse market factors in our favor, allowed us to post a record bottom line of CLP 292 billion, equal to an impressive return on average equity of 27%. We are especially pleased that this result positions us once again as the leaders in profitability in terms of return on assets and in capitalization, as you can see on the chart to the right. Nevertheless, we are aware that these high levels of net income are temporary, but we are fully committed to creating a sustainable bank that generates superior results based on a consistent and responsible long-term strategy.
Depending on the potential impacts of the political landscape and the evolution of the pandemic, we believe that our long-term ROE should be in the range of 16%-18%, even though this year we expect it to be well above this range. Please turn to slide 15. Operating revenues grew over 40% year-on-year, mainly due to non-customer income as a result of a strong rise in inflation versus the same period last year. In fact, inflation revenues contributed more than half of the year-on-year growth of operating revenues. This figure was obtained by positioning the bank appropriately to benefit from the higher than normal levels of inflation and in rates.
On the other hand, it's worth highlighting that customer income grew 26% year-on-year, contributing to the year-on-year rise in operating income, thanks to the greater contribution of demand deposits to our cost of funds in the environment of significantly higher local interest rates and improved business activity that boosted fees amid lower COVID mobility restrictions. As a result, our net interest margin grew from 3.4% in the first quarter of 2021 to 4.9% in the first quarter of 2022, a rise of 151 basis points. An important part of this rise was due to inflation, as shown on the chart on the bottom.
Nevertheless, income from interest excluding inflation grew strongly, thanks to the effective and prudent management of our currency and maturity gaps, together with our demand deposit positioning that allowed us to capitalize more than our competitors. Later in the presentation, we will go into deeper detail regarding our superior funding mix and how we compare to our peers. Fee income generation was also very dynamic this quarter, contributing CLP 19 billion to the increase in operating revenues, equal to a rise of 17% year-on-year. This strong increment was a consequence of a rise in transactional services from debit and credit cards and ATMs, as well as the higher account maintenance fees due to the expansion in our customer base. We also saw a positive increase in fees generated from our mutual fund management and stock brokerage subsidiaries.
Finally, insurance brokerage also performed well, in line with the greater business activity in consumer loan origination. In terms of financial income from treasury operations, we recorded good results thanks to the proactive management of our trading and investment portfolios that benefited from the changes in key market drivers such as higher inflation, interest rates, and inflation expectations. As you can see on the charts to the right, we have superior revenue generation. We outrank all of our peers in terms of net interest margin with a wide gap to our closest competitor. Additionally, we have an impressive evolution of our operating margin net of risk, as shown on the chart on the bottom right. We surpass all of the competition and even widen the gap to our main competitors in the last couple of quarters, clearly demonstrating our excellent and consistent business strategy. Please turn to slide number 16.
Loans reached CLP 34 trillion, up 8% in nominal terms from last year, but remained flat when compared to the fourth quarter of 2021. Mortgage loans and commercial loan origination have slowed due to the weak economic environment and political uncertainty. Specifically, mortgage loans grew 9% year-on-year and 1% quarter-on-quarter. It's important to note that mortgages are almost completely denominated in UF. Hence, this growth was fueled by the strong rise that we saw in inflation and not due to origination. As for commercial loans, what we saw was a slowdown in both the wholesale and SME segments, which in total grew 6% year-on-year and decreased 1% quarter-on-quarter. On a positive tone, consumer loans showed better growth despite the environment, rising 12% year-on-year and 4% quarter-on-quarter.
As opposed to mortgages, almost 100% of consumer loans are denominated in pesos, so this rise has been driven by great originations thanks to reinforced commercial strategy campaigns that have boosted demand for consumer loans within the higher income customer segments. Please turn to slide 17. Our superior funding structure has been key in the rising rate cycle, rewarding us with higher asset and liability management margins. First, I'd like to highlight that our funding structure has remained relatively stable despite the strong hikes in the short-term interest rates and its potential impact on demand deposit balances. In fact, the percentage of funding from DDAs continued at unprecedented levels, representing 33% of assets, as you can see on the chart on the top left, down slightly from the 36% recorded in the fourth quarter of 2021.
It's also relevant to mention that we lead our peers in terms of demand deposits to loans, benefiting us more from this balance sheet position. This financing not only provides us with a lower cost of funds, but also supports part of our structural inflation gap. Today, the UF gap in the balance banking book is in the range of around CLP 7 trillion, which means that for every 100 basis point positive change in inflation, we earn about CLP 75 billion more in net interest income, or approximately 20 basis points in NIM. In addition, over the last years, we have pursued to optimize our funding structure in relation to maturity gaps. As such, we maintain a more stable funding structure than our peers when we compare a mortgage funding gap, as shown on the right side of the slide.
This has been a result of our consistent strategy aimed at matching longer-term assets with longer-term liabilities, such as bonds placed locally and overseas. All of this should permit us to take advantage of the rising rates more than our peers, as seen in the evolution of our net interest margin and operating income. We've also positioned Banco de Chile as the most capitalized amongst our competition, as you can see on the next slide, number 18. Our total loans and Tier 1 capital ratio are significantly above the competition at 17.8% and 13.2% respectively. These figures are a result of our long-term strategy, which is based on responsible growth that are linked to consistent capital management policies and an adequate risk-return relationship.
We are convinced that a strong capitalization is a key factor, not only for the sustainability of the bank, but also for the capacity to generate attractive dividends and profitability to our shareholders. This capitalization, together with our superior credit risk ratings and debt placements in both the local and overseas markets, has permitted us to fund our business comfortably. We're optimistic that the strong improvements in leading ESG position, as we discussed earlier in the presentation, will further support growth using alternative funding instruments. These high capitalization levels also position us well for the implementation of Basel III in Chile that will require higher levels of capital than under Basel I. We are confident that we have sufficient capital to implement smoothly Basel III in our bank. Please turn to slide 19. Expected credit losses reached CLP 99 billion in the first quarter of 2022.
However, a relevant portion of this figure is due to CLP 70 billion of additional provisions that were established this quarter, in line with the persistent uncertainty of the economic and political environment. We're aware that the extraordinary low levels of delinquency observed in the loan portfolio are strongly influenced by transitory factors that mitigate the real deterioration of the fundamentals of the Chilean economy. Excluding additional provisions, we only recorded a cost of risk of 0.35%, significantly below our long-term expected level of 1.1% approximately. This figure was also significantly lower than all of our peers, demonstrating the relative soundness of our portfolio. We continued to exceed our peers in many other risk indicators, as shown on the right of this slide.
We have accumulated CLP 610 billion in additional provisions, providing us with a coverage ratio of 4.4 times, and we recorded the best delinquency ratio of only 0.87%. We are confident that our conservative strategy should support us in negative economic cycles, but should also assist us in taking advantage of growth opportunities when they appear. Please turn to slide 20. Cost control has been a major focus at Banco de Chile. In fact, this is one of the three main pillars of our long-term strategy. In this environment, our efficiency and productivity plan and initiatives have consistently been bearing fruit. This quarter, our expenses grew in line with inflation, up 7% year-on-year, or flat in real terms. This is consistent with costs that are indexed inflation.
For example, salaries are adjusted at least on May and November of each year, and many admin services are priced in U.S. dollars. However, similar to other periods, the fastest-growing expense items are those related to IT. In line with the developments and infrastructure we have implemented to boost our digital capabilities and automation of our operational processes to improve productivity. As a result, our efficiency ratio posted an impressive level of 34.2%, well below the industry and their peers, as you can see on the charts on the bottom of the slide. We are determined to continue improving our cost structure and using our resources better to sustain high levels of efficiency. As we mentioned before in this presentation, it's clear that the ratio that we have posted this quarter is highly affected by top line growth.
However, we are confident that the incremental gains we have made during the last years should lead to sustainable efficiency improvements compared to the levels we posted before the pandemic. Please turn to slide 21. Before moving on to questions, I just want to go quickly over some key takeaways and provide some guidance. We're expecting for 2022, GDP to slow down from last year to around 1.5%, and loans in the industry to grow around inflation in nominal terms for this year. For Banco de Chile, we are focusing our growth on consumer and SME commercial loans, and we aim to pick up market share in these segments.
In terms of results, I want to emphasize that we had a very strong bottom line that was obtained by anticipating some market drivers and adjusting our balance sheet accordingly to benefit more from the rise in rates and inflation, but always managing our market and financial risks prudently. This together with our commercial activities, credit risk policies and strict cost control, allowed us to post a historical bottom line exceeding all of our competitors. Along these lines, we expect our NIM to normalize as long as inflation will decline in the future. In terms of cost of risk, we estimate a level of around 1% to 1.1% this year, and our goal for efficiency is in the range of 38%-40% for this year.
These drivers are consistent for our quarterly return on average equity to slow down to around 20% by the fourth quarter of this year, translating into accumulated full year level above 20%. Once again, these figures demonstrate that Banco de Chile is the strongest bank in Chile and a great investment for shareholders. Thank you for listening, and if you have any questions, we'd be happy to answer them.
Thank you, Pablo. Apologies, we had a technical issue at the start, and the introduction was not heard. We would like to thank you for listening to Banco de Chile's first quarter 2022 results call. If you need a copy of the Management Financial Review, it is available on the company's website. Today with us, we have Mr. Rodrigo Aravena, Chief Economist and Institutional Relations Officer. Mr. Pablo Mejia, Head of Investor Relations. Daniel Galarce, Head of Financial Control and Capital, and Natalia Vilela, Investor Relations Specialist. Before proceeding to the questions, I would like to remind you that this call is being recorded and that information discussed today may include forward-looking statements regarding the company's financial and operating performance. All projections are subject to risks and uncertainties, and actual results may differ materially.
Please refer to the detailed notes in the company's press release regarding forward-looking statements. We will now move to the question and answer section. If you have a question, please press star two if you are dialed in by phone. If you are dialed in by the web, you can submit a text question or click the button to ask a voice question. We'll now give it a moment or two for the questions to come in. Our first question comes from Tito Labarta from Goldman Sachs. Caller, please go ahead.
Hi. Good afternoon, Pablo, Rodrigo. Thanks for the call, and taking my question. M y question is in terms of, the long term ROE guidance you gave of 16%-18%, just to think about, how soon you would expect to get there. T his year, obviously you said you'll be about 20%. Do you think you get there next year? To understand, it'll be mostly a function of inflation coming down. Also curious, you have a very low GDP growth expectation for next year. Do you expect a significant slowdown in loan growth next year? Any concerns about asset quality with GDP decelerating that much? Just to help us think about the trajectory to get back to that 16%-18% ROE from here. Thank you.
Hi, Tito. Thanks for the question. One of the things what we mentioned is that this year we had a high level of inflation, and that was benefiting us substantially in terms of our bottom line and profitability and also the repricing of our assets and liabilities, which are affected very positively from the increase in interest rates. In terms of how long it will take to go back to that long-term ROE, it's still we're in a transitional period, but we're still seeing in the in the next quarters high inflation. We should start to gradually see a reduction in ROEs in line with that level of inflation. It's in part inflation driven, but it will be offset by repricing of the portfolio.
What we're expecting is the first half of the year above 20% ROEs, and they will trend down to 20% around the end of the year. For 2023, 2024, it depends on the one hand inflation, which we're still expecting to be high in 2023, which is around 4 or 5%. Remember that every 100 basis points of inflation with the current gap that we have today is about that generates about CLP 75 billion in net interest income or close to 20 basis points in NIM. That would be going down from around 8% to around 5% or 4%. It has an impact there in terms of the bottom line.
We also have the benefit of the higher rates. Remember, we look back one year ago, we were at 0.5% overnight rates, and today, we're expecting to be around the 8% level at year-end. That should normalize a little bit downwards. That's also benefiting us. In the short term, for rates, a change of 100 basis points in rates over the year on average is about 5-10 basis points benefit for us. Once everything reprices, approximately 3 years, everything else equal, it's about 30 basis points. We do get a benefit from that. Next year will still be a positive year. We'll take probably the transitional period depending on many other factors, permanent impacts of the economy, employment, risks that could arise. If we're just looking at the top line, it will still be a positive year. We have to see how the economy evolves for the other line items.
Great. Thank you, Pablo. That's helpful. Just any color you can provide on with that slowdown in GDP growth that you expect for 2023, how that could impact potentially loan growth and asset quality?
For the slowdown in GDP, we're seeing around a level of 1.5% for this year. And the elasticity of what we're seeing is closer to 1% and/or one times, or around that, slightly lower for the industry. For us, what we're seeing is we're very focused in growing in the SME segment, in consumer loans, which we feel that especially the latter will have a better dynamic than other products and services that we offer, especially because of the current uncertainty that we're seeing in Chile. There is a slowdown we're expecting with rates that will affect mortgage loans and other uncertainties which is affecting commercial loans.
We do still see positive levels of growth in terms of consumer loans and SME loans with the growth hovering around for the industry of 8% and us capturing market share, the intention to capture a little bit of market share in those key products. In terms of risk, we haven't seen any sectors today, which is a particular concern, but we're monitoring all the cyclical sectors that do have more volatility during these slower economic times. We are monitoring, but we haven't seen a sector that is concerning or that we're seeing a pickup in NPLs as of yet. Obviously we have to take this into consideration with the higher levels of inflation, lower growth and uncertainty here and abroad. Still the COVID crisis isn't over.
This is something that we have to look at. In terms of risk, we're seeing for this year a level of around 1%, and in the medium term our remains around the 1.1%, give or take a little.
Okay, great. Thank you, Pablo.
You're welcome.
Thank you. Our next question comes from Jason Mollin at Scotiabank. Please go ahead.
Hello. Thanks for the opportunity to ask a question. My question very robust outlook and seems realistic to expect that as inflation comes down, longer term ROE will come down. What other risks do you see that could impact medium, longer term profitability? We are hearing about this bill or this project that some in the government have proposed to eliminate forgive loans or eliminate reporting of past due loans. How do you think of this? Is this a real risk to the way that the Chilean banking system has been operating? Thank you.
Hi, Jason. This is Rodrigo Aravena. Thank you very much for the question. So we are aware of several uncertainties that we are facing now. One of them, of course, coming from the rest of the world, of course, seeing that Chilean economy is a very open economy th at the trade volume in Chile, for example, represents more than 50% of total GDP. That's why it's very important to monitor what's going on, for example, in China or the United States economic growth. This is a very important factor for us . The same for the copper price. Internally, we can say that we have two key sources of uncertainty. One of them is related with the evolution of the economy.
What we're expecting for this in the next year is like a U-shape trend in economic growth. We're expecting a negative economic growth, actually, for the second half of the year, which is consistent with the 1.5% economic growth for this year. For 2023, we can rule out a negative growth for the overall GDP, even though our estimate today is around 0.2%-0.3% for next year. We acknowledge the possibility of a downward bias in this estimate. F or the long run, we have been adjusting, slightly adjusting the estimate for the potential GDP growth for Chile. Today, we expect an economic growth for the long run of around 2%.
A couple of years ago, the number was between 2.5% and 3%. Of course, in an environment where you have a lower capacity of growth for Chile, it would have a negative impact in terms of the potential long growth for the medium term. Additionally, we are aware of the lower elasticity between loans and GDP. In the past, we used to see elasticity of around 2 times. Now, we think that number is slightly above 1 time, so that's why, probably, around 5%-6% for the long run nominal trends would be reasonable in terms of long growth. The economy is one source of uncertainty. One other is evolution, of course, of the Constitutional Convention.
As we said in the beginning of the presentation, the results of the vote of the exit referendum for the Constitution will be a critical key factor to monitor in the future because we can rule out some changes in the framework of the Chilean economy. That's why it's important to analyze the evolution of that. Having said that, we acknowledge some risk that potentially could reduce the economic growth in the next year. We acknowledge a downward bias in terms of the medium-term economic growth, which of course affects profitability as well. In one single idea that there is a downward bias in our estimate for GDP, in employment, et cetera.
With respect to the regulatory risk side, et cetera, as you said, there is a discussion in Chile which is related with removing some information from debtors in the country. What we can say today is that the bill is still under discussion in the lower chamber, and actually yesterday there was a discussion. This discussion will continue soon during the next few days. In the case that if it were approved in the lower house, the discussion will continue in the Senate. We don't have enough information as to have a more accurate estimate in terms of the potential impact in profitability, net income, et cetera, for the bank.
In terms of the idea of this discussion, we have to say that in general, we are aware that removing information from the system can generate some negative impact in the economy. We know that there is evidence that the policies in general are based on complete information. That's why the lack of potential information can generate a wrong evaluation of risk, leading, for example, to overestimate some risk, which can affect lastly the financial inclusion in the economy. We have to say as well that this initiative, in some way, is against the objective followed by different the industry policy makers, et cetera, such as the consolidation of information between banking and non-banking lenders. It is actually the discussion on the opposite side.
As I said before, it is a risk we have to monitor how it evolves in the future. We need more information to estimate with more detail what will be the final impact and resolve the low income segment in Banco de Chile. We are not anticipating important changes, but we have to follow the discussion and to monitor the other factor of risk for Chile.
Thank you very much for the comments. Helpful.
You're welcome.
Thank you. Our next question comes from Yuri Fernandes at J.P. Morgan. Please go ahead.
Thank you, Pablo, Rodrigo, and congrats for the 27 ROE. A very, very sound.
Thank you.
I have a question regarding our earnings sustainability for 2023. M aybe too early, but I see several headwinds. Like volumes, like weaker GDP, potentially worsening asset quality, inflation. I know it's still very high, but decreasing from 2022, so a headwind for effective tax rate, a headwind for margins. My question is, what is the likelihood of earnings decreasing next year versus a very strong 2023, especially in the first half? Do you think this is real? Like earnings could decrease or like the bank could eventually revert additional provisions that I know you have a lot of additional provisions, so maybe that offset like the potentially weaker revenues.
Just trying to understand like the trend for the next year, if that could be like a weaker EPS given this normalization. I have a second question regarding competition. I remember in previous calls you saying that mortgage prices, they were very low and you would be a bit more selective growing that segment. Just checking an update here, how do you see competition in Chile given this lackluster economic environment? Like, are you seeing other peers getting a little bit more rational? Not yet? Like what is your view for different products here regarding your peers? Thank you.
Thanks for the question. Again, as we mentioned in the call, the last couple of years have been different years from normal cycles where we've had very extraordinary events, for example, very low cost of risk, which has been sustained. We've had high levels of inflation, and that's been generating the very high bottom line. Obviously, the current levels of inflation within the market didn't anticipate this earlier on or at the end of last year for 2022. Really, they're extraordinary levels of income for the bottom line in terms of these revenues.
For 2023, probably will be more of a transitional year, again, but we'll trend more downwards to a more normalized level of our ROE, maybe still depending on the outcomes of risk and all that. It could be still a transitional year where we can see higher levels of ROE, but it's difficult to see that today. In terms of additional provisions releasing, we really need to see a long-term view of how the economy evolves. There's still many risks being seen, and it's not a certain scenario that we could see that in that case for 2023.
I think it's reasonable to expect that 2023 is a year with an ROE that's lower than 2021 because of lower levels of inflation. Or 2022, sorry, not 2021. We think that this is a transitional period. In terms of competition in Chile, it's true that in Chile, there's a lot of competition. It's a competitive market where we've seen over the years strong competition, different segments, players in the market. What we're seeing is a slowdown in Chile, probably. There's a lot of uncertainties which need to be resolved before we can see growth pick up again. There's nothing in particular that we could mention that we're seeing unreasonable in how the market is operating today.
Perfect. Thank you, Pablo.
Thank you.
Our next question comes from Carlos Gomez-Lopez at HSBC. Please go ahead.
Hello, and also congratulations on the results. Two questions. First one is on the payments business. We have seen some of your competitors set up alternatives, Getnet in particular. Are you planning to set up your own network or you expect to continue to collaborate with a single one like we have in the past? Second, this may not be a question for you. It's more for your shareholders. Have you had any discussions with Citigroup regarding their long-term investment in the bank? Have they? T hey have been selling in other markets. Do they remain committed to Chile, or should we perhaps think of a change in shareholding in the near or distant future? Thank you.
In terms of the different payment businesses that are existing, we've been investing a lot in different technologies and digitalization initiatives. For example, we just launched a new payment service called Mi Pago , which is a very important payment service and it's very well known in other markets in the world, where you can do simple transfers by just using the telephone number, and we really hope that it catches on other banks. It's available for everyone. We went into alliance with another important bank in Chile to make this payment system as we showed in the presentation. Today we're comfortable on how we're working. Obviously, everything we're analyzing the different opportunities, but there's nothing that we can mention today that will change this perspective relevantly.
Today, if we look at the main player in the market is Transbank. We work together with Transbank, and they have most of the volume in the industry. For us, our agreement, we've been quite successful over the past. With the changes that we've seen today, we're seeing generally adequate revenues. In terms of the second question of Citigroup, what we're seeing is that. T here's two parts. This agreement, it's important to mention that they have the investment through LQIF in Banco de Chile, which they've held since a long period ago. Banco de Chile has been a very profitable bank in that portfolio in terms of our profitability here in Chile.
We don't have information today which we can offer regarding their information on how they would continue in Banco de Chile. This is something that you'd have to speak with Citi, but it's nothing that we have or information that we can provide. It's important to mention that on one side you have the investment, on the other side you have the commercial agreement, which has recently been reapproved, re-agreed upon, which aligns all the commercial activities that we do together with Citi in international activities. That continues.
Okay. For how long has that agreement been renewed?
It's always renewed for a couple of years since its beginning. It's always reviewed and aligns all the initiatives. It's generally around two years at each renewal.
Sorry, I'm coming back to Transbank. It has required a capital injection. You are happy to continue to provide capital to maintain your market share?
Transbank is generating revenues. Transbank already in the past there was a capital injection, but it's already generating revenues and it's self-sufficient, leaders in the market.
We don't have more news so far to share on that?
Yeah. Yeah.
Okay. No, no change there. Thank you so much.
You're welcome.
Thank you. We have a question from Ernesto Gabilondo from Bank of America. Please go ahead.
Hi. Good morning, Rodrigo and Pablo, and good morning, everybody, and thank you for the presentation. My first question is on overall asset quality. We wanted to hear from you how you're seeing the evolution of the mortgage portfolio considering the macro expectations, and also what would be your lending appetite in the consumer portfolio. My second question is a follow-up on the sustainable ROE. Just want to double-check if the sustainable ROE is around 16%-18%. It is interesting that this year is supposed to be a strong year in light of high inflation. You have strong fundamentals in terms of asset quality, cost to risk, building extra provisions, still economic growth. When looking to 2023, you are expecting practically no growth.
You're seeing negative growth in consumption, inflation going down from 8% to 4.8%. On the other hand, you are also saying that interest rates should benefit loan repricing, but also you have highly effective tax rates on lower inflation, and also there could be some potential impact on the interchange fees. Wanted to hear your thoughts, and if you think that 2023 could be more challenging than you have previously expected.
Thanks, Ernesto. In terms of asset quality, as I mentioned, what we're seeing is good level, positive levels of asset quality. That totally aligns with the cycle. A very low cost of risk that we've seen. There's no segment that we've seen that is particularly concerning, but we are monitoring. In terms of interest rates in Chile, it's important to mention that interest rates are generally fixed interest rates. Incomes, salaries generally in Chile are indexed to inflation. We haven't seen any changes in light of that as well. If you look at other products and services like you mentioned, consumer loans. Consumer loans also, what we've seen is very low cost of risk and adequate levels of.
Actually very good levels of growth we've seen up to date. Now, our risk appetite, what we're seeing is our industry growing this year around the 8% level. We're looking to gain in key market segments, which are SME loans and in particular consumer loans, growing slightly above the industry. We have an upside to grow there, especially in the upper income individuals. We've been very strong in growing our customer base through our new or relatively new Cuenta FAN, the digital bank account that we have. We just launched a new current account, which is 100% digital as well that we're growing customers there as well. We've been cross-selling those customers and through renewed or reinforced marketing campaigns, we've been able to continue growing well in consumer loans.
For next year, we think that it will still be. It's still an uncertain year. We still aren't out of COVID, so there's still a lot of uncertainties, as Rodrigo mentioned in the call as well. We'd have to see how that pans out. In our medium term or long-term levels of cost of risk, we're seeing something around the 1.1%, which is very reasonable. We're seeing improvements in NIM. If you look at our net interest margins, we went from 3.9% last year. We're expecting to be around the 4.7% for this year, give or take a little bit. For next year, there is some impact in terms of lower inflation, but we have a lot of benefit from the higher rates.
We're going from 0.5%, and today we're ending around 8%. For next year, the average level of higher overnight rate is very positive for us, and that's one of the reasons why if you look over the history in Chile, the recent history, the net interest margins have been low is because of the very low rates. The benefit you get from having zero cost or low cost non-interest bearing deposits, you can't receive that benefit or it's not as profitable or attractive when the rates are very low. We should have a much better positive operating revenues there as well.
In terms of fees, we're seeing fees this year growing in the low double digits, very strong fee growth due to the opening of the economy because of less COVID restrictions in Chile. The interchange fee, what we've seen and what we mentioned is that the interchange fee will be way more than offset, especially the agreements and the cards and how we've managed this product for us versus competitors. In reality, we don't have what we're gonna see very strong card growth this year. Next year, we should continue to see good levels of fees across the board. We're not seeing impact on that side as well. Generally, fees grow in line with customers, which is around the 8%, 6%, 7%, 8% level in general.
This year we're seeing a stronger growth because of the base comparison base. Finally, for the long-term ROE, it really depends on the permanent impact in the economy, how loan growth and how Chile is. T he banking sector is a mirror of the economy. We're expecting that if everything remains similar to how they were, the economic growth and unemployment levels and rates, we should be able to maintain the historical levels of ROEs that we've maintained, adjusted for capital, obviously, around 16%-18% ROEs.
Let me add just one quick idea, Pablo, relative to the evolution of activities that we're expecting for the future. You're right in terms that the average economic growth in the next year will be lower than this year. However, it's very important to be aware that there will be a negative economic growth in the second half of this year in both on an annual and sequential basis as well. My point here is that probably the weakest part of the economic cycle will be in the second half of this year in terms of activity. In fact, we have seen a decline in terms of the level of total consumption in Chile. For example, in the first half.
Sorry, in the first quarter of this year, the total retail e-commerce sector declined by 4.6% on a sequential basis in the first quarter, and probably the total consumption will continue declining during the second half of this year. I'm saying this because for the next year we will likely have an upward trend inside the year. O ur quarterly forecast for the next year is that in the first quarter there will be a negative economic growth on an annual basis, but there will be a recovery in the second half of 2023 in terms of both total activity and consumption as well.
It's very important to keep in mind as well that we're expecting an above trend inflation at least for the next couple of years, so we're not expecting a 3% inflation at least until 2024 in an environment where probably the interest rate of equilibrium of Chile is a bit higher when we compare with previous years. At the end of the day, this positive trend inside of the year plus a high inflation plus a higher equilibrium interest rate, plus all the long-term positive impact from all the several initiatives that we've been taking in terms of the cost side, in terms of productivity, will support our long-term estimates for ROE, which is between 15% and 18% for the long, long run.
Thank you very much, Rodrigo and Pablo.
You're welcome.
I'm not seeing any more questions, so I will hand back to Pablo and Rodrigo for closing remarks.
Thanks for joining the call today and, we're happy to hold our next conference call with you on the second quarter results.
Thank you all very much for your time. That concludes today's call. Thank you.