Banco Santander Chile Announces First Quarter 2009 Earnings

SANTIAGO, Chile - Banco Santander Chile (NYSE: SAN) announced today its unaudited results for the fourth quarter of 2008. These results are reported on a consolidated basis in accordance with Chilean GAAP(1),(2), in nominal Chilean pesos.

In 1Q09, net income attributable to shareholders totaled Ch$76,652 million (Ch$0.41 per share and US$0.72/ADR). In 2009, the Bank adopted accounting standards in line with international standards and historical figures in the rest of this report have been re-stated to make them more comparable. The main difference compared to previous accounting standards was the elimination of price level restatement. Compared to re-stated net income, 1Q09 net income decreased 10.9% YoY.

On a comparable distributable basis, that is, compared to historical net income distributable as dividends and not restated to account for new accounting standards, net income attributable to shareholders was up 1.3% YoY. The Bank’s ROAE in the quarter reached 20.2%.

Operating income increased 18.6% compared to 1Q08 (from now on YoY). Net interest income was flat YoY and totaled Ch$187,273 million in the quarter. The negative inflation rates in the quarter placed pressure on the net interest margin as the Bank has more assets than liabilities linked to inflation. As a result, in 1Q09, the Bank’s net interest margin reached 4.8% compared to 5.6% in 1Q08. The effects of lower inflation on margins were offset by the 16.6% YoY increase in average loans coupled with our continued focus on spreads. As a result, client net interest income, that is net interest income generated by our commercial areas, increased 11.3% YoY in 1Q09.

The impact of negative inflation on results was also offset with the Bank’s proactive management of the asset and funding mix. In 4Q08, the Bank increased its bond portfolio - which is comprised mainly of liquid and low risk Chilean Central Bank bonds - in anticipation of lower inflation and interest rate levels in 1Q09, and as a way to hedge our results in this scenario. As the world economy slowed and inflation dropped, interest rates decreased sharply. As a consequence, the results from financial transactions, net increased 415.1% YoY in 1Q09.

Net fee income 5.2% YoY in 1Q09 and was led by a rise in fees from checking accounts and card fees. Fees from checking accounts and lines of credit increased 15.3% YoY in the quarter. Santander is the leader in the checking account market with 630,000 accounts and 27.0% of the market. Fees from credit, debit and ATM cards increased 6.8% YoY. In the banking credit card business, Santander, with 33.5% of the credit card accounts, generated 36.3% of all purchases in 1Q09 compared to 35.3% in 1Q08. In the ATM market, Santander, with approximately 30% of the ATMs installed in the country, generated 41% of the total transactions in 2008.

In 1Q09, the Bank’s net provision expense increased 48.0% YoY. This rise was driven by the increase in charge-offs, in line with the economic slowdown. As a result of this rise in charge-offs, asset quality indicators remained stable. The expected loan loss ratio or risk index (Loan loss allowances / Total loans) reached 2.01% as of March 2009 compared to 1.88% at year-end 2008 and 1.90% as of March 2009. This is a key asset quality indicator as it determines the bank’s required level of reserves and provisions. The Bank is required to have 100% coverage of its risk index. The past due loan ratio (Unpaid loans & installments >90 days / Total loans) as of March 2009 reached 1.21% compared to 1.10% in 4Q 08 and 1.09% in March 2008. The coverage of past due loans (Loan loss allowance / Past due loans) reached 166.2% as of March 2009.

In summary, operating income, net of provision expense increased 10.0% YoY in 1Q09. The strategy of focusing on selective loan growth, funding, capital, spreads and actively managing the balance sheet offset the negative effects of deflation and rising credit risks. The growth rate of operating expenses was curbed in the quarter. In 1Q09, the efficiency ratio reached 34.5% compared to 36.6% in 1Q08. Operating expenses increased 2.8% YoY in 1Q09 compared to the 18.6% rise in operating income. We have the highest level of efficiency among the larger banks in Chile and among the best in emerging markets.

The Bank continued with its approach to selective loan growth given the more difficult economic environment. In addition, loan volumes were negatively affected during the quarter by the translation loss produced by the deflation (-2.3%) and appreciation of the peso against the US$ (7.5%). As a consequence, total loans decreased 4.1% QoQ and increased 12.6% YoY. Adjusting for translation losses, total loan volumes decreased approximately 2.4% QoQ and increased 14.6% YoY.

In the retail side, total loans to individuals decreased 1.8% QoQ and increased 8.9% YoY. The growth of lending to individual was focused mainly on the middle-upper income segments, which increased 2.5% QoQ and 31.7% YoY. In the mass consumer market volumes decreased 10.4% QoQ and 25.3% YoY. Lending to SMEs decreased 3.5% QoQ and increased 8.4% YoY. Lending to the middle market decreased 5.8% QoQ and increased 8.4% YoY. Corporate loans decreased 20.5% QoQ and increased 10.4% YoY. The main reasons for these declines were the translations losses produced by the deflationary environment and the appreciation of the Chilean peso.

As of March 31, 2009, Santander Chile’s loan to deposit ratio (excluding portion of mortgage loan funded through bonds) reached a healthy 96.5%, improving from 91.4% at March 2008. As of March 2009, 70% of our total liabilities were core funds (defined as retail deposits, long-term institutional deposits and long-term bonds). This clearly reflects our strategic objective of maintaining healthy liquidity and a strong funding base.

The Bank’s capitalization ratios improved in the quarter. As of March 31, 2009, the Bank’s BIS ratio reached a solid level of 15.0% with a Tier I ratio of 11.0%. It is important to point out, that voting common shareholders’ equity is the sole component of our Tier I capital. This is in line with our strategic objective of maintaining a strong core capital base.

The Bank credit risk ratings were improved in the quarter by Moody’s, following their upgrade of Chile’s sovereign ratings. The Bank deposits rating were improved from A2 to A1, senior debt rating was improved from Aa3 to Aa2. Subordinated debt rating was unchanged at Aa3. Both the senior and subordinated debt ratings pierced the sovereign ceilings, making Santander Chile the highest rated company in Latin America.

Institutional Background

As per the latest public records published by the Superintendency of Banks of Chile for March 2009, 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 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.

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 EUR 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.

(1) Safe harbor statement under the Private Securities Litigation Reform Act of 1995: All forward-looking statements made by Banco Santander Chile involve material risks and uncertainties and are subject to change based on various important factors which may be beyond the Bank’s control. Accordingly, the Bank’s future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Such factors include, but are not limited to, those described in the Bank’s filings with the Securities and Exchange Commission. The Bank does not undertake to publicly update or revise the forward-looking statements even if experience or future changes make it clear that the projected results expressed or implied therein will not be realized.

(2) The exchange rate used for translating Ch$ to US$ was Ch$641.25 per US$ dollar. All figures presented are in nominal terms. Historical figures are not adjusted for inflation.

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

Source: Banco Santander

Robert Moreno, Manager, Investor Relations Department, Banco Santander Chile, Tel: +562-320-8284, Fax: +562-671-6554, rmorenoh at santander.cl