FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Report of Foreign Issuer
 
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
 
Commission File Number: 001-14554
 
Banco Santander Chile
Santander Chile Bank
(Translation of Registrant’s Name into English)
 
Bandera 140
Santiago, Chile
(Address of principal executive office)
 
          Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
 
 
Form 20-F
x
 
Form 40-F
o
 
 
          Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
 
 
Yes
o
 
No
x
 
 
          Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
 
 
Yes
o
 
No
x
 
 
          Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
 
 
Yes
o
 
No
x
 
 
          If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
 


 
1

 
 
Table of Contents

Item
 
   
1.
 Fourth Quarter Earnings Report 2008 (English)
   
2.
Auditor Opinion 2008 Financials (Spanish)
   
3.
 2008 Financial Statements ( Spanish)

 
2

 
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BANCO SANTANDER-CHILE
   
By:
  /s/
Name:
  Gonzalo Romero A.
Title:
  General Counsel
 
Date: March 3, 2009

 
3

 


INDEX

SECTION
 
PAGE
     
SECTION 1: SUMMARY OF RESULTS AND STRATEGY
 
2
     
SECTION 2: BALANCE SHEET
 
5
     
SECTION 3: ANALYSIS OF QUARTERLY INCOME STATEMENT
 
9
     
SECTION 4: CREDIT RISK RATINGS
 
16
     
SECTION 5: SHARE PERFORMANCE
 
17
     
SECTION 6: INSTITUTIONAL BACKGROUND
 
18
     
ANNEX 1: BALANCE SHEET
 
19
     
ANNEX 2: YTD INCOME STATEMENT
 
20
     
ANNEX 3: QUARTERLY INCOME STATEMENT
 
21
     
ANNEX 4: QUARTERLY EVOLUTION OF MAIN RATIOS AND OTHER INFORMATION
 
22
     
ANNEX 5: QUARTERLY EVOLUTION OF BALANCE SHEET
 
23
     
ANNEX 6: QUARTERLY EVOLUTION OF INCOME STATEMENT
 
24

CONTACT INFORMATION
Santiago, Chile
Robert Moreno
Tel: (562) 320-8284
Manager, Investor Relations Department
Fax: (562) 671-6554
Banco Santander Chile
Email: rmorenoh@santander.cl
Bandera 140 Piso 19,
Website: www.santander.cl

Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
1

 
 

 


SECTION 1: SUMMARY OF RESULTS AND STRATEGY

Positive profitability trends
Core revenue: Net interest income + fee income
**
Net operating income: Core revenue + provision expense + operating expenses + market related income + other operating income, net

In 4Q08, net income attributable to shareholders totaled Ch$77,566 million (Ch$0.41 per share and US$0.68/ADR), increasing 9.6% compared to 4Q07 (from now on YoY). The YoY growth of net income was mainly driven by core revenues, that is, net interest income plus fee income. Core revenue increased 16.0% YoY, led by a 17.7% increase in net interest revenue and a 9.7% rise in fee income. Return on average equity attributable to shareholders reached 20.2% in 4Q08 compared to 19.9% in 4Q07.

In 4Q08, total loans increased 5.9% compared to 3Q08 (from now on QoQ) and 19.1% YoY. During the quarter, loan growth was mainly driven by the corporate segment, in line with our strategy of continuing to expand the loan book, but with a conservative approach to credit risk. Corporate lending increased a record 24.5% QoQ and 26.0% YoY. Total commercial loans increased 8.8% QoQ and 22.6% YoY in 4Q08.

The Bank’s selective approach to lending was also apparent in loan growth to individuals in the quarter. Total loans to individuals increased 2.7% QoQ and 16.9% YoY. Residential mortgage lending increased 3.3% QoQ and 19.0% YoY. Consumer loans expanded 0.3% QoQ and 8.0% YoY. By segment, during 2008 loan growth to high income individuals was up 35.6% YoY compared to 4.4% YoY to middle income individuals and a decrease of 11.9% YoY to lower income segments.

The Bank also experienced a favorable evolution of deposit growth in the quarter. In 4Q08, Santander Chile’s deposit base increased by a record 10.1% QoQ and 18.1% YoY, outpacing loan growth and reflecting our focus on liquidity and improving the funding mix. The Bank’s market share of deposits increased from 20.4% as of September 2008 to 20.8% at year-end 2008. The growth of deposits was led by a 16.0% QoQ increase in time deposits.  As of December 31, 2008, Santander Chile’s loan to deposit ratio reached a healthy 94.1% improving from 100.2% as of September 2008 (excluding the portion of mortgage loans funded with long-term bonds).

As mentioned in previous earning releases, since 2007 the Bank has been focusing on spreads in order to sustain profitability in a period of lower economic growth and to compensate for higher funding costs and provisioning levels. Loan spreads to companies and individuals have been increasing as liquidity abroad has become scarcer and more expensive. Spreads earned over commercial loans reached 2.63% in 4Q08 and were up 30 basis points QoQ and 45 basis points YoY. Consumer loan spreads reached 18.78% in 4Q08 and increased 18 basis points QoQ and 75 basis points YoY in 4Q08. Deposit spreads have also benefited from the Bank’s higher credit risk ratings.

Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
2
 
 
 

 


Despite this positive evolution of spreads, the Bank’s net interest margin reached 5.8% in the quarter compared to 6.2% in 4Q07 and 6.9% in 3Q08. This lower net interest margin was mainly due to the lower quarterly inflation in 4Q08 compared to 3Q08 and 4Q07.

Expanding client spreads

Spread = Interest earned on loan minus cost of funds

The impact of lower net interest margins were offset by the Bank’s proactive management of the asset and funding mix, coupled with loan growth and rising spreads. As a result, in 4Q08 net interest income was up 17.7% YoY.

Capitalization ratios continued to improve in 4Q08. The Bank’s BIS ratio as of December 31, 2008 reached a solid 13.8% with a Tier I ratio of 10.0%. The Bank has one of the highest BIS ratios among the major players in the Chilean financial system. During the quarter, the Bank issued US$40 million in subordinated bonds in the local market in order to further improve capitalization ratios.

In 4Q08, the Bank’s net provision expense increased 14.4% QoQ and 50.6% YoY. As mentioned in previous earning reports, this rise was driven by higher charge-offs in consumer loans due to the economic slowdown, as well as an increase in provisions in the middle-market  following negligible levels in the past three years. This rise in risk has been offset by a more selective loan growth towards less risky segments and higher spreads. As a result, net interest income after net provision expense increased 5.1% YoY in 4Q08 and 20.7% YoY in the twelve-month period ended December 31, 2008.

Net fee income increased 3.2% QoQ and 9.7% YoY in 4Q08 in line with the expansion of cross-selling and product usage. Santander Chile has the largest client base (excluding the state owned bank) in Chile. The total number of cross-sold clients increased 7.9% YoY. Fees from credit, debit and ATM cards increased 13.1% QoQ and 11.0% YoY.

The growth rate of operating expenses was curbed in the quarter as the Bank focused in cost control and limited the opening of new branches in order to maximize the profitability of the existing network. Operating expenses decreased 1.7% QoQ and increased 6.1% YoY in 4Q08.  Administrative expenses in 4Q08 decreased 7.5% QoQ and increased 1.7% YoY. In 4Q08, the efficiency ratio reached 38.8% compared to 42.4% in 4Q07. We have the highest level of efficiency among the larger banks in Chile and among the best in emerging markets.

Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
3

 
 

 
 

Banco Santander Chile: Summary of Quarterly Results

   
Quarter
   
Change %
 
(Ch$ million)
   
4Q08
     
3Q08
      4Q07       4Q08 / 4Q07       4Q08 / 3Q08  
Net interest income
    233,455       253,221       198,403       17.7 %     (7.8 )%
Fee income
    57,924       56,139       52,816       9.7 %     3.2 %
Core revenues
    291,379       309,360       251,219       16.0 %     (5.8 )%
Market related income
    16,802       33,933       9,280       81.1 %     (50.5 )%
Other operating income
    3,309       (1,094 )     7,751       (57.3 )%     (402.5 )%
Total operating income
    311,490       342,199       268,250       16.1 %     (9.0 )%
Operating expenses
    (120,830 )     (122,967 )     (113,839 )     6.1 %     (1.7 )%
Provision expense
    (82,522 )     (72,128 )     (54,788 )     50.6 %     14.4 %
Net operating income
    108,138       147,104       99,623       8.5 %     (26.5 )%
Net income
    78,465       96,457       71,119       10.3 %     (18.7 )%
Minority interest
    899       (39 )     344       161.3 %     (2405.1 )%
Net income attributable to shareholders
    77,566      
96,496
     
70,775
     
9.6
%    
(19.6
)%
Net income/share (Ch$)
    0.41       0.51       0.38       9.6 %     (19.6 )%
Net income/ADR (US$)1
    0.68       0.96       0.79       (13.6 )%     (29.4 )%
Total loans
    14,604,840       13,791,128       12,258,457       19.1 %     5.9 %
Customer funds
    14,905,245       14,074,217       13,391,127       11.3 %     5.9 %
Shareholders’ equity
    1,602,610       1,500,504       1,458,089       9.9 %     6.8 %
Net interest margin
    5.8 %     6.9 %     6.2 %                
Efficiency ratio
    38.8 %     35.9 %     42.4 %                
Return on average equity2
    20.2 %     27.5 %     19.9 %                
PDL / Total loans
    1.1 %     1.1 %     1.0 %                
Coverage ratio of PDLs
    177.5 %     181.0 %     199.5 %                
Expected loss3
    2.0 %     2.0 %     1.9 %                
BIS ratio
    13.8 %     13.1 %     12.2 %                
Branches4
    477       472       464                  
ATMs
    1,958       1,997       2,004                  
Employees
    9,169       9,331       9,174                  
1.
The change in earnings per ADR may differ from the change in earnings per share due to the exchange rate.
2.
Annualized Quarterly Earnings / Average Equity.
3.
Allowance for loan losses / Total loans.
4.
Includes SuperCaja and mini payment centers.

2007 figures have been re-categorized under the new format in order to make them more comparable, but the modification regarding minimum dividends has not been made to historical shareholders’ equity.

Please note that this information is provided for comparative purposes only and that this re-categorization of line items may undergo further changes during the year and, therefore, historical figures, including financial ratios, presented in this report may not be entirely comparable to future figures presented by the Bank. Re-classified historical figures have not been audited.

In this earnings report, quarterly 2007 figures have suffered minor reclassifications between line items compared to figures for these periods presented in previous earnings reports, especially between other operating income, other operating expenses and net gains from financial transactions. This did no affected total net income.

Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
4

 
 

 
 

12M08 RESULTS SUMMARY

In the twelve-month period ended December 31, 2008 (12M08), net income attributable to shareholders increased 6.3% YoY and totaled Ch$328,146 million (Ch$1.74/share and US$2.82/ADR). Growth was led by a 22.8% increase in core revenues. Net interest income increased 25.9% and fee income 11.8% YoY. The net interest margin in 12M08 reached a record level of 6.1% compared to 5.8% in 12M07. The efficiency ratio reached 38.0% in 12M08 compared to 39.4% in 12M07. Net operating income increased 11.4% in the same period. These higher operating results were partially offset by a 33.9% rise in non-operating losses, net which were negatively affected by higher losses from price level restatement.  ROAE reached 23.0% in 12M08 compared to 23.7% in 12M07.

SECTION 2: BALANCE SHEET

LOANS

Selective loan growth with a focus on companies and upper and middle income individuals

Loans 
 
Quarter ended,
   
% Change
 
 (Ch$ million)
 
Dec-08
   
Sep-08
   
Dec-07
(reclassified)
   
Dec. 08 / 07
   
Dec. 08 /
Sept. 08
 
Total loans to individuals1
    6,833,098       6,654,210       5,846,856       16.9 %     2.7 %
Consumer loans
    2,248,996       2,241,163       2,082,579       8.0 %     0.3 %
Residential mortgage loans
    3,981,347       3,853,088       3,345,493       19.0 %     3.3 %
SMEs
    2,466,147       2,418,645       2,126,067       16.0 %     2.0 %
Institutional lending
    227,464       216,212       210,357       8.1 %     5.2 %
Total retail lending
    9,526,709       9,289,066       8,183,281       16.4 %     2.6 %
Middle-Market & Real estate
    2,882,484       2,831,381       2,470,934       16.7 %     1.8 %
Corporate
    2,052,089       1,648,671       1,628,192       26.0 %     24.5 %
Total loans 2,3
    14,604,840       13,791,128       12,258,457       19.1 %     5.9 %
1
Includes consumer and mortgage lending and other loan products to individuals
2
Includes past due loans in each category.
3     Excludes allowance for loan losses and interbank loans

The Bank’s solid liquidity position and the higher spreads seen in the market helped to boost lending in the quarter. Total loans increased 5.9% QoQ In 4Q08 and 19.1% YoY. Corporate lending increased 24.5% QoQ and 26.0% YoY. During the quarter, the Bank, in line with its strategic objectives, focused its loan growth in Corporate lending as spreads have been rising and this segment better risk profile should help to control credit risk indicators going forward. Growth in the corporate segments was also driven by the 13.9% depreciation of the peso against the US$ dollar in the quarter, which resulted in a translation gain in dollar denominated loans. This partially explains the 26.3% QoQ rise in foreign trade lending in the quarter.

Lending to the middle market increased 1.8% QoQ and 16.7% YoY, mainly due to the 6.2% QoQ increase in foreign trade volumes in this segment. This was in part due to the translation gains produced by the depreciation of the peso in the quarter against the US$ dollar. The Bank’s healthy dollar liquidity also improved its competitive advantage in foreign trade financing in the quarter.  Commercial loans in the middle market segment grew 2.0% QoQ. Loan volume growth in 4Q08 in this segment was affected by the economic slowdown, but this was compensated by higher spreads.

Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
5
 


 
Lending to SMEs increased 2.0% QoQ and 16.0% YoY. Commercial loans to this segment grew 2.0% QoQ, which was a somewhat slower pace than previous periods, but at higher spreads. Foreign trade loans rose 16.0% QoQ in this segment driven by translation gains.

Total Commercial lending
 
Ch$ mn
   
% Change
Dec. / Sept. 08
 
Commercial loans
    5,345,941       7.3 %
Foreign trade loans
    1,396,596       26.3 %
Lines of credit to companies
    271,896       (1.3 )%
Factoring
    323,136       0.5 %
Leasing
    965,119       2.0 %
Other commercial loans
    71,811       10.1 %
Total commercial lending
    8,374,498       8.8 %
 
Total loans to individuals increased 2.7% QoQ and 16.9% YoY. Residential mortgage lending increased 3.3% QoQ and 19.0% YoY. Consumer loans expanded 0.3% QoQ and 8.0% YoY. As mentioned in the previous earnings report, loan growth to individuals continues to be centered in middle and upper income segments for credit risk reasons. During 2008, loan growth to higher income individuals was up 35.6%, to the middle income segment loan growth increased 4.4% and to lower income segments loan growth decreased 11.9%.


Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
6

 
 

 


FUNDING

Strong deposit growth in the quarter

Customer funds
 
Quarter ended,
   
Change %
 
(Ch$ million)
 
Dec-08
   
Sep-08
   
Dec-07
(reclassified)
   
Dec. 08 / 07
   
Dec. 08 /
Sept. 08
 
Non-interest bearing deposits
    2,949,757       3,132,432       2,868,769       2.8 %     (5.8 )%
Time deposits
    9,756,266       8,408,557       7,887,897       23.7 %     16.0 %
Total customer deposits
    12,706,023       11,540,989       10,756,666       18.1 %     10.1 %
Mutual funds
    2,199,222       2,533,228       2,634,461       (16.5 )%     (13.2 )%
Total customer funds
    14,905,245       14,074,217       13,391,127       11.3 %     5.9 %
                                         
Quarterly inflation rate
    2.21 %     3.63 %     2.31 %                
Avg. overnight interbank rate (nominal)
    8.24 %     7.58 %     5.81 %                
Avg. yield on 10 year Central Bank bonds (real)
    3.22 %     3.39 %     2.97 %                
Avg. yield on 10 year Central Bank bonds (nominal)
    6.50 %     7.74 %     6.31 %                
 
In 4Q08, Santander Chile’s deposit base increased by 10.1% QoQ and 18.1% YoY outpacing loan growth and reflecting our focus on liquidity and improving the funding mix. The Bank’s market share of deposits increased from 20.4% as of September 2008 to 20.8% at year-end 2008. The growth of deposits was led by a 16.0% QoQ increase in time deposits. The spread earned over time deposits also increased from 30 basis points in 4Q07 and 55 basis points in 3Q08 to 66 basis points in 4Q08.  Non-interest bearing demand deposits decreased 5.8% QoQ and increased 2.8% YoY. The average balance of non-interest bearing checking accounts decreased 0.4% QoQ and increased 12.7% YoY.  The higher inflation rate registered in the second half of 2008 resulted in lower growth of non-interesting bearing deposit.
 
 
 
As of December 31, 2008, Santander Chile’s loan to deposit ratio reached a healthy 94.1% improving from 100.2% as of September 2008 (excluding portion of mortgage loan funded through bonds).

Assets under management decreased 13.2% QoQ and 16.5% YoY due to the fall in stock markets worldwide and the substitution of money market funds to time deposits.

Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
7

 
 

 


SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL

Solid capitalization ratios. Year-end BIS ratio reached 13.8%

Shareholders' Equity
 
Quarter
   
Change %
 
(Ch$ million)
 
Dec-08
   
Sep-08
   
Dec-07
(reclassified)
   
Dec. 08 / 07
   
Dec. 08 /
Sept. 08
 
Capital
    891,303       818,535       818,535       8.9 %     8.9 %
Reserves
    51,539       133,429       47,331       8.9 %     (61.4 )%
Unrealized gain (loss) Available-for-sale financial assets
    (7,552 )     (31,204 )     (9,475 )     (20.3 )%     (75.8 )%
Retained Earnings:
                                       
Retained earnings previous periods
    413,053       381,030       273,004       51.3 %     8.4 %
Net income
    328,146       250,580       308,647       6.3 %     31.0 %
Provision for mandatory dividend
    (98,444 )     (75,174 )     0                  
Minority Interest
    24,565       23,308       20,047       22.5 %     5.4 %
Total Equity
    1,602,610       1,500,504       1,458,089       9.9 %     6.8 %
Equity attributable to shareholders
    1,578,045       1,477,196       1,438,042       9.7 %     6.8 %
ROE
    20.2 %     27.5 %     20.1 %                
* Starting in 2008, the Bank must provision for the minimum mandatory dividend of 30% of net income.

Shareholders’ equity totaled Ch$1,602,610 million (US$2.5 billion) as of December 31, 2008. ROAE in 4Q08 reached 20.2%. The Bank’s BIS ratio as of December 31, 2008 reached 13.8% with a Tier I ratio of 10.0%. During the quarter, the Bank issued US$40 million in subordinated bonds in the local market in order to further improve capitalization ratios. This is in line with our strategic objectives of focusing on liquidity, funding and capital.

Capital Adequacy
 
Quarter ended
   
Change %
 
(Ch$ million)
 
Dec-08
   
Sep-08
   
Dec-07
   
Dec. 08 / 07
   
Dec. 08 /
Sept. 08
 
Tier I
    1,578,043       1,477,245       1,129,395       39.7 %     6.8 %
Tier II
    588,657       514,005       473,037       24.4 %     14.5 %
Regulatory capital
    2,166,700       1,991,250       1,602,432       35.2 %     8.8 %
Risk weighted assets
    15,710,202       15,170,215       13,087,642       20.0 %     3.6 %
Tier I ratio
    10.0 %     9.7 %     8.6 %                
BIS ratio
    13.8 %     13.1 %    
12.2
%                
* Tier I includes year-to-date net income in 2008, but not in 2007.

Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
8

 
 

 

 

IFRS note: In 2009, and in line with IFRS standards being adopted by Chilean banks, the Bank’s year-end 2008 Equity will be modified. The main changes will be: (i) the restatement for 2008 earnings, in which the main impact will be the reversal of 2008 price level restatement and (ii) the revaluation of fixed assets which were previously stated in Unidades de Fomento and are now valued at market prices.


SECTION 3: ANALYSIS OF QUARTERLY INCOME STATEMENT

NET INTEREST INCOME

Positive evolution of net interest income and spreads, but NIM driven down by lower inflation

Net Interest Income / Margin
 
Quarter
   
Change %
 
(Ch$ million)
    4Q08       3Q08    
4Q07
(reclassified)
      4Q08 / 4Q07       4Q08 / 3Q08  
Net interest income
    233,455       253,221       198,403       17.7 %     (7.8 )%
Average interest-earning assets
    15,975,392       14,693,715       12,840,100       24.4 %     8.7 %
Average loans
    14,311,395       13,456,903       11,908,379       20.2 %     6.3 %
Net interest margin (NIM)
    5.8 %     6.9 %     6.2 %                
Avg. equity + non-interest bearing demand deposits / Avg. interest earning assets
    28.3 %     31.4 %     33.5 %                
Quarterly inflation rate
    2.21 %     3.63 %     2.31 %                
Avg. overnight interbank rate (nominal)
    8.24 %     7.58 %     5.81 %                
Avg. yield on 10 year Central Bank bonds (real)
    3.22 %     3.39 %     2.97 %                
1.
Annualized.
2.
Inflation measured as the variation of the Unidad de Fomento in the quarter.

In 4Q08, net interest income was up 17.7% YoY. The main driver of the increase in net interest revenue was the 24.4% and 20.2% YoY rise in average interest earning assets and loans, respectively. At the same time, the rise in client spreads also helped to drive net interest income. A key part of the Bank’s strategy has been to focus strongly on spreads in order to sustain profitability in a period of lower economic growth and to compensate for higher funding costs, lower inflation and higher credit risks. Loan spreads to companies and individuals have been increasing as liquidity abroad has become scarcer and more expensive. Spreads earned over commercial loans reached 2.63% in 4Q08 and were up 30 basis points QoQ and 45 basis points YoY. Consumer loan spreads reached 18.78% in 4Q08 and increased 18 basis points QoQ and 75 basis points YoY in 4Q08.  Deposit spreads have also benefited from the Bank’s higher credit risk ratings.

This rise in lending spreads was partially offset by lower inflation levels that affected net interest margins in the quarter, albeit remaining at high levels. The Bank’s net interest margin reached 5.8% in the quarter compared to 6.2% in 4Q07 and 6.9% in 3Q08. The Bank maintains long-term assets (mainly medium and long-term financial investments and mortgage loans) that are denominated in Unidades de Fomento (UFs), an inflation indexed unit, which are partially funded with nominal or non-interest bearing peso short-term deposits. As the Bank maintains a positive gap between assets and liabilities indexed to inflation, a rise in inflation has a positive effect on net interest income and margins and vice-versa. The lower net interest margin in the quarter was partially offset by the lower loss from price level restatement.

Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
9

 
 

 


Net interest income in 4Q08 decreased 7.8% QoQ and the NIM increased 110bp. This QoQ decline in margins was mainly due to the lower quarterly inflation rates. The lower margin was also due, in part, to higher loan growth in lower yielding, but less riskier corporate loans.

Going forward margins are expected to descend as inflation moderates and the asset mix shifts towards lower yielding and less risky loans. As mentioned above, this is being confronted by increasing spreads and actively managing the asset and liability mix.

PROVISION FOR LOAN LOSSES

Net provision expense rises as economic growth descends

Provision for loan losses
 
Quarter
   
Change %
 
(Ch$ million)
    4Q08       3Q08    
4Q07
(reclassified)
      4Q08 / 4Q07       4Q08 / 3Q08  
Gross provisions
    (16,260 )     (13,054 )     (11,766 )     38.2 %     24.6 %
Charge-offs
    (75,984 )     (68,325 )     (54,784 )     38.7 %     11.2 %
Gross provisions and charge-offs
    (92,244 )     (81,379 )     (66,551 )     38.6 %     13.4 %
Loan loss recoveries
    9,722       9,251       11,763       (17.4 )%     5.1 %
Net provisions for loan losses
    (82,522 )     (72,128 )     (54,788 )     50.6 %     14.4 %
Total loans
    14,604,840       13,791,128       12,258,457       19.1 %     5.9 %
Total reserves (RLL)
    (285,470 )     (269,167 )     (232,766 )     22.6 %     6.1 %
Past due loans* (PDL)
    160,824       148,709       116,654       37.9 %     8.1 %
Gross provision expense / Loans
    2.53 %     2.36 %     2.17 %                
Cost of credit**
    2.26 %     2.09 %     1.79 %                
PDL / Total loans
    1.10 %     1.08 %     0.95 %                
Expected loss (RLL / Total loans)
    1.95 %     1.95 %     1.90 %                
Coverage of past due loans***
    177.5 %     181.0 %     199.5 %                
*
Past due loans: installments or credit lines more than 90 days overdue.
**
Net provision expense / loans annualized.
***
RLL / Past due loans.

In 4Q08, the Bank’s net provision expense increased 14.4% QoQ and 50.6% YoY. As mentioned in previous earning reports, this rise was driven by the growth in retail banking activities, higher charge-offs in consumer loans due to the economic slowdown and higher inflation and an increase in provisions in the middle-market segment following negligible levels in the past three years.

Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
10

 
 

 


Net provisions for loan losses
by segment
 
Quarter
   
Change %
 
(Ch$ million)
    4Q08       3Q08    
4Q07
(reclassified)
      4Q08 / 4Q07      
4Q08 /
Q08
 
Retail banking*
    76,185       67,089       54,100       40.8 %     13.6 %
Middle-market
    3,471       4,800       663       423.5 %     (27.7 )%
Corporate banking
    566       65       55       929.1 %     770.8 %
Total net provisions for loan losses**
    80,222       71,954       54,818       46.3 %     11.5 %
*
Includes individuals, institutional lending and SMEs.  Excludes subsidiaries.
 
In 4Q08, the Bank continued to focus loan growth in lower risk segments in order to reduce the growth of this expense. Spreads have also been increased to cover for this higher requirement. As a result of these measures, net interest income after net provision expense increased 5.1% YoY in 4Q08 and 20.7% YoY in the twelve-month period ended December 31, 2008.
 
 
 
The past due loan ratio (Past due installment >90 days / Total loans) as of December 2008 reached 1.10% compared to 1.08% in 3Q08 and 0.95% in 4Q07. Coverage of past due loans (Loan loss allowance / Past due loans) reached 177.5% as of December 2008 compared to 181% at September 2008 and 199.5% as of December 2007.

The expected loan loss ratio (Loan loss allowances / Total loans), which is a ratio that measures how much of the Bank’s loan portfolio is at risk, remained steady QoQ and YoY at 1.95% due to the Bank’s conservative charge-off policies. Going forward, the expected loan loss ratio and the cost of credit should rise given the expected lower economic growth.

IFRS note: In 2009, and in line with IFRS standards being adopted by Chilean banks, non-performing loans will include the entire balance of loans, including the performing portions. As a result, the PDL ratio will be more in line with the expected loan loss levels and coverage ratios will fall. This does not affect the Bank’s provisioning models, which still require the Bank to have 100% coverage over the expected loan loss level.

Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
11

 
 

 


NET FEE INCOME

Focus on cross-selling

Fee Income
 
Quarter
   
Change %
 
(Ch$ million)
    4Q08       3Q08    
4Q07
(reclassified)
      4Q08 / 4Q07      
4Q08 /
3Q08
 
Checking accounts & lines of credit
    17,558       15,865       15,720       11.7 %     10.7 %
Credit, debit & ATM card fees
    11,676       10,326       10,522       11.0 %     13.1 %
Collection fees
    10,787       10,915       9,687       11.4 %     (1.2 )%
Asset management
    5,853       7,622       8,296       (29.4 )%     (23.2 )%
Guarantees, pledges and other contingent operations
    5,084       4,237       3,554       43.1 %     20.0 %
Insurance brokerage
    3,619       3,879       3,464       4.5 %     (6.7 )%
Fees from brokerage and custody of securities
    916       1,953       1,624       (43.6 )%     (53.1 )%
Other Fees
    2,431       1,344       -50       %     80.9 %
Total fees
    57,924       56,139       52,816       9.7 %     3.2 %

Net fee income increased 3.2% QoQ and 9.7% YoY in 4Q08 in line with the expansion of cross-selling and product usage. Santander Chile has the largest client base (excluding the state owned bank) in Chile. The total number of clients increased 8.8% YoY to 3.0 million in 4Q08 and the amount of cross-sold clients increased 7.9% in the same period. Going forward, the Bank is focusing on expanding cross-selling as a cost-efficient way to continue expanding fee income in a lower economic growth period.

Fees from checking accounts and lines of credit increased 10.7% QoQ and 11.7% YoY. Fee income from checking and lines of credit is expected to decline throughout 2009.

Fees from credit, debit and ATM cards increased 13.1% QoQ and 11.0% YoY. The usage of electronic means of payments continues to steadily grow in Chile, especially the usage of credit cards and ATMS. In the banking credit card business, Santander, with 33.9% of the credit card accounts, generated 33.7% of all transactions in 2008 and 35.2% of all purchases in the same period. In the ATM market, Santander, with approximately 30% of the ATMs installed in the country, generated 41% of the total transactions in 2008.

Collection fees were flat QoQ and increased 11.4% YoY. The main driver of fee growth in this line item is the collection of loan insurance policies on behalf of third parties which evolves with overall commercial activity.

Asset management fees were down 23.2% QoQ and 29.4% YoY. Assets under management decreased 13.2% QoQ and 16.5% due to unfavorable market conditions, especially in equity markets that affected valuations and asset management fees.

Fees from guarantees, pledges and other contingent operations increased 43.1% QoQ and 20.0% YoY, in line with higher commercial activity in the corporate segment and also driven by the depreciation of the peso in the quarter that positively impacted fees from stand-by letters of credit.

Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
12

 
 

 
 

Insurance brokerage fees decreased 6.7% QoQ and increased 4.5% YoY in 4Q08. The Bank’s strength in cross-selling the client base by offering attractive insurance products through the Internet has been a key driver in this line item, but a slowdown of business volumes in line with decelerating economic growth is expected going forward.

Fees securities brokerage and custody decreased 53.1% QoQ and 43.6% YoY. The fall in stock market prices and volumes is the main factor behind this decline.

Other fees, that totaled Ch$2,431 million, were positively affected by higher gains from the Bank’s foreign exchange business and financial advisory fees.

OPERATING EXPENSES AND EFFICIENCY

The Bank continues to tighten cost control

Operating Expenses
 
Quarter
   
Change %
 
(Ch$ million)
    4Q08       3Q08    
4Q07
(reclassified)
      4Q08 / 4Q07       4Q08 / 3Q08  
Personnel expenses
    (59,106 )     (53,889 )     (49,571 )     19.2 %     9.7 %
Administrative expenses
    (39,072 )     (42,238 )     (38,408 )     1.7 %     (7.5 )%
Depreciation and amortization
    (13,354 )     (14,038 )     (11,600 )     15.1 %     (4.9 )%
Other operating expenses*
    (9,298 )     (12,802 )     (14,260 )     (34.8 )%     (27.4 )%
Operating expenses
    (120,830 )     (122,967 )     (113,839 )     6.1 %     (1.7 )%
Efficiency ratio**
    38.8 %     35.9 %     42.4 %                
*
Certain items of other operating income and expenses were reclassified for 2007 in 4Q08. Therefore, these figures vary on a quarterly basis compared to previous earning reports, but the net result from other operating income and expenses remains the same.
**
Operating expenses / Operating income.  Operating income = Net interest income + Net fee income+ Market related income + Other operating income.

The growth rate of operating expenses was curbed in the quarter. Operating expenses decreased 1.7% QoQ and increased 6.1% YoY in 4Q08.  Administrative expenses in 4Q08 decreased 7.5% QoQ and increased 1.7% YoY. In 4Q08, the efficiency ratio reached 38.8% compared to 42.4% in 4Q07.

Personnel expenses increased 9.7% QoQ and 19.2% YoY in 4Q08. This was mainly due to higher inflation and higher average headcount in 2008 compared to 2007. Going forward, and depending on the evolution of inflation, we expect a further moderation in the growth rate of personnel expenses.

The growth rate of administrative expenses was also controlled in the quarter, as the Bank has been limiting the opening of new branches. Since approximately 1/3 of the Bank’s branches have been opened in the past three years, there is still ample room to sustain growth and improve efficiency by maximizing profitability of the existing network. Administrative expenses in 4Q08 decreased 7.5% QoQ and increased 1.7% YoY. As of December 2008, the Bank’s distribution network totaled 477 offices. The 5 branches the Bank opened in 4Q08 were Banca Prime branches for upper income individuals where the Bank is rapidly expanding. The ATM network decreased 1.5% QoQ, totaling 1,958 ATMs.

Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
13

 
 

 


Stable distribution capabilities

The 4.9% QoQ decrease in depreciation expenses was also due to the optimization plan of the Bank’s branch network in the second half of 2008. The 15.1% YoY rise in depreciation was mainly due to the 12 month growth of the Bank’s distribution network.

Other operating expenses are mainly expense primarily relating to the Bank’s call center, credit card related expenses, expenses related to repossessed assets and provisions for non-credit contingencies. The QoQ and YoY decrease in other operating expenses was mainly driven by lower provisions for non-credit contingencies.

OTHER OPERATING INCOME AND NET RESULTS FROM FINANCIAL TRANSACTIONS AND OPERATING INCOME

Positive results from client related treasury income despite market turmoil

Other Operating Income and Net
Results from Financial Transactions
 
Quarter
   
Change %
 
(Ch$ million)
    4Q08       3Q08       4Q07      
4Q08 /
4Q07
     
4Q08 /
3Q08
 
Other operating income*
    3,309       (1,094 )     7,751       (57.3 )%     %
                                         
Net gains from mark-to-market and trading
    102,073       96,512       (50,685 )     %     5.8 %
Exchange differences, net
    (85,271 )     (62,579 )     59,965       %     36.3 %
Net results from financial transactions
    16,802       33,933       9,280       81.1 %     (50.5 )%
*
Certain items of other operating income and expenses were reclassified for 2007 in 4Q08. Therefore, these figures vary on a quarterly basis compared to previous earning reports, but the net result from other operating income and expenses remains the same.

Other operating income, which mainly includes the results from the sale and maintenance of repossessed assets, provisions released for non-credit contingencies and other results, totaled a gain of Ch$3,309 million in 4Q08. The QoQ rise was mainly due to the release of provisions for non-credit contingencies. The 57.3% YoY decrease in other operating income in 4Q08 compared to 4Q07 was mainly due to lower gain from the reversal of provisions for non-credit contingencies.

Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
14

 
 

 


The net gains from mark-to-market and trading mainly includes the mark-to-market of financial investments held for trading, the interest revenue generated by this portfolio, any gain or loss from the sale of charged-off loans and the mark-to-market of derivatives. The results recorded as exchange differences, net mainly includes the translation gains or losses of assets and a liability denominated in foreign currency. In order to better understand these line items, we present the net results from financial transactions by business area in the table below.

Net result from financial
transactions
 
Quarter
   
Change %
 
(Ch$ million)
    4Q08       3Q08    
4Q07
(reclassified)
     
4Q08 /
4Q07
     
4Q08 /
3Q08
 
Treasury products for clients*
    21,263       30,649       14,356       48.1 %     (30.6 )%
ALCO & Proprietary trading
    (4,461 )     3,285       (5,076 )     (12.1 )%  
NM
 
Net results from financial transactions
    16,802       33,933       9,280       81.1 %     (50.5 )%
*  Santander Global Connect, market making & results from the sale of charged-off loans.

The 50.5% QoQ decrease in the net results from financial transactions was mainly due to a lower gain from our market-making business in 4Q08 compared to 3Q08, a loss in proprietary trading in the quarter of Ch$1,394 million and losses produced by the hedging of the Bank’s US$ dollar liquidity position. The latter is partially offset by the net interest income produced by this liquidity cushion. This position has also become a competitive advantage for the Bank in a moment in which foreign funding has become more expensive. Compared to 4Q07, the net results from financial transactions rose 81.1% mainly due to the higher sales of treasury products for clients, which is a recurring and growing source of income for the Bank.

OTHER INCOME AND EXPENSES

Other Income and Expenses
 
Quarter
   
Change %
 
(Ch$ million)
    4Q08       3Q08    
4Q07
(Reclassified)
      4Q08 / 4Q07      
4Q08 /
3Q08
 
Income attributable to investments in other companies
    (206 )     139       (92 )     123.9 %     %
Price level restatement
    (15,451 )     (31,157 )     (16,641 )     (7.2 )%     (50.4 )%
Quarterly inflation rate*
    2.21 %     3.63 %     2.31 %                
Income tax
    (14,016 )     (19,629 )     (11,771 )     19.1 %     (28.6 )%
* Measured as the variation of the Unidad de Fomento in the quarter.

Price level restatement in the quarter totaled a loss of Ch$15,451 million. The Bank must adjust its capital and fixed assets for the variations in price levels.  When inflation is positive, the Bank records a loss from price restatement, since the Bank's capital is larger than fixed assets. The inflation rate was 2.21% in 4Q08 compared to 3.63% in 3Q08 and 2.31% in 4Q07. The lower inflation rate compared to previous periods explains the lower loss from price level restatement.
 

IFRS note: In 2009, price level restatement will no longer be recognized. Capital will no longer be restated to reflect changes in CPI and fixed and other non-financial assets will not be adjusted for variation of the UF. Therefore, in a period of positive inflation results will be positively affected by this change, but in periods of deflation results under IFRS, all other factors equal, results would be lower.


Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
15

 
 

 


SECTION 4: CREDIT RISK RATINGS

International ratings:

The Bank has credit ratings from three leading international agencies. We have the highest risk rating in Latin America.

Moody’s
 
Rating
Long-term bank deposits
 
A2
Senior bonds
 
Aa3
Subordinated debt
 
Aa3
Bank Deposits in Local Currency
 
Aa2
Bank financial strength
 
B-
Short-term deposits
 
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
Individual rating
 
B
 
Local ratings:
 
Our local ratings, the highest in Chile, are the following:

Local ratings
 
Fitch
Ratings
 
Feller
Rate
         
Shares
 
Level 2
 
1CN1
         
Short-term deposits
 
N1+
 
Level 1+
         
Long-term deposits
 
AAA
 
AAA
         
Mortgage finance bonds
 
AAA
 
AAA
         
Senior bonds
 
AAA
 
AAA
         
Subordinated bonds
 
AA+
 
AA+
         
Outlook
 
Stable
 
Stable

Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
16

 
 

 

 
SECTION 5: SHARE PERFORMANCE
As of December 2008

Ownership Structure:


ADR Price Evolution
Santander ADR vs. Global 1200 Financial Index
(Base 100 = 12/31/2003)

ADR price (US$) 2008
Year-end 2008:
    35.03  
Maximum (2008):
    54.60  
Minimum (2008):
    28.16  

Market Capitalization: US$6,353 million

P/E 12 month trailing:
    11.8  
P/BV (24/10/08):
    2.45  
Dividend yield*:
    4.5 %

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

Daily traded volumes 4Q 2008


Local Share Price Evolution
Santander vs IPSA Index
(Base 100 = 12/31/2003)

Local share price (Ch$) 2008
Year-end 2008:
    20.49  
Maximum (2008):
    24.86  
Minimum (2008):
    16.51  

Dividends:
 
Ch$/share
   
% of previous year
earnings
 
2005:
    1.05       100 %
2006:
    0.83       65 %
    0.99       65 %
2008:
    1.06       65 %
 
Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
17

 
 

 


SECTION 6: INSTITUTIONAL BACKGROUND

Institutional Background

As per the latest public records published by the Superintendency of Banks of Chile for December 2008, Banco Santander Chile was the largest bank in terms of loans and deposits. The Bank has the highest credit ratings among all Latin American companies, with an A+ rating from Standard and Poor’s, A+ by Fitch and A2 by Moody’s, which are the same ratings assigned to the Republic of Chile. The stock is traded on the New York Stock Exchange (NYSE: SAN) and the Santiago Stock Exchange (SSE: Bsantander). The Bank’s main shareholder is Santander, which controls 76.91% of Banco Santander Chile.

Banco Santander, S.A., (SAN.MC, STD.N), headquartered in Madrid, engages primarily in commercial banking with complementary activities in global wholesale banking, cards, asset management and insurance. Santander had over EUR 1.168 trillion in funds under management at the close of 2008, from more than 80 million customers served through 13,390 offices – more branches than any other international bank. Founded in 1857, Santander is the largest financial group in Spain and Latin America and has a significant presence in Western Europe and in the United Kingdom. In 2008, Santander registered €8,876 million in attributable net profit, an increase of 9% from 2007, excluding capital gains.

In Latin America, Santander manages over US$200 billion in business volumes (loans, deposits, mutual funds, pension funds and managed funds) through 6,089 branches. In 2008, Santander reported EUR 2,945 million in net attributable income in Latin America, up 10% from the previous year.

For more information, see www.santander.com.

Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
18

 
 

 


ANNEX 1: BALANCE SHEET
 
                           
Dec. 2008 /
   
Dec. / Sept.
 
Unaudited Balance Sheet
 
Dec-08
   
Dec-08
   
Sep-08
   
Dec-07
   
2007
   
2008
 
 
 
US$ths
                     
% Chg.
 
                     
(Reclassified)
             
Assets 
                                   
Cash and balances from Central Bank
    1,333,081       854,838       854,097       1,108,444       (22.9 )%     0.1 %
Funds to be cleared
    523,049       335,405       513,843       316,240       6.1 %     (34.7 )%
Financial assets held for trading
    1,811,510       1,161,631       891,070       1,090,004       6.6 %     30.4 %
Investment collateral under agreements to repurchase
    -       -       8,805       33,999       (100.0 )%     (100.0 )%
Derivatives
    2,879,546       1,846,509       1,296,402       780,775       136.5 %     42.4 %
Interbank loans
    148,926       95,499       76,015       45,961       107.8 %     25.6 %
Loans, net of reserves for loan losses
    22,330,402       14,319,370       13,521,962       12,028,054       19.0 %     5.9 %
Available-for-sale financial assets
    2,464,312       1,580,240       1,316,741       779,635       102.7 %     20.0 %
Held-to-maturity investments
    -       -       -       -                  
Investments in other companies
    10,901       6,990       7,186       6,795       2.9 %     (2.7 )%
Intangible assets
    113,979       73,089       69,534       56,187       30.1 %     5.1 %
Fixed assets
    405,622       260,105       253,918       245,619       5.9 %     2.4 %
Current tax assets
    28,521       18,289       12,275       1,933       846.1 %     49.0 %
Deferred tax assets
    101,085       64,821       101,876       61,261       5.8 %     (36.4 )%
Other assets
    811,459       520,348       668,294       474,091       9.8 %     (22.1 )%
Total Assets
    32,962,392       21,137,134       19,592,018       17,028,998       24.1 %     7.9 %
                                                 
Liabilities and Equity
                                               
Total non-interest bearing deposits
    4,600,011       2,949,757       3,132,432       2,868,769       2.8 %     (5.8 )%
Funds to be cleared
    222,303       142,552       308,345       135,219       5.4 %     (53.8 )%
Investments sold under agreements to repurchase
    878,338       563,234       741,043       308,651       82.5 %     (24.0 )%
Time deposits and savings accounts
    15,214,450       9,756,266       8,408,557       7,887,897       23.7 %     16.0 %
Derivatives
    2,291,967       1,469,724       1,122,579       778,217       88.9 %     30.9 %
Deposits from credit institutions
    2,222,324       1,425,065       1,495,606       1,099,443       29.6 %     (4.7 )%
Marketable debt securities
    4,134,693       2,651,372       2,372,389       2,154,996       23.0 %     11.8 %
Other obligations
    161,057       103,278       101,998       147,868       (30.2 )%     1.3 %
Current tax liabilities
    254       163       423       15,897                  
Deferred tax liability
    29,265       18,766       56,892       10,877       72.5 %     (67.0 )%
Provisions
    252,889       162,165       132,216       46,376       249.7 %     22.7 %
Other liabilities
    455,644       292,182       219,034       116,699       150.4 %     33.4 %
Total Liabilities
    30,463,195       19,534,524       18,091,514       15,570,909       25.5 %     8.0 %
                                                 
Equity
                                               
Capital
    1,389,946       891,303       818,535       818,535       8.9 %     8.9 %
Reserves
    80,373       51,539       133,429       47,331       8.9 %     (61.4 )%
Unrealized gain (loss) Available-for-sale financial assets
    (11,777 )     (7,552 )     (31,204 )     (9,475 )     (20.3 )%     (75.8 )%
Retained Earnings:
    0       0       0       0                  
Retained earnings previous periods
    644,137       413,053       381,030       273,004       51.3 %     8.4 %
Net income
    511,729       328,146       250,580       308,647       6.3 %     31.0 %
Provision for mandatory dividend
    (153,519 )     (98,444 )     (75,174 )     0               31.0 %
Minority Interest
    38,308       24,565       23,308       20,047       22.5 %     5.4 %
Total Equity
    2,499,197       1,602,610       1,500,504       1,458,089       9.9 %     6.8 %
Total Liabilities and Equity
    32,962,392       21,137,134       19,592,018       17,028,998       24.1 %     7.9 %

2007 figures have been re-categorized under the new format in order to make them more comparable, but the modification regarding minimum dividends has not been made to historical shareholders’ equity.

Please note that this information is provided for comparative purposes only and that this re-categorization of line items may undergo further changes during the year and, therefore, historical figures, including financial ratios, presented in this report may not be entirely comparable to future figures presented by the Bank. Re-classified historical figures have not been audited.

In this earnings report, 2007 figures have suffered minor reclassifications between line items compared to figures for these periods presented in previous earnings reports. This affected mainly net gains from financial transactions, other operating income and other operating expenses.

Investor Relations Department
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl
19

 
 

 


ANNEX 2 : YTD INCOME STATEMENT
 
YTD Income Statement Unaudited
 
Dec-08
   
Dec-08
   
Dec-07
   
Dec. 2008 / 2007
 
    
US$ths.
   
Ch$ million nominal
   
% Chg.
 
               
(reclassified)
       
Interest revenue
    3,214,210       2,061,112       1,589,303       29.7 %
Interest expense
    (1,815,315 )     (1,164,071 )     (876,879 )     32.8 %
Net interest revenue
    1,398,894       897,041       712,424       25.9 %
Fee income
    431,085