SEC Filing | Banco Santander Chile

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FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

Commission File Number: 001-14554

Banco Santander Chile

Santander Chile Bank

(Translation of Registrant’s Name into English)

Bandera 140

Santiago, Chile

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F

Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

IMPORTANT NOTICE

The unaudited financial statements included in this 6K have been prepared in accordance with the Compendium of Accounting Standards issued by the Superintendency of Banks and Financial Institutions (SBIF) of Chile. The accounting principles issued by the SBIF are substantially similar to IFRS, but there are some exceptions. The SBIF is the banking industry regulator that according to article 15 of the General Banking Law, establishes the accounting principles to be used by the banking industry. For those principles not covered by the Compendium of Accounting Standards, banks can use generally accepted accounting principles issued by the Chilean Accountant’s Association AG and which coincides with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). In the event that discrepancies exist between the accounting principles issued by the SBIF (Compendium of Accounting Standards) and IFRS, the Compendium of Accounting Standards will take precedence. The Notes to the unaudited consolidated financial statements contain additional information to that submitted in the Unaudited Consolidated Statement of Financial Position, Unaudited Consolidated Statement of Income, Unaudited Consolidated Statement of Comprehensive Income, Unaudited Consolidated Statement of Changes in Equity and Unaudited Consolidated Statement of Cash Flows. These notes provide a narrative description of such statements. Banco Santander Chile’s net income attributable to shareholders in the nine-month period ended September 30, 2014 totaled Ch$411,590 million increasing 53.6% compared to the same nine-month period of 2013. It is important to point out that the Bank’s results as of September 30, 2014 included three one-time impacts that were recognized in the third quarter of this year:

1. The Bank recognized a one-time non-cash income of Ch$35,411 million in the line item income tax expense in September 2014 when Chile’s new tax bill became effective. The new tax bill increased the statutory tax rate to 21% in 2014, which was retroactive for the entire year of 2014. The rate will then increase to 22.5% in 2015 and 24% in 2016. As a result of this change in tax rate, the Bank had to recalculate its deferred tax assets and liabilities utilizing the 27% statutory tax rate, resulting in the abovementioned non-cash gain. This effect mainly arises from the difference between the Bank’s accounting and tax books regarding how provisions and charge-offs are recognized. For more detail please see Nota2b of the attached Financial Statements.

2. The Bank recognized a one-time non-cash expenses of Ch$36,577 million from the accelerated charge-off of intangibles, mainly software in September 2014. In past periods, the Bank has invested significantly in systems and software. These systems were usually amortized in 3 years, but with the new systems developed by the Bank, some older ones that were not contributing to the Bank’s PNL were charged-off in line with paragraph 59 of IAS 36. For more detail, please see Nota30c of the attached Financial Statements.

3. The Bank recognized a one-time non-cash net provision expense of Ch$8,578 million in August 2014 from the recalibration and improvement of its provisioning models for loans analyzed on a Group basis. For more information please see Nota1p-II of the attached financial statements.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BANCO SANTANDER-CHILE

	By:	/s/ Cristian Florence
	Name:	Cristian Florence
	Title:	General Counsel

Date: November 28, 2014

Exhibit 99.1

INDEX

SECTION		PAGE

SECTION 1: SUMMARY OF RESULTS		2

SECTION 2: RESULTS BY BUSINESS SEGMENT		7

SECTION 2: BALANCE SHEET ANALYSIS		8

SECTION 3: ANALYSIS OF QUARTERLY INCOME STATEMENT		11

SECTION 4: CREDIT RISK RATINGS		22

SECTION 5: SHARE PERFORMANCE		23

ANNEX 1: BALANCE SHEET		24

ANNEX 3: YTD INCOME STATEMENT		25

ANNEX 2: QUARTERLY INCOME STATEMENTS		26

ANNEX 3: QUARTERLY EVOLUTION OF MAIN RATIOS AND OTHER INFORMATION		27

CONTACT INFORMATION

Robert Moreno

Manager, Investor Relations Department

Banco Santander Chile

Bandera 140, 19^th floor

Santiago, Chile

Tel: (562) 2320-8284

Email: rmorenoh@santander.cl

Website: www.santander.cl

SECTION 1: SUMMARY OF RESULTS¹

Net income up 53.6% in the nine-month period ended Sept. 30, 2014. ROAE reached 22.8%

Banco Santander Chile’s net income attributable to shareholders in the nine-month period ended September 30, 2014 (9M14) totaled Ch$411,590 million (Ch$2.18 per share and US$1.45/ADR), increasing 53.6% compared to 9M13. Therefore, the Bank’s ROAE in the same period was 22.8% compared to 16.6% in 9M13. The net interest margin in 9M14 was 5.5% compared to 4.9% in 9M13, benefiting from the stronger commercial activity of the Bank and higher inflation levels observed between both periods. The efficiency ratio reached 36.7% in 9M14 compared to 41.2% in 9M13 as the Bank has been able to grow without having to increase its branch network or headcount.

In 3Q14, net income attributable to shareholders totaled Ch$110,131 million (Ch$0.58 per share and US$0.39/ADR), decreasing 31.0% compared to 2Q14 (from now on QoQ) and increasing 8.9% compared to 3Q13 (from now on YoY). The Bank’s ROAE reached 18.0% in 3Q14. As expected, the Bank’s profitability was lower on a QoQ basis mainly as a result of the lower quarterly inflation rate. At the same time, the Bank’s positive commercial trends were sustained in the quarter.

3Q14 figures include various one-time effects that are explained in further detail in this report. These were: (i) the Bank recognized a one-time non-cash expense of Ch$36,577 million from the accelerated charge-off of intangibles, mainly software, (ii) a one-time provision expense of Ch$8,578 million from the recalibration and improvement made to the provisioning models for loans analyzed on a Group basis and, (iii) a one-time non-cash income of Ch$35,411 million in the line item income tax expense in September 2014 (Ch$32,822 million attributable to net income to shareholders; the difference is attributable to non-controlling interest). Chile’s new tax bill became effective in 3Q14 and the Bank had to recalculate its deferred tax assets and liabilities utilizing the new, higher statuary rates included in that bill.

1. The information contained in this presentation is unaudited and is presented in Chilean Bank GAAP

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-2320-8284

email: rmorenoh@santander.cl

Loans up 9.6% YoY. Growth focused in segments with a higher risk-adjusted profitability

In 3Q14, Total loans increased 2.2% QoQ and 9.6% YoY. In the quarter, the Bank continued to focus on its strategy of expanding the loan book in less riskier segments in an economic environment that remains healthy, but with growth decelerating. Lending to individuals increased 2.7% QoQ and 12.0% YoY. The Bank focused on expanding its loan portfolio in higher income segments, while remaining more selective in lower income segments. Loans in the high-income segment (Income earners with over Ch$2.5mn pesos/month), which are mainly distributed through the Santander Select network, increased 3.9% QoQ and 17.1% YoY, continuing the loan mix shift started several quarters ago. Among companies, loan growth was led by the Companies and institutional segment in which loans increased 4.1% QoQ and 9.8% YoY.

Total deposits increased 8.8% YoY, with a solid expansion in the quarter

Total deposits increased 8.6% QoQ and 8.8% YoY. The Bank continued to focus on increasing its core deposit base as reflected in the 1.1% QoQ and 8.9% YoY rise in non-interest bearing demand deposits. Simultaneously in the quarter, various institutional investors and large corporate clients increased their deposits with the Bank given the high level of liquidity in the economy. This was reflected in the 13.1% QoQ and 8.7% YoY increase in time deposits in 3Q14.

Sustained growth of Client net interest income

As expected, in 3Q14 Net interest income decreased 14.1% QoQ mainly because of the lower quarterly inflation rate. The Net interest margin¹ (NIM) in 3Q14 reached 5.0% compared to 6.0% in 2Q14 and 5.3% in 3Q13. The Bank has more assets than liabilities linked to inflation and, as a result, margins have a positive sensitivity to variations in inflation. In 3Q14, the variation of the Unidad de Fomento (an inflation indexed currency unit), was 0.60% compared to 1.76% in 2Q14 and 1.04% in 3Q13. Excluding the negative impact of a lower inflation rate, the Bank’s Client NIM² remained stable at 5.5% in 3Q14 compared to 5.5% in 2Q14 and 5.6% in 3Q13. Client NIMs have remained relatively stable since 3Q13, despite the change in loan mix to less risky segments. This has been mainly due to the better funding mix and stable loan spreads.

1. Net interest margin, NIM: net interest income (NI) divided by quarterly average interest earning assets. Averages are calculated over monthly figures.

2. Client NIM: NI from all client activities such as loans and deposits minus the internal transfer rate. Excludes the corporate center and the effect of inflation on NI. Inflation: quarterly variation of the UF (an inflation indexed currency unit).

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-2320-8284

email: rmorenoh@santander.cl

Stable asset quality. Coverage ratio of NPLs increased to 104.1%

The Bank’s total Non-performing loans (NPLs) ratio remained stable at 2.9% QoQ and decreased from 3.0% in 3Q13. Total Coverage of NPLs in 3Q14 reached 104.1% compared to 102.3% in 2Q14 and 94.8% in 3Q13.

Net Provision for loan losses increased 18.2% QoQ and 3.0% YoY in 3Q14. In the quarter, the Bank recognized a one-time provision expense of Ch$8,578 million from the re-calibration and improvement of the risk models for loans analyzed on a Group basis. This re-calibration was performed in order to proactively increase coverage of NPLs in the SME segment. This explains a big part of the 28.1% QoQ and the 11.8% YoY rise in gross provisions. Charge-offs, on the other hand, increased 0.2% QoQ and decreased 8.7% YoY in 3Q14. As a result, the Cost of credit (Provision expenses annualized divided by total loans) reached 1.80% in 3Q14. The Bank’s total provision for loan losses has decreased 4.1% in 9M14 and the cost of credit in 9M14 reached 1.63% compared to 1.89% in 9M13.

* 90 days or more NPLs. ** Loan loss reserves over NPLs

Efficiency ratio reached 36.7% in 9M14

Operating expenses, excluding impairment and other operating expenses, in 3Q14 decreased 6.4% QoQ and increased 0.5% YoY. The efficiency ratio¹ reached 36.7% in 9M14.

The QoQ reduction in operating expenses was mainly due to the 68.7% QoQ decrease in amortization and depreciations as the Bank recognized lower depreciation and amortization expenses following the charge-off of intangibles. Personnel expenses decreased 0.4% QoQ, as headcount remained stable, and increased 10.1% YoY. The YoY increase in personnel expenses was mainly due to the impact of a higher YoY inflation rate over salaries. Administrative expenses increased 1.7% QoQ and 7.9% YoY. This was mainly due to greater business activity and the effects of a higher inflation rate over costs indexed to inflation.

1. Efficiency ratio: Operating expenses less impairment of property, plant and equipment / Operating income. Operating income = Net interest income + Net fee income+ Net results from Financial transactions + Other operating income and expenses.

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

Banco Santander Chile: Summary of Quarterly Results

	Quarter									Change %
(Ch$ million)	3Q14			2Q14			3Q13			3Q14 / 3Q13			3Q14 / 2Q14
Net interest income		299,112			348,039			287,605			4.0	%		(14.1	)%
Net fee and commission income		56,065			55,815			54,931			2.1	%		0.4	%
Total financial transactions, net		27,818			30,062			27,615			0.7	%		(7.5	)%
Other operating income		3,728			3,485			4,112			(9.3	)%		7.0	%
Provision for loan losses		(99,365	)		(84,036	)		(96,479	)		3.0	%		18.2	%
Net operating profit		287,358			353,365			277,784			3.4	%		(18.7	)%
Operating income (excluding impairment)		131,597			183,849			119,481			10.1	%		(28.4	)%
Impairment		(36,582	)		(16	)		(40	)		91355.0	%		228537.5	%
Operating income		95,015			183,833			119,441			(20.5	)%		(48.3	)%
Net income attributable to shareholders		110,131			159,616			101,173			8.9	%		(31.0	)%
Net income/share (Ch$)		0.58			0.85			0.54			8.9	%		(31.0	)%
Net income/ADR (US$)¹		0.39			0.62			0.43			(8.9	)%		(36.7	)%
Total loans		22,264,897			21,784,284			20,323,264			9.6	%		2.2	%
Deposits		16,255,927			14,975,221			14,947,496			8.8	%		8.6	%
Shareholders’ equity		2,482,733			2,416,870			2,213,114			12.2	%		2.7	%
Net interest margin		5.0	%		6.0	%		5.3	%
Efficiency ratio		38.3	%		36.4	%		39.8	%
Return on average equity²		18.0	%		26.7	%		18.6	%
NPL / Total loans³		2.9	%		2.9	%		3.0	%
Coverage NPLs		104.1	%		102.3	%		94.8	%
Risk index⁴		3.0	%		2.9	%		2.9	%
Cost of credit⁵		1.8	%		1.6	%		1.9	%
Core Capital ratio		10.6	%		10.7	%		10.4	%
BIS ratio		13.7	%		13.9	%		13.0	%
Branches		475			479			488
ATMs		1,692			1,753			1,915
Employees		11,493			11,381			11,626

The change in earnings per ADR may differ from the change in earnings per share due to exchange rate movements. Earnings per ADR was calculated using the Observed Exchange Rate for each period.

Return on average equity: Annualized quarterly net income attributable to shareholders divided by Average equity attributable to shareholders in the quarter. Averages calculated using monthly figures.

NPLs: Non-performing loans: total outstanding gross amount of loans with at least one installment 90 days or more overdue.

Risk Index: Loan loss allowances divided by Total loans.

Cost of credit: Annualized provision for loan losses divided by quarterly average total loans. Averages calculated using monthly figures.

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

SECTION 2: RESULTS BY BUSINESS SEGMENT

Positive core revenue trends in all business segments

	3Q14
(Ch$ million)	Individuals			SMEs²			Companies and institutional			Corporate⁴			Total segments⁵
Net interest income		155,888			68,705			54,618			22,556			301,767
Change YoY		2.9	%		3.4	%		12.0	%		37.5	%		6.6	%
Change QoQ		1.5	%		2.5	%		0.5	%		3.5	%		1.7	%
Fee and commission income		38,804			12,051			7,253			4,693			62,801
Change YoY		11.0	%		31.3	%		0.5	%		-1.0	%		12.0	%
Change QoQ		4.4	%		4.7	%		2.1	%		7.4	%		4.4	%
Core revenues¹		194,692			80,756			61,871			27,249			364,568
Change YoY		4.4	%		6.8	%		10.5	%		28.9	%		7.5	%
Change QoQ		2.1	%		2.8	%		0.7	%		4.1	%		2.2	%
Total financial transactions, net		1,586			1,502			4,547			12,486			20,121
Change YoY		-44.5	%		6.4	%		37.7	%		4.3	%		2.9	%
Change QoQ		-74.2	%		-33.2	%		17.2	%		-16.2	%		-26.0	%
Provision for loan losses		(26,284	)		(58,434	)		(13,111	)		(1,425	)		(99,254	)
Change YoY		-54.6	%		98.6	%		56.4	%		4.0	%		2.2	%
Change QoQ		-40.3	%		71.6	%		183.9	%		15.2	%		18.2	%
Net operating profit⁶		169,994			23,824			53,307			38,310			285,435
Change YoY		29.4	%		-49.9	%		4.7	%		20.7	%		9.1	%
Change QoQ		11.3	%		-49.1	%		-12.2	%		-3.8	%		-4.9	%

Core revenues: net interest income + fee and commission income

SMEs: defined as companies with sales below than Ch$1,200 million per year.

Companies and institutional: defined as companies with sales between Ch$1,200 million and Ch$10,000 million per year. Companies that engage in real estate industry that sell properties with annual sales exceeding Ch $800 million with no ceiling. Other companies such as large corporations with annual sales exceeding Ch$10.000 million and Institutional companies that serve institutions like universities, governments entities and local and regional governments.

Corporate: defined as companies with sales over Ch$10,000 million per year or which are part of a large foreign or local economic group.

Total segments exclude the results from the Financial Management and Corporate Activitiesr.

Net operating profit is defined as Net interest income + fee and commission income + Total financial transactions, net – provision for loan losses.

Net operating profit from the Bank’s business segments decreased 4.9% QoQ and increased 9.1% YoY. These results exclude our Corporate Center and the results from Financial Management, which includes, among other items, the impact of the inflation on results. The Bank has more assets than liabilities linked to inflation and, as a result, margins have a positive sensitivity to variations in inflation (such relationship between assets and liabilities linked to inflation, with positive or negative sensitivity, is referred to as “inflation gap”). Core revenues from our business segment (net interest income + fees) grew 2.2% QoQ and 7.5% YoY with positive results in all segments. This rise in core revenues was partially offset by the lower income from the sale of treasury services to clientsin the Corporate segment and the one-time effect of the recalibration and improvement made to the credit risk models for loans analyzed on a Group basis, especially in the SME segment.

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

1.Business segment core revenues: Net interest income plus fee and commission income from business segments. Excludes the results from the Financial Management and the Corporate Activities and the effects of regulations on collection fees that are negatively affected this year by the refund of insurance premiums for mortgage loans that are pre-paid.

SECTION 3: BALANCE SHEET ANALYSIS

LOANS

Loans up 9.6% YoY. Growth focused in segments with a higher risk-adjusted profitability

Loans	Quarter ended,						% Change
(Ch$ million)	Sep-14		Jun-14		Sep-13		Sep. 14 / 13			Sep. 14 / Jun. 14
Total loans to individuals¹		11,342,245		11,049,148		10,129,989		12.0	%		2.7	%
Consumer loans		3,818,635		3,736,553		3,423,558		11.5	%		2.2	%
Residential mortgage loans		6,299,766		6,095,929		5,465,600		15.3	%		3.3	%
SMEs		3,316,030		3,293,787		3,173,231		4.5	%		0.7	%
Companies and institutional²		5,385,840		5,171,768		4,906,616		9.8	%		4.1	%
Corporate		2,289,922		2,315,308		2,204,447		3.9	%		(1.1	)%
Total loans ³		22,264,897		21,784,284		20,323,264		9.6	%		2.2	%

Includes consumer loans, residential mortgage loans and other commercial loans to individuals.

Includes Companies and institutional of corporates, real estate and lending to institutions.

Total loans gross of loan loss allowances. Total loans include other non-segmented loans and exclude interbank loans.

Total loans increased 2.2% QoQ and 9.6% YoY In 3Q14. In the quarter, the Bank continued to focus on its strategy of expanding the loan book in less riskier segments in an economic environment that remains healthy, but with growth decelerating.

Lending to individuals increased 2.7% QoQ and 12.0% YoY. The Bank focused on expanding its loan portfolio in higher income segments, while remaining more selective in lower income segments. Loans in the high-income segment, which were mainly distributed through the Santander Select network, increased 3.9% QoQ and 17.1% YoY. On the other hand, in the Santander Banefe unit, which attends lower income segments, the Bank’s loan portfolio increased 0.3% QoQ and 3.6% YoY, continuing the loan mix shift started several quarters ago. By products, total consumer loans increased 2.2% QoQ and 11.5% YoY. Residential mortgage loans expanded 3.3% QoQ and 15.3% YoY. The Bank continues to focus on residential mortgage loans with loan-to-values below

80% at origination.

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

Lending to SMEs expanded 0.7% QoQ and 4.5% YoY. In the quarter, the Bank proactively decelerated loan growth in this segment in light of the expected economic slowdown. Growth was focused in SMEs clients that are also intensive in non-lending activities such as cash management, which tend to be the most profitable SMEs.

In 3Q14, the companies and institutional segment loans increased 4.1% QoQ and 9.8% YoY. Loan growth accelerated in this segment due to growth among mid-sized exporters, which are benefitting from the weaker peso. This segment is also generating increasingly higher levels of business volumes in other areas such as cash management, which has helped to drive the rise in client deposits.

In the corporate segment, loans decreased 1.1% QoQ and increased 3.9% YoY. This segment generally has a volatile evolution of loan growth, due in part, to large transactions that are not recurring between one quarter and the next. Spreads in this segment have also been rising as reflected in the 3.5% YoY and 37.5% YoY increase in net interest income in the quarter (See Results by Business Segments).

DEPOSITS

Total deposits increased 8.8% YoY, with a solid expansion in the quarter

Deposits	Quarter ended,									% Change
(Ch$ million)	Sep-14			Jun-14			Sep-13			Sep. 14 / 13			Sep. 14 / Jun. 14
Demand deposits		5,724,921			5,664,560			5,257,128			8.9	%		1.1	%
Time deposits		10,531,006			9,310,661			9,690,368			8.7	%		13.1	%
Total deposits		16,255,927			14,975,221			14,947,496			8.8	%		8.6	%
Loans to deposits¹		98.2	%		104.8	%		99.4	%
Avg. non-interest bearing demand deposits / Avg. interest earning assets		23.9	%		24.8	%		23.7	%

(Loans – residential mortgage loans) / (Time deposits + demand deposits).

Total deposits increased 8.6% QoQ and 8.8% YoY. The Bank continued to focus on increasing its core deposit base as reflected in the 1.1% QoQ and 8.9% YoY rise in demand deposits. Simultaneously in the quarter, various institutional investors and large corporate clients increased their deposits with the Bank given the high level of liquidity in the economy. This was reflected in the 13.1% QoQ and 8.7% YoY increase in time deposits in 3Q14. It is important to point out that short-term wholesale deposits¹ are not included in the Bank’s structural liquidity levels, but given the low interest rate environment, this short-term rise in institutional deposits in 3Q14 has lowered the Bank’s overall funding costs.

1.In 2014, we changed the definition of core and wholesale deposits as part of our gradual shift towards BIS III liquidity models. Core deposits are now defined as all checking accounts plus retail and companies and institutional time deposits. Long-term wholesale deposits are time deposits from institutional sources and corporate clients with an average maturity greater than 120 days. Short-term wholesale deposits are time deposits from institutional sources and the corporate segment with an average maturity of less than 120 days.

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL

ROAE in 3Q14 reached 18.0% with a core capital ratio of 10.6%

Equity	Quarter ended,									Change %
(Ch$ million)	Sep-14			Jun-14			Sep-13			Sep. 14 / 13			Sep. 14 / Jun. 14
Capital		891,303			891,303			891,303			0.0	%		0.0	%
Reserves		1,307,761			1,307,761			1,130,962			15.6	%		0.0	%
Valuation adjustment		(4,444	)		6,785			3,288			(235.2	)%		(165.5	)%
Retained Earnings:		288,113			211,021			187,561			53.6	%		36.5	%
Retained earnings prior periods		—			—			—			—	%		—	%
Income for the period		411,590			301,459			267,944			53.6	%		36.5	%
Provision for mandatory dividend		(123,477	)		(90,438	)		(80,383	)		53.6	%		36.5	%
Equity attributable to shareholders		2,482,733			2,416,870			2,213,114			12.2	%		2.7	%
Non-controlling interest		31,461			28,536			27,388			14.9	%		10.3	%
Total Equity		2,514,194			2,445,406			2,240,502			12.2	%		2.8	%
Quarterly ROAE		18.0	%		26.7	%		18.6	%

Shareholders’ equity totaled Ch$2,482,733 million as of September 2014. The ROAE was 18.0% in 3Q14 and 22.8% for 9M14. The Core Capital ratio reached 10.6% as of September 2014. Chilean regulations only permit the inclusion of voting common shareholders’ equity as Tier I capital. The Bank’s BIS ratio¹ reached 13.7% at the same date.

Capital Adequacy	Quarter ended,									Change %
(Ch$ million)	Sep-14			Jun-14			Sep-13			Sep. 14 / 13			Sep. 14 / Jun. 14
Tier I (Core Capital)		2,482,733			2,416,870			2,213,114			12.2	%		2.7	%
Tier II		732,794			726,457			564,192			29.9	%		0.9	%
Regulatory capital		3,215,527			3,143,327			2,777,306			15.8	%		2.3	%
Risk weighted assets		23,474,373			22,634,232			21,334,179			10.0	%		3.7	%
Tier I (Core capital) ratio		10.6	%		10.7	%		10.4	%
BIS ratio		13.7	%		13.9	%		13.0	%

Bis ratio: Regulatory capital divided by risk-weighted assets.

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

SECTION 3: ANALYSIS OF QUARTERLY INCOME STATEMENT

NET INTEREST INCOME

Sustained growth of client net interest income

Net Interest Income / Margin	Quarter									Change %
(Ch$ million)	3Q14			2Q14			3Q13			3Q14 / 3Q13			3Q14 / 2Q14
Client net interest income¹		302,108			297,070			282,518			6.9	%		1.7	%
Non-client net interest income²		(2,996	)		50,969			5,087			—	%		—	%
Net interest income		299,112			348,039			287,605			4.0	%		(14.1	)%
Average interest-earning assets		23,787,024			23,226,246			21,799,660			9.1	%		2.4	%
Average loans		22,090,451			21,661,513			20,047,191			10.2	%		2.0	%
Interest earning asset yield³		8.0	%		10.2	%		9.5	%
Cost of funds⁴		3.3	%		4.6	%		4.4	%
Client net interest margin⁵		5.5	%		5.5	%		5.6	%
Net interest margin (NIM)⁶		5.0	%		6.0	%		5.3	%
Quarterly inflation rate⁷		0.60	%		1.75	%		1.04	%
Central Bank reference rate		3.25	%		4.00	%		5.00	%
Avg. 10 year Central Bank yield (real)		1.49	%		1.86	%		2.25	%

1.. Please refer to footnote 1 at the end of this page.

2. Please refer to footnote 2 at the end of this page

3. Interest income divided by interest earning assets.

4. Interest expense divided by sum of interest bearing liabilities and demand deposits.

5. Client net interest margin is defined as annualized client net interest income divided by average loans.

6. Net interest margin is defined as annualized net interest income divided by average interest earning assets.

7. Inflation measured as the variation of the Unidad de Fomento in the quarter.

As expected, in 3Q14 Net interest income decreased 14.1% QoQ mainly because of the lower quarterly inflation rate and increased 4.0% YoY. The Net interest margin (NIM) in 3Q14 reached 5.0% compared to 6.0% in 2Q14 and 5.3% in 3Q13. In order to improve the explanation of margins, we have divided the analysis of Net interest income between Client net interest income² and Non-client net interest income.

Client net interest income (NI) is net interest income from all client activities such as loans and deposits minus the internal transfer rate.

Non-client NI is NI from Bank’s inflation gap, the financial cost of hedging, the financial cost of the Bank’s structural liquidity position, NI from treasury positions and the interest expense of the Bank’s financial investments classified as trading, since NI from this portfolio is recognized as financial transactions net.

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

Client net interest income. In 3Q14, Client net interest income increased 1.7% QoQ and 6.9% YoY, driven mainly by loan growth. Average loans increased 2.0% QoQ and 10.2% YoY. Client NIMs (defined as Client net interest income divided by average loans) reached 5.5% in 3Q14 compared to 5.5% in 2Q14 and 5.6% in 3Q13. Client NIMs have remained relatively stable since 3Q13, despite the change in loan mix to less risky segments. This has been mainly due to the better funding mix and stable loan spreads. In the remainder of 2014 and 2015, client net interest income should increase in line with loan growth as client margins are expected to remain relatively stable.

Net interest margin, NIM: net interest income (NI) divided by average interest earning assets. Client NIM: NI from all client activities such as loans and deposits minus the internal transfer rate. Excludes the corporate center and the effect of inflation on NI. Inflation: quarterly variation of the UF (an inflation indexed currency unit).

Non-client net interest income. The reduction of non-client net interest income was due to the lower quarterly inflation rate. The Bank has more assets than liabilities linked to inflation and, as a result, margins have a positive sensitivity to variations in inflation. In 3Q14, the variation of the Unidad de Fomento (an inflation indexed currency unit), was 0.60% compared to 1.76% in 2Q14 and 1.04% in 3Q13. The gap between assets and liabilities indexed to the UF averaged approximately Ch$4.1 trillion (US$6.8 billion) in 3Q14. This implies that for every 100 basis point change in inflation, our Net interest income increases or decrease by Ch$41 billion, all other factors equal. The existence of this gap is mainly due to the Bank’s lending and funding activities. We expect UF inflation in 4Q14 to be approximately 1.0-1.2%. In 2015, we expect the UF inflation rate to remain at levels of 0.75% per quarter, on average.

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

PROVISION FOR LOAN LOSSES AND ASSET QUALITY

Stable asset quality. Coverage ratio of NPLs increased to 104.1%

Provision for loan losses	Quarter									Change %
(Ch$ million)	3Q14			2Q14			3Q13			3Q14 / 3Q13			3Q14 / 2Q14
Gross provisions		(69,273	)		(54,069	)		(61,943	)		11.8	%		28.1	%
Charge-offs¹		(44,468	)		(44,377	)		(48,722	)		(8.7	)%		0.2	%
Gross provisions and charge-offs		(113,741	)		(98,446	)		(110,665	)		2.8	%		15.5	%
Loan loss recoveries		14,376			14,410			14,186			1.3	%		(0.2	)%
Provision for loan losses		(99,365	)		(84,036	)		(96,479	)		3.0	%		18.2	%
Total loans²		22,264,897			21,784,284			20,323,264			9.6	%		2.2	%
Total reserves (RLL)		673,620			642,633			586,416			14.9	%		4.8	%
Non-performing loans³(NPLs)		646,814			628,124			618,419			4.6	%		3.0	%
NPLs commercial loans		372,511			376,714			383,024			(2.7	)%		(1.1	)%
NPLs residential mortgage loans		175,068			163,908			157,885			10.9	%		6.8	%
NPLs consumer loans		99,235			87,502			77,510			28.0	%		13.4	%
Impaired loans⁴		1,585,208			1,537,089			1,470,752			7.8	%		3.1	%
Impaired commercial loans		864,466			839,341			797,718			8.4	%		3.0	%
Impaired residential mortgage loans		353,489			339,087			319,547			10.6	%		4.2	%
Impaired consumer loans		367,253			358,661			353,487			3.9	%		2.4	%
Cost of credit⁵		1.80	%		1.55	%		1.93	%
Risk index (RLL / total loans)⁶		3.0	%		2.9	%		2.9	%
NPL / Total loans		2.9	%		2.9	%		3.0	%
NPL / Commercial loans		3.1	%		3.2	%		3.3	%
NPL / Residential mortgage loans		2.8	%		2.7	%		2.9	%
NPL / Consumer loans		2.6	%		2.3	%		2.3	%
Impaired loans / total loans		7.1	%		7.1	%		7.2	%
Impaired commercial loan ratio		7.1	%		7.0	%		7.0	%
Impaired mortgage loan ratio		5.6	%		5.6	%		5.8	%
Impaired consumer loan ratio		9.6	%		9.6	%		10.3	%
Coverage of NPLs⁷		104.1	%		102.3	%		94.8	%
Coverage of NPLs ex-mortgage⁸		132.8	%		128.6	%		117.9	%
Coverage of commercial NPLs		101.4	%		85.5	%		73.1	%
Coverage of mortgage NPLs		27.0	%		28.0	%		27.4	%
Coverage of consumer NPLs		250.4	%		314.0	%		339.6	%

Charge-offs correspond to the direct charge-offs and are net of the reversal of provisions already established on charged-off loan

Excludes interbank loans.

NPLs: Non-performing loans: full balance of loans with at least one installment 90 days or more overdue.

Impaired loans include: (A) for loans individually evaluated for impairment, (i) the carrying amount of all loans to clients that are rated C1 through C6 and (ii) the carrying amount of all loans to an individual client with at least one non-performing loan (which is not a residential mortgage loan past due less than 90 days), regardless of category; and (B) for loans collectively evaluated for impairment, the carrying amount of all loans to a client, when at least one loan to that client is not performing or has been renegotiated.

Cost of credit: Annualized quarterly provision for loan losses divided by average loans.Averages are calculated using monthly figures.

Risk Index: Loan loss allowances divided by Total loans; measures the percentage of loans the banks must provision for given their internal models and the Superintendence of Banks guidelines.

Coverage of NPLs is calculated as Loan loss allowances divided by NPLs.

Coverage of NPLs ex-mortgage is calculated as Loan loss allowance of commercial and consumer loans divided by NPLs of commercial and consumer loans.

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

Provision for loan losses increased 18.2% QoQ and 3.0% YoY in 3Q14. In the quarter, the Bank recognized a one-time provision expense of Ch$8,578 million from the re-calibration and improvement of its provisioning models for loans analyzed on a Group basis. This re-calibration was performed in order to proactively increase coverage of NPLs in the SME segment. This explains a big part of the 28.1% QoQ and the 11.8% YoY rise in gross provisions. Charge-offs remained stable in the quarter, increasing 0.2% QoQ and decreasing 8.7% YoY. As a result, the Cost of credit (annualized quarterly provision for loan losses divided by average quarterly total loans) reached 1.80% in 3Q14. The Bank’s total net provision expense has decreased 4.1% in 9M14 and the cost of credit reached 1.63% in 9M14 compared to 1.89% in 9M13.

By product, the evolution of provision for loan losses was as following:

Provision for loan losses	Quarter									Change %
(Ch$ million)	3Q14			2Q14			3Q13			3Q14 / 3Q13			3Q14 / 2Q14
Commercial loans		(86,411	)		(39,144	)		(42,662	)		102.5	%		120.8	%
Residential mortgage loans		(3,270	)		(3,082	)		(8,682	)		(62.3	)%		6.1	%
Consumer loans		(9,684	)		(41,810	)		(45,135	)		(78.5	)%		(76.8	)%
Provision for loan losses		(99,365	)		(84,036	)		(96,479	)		3.0	%		18.2	%

Provisions for loan losses for consumer loans decreased 76.8% QoQ and 78.5% YoY. Direct charge-offs of consumer loans decreased 2.8% QoQ and 5.4% YoY. The Bank in the quarter also re-calibrated its consumer loan model to take into account the improvement in the overall asset quality of the consumer loan book. The last re-calibration of this model was performed in June 2012 based on historical data that had a distinct performance and profile compared to the current consumer loan book. This was a result of the various actions taken to improve credit risk in consumer lending, including focusing loan growth in the higher-end of the consumer market, tightening admissions policies, revamping of the collections process, and growing via pre-approved loans that have a better credit risk profile.

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

The results of these efforts are reflected in the evolution of Impaired consumer loans (consumer NPLs + renegotiated consumer loans). The ratio of impaired consumer loans to total consumer loans reached 9.6% in 3Q14. Compared to the 2010-2012 period, impaired consumer loans have fallen from levels of 15-20%, over which the previous consumer loan model was based on. In the quarter, the consumer NPLs ratio increased to 2.6% compared to 2.3% in 2Q14 and 2.3% in 3Q13. During this period, the Bank has restricted consumer loan renegotiations in order to increase collections, which drove upward the consumer NPL ratio, but overall consumer loan asset quality has remained relatively stable as reflected in the QoQ evolution of impaired consumer loans.

* Consumer impaired ratio (black line): Consumer NPLs + renegotiated consumer loans divided by total consumer loans.

Provisions for loan losses for residential mortgage loans increased 6.1% QoQ and decreased 62.3% YoY in the quarter. The YoY decrease was mainly due to the recognition in 3Q13 of higher provisions for mortgage loans that had been refinanced following the 2010 earthquake. The Mortgage NPL ratio reached 2.8% in 3Q14 compared to 2.7% in 2Q14 and 2.9% in 3Q13. Mortgage asset quality has remained relatively stable over an extended period, as can be observed in the adjacent graph. Growth in this product has been centered on mortgages with loan-to-value ratios below 80%. The QoQ rise in mortgage NPLs is mainly due to the Bank’s stricter stance on renegotiating overdue mortgage loans and not a deterioration of asset quality in this product. The evolution of the impaired mortgage loans ratio remained stable at 5.6% QoQ and decreased from 5.8% in 3Q13. The impaired mortgage loan ratio is a broader measure of asset quality and mainly includes non-performing or renegotiated residential mortgage loans.

Provision for loan losses for commercial loans increased 120.8% QoQ and 102.5% YoY. The increase in net provision expense in commercial loans was mainly due to the re-calibration of the SME provisioning model as already explained. The Bank proactively increased provisioning in the SME segment in order to increase coverage ratios in this segment. The Commercial NPL ratio reached 3.1% as of September 2014 and the impaired commercial loan ratio reached 7.1% both stable compared to previous periods. The coverage ratio commercial NPLs increased to 101.4% as of September 2014 compared to 85.5% in 2Q14 and 73.1% in 3Q13.

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

NET FEE AND COMMISSION INCOME

The client base continues to grow and fees are starting to rebound

Net Fee and Commission Income	Quarter						Change %
(Ch$ million)	3Q14		2Q14		3Q13		3Q14 / 3Q13			3Q14 / 2Q14
Credit, debit & ATM card fees		10,671		11,335		8,208		30.0	%		(5.9	)%
Asset management brokerage		8,622		7,618		8,446		2.1	%		12.9	%
Collection fees		8,284		8,568		10,839		(23.6	)%		(3.3	)%
Guarantees, pledges and other contingent operations		8,260		7,596		7,649		8.0	%		8.7	%
Insurance brokerage		8,241		8,530		8,005		2.9	%		(3.4	)%
Checking accounts		7,256		7,219		6,920		4.9	%		0.5	%
Fees from brokerage and custody of securities		2,431		1,809		1,266		92.0	%		34.4	%
Lines of credit		1,752		1,748		1,479		18.5	%		0.2	%
Other Fees		548		1,392		2,119		(74.1	)%		(60.2	)%
Net fee and commission income		56,065		55,815		54,931		2.1	%		0.4	%

Net fee and commission income increased 0.4% QoQ and 2.1% YoY. Fee and commission income is starting to rebound as the Bank continued to expand its client base. The Bank achieved positive net client growth³ for the 6^th consecutive quarter. The client base has grown 6.7% in this stretch, which started at the end of 1Q13 when the Bank completed the development of the CRM and launched the Santander Select brand for higher income clients. Clients in the higher income segments, mainly Santander Select, increased 16.7% in this period, mid-income client base rose 7.9% and lower income clients grew 2.8%. As of September 2014, the Bank had 3.5 million clients.

3 Net client growth: Number of new clients less number of clients leaving the bank during the period.

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

This growth of the client has been outstripping the growth rate of clients of our main competitors, especially in checking accounts. Between March 2013 and June 2014, the latest figure available, the Bank’s checking account base has grown by 6.7% compared to approximately 4% for our main competitors. As a result, checking account and card related fees showed a positive growth trend.

At the same time, asset management brokerage fees increased 12.9% QoQ and 2.1% YoY as the Bank significantly increased the distribution and brokerage of mutual funds. This in spite of the fact that the Bank sold its asset management business in 2013, becoming a broker that implies recognizing approximately 75% of earned management fees compared to 100% before.

These positive figures were partially offset by the decrease in collection fees that are negatively affected this year by the refund of insurance premiums for mortgage loans that are pre-paid.

By segments, the evolution of fees reflects the Bank’s efforts of expanding the client base and to increase cross-selling. Fees from individuals increased 4.4% QoQ and 11.0% YoY and in the SME segment fees were up 4.7% QoQ and 31.3% YoY.

Fee Income	Quarter									Change %
(Ch$ million)	3Q14			2Q14			3Q13			3Q14 / 3Q13			3Q14 / 2Q14
Individuals		38,804			37,185			34,944			11.0	%		4.4	%
SMEs		12,051			11,515			9,176			31.3	%		4.7	%
Companies and institutional		7,253			7,101			7,215			0.5	%		2.1	%
Corporate		4,693			4,371			4,740			(1.0	)%		7.4	%
Sub-total		62,801			60,172			56,075			12.0	%		4.4	%
Others¹		(6,736	)		(4,357	)		(1,144	)		488.8	%		54.6	%
Total		56,065			55,815			54,931			2.1	%		0.4	%

Others includes Financial management, the Corporate Activities and the effects of the change in regulations on fees

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

TOTAL FINANCIAL TRANSACTIONS, NET

Client treasury services benefit from a more volatile foreign exchange environment

Total financial transactions, net *	Quarter								Change %
(Ch$ million)	3Q14		2Q14			3Q13			3Q14 / 3Q13			3Q14 / 2Q14
Net profit (loss) from financial operations		24,693		(103,583	)		55,813			(55.8	)%		—%
Foreign exchange profit (loss), net		3,125		133,645			(28,198	)		—	%		(97.7	)%
Total financial transactions, net		27,818		30,062			27,615			0.7	%		(7.5	)%

* These results mainly include the realized gains of the Available for sale investment portfolio, realized and unrealized gains and interest revenue generated by Financial investments held for trading, gains or losses from the sale of charged-off loans and the mark-to-market of derivatives. The results recorded as Foreign exchange profits (loss), net mainly includes the translation gains or losses of assets and a liability denominated in foreign currency.

Results from total financial transactions, net were a gain of Ch$27,818 million in 3Q14, decreasing 7.5% compared to 3Q13 and increasing 0.7% compared to 3Q13. In order to understand more clearly these line items, we present them by business area in the table below.

	Quarter						Change %
Total financial transactions, net (Ch$ million)	3Q14		2Q14		3Q13		3Q14 / 3Q13			3Q14 / 2Q14
Santander Global Connect¹		13,115		12,192		10,469		25.3	%		7.6	%
Market-making		7,192		9,690		7,788		(7.7	)%		(25.8	)%
Client treasury services		20,307		21,882		18,257		11.2	%		(7.2	)%
Non-client treasury income		7,511		8,180		9,358		(19.7	)%		(8.2	)%
Total financial transactions, net		27,818		30,062		27,615		0.7	%		(7.5	)%

1. Santander Global Connect is the Bank’s commercial platform for selling treasury products to our clients.

Client treasury services, which represented 73% of total income from financial transactions, net, decreased 7.2% QoQ and increased 11.2% YoY. The QoQ decline in this line item was due to lower market-making activity on behalf of clients. On the other hand, the result from Santander Global Connect (SGC), the Bank’s platform for selling treasury products to clients, showed positive results and increased 7.6% QoQ and 25.3% YoY. This was mainly a result of greater demand for foreign currency hedging on behalf of our clients as the peso depreciated in the quarter.

Non-client treasury income decreased 8.2% QoQ and 19.7% YoY mainly due to lower gains from the sale of charged-off loans, which were recorded in this line item.

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

OPERATING EXPENSES AND EFFICIENCY

Efficiency ratio reached 36.7% in 9M14

Operating Expenses	Quarter									Change %
(Ch$ million)	3Q14			2Q14			3Q13			3Q14 / 3Q13			3Q14 / 2Q14
Personnel salaries and expenses		(86,503	)		(86,849	)		(78,584	)		10.1	%		(0.4	)%
Administrative expenses		(52,360	)		(51,482	)		(48,545	)		7.9	%		1.7	%
Depreciation & amortization		(4,736	)		(15,118	)		(15,712	)		(69.9	)%		(68.7	)%
Operating expenses, excluding impairment and other operating expenses		(143,599	)		(153,449	)		(142,841	)		0.5	%		(6.4	)%
Impairment		(36,582	)		(16	)		(40	)		91,355	%		228,538	%
Branches		475			479			488			(2.7	)%		(0.8	)%
Traditional		273			273			272			0.4	%		0.0	%
Companies and institutional centers		3			3			-			—%			0.0	%
Select		47			44			44			6.8	%		6.8	%
Banefe		68			74			77			(11.7	)%		(8.1	)%
Payment centers & others		84			85			95			(11.6	)%		(1.2	)%
ATMS		1,692			1,753			1,915			(11.6	)%		(3.5	)%
Employees		11,493			11,381			11,626			(1.1	)%		1.0	%
Efficiency ratio¹		26.7	%		36.4	%		39.8	%

Efficiency ratio: Operating expenses less impairment of property, plant and equipment divided by Operating income. Operating income = Net interest income + Net fee and commission income+ Total financial transactions, net + Other operating income and expenses..

Operating expenses, excluding impairment and other operating expenses, in 3Q14 decreased 6.4% QoQ and increased 0.5% YoY.

Personnel salaries and expenses decreased 0.4% QoQ as headcount remained stable and increased 10.1% YoY. The YoY increase in personnel expenses was mainly due to the impact of a higher inflation rate over salaries, which are indexed to inflation. Headcount increased 1.0% QoQ and decreased 1.1% YoY to 11,493 people.

Administrative expenses increased 1.7% QoQ and 7.9% YoY. This was mainly due to: (i) greater business activity that has resulted in higher system and data processing costs and (ii) the effects of a higher inflation rate over costs indexed to inflation like rent expenses. In the quarter, the Bank opened 3 Santander Select branches and closed 6 Banefe branches and 1 Super Caja payment center as part of the on-going process of seeking greater efficiencies in the brick & mortar distribution network. The Bank also continued to optimize the ATM network in order to adjust to new security procedures and to remove unprofitable machines. The Bank remained focused on growing through complementary channels such as internet, phone and mobile banking.

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

In 3Q14, the Bank recognized a one-time impairment of intangibles charge of Ch$36,577 million. This impairment was mainly of software. In past periods, the Bank has invested significantly in systems and software. Software was usually amortized in 3 years, but some older ones that were not contributing to the Bank’s PNL were fully charged-off in 3Q14. This will signify lower depreciation and amortization expenses of Ch$13 billion in 2015 and Ch$5 billion in 2016. Excluding the charge for impairment, the efficiency ratio reached 36.7% in 9M14.

OTHER OPERATING INCOME AND EXPENSES & TAX EXPENSE

Other Operating Income and Expenses, Tax Expense	Quarter									Change %
(Ch$ million)	3Q14			2Q14			3Q13			3Q14 / 3Q13			3Q14 / 2Q14
Other operating income		3,728			3,485			4,112			(9.3	)%		7.0	%
Other operating expenses		(12,162	)		(16,067	)		(15,462	)		(21.3	)%		(24.3	)%
Other operating income, net		(8,434	)		(12,582	)		(11,350	)		(25.7	)%		(33.0	)%
Income from investments in associates and other companies		500			552			345			44.9	%		(9.4	)%
Income tax income/(expense)		18,941			(25,079	)		(18,417	)		—%			—%
Effective income tax rate		n/a			13.6	%		15.4	%

Other operating income, net, totaled a loss of Ch$8,434 million in 3Q14 compared to Ch$12,582 million in 2Q14. This lower net loss was mainly due to lower provisions for non-credit contingencies.

Income tax expense

In September 2014, the new tax bill became effective. This increased the statutory corporate tax rate to 21% in 2014, which was retroactive for the entire year of 2014. The corporate tax rate will increase to 22.5% in 2015 and 24% in 2016. Beginning in 2017, a corporation’s shareholders will have to choose between two alternative tax schemes. Under the first scheme, the corporation would be subject to a 25% corporate tax rate but receive no tax benefits for reinvesting profits. Under the second scheme, the corporation would pay a 27% corporate tax rate, but would receive partial tax benefits for reinvesting profits.

The effective income tax rate in 3Q14 was negative compared to the statutory tax rate of 21%. Income tax expenses in the quarter included a one-time non-cash income of Ch$35,411 million (Ch$32,822 million attributable to net income to shareholders; the difference is attributable to non-controlling interest) from the readjustments made to the Bank’s deferred tax asset base. The Bank has more deferred tax assets than liabilities. This gain arises from the difference between the Bank’s accounting and tax books regarding how provisions and charge-offs are recognized. When the statutory rates were modified, the Bank’s net deferred tax assets increased as the future tax rates used to calculate thes assets were gradually increased from 20% to 27%. Excluding this impact, the effective tax rate in the quarter was 17.3%.

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

Below is a summary of our year-to-date income tax expense and rate.

YTD tax expenses summarized⁴ (Ch$ million)	9M14			9M13			Var. (%)
Net income before taxes		448,239			321,898			39.2	%
Price level restatement of capital¹		(113,858	)		(33,820	)		236.7	%
Net income before taxes adjusted for price level restatement		334,381			288,078			16.1	%
Statutory Tax rate		21.0	%		20.0	%
Income tax expense at statutory rate		(70,220	)		(57,616	)		21.9	%
Tax benefits²		2,343			4,669			(49.8	)%
Subtotal - Income tax		(67,877	)		(52,947	)		28.2	%
Impact from deferred tax assets³		35,587			-			—%
Income tax		(32,290	)		(52,947	)		(39.0	)%
Effective tax rate		7.2	%		16.4	%

For tax purposes, Capital is re-adjusted by CPI inflation.

Includes mainly tax credits from property taxes paid on leased assets.

This gain arises from the difference between the Bank’s accounting and tax books regarding how provisions and charge-offs are recognized. When the statutory rate was modified, the Bank’s net deferred tax assets increased as the future tax rate used to calculate this asset was increased from 20% to 27%.

This table is for informational purposes only, please refer to note 13c in our financials for more detail regarding our income tax expense.

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

SECTION 4: CREDIT RISK RATINGS

International ratings

The Bank has credit ratings from three leading international agencies. All ratings have outlook stable.

Moody’s		Rating
Foreign currency bank deposits		Aa3
Senior bonds		Aa3
Subordinated debt		A3
Bank Deposits in Local Currency		Aa3
Bank financial strength		C+
Short-term deposits		P-1

Standard and Poor’s		Rating
Long-term Foreign Issuer Credit		A
Long-term Local Issuer Credit		A
Short-term Foreign Issuer Credit		A-1
Short-term Local Issuer Credit		A-1

Fitch		Rating
Foreign Currency Long-term Debt		A+
Local Currency Long-term Debt		A+
Foreign Currency Short-term Debt		F1
Local Currency Short-term Debt		F1
Viability rating		a+

Local ratings:

Our local ratings, the highest in Chile, are the following:

Local ratings	Fitch Ratings	Feller Rate
Shares	1CN1	1CN1
Short-term deposits	N1+	N1+
Long-term deposits	AAA	AAA
Mortgage finance bonds	AAA	AAA
Senior bonds	AAA	AAA
Subordinated bonds	AA	AA+

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

SECTION 5: SHARE PERFORMANCE

As of Sept. 30, 2014

Ownership Structure:

ADR Price Evolution

Santander ADR vs. SP500

(Base 100 = 12/31/2013)

ADR price (US$) 9M14

09/30/14:			22.37
Maximum (9M14):			26.91
Minimum (9M14):			19.34

Market Capitalization: US$11,493 million

P/E 12 month trailing*:	10.7
P/BV (09/30/14)**:	2.5
Dividend yield***:	4.1	%

* Price as of Sept. 30, 2014 / 12mth. earnings

** Price as of Sept. 30, 2014 / Book value as of 09/30/14

***

Based on closing price on record date of last dividend payment.

Average daily traded volumes 9M14

US$ million

Local Share Price Evolution

Santander vs IPSA Index

(Base 100 = 12/31/2013)

Local share price (Ch$) 9M14

09/30/14:			33.37
Maximum (9M14):			37.32
Minimum (9M14):			26.81

Dividends:

Year paid	Ch$/share		% of previous year’s earnings
2011:		1.52		60	%
2012:		1.39		60	%
2013:		1.24		60	%
2014:		1.41		60	%

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

ANNEX 1: BALANCE SHEET

Unaudited Balance Sheet	Sep-14		Sep-14		Dec-13		Sept. 14 / Dec. 13
	US$ths		Ch$ million				% Chg.
Assets
Cash and deposits in banks		2,421,333		1,448,635		1,571,810		(7.8	)%
Cash items in process of collection		1,374,931		822,594		604,077		36.2	%
Trading investments		1,017,355		608,663		287,567		111.7	%
Investments under resale agreements		5,879		3,517		17,469		—%
Financial derivative contracts		4,455,228		2,665,474		1,494,018		78.4	%
Interbank loans, net		202,489		121,145		125,395		(3.4	)%
Loans and accounts receivables from customers, net		36,088,917		21,591,277		20,327,021		6.2	%
Available for sale investments		2,725,286		1,630,484		1,700,993		(4.1	)%
Held to maturity investments		-		-		-		—%
Investments in associates and other companies		28,600		17,111		9,681		76.7	%
Intangible assets		51,446		30,779		66,703		(53.9	)%
Property, plant, and equipment		312,966		187,241		180,215		3.9	%
Current taxes		39,838		23,834		1,643		1350.6	%
Deferred taxes		404,184		241,815		230,215		5.0	%
Other assets		590,464		353,263		400,025		(11.7	)%
Total Assets		49,718,914		29,745,832		27,016,832		10.1	%

	Sep-14			Sep-14			Dec-13			Sept. 14 / Dec. 13
	US$ths			Ch$ million						% Chg.
Liabilities
Deposits and other demand liabilities		9,568,966			5,724,921			5,620,763			1.9	%
Cash items in process of being cleared		1,013,417			606,307			276,379			119.4	%
Obligations under repurchase agreements		483,210			289,095			208,972			38.3	%
Time deposits and other time liabilities		17,602,136			10,531,006			9,675,272			8.8	%
Financial derivative contracts		4,052,728			2,424,666			1,300,109			86.5	%
Interbank borrowing		2,195,270			1,313,386			1,682,377			(21.9	)%
Issued debt instruments		9,354,296			5,596,488			5,198,658			7.7	%
Other financial liabilities		331,771			198,492			189,781			4.6	%
Current taxes		-			-			50,242			(100.0	)%
Deferred taxes		9,933			5,943			25,088			(76.3	)%
Provisions		394,922			236,274			236,232			0.0	%
Other liabilities		509,895			305,060			198,777			53.5	%
Total Liabilities		45,516,544			27,231,638			24,662,650			10.4	%

Equity
Capital		1,489,776			891,303			891,303			0.0	%
Reserves		2,185,868			1,307,761			1,130,991			15.6	%
Valuations adjustments		(7,428	)		(4,444	)		(5,964	)		(25.5	)%
Retained Earnings:		481,569			288,113			309,348			(6.9	)%
Retained earnings from prior years		-			-			-			—%
Income for the period		687,955			411,590			441,926			(6.9	)%
Minus: Provision for mandatory dividends		(206,387	)		(123,477	)		(132,578	)		(6.9	)%
Total Shareholders' Equity		4,149,784			2,482,733			2,325,678			6.8	%
Non-controlling interest		52,586			31,461			28,504			10.4	%
Total Equity		4,202,370			2,514,194			2,354,182			6.8	%
Total Liabilities and Equity		49,718,914			29,745,832			27,016,832			10.1	%

The exchange rate used to calculate the figures in dollars was Ch$598.28 / US$1

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

ANNEX 2: YTD INCOME STATEMENT

YTD Income Statement Unaudited	Sep-14			Sep-14			Sep-13			Sept. 14 / Sept. 13
	US$ths.			Ch$ million						% Chg.

Interest income		2,690,068			1,609,414			1,356,074			18.7	%
Interest expense		(1,084,392	)		(648,770	)		(573,321	)		13.2	%
Net interest income		1,605,676			960,644			782,753			22.7	%
Fee and commission income		450,323			269,419			258,141			4.4	%
Fee and commission expense		(170,113	)		(101,775	)		(84,445	)		20.5	%
Net fee and commission income		280,210			167,644			173,696			(3.5	)%
Net profit (loss) from financial operations		(82,483	)		(49,348	)		53,979			(191.4	)%
Net foreign exchange gain		234,338			140,200			29,151			380.9	%
Total financial transactions, net		151,855			90,852			83,130			9.3	%
Other operating income		21,266			12,723			15,869			(19.8	)%
Net operating profit before provisions for loan losses		2,059,007			1,231,863			1,055,448			16.7	%
Provision for loan losses		(442,326	)		(264,635	)		(275,992	)		(4.1	)%
Net operating profit		1,616,681			967,228			779,456			24.1	%
Personnel salaries and expenses		(414,553	)		(248,019	)		(229,911	)		7.9	%
Administrative expenses		(256,183	)		(153,269	)		(141,167	)		8.6	%
Depreciation and amortization		(55,695	)		(33,321	)		(46,626	)		(28.5	)%
Operating expenses excluding Impairment and Other operating expenses		(726,431	)		(434,609	)		(417,704	)		4.0	%
Impairment of property, plant, and equipment		(61,194	)		(36,611	)		(213	)		17088	%
Other operating expenses		(82,082	)		(49,108	)		(41,135	)		19.4	%
Total operating expenses		(869,706	)		(520,328	)		(459,052	)		13.3	%
Operating income		746,975			446,900			320,404			39.5	%
Income from investments in associates and other companies		2,238			1,339			1,494			(10.4	)%
Income before taxes		749,213			448,239			321,898			39.2	%
Income tax expense		(53,971	)		(32,290	)		(52,947	)		(39.0	)%
Net income from ordinary activities		695,241			415,949			268,951			54.7	%
Net income discontinued operations		-			-			-			—	%
Net income attributable to:
Minority interest		7,286			4,359			1,007			332.9	%
Net income attributable to shareholders		687,955			411,590			267,944			53.6	%

The exchange rate used to calculate the figures in dollars was Ch$598.28 / US$1

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

ANNEX 3: QUARTERLY INCOME STATEMENTS

Unaudited Quarterly Income Statement	3Q14			3Q14			2Q14			3Q13			3Q14 / 3Q13			3Q14 / 2Q14
	US$ths.						Ch$mn						% Chg.
Interest income		797,815			477,317			591,190			516,606			(7.6	)%		(19.3	)%
Interest expense		(297,862	)		(178,205	)		(243,151	)		(229,001	)		(22.2	)%		(26.7	)%
Net interest income		499,953			299,112			348,039			287,605			4.0	%		(14.1	)%
Fee and commission income		150,401			89,982			88,756			84,605			6.4	%		1.4	%
Fee and commission expense		(56,691	)		(33,917	)		(32,941	)		(29,674	)		14.3	%		3.0	%
Net fee and commission income		93,710			56,065			55,815			54,931			2.1	%		0.4	%
Net loss from financial operations (net trading loss)		41,273			24,693			(103,583	)		55,813			(55.8	)%		-	%
Net foreign exchange gain		5,223			3,125			133,645			(28,198	)		(111.1	)%		(97.7	)%
Total financial transactions, net		46,497			27,818			30,062			27,615			0.7	%		(7.5	)%
Other operating income		6,231			3,728			3,485			4,112			(9.3	)%		7.0	%
Net operating profit before provisions for loan losses		646,391			386,723			437,401			374,263			3.3	%		(11.6	)%
Provision for loan losses		(166,084	)		(99,365	)		(84,036	)		(96,479	)		3.0	%		18.2	%
Net operating profit		480,307			287,358			353,365			277,784			3.4	%		(18.7	)%
Personnel salaries and expenses		(144,586	)		(86,503	)		(86,849	)		(78,584	)		10.1	%		(0.4	)%
Administrative expenses		(87,518	)		(52,360	)		(51,482	)		(48,545	)		7.9	%		1.7	%
Depreciation and amortization		(7,916	)		(4,736	)		(15,118	)		(15,712	)		(69.9	)%		(68.7	)%
Operating expenses excluding Impairment and Other operating expenses		(240,020	)		(143,599	)		(153,449	)		(142,841	)		0.5	%		(6.4	)%
Impairment of property, plant, and equipment		(61,145	)		(36,582	)		(16	)		(40	)		91355.0	%		228537.5	%
Other operating expenses		(20,328	)		(12,162	)		(16,067	)		(15,462	)		(21.3	)%		(24.3	)%
Total operating expenses		(321,493	)		(192,343	)		(169,532	)		(158,343	)		21.5	%		13.5	%
Operating income		158,814			95,015			183,833			119,441			(20.5	)%		(48.3	)%
Income from investments in associates and other companies		836			500			552			345			44.9	%		(9.4	)%
Income before taxes		159,649			95,515			184,385			119,786			(20.3	)%		(48.2	)%
Income tax expense		31,659			18,941			(25,079	)		(18,417	)		—	%		—	%
Net income from ordinary activities		191,308			114,456			159,306			101,369			12.9	%		(28.2	)%
Net income discontinued operations		-			-			-			-
Net income attributable to:
Minority interest		7,229			4,325			(310	)		196			2106.6	%		—	%
Net income attributable to shareholders		184,079			110,131			159,616			101,173			8.9	%		-31.0	%

The exchange rate used to calculate the figures in dollars was Ch$598.28 / US$1

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

ANNEX 4: QUARTERLY EVOLUTION OF MAIN RATIOS AND OTHER INFORMATION

	Sep-13			Dec-13			Mar-14			Jun-14			Sep-14
(Ch$ millions)
Loans
Consumer loans		3,423,558			3,607,248			3,696,198			3,736,553			3,818,635
Residential mortgage loans		5,465,600			5,625,810			5,841,152			6,095,929			6,299,766
Commercial loans		11,434,106			11,702,254			11,918,520			11,951,802			12,146,496
Total loans		20,323,264			20,935,312			21,455,870			21,784,284			22,264,897
Allowance for loan losses		(586,416	)		(608,291	)		(626,452	)		(642,633	)		(673,620	)
Total loans, net of allowances		19,736,848			20,327,021			20,829,418			21,141,651			21,591,277

Deposits
Demand deposits		5,257,128			5,620,763			5,610,373			5,664,560			5,724,921
Time deposits		9,690,368			9,675,272			9,640,601			9,310,661			10,531,006
Total deposits		14,947,496			15,296,035			15,250,974			14,975,221			16,255,927
Loans / Deposits¹		99.4	%		100.1	%		102.4	%		104.8	%		98.2	%

Average balances
Avg. interest earning assets		21,799,669			22,470,077			23,121,712			23,226,246			23,787,024
Avg. loans		20,047,191			20,599,268			21,241,689			21,661,513			22,090,451
Avg. assets		26,112,158			26,643,136			27,884,085			27,989,256			28,911,456
Avg. demand deposits		5,173,559			5,300,996			5,542,214			5,767,539			5,693,382
Avg equity		2,175,459			2,263,385			2,376,656			2,391,833			2,449,630
Avg. free funds		7,349,018			7,564,381			7,918,870			8,159,372			8,143,011

Capitalization
Risk weighted assets		21,334,180			21,948,982			22,649,033			22,634,232			23,474,373
Tier I (Shareholders' equity)		2,213,114			2,325,678			2,424,863			2,416,870			2,482,733
Tier II		564,191			708,063			715,010			726,457			732,794
Regulatory capital		2,777,305			3,033,741			3,139,873			3,143,327			3,215,527
Tier I ratio		10.4	%		10.6	%		10.7	%		10.7	%		10.6	%
BIS ratio		13.0	%		13.8	%		13.9	%		13.9	%		13.7	%

Profitability & Efficiency
Net interest margin		5.3	%		5.2	%		5.4	%		6.0	%		5.0	%
Efficiency ratio²		39.8	%		38.2	%		35.6	%		36.4	%		38.3	%
Avg. Free funds / interest earning assets		33.7	%		33.7	%		34.0	%		35.1	%		34.2	%
Return on avg. equity		18.6	%		30.7	%		23.9	%		26.7	%		18.0	%
Return on avg. assets		1.5	%		2.6	%		2.0	%		2.3	%		1.5	%

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

	Sep-13			Dec-13			Mar-14			Jun-14			Sep-14
Asset quality
Impaired loans⁴		1,470,752			1,477,701			1,487,982			1,537,089			1,585,208
Non-performing loans (NPLs)³		618,419			613,301			585,477			628,124			646,814
Past due loans⁵		369,208			356,203			354,195			384,998			399,594
Loan loss reserves⁶		586,416			608,291			626,452			642,633			673,620
NPLs / total loans		3.00	%		2.93	%		2.73	%		2.88	%		2.91	%
PDL / total loans		1.82	%		1.70	%		1.65	%		1.77	%		1.79	%
Coverage of NPLs (Loan loss allowance / NPLs)		94.8	%		99.2	%		107.0	%		102.3	%		104.1	%
Coverage of PDLs (Loan loss allowance / PDLs)		158.8	%		170.8	%		176.9	%		166.9	%		168.6	%
Risk index (Loan loss allowances / Loans)⁶		2.89	%		2.91	%		2.92	%		2.95	%		3.03	%
Cost of credit (prov expense annualized / avg. loans)		1.93	%		1.71	%		1.53	%		1.55	%		1.80	%

Network
Branches		488			493			484			479			475
ATMs		1,915			1,860			1,860			1,753			1,692
Employees		11,626			11,516			11,455			11,381			11,493

Market information (period-end)
Net income per share (Ch$)		0.54			0.92			0.75			0.85			0.58
Net income per ADR (US$)		0.43			0.71			0.55			0.62			0.39
Stock price		32.94			30.46			32.1			36.49			33.37
ADR price		26.29			23.57			23.44			26.45			22.09
Market capitalization (US$mn)		12,386			11,104			11,043			12,461			10,407
Shares outstanding		188,446.1			188,446.1			188,446.1			188,446.1			188,446.1
ADRs (1 ADR = 400 shares)⁷		471.1			471.1			471.1			471.1			471.1

Other Data
Quarterly inflation rate⁸		1.04	%		0.95	%		1.28	%		1.76	%		0.60	%
Central Bank monetary policy reference rate (nominal)		5.00	%		4.50	%		4.00	%		4.00	%		3.25	%
Avg. 10 year Central Bank yield (real)		2.25	%		2.17	%		2.04	%		1.86	%		1.49	%
Avg. 10 year Central Bank yield (nominal)		5.27	%		5.04	%		4.91	%		4.84	%		4.45	%
Observed Exchange rate (Ch$/US$) (period-end)		502.97			523.76			550.53			550.6			601.66

1 Ratio = Loans - mortgage loans / Time deposits + demand deposits

2 Efficiency ratio =(Net interest revenue+ fee income +financial transactions net + Other operating income +other operating expenses) divided by (Personnel expenses + admiinistrative expenses + depreciation). Excludes impairment charges

3 Capital + future interest of all loans with one installment 90 days or more overdue.

4 Impaired loans include: (A) for loans individually evaluated for impairment, (i) the carrying amount of all loans to clients that are rated C1 through C6 and (ii) the carrying amount of loans to an individual client with a loan that is non-performing, regardless of category, excluding residential mortgage loans, if the past-due amount on the mortgage loan is less than 90 days; and (B) for loans collectively evaluated for impairment, (i) the carrying amount of total loans to a client, when a loan to that client is non-performing or has been renegotiated, excluding performing residential mortgage loans, and (ii) if the loan that is non-performing or renegotiated is a residential mortgage loan, all loans to that client.

5 Total installments plus lines of credit more than 90 days overdue

6 Based on internal credit models and SB IF guidelines. Banks must have a 100% coverage of risk index

7 The rato of ADRs per local shares was modified in Oct. 2012

8 Calculated using the variation of the Unidad de Fomento (UF) in the period

Investor Relations Department

Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

Exhibit 99.2

CONTENT

Consolidated Interim Financial Statements

UNAUDITED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION	3
UNAUDITED CONSOLIDATED INTERIM STATEMENTS OF INCOME FOR THE PERIOD	4
UNAUDITED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME FOR THE PERIOD	5
UNAUDITED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY FOR THE PERIOD	6
UNAUDITED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS FOR THE PERIOD	7

Notes to the Unaudited Consolidated Interim Financial Statements

NOTE 01 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9
NOTE 02 SIGNIFICANT EVENTS	37
NOTE 03 OPERATING SEGMENTS	40
NOTE 04 CASH AND CASH EQUIVALENTS	46
NOTE 05 TRADING INVESTMENTS	47
NOTE 06 DERIVATIVE FINANCIAL INSTRUMENTS, AND HEDGE ACCOUNTING	48
NOTE 07 INTERBANK LOANS	56
NOTE 08 LOANS AND ACCOUNTS RECEIVABLE FROM CUSTOMERS	57
NOTE 09 AVAILABLE FOR SALE INVESTMENTS	64
NOTE 10 INTANGIBLE ASSETS	65
NOTE 11 PROPERTY, PLANT AND EQUIPMENT	67
NOTE 12 CURRENT AND DEFERRED TAXES	70
NOTE 13 OTHER ASSETS	73
NOTE 14 TIME DEPOSITS AND OTHER TIME LIABILITIES	74
NOTE 15 ISSUED DEBT INSTRUMENTS, AND OTHER FINANCIAL LIABILITIES	75
NOTE 16 MATURITY OF ASSETS AND LIABILITIES	82
NOTE 17 OTHER LIABILITIES	84
NOTE 18 CONTINGENCIES AND COMMITMENTS	85
NOTE 19 EQUITY	87
NOTE 20 CAPITAL REQUIREMENTS (BASEL)	90
NOTE 21 NON-CONTROLLING INTEREST	92
NOTE 22 INTEREST INCOME AND INFLATION-INDEXATION ADJUSTMENTS	97
NOTE 23 FEES AND COMMISSIONS	99
NOTE 24 PROFIT AND LOSS FROM FINANCIAL OPERATIONS	100
NOTE 25 NET FOREIGN EXCHANGE INCOME	100
NOTE 26 PROVISION FOR LOAN LOSSES	101
NOTE 27 PERSONNEL SALARIES AND EXPENSES	103
NOTE 28 ADMINISTRATIVE EXPENSES	104
NOTE 29 DEPRECIATION AND AMORTIZATION	105
NOTE 30 OTHER OPERATING INCOME AND EXPENSES, AND IMPAIRMENT	106
NOTE 31 TRANSACTIONS WITH RELATED PARTIES	108
NOTE 32 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES	113
NOTE 33 SUBSEQUENT EVENTS	117

Banco Santander Chile and Subsidiaries

UNAUDITED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

		As of September 30,			As of December 31,
		2014			2013
	NOTE	MCh$			MCh$

ASSETS
Cash and deposits in banks	4		1,448,635			1,571,810
Cash items in process of collection	4		822,594			604,077
Trading investments	5		608,663			287,567
Investments under resale agreements			3,517			17,469
Financial derivative contracts	6		2,665,474			1,494,018
Interbank loans, net	7		121,145			125,395
Loans and accounts receivables from customers, net	8		21,591,277			20,327,021
Available for sale investments	9		1,630,484			1,700,993
Held to maturity investments			-			-
Investments in associates and other companies			17,111			9,681
Intangible assets	10		30,779			66,703
Property, plant, and equipment	11		187,241			180,215
Current taxes	12		23,834			1,643
Deferred taxes	12		241,815			230,215
Other assets	13		353,263			400,025
TOTAL ASSETS			29.745.832			27,016,832

LIABILITIES
Deposits and other demand liabilities	14		5,724,921			5,620,763
Cash items in process of being cleared	4		606,307			276,379
Obligations under repurchase agreements			289,095			208,972
Time deposits and other time liabilities	14		10,531,006			9,675,272
Financial derivative contracts	6		2,424,666			1,300,109
Interbank borrowing			1,313,386			1,682,377
Issued debt instruments	15		5,596,488			5,198,658
Other financial liabilities	15		198,492			189,781
Current taxes	12		-			50,242
Deferred taxes	12		5,943			25,088
Provisions			236,274			236,232
Other liabilities	17		305,060			198,777
TOTAL LIABILITIES			27,231,638			24,662,650

EQUITY

Attributable to the Bank`s shareholders:			2,482,733			2,325,678
Capital	19		891,303			891,303
Reserves	19		1,307,761			1,130,991
Valuation adjustments	19		(4,444	)		(5,964	)
Retained earnings			288,113			309,348
Retained earnings from prior years						-
Income for the period			411,590			441,926
Minus: Provision for mandatory dividends			(123,477	)		(132,578	)
Non-controlling interest	21		31,461			28,504
TOTAL EQUITY			2,514,194			2,354,182

TOTAL LIABILITIES AND EQUITY			29,745,832			27,016,832

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 3

Banco Santander Chile and Subsidiaries

UNAUDITED CONSOLIDATED INTERIM STATEMENTS OF INCOME FOR THE PERIOD

For the periods ended

		For the three months ended September 30,						For the nine months ended September 30,
		2014			2013			2014			2013
	NOTE	MCh$			MCh$			MCh$			MCh$

OPERATING INCOME

Interest income	22		477,317			516,606			1,609,414			1,356,074
Interest expense	22		(178,205	)		(229,001	)		(648,770	)		(573,321	)

Net interest income			299,112			287,605			960,644			782,753

Fee and commission income	23		89,982			84,605			269,419			258,141
Fee and commission expense	23		(33,917	)		(29,674	)		(101,775	)		(84,445	)

Net fee and commission income			56,065			54,931			167,644			173,696

Net profit (loss) from financial operations (net trading profit loss)	24		24,693			55,813			(49,348	)		53,979
Net foreign exchange gain	25		3,125			(28,198	)		140,200			29,151
Other operating income	30		3,728			4,112			12,723			15,869

Net operating profit before provision for loan losses			386,723			374,263			1,231,863			1,055,448

Provision for loan losses	26		(99,365	)		(96,479	)		(264,635	)		(275,992	)

NET OPERATING PROFIT			287,358			277,784			967,228			779,456

Personnel salaries and expenses	27		(86,503	)		(78,584	)		(248,019	)		(229,911	)
Administrative expenses	28		(52,360	)		(48,545	)		(153,269	)		(141,167	)
Depreciation and amortization	29		(4,736	)		(15,712	)		(33,321	)		(46,626	)
Impairment of property, plant, and equipment	30		(36,582	)		(40	)		(36,611	)		(213	)
Other operating expenses	30		(12,162	)		(15,462	)		(49,108	)		(41,135	)

Total operating expenses			(192,343	)		(158,343	)		(520,328	)		(459,052	)

OPERATING INCOME			95,015			119,441			446,900			320,404

Income from investments in associates and other companies			500			345			1,339			1,494

Income before tax			95,515			119,786			448,239			321,898

Income tax expense	12		18,941			(18,417	)		(32,290	)		(52,947	)

NET INCOME FOR THE PERIOD			114,456			101,369			415,949			268,951

Attributable to:
Equity holders of the Bank			110,131			101,173			411,590			267,944
Non-controlling interest	21		4,325			196			4,359			1,007
Earnings per share attributable to Equity holders of the Bank:
(expressed in Chilean pesos)
Basic earnings	19		0.584			0.537			2.184			1.422
Diluted earnings	19		0.584			0.537			2.184			1.422

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 4

Banco Santander Chile and Subsidiaries

UNAUDITED CONSOLIDATED INTERIM STATEMENTS OF OTHER COMPREHENSIVE INCOME

For the periods ended

		For the three months ended September 30						For the nine months ended September 30
		2014			2013			2014			2013
	NOTE	MCh$			MCh$			MCh$			MCh$

NET INCOME FOR THE PERIOD			114,456			101,369			415,949			268,951

OTHER COMPREHENSIVE INCOME - ITEMS WICH MAY BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS

Available for sale investments	9		6,103			(170	)		19,587			9,436
Cash flow hedge	19		(20,232	)		6,987			(17,796	)		(599	)

Other comprehensive income which may be reclassified subsequently to profit or loss, before tax a la renta			(14,129	)		6,817			1,791			8,837

Income tax related to items which may be reclassified subsequently to profit or loss	12		2,882			(1,364	)		(302	)		(1,767	)

Other comprehensive income for the period which may be reclassified subsequently to profit or loss, net of tax			(11,247	)		5,453			1,489			7,070

OTHER COMPREHENSIVE INCOME THAT WILL NOT BE RECASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD			103,209			106,822			417,438			276,021

Attributable to:
Equity holders of the Bank			98,902			106,631			413,110			275,013
Non-controlling interest	21		4,307			191			4,328			1,008

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 5

Banco Santander Chile and Subsidiaries

UNAUDITED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

For the periods ended September 30, 2014 and 2013

			RESERVES					VALUATION ADJUSTMENTS									RETAINED EARNINGS
	Capital		Reserves and other retained earnings		Effects of merger of companies under common control			Available for sale investments			Cash flow hedge			Income tax effects			Retained earnings of prior years			Income for the period			Provision for mandatory dividends			Total attributable to shareholders			Non- controlling interest			Total Equity
	MCh$		MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Equity as of December 31, 2012		891,303		977,684		(2,224	)		(10,041	)		5,315			945			-			388,282			(116,486	)		2,134,778			34,265			2,169,043
Distribution of income from previous period		-		-		-			-			-			-			388,282			(388,282	)		-			-			-			-
Equity as of January 1, 2013		891,303		977,684		(2,224	)		(10,041	)		5,315			945			388,282			-			(116,486	)		2,134,778			34,265			2,169,043
Increase or decrease of capital and reserves		-		-		-			-			-			-			-			-			-			-			-			-
Dividends distributions/ withdrawals made		-		-		-			-			-			-			(232,780	)		-			116,486			(116,294	)		(7,871	)		(124,165	)
Transfer of retained earnings to reserves		-		155,502		-			-			-			-			(155,502	)		-			-			-			(14	)		(14	)
Provision for mandatory dividends		-		-		-			-			-			-			-			-			(80,383	)		(80,383	)		-			(80,383	)
Subtotals		-		155,502		-			-			-			-			(388,282	)		-			36,103			(196,677	)		(7,885	)		(204,562	)
Other comprehensive income		-		-		-			9,435			(599	)		(1,767	)		-			-			-			7,069			1			7,070
Income for the year		-		-		-			-			-			-			-			267,944			-			267,944			1,007			268,951
Subtotals		-		-		-			9,435			(599	)		(1,767	)		-			267,944			-			275,013			1,008			276,021
Equity as of September, 2013		891,303		1,133,186		(2,224	)		(606	)		4,716			(822	)		-			267,944			(80,383	)		2,213,114			27,388			2,240,502

Equity as of December 31, 2013		891,303		1,133,215		(2,224	)		802			(8,257	)		1,491			-			441,926			(132,578	)		2,325,678			28,504			2,354,182
Distribution of income from previous period		-		-		-			-			-			-			441,926			(441,926	)		-			-			-			-
Equity as of January 1, 2014		891,303		1,133,215		(2,224	)		802			(8,257	)		1,491			441,926			-			(132,578	)		2,325,678			28,504			2,354,182
Increase or decrease of capital and reserves		-		-		-			-			-			-			-			-			-			-			(1,371	)		(1,371	)
Treasury share transactions		-		-		-			-			-			-			-			-			-			-			-			-
Dividends distributions/ withdrawals made		-		-		-			-			-			-			(265,156	)		-			132,578			(132,578	)		-			(132,578	)
Transfer of retained earnings to reserves		-		176,770		-			-			-			-			(176,770	)		-			-			-			-			-
Provision for mandatory dividends		-		-		-			-			-			-			-			-			(123,477	)		(123,477	)		-			(123,477	)
Subtotals		-		176,770		-			-			-			-			(441,926	)		-			9,101			(256,055	)		(1,371	)		(257,426	)
Other comprehensive income		-		-		-			19,626			(17,796	)		(310	)		-			-			-			1,520			(31	)		1,489
Income for the year		-		-		-			-			-			-			-			411,590			-			411,590			4,359			415,949
Subtotals		-		-		-			19,626			(17,796	)		(310	)		-			411,590			-			413,110			4,328			417,438
Equity as of September 30, 2014		891,303		1,309,985		(2,224	)		20,428			(26,053	)		1,181			-			411,590			(123,477	)		2,482,733			31,461			2,514,194

Period	Total attributable to Bank shareholders		Allocated to reserves		Allocated to dividends		Percentage distributed		Number of Shares		Dividend per share (in pesos)
	MCh$		MCh$		MCh$		%

Year 2013 (Shareholders Meeting April 2014)		441,926		176,770		265,156		60		188,446,126,794		1.407

Year 2012 (Shareholders Meeting April 2013)		387,967		155,187		232,780		60		188,446,126,794		1.235

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 6

Banco Santander Chile and Subsidiaries

UNAUDITED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

		For the nine months ended September,
		2014			2013
	NOTE	MCh$			MCh$

A – CASH FLOWS FROM OPERATING ACTIVITIES:
CONSOLIDATED INCOME BEFORE TAX			448,239			321,898
Debits (credits) to income that do not represent cash flows			(763,228	)		(655,416	)
Depreciation and amortization	29		33,321			46,626
Impairments of property, plant, and equipment	30		36,611			213
Provision for loan losses	26		307,840			315,086
Mark to market of trading investments			(14,736	)		(9,427	)
Income from investments in associates and other companies			(1,339	)		(1,494	)
Net gain on sale of assets received in lieu of payment	30		(10,057	)		(14,104	)
Provision on assets received in lieu of payment			3,494			1,997
Net gain on sale of property, plant, and equipment	30		(219	)		(289	)
Charge off of assets received in lieu of payment	30		2,909			6,751
Net interest income	22		(960,644	)		(782,753	)
Net fee and commission income	23		(167,644	)		(173,696	)
Debits (credits) to income that do not represent cash flows			(23,811	)		(51,128	)
Changes in deferred taxes	12		31,047			6,802
Increase/decrease in operating assets and liabilities			359,624			993,279
Increase (decrease) of loans and accounts receivables from customers, net			(1,112,431	)		(1,436,814	)
Increase (decrease) of financial investments			(250,587	)		370,556
Increase (decrease) due to resale agreements (assets)			(13,952	)		(27,196	)
Increase (decrease) of interbank loans			4,250			54,163
Increase (decrease) of assets received or awarded in lieu of payments			(39	)		(7,808	)
Increase of debits in customers checking accounts			99,350			149,872
Increase (decrease) of time deposits and other time liabilities			855,733			583,912
Increase (decrease) of obligations with domestic banks			500			-
Increase (decrease) of other demand liabilities or time obligations			4,808			137,237
Increase (decrease) of obligations with foreign banks			(369,401	)		211,796
Increase (decrease) of obligations with Central Bank of Chile			(89	)		(140	)
Increase (decrease) of obligations under repurchase agreements			80,123			84,839
Increase (decrease) in other financial liabilities			8,711			8,729
Net increase of other assets and liabilities			(527,641	)		(339,968	)
Redemption of letters of credit			(22,626	)		(29,453	)
Issuance under mortgage bonds program			36,252			34,637
Redemption of senior bonds and payments of interest			(4,382	)		-
Senior bond issuances			972,279			566,711
Redemption of senior bonds and payments of interest			(503,165	)		(328,295	)
Interest received			1,615,719			1,340,365
Interest paid			(651,979	)		(502,358	)
Dividends received from investments in other companies			2,837			1,745
Fees and commissions received	23		269,419			258,141
Fees and commissions paid	23		(101,775	)		(84,445	)
Income tax paid	12		(32,290	)		(52,947	)
Total cash flow provided by operating activities			44,635			659,761

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 7

Banco Santander Chile and Subsidiaries

UNAUDITED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

		For the nine months ended September,
		2014			2013
	NOTE	MCh$			MCh$

B – CASH FLOWS FROM INVESTMENT ACTIVITIES:
Purchases of property, plant, and equipment	11		(27,088	)		(16,646	)
Sales of property, plant, and equipment	11		118			242
Purchases of investments in associates and other companies			(6,313	)		(1,441	)
Purchases of intangible assets	10		(14,004	)		(7,765	)
Total cash flow provided by (used in) investment activities			(47,287	)		(25,610	)

C – CASH FLOW FROM FINANCING ACTIVITIES:
From shareholder´s financing activities			(272,559	)		(270,210	)
Redemption of subordinated bonds and payments of interest			(7,403	)		(37,430	)
Dividends paid			(265,156	)		(232,780	)
From non-controlling interest financing activities			-			(7,871	)
Dividends and/or withdrawals paid			-			(7,871	)
Total cash flow used in financing activities			(272,559	)		(278,081	)

D – NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS DURING THE PERIOD			(275,211	)		356,070

E – EFFECTS OF FOREIGN EXCHANGE RATE FLUCTUATIONS			40,625			(5,979	)

F – INITIAL BALANCE OF CASH AND CASH EQUIVALENTS			1,899,508			1,485,728

FINAL BALANCE OF CASH AND CASH EQUIVALENTS	4		1,664,922			1,835,819

		For the nine months ended September 30,
Reconciliation of provisions for the Consolidated Interim Statements of Cash Flows for the periods ended		2014 MCh$			2013 MCh$

Provision for loan losses for cash flow purposes			307,840			315,086
Recovery of loans previously charged off			(43,205	)		(39,094	)
Provision for loan losses - net	26		264,635			275,992

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 8

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CORPORATE INFORMATION

Banco Santander Chile (formerly Banco Santiago) is a banking corporation (limited company) operating under the laws of the Republic of Chile, headquartered at Bandera N°140, Santiago. The corporation provides a broad range of general banking services to its customers, ranging from individuals to major corporations. Banco Santander Chile and its subsidiaries (collectively referred to herein as the “Bank” or “Banco Santander Chile”) offers commercial and consumer banking services, including (but not limited to) factoring, collection, leasing, securities and insurance brokering, mutual and investment fund management, and investment banking.

Banco Santander Spain controls Banco Santander-Chile through its holdings in Teatinos Siglo XXI Inversiones Ltda. and Santander-Chile Holding S.A., which are controlled subsidiaries of Banco Santander Spain. As of September 30, 2014 Banco Santander Spain owns or controls directly and indirectly 99.5% of Santander-Chile Holding S.A. and 100% of Teatinos Siglo XXI Inversiones Ltda. This gives Banco Santander Spain control over 67.18% of the Bank’s shares.

Basis of preparation

These Unaudited Consolidated Interim Financial Statements have been prepared in accordance with the Compendium of Accounting Standards issued by the Superintendency of Banks and Financial Institutions (SBIF), the Chilean regulatory agency. The General Banking Law set out in its article 15 states that, the banks must apply accounting standards established by SBIF. For those issues not covered by the SBIF, the Bank must apply generally accepted standards issued by the Colegio de Contadores de Chile A.G (Association of Chilean Accountants), which agree to International Financial Reporting Standards (IFRS). In the event of discrepancies between the accounting principles and accounting standards issued by the SBIF (Compendium of Accounting Standards), the latter shall prevail.

For purposes of these financial statements we use certain terms and conventions. References to “US$”, “U.S. dollars” and “dollars” are to United States dollars, references to “EUR” are to European Economic Community Euro, references to “CNY” are to Chinese Yuan or renminbi, references to “CHF” are to Swiss franc, references to “Chilean pesos”, “pesos” or “Ch$” are to Chilean pesos, and references to “UF” are to Unidades de Fomento. The UF is an inflation-indexed Chilean monetary unit with a value in Chilean pesos that changes daily to reflect changes in the official Consumer Price Index (“CPI”) of the Instituto Nacional de Estadísticas (the Chilean National Institute of Statistics) for the previous month.

The Notes to the Consolidated Interim Financial Statements contain additional information to support the figures submitted in the Consolidated Interim Statement of Financial Position, Consolidated Interim Statement of Income, Consolidated Interim Statement of Comprehensive Income, Consolidated Interim Statement of Changes in Equity and Consolidated Interim Statement of Cash Flows for the Period. The notes provide narrative descriptions and further information in a clear, relevant, reliable and comparable manner.

Basis of preparation for the Unaudited Consolidated Interim Financial Statements

The Unaudited Consolidated Interim Financial Statements as of September 30, 2014 and 2013 and December 31, 2013 and for the three-month and nine-month periods ended September 30, 2014 and 2013, incorporate the financial statements of the Bank entities over which the bank has control (including structured entities); and includes the adjustments, reclassifications and eliminations needed to comply with the accounting and valuation criteria established by IFRS issued by IASB, except in those cases where the SBIF regulations prevail as explained above. Control is achieved when the Bank:

has power over the investee;

II.

is exposed, or has rights, to variable returns from its involvement with the investee; and

III.

has the ability to use its power to affect its returns.

The Bank reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

When the Bank has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities over the investee unilaterally. The Bank considers all relevant facts and circumstances in assessing whether or not the Bank’s voting rights in an investee are sufficient to give it power, including:

the size of the Bank’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

potential voting rights held by the Bank, other vote holders or other parties;

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 9

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

rights arising from other agreements; and

any additional facts and circumstances that indicate that the Bank has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders' meetings

Consolidation of a subsidiary begins when the Bank obtains control over the subsidiary and ceases when the Bank loses control over the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the Consolidated Interim Statements of Income and in the Consolidated Interim Statements of Other Comprehensive Income from the date the Bank gains control until the date when the Bank ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Bank and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Bank and to the non-controlling interests even if this results in the non-controlling interests having a deficit in certain circumstances.

When necessary, adjustments are made to the financial statements of the subsidiaries to ensure their accounting policies are consistent with the Bank’s accounting policies.

All intragroup assets, liabilities, equity, income, expenses and cash flows relating to transactions between consolidated entities are eliminated in full on consolidation.

Changes in the consolidated entities ownership interests in subsidiaries that do not result in loss of control over the subsidiaries are accounted for as equity transactions. The carrying values of the Group’s equity and the non-controlling interests’ equity are adjusted to reflect the changes to their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Bank.

In addition, third parties’ shares in the Consolidated Bank’s equity are presented as “Non-controlling interests” in the Consolidated Interim Statement of Changes in Equity. Their share in the income for the year is presented as “Attributable to non-controlling interests” in the Consolidated Interim Statements of Income.

The following companies are considered entities controlled by the Bank and are therefore within the scope of consolidation:

i.	Entities controlled by the Bank through participation in equity

			Percent ownership share
		Place of	As of September 30,						As of December 31,						As of September 30,
		Incorporation	2014						2013						2013
		and	Direct		Indirect		Total		Direct		Indirect		Total		Direct		Indirect		Total
Name of the Subsidiary	Main Activity	operation	%		%		%		%		%		%		%		%		%

Santander Corredora de Seguros Limitada	Insurance brokerage	Santiago, Chile		99.75		0.01		99.76		99.75		0.01		99.76		99.75		0.01		99.76

Santander S.A. Corredores de Bolsa	Financial instruments brokerage	Santiago, Chile		50.59		0.41		51.00		50.59		0.41		51.00		50.59		0.41		51.00

Santander Asset Management S.A. Administradora General de Fondos (*)	Third-party funds administration	Santiago, Chile		-		-		-		-		-		-		99.96		0.02		99.98

Santander Agente de Valores Limitada	Securities brokerage	Santiago, Chile		99.03		-		99.03		99.03		-		99.03		99.03		-		99.03

Santander S.A. Sociedad Securitizadora	Purchase of credits and issuance of debt instruments	Santiago, Chile		99.64		-		99.64		99.64		-		99.64		99.64		-		99.64

Santander Servicios de Recaudación y Pagos Limitada (**)	Support society, making and receiving payments	Santiago, Chile		-		-		-		99.90		0.10		100.00		99.90		0.10		100.00

(*) Santander Asset Management S.A. Administradora General de Fondos was sold in December 2013.

(**) From May 1, 2014, this entity was absorbed by the Bank, with authorization for this transaction obtained from the SBIF on March 26, 2014.

The detail of non-controlling participation on all the remaining subsidiaries can be seen in Note 21 – Non-controlling interest.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 10

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

ii.

Entities controlled by the Bank through other considerations

The following companies have been consolidated based on the determination that the Bank has control as previously defined above and in accordance with IFRS 10, Consolidated Financial Statements:

Santander Gestión de Recaudación y Cobranza Limitada (collection services)

Multinegocios S.A. (management of sales force)

Servicios Administrativos y Financieros Limitada (management of sales force)

Multiservicios de Negocios Limitada (call center)

Bansa Santander S.A. (management of repossessed assets and leasing of properties)

Servicios de Cobranza Fiscalex Limitada (collection services) (*)

(*) As of August 1, 2014, Servicios de Cobranza Fiscalex Limitada was absorbed by Santander Gestión de Recaudación y Cobranza Limitada. See Note 02 d)i.

iii.

Associates

An associate is an entity over which the Bank has significant influence. Significant influence, in this case, is defined as the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate.

The following companies are considered “Associates” in which the Bank accounts for its participation using the equity method:

			Percent ownership share
		Place of Incorporation	As of September 30,		As of December 31,		As of September 30,
		and	2014		2013		2013
Associates	Main activity	operation	%		%		%
Redbanc S.A.	ATM service	Santiago, Chile		33.43		33.43		33.43
Transbank S.A.	Debit and credit card services	Santiago, Chile		25.00		25.00		25.00
Centro de Compensación Automatizado	Electronic fund transfer and compensation services	Santiago, Chile		33.33		33.33		33.33
Sociedad Interbancaria de Depósito de Valores S.A.	Delivery of securities on public offer	Santiago, Chile		29.28		29.28		29.28
Cámara Compensación de Alto Valor S.A.	Payments clearing	Santiago, Chile		14.14		14.14		14.14
Administrador Financiero del Transantiago S.A.	Administration of boarding passes to public transportation	Santiago, Chile		20.00		20.00		20.00
Sociedad Nexus S.A.	Credit card processor	Santiago, Chile		12.90		12.90		12.90
Servicios de Infraestructura de Mercado OTC S.A.	Administration of the infrastructure for the financial market of derivative instruments	Santiago, Chile		11.11		11.11		11.11

In the case of Nexus S.A. and Cámara Compensación de Alto Valor S.A., Banco Santander Chile has a representative on the Board of Directors. As per the Associate definitions, the Bank has concluded that it exerts significant influence over those entities.

Servicios de Infraestructura de Mercado OTC S.A.is considered an associate due to the Bank’s executives being actively involved in the management of the company, including the organization and structuring of this company from the point of incorporation, therefore exercising significant influence over this company. This influence is in addition to a 11.11% holding in this associate.

iv.

Share or rights in other companies

Such entities represent those over which the Bank has no control or significant influences are presented in this category. These holdings are shown at acquisition value.

Non-controlling interest

Non-controlling interest represents the portion of net income and net assets which the Bank does not own, either directly or indirectly. It is presented as “Attributable to non-controlling interest” separately in the Consolidated Interim Statement of Income, and separately from shareholders’ equity in the Consolidated Interim Statement of Financial Position.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 11

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

In the case of entities controlled by the Bank through other considerations, income and equity are presented in full as non-controlling interest, since the Bank controls them, but does not have any ownership expressed as a percentage.

Operating segments

The Bank discloses separate information for each operating segment that:

has been identified, and

ii.

exceeds the quantitative thresholds stipulated for a segment.

Operating segments with similar economic characteristics often have a similar long-term financial performance. Two or more segments can be combined only if aggregation is consistent with International Financial Reporting Standard 8 “Operating Segments” (IFRS 8) and the segments have similar economic characteristics and are similar in each of the following respects:

the nature of the products and services;

ii.

the nature of the production processes;

iii.

the type or class of customers that use their products and services;

iv.

the methods used to distribute their products or services; and

if applicable, the nature of the regulatory environment, for example, banking, insurance, or public utilities.

The Bank reports separately on each operating segment that exceeds any of the following quantitative thresholds:

Its reported revenue, from both external customers and intersegment sales or transfers, is 10% or more of the combined internal and external revenue of all the operating segments.

ii.

The absolute amount of its reported profit or loss is 10% or more of the greater in absolute amount of: (i) the combined reported profit of all the operating segments that did not report a loss; (ii) the combined reported loss of all the operating segments that reported a loss.

iii.

Its assets represent 10% or more of the combined assets of all the operating segments.

Operating segments that do not meet any of the quantitative thresholds may be treated as segments to be reported, in which case the information must be disclosed separately if management believes it could be useful for the users of the Unaudited Consolidated Interim Financial Statements.

Information about other business activities of the operating segments not separately reported is combined and disclosed in the “Other segments” category.

According to the information presented, the Bank’s segments were determined under the following definitions: An operating segment is a component of an entity:

that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses from transactions with other components of the same entity);

ii.

whose operating results are regularly reviewed by the entity’s chief executive officer, who makes decisions about resources allocated to the segment and assess its performance; and

iii.

for which discrete financial information is available.

Functional and presentation currency

According to International Accounting Standard No.21 “The Effects of Changes in Foreign Exchange Rates” (IAS 21), the Chilean peso, which is the currency of the primary economic environment in which the Bank operates and the currency which influences its costs and revenues structure, has been defined as the Bank’s functional and presentation currency.

Accordingly, all balances and transactions denominated in currencies other than the Chilean Peso are treated as “foreign currency.”

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 12

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Foreign currency transactions

The Bank grants loans and accepts deposits in amounts denominated in foreign currencies, mainly the U.S. dollar. Assets and liabilities denominated in foreign currencies, held by the Bank are translated to Chilean pesos based on the market rate published by Reuters at 1:30 p.m. on the last business day of every month; the rate used was Ch$598.28 per US$1 as of September 30, 2014 (Ch$504.70 per US$1 as of September 30, 2013).

The amounts of net foreign exchange gains and losses includes recognition of the effects that exchange rate variations have on assets and liabilities denominated in foreign currencies and the profits and losses on foreign exchange spot and forward transactions undertaken by the Bank.

Definitions and classification of financial instruments

Definitions

A “financial instrument” is any contract that gives rise to a financial asset of one entity, and a financial liability or equity instrument of another entity.

An “equity instrument” is a legal transaction that evidences a residual interest in the assets of an entity deducting all of its liabilities.

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

“Hybrid financial instruments” are contracts that simultaneously include a non-derivative host contract together with a financial derivative, known as an embedded derivative, which is not separately transferable and has the effect that some of the cash flows of the hybrid contract vary in a way similar to a stand-alone derivative.

ii.

Classification of financial assets for measurement purposes

The financial assets are initially classified into the various categories used for management and measurement purposes.

Financial assets are included for measurement purposes in one of the following categories:

Trading investments portfolio (at fair value through profit and loss): this classification includes the financial assets acquired for the purpose of generating profits in the short term from fluctuations in their prices. This classification includes the portfolio of trading investments and financial derivative contracts not designated as hedging instruments.

Available for sale investments portfolio, is comprised of debt instruments not classified as: “held-to-maturity investments,” “Credit investments (loans and accounts receivable from customers or interbank loans)” or “Financial assets at fair value through profit or loss.” Available for sale (AFS) investments are initially recorded at cost, which includes transaction costs that are directly attributable to the acquisition. AFS instruments are subsequently measured at fair value, or based on appraisals determined using internal models when appropriate. Unrealized gains or losses stemming from changes in fair value are recorded as a debit or credit under the heading “Other comprehensive income” within equity. When these investments are disposed or become impaired, the cumulative amount of the adjustments at fair value recognized in “Other comprehensive income” are transferred to the Consolidated Interim Statement of Income under “Net income from financial operations.”

Held to maturity instruments portfolio: this classification includes debt securities traded on an active market, with a fixed maturity, and with fixed or determinable payments, for which the Bank has both the intent and a proven ability to hold to maturity. Held to maturity investments are recorded at their amortized cost plus interest earned, less any impairment losses established when their carrying amount exceeds the present value of estimated future cash flows.

Credit investments (loans and accounts receivable from customers or interbank loans): this classification includes financing granted to third parties, based on their nature, regardless of the class of borrower and the form of financing. It includes loans and accounts receivable from customers, interbank loans, and financial lease transactions in which the consolidated entities acts as lessor. Loans and receivables shall be measured at amortized cost using the effective interest method.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 13

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

iii. Classification of financial assets for presentation purposes

For presentation purposes, the financial assets are classified by their nature into the following line items in the Consolidated Interim Financial Statements:

Cash and deposits in banks: This line includes cash balances, checking accounts and on-demand deposits with the Central Bank of Chile and other domestic and foreign financial institutions. Amounts invested as overnight deposits are included in this item.

Cash items in process of collection: This item represents domestic transactions in the process of transfer through a central domestic clearinghouse or international transactions which may be delayed in settlement due to timing differences, etc.

Trading investments: This item includes financial instruments held-for-trading and investments in mutual funds which must be adjusted to their fair value in the same way as instruments acquired for trading.

Investments under resale agreements: includes balances of financial instruments purchased under resale agreement.

Financial derivative contracts: Financial derivative contracts with positive fair values are presented in this item. It includes both independent contracts as well as derivatives that should and can be separated from a host contract, whether they are for trading or accounted for as derivatives held for hedging, as shown in Note 6 to the Unaudited Consolidated Interim Financial Statements.

Trading derivatives: Includes the fair value of derivatives which do not qualify for hedge accounting, including embedded derivatives separated from hybrid financial instruments.

Hedging derivatives: Includes the fair value of derivatives designated as being in a hedging relationship, including the embedded derivatives separated from the hybrid financial instruments.

Interbank loans: This item includes the balances of transactions with domestic and foreign banks, including the Central Bank of Chile, other than those reflected in certain other financial asset classifications listed above.

Loans and accounts receivables from customers: These loans are non-derivative financial assets for which fixed or determined amounts are charged, that are not listed on an active market and which the Bank does not intend to sell immediately or in the short term. When the Bank is the lessor in a lease, and it substantially transfers the risks and rewards incidental to the leased asset, the transaction is presented in loans and accounts receivable from customers while the leased asset is derecognized in the Bank´s statement of financial position.

Investment instruments: Are classified into two categories: held-to-maturity investments, and available-for-sale investments. The held-to-maturity investment classification includes only those instruments for which the Bank has the ability and intent to hold to maturity. The remaining investments are treated as available for sale.

iv.

Classification of financial liabilities for measurement purposes

Financial liabilities are initially classified for management and measurement purposes as follows:

Financial liabilities held for trading (at fair value through profit or loss): include financial liabilities issued to generate short-term profits from fluctuations in their prices, financial derivatives not deemed to qualify for hedge accounting and financial liabilities arising from firm commitment of financial assets purchased under repurchase agreements or borrowed (“short positions”).

Financial liabilities at amortized cost : include financial liabilities, regardless of their class and maturity, not included in any of the aforementioned categories which arise from the borrowing activities of financial institutions.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 14

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Classification of financial liabilities for presentation purposes

The financial liabilities are classified by their nature into the following line items in the Unaudited Consolidated Interim Statement of Financial Position:

Deposits and other on- demand liabilities: this includes all on-demand obligations except for term savings accounts, which are not considered on-demand instruments in view of their special characteristics. Obligations whose payment may be required during the period are deemed to be on-demand obligations. Operations which become callable the day after the closing date are not treated as on-demand obligations.

Cash items in process of being cleared: this represents domestic transactions in the process of transfer through a central domestic clearing house or international transactions which may be delayed in settlement due to timing differences, etc..

Obligations under repurchase agreements: this includes the balances of sales of financial instruments under securities repurchase and loan agreements. In accordance with the applicable regulation, the Bank does not record instruments acquired under repurchase agreements.

Time deposits and other time liabilities: this shows the balances of deposit transactions in which a term at the end of which they become callable has been stipulated.

Financial derivative contracts: this includes financial derivative contracts with negative fair values (i.e. a liability of the Bank), whether they are for trading or for hedge accounting, as set forth in Note 6.

Trading derivatives: Includes the fair value of derivatives which do not qualify for hedge accounting, including embedded derivatives separated from hybrid financial instruments.

Hedging derivatives: Includes the fair value of derivatives designated as being in a hedging relationship, including the embedded derivatives separated from the hybrid financial instruments.

Interbank borrowings: This includes obligations due to other domestic banks, foreign banks, or the Central Bank of Chile, other than those reflected in certain other financial liability classifications listed above.

Issued debt instruments: There are three types of instruments issued by the Bank: Obligations under letters of credit, Subordinated bonds and Senior bonds placed in the local and foreign market.

Other financial liabilities: This item includes credit obligations to persons other than domestic banks, foreign banks, or the Central Bank of Chile, for financing purposes or operations in the normal course of business.

Valuation of financial instruments and recognition of fair value changes

In general, financial assets and liabilities are initially recorded at fair value which, in the absence of evidence to the contrary, is deemed to be the transaction price. Financial instruments not measured at fair value through profit or loss includes transaction costs. Subsequently, and at the end of each reporting period, they are measured pursuant to the following criteria:

Valuation of financial assets

Financial assets are measured according to their fair value, gross of any transaction costs that may be incurred in the course of a sale, except for loans and accounts receivable.

According to IFRS 13 Fair Value Measurement (effective date from January 1, 2013), “fair value” is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique. A fair value measurement is for a particular asset or liability. Therefore, when measuring fair value an entity shall take into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 15

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

The fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either: (a) in the principal market for the asset or liability; or (b) in the absence of a principal market, in the most advantageous market for the asset or liability. Even when there is no observable market to provide pricing information in connection with the sale of an asset or the transfer of a liability at the measurement date, the fair value measurement shall assume that the transaction takes place considered from the perspective of a potential market participant who intends to maximize value associated with the asset or liability.

When using valuation techniques, the Bank shall maximize the use of relevant observable inputs and minimize the use of unobservable inputs as available. If an asset or a liability measured at fair value has a bid price and an ask price, the price within the bid-ask spread that is most representative of fair value in the circumstances shall be used to measure fair value regardless of where the input is categorized within the fair value hierarchy (i.e. Level 1, 2 or 3). IFRS 13 establishes a fair value hierarchy that categorizes into three levels the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).

All derivatives are recorded in the Unaudited Consolidated Interim Statements of Financial Position at the fair value previously described. This fair value is compared to the valuation as at the trade date. If the change in value is positive, this is recorded as an asset. If the change in value is negative, this is recorded as a liability. The fair value on the trade date is deemed, in the absence of evidence to the contrary, to be the transaction price. The changes in the fair value of derivatives from the trade date are recorded in “Net income from financial operations” in the Unaudited Consolidated Interim Statement of Income.

Specifically, the fair value of financial derivatives included in the portfolios of financial assets or liabilities held for trading is deemed to be their daily quoted price. If, for exceptional reasons, the quoted price cannot be determined on a given date, the fair value is determined using similar methods to those used to measure over the counter (OTC) derivatives. The fair value of OTC derivatives is the sum of the future cash flows resulting from the instrument, discounted to present value at the date of valuation (“present value” or “theoretical close”) using valuation techniques commonly used by the financial markets: “net present value” (NPV) and option pricing models, among other methods. The calculation to establish the fair value includes credit valuation adjustments (CVA) hence the fair value of each instrument should include the credit risk of its counterparty and the Bank’s own risk of the operation.

“Loans and accounts receivable from customers” and “Held-to-maturity investments” are measured at amortized cost using the “effective interest method.” “Amortized cost” is the acquisition cost of a financial asset or liability, adjusted as appropriate for prepayments of principal and the cumulative amortization (recorded in the consolidated income statement) of the difference between the initial cost and the maturity amount as calculated under the effective interest rate method. For financial assets, amortized cost also includes any reductions for impairment and provides for amounts not recoverable . For loans and accounts receivable designated as hedged items in fair value hedges, the changes in their fair value related to the risk or risks being hedged is recorded in “Net income from financial operations”.

The “effective interest rate” is the discount rate that exactly matches the initial amount of a financial instrument to all its estimated cash flows over its remaining life. For fixed-rate financial instruments, the effective interest rate incorporates the contractual interest rate established on the acquisition date. Where applicable, the fees and transaction costs that are a part of the financial return are included. For floating-rate financial instruments, the effective interest rate matches the current rate of return until the date of the next review of interest rates.

Equity instruments whose fair value cannot be determined in a sufficiently objective manner are measured at acquisition cost adjusted for any related impairment loss. The financial derivatives, with an underlying asset of the equity instruments, are settled by delivery of those instruments and must be valued using the same principles.

The amounts at which the financial assets are recorded represent the Bank’s maximum exposure to credit risk as at the reporting date. The Bank has also received collateral and other credit enhancements to mitigate its exposure to credit risk, which consist mainly of mortgage guarantees, equity instruments and personal securities, assets under leasing agreements, assets acquired under repurchase agreements, securities loans and derivatives.

ii.

Valuation of financial liabilities

In general, financial liabilities are measured at amortized cost, as defined above, except for those financial liabilities designated as hedged items or hedging instruments and financial liabilities held for trading, which are measured at fair value.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 16

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

iii.

Valuation techniques

Financial instruments at fair value, determined on the basis of price quotations in active markets, include government debt securities, private sector debt securities, equity shares, short positions, and fixed-income securities issued.

In cases where price quotations cannot be observed in available markets, the Management determines a best estimate of the price that the market would set using its own internal models. In most cases, these models use data based on observable market parameters as significant inputs however for some valuations of financial instruments, significant inputs are unobservable in the market. To determine a value for those instruments, various techniques are employed to make these estimates, including the extrapolation of observable market data.

The most reliable evidence of the fair value of a financial instrument on initial recognition is the transaction price, unless the value of the instrument can be obtained from other market transactions performed with the same or similar instruments or can be measured by using a valuation technique in which the variables used include only observable market data, mainly interest rates.

The main techniques used as of September 30, 2014 and 2013 and as of December 31, 2013 by the Bank’s internal models to determine the fair value of the financial instruments are as follows:

i. In the valuation of financial instruments permitting static hedging (mainly “forwards” and “swaps”), the “present value” method is used. Estimated future cash flows are discounted using the interest rate curves of the related currencies. The interest rate curves are generally observable market data.

ii. In the valuation of financial instruments requiring dynamic hedging (mainly structured options and other structured instruments), the Black-Scholes model is normally used. Where appropriate, observable market inputs are used to obtain factors such as the bid-offer spread, exchange rates, volatility, correlation indexes and market liquidity.

iii.

In the valuation of certain financial instruments exposed to interest rate risk, such as interest rate futures, caps and floors, the present value method (futures) and the Black-Scholes model (plain vanilla options) are used. The main inputs used in these models are observable market data, including the related interest rate curves, volatilities, correlations and exchange rates.

The fair value of the financial instruments calculated by the aforementioned internal models considers contractual terms and observable market data, which include interest rates, credit risk, exchange rates, quoted market price of shares, volatility and prepayments, among others. The valuation models are not significantly subjective, since these methodologies can be adjusted and evaluated, as appropriate, through the internal calculation of fair value and the subsequent comparison with the related actively traded price.

iv.

Recording result

As a general rule, changes in the carrying amount of financial assets and liabilities are recorded in the Unaudited Consolidated Interim Statement of Income. A distinction is made between those arising from the accrual of interest, which are recorded under interest income or interest expense as appropriate, and those arising for other reasons, which are recorded at their net amount under “Net income from financial operations”.

In the case of trading investments, the fair value adjustments, interest income, indexation adjustment and foreign exchange, are included in the Unaudited Consolidated Interim Statement of Income under “Net income from financial operations.”

Adjustments due to changes in fair value from:

“Available-for-sale instruments” are recorded and accumulated under “Other comprehensive income” within Equity.

When available-for-sale instruments are disposed of or determined to be impaired, the cumulative gain or loss previously accumulated as “Other comprehensive income” is reclassified to the Unaudited Consolidated Interim Statement of Income.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 17

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Hedging transactions

The Bank uses financial derivatives for the following purposes:

to sell to customers who request these instruments in the management of their market and credit risks,

ii)

to use these derivatives in the management of the risks of the Bank entities’ own positions and assets and liabilities (“hedging derivatives”), and

iii)

to obtain profits from changes in the price of these derivatives (“trading derivatives”).

All financial derivatives that are not held for hedging purposes are accounted for as “trading derivatives.”

A derivative qualifies for hedge accounting if all the following conditions are met:

The derivative hedges one of the following three types of exposure:

Changes in the value of assets and liabilities due to fluctuations, among others, in the interest rate and/or exchange rate to which the position or balance to be hedged is subject (“fair value hedge”);

Changes in the estimated cash flows arising from financial assets and liabilities, and highly probable forecasted transactions (“cash flow hedge”);

The net investment in a foreign operation (“hedge of a net investment in a foreign operation”).

It is effective in offsetting exposure inherent in the hedged item or position throughout the expected term of the hedge, which means that:

At the date of arrangement the hedge is expected, under normal conditions, to be highly effective (“prospective effectiveness”).

There is sufficient evidence that the hedge was actually effective during the life of the hedged item or position (“retrospective effectiveness”).

There must be adequate documentation evidencing the specific designation of the financial derivative to hedge certain balances or transactions and how this effective hedge was expected to be achieved and measured, provided that this is consistent with the Bank’s management of own risks.

The changes in the value of financial instruments qualifying for hedge accounting are recorded as follows:

For fair value hedges, the gains or losses arising on both hedging instruments and the hedged items (attributable to the type of risk being hedged) are included as “Net income from financial operations” in the Unaudited Consolidated Interim Statement of Income

For fair value hedges of interest rate risk on a portfolio of financial instruments, gains or losses that arise in measuring hedging instruments and other gains or losses due to changes in fair value of the underlying hedged item (attributable to the hedged risk) are recorded in the Unaudited Consolidated Interim Statement of Income under “Net income from financial operations”.

For cash flow hedges, the change in fair value of the hedging instrument is included as “Cash flow hedge” in “Other comprehensive income”, until the hedged transaction occurs, thereafter being reclassified to the Unaudited Consolidated Interim Statement of Income, unless the hedged transaction results in the recognition of non–financial assets or liabilities, in which case it is included in the cost of the non-financial asset or liability.

The differences in valuation of the hedging instrument corresponding to the ineffective portion of the cash flow hedging transactions are recorded directly in the Unaudited Consolidated Interim Statement of Income under “Net income from financial operations”.

If a derivative designated as a hedging instrument no longer meets the requirements described above due to expiration, ineffectiveness or for any other reason, the derivative is classified as a “trading derivative.” When “fair value hedging” is discontinued, the fair value adjustments to the carrying amount of the hedged item arising from the hedged risk are amortized to gain or loss from that date.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 18

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

When cash flow hedges are discontinued, any cumulative gain or loss of the hedging instrument recognized under “Other comprehensive income” (from the period when the hedge was effective) remains recorded in equity until the hedged transaction occurs, at which time it is recorded in the Unaudited Consolidated Interim Statement of Income, unless the transaction is no longer expected to occur, in which case any cumulative gain or loss is recorded immediately in the Unaudited Consolidated Interim Statement of Income.

vi.

Derivatives embedded in hybrid financial instruments

Derivatives embedded in other financial instruments or in other host contracts are accounted for separately as derivatives if their risks and characteristics are not closely related to those of the host contracts, provided that the host contracts are not classified as “Other financial assets (liabilities) at fair value through profit or loss” or as “Trading investments portfolio”.

vii.

Offsetting of financial instruments

Financial asset and liability balances are offset, i.e., reported in the Unaudited Consolidated Interim Statements of Financial Position at their net amount, only if there is a legally enforceable right to offset the recorded amounts and the Bank intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

viii.

Derecognition of financial assets and liabilities

The accounting treatment of transfers of financial assets is determined by the extent and the manner in which the risks and rewards associated with the transferred assets are transferred to third parties:

If the Bank transfers substantially all the risks and rewards of ownership to third parties, as in the case of unconditional sales of financial assets, sales under repurchase agreements at fair value at the date of repurchase, sales of financial assets with a purchased call option or written put option deeply out of the money, utilization of assets in which the transferor does not retain subordinated debt nor grants any credit enhancement to the new holders, and other similar cases, the transferred financial asset is derecognized from the Unaudited Consolidated Interim Statements of Financial Position and any rights or obligations retained or created in the transfer are simultaneously recorded.

ii.

If the Bank retains substantially all the risks and rewards of ownership associated with the transferred financial asset, as in the case of sales of financial assets under repurchase agreements at a fixed price or at the sale price plus interest, securities lending agreements under which the borrower undertakes to return the same or similar assets, and other similar cases, the transferred financial asset is not derecognized from the Unaudited Consolidated Interim Statements of Financial Position and continues to be measured by the same criteria as those used before the transfer. However, the following items are recorded:

An associated financial liability for an amount equal to the consideration received; this liability is subsequently measured at amortized cost.

Both the income from the transferred (but not removed) financial asset as well as any expenses incurred due to the new financial liability.

iii.

If the Bank neither transfers nor substantially retains all the risks and rewards of ownership associated with the transferred financial asset—as in the case of sales of financial assets with a purchased call option or written put option that is not deeply in or out of the money, securitization of assets in which the transferor retains a subordinated debt or other type of credit enhancement for a portion of the transferred asset, and other similar cases—the following distinction is made:

If the transferor does not retain control of the transferred financial asset: the asset is removed from the Unaudited Consolidated Interim Statements of Financial Position and any rights or obligations retained or created in the transfer are recorded.

If the transferor retains control of the transferred financial asset: it continues to be recorded in the Unaudited Consolidated Interim Statements of Financial Position for an amount equal to its exposure to changes in value and a financial liability associated with the transferred financial asset is recorded. The net carrying amount of the transferred asset and the associated liability is the amortized cost of the rights and obligations retained, if the transferred asset is measured at amortized cost, or the fair value of the rights and obligations retained, if the transferred asset is measured at fair value.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 19

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Accordingly, financial assets are only removed from the Unaudited Consolidated Interim Statements of Financial Position when the rights over the cash flows they generate have terminated or when all the inherent risks and rewards of ownership have been substantially transferred to third parties. Similarly, financial liabilities are only derecognized from the Unaudited Consolidated Interim Statements of Financial Position when the obligations specified in the contract are discharged or cancelled or the contract has matured.

Recognizing income and expenses

The most significant criteria used by the Bank to recognize its revenues and expenses are summarized as follows:

Interest revenue, interest expense, and similar items

Interest revenue and expense are recorded on an accrual basis using the effective interest method.

Interest and inflation adjustments on loans whose payments of principal or interest are renegotiated or refinanced or loans that are more than 90 days overdue or when the Bank believes that the debtor poses a high risk of default, are generally referred to as “suspended” and are recorded in memo accounts which are not part of the Unaudited Consolidated Interim Statements of Income. These are reported as memorandum accounts (Note 22). This interest is recognized as income upon collection.

The resumption of interest income recognition of previously suspended loans only occurs when such loans became current (i.e., payments were received such that the loans are contractually past-due for less than 90 days) or they are no longer classified under the C3, C4, C5, or C6 categories (for loans individually evaluated for impairment) as per SBIF definitions (Note 1, subsection p).

Dividends received from companies classified as “Investments in associates and other companies” are recorded as income when the right to receive them arises.

ii.

Commissions, fees and similar items

Fee and commission income and expenses are recognized in the Unaudited Consolidated Interim Statement of Income using criteria that vary according to their nature. The main criteria are:

Fee and commission income and expenses on financial assets and liabilities are recognized when they are earned.

Those arising from transactions or services that are performed over a period of time are recognized over the life of these transactions or services.

Those relating to services provided in a single transaction are recognized when the single transaction is performed.

iii.

Non-financial income and expenses

Non-financial income and expenses are recognized for accounting purposes on an accrual basis.

iv.

Loan arrangement fees

Fees that arise as a result of the origination of a loan, mainly application and analysis-related fees, are deferred and charged recognized to the Unaudited Consolidated Interim Statement of Income over the term of the loan.

Impairment

Financial assets

A financial asset, other than that at fair value through profit and loss, is evaluated on each financial statement filing date to determine whether objective evidence of impairment exists.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 20

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

A financial asset or group of financial assets will be impaired if, and only if, objective evidence of impairment exists as a result of one or more events that occurred after initial recognition of the asset (“event causing the loss”), and this event or events causing the loss have an impact on the estimated future cash flows of a financial asset or group of financial assets.

An impairment loss relating to financial assets recorded at amortized cost is calculated as the difference between the recorded amount of the asset and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

Individually significant financial assets are individually tested to determine their impairment. The remaining financial assets are evaluated collectively in groups that share similar credit risk characteristics.

All impairment losses are recorded in income. Any impairment loss relating to a financial asset available for sale previously recorded in equity is transferred to profit or loss.

The reversal of an impairment loss occurs only if it can be objectively related to an event occurring after the initial impairment loss was recorded. The reversal of an impairment loss shall not exceed the carrying amount that would have been determined if no impairment loss has been recognized for the asset in prior years. The reversal is recorded in income with the exception of available for sale equity financial assets.

ii.

Non-financial assets

The Bank’s non-financial assets, excluding investment properties, are reviewed at reporting date to determine whether they show signs of impairment (i.e. its carrying amount exceeds its recoverable amount). If any such evidence exists, the recoverable amount of the asset is estimated, in order to determine the extent of the impairment loss.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.

In connection with other assets, impairment losses recorded in prior periods are assessed at each reporting date to determine whether the loss has decreased and should be reversed. The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss shall not exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior years.

Property, plant, and equipment

This category includes the amount of buildings, land, furniture, vehicles, computer hardware and other fixtures owned by the consolidated entities or acquired under finance leases. Assets are classified according to their use as follows:

Property, plant, and equipment for own use

Property, plant and equipment for own use includes but is not limited to, tangible assets received by the consolidated entities in full or partial satisfaction of financial assets representing accounts receivable from third parties which are intended to be held for continuing own use and tangible assets acquired under finance leases. These assets are presented at acquisition cost less the related accumulated depreciation and, if applicable, any impairment losses (when net carrying amount was higher than recoverable amount).

Depreciation is calculated using the straight line method over the acquisition cost of assets less their residual value, assuming that the land on which buildings and other structures stand has an indefinite life and, therefore, is not subject to depreciation.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 21

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

The Bank must apply the following useful lives for the tangible assets that comprise its assets:

ITEM	Useful life (Months)

Land		-
Paintings and works of art		-
Assets retired for disposal		-
Carpets and curtains		36
Computers and hardware		36
Vehicles		36
IT systems and software		36
ATMs		60
Other machines and equipment		60
Office furniture		60
Telephone and communication systems		60
Security systems		60
Rights over telephone lines		60
Air conditioning systems		84
Other installations		120
Security systems (acquisitions up to October 2002)		120
Buildings		1,200

The consolidated entities assess at each reporting date whether there is any indication that the carrying amount of any of their tangible assets’ exceeds its recoverable amount. If this is the case, the carrying amount of the asset is reduced to its recoverable amount and future depreciation charges are adjusted in accordance with the revised carrying amount and to the new remaining useful life, if the useful life needs to be revised.

Similarly, if there is an indication of a recovery in the value of a tangible asset, the consolidated entities record the reversal of the impairment loss recorded in prior periods and adjust the future depreciation charges accordingly. In no circumstance may the reversal of an impairment loss on an asset increase its carrying value above the one it would have had if no impairment losses had been recorded in prior years.

The estimated useful lives of the items of property, plant and equipment held for own use are reviewed at the end of each reporting period to detect significant changes. If changes are detected, the useful lives of the assets are adjusted by correcting the depreciation charge to be recorded in the Unaudited Consolidated Interim Statement of Income in future years on the basis of the new useful lives.

Maintenance expenses relating to tangible assets held for own use are recorded as an expense in the period in which they are incurred.

ii.

Assets leased out under operating leases

The criteria used to record the acquisition cost of assets leased out under operating leases, to calculate their depreciation and their respective estimated useful lives, and to record the impairment losses thereof, are consistent with those described in relation to property, plant and equipment held for own use.

Leasing

Finance leases

Finance leases are leases that substantially transfer all the risks and rewards incidental to ownership of the leased asset to the lessee.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 22

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

When the consolidated entities act as the lessor of an asset, the sum of the present value of the lease payments receivable from the lessee, including the exercise price of the lessee’s purchase option at the end of the lease term, which is equivalent to one additional lease payment and so is reasonably certain to be exercised, is recognized as lending to third parties and is therefore included under “Loans and accounts receivables from customers” in the Unaudited Consolidated Interim Statements of Financial Position.

When the consolidated entities act as lessees, they show the cost of the leased assets in the Unaudited Consolidated Interim Statements of Financial Position based on the nature of the leased asset, and simultaneously record a liability for the same amount (which is the lower of the fair value of the leased asset and the sum of the present value of the lease payments payable to the lessor plus, if appropriate, the exercise of the purchase option). The depreciation policy for these assets is consistent with that for property, plant and equipment for own use.

In both cases, the finance income and finance expenses arising from these contracts are credited and debited, respectively, to “Interest income” and “Interest expense” in the Unaudited Consolidated Interim Statement of Income so as to achieve a constant rate of return over the lease term.

ii.

Operating leases

In operating leases, ownership of the leased asset and substantially all the risks and rewards incidental thereto remain with the lessor.

When the consolidated entities act as the lessor, they present the acquisition cost of the leased assets under "Property, plant and equipment”. The depreciation policy for these assets is consistent with that for similar items of property, plant and equipment held for own use and revenues from operating leases is recorded on a straight line basis under “Other operating income” in the Unaudited Consolidated Interim Statement of Income.

When the consolidated entities act as the lessees, the lease expenses, including any incentives granted by the lessor, are charged on a straight line basis to “Administrative and other expenses” in the Unaudited Consolidated Interim Statement of Income. This charge is calculated using the longer term of the life of the lease or the useful life of any leasehold improvement,

iii.

Sale and leaseback transactions

For sale at fair value and operating leasebacks, the profit or loss generated is recorded at the time of sale except in the case of excess of proceeds over fair value, which difference is amortized over the period of use of the asset. In the case of finance leasebacks, the profit or loss generated is amortized over the lease term.

Factored receivables

Factored receivables are valued at the amount disbursed by the Bank in exchange of invoices or other commercial instruments representing the credit which the transferor assigns to the Bank. The price difference between the amounts disbursed and the actual face value of the credits is recorded as interest income in the Unaudited Consolidated Interim Statement of Income through the effective interest method over the financing period.

When the assignment of these instruments involves no liability for the assignee, the Bank assumes the risks of insolvency of the parties responsible for payment.

Intangible assets

Intangible assets are identified as non-monetary assets (separately identifiable from other assets) without physical substance which arise as a result of legal or contractual rights. The Bank recognise an intangible asset, whether purchased or self-created (at cost), when the cost of the asset can be measured reliably and it is probable that the future economic benefits that are attributable to the asset will flow to the Bank.

Intangible assets are recorded initially at acquisition or production cost and are subsequently measured at cost less any accumulated amortization and any accumulated impairment losses.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 23

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Internally developed computer software is recorded as an intangible asset if, among other requirements (basically the Bank’s ability to use or sell it), it can be identified and its ability to generate future economic benefits can be demonstrated. The estimated useful life for software is 3 years.

Intangible assets are amortized on a straight-line basis over their estimated useful life; which has been defined as 36 months.

Expenditure on research activities is recorded as an expense in the year in which it is incurred and cannot be subsequently capitalized.

Cash and cash equivalents

For the preparation of the cash flow statement, the indirect method was used, beginning with the Bank’s consolidated pre-tax income and incorporating non-cash transactions, as well as income and expenses associated with cash flows, which are classified as operating, investment or financing activities.

Allowances for loan losses

The Bank has established allowances to cover probable losses on loans and account receivables in accordance with instructions issued by Superintendency of Banks and Financial Institutions. These models and risk assessment have been approved by the Board of Directors.

The Bank models determine allowances and provisions for loan losses according to the type of portfolio or operations. Loans and accounts receivables from customers are divided into three categories:

Commercial loans,

ii.

Mortgage loans, and

iii.

Consumer loans.

The Bank performs an assessment of the risk associated with loans and accounts receivable from customers to determine their allowance for loan losses as described below:

Individual assessment - represents the case where the Bank assesses a debtor as individually significant, or when he/she cannot be classified within a group of financial assets with similar credit risk characteristics, due to their size, complexity or level of exposure.

Group assessment - a group assessment is relevant for analyzing a large number of operations with small individual balances from individuals or small companies. The Bank groups debtors with similar credit risk characteristics giving to each group a default probability and recovery rate based on a historical analysis.

The models used to determine credit risk allowances are described as follows:

Allowances for individual assessment

An individual assessment of commercial debtors is necessary in accordance with the SBIF, in the case of companies which, due to their size, complexity or level of exposure, must be known and analyzed in detail.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 24

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

The Bank assigns a risk category to each debtor, their contingent loans and loans. These are assigned to one of the following portfolio categories: Normal, Substandard and Impaired. The risk factors considered are: industry or economic sector, owners or managers, financial situation and payment capacity, and payment behavior.

The portfolio categories and their definitions are as follows:

Normal Portfolio includes debtors with a payment capacity that allows them to meet their obligations and commitments. Evaluations of the current economic and financial environment do not indicate that this will change. The classifications assigned to this portfolio are categories from A1 to A6.

ii.

Substandard Portfolio includes debtors with financial difficulties or a significant deterioration of their payment capacity. There exists reasonable doubt concerning the future reimbursement of the capital and interest within the contractual terms, with limited capacity to settle short-term financial obligations. The classifications assigned to this portfolio are categories from B1 to B4.

iii.

Impaired Portfolio includes debtors and their loans from which repayment is considered remote. This portfolio consists of debtors that demonstrate a reduced or null payment capacity with signs of a possible bankruptcy, debtors who required a forced debt restructuring or any debtor who has been in default for over 90 days in his payment of interest or capital. The classifications assigned to this portfolio are categories from C1 to C6.

Normal and Substandard Compliance Portfolio

As part of individual assessment, the Bank classifies debtors into the following categories, assigning them a probability of non-performance (PNP) and severity (SEV), which result in the expected loss percentages.

Type of Portfolio	Debtor’s Category	Probability of Non- Performance (%)		Severity (%)		Expected Loss (%)
	A1		0.04		90.0		0.03600
	A2		0.10		82.5		0.08250
	A3		0.25		87.5		0.21875
Normal portfolio	A4		2.00		87.5		1.75000
	A5		4.75		90.0		4.27500
	A6		10.00		90.0		9.00000
	B1		15.00		92.5		13.87500
Substandard portfolio	B2		22.00		92.5		20.35000
	B3		33.00		97.5		32.17500
	B4		45.00		97.5		43.87500

The Bank first determines all credit exposures, which includes the accounting balances of loans and accounts receivable from customers plus contingent loans, less any amount recovered through executing the guarantees. The exposure of each category is determined by calculating the total balance in each portfolio (A1 to B4) and applying the expected loss rate.

Impaired Portfolio

A provision for an impaired portfolio is calculated by determining the expected loss rate, adjusting for amounts recoverable through guarantees and the present value of recoveries made through collection services after the related expenses.

Once the expected loss range is determined, the debtor can be classified into categories C1 to C6. Using this classification system the related allowance percentage is applied over the exposure amount, which includes loans and contingent loans related to the debtor.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 25

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

The allowance rates applied over the calculated exposure are as follows:

Classification	Estimated range of loss	Allowance
C1	Up to 3%		2	%
C2	Greater than 3% and less than 20%		10	%
C3	Greater than 20% and less than 30%		25	%
C4	Greater than 30% and less than 50%		40	%
C5	Greater than 50% and less than 80%		65	%
C6	Greater than 80%		90	%

II.

Allowances for group evaluations

Group evaluations are used to approximate allowances required for loans with low balances related to individuals and small companies.

Levels of required allowances have been established by the Bank, in accordance with loan losses methodology by classifying and grouping the loan portfolio based on similar credit risk characteristic indicating the debtor’s ability to pay all amounts due according to the contractual terms. The Bank uses models based on debtors’ characteristics, payment history, loans due and defaulted loans, in addition to other parameters.

The Bank uses methodologies to establish credit risk, based on internal models to estimate the allowances for the group-evaluated portfolio. This portfolio includes individually non-significant commercial loans, mortgage and consumer loans (including installment loans, credit cards and overdraft lines). These methods allow the Bank to independently identify the portfolio behavior and establish the provision required to cover losses arising during the year.

The customers are classified according to their internal and external characteristics, using customer-portfolio model to differentiate each portfolio’s risk in an appropriate manner. This is known as the allocation profile method.

The allocation profile method is based on a statistical construction model that establishes a relationship through logistic regression between variables (for example default, payment behavior outside the Bank, socio-demographic data) and a response variable which determines the client’s risk which in this case is a default of 90 or more. Hence, common profiles are established and assigned a Probability of Non-Performance (PNP) and a recovery rate based on a historical analysis known as Severity (SEV).

Therefore, once the customers have been profiled and assigned a PNP and a SEV relating to the loan’s profile, the exposure at default (EXP) is calculated. This exposure includes the book value of the loans and accounts receivable from the customer, plus contingent loans, less any amount that can be recovered by executing guarantees (for credits other than consumer loans).

In August 2014, the consumer and commercial models were calibrated with the objective of improving the accuracy of a customer’s predicted behavior. This involved the release of consumer provisions of Ch$36,563 million and an increase in commercial provisions of Ch$45,141 million. The net effect was an increase of provisions for Ch$8,578 million under the "Provisions for loan losses" in the Unaudited Consolidated Interim Statement of Income.

III.

Additional provisions

According to SBIF regulation, banks are allowed to establish provisions over the limits described below so as to protect themselves from the risk of non-predictable economical fluctuations that could affect the macro-economic environment or the situation of a specific economical sector.

According to No. 10 of Chapter B-1 from the SBIF Compendium of Accounting Standards, these provisions will be recorded in liabilities, similar to provisions for contingent loans. The Bank has not recorded provisions for this concept as of September 30, 2014 and 2013 and as of December 31, 2013.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 26

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

IV.

Charge-offs

As a general rule, charge-offs should be done when the contract rights over cash flow expire. In the case of loans and accounts receivable from customers, even if the above does not happen, the Bank will charge-off these amounts in accordance with Title II of Chapter B-2 of the Compendium of Accounting Standards (SBIF).

These charge-offs refer to the derecognition from the Unaudited Consolidated Interim Statements of Financial Position of the respective loan operations, including any future payments due in the case of installments loans or leasing operations (for which partial charge-offs do not exist).

Charge-offs are recorded under “Provision for loan losses” through the Unaudited Consolidated Interim Statement of Income in accordance with Chapter B-1 of the Compendium of Accounting Standards (SBIF), independent of the cause. Any receipt of payment for a loan previously charged-off will be recognized as a recovery within “Provision for loan losses” in the Unaudited Consolidated Interim Statement of Income.

Loan and accounts receivable charge-offs are recorded for overdue, past due, and current installments based on the time periods expired since reaching overdue status, as described below:

Type of loan		Term

Consumer loans with or without collateral		6 months
Other transactions without collateral		24 months
Commercial loans with collateral		36 months
Mortgage loans		48 months
Consumer leasing		6 months
Other non-mortgage leasing transactions		12 months
Mortgage leasing (household and business)		36 months

Any payment agreement of an already charged-off loan will not give rise to income—as long as the operation is still in an impaired status—and the effective payments received are accounted for as a recovery from loans previously charged-off.

Upon recovery of previously charged-off balances, the renegotiated loans will be recognized as an asset and the associated income as a recovery of loan loss within the “Provision for loan losses”.

Recovery of “Loans and accounts receivable from clients” previously charged off

Any receipt of payment for “Loans and accounts receivable from customers” previously charged-off will be recognized as a recovery within “Provision for loan losses” in the Unaudited Consolidated Interim Statement of Income.

Provisions, contingent assets, and contingent liabilities

Provisions are liabilities of uncertain timing or amount. Provisions are recognized in the Unaudited Consolidated Interim Statements of Financial Position when the Bank:

has a present obligation (legal or constructive) as a result of past events, and

ii.

it is probable that an outflow of resources will be required to settle these obligations and the amount of these resources can be reliably measured.

Contingent assets or contingent liabilities are any potential rights or obligations arising from past events whose existence will be confirmed only by the occurrence or non-occurrence if one or more uncertain future events that are not wholly within control of the Bank.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 27

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

The following are classified as contingent in the supplementary information:

Guarantees and bonds: Including guarantees, bonds, standby letters of credit.

ii.

Confirmed foreign letters of credit: Comprises of letters of credit confirmed by the Bank.

iii.

Documentary letters of credit: Includes documentary letters of credit issued by the Bank, which have not yet been negotiated.

iv.

Documented guarantees: Guarantees with promissory notes.

Interbank guarantee: Guarantees letters issued.

vi.

Unrestricted credit lines: The balance of the available credit lines that customers may use without prior approval by the Bank (for example, using credit cards or overdrafts in checking accounts).

vii.

Other credit commitments: Loans that the Bank has agreed but not yet lent. These outstanding balances must be transferred at an agreed future date when events contractually agreed upon with the customer occur, such as lines of credit linked to the progress of a construction or similar projects.

viii.

Other contingent credits: Includes any other kind of commitment by the Bank which may exist and give rise to lending when certain future events occur. In general, this includes unusual transactions such as pledges made to secure the payment of loans among third parties or derivative contracts made by third parties that may result in a payment obligation and are not covered by deposits.

The Unaudited Consolidated Interim Statements of Financial Position and annual accounts reflect all significant provisions for which it is estimated that it is probable an outflow of resources will be required to meet the obligation. Provisions are quantified using the best available information on the consequences of the event giving rise to them and are reviewed and adjusted at the end of each reporting period. Provisions must specify the liabilities for which they were originally recognized. Partial or total reversals are recognized when such obligations cease to exist or are reduced.

Provisions are classified according to the obligation covered as follows:

Provision for employee salaries and expenses

Provision for mandatory dividends

Allowance for contingent credit risks

Provisions for contingencies

Deferred income taxes and other deferred taxes

The Bank records, when appropriate, deferred tax assets and liabilities for the estimated future tax effects attributable to differences between the carrying amount of assets and liabilities and their tax bases. The measurement of deferred tax assets and liabilities is based on the tax rate, in accordance with the applicable tax laws, using the tax rate that applies to the period when the deferred asset and liability will be settled. The future effects of changes in tax legislation or tax rates are recorded in deferred taxes beginning on the date on which the law is enacted or substantially enacted.

Use of estimates

The preparation of the financial statements requires Management to make estimates and assumptions that affect the application of the accounting policies and the reported balances of assets, liabilities, revenues and expenses. Actual results may differ from these estimates.

In certain cases, generally accepted accounting policies require that assets or liabilities be recorded or disclosed at their fair values. The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When available, quoted market prices in active markets have been used as the basis for measurement. When quoted market prices in active markets are not available, the Bank has estimated such values based on the best information available, including the use of modeling and other valuation techniques.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 28

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

The Bank has established allowances to cover probable losses, therefore, to estimate the allowances. These allowances must be regularly reviewed taking into consideration factors such as changes in the nature and volume of the loan portfolio, trends in forecasted portfolio quality, credit quality and economic conditions that may adversely affect the borrowers’ payment capacity. Increases in the allowances for loan losses are reflected as “Provision for loan losses” in the Unaudited Consolidated Interim Statement of Income. Loans are charged-off when Management determines that a loan or a portion thereof is uncollectible. Charge-offs are recorded as a reduction of the allowance for loan losses.

The estimates and assumptions made to calculate provisions are regularly reviewed by the Bank’s Management to quantify certain assets, liabilities, revenues, expenses, and commitments. Revised accounting estimates are recorded in the period in which the estimate is revised and in any affected future period.

These estimates, made on the basis of the best available information, mainly refer to:

Impairment losses of certain assets (Notes 07, 08, 10, 11 and 30)

The useful lives of tangible and intangible assets (Notes 10, 11 and 29)

The fair value of assets and liabilities (Notes 05, 06, 09 and 32)

Commitments and contingencies (Note 18)

Current and deferred taxes (Note 12)

Non-current assets held for sale

Non-current assets (or a group holding assets and liabilities for disposal) expected to be recovered mainly through the sale of these items rather than through the continued use, are classified as held for sale. Immediately prior to this classification, assets (or elements of a disposable group) are re-measured in accordance with the Bank’s policies. The assets (or disposal group) are measured at the lower of carrying amount or fair value minus cost of sales.

As of September 30, 2014 and 2013 and December 31, 2013 the Bank has not classified any non-current assets as held for sale.

Assets received or awarded in lieu of payment

Assets received or awarded in lieu of payment of loans and accounts receivable from clients are recognized at their fair value (as determined by an independent appraisal). For assets acquired under an agreement between the client and the Bank a value is agreed upon by the parties through negotiation. When the parties do not reach an agreement and legal actions are required for the Bank to gain possession, the value for those assets is determined at auction. In both instances, an independent appraisal is performed.

The excess of the outstanding loan balance over the fair value is charged to income for the period, under “Provision for loan losses”.

These assets are subsequently adjusted to their net realizable value less cost to sale (assuming a forced sale). The difference between the carrying value of the asset and the estimated fair value less costs to sell is charged to income for the period, under “Other operating expenses”.

Independent appraisals are obtained at least every 18 months and fair values are adjusted accordingly.

Earnings per share

Basic earnings per share are determined by dividing the net income attributable to the equity holders of the Bank for the reported period by the weighted average number of shares outstanding during the reported period.

Diluted earnings per share are determined in the same way as basic earnings, but the weighted average number of outstanding shares is adjusted to take into consideration the potential diluting effect of stock options, warrants, and convertible debt.

As of September 30, 2014 and 2013 and December 31, 2013 the Bank did not have any instruments that generated dilutive effects.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 29

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Temporary acquisition (assignment) of assets and liabilities

Purchases or sales of financial assets under non-optional repurchase agreements at a fixed price are recorded in the Consolidated Interim Statements of Financial Position based on the nature of the debtor (creditor) under “Deposits in the Central Bank of Chile,” “Deposits in financial institutions” or “Loans and accounts receivable from customers” (“Central Bank of Chile deposits,” “Deposits from financial institutions” or “Customer deposits”).

Differences between the purchase and sale prices are recorded as financial interest over the term of the contract.

Assets under management and investment funds managed by the Bank

Assets owned by third parties and managed by certain companies that are within the Bank’s scope of consolidation (Santander Asset Management S.A., Administradora General de Fondos and Santander S.A. Sociedad Securitizadora), are not included in the Unaudited Consolidated Interim Statements of Financial Position. Management fees are included in “Fee and commission income” in the Unaudited Consolidated Interim Statement of Income.

Provision for mandatory dividends

As of September 30, 2014 and December 31, 2013 the Bank recorded a provision for mandatory dividends. This provision is made pursuant to Article 79 of the Corporations Act, which is in accordance with the Bank’s internal policy, pursuant to which at least 30% of net income for the period is distributed, except in the case of a contrary resolution adopted at the respective shareholders’ meeting by unanimous vote of the outstanding shares. This provision is recorded, as a deducting item, under the “Retained earnings – provisions for mandatory dividends” line of the Unaudited Consolidated Interim Statement of Changes in Equity with offset to Provisions.

Employee benefits

Post-employment benefits – Defined Benefit Plan:

According to current collective labor agreements and other agreements, the Bank has an additional benefit available to its principal executives, consisting of a pension plan whose purpose is to endow them with funds for a better supplementary pension upon their retirement.

Features of the Plan:

The main features of the Post-Employment Benefits Plan promoted by the Banco Santander Chile are:

Aimed at the Bank’s management

The general requisite to apply for this benefit is that the employee must be carrying out his/her duties when turning 60 years old.

The Bank will create a pension fund, with life insurance, for each beneficiary in the plan. Periodic contributions into this fund are made by the manager and matched by the Bank.

The Bank will be responsible for granting the benefits directly.

To determine the present value of the defined benefit obligation and the current service cost, the method of projected unit credit is used.

Components of defined benefit cost include:

current service cost and any past service cost, which are recognized in profit or loss for the period;

net interest on the liability (asset) for net defined benefit, which is recognized in profit or loss for the period;

new liability (asset) remeasurements for net defined benefit include:

(a) actuarial gains and losses;

b) the difference between the actual return on plan assets and the interest on plan assets included in the net interest component and (c) changes in the effect of the asset ceiling.

The liability (asset) for net defined benefit is the deficit or surplus, determined as the difference between the present value of the defined benefit obligation less the fair value of plan assets.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 30

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Plan assets comprise the pension fund taken out by the Group with a third party that is not a related party. These assets are held by an entity legally separated from the Bank and exist solely to pay benefits to employees.

The Bank recognizes the present service cost and the net interest of the Personnel wages and expenses on the Unaudited Consolidated Interim Statement of Income.

The post-employment benefits liability, recognized in the Unaudited Consolidated Interim Statement of Financial Position, represents the deficit or surplus in the defined benefit plans of the Bank. Any surplus resulting from the calculation is limited to the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions.

When employees leave the plan before meeting the requirements to be eligible for the benefit, contributions made by the Bank are reduced.

ii.

Severance provision:

Severance provision for years of employment are recorded only when they actually occur or upon the availability of a formal and detailed plan in which the fundamental modifications to be made are identified, provided that such plan has already started to be implemented or its principal features have been publicly announced, or objective facts about its execution are known.

iii.

Cash-settled share based compensation:

The allocation of equity instruments to executives of the Bank and its Subsidiaries as a form of compensation for their services, when those instruments are provided at the end of a specific period of employment, is recorded as an expense in the Unaudited Consolidated Interim Statement of Income under the “Personnel expenses” item, as the relevant executives provide their services over the course of the period. The Bank pays the parent for the equity instruments granted to its employees. The cash obligation is determined at the grant date in an amount equal to the fair value of the liability with employees at that date. The Bank receives invoices from the parent on a bi-annual basis, creating a liabilty to the parent. At the end of each six-month period, a payment is made to settle this liabilty to the parent.

The Bank’s stock performance plan is accounted for as a cash-settled share-based payment in accordance with IFRS 2 “Share based payments”. The fair value at grant date is determined using a Monte Carlo model which represents the basis of the payment amount, and is recorded on a straight-line basis over the life of the plan. IFRS 2 requires that the fair value of the liability be remeasured at the end of each reporting period and that fair value changes attributable to rendered services to date be reflected in the statement of income. Changes to the fair value of the liability over the 3-year life of the plan were immaterial therefore the fair value remeasurement was not recorded. As a cash-settled share-based payment award, the offset of the journal entry to record the compensation expense is a liability for share-based payment awards.

Reclassification of items

Banco Santander Chile has reclassified some items in the Interim Financial Statements to provide relevant, reliable, comparable and understandable information.

These reclassifications, which did not affect the Bank’s results, have no significant or material impact on the current Unaudited Consolidated Interim Financial Statements.

aa)

Application of new and revised International Financial Reporting Standards

i.	New and revised standards affecting amounts reported and/or disclosures in the financial statements

In the current year, the Bank has applied a number of new revised IFRSs issued by the International Accounting Standard Board (IASB) as well as accounting standards as issued by the both the SBIF that are mandatory effective for an accounting period that begins on or after 1 January 2014. These standards have been fully incorporate by the Bank and are detailed as follows:

Accounting Regulations Issued by the SBIF, effective in current year

As of September 30, 2014, there are no new accounting regulations issued by SBIF to be implemented.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 31

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

New and revised IFRS standards effective in current year

Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities – On December 16, 2011, the amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of 'currently has a legally enforceable right of set-off' and 'simultaneous realization and settlement'. Management does not anticipate that the application of these amendments to IAS 32 will have a significant impact on the Bank's consolidated financial statements as the Bank does not have any financial assets and financial liabilities that qualify for offset. The implementation of this amendment had no material impact on the consolidated financial statements of the Bank.

Investment entities – Amendments to IFRS 10 – Consolidated Financial Statements; IFRS 12 – Disclosures of Interests in Other Entities and IAS 27 – Separated Financial Statements - On October 31, 2012, the IASB issued “Investment entities (amendments to IFRS 10, IFRS 12 and IAS 27)”, providing an exception to the consolidation of subsidiaries under IFRS 10 Consolidated Financial Statements for entities that follow the definition of “investment entity”, as well as some investment funds. Instead, entities will measure their investments in subsidiaries at fair value through profit and loss, in accordance with IFRS 9 Financial Instruments or IAS 39 Financial Instruments: Recognition and Measurement.

Amendments also require additional disclosure about whether the entity is considered an investment entity, details of non-consolidated subsidiaries, the nature of the relationship and certain transactions between the investment entity and its subsidiaries.. The amendments force an investment entity to account for its investment in a subsidiary in the same way in the consolidated financial statements and in its individual financial statements (or just provide individual financial statements if all subsidiaries are not consolidated). These modifications will be effective for yearly periods beginning on or after January 1, 2014. Early application is permitted. The implementation of this amendment had no material impact on the consolidated financial statements of the Bank.

IFRIC 21 - Levies – On May 20, 2013, IFRIC issued IFRIC 21 which provides guidance on accounting for the liability to pay a government imposed levy. IFRIC 21 is effective for annual periods beginning on or after 1 January 2014. This interpretation clarifies that the obligating event that gives rise to a liability to pay a government levy is the activity that triggers the payment of the levy as set out in the relevant legislation. An entity does not have a constructive obligation to pay a levy that will be triggered by operating in a future period. The implementation of this guidance had no material impact on the consolidated financial statements of the Bank.

Amendment IAS 36, Impairment of the Assets – On May 29, 2013 the IASB issued Recoverable Amount Disclosures for Non-Financial Assets. The objective of this amendment is to harmonize the disclosure requirements about fair value without the disposal costs and value in use, when present value techniques are used to measure the recoverable amount of assets that are considered value impaired, requiring an entity to disclose the discount rates that have been used to determine the recoverable amount of assets that are considered value impaired. An entity shall apply these modifications retrospectively for annual periods beginning on or after January 1, 2014. Earlier application is permitted. An entity shall not apply these modifications to periods (including comparative periods) in which IFRS 13 is not applied. The implementation of this amendment had no material impact on the consolidated financial statements of the Bank.

Amendment IAS 39, Financial instruments: recognition and measurement – On June, 27, 2013 the IASB issued the amendment Novation of Derivatives and Continuation of Hedge Accounting, establishing that a derived contract novation with a central counterparty (clearing house) would generate a hedged interruption, derecognition of the original derivative and the recognition of the new derivative contract novated. While product novation laws or regulations do not qualify for derecognition and therefore hedge accounting will not be interrupted (if requirements are met). The effective date of application for annual periods beginning on January 1, 2014, may be applied in advance. An entity shall apply the amendment retrospectively in accordance with IAS 8 - Accounting policies, changes in accounting estimates and errors. The implementation of this amendment had no material impact on the consolidated financial statements of the Bank.

At the end date of these financial statements new IFRS had been published as well as interpretations of these regulations that were not mandatory as of September 30, 2014. Though in some cases, the IASB has allowed for their in-advance adoption, the Bank has not done so up to said date.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 32

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

New accounting regulations and instructions issued by the SBIF as well as by the IASB not enforced as of September 30, 2014

1. Accounting regulations issued by the SBIF

As of September 30, 2014 there are no new accounting regulations issued by SBIF to be implemented.

New and revised IFRS issued

IFRS 9 “Financial Instruments” (“IFRS 9”) – In July 2014, the IASB issued the final version of IFRS 9 which includes the completion of all phases of the project to replace IAS 39 ‘Financial Instruments: Recognition and Measurement’ as discussed below.

Phase 1: Classification and measurement of financial assets and financial liabilities. Financial assets are classified on the basis of the business model within which they are held and their contractual cash flow characteristics. The standard also introduces a ‘fair value through other comprehensive income’ measurement category for particular simple debt instruments. The requirements for the classification and measurement of financial liabilities were carried forward unchanged from IAS 39, however, the requirements relating to the fair value option for financial liabilities were changed to address own credit risk and, in particular, the presentation of gains and losses within other comprehensive income.

Phase 2: Impairment methodology. IFRS 9 fundamentally changes the impairment requirements relating to the accounting for an entity’s expected credit losses on its financial assets and commitments to extend credit. It is no longer necessary for a credit event to have occurred before credit losses are recognised. Instead, an entity always accounts for expected credit losses, and changes in those expected credit losses. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition.

Phase 3: Hedge accounting. These requirements align hedge accounting more closely with risk management and establish a more principle-based approach to hedge accounting. Dynamic hedging of open portfolios is being dealt with as a separate project and until such time as that project is complete, entities can choose between applying the hedge accounting requirements of IFRS 9 or to continue to apply the existing hedge accounting requirements in IAS 39. The revised hedge accounting requirements in IFRS 9 are applied prospectively.

The effective date of IFRS 9 is 1 January 2018. For annual periods beginning before 1 January 2018, an entity may elect to early apply only the requirements for the presentation of gains and losses on financial liabilities designated at fair value through profit or loss. The impact of the standard is currently being assessed. It is not yet practicable to quantify the effect of IFRS 9 on these consolidated financial statements. IFRS 9 will not apply to the Financial Statements of the Bank as expressly stated by the SBIF.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 33

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Amendment IAS 19 – Defined benefit plans: employee contributions – On November 21, 2013 the IASB issued these modifications establishing the treatment for employee or third party contributions when accounting for the defined benefit plans. Therefore, if the amount of the contributions is independent of the number of years of service, it allows an entity to recognize these contributions as a reduction in service costs in the period in which the related service is rendered, instead of attributing contributions to periods of service, and if the amount of the contribution depends on the number of years of service, an entity to attribute these contributions to periods of service is required, using the same method of allocation required by paragraph 70 of the IAS 19, for gross proceeds (that is, using the contribution plan formula or a linear basis). These modifications apply for annual periods starting as of July 1, 2014 retroactively, as stated by IAS 8 - Accounting policies changes in accounting estimates and errors. Earlier application permitted. The Bank’s management is assessing the potential impact of the adoption of these modifications.

Annual modifications, cycle 2010-2012 – On December 12, 2013 this document covering seven standards was issued:

- IFRS 2

- Share-based Payments: It modifies the definition of 'concession consolidation condition (irrevocability)' y 'market conditions' and adds the definition of 'execution conditions' and ' service condition' (which was a part of the definition of the concession consolidation condition).

- IFRS 3

- Business Combinations: it states that the contingent considerations classified as assets or liabilities must be measure to fair value on each report date.

- IFRS 8

- Operating Segments: it required that and entity reveals the judgments made by the administration regarding the implementations of the criteria for the operating segments aggregation and it states that the entity must only provide reconciliation between all the assets of the reportable segment and the entity's assets if the previous ones are reported regularly.

- IFRS 13

- Fair value measurement: it states that the issuing of IFRS 13 and the modification of IFRS 9 and IAS 39 did not eliminate the possibility of measuring the accounts receivable and pay in the short term those that lack an established interest rate on the invoice amount without discounting if the effect of such action is intangible.

- IAS 16

- Property, plant and equipment: it states that when a property, plant and equipment element is revaluated, the gross carrying value is adjusted consistently with the revaluation of the carrying value.

- IAS 24

- Related party disclosures: it states that an entity providing administration personnel services key to the informing entity or to the parent of the reporting entity, this is a related party of the reporting entity.

- IAS 38

- Intangibles: it states that when an intangible element is revaluated, the gross carrying value is adjusted consistently with the revaluation of the carrying value.

IFRS annual modifications, 2010-2012 cycle, must be implemented for annual periods starting on or after July 1, 2014. Early application is permitted. The Bank’s management is assessing the potential impact of the adoption of these modifications.

Annual modifications, cycle 2011-2013 – On December 12, 2013 this document covering four standards was issued:

- IFRS 1

- First-time Adoption: It states that an entity, on its first financial statements under IFRS, has the possibility of choosing between applying an existing and currently effective IFRS, and applying a new or revised IFRS which is not currently mandatory, provided earlier application is permitted. It is required that the entity applies the same version of the IFRS throughout the periods covered by the first financial statements according to IFRS.

- IFRS 3

- Business Combinations: It states that the IFRS 3 excludes from its scope the accounting for the formation of a joint agreement on the financial statements of the joint arrangement itself.

- IFRS 13

- Fair Value Measurement: It states that the scope of the exception of portfolio defined in paragraph 52 of IFRS 13, includes all contracts included under the scope of 'IAS 39 - Financial Instruments: Recognition and measurement' and 'IFRS 9 - Financial Instruments', regardless of whether they conform to the definition of financial assets or financial liabilities as set out in 'IAS 32 - Financial Instruments: Presentation'.

- IAS 40

- Investment Property: It states that if a certain transaction complies with the definition of a business combination -as defined by IFRS 3 -Business Combinations- and of investment properties -as defined by IAS 40 Investment Property-, it needs to implement both norms independently and separately.

IFRS annual modifications, 2011-2013 cycle, must be implemented for annual periods beginning on or after July 1, 2014. Earlier application permitted. The Bank’s management is assessing the potential impact of the adoption of these modifications.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 34

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

IFRS 14, Regulatory Deferral Accounts – On January 1, 2014, the IASB issued IFRS 14 “Regulatory Deferral Accounts”, which, specify the financial reporting requirements for regulatory deferral account balances that arise when an entity provides goods or services to customers at price or rate that is subject to rate regulation. This standard requires:

limited changes to accounting policies that were applied in accordance with its previous GAAP for regulatory deferral account balances;

disclosure that were identify and explain the amounts recognized in the entity`s financial statements that arise from rate regulation;

disclosure that help users of the financial statements to understand the amounts, timing and uncertainty of future cash flows from any regulatory deferral accounts balances that are recognized.

This standard is effective to first-time adopters IFRS for annual periods beginning on or after January 1, 2016. The Bank’s management is assessing the potential impact of the adoption of these modifications.

IFRS 15 “Revenue from contracts with customers” (“IFRS 15”) In May 2014, the IASB issued IFRS 15. The effective date of IFRS 15 is 1 January 2017. The standard establishes the principles that shall be applied in connection with revenue from contracts with customers including the core principle that the recognition of revenue must depict the transfer of promised goods or services to customers in an amount that reflects the entitlement to consideration in exchange for those good and services. IFRS 15 applies to all contracts with customers but does not apply to lease contracts, insurance contracts, financial instruments and certain non-monetary exchanges. Whilst it is expected that a significant proportion of the Bank revenue will be outside the scope of IFRS 15, the impact of the standard is currently being assessed. It is not yet practicable to quantify the effect the effect of IFRS 15 on these consolidated financial statements.

. The Bank’s management is assessing the potential impact of the adoption of this standard.

IAS 27: Separate Financial Statements – In August 2014, the IASB issued the amendment “Equity Method in Separate Financial Statements”. This amendment adds the equity method, as per IAS 28, to the allowable accounting methods that a subsidiary, joint venture or associate can be recorded at when producing separate financial statements.

The standard is effective for annual periods beginning on or after 1 January 2016. Earlier application is permitted but this will require a disclosure. The Bank’s management has evaluated the impact of this standard and has determined that it will not have significant effects.

Ammendments to IFRS 10 and IAS 28 – Sale or Contribution of assets between an Investor and its Associate or Joint Venture - In September 2014, the IASB issued this amendment. This clarifies that a business is to be defined by IFRS 3 and states the correct accounting treatment when business and non business subsidiaries are sold, such that the entity (and its remaining subsidiaries) loses control of the subsidiary, to a joint venture or associate for the consolidated financial statements.

If control of a sold subsidiary is lost, a full gain or loss on the sale should be recognized in the income statement and all previously recognized gains in other comprehensive income should be reclassified. Partial gain or loss recognition for transactions between an investor and its associate or joint venture only apply to the gain or loss resulting from the sale or contribution of assets that do not constitute a business.

This standard is effective for annual periods beginning on or after January 1, 2016. Earlier application permitted but would require disclosure. The Bank’s management is assessing the potential impact of the adoption of this standard.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 35

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 01

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Annual modifications, cycle 2012-2014 – On 29 December 2014 this document covering four standards was issued:

- IFRS 5

– Non-current Assets Held for Sale and Discontinued Operations : It introduces specific guidance on how to treat an asset or disposal group when it is being reclassified between held for sale and available for distribution to owners. It states and aligns treatments of both held for sale and available for distribution to owners should they no longer meet the criteria to be classed as such and the treatment for plans of sale when a reclassification occurs.

- IFRS 7

– Financial Instruments: Disclosures: It defines what is considered payment and how to treat servicing contracts of a derecognized asset when the performance of the asset determines the fee for the servicing contract. It clarifies the applicability of the amendments to IFRS 7 regarding disclosures concerning the offsetting of financial assets and liabilities in the condensed interim financial statements.

- IAS 19

– Employee Benefits: This states which discount rate to use when the depth regional markets are not deemed sufficient to calculate a rate. Comparatives should be restated.

- IAS 34

– Interim Financial Reporting: It states that the disclosure of information ‘elsewhere in the interim financial report’ must to be adequately cross-referenced. Any cross-referenced documents can be separate to the report but must be accessible to users of the reports as at the time of publication of the financial statements.

IFRS annual modifications, 2012-2014 cycle, must be implemented for annual periods beginning on or after 1 January 2016. Earlier application permitted. The Bank’s management is assessing the potential impact of the adoption of these modifications.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 36

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 02

SIGNIFICANT EVENTS

As of September 30, 2014, the following significant events have occurred and affected the Bank`s operations and Consolidated Interim Financial Statements.

a) The Board

In the Ordinary Board Meeting of Banco Santander Chile held on April 21, 2014, the Chairman of the Board, Mr. Mauricio Larraín Garcés, presented his resignation. In this session, Mr. Vittorio Corbo Lioi was designated as Chairman with Mr. Mauricio Larraín Garcés continuing to form part of the Board of Directors as a Director.

On September 3, 2014 the Superintendency of Banks and Financial Institutions was informed of the resignation of Carlos Olivos Marchant, who served as director. The President proposed that the Director Marco Colodro Hadjes replace Carlos Olivos as a member and chairman of the Audit Committee of Directors. This was approved unanimously by those present.

In the Ordinary Board Meeting dated September 23, 2014 the Board appointed Orlando Poblete Iturrate as the new director who until then had served as Alternate Director, therefore his previous position became vacant.

Use of Profits and Distribution of Dividends

In the Shareholders’ Meeting of Banco Santander Chile held on April 22, 2014, chaired by Mr. Vittorio Corbo Lioi (Chairman), and attended by Oscar von Chrismar Carvajal (First Vice President), Roberto Méndez Torres (Second Vice President), Víctor Arbulú Crousillat, the Directors: Marco Colodro Hadjes, Mauricio Larraín Garcés, Carlos Olivos Marchant, Lucía Santa Cruz Sutil, Juan Pedro Santa María Pérez, Lisandro Serrano Spoerer, Roberto Zahler Mayanz, Raimundo Monge Zegers (Alternate Director) and Orlando Poblete Iturrate (Alternate Director). Also, the CEO Claudio Melandri Hinojosa and CAO Felipe Contreras Fajardo attended the meeting.

According to the information presented in aforementioned meeting, 2013 net income (designated in the financial statements as “Income attributable to equity holders of the Bank”) amounted to Ch$441,926 million. The Board approved the distribution of 60% of such net income, yielding a Ch$1.407 dividend per share, payable starting on April 23, 2014. Also, it was approved that the remaining 40% of the profits will be retained in the Bank’s reserves.

b) Taxation Reforms

On September 29, 2014 Law No. 20,780 was published in the Official Journal. This law amended the Chilean tax system, including Income Tax, Stamp Duty and Taxation Codes. Regarding the Income Tax Law, the key changes are:

Each company must formally elect to join a tax scheme. There are two alternative tax schemes under this law. The deadline for such election is the second half of 2016.

The schemes are:

– Attributed system, reaching a tax rate of 25% in 2017. This system involves payment of taxes independent of withdrawals or distributions of profits.

– Semi-Integrated System, reaching a tax rate of 27% in 2018. This system involves payment of taxes on the withdrawal or distribution of profits to shareholders. The corporate income tax paid on the profits distributed is creditable against the final taxes. Profits distributed are subject to withholding income tax of 35%, except for non-residents of Chile where a double taxation agreement exists between Chile and the foreign entity’s country of residence.

The current rate of 20% is changed to 21% for the year 2014, to 22.5% in 2015, 24% in 2016 and 25% in 2017. If the semi-integrated system is chosen the rate for 2017 will be 25.5% eventually reaching 27% in 2018.

The Bank has estimated the effect of the tax reform using the Semi-Integrated System. A decision has not yet been subject to discussion by the Bank's shareholders. The estimated net effect of this reform is Ch$35,411 million, this has been recorded at September 30, 2014 in "Income taxes" in the Unaudited Consolidated Interim Statement of Income. This Ch$35,411 million consists of a higher tax of Ch$3,175 million for the current tax year and a lesser deferred tax expense of Ch$38,586 million (temporary asset differences).

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 37

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 02

SIGNIFICANT EVENTS, continued

c) Issuance of bonds - at September 30, 2014

In the nine months to September 30, 2014 the Bank has issued senior bonds in the amount of CHF300,000,000, UF4,000,000, USD750,000,000, CLP25,000,000,000, AUD125,000,000 and JPY 27,300,000,000. Debt issuance information is included in Note 15.

c.1) Senior bonds

Series

Amount

Term

Issuance rate

Issuance
date

Maturity
date

Bond

CHF

300,000,000

3 years

1.00% per annum simple

01-31-2014

07-31-2017

Total

CHF

300,000,000

Bond

2,000,000

5 years

3.5% per annum simple

02-21-2014

10-01-2018

Bond

2,000,000

7 years

3.5% per annum simple

08-28-2014

01-01-2021

Total

4,000,000

Bond

CLP

25,000,000,000

5 years

6.2% per annum simple

02-22-2014

09-01-2018

Total

CLP

25,000,000,000

USD floating bond

USD

250,000,000

5 years

Libor (3 months)+75 bp

02-19-2014

02-19-2019

USD floating bond

USD

500,000,000

5 years

Libor (3 months)+90 bp

04-15-2014

04-11-2017

Total

USD

750,000,000

Bond

AUD

125,000,000

3 years

4.5% per annum simple

03-13-2014

03-13-2017

Total

AUD

125,000,000

JPY floating bond

JPY

6,600,000,000

3 years

Libor (3 months) +65 bp

04-24-2014

04-24-2017

JPY current bond 2017

JPY

2,000,000,000

3 years

0.72% per annum simple

04-24-2014

04-24-2017

JPY current bond 2019

JPY

18,700,000,000

5 years

0.97% per annum simple

04-24-2014

04-24-2019

Total

JPY

27,300,000,000

c.2) Subordinated bonds

As at September 30, 2014, the Bank had not issued subordinated bonds in this financial year.

c.3) Repurchase of bonds

The Bank has conducted the following repurchase of bonds during the first semester of 2014:

Date	Series	Amount

02-21-2014	Senior bond	CLP	118,409,000,000
03-03-2014	Senior bond	UF	6,000,000

c.4) Mortgage bonds at September 30, 2014

As of September 30, 2014 the Bank has issued the following bonds:

Series

Currency

Amount

Term

Issuance rate

Issuance
date

Maturity
date

5,000,000

18 years

3.20% per annum simple

01-09-2014

01-04-2032

Total

5,000,000

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 38

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 02

SIGNIFICANT EVENTS, continued

d) Investments in Subsidiaries

d.1) Mergers and Acquisitions

Merger of Santander Servicios de Recaudación y Pagos Limitada

The Bank has overseen the merger of the subsidiary Santander Servicios de Recaudación y Pagos Limitada through the transferal of all the rights from Santander Corredora de Seguros Limitada to the Bank on May 01, 2014. Authorization was granted by the SBIF on March 26, 2014. This merger included the conversion of "Supercaja" branches to branches of the Bank.

Merger of Servicios de Cobranza Fiscalex Limitada

On August 01, 2014, the company Servicios de Cobranza Fiscalex Limited was acquired by Santander Gestión de Recaudación y Cobranza Limitada. Both companies were previously consolidated by the Bank, therefore no material effect should be observed in the Bank’s Unaudited Consolidated Interim Financial Statements.

d.2) Capital increase of Transbank S.A.

In the Transbank’s Shareholders’ Meeting held in June of the current year, it was agreed to capitalize retained earnings and increase the capital by approximately Ch$25,200 million. The Bank has participated in proportion to its ownership share (25%), resulting a contribution of approximately Ch$6,313 million to Transbank.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 39

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 03

OPERATING SEGMENTS

The Bank manages and measures the performance of its operations by operating segment which function under three divisions. The information disclosed in this note is not necessarily comparable to that of other financial institutions, since it is based on management’s internal information system by segment.

Inter-segment transactions are conducted under normal arm’s length commercial terms and conditions. Each segment’s assets, liabilities, and income include items directly attributable to the segment to which they can be allocated on a reasonable basis.

To achieve the strategic objectives adopted by management and adapt to changing market conditions, the Bank makes changes in its organization from time to time, which in turn have a greater or lesser impact on how it is managed or administered. Hence, this disclosure furnishes information on how the Bank is managed as of September 30, 2014. During the second half of 2013, the Institutional segment was moved from the Individuals and the SME division to the Companies and Institutional division. All prior year’s segments information has been presented under the revised division definitions.

The Bank has the following operating segments falling under each Division header noted below:

Individuals and SME`s

Individuals

Santander Banefe

Serves individuals with monthly incomes from Ch$150,000 pesos to Ch$400,000 pesos, who receive services through Santander Banefe. This segment gives customers a variety of services, including consumer loans, credit cards, auto loans, mortgage loans, debit cards, savings products, mutual funds, and insurance brokerage.

b. Commercial Banking

Serves individuals with monthly incomes over Ch$400,000 pesos. This segment gives customers a variety of services, including consumer loans, credit cards, auto loans, commercial loans, foreign exchange, mortgage loans, debit cards, checking accounts, savings products, mutual funds, stockbrokerage, and insurance brokerage.

SME`s

Small companies are considered to be companies with annual sales less than Ch$1,200 million. This segment gives customers a variety of products, including commercial loans, government-guaranteed loans, leasing, factoring, foreign trade, credit cards, mortgage loans, checking accounts, savings products, mutual funds, and insurance brokerage.

Companies and Institutions

Companies

The Companies segment includes the Companies, Real Estate and Large Corporations sub segments:

Companies

Companies with annual sales in excess of Ch$1,200 million but not more than Ch$10,000 million are included in this segment. The companies within this segment have access to many products including commercial loans, leasing, factoring, foreign trade, credit cards, mortgage loans, checking accounts, transactional services, treasury services, financial consulting, savings products, mutual funds, and insurance brokerage.

Real estate

This segment includes all the companies engaged in the real estate industry who carry out projects to sell properties to third parties and annual sales exceeding Ch$800 million with no upper limit. These clients are offered not only the traditional banking services but also specialized services to finance projects, chiefly residential, with the aim of expanding sales of mortgage loans.

Large Corporations

Considers companies with annual sales exceeding Ch$10,000 million. The companies within this segment have access to many products including commercial loans, leasing, factoring, foreign trade, credit cards, mortgage loans, checking accounts, transactional services, treasury services, financial consulting, investment, savings products, mutual funds, and insurance.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 40

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 03

OPERATING SEGMENTS, continued

Institutions

Serves institutions such as universities, government entities, local and regional governments. The institutions within this segment have access to many products including commercial loans, leasing, factoring, foreign trade, credit cards, mortgage loans, checking accounts, transactional services, treasury services, savings products, mutual funds, and insurance.

Global Banking and Markets

The Global Banking and Markets segment is comprised of:

Corporate

This segment consists of foreign and domestic multinational companies with sales over Ch$10,000 million. The companies within this segment have access to many products including commercial loans, leasing, factoring, foreign trade, credit cards, mortgage loans, checking accounts, transactional services, treasury services, financial consulting, investments, savings products, mutual funds, and insurance brokerage.

Treasury

The Treasury Division provides sophisticated financial products, mainly to companies in the Wholesale Banking area and the Companies segment. These include products such as short-term financing and fund raising, brokerage services, derivatives, securitization, and other tailor-made products. The Treasury area may act as brokers to transactions and also manages the Bank’s investment portfolio.

Corporate Activities (“Other”)

This segment includes Financial Management, which develops global management functions, involving the parent company’s structural interest risk and liquidity risk. Liquidity risk is managed mainly through debt issuances. This segment also manages the Bank’s personal funds, capital allocation by unit, and the financing of investments made. The foregoing usually results in a negative contribution to income.

In addition, this segment encompasses all the intra-segment income and all the activities not assigned to a given segment or product with customers.

The segments’ accounting policies are those described in the summary of accounting policies. The Bank earns most of its income in the form of interest income, fee and commission income and income from financial operations. To evaluate a segment’s financial performance and make decisions regarding the resources to be assigned to segments, the Chief Operating Decision Maker (CODM) bases his assessment on the segment's interest income, fee and commission income, and expenses.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 41

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 03

OPERATING SEGMENTS, continued

Below are the tables showing the Bank’s results by business segment, for the periods ending as of September 30, 2014 and 2013, and in addition to the corresponding balances of loans and accounts receivable from customers as of December 31, 2013:

	For the three months ended September 30, 2014
	Net interest income			Net fee and commission income			Financial transactions, net (1)			Provision for loan losses			Support expenses (2)			Segment`s net contribution
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Segments
Individuals		155,888			38,804			1,586			(26,284	)		(97,921	)		72,073
Santander Banefe		23,122			5,389			(29	)		(1,835	)		(10,657	)		15,990
Commercial Banking		132,766			33,415			1,615			(24,449	)		(87,264	)		56,083
SMEs		68,705			12,051			1,502			(58,434	)		(22,083	)		1,741
Individuals+SMEs		224,593			50,855			3,088			(84,718	)		(120,004	)		73,814

Companies		46,436			6,670			4,395			(13,048	)		(14,029	)		30,424
Companies		20,277			3,301			2,408			(7,556	)		(8,039	)		10,391
Large Corporations		18,014			2,243			1,947			(3,895	)		(4,380	)		13,929
Real estate		8,145			1,126			40			(1,597	)		(1,610	)		6,104
Institutional		8,182			583			152			(63	)		(3,318	)		5,536
Companies and institutional		54,618			7,253			4,547			(13,111	)		(17,347	)		35,960

Commercial Banking		279,211			58,108			7,635			(97,829	)		(137,351	)		109,774

Global banking and markets		22,556			4,693			12,486			(1,425	)		(10,395	)		27,915
Corporate		18,465			4,511			714			(1,425	)		(3,396	)		18,869
Treasure		4,091			182			11,772			-			(6,999	)		9,046
Other		(2,655	)		(6,736	)		7,697			(111	)		4,147			2,342

Total		299,112			56,065			27,818			(99,365	)		(143,599	)		140,031

Other operating income																	3,728
Other operating expenses																	(48,744	)
Income from investments in associates and other companies																	500
Income tax expense																	18,941
Net income for the period																	114,456

(1)

Corresponds to the sum of the net income from financial operations and the foreign exchange profit or loss.

(2)

Corresponds to the sum of personnel salaries and expenses, administrative expenses, depreciation and amortization.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 42

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 03

OPERATING SEGMENTS, continued

	For the three months ended September 30, 2013
	Net interest income			Net fee and commission income			Financial transactions, net (1)			Provision for loan losses			Support expenses (2)			Segment`s net contribution
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Segments
Individuals		151,562			34,944			2,860			(57,958	)		(84,970	)		46,438
Santander Banefe		23,795			6,064			1,522			(12,037	)		(11,595	)		7,749
Commercial Banking		127,767			28,880			1,338			(45,921	)		(73,375	)		38,689
SMEs		66,421			9,176			1,411			(29,419	)		(20,102	)		27,487
Individuals+SMEs		217,983			44,120			4,271			(87,377	)		(105,072	)		73,925

Companies		41,151			6,495			3,334			(8,640	)		(14,315	)		28,025
Companies		18,202			3,436			2,117			(7,815	)		(7,334	)		8,606
Large Corporations		16,059			2,127			1,103			(656	)		(5,297	)		13,336
Real estate		6,890			932			114			(169	)		(1,684	)		6,083
Institutional		7,607			720			(31	)		255			(3,931	)		4,620
Companies and institutional		48,758			7,215			3,303			(8,385	)		(18,246	)		32,645

Commercial Banking		266,741			51,335			7,574			(95,762	)		(123,318	)		106,570

Global banking and markets		16,399			4,740			11,971			(1,370	)		(9,594	)		22,146
Corporate		16,794			4,798			472			(1,370	)		(4,720	)		15,974
Treasure		(395	)		(58	)		11,499			-			(4,874	)		6,172
Other		4,465			(1,144	)		8,070			653			(9,929	)		2,115

Total		287,605			54,931			27,615			(96,479	)		(142,841	)		130,831

Other operating income																	4,112
Other operating expenses																	(15,502	)
Income from investments in associates and other companies																	345
Income tax expense																	(18,417	)
Net income for the period																	101,369

(1)

Corresponds to the sum of the net income from financial operations and the foreign exchange profit or loss.

(2)

Corresponds to the sum of personnel salaries and expenses, administrative expenses, depreciation and amortization.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 43

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 03

OPERATING SEGMENTS, continued

			For the nine months ended September 30, 2014
	Loans and accounts receivable from customers (1)		Net interest income		Net fee and commission income			Financial transactions, net (2)		Provision for loan losses			Support expenses (3)			Segment`s net contribution
	MCh$		MCh$		MCh$			MCh$		MCh$			MCh$			MCh$

Segments
Individuals		11,342,245		456,275		110,951			9,164		(115,315	)		(289,556	)		171,519
Santander Banefe		745,999		69,654		15,906			1,305		(27,567	)		(32,528	)		26,770
Commercial Banking		10,596,246		386,621		95,045			7,859		(87,748	)		(257,028	)		144,749
SMEs		3,316,030		201,134		34,441			5,026		(120,235	)		(61,933	)		58,433
Individuals+SMEs		14,658,275		657,409		145,392			14,190		(235,550	)		(351,489	)		229,952

Companies		4,998,928		137,508		20,108			12,053		(25,801	)		(40,658	)		103,210
Companies		1,884,160		59,610		9,968			6,367		(18,568	)		(22,907	)		34,470
Large Corporations		2,106,346		53,477		6,590			5,261		(6,416	)		(13,377	)		45,535
Real estate		1,008,422		24,421		3,550			425		(817	)		(4,374	)		23,205
Institutional		386,912		24,774		1,785			457		(43	)		(9,304	)		17,669
Companies and institutional		5,385,840		162,282		21,893			12,510		(25,844	)		(49,962	)		120,879

Commercial Banking		20,044,115		819,691		167,285			26,700		(261,394	)		(401,451	)		350,831

Global banking and markets		2,289,922		65,002		14,862			45,267		(3,249	)		(30,366	)		91,516
Corporate		2,289,922		53,231		14,270			921		(3,249	)		(15,276	)		49,897
Treasure		-		11,771		592			44,346		-			(15,090	)		41,619
Other		52,056		75,951		(14,503	)		18,885		8			(2,792	)		77,549

Total		22,386,093		960,644		167,644			90,852		(264,635	)		(434,609	)		519,896

Other operating income																	12,723
Other operating expenses																	(85,719	)
Income from investments in associates and other companies																	1,339
Income tax expense																	(32,290	)
Net income for the period																	415,949

(1)

Corresponds to loans and accounts receivable from customers, net, without deducting their allowances for loan losses.

(2)

Corresponds to the sum of the net income from financial operations and the foreign exchange profit or loss.

(3)

Corresponds to the sum of personnel salaries and expenses, administrative expenses, depreciation and amortization.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 44

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 03

OPERATING SEGMENTS, continued

	As of December 31, 2013		For the nine months ended September 30, 2013
	Loans and accounts receivable from customers (1)		Net interest income			Net fee and commission income			Financial transactions, net (2)		Provision for loan losses			Support expenses (3)			Segment`s net contribution
	MCh$		MCh$			MCh$			MCh$		MCh$			MCh$			MCh$

Segments
Individuals		10,474,663		456,084			109,242			5,625		(174,713	)		(270,638	)		125,600
Santander Banefe		730,979		76,105			17,844			1,498		(43,879	)		(33,487	)		18,081
Commercial Banking		9,743,684		379,979			91,398			4,127		(130,834	)		(237,151	)		107,519
SMEs		3,228,865		194,178			32,095			3,546		(75,181	)		(55,597	)		99,041
Individuals+SMEs		13,703,528		650,262			141,337			9,171		(249,894	)		(326,235	)		224,641

Companies		4,682,221		120,251			20,232			9,952		(23,433	)		(38,348	)		88,654
Companies		1,757,977		55,371			10,814			5,681		(15,164	)		(20,962	)		35,740
Large Corporations		1,927,075		45,664			6,840			4,049		(7,874	)		(13,015	)		35,664
Real estate		997,169		19,216			2,578			222		(395	)		(4,371	)		17,250
Institutional		353,559		22,393			2,051			220		31			(8,847	)		15,848
Companies and institutional		5,035,780		142,644			22,283			10,172		(23,402	)		(47,195	)		104,502

Commercial Banking		18,739,308		792,906			163,620			19,343		(273,296	)		(373,430	)		329,143

Global banking and markets		2,268,440		52,985			13,365			30,289		(5,483	)		(28,810	)		62,346
Corporate		2,268,440		46,328			12,107			593		(5,483	)		(13,954	)		39,591
Treasure		-		6,657			1,258			29,696		-			(14,856	)		22,755
Other		53,013		(63,138	)		(3,289	)		33,498		2,787			(15,464	)		(45,606	)

Total		21,060,761		782,753			173,696			83,130		(275,992	)		(417,704	)		345,883

Other operating income																		15,869
Other operating expenses																		(41,348	)
Income from investments in associates and other companies																		1,494
Income tax expense																		(52,947	)
Net income for the period																		268,951

(1)

Corresponds to loans and accounts receivable from customers, net, without deducting their allowances for loan losses.

(2)

Corresponds to the sum of the net income from financial operations and the foreign exchange profit or loss.

(3)

Corresponds to the sum of personnel salaries and expenses, administrative expenses, depreciation and amortization.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 45

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 04

CASH AND CASH EQUIVALENTS

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

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Cash and deposit in banks
Cash		537,677		551,136
Deposit in the Central Bank of Chile		451,059		797,363
Deposit in domestic banks		376		81
Deposit in foreign banks		459,523		223,230
Subtotals – Cash and deposit in banks		1,448,635		1,571,810

Cash in process of collection, net		216,287		327,698

Cash and cash equivalents		1,664,922		1,899,508

The balance of funds held in cash and at the Central Bank of Chile reflects the reserves that the Bank must maintain on average each month in accordance with the regulations governing minimum reserves.

Cash in process of collection and in process of being cleared:

Cash items in process of collection and in process of being cleared represent domestic transactions which have not been processed through the central domestic clearinghouse or international transactions which may be delayed in settlement due to timing differences. These transactions were as follows:

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Assets
Documents held by other banks (document to be cleared)		216,846		289,723
Funds receivable		605,748		314,354
Subtotal		822,594		604,077
Liabilities
Funds payable		606,307		276,379
Subtotal		606,307		276,379

Cash in process of collection, net		216,287		327,698

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 46

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 05

TRADING INVESTMENTS

The detail of instruments deemed as financial trading investments is as follows:

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Chilean Central Bank and Government securities
Chilean Central Bank Bonds		182,385		75,577
Chilean Central Bank Notes		89		100
Other Chilean Central Bank and Government securities		398,402		189,962
Subtotal		580,876		265,639

Other Chilean securities
Time deposits in Chilean financial institutions		-		-
Mortgage finance bonds of Chilean financial institutions		-		-
Chilean financial institutions bonds		-		10,042
Chilean corporate bonds		27,142		2,229
Other Chilean securities		-		-
Subtotal		27,142		12,271

Foreign financial securities
Foreign Central Banks and Government securities		-		-
Other foreign financial instruments		-		-
Subtotal		-		-

Investments in mutual funds
Funds managed by related entities		645		9,657
Funds managed by others		-		-
Subtotal		645		9,657

Total		608,663		287,567

As of September 30, 2014 and December 31, 2013, there are no securities sold under repurchase agreement to clients and financial institutions.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 47

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 06

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING

As of September 30, 2014 and December 31, 2013 the Bank holds the following portfolio of derivative instruments:

	As of September 30, 2014
	Notional amount								Fair value
	Up to 3 months		More than 3 months to 1 year		More than 1 year		Total		Assets		Liabilities
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Fair value hedge derivatives
Currency forwards		-		-		-		-		-		-
Interest rate swaps		125,890		496,036		426,750		1,048,676		11,549		38
Cross currency swaps		131,821		119,656		1,040,061		1,291,538		171,007		2,399
Call currency options		-		-		-		-		-		-
Call interest rate options		-		-		-		-		-		-
Put currency options		-		-		-		-		-		-
Put interest rate options		-		-		-		-		-		-
Interest rate futures		-		-		-		-		-		-
Other derivatives		-		-		-		-		-		-
Subtotal		257,711		615,692		1,466,811		2,340,214		182,556		2,437

Cash flow hedge derivatives
Currency forwards		-		-		-		-		-		-
Interest rate swaps		-		-		-		-		-		-
Cross currency swaps		447,361		663,716		1,674,493		2,785,570		128,108		28,858
Call currency options		-		-		-		-		-		-
Call interest rate options		-		-		-		-		-		-
Put currency options		-		-		-		-		-		-
Put interest rate options		-		-		-		-		-		-
Interest rate futures		-		-		-		-		-		-
Other derivatives
Subtotal		447,361		663,716		1,674,493		2,785,570		128,108		28,858

Trading derivatives
Currency forwards		21,671,424		13,563,688		1,837,754		37,072,866		452,400		370,821
Interest rate swaps		3,840,732		12,901,625		34,097,194		50,839,551		443,926		410,754
Cross currency swaps		1,802,734		3,471,479		17,821,138		23,095,351		1,453,064		1,607,891
Call currency options		64,492		58,898		1,197		124,587		2,272		1,297
Call interest rate options		4,071		4,634		135,687		144,392		1,510		1,533
Put currency options		381,433		114,900		-		496,333		993		468
Put interest rate options		-		-		-		-		-		-
Interest rate futures		-		-		-		-		-		-
Other derivatives		327,259		-		-		327,259		645		607
Subtotal		28,092,145		30,115,224		53,892,970		112,100,339		2,354,810		2,393,371

Total		28,797,217		31,394,632		57,034,274		117,226,123		2,665,474		2,424,666

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 48

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 06

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING, continued

	As of December 31, 2013
	Notional amount								Fair value
	Up to 3 months		More than 3 months to 1 year		More than 1 year		Total		Assets		Liabilities
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Fair value hedge derivatives
Currency forwards		-		-		-		-		-		-
Interest rate swaps		-		55,000		375,599		430,599		9,951		1,020
Cross currency swaps		-		233,824		899,293		1,133,117		63,528		1,754
Call currency options		-		-		-		-		-		-
Call interest rate options		-		-		-		-		-		-
Put currency options		-		-		-		-		-		-
Put interest rate options		-		-		-		-		-		-
Interest rate futures		-		-		-		-		-		-
Other derivatives		-		-		-		-		-		-
Subtotal		-		288,824		1,274,892		1,563,716		73,479		2,774

Cash flow hedge derivatives
Currency forwards		-		-		-		-		-		-
Interest rate swaps		-		-		-		-		-		-
Cross currency swaps		522,451		937,529		661,676		2,121,656		60,453		13,927
Call currency options		-		-		-		-		-		-
Call interest rate options		-		-		-		-		-		-
Put currency options		-		-		-		-		-		-
Put interest rate options		-		-		-		-		-		-
Interest rate futures		-		-		-		-		-		-
Other derivatives		-		-		-		-		-		-
Subtotal		522,451		937,529		661,676		2,121,656		60,453		13,927

Trading derivatives
Currency forwards		14,972,304		9,801,554		1,749,378		26,523,236		198,130		188,745
Interest rate swaps		4,526,349		11,332,697		25,005,852		40,864,898		241,528		243,326
Cross currency swaps		1,634,855		3,927,402		14,246,746		19,809,003		915,099		847,821
Call currency options		443,944		42,805		5,557		492,306		1,327		2,403
Call interest rate options		-		7,031		-		7,031		-		-
Put currency options		428,638		38,450		2,936		470,024		3,831		1,108
Put interest rate options		-		-		-		-		-		-
Interest rate futures		-		-		-		-		-		-
Other derivatives		54,777		-		-		54,777		171		5
Subtotal		22,060,867		25,149,939		41,010,469		88,221,275		1,360,086		1,283,408

Total		22,583,318		26,376,292		42,947,037		91,906,647		1,494,018		1,300,109

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 49

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 06

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING, continued

Hedge accounting

Fair value hedge

The Bank uses cross-currency swaps, interest rate swaps, and call money swaps to hedge its exposure to changes in fair value of hedged items attributable to interest rates. The aforementioned hedging instruments change the effective cost of long-term issuances from a fixed interest rate to a variable interest rate.

Below is a detail of the hedged elements and hedge instruments under fair value hedges as of September 30, 2014 and December 31, 2013, classified by term to maturity:

	As of September 30, 2014
	Within 1 year		Between 1 and 3 years		Between 3 and 6 years		Over 6 years		Total
	MCh$		MCh$		MCh$		MCh$		MCh$

Hedged item
Loans and accounts receivables from customers
Mortgage loans		12,165		-		-		-		12,165
Available for sale investments
Yankee bonds		-		-		5,792		44,253		50,045
Mortgage financing bonds		-		-		-		3,383		3,383
Treasury bonds (BTP)		-		-		135,000		20,000		155,000
Central bank bonds (BCP)		-		-		-		147,500		147,500
Time deposits and other demand liabilities
Time deposits		442,442		33,000		-		-		475,442
Issued debt instruments
Senior bonds		299,140		342,096		245,827		489,960		1,377,023
Subordinated bonds		119,656		-		-		-		119,656
Interbank borrowings
Interbank loans		-		-		-		-		-
Total		873,403		375,096		386,619		705,096		2,340,214
Hedging instrument
Cross currency swaps		251,477		342,096		201,619		496,346		1,291,538
Interest rate swaps		621,926		33,000		185,000		208,750		1,048,676
Total		873,403		375,096		386,619		705,096		2,340,214

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 50

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 06

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING, continued

	As of December 31, 2013
	Within 1 year		Between 1 and 3 years		Between 3 and 6 years		Over 6 years		Total
	MCh$		MCh$		MCh$		MCh$		MCh$

Hedged item
Loans and accounts receivables from customers
Mortgage loan		12,213		-		-		-		12,213
Available for sale investments
Yankee bond		-		-		-		28,308		28,308
Mortgage finance bonds		-		-		-		3,652		3,652
Time deposits and other demand liabilities
Time deposits		55,000		-		-		27,971		82,971
Issued debt instruments
Senior bonds		-		335,805		109,497		769,659		1,214,961
Subordinated bonds		104,840		-		-		-		104,840
Interbank borrowings
Interbank loans		116,771		-		-		-		116,771
Total		288,824		335,805		109,497		829,590		1,563,716
Hedging instrument
Cross currency swaps		233,824		178,545		109,497		611,251		1,133,117
Interest rate swaps		55,000		157,260		-		218,339		430,599
Total		288,824		335,805		109,497		829,590		1,563,716

Cash flow hedges

The Bank uses cross currency swaps to hedge the risk from variability of cash flows attributable to changes in the interest rates of bonds and interbank loans at a variable rate. To cover the inflation risk in some items, both forwards as well as currency swaps are used.

Below is the notional amount of the hedged items as of September 30, 2014 and December 31, 2013, and the period when the cash flows will be generated:

	As of September 30, 2014
	Within 1 year		Between 1 and 3 years		Between 3 and 6 years		Over 6 years		Total
	MCh$		MCh$		MCh$		MCh$		MCh$

Hedged item
Loans and accounts receivables from customers
Mortgage loan		29,062		89,374		-		-		118,436
Available for sale investments
Yankee bond		-		-		27,281		111,397		138,678
Chilean Central Bank bonds		-		22,958		-		-		22,958
Time deposits and other time liabilities		403,236		-		-		-		403,236
Time deposits
Issued debt instruments
Senior bonds (variable rate)		-		874,561		149,570		-		1,024,131
Senior bonds (fixed rate)		48,730		-		-		-		48,730
Interbank borrowings
Interbank loans		630,049		399,352		-		-		1,029,401
Total		1,111,077		1,386,245		176,851		111,397		2,785,570
Hedging instrument
Cross currency swaps		1,111,077		1,386,245		176,851		111,397		2,785,570
Total		1,111,077		1,386,245		176,851		111,397		2,785,570

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 51

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 06

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING, continued

	As of December 31, 2013
	Within 1 year		Between 1 and 3 years		Between 3 and 6 years		Over 6 years		Total
	MCh$		MCh$		MCh$		MCh$		MCh$
Hedged item
Loans and accounts receivables from customers
Mortgage loan		21,623		69,502		-		-		91,125
Available for sale investments
Yankee bond		-		-		-		118,577		118,577
Chilean Central Bank bonds		-		22,958		-		18,084		41,042
Time deposits and other time liabilities
Time deposits		379,331		11,328		-		-		390,659
Issued debt instruments
Senior bonds (variable rate)		288,310		102,062		219,567		-		609,939
Senior bonds (fixed rate)		43,189		-		-		-		43,189
Interbank borrowings
Interbank loans		727,527		99,598		-		-		827,125
Total		1,459,980		305,448		219,567		136,661		2,121,656
Hedging instrument
Cross currency swaps		1,459,980		305,448		219,567		136,661		2,121,656
Total		1,459,980		305,448		219,567		136,661		2,121,656

The following is an estimate of the periods in which flows are expected to be produced:

b.1) Forecasted cash flows for interest rate risk:

	As of September 30, 2014
	Within 1 year			Between 1 and 3 years			Between 3 and 6 years			Over 6 years			Total
	MCh$			MCh$			MCh$			MCh$			MCh$
Hedged item
Inflows		62,957			6,111			2,057			429			71,554
Outflows		(29,238	)		(23,373	)		(3,270	)		-			(55,881	)
Net flows		33,719			(17,262	)		(1,213	)		429			15,673

Hedging instrument
Inflows		29,238			23,373			3,270			-			55,881
Outflows (*)		(62,957	)		(6,111	)		(2,057	)		(429	)		(71,554	)
Net flows		(33,719	)		17,262			1,213			(429	)		(15,673	)

(*) Only includes cash flow forecast portion of the hedge instruments used to cover interest rate risk.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 52

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 06

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING, continued

	As of December 31, 2013
	Within 1 year			Between 1 and 3 years			Between 3 and 6 years			Over 6 years			Total
	MCh$			MCh$			MCh$			MCh$			MCh$
Hedged item
Inflows		21,532			10,870			4,102			1,614			38,118
Outflows		(12,180	)		(10,667	)		(6,107	)		-			(28,954	)
Net flows		9,352			203			(2,005	)		1,614			9,164

Hedging instrument
Inflows		12,180			10,667			6,107			-			28,954
Outflows (*)		(21,532	)		(10,870	)		(4,102	)		(1,614	)		(38,118	)
Net flows		(9,352	)		(203	)		2,005			(1,614	)		(9,164	)

(*) Only includes cash flow forecast portion of the hedge instruments used to cover interest rate risk.

b.2) Forecasted cash flows for inflation risk:

	As of September 30, 2014
	Within 1 year			Between 1 and 3 years			Between 3 and 6 years		Over 6 years		Total
	MCh$			MCh$			MCh$		MCh$		MCh$
Hedged item
Inflows		87,082			50,627			-		-		137,709
Outflows		-			-			-		-		-
Net flows		87,082			50,627			-		-		137,709

Hedging instrument
Inflows		-			-			-		-		-
Outflows		(87,082	)		(50,627	)		-		-		(137,709	)
Net flows		(87,082	)		(50,627	)		-		-		(137,709	)

	As of December 31, 2013
	Within 1 year			Between 1 and 3 years			Between 3 and 6 years			Over 6 years			Total
	MCh$			MCh$			MCh$			MCh$			MCh$
Hedged item
Inflows		104,730			10,861			-			-			115,591
Outflows		(425	)		(927	)		(1,783	)		(1,709	)		(4,844	)
Net flows		104,305			9,934			(1,783	)		(1,709	)		110,747

Hedging instrument
Inflows		425			927			1,783			1,709			4,844
Outflows		(104,730	)		(10,861	)		-			-			(115,591	)
Net flows		(104,305	)		(9,934	)		1,783			1,709			(110,747	)

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 53

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 06

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING, continued

b.3) Forecasted cash flows for exchange rate risk:

	As of September 30, 2014
	Within 1 year			Between 1 and 3 years		Between 3 and 6 years		Over 6 years		Total
	MCh$			MCh$		MCh$		MCh$		MCh$
Hedged item
Inflows		-			-		-		-		-
Outflows		(63,708	)		-		-		-		(63,708	)
Net flows		(63,708	)		-		-		-		(63,708	)

Hedging instrument
Inflows		63,708			-		-		-		63,708
Outflows		-			-		-		-		-
Net flows		63,708			-		-		-		63,708

	As of December 31, 2013
	Within 1 year			Between 1 and 3 years		Between 3 and 6 years		Over 6 years		Total
	MCh$			MCh$		MCh$		MCh$		MCh$
Hedged item
Inflows		-			-		-		-		-
Outflows		(64,772	)		-		-		-		(64,772	)
Net flows		(64,772	)		-		-		-		(64,772	)

Hedging instrument
Inflows		64,772			-		-		-		64,772
Outflows		-			-		-		-		-
Net flows		64,772			-		-		-		64,772

The accumulated effect of the mark to market adjustment of cash flow hedges produced by hedge instruments used in hedged cash flow was recorded in the Consolidated Interim Statement of Changes in Equity, specifically within Other comprehensive income, as of September 30, 2014 and as of December 31, 2013, and is as follows:

	As of September 30,			As of December 31,
Hedged item	2014			2013
	MCh$			MCh$

Interbank loans		(8,436	)		(3,809	)
Issued debt instruments		(14,106	)		-
Available for sale investments		(2,176	)		(723	)
Loans and accounts receivable from customers		(141	)		(3,744	)
Bonds		(1,194	)		19
Net flows		(26,053	)		(8,257	)

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 54

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 06

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING, continued

Since the inflows and outflows for both the hedged element and the hedging instrument mirror each other, the hedges are nearly 100% effective, which means that the fluctuations of fair value attributable to risk components are almost completely offset. As of September 30, 2014 and 2013, Ch$771 million and Ch$69 million respectively, were recognized in income.

During the year, the Bank did not have any cash flow hedges of forecast transactions.

Below is a presentation of income generated by cash flow hedges amount that were reclassified from other comprehensive income to the period’s income:

	For the three months ended September 30,				For the nine months ended September 30,
	2014		2013		2014			2013
	MCh$		MCh$		MCh$			MCh$

Bond hedging derivatives		-		1		(16	)		(34	)
Interbank loans hedging derivatives		-		390		446			1,159

Cash flow hedge net income		-		391		430			1,125

See Note 19 “Equity”, letter d)

Net investment hedges in foreign operations:

As of September 30, 2014 and December 31, 2013, the Bank does not have any foreign net investment hedges in its hedge accounting portfolio.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 55

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 07

INTERBANK LOANS

As of September 30, 2014 and December 31, 2013, balances of “Interbank loans” are as follows:

	As of September 30,			As of December 31,
	2014			2013
	MCh$			MCh$

Domestic banks
Loans and advances to banks		-			-
Deposits in the Central Bank of Chile – not available		-			-
Non-transferable Chilean Central Bank Bonds		-			-
Other Central Bank of Chile loans		-			-
Interbank loans		119			66
Overdrafts in checking accounts		-			-
Non-transferable domestic bank loans		-			-
Other domestic bank loans		-			-
Allowances and impairment for domestic bank loans		-			-

Foreign interbank loans
Interbank loans - Foreign		121,077			125,383
Overdrafts in checking accounts		-			-
Non-transferable foreign bank deposits		-			-
Other foreign bank loans		-			-
Allowances and impairment for foreign bank loans		(51	)		(54	)

Total		121,145			125,395

The amount in each period for provisions and impairment of interbank loans is shown below:

	As of September 30,								As of December 31,
	2014								2013
	Domestic banks		Foreign banks			Total			Domestic banks		Foreign banks			Total
	MCh$		MCh$			MCh$			MCh$		MCh$			MCh$

Balance as of January 1		-		54			54			-		46			46
Charge-offs		-		-			-			-		-			-
Provisions established		-		59			59			-		127			127
Provisions released		-		(62	)		(62	)		-		(119	)		(119	)

Total		-		51			51			-		54			54

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 56

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 08

LOANS AND ACCOUNTS RECEIVABLE FROM CUSTOMERS

Loans and accounts receivable from customers

As of September 30, 2014 and December 31, 2013, the composition of the loan portfolio is as follows:

	Assets before allowances								Allowances established
	Normal portfolio		Substandard portfolio		Impaired portfolio		Total		Individual allowances		Group allowances		Total		Assets net balance
As of September 30, 2014	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Commercial loans
Commercial loans		7,319,101		245,880		569,810		8,134,791		136,089		129,137		265,226		7,869,565
Foreign trade loans		1,663,629		57,481		66,557		1,787,667		56,264		1,844		58,108		1,729,559
Checking accounts debtors		270,763		2,904		11,615		285,282		3,821		6,305		10,126		275,156
Factoring transactions		341,964		1,400		3,344		346,708		3,821		704		4,525		342,183
Leasing transactions		1,326,280		75,633		47,927		1,449,840		16,251		6,741		22,992		1,426,848
Other loans and account receivable		120,438		808		20,962		142,208		6,056		10,780		16,836		125,372
Subtotal		11,042,175		384,106		720,215		12,146,496		222,302		155,511		377,813		11,768,683

Mortgage loans
Loans with mortgage finance bonds		58,257		-		2,490		60,747		-		388		388		60,359
Mortgage mutual loans		103,478		-		2,173		105,651		-		476		476		105,175
Other mortgage mutual loans		5,784,542		-		348,826		6,133,368		-		46,451		46,451		6,086,917
Subtotal		5,946,277		-		353,489		6,299,766		-		47,315		47,315		6,252,451

Consumer loans
Installment consumer loans		1,940,967		-		335,014		2,275,981		-		202,086		202,086		2,073,895
Credit card balances		1,287,847		-		27,076		1,314,923		-		39,096		39,096		1,275,827
Leasing transactions		4,894		-		68		4,962		-		75		75		4,887
Other consumer loans		217,674		-		5,095		222,769		-		7,235		7,235		215,534
Subtotal		3,451,382		-		367,253		3,818,635		-		248,492		248,492		3,570,143

Total		20,439,834		384,106		1,440,957		22,264,897		222,302		451,318		673,620		21,591,277

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 57

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 08

LOANS AND ACCOUNTS RECEIVABLE FROM CUSTOMERS, continued

	Assets before allowances								Allowances established
	Normal portfolio		Substandard Portfolio		Impaired portfolio		Total		Individual allowances		Group allowances		Total		Assets net balance
As of December 31, 2013	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Commercial loans
Commercial loans		6,993,770		246,661		557,251		7,797,682		123,354		81,478		204,832		7,592,850
Foreign trade loans		1,731,328		47,164		61,842		1,840,334		50,574		878		51,452		1,788,882
Checking accounts debtors		264,957		3,176		11,524		279,657		3,513		4,755		8,268		271,389
Factoring transactions		310,228		2,613		3,273		316,114		4,305		617		4,922		311,192
Leasing transactions		1,235,369		73,819		40,626		1,349,814		13,739		5,016		18,755		1,331,059
Other loans and account receivable		99,524		617		18,510		118,651		4,745		7,426		12,171		106,480
Subtotal		10,635,176		374,050		693,026		11,702,252		200,230		100,170		300,400		11,401,852

Mortgage loans
Loans with mortgage finance bonds		69,273		-		3,024		72,297		-		470		470		71,827
Mortgage mutual loans		69,742		-		2,091		71,833		-		380		380		71,453
Other mortgage mutual loans		5,163,396		-		318,286		5,481,682		-		42,456		42,456		5,439,226
Subtotal		5,302,411		-		323,401		5,625,812		-		43,306		43,306		5,582,506

Consumer loans
Installment consumer loans		1,847,289		-		320,832		2,168,121		-		221,723		221,723		1,946,398
Credit card balances		1,212,134		-		23,747		1,235,881		-		37,300		37,300		1,198,581
Leasing transactions		3,383		-		68		3,451		-		68		68		3,383
Other consumer loans		195,030		-		4,765		199,795		-		5,494		5,494		194,301
Subtotal		3,257,836		-		349,412		3,607,248		-		264,585		264,585		3,342,663

Total		19,195,423		374,050		1,365,839		20,935,312		200,230		408,061		608,291		20,327,021

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 58

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 08

LOANS AND ACCOUNTS RECEIVABLE FROM CUSTOMERS, continued

Portfolio characteristics

As September, 2014 and December 31, 2013, the portfolio before allowances is as follows, by customer`s economic activity:

	Domestic loans (*)				Foreign interbank loans (**)				Total loans				Distribution percentage
	As of September 30,		As of December 31,		As of September 30,		As of December 31,		As of September 30,		As of December 31,		As of September 30,		As of December 31,
	2014		2013		2014		2013		2014		2013		2014		2013
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		%		%
Commercial loans
Manufacturing		1,197,395		1,216,914		-		-		1,197,395		1,216,914		5.35		5.78
Mining		411,356		464,865		-		-		411,356		464,865		1.84		2.21
Electricity, gas, and water		373,785		222,110		-		-		373,785		222,110		1.67		1.05
Agriculture and livestock		845,917		806,092		-		-		845,917		806,092		3.78		3.83
Forest		158,352		183,716		-		-		158,352		183,716		0.71		0.87
Fishing		260,781		265,917		-		-		260,781		265,917		1.16		1.26
Transport		876,431		721,931		-		-		876,431		721,931		3.92		3.43
Communications		187,058		249,499		-		-		187,058		249,499		0.84		1.18
Construction		1,338,803		1,337,791		-		-		1,338,803		1,337,791		5.98		6.35
Commerce		2,687,349		2,578,979		121,077		125,383		2,808,426		2,704,362		12.55		12.84
Services		469,630		447,861		-		-		469,630		447,861		2.10		2.13
Other		3,339,758		3,206,643		-		-		3,339,758		3,206,643		14.90		15.23

Subtotal		12,146,615		11,702,318		121,077		125,383		12,267,692		11,827,701		54.80		56.16

Mortgage loans		6,299,766		5,625,812		-		-		6,299,766		5,625,812		28.14		26.71

Consumer loans		3,818,635		3,607,248		-		-		3,818,635		3,607,248		17.06		17.13

Total		22,265,016		20,935,378		121,077		125,383		22,386,093		21,060,761		100.00		100.00

(*)

Includes domestic interbank loans for Ch$19 million as of September 30, 2014 (Ch$66 million as of December 31, 2013), see Note 07.

(**)

Includes foreign interbank loans for Ch$21,077 million as of September 30, 2014 (Ch$125,383 million as of December 31, 2013), see Note 07.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 59

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 08

LOANS AND ACCOUNTS RECEIVABLE FROM CUSTOMERS, continued

Impaired portfolio

As of September 30, 2014 and December 31, 2013, the impaired portfolio is as follows:

	As of September 30,								As of December 31,
	2014								2013
	Commercial		Mortgage		Consumer		Total		Commercial		Mortgage		Consumer		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Individual impaired portfolio		382,439		-		-		382,439		317,534		-		-		317,534
Non-performing loans		372,511		175,068		99,235		646,814		364,890		155,688		92,723		613,301
Other impaired portfolio		109,516		178,421		268,018		555,955		122,464		167,713		256,689		546,866
Total		864,466		353,489		367,253		1,585,208		804,888		323,401		349,412		1,477,701

ii)

The impaired portfolio with or without guarantee as of September 30, 2014 and December 31, 2013 is as follows:

	As of September 30,								As of December 31,
	2014								2013
	Commercial		Mortgage		Consumer		Total		Commercial		Mortgage		Consumer		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Secured debt		407,181		330,151		49,963		787,295		385,712		302,219		49,051		736,982
Unsecured debt		457,285		23,338		317,290		797,913		419,176		21,182		300,361		740,719
Total		864,466		353,489		367,253		1,585,208		804,888		323,401		349,412		1,477,701

iii)

The portfolio of non-performing loans as of September 30, 2014 and December 31, 2013 is as follows:

	As of September 30,								As of December 31,
	2014								2013
	Commercial		Mortgage		Consumer		Total		Commercial		Mortgage		Consumer		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Secured debt		135,757		153,917		9,569		299,243		151,494		136,768		7,241		295,503
Unsecured debt		236,754		21,151		89,666		347,571		213,396		18,920		85,482		317,798
Total		372,511		175,068		99,235		646,814		364,890		155,688		92,723		613,301

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 60

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 08

LOANS AND ACCOUNTS RECEIVABLE FROM CUSTOMERS, continued

Allowances

The changes in allowances balances during 2014 and 2013 are as follows:

	Commercial loans						Mortgage loans			Consumer loans
	Individual			Group			Group			Group			Total
Activity during 2014	MCh$			MCh$			MCh$			MCh$			MCh$

Balance as of December 31, 2013		200,230			100,170			43,306			264,585			608,291
Allowances established		52,211			77,373			9,705			92,402			231,691
Allowances released		(9,033	)		(5,311	)		(3,498	)		(33,715	)		(51,557	)
Allowances released due to charge-off		(21,106	)		(16,721	)		(2,198	)		(74,780	)		(114,805	)
Balance as of September 30, 2014		222,302			155,511			47,315			248,492			673,620

	Commercial loans						Mortgage loans			Consumer loans
	Individual			Group			Group			Group			Total
Activity during 2013	MCh$			MCh$			MCh$			MCh$			MCh$

Balance as of December 31, 2012		154,935			95,938			35,990			263,259			550,122
Allowances established		85,628			36,724			21,314			155,921			299,587
Allowances released		(22,014	)		(11,151	)		(9,216	)		(35,482	)		(77,863	)
Allowances released due to charge-off		(18,319	)		(21,341	)		(4,782	)		(119,113	)		(163,555	)
Balance as of December 31, 2013		200,230			100,170			43,306			264,585			608,291

In addition to credit risk allowances, there are allowances held for:

Country risk to cover the risk taken when holding or committing resources with any foreign country. These allowances are established according to country risk classifications as set for Chapter 7-13 of the Updated Compilation of Rules, issued by the SBIF. The balances of allowances as of September 30, 2014 and December 31, 2013 are Ch$154 million and Ch$470 million, respectively.

ii)

According to SBIF’s regulations (compendium of Accounting Standards), the Bank has established allowances related to the undrawn available credit lines and contingent loans. The balances of allowances as of September 30, 2014 and December 31, 2013 are Ch$14,737 million and Ch$18,767 million, respectively and are presented in liabilities of the Consolidated Interim Statement of Financial Position

Allowances established on customer and interbank loans

The following chart shows the balance of provisions established, associated with credits granted to customers and banks:

	As of September 30,		As of December 31,
	2014		2013

Customers loans		231,691		299,587
Interbank loans		59		127
Total		231,750		299,714

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 61

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 08

LOANS AND ACCOUNTS RECEIVABLE FROM CUSTOMERS, continued

ii) Portfolio by its impaired and non-impaired status

	As of September 30, 2014
	Non-impaired												Impaired												Total portfolio
	Commercial			Mortgage			Consumer			Total non- impaired			Commercial			Mortgage			Consumer			Total impaired			Commercial			Mortgage			Consumer			Total portfolio
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Current portfolio		11,025,239			5,631,134			3,259,878			19,916,251			350,434			116,116			162,247			628,797			11,375,673			5,747,250			3,422,125			20,545,048
Overdue for 1-29 days		168,160			104,736			116,880			389,776			65,265			20,726			54,202			140,193			233,425			125,462			171,082			529,969
Overdue for 30-89 days		88,631			210,407			74,624			373,662			80,275			54,101			58,581			192,957			168,906			264,508			133,205			566,619
Overdue for 90 days or more		-			-			-			-			368,492			162,546			92,223			623,261			368,492			162,546			92,223			623,261

Total portfolio before allowances		11,282,030			5,946,277			3,451,382			20,679,689			864,466			353,489			367,253			1,585,208			12,146,496			6,299,766			3,818,635			22,264,897

Overdue loans (less than 90 days) presented as portfolio percentage		2.28	%		5.30	%		5.55	%		3.69	%		16.84	%		21.17	%		30.71	%		21.02	%		3.31	%		6.19	%		7.97	%		4.93	%

Overdue loans (90 days or more) presented as portfolio percentage		-			-			-			-			42.63	%		45.98	%		25.11	%		39.32	%		3.03	%		2.58	%		2.42	%		2.80	%

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 62

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 08

LOANS AND ACCOUNTS RECEIVABLE FROM CUSTOMERS, continued

	As of December 31, 2013
	Non-impaired												Impaired												Total portfolio
	Commercial			Mortgage			Consumer			Total non- impaired			Commercial			Mortgage			Consumer			Total impaired			Commercial			Mortgage			Consumer			Total portfolio
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Current portfolio		10,665,404			5,017,319			3,071,977			18,754,700			335,382			102,214			151,804			589,400			11,000,786			5,119,533			3,223,781			19,344,100
Overdue for 1-29 days		142,613			103,335			122,088			368,036			34,715			23,111			57,693			115,519			177,328			126,446			179,781			483,555
Overdue for 30-89 days		89,347			181,757			63,771			334,875			74,863			51,143			54,202			180,208			164,210			232,900			117,973			515,083
Overdue for 90 days or more		-			-			-			-			359,928			146,933			85,713			592,574			359,928			146,933			85,713			592,574

Total portfolio before allowances		10,897,364			5,302,411			3,257,836			19,457,611			804,888			323,401			349,412			1,477,701			11,702,252			5,625,812			3,607,248			20,935,312

Overdue loans (less than 90 days) presented as portfolio percentage		2.13	%		5.38	%		5.70	%		3.61	%		13.61	%		22.96	%		32.02	%		20.01	%		2.92	%		6.39	%		8.25	%		4.77	%

Overdue loans (90 days or more) presented as portfolio percentage		-			-			-			-			44.72	%		45.43	%		24.53	%		40.10	%		3.08	%		2.61	%		2.38	%		2.83	%

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 63

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 09

AVAILABLE FOR SALE INVESTMENTS

As of September 30, 2014 and December 31, 2013, detail of instruments defined as available for sale investments is as follows:

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Chilean Central Bank and Government securities
Chilean Central Bank Bonds		375,271		364,821
Chilean Central Bank Notes		456		1,078
Other Chilean Central Bank and Government securities		277,337		146,295
Subtotal		653,064		512,194
Other Chilean securities
Time deposits in Chilean financial institutions		733,969		1,011,354
Mortgage finance bonds of Chilean financial institutions		32,389		33,856
Chilean financial institution bonds		1,539		-
Chilean corporate bonds		-		-
Other Chilean securities		-		-
Subtotal		767,897		1,045,210
Foreign financial securities
Foreign Central Banks and Government securities		209,523		143,589
Other foreign financial securities		-		-
Subtotal		209,523		143,589

Total		1,630,484		1,700,993

As of September 30, 2014 and December 31, 2013, the line item Chilean Central Bank and Government securities item includes securities sold under repurchase agreements to clients and financial institutions for Ch$23,730 million and Ch$90,818 million, respectively.

As of September 30, 2014 and December 31, 2013, the line item Other National Institutions Securities includes securities sold to customers and financial institutions under repurchase agreements totaling Ch$239,670 million and Ch$118,195 million, respectively.

As of September 30, 2014 available for sale investments included a net unrealized profit of Ch$20,427 million, recorded as a “Valuation adjustment” in Equity, distributed between a profit of Ch$20,428 million attributable to Bank shareholders and a loss of Ch$1 million attributable to non-controlling interest.

As of December 31, 2013 available for sale investments included a net unrealized profit of Ch$840 million, recorded as a “Valuation adjustment” in Equity, a profit of Ch$802 million attributable to Bank shareholders and a profit of Ch$38 million attributable to non-controlling interest.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 64

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 10

INTANGIBLE ASSETS

As of September 30, 2014 and December 31, 2013 the composition of intangible assets is as follows:

							As of September 30, 2014
	Years of useful life		Average remaining useful life		Net opening balance as of January 1, 2014 MCh$		Gross balance MCh$		Accumulated amortization MCh$			Net balance MCh$

Licenses		3		1		2,197		10,227		(8,284	)		1,943
Software development		3		1		64,506		219,198		(190,362	)		28,836

Total						66,703		229,425		(198,646	)		30,779

							As of December 31, 2013
	Years of useful life		Average remaining useful life		Net opening balance as of January 1, 2013 MCh$		Gross balance MCh$		Accumulated amortization MCh$			Net balance MCh$

Licenses		3		2		2,621		9,955		(7,758	)		2,197
Software development		3		2		84,726		242,023		(177,517	)		64,506

Total						87,347		251,978		(185,275	)		66,703

The changes in the value of intangible assets during the periods ended September 30, 2014 and December 31, 2013 is as follows:

b.1) Gross balance

	Licenses		Software development			Total
Gross balances	MCh$		MCh$			MCh$

Balances as of January 1, 2014		9,955		242,023			251,978
Acquisitions		272		13,732			14,004
Disposals				(36,557	)		(36,557	)
Other
Balances as of September, 2014		10,227		219,198			229,425

Balances as of January 1, 2013		9,329		224,671			234,000
Acquisitions		626		17,774			18,400
Disposals		-		-			-
Other		-		(422	)		(422	)
Balances as of December 31, 2013		9,955		242,023			251,978

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 65

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 10

INTANGIBLE ASSETS, continued

b.2)

Accumulated amortization

	Licenses			Software development			Total
Accumulated amortization	MCh$			MCh$			MCh$

Balances as of January 1, 2014		(7,758	)		(177,517	)		(185,275	)
Amortization for the period		(526	)		(12,845	)		(13,371	)
Other changes		-			-			-

Balances as of September 30 2014		(8,284	)		(190,362	)		(198,646	)

Balances as of January 1, 2013		(6,708	)		(139,945	)		(146,653	)
Amortization for the period		(1,050	)		(37,572	)		(38,622	)
Other changes		-			-			-
Balances as of December 31, 2013		(7,758	)		(177,517	)		(185,275	)

The Bank has no restriction on intangible assets as of September 30, 2014 and December 31, 2013. Additionally, the intangible assets have not been pledged as guarantee for fulfillment of financial liabilities. Also, the Bank has no debt related intangible assets as of those dates.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 66

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 11

PROPERTY, PLANT, AND EQUIPMENT

As of September 30, 2014 and December 31, 2013 the property, plant and equipment balances are composed as follows:

			As of September 30, 2014
	Net opening balance as of January 1, 2014		Gross balance		Accumulated depreciation			Net balance
	MCh$		MCh$		MCh$			MCh$

Land and building		128,119		196,010		(64,169	)		131,841
Equipment		38,841		97,019		(56,052	)		40,967
Ceded under operating leases		4,329		4,888		(619	)		4,269
Other		8,926		36,662		(26,498	)		10,164
Total		180,215		334,579		(147,338	)		187,241

			As of December 31, 2013
	Net opening balance as of January 1, 2013		Gross balance		Accumulated depreciation			Net balance
	MCh$		MCh$		MCh$			MCh$

Land and building		119,853		184,711		(56,592	)		128,119
Equipment		28,625		85,857		(47,016	)		38,841
Ceded under operating leases		4,507		4,888		(559	)		4,329
Other		9,229		32,207		(23,281	)		8,926
Total		162,214		307,663		(127,448	)		180,215

The activity in property, plant and equipment during the periods ended September 30, 2014 and December 31, 2013 is as follows:

b.1)

Gross balance

	Land and buildings		Equipment			Operating leases		Other			Total
2014	MCh$		MCh$			MCh$		MCh$			MCh$

Balances as of January 1, 2014		184,711		85,857			4,888		32,207			307,663
Additions		11,299		11,280			-		4,509			27,088
Disposals		-		(64	)		-		(54	)		(118	)
Impairment due to damage (i)		-		(54	)		-		-			(54	)
Other		-		-			-		-			-
Balances as of September 30, 2014		196,010		97,019			4,888		36,662			334,579

(i) Banco Santander Chile recognized on its financial statements as of September 30, 2014 a Ch$54 million impairment due to damages to ATMs. Compensation received from insurance totaled Ch$530 million, which is presented within Other operating income and impairment (see Note 30).

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 67

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 11

PROPERTY, PLANT, AND EQUIPMENT, continued

	Land and buildings		Equipment			Operating leases			Other		Total
2013	MCh$		MCh$			MCh$			MCh$		MCh$

Balances as of January 1, 2013		167,241		66,170			4,996			28,957		267,364
Additions		17,470		20,171			-			3,148		40,789
Disposals		-		(240	)		(108	)		-		(348	)
Impairment due to damage (i)		-		(244	)		-			-		(244	)
Transfers		-		-			-			-		-
Other		-		-			-			102		102
Balances as of December 31, 2013		184,711		85,857			4,888			32,207		307,663

(i)

Banco Santander Chile recognized on its financial statements as of December 31, 2013 a Ch$244 million impairment due to damages to ATMs. Compensation received from insurance totaled Ch$725 million.

b.2)

Accumulated depreciation

	Land and buildings			Equipment			Operating leases			Other			Total
2014	MCh$			MCh$			MCh$			MCh$			MCh$

Balances as of January 1, 2014		(56,592	)		(47,016	)		(559	)		(23,281	)		(127,448	)
Depreciation charges in the period		(7,577	)		(9,048	)		(60	)		(3,265	)		(19,950	)
Sales and disposals in the period		-			12			-			48			60
Transfers		-			-			-			-		-
Others		-			-			-			-			-
Balances as of September 30, 2014		(64,169	)		(56,052	)		(619	)		(26,498	)		(147,338	)

	Land and buildings			Equipment			Operating leases			Other			Total
2013	MCh$			MCh$			MCh$			MCh$			MCh$

Balances as of January 1, 2013		(47,388	)		(37,545	)		(489	)		(19,728	)		(105,150	)
Depreciation charges in the period		(9,207	)		(9,554	)		(89	)		(3,602	)		(22,452	)
Sales and disposals in the period		3			83			19			49			154
Transfers		-			-			-			-			-
Others		-			-			-			-			-
Balances as of December 31, 2013		(56,592	)		(47,016	)		(559	)		(23,281	)		(127,448	)

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 68

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 11

PROPERTY, PLANT, AND EQUIPMENT, continued

Operational leases - Lessor

As of September 30, 2014 and December 31, 2013, the future minimum lease cash inflows under non-cancellable operating leases are as follows:

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Due within 1 year		389		637
Due after 1 year but within 2 years		751		508
Due after 2 years but within 3 years		281		300
Due after 3 years but within 4 years		273		263
Due after 4 years but within 5 years		273		263
Due after 5 years		1,789		2,148

Total		3,756		4,119

Operational leases - Lessee

Certain Bank`s premises and equipment are leased under various operating leases. Future minimum rental payments under non-cancellable leases are as follows:

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Due within 1 year		19,487		18,941
Due after 1 year but within 2 years		17,412		16,948
Due after 2 years but within 3 years		16,395		15,161
Due after 3 years but within 4 years		15,294		14,083
Due after 4 years but within 5 years		13,500		12,902
Due after 5 years		60,074		61,730

Total		142,162		139,765

As of September 30, 2014 and December 31, 2013 the Bank has no financial leases which cannot be unilaterally rescinded.

The Bank has no restriction on property, plant and equipment as of September 30, 2014 and December 31, 2013. Additionally, the property, plant, and equipment have not been provided as guarantees of financial liabilities. The Bank has no debt in connection with property, plant and equipment.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 69

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 12

CURRENT AND DEFERRED TAXES

Current taxes

As of September 30, 2014 and December 31, 2014, the Bank recognizes an income tax provision, which is determined based on the currently applicable tax legislation. This provision is recorded net of recoverable taxes, as shown as follows:

	As of September 30,			As of December 31,
	2014			2013
	MCh$			MCh$

Summary of current tax liabilities (assets)
Current tax (assets)		(23,834	)		(1,643	)
Current tax liabilities		-			50,242

Total tax payable (recoverable)		(23,834	)		48,599

(Assets) liabilities current taxes detail (net)
Income tax, tax rate 21% (20% as of 12.31.2013)		62,250			117,095
Less:
Provisional monthly payments		(80,469	)		(61,730	)
Credit for training expenses		(1,165	)		(1,656	)
Land taxes leasing		(2,343	)		(2,987	)
Grant credits		(1,208	)		(1,892	)
Other		(899	)		(231	)

Total tax payable (recoverable)		(23,834	)		48,599

Effect on income

The effect of tax expense on income for the periods from January 1 and September 30, 2014 and 2013 is comprised of the following items:

	For the three months ended September 30,					For the nine months ended September 30,
	2014			2013		2014			2013
	MCh$			MCh$		MCh$			MCh$

Income tax expense
Current tax		37,568			17,293		62,250			58,779

Credits (debits) for deferred taxes
Origination and reversal of temporary differences		(57,288	)		910		(31,047	)		(6.802	)
Subtotals		(19,720	)		18,203		31,203			51,977
Tax for rejected expenses (Article No.21)		176			101		594			277
Other		603			113		493			693
Net (benefit) charges for income tax expense		(18,941	)		18,417		32,290			52,947

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 70

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 12

CURRENT AND DEFERRED TAXES, continued

c) Effective tax rate reconciliation

The reconciliation between the income tax rate and the effective rate applied in determining tax expenses as of September 30, 2014 and 2013 is as follows:

	As of September 30,
	2014						2013
	Tax rate			Amount			Tax rate			Amount
	%			MCh$			%			MCh$

Tax calculated over profit before tax		21.00			94,130			20.00			64,380
Permanent differences		(4.80	)		(21,505	)		(2.89	)		(9,307	)
Single penalty tax (rejected expenses)		0.13			594			0.09			277
Effect of exchange rate changes on deferred tax (*)		(8.61	)		(38,586	)		-			-
Real estate taxes		(0.52	)		(2,343	)		(0.67	)		(2,162	)
Other		-			-			(0.08	)		(241	)
Effective rates and expenses for income tax		7.20			32,290			16.45			52,947

(*) See Note 02 (b)

d) Effect of deferred taxes on other comprehensive income

Below is a summary of the separate effect of deferred tax on other comprehensive income, showing the asset and liability balances, for the periods ended September 30, 2014 and December 31, 2013:

	As of September 30,			As of September 30,
	2014			2013
	MCh$			MCh$

Deferred tax assets
Available for sale investments		24			31
Cash flow hedges		5,471			1.651
Total deferred tax assets recognized through other comprehensive income		5,495			1,682

Deferred tax liabilities
Available for sale investments		(4,314	)		(199	)
Cash flow hedges		-			-
Total deferred tax liabilities recognized through other comprehensive income		(4,314	)		(199	)

Net deferred tax balances in equity		1,181			1,483

Deferred taxes in equity attributable to Bank shareholders		1,181			1,491
Deferred tax in equity attributable to non-controlling interests		-			(8	)

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 71

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 12

CURRENT AND DEFERRED TAXES, continued

e) Effect of deferred taxes on income

As of September 30, 2014 and December 31, 2013, the Bank has recorded effects for deferred taxes in the financial statements.

Below are effects of deferred taxes on assets, liabilities and income:

	As of September 30,			As of December 31,
	2014			2013
	MCh$			MCh$
Deferred tax assets
Interests and adjustments		9,814			7,203
Non-recurring charge-offs		6,952			9,787
Assets received in lieu of payment		1,033			1,149
Property, plant and equipment		5,562			3,579
Allowance for loan losses		106,077			92,088
Provision for expenses		22,750			19,130
Derivatives		6,851			19
Leased assets		68,750			52,447
Subsidiaries tax losses		8,089			5,716
Other		442			37,415
Total deferred tax assets		236,320			228,533

Deferred tax liabilities
Valuation of investments		509			(11,593	)
Depreciation		(233	)		(315	)
Other		(1,905	)		(12,981	)
Total deferred tax liabilities		(1,629	)		(24,889	)

f) Summary of deferred tax assets and liabilities

Below is a summary of the deferred taxes impact on equity and income.

	As of September 30,			As of December 31,
	2014			2013
	MCh$			MCh$

Deferred tax assets
Recognized through other comprehensive income		5,495			1,682
Recognized through profit or loss		236,320			228,533
Total deferred tax assets		241,815			230,215

Deferred tax liabilities
Recognized through other comprehensive income		(4,314	)		(199	)
Recognized through profit or loss		(1,629	)		(24,889	)
Total deferred tax liabilities		(5,943	)		(25,088	)

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 72

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 13

OTHER ASSETS

Other asset items include the following:

	As of September 30,			As of December 31,
	2014			2013
	MCh$			MCh$

Assets for leasing (1)		53,994			41,402

Assets received or awarded in lieu of payment (2*)
Assets received in lieu of payment		11,798			14,448
Assets awarded for and through auction		9,219			6,530
Provision on assets received in lieu of payment or awarded		(2,846	)		(2,914	)
Subtotal		18,171			18,064

Other assets
Guaranteed deposits		3,012			68,330
Gold investments		427			373
VAT credit		7,524			8,705
Income tax recoverable		38,696			42,354
Prepaid expenses		31,641			34,970
Assets recovered from leasing for sale		6,441			5,747
Pension plan assets		1,688			1,822
Accounts and notes receivable		50,513			60,256
Notes receivable through brokerage and simultaneous transactions		99,574			75,145
Other receivable assets		10,422			9,746
Other assets		31,160			33,111
Subtotal		281,098			340,559

Total		353,263			400,025

(1) Assets available to be granted under the financial leasing agreements.

(2) Assets received in lieu of payment correspond to assets received as payment of overdue debts. The total assets held that correspond to this type must not exceed 20% of the Bank’s effective equity. These assets currently represent 0.38% as of September 30, 2014 (0.48% as of December 31, 2013) of the Bank’s effective equity.

Assets awarded in judicial sale correspond to those acquired in judicial auction as payment of debts previously subscribed with the Bank. The assets awarded through a judicial sale are not subject to the aforementioned requirement. These properties are assets available for sale. The Bank is expected to complete the sale within one year from the date on which the asset are received or acquired. When they are not sold within that period of time, the Bank must charge-off those assets.

Additionally, the Bank records a provision for the difference between the initial award value plus any additions and its estimated realizable value (appraisal), when the first is greater.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 73

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 14

TIME DEPOSITS AND OTHER TIME LIABILITIES

As of September 30, 2014 and December 31, 2013, the composition is as follows:

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Deposits and other demand liabilities
Checking accounts		4,502,876		4,403,526
Other deposits and demand accounts		498,584		569,395
Other demand liabilities		723,461		647,842

Total		5,724,921		5,620,763

Time deposits and other time liabilities
Time deposits		10,420,741		9,567,855
Time savings account		106,782		104,143
Other time liabilities		3,483		3,274

Total		10,531,006		9,675,272

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 74

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 15

ISSUED DEBT INSTRUMENTS AND OTHER FINANCIAL LIABILITIES

As of September 30, 2014 and December 31, 2013, the composition of this item is as follows:

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Other financial liabilities
Obligations to public sector		67,768		68,075
Other domestic obligations		115,222		118,683
Foreign obligations		15,502		3,023
Subtotals		198,492		189,781
Issued debt instruments
Mortgage finance bonds		86,315		101,667
Senior bonds		4,531,632		4,190,918
Mortgage Bonds		107,682		70,339
Subordinated bonds		870,859		835,734
Subtotals		5,596,488		5,198,658

Total		5,794,980		5,388,439

Debts classified as current are either demand obligations or will mature in one year or less. All other debts are classified as non-current. The Bank’s debts, both current and non-current, are summarized below:

As of September 30, 2014

Current

Non-current

Total

MCh$

Mortgage finance bonds

8,808

77,507

86,315

Senior bonds

2,063,801

2,467,831

4,531,632

Mortgage Bonds

107,682

Subordinated bonds

164,001

706,858

870,859

Issued debt instruments

2,236,610

3,359,878

5,596,488

Other financial liabilities

111,020

87,472

198,492

Total

2,347,630

3,447,350

5,794,980

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 75

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 15

ISSUED DEBT INSTRUMENTS AND OTHER FINANCIAL LIABILITIES, continued

	As of December 31, 2013
	Current		Non-current		Total
	MCh$		MCh$		MCh$

Mortgage finance bonds		6,493		95,174		101,667
Senior bonds		1,603,929		2,586,989		4,190,918
Mortgage Bonds		-		70,339		70,339
Subordinated bonds		138,466		697,268		835,734
Issued debt instruments		1,748,888		3,449,770		5,198,658

Other financial liabilities		101,698		88,083		189,781

Total		1,850,586		3,537,853		5,388,439

a) Mortgage finance bonds

These bonds are used to finance mortgage loans. Their principal amounts are amortized on a quarterly basis. The range of maturities of these bonds is between five and twenty years. Loans are indexed to UF and create a yearly interest rate of 5.94% as of September 30, 2014 (5.21% as of December 31, 2013).

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Due within 1 year		8,808		6,493
Due after 1 year but within 2 years		7,950		9,760
Due after 2 years but within 3 years		8,293		8,768
Due after 3 years but within 4 years		11,929		9,921
Due after 4 years but within 5 years		7,698		12,511
Due after 5 years		41,637		54,214
Total mortgage finance bonds		86,315		101,667

b) Senior bonds

The following table shows senior bonds by currency:

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Santander bonds in UF		1,565,021		1,964,905
Santander bonds in USD		2,070,040		1,658,789
Santander bonds in CHF		449,244		246,284
Santander bonds in Ch$		183,971		277,530
Santander bonds in CNY		49,509		43,410
Santander bonds in AUD		65,123		-
Santander bonds in JPY		148,724		-
Total senior bonds		4,531,632		4,190,918

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 76

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 15

ISSUED DEBT INSTRUMENTS AND OTHER FINANCIAL LIABILITIES, continued

i. Issuance of senior bonds:

In 2014, the Bank issued bonds for UF 4,000,000; CLP 25,000,000,000; CHF 300,000,000; USD 750,000,000, AUD 125,000,000, and JPY 27,300,000,000 detailed as follows:

Series	Amount			Term		Issuance rate	Issuance date	Series issued amount		Maturity date
EB Series		UF	2,000,000		5 years	3.5% per annum simple	02-21-2014	UF	2,000,000	10-01-2018
ED Series		UF	2,000,000		7 years	3.5% per annum simple	02-28-2014	UF	2,000,000	01-01-2021
UF Total		UF	4,000,000
EA Series		CLP	25,000,000,000		5 years	6.2% per annum simple	02-22-2014	CLP	25,000,000,000	09-01-2018
CLP Total		CLP	25,000,000,000
CHF Bond		CHF	300,000,000		3 years	1% per annum simple	01-31-2014	CHF	300,000,000	07-31-2017
CHF Total		CHF	300,000,000
DN Current Bond		USD	250,000,000		5 years	Libor (3 months) + 75 bp	02-19-2014	USD	250,000,000	02-19-2019
Floating Bond		USD	500,000,000		3 years	Libor (3 months) + 90 bp	04-15-2014	USD	500,000,000	04-11-2017
USD Total		USD	750,000,000
AUD Bond		AUD	125,000,000		3 years	4.5% per annum simple	03-13-2014	AUD	125,000,000	03-13-2017
AUD Total		AUD	125,000,000
JPY Floating Bond		JPY	6,600,000,000		3 years	Libor (3 months) + 65 bp	04-24-2014	JPY	6,600,000,000	04-24-2017
JPY Current Bond		JPY	2,000,000,000		3 years	0.72% per annum simple	04-24-2014	JPY	2,000,000,000	04-24-2017
JPY Current Bond		JPY	18,700,000,000		5 years	0.97% per annum simple	04-24-2014	JPY	18,700,000,000	04-24-2019
JPY Total		JPY	27,300,000,000

During 2014, the Bank repurchased bonds for CLP 118,409,000,000 and UF 6,000,000.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 77

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 15

ISSUED DEBT INSTRUMENTS AND OTHER FINANCIAL LIABILITIES, continued

During 2013, the Bank issued bonds for UF 16,768,000; CLP 32,500,000,000; USD 250,000,000 and CHF 300,000,000 detailed as follows:

Series	Amount			Term		Issuance rate	Issuance date		Series issued amount		Maturity date
E1 Series		UF	2,742,000		5 years	3.50% annum simple		02-01-2011	UF	4,000,000	02-01-2016
E2 Series		UF	952,000		7 years	3.00% annum simple		01-01-2012	UF	4,000,000	07-01-2018
E3 Series		UF	2,244,000		8,5 years	3.50% annum simple		01-01-2011	UF	4,000,000	07-01-2019
E6 Series		UF	3,720,000		10 years	3.50% annum simple		04-01-2012	UF	4,000,000	04-01-2022
E9 Series		UF	2,000,000		10 years	3.50% annum simple		01-01-2013	UF	2,000,000	01-01-2023
FD Series		UF	110,000		5 years	3.00% annum simple		08-01-2010	UF	110,000	08-01-2015
EC Series		UF	2,000,000		10 years	3.50% annum simple		11-28-2013	UF	2,000,000	09-01-2023
UF Total		UF	13,768,000
E4 Series		CLP	7,500,000,000		5 years	6.75% annum simple		06-01-2012	CLP	50,000,000,000	06-01-2016
E8 Series		CLP	25,000,000,000		10 years	6.60% annum simple		11-01-2012	CLP	25,000,000,000	11-01-2022
CLP Total		CLP	32,500,000,000
CHF Bond		CHF	150,000,000		4 years	Libor (3 months) + 100 bp		03-28-2013	CHF	150,000,000	03-28-2017
CHF Bond		CHF	150,000,000		6 years	1.75% annum simple		09-26-2013	CHF	150,000,000	09-26-2019
CHF Total		CHF	300,000,000
USD Current Bond		USD	250,000,000		5 years	Libor (3 months) + 100 bp		06-07-2013	USD	250,000,000	06-07-2018
USD TOTAL		USD	250,000,000

During 2013, the Bank performed a partial repurchase of bonds for CLP 49,245,000,000.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 78

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 15

ISSUED DEBT INSTRUMENTS AND OTHER FINANCIAL LIABILITIES, continued

ii. Nominal bonds to be placed:

As of September 30, 2014, there are no outstanding amounts of bonds authorized, to be issued.

Maturities of senior bonds are as follows:

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Due within 1 year		2,063,801		1,603,929
Due after 1 year but within 2 years		404,805		674,784
Due after 2 years but within 3 years		485,131		338,853
Due after 3 years but within 4 years		289,033		321,589
Due after 4 years but within 5 years		250,054		154,368
Due after 5 years		1,038,808		1,097,395
Total senior bonds		4,531,632		4,190,918

c) Mortgage bonds

These bonds are used to finance mortgage loans with certain characteristics such as loan-to-value ratios below 80% and a debt servicing ratio of the client lower than 20%. All outstanding mortgage bonds are UF denominated. Any cash not yet funding mortgages is invested in fixed income instruments issued by the Chilean Central Bank and the Treasury of Chile.

Detail of issued mortgage bonds per currency is as a follows:

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Mortgage bonds in UF		107,682		70,339
Total mortgage bonds		107,682		70,339

i. Placement of Mortgage bonds

In 2014, the Bank placed mortgage bonds for UF1,500,000, detailed as follows:

Series

Amount

Term

Issuance rate

Issuance
date

Series issued
amount

Maturity date

1,500,000

18 years

3.2% annum simple

09-01-2014

5,000,000

04-01-2032

UF Total

1,500,000

In 2013, the Bank issued bonds for UF 3,000,000, detailed as follows:

Series

Amount

Term

Issuance rate

Issuance
date

Series issued
amount

Maturity date

3,000,000

15 years

3.2% annum simple

07-31-2013

3,000,000

07-31-2028

UF Total

3,000,000

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 79

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 15

ISSUED DEBT INSTRUMENTS AND OTHER FINANCIAL LIABILITIES, continued

Maturities of mortgage bonds are as follows:

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Due within 1 year		-		-
Due after 1 year but within 2 years		-		-
Due after 2 years but within 3 years		-		-
Due after 3 years but within 4 years		-		-
Due after 4 years but within 5 years		-		-
Due after 5 years		107,682		70,339
Total mortgage bonds		107,682		70,339

d) Subordinated bonds

Detail of subordinated bonds per currency is as follows:

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Subordinated bonds denominated in USD		156,164		139,802
Subordinated bonds denominated in UF		714,695		695,932
Total subordinated bonds		870,859		835,734

i. Placement of subordinated bonds

During 2014, the Bank has not placed any subordinated bonds.

During 2013, the Bank placed subordinated bonds for UF 5,900,000. The following chart summarizes details of the subordinated bonds:

Series

Amount

Term

Issuance rate

Issuance
date

Series issued
amount

Maturity date

1,900,000

20 years

3.9% annum simple

04-05-2011

4,000,000

04-01-2031

4,000,000

30 years

3.9% annum simple

11-04-2011

4,000,000

04-01-2041

Total

5,900,000

During the first half of 2013, the Bank performed a partial repurchase of bonds for USD 47,786,000.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 80

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 15

ISSUED DEBT INSTRUMENTS AND OTHER FINANCIAL LIABILITIES, continued

The maturities of subordinated bonds are as follows:

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Due within 1 year		164,001		138,466
Due after 1 year but within 2 years		6,870		14,039
Due after 2 years but within 3 years		2,539		4,140
Due after 3 years but within 4 years		-		-
Due after 4 years but within 5 years		-		-
Due after 5 years		697,449		679,089
Total subordinated bonds		870,859		835,734

e) Other financial liabilities

The composition of other financial liabilities, by maturity, is detailed below:

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Non-current portion:
Due after 1 year but within 2 years		3,250		3,389
Due after 2 year but within 3 years		2,929		2,389
Due after 3 year but within 4 years		8,125		3,045
Due after 4 year but within 5 years		28,644		20,862
Due after 5 years		44,524		58,398
Non-current portion subtotals		87,472		88,083

Current portion:
Amounts due to credit card operators		92,305		97,027
Acceptance of letters of credit		14,347		741
Other long-term financial obligations, short-term portion		4,368		3,930
Current portion subtotals		111,020		101,698

Total other financial liabilities		198.492		189,781

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 81

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 16

MATURITY OF ASSETS AND LIABILITIES

As of September 30, 2014 and December 31, 2013, the detail of the maturities of assets and liabilities is as follows:

As of September 30, 2014	Demand		Up to 1 month		Between 1 and 3 months		Between 3 and 12 months		Subtotal up to 1 year		Between 1 and 5 years		More than 5 years		Subtotal More than 1 year		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Assets
Cash and deposits in banks		1,448,635		-		-		-		1,448,635		-		-		-		1,448,635
Cash items in process of collection		822,594		-		-		-		822,594		-		-		-		822,594
Trading investments		-		645		-		224,051		224,696		273,697		110,270		383,967		608,663
Investments under resale agreements		-		3,517		-		-		3,517		-		-		-		3,517
Financial derivatives contracts		-		133,660		189,734		435,675		759,069		1,005,849		900,556		1,906,405		2,665,474
Interbank loans (1)		16,112		15,267		89,817		-		121,196		-		-		-		121,196
Loans and accounts receivables from customers (2)		892,220		2,210,053		1,948,504		3,573,720		8,624,497		6,731,418		6,908,982		13,640,400		22,264,897
Available for sale investments		-		70,374		174,356		581,339		826,069		208,844		595,571		804,415		1,630,484
Held to maturity investments		-		-		-		-		-		-		-		-		-

Total assets		3,179,561		2,433,516		2,402,411		4,814,785		12,830,273		8,219,808		8,515,379		16,735,187		29,565,460

Liabilities
Deposits and other demand liabilities		5,724,921		-		-		-		5,724,921		-		-		-		5,724,921
Cash items in process of collection		606,307		-		-		-		606,307		-		-		-		606,307
Obligations under repurchase agreements		-		287,527		930		638		289,095		-		-		-		289,095
Time deposits and other time liabilities		110,265		5,376,263		3,064,803		1,785,533		10,336,864		140,321		53,821		194,142		10,531,006
Financial derivatives contacts		-		143,614		163,699		437,844		745,157		921,688		757,821		1,679,509		2,424,666
Interbank borrowings		366		163,710		285,822		392,605		842,503		457,743		13,140		470,883		1,313,386
Issued debts instruments		-		791,348		834,300		610,962		2,236,610		1,474,302		1,885,576		3,359,878		5,596,488
Other financial liabilities		93,026		14,118		1,617		2,259		111,020		42,948		44,524		87,472		198,492

Total liabilities		6,534,885		6,776,580		4,351,171		3,229,841		20,892,477		3,037,002		2,754,882		5,791,884		26,684,361

(1)

Interbank loans are presented on a gross basis. The amount of allowances is Ch$51 million.

(2)

Loans and accounts receivables from customers are presented on a gross basis. Provisions amounts according to type of loan are detailed as follows: Commercial loans Ch$377,813 million, Mortgage loans Ch$47,315 million, Consumer loans Ch$248,492 million.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 82

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 16

MATURITY OF ASSETS AND LIABILITIES, continued

As of December 31, 2013	Demand		Up to 1 month		Between 1 and 3 months		Between 3 and 12 months		Subtotal up to 1 year		Between 1 and 5 years		More than 5 years		Subtotal More than 1 year		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Assets
Cash and deposits in banks		1,571,810		-		-		-		1,571,810		-		-		-		1,571,810
Cash items in process of collection		604,077		-		-		-		604,077		-		-		-		604,077
Trading investments		-		10,018		17		-		10,035		203,608		73,924		277,532		287,567
Investments under resale agreements		-		-		17,469		-		17,469		-		-		-		17,469
Financial derivatives contracts		-		168,785		99,471		225,617		493,873		565,329		434,816		1,000,145		1,494,018
Interbank loans (1)		1,224		66,264		56,901		1,060		125,449		-		-		-		125,449
Loans and accounts receivables from customers (2)		773,387		2,173,231		1,776,530		3,533,313		8,256,461		6,367,870		6,310,981		12,678,851		20,935,312
Available for sale investments		-		228,997		240,018		627,052		1,096,067		275,281		329,645		604,926		1,700,993
Held to maturity investments		-		-		-		-		-		-		-		-		-

Total assets		2,950,498		2,647,295		2,190,406		4,387,042		12,175,241		7,412,088		7,149,366		14,561,454		26,736,695

Liabilities
Deposits and other demand liabilities		5,620,763		-		-		-		5,620,763		-		-		-		5,620,763
Cash items in process of collection		276,379		-		-		-		276,379		-		-		-		276,379
Obligations under repurchase agreements		-		185,140		18,466		5,366		208,972		-		-		-		208,972
Time deposits and other time liabilities		104,233		5,351,489		2,333,001		1,743,525		9,532,248		87,380		55,644		143,024		9,675,272
Financial derivatives contacts		-		126,257		89,128		223,414		438,799		510,661		350,649		861,310		1,300,109
Interbank borrowings		8,199		104,490		216,472		1,201,070		1,530,231		152,146		-		152,146		1,682,377
Issued debts instruments		-		470,600		688,261		590,027		1,748,888		1,548,733		1,901,037		3,449,770		5,198,658
Other financial liabilities		97,027		568		1,111		2,992		101,698		29,685		58,398		88,083		189,781

Total liabilities		6,106,601		6,238,544		3,346,439		3,766,394		19,457,978		2,328,605		2,365,728		4,694,333		24,152,311

(1)

Interbank loans are presented on a gross basis. The amount of allowances is Ch$54 million.

(2)

Loans and accounts receivables from customers are presented on a gross basis. Provisions on loans amounts according to customer type: Commercial loans Ch$300,400 million, Mortgage loans Ch$43,306 million, Consumer loans Ch$264,585 million.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 83

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 17

OTHER LIABILITIES

Other liabilities consist of:

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Accounts and notes payable		89,000		84,729
Income received in advance		417		384
Guarantees received (threshold)		65,365		2,631
Notes payable through brokerage and simultaneous transactions		76,959		-
Other payable obligations		58,265		95,266
Other liabilities		15,054		15,767

Total		305,060		198,777

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 84

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 18

CONTINGENCIES AND COMMITMENTS

a) Lawsuits and legal procedures

As of the issuance date of these financial statements, the Bank and its affiliates were subject to certain legal actions in the normal course of their business. As of September 30, 2014, the Bank and its subsidiaries have provisions for this item of Ch$1,740 million (Ch$1,224 million as of December 31, 2013), which is included in “Provisions” in the Consolidated Interim Financial Statements as provisions for contingencies. In addition, there are other provisions for lawsuits for UF 4,911.83, which primarily relates to the litigation between Santander Corredores de Seguros Limitada and its clients for leasing assets. All of these provisions are in accordance with IAS 37.

b) Contingent loans

The following table shows the Bank`s contractual obligations to issue loans:

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Letters of credit issued		190,315		218,032
Foreign letters of credit confirmed		71,596		127,600
Guarantees		1,380,379		1,212,799
Personal guarantees		243,380		181,416
Subtotal		1,885,670		1,739,847
Available on demand credit lines		5,651,151		5,141,831
Other irrevocable credit commitments		42,847		47,376
Total		7,579,668		6,929,054

c) Held securities

The Bank holds securities in the normal course of its business as follows:

	As of September 30,		As of December 31,
	2014		2013
	MCh$		MCh$

Third party operations
Collections		265,295		217,948
Assets from third parties managed by the Bank and its affiliates		1,196,273		1,015,817
Subtotal		1,461,568		1,233,765
Custody of securities
Securities held in custody		408,936		304,535
Securities held in custody deposited in other entity		905,721		532,072
Issued securities held in custody		17,373,880		15,351,545
Subtotal		18,688,537		16,188,152
Total		20,150,105		17,421,917

During 2014, the Bank classified the portfolios managed by private banking in “Assets from third parties managed by the Bank and its affiliates”. At the end of September 2014, the balance for this was Ch$1,196,273 million (Ch$1,015,817 million at December 31, 2013).

d) Guarantees

Banco Santander Chile has comprehensive officer fidelity insurance policy, No. 2951729, with the Chilena Consolidada de Seguros insurance company, for USD 5,000,000, which jointly covers both the Bank and its affiliates for the period from July 1, 2014 to June 30, 2015.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 85

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 18

CONTINGENCIES AND COMMITMENTS, continued

Contingent loans and liabilities

To satisfy its clients’ needs, the Bank took on several contingent loans and liabilities that cannot be recognized in the Consolidated Interim Financial Statement of Financial Position; these contain loan risks and they are, therefore, part of the Bank`s global risk.

Santander Agente de Valores Limitada

i)In accordance with the provisions of Article No.30 and onward of Law No.18,045 on the Securities Market, the Company provided a guarantee in the amount of UF4,000 through Insurance Policy No. 213117286, underwritten by the Compañía de Seguros de Crédito Continental S.A., which matures on December 19, 2014.

Santander S.A. Corredores de Bolsa

The Company has given guarantees to the Bolsa de Comercio de Santiago for a current value of Ch$22,515 million to cover default risk on transactions entered into instantaneously or within short timeframes..

ii)

In addition, the Company has issued a guarantee to CCLV Contraparte Central S.A. (formerly known as Cámara de Compensación) in cash, for a total Ch$3,000 million and additional guarantees entered at the Electronical Stock Market for Ch$1,084 million as of September 30, 2014.

iii)

As of September 30, 2014, the following legal situations are in process:

Case of “Inverfam S.A. vs. Santander Investment S.A. Corredores de Bolsa” predecessor of Santander S.A. Corredores de Bolsa, followed in Santiago First Civil Court, File No. 32.543-2011; a claim for indemnity damages from the loss of some securities destined to Optimal Funds which were affected by the Madoff case, that amount to Ch$107 million, approximately. It is expected that a meeting will take place to agree upon a resolution.

Case of “Bilbao vs. Santander Investment S.A. Corredores de Bolsa”, predecessor to Santander S.A. Corredores de Bolsa, followed in Santiago 20^th Civil Court, File No. 15549-2012. As of September 30, 2014, the period to provide evidence has expired and evidentiary proceedings are pending.

Santander Corredora de Seguros Limitada

In accordance with Circular No. 1,160 of the Chilean Securities and Insurance Supervisor, the Company has an insurance policy relating to its obligations as an intermediary for insurance contracts. The company purchased a guarantee policy No. 10025805, covering UF500 and professional liability policy No. 10025806 for its insurance brokers, covering UF 60,000 from the Seguros Generales Consorcio Nacional de Seguros S.A. Policies valid from April 15, 2014 to April 14, 2015.

ii)

There are lawsuits for UF4,882.49; which relates to goods given in leasing. Our lawyers have estimated, according to the criteria defined IAS 37, a loss of Ch$106.3 million. The estimated loss amount was recorded as provisions.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 86

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 19

EQUITY

Capital

As of September 30, 2014 and December 31, 2013, the Bank had capital of Ch$891,303 million for 188,446,126,794 shares outstanding, all of which are subscribed for and paid in full. All shares have the same rights, and have no preferences or restrictions.

The activity with respect to shares during 2014 and 2013 was as follows:

	SHARES
	As of September 30, 2014		As of December 31, 2013

Issued as of January 1		188,446,126,794		188,446,126,794
Issuance of paid shares		-		-
Issuance of outstanding shares		-		-
Stock options exercised		-		-
Issued as period end		188,446,126,794		188,446,126,794

As of September 30, 2014 and December 31, 2013 the Bank does not have any of its own shares in treasury, nor do any of the consolidated companies.

As of September 30, 2014 the shareholder composition is as follows:

Corporate Name or Shareholder`s Name	Shares		ADRs (*)		Total		% of equity holding

Teatinos Siglo XXI Inversiones Limitada		59,770,481,573		-		59,770,481,573		31.72
Santander Chile Holding S.A.		66,822,519,695		-		66,822,519,695		35.46
J.P. Morgan Chase Bank		-		32,348,553,271		32,348,553,271		17.17
Banks on behalf of third parties		11,874,474,748		-		11,874,474,748		6.30
Pension funds (AFP) on behalf of third parties		8,957,026,327		-		8,957,026,327		4.75
Other minority holders		8,673,071,180		-		8,673,071,180		4.60
Total		156,097,573,523		32,348,553,271		188,446,126,794		100.00

(*)

American Depository Receipts (ADR) are certificates issued by a U.S. commercial bank to be traded on the U.S. securities markets.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 87

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 19

EQUITY, continued

As of December 31, 2013 the shareholder composition is as follows:

Corporate Name or Shareholder`s Name	Shares		ADRs (*)		Total		% of equity holding

Teatinos Siglo XXI Inversiones Limitada		59,770,481,573		-		59,770,481,573		31.72
Santander Chile Holding S.A.		66,822,519,695		-		66,822,519,695		35.46
J.P. Morgan Chase Bank		-		30,087,328,471		30,087,328,471		15.97
Banks on behalf of third parties		11,590,917,506		-		11,590,917,506		6.15
Pension fund (AFP) on behalf of third parties		10,533,224,876		-		10,533,224,876		5.59
Other minority holders		9,641,654,673		-		9,641,654,673		5.11
Total		158,358,798,323		30,087,328,471		188,446,126,794		100.00

(*)

American Depository Receipts (ADR) are certificates issued by a U.S. commercial bank to be traded on the U.S. securities markets.

Dividends

Dividends have been distributed as per the Consolidated Interim Statements of Changes in Equity of the period.

Diluted earnings per share and basic earnings per share

As of September 30, 2014 and 2013, the composition of diluted earnings per share and basic earnings per share were as follows:

	As of September 30,
	2014		2013
	MCh$		MCh$

a) Basic earnings per share
Total attributable to Bank`s shareholders		411,590		267,944
Weighted average number of outstanding shares		188,446,126,794		188,446,126,794
Basic earnings per share (in Ch$)		2.184		1.422

b) Diluted earnings per share
Total attributable to Bank`s shareholders		411,590		267,944
Weighted average number of outstanding shares		188,446,126,794		188,446,126,794
Adjusted number of shares		188,446,126,794		188,446,126,794
Diluted earnings per share (in Ch$)		2.184		1.422

As of September 30, 2014 and 2013, the Bank does not have instruments with dilutive effect.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 88

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 19

EQUITY, continued

Other comprehensive income of available for sale investments and cash flow hedges:

	As of September 30,
	2014			2013
	MCh$			MCh$

Available for sale investments
As of January 1,		840			(10,017	)
Gain (loss) on the fair value adjustment of available for sale investments, before tax		17,233			2,629
Reclassification adjustments on available for sale investments, before tax		-			-
Reclassification from other comprehensive income to income for the year		2,354			8,228
Subtotals of activity during the period		19,587			10,857
Total		20,427			840

Cash flow hedges
As of January 1,		(8,257	)		5,315
Gains (losses) on the fair value adjustment of cash flow hedges, before tax		(18,226	)		(15,089	)
Reclassification adjustments on cash flow hedges, before tax		430			1,517
Amounts reclassified from equity and included in carrying amount of non-financial asset (liability) of which the acquisition or incurrence was hedged as a highly probable transaction		-			-
Subtotals of activity during the period		(17,796	)		(13,572	)
Total		(26,053	)		(8,257	)

Other comprehensive income, before tax		(5,626	)		(7,417	)

Income tax related to other comprehensive income components
Income tax relating to available for sale investments		(4,290	)		(168	)
Income tax relating to cash flow hedges		5,471			1,651
Total		1,181			1,483

Other comprehensive income, net of tax		(4,445	)		(5,934	)
Attributable to:
Bank shareholders (Equity holders of the Bank)		(4,444	)		(5,964	)
Non-controlling interest		(1	)		30

The Bank expects that the results included in "Other comprehensive income" will be reclassified to profit or loss when the specific conditions have been met.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 89

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 20

CAPITAL REQUIREMENTS (BASEL)

In accordance with Chilean General Banking Law, the Bank must maintain a minimum ratio of effective equity to risk-weighted consolidated assets of 8% net of required allowances, and a minimum ratio of basic equity to consolidated total assets of 3%, net of required allowances. However, as a result of the Bank’s merger in 2002, the SBIF has determined that the Bank’s combined effective equity cannot be lower than 11% of its risk-weighted assets. Effective net equity is defined for these purposes as basic equity (capital and reserves) plus subordinated bonds, up to a maximum of 50% of basic equity.

Assets are allocated to different risk categories, each of which is assigned a weighting percentage according to the amount of capital required to be held for each type of asset. For example, cash, deposits in banks and financial instruments issued by the Central Bank of Chile have a 0% risk weighting, meaning that it is not necessary to hold equity to back these assets according to current regulations. Property, plant and equipment have a 100% risk weighting, meaning that a minimum capital equivalent to 11% of these assets must be held. All derivatives traded off the exchanges are also assigned a risk weighting, using a conversion factor applied to their notional values, to determine the amount of their exposure to credit risk. Off-balance-sheet contingent credits are also included for weighting purposes, as “Credit equivalents.”

According to Chapter 12-1 of the SBIF’s Recopilación Actualizada de Normas [Updated Compilation of Rules] effective January 2010, the SBIF changed existing regulation with the enforcement of Chapter B-3 from the Compendium of Accounting Standards, with changed the risk exposure of contingent allocations from 100% exposition to the following:

Type of contingent loan	Exposure

a) Pledges and other commercial commitments		100	%
b) Foreign letters of credit confirmed		20	%
c) Letters of credit issued		20	%
d) Guarantees		50	%
e) Interbank guarantee letters		100	%
f) Available lines of credit		50	%
g) Other loan commitments:
- Higher education loans Law No. 20,027		15	%
- Other		100	%
h) Other contingent loans		100	%

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 90

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 20

CAPITAL REQUIREMENTS (BASEL), Continued

The levels of basic capital and effective net equity as of September 30, 2014 and December 31, 2013, are as follows:

	Consolidated assets				Risk-weighted assets
	As of September 30,		As of December 31,		As of September 30,		As of December 31,
	2014		2013		2014		2013
	MCh$		MCh$		MCh$		MCh$

Balance-sheet assets (net of allowances)
Cash and deposits in banks		1,448,635		1,571,810		-		-
Cash in process of collection		822,594		604,077		180,877		66,672
Trading investments		608,663		287,567		67,627		40,924
Investments under resale agreements		3,517		17,469		703		3,494
Financial derivative contracts (*)		1,289,322		1,008,026		1,113,980		862,810
Interbank loans, net		121,145		125,395		24,229		25,079
Loans and accounts receivables from customers, net		21,591,277		20,327,021		19,091,913		18,071,792
Available for sale investments		1,630,484		1,700,993		203,199		238,835
Investments in associates and other companies		17,111		9,681		17,111		9,681
Intangible assets		30,779		66,703		30,779		66,703
Property, plant, and equipment		187,241		180,215		187,241		180,215
Current taxes		23,834		1,643		2,383		164
Deferred taxes		241,815		230,215		24,182		23,022
Other assets		353,263		400,025		353,263		346,533
Off-balance-sheet assets
Contingent loans		3,812,654		3,436,773		2,176,886		2,013,057
Total		32,182,334		29,967,613		23,474,373		21,948,981

(*)

“Financial derivative contracts” are presented at their “Credit Equivalent Risk” value as established in Chapter 12-1 of the Updated Compilation of Ruled issued by the SBIF.

The levels of basic capital and effective net equity as the close of each period are as follows:

					Ratio
	As of September 30,		As of December 31,		As of September 30,		As of December 31,
	2014		2013		2014		2013
	MCh$		MCh$		%		%

Basic capital		2,482,733		2,325,678		7.71		7.76
Effective net equity		3,215,527		3,033,741		13.70		13.82

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 91

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 21

NON-CONTROLLING INTEREST

The non-controlling interest included in the equity and the income from the subsidiaries is summarized as follows:

								Other comprehensive income
As of September 30, 2014	Non- controlling		Equity		Income			Available for sale investments			Deferred tax		Total other comprehensive income			Comprehensive income
	%		MCh$		MCh$			MCh$			MCh$		MCh$			MCh$

Subsidiaries:
Santander Agente de Valores Limitada		0,97		537		66			-			-		-			66
Santander S.A. Sociedad Securitizadora		0,36		2		-			-			-		-			-
Santander S.A. Corredores de Bolsa		49.00		20,742		1,051			(39	)		8		(31	)		1,020
Santander Asset Management S.A. (1) Administradora General de Fondos		-		-		-			-			-		-			-
Santander Corredora de Seguros Limitada		0.25		152		(2	)		-			-		-			(2	)
Subtotals				21,433		1,115			(39	)		8		(31	)		1,084

Entities controlled through other considerations:
Bansa Santander S.A.		100.00		5,488		2,053			-			-		-			2,053
Santander Gestión de Recaudación y Cobranzas Limitada (2)		100.00		24		518			-			-		-			518
Multinegocios S.A		100.00		665		188			-			-		-			188
Servicios Administrativos y Financieros Limitada		100.00		1,918		232			-			-		-			232
Servicios de Cobranzas Fiscalex Limitada (2)		100.00		-		-			-			-		-			-
Multiservicios de Negocios Limitada		100.00		1,933		253			-			-		-			253
Subtotals				10,028		3,244			-			-		-			3,244

Total				31,461		4,359			(39	)		8		(31	)		4,328

(1) Santander Assets Management S.A. Administradora General de Fondos was sold in November 2013.

(2) On August 01, 2014 the company Servicios de Cobranza Fiscalex Limitada was acquired by Santander Gestión de Recaudación y Cobranza Limitada.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 92

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 21

NON-CONTROLLING INTEREST, continued

								Other comprehensive income
As of September 30, 2013	Non- controlling		Equity		Income			Available for sale investments		Deferred tax		Total other comprehensive income		Comprehensive income
	%		MCh$		MCh$			MCh$		MCh$		MCh$		MCh$

Subsidiaries:
Santander Agente de Valores Limitada		0.97		451		67			1		-		1		68
Santander S.A. Sociedad Securitizadora		0.36		2		-			-		-		-		-
Santander S.A. Corredores de Bolsa		49.00		19,482		1,436			-		-		-		1,436
Santander Asset Management S.A. Administradora General de Fondos		0.02		5		3			-		-		-		3
Santander Corredora de Seguros Limitada		0.25		148		2			-		-		-		2
Subtotals				20,088		1,508			1		-		1		1,509

Entities controlled through other considerations:
Bansa Santander S.A.		100.00		2,475		348			-		-		-		348
Santander Gestión de Recaudación y Cobranzas Limitada		100.00		721		(1,785	)		-		-		-		(1,785	)
Multinegocios S.A		100.00		426		183			-		-		-		183
Servicios Administrativos y Financieros Limitada		100.00		1,612		202			-		-		-		202
Servicios de Cobranzas Fiscalex Limitada		100.00		482		266			-		-		-		266
Multiservicios de Negocios Limitada		100.00		1,584		285			-		-		-		285
Subtotals				7,300		(501	)		-		-		-		(501	)

Total				27,388		1,007			1		-		1		1,008

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 93

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 21

NON-CONTROLLING INTEREST, continued

						Other comprehensive income
For the three months ended September 30, 2014	Non- controlling		Income			Available for sale investments			Deferred tax		Total other comprehensive income			Comprehensive income
	%		MCh$			MCh$			MCh$		MCh$			MCh$

Subsidiaries:
Santander Agente de Valores Limitada		0.97		21			1			-		1			22
Santander S.A. Sociedad Securitizadora		0.36		-			-			-		-			-
Santander S.A. Corredores de Bolsa		49.00		506			(24	)		5		(19	)		487
Santander Corredora de Seguros Limitada		0.25		-			-			-		-			-
Subtotals				527			(23	)		5		(18	)		509

Entities controlled through other considerations:
Bansa Santander S.A.		100.00		2,270			-			-		-			2,270
Santander Gestión de Recaudación y Cobranzas Limitada		100.00		1,572			-			-		-			1,572
Multinegocios S.A		100.00		69			-			-		-			69
Servicios Administrativos y Financieros Limitada		100.00		84			-			-		-			84
Servicios de Cobranzas Fiscalex Limitada		100.00		(275	)		-			-		-			(275	)
Multiservicios de Negocios Limitada		100.00		78			-			-		-			78
Subtotals				3,798			-			-		-			3,798

Total				4,325			(23	)		5		(18	)		4,307

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 94

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 21

NON-CONTROLLING INTEREST, continued

						Other comprehensive income
For the three months ended September 30, 2013	Non- controlling		Income			Available for sale investments			Deferred tax		Total other comprehensive income			Comprehensive income
	%		MCh$			MCh$			MCh$		MCh$			MCh$

Subsidiaries:
Santander Agente de Valores Limitada		0.97		21			(1	)		-		(1	)		20
Santander S.A. Sociedad Securitizadora		0.36		-			-			-		-			-
Santander S.A. Corredores de Bolsa		49.00		373			(5	)		1		(4	)		369
Santander Asset Management S.A. Administradora General de Fondos		0.02		1			-			-		-			1
Santander Corredora de Seguros Limitada		0.25		-			-			-		-			-
Subtotals				395			(6	)		1		(5	)		390

Entities controlled through other considerations:
Bansa Santander S.A.		100.00		(27	)		-			-		-			(27	)
Santander Gestión de Recaudación y Cobranzas Limitada		100.00		(555	)		-			-		-			(555	)
Multinegocios S.A		100.00		64			-			-		-			64
Servicios Administrativos y Financieros Limitada		100.00		72			-			-		-			72
Servicios de Cobranzas Fiscalex Limitada		100.00		141			-			-		-			141
Multiservicios de Negocios Limitada		100.00		106			-			-		-			106
Subtotals				(199	)		-			-		-			(199	)

Total				196			(6	)		1		(5	)		191

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 95

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 21

NON-CONTROLLING INTEREST, continued

The overview of the financial information of the subsidiaries included in the consolidation of the Bank that possess non-controlling interests is as follows, which does not include consolidation or conforming adjustments:

	As of September 30,									As of December 31,
	2014									2013
	Assets		Liabilities		Capital		Net Income			Assets		Liabilities		Capital		Net Income
	MCh$		MCh$		MCh$		MCh$			MCh$		MCh$		MCh$		MCh$

Santander Corredora de Seguros Limitada		68,637		7,701		61,672		(736	)		67,956		8,484		59,012		460
Santander S.A. Corredores de Bolsa		129,091		86,850		40,119		2,122			110,917		70,799		36,735		3,383
Santander Agente de Valores Limitada		198,168		142,846		48,558		6,764			194,812		146,255		39,581		8,976
Santander S.A. Sociedad Securitizadora		661		85		651		(75	)		725		74		764		(113	)
Santander Gestión de Recaudación y Cobranzas Ltda. (1)		3,678		3,654		458		(434	)		4,978		4,703		2,505		(2,230	)
Multinegocios S.A.		1,611		946		477		188			1,441		963		244		234

Servicios Administrativos y Financieros Ltda.		2,725		807		1,686		232			2,412		725		1,411		276
Servicio de Cobranza Fiscalex Ltda. (1)		-		-		-		-			4,008		3,376		216		416
Multiservicios de Negocios Ltda.		3,539		1,607		1,679		253			3,049		1,371		1,299		379
Bansa Santander S.A.		30,691		25,203		3,435		2,053			28,490		25,055		2,128		1,307
Total		438,801		269,699		158,735		10,367			418,788		261,805		143,895		13,088

(1)

On August 01, 2014 Servicio de Cobranza Fiscalex Ltda. was acquired by Santander Gestión de Recaudación y Cobranza Limitada.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 96

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 22

INTEREST INCOME AND INFLATION-INDEXATION ADJUSTMENTS

This item refers to interest earned in the period from the financial assets whose return, whether implicitly or explicitly, is determined by applying the effective interest rate method.

For the periods ended September 30, 2014 and 2013, the income from interest and inflation-indexation adjustments, not including income from hedge accounting, was attributable to the following items:

	For the three months ended September 30,
	2014								2013
	Interest		Inflation- indexation adjustments		Prepaid fees		Total		Interest		Inflation- indexation adjustments		Prepaid fees		Total
Items	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Repurchase agreements		288		-		-		288		819		-		-		819
Interbank loans		2		-		-		2		19		-		-		19
Commercial loans		175,971		23,379		1,568		200,918		183,609		36,143		1,094		220,846
Mortgage loans		62,032		37,181		4,732		103,945		58,931		54,332		3,517		116,780
Consumer loans		151,963		651		900		153,514		153,536		1,020		820		155,376
Investment instruments		14,776		2,588		-		17,364		17,888		3,925		-		21,813
Other interest income		1,180		137		-		1,317		776		270		-		1,046

Interest income		406,212		63,936		7,200		477,348		415,578		95,690		5,431		516,699

	For the nine months ended September 30,
	2014								2013
	Interest		Inflation- indexation adjustments		Prepaid fees		Total		Interest		Inflation- indexation adjustments			Prepaid fees		Total
Items	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$			MCh$		MCh$

Resale agreements		970		-		-		970		1,636		-			-		1,636
Interbank loans		85		-		-		85		172		-			-		172
Commercial loans		533,246		134,334		5,696		673,276		543,589		38,776			3,560		585,925
Mortgage loans		182,856		209,749		13,256		405,861		173,495		57,846			9,499		240,840
Consumer loans		453,052		3,450		2,345		458,847		457,941		1,275			2,268		461,484
Investment instruments		45,774		17,782		-		63,556		59,386		3,513			-		62,899
Other interest income		6,453		1,297		-		7,750		3,113		(1,407	)		-		1,706

Interest income		1,222,436		366,612		21,297		1,610,345		1,239,332		100,003			15,327		1,354,662

As indicated in section i) of Note 01, suspended interest relates to loans with late payments of 90 days or more, which are recorded in off-balance sheet accounts until they are effectively received.

For the periods ended September 30, 2013 and 2014, the suspended interest and adjustments income consists of the following:

	As of September 30,
	2014						2013
	Interest		Inflation- indexation adjustments		Total		Interest		Inflation- indexation adjustments		Total
Items	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Commercial loans		16,465		6,986		23,451		17,790		3,942		21,732
Mortgage loans		3,930		6,788		10,718		4,028		3,959		7,987
Consumer loans		5,501		794		6,295		5.646		751		6,397

Total		25,896		14,568		40,464		27,464		8,652		36,116

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 97

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 22

INTEREST INCOME AND INFLATION-INDEXING ADJUSTMENTS, continued

For the periods ended September 30 , 2014 and 2013, the expenses from interest and inflation-indexation adjustments, excluding expense from hedge accounting, is as follows:

	For the three months ended September 30,
	2014									2013
	Interest			Inflation- indexation adjustments			Total			Interest			Inflation- indexation adjustments			Total
Items	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Demand deposits		(1,451	)		(201	)		(1,652	)		(1,387	)		(287	)		(1,674	)
Repurchase agreements		(1,991	)		-			(1,991	)		(4,178	)		-			(4,178	)
Time deposits and liabilities		(80,010	)		(8,692	)		(88,702	)		(105,703	)		(12,033	)		(117,736	)
Interbank borrowings		(5,287	)		(1	)		(5,288	)		(4,978	)		(3	)		(4,981	)
Issued debt instruments		(43,566	)		(14,264	)		(57,830	)		(43,507	)		(27,619	)		(71,126	)
Other financial liabilities		(791	)		(186	)		(977	)		(1,215	)		(338	)		(1,553	)
Other interest expense		(675	)		(1,791	)		(2,466	)		(585	)		(1,820	)		(2,405	)
Interest expense total		(133,771	)		(25,135	)		(158,906	)		(161,553	)		(42,100	)		(203,653	)

	For the nine months ended September 30,
	2014									2013
	Interest			Inflation- indexation adjustments			Total			Interest			Inflation- indexation adjustments			Total
Items	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Demand deposits		(4,417	)		(1,253	)		(5,670	)		(3,823	)		(298	)		(4,121	)
Repurchase agreements		(5,503	)		-			(5,503	)		(9,169	)		-			(9,169	)
Time deposits and liabilities		(252,358	)		(46,386	)		(298,744	)		(323,647	)		(13,044	)		(336,691	)
Interbank borrowings		(15,171	)		(6	)		(15,177	)		(16,162	)		(3	)		(16,165	)
Issued debt instruments		(131,169	)		(91,411	)		(222,580	)		(127,445	)		(28,855	)		(156,300	)
Other financial liabilities		(2,346	)		(1,145	)		(3,491	)		(3,583	)		(356	)		(3,939	)
Other interest expense		(1,934	)		(9,864	)		(11,798	)		(1,750	)		(1,945	)		(3,695	)
Interest expense total		(412,898	)		(150,065	)		(562,963	)		(485,579	)		(44,501	)		(530,080	)

For the periods ended September 30, 2014 and 2013, the income from interest and inflation-indexation adjustments is as follows separately disclosing in a line below the effects of associated expenses and hedging:

	For the three months ended						For the nine months ended
	2014			2013			2014			2013
Items	MCh$			MCh$			MCh$			MCh$

Interest income		477,348			516,699			1,610,345			1,354,662
Interest expense		(158,906	)		(203,653	)		(562,963	)		(530,080	)

Interest income after expenses		318,442			313,046			1,047,382			824,582

Income from hedge accounting, net		(19,330	)		(25,441	)		(86,738	)		(41,829	)

Total net interest income		299,112			287,605			960,644			782,753

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 98

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 23

FEES AND COMMISSIONS

This item includes the amount of fees earned and paid during the year, except those which are an integral part of the financial instrument`s effective interest rate:

	For the three months ended September 30,				For the nine months ended September 30,
	2014		2013		2014		2013
	MCh$		MCh$		MCh$		MCh$

Fee and commission income
Fees and commissions for lines of credits and overdrafts		1,752		1,479		5,222		5,198
Fees and commissions for guarantees and letters of credit		8,260		7,649		23,797		22,681
Fees and commissions for card services		35,982		30,235		107,957		94,092
Fees and commissions for management of accounts		7,256		6,920		21,581		20,996
Fees and commissions for collections and payments		8,284		10,839		27,157		33,643
Fees and commissions for intermediation and management of securities		2,761		2,352		7,092		8,138
Fees and commissions for investments in mutual funds or others (*)		-		8,446		-		25,376
Insurance brokerage fees		8,241		8,005		24,888		23,374
Office banking		4,414		3,853		12,931		11,192
Other fees earned		13,032		4,827		38,794		13,451
Total		89,982		84,605		269,419		258,141

(*)

Due to the sale of Santander Asset Management S.A. Administradora General de Fondos, the Bank does not have any fees and commissions on investments in mutual funds recorded.

	For the three months ended September 30,						For the nine months ended September 30,
	2014			2013			2014			2013
	MCh$			MCh$			MCh$			MCh$

Fee and commission expense
Compensation for card operation		(25,311	)		(22,027	)		(75,891	)		(64,461	)
Fees and commissions for securities transactions		(330	)		(1,086	)		(836	)		(3,429	)
Office banking and other fees		(8,276	)		(6,561	)		(25,048	)		(16,555	)
Total		(33,917	)		(29,674	)		(101,775	)		(84,445	)

Net fees and commissions income		56,065			54,931			167,644			173,696

The fees earned in transactions with letters of credit are presented on the Consolidated Interim Statement of Income in the line item “Interest income”.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 99

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 24

PROFIT AND LOSS FROM FINANCIAL OPERATIONS

For the periods ended September 30, 2014 and 2013, the detail of income from financial operations is as follows:

	For the three months ended September 30,						For the nine months ended September 30,
	2014			2013			2014			2013
	MCh$			MCh$			MCh$			MCh$

Net income from financial operations
Trading derivatives		10,652			46,730			(99,313	)		18,760
Trading investments		12,556			5,855			36,261			22,628
Sale of loans and accounts receivables from customers
Current portfolio		-			(156	)		-			(86	)
Charged-off portfolio		(83	)		1,718			4,845			1,579
Available for sale investments		1,609			180			3,814			6,613
Repurchase of issued bonds		-			-			5,199			-
Other profit and loss from financial operations		(41	)		1,486			(154	)		4,485
Total		24,693			55,813			(49,348	)		53,979

NOTE 25

NET FOREIGN EXCHANGE INCOME

Net foreign exchange income includes the income earned from foreign currency trading, differences arising from converting monetary items in a foreign currency to the functional currency, and those generated by non-monetary assets in a foreign currency at the time of their sale.

For the periods ended September 30, 2014 and 2013, net foreign exchange income is as follows:

	For the three months ended September 30,						For the nine months ended September 30,
	2014			2013			2014			2013
	MCh$			MCh$			MCh$			MCh$

Net foreign exchange gain (loss)
Net profit (loss) from currency exchange differences		(213,353	)		(31,496	)		(365,558	)		(103,449	)
Hedging derivatives		202,602			3,478			487,045			128,744
Income from inflation-indexed assets in foreign currency		14,811			(232	)		20,148			4,410
Income from inflation-indexed liabilities in foreign currency		(935	)		52			(1,435	)		(554	)
Total		3,125			(28,198	)		140,200			29,151

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 100

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 26

PROVISIONS FOR LOAN LOSSES

The 2014 and 2013 activity within income for provisions for loan losses is as follows:

				Loans and accounts receivable from customers
	Interbank loans			Commercial loans						Mortgage loans			Consumer loans			Contingent loans
	Individual			Individual			Group			Group			Group			Individual			Group			Total
For the three months ended September 30, 2014	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Charged-off loans, net of provisions:		-			(2,685	)		(18,590	)		(2,272	)		(20,921	)		-			-			(44,468	)
Provisions established		(23	)		(16,601	)		(58,764	)		(3,034	)		(27,798	)		(2,451	)		(1,484	)		(110,155	)
Total provisions and charge-offs		(23	)		(19,286	)		(77,354	)		(5,306	)		(48,719	)		(2,451	)		(1,484	)		(154,623	)
Provisions released		8			4,390			216			707			30,367			86			5,108			40,882
Recovery of loans previously charged-off		-			1,302			3,077			1,329			8,668			-			-			14,376
Net charge to income		(15	)		(13,594	)		(74,061	)		(3,270	)		(9,684	)		(2,365	)		3,624			(99,365	)

				Loans and accounts receivable from customers
	Interbank Loans			Loans Commercial						Mortgage loans			Consumer loans			Contingent loans
	Individual			Individual			Group			Group			Group			Individual			Group			Total
For the nine months ended September 30, 2014	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Charged-off loans, net of provisions:	-			(7,414)			(52,341)			(6,704)			(64,309)			-			-			(130,768)
Provisions established		(59	)		(52,211	)		(77,373	)		(9,705	)		(92,402	)		(3,527	)		(2,850	)		(238,127	)
Total provisions and charge-offs		(59	)		(59,625	)		(129,714	)		(16,409	)		(156,711	)		(3,527	)		(2,850	)		(368,895	)
Provisions released		62			9,033			5,311			3,498			33,715			3,196			6,240			61,055
Recovery of loans previously charged-off		-			2,925			8,349			3,831			28,100			-			-			43,205
Net charge to income		3			(47,667	)		(116,054	)		(9,080	)		(94,896	)		(331	)		3,390			(264,635	)

				Loans and accounts receivable from customers

	Interbank loans			Commercial loans						Mortgage loans			Consumer loans			Contingent loans
	Individual			Individual			Group			Group			Group			Individual			Group			Total
For the three months ended September 30, 2013	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Charged-off loans, net of provisions:		-			(1,969	)		(17,980	)		(6,655	)		(22,118	)		-			-			(48,722	)
Provisions established		(16	)		(19,551	)		(12,140	)		(4,969	)		(37,271	)		(898	)		(928	)		(75,773	)
Total provisions and charge-offs		(16	)		(21,520	)		(30,120	)		(11,624	)		(59,389	)		(898	)		(928	)		(124,495	)
Provisions released		26			4,568			1,276			1,739			4,730			580			911			13,830
Recovery of loans previously charged-off		-			973			2,486			1,203			9,524			-			-			14,186
Net charge to income		10			(15,979	)		(26,358	)		(8,682	)		(45,135	)		(318	)		(17	)		(96,479	)

							Loans and accounts receivable from customers
				Commercial loans						Mortgage loans			Consumer loans			Contingent loans
	Interbank loans Individual			Individual			Group			Group			Group			Individual			Group			Total
For the nine months ended September 30, 2013	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Charged-off loans, net of provisions:		-			(4,421	)		(46,418	)		(16,678	)		(81,957	)		-			-			(149,474	)
Provisions established		(88	)		(53,847	)		(28,179	)		(19,480	)		(127,422	)		(3,323	)		(2,322	)		(234,661	)
Total provisions and charge-offs		(88	)		(58,268	)		(74,597	)		(36,158	)		(209,379	)		(3,323	)		(2,322	)		(384,135	)
Provisions released		63			15,599			7,190			8,430			32,038			1,904			3,825			69,049
Recovery of loans previously charged-off		-			2,712			6,719			3,099			26,564			-			-			39,094
Net charge to income		(25	)		(39,957	)		(60,688	)		(24,629	)		(150,777	)		(1,419	)		1,503			(275,992	)

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 101

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 26

PROVISIONS FOR LOAN LOSSES, continued

b) Charged-off, net of provisions:

	Loans and accounts receivable from customers
	Commercial loans						Mortgage loans			Consumer loans
	Individual			Group			Group			Group			Total
As of September 30, 2014	MCh$			MCh$			MCh$			MCh$			MCh$
Charged-off loans		28,520			69,062			8,902			139,089			245,573
Provisions used		(21,106	)		(16,721	)		(2,198	)		(74,780	)		(114,805	)
Charged-off loans, net of provisions		7,414			52,341			6,704			64,309			130,768

	Loans and accounts receivables from customers
	Commercial loans						Mortgage loans			Consumer loans
	Individual			Group			Group			Group			Total
As of September 30, 2013	MCh$			MCh$			MCh$			MCh$			MCh$
Charged-off loans		18,378			62,714			20,387			177,372			278,851
Provisions used		(13,957	)		(16,296	)		(3,709	)		(95,415	)		(129,377	)
Charged-off loans, net of provisions		4,421			46,418			16,678			81,957			149,474

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 102

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 27

PERSONNEL SALARIES AND EXPENSES

Composition of personnel salaries and expenses:

	For the three months ended September 30,				For the nine months ended September 30,
	2014		2013		2014		2013
	MCh$		MCh$		MCh$		MCh$

Personnel compensation		55,533		51,453		156,497		146,313
Bonuses		19,321		17,471		56,035		50,410
Stock-based benefits		154		145		482		526
Senior compensation		2,071		1,450		6,373		6,365
Pension plans		811		57		1,170		90
Training expenses		667		608		1,885		1,753
Day care and kindergarten		574		595		1,865		1,946
Health funds		1,240		913		3,410		2,674
Other personnel expenses		6,132		5,892		20,302		19,834
Total		86,503		78,584		248,019		229,911

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 103

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 28

ADMINISTRATIVE EXPENSES

For the periods ended September 30, 2014 and 2013, the composition of the item is as follows:

	For the three months ended September 30,					For the nine months ended September 30,
	2014		2013			2014		2013
	MCh$		MCh$			MCh$		MCh$

General administrative expenses		31,959		30,277			92,293		88,978
Maintenance and repair of property, plant and equipment		4,531		3,709			12,439		11,555
Office lease		7,248		6,979			20,678		20,499
Equipment lease		29		27			75		135
Insurance payments		809		741			2,445		2,344
Office supplies		950		1,107			3,207		3,199
IT and communication expenses		7,915		8,447			23,372		22,052
Lighting, heating, and other utilities		1,073		928			3,163		2,928
Security and valuables transport services		3,871		4,028			11,875		12,702
Representation and personnel travel expenses		1,123		1,353			3,283		3,875
Legal and notarial expenses		500		314			1,601		1,118
Fees for technical reports and auditing		2,164		1,470			5,183		4,614
Other general administrative expenses		1,746		1,174			4,972		3,957
Outsourced services		13,393		11,003			39,915		32,318
Data processing		8,869		6,474			24,698		19,585
Products sale		352		513			1,202		1,317
Archive service		65		738			2,633		1,465
Valuation service		507		446			1,535		1,316
Outsourcing		1,304		1,197			4,190		3,665
Other		2,296		1,635			5,657		4,970
Board expenses		333		301			947		845
Marketing expenses		4,013		4,437			12,262		11,442
Taxes, payroll taxes, and contributions		2,662		2,527			7,852		7,584
Real estate taxes		319		298			934		899
Patents		375		441			1,190		1,386
Other taxes		3		(2	)		13		2
Contributions to SBIF		1,965		1,790			5,715		5,297
Total		52,360		48,545			153,269		141,167

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 104

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 29

DEPRECIATION AND AMORTIZATION

The values of depreciation and amortization charges during the third quarter of 2014 and 2013 are detailed below:

	For the three months ended September 30,						For the nine months ended September 30,
	2014			2013			2014			2013
	MCh$			MCh$			MCh$			MCh$

Depreciation and amortization
Depreciation of property, plant, and equipment		(6,765	)		(5,805	)		(19,950	)		(16,663	)
Amortizations of intangible assets (*)		2,029			(9,907	)		(13,371	)		(29,963	)
Total		(4,736	)		(15,712	)		(33,321	)		(46,626	)

(*) See Note 30 c) regarding the impairment affecting the carrying value of these assets.

The changes in book value due to depreciation and amortization from January 1, 2013 and 2014 through September 30, 2013 and 2014 are as follows:

	Depreciation and amortization
	2014
	Property, plant, and equipment			Intangible assets			Total
	MCh$			MCh$			MCh$

Balances as of January 1, 2014		(127,448	)		(185,275	)		(312,723	)
Depreciation and amortization charges in the period		(19,950	)		(13,371	)		(33,321	)
Sales and disposals in the period		60			-			60
Other		-			-			-
Balances as of September 30, 2014		(147,338	)		(198,646	)		(345,984	)

	Depreciation and amortization
	2013
	Property, plant, and equipment			Intangible assets			Total
	MCh$			MCh$			MCh$

Balances as of January 1, 2013		(105,150	)		(146,653	)		(251,803	)
Depreciation and amortization charges in the period		(16,663	)		(29,963	)		(46,626	)
Sales and disposals in the period		70			-			70
Other		-			-			-
Balances as of September 30, 2013		(121,743	)		(176,616	)		(298,359	)

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 105

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 30

OTHER OPERATING INCOME AND EXPENSES, AND IMPAIRMENT

Other operating income is comprised of the following activities::

	For the three months ended September 30,					For the nine months ended September 30,
	2014			2013		2014		2013
	MCh$			MCh$		MCh$		MCh$

Income from assets received in lieu of payment
Income from sale of assets received in lieu of payment		1,517			2,143		3,052		5,518
Recovery of charge-offs and income from assets received in lieu of payment		1,019			1,533		7,005		8,586
Other income from assets received in lieu of payment		-			-		-		-
Subtotal		2,536			3,676		10,057		14,104
Income from the sale of participation in companies
Income from the sale of participation in companies		-			-		-		-
Subtotal		-			-		-		-
Other income
Leases		203			27		635		87
Income from sale of property, plant and equipment		96			115		219		289
Recovery of provisions for contingencies		(71	)		77		315		77
Compensation from insurance companies due to damages		109			155		530		621
Other		855			62		967		691
Subtotal		1,192			436		2,666		1,765

Total		3,728			4,112		12,723		15,869

b) Other operating expenses is comprised of the following activities :

	For the three months ended September 30,				For the nine months ended September 30,
	2014		2013		2014		2013
	MCh$		MCh$		MCh$		MCh$
Allowances and expenses for assets received in lieu of payment
Charge-offs of assets received in lieu of payment		1,106		2,718		2,909		6,751
Provisions on assets received in lieu of payment		904		697		3,494		1,997
Expenses for maintenance of assets received in lieu of payment		613		660		1,853		1,873
Subtotal		2,623		4,075		8,256		10,621

Credit card expenses		573		437		1,878		1,512

Customer services		2,538		2,306		7,551		7,862

Other expenses
Operating charge-offs		1,364		1,801		4,730		4,964
Life insurance and general product insurance policies		2,295		1,835		6,631		5,400
Additional tax on expenses paid overseas		825		678		2,327		2,118
Expenses from sale of property, plant and equipment		-		37		2		37
Provisions for contingencies		1,299		2,270		9,943		2,796
Expense for adopting chip technology on cards		245		1,279		747		1,279
Other		400		744		7,043		4,546
Subtotal		6,428		8,644		31,423		21,140

Total		12,162		15,462		49,108		41,135

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 106

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

Impairment

	For the three months ended September 30,				For the nine months ended September 30,
	2014		2013		2014		2013
	MCh$		MCh$		MCh$		MCh$

Fixed Assets		25		40		54		213
Intangibles (*)		36,557		-		36,557		-

Total		36,582		40		36,611		213

(*) The Bank, in its strategic objectives, initiated a plan to transform its business and operating model with a focus on the client. Therefore, there has arisen a number of new requirements for the Bank to adapt to changing customer demands and establish new ways to interact with them. This change in strategy resulted in a number of applications that are in use or in development that needed to be tested for impairment. Following the testing, in accordance with IAS 36 the Bank has recognized an impairment of Ch$36,557 million.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 107

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 31

TRANSACTIONS WITH RELATED PARTIES

In addition to Affiliates and associated entities, the Bank’s “related parties” include its “key personnel” from the executive staff (members of the Bank’s Board and the Managers of Banco Santander Chile and its Affiliates, together with their close relatives), as well as the entities over which the key personnel could exercise significant influence or control.

The Bank also considers the companies that are part of the Santander Group worldwide as related parties, given that all of them have a common parent, i.e., Banco Santander S.A. (located in Spain).

Article 89 of the Ley de Sociedades Anónimas (Public Companies Act), which is also applicable to banks, states that any transaction with a related party must be made under equitable conditions similar to those that customarily prevail in the market.

Article 84 of the Ley General de Bancos (General Banking Act) establishes limits for loans that can be granted to related parties and prohibits lending to the Bank’s directors, managers, or representatives.

Transactions between the Bank and its related parties are specified below and have been divided into four categories:

Santander Group Companies

This category includes all the companies that are controlled by the Santander Group around the world, and hence, including the companies over which the Bank exercises any degree of control (Affiliates and special-purpose entities).

Associated companies

This category includes the entities over which the Bank, in accordance with section b) of Note 1 to these Financial Statements, exercises a significant degree of influence and which generally belong to the group of entities known as “business support companies.”

Key personnel

This category includes members of the Bank’s Board and the managers of Banco Santander Chile and its Affiliates, together with their close relatives.

Other

This category encompasses the related parties that are not included in the groups identified above and which are, in general, entities over which the key personnel could exercise significant influence or control.

The terms for transactions with related parties are equivalent to those which prevail in transactions made under market conditions or to which the corresponding considerations in kind have been attributed.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 108

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 31

TRANSACTIONS WITH RELATED PARTIES, continued

a) Loans to related parties

This includes contingent loans, other loans and receivables to related parties:

	As of September 30,												As of December 31,
	2014												2013
	Companies of the Group			Associated Companies			Key personnel			Other			Companies of the Group			Associated Companies			Key personnel			Other
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Loans and accounts receivables:
Commercial loans		48,339			614			3,593			45,108			47,305			618			4,022			51,141
Mortgage loans		-			-			19,352			-			-			-			15,561			-
Consumer loans		-			-			2,506			-			-			-			2,061			-
Loans and account receivables:		48,339			614			25,451			45,108			47,305			618			21,644			51,141

Allowance for loan losses		(135	)		(4	)		(41	)		(144	)		(238	)		(3	)		(44	)		(6	)
Net loans		48,204			610			25,410			44,964			47,067			615			21,600			51,135

Guarantees		371,479			-			22,287			1,290			124,420			-			19,237			2,326

Contingent loans
Personal guarantees		-			-			-			-			-			-			-			-
Letters of credit		15,000			-			-			-			30,714			-			-			-
Guarantees		395,942			-			-			466			172,274			-			-			9,989
Contingent loans		410,942			-			-			466			202,988			-			-			9,989

Allowance for contingent loans		(14	)		-			-			(1	)		(22	)		-			-			(4	)

Net contingent loans		410,928			-			-			465			202,966			-			-			9,985

Loans activity to related parties during the period 2014 and 2013 is shown below:

	As of September 30,												As of December 31,
	2014												2013
	Companies of the Group			Associated Companies			Key personnel			Other			Companies of the Group			Associated Companies			Key personnel			Other
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Balances as of January 1,		250,293			618			21,644			61,130			107,384			668			19,512			59,166
Loans granted		295,751			106			7,795			17,455			161,763			377			7,313			14,858
Loans payments		(86,763	)		(110	)		(3,988	)		(33,011	)		(18,854	)		(427	)		(5,181	)		(12,894	)
Total		459,281			614			25,451			45,574			250,293			618			21,644			61,130

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 109

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 31

TRANSACTIONS WITH RELATED PARTIES, continued

b) Assets and liabilities with related parties

	As of September 30,								As of December 31,
	2014								2013
	Companies of the Group		Associated Companies		Key personnel		Other		Companies of the Group		Associated Companies		Key personnel		Other
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Assets
Cash and deposits in banks		7,282		-		-		-		5,306		-		-		-
Trading investments		-		-		-		-		-		-		-		-
Investments under resale agreements		-		-		-		-		-		-		-		-
Financial derivative contracts		910,742		-		-		-		557,026		-		-		-
Available for sale investments		-		-		-		-		-		-		-		-
Other assets		4,984		-		-		-		2,460		-		-		-

Liabilities
Deposits and other demand liabilities		4,669		5,300		4,495		4,359		58,030		10,406		2,783		23,300
Obligations under repurchase agreements		43,661		-		-		-		59,703		-		-		-
Time deposits and other time liabilities		666,464		1,366		2,457		43,247		54,212		299		3,774		156,977
Financial derivative contracts		1,275,135		-		-		-		537,162		-		-		-
Issued debts instruments		142,244		-		-		-		96,872		-		-		-
Other financial liabilities		4,561		-		-		-		3,912		-		-		-
Other liabilities		505		-		-		-		462		-		-		-

Income (expenses) recorded due to transactions with related parties

	For the three months ended September 30,
	2014												2013
	Companies of the Group			Associated Companies			Key personnel			Other			Companies of the Group			Associated Companies			Key personnel			Other
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Income (expense) recorded
Income and expenses from interest and inflation		(493	)		1			315			(179	)		(2,239	)		8			381			(35	)
Income and expenses from fees and services		8,518			19			41			9			(20	)		19			27			34
Net income from financial operations and foreign exchange transactions (*)		(285,822	)		-			5			(11,640	)		20,285			-			(141	)		(1,339	)
Other operating income and expenses		274			-			-			-			183			-			-			-
Key personnel compensation and expenses		-			-			(9,121	)		-			-			-			(8,731	)		-
Administrative and other expenses		(9,442	)		(7,871	)		-			-			(7,565	)		(8,299	)		-			-

Total		(286,965	)		(7,851	)		(8,760	)		(11,810	)		10,644			(8,272	)		(8,464	)		(1,340	)

(*)

Primarily relates to derivative contracts used to financially cover exchange risk of assets and liabilities that cover positions of the Bank and its subsidiaries.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 110

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 31

TRANSACTIONS WITH RELATED PARTIES, continued

	For the nine months ended September 30,
	2014												2013
	Companies of the Group			Associated Companies			Key personnel			Other			Companies of the Group			Associated Companies			Key personnel			Other
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Income (expense) recorded
Income and expenses due to interest and inflation		(380	)		29			1,254			(2,246	)		(6,637	)		42			735			(1,234	)
Income and expenses from fees and services		22,470			62			170			117			(43	)		55			91			132
Net income from financial operations and foreign exchange transactions (*)		(264,527	)		-			40			(11,782	)		47,281			-			(20	)		51
Other operating income and expenses		847			-			-			-			536			-			-			-
Key personnel compensation and expenses		-			-			(25,496	)		-			-			-			(24,323	)		-
Administrative and other expenses		(25,163	)		(24,773	)		-			-			(21,188	)		(22,895	)		-			-

Total		(266,753	)		(24,682	)		(24,032	)		(13,911	)		19,949			(22,798	)		(23,517	)		(1,051	)

(*)

Primarily relates to derivative contracts used to financially cover exchange risk of assets and liabilities that cover positions of the Bank and its subsidiaries.

d) Payment to Board members and key management personnel

The compensation received by key management personnel, including Board members and all the executives holding Manager positions, is shown in the “Personnel salaries and expenses” and/or “Administrative expenses” items of the Consolidated Interim Statements of Income, corresponds to the following categories:

	For the three months ended September 30,				For the nine months ended September 30,
	2014		2013		2014		2013
	MCh$		MCh$		MCh$		MCh$

Personnel compensation		4,422		4,257		12,875		12,813
Board member`s salaries and expenses		326		271		908		810
Bonuses or gratifications		3,180		3,760		9,271		9,406
Compensation in stock		154		147		482		526
Training expenses		21		11		61		40
Seniority compensation		-		5		134		16
Health funds		73		73		212		219
Other personnel expenses		134		159		383		413
Pension Plans (*)		811		57		1,170		90
Total		9,121		8,740		25,496		24,333

(*) Some of the executives that qualified for this benefit left the Group for different reasons, without complying with the requirements to use the benefit, therefore the obligation amount decreased, which generated income for the reversal of provisions.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 111

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 31

TRANSACTIONS WITH RELATED PARTIES, continued

Composition of key personnel

As of September 30, 2014 and 2013, the composition of the Bank`s key personnel is as follows:

	No. of Position executives
	As of September 30,		As of December 31,
	2014		2013
Director		13		12
Division manager		19		16
Department manager		85		80
Manager		51		60
Total key personnel		168		168

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 112

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 32

FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement of fair value assumes the transaction to sale and asset or the transference of the liability happens within the main asset or liability market, or the most advantageous market for the asset or liability.

For financial instruments with no available market prices, fair values have been estimated by using recent transactions in analogous instruments, and in the absence thereof, the present values or other valuation techniques based on mathematical valuation models sufficiently accepted by the international financial community. In the use of these models, consideration is given to the specific particularities of the asset or liability to be valued, and especially to the different kinds of risks associated with the asset or liability.

These techniques are inherently subjective and are significantly influenced by the assumptions used, including the discount rate, the estimates of future cash flows and prepayment expectations. Hence, the fair value estimated for an asset or liability may not coincide exactly with the price at which that asset or liability could be delivered or settled on the date of its valuation, and may not be justified in comparison with independent markets.

Determination of fair value of financial instruments

Below is a comparison between the value at which the Bank’s financial assets and liabilities are recorded and their fair value as of September 30, 2014 and December 31, 2013:

	As of September 30,				As of December 31,
	2014				2013
	Amount recorded		Financial Fair value		Amount recorded		Financial Fair value
	MCh$		MCh$		MCh$		MCh$

Assets
Cash and deposits in banks		1,448,635		1,448,635		1,571,810		1,571,810
Cash items in process of collection		822,594		822,594		604,077		604,077
Trading investments		608,663		608,663		287,567		287,567
Investments under repurchase agreements		3,517		3,517		17,469		17,469
Financial derivative contracts		2,665,474		2,665,474		1,494,018		1,494,018
Loans and accounts receivable from customers and interbank loans		21,712,422		24,768,954		20,452,416		23,562,746
Available for sale investments		1,630,484		1,630,484		1,700,993		1,700,993

Liabilities
Deposits and interbank borrowings		17,569,313		17,839,960		16,978,412		16,921,614
Cash items in process of being cleared		606,307		606,307		276,379		276,379
Obligations under repurchase agreements		289,095		289,095		208,972		208,972
Financial derivative contracts		2,424,666		2,424,666		1,300,109		1,300,109
Issued debt instruments and other financial liabilities		5,794,980		6,240,616		5,388,439		5,729,213

In addition, the fair value estimates presented above do not attempt to estimate the value of the Bank’s profits generated by its business activity, nor its future activities, and accordingly, they do not represent the Bank’s value as a going concern. Below is a detail of the methods used to estimate the financial instruments’ fair value.

Cash and deposits in banks

The recorded value of cash and interbank loans approximates its estimated fair value in view of these instruments’ short-term nature.

Unsettled transactions, trading instruments, available for sale investment instruments, resale agreements, and securities loans

The estimated fair value of these financial instruments was established using market values or estimates from an available dealer, or quoted market prices of similar financial instruments. Investments with maturity in less than one year are evaluated at recorded value since, due to their short maturity term, they are considered as having a fair value not significantly different from their recorded value. To estimate the fair value of debt investments or representative values in these lines of businesses, we take into consideration additional variables and elements, as long as they apply, including the estimate of prepayment rates and credit risk of issuers.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 113

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 32

FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES, continued

Loans and accounts receivable from customers and interbank loans

Fair value of commercial, mortgage and consumer loans and credit cards is measured through a discounted cash flow (DCF) analysis. To do so, we use current market interest rates considering product, term, amount and similar loan quality. Fair value of loans with 90 days or more of delinquency are measured by means of the market value of the associated guarantee, minus the rate and term of expected payment. For variable rate loans whose interest rates change frequently (monthly or quarterly) and that are not subjected to any significant credit risk change, the estimated fair value is based on their book value.

Deposits

Disclosed fair value of deposits that do not bear interest and saving accounts is the amount payable at the reporting date and, therefore, equals the recorded amount. Fair value of time deposits is calculated through a discounted cash flow calculation that applies current interest rates from a monthly calendar of scheduled maturities in the market.

Short and long term issued debt instruments

The fair value of these financial instruments is calculated by using a discounted cash flow analysis based on the current incremental lending rates for similar types of loans having similar maturities.

Financial derivative contracts

The estimated fair value of financial derivative contracts is calculated using the prices quoted on the market for financial instruments having similar characteristics.

The fair value of interest rate swaps represents the estimated amount that the Bank expects to receive or pay to rescind the contracts or agreements, bearing in mind the term structures of the interest rate curve, the underlying asset’s volatility, and the counterparty’s credit risk.

If there are no quoted prices from the market (either direct or indirect) for any derivative instrument, the respective fair value estimates have been calculated by using models and valuation techniques such as Black-Scholes, Hull, and Monte Carlo simulations, taking into consideration the relevant inputs/outputs such as volatility of options, observable correlations between underlying assets, counterparty credit risk, implicit price volatility, the velocity with which the volatility reverts to its average value, and the straight-line relationship (correlation) between the value of a market variable and its volatility, among others.

Measurement of fair value and hierarchy

IFRS 13 - Fair Value Measurement, provides a hierarchy of reasonable values which separates the inputs and/or valuation technique assumptions used to measure the fair value of financial instruments. The hierarchy reflects the significance of the inputs used in making the measurement. The three levels of the hierarchy of fair values are the following:

· Level 1: the inputs are quoted prices (unadjusted) on active markets for identical assets and liabilities that the Bank can access on the measurement date.

· Level 2: inputs other than the quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

· Level 3: inputs are unobservable inputs for the asset or liability i.e. they are not based on observable market data.

The hierarchy level within which the fair value measurement is categorized in its entirety is determined based on the lowest level of input that is significant to the fair value measurement in its entirety.

The best evidence of a financial instrument’s fair value at the initial time is the transaction price (Level 1).

In cases where quoted market prices cannot be observed, Management makes its best estimate of the price that the market would set using its own internal models which in most cases use data based on observable market parameters as a significant input (Level 2) and, in very specific cases, significant inputs not observable in market data (Level 3). Various techniques are employed to make these estimates, including the extrapolation of observable market data.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 114

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 32

FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES, continued

Financial instruments at fair value and determined by quotations published in active markets (Level 1) include:

Chilean Government and Department of Treasury bonds

Instruments which cannot be 100% observable in the market are valued according to other inputs observable in the market (Level 2).

The following financial instruments are classified under Level 2:

Type of financial instrument	Model used in valuation	Description

ž Mortgage and private bonds	Present Value of Cash Flows Model	Internal Rates of Return (“IRRs”) are provided by RiskAmerica, according to the following criterion: If, at the valuation day, there are one or more valid transactions at the Santiago Stock Exchange for a given nemotechnic, the reported rate is the weighted average amount of the observed rates. In the case there are no valid transactions for a given nemotechnic on the valuation day, the reported rate is the IRR base from a reference structure, plus a spread model based on historical spread for the same item or similar ones.

ž Time deposits	Present Value of Cash Flows Model	IRRs are provided by RiskAmerica, according to the following criterion: If, at the valuation day, there are one or more valid transactions at the Santiago Stock Exchange for a given nemotechnic, the reported rate is the weighted average amount of the observed rates. In the case there are no valid transactions for a given nemotechnic on the valuation day, the reported rate is the IRR base from a reference structure, plus a spread model based on issuer curves.

ž Constant Maturity Swaps (CMS), FX and Inflation Forward (Fwd) , Cross Currency Swaps (CCS), Interest Rate Swap (IRS)	Present Value of Cash Flows Model	IRRs are provided by ICAP, GFI, Tradition, and Bloomberg according to this criterion: With published market prices, a valuation curve is created by the bootstrapping method and is then used to value different derivative instruments.

ž FX Options	Black-Scholes	Formula adjusted by the volatility smile (implicit volatility). Prices (volatility) are provided by BGC Partners, according to this criterion: With published market prices, a volatility surface is created by interpolation and then these volatilities are used to value options.

In limited occasions significant inputs not observable in market data are used (Level 3). To carry out this estimate, several techniques are used, including extrapolation of observable market data or a mix of observable data.

The following financial instruments are classified under Level 3:

Type of financial instrument	Model used in valuation	Description
ž Caps/ Floors/ Swaptions	Black Normal Model for Cap/Floors and Swaptions	There is no observable input of implicit volatility.
ž UF options	Black – Scholes	There is no observable input of implicit volatility.
ž Cross currency swap with window	Hull-White	Hybrid HW model for rates and Brownian motion for FX. There is no observable input of implicit volatility.
ž CCS (special contracts)	Implicit Forward Rate Agreement (FRA)	Start Fwd unsupported by MUREX (platform) due to the UF forward estimate.
ž Cross currency swap, Interest rate swap, Call money swap in Tasa Activa Bancaria (Active Bank Rate) TAB,	Present Value of Cash Flows Model	Validation obtained by using the interest curve and interpolating at flow maturities, but TAB is not a directly observable variable and is not correlated to any market input.
ž Bonds (in our case, low liquidity bonds)	Present Value of Cash Flows Model	Valued by using similar instrument prices plus a charge-off rate by liquidity.

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 115

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 32

FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES, continued

The following table presents the assets and liabilities that are measured at fair value on a recurrent basis, as of September 30, 2014 and December 31, 2013.

	Fair value measurement
	2014		Level 1		Level 2		Level 3
As of September 30,	MCh$		MCh$		MCh$		MCh$
Assets
Trading investments		608,663		592,160		16,503		-
Available for sale investments		1,630,484		963,274		666,297		913
Financial derivative contracts		2,665,474		-		2,619,596		45,878
Total		4,904,621		1,555,434		3,302,396		46,791

Liabilities
Financial derivative contracts		2,424,666		-		2,424,666		-
Total		2,424,666		-		2,424,666		-

	Fair value measurement
	2013		Level 1		Level 2		Level 3
As of December 31,	MCh$		MCh$		MCh$		MCh$
Assets
Trading investments		287,567		275,296		12,271		-
Available for sale investments		1,700,993		654,945		1,045,210		838
Financial derivative contracts		1,494,018		-		1,442,752		51,266
Total		3,482,578		930,241		2,500,233		52,104

Liabilities
Financial derivative contracts		1,300,109		-		1,298,690		1,419
Total		1,300,109		-		1,298,690		1,419

The following table presents the Bank`s activity for assets and liabilities measured at fair value on a recurrent basis using unobserved significant entries (Level 3) as of September 30, 2014 and 2013:

	Assets			Liabilities
	MCh$			MCh$

Balances as of January 1, 2014		52,104			(1,419	)

Total realized and unrealized profits (losses)
Included in statement of income		(5,387	)		1,419
Included in other comprehensive income		76			-
Purchases, issuances, and loans (net)		-			-

Balances as of September 30, 2014		46,793			-

Total profits or losses included in comprehensive income at September 30, 2014 that are attributable to change in unrealized profit (losses) related to assets or liabilities as of September 30, 2014		(5,311	)		1,419

	Assets			Liabilities
	MCh$			MCh$

Balances as of January 1, 2013		63,149			(1,106	)

Total realized and unrealized profits (losses)
Included in statement of income		(10,623	)		(275	)
Included in other comprehensive income		(546	)		-
Purchases, issuances, and loans (net)		-			-

Balances as of September 30, 2013		51,980			(1,381	)
Total profits or losses included in comprehensive income at September 30, 2013 that are attributable to change in unrealized profit (losses) related to assets or liabilities as of September 30, 2013		(11,169	)		(275	)

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 116

Banco Santander Chile and Subsidiaries

Notes to the Unaudited Consolidated Interim Financial Statements

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE 32

FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES, continued

The realized and unrealized profits (losses) included in comprehensive income for 2014 and 2013, in the assets and liabilities measured at fair value on a recurrent basis through unobservable market data (Level 3) are recorded in the Consolidated Interim Statement of Comprehensive Income in the associate line item.

The potential effect as of September 30, 2014 and 2013 on the valuation of assets and liabilities valued at fair value on a recurrent basis through unobservable significant entries (Level 3), generated by changes in the principal assumptions if other reasonably possible assumptions that are less or more favorable were used, is not considered by the Bank to be significant.

The following sheet shows the financial instruments subject to offsetting according to IAS 32:

	As of September 30, 2014
	Linked financial instruments subject to offsetting						Linked financial instruments not subject to offsetting						Other financial instruments
	Gross value of financial assets		Gross value of financial liabilities compensated on the balance sheet		Net amount ("+" or "-") of financial assets presented on the balance sheet		Financial instruments- Assets		Financial instruments- Liabilities		Net amount		Assets		Liabilities		Net amount
Financial instrument	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Financial derivative contracts		-		-		-		2,474,943		2,304,044		170,899		190,531		120,622		69,909
Repurchase agreements		-		-		-		-		-		-		3,517		289,095		(285,578	)
Total		-		-		-		2,474,943		2,304,044		170,899		194,048		409,717		(215,669	)

NOTE 33

SUBSEQUENT EVENTS

Between October 1, 2014 and the date on which these Unaudited Consolidated Interim Financial Statements were issued (October 13, 2014), no events have occurred which could significantly affect their interpretation.

FELIPE CONTRERAS FAJARDO

Gerente de Contabilidad

CLAUDIO MELANDRI HINOJOSA

Gerente General

Consolidated Interim Financial Statements September 2014 / Banco Santander Chile 117