NOTE 27 PROVISION FOR LOAN LOSSES
a) The changes in provision for loan losses recorded on the Statement of Income for the years ended December 31, 2017, 2016 and 2015 was as follows:
| Loans and | Loans and receivables from customers | ||||||||||
| receivables from banks |
Commercial loans |
Mortgage loans |
Consumer loans |
Total | |||||||
| 2017 | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||
| Recognized provision | |||||||||||
| Individually evaluated | (226 | ) | (338,701 | ) | — | — | (338,927 | ) | |||
| Collectively evaluated | — | (104,171 | ) | (63,699 | ) | (312,697 | ) | (480,567 | ) | ||
| Charge to income for provisions recognized | (226 | ) | (442,872 | ) | (63,699 | ) | (312,697 | ) | (819,494 | )(*) | |
| Released provisions | |||||||||||
| Individually evaluated | 209 | 302,504 | — | — | 302,713 | ||||||
| Collectively evaluated | — | 33,538 | 31,310 | 104,953 | 169,801 | ||||||
| Charge to income for provisions used | 209 | 336,042 | 31,310 | 104,953 | 472,514 | (*) | |||||
| Recovery of assets previously written-off | — | 13,236 | 1,908 | 16,419 | 31,563 | ||||||
| Net charge to income | (17 | ) | (93,594 | ) | (30,481 | ) | (191,325 | ) | (315,417 | ) | |
| Loans and | Loans and receivables from customers | ||||||||||
| receivables from banks |
Commercial loans |
Mortgage loans |
Consumer loans |
Total | |||||||
| 2016 | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||
| Recognized provision | |||||||||||
| Individually evaluated | (307 | ) | (387,737 | ) | — | — | (388,044 | ) | |||
| Collectively evaluated | — | (49,218 | ) | (38,837 | ) | (198,242 | ) | (286,297 | ) | ||
| Charge to income for provisions recognized | (307 | ) | (436,955 | ) | (38,837 | ) | (198,242 | ) | (674,341 | )(*) | |
| Released provisions | |||||||||||
| Individually evaluated | 286 | 251,582 | — | — | 251,868 | ||||||
| Collectively evaluated | — | 22,242 | 34,589 | 96,381 | 153,212 | ||||||
| Charge to income for provisions used | 286 | 273,824 | 34,589 | 96,381 | 405,080 | (*) | |||||
| Recovery of assets previously written-off | — | 8,898 | 1,285 | 13,088 | 23,271 | ||||||
| Net charge to income | (21 | ) | (154,233 | ) | (2,963 | ) | (88,773 | ) | (245,990 | ) | |
| Loans and | Loans and receivables from customers | ||||||||||
| receivables from banks |
Commercial loans |
Mortgage loans |
Consumer loans |
Total | |||||||
| 2015 | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||
| Recognized provision | |||||||||||
| Individually evaluated | (255 | ) | (80,424 | ) | — | — | (80,679 | ) | |||
| Collectively evaluated | — | (20,953 | ) | (12,827 | ) | (85,149 | ) | (118,929 | ) | ||
| Charge to income for provisions recognized | (255 | ) | (101,377 | ) | (12,827 | ) | (85,149 | ) | (199,608 | )(*) | |
| Released provisions | |||||||||||
| Individually evaluated | 238 | 71,558 | — | — | 71,796 | ||||||
| Collectively evaluated | — | 13,388 | 8,403 | 54,787 | 76,578 | ||||||
| Charge to income for provisions used | 238 | 84,946 | 8,403 | 54,787 | 148,374 | (*) | |||||
| Recovery of assets previously written-off | — | 1,871 | 616 | 5,818 | 8,305 | ||||||
| Net charge to income | (17 | ) | (14,560 | ) | (3,808 | ) | (24,544 | ) | (42,929 | ) | |
(*)The amounts disclosed in the Consolidated Statements of Cash Flows are detailed below:
| 2017 | 2016 | 2015 | |||||
| MCh$ | MCh$ | MCh$ | |||||
| Charge to income for provisions recognized | 819,494 | 674,341 | 199,608 | ||||
| Credit to income for provisions used | (472,514 | ) | (405,080 | ) | (148,374 | ) | |
| 346,980 | 269,261 | 51,234 |
b) The break down by type of loan, whether assessed collectively or individually, for established and released provision amounts, respectively, was as follows:
| As of December 31, 2017 | |||||||||||||||
| Established Provision | Released Provision | ||||||||||||||
| Individual analysis |
Group Analysis |
Total | Individual analysis |
Group Analysis |
Total | ||||||||||
| Note | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||
| Commercial Loans | (338,701 | ) | (104,171 | ) | (442,872 | ) | 302,504 | 33,538 | 336,042 | ||||||
| Mortgage Loans | — | (63,699 | ) | (63,699 | ) | — | 31,310 | 31,310 | |||||||
| Consumer Loans | — | (312,697 | ) | (312,697 | ) | — | 104,953 | 104,953 | |||||||
| Subtotal | 10 | (338,701 | ) | (480,567 | ) | (819,268 | ) | 302,504 | 169,801 | 472,305 | |||||
| Banks | 9 | (226 | ) | — | (226 | ) | 209 | — | 209 | ||||||
| Total | (338,927 | ) | (480,567 | ) | (819,494 | ) | 302,713 | 169,801 | 472,514 | ||||||
| As of December 31, 2016 | |||||||||||||||
| Established Provision | Released Provision | ||||||||||||||
| Individual analysis |
Group Analysis |
Total | Individual analysis |
Group Analysis |
Total | ||||||||||
| Note | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||
| Commercial Loans | (387,737 | ) | (49,218 | ) | (436,955 | ) | 251,582 | 22,242 | 273,824 | ||||||
| Mortgage Loans | — | (38,837 | ) | (38,837 | ) | — | 34,589 | 34,589 | |||||||
| Consumer Loans | — | (198,242 | ) | (198,242 | ) | — | 96,381 | 96,381 | |||||||
| Subtotal | 10 | (387,737 | ) | (286,297 | ) | (674,034 | ) | 251,582 | 153,212 | 404,794 | |||||
| Banks | 9 | (307 | ) | — | (307 | ) | 286 | — | 286 | ||||||
| Total | (388,044 | ) | (286,297 | ) | (674,341 | ) | 251,868 | 153,212 | 405,080 | ||||||
| As of December 31, 2015 | |||||||||||||||
| Established Provision | Released Provision | ||||||||||||||
| Individual analysis |
Group Analysis |
Total | Individual analysis |
Group Analysis |
Total | ||||||||||
| Note | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||
| Commercial Loans | (80,424 | ) | (20,953 | ) | (101,377 | ) | 71,558 | 13,388 | 84,946 | ||||||
| Mortgage Loans | — | (12,827 | ) | (12,827 | ) | — | 8,403 | 8,403 | |||||||
| Consumer Loans | — | (85,149 | ) | (85,149 | ) | — | 54,787 | 54,787 | |||||||
| Subtotal | 10 | (80,424 | ) | (118,929 | ) | (199,353 | ) | 71,558 | 76,578 | 148,136 | |||||
| Banks | 9 | (255 | ) | — | (255 | ) | 238 | — | 238 | ||||||
| Total | (80,679 | ) | (118,929 | ) | (199,608 | ) | 71,796 | 76,578 | 148,374 | ||||||
In management’s opinion, the credit risk provisions established cover all losses that may arise from estimated incurred loan losses, based on the information examined by the Bank and its subsidiaries.