Earnings Call: Q3 2025

Nov 26, 2025

Summary

Q3 profit rose 25% YoY to CLP 72.4 billion, with stronger financial markets and subsidiary performance. Consalud’s non-cash CLP 18.3 billion valuation loss partly offset gains; Fitch upgraded the rating to BBB+.

Hello, everyone, and thank you for joining ILC's third quarter 2025 results conference call. With me today is Juan Pablo Undurraga, CFO of ILC, and Francisco Arriagada, Investor Relations. Before we begin, I will invite everyone to download from our website the presentation prepared especially for this call. This document provides an overview for the events and achievements for the period, as well as the financial performance and context of each of our businesses. Today's call will be divided into five sections. First, we will review the economic and industry context for the period, followed by ILC's consolidated results for Q3 2025. Next, we will analyze our subsidiaries' financial performance and key highlights for the period. After that, we will provide an update on our financial position. Finally, we will conclude with a Q&A section. Now, I welcome the call over to Juan Pablo Undurraga, CFO of ILC, who will review the period's context, ILC's 2025 milestones, and our consolidated results for the year. Thanks, Gustavo. Slide 5 presents the macroeconomic context for the third quarter of 2025 compared to the third quarter of 2024. In the third quarter of 2025, both global and local equity markets delivered strong performances, marking a recovery from the weakness seen in the previous period. The S&P 500 advanced 10.6%, while the IPSA gained 7.8%. Pension Fund C, which we use as a proxy for the return on legal reserves, posted a 6.4 return. As you can see from the graph below, inflation remained flat during the quarter compared to a 0.7% increase in the same period last year, while UF increases 1%. The Central Bank continued its easing cycle, maintaining the policy rate at 5% for most of the quarter before lowering it to 4.75% in August. Regarding our 2025 milestones, significant events have occurred during the year. In June, Banco Internacional achieved 100% ownership of Autofin, consolidating its presence in auto financing segment. That same month, Banco Internacional carried out two capital increases, further reinforcing its capital base. In addition, during July, the bank signed a commercial alliance with MAPFRE, aimed at expanding its distribution capabilities in the insurance business. In healthcare, in June, RedSalud signed a binding agreement to acquire the Nuevo Sanatorio Alemán, a leading healthcare institution in Concepción. The transaction, which is subject to regulatory approvals and due diligence process, is aligned with our strategy to expand the network's regional presence and strengthen its offering of high-complexity services. Finally, in the insurance sector, Confuturo was awarded 50% of Contract 11 of the Disability and Survivors Insurance contract, reinforcing its strong position in the annuities and life insurance market. On Slide 8, we can see that ILC's stock has continued to deliver strong returns, significantly outperforming the IPSA in both 2024 and year-to-date 2025. As of November 21st, our shares have delivered a 101% return year-to-date, more than double the IPSA's gain over the same period. A key milestone supporting this performance was our re-entry into the IPSA index on March 24th, which boosted both the visibility and liquidity of our stock. This strong momentum reflects market recognition of ILC growth strategy, the consistent execution by our subsidiaries, and our commitment to long-term value creation. As we have stated in previous presentations, ILC's strategy is based on five pillars. These pillars form the foundation of our approach, driving both organic and inorganic growth opportunities. Our focus remains on achieving profitability in our operations, maintaining flexibility in the businesses we engage with, and ensuring a strong financial position. We work with ESG values and metrics across all our activities. This strategic framework directly supports our overarching purpose: to be leaders in creating social and economic value that improves people's quality of life. Slide 10 highlights the strong results ILC achieved in the first nine months of 2025. Driven by solid execution across its businesses and greater performance in financial markets. ILC closed the third quarter with a profit of CLP 72.4 billion, compared to CLP 57.8 billion in the same period of 2024, representing a 25% increase. As a result, recurring profit for the first nine months of 2025 reached CLP 186.4 billion, a 68% increase compared to the previous year. This record performance reflects the consistent growth of our businesses. With these results, ILC achieved an ROE of 19.2% over the last 12 months. Over time, ILC has maintained double-digit profitability, demonstrating steady growth and resilience. On Slide 11, we present an executive summary of the main drivers behind ILC's consolidated profit of CLP 72.4 billion in the third quarter of 2025, compared to CLP 57.8 billion in the third quarter of 2024. Subsidiaries with greater exposure to financial assets such as Confuturo, Habitat, and AAISA recorded better results. Confuturo contributed with CLP 37.1 billion, while Habitat added CLP 21.8 billion during the period. In the healthcare segment, RedSalud achieved CLP 4.6 billion, supported by higher and more complex inpatient activity. In the health insurance segment, Consalud reported a loss of CLP 11.4 billion because during the quarter, the discount rate parameters of the accounting model used to calculate the present value of the liability established by the Short Isapres Law were updated. This adjustment resulted in a loss of CLP 18.3 billion during the quarter. Excluding this effect, Consalud posted a profit of CLP 6.9 billion, compared to a loss of CLP 6.2 billion recorded in the third quarter of 2024. Now, I will turn the call over Gustavo, as he will review the main operational events and key financial figures of ILC subsidiaries. Thank you, Juan Pablo. Now that we've reviewed ILC's consolidated performance, we'll take a closer look at the performance of each of our main subsidiaries. In this section, we will go division by division to better understand the key drivers behind each business, the challenges faced in the quarter, and the strategic progress achieved in line with our long-term plan. Let's begin with Banco Internacional. Moving to slide number 14. As of September 2025, Banco Internacional's total loan portfolio grew by 11.5% year-over-year, positioning the bank while the industry expanded by just 5.5%. The commercial loan portfolio grew by 8%. Meanwhile, consumer loans increased by 41%, driven by the expansion of Autofin's portfolio and the bank's digital consumer lending platforms. As a result, Banco Internacional's market share increased in commercial loans from 2.8% to 2.9%, consumer loans from 1% to 1.4%, and mortgage loans from 0.30% to 0.70%. In terms of client growth, the bank continued to expand its footprint. Commercial clients increased by 15%, reaching over 8,700 companies. Retail clients increased by 46%, totaling more than 98,000 clients, including Banco Internacional and Autofin. With this, the bank reached 111,000 total clients. Looking ahead, Banco Internacional remains focused on expanding its presence in the large corporate segment, consolidation of the retail auto finance banking segment, and diversifying both its product offering and funding sources. In this line, as shown in slide 15, Banco Internacional continues to consolidate its funding structure, reflecting a clear shift towards greater diversification and long-term stability. As of September 2025, the bank's funding base shows an increased reliance on bonds and retail time deposits, which now represent 30% and 34% of total funding. At the same time, the share of bank funding declined from 11% to 9%, reducing dependence on short-term sources. It's important to remember that in April, the bank completed the issuance of the first AT1 bond in the Chilean industry for $2 million US, also to capital increases carried out during the first half of the year, totaling $38.5 million. Looking ahead, the bank sees three main opportunities. Scaling retail financing by improving client acquisition and retention, expanding the corporate funding base, and third, developing digital financial products aligned with an efficient onboarding process. Next slide, Banco Internacional's gross operating result grew 27.6% quarter-over-quarter, reaching CLP 52.1 billion. This increase was supported by higher loan volumes and the contribution from Autofin, partially offset by lower spread. Operating expenses rose to CLP 31 billion, mainly due to Autofin, which continues to expand its operation. As a result, the efficiency ratio increases by 570 basis points year-over-year, reaching 59.5%. Banco Internacional remains focused on sustaining profitability growth by expanding its loan portfolio, while continuing to manage cost and integration efforts with Autofin. As shown on slide number 17, total risk expenses increased to CLP 8.4 billion in the third quarter of 2025, compared to CLP 6 billion in 3Q24. This increase of CLP 2.4 billion was mainly due to higher provision in Autofin, along with provision and write-offs in commercial banking. In terms of asset quality indicators, the NPL ratio stood at 2.6% as of September 2025 compared to 2.4% in September 2024. The risk index remained stable at 1.9% versus 1.8% in September 2024. The collateral coverage stood at 69%, above the industry average of 53%. Finally, Banco Internacional remains fully compliant with Basel III requirements, with a solvency ratio of 16.4% as of September 2025. Slide 18's chart shows Banco Internacional profit and ROE evolution. In the third quarter of 2025, the bank reported a net income of CLP 9.9 billion compared to CLP 10.5 billion in 3Q 2024. Autofin played a significant role, accounting 31.6% of Banco Internacional's quarterly earnings. As a consequence, the bank posted a return on average equity of 11.9% in 3Q 2025. Despite these short-term pressures, Banco Internacional continues to demonstrate solid long-term growth supported by growth loan volume, diversification of funding, the ongoing integration of Autofin, and the development of relevant commercial alliances. Now, I want to shift to the annuity market, as shown on Slide 20. In the third quarter of 2025, we continue to see a strong demand for annuities. During the quarter, the annuity rate stood at 3% compared to a programmed withdrawal rate at 3.54%. This spread continued to favor annuities as an attractive retirement option. As a result, 55% of pensioners choose annuities, while 35% opted for programmed withdrawal. The 35% pension reform, which reduced the eligibility requirement for annuities from three years to two years, continued to broaden access and reinforce the relevance of this retirement alternative. Total industry premium reached CLP 34.3 million, increasing 35% quarter-over-quarter. Confuturo premiums amounted CLP 2.7 million, below the previous quarter, with a market share at 8%. As we have mentioned in the past, we align our sales performance with investment opportunities and the generation of shareholder spread. Confuturo remains one of the leading players in the annuity market, supported by the sustained demand and regulatory developments. This quarter, sales were below the usual levels, primarily due to a lower expected internal rate of return observed during the period. Slide 21 highlights Confuturo's focus on strengthening its direct sales channel and maintaining strict cost efficiency. In the third quarter of 2025, 38% of life annuity premiums came from the direct channel, above the industry average of 32%. On the cost side, SG&A expenses reached CLP 9.7 billion, increasing 2.6% compared to the third quarter of 2024, mainly due to higher personal and IT related costs. Despite this increase, SG&A over assets under management stood at 40 basis points, lower compared to last quarter of the previous year, and below the industry average of 91 basis points. On Slide 22, we show the investment result of Confuturo's portfolio in the third quarter of 2025. Investment result of Confuturo in 3Q 2025 totaled CLP 122.3 billion, representing a 16.9% increase quarter-over-quarter. This strong performance was mainly explained by higher returns in local fixed income, which contributed CLP 6.3 billion and investment funds added CLP 15 billion. In addition, equities contributed CLP 1.6 billion and real estate portfolio resulted CLP 1.5 billion. Slide number 23. In the third quarter of 2025, Confuturo reported a net income of CLP 40.2 billion compared to CLP 38.4 billion recorded in the third quarter of 2024, representing a 41.2% increase. This increased result was mainly driven by higher investment income, supported by improved performance of local fixed income and investment funds results. As of September 2025, Confuturo achieved an ROE of 15.1%. The company is staying focused on its long-term investment strategy, especially by growing its portfolio of alternative assets, including private equity and real estate, to improve future returns and diversification. Moving now to AFP Habitat, as shown on Slide 25. In the third quarter of 2025, revenues reached CLP 65.7 billion, a 5.4% increase compared to 3Q 2024. This growth was mainly supported by higher fee income from mandatory contributions, driven by a 7.7% increase in the average taxable income per contributor. As of September 2025, Habitat contributors had an average taxable income 22.4% higher than the industry average, reinforcing the company's strong positioning in the mid to high income segment. This was partially offset by a 2.7% decrease in the number of contributors year-on-year. Legal reserves reached CLP 35.7 billion, 2.2% higher compared to the same quarter of the previous year. This result was mainly driven by the strong performance of funds with higher exposure to equities, funds A and B. The next slide shows both our international operation in Peru and Colombia, reported higher revenue in the third quarter of 2025, both supported by growth in commission income. In Peru, revenues increased 34.5% quarter-over-quarter, reaching CLP 11.6 billion, and legal reserve return improved CLP 2.8 billion compared to CLP 0.4 billion in 3Q 2024, reflecting a stronger global market performance. Colfondos in Colombia, revenues grew 31.5% quarter-over-quarter, reaching CLP 27.3 billion. Legal reserves return also showed a strong recovery, reaching CLP 10.5 billion, up from CLP 7.2 billion in 3Q 2024. The strong performance in Colombia is also attributable to a new insurance company, Andina Vida, which generated revenue for CLP 7 billion in 3Q 2025. On slide 27, we show the evolution of profit before taxes and encaje or legal reserve for both AFP Habitat and AAISA. Results were mainly supported by higher legal reserve returns, reflecting the strong performance of funds with greater exposure to equities. Excluding this effect, in the third quarter of 2025, AFP Habitat reported a profit of CLP 38 billion, up 3.7% compared to the same quarter of the previous year. Habitat's quarterly improvement was driven by higher commission revenue supported by increased taxable income. AAISA posted a profit of CLP 13.6 billion, an 87% increase compared to the same quarter the previous year. This result was primarily explained by higher revenues in Peru and Colombia, together with the contribution of Andina Vida, the new insurance company. Moving now to the health segment. Slide 39 shows RedSalud activity indicators. In the third quarter of 2025, RedSalud's revenues reached CLP 214.4 billion, which implies a 15.2% increase compared to the same period in last year. Broad-based, with inpatient, outpatient, and dental services rising 16.8%, 13.9%, and 11.5%. In inpatient care, revenues grew. Growth was mainly driven by higher income from surgical procedures, critical care units, and hospitalization. The number of surgeries increased 5.5% quarter-over-quarter, while the occupancy ratio of the network rose to 77.8%, compared to 73.1% in the third quarter of 2024, reflecting a more complex case mix. Outpatient revenues grew 13.9%, supported by higher activity in laboratory services, imaging, and medical consultation, as well as the continued expansion of clinics and medical centers. Dental revenues increased 11.5%, boosted by higher demand and promotional campaigns. RedSalud's solid growth is supported by rising demand and more complex inpatient mix and increased activity in outpatient and dental services. Moving to slide 40, RedSalud's EBITDA margin reached 11.1%, slightly below 11.2% recorded in 3Q 2024. The breakdown shows that the margin was affected mainly by clinical material costs, which reduced the margin by 1.4%, reflecting the change in the mix of services. At the operational level, the end of the referral agreement between RedSalud, Didacura, and Hospital Almogena impacted also the result. Now turning to slide number 41, RedSalud continues to diversify its revenue source, reinforcing its resilience across different payer segments. The third quarter of 2025, FONASA accounted for 49% of revenue, while Isapre represented 31%, and out-of-pocket and other payers, 20%. This reflects the sustainable relevance of the public insurer, which reached 49% share on a last 12 months basis, aligned with RedSalud's strategic objective of expanding access. It is also important to note that Isapres showed a recovery last quarter following the implementation of the Short Law, which has provided greater financial stability for the system. Overall, RedSalud's diversified revenue mix reduces exposure to regulatory changes while supporting sustainable long-term growth. On Slide 42, we can see RedSalud's EBITDA through mainly dental and outpatient center and regional hospital. Consolidated EBITDA increased 13.9% quarter-over-quarter, reaching CLP 33.8 billion in the third quarter of 2025, with a margin of 11.1% compared to 11.2% in 3Q 2024. By business unit, EBITDA increases by CLP 3.5 billion at outpatient and dental centers, reaching a margin of 17.6%. Regional hospitals showed a similar trend with an increase of CLP 1.4 billion and a margin of 9.5%. Metropolitan regional hospital remained stable, reaching a margin of 9.5%. On Slide 43, we can see that RedSalud's average monthly contribution remained stable at USD 5.7 per affiliate in the third quarter of 2025. Consolidated the recovery observed since last year or the beginning of the last year after the Isapre price adjustment and the implementation of the Short Law. This stabilization reflects the combined effects of regulatory measures, including the implementation of the extraordinary premium in late 2024 and the Short Law adjustment. Together, these have helped restore contributions to levels consistent with the historical average. In this context, the loss ratio stood at 81.7% in 3Q 2025, down from 97.4% in the third quarter, continuing the improving trend and pointing towards a more balanced outlook for Consalud. Now, if we move to the next slide, Slide 34. The title highlights we are seeing stable recurring profit following the approval of the payment plan and a reduction in medical leave costs. If you look at the gray bars, you will notice a trend of stability in our recurring profit. This performance is underlined by the implementation of Short Isapres Law, the payment plan, and the extraordinary premium. They have not only helped to fully comply with the payment plan mandated by the regulation, but also stabilized the Isapres. Now, I would like to draw your attention to the light blue arrow shown in the third quarter of 2025, which represents a negative extraordinary effect for CLP 18.3 billion. During the quarter, as Juan Pablo mentioned before, the discount rate parameters of the accounting model used to calculate the present value of the liability under IAS standards were updated. This update follows the lower spread in the market and a better outlook for the Isapre situation. That resulted in a decrease in the discount rate from 35% to 30%. Nevertheless, this is a loss. This loss is only in the books. That means a cash flow for the company. Moving to the next slide, we can see that Vida Cámara continued to expand its operations during the third quarter of 2025. The number of beneficiaries reached 654,000, up 5.8% year-over-year, with a growth across both group and individual health insurance. Highlighting individual insurance, it grew by 55.5%, supported by policies associated with preferred provider agreements with Consalud. This growth meant a higher premium collection in both health and life insurance. However, claims cost increased by 17.7%, mainly driven by higher outpatient coverage in group health insurance. Cost ratio reached 79.3% in the third quarter of 2025 compared to 77.5% in the third quarter of 2024. Now, if we turn to Slide 37, please, ILC's well minus debt maturity profile and liquidity position. As of September 2025, net financial debt totaled CLP 392.3 billion, with a net financial debt to equity ratio of 0.32 times. Liquidity stood at CLP 184.6 billion, composed mainly of cash and equivalents, and investment portfolio of liquid assets with a low-risk profile. This liquidity structure provides ample flexibility to cover upcoming maturities. An important highlight, we are proud to announce that yesterday, Fitch Ratings upgraded ILC's international credit rating to BBB+. With this improved classification, all ratings agencies now share a BBB+ international rating for ILC. This upgrade reflects the company's strong financial position and our consistent track record of value creation. According to the agency, this improvement is driven by several key factors, where we can highlight a diversified business portfolio, robust risk management practices supported by a stable regulatory framework, and sustained profitability. Fitch also highlighted our solid liquidity and controlled leverage with a net debt ratio of 0.3 times and also a healthy coverage of operating expenses. This upgrade is a direct recognition of ILC's financial discipline and growth strategy. Now to sum up, I like to highlight the key advances towards our strategic goals. Between 2023 and 2027, we remain focused on growth in the financial business, as I've mentioned. At Banco Internacional, we continue expanding our client base reaching more than 111,000 clients as of September 2025, delivering, I mean, 11.5% loan growth, above the industry 5.5%. Milestones this year include increasing our stake in Confuturo to 100%, issuing the first AT1 bond in Chile, and foregoing the new strategic alliances, like the alliances with MAPFRE. Confuturo maintains a strong position in the annuity market, supported by higher spreads, efficiency, and value creation, achieving an 8% market share in the quarter. AFP Habitat remains focused on the needs to high-income segments, benefiting this quarter from a stronger financial market performance. In the healthcare business, RedSalud reinforced its leadership in private coverage, strengthening high-complexity services. EBITDA reached CLP 23.8 billion, with a 11.1% margin, while Vida Cámara's individual health insurance grew 55% year-on-year, reaching more than 47,000 beneficiaries. On the regulatory front, the implementation of the Short Isapres Law has contributed to stabilizing the health insurance segment with positive effects at RedSalud. Finally, at the ILC level, we remain fully committed to our purpose of creating value. We achieved a profit of CLP 186 billion in the first nine months, supported by operational progress across our businesses and stronger financial markets. In addition, ILC's stock continues to perform strongly, doubling the IPSA return year to date. Before we end the presentation, I would like to extend a cordial invitation to our seventh Investor Day, which will take place on December 4th in Santiago, Chile. This event will provide an opportunity to present our strategic priorities, review key developments, and share the long-term outlook toward 2030. The presentation will be led by Pablo González, CEO of ILC, and Mario Chamorro, CEO of Banco Internacional. This concludes today's presentation. We will now open the floor for questions. It is important to remember that you have the option to send us a question through the mailbox below. I have a question here regarding Consalud. We can provide more details on how Consalud liability rate is calculated and why the accounting loss occurs this quarter. I can take that. Based on Isapre industry risks, we estimate a discount rate based on high yield bond spreads, which have decreased significantly since September 2024. Considering September 25 market conditions, the new discount rate reached 20% compared to the previous discount rate of 35%. This new discount rate increases the liability established by the Short Isapres Law, and as we mentioned before in this presentation, this adjustment resulted in an CLP 18.3 billion loss after tax during the quarter. It is important to remember that the liability established by the Short Isapres Law and the adjustment of the discount rate described are accounting effects under IFRS standard that have not involved cash flows disbursement during the year. Thank you, Juan Pablo. There is another question regarding the annuity industry, especially the low volume from Confuturo this quarter. I could take this question. The annuity market continued showing strong demand during the third quarter, with a solid growth in premiums and stable expense preference downwards. Annuity over fund withdrawal for the third quarter of this year, premium reached $34 million US. Confirming the strong demand that we observed on 2024 and 2025. A key factor, as we mentioned, the trend has been narrower spread between annuity rates and programmed withdrawal rates, which has made annuities more attractive for retirees seeking for long-term financial certainty. Regulatory changes are also reinforcing the market outlook. The reduction in the minimum eligibility threshold from the UFC to UEF has expanded access, while the gradual increase in the mandatory contribution rate will strengthen the system in a long-term horizon. Demographic trends also, particularly an aging population, will provide an additional structural tailwind for annuity going forward. Confuturo is well-positioned to capture this growth. We have a strategy focused on the direct channels, which give us some flexibility. However, Confuturo's growth will be aligned, we have mentioned that before, that Confuturo's growth will be aligned with the investment opportunities available in the market. During this quarter, the marginal investment IRR was slightly below Confuturo's appetite, which led us to sell a little less this quarter. A question regarding pension reform in Colombia, and if we have any plans for M&A in AAISA. I will start with the last question regarding M&A. AAISA continuously look together with Prudential, which is our partner there, for opportunities in the region, especially markets similar to where we participate, like Chile, Peru, and Colombia. However, there is nothing to mention right now. We continuously focus on look for opportunities, but good opportunities we see value for the shareholder, not opportunities to put flags on the map. Regarding the pension reform in Colombia, the pension reform in Colombia was approved by Congress in mid-2024, and the idea was to start in July this year. However, its implementation was suspended by the Constitutional Court due to procedural irregularities requiring a new vote in Congress. In June 2025, the House of Representatives approved the reform again, and the process now awaits a final ruling from the Court. We are awaiting the Court to the final decision, but there is no light if there will be a reform in this aspect for the coming years. As we have mentioned in the past, this reform applies, introduce a new framework where some first will change the contributors that put access to the private system. Contributors with earnings between one to three million minimum wage will direct their contribution to the public system, but the reform allows AFPs to charge over the UF for former contributors. The next step, as I mentioned, will depend on the Court confirmation and the government ability to ensure financial feasibility. This stage, there is no confirmed implementation date. The final decision right now is on the Court's decision. I think everything looks good. Thank you, everyone, for joining us today in the third quarter 2025 results conference call. If you have got any further question, please feel free to contact our investor relations team. Thank you for joining this conference call, and we hope to see you next week.