EX-99.1 2 s106026_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

Section 1: Key consolidated data

Balance Sheet (Ch$mn) |  | Mar’17 |  |  | Mar’16 |  |  | % Change |
Total assets |  |  | 36,708,538 |  |  |  | 34,847,695 |  |  |  | 5.3 | %
Gross customer loans |  |  | 27,452,651 |  |  |  | 25,725,961 |  |  |  | 6.7 | %
Customer deposits |  |  | 20,108,828 |  |  |  | 19,802,170 |  |  |  | 1.5 | %
Customer funds |  |  | 25,598,561 |  |  |  | 24,498,094 |  |  |  | 4.5 | %
Total shareholders’ equity |  |  | 2,968,491 |  |  |  | 2,821,692 |  |  |  | 5.2 | %

Income Statement (Ch$mn) |  | Mar’17 |  |  | Mar’16 |  |  | % Change |
Net interest income |  |  | 318,575 |  |  |  | 312,873 |  |  |  | 1.8 | %
Gross revenues before provisions for loan losses |  |  | 441,149 |  |  |  | 415,374 |  |  |  | 6.2 | %
Provision for loan losses |  |  | (73,862 | ) |  |  | (77,926 | ) |  |  | (5.2 | )%
Op expenses excluding impairment and other op. exp. |  |  | (168,780 | ) |  |  | (166,006 | ) |  |  | 1.7 | %
Income before tax |  |  | 180,226 |  |  |  | 155,702 |  |  |  | 15.8 | %
Consolidated net income |  |  | 143,018 |  |  |  | 126,040 |  |  |  | 13.5 | %

Profitability and efficiency |  | Mar’17 |  |  | Mar’16 |  |  | Change bp |
Net interest margin (NIM) 1 1 |  |  | 4.2 | % |  |  | 4.5 | % |  |  | -30 | bp
Efficiency ratio2 |  |  | 40.0 | % |  |  | 41.6 | % |  |  | +160 | bp
Return on avg. equity |  |  | 19.5 | % |  |  | 18.1 | % |  |  | +140 | bp
Return on avg. assets |  |  | 1.6 | % |  |  | 1.4 | % |  |  | +20 | bp
Core Capital ratio |  |  | 10.8 | % |  |  | 10.6 | % |  |  | +20 | bp
BIS ratio |  |  | 13.7 | % |  |  | 13.5 | % |  |  | +20 | bp
Return on RWA |  |  | 2.1 | % |  |  | 1.9 | % |  |  | +20 | bp

Asset quality ratios (%) |  | Mar’17 |  |  | Mar’16 |  |  | Change bp |
NPL ratio3 |  |  | 2.2 | % |  |  | 2.5 | % |  |  | -30 | bp
Coverage of NPLs ratio 4 |  |  | 135.5 | % |  |  | 122.5 | % |  |  | +130 | bp
Cost of credit5 |  |  | 1.1 | % |  |  | 1.2 | % |  |  | -10 | bp

Structure (#) |  | Mar’17 |  |  | Mar’16 |  |  | Change (%) |
Branches |  |  | 415 |  |  |  | 470 |  |  |  | (11.7) | %
ATMs |  |  | 1,288 |  |  |  | 1,529 |  |  |  | (15.8 | )%
Employees |  |  | 11,229 |  |  |  | 11,793 |  |  |  | (4.8 | )%

Market capitalization |  | Mar’17 |  |  | Mar’16 |  |  | Change (%) |
Net income per share (Ch$) |  |  | 0.76 |  |  |  | 0.67 |  |  |  | 13.5 | %
Net income per ADR (US$) |  |  | 0.46 |  |  |  | 0.39 |  |  |  | 15.6 | %
Stock price (Ch$/per share) |  |  | 41.37 |  |  |  | 32.57 |  |  |  | 27.0 | %
ADR price (US$ per share) |  |  | 25.08 |  |  |  | 19.35 |  |  |  | 29.6 | %
Market capitalization (US$mn) |  |  | 11,816 |  |  |  | 9,116 |  |  |  | 29.6 | %
Shares outstanding (millions) |  |  | 188,446.1 |  |  |  | 188,446.1 |  |  |  | 0.0 | %
ADRs (1 ADR = 400 shares) (millions) |  |  | 471.1 |  |  |  | 471.1 |  |  |  | 0.0 | %

1 NIM = Net interest income annualized divided by interest earning assets.

2. Efficiency ratio: Operating expenses excluding impairment and other operating expenses divided by Operating income. Operating income = Net interest income + Net fee and commission income + Total financial transactions, net + Other operating income minus other operating expenses.

3. Capital + future interest of all loans with one installment 90 days or more overdue divided by total loans.

4. Loan loss allowance divided by Capital + future interest of all loans with one installment 90 days or more overdue.

5. Provision expense annualized divided by average loans.

|  | 1

Section 2: Summary of results 1

| Net income increased 31.1% QoQ and 13.5% YoY in 1Q17. ROAE reached 19.5%

Net income attributable to shareholders in 1Q17 totaled Ch$142,375 million (Ch$0.76 per share and US$0.46/ADR), increasing 31.1% QoQ and 13.5% YoY. The Bank’s ROAE2 expanded 140bp compared to 1Q16 and reached 19.5%, above initial guidance. This was achieved despite a lower inflation rate in the quarter and a higher corporate tax rate.

The rise in the Bank’s ROE was driven by a solid growth of client revenues leveraged on a lower cost of credit and improved efficiency. This is reflected in the 31.9% YoY rise in net contribution from our business segments3. This was led by a 54.3% increase in net contribution from our Retail Banking segment4.

| Loans up 6.7% YoY. Loan growth among Middle & High-income earners grew 8.8% YoY

Total loans increased 0.9% QoQ and 6.7% YoY in 1Q17. Retail banking loans increased 0.4% QoQ and 6.8% YoY. Loans to individuals increased 1.2% QoQ and 7.6%. Consumer loans increased 1.3% QoQ and 8.7% YoY and mortgage loans increased 1.5% QoQ and 8.0% YoY. The Bank continued to prioritize growth among middle and high-income individuals. Loan growth among Middle and High-income earners increased 1.5% QoQ and 8.8% YoY.

| Rate cut drives shift of time deposits towards fee generating mutual funds

Total customer funds (deposits plus mutual funds) managed by the Bank decreased 0.5% QoQ and grew 4.5% YoY. Non-interest bearing demand deposits were 1.7% down QoQ and increased 4.7% YoY, outstripping time deposit growth, which also improved the funding mix. In 1Q17, the Chilean Central Bank cut interest rates 50 basis points. This resulted in lower funding costs and a switch away from time deposits to fee generating mutual funds. As a result, time deposits decreased 3.4% QoQ and 0.2% YoY. On the other hand, Mutual funds brokered by the Bank increased 9.2% QoQ and 16.9% YoY.

| 1. | The information contained in this report is unaudited and is presented in accordance with Chilean Bank GAAP as defined by the Superintendency of Banks of Chile (SBIF).

| 2. | ROAE: Return on average equity: annualized quarterly net income attributable to shareholders divided by average equity attributable to shareholders in the quarter. Averages calculated using monthly figures.

| 3. | Net operating profit is defined as Net interest income + Net fee and commission income + Total financial transactions - provision for loan losses – operating expenses.

| 4. | Retail banking = Individuals + Small and Mid-sized companies (SMEs).

|  | 2

| Core capital6 ratio reached 10.8% as of March 2017. Dividend payout of 70% approved by shareholders

The Bank’s Core capital ratio reached 10.8% at the end of 1Q17, 30bp higher than the levels at year-end 2016 and 20bp higher than the core capital ratio in 1Q16. The total BIS ratio 7 reached 13.7% as of March 2017. The YoY growth of RWA was 3.3% compared to 6.7% for loans. This relatively high level of capital and efficient growth of RWAs allowed the Bank’s Board to propose the distribution of 70% of 2016 earnings as a dividend, which was approved by shareholders on April 26, 2017. The dividend yield, considering the share price on March 31, 2017, was 4.2%.

| Sound asset quality indicators in the quarter. Cost of credit at 1.1%

Asset quality remained relatively stable in the quarter. On a YoY basis, the NPL ratio decreased from 2.5% in 1Q16 to 2.2% in 1Q17, in line with the Bank’s loan growth strategy of focusing on those segments with the highest return, net of risk. This also had a similar effect on the cost of credit, which descend to 1.1% in the quarter compared to 1.2% in 1Q16 and 1.3% in 4Q16. Compared to 4Q16 the NPL ratio increased 10bp mainly due to seasonal factors and high growth in retail banking segments compared to a reduction in wholesale lending. In 2017, we expect Non-performing loans to rise moderately due to sluggish economic growth and a weakening job market, but the loans entering NPL status already have a high coverage ratio, therefore, the cost of credit should remain relatively stable. For these reasons the Bank’s expected loss ratio or risk index, measured as Loan Loss Allowances (LLA) over total loans improved to 2.9% as of March 2017 compared to 3.0% at year-end 2016 and 1Q16.

| Client NIMs, net of risk rise 20bp to 3.7%.

A key driver of profitability in the quarter was the rise in client NIMs, net of risk. In 1Q17, Net interest income from our business segments (Client NII 8) increased 1.2% QoQ and 6.5% YoY. Client NIMs 9, which excludes the impact of inflation and the ALCO’s liquidity portfolio, reached 4.8% in 1Q17 compared to 4.8% in 4Q16 and 4.9% in 1Q16. Despite the change of the loan mix towards less riskier segments, the Bank has managed to sustain client NIMs by increasing the retail loan book as mentioned above. At the same time, funding costs have improved, which also kept client margins elevated. In addition, the cost of credit is falling. Provision for loan losses decreased 15.8% QoQ and 5.2% YoY in 1Q17. The cost of credit in the quarter was 1.1% compared to 1.3% in 4Q16 and 1.2% in 1Q16. This is a direct result of the de-risking strategy enforced by the Bank. As a result, Client NIMs, net of risk increased 20bp in 1Q17 compared to 1Q16.

6. Core capital ratio = Shareholders’ equity divided by risk-weighted assets according to SBIF BIS I definitions.

7. BIS ratio: Regulatory capital divided by RWA.

8. Client net interest income is net interest income from the Bank’s reporting segments that includes net interest income from the Retail, Middle-market and GCB segments, excluding GCB’s Treasury division. Non-client NII is NII from Bank’s inflation gap, the financial cost of hedging, the financial cost of the Bank’s structural liquidity position, NII from treasury positions and the interest expense of the Bank’s financial investments classified as trading, since NII from this portfolio is recognized as financial transactions net.

9. Client net interest income divided by average loans.

|  | 3

| Greater customer loyalty & satisfaction fueling solid fee growth

In 1Q17, fee income increased 15.3% QoQ and 15.6% YoY. This solid growth of fees was mainly driven by higher corporate banking activity and the steady improvement in customer satisfaction, which is attracting new clients and increasing cross-selling ratios. Loyal customers10 in the High-income segment grew 11.5% YoY. Among Mid-income earners, loyal customers increased 7.9% YoY. Loyal Middle-market and SME clients grew 12.2% YoY.

| Efficiency ratio improves to 40.0%. Sustained rise in productivity

The Bank’s efficiency ratio reached 40.0% in 1Q17 compared to 41.6% in the same period of last year. Operating expenses grew 1.7% on a YoY basis. The relatively low cost growth is a direct consequence of the various initiatives that the Bank has been implementing to improve commercial productivity and efficiency. Personnel expenses decreased 0.3% YoY in 1Q17. Total headcount has decreased 4.8% in the last twelve months. Administrative expenses also decreased 0.4% YoY in 1Q17. The Bank’s digital transformation and new branch formats are starting to sustain productivity gains and improved customer satisfaction. In total, in the last twelve months, 11.7% of the Bank’s branch network has been closed and 15.8% of our ATMs were eliminated. This has been replaced by an increase in transactions through channels such as internet, mobile and phone banking and greater productivity in the existing branch network.

10. Clients with >4 products plus minimum usage and profitability levels.

|  | 4

Summary of Quarterly Results

(Ch$ Million)

|  | Quarter |  |  | Change% |
|  | 1Q17 |  |  | 4Q16 |  |  | 1Q16 |  |  | 1Q17 / 1Q16 |  |  | 1Q17 / 4Q16 |
Net interest income |  |  | 318,575 |  |  |  | 316,649 |  |  |  | 312,873 |  |  |  | 1.8 | % |  |  | 0.6 | %
Net fee and commission income |  |  | 72,823 |  |  |  | 63,137 |  |  |  | 62,991 |  |  |  | 15.6 | % |  |  | 15.3 | %
Total financial transactions, net |  |  | 36,732 |  |  |  | 37,547 |  |  |  | 34,262 |  |  |  | 7.2 | % |  |  | (2.2 | )%
Provision for loan losses |  |  | (73,862 | ) |  |  | (87,713 | ) |  |  | (77,926 | ) |  |  | (5.2 | )% |  |  | (15.8 | )%
Operating expenses (excluding Impairment and Other operating expenses) |  |  | (168,780 | ) |  |  | (178,016 | ) |  |  | (166,006 | ) |  |  | 1.7 | % |  |  | (5.2 | )%
Impairment, Other operating income and expenses, net |  |  | (5,982 | ) |  |  | (16,009 | ) |  |  | (11,023 | ) |  |  | (45.7 | )% |  |  | (62.6 | )%
Operating income |  |  | 179,506 |  |  |  | 135,595 |  |  |  | 155,171 |  |  |  | 15.7 | % |  |  | 32.4 | %
Net income attributable to shareholders of the Bank |  |  | 142,375 |  |  |  | 108,633 |  |  |  | 125,439 |  |  |  | 13.5 | % |  |  | 31.1 | %
Net income/share (Ch$) |  |  | 0.76 |  |  |  | 0.58 |  |  |  | 0.67 |  |  |  | 13.5 | % |  |  | 31.1 | %
Net income/ADR (US$)1 |  |  | 0.46 |  |  |  | 0.35 |  |  |  | 0.39 |  |  |  | 15.6 | % |  |  | 30.5 | %
Total loans |  |  | 27,452,651 |  |  |  | 27,206,431 |  |  |  | 25,725,961 |  |  |  | 6.7 | % |  |  | 0.9 | %
Deposits |  |  | 20,108,828 |  |  |  | 20,691,024 |  |  |  | 19,802,170 |  |  |  | 1.5 | % |  |  | (2.8 | )%
Shareholders’ equity |  |  | 2,968,491 |  |  |  | 2,868,706 |  |  |  | 2,821,692 |  |  |  | 5.2 | % |  |  | 3.5 | %
Net interest margin |  |  | 4.2 | % |  |  | 4.2 | % |  |  | 4.5 | % |  |  |  |  |  |  |  |
Efficiency ratio2 |  |  | 40.0 | % |  |  | 44.3 | % |  |  | 41.6 | % |  |  |  |  |  |  |  |
Return on equity3 |  |  | 19.5 | % |  |  | 15.3 | % |  |  | 18.1 | % |  |  |  |  |  |  |  |
NPL / Total loans4 |  |  | 2.2 | % |  |  | 2.1 | % |  |  | 2.5 | % |  |  |  |  |  |  |  |
Coverage NPLs |  |  | 135.5 | % |  |  | 145.4 | % |  |  | 122.5 | % |  |  |  |  |  |  |  |
Cost of credit5 |  |  | 1.1 | % |  |  | 1.3 | % |  |  | 1.2 | % |  |  |  |  |  |  |  |
Core Capital ratio6 |  |  | 10.8 | % |  |  | 10.5 | % |  |  | 10.6 | % |  |  |  |  |  |  |  |
BIS ratio |  |  | 13.7 | % |  |  | 13.4 | % |  |  | 13.5 | % |  |  |  |  |  |  |  |
Branches |  |  | 415 |  |  |  | 434 |  |  |  | 470 |  |  |  |  |  |  |  |  |
ATMs |  |  | 1,288 |  |  |  | 1,295 |  |  |  | 1,529 |  |  |  |  |  |  |  |  |
Employees |  |  | 11,229 |  |  |  | 11,354 |  |  |  | 11,793 |  |  |  |  |  |  |  |  |

1. The change in earnings per ADR may differ from the change in earnings per share due to exchange rate movements. Earnings per ADR was calculated using the Observed Exchange Rate (Exchange rate for the last trading day of the quarter taken from the Central Bank of Chile) for each period.

2. Efficiency ratio: Operating expenses excluding impairment and other operating expenses divided by Operating income. Operating income = Net interest income + Net fee and commission income + Total financial transactions, net + Other operating income minus other operating expenses.

3. Return on average equity: annualized quarterly net income attributable to shareholders divided by Average equity attributable to shareholders in the quarter. Averages calculated using monthly figures.

4. NPLs: Non-performing loans: total outstanding gross amount of loans with at least one installment 90 days or more overdue.

5. Cost of credit: annualized provision for loan losses divided by quarterly average total loans. Averages calculated using monthly figures.

6. Core capital ratio = Shareholders’ equity divided by risk-weighted assets according to SBIF BIS I definitions.

|  | 5

Section 3: YTD Results by reporting segment

Net contribution from business segments rises 31.9% YoY in 1Q17

Year to date results

(Ch$ Million)

|  | Retail Banking1 |  |  | Middle market2 |  |  | Global corporate banking3 |  |  | Total segments4 |
Net interest income |  |  | 238,971 |  |  |  | 65,455 |  |  |  | 24,248 |  |  |  | 328,674 |
Change YoY |  |  | 6.7 | % |  |  | 6.1 | % |  |  | 4.8 | % |  |  | 6.4 | %
Net fee and commission income |  |  | 52,175 |  |  |  | 9,143 |  |  |  | 10,642 |  |  |  | 71,960 |
Change YoY |  |  | 14.2 | % |  |  | -2.3 | % |  |  | 50.2 | % |  |  | 15.9 | %
Core revenues |  |  | 291,146 |  |  |  | 74,598 |  |  |  | 34,890 |  |  |  | 400,634 |
Change YoY |  |  | 8.0 | % |  |  | 5.0 | % |  |  | 15.5 | % |  |  | 8.0 | %
Total financial transactions, net |  |  | 5,045 |  |  |  | 3,008 |  |  |  | 17,449 |  |  |  | 25,502 |
Change YoY |  |  | 24.0 | % |  |  | -40.6 | % |  |  | 59.6 | % |  |  | 27.1 | %
Provision for loan losses |  |  | (71,551 | ) |  |  | (3,129 | ) |  |  | 557 |  |  |  | (74,123 | )
Change YoY |  |  | -13.6 | % |  |  | 23.4 | % |  |  | 7.7 | % |  |  | -12.6 | %
Net operating profit from business segments5 |  |  | 224,640 |  |  |  | 74,477 |  |  |  | 52,896 |  |  |  | 352,013 |
Change YoY |  |  | 17.7 | % |  |  | 1.2 | % |  |  | 27.0 | % |  |  | 15.0 | %
Operating expenses6 |  |  | (128,668 | ) |  |  | (22,293 | ) |  |  | (14,520 | ) |  |  | (165,481 | )
Change YoY |  |  | 0.0 | % |  |  | 0.9 | % |  |  | 4.2 | % |  |  | 0.4 | %
Net contribution from business segments |  |  | 95,972 |  |  |  | 52,184 |  |  |  | 38,376 |  |  |  | 186,532 |
Change YoY |  |  | 54.3 | % |  |  | 1.3 | % |  |  | 38.4 | % |  |  | 31.9 | %

1. Retail consists of individuals and SMEs with annual sales below Ch$2,000 million.

2. Middle-market is made up of companies with annual sales exceeding Ch$2,000 million. It also serves institutions such as universities, government entities, local and regional governments and companies engaged in the real estate industry with annual sales exceeding Ch$800 million.

3. Global Corporate Banking, GCB: consists of foreign and domestic multinational companies with sales over Ch$10,000 million.

4. Excludes the results from Corporate Activities.

5. Net op. profit is defined as Net interest income + Net fee and commission income + Total financial transactions - provision for loan losses.

6. Operating expenses = personnel expenses +administrative expenses + depreciation.

Net contribution from our business segments rose 31.9% YoY in 1Q17 compared to the same period of 2016. These results exclude our Corporate Activities, which includes, among other items, the impact of inflation on results, the impact of movements in the exchange rate in our provision expense and the results from our liquidity portfolio.

The net contribution from Retail banking increased 54.3% YoY. Core revenues (net interest income + fees) increased 8.0% YoY driven improvements in customer loyalty that fueled fee income. This rise in revenues was furthered leveraged on the 13.6% decrease in provision expenses and 0% cost growth as productivity continued to rise.

Net contribution from the Middle-market increased 1.3% YoY in 1Q17. Core revenues in this segment grew 5.0%, led by a 6.1% increase in net interest revenue. This was offset by lower financial transactions and higher provision expenses.

Net contribution from GCB rose 37.3% in 1Q17. Core revenues increased 19.4% YoY driven by a 61.7% rise in fees. The Bank’s strength in cash management services and financial advisory fees has driven income in this segment.

|  | 6

Section 4: Loans, funding and capital

Loans

Loans up 6.7% YoY. Loan growth among Middle & High-income earners grew 8.8% YoY

Total loans increased 0.9% QoQ and 6.7% YoY in 1Q17. Retail banking loans increased 0.4% QoQ and 6.8% YoY. Loans to individuals increased 1.2% QoQ and 7.6%. Consumer loans increased 1.3% QoQ and 8.7% YoY and mortgage loans increased 1.5% QoQ and 8.0% YoY. The Bank continued to prioritize growth among middle and high-income individuals. Loan growth among middle and high-income earners increased 1.5% QoQ and 8.8% YoY.

Economic growth remained subdued in 1Q17, but consumer confidence has been improving and unemployment figures have remained relatively stable. For this reason, we expect that lending in the higher yielding Middle-income segment to accelerate as the year progresses. We will also be expanding our new distribution and client model for the different retail segments, which should lead to a more efficient growth model.

Loans by segment

(Ch$ Million)

|  | Quarter |  |  | Change% |
|  | 1Q17 |  |  | 4Q16 |  |  | 1Q16 |  |  | 1Q17 / 1Q16 |  |  | 1Q17 / 4Q16 |
Total loans to individuals1 |  |  | 14,950,433 |  |  |  | 14,774,460 |  |  |  | 13,892,590 |  |  |  | 7.6 | % |  |  | 1.2 | %
Consumer loans |  |  | 4,502,447 |  |  |  | 4,446,803 |  |  |  | 4,141,786 |  |  |  | 8.7 | % |  |  | 1.3 | %
Residential mortgage loans |  |  | 8,747,324 |  |  |  | 8,619,356 |  |  |  | 8,099,477 |  |  |  | 8.0 | % |  |  | 1.5 | %
SMEs |  |  | 3,722,927 |  |  |  | 3,664,223 |  |  |  | 3,453,809 |  |  |  | 7.8 | % |  |  | 1.6 | %
Retail banking |  |  | 18,673,360 |  |  |  | 18,438,683 |  |  |  | 17,346,399 |  |  |  | 7.6 | % |  |  | 1.3 | %
Middle-market |  |  | 6,534,707 |  |  |  | 6,491,751 |  |  |  | 6,142,987 |  |  |  | 6.4 | % |  |  | 0.7 | %
Global Corporate Banking |  |  | 2,162,457 |  |  |  | 2,192,391 |  |  |  | 2,155,131 |  |  |  | 0.3 | % |  |  | (1.4 | )%
Total loans2 |  |  | 27,452,650 |  |  |  | 27,206,431 |  |  |  | 25,725,961 |  |  |  | 6.7 | % |  |  | 0.9 | %

1. Includes consumer loans, residential mortgage loans and other commercial loans to individuals.

2. Total loans gross of loan loss allowances. Total loans include other non-segmented loans and includes interbank loans. See Note 3 of the Financial Statements.

Retail banking loans increased 1.3% QoQ and 7.6% YoY. Loans to individuals increased 1.2% QoQ and 7.6% YoY. Consumer loans increased 1.3% QoQ and 8.7% YoY and mortgage loans increased 1.5% QoQ and 8.0% YoY. The Bank continued to prioritize growth among middle and high-income individuals. Loan growth among middle and high-income earners increased 1.5% QoQ and 8.8% YoY. Loans to the higher yielding SME segment also continued to expand at an attractive rate. Loans to SMEs increased 1.6% QoQ and 7.8% YoY.

Loans in the Middle-market increased 0.7% QoQ and 6.4% YoY. In GCB, loans decreased 1.4% QoQ and grew 0.3% YoY. The results in the middle-market banking and GCB (See Section 3) were positive in 1Q17, despite lower loan growth due to an increase in non-lending revenues and greater customer loyalty. In GCB this is mainly due to a strong increase in non-lending revenues such as cash management, investment banking and treasury services for clients. These segments were also affected by a slow start in economic growth, especially in January and February. We expect a reactivation of loan demand in this segment beginning in 2Q17, in line with some early indicators that the Chilean economy should expand at a slightly higher pace in 2017 compared to 2016.

|  | 7

Funding

Rate cut drives shift of time deposits towards fee generating mutual funds

Total customer funds (deposits plus mutual funds) managed by the Bank decreased 0.5% QoQ and grew 4.5% YoY. Non-interest bearing demand deposits were 1.7% down QoQ and increased 4.7% YoY, outstripping time deposit growth, which also improved the funding mix. In 1Q17, the Chilean Central Bank cut interest rates 50 basis points. This resulted in lower funding costs and a switch away from time deposits to fee generating mutual funds. As a result, time deposits decreased 3.4% QoQ and 0.2% YoY. On the other hand, Mutual funds brokered by the Bank increased 9.2% QoQ and 16.9% YoY. This, in turn, had a positive impact on fee income in the quarter.

Funding

(Ch$ Million)

|  | Quarter |  |  | Change% |
|  | 1Q17 |  |  | 4Q16 |  |  | 1Q16 |  |  | 1Q17 / 1Q16 |  |  | 1Q17 / 4Q16 |
Demand deposits |  |  | 7,408,618 |  |  |  | 7,539,315 |  |  |  | 7,079,271 |  |  |  | 4.7 | % |  |  | (1.7 | )%
Time deposits |  |  | 12,700,210 |  |  |  | 13,151,709 |  |  |  | 12,722,899 |  |  |  | (0.2 | )% |  |  | (3.4 | )%
Total Deposits |  |  | 20,108,828 |  |  |  | 20,691,024 |  |  |  | 19,802,170 |  |  |  | 1.5 | % |  |  | (2.8 | )%
Mutual Funds brokered1 |  |  | 5,489,733 |  |  |  | 5,026,068 |  |  |  | 4,695,924 |  |  |  | 16.9 | % |  |  | 9.2 | %
Total customer funds |  |  | 25,598,561 |  |  |  | 25,717,092 |  |  |  | 24,498,094 |  |  |  | 4.5 | % |  |  | (0.5 | )%
Bonds |  |  | 7,411,645 |  |  |  | 7,326,372 |  |  |  | 5,727,832 |  |  |  | 29.4 | % |  |  | 1.2 | %
Adjusted loans to deposit ratio2 |  |  | 102.3 | % |  |  | 98.5 | % |  |  | 98.3 | % |  |  |  |  |  |  |  |
LCR 3 |  |  | 158.3 | % |  |  | 157.4 | % |  |  | 131.7 | % |  |  |  |  |  |  |  |
NSFR 4 |  |  | 106.7 | % |  |  | 109.0 | % |  |  | 108.6 | % |  |  |  |  |  |  |  |

1. Banco Santander Chile is the exclusive broker of mutual funds managed by Santander Asset Management S.A. Administradora General de Fondos, a subsidiary of SAM Investment Holdings Limited.

2. (Loans - portion of mortgages funded with long-term bonds) / (Time deposits + demand deposits). The Bank’s mortgage loans are mainly fixed-rate long-term loans that we mainly finance with matching long-term funding and not with short-term deposits. For this reason, to calculate this ratio, we subtract residential mortgage loans in the numerator of our ratio.

3. Liquidity Coverage Ratio calculated according to ECB rules. Chilean LCR ratios are still under construction.

4. Net Stable Funding Ratio calculated using internal methodology. Chilean LCR ratios are still under construction.

Liquidity levels remained healthy in the quarter. The Bank’s adjusted loan to deposit ratio was 102.3% and both the LCR and NSFR ratios continued to be ample. These sound levels of liquidity allowed the Bank to improve deposit spreads in 1Q17. In the quarter, the Bank continued to fine-tune the pricing policy of time deposits. This has helped to improve client margins despite the shift in the loan mix to less risky / lower yielding assets.

|  | 8

Shareholders’ equity and regulatory capital

ROE at 19.5%. Core Capital ratio at 10.8%. Payout set at 70% of 2016 earning

Equity

(Ch$ Million)

|  | Quarter |  |  | Change% |
|  | 1Q17 |  |  | 4Q16 |  |  | 1Q16 |  |  | 1Q17 / 1Q16 |  |  | 1Q17 / 4Q16 |
Capital |  |  | 891,303 |  |  |  | 891,303 |  |  |  | 891,303 |  |  |  | 0.0 | % |  |  | 0.0 | %
Reserves |  |  | 1,640,112 |  |  |  | 1,640,112 |  |  |  | 1,527,893 |  |  |  | 7.3 | % |  |  | 0.0 | %
Valuation adjustment |  |  | 6,763 |  |  |  | 6,640 |  |  |  | 474 |  |  |  | 1326.8 | % |  |  | 1.9 | %
Retained Earnings: |  |  | 430,313 |  |  |  | 330,651 |  |  |  | 402,022 |  |  |  | 7.0 | % |  |  | 30.1 | %
Retained earnings prior periods |  |  | 472,351 |  |  |  | 0 |  |  |  | 448,878 |  |  |  | 5.2 | % |  |  | — | %
Income for the period |  |  | 142,375 |  |  |  | 472,351 |  |  |  | 125,439 |  |  |  | 13.5 | % |  |  | (69.9 | )%
Provision for mandatory dividend |  |  | (184,413 | ) |  |  | (141,700 | ) |  |  | (172,295 | ) |  |  | 7.0 | % |  |  | 30.1 | %
Equity attributable to equity holders of the Bank |  |  | 2,968,491 |  |  |  | 2,868,706 |  |  |  | 2,821,692 |  |  |  | 5.2 | % |  |  | 3.5 | %
Non-controlling interest |  |  | 29,987 |  |  |  | 29,341 |  |  |  | 30,556 |  |  |  | (1.9 | )% |  |  | 2.2 | %
Total Equity |  |  | 2,998,478 |  |  |  | 2,898,047 |  |  |  | 2,852,248 |  |  |  | 5.1 | % |  |  | 3.5 | %
Quarterly ROE |  |  | 19.5 | % |  |  | 15.3 | % |  |  | 18.1 | % |  |  |  |  |  |  |  |
YTD ROE |  |  | 19.5 | % |  |  | 17.1 | % |  |  | 18.1 | % |  |  |  |  |  |  |  |

Shareholders’ equity totaled Ch$2,968,491 million as of March 31, 2017. The Bank’s ROE in 1Q17 reached 19.5%, above guidance. The Bank’s Core capital ratio11 reached 10.8% at the end of 1Q17, 30bp higher than the levels at year-end 2016 and 20bp higher than the core capital ratio in 1Q16. The total BIS ratio12 reached 13.7% as of March 2017. The YoY growth of RWA was 3.3% compared to 6.7% for loans. This high level of capital and efficient growth of RWAs allowed the Bank’s Board to propose the distribution of 70% of 2016 earnings as a dividend, which was approved by shareholders on April 26, 2017. The dividend yield, considering the share price on March 31, 2017, was 4.2%.

Capital Adequacy

(Ch$ Million)

|  | Quarter |  |  | Change% |
|  | 1Q17 |  |  | 4Q16 |  |  | 1Q16 |  |  | 1Q17 / 1Q16 |  |  | 1Q17 / 4Q16 |
Tier I (Core Capital) |  |  | 2,968,491 |  |  |  | 2,868,706 |  |  |  | 2,821,692 |  |  |  | 5.2 | % |  |  | 3.5 | %
Tier II |  |  | 792,549 |  |  |  | 789,001 |  |  |  | 773,581 |  |  |  | 2.5 | % |  |  | 0.4 | %
Regulatory capital |  |  | 3,761,040 |  |  |  | 3,657,707 |  |  |  | 3,595,273 |  |  |  | 4.6 | % |  |  | 2.8 | %
Risk weighted assets |  |  | 27,492,643 |  |  |  | 27,237,835 |  |  |  | 26,608,992 |  |  |  | 3.3 | % |  |  | 0.9 | %
Tier I (Core Capital) ratio |  |  | 10.8 | % |  |  | 10.5 | % |  |  | 10.6 | % |  |  |  |  |  |  |  |
BIS ratio |  |  | 13.7 | % |  |  | 13.4 | % |  |  | 13.5 | % |  |  |  |  |  |  |  |

11. Core Capital ratio = Shareholders’ equity divided by Risk-weighted Assets (RWA) according to SBIF BIS I definitions.

12. BIS ratio: Regulatory capital divided by RWA.

|  | 9

Section 5: Analysis of quarterly income statement

Net interest income

Client NIMs stabilizing at 4.8%. Total NIM affected by lower inflation compared to 1Q16

In 1Q17, Net interest income, NII, increased 0.6% QoQ and 1.8% YoY. The Net interest margin, NIM reached 4.2% compared to 4.2% in 4Q16 and 4.5% in 1Q16. In order to improve the explanation of margins, we have divided the analysis of Net interest income between Client net interest income and Non-client net interest income13.

Net Interest Income / Margin (Ch$ Million)

|  | Quarter |  |  | Change% |
|  | 1Q17 |  |  | 4Q16 |  |  | 1Q16 |  |  | 1Q17 / 1Q16 |  |  | 1Q17 / 4Q16 |
Net interest income from business segments |  |  | 328,674 |  |  |  | 324,823 |  |  |  | 308,758 |  |  |  | 6.5 | % |  |  | 1.2 | %
Non-client net interest income |  |  | (10,099 | ) |  |  | (8,174 | ) |  |  | 4,115 |  |  |  | — | % |  |  | 23.6 | %
Net interest income |  |  | 318,575 |  |  |  | 316,649 |  |  |  | 312,873 |  |  |  | 1.8 | % |  |  | 0.6 | %
Average interest-earning assets |  |  | 30,381,349 |  |  |  | 29,901,912 |  |  |  | 27,801,471 |  |  |  | 9.3 | % |  |  | 1.6 | %
Average loans from reporting segments1 |  |  | 27,246,674 |  |  |  | 26,952,880 |  |  |  | 25,432,034 |  |  |  | 7.1 | % |  |  | 1.1 | %
Avg. net gap in inflation indexed (UF) instruments2 |  |  | 4,350,466 |  |  |  | 4,729,829 |  |  |  | 3,947,572 |  |  |  | 10.2 | % |  |  | (8.0 | )%
Interest earning asset yield3 |  |  | 6.9 | % |  |  | 7.0 | % |  |  | 7.5 | % |  |  |  |  |  |  |  |
Cost of funds4 |  |  | 3.2 | % |  |  | 3.3 | % |  |  | 3.3 | % |  |  |  |  |  |  |  |
Client net interest margin5 |  |  | 4.8 | % |  |  | 4.8 | % |  |  | 4.9 | % |  |  |  |  |  |  |  |
Net interest margin (NIM) 6 |  |  | 4.2 | % |  |  | 4.2 | % |  |  | 4.5 | % |  |  |  |  |  |  |  |
Quarterly inflation rate7 |  |  | 0.5 | % |  |  | 0.5 | % |  |  | 0.7 | % |  |  |  |  |  |  |  |
Central Bank reference rate |  |  | 3.00 | % |  |  | 3.50 | % |  |  | 3.50 | % |  |  |  |  |  |  |  |

1. Average loans from business segments. Excludes loans not assigned to any business segment

2. The average quarterly difference between assets and liabilities indexed to the Unidad de Fomento (UF), an inflation indexed unit.

3. Interest income divided by average interest earning assets.

4. Interest expense divided by sum of average interest bearing liabilities and demand deposits.

5. Annualized Net interest income from business segments divided by average loans.

6. Annualized Net interest income divided by average interest earning assets.

7. Inflation measured as the variation of the Unidad de Fomento in the quarter.

Client NII. In 1Q17, Net interest income from our business segments (Client NII) increased 1.2% QoQ and 6.5% YoY. Average loans from reporting segments increased 1.1% QoQ and 7.1% YoY. Client NIMs (defined as Client NII divided by average loans), which excludes the impact of inflation and the ALCO’s liquidity portfolio, reached 4.8% in 1Q17 compared to 4.8% in 4Q16 and 4.9% in 1Q16. Despite the change of the loan mix towards less riskier segments, the Bank has managed to sustain client NIMs by increasing the retail loan book as mentioned above. At the same time, funding costs have improved, which also kept client margins elevated. We expect Client NIMs to remain relatively stable for the rest of the year and, as the cost of credit should continue to improve in 2017 (see next Section), this should result in Client NIMs, net of the cost of credit to increase 10-20bp in 2017.

13. Client Net interest income: NII from the Bank’s reporting segments that includes NII from the Retail, Middle-market and GCB segments, excluding GCB’s Treasury division. Non-client NII: NII from Bank’s inflation gap, the financial cost of hedging, the financial cost of the Bank’s structural liquidity position, NII from the available for sale portfolio and the interest expense to fund the Bank’s trading investment portfolio. The interest from the Bank’s financial investments classified as trading are recognized as Financial transactions net.

|  | 10

Non-client NII. The Bank has more assets than liabilities linked to inflation and, as a result, margins go down when inflation decelerates and vice-versa. Currently our sensitivity to a 100 bp shift in inflation is approximately 15bp of NIM. In 1Q17, the variation of the Unidad de Fomento (an inflation indexed currency unit), was 0.5% compared to 0.5% in 4Q16 and 0.7% in 1Q17. As client NIMs have remained relatively stable, the variation of total NIMs was mainly due to the variation of inflation in the periods being analyzed. The UF inflation in 1Q17 was the same as in 4Q16 and hence a similar result from Non-client interest income. Compared to 1Q16, non-client interest income decreased Ch$14 billion due to a 20bp decline in quarterly UF inflation and lower yields on the Bank’s financial investment portfolio.

Going forward, quarterly NIMs should improve and the average NIM for 2017 should finish at a level similar to the one achieved in 2016. As mentioned, Client NIMs should be stable. Total UF inflation in 2016 was 2.7% and we expect a similar level of UF inflation in 2017 (compared to an annualized rate of 2.0% in 1Q17). At the same time, the Bank’s liabilities have a shorter duration than asset, so a 100bp average yearly fall in short-term interest rates would result in a 12bp rise in NIMs. Therefore, deposit costs should continue to fall as the lower rate environment is absorbed. This will be partially offset by the lower yield obtained over the Bank’s liquidity portfolio.

Asset quality and provision for loan losses

Sound asset quality indicators in the quarter. Cost of credit at 1.1%

Asset quality remained relatively stable in the quarter. On a YoY basis the NPL ratio decreased from 2.5% in 1Q16 to 2.2%, in line with the Bank’s loan growth strategy of focusing on those segments with the highest return, net of risk. This also had a similar effect on the cost of credit, which descend to 1.1% in the quarter compared to 1.2% in 1Q16 and 1.3% in 4Q16. Compared to 4Q16 the NPL ratio increased 10bp mainly due to seasonal factors and high growth in retail banking segments compared to a reduction in wholesale lending. In 2017, we expect Non-performing loans to rise moderately due to sluggish economic growth and a weakening job market, but the loans entering NPL status already have a high coverage ratio, therefore, the cost of credit should remain relatively stable.

|  | 11

Provision for loan losses (Ch$ Million)

|  | Quarter |  |  | Change% |
|  | 1Q17 |  |  | 4Q16 |  |  | 1Q16 |  |  | 1Q17 / 1Q16 |  |  | 1Q17 / 4Q16 |
Gross provisions |  |  | (43,056 | ) |  |  | (60,675 | ) |  |  | (47,612 | ) |  |  | (9.6 | )% |  |  | (29.0 | )%
Charge-offs1 |  |  | (50,124 | ) |  |  | (46,071 | ) |  |  | (48,169 | ) |  |  | 4.1 | % |  |  | 8.8 | %
Gross provisions and charge-offs |  |  | (93,180 | ) |  |  | (106,746 | ) |  |  | (95,781 | ) |  |  | (2.7 | )% |  |  | (12.7 | )%
Loan loss recoveries |  |  | 19,318 |  |  |  | 19,033 |  |  |  | 17,855 |  |  |  | 8.2 | % |  |  | 1.5 | %
Provision for loan losses |  |  | (73,862 | ) |  |  | (87,713 | ) |  |  | (77,926 | ) |  |  | (5.2 | )% |  |  | (15.8 | )%
Cost of credit2 |  |  | 1.1 | % |  |  | 1.3 | % |  |  | 1.2 | % |  |  | -10 | bp |  |  | -20 | bp
Total loans3 |  |  | 27,452,651 |  |  |  | 27,206,431 |  |  |  | 25,725,961 |  |  |  | 6.7 | % |  |  | 0.9 | %
Total Loan loss allowances (LLAs) |  |  | 806,005 |  |  |  | 820,311 |  |  |  | 784,103 |  |  |  | 2.8 | % |  |  | (1.7 | )%
Non-performing loans4 (NPLs) |  |  | 594,855 |  |  |  | 564,131 |  |  |  | 639,981 |  |  |  | (7.1 | )% |  |  | 5.4 | %
NPLs consumer loans |  |  | 106,597 |  |  |  | 99,721 |  |  |  | 93,712 |  |  |  | 13.7 | % |  |  | 6.9 | %
NPLs commercial loans |  |  | 327,342 |  |  |  | 316,838 |  |  |  | 365,245 |  |  |  | (10.4 | )% |  |  | 3.3 | %
NPLs residential mortgage loans |  |  | 160,916 |  |  |  | 147,572 |  |  |  | 181,024 |  |  |  | (11.1 | )% |  |  | 9.0 | %
Impaired loans5 |  |  | 1,667,145 |  |  |  | 1,615,441 |  |  |  | 1,642,087 |  |  |  | 1.5 | % |  |  | 3.2 | %
Impaired consumer loans |  |  | 299,071 |  |  |  | 288,584 |  |  |  | 288,037 |  |  |  | 3.8 | % |  |  | 3.6 | %
Impaired commercial loans |  |  | 951,514 |  |  |  | 929,169 |  |  |  | 935,144 |  |  |  | 1.8 | % |  |  | 2.4 | %
Impaired residential mortgage loans |  |  | 416,560 |  |  |  | 397,688 |  |  |  | 418,906 |  |  |  | (0.6 | )% |  |  | 4.7 | %
Expected loss ratio6 (LLA / Total loans) |  |  | 2.9 | % |  |  | 3.0 | % |  |  | 3.0 | % |  |  |  |  |  |  |  |
NPL / Total loans |  |  | 2.2 | % |  |  | 2.1 | % |  |  | 2.5 | % |  |  |  |  |  |  |  |
NPL / consumer loans |  |  | 2.4 | % |  |  | 2.2 | % |  |  | 2.3 | % |  |  |  |  |  |  |  |
NPL / commercial loans |  |  | 2.4 | % |  |  | 2.3 | % |  |  | 2.7 | % |  |  |  |  |  |  |  |
NPL / residential mortgage loans |  |  | 1.8 | % |  |  | 1.7 | % |  |  | 2.2 | % |  |  |  |  |  |  |  |
Impaired loans / total loans |  |  | 6.1 | % |  |  | 5.9 | % |  |  | 6.4 | % |  |  |  |  |  |  |  |
Impaired consumer loan ratio |  |  | 6.6 | % |  |  | 6.5 | % |  |  | 7.0 | % |  |  |  |  |  |  |  |
Impaired commercial loan ratio |  |  | 6.9 | % |  |  | 6.7 | % |  |  | 7.0 | % |  |  |  |  |  |  |  |
Impaired mortgage loan ratio |  |  | 4.8 | % |  |  | 4.6 | % |  |  | 5.2 | % |  |  |  |  |  |  |  |
Coverage of NPLs7 |  |  | 135.5 | % |  |  | 145.4 | % |  |  | 122.5 | % |  |  |  |  |  |  |  |
Coverage of NPLs non-mortgage8 |  |  | 172.1 | % |  |  | 182.3 | % |  |  | 155.8 | % |  |  |  |  |  |  |  |
Coverage of consumer NPLs |  |  | 282.0 | % |  |  | 300.9 | % |  |  | 285.3 | % |  |  |  |  |  |  |  |
Coverage of commercial NPLs |  |  | 136.3 | % |  |  | 144.9 | % |  |  | 122.6 | % |  |  |  |  |  |  |  |
Coverage of mortgage NPLs |  |  | 36.8 | % |  |  | 41.4 | % |  |  | 38.0 | % |  |  |  |  |  |  |  |

1. Charge-offs corresponds to the direct charge-offs and are net of the reversal of provisions already established on charged-off loans.

2. Annualized provision for loan losses / quarterly average total loans. Averages are calculated using monthly figures.

3. Includes interbank loans.

4. Total outstanding gross amount of loans with at least one installment 90 days or more overdue.

5. Include: (a) for loans individually evaluated for impairment: (i) the carrying amount of all loans to clients that are rated C1 through C6 and, (ii) the carrying amount of all loans to an individual client with at least one NPL (which is not a residential mortgage loan past due less than 90 days), regardless of category; and (b) for loans collectively evaluated for impairment, the carrying amount of all loans to a client, when at least one loan to that client is not performing or has been renegotiated.

6. LLA / Total loans. Measures the percentage of loans that banks must provision for given their internal models and the SBIF’s guidelines.

7. LLA / NPLs.

8. LLA of commercial and consumer loans / NPLs of commercial and consumer loans.

For these reasons the Bank’s Expected loss ratio or Risk index, measured as Loan Loss Allowances (LLA) over total loans improved to 2.9% as of March 2017 compared to 3.0% at year-end 2016 and 1Q16. This also explains the increase in consumer loan NPL ratio from 2.2% at year-end 2016 to 2.4% as of March 2017 and the fall in coverage of consumer loans from 300.9% as of December 2016 to 282.0% at the end of 1Q17. The Impaired consumer loan ratio reached 6.6% flat QoQ and 40bp lower than in 1Q16.

In part, due to the same, Provision for loan losses decreased 15.8% QoQ and 5.2% YoY. The cost of credit in the quarter was 1.1% compared to 1.3% in 4Q16 and 1.2% in 1Q16. By product, the evolution of Provision for loan losses in 1Q17 was as follows:

|  | 12

|  | Provision for loan losses

(Ch$ Million)

|  | Quarter |  |  | Change% |
|  | 1Q17 |  |  | 4Q16 |  |  | 1Q16 |  |  | 1Q17 / 1Q16 |  |  | 1Q17 / 4Q16 |
Consumer loans |  |  | (51,860 | ) |  |  | (44,454 | ) |  |  | (46,918 | ) |  |  | 10.5 | % |  |  | 16.7 | %
Commercial loans1 |  |  | (21,332 | ) |  |  | (41,846 | ) |  |  | (26,644 | ) |  |  | (19.9 | )% |  |  | (49.0 | )%
Residential mortgage loans |  |  | (670 | ) |  |  | (1,413 | ) |  |  | (4,364 | ) |  |  | (84.6 | )% |  |  | (52.6 | )%
Provision for loan losses |  |  | (73,862 | ) |  |  | (87,713 | ) |  |  | (77,926 | ) |  |  | (5.2 | )% |  |  | (15.8 | )%

| 1. | Includes provision for loan losses for contingent loans.

Provisions for loan losses for consumer loans increased 16.7% QoQ and 10.5% YoY in 1Q17. As mentioned in previous earnings reports, the Bank has been enforcing a strategy of lowering exposure to the low-end of the consumer loan market. This has entailed an active policy of charging-off loans in the lower income segment and restricting loan restructuring. We expect lower provisions for consumer lending for the rest of 2017, given the aforementioned rise in coverage plus the change in the consumer loan mix, improvements in admission policy and more efficient recovery efforts. The 8.7% YoY growth of the consumer loan book also drove this increase in provision expense.

Provisions for loan losses for commercial loans decreased 49.0% QoQ and 19.9% YoY. The QoQ decrease was mainly due to high levels of provisions in 4Q16 due to the downgrades of loans in the Global corporate banking segment and the Middle-market. Compared to 1Q16, the lower provision expense was due to the improvements in asset quality. The commercial NPL ratio reached 2.4% compared to 2.3% in 4Q16 and 2.7% in 1Q16. The Coverage ratio of commercial NPLs reached 136.3% as of March 2017.

Provisions for loan losses for residential mortgage loans totaled Ch$670 million in the quarter. The Impaired mortgage loan ratio reached 4.8%, 20bp higher QoQ and 40bp lower YoY. The NPL ratio of mortgage loan was 1.8% in 1Q17 compared to 1.7% in 4Q16 and 2.2% in 1Q16. The Coverage ratio of mortgage NPLs reached 36.8% as of March 2017. Including collateral, the coverage ratio of mortgage NPLs reached 125.2% as of March 2017.

As a result of the lower cost of credit and the stable Client spreads, Client NIMs, net of risk increased 20bp in 1Q17 compared to 1Q16.

|  | 13

Net fee and commission income

Greater customer loyalty & satisfaction fueling solid fee growth

In 1Q17 fee income increased 15.3% QoQ and 15.6% YoY. In retail banking fees increased 6.4% mainly driven by rising client loyalty and cross-selling. This in turn has been driven by improvements in customer satisfaction, the success of our new WorkCafé branches in attracting new clients and cross-selling the existing client base and innovative digital product offers launched in the quarter. Loyal individual customers (clients with >4 products plus minimum usage and profitability levels) in the High-income segment grew 11.5% YoY. Among Mid-income earners, loyal customers increased 7.9% YoY. By products, the biggest contributors to fee income growth were credit card fees and asset management brokerage fees.

|  | Fee Income by client segment

(Ch$ Million)

|  | Quarter |  |  | Change% |
|  | 1Q17 |  |  | 4Q16 |  |  | 1Q16 |  |  | 1Q17 / 1Q16 |  |  | 1Q17 / 4Q16 |
Retail banking1 |  |  | 52,175 |  |  |  | 48,492 |  |  |  | 49,054 |  |  |  | 14.2 | % |  |  | 7.6 | %
Middle-market |  |  | 9,143 |  |  |  | 7,509 |  |  |  | 7,735 |  |  |  | (2.3 | )% |  |  | 21.8 | %
Global corporate banking |  |  | 10,642 |  |  |  | 6,275 |  |  |  | 6,580 |  |  |  | 50.2 | % |  |  | 69.6 | %
Others |  |  | 863 |  |  |  | 861 |  |  |  | (378 | ) |  |  | (2.2 | )% |  |  | 0.2 | %
Total |  |  | 72,823 |  |  |  | 63,137 |  |  |  | 62,991 |  |  |  | 15.6 | % |  |  | 15.3 | %

Includes fees to individuals and SMEs.

Fees in the Middle-market grew 21.8% QoQ, however decreased 2.3%YoY as this segment was affected by lower economic growth. This was compensated by the rise in customer loyalty in this segment, especially via non-lending products and services that are fee intensive. Loyal Middle-market and SME clients grew 12.2% YoY.

Finally, the Bank continues to produce strong results in the Global corporate banking segment. Fees in this segment increased 69.6% QoQ and 61.7% YoY. The strength of the Bank in providing value added non-lending services such as cash management and financial advisory services continues to boost fees in this segment.

1. Loyal high income and middle income customers with 4 products plus a minimum profitability level and a minimum usage indicator. all differentiated by segment. SME + Middle-market cross-selling differentiated by client size using a point system that depends on number of products, usage of products and income net of risk.

|  | 14

By products, the evolution of fees was as follows:

|  | Fee Income by product

(Ch$ Million)

|  | Quarter |  |  | Change% |
|  | 1Q17 |  |  | 4Q16 |  |  | 1Q16 |  |  | 1Q17 / 1Q16 |  |  | 1Q17 / 4Q16 |
Credit, debit & ATM card fees |  |  | 14,691 |  |  |  | 11,676 |  |  |  | 14,184 |  |  |  | 3.6 | % |  |  | 25.8 | %
Asset management |  |  | 10,081 |  |  |  | 10,149 |  |  |  | 8,928 |  |  |  | 12.9 | % |  |  | (0.7 | )%
Insurance brokerage |  |  | 10,057 |  |  |  | 10,368 |  |  |  | 9,659 |  |  |  | 4.1 | % |  |  | (3.0 | )%
Guarantees, pledges and other contingent op. |  |  | 9,487 |  |  |  | 8,997 |  |  |  | 9,284 |  |  |  | 2.2 | % |  |  | 5.4 | %
Collection fees |  |  | 8,926 |  |  |  | 8,023 |  |  |  | 7,961 |  |  |  | 12.1 | % |  |  | 11.3 | %
Checking accounts |  |  | 7,920 |  |  |  | 7,921 |  |  |  | 7,848 |  |  |  | 0.9 | % |  |  | (0.0 | )%
Brokerage and custody of securities |  |  | 2,200 |  |  |  | 2,053 |  |  |  | 2,040 |  |  |  | 7.8 | % |  |  | 7.2 | %
Other |  |  | 9,461 |  |  |  | 3,950 |  |  |  | 3,087 |  |  |  | 206.5 | % |  |  | 139.5 | %
Total fees |  |  | 72,823 |  |  |  | 63,137 |  |  |  | 62,991 |  |  |  | 15.6 | % |  |  | 15.3 | %

Total financial transactions, net

Results from Total financial transactions, net was a gain of Ch$36,732 million in 1Q17, decreasing 2.2% QoQ and increasing 7.2% YoY. It is important to point out that the Bank does not run a significant foreign currency gap. The Bank’s spot position in foreign currency is hedged with derivatives that are either considered trading derivatives or hedge accounting derivatives. Derivatives that are considered trading are marked-to-market in net income from financial operations. Hedge accounting derivatives are mark-to-market together with the hedged item in net foreign exchange results. This distorts these line items, especially in periods of a strong appreciation or depreciation of the exchange rate.

|  | Total financial transactions, net

(Ch$ Million)

|  | Quarter |  |  | Change% |
|  | 1Q17 |  |  | 4Q16 |  |  | 1Q16 |  |  | 1Q17 / 1Q16 |  |  | 1Q17 / 4Q16 |
Net income (expense) from financial operations1 |  |  | 1,276 |  |  |  | (74,850 | ) |  |  | (179,699 | ) |  |  | — | % |  |  | — | %
Net foreign exchange gain2 |  |  | 35,456 |  |  |  | 112,397 |  |  |  | 213,961 |  |  |  | (83.4 | )% |  |  | (68.5 | )%
Total financial transactions, net |  |  | 36,732 |  |  |  | 37,547 |  |  |  | 34,262 |  |  |  | 7.2 | % |  |  | (2.2 | )%

1. These results include the realized gains of the Available for sale investment portfolio, realized and unrealized gains and interest revenue generated by Trading investments, gains or losses from the sale of charged-off loans and the realized gains (loss) or mark-to-market of derivatives.

2. The results recorded as Foreign exchange gain mainly include the translation gains or losses of assets and liabilities denominated in foreign currency as well as from our hedge accounting derivatives.

|  | 15

In order to understand more clearly these line items, we present them by business area in the following table:

|  | Total financial transactions, net by business

(Ch$ Million)

|  | Quarter |  |  | Change% |
|  | 1Q17 |  |  | 4Q16 |  |  | 1Q16 |  |  | 1Q17 / 1Q16 |  |  | 1Q17 / 4Q16 |
Client treasury services |  |  | 23,568 |  |  |  | 21,104 |  |  |  | 20,001 |  |  |  | 17.8 | % |  |  | 11.7 | %
Non client treasury income1 |  |  | 13,164 |  |  |  | 16,443 |  |  |  | 14,261 |  |  |  | (7.7 | )% |  |  | (19.9 | )%
Total financ. transactions, net |  |  | 36,732 |  |  |  | 37,547 |  |  |  | 34,262 |  |  |  | 7.2 | % |  |  | (2.2 | )%

1. Non client treasury income. These results include the income from sale of loans, including charged-off loans, interest income and the mark-to-market of the Bank’s trading portfolio, realized gains from the Bank’s available for sale portfolio and other results from our Financial Management Division.

Client treasury services revenues rose 11.7% QoQ and 17.8% YoY. This movement of client treasury revenues, which usually makes up the bulk of our treasuring income, reflects the demand on behalf of clients for treasury products mainly for their hedging needs. The Bank has had a good year in Debt Capital Markets that has also led to cross-selling of products in our market making business, which is reflected as client treasury income.

Non-client treasury revenues decreased 19.9% QoQ and 7.7% YoY. Falling local interest rates produced positive mark-to-market gains from our liquidity fixed income portfolios in the quarter. As a reminder, 1Q16 results in this line had an extraordinary gain of Ch$6bn from the tendering of two international bonds.

|  | 16

Operating expenses and efficiency

Efficiency ratio improves to 40.0%. Sustained rise in productivity

The Bank’s efficiency ratio reached 40.0% in 1Q17 compared to 41.6% in the same period of last year. Operating expenses, excluding Impairment and Other operating expenses, decreased 5.2% QoQ and grew 1.7% YoY. The QoQ decline is mainly due to seasonal factors. The relatively low cost growth, below the YoY variation of the CPI Index despite the fact that the most of our expenses are adjusted by inflation, is a direct consequence of the various initiatives that the Bank has been implementing to improve commercial productivity and efficiency. The success of our on-going digital and branch transformation is resulting in higher labor productivity.

|  | Operating expenses

(Ch$ Million)

|  | Quarter |  |  | Change% |
|  | 1Q17 |  |  | 4Q16 |  |  | 1Q16 |  |  | 1Q17 / 1Q16 |  |  | 1Q17 / 4Q16 |
Personnel salaries and expenses |  |  | (92,676 | ) |  |  | (101,306 | ) |  |  | (92,967 | ) |  |  | (0.3 | )% |  |  | (8.5 | )%
Administrative expenses |  |  | (58,482 | ) |  |  | (57,898 | ) |  |  | (58,694 | ) |  |  | (0.4 | )% |  |  | 1.0 | %
Depreciation & amortization |  |  | (17,622 | ) |  |  | (18,812 | ) |  |  | (14,345 | ) |  |  | 22.8 | % |  |  | (6.3 | )%
Operating expenses1 |  |  | (168,780 | ) |  |  | (178,016 | ) |  |  | (166,006 | ) |  |  | 1.7 | % |  |  | (5.2 | )%
Impairment of property, plant and equipment |  |  | (184 | ) |  |  | (139 | ) |  |  | (37 | ) |  |  | 397.3 | % |  |  | 32.4 | %
Branches |  |  | 415 |  |  |  | 434 |  |  |  | 470 |  |  |  | -11.7 | % |  |  | -4.4 | %
Standard |  |  | 265 |  |  |  | 267 |  |  |  | 278 |  |  |  | -4.7 | % |  |  | -0.8 | %
WorkCafé |  |  | 6 |  |  |  | 3 |  |  |  | 0 |  |  |  | —% |  |  |  | 100.0 | %
Middle-market centers |  |  | 8 |  |  |  | 8 |  |  |  | 8 |  |  |  | 0.0 | % |  |  | 0.0 | %
Select |  |  | 53 |  |  |  | 53 |  |  |  | 54 |  |  |  | -1.9 | % |  |  | 0.0 | %
Banefe & other payment centers |  |  | 83 |  |  |  | 103 |  |  |  | 130 |  |  |  | -36.2 | % |  |  | -19.4 | %
ATMs |  |  | 1,288 |  |  |  | 1,295 |  |  |  | 1,529 |  |  |  | (15.8 | )% |  |  | (0.5 | )%
Employees |  |  | 11,229 |  |  |  | 11,354 |  |  |  | 11,793 |  |  |  | (4.8 | )% |  |  | (1.1 | )%
Efficiency ratio2 |  |  | 40.0 | % |  |  | 44.3 | % |  |  | 41.6 | % |  |  | -160 | bp |  |  | -430 | bp
YTD Efficiency ratio3 |  |  | 40.0 | % |  |  | 42.7 | % |  |  | 41.6 | % |  |  | -160 | bp |  |  | -270 | bp
Volumes per branch (Ch$mn)4 |  |  | 114,811 |  |  |  | 109,029 |  |  |  | 99,337 |  |  |  | 15.6 | % |  |  | 5.3 | %
Volumes per employee (Ch$mn)5 |  |  | 4,243 |  |  |  | 4,168 |  |  |  | 3,959 |  |  |  | 7.2 | % |  |  | 1.8 | %
YTD Cost / Assets 6 |  |  | 1.8 | % |  |  | 1.9 | % |  |  | 1.9 | % |  |  | -10 | bp |  |  | -10 | bp

1. Excluding Impairment and Other operating expenses.

2. Efficiency ratio: Operating expenses excluding impairment and other operating expenses divided by Operating income. Operating income = Net interest income + Net fee and commission income + Total financial transactions, net + Other operating income minus other operating expenses.

3. Loans + deposits over total branches.

4. Loans + deposits over total employees.

5. Operating expenses as defined in footnote 1 above, annualized / Total assets.

Personnel expenses decreased 0.3% YoY in 1Q17. Total headcount has decreased 4.8% in the last twelve months. Total volumes (loans plus deposits) per branch increased 15.6% YoY and 5.3% QoQ. At the same time, total volumes per employee increased 1.8% QoQ and 7.2% YoY. In 2Q17, another wave of management changes will be executed and as a result, the Bank will recognize a one-time charge of up to Ch$11 billion in April or May 2017 in the line item Other operating expenses. With this and other measures, the Bank expects to maintain low single digit cost growth throughout this year and the next.

|  | 17

Administrative expenses also decreased 0.4% YoY in 1Q17. The Bank’s digital transformation and new branch formats are starting to sustain productivity gains and improved customer satisfaction. Therefore, the Bank accelerated its branch closure plan in the quarter by closing 19 branches, mainly in the Santander Banefe segment. The Bank also continued to remove money losing ATMs. In total, in the last twelve months, 11.7% of the Bank’s branch network was closed and 15.8% of our ATMs were eliminated. An increase in transactions through channels such as internet, mobile and phone banking have replaced this. Simultaneously, we transformed 4 more branches into our new WorkCafé format that is significantly more productive than a traditional branch. At the same time, we continue to re-model the standard branches to a new multi-segment format that is also more efficient. The effectiveness of the Bank’s CRM has also increased productivity, as well as the implementation of other digital initiatives.

1 Volumes= Loans+ Deposits

Amortization expenses increased 22.8% YoY. This rise was mainly due to the investment in software and digital banking the Bank is carrying out as part of our plan to improve productivity and efficiency.

|  | 18

Other operating income, net & corporate tax

Other operating income, net, totaled a loss of Ch$5,798 million in 1Q17. This decrease can be explained by a greater recovery of repossessed assets previously charged off and a greater recovery of other operational charge-offs.

|  | Other operating income, net and corporate tax

(Ch$ Million)

|  | Quarter |  |  | Change% |
|  | 1Q17 |  |  | 4Q16 |  |  | 1Q16 |  |  | 1Q17 / 1Q16 |  |  | 1Q17 / 4Q16 |
Other operating income |  |  | 13,019 |  |  |  | 4,456 |  |  |  | 5,248 |  |  |  | 148.1 | % |  |  | 192.2 | %
Other operating expenses |  |  | (18,817 | ) |  |  | (20,326 | ) |  |  | (16,234 | ) |  |  | 15.9 | % |  |  | (7.4 | )%
Other operating income, net |  |  | (5,798 | ) |  |  | (15,870 | ) |  |  | (10,986 | ) |  |  | (47.2 | )% |  |  | (63.5 | )%
Income from investments in associates and other companies |  |  | 720 |  |  |  | 764 |  |  |  | 531 |  |  |  | 35.6 | % |  |  | (5.8 | )%
Income tax income (expense) |  |  | (37,208 | ) |  |  | (27,126 | ) |  |  | (29,662 | ) |  |  | 25.4 | % |  |  | 37.2 | %
Effective income tax rate |  |  | 20.6 | % |  |  | 19.9 | % |  |  | 19.1 | % |  |  |  |  |  |  |  |

Income tax expenses in 1Q17 totaled Ch$37,208 million, an increase of 37.2% compared to 4Q16 and 25.4% compared to 1Q16. In 3M17, the Bank paid an effective tax rate of 20.6% compared to 19.1% in 3M17. The rise in the effective tax rate was mainly due to: (i) the higher statutory tax rate. The statutory corporate tax rate in 2017 increased to 25.5% compared to 24.0% in 2016 and; (ii) the lower CPI inflation rate in 3M17 (+0.5%) compared to 3M17 (+0.7%), which results in a lower price level restatement charge to taxable income, since for tax purposes the Bank must readjust its capital for inflation. The Bank’s effective tax rate should be approximately 20%-21% in 2017 and the statutory corporate tax rate will rise again to 27.0% in 2018.

|  | YTD income tax1

(Ch$ Million)

|  | Quarter |  |  | Change% |
|  | 1Q17 |  |  | 1Q16 |  |  | 1Q17 / 1Q16 |
Net income before tax |  |  | 180,226 |  |  |  | 155,702 |  |  |  | 15.8 | %
Price level restatement of capital 2 |  |  | (6,570 | ) |  |  | (7,445 | ) |  |  | (11.8 | )%
Net income before tax adjusted for price level restatement |  |  | 173,656 |  |  |  | 148,257 |  |  |  | 17.1 | %
Statutory Tax rate |  |  | 25.5 | % |  |  | 24.0 | % |  |  |  |
Income tax expense at Statutory rate |  |  | (45,959 | ) |  |  | (35,582 | ) |  |  | 29.2 | %
Tax benefits 3 |  |  | 8,751 |  |  |  | 5,920 |  |  |  | 47.8 | %
Income tax |  |  | (37,208 | ) |  |  | (29,662 | ) |  |  | 25.4 | %
Effective tax rate |  |  | 20.6 | % |  |  | 19.1 | % |  |  |  |

1. This table is for informational purposes only. Please refer to note 12 in our interim financials for more details.

2. For tax purposes, capital is indexed to CPI inflation. The statutory tax rate is applied over net income before tax adjusted for price level restatement.

3. Mainly includes income tax credits from property taxes paid on leased assets as well as the impact from fluctuations in deferred tax assets and liabilities.

|  | 19

Section 6: Credit risk ratings

International ratings

The Bank has credit ratings from three leading international agencies. In 4Q16, Moody’s reaffirmed our ratings with outlook stable and Fitch and S&P placed our outlook on negative following a similar action on the sovereign ratings.

Moody’s |  | Rating
Bank Deposit |  | Aa3/P-1
Baseline Credit Assessment |  | a2
Adjusted Baseline Credit Assessment |  | a2
Senior Unsecured |  | Aa3
Commercial Paper |  | P-1

Standard and Poor’s |  | Rating
Long-term Foreign Issuer Credit |  | A
Long-term Local Issuer Credit |  | A
Short-term Foreign Issuer Credit |  | A-1
Short-term Local Issuer Credit |  | A-1

Fitch |  | Rating
Foreign Currency Long-term Debt |  | A+
Local Currency Long-term Debt |  | A+
Foreign Currency Short-term Debt |  | F1
Local Currency Short-term Debt |  | F1
Viability rating |  | a+

Local ratings

Our local ratings are the following:

Local ratings |  | Fitch Ratings |  | Feller Rate
Shares |  | 1CN1 |  | 1CN1
Short-term deposits |  | N1+ |  | N1+
Long-term deposits |  | AAA |  | AAA
Mortgage finance bonds |  | AAA |  | AAA
Senior bonds |  | AAA |  | AAA
Subordinated bonds |  | AA |  | AA+

|  | 20

Section 7: Share performance

As of March 31, 2017

Ownership Structure:

Total Shareholder Return

Santander ADR vs. SP500 (Base 100 = 12/31/2016)

ADR price (US$) 3M17

3/31/17: |  |  | 25.08 |
Maximum (3M17): |  |  | 25.45 |
Minimum (3M17): |  |  | 17.99 |

Market Capitalization: US$11,816 million

P/E 12month trailing*: |  |  | 16.5 |
P/BV (3/31/16)**: |  |  | 2.7 |
Dividend yield***: |  |  | 4.5 | %

| * | Price as of Mar 31, 2017 / 12mth. earnings

| ** | Price as of Mar 31, 2017/Book value as of 3/31/17

| ***Based | on closing price on record date of last dividend payment.

Average daily traded volumes 3M17

US$ million

Total Shareholder Return

Santander vs IPSA Index (Base 100 = 12/31/2016)

Local share price (Ch$) 3M17

3/31/17: |  |  | 41.37 |
Maximum (3M17): |  |  | 42.38 |
Minimum (3M17): |  |  | 34.65 |

Dividends:

Year paid |  | Ch$/share |  |  | % of previous year’s earnings |
2014: |  |  | 1.41 |  |  |  | 60 | %
2015: |  |  | 1.75 |  |  |  | 60 | %
2016: |  |  | 1.79 |  |  |  | 75 | %
2017: |  |  | 1.75 |  |  |  | 70 | %

|  | 21

Annex 1: Balance sheet

|  | Unaudited Balance Sheet

|  | Mar-17 |  |  | Mar-17 |  |  | Dec-16 |  |  | Mar-16 |  |  | Mar-17/Mar16 |  | Mar-17/Dec-16 |
|  | US$ Ths1 |  |  | Ch$ Million |  |  | % Chg. |
Cash and deposits in banks |  |  | 2,769,648 |  |  |  | 1,828,411 |  |  |  | 2,279,389 |  |  |  | 1,416,135 |  |  |  | 29.1 | % |  |  | (19.8 | )%
Cash items in process of collection |  |  | 1,213,192 |  |  |  | 800,901 |  |  |  | 495,283 |  |  |  | 1,043,906 |  |  |  | (23.3 | )% |  |  | 61.7 | %
Trading investments |  |  | 586,509 |  |  |  | 387,190 |  |  |  | 396,987 |  |  |  | 155,369 |  |  |  | 149.2 | % |  |  | (2.5 | )%
Investments under resale agreements |  |  | - |  |  |  | - |  |  |  | 6,736 |  |  |  | - |  |  |  | — | % |  |  | — | %
Financial derivative contracts |  |  | 3,787,915 |  |  |  | 2,500,630 |  |  |  | 2,500,782 |  |  |  | 2,990,214 |  |  |  | (16.4 | )% |  |  | (0.0 | )%
Interbank loans, net |  |  | 533,022 |  |  |  | 351,880 |  |  |  | 272,635 |  |  |  | 31,896 |  |  |  | 1003.2 | % |  |  | 29.1 | %
Loans and account receivables from customers, net |  |  | 39,830,899 |  |  |  | 26,294,766 |  |  |  | 26,113,485 |  |  |  | 24,909,962 |  |  |  | 5.6 | % |  |  | 0.7 | %
Available for sale investments |  |  | 4,253,475 |  |  |  | 2,807,974 |  |  |  | 3,388,906 |  |  |  | 2,686,185 |  |  |  | 4.5 | % |  |  | (17.1 | )%
Held-to-maturity investments |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | — | % |  |  | — | %
Investments in associates and other companies |  |  | 37,114 |  |  |  | 24,501 |  |  |  | 23,780 |  |  |  | 20,861 |  |  |  | 17.4 | % |  |  | 3.0 | %
Intangible assets |  |  | 89,551 |  |  |  | 59,118 |  |  |  | 58,085 |  |  |  | 51,660 |  |  |  | 14.4 | % |  |  | 1.8 | %
Property, plant and equipment |  |  | 377,916 |  |  |  | 249,485 |  |  |  | 257,379 |  |  |  | 234,468 |  |  |  | 6.4 | % |  |  | (3.1 | )%
Current taxes |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | — | % |  |  | — | %
Deferred taxes |  |  | 557,859 |  |  |  | 368,276 |  |  |  | 372,699 |  |  |  | 324,477 |  |  |  | 13.5 | % |  |  | (1.2 | )%
Other assets |  |  | 1,568,417 |  |  |  | 1,035,406 |  |  |  | 840,499 |  |  |  | 982,562 |  |  |  | 5.4 | % |  |  | 23.2 | %
Total Assets |  |  | 55,605,517 |  |  |  | 36,708,538 |  |  |  | 37,006,645 |  |  |  | 34,847,695 |  |  |  | 5.3 | % |  |  | (0.8 | )%
Deposits and other demand liabilities |  |  | 11,222,458 |  |  |  | 7,408,618 |  |  |  | 7,539,315 |  |  |  | 7,079,271 |  |  |  | 4.7 | % |  |  | (1.7 | )%
Cash items in process of being cleared |  |  | 912,365 |  |  |  | 602,307 |  |  |  | 288,473 |  |  |  | 873,455 |  |  |  | (31.0 | )% |  |  | 108.8 | %
Obligations under repurchase agreements |  |  | 310,760 |  |  |  | 205,151 |  |  |  | 212,437 |  |  |  | 51,423 |  |  |  | 298.9 | % |  |  | (3.4 | )%
Time deposits and other time liabilities |  |  | 19,238,079 |  |  |  | 12,700,210 |  |  |  | 13,151,709 |  |  |  | 12,722,899 |  |  |  | (0.2 | )% |  |  | (3.4 | )%
Financial derivatives contracts |  |  | 3,474,527 |  |  |  | 2,293,744 |  |  |  | 2,292,161 |  |  |  | 2,784,208 |  |  |  | (17.6 | )% |  |  | 0.1 | %
Interbank borrowings |  |  | 2,259,584 |  |  |  | 1,491,687 |  |  |  | 1,916,368 |  |  |  | 1,316,766 |  |  |  | 13.3 | % |  |  | (22.2 | )%
Issued debt instruments |  |  | 11,227,043 |  |  |  | 7,411,645 |  |  |  | 7,326,372 |  |  |  | 5,727,832 |  |  |  | 29.4 | % |  |  | 1.2 | %
Other financial liabilities |  |  | 361,020 |  |  |  | 238,331 |  |  |  | 240,016 |  |  |  | 224,888 |  |  |  | 6.0 | % |  |  | (0.7 | )%
Current taxes |  |  | 37,638 |  |  |  | 24,847 |  |  |  | 29,294 |  |  |  | 11,799 |  |  |  | 110.6 | % |  |  | (15.2 | )%
Deferred taxes |  |  | 17,606 |  |  |  | 11,623 |  |  |  | 7,686 |  |  |  | 6,307 |  |  |  | 84.3 | % |  |  | 51.2 | %
Provisions |  |  | 491,675 |  |  |  | 324,584 |  |  |  | 308,982 |  |  |  | 316,637 |  |  |  | 2.5 | % |  |  | 5.0 | %
Other liabilities |  |  | 1,510,714 |  |  |  | 997,313 |  |  |  | 795,785 |  |  |  | 879,962 |  |  |  | 13.3 | % |  |  | 25.3 | %
Total Liabilities |  |  | 51,063,469 |  |  |  | 33,710,060 |  |  |  | 34,108,598 |  |  |  | 31,995,447 |  |  |  | 5.4 | % |  |  | (1.2 | )%
Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital |  |  | 1,350,132 |  |  |  | 891,303 |  |  |  | 891,303 |  |  |  | 891,303 |  |  |  | — | % |  |  | — | %
Reserves |  |  | 2,484,416 |  |  |  | 1,640,112 |  |  |  | 1,640,112 |  |  |  | 1,527,893 |  |  |  | 7.3 | % |  |  | — | %
Valuation adjustments |  |  | 10,244 |  |  |  | 6,763 |  |  |  | 6,640 |  |  |  | 474 |  |  |  | 1326.8 | % |  |  | 1.9 | %
Retained Earnings: |  |  | 651,831 |  |  |  | 430,313 |  |  |  | 330,651 |  |  |  | 402,022 |  |  |  | 7.0 | % |  |  | 30.1 | %
Retained earnings from prior years |  |  | 715,510 |  |  |  | 472,351 |  |  |  | - |  |  |  | 448,878 |  |  |  | 5.2 | % |  |  | — | %
Income for the period |  |  | 215,667 |  |  |  | 142,375 |  |  |  | 472,351 |  |  |  | 125,439 |  |  |  | 13.5 | % |  |  | (69.9 | )%
Minus: Provision for mandatory dividends |  |  | (279,346 | ) |  |  | (184,413 | ) |  |  | (141,700 | ) |  |  | -172,295 |  |  |  | 7.0 | % |  |  | 30.1 | %
Total Shareholders' Equity |  |  | 4,496,624 |  |  |  | 2,968,491 |  |  |  | 2,868,706 |  |  |  | 2,821,692 |  |  |  | 5.2 | % |  |  | 3.5 | %
Non-controlling interest |  |  | 45,424 |  |  |  | 29,987 |  |  |  | 29,341 |  |  |  | 30,556 |  |  |  | (1.9 | )% |  |  | 2.2 | %
Total Equity |  |  | 4,542,047 |  |  |  | 2,998,478 |  |  |  | 2,898,047 |  |  |  | 2,852,248 |  |  |  | 5.1 | % |  |  | 3.5 | %

1. The exchange rate used to calculate the figures in dollars was Ch$660.16 / US$1

|  | 22

Annex 2: Quarterly income statements

|  | Unaudited Quarterly Income Statement

|  | 1Q17 |  |  | 1Q17 |  |  | 4Q16 |  |  | 1Q16 |  |  | 1Q17/1Q16 |  |  | 1Q17/4Q16 |
|  | US$ Ths1 |  |  | Ch$ Million |  |  | % Chg. |
Interest income |  |  | 793,698 |  |  |  | 523,968 |  |  |  | 526,330 |  |  |  | 518,729 |  |  |  | 1.0 | % |  |  | (0.4 | )%
Interest expense |  |  | (311,126 | ) |  |  | (205,393 | ) |  |  | (209,681 | ) |  |  | (205,856 | ) |  |  | (0.2 | )% |  |  | (2.0 | )%
Net interest income |  |  | 482,572 |  |  |  | 318,575 |  |  |  | 316,649 |  |  |  | 312,873 |  |  |  | 1.8 | % |  |  | 0.6 | %
Fee and commission income |  |  | 174,647 |  |  |  | 115,295 |  |  |  | 112,187 |  |  |  | 104,508 |  |  |  | 10.3 | % |  |  | 2.8 | %
Fee and commission expense |  |  | (64,336 | ) |  |  | (42,472 | ) |  |  | (49,050 | ) |  |  | (41,517 | ) |  |  | 2.3 | % |  |  | (13.4 | )%
Net fee and commission income |  |  | 110,311 |  |  |  | 72,823 |  |  |  | 63,137 |  |  |  | 62,991 |  |  |  | 15.6 | % |  |  | 15.3 | %
Net income (expense) from financial operations |  |  | 1,933 |  |  |  | 1,276 |  |  |  | (74,850 | ) |  |  | (179,699 | ) |  |  | -% |  |  |  | -% |
Net foreign exchange gain |  |  | 53,708 |  |  |  | 35,456 |  |  |  | 112,397 |  |  |  | 213,961 |  |  |  | (83.4 | )% |  |  | (68.5 | )%
Total financial transactions, net |  |  | 55,641 |  |  |  | 36,732 |  |  |  | 37,547 |  |  |  | 34,262 |  |  |  | 7.2 | % |  |  | (2.2 | )%
Other operating income |  |  | 19,721 |  |  |  | 13,019 |  |  |  | 4,456 |  |  |  | 5,248 |  |  |  | 148.1 | % |  |  | 192.2 | %
Net operating profit before provisions for loan losses |  |  | 668,246 |  |  |  | 441,149 |  |  |  | 421,789 |  |  |  | 415,374 |  |  |  | 6.2 | % |  |  | 4.6 | %
Provision for loan losses |  |  | (111,885 | ) |  |  | (73,862 | ) |  |  | (87,713 | ) |  |  | (77,926 | ) |  |  | (5.2 | )% |  |  | (15.8 | )%
Net operating profit |  |  | 556,361 |  |  |  | 367,287 |  |  |  | 334,076 |  |  |  | 337,448 |  |  |  | 8.8 | % |  |  | 9.9 | %
Personnel salaries and expenses |  |  | (140,384 | ) |  |  | (92,676 | ) |  |  | (101,306 | ) |  |  | (92,967 | ) |  |  | (0.3 | )% |  |  | (8.5 | )%
Administrative expenses |  |  | (88,588 | ) |  |  | (58,482 | ) |  |  | (57,898 | ) |  |  | (58,694 | ) |  |  | (0.4 | )% |  |  | 1.0 | %
Depreciation and amortization |  |  | (26,694 | ) |  |  | (17,622 | ) |  |  | (18,812 | ) |  |  | (14,345 | ) |  |  | 22.8 | % |  |  | (6.3 | )%
Op. expenses excl. Impairment and Other operating expenses |  |  | (255,665 | ) |  |  | (168,780 | ) |  |  | (178,016 | ) |  |  | (166,006 | ) |  |  | 1.7 | % |  |  | (5.2 | )%
Impairment of property, plant and equipment |  |  | (279 | ) |  |  | (184 | ) |  |  | (139 | ) |  |  | (37 | ) |  |  | 397.3 | % |  |  | 32.4 | %
Other operating expenses |  |  | (28,504 | ) |  |  | (18,817 | ) |  |  | (20,326 | ) |  |  | (16,234 | ) |  |  | 15.9 | % |  |  | (7.4 | )%
Total operating expenses |  |  | (284,448 | ) |  |  | (187,781 | ) |  |  | (198,481 | ) |  |  | (182,277 | ) |  |  | 3.0 | % |  |  | (5.4 | )%
Operating income |  |  | 271,913 |  |  |  | 179,506 |  |  |  | 135,595 |  |  |  | 155,171 |  |  |  | 15.7 | % |  |  | 32.4 | %
Income from investments in associates and other companies |  |  | 1,091 |  |  |  | 720 |  |  |  | 764 |  |  |  | 531 |  |  |  | 35.6 | % |  |  | (5.8 | )%
Income before tax |  |  | 273,004 |  |  |  | 180,226 |  |  |  | 136,359 |  |  |  | 155,702 |  |  |  | 15.8 | % |  |  | 32.2 | %
Income tax expense |  |  | (56,362 | ) |  |  | (37,208 | ) |  |  | (27,126 | ) |  |  | (29,662 | ) |  |  | 25.4 | % |  |  | 37.2 | %
Net income from ordinary activities |  |  | 216,641 |  |  |  | 143,018 |  |  |  | 109,233 |  |  |  | 126,040 |  |  |  | 13.5 | % |  |  | 30.9 | %
Net income discontinued operations |  |  | - |  |  |  | - |  |  |  | -- |  |  |  | - |  |  |  |  |  |  |  |  |
Net income attributable to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-controlling interest |  |  | 974 |  |  |  | 643 |  |  |  | 600 |  |  |  | 601 |  |  |  | 7.0 | % |  |  | 7.2 | %
Net income attributable to equity holders of the Bank |  |  | 215,667 |  |  |  | 142,375 |  |  |  | 108,633 |  |  |  | 125,439 |  |  |  | 13.5 | % |  |  | 31.1 | %

1. The exchange rate used to calculate the figures in dollars was Ch$660.16 / US$1

|  | 23

Annex 3: Quarterly evolution of main ratios and other information

(Ch$ millions) |  |  |  |  |  |  |  |  |
|  | Mar-16 |  |  | Jun-16 |  |  | Sep-16 |  |  | Dec-16 |  |  | Mar-17 |
Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | 4,141,786 |  |  |  | 4,239,461 |  |  |  | 4,311,786 |  |  |  | 4,446,803 |  |  |  | 4,502,447 |
Residential mortgage loans |  |  | 8,099,477 |  |  |  | 8,321,626 |  |  |  | 8,471,975 |  |  |  | 8,619,356 |  |  |  | 8,747,324 |
Commercial loans |  |  | 13,452,772 |  |  |  | 13,602,948 |  |  |  | 13,807,911 |  |  |  | 13,867,465 |  |  |  | 13,850,836 |
Interbank loans |  |  | 31,926 |  |  |  | 236,532 |  |  |  | 276,703 |  |  |  | 272,807 |  |  |  | 352,044 |
Total loans (including interbank) |  |  | 25,725,961 |  |  |  | 26,400,567 |  |  |  | 26,868,375 |  |  |  | 27,206,431 |  |  |  | 27,452,650 |
Allowance for loan losses |  |  | (784,102 | ) |  |  | (795,405 | ) |  |  | (812,707 | ) |  |  | (820,311 | ) |  |  | (806,005 | )
Total loans, net of allowances |  |  | 24,941,859 |  |  |  | 25,605,162 |  |  |  | 26,055,668 |  |  |  | 26,386,120 |  |  |  | 26,646,646 |
Deposits |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Demand deposits |  |  | 7,079,271 |  |  |  | 7,238,303 |  |  |  | 6,913,452 |  |  |  | 7,539,315 |  |  |  | 7,408,618 |
Time deposits |  |  | 12,722,899 |  |  |  | 12,997,791 |  |  |  | 13,126,798 |  |  |  | 13,151,709 |  |  |  | 12,700,210 |
Total deposits |  |  | 19,802,170 |  |  |  | 20,236,094 |  |  |  | 20,040,250 |  |  |  | 20,691,024 |  |  |  | 20,108,828 |
Mutual funds (Off balance sheet) |  |  | 4,695,924 |  |  |  | 4,881,450 |  |  |  | 5,269,815 |  |  |  | 5,026,068 |  |  |  | 5,489,733 |
Total customer funds |  |  | 24,498,094 |  |  |  | 25,117,544 |  |  |  | 25,310,065 |  |  |  | 25,717,092 |  |  |  | 25,598,561 |
Loans / Deposits1 |  |  | 98.3 | % |  |  | 99.0 | % |  |  | 100.4 | % |  |  | 98.5 | % |  |  | 102.3 | %
Average balances |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Avg. interest earning assets |  |  | 27,801,471 |  |  |  | 28,628,066 |  |  |  | 28,979,918 |  |  |  | 29,901,912 |  |  |  | 30,381,349 |
Avg. Loans from reporting segments |  |  | 25,432,034 |  |  |  | 25,980,829 |  |  |  | 26,550,078 |  |  |  | 26,952,880 |  |  |  | 27,246,674 |
Avg. assets |  |  | 34,754,591 |  |  |  | 35,195,160 |  |  |  | 35,869,635 |  |  |  | 36,163,077 |  |  |  | 36,629,695 |
Avg. demand deposits |  |  | 7,181,633 |  |  |  | 7,280,495 |  |  |  | 7,132,397 |  |  |  | 7,094,735 |  |  |  | 7,370,951 |
Avg equity |  |  | 2,772,379 |  |  |  | 2,714,063 |  |  |  | 2,755,631 |  |  |  | 2,833,913 |  |  |  | 2,914,173 |
Avg. free funds |  |  | 9,954,012 |  |  |  | 9,994,558 |  |  |  | 9,888,028 |  |  |  | 9,928,649 |  |  |  | 10,285,124 |
Capitalization |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk weighted assets |  |  | 26,608,992 |  |  |  | 26,876,727 |  |  |  | 27,130,807 |  |  |  | 27,237,835 |  |  |  | 27,492,643 |
Tier I (Shareholders' equity) |  |  | 2,821,692 |  |  |  | 2,704,685 |  |  |  | 2,794,109 |  |  |  | 2,868,706 |  |  |  | 2,968,491 |
Tier II |  |  | 773,581 |  |  |  | 781,772 |  |  |  | 786,936 |  |  |  | 789,001 |  |  |  | 792,549 |
Regulatory capital |  |  | 3,595,272 |  |  |  | 3,486,457 |  |  |  | 3,581,046 |  |  |  | 3,657,707 |  |  |  | 3,761,040 |
Tier I ratio |  |  | 10.6 | % |  |  | 10.1 | % |  |  | 10.3 | % |  |  | 10.5 | % |  |  | 10.8 | %
BIS ratio |  |  | 13.5 | % |  |  | 13.0 | % |  |  | 13.2 | % |  |  | 13.4 | % |  |  | 13.7 | %
Profitability & Efficiency |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net interest margin (NIM)1 |  |  | 4.5 | % |  |  | 4.6 | % |  |  | 4.5 | % |  |  | 4.2 | % |  |  | 4.2 | %
Client NIM2 |  |  | 4.9 | % |  |  | 4.8 | % |  |  | 4.9 | % |  |  | 4.8 | % |  |  | 4.8 | %
Efficiency ratio3 |  |  | 41.6 | % |  |  | 43.8 | % |  |  | 41.1 | % |  |  | 44.3 | % |  |  | 40.0 | %
Costs / assets4 |  |  | 1.9 | % |  |  | 1.9 | % |  |  | 1.9 | % |  |  | 1.9 | % |  |  | 1.8 | %
Avg. Demand deposits / interest earning assets |  |  | 25.8 | % |  |  | 25.4 | % |  |  | 24.6 | % |  |  | 23.7 | % |  |  | 24.3 | %
Return on avg. equity |  |  | 18.1 | % |  |  | 17.1 | % |  |  | 17.7 | % |  |  | 15.3 | % |  |  | 19.5 | %
Return on avg. assets |  |  | 1.4 | % |  |  | 1.3 | % |  |  | 1.4 | % |  |  | 1.2 | % |  |  | 1.6 | %
Return on RWA |  |  | 1.9 | % |  |  | 1.7 | % |  |  | 1.8 | % |  |  | 1.6 | % |  |  | 2.1 | %

|  | 24

(Ch$ millions) |  |  |  |  |  |  |  |  |
|  | Mar-16 |  |  | Jun-16 |  |  | Sep-16 |  |  | Dec-16 |  |  | Mar-17 |
Asset quality |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans5 |  |  | 1,642,087 |  |  |  | 1,645,082 |  |  |  | 1,594,267 |  |  |  | 1,615,441 |  |  |  | 1,667,145 |
Non-performing loans (NPLs) 6 |  |  | 639,981 |  |  |  | 566,177 |  |  |  | 556,965 |  |  |  | 564,131 |  |  |  | 594,855 |
Past due loans7 |  |  | 353,610 |  |  |  | 340,761 |  |  |  | 336,337 |  |  |  | 324,312 |  |  |  | 330,207 |
Loan loss reserves |  |  | 784,102 |  |  |  | 795,405 |  |  |  | 812,707 |  |  |  | 820,311 |  |  |  | 806,005 |
Impaired loans / total loans |  |  | 6.4 | % |  |  | 6.2 | % |  |  | 5.9 | % |  |  | 5.9 | % |  |  | 6.1 | %
NPLs / total loans |  |  | 2.5 | % |  |  | 2.1 | % |  |  | 2.1 | % |  |  | 2.1 | % |  |  | 2.2 | %
PDL / total loans |  |  | 1.4 | % |  |  | 1.3 | % |  |  | 1.3 | % |  |  | 1.2 | % |  |  | 1.2 | %
Coverage of NPLs (Loan loss allowance / NPLs) |  |  | 122.5 | % |  |  | 140.5 | % |  |  | 145.9 | % |  |  | 145.4 | % |  |  | 135.5 | %
Coverage of PDLs (Loan loss allowance / PDLs) |  |  | 221.7 | % |  |  | 233.4 | % |  |  | 241.6 | % |  |  | 252.9 | % |  |  | 244.1 | %
Risk index (Loan loss allowances / Loans) 8 |  |  | 3.0 | % |  |  | 3.0 | % |  |  | 3.0 | % |  |  | 3.0 | % |  |  | 2.9 | %
Cost of credit (prov expense annualized / avg. loans) |  |  | 1.2 | % |  |  | 1.3 | % |  |  | 1.4 | % |  |  | 1.3 | % |  |  | 1.1 | %
Network |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Branches |  |  | 470 |  |  |  | 468 |  |  |  | 464 |  |  |  | 434 |  |  |  | 415 |
ATMs |  |  | 1,529 |  |  |  | 1,484 |  |  |  | 1,406 |  |  |  | 1,295 |  |  |  | 1,288 |
Employees |  |  | 11,793 |  |  |  | 11,653 |  |  |  | 11,557 |  |  |  | 11,354 |  |  |  | 11,229 |
Market information (period-end) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income per share (Ch$) |  |  | 0.67 |  |  |  | 0.62 |  |  |  | 0.65 |  |  |  | 0.58 |  |  |  | 0.76 |
Net income per ADR (US$) |  |  | 0.39 |  |  |  | 0.37 |  |  |  | 0.39 |  |  |  | 0.35 |  |  |  | 0.46 |
Stock price |  |  | 32.57 |  |  |  | 31.92 |  |  |  | 34.04 |  |  |  | 37.26 |  |  |  | 41.37 |
ADR price |  |  | 19.35 |  |  |  | 19.37 |  |  |  | 20.69 |  |  |  | 21.87 |  |  |  | 25.08 |
Market capitalization (US$mn) |  |  | 9,116 |  |  |  | 9,126 |  |  |  | 9,747 |  |  |  | 10,303 |  |  |  | 11,816 |
Shares outstanding |  |  | 188,446.1 |  |  |  | 188,446.1 |  |  |  | 188,446.1 |  |  |  | 188,446.1 |  |  |  | 188,446.1 |
ADRs (1 ADR = 400 shares) |  |  | 471.1 |  |  |  | 471.1 |  |  |  | 471.1 |  |  |  | 471.1 |  |  |  | 471.1 |
Other Data |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Quarterly inflation rate10 |  |  | 0.7 | % |  |  | 0.9 | % |  |  | 0.6 | % |  |  | 0.5 | % |  |  | 0.5 | %
Central Bank monetary policy reference rate (nominal) |  |  | 3.50 | % |  |  | 3.50 | % |  |  | 3.50 | % |  |  | 3.50 | % |  |  | 3.00 | %
Observed Exchange rate (Ch$/US$) (period-end) |  |  | 675.10 |  |  |  | 661.49 |  |  |  | 659.08 |  |  |  | 660.00 |  |  |  | 662.66 |

1. Ratio =( Loans - mortgage loans) / (Time deposits + demand deposits)

2. NIM = Net interest income annualized divided by interest earning assets

3. Client NIM = Net interest income from reporting segments annualized over average loans

4. Efficiency ratio =(Net interest income+ net fee and commission income +financial transactions net + Other operating income +other operating expenses) divided by (Personnel expenses + administrative expenses + depreciation). Excludes impairment charges

5. Costs / assets = (Personnel expenses + adm. Expenses + depreciation) / Total assets

6. Impaired loans include: (A) for loans individually evaluated for impairment, (i) the carrying amount of all loans to clients that are rated C1 through C6 and (ii) the carrying amount of loans to an individual client with a loan that is non-performing, regardless of category, excluding residential mortgage loans, if the past-due amount on the mortgage loan is less than 90 days; and (B) for loans collectively evaluated for impairment, (i) the carrying amount of total loans to a client, when a loan to that client is non-performing or has been renegotiated, excluding performing residential mortgage loans, and (ii) if the loan that is non-performing or renegotiated is a residential mortgage loan, all loans to that client.

7. Capital + future interest of all loans with one installment 90 days or more overdue.

8. Total installments plus lines of credit more than 90 days overdue.

9. Based on internal credit models and SBIF guidelines. Banks must have a 100% coverage of risk index.

10. Calculated using the variation of the Unidad de Fomento (UF) in the period.

|  | 25