BCH 0001213900-23-081393 6-K as filed: Oct 30, 2023

Exhibit 99.1

BANCO DE CHILE AND SUBSIDIARIES

(Free translation of Consolidated Financial Statements originally issued in Spanish)

INDEX

I.	Interim Consolidated Statements of Financial Position
II.	Interim Consolidated Statements of Income
III.	Interim Consolidated Statements of Other Comprehensive Income
IV.	Interim Consolidated Statements of Cash Flows
V.	Interim Consolidated Statements of Changes in Equity
VI.	Notes to the Interim Consolidated Financial Statements

MCh$	=	Millions of Chilean pesos
BCh$	=	Billions of Chilean pesos
MUS$	=	Millions of U.S. dollars
ThUS$	=	Thousands of U.S. dollars
UF or CLF	=	Unidad de Fomento
		(The UF is an inflation-indexed, Chilean peso denominated monetary unit set daily in advance on the basis of the previous month’s inflation rate).
Ch$ or CLP	=	Chilean pesos
US$ or USD	=	U.S. dollar
JPY	=	Japanese yen
EUR	=	Euro
HKD	=	Hong Kong dollar
CHF	=	Swiss Franc
PEN	=	Peruvian sol
AUD	=	Australian dollar
NOK	=	Norwegian krone
MXN	=	Mexican peso

IFRS	=	International Financial Reporting Standards
IAS	=	International Accounting Standards
RAN	=	Actualized Standards Compilation issued by the Chilean Commission for the Financial Market (“CMF”)
IFRIC	=	International Financial Reporting Interpretations Committee
SIC	=	Standards Interpretation Committee

BANCO DE CHILE AND SUBSIDIARIES

INDEX

		Page
Interim Consolidated Statements of Financial Position		1
Interim Consolidated Statements of Income		3
Interim Consolidated Statements of Other Comprehensive Income		5
Interim Consolidated Statements of Cash Flows		6
Interim Consolidated Statements of Change Equity		8
1.	Company information:	9
2.	Main Accounting Criteria Used:	10
3.	New Accounting Pronouncements Issued and Adopted, or Issued that have not yet been Adopted:	46
4.	Accounting Changes:	51
5.	Relevant Events:	51
6.	Business Segments:	55
7.	Cash and Cash Equivalents:	58
8.	Financial Assets Held for Trading at Fair Value through Profit or Loss:	59
9.	Non-trading Financial Assets mandatorily measured at Fair Value through Profit or Loss:	61
10.	Financial Assets and Liabilities designated as at Fair Value through Profit or Loss:	61
11.	Financial Assets at Fair Value through Other Comprehensive Income:	62
12.	Derivative Financial Instruments for hedging purposes:	64
13.	Financial assets at amortized cost:	68
14.	Investments in other companies:	90
15.	Intangible Assets:	92
16.	Property and equipment:	93
17.	Right-of-use assets and Lease liabilities:	94
18.	Taxes:	97
19.	Other Assets:	102
20.	Non-current assets and disposal groups held for sale and Liabilities included in disposal groups for sale:	103
21.	Financial liabilities held for trading at fair value through profit or loss:	104
22.	Financial liabilities at amortized cost:	105
23.	Financial instruments of regulatory capital issued:	111
24.	Provisions for contingencies:	115
25.	Provision for dividends, interests and reappraisal of financial instruments of regulatory capital issued:	120
26.	Special provisions for credit risk:	121
27.	Other Liabilities:	122
28.	Equity:	123
29.	Contingencies and Commitments:	128
30.	Interest Revenue and Expenses:	133
31.	UF indexation revenue and expenses:	136
32.	Income and Expeses from commissions:	139
33.	Net Financial income (expense):	140
34.	Income attributable to investments in other companies:	141
35.	Result from non-current assets and disposal groups held for sale not admissible as discontinued operations:	142
36.	Other operating Income and Expenses:	143
37.	Expenses from salaries and employee benefits:	144
38.	Administrative expenses:	144
39.	Depreciation and Amortization:	145
40.	Impairment of non-financial assets:	145
41.	Credit loss expense:	146
42.	Income from discontinued operations:	148
43.	Related Party Disclosures:	148
44.	Fair Value of Financial Assets and Liabilities:	157
45.	Maturity according to their remaining Terms of Financial Assets and Liabilities:	169
46.	Financial and Non-Financial Assets and Liabilities by Currency:	171
47.	Risk Management and Report:	172
48.	Information on Regulatory Capital and Capital Adequacy Ratios:	217
49.	Subsequent Events:	220

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

For the periods ended September 30, 2023 and December 31, 2022

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

		September		December
	Notes	2023		2022
		MCh$		MCh$
ASSETS
Cash and due from banks	7		3,077,010		2,764,884
Transactions in the course of collection	7		539,074		772,196
Financial assets held for trading at fair value through profit or loss:
Derivative financial instruments	8		2,445,549		2,960,029
Debt financial instruments	8		3,565,118		3,433,745
Others	8		454,970		257,325
Non-trading financial assets mandatorily measured at fair value through profit or loss	9		—		—
Financial assets at fair value through profit or loss	10		—		—
Financial assets at fair value through other comprehensive income:
Debt financial instruments	11		3,524,783		3,967,392
Others	11		—		—
Derivative financial instruments for hedging purposes	12		59,519		27,077
Financial assets at amortized cost:
Rights from resale agreements and securities lending	13		51,349		54,061
Debt financial instruments	13		911,831		902,355
Loans and advances to Banks	13		2,181,001		2,174,115
Loans to customers - Commercial loans	13		19,230,252		19,871,510
Loans to customers - Residential mortgage loans	13		11,983,201		11,386,851
Loans to customers - Consumer loans	13		4,793,069		4,658,051
Investments in other companies	14		70,703		62,211
Intangible assets	15		127,546		106,620
Property and equipment	16		205,194		210,124
Right-of-use assets	17		89,531		94,921
Current tax assets	18		86,942		187,401
Deferred tax assets	18		523,366		539,509
Other assets	19		1,214,385		814,117
Non-current assets and disposal groups held for sale	20		18,942		10,868
TOTAL ASSETS			55,153,335		55,255,362

The accompanying notes 1 to 49 are an integral part of these interim consolidated financial statements

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

For the periods ended September 30, 2023 and December 31, 2022

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

		September			December
	Notes	2023			2022
		MCh$			MCh$
LIABILITIES
Transactions in the course of payment	7		484,839			681,792
Financial liabilities held for trading at fair value through profit or loss:
Derivative financial instruments	21		2,614,576			3,101,482
Others	21		2,109			6,271
Financial liabilities designated as at fair value through profit or loss	10		—			—
Derivative Financial Instruments for hedging purposes	12		125,412			223,016
Financial liabilities at amortized cost:
Current accounts and other demand deposits	22		12,786,573			13,383,232
Saving accounts and time deposits	22		15,138,985			14,157,141
Obligations by repurchase agreements and securities lending	22		100,332			216,264
Borrowings from financial institutions	22		5,345,511			5,397,676
Debt financial instruments issued	22		9,517,768			9,267,947
Other financial obligations	22		253,361			344,030
Lease liabilities	17		84,214			89,369
Financial instruments of regulatory capital issued	23		1,036,187			1,010,905
Provisions for contingencies	24		163,680			176,026
Provision for dividends, interests and reappraisal of financial instruments of regulatory capital issued	25		432,850			520,158
Special provisions for credit risk	26		766,017			765,766
Currents tax liabilities	18		1,246			932
Deferred tax liabilities	18		—			—
Other liabilities	27		1,273,542			1,055,028
Liabilities included in disposal groups held for sale	20		—			—
TOTAL LIABILITIES			50,127,202			50,397,035

EQUITY
Capital	28		2,420,538			2,420,538
Reserves	28		709,742			709,742
Accumulated other comprehensive income
Elements that are not reclassified in profit and loss	28		5,033			2,520
Elements that can be reclassified in profit and loss	28		14,502			(72,322	)
Retained earnings from previous period	28		1,451,076			908,572
Income for the period	28		858,091			1,409,433
Less: Provision for dividends, interests and reappraisal of financial instruments of regulatory capital issued	28		(432,850	)		(520,158	)
Shareholders of the Bank	28		5,026,132			4,858,325
Non-controlling interests	28		1			2
TOTAL EQUITY			5,026,133			4,858,327
TOTAL LIABILITIES AND EQUITY			55,153,335			55,255,362

The accompanying notes 1 to 49 are an integral part of these interim consolidated financial statements

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF INCOME

for the period between January 1, and September 30

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

			For the nine-months period ended September 30,						07.01.2023 to			07.01.2022 to
	Notes		2023			2022			09.30.2023			09.30.2022
			MCh$			MCh$			MCh$			MCh$

Interest revenue		30		2,367,843			1,620,414			798,103			629,903
Interest expense		30		(1,255,198	)		(683,201	)		(421,986	)		(316,751	)
Net interest income				1,112,645			937,213			376,117			313,152

UF indexation revenue		31		535,453			1,683,547			54,190			599,991
UF indexation expenses		31		(318,961	)		(911,247	)		(23,333	)		(330,063	)
Net income from UF indexation				216,492			772,300			30,857			269,928

Income from commissions		32		528,206			501,230			179,119			174,285
Expenses from commissions		32		(122,741	)		(106,051	)		(46,634	)		(36,390	)
Net income from commissions				405,465			395,179			132,485			137,895

Financial income (expense) for:
Financial assets and liabilities held for trading		33		240,298			124,876			3,447			75,256
Non-trading financial assets mandatorily measured at fair value through profit or loss		33		—			—			—			—
Financial assets and liabilities designated as at fair value through profit or loss		33		—			—			—			—
Result from derecognition of financial assets and liabilities at amortized cost and financial assets at fair value through other comprehensive income		33		(265	)		(57,902	)		(199	)		(58,376	)
Exchange, indexation and accounting hedging of foreign currency		33		110,773			111,449			124,578			29,244
Reclassification of financial assets for changes in the business model		33		—			—			—			—
Other financial result		33		—			—			—			—
Net Financial income (expense)		33		350,806			178,423			127,826			46,124

Income attributable to investments in other companies		34		9,357			8,427			3,561			2,740
Result from non-current assets and disposal groups held for sale not admissible as discontinued operations		35		2,209			(134	)		80			(1,194	)
Other operating income		36		36,498			18,729			10,981			9,541
TOTAL OPERATING INCOME				2,133,472			2,310,137			681,907			778,186

Expenses from salaries and employee benefits		37		(405,635	)		(382,327	)		(136,841	)		(137,349	)
Administrative expenses		38		(303,611	)		(265,402	)		(102,804	)		(91,978	)
Depreciation and amortization		39		(68,788	)		(62,819	)		(22,486	)		(21,806	)
Impairment of non-financial assets		40		(112	)		(60	)		(129	)		(160	)
Other operating expenses		36		(20,714	)		(18,269	)		(7,506	)		(7,311	)
TOTAL OPERATING EXPENSES				(798,860	)		(728,877	)		(269,766	)		(258,604	)

OPERATING RESULT BEFORE CREDIT LOSSES				1,334,612			1,581,260			412,141			519,582

The accompanying notes 1 to 49 are an integral part of these interim consolidated financial statements

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF INCOME

for the period between January 1, and September 30

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

			For the nine-months period ended September 30,						07.01.2023 to			07.01.2022 to
	Notes		2023			2022			09.30.2023			09.30.2022
			MCh$			MCh$			MCh$			MCh$

Credit loss expense for:
Provisions for credit risk of loans and advances to banks and loans to customers		41		(280,981	)		(194,324	)		(77,479	)		(74,504	)
Special provisions for credit risk		41		31			(158,378	)		956			(41,248	)
Recovery of written-off credits		41		44,542			48,606			17,840			16,214
Impairments for credit risk from other financial assets at amortized cost and financial assets at fair value through other comprehensive income		41		3,057			(7,653	)		(1,788	)		(6,680	)
Credit loss expense		41		(233,351	)		(311,749	)		(60,471	)		(106,218	)

NET OPERATING INCOME				1,101,261			1,269,511			351,670			413,364

Income from continuing operations before tax
Income tax		18		(243,170	)		(206,686	)		(91,677	)		(73,788	)

Income from continuing operations after tax				858,091			1,062,825			259,993			339,576

Income from discontinued operations before tax
Income tax from discontinued operations		18		—			—			—			—

Income from discontinued operations after tax		42		—			—			—			—

NET INCOME FOR THE PERIOD		28		858,091			1,062,825			259,993			339,576

Attributable to:
Shareholders of the Bank		28		858,091			1,062,823			259,993			339,574
Non-controlling interests				—			2			—			2

Earnings per share:				$			$			$			$
Basic earnings		28		8.49			10.52			2.57			3.36
Diluted earnings		28		8.49			10.52			2.57			3.36

The accompanying notes 1 to 49 are an integral part of these interim consolidated financial statements

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF

OTHER COMPREHENSIVE INCOME

for the period between January 1, and September 30

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

			For the nine-months period ended September 30,						07.01.2023 to			07.01.2022 to
	Notes		2023			2022			09.30.2023			09.30.2022
			MCh$			MCh$			MCh$			MCh$

NET INCOME FOR THE PERIOD		28		858,091			1,062,825			259,993			339,576

ITEMS NOT TO BE RECLASSIFIED TO PROFIT OR LOSS
Re-measurement of the liability (asset) for net defined benefits and actuarial results for other employee benefit plans		28		(30	)		(8	)		85			—
Fair value changes of equity instruments designated as at fair value through other comprehensive income		28		3,472			199			2,875			—
Fair value changes of financial liabilities designated as at fair value through profit or loss attributable to changes in the credit risk of the financial liability		28		—			—			—			—
Others		28		—			—			—			—
OTHER COMPREHENSIVE INCOME THAT WILL NOT BE RECLASSIFIED TO PROFIT OR LOSS BEFORE TAX				3,442			191			2,960			—

Income tax on other comprehensive income that will not be reclassified to profit or loss		18		(929	)		(52	)		(799	)		—

TOTAL OTHER COMPREHENSIVE INCOME THAT WILL NOT BE RECLASSIFIED TO INCOME AFTER TAXES		28		2,513			139			2,161			—

ELEMENTS THAT CAN BE RECLASSIFIED TO PROFIT OR LOSS
Fair value changes of financial assets at fair value through other comprehensive income		28		(22,018	)		5,118			(27,862	)		13,348
Cash flow hedges		28		147,508			(119,933	)		88,405			20,018
Participation in other comprehensive income of entities registered under the equity method		28		92			(48	)		114			(48	)

OTHER COMPREHENSIVE INCOME THAT WILL BE RECLASSIFIED TO INCOME BEFORE TAXES				125,582			(114,863	)		60,657			33,318

Income tax on other comprehensive income that can be reclassified in profit or loss		28		(38,758	)		35,178			(20,917	)		(2,193	)

TOTAL OTHER COMPREHENSIVE INCOME THAT WILL BE RECLASSIFIED TO PROFIT OR LOSS AFTER TAX		28		86,824			(79,685	)		39,740			31,125

TOTAL OTHER COMPREHENSIVE INCOME FOR THE PERIOD		28		89,337			(79,546	)		41,901			31,125

CONSOLIDATED COMPREHENSIVE INCOME FOR THE PERIOD				947,428			983,279			301,894			370,701

Attributable to:
Shareholders of the Bank				947,428			983,277			301,894			370,699
Non-controlling interests				—			2			—			2

The accompanying notes 1 to 49 are an integral part of these interim consolidated financial statements

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

for the period between January 1, and September 30

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

			September			September
	Notes		2023			2022
			MCh$			MCh$
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit for the period before taxes				1,101,261			1,269,511
Income tax		18		(243,170	)		(206,686	)
Profit for the period after taxes				858,091			1,062,825
Charges (credits) to income (loss) that do not represent cash flows:
Depreciation and amortization		39		68,788			62,819
Impairment of non-financial assets		40		112			60
Provisions for credit losses				281,488			209,994
Provisions for contingencies		26		(3,596	)		5,361
Additional provisions		41		—			145,000
Fair value of debt financial instruments held for trading at fair value through in profit or loss				12,090			(2,844	)
Change in deferred tax assets and liabilities		18		16,283			(84,316	)
Net (income) loss from investments in companies with significant influence		14		(8,346	)		(7,927	)
Net (income) loss on sale of assets received in payments				(1,241	)		(3,070	)
Net (income) loss on sale of sale of fixed assets		35		(2,258	)		(553	)
Write-offs of assets received in payment		35		4,730			5,144
Other charges (credits) that do not represent cash flows				5,400			(1,599	)
Net change in exchange rates, interest, readjustments and commissions accrued on assets and liabilities				151,942			(401,535	)

Changes due to (increase) decrease in assets and liabilities affecting the operating flow:
Net ( increase ) decrease in accounts receivable from banks				(5,559	)		(1,579,147	)
Net ( increase ) decrease in loans and accounts receivables from customers				(200,870	)		(588,685	)
Net ( increase ) decrease of debt financial instruments held for trading at fair value through profit or loss				(119,760	)		7,543
Net ( increase ) decrease in other assets and liabilities				(88,058	)		(264,017	)
Increase ( decrease ) in deposits and other demand obligations				(593,174	)		(3,953,440	)
Increase ( decrease ) in repurchase agreements and securities loans				(120,127	)		(73,805	)
Increase ( decrease ) in deposits and other time deposits				1,061,967			4,037,361
Sale of assets received in lieu of payment				9,392			13,029
Increase ( decrease ) in obligations with foreign banks				(59,902	)		492,410
Increase ( decrease ) in other financial obligations				(90,600	)		(15,755	)
Increase ( decrease ) in obligations with the Central Bank of Chile				—			(14	)
Net increase ( decrease ) of debt financial instruments at fair value through other comprehensive income				469,361			(502,210	)
Net (increase) decrease of financial instruments at amortized cost				6,311			6,257
Total net cash flows provided by (used in) operating activities				1,652,464			(1,431,114	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Leasedhold improvements		17		(1,325	)		(1,815	)
Fixed assets purchase		16		(20,209	)		(11,811	)
Fixed assets sale				3,090			553
Acquisition of intangibles		15		(42,303	)		(31,295	)
Acquisition of investments in companies		14		—			—
Dividend received of investments in companies				4,486			1,622
Total net cash flows from (used in) investing activities				(56,261	)		(42,746	)

CASH FLOW FROM FINANCING ACTIVITIES:
Attributable to the interest of the owners:
Redemption and payment of interest of letters of credit				(827	)		(1,659	)
Redemption and payment of interest on current bonds				(1,165,336	)		(1,095,904	)
Redemption and payment of interest on subordinated bonds				(30,651	)		(34,090	)
Current bonds issuance		22		936,753			350,068
Subordinated bonds issuance				—			—
Payment of common stock dividends		28		(866,929	)		(539,827	)
Principal and interest payments for obligations under lease contracts		17		(24,226	)		(24,136	)
Attributable to non-controlling interest:
Dividend payment and/or withdrawals of paid-in capital in respect of the subsidiaries corresponding to the non-controlling interest				(1	)		(1	)
Total net cash flows from (used in) financing activities				(1,151,217	)		(1,345,549	)

VARIATION IN CASH AND CASH EQUIVALENTS DURING THE PERIOD				444,986			(2,819,409	)

Exchange variations effect				39,655			244,962

Opening balance of cash and cash equivalent		7		6,105,389			7,288,827

Final balance of cash and cash equivalent		7		6,590,030			4,714,380

	September			September
	2023			2022
Interest operating cash flow:	MCh$			MCh$

Interest and readjustments received		2,634,302			2,002,004
Interest and readjustments paid		(1,113,568	)		(449,064	)

The accompanying notes 1 to 49 are an integral part of these interim consolidated financial statements

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

for the period between January 1, and September 30

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

Reconciliation of liabilities arising from financing activities:

						Changes other than Cash
	12.31.2022		Net Cash Flow			Acquisition / (Disposals)		Foreign currency		UF Movement		09.30.2023
	MCh$		MCh$			MCh$		MCh$		MCh$		MCh$

Letters of credit		2,377		(827	)		—		—		57		1,607
Bonds		10,276,475		(259,234	)		—		87,503		447,604		10,552,348
Dividends paid		—		(866,929	)		—		—		—		(866,929	)
Obligations for lease contracts		89,369		(24,226	)		15,383		—		3,688		84,214
Dividend payment and/or withdrawals of paid-in capital in respect of the subsidiaries corresponding to the non-controlling interest		—		(1	)		—		—		—		(1	)
Total liabilities from financing activities		10,368,221		(1,151,217	)		15,383		87,503		451,349		9,771,239

The accompanying notes 1 to 49 are an integral part of these interim consolidated financial statements

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

for the period between January 1, and September 30

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

			Attributable to shareholders of the Bank
	Note		Capital		Reserves			Accumulated other comprehensive income			Retained earnings from previous years and income (loss) for the period			Total			Non-controlling interests			Total Equity
			MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Opening balances as of January 1, 2022				2,420,538		710,472			38,739			1,123,772			4,293,521			1			4,293,522
Dividends distributed and paid		28		—		—			—			(539,827	)		(539,827	)		(1	)		(539,828	)
Earnings reserves from previous year				—		(730	)		—			730			—			—			—
Application of provision for payment of common stock dividends				—		—			—			323,897			323,897			—			323,897
Provision for payment of common stock dividends				—		—			—			(375,197	)		(375,197	)		—			(375,197	)
Subtotal: transactions with owners during the period				—		(730	)		—			(590,397	)		(591,127	)		(1	)		(591,128	)
Income for the period 2022		28		—		—			—			1,062,823			1,062,823			2			1,062,825
Other comprehensive income for the period		28		—		—			(79,546	)		—			(79,546	)		—			(79,546	)
Subtotal: Comprehensive income for the period				—		—			(79,546	)		1,062,823			983,277			2			983,279
Balances as of September 30, 2022				2,420,538		709,742			(40,807	)		1,596,198			4,685,671			2			4,685,673
Dividends distributed and paid				—		—			—			—			—			—			—
Provision for payment of common stock dividends				—		—			—			(144,961	)		(144,961	)		—			(144,961	)
Subtotal: transactions with owners during the period				—		—			—			(144,961	)		(144,961	)		—			(144,961	)
Income for the period 2022				—		—			—			346,610			346,610			—			346,610
Other comprehensive income for the period				—		—			(28,995	)		—			(28,995	)		—			(28,995	)
Subtotal: Comprehensive income for the period				—		—			(28,995	)		346,610			317,615			—			317,615
Balances as of December 31, 2022				2,420,538		709,742			(69,802	)		1,797,847			4,858,325			2			4,858,327
Dividends distributed and paid		28		—		—			—			(866,929	)		(866,929	)		(1	)		(866,930	)
Application of provision for payment of common stock dividends		28		—		—			—			520,158			520,158			—			520,158
Provision for payment of common stock dividends		28		—		—			—			(432,850	)		(432,850	)		—			(432,850	)
Subtotal: transactions with owners during the period				—		—			—			(779,621	)		(779,621	)		(1	)		(779,622	)
Income for the period 2023		28		—		—			—			858,091			858,091			—			858,091
Other comprehensive income for the period		28		—		—			89,337			—			89,337			—			89,337
Subtotal: Comprehensive income for the period				—		—			89,337			858,091			947,428			—			947,428
Balances as of September 30, 2023				2,420,538		709,742			19,535			1,876,317			5,026,132			1			5,026,133

The accompanying notes 1 to 49 are an integral part of these interim consolidated financial statements

BANCO DE CHILE AND SUBSIDIARIES

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2023 and 2022 and December 31, 2022

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

1.	Company information:

Banco de Chile is authorized to operate as a commercial bank since September 17, 1996, being, in conformity with the stipulations of article 25 of Law No. 19,396, the legal continuation of Banco de Chile resulting from the merger of the Banco Nacional de Chile, Banco Agrícola and Banco de Valparaiso, which was constituted by public deed dated October 28, 1893, granted before the Notary Public of Santiago, Mr. Eduardo Reyes Lavalle, authorized by Supreme Decree of November 28, 1893.

The Bank is a Corporation organized under the laws of the Republic of Chile, regulated by the Chilean Commission for the Financial Market (“CMF”). Since 2001, it is subject to the supervision of the Securities and Exchange Commission of the United States of America (“SEC”), in consideration of the fact that the Bank is registered on the New York Stock Exchange (“NYSE”), through a program of American Depositary Receipt (“ADR”).

Banco de Chile offers a broad range of banking services to its customers, ranging from individuals to large corporations. Additionally, the Bank offers international as well as treasury banking services, in addition to those offered by subsidiaries that include securities brokerage, mutual fund and investment management, insurance brokerage and financial advisory services.

Banco de Chile’s legal address is Ahumada 251, Santiago, Chile and its website is www.bancochile.cl.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

2.	Main Accounting Criteria Used:

(a)

Legal Dispositions:

Decree Law No. 3,538 of 1980, according to the text replaced by the first article of Law No. 21,000 that “Creates the Commission for the Financial Market”, provides in numeral 6 of its article 5 that the Commission for the Market Financial (“CMF”) may “set the standards for the preparation and presentation of reports, balance sheets, statements of situation and other financial statements of the audited entities and determine the principles under which they must keep their accounting”.

According to the current legal framework, banks must use the accounting principles provided by the CMF and in everything that is not dealt with by it or in contravention of its instructions, they must adhere to the generally accepted accounting principles, which correspond to the technical standards issued by the College of Accountants of Chile AG, coinciding with the International Financial Reporting Standards (“IFRS”) agreed by the International Accounting Standards Board (“IASB”). If there are discrepancies between these accounting principles of general acceptance and the accounting criteria issued by the CMF, the latter shall prevail.

The notes to the Consolidated Financial Statements contain additional information to that presented in the Consolidated Statement of Financial Position, in the Consolidated Statement of Income, Consolidated Statement of Other Comprehensive Income, Consolidated Statement of Changes in Equity and Consolidated Statement of Cash Flows. They provide narrative descriptions or disaggregation of such statements in a clear, relevant, reliable and comparable way.

(b)

Basis of Consolidation:

The Interim Financial Statements of Banco de Chile as of September 30, 2023 and 2022 and December 31, 2022, have been consolidated with its Chilean subsidiaries and foreign subsidiary, using the global integration method (line-by-line). They include preparation of individual financial statements of the Bank and companies that participate in the consolidation and it include adjustments and reclassifications necessary to homologue accounting policies and valuation criteria applied by the Bank. The Interim Consolidated Financial Statements have been prepared using the same accounting policies for similar transactions and other events, in equivalent circumstances.

Significant intercompany transactions and balances (assets and liabilities, equity, income, expenses and cash flows) originated in operations performed between the Bank and its subsidiaries and between subsidiaries have been eliminated in the consolidation process. The non-controlling interest corresponding to the participation percentage of third parties in subsidiaries, which the Bank does not own directly or indirectly, has been recognized and is shown separately in the consolidated shareholders’ equity of Banco de Chile.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

2.	Main Accounting Criteria Used, continued:

–

Controlled companies (Subsidiaries)

Interim Consolidated Financial Statements as of September 30, 2023 and 2022 incorporate Financial Statements of the Bank and the controlled companies (subsidiaries) in accordance with IFRS 10 “Consolidated Financial Statements”.

The entities controlled by the Bank and which form parts of the consolidation are detailed as follows:

				Interest Owned
				Directa			Indirect				Total
			Functional	September	December		September		December		September		December
Rut	Entity	Country	Currency	2023	2022		2023		2022		2023		2022
				%		%		%		%		%		%
96,767,630-6	Banchile Administradora General de Fondos S.A.	Chile	Ch$	99.98		99.98		0.02		0.02		100.00		100.00
96,543,250-7	Banchile Asesoría Financiera S.A.	Chile	Ch$	99.96		99.96		—		—		99.96		99.96
77,191,070-K	Banchile Corredores de Seguros Ltda.	Chile	Ch$	99.83		99.83		0.17		0.17		100.00		100.00
96,571,220-8	Banchile Corredores de Bolsa S.A.	Chile	Ch$	99.70		99.70		0.30		0.30		100.00		100.00
96,645,790-2	Socofin S.A.	Chile	Ch$	99.00		99.00		1.00		1.00		100.00		100.00

−

Investments in associates and joint venture

Associated entities are those over which the Bank has the capacity to exercise significant influence, without having control over the associate.

Investments in associates where exists significant influence, are accounted for using the equity method (Note No. 14).

Joint Ventures are joint arrangements whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Joint control exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

Investments defined as a “Joint Venture” will be registered according to the equity method.

Investments in other companies that, for their characteristics, are defined as “Joint Ventures” are Artikos Chile S.A. and Servipag Ltda.

−

Minority investments in other companies

On initial recognition, the Bank and subsidiaries may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading and is not contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

2.	Main Accounting Criteria Used, continued:

−

Fund administration

The Bank and its subsidiaries manage and administer assets held in mutual funds and other investment products on behalf of investors, perceiving a paid according to the service provided and according to market conditions. Managed resources are owned by third parties and, therefore, not included in the Consolidated Statements of Financial Position.

According to established in IFRS 10, for consolidation purposes is necessary to assess the role of the Bank and its subsidiaries with respect to the funds they manage, must determine whether that role is Agent or Principal.

The Bank and its subsidiaries manage on behalf and for the benefit of investors, acting in that relationship only as Agent. Under this category, and as provided in the aforementioned regulation, it does not control such funds when exercise its authority to make decisions. Therefore, as of September 30, 2023 and 2022 act as agent, and therefore do not consolidate any fund, no funds are part of the consolidation.

(c)

Non-controlling interest:

Non-controlling interest represents the share of losses, income and net assets of which, directly or indirectly, the Bank does not own. It is presented separately from the equity of the owners of the Bank in the Consolidated Statements of Income and the Consolidated Statements of Financial Position.

(d)

Use of Estimates and Judgment:

Preparing Consolidated Financial Statements requires Management to make judgments, estimations and assumptions that affect the application of accounting policies and the valuation of assets, liabilities, income and expenses presented. Real results could differ from these estimated amounts. The estimates made refer to:

Losses due to impairment of assets and liabilities (Notes No. 11, 13, 15, 16, 17 and No. 40)

Provision for credit risk (Notes No. 13, 26 and 41);

Expenses for amortization of intangible assets and depreciation of property and equipment and leased assets and lease liabilities (Notes No. 15, 16 and 17);

Income taxes and deferred taxes (Note No. 18);

Provisions (Note No. 24);

Contingencies and Commitments (Note No. 29);

Fair value of financial assets and liabilities (Notes No. 8, 11, 12, 21 and 44).

Estimates and relevant assumptions are regularly reviewed by the management according to quantify certain assets, liabilities, gains, loss and commitments. Estimates reviewed are registered in income in the year that the estimate is reviewed.

During the period ended September 30, 2022 there have been no significant changes in the estimates made.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

2.	Main Accounting Criteria Used, continued:

(e)

Financial Assets:

The classification, measurement and presentation of financial assets has been carried out based on the standards issued by the CMF in the Compendium of Accounting Standards for Banks (CASB), considering the criteria described below:

Classification of financial assets:

On initial recognition, a financial asset is classified within the following categories: Financial assets held for trading at fair value through profit or loss; Financial assets not held for trading mandatorily valued at fair value through profit or loss; Financial assets designated as at fair value through profit or loss; Financial assets at fair value through other comprehensive income and Financial assets at amortized cost.

The criteria for classifying financial assets, which incorporates the standards defined in IFRS 9, depends on the business model with which the entity manages the assets and the contractual characteristics of the cash flows, commonly known as “Solely Payments of Principal and Interest” (SPPI) criterion.

The valuation of these assets should reflect how the Bank manages groups of financial assets and does not depend on the intent for an individual instrument.

A financial asset should be valued at amortized cost if both of the following conditions are met:

	-	It is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
	-	The contractual terms of the financial asset give rise to cash flows that are solely payments of principal and interest.

A debt financial instrument must be valued at fair value with changes in “Other comprehensive income” if the following two conditions are met:

	-	It is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
	-	The contractual terms of the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt financial instrument will be classified at fair value through profit or loss whenever, due to the business model or the characteristics of its contractual cash flows, it is not appropriate to classify it in any of the other categories described.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

Valuation of financial assets:

Initial recognition:

Financial assets are initially recognized at fair value plus, in the case of a financial asset that is not carried at fair value through profit or loss, the transaction costs that are directly attributable to its purchase or issuance, using the Effective Interest Rate method (EIT). The calculation of the EIT includes all fees and other items paid or received that are part of the EIT. Transaction costs include incremental costs that are directly attributable to the acquisition or issuance of a financial asset.

Post measurement:

All variations in the value of financial assets due to the accrual of interest and items assimilated to interest are recorded in “Interest income” or “Interest expense” of the Consolidated Income Statement for the year in which the accrual occurred, except for trading derivatives that are not part of accounting hedges.

The changes in the valuations that occur after the initial registration for reasons other than those mentioned in the previous paragraph, are treated as described below, based on the categories in which the financial assets are classified.

Financial assets held for trading at fair value through profit or loss, Financial assets not held for trading mandatorily valued at fair value through profit or loss and Financial assets designated as at fair value through profit or loss:

In “Financial assets held for trading at fair value through profit or loss” will record financial assets whose business model aims to generate profits through purchases and sales or to generate results in the short term.

The financial assets recorded under “Financial assets not held for trading mandatorily valued at fair value through profit or loss” are assigned to a business model whose objective is achieved by obtaining contractual cash flows and/or selling financial assets but where the cash flows contracts have not met the conditions of the SPPI test.

In “Financial assets designated as at fair value through profit or loss” financial assets will be classified only when such designation eliminates or significantly reduces the inconsistency in the valuation or in the recognition that would arise from valuing or recognizing the assets on a different basis.

The assets recorded in these items are valued after their acquisition at their fair value and changes in their value are recorded, at their net amount, under “Financial assets and liabilities held for trading”, “Financial assets and liabilities financial assets not held for trading mandatorily valued at fair value through profit or loss” and “Financial assets and liabilities designated as at fair value through profit or loss” of the Consolidated Income Statement. Variations originated from exchange differences are recorded under “Foreign currency changes, UF indexation and accounting hedge” in the Consolidated Income Statement.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

2.	Main Accounting Criteria Used, continued:

Financial assets at fair value through other comprehensive income

−

Debt financial instruments:

The assets recorded in this item are valued at their fair value, interest income and UF indexation of these instruments, as well as exchange differences and impairment arising, are recorded in the Consolidated Statement of Income, while subsequent variations in their valuation are temporarily recorded (for its amount net of taxes) in “Changes in the fair value of financial assets at fair value through other comprehensive income” of the Consolidated Statements of Other Comprehensive Income.

The amounts recorded in “Changes in the fair value of financial assets at fair value through other comprehensive income” continue to form part of the Bank's consolidated equity until the asset is derecognized in the consolidated balance. In the case of selling these assets, the result is recognized in “Financial result for derecognizing financial assets and liabilities at amortized cost and financial assets at fair value with changes in others comprehensive income” of the Consolidated Income Statement.

Net losses due to impairment of financial assets at fair value through other comprehensive income produced in the year are recorded in “Impairment due to credit risk of other financial assets at amortized cost and financial assets at fair value through other comprehensive income” of the Consolidated Income Statement.

−

Equity financial instruments:

At the time of initial recognition, the Bank may make the irrevocable decision to present subsequent changes in fair value in other comprehensive income. Subsequent variations in this valuation will be recognized in “Changes in the fair value of equity instruments designated as at fair value through other comprehensive income”. The dividends received from these investments are recorded in “Income from investments in companies” of the Consolidated Income Statement. These instruments are not subject to the impairment model of IFRS 9.

−

Financial assets at amortized cost:

The assets recorded in this item of the Consolidated Statement of Financial Position are valued after their acquisition at their “amortized cost”, in accordance with the “effective interest rate” method.

They are subdivided according to the following:

Investment under resale agreements and securities loans (Note No. 13 (a)).

Debt financial instruments (Note No. 13 (b)).

Due from banks (Note No. 13 (c)).

Loans and accounts receivable from customers (Note No. 13 (d)).

Losses due to impairment of these assets generated in each year are recorded in “Provisions for credit risk and loans and accounts receivable from customers” and “Impairment due to credit risk of other financial assets at amortized cost and financial assets at fair value through other comprehensive income” of the Consolidated Income Statement.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

2.	Main Accounting Criteria Used, continued:

−

Investment under resale agreements, obligations under repurchase agreements and securities loans:

Resale agreement operations are carried out as a form of investment. Under these agreements, financial instruments are purchased, which are included as assets in “Investment under resale agreements and securities loans”, which are valued according to the interest rate of the agreement through the amortized cost method. In accordance with current regulations, the Bank does not record as its own portfolio those papers purchased under resale agreements.

Repurchase agreement operations are also carried out as a form of financing, which are included as liabilities in “Obligations for repurchase agreements and securities loans”. In this regard, the investments that are sold subject to a repurchase obligation and that serve as collateral for the loan correspond to debt financial instruments. The obligation to repurchase the investment is classified in liabilities as “Obligations under repurchase agreements and securities loans” and is valued according to the interest rate of the agreement.

−

Debt financial instruments at amortized cost:

These instruments are recorded at their cost value plus accrued interest and UF indexation, less provision for impairment constituted when their recorded amount is greater than the estimated amount of recovery. Interest and UF indexation of debt financial instrument at amortized cost are included in “Interest income” and “UF indexation income”.

−

Loans and Advances to Banks:

This item shows the balances of operations with local and abroad banks, including the Central Bank of Chile and foreign Central Banks.

−

Loans and accounts receivable from customers:

Loans to customers include originated and purchased non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and which the Bank does not intend to sell immediately or in the short term.

(i) Valuation method

They are initially measured at cost plus incremental transaction costs and income, and subsequently measured at amortized cost, using the effective interest rate method, less any impairment loss, except when the Bank defined some loans as hedged items, measured at fair value through profit or loss as described in letter (k) of this note.

(ii) Lease contracts

These are included under the item “Loans to customers” correspond to periodic rent installments of contracts which meet the definition to be classified as financial leases and are presented at their nominal value net of unearned interest as of each year-end.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

2.	Main Accounting Criteria Used, continued:

(iii) Factoring transactions

They are valued for the amounts disbursed by the Bank in exchange for invoices or other commercial instruments representative of credit, with or without responsibility of the grantor, received in discount. Price differences between the amounts disbursed and the nominal value of the credits are recorded in the result as interest income, through the effective interest method, during the financing period. In those cases, where the transfer of these instruments it was made without responsibility of the grantor, it is the Bank who assumes the insolvency risks of those required to pay.

(f)

Credit risk allowance

The Bank permanently evaluates the entire portfolio of loans and contingent loans, with the aim of establishing the necessary and sufficient provisions in a timely manner to cover the expected losses associated with the characteristics of the debtors and their credits, based on the payment and subsequent recovery.

Allowances are required to cover the risk of loan losses have been established in accordance with the instructions issued by the CMF. The loans are presented net of those allowances and, in the case of contingent loans are shown in liabilities under the item “Special provisions for credit risk”.

In accordance with what is stipulated by the CMF, models or methods are used based on an individual and group analysis of debtors, to establish allowance for loan losses. The Bank’s Board of Directors approves said models, as well as modifications to their design and application.

(i) Allowance for individual evaluations:

An individual analysis of debtors is applied to companies that are of such significance with respect to size, complexity or level of exposure to the bank, that they must be analyzed in detail.

Likewise, the analysis of borrowers focuses on its credit quality related to the capacity and willingness to meet their credit obligations, through sufficient and reliable information, and should also be analyzed in terms of guarantees, terms, interest rates, currency and revaluation, etc.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

For purposes of establish the allowances, the banks must assess the credit quality, then classify to one of three categories of loans portfolio: Normal, Substandard and Non-Complying Loans, it must classify the debtors and their operations related to loans and contingent loans in the categories that apply.

−

Normal Loans and Substandard Loans:

Normal loans: includes those debtors whose payment capacity allows them to meet their obligations and commitments, and according to the evaluation of their economic-financial situation no change in this condition are displayed. Loans classified in categories A1 through A6.

Substandard loans: includes all borrowers with insufficient payment capacity or significant deterioration of payment capacity that may be reasonably expected not to comply with all principal and interest payments obligations set forth in the credit agreement, showing a low flexibility to meet its financial obligations in the short term.

They are also part of the Substandard Portfolio those debtors who have shown arrears of more than 30 days in the recent past. The classifications assigned to this portfolio are categories B1 to B4 of the rating scale.

As a result of individual analysis of the debtors, the Bank must classify them in the following categories, assigning, subsequently, the percentage of probability of default and loss given default resulting in the following percentage of expected loss:

Type of portfolio	Category of the debtors	Probability of default (%) PD		Loss given default (%) LGD		Expected loss (%) EL
Normal Loans	A1		0.04		90.0		0.03600
	A2		0.10		82.5		0.08250
	A3		0.25		87.5		0.21875
	A4		2.00		87.5		1.75000
	A5		4.75		90.0		4.27500
	A6		10.00		90.0		9.00000
Substandard Loans	B1		15.00		92.5		13.87500
	B2		22.00		92.5		20.35000
	B3		33.00		97.5		32.17500
	B4		45.00		97.5		43.87500

Allowances for Normal and Substandard Loans:

To determine the amount of allowances to be constitute for normal and substandard portfolio, previously should be estimated the exposure to subject to the allowances, which will be applied to respective expected loss, which consist of probability of default (PD) and loss given default (LGD) established for the category in which the debtor and/or guarantor belong, as appropriate.

The exposure affects to allowances applicable to loans plus contingent loans minus the amounts to be recovered by way of the foreclosure of financial or real guarantees of the operations. Loans mean the book value of credit of the respective debtor, while for contingent loans, the value resulting from to apply the indicated in No. 3 of Chapter B-3 of the CASB.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

In the case of real guarantees, the Bank must demonstrate that the value assigned to this deduction reasonably reflects the value that it would obtain in the sale of the assets or capital instruments. Also, in qualified cases, the direct debtor's credit risk may be substituted for the credit quality of the guarantor. In no case may the guaranteed securities be discounted from the amount of the exposure, since this procedure is only applicable when it comes to financial or real guarantees.

For calculation purposes, the following must be considered:

Provision debtor = (ESA-GE) x (PDdebtor /100) x (LGDdebtor /100) + GE x (PDguarantor /100) x (LGDguarantor /100)

Where:

	ESA	=	Exposure subject to allowances, (Loans + Contingent Loans) – Financial Guarantees
	GE	=	Guaranteed exposure

However, the Bank must maintain a minimum provision level of 0.50% over normal portfolio and contingent loans.

−

Non-complying Loans:

The non-complying portfolio includes the debtors and their credits for which their recovery is considered remote, as they show an impaired or no payment capacity. This category comprises all debtors who have stopped paying their creditors or with visible evidence that they will stop doing so, as well as those for which a forced restructuring of their debts is necessary, reducing the obligation or postponing the payment of the principal or interest and, in addition, any debtor that has 90 days overdue or more in the payment of interest or principal of any credit. This portfolio is composed of the debtors belonging to categories C1 to C6 of the rating scale and all credits, including 100% of the amount of contingent loans, held by those same debtors.

For purposes to establish the allowances on the non-complying loans, the Bank disposes the use of percentage of allowances to be applied on the amount of exposure, which corresponds to the amount of loans and contingent loans that maintain the same debtor. To apply that percentage, must be estimated an expected loss rate, less the amount of the exposure the recoveries by way of foreclosure of financial or real guarantees that to support the operation and, if there are available specific background, also must be deducting present value of recoveries obtainable exerting collection actions, net of expenses associated with them. This loss percentage must be categorized in one of the six levels defined by the range of expected actual losses by the Bank for all transactions of the same debtor.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

These categories, their range of loss as estimated by the Bank and the percentages of allowance that must be applied on the amount of exposures, are listed in the following table:

Type of portfolio	Scale of risk	Expected Loss Range	Allowance (%)
Non-complying loans	C1	Up to 3%		2
	C2	More than 3% up to 20%		10
	C3	More than 20% up to 30%		25
	C4	More than 30 % up to 50%		40
	C5	More than 50% up to 80%		65
	C6	More than 80%		90

For calculation purposes, the following must be considered:

	Expected Loss Rate	= (E−R)/E
	Allowance	= E × (AP/100)

Where:

E	=	Exposure Amount
R	=	Recoverable Amount
AP	=	Allowance Percentage (according to the category in which the Expected Loss Rate should be assigned).

All credits of the debtor must be kept in the Default Portfolio until there is a normalization of their ability or payment behavior, without prejudice to punishment of each particular credit that meets the condition indicated in Title II of Chapter B-2 of the Compendium of Accounting Standards for Banks. To remove a debtor from the Default Portfolio, once the circumstances that lead to classification in this portfolio according to these regulations have been overcome, at least the following copulative conditions must be met:

No obligation of the debtor with the bank with more than 30 calendar days overdue.

No new refinances granted to pay its obligations.

At least one of the payments includes amortization of capital.

If the debtor has a credit with partial payment periods less than six months, has already made two payments.

If the debtor must pay monthly fees for one or more credits, has paid four consecutive dues.

The debtor does not have direct debts unpaid in the CMF recast information, except in the case of insignificant amounts.

(ii) Allowances for group evaluations

Group evaluations are relevant for residential mortgage and consumer loan exposures, in addition to commercial exposures related to student loans and exposures with debtors that simultaneously meet the following conditions:

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

2.	Main Accounting Criteria Used, continued:

The Bank has an aggregate exposure to the same counterparty of less than 20,000 UF. The aggregate exposure should require gross provisions or other mitigations. In addition, for its computation, mortgage loans must be excluded. In the case of off-balance sheet items, the gross amount is calculated by applying the credit conversion factors, defined in chapter B-3 of the CASB. To determine the aggregate exposure, the bank must consider the definition of corporate group established in Title II of Chapter 12-16 of the Actualized Standards Compilation.

Banks must carry out a complete and permanent monitoring of all operations with entities belonging to business groups. Considering the costs that may result the conformation of groups for all debtors, the bank must at least keep control and form groups, if applicable, for all debtors who maintain a current exposure greater than a minimum amount established by the banking institution which may not be greater than 1% of its effective equity at the time the definition of the group portfolio is made.

Each aggregate exposure to the same counterparty does not exceed 0.2% of the total commercial group portfolio. To avoid circular computation, the criterion will be checked only once.

For the remaining commercial credit exposures, the individual analysis model of the debtors must be applied.

The determination of the type of analysis (group or individual) must be carried out at the global consolidated level, once a year, or after significant adjustments in the Bank's portfolio, such as mergers, acquisitions, purchases or significant portfolio sales.

To determine the allowances, the group evaluations require the formation of groups of loans with similar characteristics in terms of type of debtors and conditions agreed, to establish technically based estimates by prudential criteria and following both the payment behavior of the group that concerned as recoveries of defaulted loans and consequently provide the necessary provisions to cover the risk of the portfolio.

To determine its provisions, the Bank segments its debtors into homogeneous groups, according described above, associating to each group a determined probability of default and a percentage of recovery based in a historic analysis. The amount of provisions to register it will be obtained multiplied the total loans of respective group by the percentages of estimated default and of loss given the default.

In the case of consumer loans, collaterals are not considered for the purpose of estimating the expected loss.

The Bank discriminates between provisions on the normal portfolio and on the portfolio in default, and those that protect the risks of contingent credits associated with those portfolios.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

−

Standard method of provisions for group portfolio

The standard methodologies presented below establish the variables and parameters that determine the provision factor for each type of portfolio that the CMF has defined as representative, according to the common characteristics shared by the operations that comprise them.

a. Residential mortgage portfolio

The provision factor applicable, represented by expected loss over the mortgage loans, it will depend to the past due of each credit and the relation, at the end of month, between outstanding capital and the value of the mortgage guarantees (CMG), according the following table:

Provision factor applicable according to delinquency and CMG
		Past due days at the end-month								Non-Complying
CMG section	Concept	0		1-29		30-59		60-89			Portfolio
CMG ≤ 40%	PD (%)		1.0916		21.3407		46.0536		75.1614			100.0000
	LGD (%)		0.0225		0.0441		0.0482		0.0482			0.0537
	EAD (%)		0.0002		0.0094		0.0222		0.0362			0.0537
40% < CMG ≤ 80%	PD (%)		1.9158		27.4332		52.0824		78.9511			100.0000
	LGD (%)		2.1955		2.8233		2.9192		2.9192			3.0413
	EAD (%)		0.0421		0.7745		1.5204		2.3047			3.0413
80% < CMG ≤ 90%	PD (%)		2.5150		27.9300		52.5800		79.6952			100.0000
	LGD (%)		21.5527		21.6600		21.9200		22.1331			22.2310
	EAD (%)		0.5421		6.0496		11.5255		17.6390			22.2310
CMG > 90%	PD (%)		2.7400		28.4300		53.0800		80.3677			100.0000
	LGD (%)		27.2000		29.0300		29.5900		30.1558			30.2436
	EAD (%)		0.7453		8.2532		15.7064		24.2355			30.2436

Where:

: Probability of default

LGD

: Loss given default

EAD

: Exposure at default

CMG

: Outstanding loan capital /Mortgage Guarantee value

Commercial portfolio

To determine these allowances, the Bank considers the standard methods presented below, as applicable to commercial leasing operations or other types of commercial loans. Then, the applicable provision factor will be assigned considering the parameters defined for each method.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

Commercial Leasing Operations

The provision factor applies to the current value of commercial leasing operations (including the purchase option) and will depends on the default of each operation, the type of leased asset and the relationship between the current value of each operation and the leased asset value (PVB) at each month-end, as indicated in the following tables:

Probability of default (PD) applicable according to default and type of asset (%)
	Type of asset
Days of default of the operation at the month-end	Real estate		Non-real estate
0		0.79		1.61
1-29		7.94		12.02
30-59		28.76		40.88
60-89		58.76		69.38
Portfolio in default		100.00		100.00

Loss given the default (LGD) applicable according to PVB section and type of asset (%)
PVB = Current value of the operation / Value of the leased asset
PVB section	Real estate		Non-real estate
PVB ≤ 40%		0.05		18.20
40% < PVB ≤ 50%		0.05		57.00
50% < PVB ≤ 80%		5.10		68.40
80% < PVB ≤ 90%		23.20		75.10
PVB > 90%		36.20		78.90

The determination of the PVB relationship is made considering the appraisal value expressed in UF for real estate and in Chilean pesos for non-real estate, recorded at the time of the respective loan granting, taking into account possible situations that may be causing temporary increases in the assets prices at that time.

Generic commercial loans and factoring

For the factoring operations and other commercial loans, other than those indicated above, the provision factor, applicable to the amount of the placement and the exposure of the contingent loan risk, will depends on the default of each operation and the relationship that exists at the end of each month, between the obligations that the debtor has with the bank and the value of the collateral that protect them (PTVG), as indicated in the following tables:

Probability of default (PD) applicable according to default and PTVG section (%)
	With collateral				Without
Days of default at the month-end	PTVG≤100%		PTVG>100%		colateral
0		1.86		2.68		4.91
1-29		11.60		13.45		22.93
30-59		25.33		26.92		45.30
60-89		41.31		41.31		61.63
Portfolio in default		100.00		100.00		100.00

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

2.	Main Accounting Criteria Used, continued:

Loss given the default (LGD) applicable according to PTVG section (%)
Collateral (with / without)	PTVG section	Generic commercial operations or factoring without the responsibility of the transferor		Factoring with the responsibility of the transferor
With collateral	PTVG ≤ 60%		5.00		3.20
	60% < PTVG≤ 75%		20.30		12.80
	75% < PTVG ≤ 90%		32.20		20.30
	90% < PTVG		43.00		27.10
Without collateral			56.90		35.90

The collaterals used for the purposes of calculating the PTVG relationship of this method may be specific or general, including those that are simultaneously specific and general. Collateral can only be considered if, according to the respective coverage clauses, it was constituted in the first degree of preference in favor of the Bank and only guarantees the debtor's credits with respect to which it is imputed (not shared with other debtors).

The invoices assigned in the factoring operations will not be considered for purposes of calculating the PTVG. The excess of collateral associated with mortgage loans referred to in numeral 3.1.1 Residential mortgage portfolio in Chapter B-1 of CASB may be considered, computed as the difference between 80% of the property’ commercial value, according to with the conditions set out in that framework, and the mortgage loan that guarantees.

For the calculation of the PTVG ratio, the following considerations must be taken into account:

Transactions with specific collaterals: when the debtor granted specific collateral for generic commercial loans and factoring, the PTVG ratio is calculated independently for each covered transaction, such as the division between the amount of the loans and the contingent loans exposure and the collateral's value of the covered product.

ii.

Transactions with general collaterals: when the debtor granted general or general and specific collaterals, the Bank calculates the respective PTVG, jointly for all generic commercial loans and factoring and not contemplated in the preceding paragraph i), as the quotient between the sum of the amounts of the loans and exposures of contingent loans and the general, or general and specific collateral that, according to the scope of the remaining coverage clauses, safeguard the loans considered in the numerator aforementioned coverage ratio.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

The amounts of the guarantees used in the PTVG ratio of numerals i) and ii), different from those associated with excess guarantees from mortgage loans to which the residential mortgage portfolio refers, must be determined according to:

The last valuation of the collateral, be it appraisal or fair value, according to the type of real guarantee in question. For the determination of fair value, the criteria indicated in Chapter 7-12 (Fair Value of Financial Instruments) of the RAN should be considered.

	-	Possible situations that could be causing temporary increases in the values of the collaterals.

	-	Limitations on the amount of coverage established in their respective clauses.

−

Portfolio in default.

Includes all placements and 100% of the amount of the contingent loans, of the debtors that the closing of a month presents a delay equal to or greater than 90 days in the payment of the interest of the capital of any credit. It will also include debtors who are granted a credit to leave an operation that has more than 60 days of delay in their payment, as well as those debtors who were subject to forced restructuring or partial forgiveness of a debt.

They may exclude from the portfolio in default: a) mortgage loans for housing, which delinquent less than 90 days, unless the debtor has another loan of the same type with greater delinquency; and, b) credits for financing higher studies of Law No. 20,027, which do not yet present the non-compliance conditions indicated in Circular No. 3,454 of December 10, 2008.

All credits of the debtor must be kept in the Default Portfolio until there is a normalization of their ability or payment behavior, without prejudice to punishment of each particular credit that meets the condition indicated in Title II of Chapter B-2 of the CASB. To remove a debtor from the Default Portfolio, once the circumstances that lead to classification in this portfolio according to the present rules have been overcome, at least the following copulative conditions must be met:

No obligation of the debtor with the bank with more than 30 calendar days overdue.

No new refinances granted to pay its obligations.

At least one of the payments includes amortization of capital.

If the debtor has a credit with partial payment periods less than six months, has already made two payments.

If the debtor must pay monthly fees for one or more credits, has paid four consecutive dues.

The debtor does not appear with unpaid debts direct according to the information recast by CMF, except for insignificant amounts.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

(iii) Provisions related to financing with FOGAPE COVID-19 guarantee.

On July 17, 2020, the CMF requested to determine specific provisions of the credits guaranteed by the FOGAPE COVID-19 guarantee, for which the expected losses were determined estimating the risk of each operation, without considering the substitution of credit quality of the guarantee, according to the corresponding individual or group analysis method, in accordance with the provisions of Chapter B-1 of the CASB. This procedure must be carried out in an aggregate manner, grouping all those operations to which the same deductible percentage is applicable.

The deductible is applied by the Fund Administrator, which must be borne by each financial institution and does not depend on each particular operation, but is determined based on the total of the balances guaranteed by the Fund, for each group of companies that have the same coverage, according to their net sales size.

(iv) Provisions related to financing with FOGAPE Reactivation guarantee.

To determine the provisions of the amounts guaranteed by the FOGAPE Reactivation, the Bank considers the substitution of the credit quality of the debtors for that of the FOGAPE, for all the types of financing indicated, up to the amount covered by the aforementioned guarantee. Naturally, the option to consider the risk attributable to FOGAPE may be made while said guarantee remains in force, without considering the capitalized interest, in accordance with the provisions of article 17 of the Fund Regulations.

Likewise, for the computation of the provisions of the amount not covered by the guarantee, corresponding to the debtors, the treatment must be differentiated according to the level of default of the refinanced credit and the grace period, which must consider the cumulative consecutive months grace period between the refinanced loan and other prior measures.

For this purpose, the following situations should be considered:

Refinancing with less than 60 days past due and less than 180 days of grace.

When the Bank grants the refinancing and is the current creditor, depending on the methodology used in accounting for provisions (standard or internal method) for the group portfolio, the computation of default and the expected loss parameters remain constant at the time to carry out the refinancing, as long as no payment is due.

In the case of debtors evaluated on an individual basis, their risk category is maintained at the time of rescheduling, which does not prevent them from being reclassified to the category that corresponds to them, in the event of a worsening of their payment capacity.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

Refinancing with greater than 60 days and less than 89 days past due or grace periods greater than 180 days and less than 360 days.

The provisions established in the previous point apply, and at least one of the following conditions must also be met:

In its credit granting policies, the Bank considers at least the following aspects:

A robust procedure for the categorization of viable debtors, which considers at least the sector and its solvency and liquidity situation.

Efficient mechanisms for monitoring the debtor's situation, with formally defined internal governance.

ii.

Interest is charged in the months of grace, in accordance with the guidelines established in article 15 letter a) of the Regulation, or there is a demand for payment in another credit with the bank. In the latter case, if noncompliance is observed, the carry forward rules contained in numerals 2.2 and 3.2 of Chapter B-1 of the CASB must be considered, depending on whether it is a credit subject to individual or group evaluation, respectively.

Refinancing with grace periods greater than 360 days.

The Bank must apply the provisions established in Chapter B-1 of the CASB, considering the operation as a forced renegotiation and, therefore, apply the provisions that correspond to the portfolio in default.

(v) Impairment of loans

The impaired loans include the following assets, according to Chapter B-1 of the CASB of the CMF:

In case of debtors subject to individual assessment, includes credits from “Non-complying loans” those classified in categories B3 and B4 of “Substandard loans”.

Debtors subject to assessment group evaluation, the impaired portfolio includes all credits of the “Non-complying loans”.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

(vi) Charge-offs

As a general rule, the charge-offs are produced when the contractual rights on cash flows end. In case of loans, even if the above does not happen, it will proceed to charge-offs the respective asset balances.

The charge-off refers to derecognition of the assets in the Consolidated Statement of Financial Position, related to the respective transaction and, therefore, the part that could not be past-due if a loan is payable in installments, or a lease.

- Charge-offs of loans to customers

The charge-off must be to make using credit risk provisions constituted, whatever the cause for which the charge-off was produced.

Write-offs for loans to customers and accounts receivable, other than from leasing operations, should be made in the following circumstances, whichever occurs first:

The Bank, based on all available information, concludes that will not obtain any cash flow of the credit recorded as an asset.

When the debt without executive title expires 90 days after it was recorded in asset.

At the expiration of the statute of limitations for actions to demand payment through an executive trial, or at the time of rejection or abandonment of the execution of the judgment by final court resolution.

When past-due term of a transaction reaches the charge-off term disposed below:

Type of Loan		Term
Consumer loans - secured and unsecured		6 months
Other transactions - unsecured		24 months
Commercial loans - secured		36 months
Residential mortgage loans		48 months

The term represents the time elapsed since the date on which payment of all or part of the obligation in default became due.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

- Charge-offs of lease operations

These assets must be charge-offs against the following circumstances, whichever occurs first:

The Bank concludes that there is no possibility of the rent recoveries and the value of the property cannot be considered for purposes of recovery of the contract, either because the lessee has not the asset, for the property’s conditions, for expenses that involve its recovery, transfer and maintenance, due to technological obsolescence or absence of a history of your location and current situation.

When it complies the prescription term of actions to demand the payment through executory or upon rejection or abandonment of executory by court.

When a contract has been in default reach the period of time indicated below:

Type of Loan		Term
Consumer leases		6 months
Other non-real estate lease transactions		12 months
Real estate leases (commercial or residential)		36 months

The term represents the time elapsed since the date on which payment of all or part of the obligation in default became due.

(vii) Written-off loans recoveries

Cash recoveries on charge-off loans including loans that were reacquired from the Central Bank of Chile are recorded directly in income in the Consolidated Statement of Income, as a reduction of the “Recoveries of written-off loans” item.

In the event of recoveries of assets, the income will be recognized in the results for the amount by which they are incorporated into the asset. The same criterion will be followed if the leased assets were recovered after the charge-off for a leasing operation, when such assets are incorporated into the asset.

Any renegotiation of a credit already written off does not give rise to income, as long as the operation remains to have an impaired quality; the actual payments received must be treated as recoveries of credits written off, as indicated above.

Therefore, renegotiated credit can be recorded as an asset only if it has not deteriorated quality; also recognizing revenue from activation must be recorded like recovery of loans.

The same criteria should apply in the case that was give credit to pay a charge-off loan.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

(g)

Impairment due to credit risk of Financial assets at amortized cost and Financial assets at fair value through other comprehensive income (FVOCI):

In accordance with the established in Chapter A-2 of the CASB of the CMF, the impairment model of IFRS 9 will not be applied to loans in the category “Financial assets at amortized cost” (“Due from banks” and “Loans and accounts receivable from customers”), nor on “Contingent loans”, since the criteria for these instruments are defined in Chapters B-1 to B-3 of the CASB.

For the rest of the financial assets measured at Amortized Cost or FVOCI, the model on which impairment losses must be calculated corresponds to one of Expected Credit Loss (ECL) as established in IFRS 9.

Debt financial instruments whose subsequent valuation is at amortized cost or at FVOCI will be subject to impairment due to credit risk. On the contrary, those instruments at fair value through profit or loss do not require this measurement.

The measurement of impairment is carried out in accordance with a general impairment model that is based on the existence of 3 possible phases of the financial asset, the existence or not of a significant increase in credit risk and the condition of impairment. The 3 phases determine the amount of impairment that will be recognized as an expected credit loss, as well as the interest income that will be recorded at each reporting date. Each phase is listed below:

Phase 1: Incorporates financial assets whose credit risk has not increased significantly since initial recognition. Expected credit losses are recognized to 12-month. Interest is recognized based on the gross amount on the balance sheet.

Phase 2: Incorporates financial assets whose credit risk has increased significantly since initial recognition. Expected credit losses are recognized throughout the life of the financial asset. Interest is recognized based on the gross amount on the balance sheet.

Phase 3: Incorporates impaired financial assets. Expected credit losses are recognized throughout the life of the financial asset. Interest is recognized based on the net amount (gross amount on the balance sheet less allowance for credit risk).

−

Impairment of debt financial instruments measured at fair value through other comprehensive income

The Bank applies the value impairment requirements for the recognition and measurement of a value correction for losses to financial assets that are measured at fair value through other comprehensive income in accordance with IFRS 9. This value adjustment for losses is recognized in Other Comprehensive Income (OCI) and does not reduce the carrying amount of the financial asset in the Consolidated Statement of Financial Position. The accumulated loss recognized in OCI is recycled in results when derecognizing the financial assets.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

(h)

Financial liabilities:

Classification of financial liabilities:

Financial liabilities are classified in the following categories:

Financial liabilities at amortized cost;

Financial liabilities held for trading at fair value through profit or loss: Financial instruments are recorded in this item when the Bank's objective is to generate profits through purchases and sales with these instruments. This item includes financial derivative trading contracts that are liabilities, which will be measured subsequently at fair value.

Financial liabilities designated as at fair value through profit or loss: The Bank has the option to irrevocably designate, at the time of initial recognition, a financial liability as measured at fair value through profit or loss if the application of this criterion eliminates or significantly reduces inconsistencies in the measurement or recognition, or if it is a group of financial liabilities, or a group of financial assets and liabilities, that is managed, and its performance evaluated, based on fair value in line with a risk management or investment strategy.

Valuation of financial liabilities:

Initial valuation:

They are initially recorded at fair value, less transaction costs that are directly attributable to the issuance of the instruments.

Variations in the value of financial liabilities due to the accrual of interest, UF indexation and similar concepts are recorded under the headings “Interest expenses” and “UF indexation expenses” of the Consolidated Income Statement for the period in which the accrual occurred (see Note No. 30 and No. 31).

Subsequent valuation:

The changes in the valuations that will occur after the initial registration due to reasons other than those mentioned in the previous paragraph, are treated as described below, based on the categories in which the financial liabilities are classified

Financial liabilities at amortized cost:

The liabilities recorded in this item are valued after their acquisition at their amortized cost, which is determined in accordance with the effective interest rate method (EIR).

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

(i)

Derecognition of financial assets and liabilities:

The Bank and its subsidiaries derecognize a financial asset from its Statement of Financial Position, when the contractual rights to the cash flows of the financial asset have expired or when the contractual rights to receive the cash flows of the financial asset are transferred during a transaction in which all ownership risks and rewards of the financial asset are transferred. Any portion of transferred financial assets that is created or retained by the Bank is recognized as a separate asset or liability.

When the Bank transfers a financial asset, it assesses to what extent it has retained the risks and rewards of ownership. In this case:

−

If substantially all risks and rewards of ownership of the financial asset have been transferred, it is derecognized, and any rights or obligations created or retained upon transfer are recognized separately as assets or liabilities.

−

If substantially all risks and rewards of ownership of the financial asset have been retained, the Bank continues to recognize it.

−

If substantially all risks and rewards of ownership of the financial asset are neither transferred nor retained, the Bank will determine if it has retained control of the financial asset. In this case:

If the Bank has not retained control, the financial asset will be derecognized, and any rights or obligations created or retained upon transfer will be recognized separately as assets or liabilities.

If the Bank has retained control, it will continue to recognize the financial asset in the Consolidated Financial Statement by an amount equal to its exposure to changes in value that can experience and recognize a financial liability associated to the transferred financial asset.

The Bank derecognizes a financial liability (or a portion thereof) from its Consolidated Statement of Financial Position if, and only if, it has extinguished or, in other words, when the obligation specified in the corresponding contract has been paid or settled or has expired.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

(j)

Compensation of financial assets and liabilities:

Financial assets and liabilities are subject to compensation, so that their net amount is presented in the Consolidated Statement of Financial Position, when and only when the Bank has the right, legally enforceable, to offset the recognized amounts and intends to settle the net amount, or to realize the asset and settle the liability simultaneously.

Income and expenses are presented net only when permitted by accounting standards, or in the case of gains and losses arising from a group of similar transactions such as the Bank's trading and foreign exchange activity.

(k)

Functional currency:

The items included in the Financial Statements of Banco de Chile and its subsidiaries are valued using the currency of the primary economic environment in which it operates (functional currency). The functional and presentation currency of the Consolidated Financial Statements of Banco de Chile is the Chilean peso, which is the currency of the primary economic environment in which the Bank operates, and also obeys the currency that influences the cost and income structure.

(l)

Transactions in foreign currency:

Transactions in currencies other than the functional currency are considered to be in foreign currency and are initially recorded at the exchange rate of the functional currency on the transaction date. Monetary assets and liabilities denominated in foreign currencies are converted using the exchange rate of the functional currency as of the date of the Consolidated Statement of Financial Position. All differences are recorded as a debit or credit to income.

As of September 30, 2023 and 2022, the Bank and its subsidiaries applied the exchange rate of accounting representation according to the standards issued by the CMF, for which the assets in dollars are shown at their equivalent value in Chilean pesos calculated using the following market exchange rate Ch$889.82 US$1 (Ch$969.66 US$1 as of September 30, 2022)

As of September 30, 2023, the amount of Ch$110,773 million corresponding to a net financial profit from exchange, indexation and accounting hedging of foreign currency (Ch$111,449 million as of September 30, 2022) shown in the Consolidated Statements of Income, includes the result from exchange operations, indexation and accounting hedges of foreign currency, including the conversion of assets and liabilities in foreign currency or indexed to the exchange rate.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

(m)

Operating Segments:

The Bank discloses information by segment in accordance with IFRS 8 (Note No. 6). The Bank’s operating segments are determined based on its different business units, considering the following:

That it conducts business activities from which income is obtained and expenses are incurred (including income and expenses relating to transactions with other components of the same entity).

That its operating results are reviewed regularly by the entity’s highest decision-making authority for operating decisions, to decide about resource allocation for the segment and evaluate its performance; and

For which separate financial information available.

(n)

Statement of cash flows:

The Consolidated Statement of Cash Flows shows the changes in cash and cash equivalents derived from operating activities, investment and financing activities during the year. The indirect method has been used in the preparation of this statement of cash flows.

For the preparation of Consolidated Financial Statements of Cash Flow, it is considered the following concepts:

Cash and cash equivalents: corresponds to the item “Cash and deposits in banks”, plus (minus) the net balance corresponding to operations with liquidation in progress that are shown in the Consolidated Statement of Financial Position, plus other cash equivalents such as investments in short-term debt financial instruments that meet the criteria to be considered “cash equivalents”, for which they must have an original maturity of 90 days or less from the date of acquisition, be highly liquid, easily convertible into amounts known amounts of cash as of the date of the initial investment, and that the financial instruments are exposed to an insignificant risk of changes in value.

Operating activities: corresponds to normal activities of the Bank, as well as other activities that cannot classify like investing or financing activities.

Investing activities: correspond to the acquisition, sale or disposition other forms, of long-term assets and other investments not included in cash and cash equivalents.

Financing activities: corresponds to the activities that produce changes in the amount and composition of the equity and the liabilities that are not included in the operating or investing activities.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

(o)

Financial derivative contracts:

A “Financial Derivative” is a financial instrument whose value changes in response to changes in an observable market variable (such as an interest rate, exchange rate, the price of a financial instrument or a market index, including credit ratings), whose initial investment is very small in relation to other financial instruments with a similar response to changes in market conditions and which is generally settled at a future date.

The Bank maintains contracts of Derivative financial instruments, for cover the exposition of risk of foreign currency and interest rate. These contracts are recorded in the Consolidated Statement of Financial Position at their cost (included transactions costs) and subsequently measured at fair value. Derivative instruments are reported as an asset when their fair value is positive and as a liability when negative under the item “Derivative Instruments”.

Changes in fair value of derivative contracts held for trading purpose are included under “Financial Assets and Liabilities held for Trading”, on the Consolidated Statement of Income.

In addition, the Bank includes in the valorization of derivatives the “Credit valuation adjustment” (CVA), to reflect the counterparty risk in the determination of fair value and the Bank's own credit risk, known as “Debit valuation adjustment” (DVA).

Certain embedded derivatives in other financial instruments are treated as separate derivatives when their risk and characteristics are not closely related to those of the main contract and if the contract in its entirety is not recorded at its fair value with its unrealized gains and losses included in income.

(p)

Financial derivative contracts for accounting hedges:

The Bank has chosen to continue applying the hedge accounting requirements of IAS 39 when adopting IFRS 9.

At the moment of subscription of a derivative contract must be designated by the Bank as a derivative instrument for trading or hedging purposes.

If a derivative instrument is classified as a hedging instrument, it can be:

A hedge of the fair value of existing assets or liabilities or firm commitments, or;

A hedge of cash flows related to existing assets or liabilities or forecasted transactions.

A hedge relationship for accounting hedges purposes must comply with all of the following conditions:

at its inception, the hedge relationship has been formally documented;

it is expected that the hedge will be highly effective;

the effectiveness of the hedge can be measured in a reasonable manner; and

the hedge is highly effective with respect to the hedged risk on an ongoing basis and throughout the entire hedge relationship.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

The Bank presents and measures individual hedges (where there is a specific identification of hedged item and hedged instruments) by classification, according to the following criteria:

Fair value hedges: Changes in the fair value of a derivative hedging instrument, designated as a fair value hedge, are recognized in income under the lines “Net interest income” and “Net indexation income” and/or “Foreign currency changes, UF indexation and accounting hedge”, depending on the type of risk covered. The hedged item is also presented at fair value in relation to the risk being hedged; gains or losses attributable to the hedged risk are recognized in income under the lines “Net interest income” and “Net income from UF indexation” and adjust the book value of the item subject to the hedge.

Cash flow hedge: Changes in the fair value of financial instruments derivative designated like “cash flow hedge” are recognized in “Cash flow accounting hedge” included in the Consolidated Other Comprehensive Income, to the extent that hedge is effective and hedge is reclassified to income in the item “Net interest income” and “Net income from UF indexation” and/or “Foreign currency changes, UF indexation and accounting hedge”, when hedged item affects the income of the Bank produced for the “interest rate risk” or “foreign exchange risk”, respectively. If the hedge is not effective, the changes in the fair value are recognized directly in the results of the year under the caption “Other financial result”.

If the hedged instruments do not comply with criteria of cash flow accounting hedges, it expires or is sold, it suspends or executed, this hedge must be discontinued prospectively. Accumulated gains or losses recognized previously in the equity are maintained there until projected transactions occur, in that moment will be registered in Consolidated Statement of Income (in the item “Net interest income” and “Net income from UF indexation” and/or “Foreign currency changes, UF indexation and accounting hedge”, depend of the hedge), lesser than it foresees that the transaction will not execute, in this case it will be registered immediately in Consolidated Statement of Income (in the item “Net interest income” and “Net income from UF indexation” and/or “Foreign currency changes, UF indexation and accounting hedge”, depend of the hedge).

(q)

Intangible Assets:

Intangible assets (Note No. 15) are initially recognized at their acquisition cost, and are subsequently measured at their cost less any accumulated amortization or less any accumulated impairment losses.

Software or computer programs purchased by the Bank and its subsidiaries are accounted for at cost less accumulated amortization and impairment losses.

The subsequent expense in software assets is capitalized only when it increases the future economic benefit for the specific asset. All other expenses are recorded as an expense as incurred.

Amortization is recorded in income using the straight-line amortization method based on the estimated useful life of the software, from the date on which it is available for use. The estimated useful life of software is a maximum of 6 years.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

(r)

Property and equipment:

Property and equipment (Note No. 16) includes the amount of land, real estate, furniture, computer equipment and other installations owned by the consolidated entities and which are for own use. These assets are stated at historical cost less depreciation and accumulated impairment. This cost includes expenses than have been directly attributed to the asset’s acquisition.

Depreciation is recognized in the Consolidated Statements of Income on a straight-line basis over the estimated useful lives of each part of an item of property and equipment.

The estimated average useful lives for the periods 2023 and 2022 are as follows:

	- Buildings	50 years
	- Installations	10 years
	- Equipment	5 years
	- Supplies and accessories	5 years

Maintenance expenses relating to those assets held for own uses are recorded as expenses in the year in which they are incurred.

(s)

Deferred taxes and income taxes:

The income tax provision of the Bank and its subsidiaries has been determined in conformity with current legal regulations.

The Bank and its subsidiaries recognize, when appropriate, deferred tax assets and liabilities for future estimates of tax effects attributable to temporary differences between the book and tax values of assets and liabilities. Deferred tax assets and liabilities are measured based on the tax rate expected to be applied, in accordance with current tax law, in the year that deferred tax assets are realized or liabilities are settled. The effects of future changes in tax legislation or tax rates are recognized in deferred taxes starting on the date of publication of the law approving such changes (Note No. 18).

Deferred tax assets are recognized only when it is likely that future tax profits will be sufficient to recover deductions for temporary differences. According to instructions from the CMF, deferred taxes are presented in the Consolidated Statement of Financial Position according with IAS 12 “Income Tax”.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

(t)

Provisions, contingent assets and liabilities:

Provisions are liabilities involving uncertainty about their amount or maturity. They are recorded in the Consolidated Statement of Financial Position when the following requirements are jointly met:

a present obligation has arisen from a past event;

as of the date of the Financial Statements it is probable that the Bank or its subsidiaries have to disburse resources to settle the obligation; and

the amount of these resources can be reliably measured.

A contingent asset or liability is any right or obligation arising from past events whose existence will be confirmed by one or more uncertain future events which are not within the control of the Bank.

Contingent credits are understood as operations or commitments in which the Bank assumes a credit risk by committing itself to third parties, in the event of a future event, to make a payment or disbursement that must be recovered from its clients.

The following are classified as contingent credits in off-balance sheet information:

Undrawn credit lines: Considers the unused amounts of lines of credit that allow customers to make use of credit without prior decisions by the bank.

Undrawn credit lines with immediate termination: Considers those undrawn credit lines, defined in the previous numeral, that the bank can unconditionally cancel at any time and without prior notice, or for which its automatic cancellation is contemplated in case of deterioration of the debtor's solvency, as permitted by the current legal framework and the contractual conditions established between the parties.

Contingent credits linked to the CAE: Correspond to credit commitments granted in accordance with Law No. 20,027 (“CAE”).

Letters of credit for goods circulation operations: Considers the commitments that arise, both to the issuing bank and to the confirming bank, from self-settled commercial letters of credit with a maturity period of less than 1 year, arising from merchandise circulation operations (for example, confirmed foreign or documentary letters of credit). Includes documentary letters of credit issued by the Bank, which have not yet been negotiated.

Debt purchase commitments in local currency abroad: Note issuance facility (NIF) and revolving underwriting facility (RUF) are considered.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

Transactions related to contingent events: Guarantee bonds with promissory notes referred to in Chapter 8-11 of the Actualized Standards Compilation are considered.

Warranty by endorsement and sureties: Includes warranty by endorsement, sureties and standby letters of credit referred to in Chapter 8-10 of the Actualized Standards Compilation. In addition, it includes the payment guarantees of buyers in factoring operations, as indicated in Chapter 8-38 of that Compilation.

Other credit commitments: It includes the unplaced amounts of committed loans that are to be disbursed on an agreed future date or triggered by events contractually defined with the client, as is the case with irrevocable credit lines tied to the progress of projects (for provisions purposes, both the gross exposure referred to in No. 3 and future increases in the amount of guarantees associated with committed disbursements must be considered).

Exposure to credit risk on contingent loans:

To calculate provisions for contingent credits, the amount of exposure to be considered will be equivalent to the percentage of the amounts of the contingent credits indicated below:

Type of contingent credit		Credit Conversion Factor
Undrawn credit lines with immediate termination		10%
Contingent credits linked to the CAE		15%
Letters of credit for goods circulation operations		20%
Other undrawn credit lines		40%
Debt purchase commitments in local currency abroad		50%
Transactions related to contingent events		50%
Warranty by endorsement and sureties		100%
Other credit commitments		100%
Other contingent loans		100%

When dealing with transactions performed with customers with overdue loans, that exposure shall be equivalent to 100% of its contingent loans.

(u)

Provisions for minimum dividends:

According with the CASB of the CMF, the Bank records within liabilities the portion of net income for the year that should be distributed to comply with the Corporations Law or its dividend policy. For these purposes, the Bank establishes a provision in a complementary equity account within retained earnings (Note No. 25).

For purposes of calculating the provision of minimum dividends, the distributable net income is considered, which is defined as that which results from reducing or adding to the net income for the year, the correction of the value of the paid-in capital and reserves, due to the effects of the variation of the Consumer Price Index.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

(v)

Employee benefits:

Employee benefits are all forms of consideration granted by an entity in exchange for services provided by employees or severance pay.

Short-term employee benefits are employee benefits (other than termination benefits) that are expected to be settled in full before twelve months after the end of the annual reporting period in which the employees have rendered the related services (Note No. 24 (c)).

Staff vacations

The annual costs of vacations and staff benefits are recognized on an accrual basis.

Other short-term benefits

The entity contemplates for its employees an annual incentive plan for meeting objectives and individual contribution to the company’s results, which are eventually delivered, consisting of a certain number or portion of monthly salaries and are provisioned based on the estimated amount to be distributed.

Other long-term employee benefits are all employee benefits other than short-term employee benefits, post-employment benefits, and termination benefits.

Employee benefits for termination of employment contract

The Bank has agreed with part of the staff the payment of compensation to those who have completed 30 or 35 years of permanence, in the event that they retired from the Institution. The proportional part accrued by those employees who will have access to exercise the right to this benefit and who at the end of the year have not yet acquired it has been incorporated into this obligation.

The obligations of this benefit plan are valued according to the projected credit unit method, including as variables the staff turnover rate, the expected salary growth and the probability of using this benefit, discounted at the current rate for long-term operations (6.18% as of September 30, 2023 and 5.50% as of December 31, 2022).

The discount rate used corresponds to the rate of 10-year Bonds in pesos of the Central Bank of Chile (BCP).

Gains and losses arising from changes in actuarial variables are recognized in Other Comprehensive Income. There are no other additional costs that should be recognized by the Bank.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

(w)

Earnings per share:

The basic earnings per share is determined by dividing the net income attributed to the Bank's owners in a period and the weighted average number of shares outstanding during that period.

Diluted earnings per share are determined similarly to basic earnings, but the weighted average number of outstanding shares is adjusted to take into account the potential dilutive effect of the options on shares, warrants and convertible debt. At the end of the periods ended September 30, 2023 and 2022 there are no concepts to adjust.

(x)

Interest revenue and expense and UF indexation:

Interest income and expenses and UF indexation (Notes No. 30 and 31) are recognized in the Consolidated Statement of Income using the effective interest rate method. The effective interest rate is the rate which exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument (or, where appropriate, in a shorter period), to the carrying amount of the financial asset or financial liability. To calculate the effective interest rate, the Bank determines cash flows by taking into account all contractual conditions of the financial instrument, excluding future credit losses.

The effective interest rate calculation includes all fees and other amounts paid or received that form part of the effective interest rate. Transaction costs include incremental costs that are directly attributable to the purchase or issuance of a financial asset or liability.

In the case of the impaired portfolio and current loans with a high risk of irrecoverability of loans and accounts receivable from customers, the Bank has applied a conservative position of discontinuing the accrual of interest and UF indexation on an accrual basis in the Consolidated Statement of Income, when the credit or one of its installments has been 90 days default in its payment.

(y)

Commission income and expenses:

Revenue and expenses from fees (Note No. 32) are recognized in the Consolidated Income Statement using the criteria established in IFRS 15 “Revenue from contracts with customers”.

Under IFRS 15, revenues are recognized considering the terms of the contract with customers. Revenue is recognized when or as the performance obligation is satisfied by transferring the goods or services committed to the customer.

Under IFRS 15, revenues are recognized using different criteria depending on their nature. The most significant are:

−

Those that correspond to a singular act, when the act that originates them takes place.

−

Those that originate in transactions or services that are extended over time, during the life of such transactions or services.

−

Commissions on loan commitments and other fees related to credit operations are deferred (together with the incremental costs directly related to the placement) and recognized as an adjustment to the effective interest rate of the placement. In the case of loan commitments, when there is no certainty of the date of effective placement, the commissions are recognized in the period of the commitment that originates it on a linear basis.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

The fees registered by the Bank correspond mainly to:

−

Commissions for credit prepayment: These commissions are accrued at the time the credits are prepaid.

−

Commissions for lines of credit and overdrafts: These commissions are accrued in the period related to the granting of lines of credit and overdrafts in checking accounts.

−

Commissions for warranty by endorsement and letters of credit: These commissions are accrued in the period related to the granting by the bank of payment guarantees for real or contingent obligations of third parties.

−

Commissions for card services: Correspond to commissions accrued for the period, related to the use of credit cards, debit cards and other.

−

Commissions for account management: Includes commissions for the maintenance of current accounts and other deposit accounts.

−

Commissions for collections and payments: Includes commissions generated by the collection and payment services provided by the Bank.

−

Commissions for intermediation and management of securities: correspond to income from brokerage service, placements, administration and custody of securities.

−

Remuneration for administration of mutual funds, investment funds or others: corresponds to the commissions from the General Fund Administrator for the administration of third-party funds.

−

Remuneration for brokerage and insurance consulting services: Income from brokerage and insurance advice by the Bank or its subsidiaries is included.

−

Commissions for factoring operations services: Commissions for factoring operations services performed by the Bank are included.

−

Commissions for services of financial leasing operations: Commissions for services of financial leasing operations carried out by the Bank as lessor are included.

−

Commissions for financial consulting services: commissions for financial advisory services performed by the Bank and its subsidiary are included.

−

Other commissions earned: includes income generated from foreign currency exchange, issuance bank guarantees, issuance of bank check, use of distribution channels, agreement on the use of a brand and placement of financial products and cash transfers, and recognition of payments associated with commercial alliances, among others.

Commission expenses include:

−

Commissions for card operations: commissions paid for credit and debit card operations are included.

−

Commissions for licensing the use of card brands

−

Expenses for obligations of loyalty and merits programs for card customers.

−

Commissions for operations with securities: commissions for deposit and custody of securities and brokerage of securities are included.

−

Other commissions for services received: Commissions are included for guarantees and endorsements of Bank obligations, for foreign trade operations, for correspondent banks in the country and abroad, for ATMs and electronic fund transfer services.

−

Commissions for compensation of large value payments: corresponds to commissions paid to entities such as ComBanc, CCLV Contraparte Central, etc.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

(z)

Impairment of non-financial assets:

The carrying amounts of the non-financial assets of the Bank and its subsidiaries, are reviewed throughout the year and especially at each reporting date, to determine if any indication of impairment exists. If such indication exists, the recoverable amount of the asset is then estimated.

(aa)

Financial and operating leases:

−

The Bank acting as lessor

Assets leased to customers under agreements which transfer substantially all the risks and rewards of ownership, with or without ultimate legal title, are classified as finance leases. When assets held are subject to a finance lease, the leased assets are derecognized and a receivable is recognized which is equal to the present value of the minimum lease payments, discounted at the interest rate implicit in the lease. Initial direct costs incurred in negotiating, and arranging a finance lease are incorporated into the receivable through the discount rate applied to the lease. Finance lease income is recognized over the lease term based on a pattern reflecting a constant periodic rate of return on the net investment in the finance lease.

Assets leased to customers under agreements, which do not transfer substantially all the risks, and rewards of ownership are classified as operating leases.

The leased investment properties, under the operating lease modality, are included in the Consolidated Statement of Financial Position as “Other assets” and depreciation is determined on the book value of these assets, applying a proportion of the value in a systematic way on the economic use of the estimated useful life. Lease income is recognized on a straight-line basis over the lease term.

−

The Bank acting as lessee

A contract is, or contains a lease, if one party has the right to control the use of an identified asset for a period of time in exchange for a regular payment (Note No. 17).

On the start date of a lease, a right-to-use assets leased is determined at cost, which includes the amount of the initial measurement of the lease liability plus other disbursements made.

The amount of the lease liability is measured at the present value of future lease payments that have not been paid on that date, which are discounted using the Bank's incremental financing interest rate.

The right-of-use asset is measured using the cost model, less accumulated depreciation and accumulated losses due to impairment of value, depreciation of the right-of-use asset, is recognized in the Consolidated Statements of Income based on the linear depreciation method from the start date and until the end of the lease term.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

The monthly variation of the UF for the contracts established in said monetary unit should be treated as a new measurement, therefore the UF readjustment modifies the value of the lease liability, and in parallel, the amount of the right-of-use asset must be adjusted by this effect.

After the start date, the lease liability is measured by lowering the carrying amount to reflect the lease payments made and the modifications to the lease.

According to IFRS 16 “Leases” the Bank does not apply this rule to contracts whose duration is 12 months or less and those that contain an underlying asset of low value. In these cases, payments are recognized as a lease expense.

(ab)

Additional provisions:

In accordance to the CMF regulations, the banks have recorded additional allowances for its individually evaluated loan portfolio, taking into consideration the expected impairment of this portfolio. The calculation of this allowance is performed based on the Bank’s historical experience and considering possible future adverse macroeconomic conditions or circumstances that could affect a specific sector.

The provisions made in order to forestall the risk of macroeconomic fluctuations should anticipate situations reversal of expansionary economic cycles in the future, could translate into a worsening in the conditions of the economic environment and thus, function as a countercyclical mechanism accumulation of additional provisions when the scenario is favorable and release or assignment to specific provisions when environmental conditions deteriorate.

According to the above, additional provisions must always correspond to general provisions on commercial, consumer or mortgage loans, or segments identified, and in no case may be used to offset weaknesses of the models used by the Bank (Note No. 26).

As of September 30, 2023, the balance of additional provisions amounts to Ch$700,252 million (Ch$700,252 million in December 2022), which are presented in the caption “Special Provisions for Credit Risk” of liabilities in the Consolidated Statement of Financial Position.

(ac)

Fair value measurement:

“Fair value” is understood as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between participants in a principal (or more advantageous) market at the measurement date under current market conditions, independent whether that price is directly observable or estimated using another valuation technique. The most objective and usual reference of fair value is the price that would be paid in an active, transparent and deep market (“quoted price” or “market price”).

When available, the Bank estimates the fair value of an instrument using quoted prices in an active market for that instrument. A market is considered active if quoted prices are readily and regularly available and represent actual and regularly occurring market transactions on an arm’s length basis.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

Main Accounting Criteria Used, continued:

If a market for a financial instrument is not active, the Bank establishes fair value using a valuation technique. These valuation techniques include the use of recent market transactions between knowledgeable, willing parties in an arm’s length transaction, if available, as well as references to the fair value of other instruments that are substantially the same, discounted cash flows and options pricing models.

The chosen valuation technique makes maximum use of information obtained in the market, using the least possible amount of data estimated by the Bank, incorporates all the factors that market participants would consider to establish the price, and will be consistent with generally accepted economic methodologies for calculating the price of financial instruments. The variables used by the valuation technique reasonably represent market expectations and reflect the return-risk factors inherent to the financial instrument. Periodically, the Bank calibrates the valuation techniques and tests it for validity using prices from observable current market transaction in the same instrument or based on available observable market information.

The best evidence of the fair value of a financial instrument at initial recognition is the transaction price (i.e. the fair value of the consideration given or received) unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets. However, when transaction price provides the best evidence of fair value at initial recognition, the financial instrument is initially measured at the transaction price and any difference between this price and the value initially obtained from a valuation model is subsequently recognized in incomes.

On the other hand, it should be noted that the Bank has financial assets and liabilities offset each other’s market risks, based on which average market prices are used as a basis for determining their fair value.

Then, the fair value estimates obtained from models are adjusted for any other factors, such as liquidity risk or model uncertainties; to the extent that the Bank believes that a third-party market participant would take them into account in pricing a transaction.

The Bank’s fair value disclosures are included in Note No. 44.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

New Accounting Pronouncements Issued and Adopted, or Issued that have not yet been Adopted:

Standards approved and/or modified by the International Accounting Standards Board (IASB) and by the Commission for the Financial Market (CMF):

Standards and interpretations that have been adopted in these Consolidated Financial Statements.

As of the date of issuance of these Consolidated Financial Statements, the new accounting pronouncements issued by both the IASB and the CMF, which have been adopted by the Bank and its subsidiaries, are detailed below:

Accounting standards issued by IASB.

IAS 1 Presentation of Financial Statements and IFRS Practice Statement No. 2 Accounting Policy Disclosures.

In February 2021, the IASB published amendments to IAS 1 to require companies to disclose material information in order to improve the disclosures of their accounting policies and provide useful information to investors and other users of financial statements.

To help entities apply the amendments to IAS 1, the Board also amended IFRS Practice Statement No. 2 to illustrate how an entity can judge whether accounting policy information is material to its financial statements.

The amendments to IAS 1 will be effective for Financial Statement presentation periods beginning on or after January 1, 2023.

To implement these amendments, some non-material modifications were made to Note No. 2 Main Accounting Criteria Used in the Consolidated Interim Financial Statements.

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Definition of Accounting Estimate.

In February 2021, the IASB incorporated changes to the definition of accounting estimates contained in IAS 8, the amendments are intended to help entities distinguish changes in accounting estimates from changes in accounting policies.

The amendments to IAS 8 will be effective for Financial Statement presentation periods beginning on or after January 1, 2023.

The application of this amendment did not generate any impacts on the current Consolidated Interim Financial Statements of Banco de Chile and its subsidiaries.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

New Accounting Pronouncements Issued and Adopted, or Issued that have not yet been Adopted, continued:

IAS 12 Income Tax. Deferred taxes related to assets and liabilities arising from a single transaction.

In May 2021, the IASB published amendments to IAS 12, to specify how companies should account for deferred taxes on transactions such as leases and decommissioning obligations.

IAS 12 Income Tax specifies how a company accounts for income tax, including deferred tax, which represents tax to be paid or recovered in the future. In certain circumstances, companies are exempt from recognizing deferred taxes when they first recognize assets or liabilities. Prior to the amendment, there was some uncertainty as to whether the exemption applied to transactions such as leases and decommissioning obligations, transactions for which companies recognize both an asset and a liability.

The amendments clarify that the exemption does not apply and that companies are required to recognize deferred taxes on such transactions. The purpose of the amendments is to reduce the differences in reporting deferred tax on leases and decommissioning obligations.

The amendments are effective for the presentation periods of the Financial Statements beginning on January 1, 2023, and early application is allowed.

The implementation of this amendment had no impact for Bank of Chile and its affiliates.

Accounting standards issued by CMF

Circular No. 2,323. Modifies Chapter B-1 “Provisions for credit risk” of the CASB.

On October 21, 2022, the CMF published this circular that modifies Chapter B-6 “Provisions for country risk” and B-7 “Special provisions for credits abroad” of the Compendium of Accounting Standards for Banks, the objective of this modification is to include to operations denominated in Chilean pesos within the computation of provisions for country risk and special for loans abroad.

The Bank implemented this change without generating material impacts.

Circular No. 2,331. Information to be reported on credits with the guarantee of FOGAPE Chile Apoya.

On February 7, 2023, the CMF issued Circular No. 2.331, which provides details regarding the information that banks and cooperatives must submit to the CMF through new regulatory files. This is aimed at ensuring proper monitoring of the evolution of loans guaranteed by the Chile Apoya program, part of the Guarantee Fund for Small and Medium-Sized Entrepreneurs (FOGAPE).

The Bank implemented this Circular, fulfilling the sending of the new regulatory files.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

3.	New Accounting Pronouncements Issued and Adopted, or Issued that have not yet been Adopted, continued:

Circular No. 2,330. Chapter 21-14 of the RAN: Evaluation of the Adequacy of Banks’ Liquidity Position.

On January 16, 2023, the CMF published the regulations that aim to present the criteria and guidelines that will be taken into consideration for the evaluation of the liquidity adequacy of banks, together with the possibility of the CMF to determine additional liquid asset requirements as a result of the supervisory review process. The Bank implemented this Circular, complying with the submission in April 2023 of the first Liquidity Self-Assessment Report (LSR).

General Regulation (NCG by its Spanish initials) No. 484. Commissions in credit operations Law 18,010 and adjustments to current contracts.

On August 5, 2022, the CMF issued this NCG 484, which establishes the criteria and conditions that must be met by the collections made to the debtor in a credit operation to be considered commission and not interest. In addition, by virtue of the established definitions and in order to maintain regulatory coherence, other regulatory bodies were modified.

The instructions established in this General Regulation came into effect on August 1, 2023.

The implementation of this new standard did not generate material impacts for the Bank and its subsidiaries.

Other Regulations.

Law 21,420 modifies art. 2 No. 2 of DL 825 of 1974, on Sales and Services Tax (VAT).

On January 1, 2023, the legal modifications incorporated into the basic service taxable event defined in art. 2 No. 2 of DL No. 825 Law on Sales and Services Tax came into effect. Said legal modification implied a higher expense or cost, since some services contracted by the institution from January 1, 2023, went from not being subject to being taxed with VAT.

The implementation of this new standard did not have a material impact on the Bank and its subsidiaries.

Other instructions issued by the CMF – Letters to Management.

By letter to Management dated October 13, 2023, the CMF reported the treatment for promissory notes or certificates of liquidity deposits granted by the Central Bank of Chile (PDL by its Spanish initials) with the exclusive purpose of guaranteeing and supporting the payment of the Loan Increase Conditional Credit Facility (FCIC by its Spanish initials). In this regard, banks that acquire these promissory notes must incorporate such operations in the regulatory risk measurements, such as in the LCR and NSFR measurements reported in the “Liquidity Ratios” report C49. Regarding their accounting, the promissory notes must be recorded in the Financial Debt Instruments account of the Financial Assets item at amortized cost. For the file “Non-derivative Financial Instruments” (P40), it is established that they must be reported according to their own characteristics. As of the date of issuance of the Financial Statements, the Bank has not acquired this type of instruments.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

3.	New Accounting Pronouncements Issued and Adopted, or Issued that have not yet been Adopted, continued:

New Standards and interpretations that have been issued but their application date is not yet in force:

The following is a summary of new standards, interpretations and improvements to the International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) and the CMF that are not yet effective as of September 30, 2023, as follows:

Accounting standards issued by IASB.

IAS 28 Investments in Associates and Joint Venture and IFRS 10 Consolidated Financial Statements.

In September 2014, the IASB published this modification, which clarifies the scope of the profits and losses recognized in a transaction, that involves an associate or joint venture, and that this depends on whether the asset sold or contribution constitutes a business. Therefore, the IASB concluded that all gains or losses must be recognized against loss of control of a business.

Likewise, the gains or losses that result from the sale or contribution of a subsidiary that does not constitute a business (definition of IFRS 3) to an associate or joint venture must be recognized only to the extent of unrelated interests in the associate or joint venture.

During December 2015, the IASB agreed to set the effective date of this modification in the future, allowing its immediate application.

Banco de Chile and its subsidiaries will have no impact on the Interim Consolidated Financial Statements as a result of the application of this amendment.

IFRS 16 Leases. Recognition of the lease liability in a sale with leaseback.

In September 2022, the IASB published an amendment to IFRS 16 related to the recognition of the lease liability in a sale with leaseback.

The amendment specifies the requirements that a seller-lessee must use to measure the lease liability that arises on sale and leaseback so that the seller-lessee does not recognize any gain or loss related to the right of use that it retains.

The modifications are effective for the periods of presentation of the Financial Statements that begin on or after January 1, 2024, and early application is allowed.

The implementation of this amendment will have no impact for Banco de Chile and its subsidiaries.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

3.	New Accounting Pronouncements Issued and Adopted, or Issued that have not yet been Adopted, continued:

IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments Disclosures - Supplier Financing Arrangements.

In May 2023, the IASB issued amendments to IAS 7 and IFRS 7. The amendments specify the current requirements to enhance the disclosure in the financial statements of supplier financing arrangements concerning liabilities, cash flows, and a company’s exposure to liquidity risk.

The amendments are effective for periods beginning on or after January 1, 2024, and early application is permitted.

Management will assess the potential effects of this amendment.

IAS 21 Effects of Changes in Foreign Exchange Rates

In August 2023, the IASB published amendments to IAS 21. These amendments set out criteria that will allow companies to assess whether a currency is exchangeable and when it is not so, they can determine the exchange rate to use and the disclosures to provide.

The amendments are effective for periods beginning on or after January 1, 2025, and early application is permitted.

Management will assess the potential effects of this amendment.

Circulars issued in the process of implementing the Basel III standards.

During the year 2023, the CMF has issued the following standards related to the implementation of Basel III:

On March 31, 2023, through a press release, the CMF informed that its Council approved resolution No. 2,319 on the qualification of systemically important banks and the additional requirements for them, maintaining for the Bank an additional Basic Capital charge with respect to risk-weighted assets of 1.25%. The requirements of this standard have been gradually established, by December 2023 the requirement will be 50% of the charge.

On May 23, 2023, at its Financial Policy meeting, the Board of the Central Bank of Chile agreed to activate the Counter-Cyclical Capital Requirement at a level of 0.5% of risk-weighted assets, this attribution of the Central Bank is part of the Basel III capital standards for banks, in accordance with the provisions of article 66 ter of the General Banking Law. The purpose of the requirement is to accumulate a capital buffer so that it is available in the face of severe stress scenarios. Banks must establish the entire buffer within one year and, therefore, include it in the solvency reports of May 2024.

On June 22, 2023, the CMF issued Circular No. 2,336, which aims to move towards the complete implementation of the Basel III standards and avoid duplication of regulatory instructions, particularly in the measurement of market risks from the banking book.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

4.	Accounting Changes:

During the period ended September 30, 2023, there have been no material or relative importance changes in accounting that affect the presentation of these Consolidated Interim Financial Statements.

5.	Relevant Events:

On January 26, 2023, the Board of Directors of Banco de Chile agreed to convene an Ordinary Shareholders’ Meeting for March 23, 2023 in order to propose, among other matters, the following distribution of profits for the year ended on December 31, 2022:

Deduct and withhold from the net income of the year, an amount equivalent to the effect of inflation of the paid capital and reserves according to the variation of the Consumer Price Index that occurred between November 2021 and November 2022, amounting to Ch$542,504,045,836 which will be added to retained earnings from previous periods.

ii.

Distribute in the form of dividend the remaining profit, corresponding to a dividend of Ch$8.58200773490 to each of the 101,017,081,114 shares of the Bank.

Consequently, it will be proposed a distribution as dividend of 61.5% of the profits for the year ending December 31, 2022.

On March 3, 2023, Banco de Chile informed the Financial Markets Commission that Mr. Alfredo Ergas Segal had ceased to hold office as Director of the Bank due to a supervening cause of incapacity arising from circumstances beyond his control. This was due to the fact that, within the framework of the corresponding periodic update at the Board meeting on December 22, 2022, a company in which Mr. Ergas is a Director was included as one of the Bank’s main clients, thus constituting the situation outlined in numeral 5 of subsection 3 of article 50 bis of Law 18,046 on corporations.

The aforementioned factual circumstances and the corresponding communication to the Superintendence of Pensions previously made by Mr. Ergas regarding the same matter, were reported by the Bank to the Commission for the Financial Market on December 30th.

In turn, by Resolution No. E-250 of March 3, 2023, the Superintendence of Pensiones established the disability of Mr. Ergas, based on the verification of the cause of supervening disability referred to above.

By virtue of the foregoing, the Independent Alternate Director Mr. Paul Fürst Gwinner assumed the role of Independent Regular Director, replacing Mr. Ergas in accordance with the procedure set forth in the Bank’s Bylaws.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

5.	Relevant Events, continued:

On March 23, 2023, at the Bank’s Ordinary Shareholders’ Meeting, our shareholders proceeded to the complete renewal of the Board of Directors, due to the end of the legal and statutory three-year term with respect to the Board of Directors that has ceased in its functions.

After the corresponding voting at the aforesaid meeting, the following persons were appointed as the Bank’s Directors for a new three-year term:

Directors:	Raúl Anaya Elizalde
	Hernán Büchi Buc
	Andrés Ergas Heymann
	Jaime Estévez Valencia	(Independent)
	Julio Santiago Figueroa
	Pablo Granifo Lavín
	Ana Holuigue Barros	(Independent)
	Andrónico Luksic Craig
	Jean Paul Luksic Fontbona
	Sinéad O’Connor
	Francisco Pérez Mackenna

First Alternate Director:	Paul Fürst Gwinner	(Independent)
Second Alternate Director:	Sandra Marta Guazzotti

Moreover, in its Ordinary Session No. BCH 2,986 of the same date, the Board of Directors of the Bank agreed to the following officer appointments and designations:

Chairman:	Pablo Granifo Lavín
Vice Chairman:	Andrónico Luksic Craig
Vice Chairman:	Julio Santiago Figueroa

During the year 2023 Banco de Chile has reported as essential fact the following placements in the local market of senior, dematerialized and bearer bonds issued by Banco de Chile and registered in the Securities Registry of the Financial Market Commission

Date

Registration
number in the
Securities Registry

Serie

Amount

Currency

Maturity date

Average rate

January 6, 2023

11/2022

4,000,000

CLF

09/01/2035

2.61

March 16, 2023

14/2016

9,750,000,000

CLP

05/01/2027

6.55

March 23, 2023

14/2016

11,250,000,000

CLP

05/01/2027

6.55

April 11, 2023

11/2022

650,000

CLF

05/01/2035

2.50

April 28, 2023

11/2015

500,000

CLF

08/01/2032

2.65

May 18, 2023

11/2022

460,000

CLF

09/01/2034

2.78

June 2, 2023

11/2015

300,000

CLF

12/01/2032

2.96

June 6, 2023

11/2022

215,000

CLF

09/01/2034

2.78

June 8, 2023

11/2015

290,000

CLF

08/01/2029

3.39

June 9, 2023

11/2015

510,000

CLF

08/01/2029

3.39

June 9, 2023

11/2015

740,000

CLF

12/01/2031

2.94

June 12, 2023

11/2022

4,000,000

CLF

05/01/2033

2.89

June 15, 2023

11/2015

650,000

CLF

08/01/2029

3.26

June 16, 2023

11/2022

200,000

CLF

09/01/2034

2.78

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

5.	Relevant Events, continued:

Date

Registration
number in the
Securities Registry

Serie

Amount

Currency

Maturity date

Average rate

August 1, 2023

11/2015

155,000

CLF

02/01/2033

3.04

August 18, 2023

11/2015

515,000

CLF

02/01/2033

3.35

August 24, 2023

11/2015

250,000

CLP

12/01/2032

3.34

August 25, 2023

9/2015

630,000

CLF

02/01/2028

3.61

August 29, 2023

9/2015

1,370,000

CLF

02/01/2028

3.61

August 29, 2023

11/2015

260,000

CLF

12/01/2031

3.27

During the year 2023 Banco de Chile has reported as an essential fact the following placements in the foreign market, issued under its Medium Term Notes Program (“MTN”):

Date	Amount		Currency	Maturity date	Average rate
June 1, 2023		700,000,000	MXN	06/03/2027	TIIE (28 days) + 0.85%
June 8, 2023		6,300,000,000	JPY	06/16/2025	0.75%

On July 24, 2023, the subsidiary Banchile Administradora General de Fondos S.A. reported that, in the Board meeting on the same date, the resignation presented by the Director, Mr. Andrés Lagos Vicuña, was acknowledged and accepted. Therefore, the Board of Directors agreed to appoint Ms. Catherine Tornel León as Director of Banchile Administradora General de Fondos S.A.

On August 29, 2023, it was reported that Banco de Chile and Citigroup Inc. have agreed to extend the validity of the Cooperation Agreement, Global Connectivity Contract and the Amended and Restated Trademark License Agreement, the first two signed on October 22, 2015 and the last on November 29, 2019.

In accordance with the aforementioned extension, the validity of said contracts extends from January 1, 2024 and until January 1, 2026, the parties could agree before August 31, 2025 an extension for two years from on January 1, 2026. If this does not occur, the contracts will be automatically extended once for a period of one year starting on January 1, 2026 and until January 1, 2027. The same renewal procedure may be used in the future as often as the parties agree.

Together with the above and on this same date, Banco de Chile and Citigroup Inc. signed a modification to the Global Connectivity Agreement, a modification to the Amended and Restated Trademark License Agreement and an Amended and Restated Master Service Agreement, agreeing that the validity period of the latter will be the same as that established in the Cooperation Contract referred to in the previous paragraph.

The Board of Directors, in session held on August 24, 2023, approved the extension, modifications and subscription of the contracts mentioned above, in the terms provided for in articles 146 et seq. of the Corporations Law.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

5.	Relevant Events, continued:

On September 28, 2023, the Bank reported that in Ordinary Session No. 2,997, Mr. Andrónico Luksic Craig presented his resignation from the position of Regular Director and Vice President of Banco de Chile, effective as of December 29, 2023. The Board of Directors was aware of the aforementioned resignation of Mr. Luksic, accepted it with effect from the indicated date and expressed its recognition of his contribution and work for more than 20 years on the Board of Directors, contributing to the development of the Institution.

For their part, the alternate directors, Mr. Paul Fürst Gwinner and Mrs. Sandra Marta Guazzotti, expressed in the same Board session their intention to continue, as alternate directors, proceeding accordingly, in accordance with what is established in article 8 of the corporate bylaws, the Board of Directors will appoint a replacement director.

Taking into account the above, in the aforementioned session the Board of Directors agreed to appoint Mr. Patricio Jottar Nasrallah as Regular Director, replacing Mr. Andrónico Luksic Craig, with effect from December 29, 2023 and until the next ordinary shareholders’ meeting, which is responsible to decide on the final appointment.

Likewise, in the aforementioned session, the Board of Directors agreed to appoint the Regular Director, Mr. Francisco Pérez Mackenna, as Vice-president of the Board of Directors, effective from December 29th.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

6.	Business Segments:

For management purposes, the Bank is organized into four segments, which are defined based on the types of products and services offered, and the type of client in which focuses as described below:

Retail:

This segment focuses on individuals and small and medium-sized companies (SMEs) with annual sales up to UF 70,000, where the product offering focuses primarily on consumer loans, commercial loans, checking accounts, credit cards, credit lines and Residential mortgage loans.

Wholesale:

This segment focused on corporate clients and large companies, whose annual revenue exceed UF 70,000, where the product offering focuses primarily on commercial loans, checking accounts and liquidity management services, debt instruments, foreign trade, derivative contracts and leases.

Treasury:

This segment includes the associated revenues to the management of the investment portfolio and the business of financial transactions and currency trading.

Transactions with customers carried out by the Treasury are reflected in the respective aforementioned segments. These products are highly transaction-focused and include foreign exchange transactions, derivatives and financial instruments in general, among others.

Subsidiaries:

Corresponds to the businesses generated by the companies controlled by the Bank, which carry out activities complementary to the bank business. The companies that comprise this segment are:

	-	Banchile Administradora General de Fondos S.A.
	-	Banchile Asesoría Financiera S.A.
	-	Banchile Corredores de Seguros Ltda.
	-	Banchile Corredores de Bolsa S.A.
	-	Socofin S.A.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

6.	Business Segments, continued:

The financial information used to measure the performance of the Bank’s business segments is not comparable with similar information from other financial institutions because each institution relies on its own definitions. The accounting policies applied to the segments is the same as those described in the summary of accounting principles. The Bank obtains the majority of the results from: interest, indexation and commissions and financial operations and changes, discounting provisions for credit risk and operating expenses. Management is mainly based on these concepts to evaluate the performance of the segments and make decisions about the goals and allocations of resources of each unit. Although the results of the segments reconcile with those of the Bank at the total level, this is not necessarily the case in terms of the different concepts, given that management is measured and controlled individually and not on a consolidated basis, applying the following criteria:

●

The net interest margin of loans and deposits is obtained aggregating the net financial margins of each individual operation of credit and uptake made by the bank. For these purposes, the volume of each operation and its contribution margin are considered, which in turn corresponds to the difference between the effective rate of the customer and the internal transfer price established according to the term and currency of each operation. Additionally, the net margin includes the result of interest and indexation from the accounting hedges.

●

Provisions for credit risk are determined at the customer and counterparty level based on the characteristics of each of their operations. In the case of additional provisions, these are assigned to the different business segments based on the credit risk weighted assets that each segment has.

●

The capital and its financial impacts on outcome have been assigned to each segment based on the risk-weighted assets.

●

Operational expenses are reflected at the level of the different functional areas of the Bank. The allocation of expenses from functional areas to business segments is done using different allocation criteria, at the level of the different concepts and expense items.

Taxes are managed at a corporate level and are not allocated to business segments.

For the periods ended September 30, 2023 and 2022 there was no income from transactions with a customer or counterparty that accounted for 10% or more of the Bank’s total revenues.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

6.	Business Segments, continued:

The following table presents the income by segment for the periods ended between January 1, and September 30, 2023 and 2022 for each of the segments defined above:

	Retail						Wholesale						Treasury						Subsidiaries						Subtotal						Consolidation adjustment						Total
	September			September			September			September			September			September			September			September			September			September			September			September			September			September
	2023			2022			2023			2022			2023			2022			2023			2022			2023			2022			2023			2022			2023			2022
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Net interest revenue (expense) and UF indexation		1,005,814			1,088,446			565,041			637,593			(232,937	)		(8,758	)		(9,053	)		(7,846	)		1,328,865			1,709,435			272			78			1,329,137			1,709,513
Net commissions revenue (expense)		248,192			223,430			56,002			55,320			(1,773	)		(1,702	)		127,541			129,265			429,962			406,313			(24,497	)		(11,134	)		405,465			395,179
Profit (loss) of financial operations		330			333			17,094			16,988			195,363			29,750			27,471			19,981			240,258			67,052			(225	)		(78	)		240,033			66,974
Foreign currency changes, indexation and accounting hedge		9,051			11,716			25,175			25,275			56,382			54,393			20,165			20,065			110,773			111,449			—			—			110,773			111,449
Other income		30,149			13,234			10,796			7,437			—			—			2,712			2,501			43,657			23,172			(4,950	)		(4,577	)		38,707			18,595
Income attributable to investments in other companies		5,665			5,543			2,364			2,127			260			201			1,068			556			9,357			8,427			—			—			9,357			8,427
Total operating revenue		1,299,201			1,342,702			676,472			744,740			17,295			73,884			169,904			164,522			2,162,872			2,325,848			(29,400	)		(15,711	)		2,133,472			2,310,137
Expenses from salaries and employee benefits		(259,910	)		(247,887	)		(80,001	)		(72,991	)		(2,008	)		(1,817	)		(63,731	)		(59,646	)		(405,650	)		(382,341	)		15			14			(405,635	)		(382,327	)
Administrative expenses		(246,061	)		(203,996	)		(56,510	)		(49,629	)		(1,490	)		(1,347	)		(28,199	)		(25,295	)		(332,260	)		(280,267	)		28,649			14,865			(303,611	)		(265,402	)
Depreciation and amortization		(57,261	)		(51,366	)		(6,346	)		(6,486	)		(308	)		(321	)		(4,873	)		(4,646	)		(68,788	)		(62,819	)		—			—			(68,788	)		(62,819	)
Impairment of non-financial assets		(21	)		(9	)		(5	)		(122	)		—			—			(86	)		71			(112	)		(60	)		—			—			(112	)		(60	)
Other operating expenses		(14,347	)		(10,455	)		(5,909	)		(7,612	)		(1	)		—			(1,193	)		(1,034	)		(21,450	)		(19,101	)		736			832			(20,714	)		(18,269	)
Total operating expenses		(577,600	)		(513,713	)		(148,771	)		(136,840	)		(3,807	)		(3,485	)		(98,082	)		(90,550	)		(828,260	)		(744,588	)		29,400			15,711			(798,860	)		(728,877	)
Expenses for credit losses (*)		(251,824	)		(217,303	)		15,416			(86,793	)		3,057			(7,653	)		—			—			(233,351	)		(311,749	)		—			—			(233,351	)		(311,749	)
Income from operations		469,777			611,686			543,117			521,107			16,545			62,746			71,822			73,972			1,101,261			1,269,511			—			—			1,101,261			1,269,511
Income taxes																																						(243,170	)		(206,686	)
Income after income taxes																																						858,091			1,062,825

(*)	As of September 30, 2022, the retail and wholesale segments include additional provisions assigned based on their risk-weighted assets for Ch$73,907 million and Ch$71,093 million, respectively.

The following table presents assets and liabilities of the periods ended September 30, 2023 and December 31, 2022 by each segment defined above:

	Retail				Wholesale				Treasury				Subsidiaries				Subtotal				Consolidation adjustment						Total
	September		December		September		December		September		December		September		December		September		December		September			December			September		December
	2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023			2022			2023		2022
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$			MCh$			MCh$		MCh$

Assets		22,530,258		22,025,372		12,786,156		13,576,675		18,462,517		18,602,123		918,392		561,621		54,697,323		54,765,791		(154,296	)		(237,339	)		54,543,027		54,528,452
Current and deferred taxes																												610,308		726,910
Total assets																												55,153,335		55,255,362

Liabilities		18,698,639		17,572,012		9,509,569		10,151,503		21,357,244		22,182,398		714,800		727,529		50,280,252		50,633,442		(154,296	)		(237,339	)		50,125,956		50,396,103
Current and deferred taxes																												1,246		932
Total liabilities																												50,127,202		50,397,035

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

7.	Cash and Cash Equivalents:

The detail of the balances included under cash and cash equivalents as follows:

	September		December
	2023		2022
	MCh$		MCh$
Cash and due from banks:
Cash		962,664		947,669
Deposit in Chilean Central Bank (*)		728,647		384,230
Deposit in abroad Central Bank		—		—
Deposits in domestic banks		15,542		116,541
Deposits in abroad banks		1,370,157		1,316,444
Subtotal – Cash and due from banks		3,077,010		2,764,884

Net transactions in the course of settlement (**)		54,235		90,404
Others cash equivalents (***)		3,458,785		3,250,101
Total cash and cash equivalents		6,590,030		6,105,389

The detail of the balances included under net ongoing clearance operations is as follows:

	September			December
	2023			2022
	MCh$			MCh$
Assets
Documents drawn on other banks (clearing)		106,241			94,675
Funds receivable		432,833			677,521
Subtotal - assets		539,074			772,196

Liabilities
Funds payable		(484,839	)		(681,792	)
Subtotal - liabilities		(484,839	)		(681,792	)
Net transactions in the course of settlement		54,235			90,404

(*)	The level of funds in cash and in the Central Bank of Chile responds to regulations on reserve requirements that the bank must maintain on average in monthly periods.

(**)	Ongoing clearance operations correspond to transactions in which only the settlement remains that will increase or decrease the funds in the Central Bank of Chile or in foreign banks, normally within 12 or 24 business hours.

(***)

Refers to financial instruments that meet the criteria to be considered as “cash equivalents” as defined by IAS 7, i.e., to qualify as “cash equivalents” investments in debt financial instruments must be: short-term with an original maturity of 90 days or less from the date of acquisition, highly liquid, readily convertible to known amounts of cash from the date of initial investment, and that the financial instruments are exposed to an insignificant risk of changes in their value.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

8.	Financial Assets Held for Trading at Fair Value through Profit or Loss:

The item detail is as follows:

	September		December
	2023		2022
	MCh$		MCh$

Financial derivative contracts		2,445,549		2,960,029
Debt Financial Instruments		3,565,118		3,433,745
Other financial instruments		454,970		257,325
Total		6,465,637		6,651,099

(a)

The Bank as of September 30, 2023 and December 31, 2022, maintains the following asset portfolio of derivative instruments:

	Notional amount of contract with final expiration date in
	Demand				Up to 1 month				Over 1 month and up to 3 months				Over 3 months and up to 12 months				Over 1 year and up to 3 years				Over 3 year and up to 5 years				Over 5 years				Total				Fair Value Assets
	September		December		September		December		September		December		September		December		September		December		September		December		September		December		September		December		September		December
	2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Currency forward		—		—		3,221,967		3,709,915		2,570,002		2,877,266		3,137,210		3,331,247		406,431		523,024		20,075		45,610		—		—		9,355,685		10,487,062		330,252		565,373
Interest rate swap		—		—		741,148		1,469,421		1,448,749		1,372,813		6,536,870		5,305,882		7,225,920		5,531,197		4,069,686		3,897,824		4,576,712		4,824,660		24,599,085		22,401,797		1,230,499		1,324,541
Interest rate and cross currency swap		—		—		162,010		400,358		217,738		443,952		978,930		1,245,809		2,802,279		2,695,878		1,119,745		1,154,754		2,392,299		2,331,640		7,673,001		8,272,391		878,984		1,065,036
Call currency options		—		—		5,743		15,504		22,325		44,966		71,977		32,090		12,982		—		—		—		—		—		113,027		92,560		5,025		2,321
Put currency options		—		—		4,151		8,806		27,587		16,598		66,142		22,449		8,453		—		—		—		—		—		106,333		47,853		789		2,758
Total		—		—		4,135,019		5,604,004		4,286,401		4,755,595		10,791,129		9,937,477		10,456,065		8,750,099		5,209,506		5,098,188		6,969,011		7,156,300		41,847,131		41,301,663		2,445,549		2,960,029

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

8.	Financial Assets Held for Trading at Fair Value through Profit or Loss, continued:

The detail of the Debt Financial Instruments is the following:

	September		December
	2023		2022
	MCh$		MCh$
Instruments issued by the Chilean Government and Central Bank of Chile
Debt financial instruments from the Central Bank of Chile		3,210,451		3,014,768
Bonds and Promissory notes from the General Treasury of the Republic		190,580		44,524
Other fiscal debt financial instruments		—		—

Other Instruments Issued in Chile
Debt financial instruments from other domestic banks		164,087		374,453
Bonds and trade effects from domestic companies		—		—
Other debt financial instruments issued in the country		—		—

Instruments Issued Abroad
Financial instruments from foreign governments or Central Banks		—		—
Financial debt instruments from foreign goverments and fiscal entities		—		—
Debt financial instruments from other foreign banks		—		—
Bonds and trade effects from foreign companies		—		—
Total		3,565,118		3,433,745

Under instruments of the State and Central Bank of Chile are classified instruments sold under repurchase agreements to clients and financial institutions, by amount of Ch$34,787 million as of September 30, 2023 (no balance at December 2022). The repurchase agreements have an average maturity of 2 days at the end of September 2023 (no balance at December 2022).

Instruments sold under repurchase agreements to clients and financial institutions include other debt financial instruments issued in the country, by an amount of Ch$56,735 million as of September 30, 2023 (Ch$208,330 million in December 2022). The repurchase agreements have an average maturity of 7 days at the end of the 2023 period (7 days in December 2022).

Additionally, the Bank has investments in own-issued letters of credit for an amount equivalent to Ch$1,953 million as of September 30, 2023 (Ch$2,790 million in December 2022), which are presented as a reduction of the liability item “Debt Financial Instruments Issued”.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

8.	Financial Assets Held for Trading at Fair Value through Profit or Loss, continued:

The detail of other financial instruments is as follows:

	September		December
	2023		2022
	MCh$		MCh$
Mutual fund investments
Funds managed by related companies		452,325		250,337
Funds managed by third-party		—		—

Equity instruments
Domestic equity instruments		1,121		2,357
Foreign equity instruments		10		3,261

Loans originated and acquired by the entity
Loans and advances to banks		—		—
Commercial loans		—		—
Residential mortgage loans		—		—
Consumer loans		—		—
Others		1,514		1,370
Total		454,970		257,325

9.	Non-trading Financial Assets mandatorily measured at Fair Value through Profit or Loss:

As of September 30, 2023 and December 31, 2022, the Bank does not hold any non-trading financial assets mandatorily measured at fair value through profit or loss.

10.	Financial Assets and Liabilities designated as at Fair Value through Profit or Loss:

As of September 30, 2023 and December 31, 2022, the Bank does not hold financial assets and liabilities designated as at fair value through profit or loss.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

11.	Financial Assets at Fair Value through Other Comprehensive Income:

The item detail is as follows:

	September		December
	2023		2022
	MCh$		MCh$

Debt Financial Instruments		3,524,783		3,967,392
Other financial instruments		—		—
Total		3,524,783		3,967,392

(a)

As of September 30, 2023 and December 31, 2022, the detail of debt financial instruments is as follows:

	September		December
	2023		2022
	MCh$		MCh$
Instruments issued by the Chilean Government and Central Bank of Chile
Debt financial instruments from the Central Bank of Chile		462,883		—
Bonds and Promissory notes from the General Treasury of the Republic		1,318,677		2,254,578
Other fiscal debt financial instruments		2,087		4,279

Other Instruments Issued in Chile
Debt financial instruments from other domestic banks		1,481,882		1,494,914
Bonds and trade effects from domestic companies		60,648		45,994
Other debt financial instruments issued in the country		—		—

Instruments Issued Abroad
Financial instruments from foreign Central Banks		—		—
Financial instruments from foreign governments and fiscal entities		43,448		42,017
Debt financial instruments from other foreing banks		155,158		125,610
Bonds and trade effects from foreign companies		—		—
Other debt financial instruments issued abroad		—		—
Total		3,524,783		3,967,392

Instruments of the Government and the Central Bank of Chile include instruments sold under repurchase agreements to clients and financial institutions for an amount of Ch$5,017 million in September 2023 (Ch$7,369 million in December 2022). The repurchase agreements have an average maturity of 4 days in September 2023 (4 days in December 2022). As part of the FCIC program, instruments delivered as collateral are included for an approximate amount of Ch$1,208,454 million as of September 30, 2023 (Ch$693,206 million in December 2022).

Under the same item, instruments that guarantee margins for cleared derivatives transactions are classified through Comder Contraparte Central S.A. for an amount of Ch$30,468 million as of September 30, 2023 (Ch$39,508 million as of December 31, 2022).

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

11.

Financial Assets at Fair Value through Other Comprehensive Income, continued:

Under Instruments of Other National Institutions are classified instruments delivered as collateral as part of FCIC program for an approximate amount of Ch$1,064,925 million as of September 30, 2023 (Ch$219,425 million as of December 31, 2022).

As of September 30, 2023 the accumulated credit impairment for debt instruments at fair value through other comprehensive income was Ch$5,780 million (Ch$9,496 million as of December 31, 2022).

(b)

The analysis of changes in fair value and expected losses of debt instruments measured at fair value is as follows:

	Phase 1 Individual						Phase 2 Individual						Phase 3 Individual				Total
	Fair value			Impairment			Fair value			Impairment			Fair value		Impairment		Fair value			Impairment
	MCh$			MCh$			MCh$			MCh$			MCh$		MCh$		MCh$			MCh$

Balance as of January 1, 2022		3,054,795			4,085			14			—			—		—		3,054,809			4,085
Net change in balance		864,521			5,411			(14	)		—			—		—		864,507			5,411
Change in fair value		48,076			—			—			—			—		—		48,076			—
Transfer to Phase 1		—			—			—			—			—		—		—			—
Transfer to Phase 2		—			—			—			—			—		—		—			—
Transfer to Phase 3		—			—			—			—			—		—		—			—
Impact due to transfer between phases		—			—			—			—			—		—		—			—
Net impact due to impairment		—			—			—			—			—		—		—			—
Balance as of December 31, 2022		3,967,392			9,496			—			—			—		—		3,967,392			9,496

Balance as of January 1, 2023		3,967,392			9,496			—			—			—		—		3,967,392			9,496
Net change in balance		(390,467	)		(3,716	)		(30,124	)		(1,921	)		—		—		(420,591	)		(5,637	)
Change in fair value		(22,174	)		—			156						—		—		(22,018	)		—
Transfer to Phase 1		—			—			—			—			—		—		—			—
Transfer to Phase 2		(29,968	)		—			29,968			—			—		—		—			—
Transfer to Phase 3		—			—			—			—			—		—		—			—
Impact due to transfer between phases		—			—			—			1,921			—		—		—			1,921
Net impact due to impairment		—			—			—			—			—		—		—			—
Balance as of September 30, 2023		3,524,783			5,780			—			—			—		—		3,524,783			5,780

(c)

Realized and unrealized gains and losses:

As of September 30, 2023, the portfolio of debt financial instruments includes an accumulated unrealized loss of Ch$21,750 million (unrealized gain of Ch$268 million in December 2022), recorded as an equity valuation adjustment.

Gross realized gains and losses on the sale of debt financial instruments, as of September 30, 2023 and 2022 are reported under “Net Financial income (expense)” (See Note No. 33). The changes in realized gains and losses at the end of both periods are the following:

	September			September
	2023			2022
	MCh$			MCh$

Unrealized (losses) gains		(22,326	)		(52,783	)
Realized losses (gains) reclassified to income		308			57,901
Subtotal		(22,018	)		5,118
Income tax on other comprehensive income		1,069			2,796
Net effect in equity		(20,949	)		7,914

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

12.	Derivative Financial Instruments for hedging purposes:

(a.1)

As of September 30, 2023 and December 31, 2022, the Bank has the following asset portfolio of financial derivative instruments for accounting hedging purposes:

	Notional amount of contract with final expiration date in
	Demand				Up to 1 month				Over 1 month and up to 3 months				Over 3 months and up to 12 months				Over 1 year and up to 3 years				Over 3 year and up to 5 years				Over 5 years				Total				Fair value Assets
	September		December		September		December		September		December		September		December		September		December		September		December		September		December		September		December		September		December
	2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Derivatives held for fair value hedges
Currency forward		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Interest rate swap		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Interest rate swap and cross currency swap		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Call currency options		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Put currency options		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—

Cash flow hedge derivatives
Currency forward		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Interest rate swap		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Interest rate swap and cross currency swap		—		—		—		—		104,661		—		—		167,199		175,179		135,025		157,996		122,127		334,120		111,547		771,956		535,898		59,519		27,077
Call currency options		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Put currency options		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal		—		—		—		—		104,661		—		—		167,199		175,179		135,025		157,996		122,127		334,120		111,547		771,956		535,898		59,519		27,077
Total		—		—		—		—		104,661		—		—		167,199		175,179		135,025		157,996		122,127		334,120		111,547		771,956		535,898		59,519		27,077

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

12.	Derivative Financial Instruments for hedging purposes, continued:

(a.2)

As of September 30, 2023 and December 31, 2022, the Bank has the following debt portfolio of financial derivative instruments for accounting hedging purposes:

	Notional amount of contract with final expiration date in
	Demand				Up to 1 month				Over 1 month and up to 3 months				Over 3 months and up to 12 months				Over 1 year and up to 3 years				Over 3 year and up to 5 years				Over 5 years				Total				Fair value Liabilities
	September		December		September		December		September		December		September		December		September		December		September		December		September		December		September		December		September		December
	2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Derivatives held for fair value hedges
Currency forward		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Interest rate swap		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Interest rate swap and cross currency swap		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Call currency options		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Put currency options		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—

Cash flow hedge derivatives
Currency forward		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Interest rate swap		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Interest rate swap and cross currency swap		—		—		—		—		65,553		—		—		63,587		127,023		123,214		133,158		129,166		968,359		1,151,878		1,294,093		1,467,845		125,412		223,016
Call currency options		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Put currency options		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal		—		—		—		—		65,553		—		—		63,587		127,023		123,214		133,158		129,166		968,359		1,151,878		1,294,093		1,467,845		125,412		223,016
Total		—		—		—		—		65,553		—		—		63,587		127,023		123,214		133,158		129,166		968,359		1,151,878		1,294,093		1,467,845		125,412		223,016

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

12.

Derivative Financial Instruments for hedging purposes, continued:

(b)

Fair value Hedges:

As of Septermber 30, 2023 and December 31, 2022, no fair value hedges are held.

(c)

Cash flow Hedges:

(c.1)

The Bank uses cross currency swaps to hedge the risk from variability of cash flows attributable to changes in the interest rates and foreign exchange of foreign banks obligations and bonds issued abroad in US Dollars, Hong Kong dollars, Swiss Franc, Japanese Yens, Peruvian Sol, Australian Dollars, Euros, Norwegian kroner and Mexican peso. The cash flows of the cross currency swaps equal the cash flows of the hedged items, which modify uncertain cash flows to known cash flows derived from a fixed interest rate.

Additionally, these cross currency swap contracts used to hedge the risk from variability of the Unidad de Fomento (“CLF”) in assets flows denominated in CLF until a nominal amount equal to the portion notional of the hedging instrument CLF, whose readjustment impact the item “Interest Revenue” of the Income Financial Statements.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

12.

Derivative Financial Instruments for hedging purposes, continued:

(c)

Cash flow Hedges, continued:

(c.2)

Below are the cash flows from bonds issued abroad objects of this hedge and the cash flows of the asset part of the derivative instrument:

	Demand				Up to 1 month						Over 1 month and up to 3 months						Over 3 months and up to 12 months						Over 1 year and up to 3 years						Over 3 years and up to 5 years						Over 5 years						Total
	September		December		September			December			September			December			September			December			September			December			September			December			September			December			September			December
	2023		2022		2023			2022			2023			2022			2023			2022			2023			2022			2023			2022			2023			2022			2023			2022
	MCh$		MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Hedge element
Outflows:
Corporate Bond		—		—		(7,891	)		(378	)		(125,084	)		(4,423	)		(27,776	)		(226,822	)		(389,787	)		(339,527	)		(387,159	)		(338,871	)		(1,419,855	)		(1,421,772	)		(2,357,552	)		(2,331,793	)
Obligation USD		—		—		—			—			(62,478	)		—			—			(59,876	)		—			—			—			—			—			—			(62,478	)		(59,876	)

Hedge instrument
Inflows:
Cross Currency Swap		—		—		7,891			378			187,562			4,423			27,776			286,698			389,787			339,527			387,159			338,871			1,419,855			1,421,772			2,420,030			2,391,669
Net cash flows		—		—		—			—			—			—			—			—			—			—			—			—			—			—			—			—

(c.3)

Below are the cash flows from underlying assets and the cash flows of the liability part of the derivative instrument:

	Demand				Up to 1 month						Over 1 month and up to 3 months						Over 3 months and up to 12 months						Over 1 year and up to 3 years						Over 3 years and up to 5 years						Over 5 years						Total
	September		December		September			December			September			December			September			December			September			December			September			December			September			December			September			December
	2023		2022		2023			2022			2023			2022			2023			2022			2023			2022			2023			2022			2023			2022			2023			2022
	MCh$		MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Hedge element
Inflows:
Cash flows in CLF		—		—		5,306			1,437			181,777			1,742			24,035			268,092			374,536			327,478			345,142			309,408			1,419,149			1,389,012			2,349,945			2,297,169

Hedge instrument
Outflows:
Cross Currency Swap HKD		—		—		(5,306	)		(1,437	)		(181,777	)		(1,742	)		(24,035	)		(268,092	)		(374,536	)		(327,478	)		(345,142	)		(309,408	)		(1,419,149	)		(1,389,012	)		(2,349,945	)		(2,297,169	)
Net cash flows		—		—		—			—			—			—			—			—			—			—			—			—			—			—			—			—

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

12.

Derivative Financial Instruments for hedging purposes, continued:

(c)

Cash flow Hedges, continued:

With respect to UF assets hedged; these are revalued monthly according to the variation of the UF, which is equivalent to monthly reinvest the assets until maturity of the relationship hedging.

(c.4)

The unrealized results generated during the period 2023 by those derivative contracts that conform the hedging instruments in this cash flow hedging strategy, have been recorded with credit to equity amounting to Ch$147,508 million (charge to equity of Ch$119,933 million in September 2022). The net effect of taxes credit to equity amounts to Ch$107,681 million (charge to equity of Ch$87,551 million during the period September 2022).

The accumulated balance for this concept as of September 30, 2023 corresponds to a credit in equity amounted to Ch$43,726 million (charge to equity of Ch$103,782 million as of December 2022).

(c.5)

The effect of the cash flow hedging derivatives that offset the result of the hedged instruments corresponds to a charge to income of Ch$6,550 million during the period 2023 (charge to results for Ch$17,292 million during the period September 2022).

(c.6)

As of September 30, 2023 and 2022, it not exist inefficiency in cash flow hedge, because both, hedge item and hedge instruments, are mirrors of each other, it means that all variation of value attributable to rate and revaluation components are netted totally.

(c.7)

As of September 30, 2023 and 2022, the Bank does not have hedges of net investments in foreign business.

13.	Financial assets at amortized cost:

The item detail is as follows:

	September			December
	2023			2022
	MCh$			MCh$

Rights from resale agreements and securities lending		51,349			54,061
Debt financial instruments		911,831			902,355
Loans and advances to Banks		2,181,001			2,174,115
Loans to customers:
Commercial loans		19,609,336			20,285,710
Residential mortgage loans		12,014,056			11,416,154
Consumer loans		5,134,368			4,992,940
Provisions established for credit risk:
Commercial loans provisions		(379,084	)		(414,200	)
Mortgage loans provisions		(30,855	)		(29,303	)
Consumer loans provisions		(341,299	)		(334,889	)
Total		39,150,703			39,046,943

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(a)

Rights from resale agreements and securities lending:

The Bank provides financing to its customers through resale agreements and securities lending, in which the financial instrument serves as collateral. As of September 30, 2023 and December 31, 2022, the detail is as follows:

	September		December
	2023		2022
	MCh$		MCh$
Transaction with domestic banks
Resale agreements with other banks		—		—
Resale agreements with the Central Bank of Chile		—		—
Rights from securities lending		—		—

Transaction with foreign banks
Resale agreements with other banks		—		—
Resale agreements with foreign Central Banks		—		—
Rights from securities lending		—		—

Transaction with other domestic entities
Resale agreements		51,349		54,061
Rights from securities lending		—		—

Transaction with other foreign entities
Resale agreements		—		—
Rights from securities lending		—		—

Accumulated Impairment Value of Financial Assets at Amortized Cost - Rights from resale agreements and securities lending
Financial assets with no significant increase in credit risk since initial recognition (phase 1)		—		—
Financial assets with a significant increase in credit risk since initial recognition, but without credit impairment (phase 2)		—		—
Financial assets with credit impairment (phase 3)		—		—
Total		51,349		54,061

The Bank and its subsidiaries have received financial instruments that they can sell or give as collateral in case the owner of these instruments enters into default or in bankruptcy. As of September 30, 2023, the fair value of the instruments received amounts to Ch$49,500 million (Ch$53,173 million in December 2022).

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(b)

Debt financial instruments:

At the end of each period, the balances presented under this item are as follows:

	September		December
	2023		2022
	MCh$		MCh$
Instruments issued by the Chilean Government and Central Bank of Chile
Debt financial instruments from the Central Bank of Chile		—		—
Bonds and promissory notes from the General Treasury of the Republic		911,831		902,355
Other fiscal debt financial instruments		—		—

Other Finacial Instruments issued in Chile
Debt financial instruments from other domestic banks		—		—
Bonds and trade effects from domestic companies		—		—
Other debt financial instruments issued in the country		—		—

Financial Instruments issued Abroad
Debt financial instruments from foreign Central Banks		—		—
Debt financial instruments from foreign governments and fiscal entities		—		—
Debt financial instruments from other foreing banks		—		—
Bonds and trade effects from foreign companies		—		—
Other debt financial instruments issued abroad		—		—

Accumulated Impairment Value of Financial Assets at Amortized Cost Debt Financial Instruments
Financial assets with no significant increase in credit risk since initial recognition (phase 1)		—		—
Financial assets with a significant increase in credit risk since initial recognition, but without credit impairment (phase 2)		—		—
Financial assets with credit impairment (phase 3)		—		—
Total		911,831		902,355

Under Instruments of the Government and the Central Bank of Chile, instruments are classified pledged as collateral as part of the FCIC program are included for an approximate amount of Ch$811,117 million as of September 30, 2023 (Ch$560,434 million as of December 31, 2022).

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(c)

Loans and advances to Banks: At the end of each period, the balances presented under this item are as follows:

	Assets before allowances								Allowances established
	Normal Portfolio		Substandard Portfolio		Non-Complying Portfolio				Normal Portfolio			Substandard Portfolio		Non-Complying Portfolio					Net
	Individual		Individual		Individual				Individual			Individual		Individual					Financial
As of September 30, 2023	Evaluation		Evaluation		Evaluation		Total		Evaluation			Evaluation		Evaluation		Total			Asset
	MCh$		MCh$		MCh$		MCh$		MCh$			MCh$		MCh$		MCh$			MCh$

Domestic Banks
Interbank loans of liquidity		150,039		—		—		150,039		(54	)		—		—		(54	)		149,985
Interbank loans commercial		—		—		—		—		—			—		—		—			—
Current accounts overdrafts		—		—		—		—		—			—		—		—			—
Chilean exports foreign trade loans		—		—		—		—		—			—		—		—			—
Chilean imports foreign trade loans		—		—		—		—		—			—		—		—			—
Credits with third countries		—		—		—		—		—			—		—		—			—
Non-transferable deposits in domestic banks		—		—		—		—		—			—		—		—			—
Other debts with domestic banks		—		—		—		—		—			—		—		—			—
Foreign Banks
Interbank loans of liquidity		—		—		—		—		—			—		—		—			—
Interbank loans commercial		205,632		—		—		205,632		(450	)		—		—		(450	)		205,182
Current accounts overdrafts		—		—		—		—		—			—		—		—			—
Chilean exports foreign trade loans		125,214		—		—		125,214		(255	)		—		—		(255	)		124,959
Chilean imports foreign trade loans		—		—		—		—		—			—		—		—			—
Credits with third countries		1		—		—		1		—			—		—		—			1
Current account deposits with foreign banks for derivatives transactions		—		—		—		—		—			—		—		—			—
Other non-transferable deposits with foreign banks		—		—		—		—		—			—		—		—			—
Other debts with foreign banks		—		—		—		—		—			—		—		—			—
Subtotal Domestic Bank and Foreign		480,886		—		—		480,886		(759	)		—		—		(759	)		480,127
Central Bank of Chile
Current account deposits for derivative transactions with a counterparty		—		—		—		—		—			—		—		—			—
Other deposits not available		1,700,874		—		—		1,700,874		—			—		—		—			1,700,874
Other receivables		—		—		—		—		—			—		—		—			—
Foreign Central Banks
Current account deposits for derivatives transactions		—		—		—		—		—			—		—		—			—
Other deposits not available		—		—		—		—		—			—		—		—			—
Other receivables		—		—		—		—		—			—		—		—			—
Subtotal Central Bank of Chile and Foreign Central Banks		1,700,874		—		—		1,700,874		—			—		—		—			1,700,874
Total		2,181,760		—		—		2,181,760		(759	)		—		—		(759	)		2,181,001

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(c)

Loans and advances to Banks, continued:

	Assets before allowances								Allowances established
	Normal Portfolio		Substandard Portfolio		Non-Complying Portfolio				Normal Portfolio			Substandard Portfolio		Non-Complying Portfolio					Net
	Individual		Individual		Individual				Individual			Individual		Individual					Financial
As of December 31, 2022	Evaluation		Evaluation		Evaluation		Total		Evaluation			Evaluation		Evaluation		Total			Asset
	MCh$		MCh$		MCh$		MCh$		MCh$			MCh$		MCh$		MCh$			MCh$

Domestic Banks
Interbank loans of liquidity		—		—		—		—		—			—		—		—			—
Interbank loans commercial		—		—		—		—		—			—		—		—			—
Current accounts overdrafts		—		—		—		—		—			—		—		—			—
Chilean exports foreign trade loans		—		—		—		—		—			—		—		—			—
Chilean imports foreign trade loans		—		—		—		—		—			—		—		—			—
Credits with third countries		—		—		—		—		—			—		—		—			—
Non-transferable deposits in domestic banks		—		—		—		—		—			—		—		—			—
Other debts with foreign banks		—		—		—		—		—			—		—		—			—
Foreign Banks
Interbank loans of liquidity		—		—		—		—		—			—		—		—			—
Interbank loans commercial		186,660		—		—		186,660		(408	)		—		—		(408	)		186,252
Current accounts overdrafts		—		—		—		—		—			—		—		—			—
Chilean exports foreign trade loans		186,553		—		—		186,553		(269	)		—		—		(269	)		186,284
Chilean imports foreign trade loans		—		—		—		—		—			—		—		—			—
Credits with third countries		479		—		—		479		—			—		—		—			479
Current account deposits with foreign banks for derivatives transactions		—		—		—		—		—			—		—		—			—
Other non-transferable deposits with foreign banks		—		—		—		—		—			—		—		—			—
Other debts with foreign banks		—		—		—		—		—			—		—		—			—
Subtotal Domestic Bank and Foreign		373,692		—		—		373,692		(677	)		—		—		(677	)		373,015
Central Bank of Chile
Current account deposits for derivative transactions with a counterparty		—		—		—		—		—			—		—		—			—
Other deposits not available		1,801,100		—		—		1,801,100		—			—		—		—			1,801,100
Other receivables		—		—		—		—		—			—		—		—			—
Foreign Central Banks
Current account deposits for derivatives transactions		—		—		—		—		—			—		—		—			—
Other deposits not available		—		—		—		—		—			—		—		—			—
Other receivables		—		—		—		—		—			—		—		—			—
Subtotal Central Bank of Chile and Foreign Central Banks		1,801,100		—		—		1,801,100		—			—		—		—			1,801,100
Total		2,174,792		—		—		2,174,792		(677	)		—		—		(677	)		2,174,115

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(d)

Loans to Customers: At the end of each period, the balances presented under this item are as follows:

	Assets before allowances												Allowances established
Loans to Customers	Normal Portfolio Evaluation				Substandard Portfolio Evaluation		Non-Complying Portfolio Evaluation						Normal Portfolio Evaluation						Substandard Portfolio Evaluation			Non-Complying Portfolio Evaluation									Deductible Warranties Fogape						Net Financial
As of September 30, 2023	Individual		Group		Individual		Individual		Group		Total		Individual			Group			Individual			Individual			Group			Sub Total			Covid-19			Total			Asset
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Commercial loans
Commercial loans		10,421,834		3,901,515		155,948		211,049		311,476		15,001,822		(90,906	)		(26,514	)		(4,047	)		(59,653	)		(81,302	)		(262,422	)		(12,531	)		(274,953	)		14,726,869
Chilean exports foreign trade loans		1,244,592		4,041		5,032		8,005		361		1,262,031		(23,522	)		(114	)		(29	)		(3,448	)		(158	)		(27,271	)		—			(27,271	)		1,234,760
Accrediting foreign trade loans negotiated in terms of Chilean imports		2,219		—		—		—		—		2,219		(100	)		—			—			—			—			(100	)		—			(100	)		2,119
Chilean imports foreign trade loans		579,401		44,356		6,967		1,929		2,254		634,907		(19,706	)		(1,183	)		(911	)		(1,620	)		(1,123	)		(24,543	)		—			(24,543	)		610,364
Foreign trade credits to third countries		215		—		—		—		—		215		(9	)		—			—			—			—			(9	)		—			(9	)		206
Current account debtors		84,253		91,021		5,558		3,493		1,430		185,755		(2,588	)		(2,161	)		(935	)		(1,067	)		(702	)		(7,453	)		—			(7,453	)		178,302
Credit card debtors		20,849		68,297		1,002		978		7,531		98,657		(852	)		(2,102	)		(149	)		(562	)		(4,124	)		(7,789	)		—			(7,789	)		90,868
Factoring transactions		504,213		35,539		3,935		411		176		544,274		(9,216	)		(838	)		(333	)		(335	)		(63	)		(10,785	)		—			(10,785	)		533,489
Commercial lease transactions (1)		1,437,620		279,440		26,442		35,970		12,060		1,791,532		(3,023	)		(2,272	)		(45	)		(4,859	)		(2,562	)		(12,761	)		(541	)		(13,302	)		1,778,230
Student loans		25		53,747		—		—		3,670		57,442		(1	)		(2,373	)		—			—			(2,556	)		(4,930	)		—			(4,930	)		52,512
Other loans and accounts receivable		7,481		11,958		716		8,888		1,439		30,482		(230	)		(17	)		(222	)		(6,919	)		(561	)		(7,949	)		—			(7,949	)		22,533
Subtotal		14,302,702		4,489,914		205,600		270,723		340,397		19,609,336		(150,153	)		(37,574	)		(6,671	)		(78,463	)		(93,151	)		(366,012	)		(13,072	)		(379,084	)		19,230,252
Residential mortgage loans
Letters of credit		—		2,655		—		—		143		2,798		—			(3	)		—			—			(7	)		(10	)		—			(10	)		2,788
Endorsable mortgage loans		—		11,588		—		—		360		11,948		—			(11	)		—			—			(29	)		(40	)		—			(40	)		11,908
Loans with mutual funds financed by mortgage bonds		—		—		—		—		—		—		—			—			—			—			—			—			—			—			—
Other residential lending		—		11,601,186		—		—		231,445		11,832,631		—			(14,179	)		—			—			(15,674	)		(29,853	)		—			(29,853	)		11,802,778
Residential lease transactions (1)		—		—		—		—		—		—		—			—			—			—			—			—			—			—			—
Other loans and accounts receivable		—		159,252		—		—		7,427		166,679		—			(236	)		—			—			(716	)		(952	)		—			(952	)		165,727
Subtotal		—		11,774,681		—		—		239,375		12,014,056		—			(14,429	)		—			—			(16,426	)		(30,855	)		—			(30,855	)		11,983,201
Consumer loans
Consumer loans in installments		—		2,928,541		—		—		219,767		3,148,308		—			(139,781	)		—			—			(121,563	)		(261,344	)		—			(261,344	)		2,886,964
Current account debtors		—		266,811		—		—		2,449		269,260		—			(11,083	)		—			—			(1,195	)		(12,278	)		—			(12,278	)		256,982
Credit card debtors		—		1,681,292		—		—		33,870		1,715,162		—			(46,213	)		—			—			(20,313	)		(66,526	)		—			(66,526	)		1,648,636
Consumer lease transactions (1)		—		423		—		—		—		423		—			(4	)		—			—			—			(4	)		—			(4	)		419
Other loans and accounts receivable		—		16		—		—		1,199		1,215		—			(4	)		—			—			(1,143	)		(1,147	)		—			(1,147	)		68
Subtotal		—		4,877,083		—		—		257,285		5,134,368		—			(197,085	)		—			—			(144,214	)		(341,299	)		—			(341,299	)		4,793,069
Total		14,302,702		21,141,678		205,600		270,723		837,057		36,757,760		(150,153	)		(249,088	)		(6,671	)		(78,463	)		(253,791	)		(738,166	)		(13,072	)		(751,238	)		36,006,522

(1)	In this item, the Bank finances its clients the acquisition of movable and immovable property through financial lease agreements. As of September 30, 2023 Ch$902,781 million correspond to finance leases on immovable property and Ch$889,174 million correspond to finance leases on movable property.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(d)

Loans to Customers, continued:

	Assets before allowances												Allowances established
Loans to Customers	Normal Portfolio Evaluation				Substandard Portfolio Evaluation		Non-Complying Portfolio Evaluation						Normal Portfolio Evaluation						Substandard Portfolio Evaluation			Non-Complying Portfolio Evaluation									Deductible Warranties Fogape						Net Financial
As of December 31, 2022	Individual		Group		Individual		Individual		Group		Total		Individual			Group			Individual			Individual			Group			Sub Total			Covid-19			Total			Asset
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Commercial loans
Commercial loans		11,267,836		3,946,954		227,161		162,190		267,428		15,871,569		(97,717	)		(29,691	)		(18,459	)		(59,989	)		(82,000	)		(287,856	)		(31,986	)		(319,842	)		15,551,727
Chilean exports foreign trade loans		941,478		3,857		4,565		5,980		533		956,413		(19,033	)		(114	)		(256	)		(2,779	)		(255	)		(22,437	)		—			(22,437	)		933,976
Accrediting foreign trade loans negotiated in terms of Chilean imports		2,715		—		—		—		—		2,715		(121	)		—			—			—			—			(121	)		—			(121	)		2,594
Chilean imports foreign trade loans		638,964		43,915		9,726		3,967		1,843		698,415		(19,478	)		(1,193	)		(709	)		(2,564	)		(868	)		(24,812	)		—			(24,812	)		673,603
Foreign trade credits to third countries		—		—		—		—		—		—		—			—			—			—			—			—			—			—			—
Current account debtors		78,854		87,728		5,260		2,673		1,144		175,659		(2,093	)		(2,083	)		(679	)		(669	)		(544	)		(6,068	)		—			(6,068	)		169,591
Credit card debtors		18,235		61,911		875		649		5,153		86,823		(726	)		(1,852	)		(136	)		(373	)		(2,795	)		(5,882	)		—			(5,882	)		80,941
Factoring transactions		589,682		34,074		4,255		454		53		628,518		(10,523	)		(828	)		(333	)		(351	)		(19	)		(12,054	)		—			(12,054	)		616,464
Commercial lease transactions (1)		1,415,018		290,772		35,050		31,392		9,162		1,781,394		(2,560	)		(3,784	)		(146	)		(4,259	)		(1,228	)		(11,977	)		(757	)		(12,734	)		1,768,660
Student loans		—		56,542		—		—		3,052		59,594		—			(2,451	)		—			—			(2,105	)		(4,556	)		—			(4,556	)		55,038
Other loans and accounts receivable		6,551		9,088		324		7,357		1,290		24,610		(216	)		(25	)		(79	)		(4,951	)		(423	)		(5,694	)		—			(5,694	)		18,916
Subtotal		14,959,333		4,534,841		287,216		214,662		289,658		20,285,710		(152,467	)		(42,021	)		(20,797	)		(75,935	)		(90,237	)		(381,457	)		(32,743	)		(414,200	)		19,871,510
Residential mortgage loans
Letters of credit		—		3,717		—		—		175		3,892		—			(4	)		—			—			(9	)		(13	)		—			(13	)		3,879
Endorsable mortgage loans		—		14,251		—		—		349		14,600		—			(16	)		—			—			(28	)		(44	)		—			(44	)		14,556
Loans with mutual funds financed by mortgage bonds		—		—		—		—		—		—		—			—			—			—			—			—			—			—			—
Other residential lending		—		11,044,318		—		—		189,029		11,233,347		—			(14,495	)		—			—			(13,112	)		(27,607	)		—			(27,607	)		11,205,740
Residential lease transactions (1)		—		—		—		—		—		—		—			—			—			—			—			—			—			—			—
Other loans and accounts receivable		—		158,133		—		—		6,182		164,315		—			(639	)		—			—			(1,000	)		(1,639	)		—			(1,639	)		162,676
Subtotal		—		11,220,419		—		—		195,735		11,416,154		—			(15,154	)		—			—			(14,149	)		(29,303	)		—			(29,303	)		11,386,851
Consumer loans
Consumer loans in installments		—		2,925,947		—		—		188,507		3,114,454		—			(147,154	)		—			—			(114,176	)		(261,330	)		—			(261,330	)		2,853,124
Current account debtors		—		250,308		—		—		3,101		253,409		—			(9,661	)		—			—			(1,522	)		(11,183	)		—			(11,183	)		242,226
Credit card debtors		—		1,593,759		—		—		29,776		1,623,535		—			(43,204	)		—			—			(18,184	)		(61,388	)		—			(61,388	)		1,562,147
Consumer lease transactions (1)		—		503		—		—		—		503		—			(6	)		—			—			—			(6	)		—			(6	)		497
Other loans and accounts receivable		—		47		—		—		992		1,039		—			(18	)		—			—			(964	)		(982	)		—			(982	)		57
Subtotal		—		4,770,564		—		—		222,376		4,992,940		—			(200,043	)		—			—			(134,846	)		(334,889	)		—			(334,889	)		4,658,051
Total		14,959,333		20,525,824		287,216		214,662		707,769		36,694,804		(152,467	)		(257,218	)		(20,797	)		(75,935	)		(239,232	)		(745,649	)		(32,743	)		(778,392	)		35,916,412

(1)

In this item, the Bank finances its clients the acquisition of movable and immovable property through financial lease agreements. As of December 31, 2022 Ch$910,141 million correspond to finance leases on immovable property and Ch$871,756 million correspond to finance leases on movable property.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(e)

Contingent loan: At the close of each reporting period, the contingent credit risk exposure is as follows;

	Outstanding exposure before provisions												Provisions established																		Net exposure
	Normal Portfolio				Substandard Portfolio		Non-Complying Portfolio						Normal Portfolio						Substandard Portfolio			Non-Complying Portfolio									for credit risk of
	Evaluation				Evaluation		Evaluation						Evaluation						Evaluation			Evaluation									contingent
As of September 30, 2023	Individual		Group		Individual		Individual		Group		Total		Individual			Group			Individual			Individual			Group			Total			loans
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Warranty by endorsement and sureties		298,467		598		—		—		—		299,065		(3,340	)		(9	)		—			—			—			(3,349	)		295,716
Letters of credit for goods circulation operations		338,398		563		—		—		—		338,961		(759	)		(3	)		—			—			—			(762	)		338,199
Commitments to purchase local currency debt abroad		—		—		—		—		—		—		—			—			—			—			—			—			—
Contingent event transactions		2,510,992		51,248		61,064		15,991		155		2,639,450		(27,683	)		(516	)		(5,569	)		(4,497	)		(80	)		(38,345	)		2,601,105
Undrawn credit lines with immediate termination		1,325,600		8,650,377		4,319		1,056		9,322		9,990,674		(2,272	)		(4,192	)		(49	)		(491	)		(4,603	)		(11,607	)		9,979,067
Undrawn credit lines		—		—		—		—		—		—		—			—			—			—			—			—			—
Credits for Higher Education Law No. 20,027 (CAE)		—		—		—		—		—		—		—			—			—			—			—			—			—
Other irrevocable loan commitments		—		—		—		—		—		—		—			—			—			—			—			—			—
Other contingent loans		—		—		—		—		—		—		—			—			—			—			—			—			—
Total		4,473,457		8,702,786		65,383		17,047		9,477		13,268,150		(34,054	)		(4,720	)		(5,618	)		(4,988	)		(4,683	)		(54,063	)		13,214,087

	Outstanding exposure before provisions												Provisions established																		Net exposure
	Normal Portfolio				Substandard Portfolio		Non-Complying Portfolio						Normal Portfolio						Substandard Portfolio			Non-Complying Portfolio									for credit risk of
	Evaluation				Evaluation		Evaluation						Evaluation						Evaluation			Evaluation									contingent
As of December 31, 2022	Individual		Group		Individual		Individual		Group		Total		Individual			Group			Individual			Individual			Group			Total			loans
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Warranty by endorsement and sureties		340,789		575		7,362		48		—		348,774		(2,939	)		(8	)		(2,970	)		(19	)		—			(5,936	)		342,838
Letters of credit for goods circulation operations		423,810		385		—		—		—		424,195		(875	)		(2	)		—			—			—			(877	)		423,318
Commitments to purchase local currency debt abroad		—		—		—		—		—		—		—			—			—			—			—			—			—
Contingent event transactions		2,541,711		52,124		86,748		16,872		153		2,697,608		(25,758	)		(533	)		(7,888	)		(3,528	)		(73	)		(37,780	)		2,659,828
Undrawn credit lines with immediate termination		1,251,041		8,078,996		4,948		789		12,089		9,347,863		(2,061	)		(4,115	)		(67	)		(471	)		(5,986	)		(12,700	)		9,335,163
Undrawn credit lines		—		—		—		—		—		—		—			—			—			—			—			—			—
Credits for Higher Education Law No. 20,027 (CAE)		—		—		—		—		—		—		—			—			—			—			—			—			—
Other irrevocable loan commitments		72,355		—		—		—		—		72,355		(84	)		—			—			—			—			(84	)		72,271
Other contingent loans		—		—		—		—		—		—		—			—			—			—			—			—			—
Total		4,629,706		8,132,080		99,058		17,709		12,242		12,890,795		(31,717	)		(4,658	)		(10,925	)		(4,018	)		(6,059	)		(57,377	)		12,833,418

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(f)

Provisions:

Summary of changes in due from banks provisions constituted by credit risk portfolio in the period:

	Changes in provisions constituted by portfolio in the period
	Individual Evaluation
	Normal Portfolio			Substandard Portfolio		Non-Complying Portfolio		Total
	MCh$			MCh$		MCh$		MCh$
Loans and advances to Banks
Balance as of January 1, 2023		677			—		—		677
Allowances established/ released:
Change in measurement without portfolio reclassification during the period		(200	)		—		—		(200	)
Change in measurement without portfolio reclassification from the beginning to the end of the period (portfolio from (-) until (+)):
Transfer from Normal individual to Substandard		—			—		—		—
Transfer from Normal individual to Non-Complying individual		—			—		—		—
Transfer from Substandard to Non-Complying individual		—			—		—		—
Transfer from Substandard to Normal individual		—			—		—		—
Transfer from Non-Complying individual to Substandard		—			—		—		—
Transfer from Non-Complying individual to Normal individual		—			—		—		—
New assets originated		1,360			—		—		1,360
New credits for conversion of contingent to loan		—			—		—		—
New assets purchased		—			—		—		—
Sales or transfers of credits		—			—		—		—
Payment of credit		(1,100	)		—		—		(1,100	)
Provisions for write-offs		—			—		—		—
Recovery of written-off loans		—			—		—		—
Foreign exchange differences		22			—		—		22
Other changes in allowances		—			—		—		—
Balance as of September 30, 2023		759			—		—		759

	Changes in provisions constituted by portfolio in the year
	Individual Evaluation
	Normal Portfolio			Substandard Portfolio		Non-Complying Portfolio		Total
	MCh$			MCh$		MCh$		MCh$
Loans and advances to Banks
Balance as of January 1, 2022		519			—		—		519
Allowances established/ released:
Change in measurement without portfolio reclassification during the year		(51	)		—		—		(51	)
Change in measurement without portfolio reclassification from the beginning to the end of the year (portfolio from (-) until (+)):
Transfer from Normal individual to Substandard		—			—		—		—
Transfer from Normal individual to Non-Complying individual		—			—		—		—
Transfer from Substandard to Non-Complying individual		—			—		—		—
Transfer from Substandard to Normal individual		—			—		—		—
Transfer from Non-Complying individual to Substandard		—			—		—		—
Transfer from Non-Complying individual to Normal individual		—			—		—		—
New assets originated		1,793			—		—		1,793
New credits for conversion of contingent to loan		—			—		—		—
New assets purchased		—			—		—		—
Sales or transfers of credits		—			—		—		—
Payment of credit		(1,550	)		—		—		(1,550	)
Provisions for write-offs		—			—		—		—
Recovery of written-off loans		—			—		—		—
Foreign exchange differences		(34	)		—		—		(34	)
Other changes in allowances		—			—		—		—
Balance as of December 31, 2022		677			—		—		677

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(f)

Provisions, continued:

Summary of changes in commercial loan provisions constituted by credit risk portfolio in the period;

	Changes in provisions constituted by portfolio in the period
	Normal Portfolio						Substandard Portfolio			Non-Complying Portfolio									Deductible Warranties
	Evaluation						Evaluation			Evaluation									FOGAPE
	Individual			Grupal			Individual			Individual			Grupal			Sub total			Covid-19			Total
Commercial loans	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Balance as of January 1, 2023		152,467			42,021			20,797			75,935			90,237			381,457			32,743			414,200
Provisions established/ released:
Change in measurement without portfolio reclassification during the period		(47,390	)		(3,906	)		(4,145	)		1,980			15,270			(38,191	)		—			(38,191	)
Change in measurement without portfolio reclassification from the beginning to the end of the period (portfolio from (-) until (+)):
Transfer from Normal individual to Substandard		(1,204	)		—			2,100			—			—			896			—			896
Transfer from Normal individual to Non-Complying individual		(67	)		—			—			1,989			—			1,922			—			1,922
Transfer from Substandard to Non-Complying individual		—			—			(2,964	)		10,828			—			7,864			—			7,864
Transfer from Substandard to Normal individual		844			—			(12,294	)		—			—			(11,450	)		—			(11,450	)
Transfer from Non-Complying individual to Substandard		—			—			—			(12	)		—			(12	)		—			(12	)
Transfer from Non-Complying individual to Normal individual		—			—			—			(17	)		—			(17	)		—			(17	)
Transfer from Normal group to Non-Complying group		—			(11,631	)		—			—			29,825			18,194			—			18,194
Transfer from Non-Complying group to Normal group		—			575			—			—			(7,995	)		(7,420	)		—			(7,420	)
Transfer from Individual (normal, substandard, non-complying) to Group (normal, non-complying)		—			—			—			—			—			—			—			—
Transfer from Group (normal, non-complying) to Individual (normal, substandard, non-complying)		1,437			(897	)		844			130			(438	)		1,076			—			1,076
New assets originated		163,195			18,257			4,984			17,135			13,938			217,509			—			217,509
New credits for conversion of contingent to loan		9,828			6,207			780			906			585			18,306			—			18,306
New assets purchased		—			—			—			—			—			—			—			—
Sales or transfers of credits		—			—			—			(43	)		—			(43	)		—			(43	)
Payment of credit		(131,629	)		(13,204	)		(3,536	)		(19,386	)		(27,489	)		(195,244	)		—			(195,244	)
Provisions for write-offs		—			—			—			(11,655	)		(20,864	)		(32,519	)		—			(32,519	)
Recovery of written-off loans		—			78			—			—			—			78			—			78
Changes to models and assumptions		—			—			—			—			—			—			—			—
Foreign exchange differences		2,672			74			105			673			82			3,606			—			3,606
Other changes in allowances		—			—			—			—			—			—			(19,671	)		(19,671	)
Balance as of September 30, 2023		150,153			37,574			6,671			78,463			93,151			366,012			13,072			379,084

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(f)

Provisions, continued:

	Changes in provisions constituted by portfolio in the year
	Normal Portfolio						Substandard Portfolio			Non-Complying Portfolio									Deductible Warranties
	Evaluation						Evaluation			Evaluation									FOGAPE
	Individual			Group			Individual			Individual			Group			Sub total			Covid-19			Total
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Commercial loans
Balance as of January 1, 2022		148,704			52,512			6,121			73,677			87,340			368,354			48,534			416,888
Provisions established/ released:
Change in measurement without portfolio reclassification during the year		(25,395	)		(2,777	)		(4,103	)		23,725			15,801			7,251			—			7,251
Change in measurement without portfolio reclassification from the beginning to the end of the year (portfolio from (-) until (+)):
Transfer from Normal individual to Substandard		(4,203	)		—			21,075			—			—			16,872			—			16,872
Transfer from Normal individual to Non-Complying individual		(1,015	)		—			—			9,568			—			8,553			—			8,553
Transfer from Substandard to Non-Complying individual		—			—			(2,833	)		14,814			—			11,981			—			11,981
Transfer from Substandard to Normal individual		944			—			(894	)		—			—			50			—			50
Transfer from Non-Complying individual to Substandard		—			—			35			(246	)		—			(211	)		—			(211	)
Transfer from Non-Complying individual to Normal individual		1			—			—			—			—			1			—			1
Transfer from Normal group to Non-Complying group		—			(15,304	)		—			—			35,153			19,849			—			19,849
Transfer from Non-Complying group to Normal group		—			1,539			—			—			(10,220	)		(8,681	)		—			(8,681	)
Transfer from Individual (normal, substandard, non-complying) to Group (normal, non-complying)		—			—			—			—			—			—			—			—
Transfer from Group (normal, non-complying) to Individual (normal, substandard, non-complying)		2,829			(2,275	)		415			168			(226	)		911			—			911
New assets originated		201,650			26,590			8,222			22,174			13,377			272,013			—			272,013
New credits for conversion of contingent to loan		502			359			133			31			32			1,057			—			1,057
New assets purchased		—			—			—			—			—			—			—			—
Sales or transfers of credits		—			—			—			(1,630	)		—			(1,630	)		—			(1,630	)
Payment of credit		(171,428	)		(18,835	)		(7,238	)		(48,902	)		(24,910	)		(271,313	)		—			(271,313	)
Provisions for write-offs		—			(5	)		—			(18,010	)		(26,006	)		(44,021	)		—			(44,021	)
Recovery of written-off loans		—			224			—			—			—			224			—			224
Changes to models and assumptions		—			—			—			—			—			—			—			—
Foreign exchange differences		(122	)		(7	)		(136	)		566			(104	)		197			—			197
Other changes in allowances		—			—			—			—			—			—			(15,791	)		(15,791	)
Balance as of December 31, 2022		152,467			42,021			20,797			75,935			90,237			381,457			32,743			414,200

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(f)

Provisions, continued:

Summary of changes in residential mortgage loan provisions constituted by credit risk portfolio in the period;

	Changes in provisions constituted by portfolio in the period
	Group Evaluation
	Normal Portfolio			Non-Complying Portfolio			Total
	MCh$			MCh$			MCh$
Residential mortgage loans
Balance as of January 1, 2023		15,154			14,149			29,303
Allowances established/ released:
Change in measurement without portfolio reclassification during the period		1,551			360			1,911
Change in measurement without portfolio reclassification from the beginning to the end of the period (portfolio from (-) until (+)):
Transfer from Normal group to Non-Complying group		(3,047	)		6,299			3,252
Transfer from Non-Complying group to Normal group		232			(1,384	)		(1,152	)
New assets originated		1,462			90			1,552
New assets purchased		—			—			—
Sales or transfers of credits		—			—			—
Payment of credit		(923	)		(2,177	)		(3,100	)
Provisions for write-offs		—			(911	)		(911	)
Recovery of written-off loans		—			—			—
Changes to models and assumptions		—			—			—
Foreign exchange differences		—			—			—
Other changes in allowances		—			—			—
Balance as of September 30, 2023		14,429			16,426			30,855

	Changes in provisions constituted by portfolio in the year
	Group Evaluation
	Normal Portfolio			Non-Complying Portfolio			Total
	MCh$			MCh$			MCh$
Residential mortgage loans
Balance as of January 1, 2022		9,512			21,219			30,731
Allowances established/ released:
Change in measurement without portfolio reclassification during the year		6,228			1,559			7,787
Change in measurement without portfolio reclassification from the beginning to the end of the year (portfolio from (-) until (+)):
Transfer from Normal group to Non-Complying group		(2,537	)		6,435			3,898
Transfer from Non-Complying group to Normal group		1,773			(10,431	)		(8,658	)
New assets originated		1,334			280			1,614
New assets purchased		—			—			—
Sales or transfers of credits		—			—			—
Payment of credit		(1,156	)		(3,241	)		(4,397	)
Provisions for write-offs		—			(1,672	)		(1,672	)
Recovery of written-off loans		—			—			—
Changes to models and assumptions		—			—			—
Foreign exchange differences		—			—			—
Other changes in allowances		—			—			—
Balance as of December 31, 2022		15,154			14,149			29,303

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(f)

Provisions, continued:

Summary of changes in consumer loan provisions constituted by credit risk portfolio in the period;

	Changes in provisions constituted by portfolio in the period
	Group Evaluation
	Normal Portfolio			Non-Complying Portfolio			Total
	MCh$			MCh$			MCh$
Consumer loans
Balance as of January 1, 2023		200,043			134,846			334,889
Allowances established/ released:
Change in measurement without portfolio reclassification during the period		14,462			129,834			144,296
Change in measurement without portfolio reclassification from the beginning to the end of the period (portfolio from (-) until (+)):
Transfer from Normal group to Non-Complying group		(102,893	)		133,255			30,362
Transfer from Non-Complying group to Normal group		7,182			(23,881	)		(16,699	)
New assets originated		94,566			65,622			160,188
New credits for conversion of contingent to loan		60,134			3,146			63,280
New assets purchased		—			—			—
Sales or transfers of credits		—			—			—
Payment of credit		(78,211	)		(147,824	)		(226,035	)
Provisions for write-offs		—			(150,818	)		(150,818	)
Recovery of written-off loans		1,787			—			1,787
Changes to models and assumptions		—			—			—
Foreign exchange differences		15			34			49
Other changes in allowances		—			—			—
Balance as of September 30, 2023		197,085			144,214			341,299

	Changes in provisions constituted by portfolio in the year
	Group Evaluation
	Normal Portfolio			Non-Complying Portfolio			Total
	MCh$			MCh$			MCh$
Consumer loans
Balance as of January 1, 2022		142,634			127,996			270,630
Allowances established/ released:
Change in measurement without portfolio reclassification during the year		83,308			109,783			193,091
Change in measurement without portfolio reclassification from the beginning to the end of the year (portfolio from (-) until (+)):
Transfer from Normal group to Non-Complying group		(84,107	)		116,954			32,847
Transfer from Non-Complying group to Normal group		7,923			(36,693	)		(28,770	)
New assets originated		99,205			45,329			144,534
New credits for conversion of contingent to loan		3,699			528			4,227
New assets purchased		—			—			—
Sales or transfers of credits		—			—			—
Payment of credit		(58,447	)		(121,642	)		(180,089	)
Provisions for write-offs		(7	)		(107,605	)		(107,612	)
Recovery of written-off loans		6,048			—			6,048
Changes to models and assumptions		—			—			—
Foreign exchange differences		(213	)		196			(17	)
Other changes in allowances		—			—			—
Balance as of December 31, 2022		200,043			134,846			334,889

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(f)

Provisions, continued:

Summary of changes in contingent credit risk provisions constituted by credit risk portfolio in the period;

	Changes in provisions constituted by portfolio in the period
	Normal Portfolio						Substandard Portfolio			Non-Complying Portfolio
	Evaluation						Evaluation			Evaluation
	Individual			Group			Individual			Individual			Group			Total
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Contingent loan exposure
Balance as of January 1, 2023		31,717			4,658			10,925			4,018			6,059			57,377
Provisions established/ released:
Change in measurement without portfolio reclassification during the period		(1,217	)		(343	)		(38	)		(82	)		(471	)		(2,151	)
Change in measurement without portfolio reclassification from the beginning to the end of the period (portfolio from (-) until (+)):
Transfer from Normal individual to Substandard		(267	)		—			493			—			—			226
Transfer from Normal individual to Non-Complying individual		(4	)		—			—			260			—			256
Transfer from Substandard to Non-Complying individual		—			—			(176	)		993			—			817
Transfer from Substandard to Normal individual		579			—			(2,860	)		—			—			(2,281	)
Transfer from Non-Complying individual to Substandard		—			—			1			(63	)		—			(62	)
Transfer from Non-Complying individual to Normal individual		—			—			—			(46	)		—			(46	)
Transfer from Normal group to Non-Complying group		—			(83	)		—			—			1,550			1,467
Transfer from Non-Complying group to Normal group		—			—			—			—			(2,070	)		(2,070	)
Transfer from Individual (normal, substandard, non-complying) to Group (normal, non-complying )		—			—			—			—			—			—
Transfer from Group (normal, non-complying) to Individual (normal, substandard, non-complying)		52			(35	)		1			7			(11	)		14
New contingent loan granted		23,605			1,520			11,060			2,384			695			39,264
Contingent credits for conversion		(243	)		(332	)		(58	)		(125	)		(296	)		(1,054	)
Changes to models and assumptions		—			—			—			—			—			—
Foreign exchange differences		333			1			(172	)		—			120			282
Other changes in provisions		(20,501	)		(666	)		(13,558	)		(2,358	)		(893	)		(37,976	)
Balance as of September 30, 2023		34,054			4,720			5,618			4,988			4,683			54,063

	Changes in provisions constituted by portfolio in the year
	Normal Portfolio						Substandard Portfolio			Non-Complying Portfolio
	Evaluation						Evaluation			Evaluation
	Individual			Group			Individual			Individual			Group			Total
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Contingent loan exposure
Balance as of January 1, 2022		34,785			4,371			4,297			1,280			9,253			53,986
Provisions established/ released:
Change in measurement without portfolio reclassification during the year		1,555			6,226			(784	)		(11	)		(2	)		6,984
Change in measurement without portfolio reclassification from the beginning to the end of the year (portfolio from (-) until (+)):
Transfer from Normal individual to Substandard		(2,226	)		—			7,201			—			—			4,975
Transfer from Normal individual to Non-Complying individual		(97	)		—			—			1,419			—			1,322
Transfer from Substandard to Non-Complying individual		—			—			(497	)		5,920			—			5,423
Transfer from Substandard to Normal individual		45			—			(59	)		—			—			(14	)
Transfer from Non-Complying individual to Substandard		—			—			1			(17	)		—			(16	)
Transfer from Non-Complying individual to Normal individual		1			—			—			(37	)		—			(36	)
Transfer from Normal group to Non-Complying group		—			(136	)		—			—			1,790			1,654
Transfer from Non-Complying group to Normal group		—			79			—			—			(5,697	)		(5,618	)
Transfer from Individual (normal, substandard, non-complying) to Group (normal, non-complying )		—			—			—			—			—			—
Transfer from Group (normal, non-complying) to Individual (normal, substandard, non-complying)		130			(91	)		81			2			(6	)		116
New contingent loan granted		33,913			2,275			8,770			158			1,460			46,576
Contingent credits for conversion		(386	)		(1,172	)		(57	)		(11	)		(12	)		(1,638	)
Changes to models and assumptions		—			—			—			—			—			—
Foreign exchange differences		(274	)		4			(11	)		(2	)		33			(250	)
Other changes in provisions		(35,729	)		(6,898	)		(8,017	)		(4,683	)		(760	)		(56,087	)
Balance as of December 31, 2022		31,717			4,658			10,925			4,018			6,059			57,377

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

In addition to these provisions for credit risk, country risk provisions are maintained to cover foreign operations and additional provisions agreed by the Board of Directors, which are presented in liabilities under the item Special provisions for credit risk (See Note No. 26).

Other disclosures:

As of September 30, 2023, under the Commercial Loans item, operations are maintained that guarantee obligations maintained with the Central Bank of Chile as part of the Loan Increase Conditional Credit Facility (FCIC by its Spanish initials) program for an approximate amount of Ch$2,845,325 million (Ch$3,297,016 million in December 2022).

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

Industry sector:

At the closing of each reporting period, the composition of economic activity for loans, contingent loans exposure and provisions constituted are as follows:

	Credit and Contingent loans Exposure												Allowances Established
	Domestic loans				Foreign loans				Total		Total		Domestic loans						Foreign loans						Total			Total
	September		December		September		December		September		December		September			December			September			December			September			December
	2023		2022		2023		2022		2023		2022		2023			2022			2023			2022			2023			2022
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Loans and advances to Banks		1,850,913		1,801,100		330,847		373,692		2,181,760		2,174,792		(54	)		—			(705	)		(677	)		(759	)		(677	)

Commercial loans
Agriculture and livestock		785,390		797,020		—		—		785,390		797,020		(13,353	)		(15,876	)		—			—			(13,353	)		(15,876	)
Fruit		659,883		663,000		—		—		659,883		663,000		(10,692	)		(13,980	)		—			—			(10,692	)		(13,980	)
Forestry		105,815		102,427		—		—		105,815		102,427		(2,707	)		(2,515	)		—			—			(2,707	)		(2,515	)
Fishing		29,261		30,492		—		—		29,261		30,492		(2,821	)		(2,966	)		—			—			(2,821	)		(2,966	)
Mining		452,258		314,851		—		—		452,258		314,851		(3,767	)		(2,124	)		—			—			(3,767	)		(2,124	)
Oil and natural gas		935		1,011		—		—		935		1,011		(14	)		(19	)		—			—			(14	)		(19	)
Product manufacturing industries;
Foods, beverages and tobacco		586,989		594,583		—		—		586,989		594,583		(15,980	)		(16,315	)		—			—			(15,980	)		(16,315	)
Textiles, leather goods and footwear		33,492		33,130		—		—		33,492		33,130		(896	)		(839	)		—			—			(896	)		(839	)
Woods and furnitures		101,116		105,502		—		—		101,116		105,502		(2,364	)		(2,532	)		—			—			(2,364	)		(2,532	)
Cellulose, Paper and printing		17,303		20,849		—		—		17,303		20,849		(766	)		(962	)		—			—			(766	)		(962	)
Chemicals and petroleum products		325,506		365,185		—		—		325,506		365,185		(5,532	)		(6,568	)		—			—			(5,532	)		(6,568	)
Metal, non-metal, machine or others		551,896		574,024		—		—		551,896		574,024		(10,163	)		(11,097	)		—			—			(10,163	)		(11,097	)
Electricity, gas and water		460,010		463,529		1,375		—		461,385		463,529		(4,370	)		(4,880	)		(59	)		—			(4,429	)		(4,880	)
Residential construction		288,738		270,049		—		—		288,738		270,049		(10,963	)		(11,518	)		—			—			(10,963	)		(11,518	)
Non-residential construction (office, civil engineering)		365,268		355,453		—		—		365,268		355,453		(11,668	)		(9,938	)		—			—			(11,668	)		(9,938	)
Wholesale		1,797,471		2,034,520		—		—		1,797,471		2,034,520		(55,495	)		(58,705	)		—			—			(55,495	)		(58,705	)
Retail, restaurants and hotels		1,051,846		1,039,471		—		6,752		1,051,846		1,046,223		(44,319	)		(47,644	)		—			(547	)		(44,319	)		(48,191	)
Transport and storage		1,132,370		1,208,622		—		—		1,132,370		1,208,622		(21,680	)		(22,654	)		—			—			(21,680	)		(22,654	)
Communications		109,285		232,694		—		—		109,285		232,694		(3,288	)		(3,439	)		—			—			(3,288	)		(3,439	)
Financial services		2,813,124		2,990,382		—		—		2,813,124		2,990,382		(28,132	)		(30,132	)		—			—			(28,132	)		(30,132	)
Business services		1,695,334		1,998,911		—		19,425		1,695,334		2,018,336		(48,462	)		(58,868	)		—			(830	)		(48,462	)		(59,698	)
Real estate services		3,468,252		3,338,119		17,024		3,367		3,485,276		3,341,486		(21,667	)		(26,399	)		(945	)		(144	)		(22,612	)		(26,543	)
Student loans		57,442		59,594		—		—		57,442		59,594		(4,931	)		(4,555	)		—			—			(4,931	)		(4,555	)
Government administration, defence and police force		22,156		26,136		—		—		22,156		26,136		(285	)		(453	)		—			—			(285	)		(453	)
Social services and other community services		842,071		832,236		—		—		842,071		832,236		(14,573	)		(16,608	)		—			—			(14,573	)		(16,608	)
Personal services		1,837,726		1,804,376		—		—		1,837,726		1,804,376		(39,192	)		(41,093	)		—			—			(39,192	)		(41,093	)
Subtotal		19,590,937		20,256,166		18,399		29,544		19,609,336		20,285,710		(378,080	)		(412,679	)		(1,004	)		(1,521	)		(379,084	)		(414,200	)

Residential mortgage loans		12,014,056		11,416,154		—		—		12,014,056		11,416,154		(30,855	)		(29,303	)		—			—			(30,855	)		(29,303	)

Consumer loans		5,134,368		4,992,940		—		—		5,134,368		4,992,940		(341,299	)		(334,889	)		—			—			(341,299	)		(334,889	)

Contingent loan exposure		13,268,150		12,890,795		—		—		13,268,150		12,890,795		(54,063	)		(57,377	)		—			—			(54,063	)		(57,377	)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(h)

Residential mortgage loans and its provisions established by insolvent tranche of the loan on the value of the mortgage guarantee (PVG) and days of default respectively:

As of September 30, 2023

	Residential mortgage loans (MCh$)							Allowances established of Residential mortgage loans (MCh$)
	Days in default at the end of the period							Days in default at the end of the period
Loan Tranche / Guarantee Value (%)		0	1 to 29	30 to 59	60 to 89	> = 90	Total		0		1 to 29		30 to 59		60 to 89		> = 90		Total
PVG <=40%		1,611,672	27,343	11,695	3,676	11,425	1,665,811		(1,077	)	(365	)	(312	)	(133	)	(624	)	(2,511	)
40% < PVG <= 80%		9,360,556	198,753	84,484	33,634	97,152	9,774,579		(10,674	)	(3,287	)	(2,550	)	(1,311	)	(6,140	)	(23,962	)
80% < PVG <= 90%		509,052	15,877	5,379	1,883	8,061	540,252		(1,550	)	(650	)	(329	)	(197	)	(1,335	)	(4,061	)
PVG > 90%		31,738	572	96	—	1,008	33,414		(122	)	(17	)	(2	)	—		(180	)	(321	)
Total		11,513,018	242,545	101,654	39,193	117,646	12,014,056		(13,423	)	(4,319	)	(3,193	)	(1,641	)	(8,279	)	(30,855	)

As of December 31, 2022

	Residential mortgage loans (MCh$)												Allowances established of Residential mortgage loans (MCh$)
	Days in default at the end of the year												Days in default at the end of the year
Loan Tranche / Guarantee Value (%)	0		1 to 29		30 to 59		60 to 89		> = 90		Total		0			1 to 29			30 to 59			60 to 89			> = 90			Total
PVG <=40%		1,502,626		17,899		7,901		3,159		9,253		1,540,838		(1,187	)		(246	)		(224	)		(119	)		(506	)		(2,282	)
40% < PVG <= 80%		8,562,729		143,340		54,539		24,873		71,357		8,856,838		(9,857	)		(2,689	)		(1,815	)		(1,028	)		(4,271	)		(19,660	)
80% < PVG <= 90%		634,977		10,144		5,605		2,493		4,185		657,404		(2,291	)		(429	)		(423	)		(302	)		(788	)		(4,233	)
PVG > 90%		354,689		1,711		545		152		3,977		361,074		(2,053	)		(108	)		(35	)		(30	)		(902	)		(3,128	)
Total		11,055,021		173,094		68,590		30,677		88,772		11,416,154		(15,388	)		(3,472	)		(2,497	)		(1,479	)		(6,467	)		(29,303	)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(i)

Loans and advances to Banks and Commercial loans and their allowances established by classification category:

Below is the concentration of loans and advances to banks and commercial loans and their provisions constituted by classification category:

As of	Individual																																																		Group												Provisions of deductible warranties
September 30,	Normal Portfolio																					Substandard Portfolio															Non-Complying Portfolio																								Portfolio			Portfolio									Fogape
2023	A1			A2			A3			A4			A5			A6			Subtotal			B1			B2			B3			B4			Subtotal			C1			C2			C3			C4			C5			C6			Subtotal			Total			Normal			Non-Complying			Total			Total			Covid 19
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Loans and advances to Banks
Interbank loans for liquidity		150,039			—			—			—			—			—			150,039			—			—			—			—			—			—			—			—			—			—			—			—			150,039			—			—			—			150,039			—
Interbank commercial loans		—			—			205,632			—			—			—			205,632			—			—			—			—			—			—			—			—			—			—			—			—			205,632			—			—			—			205,632			—
Current accounts overdrafts		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Chilean exports foreign trade loans		338			90,723			28,779			4,449			925			—			125,214			—			—			—			—			—			—			—			—			—			—			—			—			125,214			—			—			—			125,214			—
Chilean imports foreign trade loans		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Foreign trade loans between third countries		1			—			—			—			—			—			1			—			—			—			—			—			—			—			—			—			—			—			—			1			—			—			—			1			—
Current account deposits in foreign banks for derivative operations		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Other non-transferable deposits in banks		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Other debts with banks		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Subtotal		150,378			90,723			234,411			4,449			925			—			480,886			—			—			—			—			—			—			—			—			—			—			—			—			480,886			—			—			—			480,886			—
Allowances established		54			75			512			78			40			—			759			—			—			—			—			—			—			—			—			—			—			—			—			759			—			—			—			759			—
% Allowances established		0.04	%		0.08	%		0.22	%		1.75	%		4.32	%		—			0.16	%		—			—			—			—			—			—			—			—			—			—			—			—			0.16	%		—			—			—			0.16	%		—

Commercial loans
Commercial loans		—			796,918			1,940,736			2,224,507			3,401,472			2,058,201			10,421,834			103,437			27,527			19,613			5,371			155,948			75,361			31,250			39,866			17,588			17,063			29,921			211,049			10,788,831			3,901,515			311,476			4,212,991			15,001,822			12,531
Chilean exports foreign trade loans		—			375,278			199,902			198,818			290,204			180,390			1,244,592			4,122			363			547			—			5,032			238			937			2,540			2,128			330			1,832			8,005			1,257,629			4,041			361			4,402			1,262,031			—
Accrediting foreign trade loans negotiated in terms of Chilean imports		—			—			—			—			2,123			96			2,219			—			—			—			—			—			—			—			—			—			—			—			—			2,219			—			—			—			2,219			—
Chilean imports foreign trade loans		—			10,529			82,911			174,393			144,913			166,655			579,401			6,967			—			—			—			6,967			—			—			—			7			451			1,471			1,929			588,297			44,356			2,254			46,610			634,907			—
Foreign trade credits to third countries		—			—			—			—			215			—			215			—			—			—			—			—			—			—			—			—			—			—			—			215			—			—			—			215			—
Current account debtors		—			47			25,462			19,528			17,427			21,789			84,253			2,264			2,519			278			497			5,558			278			1,743			96			651			200			525			3,493			93,304			91,021			1,430			92,451			185,755			—
Credit card debtors		13			525			1,663			2,932			7,746			7,970			20,849			649			289			37			27			1,002			111			111			57			108			164			427			978			22,829			68,297			7,531			75,828			98,657			—
Factoring transactions		354			90,238			122,342			98,642			110,422			82,215			504,213			3,929			—			6			—			3,935			—			2			—			—			131			278			411			508,559			35,539			176			35,715			544,274			—
Commercial lease transactions		—			59,570			44,622			355,134			475,955			502,339			1,437,620			16,927			4,761			4,502			252			26,442			3,989			26,668			1,221			3,520			465			107			35,970			1,500,032			279,440			12,060			291,500			1,791,532			541
Student loans		—			—			—			—			25			—			25			—			—			—			—			—			—			—			—			—			—			—			—			25			53,747			3,670			57,417			57,442			—
Other loans and accounts receivable		—			419			1,901			1,112			2,247			1,802			7,481			46			126			13			531			716			327			95			284			13			2,108			6,061			8,888			17,085			11,958			1,439			13,397			30,482			—
Subtotal		367			1,333,524			2,419,539			3,075,066			4,452,749			3,021,457			14,302,702			138,341			35,585			24,996			6,678			205,600			80,304			60,806			44,064			24,015			20,912			40,622			270,723			14,779,025			4,489,914			340,397			4,830,311			19,609,336			—
Allowances established		—			867			3,874			28,638			45,337			71,437			150,153			3,551			1,548			642			930			6,671			1,606			6,081			11,016			9,606			13,593			36,561			78,463			235,287			37,574			93,151			130,725			366,012			13,072
% Allowances established		—			0.07	%		0.16	%		0.93	%		1.02	%		2.36	%		1.05	%		2.57	%		4.35	%		2.57	%		13.93	%		3.24	%		2.00	%		10.00	%		25.00	%		40.00	%		65.00	%		90.00	%		28.98	%		1.59	%		0.84	%		27.37	%		2.71	%		1.87	%

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(i)

Loans and advances to Banks and Commercial loans and their allowances established by classification category, continued:

As of	Individual																																																		Group												Provisions of deductible warranties
December 31,	Normal Portfolio																					Substandard Portfolio															Non-Complying Portfolio																								Portfolio			Portfolio									Fogape
2022	A1			A2			A3			A4			A5			A6			Subtotal			B1			B2			B3			B4			Subtotal			C1			C2			C3			C4			C5			C6			Subtotal			Total			Normal			Non-Complying			Total			Total			Covid 19
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Loans and advances to Banks
Interbank loans for liquidity		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Interbank commercial loans		—			—			186,660			—			—			—			186,660			—			—			—			—			—			—			—			—			—			—			—			—			186,660			—			—			—			186,660			—
Current accounts overdrafts		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Chilean exports foreign trade loans		78			149,694			32,530			4,251			—			—			186,553			—			—			—			—			—			—			—			—			—			—			—			—			186,553			—			—			—			186,553			—
Chilean imports foreign trade loans		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Foreign trade loans between third countries		—			479			—			—			—			—			479			—			—			—			—			—			—			—			—			—			—			—			—			479			—			—			—			479			—
Current account deposits in foreign banks for derivative operations		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Other non-transferable deposits in banks		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Other debts with banks		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Subtotal		78			150,173			219,190			4,251			—			—			373,692			—			—			—			—			—			—			—			—			—			—			—			—			373,692			—			—			—			373,692			—
Allowances established		—			124			479			74			—			—			677			—			—			—			—			—			—			—			—			—			—			—			—			677			—			—			—			677			—
% Allowances established		—			0.08	%		0.22	%		1.74	%		—			—			0.18	%		—			—			—			—			—			—			—			—			—			—			—			—			0.18	%		—			—			—			0.18	%		—

Commercial loans
Commercial loans		—			1,326,655			2,066,763			2,372,591			3,522,434			1,979,393			11,267,836			125,517			43,693			46,476			11,475			227,161			40,585			21,608			24,175			28,604			11,857			35,361			162,190			11,657,187			3,946,954			267,428			4,214,382			15,871,569			31,986
Chilean exports foreign trade loans		—			297,323			142,624			123,281			224,505			153,745			941,478			3,915			—			650			—			4,565			448			9			2,263			1,286			351			1,623			5,980			952,023			3,857			533			4,390			956,413			—
Accrediting foreign trade loans negotiated in terms of Chilean imports		—			—			—			—			2,621			94			2,715			—			—			—			—			—			—			—			—			—			—			—			—			2,715			—			—			—			2,715			—
Chilean imports foreign trade loans		—			95,894			88,440			159,031			150,348			145,251			638,964			9,602			124			—			—			9,726			621			435						128			188			2,595			3,967			652,657			43,915			1,843			45,758			698,415			—
Foreign trade credits to third countries		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Current account debtors		—			89			17,733			29,339			13,264			18,429			78,854			2,396			2,439			269			156			5,260			316			1,595			114			163			105			380			2,673			86,787			87,728			1,144			88,872			175,659			—
Credit card debtors		26			314			1,677			2,778			6,456			6,984			18,235			509			288			24			54			875			101			15			59			69			148			257			649			19,759			61,911			5,153			67,064			86,823			—
Factoring transactions		9,352			129,798			117,954			124,105			88,514			119,959			589,682			4,249			6			—			—			4,255			—			7			—			11			185			251			454			594,391			34,074			53			34,127			628,518			—
Commercial lease transactions		—			60,749			49,668			362,068			442,247			500,286			1,415,018			19,754			5,305			9,602			389			35,050			1,249			25,830			1,485			2,298			468			62			31,392			1,481,460			290,772			9,162			299,934			1,781,394			757
Student loans		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			56,542			3,052			59,594			59,594			—
Other loans and accounts receivable		—			377			1,265			1,161			2,053			1,695			6,551			73			149			6			96			324			179			80			84			2,475			629			3,910			7,357			14,232			9,088			1,290			10,378			24,610			—
Subtotal		9,378			1,911,199			2,486,124			3,174,354			4,452,442			2,925,836			14,959,333			166,015			52,004			57,027			12,170			287,216			43,499			49,579			28,180			35,034			13,931			44,439			214,662			15,461,211			4,534,841			289,658			4,824,499			20,285,710			—
Allowances established		3			1,391			4,031			28,379			44,647			74,016			152,467			3,758			4,222			10,828			1,989			20,797			870			4,958			7,045			14,014			9,055			39,993			75,935			249,199			42,021			90,237			132,258			381,457			32,743
% Allowances established		0.03	%		0.07	%		0.16	%		0.89	%		1.00	%		2.53	%		1.02	%		2.26	%		8.12	%		18.99	%		16.34	%		7.24	%		2.00	%		10.00	%		25.00	%		40.00	%		65.00	%		90.00	%		35.37	%		1.61	%		0.93	%		31.15	%		2.74	%		1.88	%

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(j)

Loans and their provisions for loan losses by tranches of days past-due:

The concentration of credit risk by days past due is as follows;

	Financial assets before allowances												Allowances established
	Normal Portfolio				Substandard Portfolio		Non-Complying Portfolio						Normal Portfolio						Substandard Portfolio			Non-Complying Portfolio									Deductible Warranties						Net
	Evaluation				Evaluation		Evaluation				Sub		Evaluation						Evaluation			Evaluation						Sub			FOGAPE						Financial
As of September 30, 2023	Individual		Group		Individual		Individual		Group		Total		Individual			Group			Individual			Individual			Group			Total			Covid-19			Total			Assets
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Loans and advances to Banks
0 days		409,421		—		—		—		—		409,421		(700	)		—			—			—			—			(700	)		—			(700	)
1 to 29 days		71,385		—		—		—		—		71,385		(59	)		—			—			—			—			(59	)		—			(59	)
30 to 59 days		80		—		—		—		—		80		—			—			—			—			—			—			—			—
60 to 89 days		—		—		—		—		—		—		—			—			—			—			—			—			—			—
> = 90 days		—		—		—		—		—		—		—			—			—			—			—			—			—			—
Subtotal		480,886		—		—		—		—		480,886		(759	)		—			—			—			—			(759	)		—			(759	)		480,127

Commercial loans
0 days		14,059,877		4,293,300		155,994		110,397		81,086		18,700,654		(146,323	)		(28,248	)		(4,796	)		(22,494	)		(16,322	)		(218,183	)		(12,574	)		(230,757	)
1 to 29 days		233,680		145,563		28,500		11,173		31,341		450,257		(3,620	)		(4,751	)		(1,096	)		(3,454	)		(6,112	)		(19,033	)		(245	)		(19,278	)
30 to 59 days		8,520		38,273		15,478		15,370		27,719		105,360		(166	)		(3,093	)		(648	)		(3,303	)		(5,696	)		(12,906	)		(86	)		(12,992	)
60 to 89 days		625		12,778		5,628		28,898		18,197		66,126		(44	)		(1,482	)		(131	)		(4,195	)		(3,827	)		(9,679	)		(25	)		(9,704	)
> = 90 days		—		—		—		104,885		182,054		286,939		—			—			—			(45,017	)		(61,194	)		(106,211	)		(142	)		(106,353	)
Subtotal		14,302,702		4,489,914		205,600		270,723		340,397		19,609,336		(150,153	)		(37,574	)		(6,671	)		(78,463	)		(93,151	)		(366,012	)		(13,072	)		(379,084	)		19,230,252

Residential mortgage loans
0 days		—		11,461,157		—		—		51,861		11,513,018		—			(9,914	)		—			—			(3,509	)		(13,423	)		—			(13,423	)
1 to 29 days		—		213,704		—		—		28,841		242,545		—			(2,369	)		—			—			(1,950	)		(4,319	)		—			(4,319	)
30 to 59 days		—		75,557		—		—		26,097		101,654		—			(1,483	)		—			—			(1,710	)		(3,193	)		—			(3,193	)
60 to 89 days		—		24,263		—		—		14,930		39,193		—			(663	)		—			—			(978	)		(1,641	)		—			(1,641	)
> = 90 days		—		—		—		—		117,646		117,646		—			—			—			—			(8,279	)		(8,279	)		—			(8,279	)
Subtotal		—		11,774,681		—		—		239,375		12,014,056		—			(14,429	)		—			—			(16,426	)		(30,855	)		—			(30,855	)		11,983,201

Consumer loans
0 days		—		4,613,375		—		—		83,607		4,696,982		—			(144,374	)		—			—			(44,002	)		(188,376	)		—			(188,376	)
1 to 29 days		—		182,843		—		—		27,044		209,887		—			(29,104	)		—			—			(14,401	)		(43,505	)		—			(43,505	)
30 to 59 days		—		58,922		—		—		28,996		87,918		—			(15,569	)		—			—			(17,419	)		(32,988	)		—			(32,988	)
60 a 89 days		—		21,943		—		—		25,059		47,002		—			(8,038	)		—			—			(14,071	)		(22,109	)		—			(22,109	)
> = 90 days		—		—		—		—		92,579		92,579		—			—			—			—			(54,321	)		(54,321	)		—			(54,321	)
Subtotal		—		4,877,083		—		—		257,285		5,134,368		—			(197,085	)		—			—			(144,214	)		(341,299	)		—			(341,299	)		4,793,069

Total Loans		14,783,588		21,141,678		205,600		270,723		837,057		37,238,646		(150,912	)		(249,088	)		(6,671	)		(78,463	)		(253,791	)		(738,925	)		(13,072	)		(751,997	)		36,486,649

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(j)

Loans and their provisions for loan losses by number of days past-due, continued:

	Financial assets before allowances												Allowances established
	Normal Portfolio				Substandard Portfolio		Non-Complying Portfolio						Normal Portfolio						Substandard Portfolio			Non-Complying Portfolio									Deductible Warranties						Net
	Evaluation				Evaluation		Evaluation				Sub		Evaluation						Evaluation			Evaluation						Sub			FOGAPE						Financial
As of December 31, 2022	Individual		Group		Individual		Individual		Group		Total		Individual			Group			Individual			Individual			Group			Total			Covid-19			Total			Assets
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Loans and advances to Banks
0 days		271,125		—		—		—		—		271,125		(549	)		—			—			—			—			(549	)		—			(549	)
1 to 29 days		102,567		—		—		—		—		102,567		(128	)		—			—			—			—			(128	)		—			(128	)
30 to 59 days		—		—		—		—		—		—		—			—			—			—			—			—			—			—
60 to 89 days		—		—		—		—		—		—		—			—			—			—			—			—			—			—
> = 90 days		—		—		—		—		—		—		—			—			—			—			—			—			—			—
Subtotal		373,692		—		—		—		—		373,692		(677	)		—			—			—			—			(677	)		—			(677	)		373,015

Commercial loans
0 days		14,830,653		4,390,886		244,263		90,196		77,668		19,633,666		(150,565	)		(34,657	)		(18,649	)		(24,619	)		(20,625	)		(249,115	)		(31,595	)		(280,710	)
1 to 29 days		120,380		99,476		22,410		29,696		24,008		295,970		(1,672	)		(3,878	)		(1,345	)		(6,236	)		(5,980	)		(19,111	)		(545	)		(19,656	)
30 to 59 days		7,560		34,552		17,302		14,375		22,225		96,014		(174	)		(2,312	)		(741	)		(5,171	)		(5,636	)		(14,034	)		(193	)		(14,227	)
60 to 89 days		740		9,927		3,241		7,907		14,886		36,701		(56	)		(1,174	)		(62	)		(3,676	)		(4,049	)		(9,017	)		(81	)		(9,098	)
> = 90 days		—		—		—		72,488		150,871		223,359		—			—			—			(36,233	)		(53,947	)		(90,180	)		(329	)		(90,509	)
Subtotal		14,959,333		4,534,841		287,216		214,662		289,658		20,285,710		(152,467	)		(42,021	)		(20,797	)		(75,935	)		(90,237	)		(381,457	)		(32,743	)		(414,200	)		19,871,510

Residential mortgage loans
0 days		—		11,002,441		—		—		52,580		11,055,021		—			(11,364	)		—			—			(4,024	)		(15,388	)		—			(15,388	)
1 to 29 days		—		149,652		—		—		23,442		173,094		—			(1,908	)		—			—			(1,564	)		(3,472	)		—			(3,472	)
30 to 59 days		—		50,866		—		—		17,724		68,590		—			(1,349	)		—			—			(1,148	)		(2,497	)		—			(2,497	)
60 to 89 days		—		17,460		—		—		13,217		30,677		—			(533	)		—			—			(946	)		(1,479	)		—			(1,479	)
> = 90 days		—		—		—		—		88,772		88,772		—			—			—			—			(6,467	)		(6,467	)		—			(6,467	)
Subtotal		—		11,220,419		—		—		195,735		11,416,154		—			(15,154	)		—			—			(14,149	)		(29,303	)		—			(29,303	)		11,386,851

Consumer loans
0 days		—		4,535,528		—		—		74,062		4,609,590		—			(151,281	)		—			—			(45,533	)		(196,814	)		—			(196,814	)
1 to 29 days		—		162,285		—		—		20,345		182,630		—			(25,429	)		—			—			(12,424	)		(37,853	)		—			(37,853	)
30 to 59 days		—		52,836		—		—		24,344		77,180		—			(15,414	)		—			—			(15,709	)		(31,123	)		—			(31,123	)
60 a 89 days		—		19,915		—		—		21,236		41,151		—			(7,919	)		—			—			(12,437	)		(20,356	)		—			(20,356	)
> = 90 days		—		—		—		—		82,389		82,389		—			—			—			—			(48,743	)		(48,743	)		—			(48,743	)
Subtotal		—		4,770,564		—		—		222,376		4,992,940		—			(200,043	)		—			—			(134,846	)		(334,889	)		—			(334,889	)		4,658,051

Total Loans		15,333,025		20,525,824		287,216		214,662		707,769		37,068,496		(153,144	)		(257,218	)		(20,797	)		(75,935	)		(239,232	)		(746,326	)		(32,743	)		(779,069	)		36,289,427

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

13.

Financial assets at amortized cost, continued:

(k)

Finance lease contracts:

The cash flows to be received by the Bank from finance lease contracts have the following maturities:

	Total receivable				Unearned income						Net balance receivable (*)
	September		December		September			December			September		December
	2023		2022		2023			2022			2023		2022
	MCh$		MCh$		MCh$			MCh$			MCh$		MCh$

Within one year		595,310		583,321		(85,108	)		(76,614	)		510,202		506,707
From 1 to 2 years		452,007		433,397		(61,177	)		(55,714	)		390,830		377,683
From 2 to 3 years		295,446		294,728		(37,497	)		(35,133	)		257,949		259,595
From 3 to 4 years		192,792		191,083		(23,944	)		(22,481	)		168,848		168,602
From 4 to 5 years		137,765		134,590		(16,328	)		(15,614	)		121,437		118,976
After 5 years		365,951		378,280		(32,521	)		(33,166	)		333,430		345,114
Total		2,039,271		2,015,399		(256,575	)		(238,722	)		1,782,696		1,776,677

(*)

The net balance receivable does not include past-due portfolio totaling Ch$9,259 million as of September 30, 2023 (Ch$5,220 million in December 2022).

The Bank maintains financial lease operations associated with real estate, industrial machinery, vehicles and transportation equipment. These leases contracts have an average term between 2 and 15 years.

(l)

Purchase of loan portfolio:

During the period ended as of September 30, 2023 and the year 2022 no portfolio purchases were made.

(m)

Sale or transfer of loans from the loan portfolio:

During the period 2023, the following sale were made:

	2023
	Carrying amount		Allowances		Sale price		Effect on income (loss) gain
	MM$		MM$		MM$		MM$

Sale of current loans		16,261		43		16,261		43
Sale of written – off loans		—		—		—		—
Total		16,261		43		16,261		43

There have not been operations of sale or transfer of the loan portfolio during the period from January to September 2022.

(n)

Securitization of own assets:

During the period 2023 and the year 2022, there is no securitization transactions executed involving its own assets.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

14.

Investments in other companies:

(a)

In the item “Investments in other companies” include investments of Ch$70,703 million as of September 30, 2023 (Ch$62,211 million as of December 31, 2022), as follows:

		% Ownership Interest				Assets
		September		December		September		December
Company	Shareholder	2023		2022		2023		2022
		%		%		MCh$		MCh$
Associates
Transbank S.A.	Banco de Chile		26.16		26.16		32,850		29,015
Redbanc S.A.	Banco de Chile		38.13		38.13		4,737		4,400
Centro de Compensación Automatizado S.A.	Banco de Chile		33.33		33.33		4,317		5,172
Administrador Financiero del Transantiago S.A.	Banco de Chile		20.00		20.00		4,052		4,366
Sociedad Interbancaria de Depósitos de Valores S.A.	Banco de Chile		26.81		26.81		2,249		2,066
Sociedad Imerc OTC S.A.	Banco de Chile		12.33		12.33		1,770		1,662
Sociedad Operadora de la Cámara de Compensación de Pagos de Alto Valor S.A.	Banco de Chile		15.00		15.00		1,171		1,145
Subtotal Associates							51,146		47,826

Joint Ventures
Servipag Ltda.	Banco de Chile		50.00		50.00		8,477		6,831
Artikos Chile S.A.	Banco de Chile		50.00		50.00		1,573		1,520
Subtotal Joint Ventures							10,050		8,351
Subtotal							61,196		56,177

Minority Investments
Sociedad de Infraestructuras de Mercado S.A.() (*)	Banchile Corredores de Bolsa						6,898		—
Banco Latinoamericano de Comercio Exterior S.A. (Bladex) (*)	Banco de Chile						1,121		309
Bolsa de Comercio de Santiago, Bolsa de Valores () (*)	Banchile Corredores de Bolsa						1,104		5,342
Bolsa Electrónica de Chile, Bolsa de Valores (*)	Banchile Corredores de Bolsa						350		350
Sociedad de Telecomunicaciones Financieras Interbancarias Mundiales (Swift)	Banco de Chile						26		25
CCLV Contraparte Central S.A.	Banchile Corredores de Bolsa						8		8
Subtotal Minority Investments							9,507		6,034
Total							70,703		62,211

(*)

Investments in shares have been irrevocably designated as at fair value through other comprehensive income and, therefore, are recorded at market value in accordance with IFRS 9.

(**)

On March 1, 2023, the division of the Bolsa de Comercio de Santiago (Santiago Stock Exchange) was materialized, remaining as the continuing entity and establishing from it the Sociedad de Infraestructuras de Mercado S.A. (“SIM”).

(b)

The change of investments in companies registered under the equity method in the period of 2023 and 2022, are as follows:

	September			September
	2023			2022
	MCh$			MCh$

Balance as of January 1,		56,177			46,923
Acquisition of investments in companies		—			—
Participation on income in companies with significant influence and joint control		8,346			7,927
Dividends received		(3,475	)		(1,122	)
Others		148			(33	)
Total		61,196			53,695

(c)

During the period ended as of September 30, 2023 and 2022 no impairment has incurred in these investments.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

14.

Investments in other companies, continued:

(d)

Summarized Financial Information of Associates and Joint Ventures

	Associates																					Joint Ventures
	Centro de Compensación Automatizado S.A.			Sociedad Operadora de la Cámara de Compensación de Pagos de Alto Valor S.A.			Sociedad Interbancaria de Depósitos de Valores S.A.			Redbanc S.A.			Transbank S.A.			Administrador Financiero del Transantiago S.A.			Sociedad Imerc OTC S.A.			Artikos S.A.			Servipag S.A.
September 2023	MCh$			MCh$						MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Current assets		5,257			1,990			119			12,913			1,255,345			61,039			10,803			3,008			80,363
Non-current assets		11,074			6,503			8,270			16,366			162,237			740			11,167			1,697			18,183
Total Assets		16,331			8,493			8,389			29,279			1,417,582			61,779			21,970			4,705			98,546

Current liabilities		3,510			800			—			13,737			1,280,147			42,255			7,861			975			75,641
Non-current liabilities		215			8			—			3,183			11,846			—			—			583			5,952
Total Liabilities		3,725			808			—			16,920			1,291,993			42,255			7,861			1,558			81,593
Equity		12,606			7,685			8,389			12,359			125,589			19,524			14,100			3,147			16,953
Minority interest		—			—			—			—			—			—			9			—			—
Total Liabilities and Equity		16,331			8,493			8,389			29,279			1,417,582			61,779			21,970			4,705			98,546

Operating income		12,535			3,373			12			38,639			652,152			3,191			6,465			4,156			28,964
Operating expenses		(8,258	)		(3,090	)		(22	)		(37,985	)		(558,211	)		(1,654	)		(5,664	)		(585	)		(25,633	)
Other expenses or income		343			202			1,194			100			(75,434	)		1,587			478			(2,119	)		1,049
Gain (loss) before tax		4,620			485			1,184			754			18,507			3,124			1,279			1,452			4,380
Income tax		(1,163	)		(67	)		—			(123	)		(4,060	)		(676	)		(418	)		(346	)		(1,089	)
Gain for the period		3,457			418			1,184			631			14,447			2,448			861			1,106			3,291

	Associates																					Joint Ventures
	Centro de Compensación Automatizado S.A.			Sociedad Operadora de la Cámara de Compensación de Pagos de Alto Valor S.A.			Sociedad Interbancaria de Depósitos de Valores S.A.			Redbanc S.A.			Transbank S.A.			Administrador Financiero del Transantiago S.A.			Sociedad Imerc OTC S.A.			Artikos S.A.			Servipag S.A.
December 2022	MCh$			MCh$						MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Current assets		8,954			6,646			81			14,459			1,359,640			59,946			31,105			2,540			76,085
Non-current assets		10,388			1,711			7,637			16,058			137,505			793			4,459			1,985			14,605
Total Assets		19,342			8,357			7,718			30,517			1,497,145			60,739			35,564			4,525			90,690

Current liabilities		3,986			1,004			463			17,595			1,385,956			40,113			20,672			1,326			73,923
Non-current liabilities		309			—			—			1,554			1,427			—			1,670			567			3,105
Total Liabilities		4,295			1,004			463			19,149			1,387,383			40,113			22,342			1,893			77,028
Equity		15,047			7,353			7,255			11,368			109,762			20,626			13,213			2,632			13,662
Minority interest		—			—			—			—			—			—			9			—			—
Total Liabilities and Equity		19,342			8,357			7,718			30,517			1,497,145			60,739			35,564			4,525			90,690

Operating income		7,516			4,550			17			51,851			969,177			4,468			8,882			5,559			40,403
Operating expenses		(2,612	)		(4,279	)		(49	)		(50,155	)		(835,126	)		(2,296	)		(8,412	)		(3,905	)		(36,347	)
Other expenses or income		907			667			1,540			264			(103,854	)		2,339			877			69			525
Gain (loss) before tax		5,811			938			1,508			1,960			30,197			4,511			1,347			1,723			4,581
Income tax		(1,109	)		(8	)		—			(249	)		(3,952	)		(490	)		(473	)		(362	)		(849	)
Gain for the year		4,702			930			1,508			1,711			26,245			4,021			874			1,361			3,732

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

15.

Intangible Assets:

(a)

The composition of intangible assets as of September 30, 2023 and December 31, 2022, are as follows:

	Useful Life				Average remaining amortization				Gross balance				Accumulated Amortization						Net balance
	September		December		September		December		September		December		September			December			September		December
	2023		2022		2023		2022		2023		2022		2023			2022			2023		2022
	Years		Years		Years		Years		MCh$		MCh$		MCh$			MCh$			MCh$		MCh$
Other independently originated intangible assets		6		6		5		5		304,496		263,268		(176,950	)		(156,648	)		127,546		106,620
Total										304,496		263,268		(176,950	)		(156,648	)		127,546		106,620

(b)

The change of intangible assets during the periods ended as of September 30, 2023 and December 31, 2022, are as follows:

	September			December
	2023			2022
	MCh$			MCh$
Gross Balance
Balance as of January 1,		263,268			209,432
Acquisition		42,303			56,891
Disposals/ write-downs		(1,050	)		(2,751	)
Reclassification		—			(182	)
Impairment (*)		(25	)		(122	)
Total		304,496			263,268

Accumulated Amortization
Balance as of January 1,		(156,648	)		(136,900	)
Amortization for the period (**)		(21,352	)		(21,502	)
Disposals/ write-downs		1,050			1,572
Reclassification		—			182
Impairment (*)		—			—
Total		(176,950	)		(156,648	)

Balance Net		127,546			106,620

(*)

See Note No. 40 Impairment of non-financial assets.

(**)

See Note No. 39 Depreciation and Amortization.

(c)

As of September 30, 2023, the Bank maintains Ch$10,085 million (Ch$15,500 million as of December 31, 2022) of assets associated with technological developments.

(d)

As of September 30, 2023 and December 31, 2022, there are no restrictions on the intangible assets of the Bank. Furthermore, there are no intangible assets held as collateral for the fulfillment of obligations.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

16.

Property and equipment:

(a)

The properties and equipment as of September 30, 2023 and December 31, 2022 are composed as follows:

	Useful Life				Average remaining depreciation				Gross balance				Accumulated Depreciation						Net balance
	September		December		September		December		September		December		September			December			September		December
	2023		2022		2023		2022		2023		2022		2023			2022			2023		2022
	Years		Years		Years		Years		MCh$		MCh$		MCh$			MCh$			MCh$		MCh$
Type of property and equipment:
Land and Buildings		25		25		18		18		320,979		316,968		(163,342	)		(157,810	)		157,637		159,158
Equipment		5		5		3		3		256,401		246,706		(216,416	)		(203,136	)		39,985		43,570
Others		7		7		4		4		59,894		58,890		(52,322	)		(51,494	)		7,572		7,396
Total										637,274		622,564		(432,080	)		(412,440	)		205,194		210,124

(b)

The changes in properties and equipment as of September 30, 2023 and December 31, 2022, are as follows:

	September 2023
	Land and Buildings			Equipment			Others			Total
	MCh$			MCh$			MCh$			MCh$
Gross Balance
Balance as of January 1, 2023		316,968			246,706			58,890			622,564
Additions		7,795			10,434			1,980			20,209
Write-downs and sales of the period		(3,784	)		(737	)		(976	)		(5,497	)
Impairment (***)		—			(2	)		—			(2	)
Total		320,979			256,401			59,894			637,274

Accumulated Depreciation
Balance as of January 1, 2023		(157,810	)		(203,136	)		(51,494	)		(412,440	)
Depreciation of the period () (*)		(6,923	)		(14,017	)		(1,762	)		(22,702	)
Write-downs and sales of the period		1,391			737			934			3,062
Total		(163,342	)		(216,416	)		(52,322	)		(432,080	)

Balance as of September 30, 2023		157,637			39,985			7,572			205,194

	December 2022
	Land and Buildings			Equipment			Others			Total
	MCh$			MCh$			MCh$			MCh$
Gross Balance
Balance as of January 1, 2022		311,279			243,757			56,582			611,618
Additions		6,041			9,823			2,842			18,706
Write-downs and sales of the year		(352	)		(6,900	)		(498	)		(7,750	)
Transfers		—			36			(36	)		—
Impairment		—			(10	)		—			(10	)
Total		316,968			246,706			58,890			622,564

Accumulated Depreciation
Balance as of January 1, 2022		(148,645	)		(191,334	)		(49,319	)		(389,298	)
Depreciation of the year (**)		(9,228	)		(18,650	)		(2,701	)		(30,579	)
Write-downs and sales of the year		63			6,883			490			7,436
Transfers		—			(36	)		36			—
Impairment		—			1			—			1
Total		(157,810	)		(203,136	)		(51,494	)		(412,440	)

Balance as of December 31, 2022		159,158			43,570			7,396			210,124

(*)

See Note No. 39 Depreciation and Amortization.

(**)

This amount does not include the depreciation of the Investment Properties; amount is included in “Other Assets” for Ch$268 million (Ch$357 millon in December 2022).

(***)

See Note No. 40 Impairment of non-financial assets.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

16.

Property and equipment, continued:

(c)

As of September 30, 2023, the Bank records Ch$6,464 million (Ch$5,554 million as of December 31, 2022) in assets under construction.

(d)

As of September 30, 2023 and December 31, 2022, there are no restrictions on the properties and equipment of the Bank and its subsidiaries. Furthermore, there are no properties and equipment held as collateral for the fulfillment of obligations.

17.

Right-of-use assets and Lease liabilities:

(a)

The composition of the rights over leased assets as of September 30, 2023 and December 31, 2022, is as follows:

	Gross Balance				Accumulated Depreciation						Net Balance
	September		December		September			December			September		December
	2023		2022		2023			2022			2023		2022
	MCh$		MCh$		MCh$			MCh$			MCh$		MCh$
Categories
Buildings		151,456		144,482		(75,274	)		(64,352	)		76,182		80,130
Floor space for ATMs		6,189		43,492		(454	)		(35,735	)		5,735		7,757
Improvements to leased properties		29,757		28,595		(22,143	)		(21,561	)		7,614		7,034
Total		187,402		216,569		(97,871	)		(121,648	)		89,531		94,921

(b)

The changes of the rights over leased assets as of September 30, 2023 and December 31, 2022, is as follows:

	September 2023
	Buildings			Floor space for ATMs			Improvements to leased properties			Total
	MCh$			MCh$			MCh$			MCh$

Gross Balance
Balance as of January 1, 2023		144,482			43,492			28,595			216,569
Additions		13,198			5,788			1,325			20,311
Write-downs		(5,787	)		(42,758	)		(163	)		(48,708	)
Remeasurement		(437	)		(333	)		—			(770	)
Total		151,456			6,189			29,757			187,402

Accumulated Depreciation
Balance as of January 1, 2023		(64,352	)		(35,735	)		(21,561	)		(121,648	)
Depreciation of the period (*)		(16,247	)		(7,475	)		(744	)		(24,466	)
Write-downs		5,325			42,756			162			48,243
Total		(75,274	)		(454	)		(22,143	)		(97,871	)

Balance as of September 30, 2023		76,182			5,735			7,614			89,531

(*)

See Note No. 39 Depreciation and Amortization.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

17.

Right-of-use assets and Lease liabilities, continued:

(b)

The changes of the rights over leased assets as of September 30, 2023 and December 31, 2022, is as follow, continued:

	December 2022
	Buildings			Floor space for ATMs			Improvements to leased properties			Total
	MCh$			MCh$			MCh$			MCh$

Gross Balance
Balance as of January 1, 2022		124,978			42,051			26,066			193,095
Additions		23,930			2,819			2,529			29,278
Write-downs		(4,296	)		(1,002	)		—			(5,298	)
Remeasurement		(130	)		(376	)		—			(506	)
Total		144,482			43,492			28,595			216,569

Accumulated Depreciation
Balance as of January 1, 2022		(46,743	)		(25,566	)		(20,598	)		(92,907	)
Depreciation of the year		(19,636	)		(11,168	)		(963	)		(31,767	)
Write-downs		2,027			999			—			3,026
Total		(64,352	)		(35,735	)		(21,561	)		(121,648	)

Balance as of December 31, 2022		80,130			7,757			7,034			94,921

(c)

Below are the future maturities (including unearned interest) of the lease liabilities as of September 30, 2023 and December 31, 2022:

	September 2023
	Demand		Up to 1 month		Over 1 month and up to 3 months		Over 3 months and up to 12 months		Over 1 year and up to 3 years		Over 3 years and up to 5 years		Over 5 years		Total
Lease associated to:	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Buildings		—		1,961		3,741		14,220		26,515		19,869		18,723		85,029
ATMs		—		276		552		2,218		3,218		2,504		134		8,902
Total		—		2,237		4,293		16,438		29,733		22,373		18,857		93,931

	December 2022
	Demand		Up to 1 month		Over 1 month and up to 3 months		Over 3 months and up to 12 months		Over 1 year and up to 3 years		Over 3 years and up to 5 years		Over 5 years		Total
Lease associated to:	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Buildings		—		1,869		3,672		15,954		30,707		19,172		21,533		92,907
ATMs		—		1,098		2,176		4,684		1,138		206		79		9,381
Total		—		2,967		5,848		20,638		31,845		19,378		21,612		102,288

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

17.

Right-of-use assets and Lease liabilities, continued:

The Bank and its subsidiaries maintain contracts with certain renewal options and for which there is reasonable certainty that said option shall be carried out. In such cases, the lease period used to measure the liability and assets corresponds to an estimate of future renewals.

(d)

The changes of the obligations for lease liabilities and the flows for the periods 2023 and 2022 are as follows:

	Total cash flow for the period
Lease liability	MCh$

Balances as of January 1, 2022		95,670
Liabilities for new lease agreements		15,602
Interest accrued expenses		1,400
Payments of capital and interests		(24,136	)
Remeasurement		(176	)
Derecognized contracts		(1,094	)
Readjustments		8,191
Balances as of September 30, 2022		95,457
Liabilities for new lease agreements		957
Interest accrued expenses		465
Payments of capital and interests		(8,239	)
Remeasurement		(330	)
Derecognized contracts		(926	)
Readjustments		1,985
Balances as of December 31, 2022		89,369
Liabilities for new lease agreements		16,623
Interest accrued expenses		1,335
Payments of capital and interests		(24,226	)
Remeasurement		(770	)
Derecognized contracts		(469	)
Readjustments		2,352
Balances as of September 30, 2023		84,214

(e)

The future cash flows related to short-term lease agreements in effect as of September 30, 2023 correspond to Ch$4,204 million (Ch$3,483 million as of December 31, 2022).

(f)

As of September 30, 2023, the minimum future rental income to be received from operating leases amounts to Ch$16,220 million (Ch$14,578 million as of December 31, 2022).

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

18.

Taxes:

(a)

Current Taxes:

The Bank and its subsidiaries at the end of each period, have constituted a First Category Income Tax Provision, which was determined based on current tax regulations, and has been reflected in the Statement of Financial Position net of taxes to be recovered or payable, as applicable, as of September 30, 2023 and December 31, 2022 according to the following detail:

	September			December
	2023			2022
	MCh$			MCh$

Income tax		260,034			311,532
Less:
Monthly prepaid taxes		(361,006	)		(492,990	)
Credit for training expenses		(1,400	)		(2,216	)
Others		16,676			(2,795	)
Total Tax Refundable (net)		(85,696	)		(186,469	)

Tax rate		27	%		27	%

	September			December
	2023			2022
	MCh$			MCh$

Current tax assets		86,942			187,401
Current tax liabilities		(1,246	)		(932	)
Total tax receivable (payable), net		85,696			186,469

(b)

Income Tax:

The effect of the tax expense during the periods between January 1 and September 30, 2023 and 2022, are broken down as follows:

	September		September
	2023		2022
	MCh$		MCh$
Income tax expense:
Current year tax		220,207		282,502
Tax Previous year		—		2,931
Subtotal		220,207		285,433
(Credit) Debit for deferred taxes:
Origin and reversal of temporary differences		16,283		(84,316	)
Subtotal		16,283		(84,316	)
Others		6,680		5,569
Net charge to income for income taxes		243,170		206,686

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

18.

Taxes, continued:

(c)

Reconciliation of effective tax rate:

The following is a reconciliation of the income tax rate to the effective rate applied to determine the Bank’s income tax expense as of September 30, 2023 and 2022:

	September 2023						September 2022
	Tax rate						Tax rate
	%			MCh$			%			MCh$

Income tax calculated on net income before tax		27.00			297,340			27.00			342,768
Additions or deductions		(0.08	)		(895	)		1.12			14,271
Price-level restatement		(4.67	)		(51,390	)		(12.52	)		(158,905	)
Others		(0.17	)		(1,885	)		0.67			8,552
Effective rate and income tax expense		22.08			243,170			16.27			206,686

The effective rate for income tax for the period 2023 is 22.08% (16.27% in September 2022).

(d)

Effect of deferred taxes on income and equity:

The Bank and its subsidiaries have recorded the effects of deferred taxes in their Interim Consolidated Financial Statements. The effects of deferred taxes on assets, liabilities and income accounts as of September 30, 2023:

	Balances as of December 31,		Effect on					Balances as of September 30,
	2022		Income			Equity		2023
	MCh$		MCh$			MCh$		MCh$
Debit Differences:
Allowances for loan losses		376,743		(12,245	)		—		364,498
Personnel provision		20,228		(3,231	)		—		16,997
Provision of undrawn credit lines		3,429		(295	)		—		3,134
Staff vacations provisions		11,139		395			—		11,534
Accrued interests adjustments from impaired loans		10,305		3,746			—		14,051
Staff severance indemnities provision		1,368		(57	)		8		1,319
Provision of credit cards expenses		9,146		1,178			—		10,324
Provision of accrued expenses		11,829		(730	)		—		11,099
Adjustment for valuation of financial assets at fair value through other comprehensive income		4,693		—			1,069		5,762
Leasing		89,821		5,906			—		95,727
Incomes received in advance		9,012		(2,921	)		—		6,091
Other adjustments		31,552		(3,159	)		—		28,393
Total Debit Differences		579,265		(11,413	)		1,077		568,929

Credit Differences:
Depreciation and price-level restatement of property and equipment		10,937		2,635			—		13,572
Transitory assets		7,953		2,977			—		10,930
Loans accrued to effective rate		2,441		43			—		2,484
Prepaid expenses		2,688		350			—		3,038
Other adjustments		15,737		(1,135	)		937		15,539
Total Credit Differences		39,756		4,870			937		45,563

Total, Net		539,509		(16,283	)		140		523,366

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

18.

Taxes, continued:

(d)

Effect of deferred taxes on income and equity, continued:

The effects of deferred taxes on assets, liabilities and income accounts as of December 31, 2022:

	Balance as of December 31,		Effect on					Balances as of December 31,
	2021		Income			Equity		2022
	MCh$		MCh$			MCh$		MCh$
Debit differences:
Allowances for loan losses		317,295		59,448			—		376,743
Personnel provision		14,304		5,924			—		20,228
Provision of undrawn credit lines		4,139		(710	)		—		3,429
Staff vacations provisions		9,993		1,146			—		11,139
Accrued interest adjustments from impaired loans		5,073		5,232			—		10,305
Staff severance indemnities provision		345		988			35		1,368
Provisions of credit card expenses		9,774		(628	)		—		9,146
Provisions of accrued expenses		12,315		(486	)		—		11,829
Adjustment for valuation of financial assets at fair value through other comprehensive income		3,895		—			798		4,693
Leasing		52,019		37,802			—		89,821
Incomes received in advance		12,368		(3,356	)		—		9,012
Other adjustments		35,768		(4,216	)		—		31,552
Total Debit Differences		477,288		101,144			833		579,265

Credit differences:
Depreciation and price-level restatement of property and equipment		16,446		(5,509	)		—		10,937
Transitory assets		6,958		995			—		7,953
Loans accrued to effective rate		2,437		4			—		2,441
Prepaid expenses		5,668		(2,980	)		—		2,688
Other adjustments		11,502		4,181			54		15,737
Total Credit Differences		43,011		(3,309	)		54		39,756

Total, Net		434,277		104,453			779		539,509

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

18.

Taxes, continued:

(e)

For the purpose of complying with the Circular No. 47 issued by the Chilean Internal Revenue Service (SII) and No. 3,478 issued by the CMF, dated August 18, 2009 the changes and effects generated by the application of Article 31, No. 4 of the Income Tax Law are detailed below.

As the circular requires, the information corresponds only to the Bank’s credit operations and does not consider operations of subsidiary entities that are consolidated in these Interim Consolidated Financial Statements.

					Tax value assets
(e.1) Loans and advance to banks and Loans to customers as of September 30, 2023	Book value assets (*)		Tax value assets		Past-due loans with guarantees		Past-due loans without guarantees		Total Past-due loans
	MCh$		MCh$		MCh$		MCh$		MCh$

Loans and advance to banks		2,181,001		2,181,760		—		—		—
Commercial loans		16,915,918		17,762,146		39,799		107,907		147,706
Consumer loans		4,792,650		6,028,886		1,004		36,647		37,651
Residential mortgage loans		11,983,201		12,017,420		8,456		506		8,962
Total		35,872,770		37,990,212		49,259		145,060		194,319

					Tax value assets
(e.1) Loans and advance to banks and Loans to customers as of December 31, 2022	Book value assets (*)		Tax value assets		Past-due loans with guarantees		Past-due loans without guarantees		Total Past-due loans
	MCh$		MCh$		MCh$		MCh$		MCh$

Loans and advance to banks		2,174,115		2,174,792		—		—		—
Commercial loans		17,461,599		18,338,161		28,688		75,561		104,249
Consumer loans		4,657,554		5,824,164		756		28,448		29,204
Residential mortgage loans		11,386,852		11,420,425		7,312		669		7,981
Total		35,680,120		37,757,542		36,756		104,678		141,434

(*)

In accordance with the mentioned Circular and instructions from the SII, the value of financial statement assets, are presented on an individual basis (only Banco de Chile) net of allowance for loan losses and do not include lease and factoring operations.

100

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

18.

Taxes, continued:

(e.2) Provisions on past-due loans	Balance as of January 1, 2023		Charge-offs against provisions			Provisions established		Provisions released			Balance as of September 30, 2023
	MCh$		MCh$			MCh$		MCh$			MCh$

Commercial loans		75,561		(48,189	)		100,908		(20,373	)		107,907
Consumer loans		28,448		(236,799	)		258,776		(13,778	)		36,647
Residential mortgage loans		669		(1,929	)		2,367		(601	)		506
Total		104,678		(286,917	)		362,051		(34,752	)		145,060

(e.2) Provisions on past-due loans	Balance as of January 1, 2022		Charge-offs against provisions			Provisions established		Provisions released			Balance as of December 31, 2022
	MCh$		MCh$			MCh$		MCh$			MCh$

Commercial loans		63,604		(46,736	)		127,899		(69,206	)		75,561
Consumer loans		10,157		(166,355	)		194,340		(9,694	)		28,448
Residential mortgage loans		363		(4,002	)		16,949		(12,641	)		669
Total		74,124		(217,093	)		339,188		(91,541	)		104,678

	September		December
(e.3) Charge-offs and recoveries	2023		2022
	MCh$		MCh$

Charge-offs Art. 31 No. 4 second subparagraph		21,465		25,524
Write-offs resulting in provisions released		45		125
Recovery or renegotiation of written-off loans		1,114		62,911

	September		December
(e.4) Application of Art. 31 No. 4 first & third subsections of the income tax law	2023		2022
	MCh$		MCh$

Charge-offs in accordance with first subsection		—		—
Write-offs in accordance with third subsection		45		125

101

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

19.

Other Assets:

At the end of each period, the item is composed as follows:

	September			December
	2023			2022
	MCh$			MCh$

Cash collateral provided for derivative financial transactions		293,771			314,301
Debtors from brokerage of financial instruments		234,368			128,286
Accounts receivable from the General Treasury of the Republic and other fiscal organizations		229,834			59,304
Assets to be leased out as lessor (*)		174,391			94,925
Accounts receivable from third parties		172,304			131,608
Prepaid expenses		52,214			39,744
Income from regular activities from contracts with customers		13,612			6,472
Investment properties		11,852			12,120
Other provided cash collateral		4,529			5,299
Pending transactions		3,223			3,058
VAT receivable		3			7
Accumulated impairment in respect of other assets receivable		(1,189	)		(882	)
Other Assets		25,473			19,875
Total		1,214,385			814,117

(*)

Correspond to fixed assets to be delivered under the financial lease modality.

102

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

20.

Non-current assets and disposal groups held for sale and Liabilities included in disposal groups for sale:

(a)

At the end of each period, the item is composed as follows:

	September			December
	2023			2022
	MCh$			MCh$

Assets received in lieu of payment or awarded at judicial sale (*)
Assets awarded at judicial sale		17,071			10,006
Assets received in lieu of payment		731			143
Provision for assets received in lieu of payment or awarded		(8	)		(25	)

Non-current assets for sale
Investments in other companies		—			—
Assets for recovery of assets transferred in financial leasing operations		1,148			744

Disposal groups held for sale					—
Total		18,942			10,868

(*)

Assets received in lieu of payment are assets received as payment of customers’ past-due debts. The assets acquired must in this way does not exceed 20% of the Bank’s effective equity.

(b)

The changes of the provision for assets received in lieu of payment during the periods 2023 and 2022 are as follows:

Provision for assets received in lieu of payment	MCh$

Balance as of January 1, 2022		79
Provisions used		(335	)
Provisions established		258
Provisions released		—
Balance as of September 30, 2022		2
Provisions used		(306	)
Provisions established		329
Provisions released		—
Balance as of December 31, 2022		25
Provisions used		(661	)
Provisions established		644
Provisions released		—
Balance as of September 30, 2023		8

(c)

The Bank does not present liabilities classified in the disposal group for sale during the periods September 2023 and December 2022.

103

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

21.

Financial liabilities held for trading at fair value through profit or loss:

The item detail is as follows:

	September		December
	2023		2022
	MCh$		MCh$

Financial derivative contracts		2,614,576		3,101,482
Other financial instruments		2,109		6,271
Total		2,616,685		3,107,753

As of September 30, 2023 and December 31, 2022, the Bank maintains the following debt portfolio of derivative instruments:

	Notional amount of contract with final expiration date in
	Demand				Up to 1 month				Over 1 month and up to 3 months				Over 3 months and up to 12 months				Over 1 year and up to 3 years				Over 3 year and up to 5 years				Over 5 years				Total				Fair value Liabilities
	September		December		September		December		September		December		September		December		September		December		September		December		September		December		September		December		September		December
	2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Currency forward		—		—		3,484,123		3,785,602		2,827,185		2,178,784		3,236,172		3,562,216		511,164		589,336		12,230		—		—		—		10,070,874		10,115,938		357,889		535,643
Interest rate swap		—		—		539,051		1,905,526		1,321,825		1,837,023		6,238,660		5,208,401		6,679,532		5,173,535		3,732,742		3,743,709		4,457,775		4,398,123		22,969,585		22,266,317		1,139,281		1,248,414
Interest rate swap and cross currency swap		—		—		146,605		307,672		293,869		584,427		1,321,616		1,327,828		3,445,402		3,271,782		1,490,592		1,872,025		2,950,159		2,844,395		9,648,243		10,208,129		1,112,201		1,311,871
Call currency options		—		—		4,481		17,387		13,795		18,726		16,211		26,020		—		—		—		—		—		—		34,487		62,133		2,516		1,665
Put currency options		—		—		3,414		20,572		17,971		27,620		154,163		27,610		30,328		—		—		—		—		—		205,876		75,802		2,689		3,889
Total		—		—		4,177,674		6,036,759		4,474,645		4,646,580		10,966,822		10,152,075		10,666,426		9,034,653		5,235,564		5,615,734		7,407,934		7,242,518		42,929,065		42,728,319		2,614,576		3,101,482

Other instruments or financial liabilities:

	September		December
	2023		2022
	MCh$		MCh$

Current accounts and other demand deposits		—		—
Savings accounts and other time deposits		—		—
Debt instruments issued		—		—
Others		2,109		6,271
Total		2,109		6,271

104

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

22.

Financial liabilities at amortized cost:

The item detail is as follows:

	September		December
	2023		2022
	MCh$		MCh$

Current accounts and other demand deposits		12,786,573		13,383,232
Saving accounts and time deposits		15,138,985		14,157,141
Obligations by repurchase agreements and securities lending		100,332		216,264
Borrowings from financial institutions		5,345,511		5,397,676
Debt financial instruments issued		9,517,768		9,267,947
Other financial obligations		253,361		344,030
Total		43,142,530		42,766,290

(a)

Current accounts and other demand deposits:

At the end of each period, the composition of current accounts and other demand deposits is as follows:

	September		December
	2023		2022
	MCh$		MCh$

Current accounts		10,459,943		11,172,137
Other demand obligations		1,332,126		1,166,708
Demand deposits accounts		610,617		657,057
Other demand deposits		383,887		387,330
Total		12,786,573		13,383,232

(b)

Saving accounts and time deposits:

At the end of each period, the composition of saving accounts and time deposits is as follows:

	September		December
	2023		2022
	MCh$		MCh$

Time deposits		14,757,951		13,723,090
Term savings accounts		357,545		407,745
Other term balances payable		23,489		26,306
Total		15,138,985		14,157,141

105

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

22.

Financial liabilities at amortized cost, continued:

(c)

Obligations by repurchase agreements and securities lending:

The Bank obtains financing by selling financial instruments and agreeing to repurchase them in the future, plus interest at a prefixed rate. As of September 30, 2023 and December 31, 2022, the repurchase agreements are the following:

	September		December
	2023		2022
	MCh$		MCh$
Transaction with domestic banks
Repurchase agreements with other banks		—		—
Repurchase agreements with the Central Banks of Chile		—		—
Obligations from securities lending		—		—

Transaction with foreign banks
Repurchase agreements with other banks		—		—
Repurchase agreements with foreign Central Banks		—		—
Obligations from securities lending		—		—

Transaction with other domestic entities
Repurchase agreements		100,332		216,264
Obligations from securities lending		—		—

Transaction with other foreign entities
Repurchase agreements		—		—
Obligations from securities lending		—		—

Total		100,332		216,264

The fair value of the financial instruments delivered as collateral by the Bank and its subsidiaries, in sales transactions with repurchase agreement and securities lending as of September 30, 2023 amounts to Ch$100,341 million (Ch$215,781 million in December 2022). In the event that the Bank and its subsidiaries enter into default or bankruptcy, the counterparty is authorized to sell or deliver these investments as collateral.

106

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

22.

Financial liabilities at amortized cost, continued:

(d)

Borrowings from Financial Institutions:

At the end of each period, borrowings from financial institutions are detailed as follows:

	September		December
	2023		2022
	MCh$		MCh$

Domestic banks
Banco Santander		—		2,699
Subtotal domestic banks		—		2,699

Foreign banks
Foreign trade financing
Bank of New York Mellon		171,519		77,846
Bank of America		131,188		80,509
Standard Chartered Bank		122,811		81,828
Wells Fargo Bank		110,540		231,311
HSBC Bank		92,912		85,153
Zurcher Kantonalbank		67,637		—
Citibank N.A. United State		52,198		69,810
Commerzbank AG		42,738		348
Caixabank S.A.		13,609		—
Bank of Nova Scotia		—		142,787
Industrial and Commercial Bank of China		—		1,280

Borrowings and other obligations
Wells Fargo Bank		189,090		149,944
Commerzbank AG		2,692		110
Citibank N.A. United Kingdom		—		108,017
Standard Chartered Bank		—		14,281
Deutsche Bank AG		—		3,179
Others		56		53
Subtotal foreign banks		996,990		1,046,456

Chilean Central Bank (*)		4,348,521		4,348,521

Total		5,345,511		5,397,676

(*)

Financing provided by the Chilean Central Bank to deliver liquidity to the economy and support the credit flow to households and companies, related to the Conditional Credit Facility to Increase Lending (FCIC by its Spanish initials).

107

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

22.

Financial liabilities at amortized cost, continued:

(e)

Debt financial instruments issued:

At the end of each period, the composition of debt financial instruments issued as follows:

	September		December
	2023		2022
	MCh$		MCh$

Letters of credit
Letters of credit for housing		1,588		2,328
Letters of credit for general purposes		19		49

Bonds
Current Bonds		9,516,161		9,265,570
Mortgage bonds		—		—
Total		9,517,768		9,267,947

During the period ended September 30, 2023 Banco de Chile has placed bonds for Ch$936,753 million, which corresponds to Short-Term Current Bonds and Long-Term Bonds for amounts of Ch$286,354 and Ch$650,399 million respectively, according to the following details:

Short-term Current Bonds

Counterparty

Currency

Amount
MCh$

Annual
interest rate
%

Issued

date

Maturity
date

Wells Fargo Bank

USD

39,449

5.65

03/30/2023

08/01/2023

Wells Fargo Bank

USD

39,449

5.65

03/30/2023

07/28/2023

Wells Fargo Bank

USD

40,385

5.60

04/03/2023

10/02/2023

Wells Fargo Bank

USD

40,425

5.56

04/04/2023

09/01/2023

Wells Fargo Bank

USD

42,041

5.85

08/01/2023

02/01/2024

Wells Fargo Bank

USD

42,303

5.75

08/25/2023

11/27/2023

Wells Fargo Bank

USD

42,302

5.85

08/25/2023

01/22/2024

Total as of September 30, 2023

286,354

108

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

22.

Financial liabilities at amortized cost, continued:

(e)

Debt financial instruments issued, continued:

Long-Term Bonds

Serie	Currency	Amount MCh$		Terms Years	Annual interest rate %	Issued date	Maturity date

BCHIGI0322	UF		143,510	12	2.61	01/06/2023	09/01/2035
BCHIDG1116	CLP		9,179	4	6.55	03/16/2023	05/01/2027
BCHIDG1116	CLP		10,604	4	6.55	03/23/2023	05/01/2027
BCHIGG1121	UF		23,889	12	2.50	04/11/2023	05/01/2035
BCHICG0815	UF		18,716	9	2.65	04/28/2023	08/01/2032
BCHIGB0322	UF		16,521	11	2.78	05/18/2023	09/01/2034
BCHICH1215	UF		10,939	9	2.96	06/02/2023	12/01/2032
BCHIGB0322	UF		7,747	11	2.78	06/06/2023	09/01/2034
BCHIBU0815	UF		10,346	6	3.39	06/08/2023	08/01/2029
BCHIBU0815	UF		18,200	6	3.39	06/09/2023	08/01/2029
BCHICE1215	UF		27,024	8	2.94	06/09/2023	12/01/2031
BCHIFW1121	UF		142,385	10	2.89	06/12/2023	05/01/2033
BCHIBU0815	UF		23,372	6	3.26	06/15/2023	08/01/2029
BCHIGB0322	UF		7,217	11	2.78	06/16/2023	09/01/2034
BCHICI0815	UF		5,658	10	3.04	08/01/2023	02/01/2033
BCHICI0815	UF		18,388	10	3.35	08/18/2023	02/01/2033
BCHICH1215	UF		8,919	9	3.34	08/24/2023	12/01/2032
BCHIBO0815	UF		22,243	4	3.61	08/25/2023	02/01/2028
BCHIBO0815	UF		48,392	4	3.61	08/29/2023	02/01/2028
BCHICE1215	UF		9,349	8	3.27	08/29/2023	12/01/2031
Subtotal			582,598

BONO MXN	MXN		31,968	4	TIE (28 days) + 0.85	06/01/2023	06/03/2027
BONO JPY	JPY		35,833	2	0.75	06/08/2023	06/16/2025
Subtotal other currencies			67,801
Total as of September 30, 2023			650,399

109

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

22.

Financial liabilities at amortized cost, continued:

(e)

Debt financial instruments issued, continued:

During the year ended December 31, 2022 Banco de Chile has placed bonds for Ch$1,355,816 million, which corresponds to Short-Term Current Bonds and Long-Term Bonds for amounts of Ch$215,249 and Ch$1,140,567 million respectively, according to the following details:

Short-term Bonds

Counterparty

Currency

Amount
MCh$

Annual
interest rate
%

Issued

date

Maturity
date

Wells Fargo Bank

USD

17,065

1.61

05/18/2022

08/16/2022

Wells Fargo Bank

USD

41,944

1.61

05/19/2022

08/17/2022

Citibank N.A.

USD

8,379

2.25

05/20/2022

11/21/2022

Citibank N.A.

USD

5,028

1.60

05/20/2022

08/22/2022

Wells Fargo Bank

USD

28,702

2.35

06/06/2022

12/06/2022

Citibank N.A.

USD

1,652

2.25

06/09/2022

12/09/2022

Wells Fargo Bank

USD

85,779

5.40

12/13/2022

06/12/2023

Wells Fargo Bank

USD

26,700

5.00

12/19/2022

03/16/2023

Total as of December 31, 2022

215,249

Long-Term Current Bonds

Serie	Currency	Amount MCh$		Terms Years	Annual interest rate %	Issued date	Maturity date

BCHIBS0815	UF		15,707	14	3.00	01/05/2022	01/05/2036
BCHIBS0815	UF		15,719	14	3.06	01/20/2022	01/20/2036
BCHICF0815	UF		65,738	17	2.65	03/01/2022	03/01/2039
BCHICP0815	UF		65,883	19	2.80	03/01/2022	03/01/2041
BCHIBS0815	UF		32,583	14	2.60	03/17/2022	03/17/2036
BCHICQ1015	UF		69,443	19	3.20	11/02/2022	11/02/2041
BCHICN0815	UF		69,802	19	3.20	11/02/2022	11/02/2041
BCHICO1215	UF		70,178	19	3.20	11/02/2022	11/02/2041
BCHICK0815	UF		73,568	18	3.20	11/14/2022	11/14/2040
BCHICM1215	UF		18,618	18	3.20	11/18/2022	11/18/2040
BCHIDV1116	UF		9,305	11	4.40	11/21/2022	11/21/2033
BCHIDV1116	UF		37,271	11	4.40	11/22/2022	11/22/2033
BCHIBU0815	UF		20,003	14	3.00	12/02/2022	12/02/2036
BCHIDU0716	UF		36,536	11	4.40	12/02/2022	12/02/2033
BCHICM1215	UF		9,453	18	3.20	12/05/2022	12/05/2040
BCHICM1215	UF		46,318	18	3.20	12/07/2022	12/07/2040
BCHICL1015	UF		74,421	18	3.20	12/07/2022	12/07/2040
BCHIGJ0522	UF		141,320	13	2.70	12/07/2022	12/07/2035
BCHICJ1215	UF		25,912	18	3.20	12/12/2022	12/12/2040
BCHICJ1215	UF		48,099	18	3.20	12/13/2022	12/13/2040
BCHIGK1221	UF		143,020	14	2.70	12/22/2022	12/22/2036
Subtotal UF			1,088,897

BONO PEN	PEN		51,670	20	8.65	03/09/2022	03/09/2042
Subtotal other currencies			51,670
Total as of December 31, 2022			1,140,567

As of September 30, 2023 and December 31, 2022, the Bank has not presented defaults in the payment of principal and interest on its debt instruments. Likewise, there have been no breaches of covenants and other commitments associated with the debt instruments issued.

110

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

22.

Financial liabilities at amortized cost, continued:

(f)

Other Financial Obligations:

At the end of each period, the composition of other financial obligations as follows:

	September		December
	2023		2022
	MCh$		MCh$

Other Chilean financial obligations		253,327		343,927
Other financial obligations with the Public sector		34		103
Total		253,361		344,030

23.

Financial instruments of regulatory capital issued:

At the end of each period, this item is composed as follows:

	September		December
	2023		2022
	MCh$		MCh$

Subordinated bonds
Subordinated bonds with transitory recognition		—		—
Subordinated bonds		1,036,187		1,010,905
Bonds with no fixed term of maturity				—
Preferred stock				—
Total		1,036,187		1,010,905

Issuances of regulatory capital financial instruments in the period:

During the period ended September 30, 2023 and December 31, 2022, no issues of regulatory capital financial instruments have been made.

111

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

23.

Financial instruments of regulatory capital issued, continued:

Changes in regulatory capital financial instruments:

	Subordinated bonds			Bonds with no maturity		Preferred shares
	MCh$			MCh$		MCh$

Balance as of January 1, 2022		917,510			—		—
Emissions made		—			—		—
Transaction costs		—			—		—
Transaction costs amortization		—			—		—
Accrued interest		31,271			—		—
Acquisition or redemption by the issuer		—			—		—
Modification of the issuance conditions		—			—		—
Interest and UF indexation payments to the holder		(42,866	)		—		—
Principal payments to the holder		(15,184	)		—		—
Accrued UF indexation		120,174			—		—
Exchange rate differences		—			—		—
Depreciation		—			—		—
Reappraisal		—			—		—
Expiration		—			—		—
Conversion to common shares		—			—		—
Balance as of December 31, 2022		1,010,905			—		—

Balance as of January 1, 2023		1,010,905			—		—
Emissions made		—			—		—
Transaction costs		—			—		—
Transaction costs amortization		—			—		—
Accrued interest		26,318			—		—
Acquisition or redemption by the issuer		—			—		—
Modification of the issuance conditions		—			—		—
Interest and UF indexation payments to the holder		(23,658	)		—		—
Principal payments to the holder		(6,993	)		—		—
Accrued UF indexation		29,615			—		—
Exchange rate differences		—			—		—
Depreciation		—			—		—
Reappraisal		—			—		—
Expiration		—			—		—
Conversion to common shares		—			—		—
Balance as of September 30, 2023		1,036,187			—		—

112

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

23.

Financial instruments of regulatory capital issued, continued:

Below is the detail of the subordinated bonds due as of September 30, 2023 and December 31, 2022:

September 2023
Serie	Currency	Issuance currency amount		Interest rate %	Registration date	Maturity date	Balance due MCh$

C1	UF		300,000	7.5	12/06/1999	01/01/2030		5,035
C1	UF		200,000	7.4	12/06/1999	01/01/2030		3,361
C1	UF		530,000	7.1	12/06/1999	01/01/2030		8,978
C1	UF		300,000	7.1	12/06/1999	01/01/2030		5,085
C1	UF		50,000	6.5	12/06/1999	01/01/2030		861
C1	UF		450,000	6.6	12/06/1999	01/01/2030		7,747
D1	UF		2,000,000	3.6	06/20/2002	04/01/2026		19,137
F	UF		1,000,000	5.0	11/28/2008	11/01/2033		35,458
F	UF		1,500,000	5.0	11/28/2008	11/01/2033		53,187
F	UF		759,000	4.5	11/28/2008	11/01/2033		27,969
F	UF		241,000	4.5	11/28/2008	11/01/2033		8,881
F	UF		4,130,000	4.2	11/28/2008	11/01/2033		155,180
F	UF		1,000,000	4.3	11/28/2008	11/01/2033		37,573
F	UF		70,000	4.2	11/28/2008	11/01/2033		2,638
F	UF		4,000,000	3.9	11/28/2008	11/01/2033		155,067
F	UF		2,300,000	3.8	11/28/2008	11/01/2033		89,515
G	UF		600,000	4.0	11/29/2011	11/01/2036		21,547
G	UF		50,000	4.0	11/29/2011	11/01/2036		1,796
G	UF		80,000	3.9	11/29/2011	11/01/2036		2,893
G	UF		450,000	3.9	11/29/2011	11/01/2036		16,289
G	UF		160,000	3.9	11/29/2011	11/01/2036		5,792
G	UF		1,000,000	2.7	11/29/2011	11/01/2036		40,973
G	UF		300,000	2.7	11/29/2011	11/01/2036		12,292
G	UF		1,360,000	2.6	11/29/2011	11/01/2036		55,894
J	UF		1,400,000	1.0	11/29/2011	11/01/2042		75,230
J	UF		1,500,000	1.0	11/29/2011	11/01/2042		80,718
J	UF		1,100,000	1.0	11/29/2011	11/01/2042		59,626
I	UF		900,000	1.0	11/29/2011	11/01/2040		47,465
				Total subordinated bonds due				1,036,187

113

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

23.

Financial instruments of regulatory capital issued, continued:

Below is the detail of the subordinated bonds due as of September 30, 2023 and December 31, 2022, continued:

December 2022
Serie	Currency	Issuance currency amount		Interest rate %	Registration date	Maturity date	Balance due MCh$

C1	UF		300,000	7.5	12/06/1999	01/01/2030		5,553
C1	UF		200,000	7.4	12/06/1999	01/01/2030		3,707
C1	UF		530,000	7.1	12/06/1999	01/01/2030		9,906
C1	UF		300,000	7.1	12/06/1999	01/01/2030		5,610
C1	UF		50,000	6.5	12/06/1999	01/01/2030		951
C1	UF		450,000	6.6	12/06/1999	01/01/2030		8,555
D2	UF		1,600,000	4.3	06/20/2002	04/01/2023		2,820
D2	UF		400,000	4.3	06/20/2002	04/01/2023		705
D1	UF		2,000,000	3.6	06/20/2002	04/01/2026		21,279
F	UF		1,000,000	5.0	11/28/2008	11/01/2033		33,930
F	UF		1,500,000	5.0	11/28/2008	11/01/2033		50,895
F	UF		759,000	4.5	11/28/2008	11/01/2033		26,835
F	UF		241,000	4.5	11/28/2008	11/01/2033		8,521
F	UF		4,130,000	4.2	11/28/2008	11/01/2033		149,084
F	UF		1,000,000	4.3	11/28/2008	11/01/2033		36,098
F	UF		70,000	4.2	11/28/2008	11/01/2033		2,535
F	UF		4,000,000	3.9	11/28/2008	11/01/2033		149,314
F	UF		2,300,000	3.8	11/28/2008	11/01/2033		86,214
G	UF		600,000	4.0	11/29/2011	11/01/2036		20,686
G	UF		50,000	4.0	11/29/2011	11/01/2036		1,724
G	UF		80,000	3.9	11/29/2011	11/01/2036		2,778
G	UF		450,000	3.9	11/29/2011	11/01/2036		15,645
G	UF		160,000	3.9	11/29/2011	11/01/2036		5,563
G	UF		1,000,000	2.7	11/29/2011	11/01/2036		39,616
G	UF		300,000	2.7	11/29/2011	11/01/2036		11,885
G	UF		1,360,000	2.6	11/29/2011	11/01/2036		54,050
J	UF		1,400,000	1.0	11/29/2011	11/01/2042		73,326
J	UF		1,500,000	1.0	11/29/2011	11/01/2042		78,679
J	UF		1,100,000	1.0	11/29/2011	11/01/2042		58,137
I	UF		900,000	1.0	11/29/2011	11/01/2040		46,304
				Total subordinated bonds due				1,010,905

114

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

24.	Provisions for contingencies:

(a)

At the end of each period, this item is composed as follows:

	September		December
	2023		2022
	MCh$		MCh$

Provisions for employee benefit obligations		124,036		139,315
Provisions for obligations of customer loyalty and merit programs		37,973		33,609
Provisions for operational risk		1,407		2,838
Provisions of a bank branch abroad for profit remittances to its parent company		—		—
Provisions for reestructuring plans		—		—
Provisions for lawsuits and litigation		—		—
Other provisions for contingencies		264		264
Total		163,680		176,026

115

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

24.

Provisions for contingencies, continued;

(b)

The following table shows the changes in provisions during the period 2023 and 2022:

	Provisions for employee benefit obligations			Provisions of a bank branch abroad for profit remittances to its parent company		Provisions for reestructuring plans		Provisions for lawsuits and litigation		Provisions for obligations of customer loyalty and merit programs			Provisions for operational risk			Other provisions for contingencies		Total
	MCh$			MCh$		MCh$		MCh$		MCh$			MCh$			MCh$		MCh$

Balances as of January 1, 2022		106,964			—		—		—		35,937			693			264		143,858
Provisions established		82,177			—		—		—		—			265			—		82,442
Provisions used		(74,869	)		—		—		—		—			—			—		(74,869	)
Provisions released		—			—		—		—		(62	)		—			—		(62	)
Balances as of of September 30, 2022		114,272			—		—		—		35,875			958			264		151,369
Provisions established		41,611			—		—		—		—			1,880			—		43,491
Provisions used		(16,568	)		—		—		—		—			—			—		(16,568	)
Provisions released		—			—		—		—		(2,266	)		—			—		(2,266	)
Balances as of December 31, 2022		139,315			—		—		—		33,609			2,838			264		176,026
Provisions established		76,276			—		—		—		4,364			542			—		81,182
Provisions used		(91,555	)		—		—		—		—			(1,496	)		—		(93,051	)
Provisions released		—			—		—		—		—			(477	)		—		(477	)
Balances as of September 30, 2023		124,036			—		—		—		37,973			1,407			264		163,680

116

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

24.

Provisions for contingencies, continued;

(c)

Provisions for employee benefit obligations:

	September		December
	2023		2022
	MCh$		MCh$

Provision of short-term employee benefits		113,872		128,580
Provision of benefits to employees for contract termination		10,164		10,735
Provisión of benefits to post-employment employees		—		—
Provision of long-term employee benefits		—		—
Provision of share-based employee benefits		—		—
Provisión for obligations for defined contribution post-employment plans		—		—
Provisión for obligations for post-employment defined benefit plans		—		—
Provision for other employee obligations		—		—
Total		124,036		139,315

(d)

Provision of short-term employee benefits:

(i)

Compliance bonuses provision:

	September			September
	2023			2022
	MCh$			MCh$

Balances as of January 1		73,204			53,069
Net provisions established		38,830			43,813
Provisions used		(60,117	)		(46,588	)
Total		51,917			50,294

(ii)

Vacation provision:

	September			September
	2023			2022
	MCh$			MCh$

Balances as of January 1		41,257			37,010
Net provisions established		7,604			7,166
Provisions used		(6,301	)		(5,682	)
Total		42,560			38,494

117

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

24.

Provisions for contingencies, continued;

(d)

Provision of short-term employee benefits, continued:

(iii)

Provision of other benefits to personnel:

	September			September
	2023			2022
	MCh$			MCh$

Balances as of January 1		14,119			10,439
Net provisions established		28,696			29,640
Provisions used		(23,420	)		(21,668	)
Total		19,395			18,411

(e)

Provision of benefits to employees for contract termination:

(i)

Changes of the provision for employee benefits due to the termination of the employment contract:

	September			September
	2023			2022
	MCh$			MCh$

Present value of the obligations at the beginning of the period		10,735			6,446
Increase in provision		1,116			1,551
Benefit paid		(1,717	)		(932	)
Effect of change in actuarial factors		30			8
Total		10,164			7,073

118

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

24.

Provisions for contingencies, continued;

(e)

Provision of benefits to employees for contract termination, continued:

(ii)

Net benefits expenses:

	September		September
	2023		2022
	MCh$		MCh$

Increase in provisions		559		1,193
Interest cost of benefits obligations		557		358
Effect of change in actuarial factors		30		8
Net benefit expenses		1,146		1,559

(iii)

Factors used in the calculation of the provision:

The main assumptions used in the determination of severance indemnity obligations for the Bank's plan are shown below:

	September 30, 2023		December 31, 2022
	%		%

Discount rate		6.18		5.50
Salary increase rate		5.60		4.80
Payment probability		99.99		99.99

The most recent actuarial valuation of the staff severance indemnities provision was carried out during the third quarter of 2023.

(f)

Employee benefits share-based provision:

As of September 30, 2023 and December 31, 2022, the Bank and its subsidiaries do not have a stock-based compensation plan.

119

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

25.

Provision for dividends, interests and reappraisal of financial instruments of regulatory capital issued:

(a)

The item detail is as follows:

	September		December
	2023		2022
	MCh$		MCh$

Provisions for dividends		432,850		520,158
Provisions for payment of interest on bonds with no fixed maturity date		—		—
Provision for revaluation of bonds without a fixed term of maturity		—		—
Total		432,850		520,158

(b)

The changes at the end of each period are as follows:

	Provisions for dividends			Provisions for payment of interest on bonds with no fixed maturity date		Provision for revaluation of bonds without a fixed term of maturity		Total
	MCh$			MCh$		MCh$		MCh$

Balances as of January 1, 2022		323,897			—		—		323,897
Provisions established		375,197			—		—		375,197
Provisions used		(323,897	)		—		—		(323,897	)
Provisions released		—			—		—		—
Balances as of September 30, 2022		375,197			—		—		375,197
Provisions established		144,961			—		—		144,961
Provisions used		—			—		—		—
Provisions released		—			—		—		—
Balances as of December 31, 2022		520,158			—		—		520,158
Provisions used		432,850			—		—		432,850
Provisions released		(520,158	)		—		—		(520,158	)
Provisions used		—			—		—		—
Balances as of September 30, 2023		432,850			—		—		432,850

120

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

26.

Special provisions for credit risk:

At the end of each period, this item is composed as follows:

	September		December
	2023		2022
	MCh$		MCh$

Additional loan provisions		700,252		700,252
Provisions for credit risk for contingent loans (*)		54,063		57,377
Provisions for country risk for transactions with debtors with residence abroad		11,702		8,137
Special provisions for loans abroad		—		—
Provisions for adjustments to the minimum provision required for normal portfolio with individual evaluation		—		—
Provisions constituted by credit risk as a result of additional prudential requirements		—		—
Total		766,017		765,766

(*)	The changes of provisions for credit risk for contingent loans is disclosed in Note No. 13 letter f).

The changes of provisions for special credit risk is as follows:

	Additional loan provisions		Provisions for credit risk for contingent loans			Provisions for country risk for transactions with debtors with residence abroad			Total
	MCh$		MCh$			MCh$			MCh$
Balances as of January 1, 2022		540,252		53,986			7,336			601,574
Provisions established		145,000		5,361			8,017			158,378
Provisions used		—		—			—			—
Provisions released		—		—			—			—
Foreign exchange differences		—		1,489			—			1,489
Balances as of September 30, 2022		685,252		60,836			15,353			761,441
Provisions established		15,000		—			—			15,000
Provisions used		—		—			—			—
Provisions released		—		(1,493	)		(7,216	)		(8,709	)
Foreign exchange differences		—		(1,966	)		—			(1,966	)
Balances as of December 31, 2022		700,252		57,377			8,137			765,766
Provisions established		—		—			3,565			3,565
Provisions used		—		—			—			—
Provisions released		—		(3,596	)		—			(3,596	)
Foreign exchange differences		—		282			—			282
Balances as of September 30, 2023		700,252		54,063			11,702			766,017

121

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

27.	Other Liabilities:

At the end of each period, this item is composed as follows:

	September		December
	2023		2022
	MCh$		MCh$

Accounts payable to third parties		396,768		384,619
Obligations for mortgage loans granted to be remit to other banks and/or real estate companies		338,517		203,831
Creditors for intermediation of financial instruments		233,846		131,106
Cash guarantees received for derivative financial transactions		202,270		201,846
Liability for income from usual activities from contracts with customers		47,938		59,258
Agreed dividends payable		12,885		8,005
VAT debit		6,060		4,744
Outstanding transactions		1,203		1,208
Other cash guarantees received		451		475
Securities to be settled		37		27,198
Other liabilities		33,567		32,738
Total		1,273,542		1,055,028

122

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

28.

Equity:

(a)

Capital:

(i)

Authorized, subscribed and paid shares:

As of September 30, 2023, the paid-in capital of Banco de Chile is represented by 101,017,081,114 registered shares (101,017,081,114 shares as of December 31, 2022), with no par value, subscribed and fully paid.

	As of September 30, 2023
Corporate Name or Shareholders’s name	Number of Shares		% of Equity Holding

LQ Inversiones Financieras S.A.		46,815,289,329		46.344	%
Banco de Chile on behalf State Street		5,366,323,874		5.312	%
Banco Santander on behalf foreign investors		5,262,546,605		5.210	%
Banchile Corredores de Bolsa S.A.		5,210,759,155		5.158	%
Inversiones LQ-SM Limitada		4,854,988,014		4.806	%
Banco de Chile on behalf of non-resident third parties		4,417,932,379		4.373	%
Banco de Chile on behalf Citibank New York		1,925,015,504		1.906	%
Ever Chile SPA		1,888,369,814		1.869	%
J P Morgan Chase Bank		1,467,058,508		1.452	%
Inversiones Avenida Borgoño SPA		1,190,565,316		1.179	%
Ever 1 BAE SPA		1,166,584,950		1.155	%
Larraín Vial S.A. Corredora de Bolsa		1,059,183,739		1.049	%
Banco Santander Chile		908,362,594		0.899	%
A.F.P Habitat S.A. for A Fund		607,941,211		0.602	%
BCI Corredores de Bolsa S.A.		583,213,648		0.577	%
Valores Security S.A. Corredores de Bolsa		535,070,913		0.530	%
Inversiones CDP SPA		487,744,912		0.483	%
Santander S.A. Corredores de Bolsa Limitada		480,194,628		0.475	%
BTG PACTUAL CHILE S. A. Corredores de Bolsa		475,548,665		0.471	%
AFP Cuprum S. A. for A Fund		467,874,965		0.463	%
Subtotal		85,170,568,723		84.313	%
Others shareholders		15,846,512,391		15.687	%
Total		101,017,081,114		100.000	%

123

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

28.

Equity, continued:

(a)

Capital, continued:

(i)

Authorized, subscribed and paid shares, continued:

	As of December 31, 2022
Corporate Name or Shareholders’s name	Number of Shares		% of Equity Holding

LQ Inversiones Financieras S.A.		46,815,289,329		46.344	%
Banco Santander on behalf foreign investors		5,152,721,486		5.101	%
Banchile Corredores de Bolsa S.A.		5,136,168,146		5.084	%
Inversiones LQ-SM Limitada		4,854,988,014		4.806	%
Banco de Chile on behalf State Street		4,578,821,545		4.533	%
Banco de Chile on behalf of non-resident third parties		4,469,302,412		4.424	%
Banco de Chile on behalf Citibank New York		2,114,554,951		2.093	%
Ever Chile SPA		1,888,369,814		1.869	%
Inversiones Avenida Borgoño SPA		1,190,565,316		1.179	%
Ever 1 BAE SPA		1,166,584,950		1.155	%
Larraín Vial S.A. Corredora de Bolsa		992,600,803		0.983	%
J P Morgan Chase Bank		912,758,708		0.904	%
Banco Santander Chile		727,463,267		0.720	%
A.F.P Cuprum S.A. for A Fund		665,713,252		0.659	%
A.F.P Habitat S.A. for A Fund		574,953,861		0.569	%
BCI Corredores de Bolsa S.A.		520,057,341		0.515	%
Valores Security S.A. Corredores de Bolsa		516,590,290		0.511	%
Inversiones CDP SPA		487,744,912		0.483	%
A.F.P Capital S.A. for A Fund		475,086,799		0.470	%
Santander S.A. Corredores de Bolsa Limitada		462,028,745		0.457	%
Subtotal		83,702,363,941		82.860	%
Others shareholders		17,314,717,173		17.140	%
Total		101,017,081,114		100.000	%

124

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

28.

Equity, continued:

(a)

Capital, continued:

(ii)

The following table shows the changes in share from December 31, 2022 to September 30, 2023:

	Total Ordinary Shares

Total shares as of December 31, 2022		101,017,081,114

Total shares as of September 30, 2023		101,017,081,114

(b)

Approval and payment of dividends:

At the Bank Ordinary Shareholders’ Meeting held on March 23, 2023 it was approved the distribution and payment of dividend No. 211 of Ch$8.58200773490 per share of the Banco de Chile, with charge to the net distributable income for the year 2022. The dividends paid in the in the period 2023 amounted to Ch$866,929 million.

At the Bank Ordinary Shareholders’ Meeting held on March 17, 2022 it was approved the distribution and payment of dividend No. 210 of Ch$5.34393608948 per share of the Banco de Chile, with charge to the net distributable income for the year 2021. The dividends paid in the in the period 2022 amounted to Ch$539,827 million.

(c)

Provision for minimum dividends:

The Board of Directors of Banco de Chile agreed for the purposes of minimum dividends, to establish a provision of 60% of the net income resulting from reducing or adding to the net income for the corresponding period, the value effect of the monetary unit of paid capital and reserves, as a result of any change in the Consumer Price Index (CPI) between the month prior to the current month and the month of November of the previous year. The amount to be reduced of the liquid income for the period ended as of September 30, 2023 amounted to Ch$136,674 million.

As indicated, as of September 30, 2023, the amount of the net income determined in accordance with the preceding paragraph is equivalent to Ch$721,417 million (Ch$866,929 million as of December 31, 2022). Consequently, the Bank recorded a provision for minimum dividends under “Provision for dividends, interests and reappraisal of financial instruments of regulatory capital issued” as of September 30, for an amount of Ch$432,850 million (Ch$520,158 million in December 2022), which reflects as a counterpart an equity reduction for the same amount in the item “Retained earnings”.

125

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

28.

Equity, continued:

(d)

Earnings per share:

(i)

Basic earnings per share:

Basic earnings per share are determined by dividing the net income attributable to the Bank ordinary equity holders in a period between the weighted average number of shares outstanding during that period, excluding the average number of own shares held throughout the period.

(ii)

Diluted earnings per share:

In order to calculate the diluted earnings per share, both the amount of income attributable to common shareholders and the weighted average number of shares outstanding, net of own shares, must be adjusted for all the inherent dilutive effects to the potential common shares (stock options, warrants and convertible debt).

Accordingly, the basic and diluted earnings per share as of September 30, 2023 and 2022 were determined as follows:

	September		September
	2023		2022
Basic earnings per share:
Net profits attributable to ordinary equity holders of the bank (in million of Chilean pesos)		858,091		1,062,823
Weighted average number of ordinary shares		101,017,081,114		101,017,081,114
Earning per shares (in Chilean pesos)		8.49		10.52

Diluted earnings per share:
Net profits attributable to ordinary equity holders of the bank (in million of Chilean pesos)		858,091		1,062,823
Weighted average number of ordinary shares		101,017,081,114		101,017,081,114
Assumed conversion of convertible debt		—		—
Adjusted number of shares		101,017,081,114		101,017,081,114
Diluted earnings per share (in Chilean pesos)		8.49		10.52

As of September 30, 2023 and 2022, the Bank does not have instruments that generate dilutive effects.

126

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

28.

Equity, continued:

(e)

Other comprehensive income:

Below is the composition and changes of accumulated other comprehensive income as of September 30, 2023 and 2022:

	Elements that will not be reclassified in profit or loss										Elements that can be reclassified in profit or loss
	New measurements of net defined benefit liability and actuarial results for other employee benefit plans			Fair value changes of equity instruments designated as at fair value through other comprehensive income		Income tax			Subtotal		Fair value changes of financial assets at fair value through other comprehensive income			Cash flow accounting hedge			Participation in other comprehensive income of entities registered under the equity method			Income tax			Subtotal			Total
	MCh$			MCh$		MCh$			MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Opening balances as of January 1, 2022		(208	)		3,590		(913	)		2,469		(47,808	)		111,694			(21	)		(27,595	)		36,270			38,739
Other comprehensive income for the period		(8	)		199		(52	)		139		5,118			(119,933	)		(48	)		35,178			(79,685	)		(79,546	)
Balances as of September 30, 2022		(216	)		3,789		(965	)		2,608		(42,690	)		(8,239	)		(69	)		7,583			(43,415	)		(40,807	)

Opening balances as of January 1, 2023		(338	)		3,790		(932	)		2,520		268			(103,782	)		(190	)		31,382			(72,322	)		(69,802	)
Other comprehensive income for the period		(30	)		3,472		(929	)		2,513		(22,018	)		147,508			92			(38,758	)		86,824			89,337
Balances as of September 30, 2023		(368	)		7,262		(1,861	)		5,033		(21,750	)		43,726			(98	)		(7,376	)		14,502			19,535

127

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

28.

Equity, continued:

(f)

Retained earnings from previous years:

During the year 2023, the Ordinary Shareholders Meeting of Banco de Chile agreed to deduct and withhold from the year 2022 liquid income, an amount equivalent to the value effect of the monetary unit of paid capital and reserves according to the variation in the Consumer Price Index, which occurred between November 2021 and November 2022, amounting to Ch$542,504 million.

29.	Contingencies and Commitments:

(a)

The Bank and its subsidiaries have exposures associated with contingent loans and other liabilities according to the following detail:

(a.1)

Contingent loans:

	September		December
	2023		2022
	MCh$		MCh$
Guarantees and sureties
Guarantees and sureties in chilean currency		—		—
Guarantees and sureties in foreing currency		299,065		348,774

Letters of credit for goods circulation operations		338,961		424,195

Debt purchase commitments in local currency abroad		—		—

Transactions related to contingent events
Transactions related to contingent events in chilean currency		2,183,750		2,230,917
Transactions related to contingent events in foreing currency		455,700		466,691

Undrawn credit lines with immediate termination
Balance of lines of credit and agreed overdraft in current account – commercial loans		1,461,873		1,396,659
Balance of lines of credit on credit card – commercial loans		316,363		290,950
Balance of lines of credit and agreed overdraft in current account – consumer loans		1,477,650		1,457,303
Balance of lines of credit on credit card – consumer loans		6,734,788		6,202,951
Balance of lines of credit and agreed overdraft in current account – due from banks loans		—		—

Undrawn credit lines		—		—

Other commitments
Credits for higher studies Law No. 20,027 (CAE)		—		—
Other irrevocable credit commitments		—		72,355

Other credit commitments		—		—

Total		13,268,150		12,890,795

128

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

29.

Contingencies and Commitments, continued:

(a.2)

Responsibilities assumed to meet customer needs:

	September		December
	2023		2022
	MCh$		MCh$

Transactions on behalf of third parties
Collections		182,411		174,238
Placement or sale of financial instruments		—		—
Transferred financial assets managed by the bank		—		—
Third-party resources managed by the bank		830,693		766,706
Subtotal		1,013,104		940,944

Securities custody
Securities safekept by a banking subsidiary		5,787,542		5,593,924
Securities safekept by the Bank		3,655,879		3,646,536
Securities safekept deposited in another entity		15,229,467		14,855,338
Securities issued by the bank		—		—
Subtotal		24,672,888		24,095,798

Total		25,685,992		25,036,742

(b)

Lawsuits and legal proceedings:

(b.1)

Normal judicial contingencies in the industry:

At the date of issuance of these Interim Consolidated Financial Statements, there are legal actions filed against the Bank related with the ordinary course operations. As of September 30, 2023, the Bank maintain provisions for judicial contingencies amounting to Ch$1,209 million (Ch$1,790 million as of December 2022), which are part of the item “Provisions for contingencies” in the Statement of Financial Position.

The estimated end dates of the respective legal contingencies are as follows:

	As of September 30, 2023
	2023		2024		2025		2026		2027		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Legal contingencies		214		739		256		—		—		1,209

(b.2)

Contingencies for significant lawsuits in courts:

As of September 30, 2023 and December 31, 2022, there are not significant lawsuits in court that affect or may affect these Interim Consolidated Financial Statements.

129

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

29.

Contingencies and Commitments, continued:

(c)

Guarantees granted by operations:

In subsidiary Banchile Administradora General de Fondos S.A.:

In compliance with Article No, 12 of Law No. 20,712, Banchile Administradora General de Fondos S.A., has designated Banco de Chile as the representative of the beneficiaries of the guarantees it has established, and in such role the Bank has issued bank guarantees totaling UF 3,264,000 maturing January 5, 2024 (UF 4,153,500, maturing on January 6, 2023). The subsidiary took a policy with Mapfre Seguros Generales S.A. for the Real State Funds by a guaranteed amount of UF 915,300.

As of September 30, 2023 and December 31, 2022, the Bank has not guaranteed mutual funds.

ii.

In subsidiary Banchile Corredores de Bolsa S.A.:

For the purposes of ensuring correct and complete compliance with all of its obligations as broker-dealer entity, in conformity with the provisions from Article 30 and subsequent of Law No. 18,045 on Securities Markets, the subsidiary established a guarantee in an insurance policy for UF 20,000, insured by Mapfre Seguros Generales S.A., that matures April 22, 2024, whereby the Securities Exchange of the Santiago Stock Exchange was appointed as the subsidiary’s creditor representative.

130

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

29.

Contingencies and Commitments, continued:

(c)

Guarantees granted by operations, continued:

	September		December
	2023		2022
Guarantees:	MCh$		MCh$
Shares delivered to guarantee forward sales transactions covered simultaneously:
Santiago Securities Exchange, Stock Exchange		5,724		15,840
Electronic Chilean Securities Exchange, Stock Exchange		11,525		10,323

Fixed income securities to guarantee CCLV system:
Santiago Securities Exchange, Stock Exchange		9,987		9,983

Fixed Income securities to guarantee equity short sale and Hedging Loan:
Santiago Securities Exchange, Stock Exchange		—		—

Shares delivered to guarantee equity lending and short-selling:
Santiago Securities Exchange, Stock Exchange		5,904		7,992

Cash guarantees received for operations with derivatives		4,609		743
Cash guarantees for operations with derivatives		4,471		1,443

Equity securities received for operations with derivatives:
Electronic Chilean Securities Exchange, Stock Exchange		216		273
Depósito Central de Valores S.A.		540		1,363

Financial intermediation securities received for operations with derivatives:
Internal custody		120		238

Total		43,096		48,198

In conformity with the internal regulation of the stock exchange in which it participates, and for the purpose of ensuring its proper performance, the Company maintains a pledge in favor of the Santiago Stock Exchange of one million shares of said stock exchange and the same number of shares of the Sociedad de Infraestructuras de Mercado S.A. It also maintains a pledge in favor of the Electronic Exchange for one hundred thousand shares of said Institution.

Banchile Corredores de Bolsa S.A. keeps an insurance policy current with Chubb Seguros Chile S.A. that expires June 30, 2024, this considers matters of employee fidelity, physical losses, falsification or adulteration, and currency fraud with a coverage amount equivalent to US$20,000,000.

It also provided a bank guarantee in the amount of UF 311,400 for the benefits of investors in portfolio management contracts. This bank guarantee is revaluated in UF to fixed term, non-endorsable and has a maturity date of January 8, 2024.

It also provided a cash guarantee in the amount of US$122,494.32 for the purpose of complying with the obligations to Pershing, for any operations conducted through that broker, additionally, there are US$2,559,313.32 for short sale operations.

131

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

29.

Contingencies and Commitments, continued:

(c)

Guarantees granted by operations, continued:

A guarantee corresponding to UF 10,000 has been constituted, to guarantee compliance with the fund's investment portfolio management service contract. Said guarantee corresponds to a non-endorsable fixed-term readjustable bond in UF issued by Banco de Chile with validity until January 27, 2026.

iii.

In subsidiary Banchile Corredores de Seguros Ltda.:

According to established in article 58, letter D of D.F.L. 251, as of September 30, 2023 the entity maintains two insurance policies with effect from April 15, 2023 to April 14, 2024 which protect it against of potential damages caused by infractions of the law, regulations and complementary rules that regulate insurance brokers, especially when the non-compliance comes from acts, errors or omissions of the broker, its representatives, agents or dependents that participate in the intermediation.

The policies contracted are:

Matter insured	Amount Insured (UF)

Errors and omissions liability policy		500
Civil liability policy		60,000

(d)

Exempt Resolution No. 270 dated October 30, 2014, the Superintendency of Securities and Insurance (current Commission for the Financial Market) imposed a fine of UF 50,000 to Banchile Corredores de Bolsa S.A. for violations of the second paragraph of article 53 of the Securities Market Law, said company filed a claim with the competent Civil Court requesting the annulment of the fine. On December 10, 2019, a judgement in the case was issued reducing the fine to the amount of UF 7,500. The judgment indicated has been subject to cassation appeals filed by both parties, which are pending before the Illustrious Court of Appeals of Santiago. On August 21, 2023, the hearing of the case took place, which is currently under review

The company has not made provisions considering that the Bank’s legal advisors in charge of the procedure estimate that there are solid grounds that the claim filed by Banchile Corredores de Bolsa S.A. can be accepted.

132

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

30.	Interest Revenue and Expenses:

(a)

At the end of the period, the summary of interest is as follows:

	For the nine-months period ended September 30,						07.01.2023 to			07.01.2022 to
	2023			2022			09.30.2023			09.30.2022
	MCh$			MCh$			MCh$			MCh$

Interest revenue		2,367,843			1,620,414			798,103			629,903
Interest expenses		(1,255,198	)		(683,201	)		(421,986	)		(316,751	)
Total net interest income		1,112,645			937,213			376,117			313,152

(b)

The composition of interest revenue is as follows:

	For the nine-months period ended September 30,						07.01.2023 to			07.01.2022 to
	2023			2022			09.30.2023			09.30.2022
	MCh$			MCh$			MCh$			MCh$

Financial assets at amortized cost:
Rights from resale agreements and securities lending		4,279			2,672			1,621			1,147
Debt financial instruments		10,572			10,276			3,537			3,400
Loans and advances to Banks		121,992			108,857			35,142			43,384
Commercial loans		1,099,394			720,532			376,309			278,770
Residential mortgage loans		271,835			235,153			92,546			82,077
Consumer Loans		578,756			431,362			200,409			159,866
Other financial instruments		44,143			7,414			17,674			5,767
Financial assets at fair value through other comprehensive income:
Debt financial instruments		263,201			113,975			80,536			53,180
Other financial instruments		—			—			—			—
Income of accounting hedges of interest rate risk		(26,329	)		(9,827	)		(9,671	)		2,312
Total		2,367,843			1,620,414			798,103			629,903

(b.1)

At the end of the period, the stock of interest not recognized in income is as follows:

	September		September
	2023		2022
	MCh$		MCh$

Commercial loans		34,544		20,504
Residential mortgage loans		3,412		2,415
Consumer Loans		4,383		2,660
Total		42,339		25,579

133

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

30.

Interest Revenue and Expenses, continued:

(b)

The composition of interest revenue is as follows, continued:

(b.2)

The amount of interest recognized on a received basis for impaired portfolio in the period amounts to:

	For the nine-months period ended September 30,				07.01.2023 to		07.01.2022 to
	2023		2022		09.30.2023		09.30.2022
	MCh$		MCh$		MCh$		MCh$

Commercial loans		633		522		239		157
Residential mortgage loans		1,569		952		656		370
Consumer Loans		—		—		—		—
Total		2,202		1,474		895		527

(c)

The composition of interest expenses is as follows:

	For the nine-months period ended September 30,						07.01.2023 to			07.01.2022 to
	2023			2022			09.30.2023			09.30.2022
	MCh$			MCh$			MCh$			MCh$

Financial liabilities at amortized cost:
Current accounts and other demand deposits		967			3,403			222			1,386
Saving accounts and time deposits		1,014,987			484,025			337,023			238,848
Obligations by repurchase agreements and securities lending		11,641			9,162			2,379			5,165
Borrowings from financial institutions		44,649			23,980			15,878			10,367
Debt financial instruments issued		187,066			154,535			68,894			53,773
Other financial obligations		—			—			—			—
Lease liabilities		1,335			1,400			434			479
Financial instruments of regulatory capital issued		26,318			23,094			9,929			8,006
Income of accounting hedges of interest rate risk		(31,765	)		(16,398	)		(12,773	)		(1,273	)
Total		1,255,198			683,201			421,986			316,751

134

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

30.

Interest Revenue and Expenses, continued:

(d)

As of September 30, 2023 and 2022, the Bank uses cross currency and interest rate swaps to hedge its position on changes on the fair value of corporate bonds and commercial loans and cross currency swaps to hedge the risk of variability of obligations flows with foreign banks and bonds issued in foreign currency.

	For the nine-months period ended September 30,																		07.01.2023 to									07.01.2022 to
	2023									2022									09.30.2023									09.30.2022
	Income			Expense			Total			Income			Expense			Total			Income			Expense			Total			Income			Expense			Total
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Gain from fair value accounting hedges		—			—			—			608			—			608			—			—			—			—			—			—
Loss from fair value accounting hedges		—			—			—			(740	)		—			(740	)		—			—			—			—			—			—
Gain from cash flow accounting hedges		88,585			131,814			220,399			65,327			77,433			142,760			6,983			25,057			32,040			13,033			17,056			30,089
Loss from cash flow accounting hedges		(114,914	)		(100,049	)		(214,963	)		(74,414	)		(61,035	)		(135,449	)		(16,654	)		(12,284	)		(28,938	)		(10,721	)		(15,783	)		(26,504	)
Net gain on hedge items		—			—			—			(608	)		—			(608	)		—			—			—			—			—			—
Total		(26,329	)		31,765			5,436			(9,827	)		16,398			6,571			(9,671	)		12,773			3,102			2,312			1,273			3,585

135

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

31.	UF indexation revenue and expenses:

(a)

At the end of the period, the summary of UF indexation is as follows:

	For the nine-months period ended September 30,						07.01.2023 to			07.01.2022 to
	2023			2022			09.30.2023			09.30.2022
	MCh$			MCh$			MCh$			MCh$

UF indexation revenue		535,453			1,683,547			54,190			599,991
UF indexation expenses		(318,961	)		(911,247	)		(23,333	)		(330,063	)
Total net income from UF indexation		216,492			772,300			30,857			269,928

(b)

The composition of UF indexation revenue is as follows

	For the nine-months period ended September 30,						07.01.2023 to			07.01.2022 to
	2023			2022			09.30.2023			09.30.2022
	MCh$			MCh$			MCh$			MCh$

Financial assets at amortized cost:
Rights from resale agreements and securities lending		—			—			—			—
Debt financial instruments		17,753			54,061			1,669			19,358
Loans and advances to Banks		—			—			—			—
Commercial loans		204,338			678,314			21,219			244,173
Residential mortgage loans		352,340			1,060,404			36,489			378,179
Consumer Loans		1,332			5,706			114			1,931
Other financial instruments		1,962			3,033			229			941
Financial assets at fair value through other comprehensive income:
Debt financial instruments		19,197			54,421			637			20,225
Other financial instruments		—			—			—			—
Income of accounting hedges of UF, IVP, IPC indexation risk		(61,469	)		(172,392	)		(6,167	)		(64,816	)
Total		535,453			1,683,547			54,190			599,991

(b.1)

At the end of the period, the stock of UF indexation not recognized in results is as follows:

	September		September
	2023		2022
	MCh$		MCh$

Commercial loans		4,297		4,083
Residential mortgage loans		5,373		6,724
Consumer Loans		8		74
Total		9,678		10,881

136

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

31.

UF indexation revenue and expenses, continued:

(b)

The composition of UF indexation revenue is as follows, continued:

(b.2)

The amount of indexation recognized on the basis received by the impaired portfolio in the period amounted to:

	For the nine-months period ended September 30,				07.01.2023 to		07.01.2022 to
	2023		2022		09.30.2023		09.30.2022
	MCh$		MCh$		MCh$		MCh$

Commercial loans		1,039		819		312		244
Residential mortgage loans		3,646		2,933		1,257		1,233
Consumer Loans		—		—		—		—
Total		4,685		3,752		1,569		1,477

(c)

The composition of UF indexation expenses is as follows:

	For the nine-months period ended September 30,				07.01.2023 to		07.01.2022 to
	2023		2022		09.30.2023		09.30.2022
	MCh$		MCh$		MCh$		MCh$

Financial liabilities at amortized cost:
Current accounts and other demand deposits		9,440		30,719		1,410		10,576
Saving accounts and time deposits		65,222		144,165		5,671		59,908
Obligations by repurchase agreements and securities lending		—		—		—		—
Borrowings from financial institutions		—		—		—		—
Debt financial instruments issued		214,684		640,824		14,721		225,432
Other financial obligations		—		—		—		—
Financial instruments of regulatory capital issued		29,615		95,539		1,531		34,147
Income of accounting hedges of UF, IVP, IPC indexation risk		—		—		—		—
Total		318,961		911,247		23,333		330,063

137

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

31.

UF indexation revenue and expenses, continued:

(d)

As of September 30, 2023 and 2022, the Bank uses cross currency and interest rate swaps to hedge its position on Changes on the fair value of corporate bonds and commercial loans and cross currency swaps to hedge the risk of variability of obligations flows with foreign banks and bonds issued in foreign currency.

	For the nine-months period ended September 30,																07.01.2023 to								07.01.2022 to
	2023								2022								09.30.2023								09.30.2022
	Income			Expense		Total			Income			Expense		Total			Income			Expense		Total			Income			Expense		Total
	MCh$			MCh$		MCh$			MCh$			MCh$		MCh$			MCh$			MCh$		MCh$			MCh$			MCh$		MCh$

Gain from fair value accounting hedges		—			—		—			—			—		—			—			—		—			—			—		—
Loss from fair value accounting hedges		—			—		—			—			—		—			—			—		—			—			—		—
Gain from cash flow accounting hedges		2,308			—		2,308			—			—		—			2,308			—		2,308			—			—		—
Loss from cash flow accounting hedges		(63,777	)		—		(63,777	)		(172,392	)		—		(172,392	)		(8,475	)		—		(8,475	)		(64,816	)		—		(64,816	)
Net gain on hedge items		—			—		—			—			—		—			—			—		—			—			—		—
Total		(61,469	)		—		(61,469	)		(172,392	)		—		(172,392	)		(6,167	)		—		(6,167	)		(64,816	)		—		(64,816	)

138

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

32.	Income and Expeses from commissions:

The income and expenses for commissions that are shown in the Interim Consolidated Statement of Income for the period is as following:

	For the nine-months period ended September 30,				07.01.2023 to		07.01.2022 to
	2023		2023		09.30.2023		09.30.2022
	MCh$		MCh$		MCh$		MCh$

Income from commissions and services rendered
Comissions from card services		181,974		160,138		60,036		53,362
Remuneration from administration of mutual funds, investment funds or others		87,196		90,388		29,921		31,203
Comissions from collections and payments		58,814		63,484		20,265		22,272
Comissions from portfolio management		46,343		43,720		15,813		15,636
Comissions from guarantees and letters of credit		27,507		26,117		9,505		9,304
Brand use agreement		24,947		20,031		8,643		6,806
Use of distribution channel		22,651		20,055		7,572		6,729
Insurance not related to the granting of credits to natural persons		18,697		15,832		6,375		5,639
Comissions from trading and securities management		13,057		15,288		4,599		5,488
Insurance related to the granting of credits to natural persons		11,711		10,609		4,189		3,666
Comissions from credit prepayments		8,045		7,306		3,001		2,434
Insurance not related to the granting of credits to legal entities		6,570		2,866		2,160		1,151
Comissions from lines of credit and current account overdrafts		3,707		3,412		1,250		1,168
Financial advisory services		1,789		6,704		463		4,564
Insurance related to the granting of credits to legal entities		1,652		1,273		646		413
Comissions from factoring operations services		1,028		1,026		352		351
Loan commissions with letters of credit		79		124		27		42
Other commission earned		12,439		12,857		4,302		4,057
Total		528,206		501,230		179,119		174,285

Expenses from commissions and services received
Commissions from card transactions		41,554		36,655		13,969		11,927
Interbank transactions		36,876		28,893		13,063		10,501
Expenses from obligations of loyalty and merit card customers programs		28,747		24,921		14,358		9,672
Commissions from use of card brands license		6,729		6,617		2,457		1,245
Comissions from securities transaction		3,854		4,246		1,205		1,531
Collections and payments		3,192		3,344		1,059		1,125
Other commissions from services received		1,789		1,375		523		389
Total		122,741		106,051		46,634		36,390

139

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

33.	Net Financial income (expense):

(a)

The amount of net financial income (expense) shown in the Interim Consolidated Income Statement for the period corresponds to the following concepts:

	For the nine-months period ended September 30,						07.01.2023 to			07.01.2022 to
	2023			2022			09.30.2023			09.30.2022
Financial result from:	MCh$			MCh$			MCh$			MCh$

Financial assets held for trading at fair value through profit or loss:
Financial derivative contracts		4,102,782			4,883,154			1,306,029			1,911,088
Debt Financial Instruments		225,499			149,080			72,451			61,266
Other financial instruments		18,361			7,576			8,720			3,914

Financial liabilities held for trading at fair value through profit or loss
Financial derivative contracts		(4,106,020	)		(4,914,853	)		(1,384,471	)		(1,900,576	)
Other financial instruments		(324	)		(81	)		718			(436	)
Subtotal		240,298			124,876			3,447			75,256

Non-trading financial assets mandatorily measured at fair value through profit or loss:
Debt Financial Instruments		—			—			—			—
Other financial instruments		—			—			—			—

Financial assets designated as at fair value through profit or loss:
Debt Financial Instruments		—			—			—			—
Other financial instruments		—			—			—			—

Financial liabilities designated as at fair value through profit or loss:
Current accounts and other demand deposits and savings accounts and other time deposits		—			—			—			—
Debt instruments issued		—			—			—			—
Others		—			—			—			—

Derecognition of financial assets and liabilities at amortized cost and financial assets at fair value through other comprehensive income:
Financial assets at amortized cost		43			—			43			—
Financial assets at fair value through other comprehensive income		(308	)		(57,901	)		(242	)		(58,376	)
Financial liabilities at amortized cost		—			(1	)		—			—
Financial instruments of regulatory capital issued		—			—			—			—
Subtotal		(265	)		(57,902	)		(199	)		(58,376	)

Exchange, indexation and accounting hedging of foreign currency
Gain (loss) from foreign currency exchange		52,571			(51,357	)		(61,464	)		(27,458	)
Gain (loss) from indexation for exchange rate		8,719			15,017			17,115			5,576
Net gain (loss) from derivatives in accounting hedges of foreign currency risk		49,483			147,789			168,927			51,126
Subtotal		110,773			111,449			124,578			29,244

Reclassification of financial assets for changes to business models:
From financial assets at amortized cost to financial assets held for trading at fair value through profit or loss		—			—			—			—
From financial assets at fair value through other comprehensive income to financial assets held for trading at fair value through profit or loss		—			—			—			—

Modifications of financial assets and liabilities:
Financial assets at amortized cost		—			—			—			—
Financial assets at fair value through other comprehensive income		—			—			—			—
Financial liabilities at amortized cost		—			—			—			—
Lease liabilities		—			—			—			—
Financial instruments of regulatory capital issued		—			—			—			—

Ineffective accounting hedges:
Gain (loss) from ineffective cash flow accounting hedges		—			—			—			—
Gain (loss) from ineffective accounting hedges of net investment abroad		—			—			—			—

Other type of accounting hedges:
Hedges of other types of financial assets		—			—			—			—

Total		350,806			178,423			127,826			46,124

140

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

33.

Net Financial income (expense), continued:

(b)

Below is a detail of the income (expense) associated with the changes of provisions constituted for credit risk related to loans and contingent loans denominated in foreign currency, which is reflected in “Exchange, indexation and accounting hedging of foreign currency”.

	For the nine-months period ended September 30,						07.01.2023 to			07.01.2022 to
	2023			2022			09.30.2023			09.30.2022
	MCh$			MCh$			MCh$			MCh$

Loans and advances to Banks		(22	)		(64	)		(53	)		(30	)
Commercial loans		(3,606	)		(11,680	)		(8,340	)		(4,079	)
Residential mortgage loans		—			—			—			—
Consumer loans		(49	)		(115	)		(103	)		(44	)
Contingent loans		(282	)		(1,716	)		(1,045	)		(814	)
Total		(3,959	)		(13,575	)		(9,541	)		(4,967	)

34.	Income attributable to investments in other companies:

The income obtained from investments in companies detailed in note No. 14 corresponds to the following:

		September		September
Company	Shareholder	2023		2022
		MCh$		MCh$
Associates
Transbank S.A.	Banco de Chile		3,779		3,550
Centro de Compensación Automatizado S.A.	Banco de Chile		1,152		1,066
Administrador Financiero del Transantiago S.A.	Banco de Chile		490		514
Sociedad Interbancaria de Depósitos de Valores S.A.	Banco de Chile		317		318
Redbanc S.A.	Banco de Chile		240		663
Sociedad Imerc OTC S.A.	Banco de Chile		106		91
Sociedad Operadora de la Cámara de Compensación de Pagos de Alto Valor S.A.	Banco de Chile		63		103
Subtotal Associates			6,147		6,305

Joint Ventures
Servipag Ltda.	Banco de Chile		1,646		1,194
Artikos Chile S.A.	Banco de Chile		553		428
Subtotal Joint Ventures			2,199		1,622


Minority Investments
Sociedad de Infraestructuras de Mercado S.A.	Banchile Corredores de Bolsa		895		—
Bolsa de Comercio de Santiago, Bolsa de Valores	Banchile Corredores de Bolsa		51		451
Banco Latinoamericano de Comercio Exterior S.A. (Bladex)	Banco de Chile		37		37
Bolsa Electrónica de Chile, Bolsa de Valores	Banchile Corredores de Bolsa		19		12
CCLV Contraparte Central S.A.	Banchile Corredores de Bolsa		9		—
Subtotal Minority Investments			1,011		500
Total			9,357		8,427

141

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

35.	Result from non-current assets and disposal groups held for sale not admissible as discontinued operations:

	September			September
	2023			2022
	MCh$			MCh$

Net income from assets received in payment or adjudicated in judicial auction
Gain (loss) on sale of assets received in lieu of payment or foreclosed at judicial auction		3,977			4,504
Other income from assets received in payment or foreclosed at judicial auction		38			161
Provisions for adjustments to net realizable value of assets received in lieu of payment or foreclosed at judicial auction		(647	)		(292	)
Charge-off assets received in lieu of payment or foreclosed at judicial auction		(4,730	)		(5,144	)
Expenses to maintain assets received in lieu of payment or foreclosed at judicial auction		(651	)		(651	)
Non-current assets held for sale
Investments in other companies		—			(435	)
Intangible assets		—			—
Property and equipment		2,258			553
Assets for recovery of assets transferred in financial leasing operations		1,964			1,170
Other assets		—			—
Disposal groups held for sale		—			—
Total		2,209			(134	)

142

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

36.	Other operating Income and Expenses:

During the periods 2023 and 2022, the Bank and its subsidiaries present other operating income, according to the following:

	September		September
	2023		2022
	MCh$		MCh$

Expense recovery		19,547		1,635
Tax management income		6,790		104
Income from investment properties		5,084		4,936
Revaluation of prepaid monthly payments		2,487		9,426
Income from correspondent banks		2,162		2,359
Foreign trade income		72		52
Fiduciary and trustee commissions		60		55
Expense recovery income		47		35
Others income		249		127
Total		36,498		18,729

During the periods 2023 and 2022, the Bank and its subsidiaries present other operating expenses, according to the following:

	September			September
	2023			2022
	MCh$			MCh$

Write-offs for operating risks		18,956			12,051
Expenses for credit operations of financial leasing		2,630			3,802
Legal expenses		2,396			1,321
Correspondent banks		1,828			2,572
Expenses for charge-off leased assets recoveries		409			72
Card administration		356			1,937
Renegotiated loan insurance premium		223			270
Life ensurance		213			193
Valuation expense		194			336
Provision for pending operations (90 days)		151			(380	)
Provisions for trials and litigation		123			39
(Release) expense of provisions for operational risk		(1,431	)		(357	)
Expense recovery from operational risk events		(6,283	)		(4,317	)
Others expenses		949			730
Total		20,714			18,269

143

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

37.	Expenses from salaries and employee benefits:

The composition of the expense for employee benefit obligations during the period 2023 and 2022 is as follows:

	September		September
	2023		2022
	MCh$		MCh$

Expenses for short-term employee benefit		381,149		357,663
Expenses for employee benefits due to termination of employment contract		14,808		17,556
Training expenses		3,508		2,032
Expenses for nursery and kindergarten		1,131		1,051
Other personnel expenses		5,039		4,025
Total		405,635		382,327

38.	Administrative expenses:

This item is composed as follows:

	September		September
	2023		2022
	MCh$		MCh$
General administrative expenses
Information technology and communications		104,306		90,277
Maintenance and repair of property and equipment		35,792		30,714
External advisory services and professional services fees		8,978		10,881
Surveillance and securities transport services		8,292		9,699
Insurance premiums except to cover operational risk events		7,458		6,172
Office supplies		6,678		6,594
External financial information and fraud prevention service		5,209		4,752
Legal and notary expenses		4,575		2,586
Energy, heating and other utilities		4,160		3,837
Postal box, mail, postage and home delivery services		3,343		3,226
Other expenses of obligations for lease contracts		2,981		2,694
External service of custody of documentation		2,916		2,880
Expenses for short-term leases		2,846		2,037
Donations		2,521		1,656
Representation and travel expenses		2,363		1,680
Card embossing service		1,224		933
Fees for other technical reports		752		551
Fees for review and audit of the financial statements by the external auditor		648		529
Expenses for leases low value		369		374
Fines applied by other agencies		96		207
Other general administrative expenses		16,658		14,976

Outsource services
Technological developments expenses, certification and technology testing		16,206		13,173
Data processing		8,740		6,341
External credit evaluation service		4,091		3,464
External collection service		2,471		—
External human resources administration services and supply of external personnel		1,156		1,123
External cleaning service, casino, custody of files and documents, storage of furniture and equipment		289		266
Call Center service for sales, marketing, quality control customer service		84		68

Board expenses
Board of Directors Compensation		2,484		2,304
Other Board expenses		88		39

Marketing		27,646		24,769

Taxes, contributions and other legal charges
Contribution to the banking regulator		11,041		10,145
Real estate contributions		3,990		3,651
Taxes other than income tax		1,852		1,591
Municipal patents		1,251		1,167
Other legal charges		57		46
Total		303,611		265,402

144

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

39.	Depreciation and Amortization:

The amounts corresponding to charges to results for depreciation and amortization during the periods 2023 and 2022, are detailed as follows:

	September		September
	2023		2022
	MCh$		MCh$

Amortization of intangibles assets
Other intangible assets arising from business combinations		—		—
Other independently originated intangible assets		21,352		15,611
Depreciation of property and equipment
Buildings and land		6,923		6,960
Other property and equipment		16,047		16,384
Depreciation and impairment of leased assets
Buildings and land		23,722		23,123
Other property and equipment		—		—
Depreciation for improvements in leased real estate as leased of right-to-use assets		744		741
Amortization for the right-to-use other intangible assets under lease		—		—
Depreciation of other assets for investment properties		—		—
Amortization of other assets per activity income asset		—		—
Total		68,788		62,819

40.	Impairment of non-financial assets:

As of September 30, 2023 and 2022, the composition of the item for impairment of non-financial assets is composed as follows:

	September		September
	2023		2022
	MCh$		MCh$

Impairment of intangible assets		25		122
Impairment of property and equipment		2		9
Impairment of assets from income from ordinary activities from contracts with customers		85		(71	)
Total		112		60

145

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

41.	Credit loss expense:

(a)

The composition is as follows:

	For the nine-months period ended September 30,						07.01.2023 to			07.01.2022 to
	2023			2022			09.30.2023			09.30.2022
	MCh$			MCh$			MCh$			MCh$

Expense of provisions established for loan credit risk		280,981			194,324			77,479			74,504
Expense of special provisions for credit risk		(31	)		158,378			(956	)		41,248
Recovery of written-off credits		(44,542	)		(48,606	)		(17,840	)		(16,214	)
Impairments for credit risk from financial assets at fair value through other comprehensive income		(3,057	)		7,653			1,788			6,680
Total		233,351			311,749			60,471			106,218

(b)

Summary of the expense of provisions constituted for credit risk and expense for credit losses:

	Expense of loans provisions constituted in the period
	Normal Portfolio						Substandard Portfolio			Non-Complying Portfolio							Deductible warranty
	Evaluation						Evaluation			Evaluation							Fogape
As of September 30, 2023	Individual			Group			Individual			Individual		Group		Subtotal			Covid-19			Total
	MCh$			MCh$			MCh$			MCh$		MCh$		MCh$			MCh$			MCh$
Loans and advances to Banks
Provisions established		59			—			—			—		—		59			—			59
Provisions released		—			—			—			—		—		—			—			—
Subtotal		59			—			—			—		—		59			—			59
Commercial loans
Provisions established		—			—			—			18,836		47,124		65,960			—			65,960
Provisions released		(5,166	)		(4,510	)		(14,241	)		—		—		(23,917	)		(19,671	)		(43,588	)
Subtotal		(5,166	)		(4,510	)		(14,241	)		18,836		47,124		42,043			(19,671	)		22,372
Residential mortgage loans
Provisions established		—			—			—			—		9,832		9,832			—			9,832
Provisions released		—			(725	)		—			—		—		(725	)		—			(725	)
Subtotal		—			(725	)		—			—		9,832		9,107			—			9,107
Consumer loans
Provisions established		—			—			—			—		252,449		252,449			—			252,449
Provisions released		—			(3,006	)		—			—		—		(3,006	)		—			(3,006	)
Subtotal		—			(3,006	)		—			—		252,449		249,443			—			249,443
Expense (release) of provisions for credit risk		(5,107	)		(8,241	)		(14,241	)		18,836		309,405		300,652			(19,671	)		280,981

Recovery of written-off credits
Loans and advances to Banks																					—
Commercial loans																					(12,875	)
Residential mortgage loans																					(8,965	)
Consumer loans																					(22,702	)
Subtotal																					(44,542	)
Loan credit loss expenses																					236,439

146

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

41.

Credit loss expense, continued:

(b)

Summary of the expense of provisions constituted for credit risk and expense for credit losses, continued;

	Expense of loans provisions constituted in the period
	Normal Portfolio					Substandard Portfolio		Non-Complying Portfolio							Deductible warranty
	Evaluation					Evaluation		Evaluation							Fogape
As of September 30, 2022	Individual		Group			Individual		Individual		Group		Subtotal			Covid-19			Total
	MCh$		MCh$			MCh$		MCh$		MCh$		MCh$			MCh$			MCh$
Loans and advances to Banks
Provisions established		125		—			—		—		—		125			—			125
Provisions released		—		—			—		—		—		—			—			—
Subtotal		125		—			—		—		—		125			—			125
Commercial loans
Provisions established		4,630		—			15,344		5,477		35,273		60,724			—			60,724
Provisions released		—		(3,447	)		—		—		—		(3,447	)		(14,929	)		(18,376	)
Subtotal		4,630		(3,447	)		15,344		5,477		35,273		57,277			(14,929	)		42,348
Residential mortgage loans
Provisions established		—		4,060			—		—		1,598		5,658			—			5,658
Provisions released		—		—			—		—		—		—			—			—
Subtotal		—		4,060			—		—		1,598		5,658			—			5,658
Consumer loans
Provisions established		—		38,710			—		—		107,483		146,193			—			146,193
Provisions released		—		—			—		—		—		—			—			—
Subtotal		—		38,710			—		—		107,483		146,193			—			146,193
Expense (release) of provisions for credit risk		4,755		39,323			15,344		5,477		144,354		209,253			(14,929	)		194,324

Recovery of written-off credits
Loans and advances to Banks																			—
Commercial loans																			(19,267	)
Residential mortgage loans																			(7,963	)
Consumer loans																			(21,376	)
Subtotal																			(48,606	)
Loan credit loss expenses																			145,718

147

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

41.

Credit loss expense, continued:

(c)

Summary of expense for special provisions for credit risk:

	For the nine-months period ended September 30,						07.01.2023 to			07.01.2022 to
	2023			2022			09.30.2023			09.30.2022
	MCh$			MCh$			MCh$			MCh$
Expenses of provisions for contingent loans:
Loans and advances to Banks		—			—			—			—
Commercial loans		(2,084	)		6,293			429			6,567
Consumer loans		(1,512	)		(932	)		(898	)		147
Expenses form provisions for country risk for transactions with debtors with residence abroad		3,565			8,017			(487	)		(466	)
Expense of special provisions for loans abroad		—			—			—			—
Expenses of additional loan provisions:
Loans and advances to Banks		—			145,000			—			35,000
Commercial loans		—			—			—			—
Consumer loans		—			—			—			—
Expense of other special provisions established for credit risk		(31	)		158,378			(956	)		41,248

42.	Income from discontinued operations:

As of September 30, 2023 and December 31, 2022, the Bank does not maintain income from discontinued operations.

43.	Related Party Disclosures:

Related parties are considered to be those natural or legal persons who are in positions to directly or indirectly have significant influence through their ownership or management of the Bank and its subsidiaries, as set out in the Compendium of Accounting Standards for Banks and Chapter 12-4 of the current Compilation of Standards issued by the CMF.

According to the above, the Bank has considered as related parties those natural or legal persons who have a direct participation or through third parties on Bank ownership, where such participation exceeds 5% of the shares, and also people who, regardless of ownership, have authority and responsibility for planning, management and control of the activities of the entity or its subsidiaries. There also are considered as related the companies in which the parties related by ownership or management of the Bank have a share which reaches or exceeds 5%, or has the position of director, general manager or equivalent.

148

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

43.

Related Party Disclosures, continued:

(a)

Assets and liabilities with related parties:

	Related Party Type
Type of current assets and liabilities with related parties As of September 30, 2023	Parent Entity		Other Legal Entity			Key Personnel of the Consolidated Bank			Othe Related Party			Total
ASSETS	MCh$		MCh$			MCh$			MCh$			MCh$
Financial assets held for trading at fair value through profit or loss
Derivative Financial Instruments		—		267,054			—			—			267,054
Debt financial instruments		—		—			—			—			—
Other financial instruments		—		—			—			—			—
Non-trading financial assets mandatorily measured at fair value through profit or loss		—		—			—			—			—
Financial assets designated as at fair value through profit or loss		—		—			—			—			—
Financial assets at fair value through other comprehensive income		—		6,292			—			—			6,292
Derivative Financial Instruments for hedging purposes		—		—			—			—			—
Financial assets at amortized cost:
Rights from resale agreements and securities lending		—		—			—			—			—
Debt financial instruments		—		—			—			—			—
Commercial loans		—		241,138			1,208			11,206			253,552
Residential mortgage loans		—		—			17,921			59,528			77,449
Consumer Loans		—		4			1,736			10,621			12,361
Allowances established – Loans		—		(1,465	)		(16	)		(262	)		(1,743	)
Other assets		10		130,419			—			43			130,472
Contingent loans		—		101,445			4,476			18,320			124,241

LIABILITIES
Financial liabilities held for trading at fair value through profit or loss
Derivative Financial Instruments		—		286,897			—			317			287,214
Financial liabilities designated as at fair value through profit or loss		—		—			—			—			—
Derivative Financial Instruments for hedging purposes		—		3,999			—			—			3,999
Financial liabilities at amortized cost:
Current accounts and other demand deposits		277		183,180			3,570			7,134			194,161
Saving accounts and time deposits		3,171		181,705			5,285			25,116			215,277
Obligations by repurchase agreements and securities lending		—		6,627			—			—			6,627
Borrowings from financial institutions		—		52,198			—			—			52,198
Debt financial instruments issued		—		—			—			—			—
Other financial obligations		—		—			—			—			—
Lease liabilities		—		10,518			—			—			10,518
Other liabilities		—		132,048			350			37			132,435

149

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

43.

Related Party Disclosures, continued:

(a)

Assets and liabilities with related parties, continued:

	Related Party Type
Type of current assets and liabilities with related parties As of December 31, 2022	Parent Entity		Other Legal Entity			Key Personnel of the Consolidated Bank			Othe Related Party			Total
ASSETS	MCh$		MCh$			MCh$			MCh$			MCh$
Financial assets held for trading at fair value through profit or loss
Derivative Financial Instruments		—		343,278			—			—			343,278
Debt financial instruments		—		—			—			—			—
Other financial instruments		—		3,354			—			—			3,354
Non-trading financial assets mandatorily measured at fair value through profit or loss		—		—			—			—			—
Financial assets designated as at fair value through profit or loss		—		—			—			—			—
Financial assets at fair value through other comprehensive income		—		16,759			—			—			16,759
Derivative Financial Instruments for hedging purposes		—		—			—			—			—
Financial assets at amortized cost:
Rights from resale agreements and securities lending		—		—			—			—			—
Debt financial instruments		—		—			—			—			—
Commercial loans		—		609,155			1,384			12,024			622,563
Residential mortgage loans		—		—			15,221			58,608			73,829
Consumer Loans		—		—			2,068			10,879			12,947
Allowances established – Loans		—		(4,153	)		(21	)		(401	)		(4,575	)
Other assets		9		149,096			—			21			149,126
Contingent loans		—		177,834			4,119			17,872			199,825

LIABILITIES
Financial liabilities held for trading at fair value through profit or loss
Derivative Financial Instruments		—		400,984			—			—			400,984
Financial liabilities designated as at fair value through profit or loss		—		—			—			—			—
Derivative Financial Instruments for hedging purposes		—		7,647			—			—			7,647
Financial liabilities at amortized cost:
Current accounts and other demand deposits		217		206,465			3,081			6,529			216,292
Saving accounts and time deposits		4,643		274,318			3,815			24,125			306,901
Obligations by repurchase agreements and securities lending		—		—			—			—			—
Borrowings from financial institutions		—		177,827			—			—			177,827
Debt financial instruments issued		—		—			—			—			—
Other financial obligations		—		—			—			—			—
Lease liabilities		—		11,252			—			—			11,252
Other liabilities		—		108,767			517			52			109,336

150

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

43.

Related Party Disclosures, continued:

(b)

Income and expenses from related party transactions (*):

As of September 30, 2023	Parent Entity		Other Legal Entity			Key personnel of the consolidated Bank			Other Related party			Total
	MCh$		MCh$			MCh$			MCh$			MCh$
Interest revenue		—		20,901			399			2,000			23,300
UF indexation revenue		—		2,966			517			2,034			5,517
Income from commissions		139		79,911			15			64			80,129
Net Financial income (expense)		—		(4,009	)		—			—			(4,009	)
Other income		—		218			—			—			218
Total Income		139		99,987			931			4,098			105,155

Interest expense		1,284		5,735			468			1,914			9,401
UF indexation expenses		—		—			14			7			21
Expenses from commissions		—		23,716			—			—			23,716
Expenses credit losses (gains)		—		(2,331	)		(6	)		(68	)		(2,405	)
Expenses from salaries and employee benefits		—		276			32,344			63,735			96,355
Administrative expenses		—		9,325			2,862			105			12,292
Other expenses		—		—			2			19			21
Total Expenses		1,284		36,721			35,684			65,712			139,401

As of September 30, 2022	Parent Entity		Other Legal Entity		Key personnel of the consolidated Bank			Other Related party			Total
	MCh$		MCh$		MCh$			MCh$			MCh$
Interest revenue		—		15,696		325			1,517			17,538
UF indexation revenue		—		18,855		1,526			5,906			26,287
Income from commissions		66		83,055		18			50			83,189
Net Financial income (expense)		—		85,709		—			—			85,709
Other income		—		79		—			—			79
Total Income		66		203,394		1,869			7,473			212,802

Interest expense		821		6,762		96			759			8,438
UF indexation expenses		—		—		5			46			51
Expenses from commissions		—		26,332		—			—			26,332
Expenses credit losses (gains)		—		256		(7	)		(39	)		210
Expenses from salaries and employee benefits		—		—		27,076			56,573			83,649
Administrative expenses		—		15,421		2,707			74			18,202
Other expenses		—		10		1			10			21
Total Expenses		821		48,781		29,878			57,423			136,903

(*)	This does not constitute a Statement of Income from operations with related parties since the assets with these parties are not necessarily equal to the liabilities and in each of them the total income and expenses are reflected and not those corresponding to matched operations.

151

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

43.

Related Party Disclosures, continued:

(c)

Transactions with related parties: Below are the individual transactions in the period with related parties that are legal persons, which do not correspond to the usual operations of the line of business carried out with customers in general and when said individual transactions consider a transfer of resources, services or obligations greater than UF 2,000.

As of September 30, 2023

	Nature of the relationship	Description of the transaction			Transactions under equivalence conditions to those transactions with mutual independence			Effect on Income				Effect on Financial position
Company name	with the Bank	Type of service	Term	Renewal conditions	between the parties	Amount		Income		Expenses		Accounts receivable		Accounts payable
						MCh$		MCh$		MCh$		MCh$		MCh$
Ionix SPA	Other related parties	IT license services	30 days	Contract	Yes		477		—		477		—		34
		IT support services	30 days	Contract	Yes		216		—		216		—		—
Servipag Ltda.	Joint venture	IT support services	30 days	Contract	Yes		284		—		284		—		377
		Collection services	30 days	Contract	Yes		3,288		—		3,288		—		—
		Software services	30 days	Contract	Yes		107		—		107		—		—
Bolsa de Comercio de Santiago, Bolsa de Valores	Minority investments	Service of financial information	30 days	Contract	Yes		248		—		248		—		6
		Brokerage commission	30 days	Contract	Yes		235		—		235		—		—
		IT support services	30 days	Contract	Yes		195		—		195		—		—
Enex S.A.	Other related parties	Rent spaces for ATM	30 days	Contract	Yes		991		—		991		—		212
DCV Registros S.A.	Other related parties	IT services	30 days	Contract	Yes		254		—		254		—		—
CCLV Contraparte Central S.A.	Minority investments	Brokerage commission	30 days	Contract	Yes		203		—		203		—		—
Redbanc S.A.	Associates	Electronic transaction management services	30 days	Contract	Yes		12,327		—		12,327		—		1,472
		IT proyect services	30 days	Contract	Yes		536		—		536		—		—
		IT services	30 days	Contract	Yes		196		—		196		—		—
		Installation services	30 days	Contract	Yes		104		—		104		—		—
Sistemas Oracle de Chile Ltda.	Other related parties	Software services	30 days	Contract	Yes		73		—		73		—		—
		IT services	30 days	Contract	Yes		91		—		91		—		—
		IT support services	30 days	Contract	Yes		1,326		—		1,326		—		—

152

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

43.

Related Party Disclosures, continued:

(c)

Transactions with related parties, continued:

As of September 30, 2023

	Nature of the relationship	Description of the transaction			Transactions under equivalence conditions to those transactions with mutual independence			Effect on Income				Effect on Financial position
Company name	with the Bank	Type of service	Term	Renewal conditions	between the parties	Amount		Income		Expenses		Accounts receivable		Accounts payable
						MCh$		MCh$		MCh$		MCh$		MCh$
Depósito Central de Valores S.A.	Other related parties	Quality control and custodial services	30 days	Contract	Yes		769		—		769		—		42
		Custodial services	30 days	Contract	Yes		824		—		824		—		—
Manantial S.A.	Other related parties	General expenses	30 days	Contract	Yes		283		—		283		—		—
Universidad Del Desarrollo	Other related parties	Loyalty	30 days	Contract	Yes		115		—		115		—		—
Universidad Adolfo Ibañez	Other related parties	Training	30 days	Contract	Yes		219		—		219		—		—
Nexus S.A.	Other related parties	General income	30 days	Contract	Yes		148		148		—		—		—
		Card processing	30 days	Contract	Yes		3,487		—		3,487		—		—
		IT services	30 days	Contract	Yes		405		—		405		—		—
		Embossing services	30 days	Contract	Yes		235		—		235		—		—
		Customer product delivery services	30 days	Contract	Yes		273		—		273		—		—
		Fraud prevention services	30 days	Contract	Yes		380		—		380		—		—
Sociedad Operadora de la Cámara de Compensación de Pagos de Alto Valor S.A.	Associates	Collection services	30 days	Contract	Yes		497		—		497		—		60
Comder Contraparte Central S.A.	Other related parties	Securities clearing services	30 days	Contract	Yes		557		—		557		—		37
Bolsa Electrónica de Chile S.A.	Minority investments	Brokerage commission	30 days	Contract	Yes		105		—		105		—		—
Citigroup Global Markets INC	Other related parties	Brokerage commission	30 days	Contract	Yes		261		—		261		—		—
Transbank S.A.	Associates	Card processing	30 days	Contract	Yes		440		—		440		—		71
		Exchange commission	30 days	Contract	Yes		72,734		72,734		—		9		—
Centro de Compensación Automatizado S.A.	Associates	Fraud prevention services	30 days	Contract	Yes		386		—		386		—		295
		Transfer services	30 days	Contract	Yes		1,932		—		1,932		—		—
		Collection services	30 days	Contract	Yes		137		—		137		—		—
Artikos Chile S.A.	Joint venture	IT support services	30 days	Contract	Yes		352		—		352		—		18
		IT services	30 days	Contract	Yes		239		—		239		—		—
Citibank N.A.	Other related parties	Connectivity business commissions	Quarterly	Contract	Yes		4,522		4,522		—		6,325		—
Nuevos Desarrollos S.A.	Other related parties	Financial lease agreements	30 days	Contract	Yes		250		—		—		—		140
Plaza Oeste	Other related parties	Financial lease agreements	30 days	Contract	Yes		183		—		—		—		945
Plaza del Trebol	Other related parties	Financial lease agreements	30 days	Contract	Yes		218		—		—		—		425
Plaza Tobalaba	Other related parties	Financial lease agreements	30 days	Contract	Yes		95		—		—		—		249
Plaza la Serena	Other related parties	Financial lease agreements	30 days	Contract	Yes		191		—		—		—		—
Inmob Mall Calama	Other related parties	Financial lease agreements	30 days	Contract	Yes		131		—		—		—		394

153

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

43.

Related Party Disclosures, continued:

(c)

Transactions with related parties, continued:

As of December 31, 2022

	Nature of the relationship	Description of the transaction			Transactions under equivalence conditions to those transactions with mutual independence			Effect on Income				Effect on Financial position
Company name	with the Bank	Type of service	Term	Renewal conditions	between the parties	Amount		Income		Expenses		Accounts receivable		Accounts payable
						MCh$		MCh$		MCh$		MCh$		MCh$
Ionix SPA	Other related parties	IT license services	30 days	Contract	Yes		440		—		440		—		32
		IT support services	30 days	Contract	Yes		334		—		334		—		—
Canal 13 S.A.	Other related parties	Advertising service	30 days	Monthly	Yes		584		—		584		—		134
Servipag Ltda.	Joint venture	Software services	30 days	Contract	Yes		768		—		768		—		—
		Collection services	30 days	Contract	Yes		4,405		—		4,405		—		465
Bolsa de Comercio de Santiago, Bolsa de Valores	Minority investments	IT support services	30 days	Contract	Yes		259		—		259		—		—
		Service of financial information	30 days	Contract	Yes		335		—		335		—		—
		Brokerage commission	30 days	Contract	Yes		310		—		310		—		—
Enex S.A.	Other related parties	Rent spaces for ATM	30 days	Contract	Yes		1,183		—		1,183		—		168
Redbanc S.A.	Associates	Software development	30 days	Contract	Yes		399		—		399		—		—
		Electronic transaction management services	30 days	Contract	Yes		13,380		—		13,380		—		1,223
Sistemas Oracle de Chile Ltda.	Other related parties	Software services	30 days	Contract	Yes		6,029		—		6,029		—		2,281
		IT support services	30 days	Contract	Yes		2,873		—		2,873		—		—
Depósito Central de Valores S.A.	Other related parties	Custodial services	30 days	Contract	Yes		2,230		—		2,230		—		53
Inmobiliaria e Inversiones Capitolio S.A.	Other related parties	Space rental	30 days	Contract	Yes		82		—		82		—		—
Tagle y Compañía Ltda.	Other related parties	Legal services	30 days	Contract	Yes		126		—		126		—		6
Manantial S.A	Other related parties	Materials and supplies	30 days	Contract	Yes		224		—		224		—		15
Radiodifusión SPA	Other related parties	Advertising service	30 days	Contract	Yes		105		—		105		—		4

154

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

43.

Related Party Disclosures, continued:

(c)

Transactions with related parties, continued:

As of December 31, 2022

	Nature of the relationship	Description of the transaction			Transactions under equivalence conditions to those transactions with mutual independence			Effect on Income				Effect on Financial position
Company name	with the Bank	Type of service	Term	Renewal conditions	between the parties	Amount		Income		Expenses		Accounts receivable		Accounts payable
						MCh$		MCh$		MCh$		MCh$		MCh$
Nexus S.A.	Other related parties	Customer product delivery services	30 days	Contract	Yes		1,185		—		1,185		—		1,679
		Card processing	30 days	Contract	Yes		11,178		—		11,178		—		—
		IT development services	30 days	Contract	Yes		1,565		—		1,565		—		—
		Embossing services	30 days	Contract	Yes		724		—		724		—		—
		Fraud prevention services	30 days	Contract	Yes		1,234		—		1,234		—		—
Artikos Chile S.A.	Joint venture	IT support services	30 days	Contract	Yes		421		—		421		—		17
		IT services	30 days		Yes		340		—		340		—		—
DCV Registros S.A.	Other related parties	IT services	30 days	Contract	Yes		275		—		275		—		—
Sociedad Operadora de la Cámara de Compensación de Pagos de Alto Valor S.A.	Associates	Collection services	30 days	Contract	Yes		588		—		588		—		56
Comder Contraparte Central S.A.	Other related parties	Securities clearing services	30 days	Contract	Yes		830		—		830		—		—
Citigroup Global Markets INC	Other related parties	Brokerage commission	30 days	Contract	Yes		480		—		480		—		—
Bolsa Electrónica de Chile S.A.	Minority investments	Brokerage commission	30 days	Contract	Yes		153		—		153		—		—
Transbank S.A.	Associates	Processing fees	30 days	Contract	Yes		1,150		—		1,150		—		91
		Exchange commission	30 days	Contract	Yes		94,489		94,489		—		8		—
Centro de Compensación Automatizado S.A.	Associates	Transfer services	30 days	Contract	Yes		2,340		—		2,340		—		378
Citibank N.A.	Other related parties	Connectivity business commissions	Quarterly	Contract	Yes		10,583		10,583		—		6,702		—
Centros Comerciales vecinales Arauco Express s.a	Other related parties	Financial lease agreements	30 days	Contract	Yes		114		—		—		—		170
Nuevos Desarrollos s.a.	Other related parties	Financial lease agreements	30 days	Contract	Yes		303		—		—		—		392
Plaza Oeste	Other related parties	Financial lease agreements	30 days	Contract	Yes		221		—		—		—		1,039
Plaza del Trebol	Other related parties	Financial lease agreements	30 days	Contract	Yes		263		—		—		—		593
Plaza Tobalaba	Other related parties	Financial lease agreements	30 days	Contract	Yes		114		—		—		—		320
Plaza la Serena	Other related parties	Financial lease agreements	30 days	Contract	Yes		243		—		—		—		—
Inmob Mall Calama	Other related parties	Financial lease agreements	30 days	Contract	Yes		178		—		—		—		505

155

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

43.

Related Party Disclosures, continued:

(d)

Payments to the Board of Directors and to key personnel of the management of the Bank and its subsidiaries:

	September		September
	2023		2022
	MCh$		MCh$
Directory:
Payment of remuneration and attendance fees of the Board of Directors - Bank and its subsidiaries		2,484		2,304

Key Personnel of the Management of the Bank and its Subsidiaries:
Payment for benefits to short-term employees		31,523		26,253
Payment for benefits to employees for termination of employment contract		821		823
Payment for benefits to post-employment employees		—		—
Payment for benefits to long-term employees		—		—
Payment to employees based on shares or equity instruments		—		—
Payment for obligations for defined contribution post-employment plans		—		—
Payment for obligations for post-employment defined benefit plans		—		—
Payment for other staff obligations		—		—
Subtotal		32,344		27,076
Total		34,828		29,380

(e)

Composition of the Board of Directors and key personnel of the Management of the Bank and its subsidiaries:

	September		September
	2023		2022
	No. Executives
Directory:
Directors – Bank and its subsidiaries		17		17

Key Personnel of the Management of the Bank and its Subsidiaries:
CEO – Bank		1		1
CEOs – Subsidiaries		5		5
Division Managers / Area – Bank		90		94
Division Managers / Area – Subsidiaries		32		31
Subtotal		128		131
Total		145		148

156

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

44.

Fair Value of Financial Assets and Liabilities:

Banco de Chile and its subsidiaries have defined a corporate framework for valuation and control related with the process to the fair value measurement.

Within the established framework includes the Product Control Unit, which is independent of the business areas and reports to the Financial Management Control and Productivity Division Manager. This function befall to the Financial Control, Treasury and Capital Manager, through the Financial Risk Information and Control Section, is responsible for independent verification of price and results of trading (including derivatives) and investment operations and all fair value measurements.

To achieve the appropriate measurements and controls, the Bank and its subsidiaries, take into account at least the following aspects:

(i)

Industry standard valuation.

To value financial instruments, Banco de Chile uses industry standard modeling; quota value, share price, discounted cash flows and valuation of options through Black-Scholes-Merton, according to the case. The input parameters for the valuation correspond to rates, prices and levels of volatility for different terms and market factors that are traded in the national and international market and that are provided by the main sources of the market.

(ii)

Quoted prices in active markets.

The fair value for instruments with quoted prices in active markets is determined using daily quotes from electronic systems information (such as Bolsa de Comercio de Santiago, Bloomberg, LVA and Risk America, etc). This quote represents the price at which these instruments are regularly traded in the financial markets.

(iii)

Valuation techniques.

If no specific quotes are available for the instrument to be valued, valuation techniques will be used to determine the fair value.

Due to, in general, the valuation models require a set of market parameters as inputs, the aim is to maximize information based on observable or price-related quotations for similar instruments in active markets. To the extent there is no information in direct from the markets, data from external suppliers of information, prices of similar instruments and historical information are used to validate the valuation parameters.

157

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

44.

Fair Value of Financial Assets and Liabilities, continued:

(iv)

Fair value adjustments.

Part of the fair value process considers three adjustments to the market value, calculated based on the market parameters, including; a liquidity adjustment, a Bid/Offer adjustment and an adjustment is made for credit risk of derivatives (CVA and DVA). Likewise, for certain fixed-income instruments maintained in investment portfolios, the portion of the adjustment at fair value explained by impairment due to credit risk of the counterparty is determined.

The calculation of the liquidity adjustment considers the size of the position in each factor, the particular liquidity of each factor, the relative size of Banco de Chile with respect to the market, and the liquidity observed in transactions recently carried out in the market. In turn, the Bid/Offer adjustment, represents the impact on the valuation of an instrument depending on whether the position corresponds to a long (bought) or a short (sold). To calculate this adjustment is used the direct quotes from active markets or indicative prices or derivatives of similar assets depending on the instrument, considering the Bid, Mid and Offer, respectively. Finally, the adjustment made for CVA and DVA for derivatives corresponds to the credit risk recognition of the issuer, either of the counterparty (CVA) or of Banco de Chile (DVA). Similarly, the determination of credit risk impairment is determined based on the counterparty risk implicit in the instrument's market rate.

Liquidity value adjustments are made to trading instruments (including derivatives) only, while Bid / Offer adjustments are made for trading instruments and Financial instrument at fair value through Other Comprehensive Income. Adjustments for CVA / DVA are carried out only for derivatives. For its part, credit risk impairment is computed for fixed income instruments measured at fair value through other comprehensive income (FVTOCI) and fixed income instruments measured at amortized cost (held to maturity).

(v)

Fair value control.

A process of independent verification of prices and interest rates is executed daily, in order to control that the market parameters used by Banco de Chile in the valuation of the financial instruments relating to the current state of the market and from them the best estimate derived of the fair value. The objective of this process is to control that the official market parameters provided by the respective business areas, before being entered into the valuation, are within acceptable ranges of differences when compared to the same set of parameters prepared independently by the Financial Risk Information and Control Section. As a result, value differences are obtained at the level of currency, product and portfolio. In the event significant differences exist, these differences are scaled according to the amount of individual materiality of each market factor and aggregated at the portfolio level, according to the grouping levels within previously defined ranges. These ranges are approved by the Finance, International and Financial Risk Committee.

Complementary and in parallel, the Financial Risk Information and Control Section generates and reports on a daily basis Profit and Loss (“P&L”) and Exposure to Market Risks, which allow for proper control and consistency of the parameters used in the valuation.

158

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

44.

Fair Value of Financial Assets and Liabilities, continued:

(vi)

Judgmental analysis and information to Management.

In particular cases, where there are no market quotations for the instrument to be valued and there are no prices for similar transactions instruments or indicative parameters, a specific control and a reasoned analysis must be carried out in order to estimate the fair value of the operation. Within the valuation framework described in the Reasonable Value Policy (and its procedure) approved by the Board of Directors of Banco de Chile, a required level of approval is set in order to carry out transactions where market information is not available or it is not possible to infer prices or rates from it.

(a)

Hierarchy of instrument valued at Fair value:

Banco de Chile and its subsidiaries, classify all the financial instruments among the following levels:

Level 1:

These are financial instruments whose fair value is calculated at quoted prices (unadjusted) in extracted from liquid and deep markets. For these instruments there are quotes or prices (return internal rates, quote value, price) the observable market, so that assumptions are not required to determine the value.

In this level, the following instruments are considered: currency futures, debt instruments issued by the Treasury and the Central Bank of Chile, which belong to benchmarks, mutual fund investments and equity shares.

For the instruments of the Central Bank of Chile and the General Treasury of the Republic, all those mnemonics belonging to a Benchmark, in other words corresponding to one of the following categories published by the Santiago Stock Exchange, will be considered as Level 1: Pesos-02, Pesos-03, Pesos-04, Pesos-05, Pesos-07, Pesos-10, UF-02, UF-04, UF-05, UF-07, UF-10, UF-20, UF-30. A Benchmark corresponds to a group of mnemonics that are similar in duration and are traded in an equivalent way, i.e., the price (return internal rates in this case) obtained is the same for all the instruments that make up a Benchmark. This feature defines a greater depth of market, with daily quotations that allow classifying these instruments as Level 1.

In the case of debt issued by the Chilean Government, the internal rate of return of the market is used to discount all flows to present value. In the case of mutual funds and equity shares, the current market price per share, which multiplied by the number of instruments results in the fair value.

The preceding described valuation methodology is equivalent to the one used by the Bolsa de Comercio de Santiago (Santiago Stock Exchange) and correspond to the standard methodology used in the market.

159

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

44.

Fair Value of Financial Assets and Liabilities, continued:

(a)

Hierarchy of instrument valued at Fair value, continued:

Level 2:

They are financial instruments whose fair value is calculated based on prices other than in quoted in Level 1 that are observable for the asset or liability, directly (that is, as prices or internal rates of return) or indirectly (that is, derived from prices or internal rates of return from similar instruments). These categories include:

Quoted prices for similar assets or liabilities in active markets.

Quoted prices for identical or similar assets or liabilities in markets that are not active.

Inputs data other than quoted prices that are observable for the asset or liability.

Inputs data corroborated by the market.

At this level there are mainly derivatives instruments, debt issued by banks, debt issues of Chilean and foreign companies, issued in Chile or abroad, mortgage claims, financial brokerage instruments and some issuances by the Central Bank of Chile and the General Treasury of the Republic, which do not belong to benchmarks.

To value derivatives, depends on whether they are impacted by volatility as a relevant market factor in standard valuation methodologies; for options the Black-Scholes-Merton formula is used; for the rest of the derivatives, forwards and swaps, discounted cash flows method is used.

For the remaining instruments at this level, as for debt issues of level 1, the valuation is done through cash flows model by using an internal rate of return that can be derived or estimated from internal rates of return of similar securities as mentioned above.

In the event that there is no observable price for an instrument in a specific term, the price will be inferred from the interpolation between periods that have observable quoted price in active markets. These models incorporate various market variables, including the credit quality of counterparties, exchange rates and interest rate curves.

160

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

44.

Fair Value of Financial Assets and Liabilities, continued:

(a)

Hierarchy of instrument valued at Fair value, continued:

Valuation Techniques and Inputs for Level 2 Instrument:

Type of Financial Instrument	Valuation Method	Description: Inputs and Sources
Local Bank and Corporate Bonds	Discounted cash flows model	Prices (internal rates of return) are provided by third party price providers that are widely used in the Chilean market. Model is based on a Base Yield (Central Bank Bonds) and issuer spread. The model is based on daily prices and risk/maturity similarities between Instruments.

Offshore Bank and Corporate Bonds		Prices are provided by third party price providers that are widely used in the Chilean market. Model is based on daily prices.

Local Central Bank and Treasury Bonds		Prices (internal rates of return) are provided by third party price providers that are widely used in the Chilean market. Model is based on daily prices.

Mortgage Notes		Prices (internal rates of return) are provided by third party price providers that are widely used in the Chilean market. Model is based on a Base Yield (Central Bank Bonds) and issuer spread. The model takes into consideration daily prices and risk/maturity similarities between instruments.

Time Deposits		Prices (internal rates of return) are provided by third party price providers that are widely used in the Chilean market. Model is based on daily prices and considers risk/maturity similarities between instruments.

Cross Currency Swaps, Interest Rate Swaps, FX Forwards, Inflation Forwards		Forward Points, Inflation forecast and local swap rates are provided by market brokers that are widely used in the Chilean market. Offshore rates and spreads are obtained from third party price providers that are widely used in the Chilean market. Zero Coupon rates are calculated by using the bootstrapping method over swap rates.

FX Options	Black-Scholes Model	Prices for volatility surface estimates are obtained from market brokers that are widely used in the Chilean market.

161

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

44.

Fair Value of Financial Assets and Liabilities, continued:

(a)

Hierarchy of instrument valued at Fair value, continued:

Level 3:

These are financial instruments whose fair value is determined using non-observable inputs data neither for the assets or liabilities under analysis nor for similar instruments. An adjustment to an input that is significant to the entire measurement can result in a fair value measurement classified within Level 3 of the fair value hierarchy, if the adjustment uses significant non-observable data entry.

The instruments likely to be classified as level 3 are mainly Corporate Debt by Chilean and foreign companies, issued both in Chile and abroad.

Valuation Techniques and Inputs for Level 3 Instrument:

Type of Financial Instrument	Valuation Method	Description: Inputs and Sources
Local Bank and Corporate Bonds	Discounted cash flows model	Since inputs for these types of securities are not observable by the market, we model interest rate of returns for them based on a Base Yield (Central Bank Bonds) and issuer spread. These inputs (base yield and issuer spread) are provided on a daily basis by third party price providers that are widely used in the Chilean market.

Offshore Bank and Corporate Bonds	Discounted cash flows model	Since inputs for these types of securities are not observable by the market, we model interest rate of returns for them based on a Base Yield (US-Libor) and issuer spread. These inputs (base yield and issuer spread) are provided on a weekly basis by third party price providers that are widely used in the Chilean market.

162

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

44.

Fair Value of Financial Assets and Liabilities, continued:

(b)

Level chart:

The following table shows the classification by levels, for financial instruments registered at fair value.

	Level 1				Level 2				Level 3				Total
	September		December		September		December		September		December		September		December
	2023		2022		2023		2022		2023		2022		2023		2022
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Financial Assets
Financial Assets held for trading at fair value through profit or loss
Derivative contracts financial:
Forwards		—		—		330,252		565,373		—		—		330,252		565,373
Swaps		—		—		2,109,483		2,389,577		—		—		2,109,483		2,389,577
Call Options		—		—		5,025		2,321		—		—		5,025		2,321
Put Options		—		—		789		2,758		—		—		789		2,758
Futures		—		—		—		—		—		—		—		—
Subtotal		—		—		2,445,549		2,960,029		—		—		2,445,549		2,960,029
Debt Financial Instruments:
From the Chilean Government and Central Bank		144,028		28,128		3,257,003		3,031,164		—		—		3,401,031		3,059,292
Other debt financial instruments issued in Chile		—		—		106,393		273,934		57,694		100,519		164,087		374,453
Financial debt instruments issued Abroad		—		—		—		—		—		—		—		—
Subtotal		144,028		28,128		3,363,396		3,305,098		57,694		100,519		3,565,118		3,433,745

Others		454,970		257,325		—		—		—		—		454,970		257,325

Financial Assets at fair value through Other Comprehensive Income
Debt Financial Instruments: (1)
From the Chilean Government and Central Bank		502,784		552,763		1,280,863		1,706,094		—		—		1,783,647		2,258,857
Other debt financial instruments issued in Chile		—		—		1,449,919		1,499,625		92,611		41,283		1,542,530		1,540,908
Financial debt instruments issued Abroad		—		—		198,606		167,627		—		—		198,606		167,627
Subtotal		502,784		552,763		2,929,388		3,373,346		92,611		41,283		3,524,783		3,967,392

Derivative contracts financial for hedging purposes
Forwards		—		—		—		—		—		—		—		—
Swaps		—		—		59,519		27,077		—		—		59,519		27,077
Call Options		—		—		—		—		—		—		—		—
Put Options		—		—		—		—		—		—		—		—
Futures		—		—		—		—		—		—		—		—
Subtotal		—		—		59,519		27,077		—		—		59,519		27,077
Total		1,101,782		838,216		8,797,852		9,665,550		150,305		141,802		10,049,939		10,645,568

Financial Liabilities
Financial liabilities held for trading at fair value through profit or loss
Derivative contracts financial:
Forwards		—		—		357,889		535,643		—		—		357,889		535,643
Swaps		—		—		2,251,482		2,560,285		—		—		2,251,482		2,560,285
Call Options		—		—		2,516		1,665		—		—		2,516		1,665
Put Options		—		—		2,689		3,889		—		—		2,689		3,889
Futures		—		—		—		—		—		—		—		—
Subtotal		—		—		2,614,576		3,101,482		—		—		2,614,576		3,101,482

Others		—		—		2,109		6,271		—		—		2,109		6,271

Derivative contracts financial for hedging purposes
Forwards		—		—		—		—		—		—		—		—
Swaps		—		—		125,412		223,016		—		—		125,412		223,016
Call Options		—		—		—		—		—		—		—		—
Put Options		—		—		—		—		—		—		—		—
Futures		—		—		—		—		—		—		—		—
Subtotal		—		—		125,412		223,016		—		—		125,412		223,016
Total		—		—		2,742,097		3,330,769		—		—		2,742,097		3,330,769

(1)

As of September 30, 2023, 100% of instruments of Level 3 have denomination “Investment Grade”. Also, 100% of total of these financial instruments correspond to domestic issuers.

163

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

44.

Fair Value of Financial Assets and Liabilities, continued:

(c)

Level 3 reconciliation:

The following table shows the reconciliation between the balances at the beginning and at the end of year for those instruments classified in Level 3, whose fair value is reflected in the Interim Consolidated Financial Statements:

	September 2023
	Balance as of January 1, 2023		Gain (Loss) Recognized in Income (1)		Gain (Loss) Recognized in Equity (2)			Purchases		Sales			Transfer from Level 1 and 2		Transfer to Level 1 and 2			Balance as of September 30, 2023
	MCh$		MCh$		MCh$			MCh$		MCh$			MCh$		MCh$			MCh$
Financial Assets held for trading at fair value through profit or loss
Debt Financial Instruments:
Other debt financial instruments issued in Chile		100,519		350		—			18,085		(62,111	)		15,190		(14,339	)		57,694
Subtotal		100,519		350		—			18,085		(62,111	)		15,190		(14,339	)		57,694

Financial Assets at fair value through Other Comprehensive Income
Debt Financial Instruments:
Other debt financial instruments issued in Chile		41,283		2,256		(5,470	)		63,930		(1,695	)		—		(7,693	)		92,611
Subtotal		41,283		2,256		(5,470	)		63,930		(1,695	)		—		(7,693	)		92,611
Total		141,802		2,606		(5,470	)		82,015		(63,806	)		15,190		(22,032	)		150,305

	December 2022
	Balance as of January 1, 2022		Gain (Loss) Recognized in Income (1)			Gain (Loss) Recognized in Equity (2)		Purchases		Sales			Transfer from Level 1 and 2		Transfer to Level 1 and 2		Balance as of December 31, 2022
	MCh$		MCh$			MCh$		MCh$		MCh$			MCh$		MCh$		MCh$
Financial Assets held for trading at fair value through profit or loss
Debt Financial Instruments:
Other debt financial instruments issued in Chile		51,484		902			—		111,960		(63,827	)		—		—		100,519
Subtotal		51,484		902			—		111,960		(63,827	)		—		—		100,519

Financial Assets at fair value through Other Comprehensive Income
Debt Financial Instruments:
Other debt financial instruments issued in Chile		25,203		(1,477	)		4,921		25,044		(12,408	)		—		—		41,283
Subtotal		25,203		(1,477	)		4,921		25,044		(12,408	)		—		—		41,283
Total		76,687		(575	)		4,921		137,004		(76,235	)		—		—		141,802

(1)

Recorded in income under item “Net Financial income (expense)”.

(2)

Recorded in equity under item “Accumulated other comprehensive income”.

164

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

44.

Fair Value of Financial Assets and Liabilities, continued:

(d)

Sensitivity of instruments classified in Level 3 to changes in key assumptions of models:

The following table shows the sensitivity, by type of instrument, of those instruments classified in Level 3 using alternative in key valuation assumptions:

	As of September 30, 2023					As of December 31, 2022
	Level 3		Sensitivity to changes in key assumptions of models			Level 3		Sensitivity to changes in key assumptions of models
	MCh$		MCh$			MCh$		MCh$

Financial Assets held for trading at fair value through profit or loss
Debt Financial Instruments:
Other debt financial instruments issued in Chile		57,694		(1,146	)		100,519		(997	)
Subtotal		57,694		(1,146	)		100,519		(997	)

Financial Assets at fair value through Other Comprehensive Income
Debt Financial Instruments:
Other debt financial instruments issued in Chile		92,611		(2,733	)		41,283		(1,263	)
Subtotal		92,611		(2,733	)		41,283		(1,263	)
Total		150,305		(3,879	)		141,802		(2,260	)

With the purpose of determining the sensitivity of the financial investments to changes in significant market factors, the Bank has made alternative calculations at fair value, changing those key parameters for the valuation and which are not directly observable in screens. In the case of the financial assets listed in the table above, which correspond to Bank Bonds and Corporate Bonds, it was considered that, since there are no current observables prices, the input prices will be based on brokers’ quotes. The prices are usually calculated as a base rate plus a spread. For Local Bonds it was determined to apply a 10% impact on the price, while for the Off Shore Bonds it was determined to apply a 10% impact only on the spread, since the base rate is covered by interest rate swaps instruments in the so-called accounting hedges. The 10% impact is considered reasonable, taking into account the market performance of these instruments and comparing it against the bid / offer adjustment that is provisioned by these instruments.

165

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

44.

Fair Value of Financial Assets and Liabilities, continued:

(e)

Other assets and liabilities:

The following table summarizes the fair values of the Bank’s main financial assets and liabilities that are not recorded at fair value in the Statement of Financial Position. The values shown in this note are not attempt to estimate the value of the Bank’s income-generating assets, nor forecast their future behavior. The estimated fair value is as follows:

	Book Value				Estimated Fair Value
	September		December		September		December
	2023		2022		2023		2022
	MCh$		MCh$		MCh$		MCh$
Assets
Cash and due from banks		3,077,010		2,764,884		3,077,010		2,764,884
Transactions in the course of collection		539,074		772,196		539,074		772,196
Subtotal		3,616,084		3,537,080		3,616,084		3,537,080
Financial assets at amortized cost:
Rights from resale agreements and securities lending		51,349		54,061		51,349		54,061
Debt financial instruments		911,831		902,355		817,197		836,527
Loans and advances to Banks:
Domestic banks		149,985		—		149,985		—
Central Bank of Chile		1,700,874		1,801,100		1,700,874		1,801,100
Foreign banks		330,142		373,015		328,089		369,526
Subtotal		3,144,181		3,130,531		3,047,494		3,061,214
Loans to customers, net:
Commercial loans		19,230,252		19,871,510		18,673,286		19,161,774
Residential mortgage loans		11,983,201		11,386,851		11,489,631		11,138,046
Consumer loans		4,793,069		4,658,051		4,857,595		4,608,041
Subtotal		36,006,522		35,916,412		35,020,512		34,907,861
Total		42,766,787		42,584,023		41,684,090		41,506,155

Liabilities
Transactions in the course of payment		484,839		681,792		484,839		681,792
Financial liabilities at amortized cost:
Current accounts and other demand deposits		12,786,573		13,383,232		12,786,573		13,383,232
Saving accounts and time deposits		15,138,985		14,157,141		15,135,815		14,140,995
Obligations by repurchase agreements and securities lending		100,332		216,264		100,332		216,264
Borrowings from financial institutions		5,345,511		5,397,676		5,034,150		4,844,427
Debt financial instruments issued:
Letters of credit for residential purposes		1,588		2,328		1,639		2,466
Letters of credit for general purposes		19		49		19		52
Bonds		9,516,161		9,265,570		8,994,987		9,030,443
Other financial obligations		253,361		344,030		253,394		363,809
Subtotal		43,142,530		42,766,290		42,306,909		41,981,688
Financial instruments of regulatory capital issued:
Subordinate bonds		1,036,187		1,010,905		945,581		1,002,250
Total		44,663,556		44,458,987		43,737,329		43,665,730

Other financial assets and liabilities not measured at their fair value, but for which a fair value is estimated, even if not managed based on such value, include assets and liabilities such as placements, deposits and other time deposits, debt issued, and other financial assets and obligations with different maturities and characteristics. The fair value of these assets and liabilities is calculated using the Discounted Cash Flow model and the use of various data sources such as yield curves, credit risk spreads, etc. In addition, due to some of these assets and liabilities are not traded on the market, periodic reviews and analyzes are required to determine the suitability of the inputs and determined fair values.

166

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

44.

Fair Value of Financial Assets and Liabilities, continued:

(f)

Levels of other assets and liabilities:

The following table shows the estimated fair value of financial assets and liabilities not valued at their fair value, as of September 30, 2023 and December 31, 2022:

	Level 1 Estimated Fair Value				Level 2 Estimated Fair Value				Level 3 Estimated Fair Value				Total Estimated Fair Value
	September		December		September		December		September		December		September		December
	2023		2022		2023		2022		2023		2022		2023		2022
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Assets
Cash and due from banks		3,077,010		2,764,884		—		—		—		—		3,077,010		2,764,884
Transactions in the course of collection		539,074		772,196		—		—		—		—		539,074		772,196
Subtotal		3,616,084		3,537,080		—		—		—		—		3,616,084		3,537,080
Financial assets at amortized cost:
Rights from resale agreements and securities lending		51,349		54,061		—		—		—		—		51,349		54,061
Debt financial instruments		817,197		836,527		—		—		—		—		817,197		836,527
Loans and advances to Banks:
Domestic banks		149,985		—		—		—		—		—		149,985		—
Central Bank of Chile		1,700,874		1,801,100		—		—		—		—		1,700,874		1,801,100
Foreign banks		—		—		—		—		328,089		369,526		328,089		369,526
Subtotal		2,719,405		2,691,688		—		—		328,089		369,526		3,047,494		3,061,214
Loans to customers, net:
Commercial loans		—		—		—		—		18,673,286		19,161,774		18,673,286		19,161,774
Residential mortgage loans		—		—		—		—		11,489,631		11,138,046		11,489,631		11,138,046
Consumer loans		—		—		—		—		4,857,595		4,608,041		4,857,595		4,608,041
Subtotal		—		—		—		—		35,020,512		34,907,861		35,020,512		34,907,861
Total		6,335,489		6,228,768		—		—		35,348,601		35,277,387		41,684,090		41,506,155

Liabilities
Transactions in the course of payment		484,839		681,792		—		—		—		—		484,839		681,792
Financial liabilities at amortized cost:
Current accounts and other demand deposits		12,786,573		13,383,232		—		—		—		—		12,786,573		13,383,232
Saving accounts and time deposits		—		—		—		—		15,135,815		14,140,995		15,135,815		14,140,995
Obligations by repurchase agreements and securities lending		100,332		216,264		—		—		—		—		100,332		216,264
Borrowings from financial institutions		—		—		—		—		5,034,150		4,844,427		5,034,150		4,844,427
Debt financial instruments issued:
Letters of credit for residential purposes		—		—		1,639		2,466		—		—		1,639		2,466
Letters of credit for general purposes		—		—		19		52		—		—		19		52
Bonds		—		—		8,994,987		9,030,443		—		—		8,994,987		9,030,443
Other financial obligations		—		—		—		—		253,394		363,809		253,394		363,809
Subtotal		12,886,905		13,599,496		8,996,645		9,032,961		20,423,359		19,349,231		42,306,909		41,981,688
Financial instruments of regulatory capital issued:
Subordinate bonds		—		—		—		—		945,581		1,002,250		945,581		1,002,250
Total		13,371,744		14,281,288		8,996,645		9,032,961		21,368,940		20,351,481		43,737,329		43,665,730

167

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

44.

Fair Value of Financial Assets and Liabilities, continued:

(f)

Levels of other assets and liabilities, continued:

The Bank determines the fair value of these assets and liabilities according to the following:

●

Short-term assets and liabilities: For assets and liabilities with short-term maturity, it is assumed that the book values approximate to their fair value. This assumption is applied to the following assets and liabilities:

Assets:		Liabilities:

-	Cash and deposits in banks	-	Current accounts and other demand deposits
-	Transactions in the course of collection	-	Transactions in the course of payments
-	Investment under resale agreements and securities loans	-	Obligations under repurchase agreements and securities loans
-	Loans and advance to domestic banks

●

Loans to Customers and Advance to foreign banks: Fair value is determined by using the discounted cash flow model and internally generated discount rates, based on internal transfer rates derived from our internal transfer price process. Once the present value is determined, we deduct the related loan loss allowances in order to incorporate the credit risk associated with each contract or loan. As we use internally generated parameters for valuation purposes, we categorize these instruments in Level 3.

●

Debt financial instruments at amortized cost: The fair value is calculated with the methodology of the Stock Exchange, using the IRR observed in the market. Because the instruments that are in this category correspond to Treasury Bonds that are Benchmark, they are classified in Level 1.

●

Letters of Credit and Bonds: In order to determine the present value of contractual cash flows, we apply the discounted cash flow model by using market interest rates that are available in the market, either for the instruments under valuation or instruments with similar features that fit valuation needs in terms of currency, maturities and liquidity. The market interest rates are obtained from third party price providers widely used by the market. As a result of the valuation technique and the quality of inputs (observable) used for valuation, we categorize these financial liabilities in Level 2.

●

Saving Accounts, Time Deposits, Borrowings from Financial Institutions, Subordinated Bonds and Other borrowings financial: The discounted cash flow model is used to obtain the present value of committed cash flows by applying a bucket approach and average adjusted discount rates that derived from both market rates for instruments with similar features and our internal transfer price process. As we use internally generated parameters and/or apply significant judgmental analysis for valuation purposes, we categorize these financial liabilities in Level 3.

168

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

45.

Maturity according to their remaining Terms of Financial Assets and Liabilities:

The table below details the main financial assets and liabilities grouped in accordance with their remaining maturity, including capitals and accrued interest as of September 30, 2023 and December 31, 2022. As these are for trading and Financial instrument at fair value through other comprehensive income are included at their fair value:

	September 2023
	Demand		Up to 1 month		Over 1 month and up to 3 months		Over 3 month and up to 12 months		Subtotal up to 1 year		Over 1 year and up to 3 years		Over 3 year and up to 5 years		Over 5 years		Subtotal over 1 year		Total
Assets	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Cash and due from banks		3,077,010		—		—		—		3,077,010		—		—		—		—		3,077,010
Transactions in the course of collection		—		539,074		—		—		539,074		—		—		—		—		539,074
Financial assets held for trading at fair value through profit or loss
Derivative contracts financial		—		117,619		141,777		365,270		624,666		627,114		399,631		794,138		1,820,883		2,445,549
Debt financial instruments		—		3,565,118		—		—		3,565,118		—		—		—		—		3,565,118
Others		—		454,970		—		—		454,970		—		—		—		—		454,970
Financial assets at fair value through other comprehensive income		—		254,023		276,043		1,989,057		2,519,123		194,394		19,537		791,729		1,005,660		3,524,783
Derivative contracts financial for hedging purposes		—		—		6,966		—		6,966		7,005		20,006		25,542		52,553		59,519
Financial assets at amortized cost
Rights from resale agreements and securities lending		—		39,017		7,911		4,421		51,349		—		—		—		—		51,349
Debt financial instruments		—		—		—		—		—		470,672		—		441,159		911,831		911,831
Loans and advances to Banks (*)		—		1,957,684		13,995		210,081		2,181,760		—		—		—		—		2,181,760
Loans to customers, net (*)		—		4,904,867		3,352,797		6,398,744		14,656,408		7,163,544		3,774,159		11,163,649		22,101,352		36,757,760
Total fnancial assets		3,077,010		11,832,372		3,799,489		8,967,573		27,676,444		8,462,729		4,213,333		13,216,217		25,892,279		53,568,723

	September 2023
	Demand			Up to 1 month		Over 1 month and up to 3 months			Over 3 month and up to 12 months		Subtotal up to 1 year			Over 1 year and up to 3 years		Over 3 year and up to 5 years		Over 5 years		Subtotal over 1 year		Total
Liabilities	MCh$			MCh$		MCh$			MCh$		MCh$			MCh$		MCh$		MCh$		MCh$		MCh$
Transactions in the course of payment		—			484,839		—			—		484,839			—		—		—		—		484,839
Financial liabilities held for trading at fair value through profit or loss
Derivative contracts financial		—			108,325		147,735			376,869		632,929			649,347		441,424		890,876		1,981,647		2,614,576
Others		—			895		—			1,214		2,109			—		—		—		—		2,109
Derivative contracts financial for hedging purposes		—			—		1,794			—		1,794			16,042		6,771		100,805		123,618		125,412
Financial liabilities at amortized cost
Current accounts and other demand deposits		12,786,573			—		—			—		12,786,573			—		—		—		—		12,786,573
Saving accounts and time deposits (**)		—			9,471,976		4,309,178			928,396		14,709,550			70,764		544		582		71,890		14,781,440
Obligations by repurchase agreements and securities lending		—			100,029		303			—		100,332			—		—		—		—		100,332
Borrowings from financial institutions		—			205,766		168,304			4,858,506		5,232,576			112,935		—		—		112,935		5,345,511
Debt financial instruments issued
Letters of credit		—			183		339			408		930			263		80		334		677		1,607
Bonds		—			214,262		434,956			646,290		1,295,508			2,254,711		2,002,986		3,962,956		8,220,653		9,516,161
Other financial obligations		—			253,329		9			23		253,361			—		—		—		—		253,361
Lease liabilities		—			2,008		3,762			14,725		20,495			26,727		20,058		16,934		63,719		84,214
Financial instruments of regulatory capital issued		—			3,241		106,794			6,554		116,589			21,753		10,121		887,724		919,598		1,036,187
Total fnancial liabilities		12,786,573			10,844,853		5,173,174			6,832,985		35,637,585			3,152,542		2,481,984		5,860,211		11,494,737		47,132,322

Mismatch		(9,709,563	)		987,519		(1,373,685	)		2,134,588		(7,961,141	)		5,310,187		1,731,349		7,356,006		14,397,542		6,436,401

(*)

These balances are presented without deduction of their respective provisions, which amount to Ch$751,238 million for loans to customers and Ch$759 million for borrowings from financial institutions.

(**)

Excludes term saving accounts, which amount to Ch$357,545 million.

169

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

45.

Maturity according to their remaining Terms of Financial Assets and Liabilities, continued:

	December 2022
	Demand		Up to 1 month		Over 1 month and up to 3 months		Over 3 month and up to 12 months		Subtotal up to 1 year		Over 1 year and up to 3 years		Over 3 year and up to 5 years		Over 5 years		Subtotal over 1 year		Total
Assets	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Cash and due from banks		2,764,884		—		—		—		2,764,884		—		—		—		—		2,764,884
Transactions in the course of collection		—		772,196		—		—		772,196		—		—		—		—		772,196
Financial assets held for trading at fair value through profit or loss
Derivative contracts financial		—		174,943		243,091		637,830		1,055,864		701,848		415,817		786,500		1,904,165		2,960,029
Debt financial instruments		—		3,433,745		—		—		3,433,745		—		—		—		—		3,433,745
Others		—		257,325		—		—		257,325		—		—		—		—		257,325
Financial assets at fair value through other comprehensive income		—		71,345		231,925		2,143,838		2,447,108		718,241		80,008		722,035		1,520,284		3,967,392
Derivative contracts financial for hedging purposes		—		—		—		15,863		15,863		443		8,052		2,719		11,214		27,077
Financial assets at amortized cost
Rights from resale agreements and securities lending		—		35,549		14,324		4,188		54,061		—		—		—		—		54,061
Debt financial instruments		—		—		—		—		—		16,280		445,624		440,451		902,355		902,355
Loans and advances to Banks (*)		—		1,904,367		63,396		207,029		2,174,792		—		—		—		—		2,174,792
Loans to customers, net (*)		—		4,940,664		2,937,024		6,830,834		14,708,522		7,403,768		3,752,730		10,829,784		21,986,282		36,694,804
Total fnancial assets		2,764,884		11,590,134		3,489,760		9,839,582		27,684,360		8,840,580		4,702,231		12,781,489		26,324,300		54,008,660

	December 2022
	Demand			Up to 1 month		Over 1 month and up to 3 months		Over 3 month and up to 12 months		Subtotal up to 1 year			Over 1 year and up to 3 years		Over 3 year and up to 5 years		Over 5 years		Subtotal over 1 year		Total
Liabilities	MCh$			MCh$		MCh$		MCh$		MCh$			MCh$		MCh$		MCh$		MCh$		MCh$
Transactions in the course of payment		—			681,792		—		—		681,792			—		—		—		—		681,792
Financial liabilities held for trading at fair value through profit or loss
Derivative contracts financial		—			167,937		222,880		588,342		979,159			692,759		465,828		963,736		2,122,323		3,101,482
Others		—			4,355		1,916		—		6,271			—		—		—		—		6,271
Derivative contracts financial for hedging purposes		—			—		—		1,462		1,462			20,240		15,639		185,675		221,554		223,016
Financial liabilities at amortized cost
Current accounts and other demand deposits		13,383,232			—		—		—		13,383,232			—		—		—		—		13,383,232
Saving accounts and time deposits (**)		—			9,342,195		2,962,617		1,324,088		13,628,900			113,901		5,940		655		120,496		13,749,396
Obligations by repurchase agreements and securities lending		—			216,212		52		—		216,264			—		—		—		—		216,264
Borrowings from financial institutions		—			289,675		84,391		675,089		1,049,155			4,348,521		—		—		4,348,521		5,397,676
Debt financial instruments issued														—		—		—
Letters of credit		—			338		364		528		1,230			744		39		364		1,147		2,377
Bonds		—			38,469		173,248		1,248,410		1,460,127			1,895,121		2,282,248		3,628,074		7,805,443		9,265,570
Other financial obligations		—			343,943		11		54		344,008			22		—		—		22		344,030
Lease liabilities		—			2,618		7,644		17,353		27,615			27,634		15,009		19,111		61,754		89,369
Financial instruments of regulatory capital issued		—			1,153		—		117,262		118,415			20,157		12,345		859,988		892,490		1,010,905
Total fnancial liabilities		13,383,232			11,088,687		3,453,123		3,972,588		31,897,630			7,119,099		2,797,048		5,657,603		15,573,750		47,471,380

Mismatch		(10,618,348	)		501,447		36,637		5,866,994		(4,213,270	)		1,721,481		1,905,183		7,123,886		10,750,550		6,537,280

(*)

These balances are presented without deduction of their respective provisions, which amount to Ch$778,392 million for loans to customers and Ch$677 million for borrowings from financial institutions.

(**)

Excludes term saving accounts, which amount to Ch$407,745 million.

170

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

46.

Financial and Non-Financial Assets and Liabilities by Currency:

As of September 30, 2023	CLP			CLF		FX Indexation		USD		COP		GBP		EUR			CHF			JPY			CNY		Others			TOTAL
	MCh$			MCh$		MCh$		MCh$		MCh$		MCh$		MCh$			MCh$			MCh$			MCh$		MCh$			MCh$
Assets
Financial assets		25,881,560			20,396,345		143,718		6,119,234		—		31,672		179,629			8,206			20,590			17,367		18,405			52,816,726
Non-Financial assets		1,937,492			45,625		13,295		338,546		—		7		1,455			29			36			—		124			2,336,609
Total Assets		27,819,052			20,441,970		157,013		6,457,780		—		31,679		181,084			8,235			20,626			17,367		18,529			55,153,335

Liabilities
Financial liabilities		29,593,651			10,255,816		480		6,101,580		—		16,810		188,789			385,557			216,872			4,202		726,110			47,489,867
Non-Financial liabilities		1,990,092			345,358		588		297,098		—		16		3,830			29			47			106		171			2,637,335
Total Liabilities		31,583,743			10,601,174		1,068		6,398,678		—		16,826		192,619			385,586			216,919			4,308		726,281			50,127,202

Mismatch of Financial Assets and Liabilities (*)		(3,712,091	)		10,140,529		143,238		17,654		—		14,862		(9,160	)		(377,351	)		(196,282	)		13,165		(707,705	)		5,326,859

(*)

This value does not consider non-financial assets and liabilities and the notional values of derivative instruments, which are disclosed at fair value.

As of December 31, 2022	CLP			CLF		FX Indexation		USD			COP		GBP		EUR			CHF			JPY			CNY		Others			TOTAL
	MCh$			MCh$		MCh$		MCh$			MCh$		MCh$		MCh$			MCh$			MCh$			MCh$		MCh$			MCh$
Assets
Financial assets		27,002,192			19,662,498		118,265		6,164,921			—		40,693		191,526			2,646			13,243			14,491		19,116			53,229,591
Non-Financial assets		1,676,512			25,186		4,625		318,509			—		23		911			—			—			—		5			2,025,771
Total Assets		28,678,704			19,687,684		122,890		6,483,430			—		40,716		192,437			2,646			13,243			14,491		19,121			55,255,362

Liabilities
Financial liabilities		29,120,086			10,560,342		233		6,624,182			—		23,466		237,470			364,359			194,286			3,485		751,216			47,879,125
Non-Financial liabilities		1,981,737			209,270		355		323,996			—		28		2,106			56			37			117		208			2,517,910
Total Liabilities		31,101,823			10,769,612		588		6,948,178			—		23,494		239,576			364,415			194,323			3,602		751,424			50,397,035

Mismatch of Financial Assets and Liabilities (*)		(2,117,894	)		9,102,156		118,032		(459,261	)		—		17,227		(45,944	)		(361,713	)		(181,043	)		11,006		(732,100	)		5,350,466

(*)

This value does not consider non-financial assets and liabilities and the notional values of derivative instruments, which are disclosed at fair value.

171

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report:

(1)

Introduction:

Banco de Chile seeks to maintain a risk profile that ensures the sustainable growth that is aligned with its strategic objectives, maximizing value creation and guarantee its long-term solvency.

Our risk management policies are established in order to identify and analyze the risks faced by the Bank, set appropriate risk limits, alerts and controls, monitor risks and compliance with limits and alerts in order to carry out the necessary action plans. Through its administration policies and procedures, the Bank develops a disciplined and constructive control environment. Policies as well as risk management standards, procedures and systems are regularly reviewed.

For this, the Bank has teams with extensive experience and knowledge in each area associated with risks, ensuring comprehensive and consolidated management of the same, including the Bank and its subsidiaries.

(a)

Risk Management Structure

Credit, Market and Operational Risk Management are at the all levels of the Organization, with a Corporate Governance structure that recognizes the relevance of the different risk areas that exist.

The Board of Directors of Banco de Chile is responsible for establishing the policies, the risk appetite framework, the guidelines for the development, validation and monitoring of models. Likewise, it approves the provision models, the Additional Provisions Policy and pronounces annually on the sufficient provisions. Also, it ratifies the strategies, policies, functional structure and comprehensive management model of Operational Risk and is in charge of guaranteeing the consistency of this model with the Bank's strategy, ensuring proper implementation of the model in the organization. Along with this, it establishes the Subsidiary Risk Control Policy, describing the supervision scheme that the Bank applies to the relevant subsidiaries to control the risks that affect them. For its part, the Administration is responsible both for the establishment of standards and associated procedures as well as for the control and compliance with the disposed by the Board of Directors, ensuring that there is consistency between the criteria applied by the Bank and its subsidiaries, maintaining strict coordination at the corporate level and informing the Board of Directors in the defined instances.

The Bank's Corporate Governance considers the active participation of the Board, acting directly or through different committees made up of Directors and Senior Management. It is permanently informed of the evolution of the different risk areas, participating through its Finance, International and Financial Risk, Credit, Portfolio Risk Committee and Higher Operational Risk Committee, in which the status of credit, market and operational risks are reviewed.

Risk Management is developed jointly by the Wholesale Credit Risk Division, the Retail Credit Risk and Global Risk Control Division and the Cybersecurity Division, which constitute the corporate risk governance structure, which by having highly experienced and specialized teams, together with a robust regulatory framework, allow optimal and effective management of the matters they address.

172

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(1)

Introduction, continued:

(a)

Risk Management Structure, continued:

The Wholesale Credit Risk Division and the Retail Credit Risk and Global Risk Control Division are responsible for credit risk in the admission, monitoring and recovery phases for the different business segments. Additionally, the Wholesale Credit Risk Division has under its supervision the Market Risk Management that performs the function of measuring, limiting, controlling and reporting said risk together with the definition of valuation and management standards for the Bank's assets and liabilities.

In turn, in the Retail Credit Risk and Global Risk Control Division, the Admissions Area, among its functions, develops the regulatory framework in matters of credit risk, and the Risk Models Area, which develops the different methodologies related to credit risk. Likewise, in this Division, model monitoring, validation and model risk management are carried out by the respective Areas that deal with these matters, ensuring the independence of the function.

This Division also has the Operational Risk and Business Continuity Management, in charge of managing and supervising the application of the policies, rules and procedures in each of these areas within the Bank and Subsidiaries. For purposes, the Operational Risk Management is in charge of guaranteeing the identification and efficient management of operational risks and promoting a culture in terms of risks to prevent financial losses and improve the quality of the processes, as well as proposing continuous improvements to risk management, aligned with business objectives. In addition to the above, the Business Continuity Management aims to manage the strategy and control of business continuity in the operational and technological field for the Bank, maintaining alternative operation plans and controlled tests to reduce the impact of disruptive events that may affect the organization. Both in Operational Risk and in Business Continuity, its methodologies, controls and scope are applied at the Banco de Chile level and are replicated in the subsidiaries, guaranteeing their homologation to the Bank's global management model.

For its part, the Cybersecurity Division is responsible for defining, implementing and reporting the progress of the Strategic Cybersecurity Plan in line with the Bank's business strategy, one of its main focuses being to protect internal information, that of its customers and collaborators.

This Division is comprises by the Cybersecurity Engineering Management, the Cyber Defense Management, the Strategic Management Deputy Management and the Advanced Cyber Intelligence and Analytics Unit. The Technological Risk Management and the Cybersecurity Assurance Deputy Management also constitute it, as control units. Numeral 5 of this Note describes the responsibilities of the indicated Unit, Managers and Deputy Managers.

173

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(1)

Introduction, continued:

(a)

Risk Management Structure, continued:

(i)

Finance, International and Financial Risk Committee

This committee functions are to design policies and procedures related to price and liquidity risk; design a structure of limits and alerts of financial exposures, review the proposal to the Board of Directors of the Risk Appetite Framework, and ensure a correct and timely measurement, control and reporting thereof; track exposures and financial risks; analyze impacts on the valuation of operations and / or results due to potential adverse movements in the values of market variables or liquidity narrowness; review the stress test assumptions and establish action plans where appropriate; ensure the existence of independent units that value financial positions, and analyze the results of financial positions; review and approve the Comprehensive Risk Measurement in the area of market and liquidity risk; track the international financial exposure of liabilities; review the main credit exposures of Treasury products (derivatives, bonds); ensure that the management guidelines for price and liquidity risks in subsidiaries are consistent with those of the Bank, and be aware of the evolution of their main financial risks.

The Finance, International and Financial Risk Committee, session monthly and is comprises by the Chairman of the Board, three Directors or Advisors to the Board, General Manager, Financial Management Control and Productivity Division Manager, Wholesale Credit Risk Division Manager, Treasury Division Manager and Market Risk Area Manager. If deemed appropriate, the Committee may invite certain persons to participate, on a permanent or occasional basis, in one or more sessions.

(ii)

Credit Committees

The credit approval process is done mainly through various credit committees, which are composed of qualified professionals and with the sufficient attributions to take decisions required.

Each committee is responsible for defining the terms and conditions under which the Bank accepts counterparty risks and the Wholesale Credit Risk and Retail Credit Risk Divisions and Global Risk Control participate independently and autonomously of the commercial areas. They are constituted according to the commercial segments and the amounts to approve and have different meeting periodicities.

Within the risk management structure of the Bank, the maximum approval instance is the Credit Committee of Directors. Sessions weekly and is comprises by the Chairman of the Board, regular and alternate directors, General Manager and the Wholesale Credit Risk Division Manager. This Committee is responsible for knowing, analyzing and resolving all credit operations associated with clients and / or economic groups whose total amount subject for approval is equal to or greater than UF 750,000. It also has to know, analyze and resolve all those credit operations that, in accordance with the established in the Bank's internal rules, must be approved by this Committee, with the exception of the special powers delegated by the Board to the Administration.

174

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(1)

Introduction, continued:

(a)

Risk Management Structure, continued:

(iii)

Portfolio Risk Committee

The main function is to know the evolution of the composition, concentration and risk of the loan portfolio of the different banks and segments, covering the complete cycle of credit risk management with the processes of admission, monitoring and recovery of the credits granted. Review the main debtors and the different risk indicators of the portfolio, proposing differentiated management strategies. Approves and proposes to the Board the different credit risk policies. It is responsible for reviewing, approving and recommending to the Board of Directors, for its final approval, the different portfolio evaluation methodologies, provision models and methodologies associated with capital management. It is also responsible for reviewing and analyzing the adequacy of provisions for the different banks and segments. Also to review the guidelines and methodological advances for the development of internal models of credit risk, together with monitoring the concentration by sectors and segments according to the sectoral limits policy. Reviews and approves both the Comprehensive Risk Measurement (CRM) and the Credit Risk Appetite Framework (RAF) in the area of credit risk, ensuring their due approval by the Board of Directors. Defines the metrics that are part of the Risk Appetite Framework and their acceptable levels. Verifies the consistency of the credit risk policies of the subsidiaries in relation to those of the Bank, controls them globally and becomes aware of the credit risk management carried out by the subsidiaries. In general, know and analyze any relevant aspect in matters of Credit Risk in the portfolio of Banco de Chile.

The Portfolio Risk Committee meets monthly and is comprises by the Chairman of the Board, three regular and alternate Directors, General Manager, Wholesale Credit Risk Division Manager, Retail Credit Risk Division Manager and Global Risk Control, Commercial Division Manager, Risk Management and Information Control Manager.

(iv) Technical Committee for the Supervision of Internal Models

The main function of the Committee is to provide a framework of methodological guidelines for the Development, Follow-up and Documentation of the mathematical models that are used in the massive segments for credit risk management, such as Management Models (Admission, Follow-up, Collection and Rating, among others) and the regulatory models (Stress Testing, Capital and Provisions, specific for credit risk or additional, under local or international regulations), among others. The Committee may exceptionally evaluate alternative methodologies, other than those related to credit risk, at the request of its Chairman.

The Committee has the functions of defining the main criteria and guidelines to be used for the construction of new models; Review and approve methodologies associated with non-regulatory models (eg admission, collection), which must be submitted for the consideration of the Portfolio Risk Committee, so that it can rule on their ratification; In the case of regulatory models, the Technical Committee is limited to their review, leaving approval in the hands of the Portfolio Risk Committee and the Board of Directors. Establish minimum standards to monitor the quality of internal models. Establish the minimum standards to document the different areas related to the development, construction, monitoring, and operation of the models.

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47.

Risk Management and Report, continued:

(1)

Introduction, continued:

(a)

Risk Management Structure, continued:

(iv)

Technical Committee for the Supervision of Internal Models, continued:

In terms of its composition, it is comprises by the manager of the Retail Credit Risk and Global Risk Control Division, the managers of the Risk Monitoring, Studies and Management, People Business Development, Risk Models Areas, Retail Monitoring and Models, and the Deputy Managers of Big Data and Regulatory Systems, of Models Validation, of Pre-approved Admission, of Regulatory Models, Management Models and Provisions and a Head of People Risk Department who acts as secretary. The Committee meets monthly.

(v) Model Risk Management Committee

The main function of the Committee is to establish and supervise a model risk management framework at the institutional level of the models and methodologies found in the Bank's institutional inventory.

The Committee has the functions of reviewing and discussing the identification and evaluation of model risks, focused on recognizing and understanding: the risks that may arise from new or evolving initiatives; risks of existing models; and risks of emerging models. Provide guidance based on aggregate model risk results and appreciation of model limitations, through periodic review of model risk reports and dashboards. Ensure that the inventory of institutional models is kept up to date, in accordance with the procedures available in the model risk management framework. Become aware of the status of the observations to the models and the fulfillment of the action plans at the aggregate level. Analyze, review and propose modifications to model risk management documents. Submit the Model Risk Management policy for review and ratification by the Board of Directors on an annual basis.

In terms of its composition, it is comprises by the manager of the Retail Credit Risk and Global Risk Control Division, Wholesale Credit Risk Division Manager, and the managers of Model Risk Areas and Internal Control, of Prevention of Asset Laundering, of Financial Control, Treasury and Capital, of Risk Models, of Retail and Regulatory Admission, of Operational Risk, of Retail and Model Monitoring, of Wholesale Monitoring and Risk Information, and by the Assistant Managers of Market Risk, Validation of Models, Model Risk Management that acts as secretary. The Committee meets quarterly.

(vi) Operational Risk Higher Committee

It is enforceable and is empowered to sanction the necessary changes in the processes, procedures, controls and computer systems that support the operation of the Bank, in order to mitigate its operational risks, ensuring that the different areas properly manage and control these risks. Additionally, it must be aware of the operational risk management carried out by the subsidiary companies and reported in their respective Operational Risk Committee, including the issues of Information Security and Business Continuity. Likewise, know the corrective measures adopted in the event of deviations or contingency scenarios that could affect the subsidiaries and/or the Bank in this type of risk.

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47.

Risk Management and Report, continued:

(1)

Introduction, continued:

(a)

Risk Management Structure, continued:

(vi)

Operational Risk Higher Committee, continued:

The Operational Risk Higher Committee is comprises by the Chairman of the Board, three Directors, regular or alternate, appointed by the Bank's Board of Directors, General Manager, Retail Credit Risk Divisions and Global Risk Control Manager, Operations and Technology Division Manager, Commercial Division Manager, Cybersecurity Division Manager, Marketing and Digital Banking Division Manager and Operational Risk Manager. The Committee meets monthly and can be summoned in an extraordinary manner.

(vii) Operational Risk Committee

It is empowered to trigger the necessary changes in the processes, procedures, controls and information systems that support the operation of Banco de Chile, in order to mitigate its operational risks, ensuring that the different areas properly manage and control these risks.

The Operational Risk Committee is comprises by the Retail Credit Risk Divisions and Global Risk Control Manager, Financial Management Control and Productivity Division Manager, Cybersecurity Division Manager, Operational Risk Manager, Technological Risk Manager, Business Continuity Manager, Operations Area Manager, Planning and PMO Manager, Customer Area Manager, Large Companies Group Manager, Customer Service Manager, Chief Attorney and Operational Risk Management Deputy Manager. The Committee session monthly and can be summoned extraordinarily.

(viii) Capital Management Committee

This committee meets quarterly and is comprised by two members of the Board of Directors; the General Manager; the Financial Management Control and Productivity Division Manager; the Wholesale Credit Risk Division Manager; the Retail Credit Risk and Global Risk Control Division Manager; and the Treasury and Capital Financial Control Area Manager. The Presidency of the Committee is in charge of a member of the board of Directors. In case of absence of the Chairman, he is subrogated by the other member of the board of Directors.

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47.

Risk Management and Report, continued:

(1)

Introduction, continued:

(a)

Risk Management Structure, continued:

(viii)

Capital Management Committee, continued:

The Capital Management Committee's main function is to monitor and supervise the capital management of the Bank and its subsidiaries, and ensure its compliance in accordance with the Corporate Capital Management Policy and related regulations, being responsible for: (i) review and propose to the Board of Directors, for its approval, the Corporate Capital Management Policy, (ii) review and approve the governance documentation associated with capital management, (iii) ensure that the Bank has sufficient capital to meet both its current needs and those arising from stress scenarios, over a three-year horizon, (iv) review and approve, on an annual basis, the Capital Plan and propose Internal Capital Objectives, for their subsequent approval by the Board of Directors, (v) review and approve the Comprehensive Risk Measurement (CRM) and the Business and Capital Risk Appetite Framework (RAF), (vi) review and approve the results of the Stress Tests (previously approved by the specialized Committees), in their integrated version, for inclusion in the Capital Plan, as well as the Bank's CRM and RAF, in their integrated versions, and propose adjustments to the Specialized Committees if deemed necessary, (vii) review and propose to the Board of Directors, for its approval, the Effective Equity Self-Assessment Report, (viii) periodically monitor the different metrics defined for the Bank's capital management, as well as the variables that affect those parameters, (ix) keep the Board of Directors informed of compliance with the Capital Plan, the Bank's Integrated RAF, including the Business and Capital RAF, as well as the evolution of the variables that affect capital management, (x) propose the activation and supervise the execution of the Contingency Plans associated with non-compliance with the RAF for Businesses and Capital, prior to their approval by the Board of Directors, as well as reviewing their updates annually, (xi) know and approve the methodologies and criteria used in regulatory and internal measurements related to capital management, and risk management with an impact on capital, associated with Pillars 1 and 2 of Basel, (xii) know and approve the information disclosed to the market within the framework of Pillar 3 of Basel, (xiii) review the results of the validation of the models associated with capital management and monitor the status of the observations generated from the validations, (xiv) be aware of the results of the internal control evaluation of the Capital Self-Assessment Process, prior to the issuance of the Total or Regulatory Capital Self-Assessment Report.

(b)

Internal Audit

The risk management processes of the entire Bank are permanently audited by the Internal Audit Area, which examines the sufficiency of the procedures and their compliance. Internal Audit discusses the results of all evaluations with the administration and reports its findings and recommendations to the Board of Directors through the Audit Committee.

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47.

Risk Management and Report, continued:

(1)

Introduction, continued:

(c)

Measurement Methodology

Regarding to Credit Risk, provision levels and portfolio expenses are the basic measures for determining the credit quality of our portfolio.

Banco de Chile permanently evaluates its loan portfolio, timely recognizing the associated level of risk of the loan portfolio. For this purpose, there is a centralized guidelines document with directives and pattern related to the development of credit risk models, covering management models (reactive and proactive admission models and collection models), provision models (both under local regulations in accordance with the instructions issued by the CMF, as well as under international regulations IFRS 9) and stress tests. The Board of Directors approves these guidelines and the models developed.

As a result of this evaluation, on both individual and group portfolios, the level of provisions that the Bank should constitute is determined, in the event of customers payment default.

The individual evaluation mainly applies to the Bank's portfolio of legal persons that, due to their size, complexity or indebtedness, requires a more detailed level of knowledge and a case-by-case analysis. Each debtor is assigned one of the 16 risk categories defined by the CMF, in order to establish the provisions in a timely and appropriate manner. The review of the portfolio risk classifications is carried out permanently considering the financial situation, payment behavior and the environment of each client.

The group evaluation mainly applies to the portfolio of natural persons and smaller companies. These assessments are carried out monthly through statistical models that allow estimating the level of provisions necessary to cover the portfolio risk; in the case of commercial and mortgage portfolios, these results are contrasted with the standard models provided by the regulator, with the resulting provision being the largest between both methods. The consistency analysis of the models is carried out through an independent validation of the unit that develops them and, subsequently, through the analysis of retrospective tests that allow to compare the real losses with the expected ones.

In order to validate the quality and robustness of the risk assessment processes, the Bank annually performs a test of the sufficiency of provisions for the total loan portfolio, thus verifying that the provisions established are sufficient to cover the losses that could derive from the credit operations granted. The result of this analysis is presented to the Board of Directors, who manifests itself on the sufficiency of the provisions in each fiscal year.

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47.

Risk Management and Report, continued:

(1)

Introduction, continued:

(c)

Measurement Methodology, continued:

Banco de Chile establishes additional provisions with the objective of protecting itself from the risk of unpredictable economic fluctuations that may affect the macroeconomic environment or the situation of a specific economic sector. At least once a year, the amount of additional provisions to be constituted or released is annually proposed to the Portfolio Risk Committee and subsequently to the Board of Directors for approval.

In this context, during the year 2022 the Bank constituted additional provisions taking into account various prospective analyzes, economic cycle expectations and local, among the main factors. In turn, during this year, the Bank has not constituted or released any additional provisions.

The monitoring and control of risks are carried out mainly based on limits established by the Board of Directors. These limits reflect the Bank's business and market strategy, as well as the level of risk that it is willing to accept, with additional emphasis on the selected industries.

The Bank develops its capital planning process in an integrated manner with its strategic planning, in line with the risks inherent to its activity, the economic and competitive environment, its business strategy, corporate values, as well as its governance, management and risk control. As part of the capital planning process and, in line with what is required by the regulator, it has incorporated the new calculations of Risk-Weighted Assets and stress tests in the dimensions of credit, market and operational risk, as well as the Comprehensive Measurement of financial and non-financial risks.

The Bank annually reviews and updates its Risk Appetite Framework, approved by the Board of Directors, through which it is possible to identify, evaluate, measure, mitigate and control proactively and in advance all relevant risks that could materialize in the normal course of their business. To this end, the Bank uses different management tools and defines an adequate structure of alerts and limits, which are part of said Framework, which allow it to constantly monitor the performance of different indicators and implement timely corrective actions, in the event that are required. The result of these activities is part of the annual self-assessment report of effective equity approved by the Board of Directors and reported to the CMF.

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47.

Risk Management and Report, continued:

(2)

Credit Risk:

Credit risk considers the likelihood that the counterparty in the credit operation will not be able to fulfill its contractual obligation due to incapacity or financial insolvency, and this leads to a potential credit loss.

The Bank seeks an adequate risk-return relation and an appropriate balance of the risks assumed, through a permanent credit risk management considering the processes of admission, monitoring and recovery of the loans granted. Likewise, it continuously manages risk knowledge, from a comprehensive approach, in order to contribute to the business and anticipate threats that could damage the solvency, quality of the portfolio, permeating a unique risk culture towards the Corporation, promoting the training and permanent formation of the Corporation's personnel.

The foregoing has the permanent challenge of establishing the risk management framework for the different business segments served by the Bank, responding to regulatory requirements and commercial dynamism, being part of the digital transformation, and contributing from the perspective of risks to the various businesses addressed, through a vision of the portfolio that allows managing, resolving and controlling the business approval and monitoring process efficiently and proactively.

In the business segments, the application of additional management processes is taken into consideration, to the extent required, for those financing requests that that will have a greater exposure to environmental and/or social risks.

The Bank integrates the socio-environmental criteria in its evaluations for the granting of financing destined to the development of projects, whether national or regional and that can generate an impact of this type, where they are executed. For the financing of projects, they must have the corresponding permits, authorizations, patents and studies, according to the impact they generate. In addition, the Bank has specialized units for serving large clients, through which the financing of project development is concentrated, including those of Public Works concessions that contemplate the construction of infrastructure, mining, electrical, real estate developments that can generate an environmental impact.

Credit policies and processes materialize in the following management principles, which are addressed with a specialized approach according to the characteristics of the different markets and segments served, recognizing the singularities of each one of them:

Apply a rigorous evaluation in the admission process, based on established credit policies, standards and procedures, together with the availability of sufficient and accurate information. Thus, it corresponds to analyze the generation of flows and solvency of the client to meet their payment commitments and, when the characteristics of the operation merit it, must constitute adequate collateral that allow mitigating the risk incurred with the client.

Have permanent and robust portfolio tracking processes, through systems that alert both the potential signs of impairment of clients, with respect to the conditions of origin, and also the possible business opportunities with those that present a better payments quality and behavior.

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47.

Risk Management and Report, continued:

(2)

Credit Risk, continued:

To develop credit risk modeling guidelines, in regulatory aspects and management, for efficient decision-making at different stages of the credit process.

Have a collection structure with timely, agile and effective processes that allow management to be carried out in accordance with the different types of clients and the types of breaches that arise, always in strict adherence to the regulatory framework and the Bank's reputational definitions.

Maintain an efficient administration in work teams organization, tools and availability of information that allow an optimal credit risk management.

Based on these management principles, the credit risk divisions contribute to the business and anticipate threats that may affect the solvency and quality of the portfolio. In particular, during the last three years the solidity of these principles and the role of credit risk have made it possible to respond adequately to the challenges derived from the pandemic, providing timely responses to clients while maintaining the solid fundamentals that characterize the Bank's portfolio in its different segments and products.

Within the framework of risk management, during 2023, a permanent and focused monitoring of the behavior of the portfolios has continued, including the evolution of the credits associated with the FOGAPE Covid, FOGAPE Reactivation programs and recently FOGAPE Chile Apoya and FOGAES.

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47.

Risk Management and Report, continued:

(2)

Credit Risk, continued:

(a)

Retail Segments:

In these segments, admission management is carried out mainly through a risk evaluation that uses scoring tools and an adequate credit attribution model to approve each operation. These evaluations take into consideration the level of indebtedness, payment capacity and the maximum acceptable exposure for the client.

For these segments, the Bank's risk functions are segregated and distributed in the following areas:

−

Retail Admission and Regulatory Area, performs the evaluation of operations and clients, with specialization by products and segments. Maintains a framework of policies and standards that ensure the quality of the portfolio according to the desired risk, defining guidelines for the admission of clients and their respective parameterization in the evaluation systems. These definitions are released to commercial and risk areas through programs and continuous training, and their application is monitored through credit review processes.

−

Risk Model Area, is responsible for developing, maintaining and updating credit risk models, whether for regulatory or management uses, in accordance with local and international regulations, determining the most appropriate functional specifications and statistical techniques for the development of the required models. These models are validated by the Model Validation Subdivision and presented to the corresponding government bodies, such as the “Technical Committee for the Supervision and Development of Internal Models”, the Portfolio Risk Committee or the Board of Directors, as appropriate.

−

Model Risk and Internal Control Area, its purpose is to manage the risks associated with models and their processes, for which it relies on the functions of model validation, model risk management and internal control.

Model validation is responsible for carrying out an independent review of risk models, including risk-weighted assets and stress tests, both in the construction and implementation stages. It considers the validation of compliance with the guidelines established by the Board of Directors, addressing aspects such as governance, data quality, modeling techniques, implementation, methodological and parametric analysis, and documentation. The results of the review are presented and placed in consideration of the respective Committees, as appropriate.

For its part, model risk management is responsible for monitoring and ensuring compliance with the activities associated with the state in which the models are according to their life cycle.

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47.

Risk Management and Report, continued:

(2)

Credit Risk, continued:

(a)

Retail Segments, continued:

Finally, internal control has the objective of ensuring the reliability and transparency of the information generated by the Bank. For this, a periodic evaluation process is carried out, based on the risks that could have a material impact and which is carried out through the evaluation of the design and operational effectiveness of the identified controls and thus be able to comply with the operating, information and compliance objectives. Additionally, and complying with the same previous framework, the internal control process for Basel III has been implemented, which consists of an independent review of the capital management function.

−

Retail Tracking and Models Area, is in charge of measuring the behavior of portfolios especially through the monitoring of the main indicators of the aggregate portfolio and the analysis of layers, reported in management reports, generating relevant information for decision-making in different instances defined. Also, special follow-ups are generated according to relevant events in the environment. This Area ensures that the different strategies executed meet the risk quality objectives that determined their implementation.

For its part, through the risk model monitoring function, they are monitored, ensuring compliance with the standards defined to ensure their predictive and discriminating power.

Additionally, this Area is responsible for managing the process for calculating provisions for credit risk, ensuring the correct execution of the processes and results obtained.

−

Collection Area performs a cross-collection management in the Bank and defines refinancing criteria through the establishment of predefined renegotiation guidelines to solve the indebtedness of viable customers and with payment intentions, maintaining an adequate risk-return ratio, together with the incorporation of robust tools for a differentiated collection management according to the institutional policies and with strict adherence to the current regulatory framework.

In this sense, the Bank has specific regulations related to the collection and normalization of clients, which makes it possible to ensure the quality of the portfolio in accordance with credit policies and the desired risk appetite framework. Through collection management, the attention of clients with temporary flow problems is favored, debt normalization plans are proposed to viable clients, in such a way that it is possible to maintain the relationship in the long term once their situation is regularized, the recovery of assets at risk is maximized and the necessary collection actions are carried out, in a timely manner, to ensure the recovery of debts or reduce potential loss.

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47.

Risk Management and Report, continued:

(2)

Credit Risk, continued:

(b)

Wholesale Segments:

In these segments, admission management is carried out through an individual evaluation of the client and the relationship of the rest of the group with the Bank is also considered if it belongs to a group of companies. This individual evaluation - and group if applicable - considers, among others, generation capacity, financial capacity with emphasis on equity solvency, exposure levels, industry variables, evaluation of partners and management, and aspects of the operation such as financing structure, term, products and possible collaterals.

The indicated evaluation is supported by a rating model that allows greater homogeneity in the evaluation of the client and his group. This evaluation also includes specialized areas in some segments that by their nature require expert knowledge, such as real estate, construction, agriculture, financial, international, among others.

In a centralized manner, a permanent monitoring of the portfolio is carried at the individual level off business segments and economic sectors, based on periodically updated information from both the client and the industry. Through this process, alerts are generated that ensure the correct and timely recognition of the risk of the individual portfolio and the special conditions established in the admission stage are monitored, such as controls of financial covenants, coverage of certain collaterals and conditions imposed at the time of approval.

Additionally, within the Admission areas, joint monitoring tasks are carried out that allow monitoring the development of operations from their gestation to their recovery, with the aim of ensuring the correct and timely identification of portfolio risks, and to manage in advance those cases with higher risk levels.

Upon detection of clients that show signs of impairment or default with any condition, the commercial area to which the client belongs, together with the Wholesale Credit Risk Division, establish action plans for their regularization. In those more complex cases where specialized management is required, the Special Assets Management area, belonging to the Wholesale Credit Risk Division, is directly in charge of collection management, establishing action plans and negotiations based on the particular characteristics of each client.

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47.

Risk Management and Report, continued:

(2)

Credit Risk, continued:

(c)

Portfolio Concentration:

The maximum exposure to credit risk, by client or counterparty, without taking into account guarantees or other credit enhancements as of September 30, 2023 and December 31, 2022, does not exceed 10% of the Bank's effective equity.

The following tables show credit risk exposure per balance sheet item, including derivatives, detailed by both geographic region and industry sector as of September 30, 2023:

	Chile		United States		England		Brazil		Others		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Financial Assets

Cash and Due from Banks		1,706,853		1,255,408		25,053		9		89,687		3,077,010

Financial assets held for trading at fair value through profit or loss

Derivative contracts Financial
Forwards (*)		207,782		21,019		46,614		—		54,837		330,252
Swaps (**)		816,723		154,971		929,247		—		208,542		2,109,483
Call Options		3,214		—		1,421		—		390		5,025
Put Options		132		—		614		—		43		789
Futures		—		—		—		—		—		—
Subtotal		1,027,851		175,990		977,896		—		263,812		2,445,549

Debt Financial Instruments
From the Chilean Government and Central Bank		3,401,031		—		—		—		—		3,401,031
Other debt financial instruments issued in Chile		164,087		—		—		—		—		164,087
Financial debt instruments issued Abroad		—		—		—		—		—		—
Subtotal		3,565,118		—		—		—		—		3,565,118

Others Financial Instruments
Investments in mutual funds		452,325		—		—		—		—		452,325
Equity instruments		1,121		10		—		—		—		1,131
Others		811		640		—		—		63		1,514
Subtotal		454,257		650		—		—		63		454,970

Financial Assets at fair value through other comprehensive income

Debt Financial Instruments
From the Chilean Government and Central Bank		1,783,647		—		—		—		—		1,783,647
Other debt financial instruments issued in Chile		1,542,530		—		—		—		—		1,542,530
Financial debt instruments issued Abroad		—		198,606		—		—		—		198,606
Subtotal		3,326,177		198,606		—		—		—		3,524,783

Derivative contracts financial for hedging purposes
Forwards		—		—		—		—		—		—
Swaps		2,398		15,168		31,280		—		10,673		59,519
Call Options		—		—		—		—		—		—
Put Options		—		—		—		—		—		—
Futures		—		—		—		—		—		—
Subtotal		2,398		15,168		31,280		—		10,673		59,519

Financial assets at amortized cost
Rights from resale agreements and securities lending		51,349		—		—		—		—		51,349

Debt Financial Instruments
From the Chilean Government and Central Bank		911,831		—		—		—		—		911,831
Subtotal		911,831		—		—		—		—		911,831

Loans and advances to Banks
Central Bank of Chile		1,700,874		—		—		—		—		1,700,874
Domestic banks		150,039		—		—		—		—		150,039
Foreign banks		—		—		—		109,194		221,653		330,847
Subtotal		1,850,913		—		—		109,194		221,653		2,181,760

Loans to Customers, Net
Commercial loans		19,590,939		—		—		—		18,397		19,609,336
Residential mortgage loans		12,014,056		—		—		—		—		12,014,056
Consumer loans		5,134,368		—		—		—		—		5,134,368
Subtotal		36,739,363		—		—		—		18,397		36,757,760

(*)

Others includes: France Ch$39,978 million and Spain Ch$10,177 million.

(**)

Others includes: France Ch$46,095 million and Spain Ch$32,430 million.

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47.

Risk Management and Report, continued:

(2)

Credit Risk, continued:

(c)

Portfolio Concentration, continued:

	Central Bank of Chile		Government		Retail (Individuals		Financial Services		Trade		Manufacturing		Mining		Electricity, Gas and Water		Agriculture and Livestock		Fishing		Transportation and Telecom		Construction		Services		Others		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Cash and Due from Banks		728,647		—		—		2,348,363		—		—		—		—		—		—		—		—		—		—		3,077,010

Financial Assets held for trading at fair value through profit or loss
Derivative contracts Financial
Forwards		—		—		—		204,498		12,179		12,739		207		7,742		5,950		44		1,440		815		84,638		—		330,252
Swaps		—		—		—		2,032,981		1,098		5,612		—		12,270		18,511		3,217		28,127		4,072		3,595		—		2,109,483
Call Options		—		—		—		2,357		863		565		—		—		1,154		—		42		—		44		—		5,025
Put Options		—		—		—		698		57		34		—		—		—		—		—		—		—		—		789
Futures		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal		—		—		—		2,240,534		14,197		18,950		207		20,012		25,615		3,261		29,609		4,887		88,277		—		2,445,549

Debt Financial Instruments
From the Chilean Government and Central Bank		3,210,451		190,580		—		—		—		—		—		—		—		—		—		—		—		—		3,401,031
Other debt financial instruments issued in Chile		—		—		—		164,087		—		—		—		—		—		—		—		—		—		—		164,087
Financial debt instruments issued Abroad		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal		3,210,451		190,580		—		164,087		—		—		—		—		—		—		—		—		—		—		3,565,118

Others Financial Instruments
Investments in mutual funds		—		—		—		452,325		—		—		—		—		—		—		—		—		—		—		452,325
Equity instruments		—		—		—		1,131		—		—		—		—		—		—		—		—		—		—		1,131
Others		—		—		—		1,514		—		—		—		—		—		—		—		—		—		—		1,514
Subtotal		—		—		—		454,970		—		—		—		—		—		—		—		—		—		—		454,970

Financial Assets at fair value through Other Comprehensive Income
Debt Financial Instruments
From the Chilean Government and Central Bank		462,883		1,320,764		—		—		—		—		—		—		—		—		—		—		—		—		1,783,647
Other debt financial instruments issued in Chile		—		—		—		1,297,524		17,387		—		—		12,256		7,212		—		4,830		—		—		203,321		1,542,530
Financial debt instruments issued Abroad		—		—		—		198,606		—		—		—		—		—		—		—		—		—		—		198,606
Subtotal		462,883		1,320,764		—		1,496,130		17,387		—		—		12,256		7,212		—		4,830		—		—		203,321		3,524,783

Derivative contracts financial for hedging purposes
Forwards		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Swaps		—		—		—		59,519		—		—		—		—		—		—		—		—		—		—		59,519
Call Options		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Put Options		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Futures		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal		—		—		—		59,519		—		—		—		—		—		—		—		—		—		—		59,519

Financial assets at amortized cost (*)
Rights from resale agreements		—		—		—		38,351		—		—		—		—		—		—		—		—		—		12,998		51,349

Debt financial instruments
From the Chilean Government and Central Bank		—		911,831		—		—		—		—		—		—		—		—		—		—		—		—		911,831
Subtotal		—		911,831		—		—		—		—		—		—		—		—		—		—		—		—		911,831

Loans and advances to Banks
Central Bank of Chile		1,700,874		—		—		—		—		—		—		—		—		—		—		—		—		—		1,700,874
Domestic banks		—		—		—		150,039		—		—		—		—		—		—		—		—		—		—		150,039
Foreign banks		—		—		—		330,847		—		—		—		—		—		—		—		—		—		—		330,847
Subtotal		1,700,874		—		—		480,886		—		—		—		—		—		—		—		—		—		—		2,181,760

(*)

Economic activity of Loans and accounts receivable from customers disclosed in Note No. 13 g).

187

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(2)

Credit Risk, continued:

(c)

Portfolio Concentration, continued:

The following tables show credit risk exposure per balance sheet item, including derivatives, detailed by both geographic region and industry sector as of December 31, 2022:

	Chile		United States		England		Brazil		Others		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Financial Assets

Cash and Due from Banks		1,448,441		1,227,305		24,982		8		64,148		2,764,884

Financial assets held for trading at fair value through profit or loss

Derivative contracts Financial
Forwards (*)		315,527		38,355		91,832		—		119,659		565,373
Swaps (**)		1,037,521		32,161		1,095,040		—		224,855		2,389,577
Call Options		2,321		—		—		—		—		2,321
Put Options		2,758		—		—		—		—		2,758
Futures		—		—		—		—		—		—
Subtotal		1,358,127		70,516		1,186,872		—		344,514		2,960,029

Debt Financial Instruments
From the Chilean Government and Central Bank		3,059,292		—		—		—		—		3,059,292
Other debt financial instruments issued in Chile		374,453		—		—		—		—		374,453
Financial debt instruments issued Abroad		—		—		—		—		—		—
Subtotal		3,433,745		—		—		—		—		3,433,745

Others Financial Instruments
Investments in mutual funds		250,337		—		—		—		—		250,337
Equity instruments		2,357		3,261		—		—		—		5,618
Others		763		522		—		—		85		1,370
Subtotal		253,457		3,783		—		—		85		257,325

Financial Assets at fair value through other comprehensive income

Debt Financial Instruments
From the Chilean Government and Central Bank		2,258,857		—		—		—		—		2,258,857
Other debt financial instruments issued in Chile		1,540,908		—		—		—		—		1,540,908
Financial debt instruments issued Abroad		—		167,627		—		—		—		167,627
Subtotal		3,799,765		167,627		—		—		—		3,967,392

Derivative contracts financial for hedging purposes
Forwards		—		—		—		—		—		—
Swaps		118		18,368		8,142		—		449		27,077
Call Options		—		—		—		—		—		—
Put Options		—		—		—		—		—		—
Futures		—		—		—		—		—		—
Subtotal		118		18,368		8,142		—		449		27,077

Financial assets at amortized cost
Rights from resale agreements and securities lending		54,061		—		—		—		—		54,061

Debt Financial Instruments
From the Chilean Government and Central Bank		902,355		—		—		—		—		902,355
Subtotal		902,355		—		—		—		—		902,355

Loans and advances to Banks
Central Bank of Chile		1,801,100		—		—		—		—		1,801,100
Domestic banks		—		—		—		—		—		—
Foreign banks		—		—		18,679		182,320		172,693		373,692
Subtotal		1,801,100		—		18,679		182,320		172,693		2,174,792

Loans to Customers, Net
Commercial loans		20,256,166		—		—		—		29,544		20,285,710
Residential mortgage loans		11,416,154		—		—		—		—		11,416,154
Consumer loans		4,992,940		—		—		—		—		4,992,940
Subtotal		36,665,260		—		—		—		29,544		36,694,804

(*)

Others includes: France Ch$92,885 million and Spain Ch$18,923 million.

(**)

Others includes: France Ch$62,731 million and Spain Ch$45,189 million.

188

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(2)

Credit Risk, continued:

(c)

Portfolio Concentration, continued:

	Central Bank of Chile		Government		Retail (Individuals)		Financial Services		Trade		Manufacturing		Mining		Electricity, Gas and Water		Agriculture and Livestock		Fishing		Transportation and Telecom		Construction		Services		Others		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Cash and Due from Banks		384,230		—		—		2,380,654		—		—		—		—		—		—		—		—		—		—		2,764,884

Financial Assets held for trading at fair value through profit or loss
Derivative contracts Financial
Forwards		—		—		—		371,960		28,966		12,435		124		2,153		8,456		18		144		1,602		139,515		—		565,373
Swaps		—		—		—		2,311,655		9,770		9,123		—		10,148		4,236		3,848		16,166		14,493		10,138		—		2,389,577
Call Options		—		—		—		123		601		61		—		—		90		6		1		1,437		2		—		2,321
Put Options		—		—		—		752		1,412		481		—		—		5		—		21		—		87		—		2,758
Futures		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal		—		—		—		2,684,490		40,749		22,100		124		12,301		12,787		3,872		16,332		17,532		149,742		—		2,960,029

Debt Financial Instruments
From the Chilean Government and Central Bank		3,014,768		44,524		—		—		—		—		—		—		—		—		—		—		—		—		3,059,292
Other debt financial instruments issued in Chile		—		—		—		374,453		—		—		—		—		—		—		—		—		—		—		374,453
Financial debt instruments issued Abroad		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal		3,014,768		44,524		—		374,453		—		—		—		—		—		—		—		—		—		—		3,433,745

Others Financial Instruments
Investments in mutual funds		—		—		—		250,337		—		—		—		—		—		—		—		—		—		—		250,337
Equity instruments		—		—		—		5,618		—		—		—		—		—		—		—		—		—		—		5,618
Others		—		—		—		1,370		—		—		—		—		—		—		—		—		—		—		1,370
Subtotal		—		—		—		257,325		—		—		—		—		—		—		—		—		—		—		257,325

Financial Assets at fair value through Other Comprehensive Income
Debt Financial Instruments
From the Chilean Government and Central Bank		—		2,258,857		—		—		—		—		—		—		—		—		—		—		—		—		2,258,857
Other debt financial instruments issued in Chile		—		—		—		1,513,240		13,591		—		—		4,934		—		—		4,639		4,504		—		—		1,540,908
Financial debt instruments issued Abroad		—		—		—		167,627		—		—		—		—		—		—		—		—		—		—		167,627
Subtotal		—		2,258,857		—		1,680,867		13,591		—		—		4,934		—		—		4,639		4,504		—		—		3,967,392

Derivative contracts financial for hedging purposes
Forwards		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Swaps		—		—		—		27,077		—		—		—		—		—		—		—		—		—		—		27,077
Call Options		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Put Options		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Futures		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal		—		—		—		27,077		—		—		—		—		—		—		—		—		—		—		27,077

Financial assets at amortized cost (*)
Rights from resale agreements		—		—		—		43,116		469		—		—		—		—		—		—		—		7,950		2,526		54,061

Debt financial instruments
From the Chilean Government and Central Bank		—		902,355		—		—		—		—		—		—		—		—		—		—		—		—		902,355
Subtotal		—		902,355		—		—		—		—		—		—		—		—		—		—		—		—		902,355

Loans and advances to Banks
Central Bank of Chile		1,801,100		—		—		—		—		—		—		—		—		—		—		—		—		—		1,801,100
Domestic banks		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Foreign banks		—		—		—		373,692		—		—		—		—		—		—		—		—		—		—		373,692
Subtotal		1,801,100		—		—		373,692		—		—		—		—		—		—		—		—		—		—		2,174,792

(*)	Economic activity of Loans and accounts receivable from customers disclosed in Note No. 13 g).

189

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(2)

Credit Risk, continued:

(d)

Collaterals and Other Credit Enhancements:

The amount and type of collateral required depends on the counterparty’s credit risk assessment.

The Bank has guidelines regarding the acceptability of types of collateral and valuation parameters.

The main types of collateral obtained are:

●

For commercial loans: Residential and non-residential real estate, liens and inventory.

●

For retail loans: Mortgages loans on residential property.

The Bank also obtains collateral from parent companies for loans granted to their subsidiaries.

Management makes sure its collateral is acceptable according to both external standards and internal policies guidelines and parameters. The Bank has approximately 245,238 collateral assets as of September 30, 2023 (244,033 in December 2022), the majority of which consist of real estate. The following table contains guarantees value:

			Guarantee
September 2023	Loans		Mortgages		Pledges		Securities		Warrants		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Corporate Lending		14,790,077		4,307,710		209,938		547,264		11,938		5,076,850
Small Business Lending		4,819,259		3,396,605		18,013		10,419		—		3,425,037
Consumer Lending		5,134,368		381,181		714		2,701		—		384,596
Mortgage Lending		12,014,056		10,407,477		178		481		—		10,408,136
Total		36,757,760		18,492,973		228,843		560,865		11,938		19,294,619

			Guarantee
December 2022	Loans		Mortgages		Pledges		Securities		Warrants		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Corporate Lending		15,469,444		3,993,984		193,235		590,126		4,386		4,781,731
Small Business Lending		4,816,266		3,352,055		20,294		11,700		—		3,384,049
Consumer Lending		4,992,940		364,469		912		3,364		—		368,745
Mortgage Lending		11,416,154		9,928,827		133		607		—		9,929,567
Total		36,694,804		17,639,335		214,574		605,797		4,386		18,464,092

The Bank also uses mitigating tactics for credit risk on derivative transactions. To date, the following mitigating tactics are used:

●

Accelerating transactions and net payment using market values at the date of default of one of the parties.

●

Option for both parties to terminate early any transactions with a counterparty at a given date, using market values as of the respective date.

●

Margins established with time deposits by customers who have FX forwards with subsidiary Banchile Corredores de Bolsa S.A.

190

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(2)

Credit Risk, continued:

(d)

Collaterals and Other Credit Enhancements, continued:

The value of the guarantees that the Bank maintains related to the loans individually classified as impaired as of September 30, 2023 and December 31, 2022 amounted Ch$148,424 million and Ch$110,686 million, respectively.

The value guarantees related to past due loans but no impaired as of September 30, 2023 and December 31, 2022 amounted Ch$499,249 million and Ch$325,079 million respectively.

(e)

Credit Quality by Asset Class:

The Bank determines the credit quality of financial assets using internal credit ratings. The rating process is linked to the Bank’s approval and monitoring processes and is carried out in accordance with risk categories established by current standards. Credit quality is continuously updated based on any favorable or unfavorable developments to customers or their environments, considering aspects such as commercial and payment behavior as well as financial information.

The Bank also carries out reviews focused on companies that participate in specific economic sectors, which are affected either by macroeconomic variables or variables of the sector. In this way, it is possible to timely establish the necessary and sufficient level of provisions to cover the losses due to the eventual non-recoverability of the credits granted.

The credit quality by asset class for Consolidated Statements of Financial Position sheet items, based on the Bank’s credit rating system, is presented in Note No. 13 letter (d).

Below is the detail of the default but not impaired portfolio:

	Past due but no impaired (*)
	1 to 29 days		30 to 59 days		60 to 89 days		90 or more days
	MCh$		MCh$		MCh$		MCh$

September 2023		839,284		193,565		61,486		—
December 2022		622,379		157,852		46,762		—

(*)	These amounts include the overdue portion and the remaining balance of loans in default.

(f)

Assets Received in Lieu of Payment:

The Bank has received assets in lieu of payment totaling Ch$17,802 million and Ch$10,149 million as of September 30, 2023 and December 31, 2022, respectively, the majority of which are properties. All of these assets are managed for sale.

191

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(2)

Credit Risk, continued:

(g)

Renegotiated Assets:

The loans are considered to be renegotiated when the corresponding financial commitments are restructured and the Bank assesses the probability of recovery as sufficiently high.

The following table details the book value of loans with renegotiated terms per financial asset class:

	September		December
	2023		2022
Financial Assets	MCh$		MCh$

Loans and advances to banks
Central Bank of Chile		—		—
Domestic banks		—		—
Foreign banks		—		—
Subtotal		—		—

Loans to customers, net
Commercial loans		435,921		381,171
Residential mortgage loans		260,355		251,380
Consumer loans		279,588		258,434
Subtotal		975,864		890,985
Total renegotiated financial assets		975,864		890,985

(h)

Compliance with credit limit granted to related debtors:

Below are detailed the figures for compliance with the credit limit granted to debtors related to the ownership or management of the Bank and subsidiaries, in accordance with the Article 84 No. 2 of the General Banking Law, which establishes that in no case the total of these credits may exceed the amount of its Total or Regulatory Capital:

	September 2023			December 2022
	MCh$			MCh$

Total related debt		500,454			960,640
Consolidated Total or Regulatory Capital		6,563,523			6,373,416
Limit used %		7.62	%		15.07	%

192

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(3)

Market Risk:

Market Risk refers to the loss that the Bank could face due to a liquidity shortage to honor the payments, or to close financial transactions in a timely manner (Liquidity Risk), or due to adverse movements in the values of market variables (Risk Price). For its correct management, the guidelines of the Liquidity Risk Management Policy and the Market Risk Management Policy are considered, both are subject to review, at least annually, by the Market Risk Manager and approval by the Bank’s Board of Directors, at least annually.

(a)

Liquidity Risk:

Liquidity Risk Measurement and Limits

The Bank manages the Liquidity Risk in accordance with the established on the Liquidity Risk Management Policy, managing separately for each sub-category thereof; this is for Trading Liquidity Risk and Funding Liquidity Risk.

Trading Liquidity Risk is the inability to close, at current market prices, the financial positions opened mainly from the Trading Book (which is daily valued at market prices and the value differences instantly reflected in the Income Statement). This risk is controlled by establishing limits on the positions amounts of the Trading Book in accordance with what is estimated to be closed in a short time period. Additionally, the Bank incorporates a negative impact on the Income Statement whenever it considers that the size of a certain position in the Trading Book exceeds the reasonable amount, negotiated in the secondary markets, which would allow the exposure to be offset without altering market prices.

Funding Liquidity Risk refers to the Bank’s inability to obtain sufficient cash to meet its immediate obligations. This risk is managed by a minimum amount of highly liquid assets called liquidity buffer, and establishing limits and controls of internal metrics, among which the Market Access Report (“MAR”) stands out, which estimates the amount of funding that the Bank would need from wholesale financial counterparties, for the next 30 and 90 days in each of the relevant currencies of the balance sheet, to face a cash need as a result of the operation under business as usual conditions.

193

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(3)

Market Risk, continued:

(a)

Liquidity Risk, continued:

The use of September within 2023 is illustrated below (LCCY = local currency; FCCY = foreign currency):

	MAR LCCY + FCCY BCh$					MAR FCCY MUS$
	1 - 30 days			1 - 90 days			1 - 30 days

Maximum		1,401			3,592	Maximum		1,401
Minimum		(1,359	)		917	Minimum		(1,359	)
Average		45			1,999	Average		45

The Bank also monitors the amount of assets denominated in local currency that is funded by liabilities denominated in foreign currency, including all tenors and the cash flows generated by full delivery derivatives payments. This metric is referred to as Cross Currency Funding. The bank oversees and limits this amount in order to take precautions against not only Banco de Chile’s event but also against a systemic adverse environment generated by a country risk event that might trigger lack of foreign currency funding.

The use of Cross Currency Funding within the year 2023 is illustrated below:

	Cross Currency Funding MUS$

Maximum		2,359
Minimum		477
Average		1,366

The Bank establishes thresholds that alert behaviors outside the expected ranges at a normal or prudent level of operation, in order to protect other dimensions of liquidity risk such as, for example, maturities concentration of fund providers, the diversification of sources of funds either by type of counterparty or type of product, among others.

The evolution over time of the statement of financial ratios of the Bank is monitored in order to detect structural changes in the characteristics of the balance sheet, such as those presented in the following table and whose relevant values of use during the year 2023 are shown below:

	Liquid Assets/ Net Funding <30 days			Liabilities>1 year/ Assets >1 year			Deposits/ Loans

Maximum		228	%		101	%		66	%
Minimum		176	%		91	%		63	%
Average		199	%		95	%		64	%

194

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(3)

Market Risk, continued:

(a)

Liquidity Risk, continued:

Additionally, some market index, prices and monetary decisions taken by the Central Bank of Chile are monitored to detect structural changes in market conditions that can trigger a liquidity shortage or even a financial crisis.

Furthermore, the Liquidity Risk Management Policy enforces to perform stress tests periodically which are controlled against potentially accessible action plans in each modeled scenario, according with the guidelines established in the Liquidity Contingency Plan. This process is essential in determining the liquidity risk appetite framework of the institution.

The Bank measures and controls the mismatch of cash flows under regulatory standards with the C46 index report, which represents the net cash flows expected over time as a result of the contractual maturity of almost all assets and liabilities. Additionally, the Commission for the Financial Market (hereinafter, “CMF”) authorized Banco de Chile, among others, to report the adjusted C46 index. This allows the Bank to report, in addition to the regular C46 index, outflow behavior assumptions of certain specific elements of the liability, such as demand deposits and time deposits. In addition, the regulator also requires some rollover assumptions for the loan portfolio.

To date, the CMF establish the following dispositions for the C46 index:

Foreign Currency balance sheet items: 1-30 days, Regulatory Limit C46 index < 1 x Tier-1 Capital

The levels of use of this index during the period 2023 is illustrated below:

	Adjusted C46 CCY and FCCY as part of Basic Capital						Adjusted C46 FCCY as part of Basic Capital
	1 - 30 days			1 - 90 days			1 - 30 days

Maximum		(0.10	)		(0.02	)		0.20
Minimum		(0.36	)		(0.32	)		0.05
Average		(0.19	)		(0.22	)		0.14
Regulatory Limit		N/A			N/A			1.0

195

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(3)

Market Risk, continued:

(a)

Liquidity Risk, continued:

The individual and consolidated term liquidity gap are presented below:

QUARTERLY STATEMENT OF INDIVIDUAL LIQUIDITY SITUATION

AS OF SEPTEMBER 30, 2023 CONTRACTUAL BASIS

Values in MCh$

CONSOLIDATED CURRENCY	From 0 to 7 days		From 0 to 15 days		From 0 to 30 days		From 0 to 90 days

Cash flow receivable (assets) and income		8,157,696		11,003,192		12,233,675		15,445,627
Cash flow payable (liabilities) and expenses		18,209,397		20,537,769		24,316,200		29,482,684
Liquidity Gap		10,051,701		9,534,577		12,082,525		14,037,057

FOREIGN CURRENCY	From 0 to 7 days		From 0 to 15 days		From 0 to 30 days		From 0 to 90 days

Cash flow receivable (assets) and income		1,963,740		2,331,206		2,422,643		2,924,848
Cash flow payable (liabilities) and expenses		2,691,251		3,012,206		3,446,255		4,440,497
Liquidity Gap		727,511		681,000		1,023,612		1,515,649

Limits:
One time capital						4,992,458
AVAILABLE MARGIN						3,968,846

*	In the limit up to 30 days, in consolidated currency, the Bank has a liquidity situation of Ch$3,968,846,198,339.

QUARTERLY STATEMENT OF INDIVIDUAL LIQUIDITY SITUATION

AS OF SEPTEMBER 30, 2023 ADJUSTED BASIS

Values in MCh$

CONSOLIDATED CURRENCY	From 0 to 7 days		From 0 to 15 days			From 0 to 30 days			From 0 to 90 days

Cash flow receivable (assets) and income		7,803,250		10,463,315			11,242,969			13,330,934
Cash flow payable (liabilities) and expenses		8,681,800		9,517,176			10,905,419			13,433,599
Liquidity Gap		878,550		(946,139	)		(337,550	)		102,665

FOREIGN CURRENCY	From 0 to 7 days			From 0 to 15 days			From 0 to 30 days		From 0 to 90 days

Cash flow receivable (assets) and income		1,857,902			2,173,723			2,065,991		2,221,743
Cash flow payable (liabilities) and expenses		1,785,657			2,010,423			2,308,339		3,149,848
Liquidity Gap		(72,245	)		(163,300	)		242,348		928,105

Limits:
One time capital								4,992,458
AVAILABLE MARGIN								4,750,110

*	In the limit up to 30 days, in consolidated currency, the Bank has a liquidity situation of Ch$4,750,109,944,249.

196

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(3)

Market Risk, continued:

(a)

Liquidity Risk, continued:

QUARTERLY STATEMENT OF CONSOLIDATED LIQUIDITY SITUATION

AS OF SEPTEMBER 30, 2023 CONTRACTUAL BASIS

Values in MCh$

CONSOLIDATED CURRENCY	From 0 to 7 days		From 0 to 15 days		From 0 to 30 days		From 0 to 90 days

Cash flow receivable (assets) and income		8,851,828		11,706,633		12,947,097		16,175,610
Cash flow payable (liabilities) and expenses		18,750,418		21,088,444		24,868,344		30,034,933
Liquidity Gap		9,898,590		9,381,811		11,921,247		13,859,323

FOREIGN CURRENCY	From 0 to 7 days		From 0 to 15 days		From 0 to 30 days		From 0 to 90 days

Cash flow receivable (assets) and income		1,963,796		2,331,262		2,422,855		2,925,461
Cash flow payable (liabilities) and expenses		2,691,251		3,012,206		3,446,255		4,440,553
Liquidity Gap		727,455		680,944		1,023,400		1,515,092

Limits:
One time capital						4,992,458
AVAILABLE MARGIN						3,969,058

*	In the limit up to 30 days, in consolidated currency, the Bank has a liquidity situation of Ch$3,969,058,100,905.

QUARTERLY STATEMENT OF CONSOLIDATED LIQUIDITY SITUATION

AS OF SEPTEMBER 30, 2023 ADJUSTED BASIS

Values in MCh$

CONSOLIDATED CURRENCY	From 0 to 7 days		From 0 to 15 days			From 0 to 30 days			From 0 to 90 days

Cash flow receivable (assets) and income		8,497,382		11,166,756			11,956,391			14,060,917
Cash flow payable (liabilities) and expenses		9,222,821		10,067,851			11,457,563			13,985,848
Liquidity Gap		725,439		(1,098,905	)		(498,828	)		(75,069	)

FOREIGN CURRENCY	From 0 to 7 days			From 0 to 15 days			From 0 to 30 days		From 0 to 90 days

Cash flow receivable (assets) and income		1,857,958			2,173,778			2,066,203		2,222,356
Cash flow payable (liabilities) and expenses		1,785,657			2,010,423			2,308,339		3,149,904
Liquidity Gap		(72,301	)		(163,355	)		242,136		927,548

Limits:
One time capital								4,992,458
AVAILABLE MARGIN								4,750,322

*	In the limit up to 30 days, in consolidated currency, the Bank has a liquidity situation of Ch$4,750,321,846,811.

197

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(3)

Market Risk, continued:

(a)

Liquidity Risk, continued:

Liquid Assets Consolidated Balance Statement as of September 30, 2023, values in BCh$

Source: Financial Statements Banco de Chile as of September 30, 2023

Additionally, the regulatory entities have introduced other metrics that the Bank uses in its management, such as the Liquidity Coverage Ratio (“LCR”) and Net Stable Financing Ratio (“NSFR”), using assumptions similar to those used in the international banking. For the first, the minimum level required is 1 time (100%) of the LCR indicator, while for the second the limit requirement is 0.7 times (70%) of the NSFR indicator. The evolution of the LCR and NSFR metrics during the year 2023 are shown below:

	LCR		NSFR

Maximum		3.43		1.37
Minimum		2.60		1.31
Average		3.12		1.34
Regulatory Limit		1.0		0.7	(*)

(*)	Effective value from June 1, 2022, which will gradually increase until reaching 1.0 in January 2026.

198

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(3)

Market Risk, continued:

(a)

Liquidity Risk, continued:

The contractual maturity profile of the financial liabilities of Banco de Chile and its subsidiaries (consolidated basis), to September 30, 2023 and December 2022, is as follows:

	Up to 1 month		1 to 3 months		3 to 12 months		1 to 3 years		3 to 5 years		Over 5 years		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Liabilities as of September 30, 2023
Transactions in the course of payment		484,839		—		—		—		—		—		484,839
Full delivery derivative transactions		792,826		721,738		1,098,104		1,356,424		788,716		1,618,924		6,376,732
Financial liabilities at amortized cost:
Current accounts and other demand deposits		12,786,573		—		—		—		—		—		12,786,573
Saving accounts and time deposits		9,836,989		4,384,413		963,244		77,940		544		582		15,263,712
Obligations by repurchase agreements and securities lending		100,244		303		—		—		—		—		100,547
Borrowings from financial institutions		69,291		299,612		4,849,768		111,228		—		—		5,329,899
Debt financial instruments issued (all currencies)		212,420		431,666		774,948		2,650,140		2,271,732		4,428,973		10,769,879
Other financial obligations		253,480		18		47		—		—		—		253,545
Financial instruments of regulatory capital issued (subordinated bonds)		3,333		18,110		27,360		97,606		84,273		1,146,953		1,377,635
Total (excluding non-delivery derivative transactions)		24,539,995		5,855,860		7,713,471		4,293,338		3,145,265		7,195,432		52,743,361

Non-delivery derivative transactions		422,198		926,098		913,026		1,334,433		800,927		2,075,950		6,472,632

	Up to 1 month		1 to 3 months		3 to 12 months		1 to 3 years		3 to 5 years		Over 5 years		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Liabilities as of December 31, 2022
Transactions in the course of payment		681,792		—		—		—		—		—		681,792
Full delivery derivative transactions		743,686		780,406		1,375,700		1,581,587		756,582		1,743,275		6,981,236
Financial liabilities at amortized cost:
Current accounts and other demand deposits		13,383,232		—		—		—		—		—		13,383,232
Saving accounts and time deposits		9,774,591		3,013,166		1,362,905		121,808		5,940		655		14,279,065
Obligations by repurchase agreements and securities lending		219,043		52		—		—		—		—		219,095
Borrowings from financial institutions		158,173		83,612		795,721		4,348,400		—		—		5,385,906
Debt financial instruments issued (all currencies)		13,442		170,745		1,349,567		2,286,711		2,555,020		4,119,530		10,495,015
Other financial obligations		343,526		21		110		45		—		—		343,702
Financial instruments of regulatory capital issued (subordinated bonds)		2,869		—		48,017		94,649		84,952		1,135,504		1,365,991
Total (excluding non-delivery derivative transactions)		25,320,354		4,048,002		4,932,020		8,433,200		3,402,494		6,998,964		53,135,034

Non-delivery derivative transactions		686,308		751,720		1,595,212		1,283,629		683,109		2,161,307		7,161,285

199

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(3)

Market Risk, continued:

(b)

Price Risk:

The Price Risk measurement and management processes are carried out in accordance with the established on the Market Risk Management Policy, by using internal metrics developed by the Bank, both for the Trading Book and for the Accrual Book (the Accrual Book includes all balance sheet items, including those in the Trading Book but in such case these are reported at an interest rate adjustment term of one day, thus not generating accrual interest rate risk). In addition, the portfolio recorded under the Fair Value Through Other Comprehensive Income (hereinafter FVOCI) is considered, which is a sub-set of the Accrual Book, which given its nature is relevant to measure it independently. In addition, the Bank reports metrics to regulatory entities according to the models defined by them.

The Bank has established internal limits for the exposures of the Trading Book. In fact, FX positions (FX delta), interest rate sensitivities generated by the derivatives and debt securities portfolios (DV01 or also referred as to rho) and the FX options volatility sensitivity (vega) are measured, reported and controlled against their limits. Limits are established on an aggregate basis but also for some specific tenor points. The use of these limits is daily monitored, controlled and reported by independent control functions to the senior management of the bank. The internal governance framework also establishes that these limits must be approved by the board and reviewed at least annually.

The Bank measures and controls the risk for the Trading Book portfolios using the Value-at-Risk (VaR). The model uses a 99% confidence level and the most recent one-year observed rates, prices and yields data.

The use of VaR within the year 2023 is illustrated below:

	Value-at-Risk 99% one-day confidence level MCh$

Maximum		3,909
Minimum		796
Average		2,280

Additionally, the Bank performs measuring, limiting, controlling and reporting interest rate exposures and risks for the Accrual Book using internally developed methodologies based on the differences in the amounts of assets and liabilities considering the interest rate repricing dates. Exposures are measured according to the Interest Rate Exposure or IRE metric and their corresponding risks using the Earnings-at-Risk or EaR metric. Within these metrics, Prepayment Risk is considered, which corresponds to the customer’s ability to pay, totally or partially, their debt before maturity. For this, a loan flow allocation model is generated with exposure to interest rate fluctuations, according to their prepayment behavior, finally reflecting a decrease in their average maturity term.

200

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(3)

Market Risk, continued:

(b)

Price Risk, continued:

The use of EaR within the year 2023 is illustrated below:

	12- months Earnings-at-Risk 99% confidence level 3 months closing period MCh$

Maximum		286,176
Minimum		235,747
Average		261,955

The regulatory risk measurement for the Trading Book (APRM report, from the spanish Activos Ponderados por Riesgo Mercado) is produced by utilizing guidelines provided by the Central Bank of Chile (hereinafter, “BCCh”) and the CMF. The referred methodologies estimate the potential loss that the bank may incur considering standardized fluctuations of the value of market factors such as FX rates, interest rates and volatilities that may adversely impact the value of FX spot positions, interest rate exposures, and volatility exposures, respectively. In addition, correlation factors are included to represent non-parallel changes in the yield curve.

The risk measurement for the Banking Book, according to regulatory guidelines (RMLB report by its Spanish initials), as a result of interest rate fluctuations is carried out through the use of standardized methodologies provided by regulatory entities (BCCh and CMF). The report includes models for reporting interest rate gaps and how their value varies, according to rate fluctuations that are defined by the scenarios provided by the regulations. In addition to this, the regulatory entity has requested banks to establish internal limits, separately for short-term and long-term balances, NII and EVE respectively, for these regulatory measurements.

The results effectively realized during the month for trading activities are controlled against defined loss levels and if these levels are exceeded, senior management is notified in order to evaluate potential corrective actions.

In addition to the above, the Market Risk Management Policy of Banco de Chile enforces to perform daily stress tests for the Trading Book and monthly for the Accrual Book. Additionally, the stress test for the FVOCI portfolio is included, which is reported daily. The output of the stress testing process is monitored against corresponding alert levels; in the case those triggers are breached, the senior management is notified in order to implement further actions, if necessary. In addition, the results during the month for the trading activities are controlled against defined loss levels and in case such levels are exceeded, senior management is also notified.

201

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(3)

Market Risk, continued:

(b)

Price Risk, continued:

	Up to 1 month		1 to 3 months		3 to 12 months		1 to 3 years		3 to 5 years		Over 5 years		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Assets as of September 30, 2023
Cash and due from banks		3,055,518		—		—		—		—		—		3,055,518
Transactions in the course of collection		528,763		—		—		—		—		—		528,763
Financial assets at fair value through other comprehensive income:
Debt financial instruments		300,037		465,068		1,940,938		383,073		245,855		201,511		3,536,482
Derivative financial instruments for hedging purposes		4,655		193,549		31,714		397,161		397,040		1,104,316		2,128,435
Financial assets at amortized cost:
Rights from resale agreements and securities lending		—		—		—		—		—		—		—
Debt financial instruments		1,203		—		19,092		496,716		26,244		445,239		988,494
Loans and advances to Banks		1,957,790		14,062		218,234		—		—		—		2,190,086
Loans to customers, net		5,015,036		3,639,248		7,544,861		9,064,339		4,839,158		13,607,851		43,710,493
Total Assets		10,863,002		4,311,927		9,754,839		10,341,289		5,508,297		15,358,917		56,138,271

	Up to 1 month		1 to 3 months		3 to 12 months		1 to 3 years		3 to 5 years		Over 5 years		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Assets as of December 31, 2022
Cash and due from banks		2,624,888		—		—		—		—		—		2,624,888
Transactions in the course of collection		743,379		—		—		—		—		—		743,379
Financial assets at fair value through other comprehensive income:
Debt financial instruments		82,025		324,492		2,487,874		614,944		220,962		248,832		3,979,129
Derivative financial instruments for hedging purposes		378		4,040		296,187		347,208		352,502		1,033,196		2,033,511
Financial assets at amortized cost:
Rights from resale agreements and securities lending		—		—		—		—		—		—		—
Debt financial instruments		—		8,816		11,222		56,159		459,884		452,991		989,072
Loans and advances to Banks		1,904,368		63,569		209,047		—		—		—		2,176,984
Loans to customers, net		5,061,294		3,188,902		7,913,635		9,165,338		4,722,852		13,044,702		43,096,723
Total Assets		10,416,332		3,589,819		10,917,965		10,183,649		5,756,200		14,779,721		55,643,686

202

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(3)

Market Risk, continued:

(b)

Price Risk, continued:

	Up to 1 month		1 to 3 months		3 to 12 months		1 to 3 years		3 to 5 years		Over 5 years		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Liabilities as of September 30, 2023
Transactions in the course of payment		454,344		—		—		—		—		—		454,344
Derivative Financial Instruments for hedging purposes		3,261		185,155		23,774		370,790		358,617		1,375,473		2,317,070
Financial liabilities at amortized cost:
Current accounts and other demand deposits		12,815,424		—		—		—		—		—		12,815,424
Saving accounts and time deposits		9,836,989		4,384,413		963,244		77,940		544		582		15,263,712
Obligations by repurchase agreements and securities lending		5,023		—		—		—		—		—		5,023
Borrowings from financial institutions		69,291		299,612		4,849,768		111,228		—		—		5,329,899
Debt financial instruments issued (*)		212,420		431,666		774,948		2,650,140		2,271,732		4,428,973		10,769,879
Financial instruments of regulatory capital issued (subordinated bonds)		3,333		18,110		27,360		97,606		84,273		1,146,953		1,377,635
Other liabilities		253,480		18		47		—		—		—		253,545
Total liabilities		23,653,565		5,318,974		6,639,141		3,307,704		2,715,166		6,951,981		48,586,531

	Up to 1 month		1 to 3 months		3 to 12 months		1 to 3 years		3 to 5 years		Over 5 years		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Liabilities as of December 31, 2022
Transactions in the course of payment		650,640		—		—		—		—		—		650,640
Derivative Financial Instruments for hedging purposes		1,440		1,006		272,568		341,455		332,705		1,503,902		2,453,076
Financial liabilities at amortized cost:
Current accounts and other demand deposits		13,454,288		—		—		—		—		—		13,454,288
Saving accounts and time deposits		9,774,591		3,013,166		1,362,905		121,808		5,940		655		14,279,065
Obligations by repurchase agreements and securities lending		7,344		—		—		—		—		—		7,344
Borrowings from financial institutions		158,173		83,612		795,721		4,348,400		—		—		5,385,906
Debt financial instruments issued (*)		13,442		170,745		1,349,567		2,286,711		2,555,020		4,119,530		10,495,015
Financial instruments of regulatory capital issued (subordinated bonds)		2,869		—		48,017		94,649		84,952		1,135,504		1,365,991
Other liabilities		343,526		21		110		45		—		—		343,702
Total liabilities		24,406,313		3,268,550		3,828,888		7,193,068		2,978,617		6,759,591		48,435,027

(*)	Amounts shown here are different from those reported in the liabilities report which is part of the liquidity analysis, due to differences in the treatment of mortgage bonds issued by the Bank in both reports.

203

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(3)

Market Risk, continued:

(b)

Price Risk, continued:

Price Risk Sensitivity Analysis

The Bank uses stress tests as the main sensitivity analysis tool for Price Risk. The analysis is implemented for the Trading Book, Accrual Book and the FVOCI portfolio separately. The Bank has adopted this tool as it is considered more useful than fluctuations in business as usual scenario, such as VaR or EaR, given that:

(i)

The financial crisis show market factors fluctuations that are materially larger than those used in the VaR with 99% of confidence level or EaR with 99% of confidence level.

(ii)

The financial crisis also show that correlations between these fluctuations are materially different from those used in the VaR computation, since a crisis precisely indicates severe disconnections between the behaviors of market factors fluctuations respect to the patterns observed under normal conditions.

(iii)

Trading liquidity dramatically diminishes during financial distress and especially in emerging markets. Therefore, the overnight VaR number might not be representative of the loss for trading portfolios in such environment since closing exposures period may exceed one business day. This may also happen when calculating EaR, even considering three months as the closing period.

The impacts are determined by mathematical simulations of fluctuations in the values of market factors, and also, estimating the changes of the economic and /or accounting value of the financial positions.

204

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(3)

Market Risk, continued:

(b)

Price Risk, continued:

In order to comply with IFRS 9, the following exercise was included illustrating an estimation of the impact of extreme but reasonable fluctuations of interest rates, swaps yields, FX rates and exchange volatility, which are used for valuing Trading Book, Accrual Book and the FVOCI portfolio. Given that the Bank’s portfolio includes positions denominated in nominal and real interest rates, these fluctuations must be aligned with extreme but realistic Chilean inflation changes forecasts.

For the Trading Book, the exercise is implemented by multiplying the sensitivities by the fluctuations obtained as the results of mathematical simulations over a two-week time horizon and using the maximum historical volatility, within a significant period of time, in each of the market factor present. In the case of the FVOCI portfolio a four-week time horizon is used due to liquidity constrains; Accrual Book impacts are estimated by multiplying cumulative gaps by forward interest rates fluctuations modeled over a three-month time horizon and using the maximum historical volatility of interest fluctuations but limited by maximum fluctuations and / or levels observed within a significant period of time. It is relevant to note that the methodology might ignore some portion of the interest rates convexity, since it is not captured properly when large fluctuations are modeled. In any case, given the magnitude of the changes, the methodology may be reasonable enough for the purposes and scope of the analysis.

The following table illustrates the fluctuations resulting from the main market factors in the maximum stress test exercise, or more adverse, for the Trading Book.

The directions or signs of these fluctuations are those that correspond to those that generate the most adverse impact at the aggregate level.

Average Fluctuations of Market Factors for Maximum Stress Scenario

Trading Book

	CLP Derivatives (bps)			CLP Bonds (bps)		CLF Derivatives (bps)		CLF Bonds (bps)		USD Offshore SOFR Derivatives (bps)			Spread USD On/Off Derivatives (bps)
Less than 1 year		(12	)		83		130		249		(10	)		(79	)
Greater than 1 year		3			130		52		175		(6	)		(47	)

bps = basis points.

205

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

47.

Risk Management and Report, continued:

(3)

Market Risk, continued:

(b)

Price Risk, continued:

The worst impact on the Bank’s Trading Book as of September 30, 2023, as a result of the simulation process described above, is as follows:

Most Adverse Stress Scenario P&L Impact

Trading Book

(MCh$)

CLP Interest Rate			(8,448)
Derivatives	136
Debt instruments	(8,583	)
CLF Interest Rate			(16,079)
Derivatives	(326	)
Debt instruments	(15,752	)
Interest rate USD offshore			(140)
Domestic/offshore interest rate spread USD			(1,042)
Total Interest rates			(25,708)
Banking spread			(212)
Total FX and FX Options			226
Total			(25,695)

The modeled scenario would generate losses in the Trading Book for approximately Ch$25,695 million. In any case, such fluctuations would not result in material losses compared to Basic Capital or to the P&L estimate for the next 12-months.

The impact on the Accrual Book as of September 30, 2023, which does not necessarily mean a net loss(gain) but a greater(lower) net income from funds generation (resulting net interest rate generation), is illustrated below:

Most Adverse Stress Scenario 12-Month Revenue
Accrual Book
(MCh$)

Impact by Base Interest Rate shocks	(270,845	)
Impact due to Spreads Shocks	1,148
Higher / (Lower) Net revenues	(269,697	)

The impact on the FVOCI portfolio it is show in the followings tables. First are the main fluctuation in the market factors, due to the scenarios provided for the stress test meltdown (more adverse), for this portfolio.

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Risk Management and Report, continued:

(3)

Market Risk, continued:

(b)

Price Risk, continued:

The sign of the fluctuation below, correspond to the ones that generate the most adverse impact.

Average Fluctuations of Market Factors for Maximum Stress Scenario

FVOCI Portfolio

	CLP Bonds (bps)		CLF Bonds (bps)		USD Offshore SOFR Derivatives (bps)		Spread USD On/Off Derivatives (bps)
Less than 1 year		107		496		28		1
Greater than 1 year		108		243		31		(5	)

bps = basis points

The worst impact on the Bank’s FVOCI portfolio as of September 30, 2023, as a result of the simulation process described above, is as follows:

Most Adverse Stress Scenario P&L Impact

FVOCI portfolio

(MCh$)

CLP Debt Instrument	(20,256	)
CLF Debt Instrument	(62,922	)
Interest rate USD offshore	(3,470	)
Domestic/offshore interest rate spread USD	—
Banking spread	(2,325	)
Corporative spread	(26,153	)
Total	(115,127	)

The modeled for the FVTOCI Portfolio would generate potential impacts on equity accounts for approximately Ch$115,127 million.

The main negative impact on the Trading Book would occur as a result of an increase in debt instruments in CLF over 1 year, followed by an increase in CLP debt instruments over 1 year, while in the case of the FVTOCI portfolio the main impact comes from upward fluctuations in interest rates of debt instruments in CLF greater than 1 year and from the simulated corporate spread. For its part, the lowest potential income in the next 12 months in the Accrual Book would occur in a scenario of a sharp drop in nominal interest rates and inflation.

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Risk Management and Report, continued:

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Other Information related to Financial Risks:

Implementation of new reference rates in foreign currency:

As a consequence of the decisions made by the United Kingdom Financial Conduct Authority (FCA) and the recommendations of the Alternative Reference Rates Committee (ARRC) made up of the Federal Reserve Board and the New York FED, from 12-31-2021 Libor rates in currencies other than US$ are no longer published, from 01-01-2022 new operations based on Libor stopped being issued and it was reported that from 06-30-2023 Libor in US$ will stop being published. As a result, it was recommended to use the US$ Libor published only in contracts in force as of 12-31-2021 up to the last date of publication of this.

Because of this, since 2020 the Bank has been enabling and implementing, in its different dimensions, the new risk-free reference rates (“RFR”) for carrying out operations in foreign currency as of 01-01-2022.

The process has been structured in 5 phases:

●

1st phase

Identification of the risks associated with the Libor transition process through the collection of information regarding the number of operations, amounts involved, remaining terms, types of products and course coins.

Periodic exchange of information with the main global banks regarding the RFRs that were being defined as a replacement for Libor rates.

Review of the documents published by the ARRC with its recommendations.

●

2nd phase

Preparation and presentation to the CMF in the year 2021 of the situational analysis of Banco de Chile regarding the end of Libor. This included reporting on the information research carried out in the 1st stage and the impact that the end of the Libor rate had both at the level of products and at the level of Bank areas.

●

3rd phase

Definition of the new RFRs to be used in the different currencies (daily SOFR, term SOFR, TONAR, SONIA, etc.)

Implementation of the RFR in the Bank’s systems

●

4th phase

Carrying out tests of course of financial operations to review the correct accrual of the new RFR.

Preparation of documentation with the RFR.

●

5th phase

Renegotiation of contracts with floating Libor rate with expiration after June 2023, in process.

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Other Information related to Financial Risks, continued:

FCA publication of April 03, 2023:

In November 2022, FCA announced a consultation on the possibility of continuing to publish synthetic USD LIBOR rates for 1, 3 and 6 months after the cessation of the defined LIBOR panel on June 30, 2023.

From the inquiry, on April 3, 2023 the FCA has announced that it will require the LIBOR panel to continue to publish 1, 3 and 6 month LIBOR rate adjustments using a ’synthetic’ non-representative methodology.

Likewise, the FCA intends to cease publishing synthetic adjustments on September 30, 2024, however, it will take into account any unforeseen and material events.

Offsetting of financial assets and liabilities:

The Bank trades financial derivatives with foreign counterparties using ISDA Master Agreement (International Swaps and Derivatives Association, Inc.), under legal jurisdiction of the City of New York – USA or London – United Kingdom. Legal framework in these jurisdictions, along with documentation mentioned, it allows Banco de Chile the right to anticipate the maturity of the transaction and then, offset the net value of those transactions in case of default of counterparty. Additionally, the Bank has negotiated with these counterparties an additional annex (CSA Credit Support Annex), that includes other credit mitigating, such as entering margins on a certain amount of net value of transactions, early termination (optional or mandatory) of transactions at certain dates in the future, coupon adjustment of transaction in exchange for payment of the debtor counterpart over a certain threshold amount, etc.

Below are detail the contracts susceptible to offset:

	Fair Value				Negative Fair Value of contracts with right to offset						Positive Fair Value of contracts with right to offset						Financial Collateral						Net Fair Value
	September		December		September			December			September			December			September			December			September		December
	2023		2022		2023			2022			2023			2022			2023			2022			2023		2022
	MCh$		MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$		MCh$

Derivative financial assets		2,505,068		2,987,106		(820,778	)		(1,014,141	)		(1,259,297	)		(1,508,710	)		(169,607	)		(180,863	)		255,386		283,392

Derivative financial liabilities		2,739,988		3,324,498		(820,778	)		(1,014,141	)		(1,259,297	)		(1,508,710	)		(255,324	)		(302,571	)		404,589		499,076

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(5)

Operational risk:

One of the Bank’s objectives is to monitor, control and maintain at adequate levels, the risk of losses resulting from a lack of adequacy or a failure of processes, personnel and/or internal systems, or due to external events. This definition includes legal risk and excludes strategic and reputational risk.

Operational risk is inherent in all activities, products and systems, and cuts across the entire organization in its strategic, business and support processes. It is the responsibility of all the Bank’s collaborators to manage and control the risks generated within their scope of action, since their materialization may lead to direct or indirect financial losses.

To face this risk, the Bank has defined a Regulatory Framework and a governance structure according to the volume and complexity of its activities. The Retail Credit Risk and Global Risk Control Division administer the management of this risk, through the establishment of an Operational Risk Management. Likewise, the “Superior Committee for Operational Risk” and the “Committee for Operational Risk” supervise it.

The Operational Risk Policy defines a comprehensive management model based on four main processes that ensure an adequate control environment in the organization.

These processes are implemented in the different areas of Operational Risk action, using various management and control tools:

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Operational risk, continued:

The aforementioned processes correspond to:

1. Identification and Evaluation: Identification and assessment is an important feature within operational risk management. At Banco de Chile, the identification and evaluation process considers internal and external factors, which allows the Bank to better understand operational risk, and thus allocate resources and define strategies efficiently and effectively.

The Bank promotes the use of methodologies and procedures with the objective of guaranteeing an adequate identification and evaluation of these risks, both inherent and residual. These are executed with a frequency that allows knowing the operational risks in a timely manner.

2. Control and Mitigation: Determination of acceptable risk levels and mitigation actions to be applied in case of deviation from these levels.

The control and mitigation process is an important characteristic within operational risk management, since its objective is to maintain risk at adequate levels.

Banco de Chile will execute a set of control and mitigation tools in the different areas of management, which will make it possible to alert deviations in exposure to operational risk, where mitigation measures will be evaluated to solve them.

3. Monitoring and Reporting: Monitoring and reporting is an important characteristic of operational risk management, since its objective is to guarantee the monitoring of the main risks and inform the different interested parties.

At Banco de Chile, monitoring and reporting will consider information related to the different areas of management. If necessary, the results of the monitoring activities will be included in the relevant government instances.

4. Operational Risk Culture: Continuous training and awareness of Bank employees with the aim of strengthening operational risk management.

The Operational Risk Management plans operational risk culture programs, aimed at raising awareness and training Bank employees in risk identification, control effectiveness, and event detection in their normal operating activities, so that each collaborator contributes to reduce the occurrence of risk events and mitigate their impact on the business. This may be done in coordination with the different organizational units as necessary.

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Risk Management and Report, continued:

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Operational risk, continued:

Additionally, the comprehensive management of Operational Risk considers the following areas:

−

Fraud Management: considers the permanent analysis of information (both internal and external) to identify risk points and behavior, defining and driving mitigation actions, aiming to improve security for our customers and reduce economic losses associated with this concept.

−

Process Assessment: considers the identification and assessment of risks and controls associated with all bank processes, constantly monitoring and determining acceptable risk levels and mitigation actions to be applied in the event of deviation from these levels.

−

Testing of Controls: consists of evaluating the operational effectiveness of the documented controls by risk operational through effectiveness tests, allowing to verify if the controls are correctly designed and implemented to prevent or detect a material error.

−

Event Management: Significant operational risk events, whether resulting in losses or not, are analyzed, controlled, and reported to the defined governance entities, in order to prevent them from recurring, with emphasis on proper process execution and promoting mitigating measures to ensure an adequate control environment.

−

Loss Base Management: Its purpose is to establish processes and procedures that allow the identification, collection and treatment of operational loss records, and their proper recording in the loss base, ensuring compliance with the regulatory requirements established in the methodology for the computation of operational risk weighted assets.

−

Profile and Risk Appetite Framework: Its objective is to determine the inherent risk profile of the institution, through methodologies that allow quantifying said profile. Additionally, Operational Risk management is aligned with the statements established in the Bank's Operational Risk Appetite Framework (“RAF”).

−

Operational Risk Capital Management: considers designing and ensuring the implementation of the measurement, reporting and control of stress testing models for operational risk, in accordance with the regulatory framework established for this area. Additionally, ensure the correct measurement and reporting of operational risk weighted assets.

−

Supplier Management: Its purpose is to identify, manage and monitor the risks that may arise from outsourcing services to external providers. For this, the Bank has a supplier management model that considers an analysis of criticality and risk associated with the services contracted and a scheme of evaluation and monitoring with special focus on those considered relevant.

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Operational risk, continued:

−

Self-Assessment Matrix: Its purpose is to comply with the established in Chapter 1-13 of the Actualized Standards Compilation for the Financial Market, where the management of both the Bank and its Subsidiaries must analyze and comment on the development of its risk management. This pronouncement considers each of the matters established in the standard, taking into account additional aspects related to management. In this context, the Operational Risk Management Department has the role of coordinator and general orchestrator of the exercise, consolidating results and reporting them to the corresponding government instances.

−

Operational Risk Assessment for Projects: The Bank is constantly working on project development, intensified in a digital transformation context, which includes the creation of new products and services, major technological implementations and operational changes in its processes. The implementation of these projects can lead to the emergence of new risks that must be properly mitigated prior to implementation, through the design of robust controls. For this, there is a methodological framework and specific tools that allow for an assessment of the different risks and controls, establish a general level of risk exposure, and determine mitigation actions in cases where necessary.

−

Subsidiary Control: It consists of verifying the Operational Risk policy of the subsidiaries in relation to the Bank. On the other hand, knowledge is taken of the management carried out by the subsidiaries and reported to their respective government instances. Finally, the corrective measures adopted in the event of deviations or contingency scenarios that could affect subsidiaries and/or the Bank are known.

All areas previously mentioned, together with the corresponding regulatory framework and governance structure, constitute the overall management of Operational Risk. Each of the areas is based on a process of identification, evaluation and mitigation of risks, whether or not they have been realized, which can lead to the definition of action plans or indicators that allow for adequate monitoring of each risk. In this way, Banco de Chile and its Subsidiaries ensure an adequate environment for the management of operational risk.

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Risk Management and Report, continued:

(5)

Operational risk, continued:

Below is the exposure to net loss, gross loss and recoveries due to operational risk events as of September 30, 2023 and 2022:

	September 2023							September 2022
Category	Lost Gross		Recoveries			Lost Net		Lost Gross		Recoveries			Lost Net
		MCh$		MCh$			MCh$		MCh$		MCh$			MCh$
Internal fraud		77		(14	)		63		58		(5	)		53
External fraud		16,397		(6,139	)		10,258		10,352		(4,182	)		6,170
Work practices and safety in the business position		1,367		—			1,367		845		(3	)		842
Customers, products and business practices		944		—			944		664		—			664
Damage to physical assets		809		(13	)		796		253		(3	)		250
Business interruption and system failures		366		—			366		115		—			115
Execution, delivery and process management		2,435		(601	)		1,834		2,348		(315	)		2,033
Total		22,395		(6,767	)		15,628		14,635		(4,508	)		10,127

Cybersecurity

The Engineering Management is in charge of defining, implementing and maximizing existing cyber threat protection technologies, and defining and maintaining the security architecture. The Cyber Defense Management is responsible for safeguarding information assets by proactively detecting, responding and containing threats. Likewise, this department is responsible for managing cybersecurity incidents in an assertive and timely manner, minimizing the impact and improving response times, with the aim of protecting the Bank's operations. The Strategic Management Sub-department is responsible for defining and managing and complying with the Strategic Plan of the Cybersecurity Division, guaranteeing the effective and efficient use of resources, and imparting and controlling the Cybersecurity guidelines to suppliers. The Technological Risk Management is in charge of identifying, evaluating, treating and reporting information security, technological and cybersecurity risks, this includes the management of technological risks in the Bank's projects. Furthermore, the Sub-Management of Cybersecurity Assurance has the responsibility of reviewing compliance with the Strategic Plan, policies, procedures and regulatory framework in terms of cybersecurity. It also develops and implements the Cybersecurity Awareness Program of the corporation. Finally, the Advanced Cyber Intelligence and Analytics Unit aims to obtain, analyze, and process timely information regarding threats, to provide cyber intelligence and facilitate decision-making within the corporation, in order to keep it safe, protected and resilient.

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(6)

Business Continuity:

The Bank in the management for the compliance with the objectives related to the delivery of the service of attention to its clients, has the Management of Business Continuity, responsible for managing the constant preparation for the safeguard of the operation of the critical products and services before situations that could affect the continuity of the organization or of the country.

In addition, the Business Continuity Management defines the global and regulatory framework established in the Policy and Standard, developing a consistent Continuity Plan for the Bank and its Subsidiaries, with the aim of managing the strategy and control of business continuity in operational and technological lines, maintaining alternate operation plans, controlled and simulation tests to reduce the impact of disruptive events, in addition to providing resilience to the organization by establishing comprehensive strategies to ensure the safety of the employees, protect the Bank's assets from catastrophic scenarios, maintain relevant documentation and carry out trainings associated with this subject.

That is why Business Continuity has methodologies and controls that contribute to the application of the integrated model within the corporation, mainly represented in the following management areas:

−

Document Management: It consists of carrying out methodological processes of updating the documentation that supports Business Continuity in operational and technological areas, with the aim of keeping the strategy implemented in the Bank up to date and in accordance with the guidelines of Business Continuity Management (BCM).

−

Business Continuity Tests: It refers to annually scheduled contingency simulations that address the 5 risk scenarios defined for the Bank (Failure in Technology Infrastructure, Failure in Physical Infrastructure, Massive Absence of Personnel, Failure in Critical Supplier Service and Cybersecurity), allowing to maintain constant training and integration of critical personnel operating the payment chain, under the defined contingency procedures that support the Bank's critical products and services.

−

Crisis Management: Internal process of the Bank that maintains and trains the key executive roles associated with the Crisis Groups in conjunction with the main recovery strategies and structures defined in the BCM model. In this way, it constantly strengthens the different areas necessary for preparation, execution and monitoring, which will allow to face crisis events in the Bank.

−

Critical Supplier Management: This involves the management, control and testing of Business Continuity Plans implemented by the suppliers involved in the processing of critical products and services for the Bank, associated with the risk scenarios established in direct relation to the contracted service.

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Risk Management and Report, continued:

(6)

Operational risk, continued:

−

Alternative Site Management: It includes the continuous management and control of secondary physical locations for the Bank's critical units, to keep the operation active in case of failure in the main work location. The objective is to protect and maintain the technological and operational functionalities of the alternative sites, to reduce recovery times in case of crisis and that activation is effective when its use is required.

−

Relations with subsidiaries and External Entities: It consists of the permanent control, management and leveling on the compliance of Subsidiaries under the methodology and strategic lines established by the Bank in crisis environments and Business Continuity Management. It also includes the global management with the requirements of internal and external regulators.

−

Continuous Improvement: considers the application of automation processes and the adaptation of resources used in the internal processes of the business continuity model, with the objective of improving response times in the delivery and analysis of information in contingencies, complementing the managed processes of the BCM.

−

Training: It includes the development and implementation of processes and instances prepared under different learning methodologies to strengthen and empower employees about the continuity of business model.

−

Cybersecurity Control: During the first half of 2023, the role of information security officer (ISO) is incorporated into the Retail Credit Risk and Global Risk Control Division, which has an independent function in charge of designing and implementing a monitoring environment of adequate definition and implementation of the information security and cybersecurity strategy and controls, as well as the independence of the control functions of the Cybersecurity Division. Additionally, with the purpose of reinforcing the independence of Technological Risk, there is a double dependence on both the Cybersecurity Division Manager (CSO) and the ISO in their evaluation and management of the risks of processes, information assets and projects.

The management and unification of the described areas, together with the compliance of the implemented regulations and the structured governability, constitute the Business Continuity Model of the Bank of Chile.

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48.

Information on Regulatory Capital and Capital Adequacy Ratios:

Requirements and Capital Management:

The main objectives of the Bank's capital management are to ensure the adequacy and quality of its capital, at a consolidated level, based on the adequate management of the risks it faces in its operations, establishing sufficient capital levels, through the definition of internal objectives, that supports both the business strategy in both normal and stress scenarios in the short and medium term, thus ensuring compliance with regulatory requirements, coverage of its material risks, a solid credit classification and the generation of adequate capital clearances. During 2023, the Bank has comfortably met the required capital requirements and its internal sufficiency objectives.

As part of its Capital Management Policy, the Bank has established capital sufficiency alerts and limits approved by the Board of Directors, which are monitored by the governance structures that the Bank has established for these purposes, including the Capital Management Committee. During 2023, none of the internal alerts defined by the Bank were activated as part of the Capital Risk Appetite Framework. In this sense, the Bank manages capital based on its strategic objectives, its risk profile and its ability to generate cash flows, as well as the economic and business context in which it operates. Consequently, the Bank may modify the amount of payment of dividends to its shareholders or issue basic capital, additional tier 1 capital or tier 2 capital instruments.

Capital Requirements

In accordance with the General Banking Law, the effective equity of a bank may not be less than 8% of its risk-weighted assets (RWA), net of required provisions. Additionally, it establishes that the Basic Capital may not be less than 4.5% of its APR or 3% of its total assets, net of required provisions. Regarding Tier 1 capital, corresponding to the sum of Basic Capital and Additional Tier 1 Capital, the latter in the form of bonds with no maturity date and preferred shares, it is established that it may not be less than 6% of their RWAs, net of required provisions. Likewise, banking entities must comply, as established by current regulations or regulators, with capital buffers, such as the conservation buffer, the systemically important buffer, the countercyclical buffer and/or capital charges by Pillar 2.

Adoption of the Basel III standard

In 2019, the CMF began the regulatory process for the implementation of Basel III standards in Chile, as established in Law No. 21,130 that modernizes banking legislation. During the years 2020 and 2021, the CMF promulgated the different regulations for the adoption of the Basel III standard for local banking, which are applicable as of December 1, 2021. The regulation includes the standard methodologies to determine, among others, Credit, Operational and Market Risk-Weighted Assets, regulatory capital, leverage ratio and systemically important banks. Additionally, the regulations describe requirements and conditions applicable to: (i) the application of internal models for the calculation of certain risk-weighted assets, (ii) the issuance of additional tier 1 and tier 2 capital hybrid instruments, (iii) market disclosure requirements (Pillar 3), (iv) the principles for determining capital buffers (countercyclical and conservation), (v) additional requirements to which banks defined as systemically important and (vi) the criteria by which banks can be defined as atypical and subject to more exhaustive supervision, as well as additional capital requirements (Pillar 2) among others.

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48.

Information on Regulatory Capital and Capital Adequacy Ratios, continued:

On March 31, 2023, the CMF ratified the systemically important banking feature of Banco de Chile, confirming a system cushion of 1.25% for the entity, with the graduality defined by the regulation. Likewise, based on the conclusions of the self-assessment of capital process for the year ended December 31, 2021, the CMF did not establish additional capital charges for Pillar 2 for the Bank.

On May 23, 2023, the Central Bank reported that its board agreed to activate the countercyclical capital requirement for banks, at a local banking industry level, equivalent to 0.5% of the risk-weighted assets of banking institutions, payable within one year.

The aforementioned Basel III banking solvency standards consider a series of transitory regulations. These measures include: i) the gradual adoption of the conservation buffer, requirements for systemic banks, ii) the gradual application of adjustments to regulatory capital, iii) the temporary substitution of additional tier 1 capital (AT1) for tier 2 capital instruments, that is, subordinated bonds and additional provisions and iv) gradualness to continue recognizing subordinated bonds issued by banking subsidiaries as effective equity, among other matters.

Information on regulatory capital and capital adequacy indicators is presented below:

		Total assets, risk-weighted assets and components of the effective equity according to Basel III	Local and Overall consolidated		Local and Overall consolidated
			Sep-2023		Dec-2022
Item No.		Item description	MCh$		MCh$

	1	Total assets according to the statement of financial position		55,153,335		55,255,362
	2	Non-consolidated investment in subsidiaries		—		—
	3	Assets discounted from regulatory capital, other than item 2		165,386		165,833
	4	Derivative credit equivalents		994,374		1,276,512
	4.1	Financial derivative contracts		2,505,068		2,987,106
	5	Contingent loans		2,649,156		2,756,396
	6	Assets generated by the intermediation of financial instruments		—		—
	7	= (1-2-3+4-4.1+5-6) Total assets for regulatory purposes		56,126,411		56,135,331
	8.a	Credit risk weighted assets, estimated according to the standard methodology (CRWA)		31,622,065		30,657,020
	8.b	Credit risk weighted assets, estimated according to internal methodologies (CRWA)		—		—
	9	Market risk weighted assets (MRWA)		1,519,328		1,365,367
	10	Operational risk weighted assets (ORWA)		3,917,066		3,630,835
	11.a	= (8.a/8.b+9+10) Risk-weighted assets (RWA)		37,058,459		35,653,222
	11.b	= (8.a/8.b+9+10) Risk-weighted assets, after application of the output floor (RWA)		37,058,459		35,653,222
	12	Owner's equity		5,026,132		4,858,325
	13	Non-controlling interest		1		2
	14	Goodwill		—		—
	15	Excess minority investments		—		—
	16	= (12+13-14-15) Core Tier 1 Capital (CET1)		5,026,133		4,858,327
	17	Additional deductions to core tier 1 capital, other than item 2		33,674		18,940
	18	= (16-17-2) Core Tier 1 Capital (CET1)		4,992,459		4,839,387
	19	Voluntary provisions (additional) imputed as additional Tier 1 capital (AT1)		185,292		178,266
	20	Subordinated bonds imputed as additional tier 1 capital (AT1)		—		—
	21	Preferred shares allocated to additional tier 1 capital (AT1)		—		—
	22	Bonds without a fixed term of maturity imputed to additional tier 1 capital (AT1)		—		—
	23	Discounts applied to AT1		—		—
	24	= (19+20+21+22-23) Additional Tier 1 Capital (AT1)		185,292		178,266
	25	= (18+24) Tier 1 Capital		5,177,751		5,017,653
	26	Voluntary provisions (additional) imputed as Tier 2 capital (T2)		395,276		383,213
	27	Subordinated bonds imputed as Tier 2 capital (T2)		990,496		972,550
	28	= (26+27) Equivalent tier 2 capital (T2)		1,385,772		1,355,763
	29	Discounts applied to T2		—		—
	30	= (28-29) Tier 2 capital (T2)		1,385,772		1,355,763
	31	= (25+30) Effective equity		6,563,523		6,373,416
	32	Additional basic capital required for the constitution of the conservation buffer		463,238		445,669
	33	Additional basic capital required to set up the countercyclical buffer		—		—
	34	Additional basic capital required for banks qualified as systemic		115,809		111,417
	35	Additional capital required for the evaluation of the adequacy of effective equity (Pillar 2)		—		—

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48.

Information on Regulatory Capital and Capital Adequacy Ratios, continued:

	Local and Overall consolidated			Local and Overall consolidated
	September - 2023			December - 2022
Capital Adequacy Ratios and Regulatory Compliance according to Basel III	%			%
Leverage Ratio		8.90	%		8.62	%
Leverage Ratio that the bank must meet, considering the minimum requirements		3	%		3	%
CET 1 Capital Ratio		13.47	%		13.57	%
CET 1 Capital Ratio that the bank must meet, considering the minimum requirements		4.81	%		4.81	%
Capital buffer shortfall		0	%		0	%
Tier 1 Capital Ratio		13.97	%		14.07	%
Tier 1 Capital Ratio that the bank must meet, considering the minimum requirements		6.00	%		6.00	%
Total or Regulatory Capital Ratio		17.71	%		17.88	%
Total or Regulatory Capital Ratio that the bank must meet, considering the minimum requirements		8.00	%		8.00	%
Total or Regulatory Capital Ratio that the bank must meet, considering the charge for article 35 bis		8.00	%		8.00	%
Total or Regulatory Capital Ratio that the bank must meet, considering the minimum requirements, conservation buffer and countercyclical buffer		9.25	%		9.25	%
Credit rating		A			A
Regulatory compliance for Capital Adequacy
Additional provisions computed in Tier 2 capital (T2) in relation to CRWA		1.25	%		1.25	%
Subordinated bonds computed as Tier 2 capital (T2) in relation to CET 1 Capital		19.71	%		20.02	%
Additional Tier 1 Capital (AT1) in relation to CET 1 Capital		3.71	%		3.68	%
Voluntary (additional) provisions and subordinated bonds computed as AT1 in relation to RWAs		0.50	%		0.50	%

219

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49.

Subsequent Events:

On October 6, 2023, the subsidiary Banchile Administradora General de Fondos S.A. reported that, on that same date, Ms. Catherine Tornel León presented her resignation from the position of Director of Banchile Administradora General de Fondos S.A.

On October 23, 2023, the subsidiary Banchile Administradora General de Fondos S.A. reported that, in a meeting held on the same date, the Company's Board of Directors appointed Mr. Francisco Javier Brancoli Bravo as Director.

The Interim Consolidated Financial Statements of Banco de Chile for the period ended September 30, 2023 were approved by the Directors on October 26, 2023.

In Management's opinion, there are no other significant subsequent events that affect or could affect the Interim Consolidated Financial Statements of Banco de Chile and its subsidiaries between September 30, 2023 and the date of issuance of these Interim Consolidated Financial Statements.

/s/ Héctor Hernández G.

/s/ Eduardo Ebensperger O.

Héctor Hernández G.

General Accounting Manager

Eduardo Ebensperger O.

Chief Executive Officer

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	Banco de Chile

	By:	/s/ Eduardo Ebensperger O.
		Eduardo Ebensperger O.
		CEO