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

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

Santiago, Chile, October 24, 2013. Banco Santander Chile (NYSE: BSAC; SSE:
Bsantander) announced today its unaudited results for the third quarter of
2013. These results are reported on a consolidated basis in accordance with
Chilean GAAP.

Net income up 17.8% QoQ. ROE reaches 18.6% in 3Q13

Net  income  in  the  nine-month  period  ended  September  30,  2013  totaled 
Ch$267,944 million (Ch$1.42  per share  and US$1.13/ADR).  In 3Q13,Net  income 
attributable to shareholders totaled Ch$101,173 million (Ch$0.54 per share and
US$0.43/ADR), increasing 17.8% compared  to 2Q13 (from now  on QoQ) and  99.8% 
compared to 3Q12 (from now on YoY). Solid loan and core deposits growth and  a 
higher net interest margin boosted earnings in the quarter. The Bank's ROE  in 
the quarter reached 18.6%.

Loan growth continues to accelerate in the segments the Bank targets for

In 3Q13, total loans increased 2.8% QoQ  (an annualized rate of 11%) and  9.8% 
YoY. In the quarter,  loan growth continued to  accelerate in the markets  the 
Bank  is  targeting:  high-income  individuals,  SMEs  and  middle  market  of 
companies. Loans in these combined markets  increased 3.1% QoQ and 14.4%  YoY. 
This is in  line with the  Bank's strategy  of expanding loan  volumes with  a 
focus on  increasing spreads,  net of  provisions. In  the quarter,  the  Bank 
focused on expanding its  consumer loan portfolio  in higher income  segments, 
while remaining  more selective  in the  mass consumer  market and  mortgages. 
Loans to high-income individuals increased 3.7% QoQ and 12.4% YoY.

Improved funding mix and strong growth of core deposits

Total deposits grew 2.3% QoQ and 6.1% YoY. In the quarter, the Bank's
continued to focus on increasing core deposits (demand and time deposits from
our retail and corporate clients), while lowering deposits from more expensive
institutional sources. Core deposits expanded 4.2% QoQ and 18.0% YoY. Core
deposits represent 85% of the Bank's total deposit base. Among core deposits,
the bulk of growth came from individuals, which expanded 3.5% QoQ, and 21.8%

Net interest income up 15.7% QoQ. Net interest margin reaches 5.3% in 3Q13

In 3Q13, Net interest income increased 15.7% QoQ and 20.5% YoY. Loan growth, a
better funding mix and higher inflation rates drove this rise in net  interest 
income. The net interest margin (NIM) in 3Q13 reached 5.3% compared to 4.7% in
both 2Q13  and 3Q12.  In 3Q13,  the variation  of the  Unidad de  Fomento  (an 
inflation indexed currency  unit), was 1.04%  compared to -0.07%  in 2Q13  and 
-0.16% in 3Q12. The Bank has more assets than liabilities linked to  inflation 
and, as  a  result, margins  have  a  positive sensitivity  to  variations  in 

Non performing loans ratio improves 10bp in 3Q13. One-time events in
commercial lending increases provision expense

The Bank's non-performing loan (NPLs) ratio fell from 3.1% in 2Q13 to 3.0% in
3Q13 and the risk index remained stable at 2.9%. Total coverage of NPLs in
3Q13 reached 94.8% compared to 91.3% in 2Q13 and 98.3% in 3Q12. Excluding
residential mortgage loans that have a lower coverage ratio due to the value
of residential property collateral, the coverage ratio increased to 118% in
3Q13. Asset quality in consumer lending continues to improve. Consumer NPLs
decreased 11.0% QoQ and 25.6% YoY. The coverage of consumer NPLs reached
339.6% in 3Q13.

Net provision for loan losses in the quarter increased 11.3% QoQ and decreased
19.2% YoY. The cost of credit reached 1.9% in 3Q13. Net provision expense in
consumer loans decreased 4.2% QoQ and 46.4% YoY. This was offset by the 39.7%
QoQ and 38.6% YoY rise in net provision expense in commercial loans. This
increase was mainly due to: (i) the Bank lowered the risk rating of various
clients in the middle-market segment, which signified approximately Ch$4
billion in higher provisions; (ii) stronger loan growth that led to higher
loan loss provisions as the Bank's internal provisioning models recognize
provisions when a loan is granted.

Efficiency ratio improves to 39.8% in 3Q13. Cost growth flat QoQ 

Operating expenses in 3Q13 increased 0.6% QoQ as the Bank continued to wrap up
its investment program in the Transformation Project. The efficiency ratio
reached 39.8% in 3Q13 compared to 42.5% in 2Q13 and 41.9% in 3Q12.

Core capital ratio reaches 10.4% in 3Q13

Shareholders' equity  totaled  Ch$2,213,114  million (US$4.4  billion)  as  of 
September 30, 2013. The core capital  ratio reached 10.4% as of September  30, 
2013. The Bank's BIS ratio reached 13.0% at the same date.

Robert Moreno
Manager, Investor Relations Department
Banco Santander Chile
Bandera 140 Piso 19
Santiago, Chile
Tel: (562) 2320-8284
Fax: (562) 671-6554


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Source: Banco Santander-Chile via Thomson Reuters ONE