Performance
Tanner Servicios Financieros S.A. generated profit after taxes of Ch$ 25,319 million (~US$ 41 million) for the year ended December 31, 2017, which represented an increase of 13.3% over 2016 results. The positive fluctuation was primarily driven by an 8.8% YoY growth in the gross profit, which was a function of shifts in the portfolio composition (in favor of more profitable products) and reduced risk expenses.
Our gross loan portfolio in 2017 reached Ch$ 961,131 million (~US$ 1,563 million), +16.6% YoY, while provisions totaled Ch$ 24,315 million (~US$ 40 million), increasing 4.1% with respect to the prior year. Total net loans as of year-end 2017 was Ch$ 936,816 million (~US$ 1,523 million), rising 36.9% and 17.0% compared to December 2015 and 2016, respectively.
Our portfolio continues to concentrate on business lines that are better aligned with Tanner’s value proposition – Factoring and Auto-Financing – which represent 31.1% and 32.3% of the net loan portfolio, respectively, as of year-end 2017.
In 2017, important progress was made in the Factoring (+26.2% YoY) and Auto-Financing (+24.9% YoY) business lines, in conjunction with the increase of Ch$ 11,876 million (~US$ 19 million), +6.2% YoY, in Corporate Lending, which was a result of the Company’s strategic decision to focus on smaller working capital loans aimed at our Factoring customers in order to provide them with a more comprehensive product offering.
Recent strategic initiatives have been accompanied by efforts to significantly diversify the portfolio by economic sector and customer type, as well as to reduce the concentration of our major customers.
Asset quality improvements are the result of the actions taken since 2015 to strengthen Tanner’s loan approval, control and collection policies with the objective of reducing NPLs levels, which peaked in the January-June 2015 period.
As of December 31, 2017, the Company had improved its liquidity and solvency indicators as compared to 2016, mainly because of the decrease in current liabilities after securing longer-term funding. The bonds issued during the last quarter of the year allowed us to reduce our reliance on short-term bank credit lines. Another contributing factor was the rise in current assets due to the growth in factored receivables and financial assets.
(3) Leverage: Liabilities / Equity
(4) Capitalization: Equity/ Assets
Despite Chile’s economic slowdown, which has impacted all financial institutions in the country, our profitability improved in 2017 relative to 2016, driven by higher net income generation. Profitability hasn’t reached the 2014 level given the challenging market environment, however, we believe that the measures implemented have positioned us favorably to continue to improve our profitability levels going forward.