Banco Santander Chile Announces 4Q09 and 2009 Earnings

By Banco Santander Chile, PRNE
Thursday, February 4, 2010

SANTIAGO, Chile, February 5 - Banco Santander Chile (NYSE: SAN; SSE: Bsantander) announced today its
unaudited results for the fourth quarter of 2009. These results are reported
on a consolidated basis in accordance with Chilean GAAP(1) in nominal Chilean

In 4Q09, net income attributable to shareholders totaled Ch$137,309
million (Ch$0.73 per share and US$1.49/ADR(2)). These results represent an
increase of 24.9% compared to 3Q09 (from now on QoQ) and an increase of 46.6%
compared to restated 4Q08 figures (from now on YoY). Compared to historical
figures (not adjusted for the new accounting standards), net income
attributable to shareholders increased 77.0% YoY in 4Q09. Adjusting for
one-time pre-tax income of Ch$15,686 million in the quarter, net income
increased 13.1% QoQ and 32.7% YoY.

With these results, the Bank's ROAE in the quarter reached 34.1%. The
Bank currently has the highest ROE among the banks operating in Chile. This
strong profitability was achieved while having one of the highest levels of
capitalization in the Chilean financial system. As of December 31, 2009, the
Bank's BIS ratio reached 15.6% and its Tier I ratio stood at 11.7%. The ROAE
adjusted for one-time income in the quarter reached 30.9%.

In 4Q09, retail loans increased 3.1% QoQ and total loans grew 1.1% in the
same period. The pick up in economic growth has led to a rebound in loan
volumes, especially in higher yielding retail banking activities. The lower
interest rate and inflation environment has also boosted loan demand. As a
result, loans to individuals increased 3.5% QoQ led by a 6.6% QoQ rise in
loans to high income individuals. Loan growth to middle and lower income
individual increased for the first time in 2009, growing 1.2% QoQ. Lending to
SMEs continues to be another area of positive growth, increasing 2.5% QoQ.

In 4Q09, the Bank's net provision expense decreased 14.4% QoQ. This was
mainly due to an improvement in asset quality levels among individuals as a
result of the Bank's efforts to control asset quality and the improved
economic scenario. As a result, charge-offs in the quarter decreased 25.2%
QoQ and 35.4% YoY in 4Q09.

In 4Q09, net interest income was up 3.7% QoQ and decreased 2.9% YoY. Net
of provision expense, net interest income was up 14.1% QoQ and 6.1% YoY. The
Bank's net interest margin reached 5.8% in the quarter compared to 5.7% in
3Q09. This positive QoQ evolution of net interest income and margins was due
to an improved loan mix fueled by the solid rebound in retail lending and a
higher inflation rate in the quarter. The Bank maintains long-term assets
(mainly medium and long-term financial investments) 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. The UF
inflation reached 0.52% in 4Q09 compared to (0.47%) in 3Q09.

Net fee income was flat QoQ and increased 4.0% YoY in 4Q09. Fees from
credit, debit and ATM cards increased 2.2% QoQ and 19.9% YoY. The rise in
fees from this business reflects the increase in usage of the Bank's cards
mainly as a result of the launching of three new successful credit card
products in 2009. As of December 2009, the Bank, with 33.1% of all bank
credit cards, generated 38.2% of monetary purchases. Purchases were up 22.9%
in real terms YoY compared to 8.1% for the rest of the market, excluding
Santander. Santander Chile ranks number one in Chile in terms of purchases
with credit cards with approximately 19% of the market, including non-bank
lenders. This was offset by the 2.4% QoQ and 31.7% YoY decrease in fees from
checking accounts and lines of credit. This as a direct result of regulatory
changes that prohibits fees charged for unauthorized overdrafts as of April

The Bank continued to control costs in the quarter and the efficiency
ratio reached 30.5% compared to 32.6% in 3Q09 and 36.6% in 4Q08. The positive
evolution of operating efficiency was mainly due to general cost control and
the increase in usage of alternative channels, especially internet.

In 2009, net income attributable to shareholders totaled Ch$431,253
million (Ch$2.29/share and US$4.69/ADR). Net income attributable to
shareholders increased 3.9% YoY due to a 6.0% increase in gross income, net
of provisions and operating costs. The Bank had a successful 2009 despite the
adverse economic environment, which resulted in higher provision expenses and
deflation, which hurt margins. This was more then offset by the Bank's
strategy of actively managing the balance sheet, growing selectively,
increasing cross-selling and controlling costs. Net income attributable to
shareholders increased 31.4% in 2009 compared to non-restated 2008 net

In 2009, the Bank's ROAE reached 28.0%, the highest in the Chilean
banking system and compared to ROAE of 12.6% for the system, excluding
Santander. The efficiency ratio reached 32.2%, the most efficient bank in
Chile and 1,880 basis points lower than the efficiency ratio of the system,
excluding Santander.

The net contribution by business segment reflects our strategy of
focusing on profitability and the diversified earnings mix of the Bank. The
contribution of retail banking activities increased 6.2% in 2009 despite a
10.7% rise in provision expense. This was driven by higher spreads, greater
fee income and tight control of costs in this segment. The net contribution
of the middle market was flat YoY despite the 57.6% increase in provision
expense in this segment led by the salmon sector and other specific loan
positions. This was offset by greater spreads, fee income and cost savings.
The net contribution of our Global Banking and Markets segment increased
11.9% in 2009, despite the 47.3% decrease in loans YoY. This reflects our
focus on profitability and non-lending activities in this segment over loan
market share concerns.

(1) In 2009, banks in Chile adopted new accounting standards in line with
international standards (IFRS) and historical figures in the rest of this
report have been re-stated to make them comparable. The main difference
compared to previous accounting standards was the elimination of price level
restatement, a non-cash item. All figures and variation presented are based
on 4Q08 and 2008 figures that have been restated in line with new accounting
standards adopted in 2009.

(2) Earnings per ADR is calculated using an exchange rate of Ch$506.43
per US$.

Institutional Background

As per the latest public records published by the Superintendency of
Banks of Chile for December 2009, Banco Santander Chile was the largest bank
in terms of loans and second in 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 A1 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.

For more information see

Banco Santander (SAN.MC, STD.N) is a retail and commercial bank, based in
Spain. Santander has more than 90 million customers, 13,660 branches — more
than any other international bank — and 169,460 employees around the world.
It is the largest financial group in Spain and Latin America, with leading
positions in the United Kingdom and Portugal and a broad presence in Europe
through its Santander Consumer Finance arm. In 2009, Santander registered EUR
8,943 million
in net attributable profit. Banco Santander's eligible capital
at the close of the third quarter came to EUR 79,704 million, with a surplus
of EUR 34,769 million above the required regulatory minimum. With this
capital base, the BIS ratio, using Basel II criteria, comes to 14.2%, Tier I
to 10.1% and core capital 8.6%. These ratios place Santander among the most
solvent banks in the world.

More information at

    Investor Relations Department
    Robert Moreno Heimlich
    Tel: +562-320-8284
    fax: +562-671-6554,

Robert Moreno Heimlich, Banco Santander Chile Investor Relations Department, +562-320-8284, fax, +562-671-6554, rmorenoh at

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