Banco Santander-Chile : Banco Santander Chile Announces First Quarter 2013 Earnings

  Banco Santander-Chile : Banco Santander Chile Announces First Quarter 2013

Santiago, Chile, April 25, 2013. Banco Santander Chile (NYSE: BSAC; SSE:
Bsantander) announced today its unaudited results for the first quarter 2013.
These results are reported on a consolidated basis in accordance with Chilean

Lower inflation and a higher tax rate reduces profitability in 1Q13

In 1Q13, Net income attributable to shareholders totaled Ch$80,879 million
(Ch$0.43 per share and US$0.36/ADR). Compared to 4Q12 (from now on QoQ), net
income decreased 28.9% and 31.7% compared to 1Q13 (from now on YoY). During
the quarter, the lower inflation temporarily reduced net interest income and
profitability. The higher statutory tax rate also lowered profitability.

In 1Q13, net interest income decreased 12.9% QoQ and 7.4% YoY. The net
interest margin (NIM) in 1Q13 reached 4.7% compared to 5.5% in 4Q12 and 5.3%
in 1Q12. The lower net interest margin income in the quarter was mainly due to
the quarterly fluctuations of inflation. In 1Q13, the variation of the Unidad
de Fomento (an inflation indexed currency unit), was 0.13% compared to 1.11%
in 4Q12 and 1.07% in 1Q12. It is important to point out that the Bank has more
assets than liabilities linked to inflation and, as a result, margins have a
positive sensitivity to variations in inflation. Therefore, the QoQ decline in
inflation was an important factor that explains the reduction in net interest
income and profitability in the quarter.

Loan growth accelerating in segments the Bank has targeted for growth

In 1Q13, total loans increased 1.2% QoQ and 7.4% YoY. In the quarter, loan
growth continued to accelerate in the markets the Bank is currently targeting:
high-income individuals, SMEs and middle market of companies. Loans in these
combined markets increased 3.1% QoQ and 11.4% YoY. Loans to high-income
individuals increased 2.9% QoQ. Lending to SMEs (defined as companies that
sell less than Ch$1,200 million per year) expanded 1.4% QoQ and 9.8% YoY,
reflecting the Bank's consistent focus on this segment. In the quarter, the
Bank also focused its loan growth in the middle-market companies segment
(companies with annual sales between Ch$1,200 million and Ch$10,000 million
per year), which increased 4.4% QoQ and 14.7% YoY.

Solid growth of core deposits

Customer funds (deposits + mutual funds) increased 2.6% QoQ and 5.1% YoY. Core
deposits (demand and time deposits from our retail and corporate clients)
expanded 12.4% YoY. Core deposits now represent 83% of the Bank's total
deposit base. This should help support net interest margins in 2013.

Asset quality stabilizing in consumer loans

Net provision for loan losses in the quarter totaled Ch$92,858 million an
increase of 2.7% QoQ and 18.6% YoY. Net provision expense in consumer loans,
which represent 63% of total provision expense, decreased 1.0% QoQ and 3.8%
YoY. This reflects the different measure carried out by the Bank to improve
credit risk. This includes focus loan growth in the higher end of the consumer
market, tightening admissions policies, improving the collections process and
updating the consumer provisioning models (performed in 3Q12). The measures
mentioned above have gradually resulting in a stabilization of asset quality
in consumer lending. Consumer NPLs decreased 2.7% QoQ. The coverage of
consumer NPLS reached 226.4% in 1Q13 compared to 224.0% in 4Q12. At the same
time, the amount of impaired consumer loans (consumer NPLS+ renegotiated
consumer loans) has evolved favorably. This is a leading indicator for the
evolution of future charge-offs. The improved collection efforts have also led
to an important rise in loan loss recoveries, especially in consumer lending.
Total loan loss recoveries increased 113.3% YoY. In this same period, consumer
loan loss recoveries increased 146.3% YoY. 

Cost growth moderates as key projects advance

Operating expenses in 1Q13 decreased 3.9% QoQ and increased 7.7% YoY. The
efficiency ratio reached 41.8% in 1Q13. Administrative expenses increased 9.0%
YoY as the Bank continued with its Transformation Projects aimed at enhancing
productivity in retail banking. Going forward, though, administrative expenses
should grow at a slower pace as many of these projects are finalizing. The
3.1% YoY increase in personnel expenses in 1Q13 reflects the stable evolution
of the Bank's headcount. Personnel expenses should experience moderate growth
in the rest of the year as headcount levels should not grow significantly. 

Core capital ratio reached 10.9%. Dividend yield of 3.8%

Shareholders' equity totaled Ch$2,194,025 million (US$4.6 billion) as of March
31, 2013. Core capital reached 10.9% and the Bank's BIS ratio reached 13.9% at
the same date. The Bank's Board will also submit for shareholder approval on
April 29, 2013 its annual dividend equivalent to 60% of 2012 net income
(Ch$1.24/share) equivalent to a dividend yield of 3.8% on the day before the
ex-dividend date in Chile. ROAE in the quarter reached 15.0%.


Robert Moreno

Manager, Investor Relations Department

Banco Santander Chile

Bandera 140 Piso 19

Santiago, Chile

Tel: (562) 2320-8284

Fax: (562) 671-6554



On January 1, 2013 the Bank began to apply the modifications to IAC 19
relating to Employee Pension Benefits. This change was applied retroactively
to 2012 figures which resulted in lower assets and liabilities of Ch$786
million and a higher net income of Ch$315 million all charged to 4Q12 figures
in this report.


This announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of
information contained therein.

Source: Banco Santander-Chile via Thomson Reuters ONE
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