Banco Santander Chile Announces Fourth Quarter 2012 Earnings

Santiago, Chile, February 4, 2013. Banco Santander Chile (NYSE: BSAC; SSE: Bsantander) announced today its unaudited results for the fourth quarter and full-year 2012. These results are reported on a consolidated basis in accordance with Chilean GAAP.

4Q12 net income rises 124.3% QoQ and 11.0% YoY.

In 4Q12, Net income attributable to shareholders totaled Ch$113,402 million (Ch$0.60 per share and US$0.50/ADR). Compared to 3Q12 (from now on QoQ), net income increased 124.3%. Compared to 4Q11 (from now on YoY) net income increased 11.0%. During the quarter, the Bank saw an important QoQ improvement in profitability as loan growth accelerated, the funding mix improved, margins rose in line with higher inflation and provision expenses declined, following the non-recurring charges recognized in 3Q12.

ROE reaches 21.6% in 4Q12

ROAE in the quarter reached 21.6%. Core capital reached 10.7% as of December 31, 2012 and the Bank`s BIS ratio reached 13.7% at the same date.

Positive evolution of margins in the quarter

In 4Q12, Net interest income increased 18.5% QoQ. The Net interest margin (NIM) in 4Q12 reached 5.5% compared to 4.7% in 3Q12 and 5.3% in 4Q11.  Inflation rebounded from -0.16% in 3Q12 to 1.11% in 4Q12 and this drove the strong QoQ rise in net interest income. Compared to 4Q12 net interest income increased 7.2% in line with loan growth.

Loan growth accelerating in segments the Bank has targeted for growth

In 4Q12, total loans increased 2.0% QoQ. In the quarter, loan growth continued to accelerate in the markets the Bank is targeting the most: high-income individuals, SMEs and middle market of companies. Loans in these combined markets increased 2.9% QoQ and 9.6% YoY. Loans to high-income individuals increased 2.1% QoQ. Lending to SMEs (defined as companies that sell less than Ch$1,200 million per year) expanded 3.3% QoQ, 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 3.9% QoQ.

Solid growth of non-interest bearing demand deposits

Total deposits were flat QoQ and grew 5.6% YoY. In the quarter and throughout 2012, the Bank has focused on increasing its core deposits (demand deposits and time deposits from non-institutional sources), while reducing dependence on institutional deposits that tend to be more expensive. As a result, at year-end 2012 total non-interest bearing demand deposits increased 8.0% QoQ and 12.6% YoY. This has improved the Bank`s funding mix, as core deposits tend to be cheaper and more stable than other sources of funding.

Provision expense decreases 24.3% QoQ

Net provision for loan losses in 4Q12 decreased 24.3% QoQ and increased 4.4% YoY. Net provision expense in consumer loans decreased 24.4% QoQ and increased 6.3% YoY. In 3Q12, the Bank recalibrated the consumer loan-provisioning model that increased the minimum provision set aside for renegotiated consumer loans. Excluding this effect, the QoQ decline in provision expense was 4.6% in 4Q12.

Cost growth moderates as key projects advance

Operating expenses in 4Q12 increased 4.0% QoQ and 7.0% YoY as the Bank continued with its projects of investing in a new Client Relationship Management system and the Transformation Initiatives aimed at enhancing productivity in retail banking. The efficiency ratio reached 40.0% in 4Q12 compared to 42.4% in 3Q12 and 38.5% in 4Q11. Operating expense growth has been decelerating in recent quarters as headcount has remained stable and the different productivity initiatives implemented since 2011 are starting to produce results.

In 2012, Santander Chile`s ROE reached 18.9% with an efficiency ratio of 40.0%

In 2012 (12M11), Net income attributable to shareholders[1] totaled Ch$387,967 million (Ch$2.06 per share and US$1.72/ADR[2]) and decreased 10.8% compared to net income achieved in 2011. ROE reached 18.9% in 12M11, among the highest returns in the Chilean financial system. The Efficiency ratio in 12M12 reached 40.0%, one of the best in Chile.

Robert Moreno
Manager, Investor Relations Department
Banco Santander Chile
Bandera 140 Piso 19
Santiago, Chile
Tel: (562) 320-8284
Fax: (562) 671-6554

[1] The results in this report are unaudited and are reported according to Chilean Bank GAAP.
[2] Earnings per ADR was calculated using the Observed Exchange Rate of Ch$478.6 per US$ as of December 31, 2012.

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 the
information contained therein.

Source: Banco Santander-Chile via Thomson Reuters ONE

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