Ladies and gentlemen, thank you for standing by. And I would like to welcome you to Banco Santander-Chile Results Conference Call on the 2nd of February, 2024. At this time, all participant lines are on listen-only mode. The format of the call today will be a presentation by the management team, followed by a question-and-answer session. So, without further ado, I would now like to pass the line to Mr. Emiliano Muratore, the CFO. Please go ahead, sir.

Good morning, everyone. Welcome to Banco Santander-Chile's fourth quarter 2023 results webcast and conference call. This is Emiliano Muratore, CFO and I'm joined today by Cristian Vicuna, Chief of Strategic Planning and Investor Relations; and Carmen Gloria Silva, our Economist. First, I want to express my gratitude for your presence at this quarterly meeting. Let's go down to business. We are here to discuss our performance during the fourth quarter. The macro conditions were more favorable than we anticipated in our last call, which helped our margins and net income recover. The Central Bank of Chile has continued its rate reduction strategy, which has had a positive impact on funding costs. We'll dive into the specifics of our quarterly results in a moment. Now I pass the line to Carmen Gloria for the macro update.

Thank you, Emiliano. On slide 5, I present a summary of the macro overview in the country. After a necessary process of macroeconomic adjustment, 2023 was marked as a year of strategic global economic growth, extended global financial conditions, and emerging geopolitical tensions. All of this occurred in a context where the process of inflationary convergence was consolidated, which facilitated the end of the cycle of rate hikes by the main monetary authorities. In this global environment, economic activity in Chile continued its deceleration during 2023. Investment persisted in the adjustment from previous years and private consumption presented year-on-year reduction in response to elevated interest rates and the continually deteriorating labor markets. Indeed, the labor force participation rate showed virtually no progress hovering around 61% for nearly the entire year below pre-pandemic levels, and the unemployment rate escalated to 8.5%. Despite this weakness, economic activity was bolstered by strong effects emanating from specific supply factors. On one hand, the added value of electricity generation received an additional impetus due to increased rainfall in the country. On the other hand, the mining sector displayed improved performance due to the start of new projects. The level of activity would have contracted marginally in 2023, exhibiting an annual variation of minus 0.2%, less than previously estimated. For the current year, economic activity is projected to grow at around 2%, propelled by a less restrictive financial environment, increased labor market dynamism during the latter half of the year, and the surge in mining production. This process will persist through 2025, culminating in an expansion of 2.5%. Domestic inflation continued its effect at a rate lower than anticipated. The CPI concluded 2023 with an annual variation of 3.9%, falling below what was projected. The adjustment in national energy prices, the quickening in domestic demand, a constructive monetary policy, and the appreciation of the exchange rate in the first half of the year were crucial for this decline. In the next month, inflation will persist in its downward trend until reaching 3% at the onset of the second quarter, and it will experience some temporary increases around that value until the year's end. As of January 2024, a new consumer basket was considered in the CPI calculation. According to our preliminary analysis, this new asset would not introduce any changes to the price dynamics. Lower inflationary pressures permitted the continuation of the monitoring amortization cycle. The Central Bank accumulated a reduction of 300 basis points in the monetary policy rate during 2023, concluding at 8.25%. For the current year, the reductions continue with a cut of 100 basis points in January, and for the coming meetings to be held at the beginning of April, a new record decrease is projected between 100 and 125 basis points, set to close at 4% at the year's end, close to its neutral value. The exchange rate has recently depreciated again beyond the value explained by its fundamentals. This upward trend exceeded that of certain other regional currencies in response to the minor rate differential. In our central scenario, the exchange rate would rectify its deviation and appreciate towards the year's end to levels approaching CLP 870, driven by the anticipated weakening in the zone globally, the recovery of international copper prices, and adjustments in the global monetary cycle, particularly by the U.S., which will alleviate pressure on the rate trend.

Thank you, Carmen Gloria. Turning our attention to slide 7. Let me begin by reminding you of our commitment to our four key strategic pillars that are part of our Chile First strategy. We would like to take the opportunity to highlight some of our main achievements in 2023. Firstly, we are the largest bank in Chile in terms of total volume, the sum of loans and deposits with a market share of 17.4%. Our place in the Dow Jones Sustainability Index for emerging markets was confirmed, being the only Chilean bank to qualify for this index, emphasizing our leadership in sustainability. In this context, we issued our first green bond for around $50 million under our ESG framework. This issuance was the first in Chile to stay green mortgage as the use of proceeds. Currently, we have a growing portfolio of approximately CLP 100 billion in green housing that complies with the highest housing energy certifications by the Ministry of Housing and Urban Planning in Chile. We offer preferential interest rates to clients using green housing, and we also contribute to consolidation and preservation projects in Chile. We continue to remain committed to financial inclusion through our digital initiatives Santander Life and Más Lucas. Just in 2023, we have facilitated access to a bank account for more than 167,000 people. The advances in our digital initiatives have driven our clients to reduce their cash transactions, allowing us to accelerate the transformation of our branches. By year-end 2023, we reached 91 Workcafés, including five Expresso branches, which we will hear more about in a few slides. Thanks to these advances, we have achieved the highest quality service among Chilean banks for the fourth consecutive year, with an NPS of 60. We have been recognized as the Best Bank in Chile by Euromoney and The Banker. Our earnings potential has been acknowledged by the market, with our total shareholder return reaching an impressive 35.8% in 2023, the highest among our Chilean peers and doubled the return of the Chilean stock index in 2023. Moreover, we announced our new investment plan for 2023 to 2026 for $150 million to continue with the modernization of our branch network as well as tech initiatives to progress with our strategic pillars. Now moving on to our strategy Chile First on page 8. First and foremost, we are seeing a transformative journey towards becoming a digital bank without branches. Our transformation into a digital bank is not only about adopting the latest technology but also about creating a physical presence through our innovative Workcafés. These spaces are more than just places to interact with customers; they are dynamic hubs that promote connectivity with advanced technology and our commitment to excellent service. Our Workcafés are designed to redefine the banking experience. Our second pillar is centered on providing specialized value-added services tailored to our corporate new markets and private banking clients. Our commitment is to deliver premium transactional trade, foreign exchange, and advisory products and services, ensuring our clients receive a top-notch experience. In our third pillar, we are committed to fostering innovation and proper lean growth. We are not content with the status quo. We aim to lead the change in redefining the banking landscape. We actively seek out new business opportunities, pioneering the sustainable transformation of our clients. By challenging conventions, we aim to drive growth and cultivate success. Lastly, we place great importance on the role of our organization. To realize our objectives, we are dedicated to building an agile, collaborative, and high-performance culture. We recognize that diversity is our strength, and individuals will flourish based on merit. We are constructing a thriving community where talents are nurtured and innovative ideas are highly valued. The outstanding success of our digital products has been firmly established in 2023, with the continued growth of our digital client base. Key initiatives such as Santander Life, and more recently, Más Lucas, have been instrumental in achieving this. The Más Lucas account was launched in March 2023 and is the first 100% digital savings account for the mass market. It now has over 117,000 clients, exceeding our initial expectations for the year, and it currently accounts for more than 30% of our new account openings per month. The onboarding process for Más Lucas is entirely digital, featuring facial recognition technology and no password requirements. This account comes with no fixed or variable costs and accepts deposits up to CLP 5 million. On slide 10, we can see how the advances of our digital strategy allow us to continue the transformation of the branch network through Workcafés to improve productivity. Our banks' Work/Café branches are expanding to cater to the specific needs of our clients. We have launched three new types of Work/Café formats, including the Work/Café Expresso, which consolidates cash operations into transaction hubs, while maintaining our work ambiance. This is a great initiative as it provides an efficient and secure banking experience for our customers. We have already opened five of these branches in 2023 and since its launch, the NPS of the Work/Café Expresso is 74 points, which has helped improve the overall opinion of the bank by 30 points. We also have our Work/Café StartUp, which offers a comprehensive solution to all the needs of entrepreneurs, especially to increase banking usage, carrying out finance programs with the bank, and even offering financing. This is a great way to support entrepreneurs and help them grow their business. Finally, we have launched Work/Café Inversiones, a dedicated asset management Work/Café designed especially for investment advice for clients, independent of their income situation. In this branch, we offer weekly talks about different investment products and economic trends to provide advice services and, in this way, support financial education. At the bottom of the page, you can see how the use of digital channels and the transformation of our branch network is leading to a strong decrease in our branch footprint, decreasing 24% in 2022, and a further 14% in 2023, reaching a total of 247 branches by year-end. Notably, 31% of our branches no longer have human sellers with these branches providing value-added services like our traditional Workcafés. At the same time, our productivity has continued to improve, with loan and deposit volumes per branch increasing by 24% year-over-year, and an 8.9% rise in the same metric per employee during the same period. On slide 11, we can see how our key initiatives with SMEs are driving impressive growth in this segment. Our digital life account for SMEs continues to drive a 19% year-over-year increase in total SME clients, with more than 386,000 SME clients. Moreover, there has been a 21% year-over-year increase in active SME clients, considering current account holders for businesses as reported by the CMF, with a remarkable 25% increase capturing close to 35% of the total market as of October 2023. Getnet, our acquiring business, continues to be an important driver for capturing new SME clients as well as expanding into larger clients requiring an optimal solution for more sophisticated clients needing a more integrated payment system. Currently, Getnet operates more than 163,000 active point of sale terminals across the country. During 2023, Getnet generated fees totaling CLP 45 billion and a net income of CLP 11 billion. Slide 12 illustrates how we have the best cost dynamics in the industry, and through tight cost control supported by our digital transformation, we have been able to exercise effective cost management during 2023. As you can see, with our growing client base and the launch of various Chile First initiatives such as Más Lucas and Work/Café Expresso, we managed to reduce our costs by CLP 57 billion. This reduction was thanks to proactively implementing higher standards in forecast portfolio online accounts and a dynamic management on credit cards. This among other initiatives enabled us to renegotiate our growth cybersecurity insurance. Furthermore, we are in the process of implementing Gravity, the Santander Group's home ground digital cloud-native core banking platform. This technology is unique in the industry and has helped Santander become the first major bank in the world with in-house software that digitalizes core banking, allowing the bank to serve our customers faster, better, more efficiently, and reliably. We are in Chile, in the final stage of the implementation of Gravity with Santander Consumer already implemented in 2023 and the rest of Santander-Chile in the first half of 2024. Our recurrence ratio, that is, our net fees divided by total expenses, is currently at 58%, substantially higher than the rest of the Chilean system. Therefore, the fees generated by our clients through current accounts and value-added products such as cards, insurance, and mutual funds cover 58% of our expenses. Our costs represent only 1.1% of our assets compared to 1.5% in the industry. These key performance indicators underscore our organization's transformation towards agility, collaboration, and high performance. On Slide 13, we're pleased to show that we have maintained our leadership in terms of our NPS, Net Promoter Score, creating a four-point lead in the fourth quarter with our closest peer and reaching a total of 60 points. Our NPS score is based on feedback from more than 50,000 surveys measuring over 30 NPS metrics across our various service channels on a daily basis. This invaluable feedback allows us to proactively manage and improve our client service. Our digital and remote channels continue to receive very high levels of satisfaction from our clients, with our app and our website reaching scores of about 70 points. Our contact center is also highly rated, outperforming our peers. On Slide 14, we can see how we are moving forward with our employees. For five consecutive years, we obtained the top employer certificate. During the year, we carried out three employee surveys called Your Voice, where we measure commitment, leadership, and SPF, Simple, Personal, and Fair. We can see in the graph how these indicators have been steadily improving. We also want to highlight that in January, we reached a new Collective Agreement with our 23 employee unions, including further employee benefits and adjustments to the working week to 40 hours, reaching the country's regulatory target years in advance. In terms of diversity, we continue to steadily increase the number of women in higher positions and Senior Management, and with our Board elections in April 23, we became the listed Chilean company with the highest participation of female directors on the Board. Slide 15 shows our impressive progress with our standard Responsible Banking goals. As you can see, a number of our original goals have already been met, such as being among the top employers in Chile, 100% of our energy coming from renewable sources thanks to our solar plant, the elimination of 100% of single-use plastic, and the granting of more than 19,000 scholarships and internships since 2019, surpassing the original goal and reaching 100% travel neutrality. Our remaining goals are progressing well and are on track to meet their targets for 2025. We have added an extra goal to have 40% to 60% of women on our board of directors, a target we achieved in 2023 with 44%. Going forward, we will be reviewing where our challenges lie for the coming years and setting ourselves more ambitious targets that I'm positive we will meet. On slide 16, we can see how our efforts are translating into recognition of our leadership in the Chilean banking industry. In 2023, The Banker awarded us the best bank in Chile, while Euromoney recognized us as the best bank in Chile and best bank for SMEs, corporate social responsibility, diversity and inclusion, and ESG. Furthermore, Global Finance also awarded us the Best Bank for SMEs, and we gained recognition for our commitment to sustainability in the Latin Trade Index America Sustainability Awards 2023. Additionally, our advancements in sustainability have been recognized by prominent sustainability industries, receiving solid ratings from Sustainalytics and MSCI. More recently, we were confirmed as the only Chilean bank to qualify for the Dow Jones Sustainability Index for global emerging companies. Now let's talk about the trends in our results and balance sheet in 2023 on the fourth quarter. On slide 18, we show our results for 2023. As you can see on the quarterly graph, the net income attributable to shareholders rebounded very strongly, producing the highest quarterly ROE in the year of 16.6%. With this accumulated net income of 2023 totaling CLP 496 billion, decreasing 39% year-over-year impacted by the pressure on margins from the higher cost of funding. Our operating segments, excluding the corporate centers and ALM, continued to perform well with a 34.7% year-over-year increase in their net contribution, showing an important expansion in NII and fees while costs demonstrated the results of our strategy across segments. Furthermore, the book value of our equity increased 5.8% year-over-year, with our TNAV per share and dividend per share growing 12%. Overall, the accumulated return over our average equity for the year reached 11.9%. The results of our corporate and investment banking, or CIB, have continued to be impressive, increasing a 65% year-over-year growth. Net contribution from the middle market of corporates increased 27.9% year-over-year. Both of these commercial segments experienced an important rise in deposit spreads as well as high growth of fees and treasury income. The focus of this segment continues to be on our non-lending activities driving profitability. On slide 20, we can see that retail banking results increased 25.6% year-over-year, driven by the greater client base and increased activity by our clients. Our active individual client base included 88,000 private banking and wealth management clients from 62,700 Santander Consumer clients. Total individual active clients increased by 8.1% year-over-year. Meanwhile, our active individual clients have grown 20.9% compared to December last year. The margin in this segment increased by 22.3% year-over-year due to a better mix of funding and loan growth. Fees in this segment increased strongly by 21.1% year-over-year, driven by greater usage and the increase in the client base, as well as the fees generated by Getnet. Provisions increased by 56.7% year-over-year due to the growth of the portfolio, slowing economic growth, and the normalization of asset quality of our retail loans after historically low levels of nonperforming loans due to the increased liquidity of our clients in recent periods. Operating costs increased in a controlled manner by 4.1% year-over-year as the bank continues its digital transformation, generating greater operating efficiency. On slide 21 in the fourth quarter, loan growth was driven by retail lending. Retail banking loans grew 3.1% quarter-on-quarter and 7.3% year-over-year, driven by growth in mortgages. In recent periods, the origination of new mortgage loans has decreased due to high inflation and rates. However, in the second half of the year, mortgage loans once again grew stronger than inflation, reaching a growth of 2.5% in the quarter and 8.5% year-over-year as clients adjusted to market conditions. Consumer lending grew by 6% year-over-year, mainly due to credit card growth after quarters of contraction. Between the end of 2019 and 2021, these loans decreased by 7%, as clients reduced large purchases such as travel and hotels, which fueled credit card loans. At the same time, many clients paid off credit card debt with the liquidity from government transfers and pension funds. By the end of 2022, as household liquidity levels returned to normal and holiday travel resumed, credit card loans began to grow again. Retail banking loans grew by 3.1% in the quarter and 7.3% since December 31, 2022, driven by growth in mortgages. In recent periods, the origination of new mortgage loans has decreased due to high inflation and rates. SME loans grew by 2.4% in the quarter, and as the COVID FOGAPE loans are now finishing, we are seeing a reactivation in demand for loans as well as the impact from the expansion of the SME client base through our digital accounts and Getnet. Our Middle Market segment decreased by 2.1% year-over-year and grew by 1.5% in the quarter. This increase is mainly due to the effect of translation gains on loans in dollars for our import and export clients. Around 21% of our commercial loans are in USD, and the Chilean peso depreciated 2.9% in 2023. This also explained in part by the 3.3% year-over-year increase in CIB and the 1.5% decrease in the quarter. Overall, loans have grown 5.3% year-over-year, and we expect loan growth to remain around mid-single digits in 2024. Slide 22. Liquidity levels remained strong in the quarter. The bank's total deposits increased by 3.9% quarter-on-quarter and 9.6% year-over-year. The increase was driven by time deposits that increased 3.1% quarter-on-quarter and 24.3% year-over-year, mainly due to an increase in large corporate deposits as the high interest rates remain attractive to clients, while our demand deposits have decreased by 3.9% year-over-year due to a shift to time deposits. At year-end, there was a strong increase of 4.9% quarter-on-quarter in demand deposits as our clients maintained higher liquidity levels. Our client investments through mutual funds intermediated by the bank also grew in the quarter, reaching an increase of 5.4% quarter-on-quarter and 25% during the year. Bonds issued increased by 9.8% year-over-year and 1.1% for the quarter. During the year, the bank has issued bonds in USD, Chilean pesos, dollars, and Japanese yens, taking advantage of attractive opportunities in various fixed income markets locally and abroad. In the first days of 2024, the bank issued a senior bond for a total of CHF 225 million in the Swiss market, with a term of three years and a rate of 2.445%. It has been a while since we tapped this market, and we saw great interest and demand from investors. The bank's liquidity coverage ratio, which measures the percentage of liquid assets over net cash outflows as of December 31, 2023, was 202%, well above the minimum. On the same day, the bank's net stable funding ratio (NSFR), which measures the percentage of illiquid assets financed through stable funding sources, reached 106.5%, also well above the current regulatory minimum set for this ratio. On Slide 23, we have simplified the balance sheet to explain the different sensitivities on our structural balance sheet. In terms of inflation, on the asset side, we have around $45 billion in loans, of which nearly 60% is linked to inflation. On the liability side, the bank does have some deposits and bonds in UF; however, we also use derivatives to control our exposure to inflation. Regarding interest rates, our time deposits, some $18 billion have a maturity of 30 to 60 days in general. This means that with rate increases, the cost of funding increases quickly; however, now that rate cuts have started, the pass-through for our cost of funding is relatively quick. We also have interest sensitivity due to the FCIC line from the Central Bank. At the beginning of the pandemic, the bank received a fixed-rate credit line from the Central Bank as part of the FCIC program, which we swapped to a variable rate in 2020. The FCIC is to be paid in two installments during 2024 on April 1 and July 1. In October 2023, the Central Bank launched a liquidity deposit program that offers Central Bank instruments with floating monetary policy rates, with maturities matching the FCIC payment base. The bank began to replace part of the Central Bank papers that were in the available-for-sale portfolio with these liquidity deposits recognized in the held-to-collect portfolio. As of December 31, 2023, the bank has invested $3.9 billion in this instrument. For us, the payment of the FCIC will not significantly impact our NII, as we will be paying a variable rate liability with the variable rate decrease in deposits from the Central Bank. In terms of our net interest margin (NIM) ratio, we should see an improvement as the denominator of our interest-earning assets decreases as we use our liquidity assets for the payments. In terms of margins, the bank's NIM in the quarter reached 2.9% and 2.2% for the year. As shown on this slide, we separate our client NIM from our ALM activities. The client NIM, defined as NII from our business segments over interest-earning assets, has increased as deposits on loans spread up risen. However, our non-client NIM shows the effects of the U.S. GAAP between our assets and liabilities and our liquidity management. In general, the bank is well-positioned for a fall in real rates with our liabilities repricing faster than our assets. The variation of the U.S. in the fourth quarter was very high at 1.6%. However, we are expecting very low inflation for the first quarter of 2024. This pass-through of the lowering variation in the U.S. on our merger will be immediate and will pressure our margin gains downward at the beginning of this year. Meanwhile, the Central Bank of Chile cut interest rates again by 100 basis points in January, and we expect further cuts in the coming quarters. For 2024, we expect our NIMs to start weaker than the fourth quarter. However, recovering strongly as the year goes on to reach total NIMs of 3% to 3.5% for 2024, depending on the evolution of rate cuts in Chile. Moving on to asset quality on Slide 25. The NPL ratio reached 2.3%, a little below current trends due to our calendar effect at December 31. The coverage of NPLs as of December 2023 reached 157%, and there has been no reversal of voluntary provision. Our impaired loan ratio, which includes NPLs and restructured loans, reached 5.6%, still below pre-pandemic levels but showing the same upward trend. We believe that NPLs will continue to increase slightly as asset quality follows the economic cycle on the labor market. On Slide 26, we show how the asset quality of the loan product was over the last four years. At this point, we now have higher coverage for all our products while the NPL ratio has been rising—the impaired ratio remains under control for consumer and mortgage loans. Our commercial loan book is showing more signs of deterioration, with NPLs reaching 3% and the impaired ratio of 7.6%. As we can see on the graph on the right, most of the effect is concentrated on small and medium-sized companies. As a reminder, these SME loans account for around 9% of our total loan book. As we can see on Slide 27, overall, our cost of trade remained in line with our guidance of 1.2%. In the graph on the bottom left, we can see how the cost of risk per segment is now similar to where we were before the pandemic. We expect the cost of credit to remain at these levels for 2024, with a better performance in the second semester. On Slide 28, we move to non-net interest income revenue sources, which continue showing exceptional growth trends. Income from fees on treasury rose 6.4% compared to the fourth quarter in 2022 and decreased 5.2% in the quarter. This decrease was mainly due to lower insurance brokerage and lower collection fees. However, commissions from our products continue with good trends. The gradual implementation of the new interchange fee regulation began in October and will reduce fee growth in the fourth quarter, and we estimate a negative impact on 2024 of CLP 25 billion and CLP 47 million for 2025. Considering this impact for 2024, we expect these line items to grow around 8%, with strong growth from client and products mitigating the interchange fee impact. The results from financial transactions increased by 37.9% year-over-year, mainly due to higher gains on foreign exchange hedges, and decreased 30.2% quarter-on-quarter, mainly due to negative results in the inefficiency of purchasing the portfolio managed by financial management on the sale of portfolios in the period. As shown on Slide 29, we can also see the bank's efforts to continue increasing productivity and controlling costs. Operating expenses decreased by 5.6% year-over-year and increased by 3% in the quarter. The quarterly decrease in personnel expenses is mainly due to lower spending on certain incentives in the fourth quarter in line with the decrease in the number of branches. Meanwhile, our administrative expenses grew by 18% in the quarter, mainly due to higher IT and communication expenses and outsourced services such as technological developments in the quarter. During 2023, the bank focused on advancing in the execution of an investment plan of $450 million for the years 2023 to 2026, with a focus on digital initiatives and the renovation of branches. Moving on to Slide 30, we observed a positive evolution of our capital ratio. At the end of the fourth quarter of 2023, the bank reported a core equity ratio of 11.1% and a total ratio of 17.6% after the distribution of annual dividends that amounted to 60% of the 2022 earnings. In May, the regulator announced that from next year, TB banks will need to include a countercyclical buffer of 0.5%. This, along with a conservation buffer of 2.5% and the systemic buffer of 1.5%, means that our minimum fully loaded capital will be 9% in December 2025. On January 17, 2024, the CMF applied the current regulation on additional capital requirements according to Pillar II, which contemplates two main topics: credit concentration risk and the market risk of the banking book. Our Pillar II requirement was established for six banks in the Chilean system. They did not apply any charge to Santander Chile on this occasion. However, the measurement of the market risk of the banking book will continue to be discussed, and capital charges may be imposed in the coming years. On Slide 32, we conclude with some guidance for 2024. Our strategy as a digital bank with Workcafés will continue to provide us with a greater digital client base with solid growth and advances in operational efficiencies. For 2024, our market expectations are more positive, with an estimated GDP of close to 2% and a UF variation around 2.5%, with a monetary policy rating ending 2024 at 4%. With this, we expect loan growth to reach mid-single digits after the economy reactivates. As rates continue to fall, our margins will continue to recover, reaching a rate of 3% to 3.5% in 2024. Depending on the evolution of rate cuts, non-NII should be growing around 8% with good customer product trends, but impacted by lower interchange fees. The cost of risk should stabilize during the year around 1.2%, with asset quality following the economic cycle. Costs should grow in line with inflation while maintaining best-in-class levels, and effective tax rates will normalize. With all of this, our ROE for 2024 will be recovering towards normalized levels around 15% to 17%, with the first quarter of 2024 impacted by the low quarter inflation and reaching an ROE in the neighborhood of 10% in the first quarter, with profitability improving during the year. Finally, our guidance for long-term ROE remains unchanged at between 17% to 19%. With this, I finish my presentation, and now we will gladly answer any questions you have.

Thank you for the presentation. We will now move to the Q&A part of the call. Our first question comes from Mr. Tito Labarta from Goldman Sachs. Please go ahead, sir.

Hi. Good morning. Thank you for the call and taking my questions. A couple of questions, if I can. Just to follow up a little bit on the asset quality and loan growth, right? I mean, you're seeing a little deterioration there, but I think as you mentioned more normalization. Just how much more do you think you could expect in terms of asset quality deterioration and in terms of how that could impact the loan growth, right? If things cover faster than expected, do you think there could be upside to your loan growth? Or any risk to get into that mid-single-digit loan growth? And maybe just some color on the loan growth by the different segments where you see the bigger opportunities? Thank you.

Thanks, Tito. So first on the loan growth part, we don't see relevant risks regarding our guidance of mid-single digits at 6%. We see different composition in the way that growth should happen. We see more opportunities in the second half of the year for our consumer loan portfolio due to lower rates, lower short-term rates that are going to be probably in the market by the third quarter. Apart from that, we don't see any extraordinary risks to our guidance. We should see relevant growth in our retail portfolio of SMEs and personal loans compared to our larger corporate customers. Regarding the cost of risk, we're currently at a 1.2% cost of credit. We see some pressures that are coming along with the cycle. Our employment is closing in on 9% to 10% for the country. So this is pressuring a little the NPLs. So NPLs would be going up to 2.5% to maybe 2.6% levels in the first part of the period and then normalizing; we see a more favorable second half of the year. So we are thinking of a total yield guidance of 1.2% for the cost of credit.

Okay. That’s very clear. Thank you.

Thank you very much. Our next question comes from Mr. Ernesto Gabilondo from Bank of America. Please go ahead, sir.

Thank you. Hi, good morning, Emiliano and Cristian. Thanks for taking my call. I have a couple of questions from my side. The first one will be on your NIM guidance. So when making the numbers, I believe you're expecting NIM expansion between 110 and 130 basis points to 3%, 3.5%. So having said that, can you walk us through on how should we expect NIM during 2024, especially considering the maturity of the derivative hedge and after paying back the credit line to the Central Bank? So, I was wondering if we can divide how should we expect NIM for the first half and NIM for the second half? And then my second question will be on Santander Life. Can you talk a little bit more about how profitable is already Santander Life? I don't know if you can share a P&L for this segment, what could be like the efficiency and the ROE for this segment? And I don't know if you have a medium-term target for this business? Thank you.

Hello, Ernesto. This is Emiliano. Thank you for your question. I'll answer the first part, and Cristian will address the second. Regarding the NIM profile for the year, it would be beneficial to look at the NIM slide that illustrates the quarterly changes in 2023. The NIM is influenced by both inflation levels and interest rates. As noted in the fourth quarter of last year, while rates remained high, the inflation rate was sufficient to maintain a NIM close to 3% for that quarter. In 2024, we anticipate that the first half will see a lower NIM compared to the annual total, primarily due to two reasons. Firstly, the negative CPI in December impacts the UF in the first quarter, leading to a projected NIM in the low 2% range, assuming low inflation holds true and that the rates are evolving positively for our balance sheet following the Central Bank's 100 basis point cut. This also informs our guidance. Moving into the latter half of the year, we expect NIM to increase as interest rates decline and inflation settles around a 2.5 to 2.7 UF variation for the year. The second half should see NIM exceeding 3.5, likely driven by the interplay of rates and inflation. Additionally, the expiration of the FCIC will significantly reduce the denominator on the balance sheet, leading to a decrease in total interest-bearing assets. We plan to reduce leverage by settling that liability with short-term securities, which will elevate the NIM above 3.5 in the second half. Thus, we expect to finish the year with a NIM between 3 and 3.5, contingent on inflation and rate developments throughout the year.

Thank you for the Life question, Ernesto. While we are not disclosing yet specific P&L for Life, I can give you some numbers for your better understanding of the initiative. Currently, we have about $1.3 billion in customer deposits related to Life and about $100 million in consumer loans in the Life account. Fees for the segment mean about $32 million a year in card fees for ourselves. So, the monthly fee that the customer pays to access the card costs about $3. We currently have close to 100% of our Life customers on a beta model with no relationship manager tracking them, so that's very, very helpful for us to drive the cost of serving the customer very low. The customer acquisition cost for every single Life customer is paid within three months, meaning that on the fourth month, that a Life customer gets into the bank, it's already profitable. So, those are some figures to give you some flavor of how the Life segment is currently performing.

Thank you very much, Emiliano and Cristian. Just a follow-up on Santander Life. So, how many clients do you have today? I don't know if you have a target to get or to approach a certain amount of clients.

So, currently in terms of current accounts, total current customers for the bank, we have about 300,000— a little more than 300,000 SME customers, 1.3 million Life current account customers, and about one million traditional current accounts. So that's 2.6 million current accounts in total. We're aiming to get to an area of 4.5 million customers by 2026. So we are closely monitoring these figures to drive our customer expansion.

Hey guys. Thank you very much for taking my question. I have a first one regarding the normalization of taxes. In the guidance, what does normalized tax mean like, if you can provide a range on that? Then I would like to ask about deposits. When we—I like a lot you're breaking down by business units, right to have the retail, the middle, the corporate. But when I check the deposits growth, it seems that most growth is coming from CIB, right? Like potentially larger, more wholesale kind of funding. So my question is what are you seeing on the funding side? Are you, like, I don't know maybe households? They're still in a more challenging scenario, and you don't see a lot of retail deposits. But just want to get some help to understand a little bit about the funding cost on the bank going forward because a point of concern is that the wholesale funding may be a little bit more expensive. So, I'd like to get your thoughts on this different deposit growth. And then I may do a follow-up. Thank you.

Thank you, Yuri. I'll address the tax question, and Emiliano will respond to the first one. The tax rate for Chilean NTV operations is 27%. Historically, our tax rate during normal inflation years, without considering dollar effects, ranges from 23% to 25%. We anticipate inflation to be around 2.5% this year, which should allow us to reach those levels. Additionally, Emiliano will elaborate on this, but there tends to be some seasonality in the last quarter regarding how corporations manage their end-of-year deposits. This often leads to a flight to quality, resulting in increased investment flows from those companies in December.

Hello Yuri, thank you for your question. Now, regarding the cost of funds or cost of deposits, I think that going forward we have two main tailwinds. First is like the rates going down, so the cost of time deposits will decline significantly during the year. We've been doing a very aggressive tactic in terms of pricing the different segments in individuals and SMEs trying to increase the margin coming from time deposits. Actually, when you look at the beta—taking the beta, the average cost of time deposits in pesos for the whole bank compared to the monetary policy rate, we were able to take that from 92% to 93% of the rate to close to 80% to 82%. I mean, that's because we've been—let's say, implied as you mentioned, some loss of balances from maybe affluent or private banking clients that are more price-sensitive. But overall, this strategy was very profitable for us. So, the cost of time deposits will be positive going forward. The second is the mix. As you pointed out, the wholesale or middle market to bigger corporates has been doing better in terms of liability balances, but it's also true that it was the first segment to stop falling in demand deposits and stabilize. Now starting to grow demand deposits, which are non-interest bearing. So, also, the mix between time and demand deposits that was part of the headwind we had over the last few years due to the level of rates and the opportunity cost that the clients had. Now, going forward, we expect that mix to start improving from where we are now, and we are relatively optimistic with how the cost of funds will support the NIMs going forward.

Super helpful Emiliano and Cristian. If I may just on a more strategic question here on the client mix, you discussed Life previously and you have this breakdown of customers by segmentation. You were doing Getnet, you have the Delta strategy. My question to you is regarding the mix of clients going forward, right? Historically, I think you — most of your retail clients, they are higher income. Is there any change to that? Like is Santander willing to go more lower income in Chile? Like how should we think about your positioning on the customer mix in Chile going forward? Thank you.

Yes, I mean definitely as you said if you compare the mix in terms of the number of clients, now our composition is much more geared towards the middle lower part of the pyramid. I would say that the main driver for that switch of the strategy, going forward is digitalization, right? The cost to serve clients with branches and with an account representative for each client is a very expensive model to serve. This historically produced that only middle to high-income individuals were able to create enough revenue to sustain such an expensive model. Now, with the work we've done in developing digital solutions, we can serve any kind of clients cost-effectively. The Life initiative—because of the balances it created in terms of deposits and also the credit presentation we are seeing—is a very profitable source of business for us. So, yes, we are ambitious to grow in the number of clients, and in the composition, compared to 5 or 10 years ago, it will be much more massive. At this moment of the cycle, we don't have any specific high appetite for lending and for credit because we are seeing the economy still coming out of recession. However, definitely, this will provide some raw material going forward to cross-sell or upsell, and even the pure transactionality with how efficient we are in the digital solutions makes a business case to sustain the client for their payments and transactionality. Looking forward, we'll be prepared to upsell and cross-sell depending on their behavior and profiles.

Hi. Thank you for taking my questions. Could I clarify on the liquidity? After you repay the Central Bank bonds during the middle of this year, should that pressure your liquidity? Could you clarify that? I think you have deposits to cover for it. But if you could just clarify any impact on liquidity coming from that? And my second question is on asset quality. You mentioned issues in the SMEs. But any other part of the loan book where you're seeing stress? And any extraordinary provisions that you would like to make during the year for any of these segments? Thank you so much.

Hello, Neha. Thank you for your question. I'll take the first one and I'll leave the second one for Cristian. So regarding the maturity of the FCIC, that won't create any liquidity pressure because, as we mentioned in past calls, the Central Bank established a phase-out strategy or regulation for banks that basically forced banks to start buying high liquid assets starting January 2023 to cover 100% of the maturity of the FCIC. What that means is that by the date of the maturity, we and all the rest of the banks will have 100% of that money in short-term or highly liquid assets. That’s why, in terms of the calculation of the NIM and any other ratio that uses total assets or interest-bearing assets as a numerator, that won't create an impact. At the end, we have roughly speaking about 10% of the assets in that facility that will go away together with the liability. So, in terms of liquidity, we can reach that maturity with 100% pre-funding, and that won't impact. It has been impacting, if you want, during this last year, and by the date of maturity, we will have it fully funded.

So, Neha, regarding a deep dive into our asset quality, first, we’re very happy with the current performance of our consumer loan book. It's actually very, very healthy. Regarding the mortgage loan, we are monitoring very closely the performance because there are some specific parts of the portfolio that are suffering due to higher rates and inflation over the last years that have increased their monthly payments. However, it's very concentrated in a specific and small part of the mortgage portfolio. In the commercial portfolio, let me remind you that we have about a 14% total market share for the commercial portfolio. When you look at how it's composed, we have about an 11% market share in single-name, individual large middle market corporates and about a 20% market share in the SME portfolio. So, we feel quite comfortable with the larger part of the portfolio being commercial, middle market, and corporate. But in the SMEs, we see pressures in three specific industries: construction and real estate, which has been a problem worldwide, very, very short-term funding stressed by higher rates and increased costs of materials and construction. We also have agricultural issues in Chile due to flooding from the El Niño event in the third quarter that impacted crops, and hotels and restaurants have been suffering since 2019 due to COVID and specific problems there within the SME portfolio. Overall, we see this as very contained, but I hope that gives you a little more understanding of how this will be going forward.

Hello. Thanks for the presentation. How do you expect to build the addressable market size of lower-income clients and thus the profitability of digital initiatives targeting those segments considering the regulators increasing some loan loss provisioning needs and capital needs? Thanks.

So Thomas, can you explain a little more your question? So I didn't really get what…

Well, my question is, how do you expect—what's your expectation for the total market size of lower-income clients to evolve given that the regulator has increased some loan loss provisioning needs? Or at least is targeting to increase those loan loss provisioning needs? My question revolves around if you expect to still be profitable with those digital initiatives you're targeting given that the total size of potential clients could decrease?

Yes. So, Ewald, I'll take it. Your question implies more on the economics of lending, which definitely is a revenue source for our business. That's kind of a middle-to-low part of the pyramid clients like most of Life clients, also Más Lucas clients. We can make money without lending much. Our customer acquisition cost for those digital clients—earlier in the life cycle, it was about $1 or $2. That was very good to maintain. Now we are closer to $7-$10 of customer acquisition costs. When you look at the lifetime value of those clients, especially on liabilities rationality on met businesses, you see you make back your costs close to four or five months. I mean, then you have some attrition. So we think we can make a profitable business with that number of clients, despite the fact that when we consider lending, and when we start penetrating them with different products for lending, we have to factor in, as you said, higher costs in provisioning and also in capital. But we do expect to keep being profitable in acquiring those kinds of clients despite the higher regulatory pressure on our volume.

Hi. Good morning, and thank you for the presentation. I have a couple of questions. The first is regarding the performance of the new credit card loans. We saw during the last quarter an impressive pace of growth with double-digit growth year-over-year. I would like to understand if you are feeling comfortable with the performance of these loans with these new vintages, or should we start to think that the performance is worse than, for example, the loans that were disposed at the beginning of 2023 or 2022? That would be the first question. The second is regarding the guidance of ROE. Just trying to understand the 15% to 17% range that you provided in the presentation. Is that the full year ROE? Because if we start with the first quarter with a 10% ROE, it means that in the second half of the year, we should be close to 20% or even above? Thank you so much.

Daniel, thank you for your question. Let me start with the second one. Yes, that is the full year guidance for ROE. As you mentioned, starting with a 10% fourth quarter, assuming the path of rates—that even after the Wednesday meeting, the Central Bank has stated that the neutral rate of 4% will be reached during the second half. You get ROEs close to 20%, which gives you that average of 15% to 17% for the full year. Regarding asset quality in credit cards, I mean, we are comfortable. When you look at the graph of the evolution of the credit cards, you have to factor in the effect of inflation. The credit card business is very tightly linked to inflation. So when you look at the evolution of the balances in real terms, let's say we are going back to the pre-pandemic levels. Basically, what happened was that households got a lot of liquidity from the pension funds and government transfers during the pandemic. Part of that liquidity was spent; some was invested, and part of it was used to pay back debt—a sort of deleveraging during the pandemic. And now they are going back to normal levels of leverage. We know quite well that the clients have their profiles, and we are not seeing a specific deterioration of the new businesses in the credit card segment.

Thank you very much. It looks like we have no further questions. I'll pass the line back to the management team for the concluding remarks.

Thank you all very much for taking the time to participate in today's call. We look forward to speaking with you again soon.

Thank you very much. This concludes today's conference call. We'll now be closing all the lines. Thank you and goodbye.