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Reporting Segments

12 Months Ended

Dec. 31, 2019

NOTE 04

REPORTING SEGMENTS

The Bank manages and measures the performance of its operations by business segments. The information disclosed in this note is not necessarily comparable to that of other financial institutions, since it is based on management's internal information system by segment.

Inter-segment transactions are conducted under normal arm's length commercial terms and conditions. Each segment's assets, liabilities, and income include items directly attributable to the segment to which they can be allocated on a reasonable basis.

Under IFRS 8, the Bank has aggregated operating segments with similar economic characteristics according to the aggregation criteria specified in the standard. A reporting segment consists of clients that are offered differentiated but, considering how their performance is measured, are homogenous services based on IFRS 8 aggregation criteria, thus they form part of the same reporting segment. Overall, this aggregation has no significant impact on the understanding of the nature and effects of the Bank's business activities and the economic environment.

The Bank has the reportable segments noted below:

Retail Banking

Consists of individuals and small to middle-sized entities (SMEs) with annual income less than Ch$2,000 million. This segment gives customers a variety of services, including consumer loans, credit cards, automobile loans, commercial loans, foreign exchange, mortgage loans, debit cards, checking accounts, savings products, mutual funds, stockbrokerage, and insurance brokerage. Additionally the SME clients are offered government-guaranteed loans, leasing and factoring.

Middle-market

This segment is made up of companies and large corporations with annual sales exceeding Ch$2,000 million. It serves institutions such as universities, government entities, local and regional governments and companies engaged in the real estate industry who carry out projects to sell properties to third parties and annual sales exceeding Ch$800 million with no upper limit. The companies within this segment have access to many products including commercial loans, leasing, factoring, foreign trade, credit cards, mortgage loans, checking accounts, transactional services, treasury services, financial consulting, savings products, mutual funds, and insurance brokerage. Also companies in the real estate industry are offered specialized services to finance projects, chiefly residential, with the aim of expanding sales of mortgage loans.

Global Investment Banking

This segment consists of foreign and domestic multinational companies with sales over Ch$10,000 million. The companies within this segment have access to many products including commercial loans, leasing, factoring, foreign trade, credit cards, mortgage loans, checking accounts, transactional services, treasury services, financial consulting, investments, savings products, mutual funds and insurance brokerage.

This segment also consists of a Treasury Division which provides sophisticated financial products, mainly to companies in the Middle-market and Global Investment Banking segments. These include products such as short-term financing and fund raising, brokerage services, derivatives, securitization, and other tailor-made products, The Treasury area may act as brokers to transactions and also manages the Bank's investment portfolio.

Corporate Activities ("Other")

This segment mainly includes the results of our Financial Management Division, which develops global management functions, including managing inflation rate risk, foreign currency gaps, interest rate risk and liquidity risk. Liquidity risk is managed mainly through wholesale deposits, debt issuances and the Bank's available for sale portfolio. This segment also manages capital allocation by unit. These activities usually result in a negative contribution to income.

In addition, this segment encompasses all the intra-segment income and all the activities not assigned to a given segment or product with customers.

The segments' accounting policies are those described in the summary of accounting policies, The Bank earns most of its income in the form of interest income, fee and commission income and income from financial operations. To evaluate a segment's financial performance and make decisions regarding the resources to be assigned to segments, the Chief Operating Decision Maker (CODM) bases his assessment on the segment's interest income, fee and commission income, and expenses.

Below are the tables showing the Bank's results by reporting segment for the years ended December 31, 2019, 2018 and 2017 in addition to the corresponding balances of loans and accounts receivable from customers:

			For the year ended December 31, 2019
	Loans and accounts receivable at amortised cost (1)		Net interest income		Net fee and commission income			Financial transactions, net (2)		Expected credit losses			Support expenses (3)			Segment's net contribution
	MCh$		MCh$		MCh$			MCh$		MCh$			MCh$			MCh$

Retail Banking		22,926,377		960,361		230,627			28,426		(279,969	)		(575,511	)		356,665
Middle-market		8,093,496		298,587		38,712			13,535		(38,746	)		(97,054	)		220,320
Global Investment Banking		1,603,633		98,154		29,103			94,761		(224	)		(65,343	)		156,083
Other		48,009		59,862		(11,356	)		64,970		(4,819	)		(11,953	)		99,502

Total		32,671,515		1,416,964		287,086			201,692		(323,311	)		(749,861	)		832,570

Other operating income																	13,001
Other operating expenses and impairment																	(52,029	)
Income from investments in associates and other companies																	1,146
Income tax expense																	(175,074	)
Result of continuing operations																	619,614
Result of discontinued operations																	1,699
Net income for the year																	621,313

(1) Corresponds to loans and accounts receivable at amortised cost under IFRS 9, without deducting their allowances for loan losses.

(2) Corresponds to the sum of the net income from financial operations and the foreign exchange profit or loss.

(3) Corresponds to the sum of personnel salaries and expenses, administrative expenses, depreciation and amortization.

			For the year ended December 31, 2018
	Loans and accounts receivable at amortised cost (1)		Net interest income		Net fee and commission income			Financial transactions, net (2)		Expected credit losses			Support expenses (3)			Segment's net contribution
	MCh$		MCh$		MCh$			MCh$		MCh$			MCh$			MCh$

Retail Banking		20,786,637		949,764		220,532			19,694		(287,739	)		(553,157	)		349,094
Middle-market		7,690,380		272,912		36,746			16,848		(26,314	)		(92,377	)		207,815
Global Investment Banking		1,613,088		96,722		35,064			57,340		2,339			(64,913	)		126,552
Other		123,310		94,970		(1,457	)		11,200		(5,694	)		(11,486	)		87,533

Total		30,213,415		1,414,368		290,885			105,082		(317,408	)		(721,933	)		770,994

Other operating income																	23,129
Other operating expenses and impairment																	(32,381	)
Income from investments in associates and other companies																	1,325
Income tax expense																	(167,144	)
Result of continuing operations																	595,923
Result of discontinued operations																	3,770
Net income for the year																	599,693

(1) Corresponds to loans and accounts receivable from customers, without deducting their allowances for loan losses.

(2) Corresponds to the sum of the net income from financial operations and the foreign exchange profit or loss.

(3) Corresponds to the sum of personnel salaries and expenses, administrative expenses, depreciation and amortization.

			For the year ended December 31, 2017
	Loans and accounts receivable from customers (1)		Net interest income			Net fee and commission income		Financial transactions, net (2)		Provision for loan losses			Support expenses (3)			Segment's net contribution
	MCh$		MCh$			MCh$		MCh$		MCh$			MCh$			MCh$

Retail Banking		19,233,169		970,332			206,449		20,595		(293,956	)		(534,970	)		368,450
Middle-market		6,775,734		264,663			36,280		13,751		(19,235	)		(91,882	)		203,577
Global Investment Banking		1,633,796		100,808			27,626		50,714		6,440			(62,685	)		122,903
Other		83,215		(9,112	)		8,708		44,692		4,496			(15,356	)		33,428

Total		27,725,914		1,326,691			279,063		129,752		(302,255	)		(704,893	)		728,358

Other operating income																	62,016
Other operating expenses and impairment																	(74,057	)
Income from investments in associates and other companies																	1,144
Income tax expense																	(145,031	)
Result of continuing operations																	572,430
Result of discontinued operations																	2,819
Net income for the year																	575,249

(1) Corresponds to loans and accounts receivable from customers, without deducting their allowances for loan losses.

(2) Corresponds to the sum of the net income from financial operations and the foreign exchange profit or loss.

(3) Corresponds to the sum of personnel salaries and expenses, administrative expenses, depreciation and amortization.