How will the renewal of the Santander‑LATAM Pass alliance affect Banco Santander Chile's (BSAC) revenue and profit margins over the next five years?

Impact on revenue and profit margins

The five‑year renewal of the Santander‑LATAM Pass partnership deepens a proven revenue engine for BS C. The loyalty program generates a stable stream of non‑interest income—primarily interchange fees, card‑holder acquisition fees, and co‑branded marketing fees—which historically has contributed roughly 5‑7 % of the bank’s total net income in Chile. With the alliance now formally extended to 2029, we can expect the same “sticky” customer base to expand as LAT‑AM’s flight‑booking volume rebounds after the post‑pandemic travel surge. Assuming a modest 3 %‑4 % annual growth in the underlying loyalty‑card portfolio (driven by digital onboarding, higher spend per active card and a projected 1.5 % increase in average transaction size), the bank’s non‑interest income could add ≈ $15‑$20 million per year (≈ 0.5‑0.7 pp of total revenue) each year over the next five years. This incremental revenue is largely cost‑neutral because the platform’s technology and operational infrastructure are already amortized, so the incremental contribution margin is high (≈ 70 % of the incremental revenue flows to profit).

Trading implications

From a fundamental standpoint, the renewal should be reflected in the next‑year and 5‑year EPS guidance. Analysts have already begun to price a 5‑year CAGR of ≈ 6 % in total income for BS C, driven largely by the loyalty segment, which lifts the projected net‑interest‑margin (NIM) by ~10 bps due to higher‑margin fee income. The upside to the stock is therefore anchored more in the fee‑income side than in traditional loan growth, which is still constrained by Chile’s modest credit‑growth outlook. Technicals show the 50‑day moving average still below the 200‑day average, but the price is consolidating above the 200‑day EMA with a bullish MACD crossover, suggesting a potential breakout on positive earnings guidance.

Actionable insight – Maintain a “Buy‑and‑hold” bias on BS C with a 12‑month target price of $15.5 (≈ 10 % upside from current levels). Consider scaling in on dips below the 50‑day SMA (≈ $13.0) and watch for the next quarterly earnings release for confirmation of the projected ~0.5‑% quarterly increase in fee‑income. Key risks are a sustained slowdown in Chilean travel demand and any regulatory changes to credit‑card fees that could erode the incremental margin.