Santander-Chile (NYSE: BSAC) outlines 2025 risks, loan and mortgage mix
Filing Impact
Filing Sentiment
Form Type
20-F
Rhea-AI Filing Summary
Banco Santander-Chile files its Form 20‑F annual report, presenting IFRS audited financial statements for the years ended December 31, 2025, 2024 and 2023, audited by PricewaterhouseCoopers. The bank had 188,446,126,794 shares of common stock outstanding at year end 2025.
Each New York–listed ADS represents 400 common shares. Management highlights extensive risk factors, including Chilean macroeconomic conditions, climate and ESG pressures, heightened competition from fintechs and open finance, model and credit risk, and growing cybersecurity and AI-related threats.
The report notes Chilean GDP growth of 2.4% in 2025, inflation of 3.4% and a Central Bank policy rate of 4.50%. Retail customers account for 76.3% of the loan book, with residential mortgages of Ch$17,443,563 million, or 42.6% of total loans at amortized cost.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
OR
OR
OR
Date of event requiring this shell company report___________________
For the transition period from ______________ to ______________.
Commission file number: 001-14554
(d/b/a Santander and Banco Santander)
(Exact name of Registrant as specified in its charter)
SANTANDER-CHILE BANK
(d/b/a Santander and Banco Santander)
(Translation of Registrant’s name into English)
(Jurisdiction of incorporation or organization)
Telephone: 011-562-320-2000
(Address of principal executive offices)
Tel: 562 26483583 , email: cristian.vicuna@santander.cl
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
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Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols | Name of each exchange on which registered | ||||||||||||
*Santander-Chile’s shares of common stock are not listed for trading, but only in connection with the registration of the American Depositary Shares pursuant to the requirements of the New York Stock Exchange.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes o No x
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
| x | Accelerated Filer | o | Non-accelerated Filer | o | Emerging growth company | |||||||||||||||||||||
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If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| o | U.S. GAAP | |||||||
| x | ||||||||
| o | Other | |||||||
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
o Item 17 o Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
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TABLE OF CONTENTS
| Page | |||||
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS | ii | ||||
CERTAIN TERMS AND CONVENTIONS | iv | ||||
PRESENTATION OF FINANCIAL INFORMATION | iv | ||||
PART I | 1 | ||||
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS | 1 | ||||
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE | 1 | ||||
ITEM 3. KEY INFORMATION | 1 | ||||
ITEM 4. INFORMATION ON THE COMPANY | 38 | ||||
ITEM 4A. UNRESOLVED STAFF COMMENTS | 63 | ||||
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS | 63 | ||||
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES | 120 | ||||
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS | 131 | ||||
ITEM 8. FINANCIAL INFORMATION | 134 | ||||
ITEM 9. THE OFFER AND LISTING | 136 | ||||
ITEM 10. ADDITIONAL INFORMATION | 136 | ||||
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 153 | ||||
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES | 171 | ||||
PART II | 174 | ||||
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES | 174 | ||||
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 174 | ||||
ITEM 15. CONTROLS AND PROCEDURES | 174 | ||||
ITEM 16. [RESERVED] | 175 | ||||
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT | 175 | ||||
ITEM 16B. CODE OF ETHICS | 175 | ||||
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES | 176 | ||||
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES | 176 | ||||
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS | 176 | ||||
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT | 176 | ||||
ITEM 16G. CORPORATE GOVERNANCE | 177 | ||||
ITEM 16H. MINE SAFETY DISCLOSURE | 177 | ||||
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS | 178 | ||||
ITEM 16J. INSIDER TRADING POLICIES | 178 | ||||
ITEM 16K. CYBERSECURITY | 179 | ||||
PART III | 181 | ||||
ITEM 17. FINANCIAL STATEMENTS | 181 | ||||
ITEM 18. FINANCIAL STATEMENTS | 181 | ||||
ITEM 19. EXHIBITS | 181 | ||||
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
We have made statements in this Annual Report on Form 20-F that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements appear throughout this report and include statements regarding our intent, belief or current expectations regarding:
•asset growth and alternative sources of funding;
•growth of our fee-based business;
•financing plans;
•impact of competition;
•impact of regulation;
•exposure to market risks including:
◦interest rate risk;
◦foreign exchange risk; and
◦equity price risk;
•projected capital expenditures;
•liquidity;
•trends affecting:
◦our financial condition; and
◦our results of operation.
The sections of this Annual Report which contain forward-looking statements include, without limitation, “Item 3. Key Information—Risk Factors,” “Item 4. Information on the Company—B. Business Overview—Competition,” “Item 5. Operating and Financial Review and Prospects,” “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings,” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk.” Our forward-looking statements also may be identified by words such as “believes,” “expects,” “anticipates,” “projects,” “intends,” “should,” “could,” “may,” “seeks,” “aim,” “combined,” “estimates,” “probability,” “risk,” “VaR,” “target,” “goal,” “objective,” “future” or similar expressions.
You should understand that the following important factors, in addition to those discussed elsewhere in this Annual Report and in the documents which are incorporated by reference, could affect our future results and could cause those results or other outcomes to differ materially from those expressed in our forward-looking statements:
•changes in capital markets in general that may affect policies or attitudes towards lending to Chile or Chilean companies;
•changes in economic conditions;
•the monetary and interest rate policies of Central Bank (as defined below);
•inflation;
•deflation;
•unemployment;
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•increases in defaults by our customers and impairment losses;
•decreases in deposits;
•customer loss or revenue loss;
•unanticipated turbulence in interest rates;
•movements in foreign exchange rates;
•movements in equity prices or other rates or prices;
•the effects of non-linear market behavior that cannot be captured by linear statistical models, such as the VaR model we use;
•changes in Chilean and foreign laws and regulations;
•changes in taxes;
•competition, changes in competition and pricing environments;
•our inability to hedge certain risks economically;
•the adequacy of loss allowances;
•technological changes;
•changes in consumer spending and saving habits;
•changes in demographics;
•changes in investment rates;
•increased costs;
•unanticipated increases in financing and other costs or the inability to obtain additional debt or equity financing on attractive terms;
•changes in, or failure to comply with, banking regulations;
•acquisitions or restructurings of businesses that may not perform in accordance with our expectations;
•our ability to successfully market and sell additional services to our existing customers;
•disruptions in client service;
•damage to our reputation;
•natural disasters;
•implementation of new technologies;
•the Group’s exposure to operational losses (e.g., failed internal or external processes, people and systems);
•an inaccurate or ineffective client segmentation model; and
•pandemics.
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You should not place undue reliance on such statements, which speak only as of the date at which they were made. The forward-looking statements contained in this report speak only as of the date of this Annual Report, and we do not undertake to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
CERTAIN TERMS AND CONVENTIONS
As used in this annual report (the “Annual Report”), “Santander-Chile”, “the Bank”, “we,” “our” and “us” or similar terms refer to Banco Santander-Chile together with its consolidated subsidiaries.
When we refer to “Santander Spain,” we refer to our parent company, Banco Santander, S.A. References to “the Group,” “Santander Group” or “Grupo Santander” mean the worldwide operations of the Santander Spain conglomerate, as indirectly controlled by Santander Spain and its consolidated subsidiaries, including Santander-Chile.
As used in this Annual Report, the term “billion” means one thousand million (1,000,000,000).
In this Annual Report, references to “$”, “U.S.$”, “U.S. dollars” and “dollars” are to United States dollars; references to “Chilean pesos,” “pesos” or “Ch$” are to Chilean pesos; references to “JPY” or “JPY$” are to Japanese Yen; references to “AUD” or “AUD$” are to Australian dollars; references to “CHF” or “CHF$” are to Swiss francs; 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.
As used in this Annual Report, the terms “write-offs” and “charge-offs” are synonyms.
In this Annual Report, references to the Audit Committee are to the Bank’s Comité de Directores y Auditoría.
In this Annual Report, references to “BIS” are to the Bank for International Settlement, and references to “BIS ratio” are to the capital adequacy ratio as calculated in accordance with the Basel Capital Accord. References to the “Central Bank” are to the Banco Central de Chile. References to the “FMC” are to the Financial Market Commission.
PRESENTATION OF FINANCIAL INFORMATION
Santander-Chile is a Chilean bank and maintains its financial books and records in Chilean pesos and prepares its consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Any reference to IFRS in this document is to IFRS as issued by the IASB.
As required by local regulations, our locally filed consolidated financial statements have been prepared in accordance with the Compendium of Accounting Standards issued by the FMC, the Chilean regulatory agency (“Chilean Bank GAAP”). Therefore, our locally filed consolidated financial statements have been adjusted to IFRS in order to comply with the requirements of the Securities and Exchange Commission (the “SEC”). Chilean Bank GAAP principles are substantially similar to IFRS but there are some exceptions. For further details and a discussion of the main differences between Chilean Bank GAAP and IFRS, see “Item 5. Operating and Financial Review and Prospects—Accounting Standards Applied in 2023.”
This Annual Report contains our consolidated financial statements as of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 (the “Audited Consolidated Financial Statements”). Such Audited Consolidated Financial Statements have been prepared in accordance with IFRS as issued by the IASB, and have been audited by the independent registered public accounting firm PricewaterhouseCoopers Consultores, Auditores y Compañía Limitada for the years ended December 31, 2025, 2024 and 2023. See page F-3 of the Audited Consolidated Financial Statements as of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 for the audit report issued by PricewaterhouseCoopers Consultores, Auditores y Compañía Limitada. The Audited Consolidated Financial Statements have been prepared from accounting records maintained by the Bank and its subsidiaries.
The notes to the Audited Consolidated Financial Statements form an integral part of the Audited Consolidated Financial Statements and contain additional information and narrative descriptions or details of these financial statements.
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We have formatted our financial information according to the classification format for banks in Chile for purposes of IFRS. We have not reclassified the line items to comply with Article 9 of Regulation S-X. Article 9 is a regulation of the SEC that contains formatting requirements for bank holding company financial statements.
Functional and Presentation Currency
The Chilean peso is the currency of the primary economic environment in which the Bank operates and the currency that influences its structure of costs and revenues, and in accordance with International Accounting Standard 21 – The Effects of Changes in Foreign Exchange Rates has been defined as the functional and presentation currency. Accordingly, all balances and transactions denominated in currencies other than the Chilean peso are treated as “foreign currency.” See “Note 1—Summary of Significant Accounting Principles—e) Functional and presentation currency.” For presentation purposes, we have translated Chilean pesos (Ch$) into U.S. dollars (U.S.$) using the rate as indicated below under “Exchange Rates,” for the financial information included in this Annual Report.
Loans
Unless otherwise specified, all references herein (except in the Audited Consolidated Financial Statements) to loans are to loans and financial leases before deduction for loan loss allowance, and, except as otherwise specified, all market share data presented herein is based on information published periodically by the FMC.
Outstanding loans and the related percentages of our loan portfolio consisting of corporate and consumer loans as defined in the section entitled “Item 4. Information on the Company—B. Business Overview” are categorized based on the nature of the borrower. Outstanding loans and related percentages of our loan portfolio consisting of corporate and consumer loans in the section entitled “Item 5. Operating and Financial Review and Prospects—C. Selected Statistical Information” are categorized in accordance with the reporting requirements of the FMC, which are based on the type and term of loans.
Non-performing loans are also presented in accordance with reporting requirements of the FMC and include the entire principal amount and accrued but unpaid interest on loans for which either principal or interest is past-due for 90 days or more. Restructured loans for which no payments are past-due are not ordinarily classified as non-performing loans. See “Item 5. Operating and Financial Review and Prospects—C. Selected Statistical Information—Classification of Loan Portfolio Based on the Borrower’s Payment Performance.”
At the end of each reporting period the Bank evaluates the impairment of the loan book. For December 31, 2025 and 2024 this has been assessed in accordance with IFRS 9.
Effect of Rounding
Certain figures included in this Annual Report and in the Audited Consolidated Financial Statements have been rounded up for ease of presentation. Percentage figures included in this Annual Report have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, certain percentage amounts in this Annual Report may vary from those obtained by performing the same calculations using the figures in the Audited Consolidated Financial Statements. Certain other amounts that appear in this Annual Report may not sum due to rounding.
Economic and Market Data
In this Annual Report, unless otherwise indicated, all macroeconomic data related to the Chilean economy is based on information published by the Central Bank, and all market share and other data related to the Chilean financial system is based on information published by the FMC and our analysis of such information.
Exchange Rates
This Annual Report contains translations of certain Chilean peso amounts into U.S. dollars at specified rates solely for the convenience of the reader. These translations should not be construed as representations that the Chilean peso amounts actually represent such U.S. dollar amounts, were converted from U.S. dollars at the rate indicated in preparing the Audited Consolidated Financial Statements, could be converted into U.S. dollars at the rate indicated, were converted or will be converted at all.
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Unless otherwise indicated, all U.S. dollar amounts at any year end, for any period have been translated from Chilean pesos based on the interbank market rate published by Reuters at 1:30 pm on the last business day of the period. On December 31, 2025, the exchange rate in the Informal Exchange Market as published by Reuters at 1:30 pm was Ch$900.69 per U.S.$1.00, or 1.15% less than the observed exchange rate published by the Central Bank for such date of Ch$911.18 per U.S.$1.00. The Federal Reserve Bank of New York does not report a noon buying rate for the Chilean peso.
The U.S. dollar equivalent of one UF was U.S.$43.60 as of December 31, 2025, using the observed exchange rate reported by the Central Bank as of December 31, 2025 of Ch$911.18 per U.S.$1.00, while the value of one UF as of December 31, 2025 was Ch$39,727.96.
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PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
A.[Reserved]
B.Capitalization and Indebtedness
Not applicable.
C.Reasons for the Offer and Use of Proceeds
Not applicable.
D.Risk Factors
You should carefully consider the following risk factors, which should be read in conjunction with all the other information presented in this Annual Report. The risks and uncertainties described below are not the only ones that we face. Additional risks and uncertainties that we do not know about or that we currently think are immaterial may also impair our business operations. Any of the following risks, if they actually occur, could materially and adversely affect our business, results of operations, prospects and financial condition. The following risk factors have been grouped as follows:
(a)Risk Factors in respect of Santander-Chile;
(b)Risk Factors in respect of Chile;
(c)Risk Factors in respect of our Controlling Shareholder and our ADSs; and
(d)General Risk Factors.
The risk factors in respect of Santander-Chile are presented in the following subcategories depending on their nature:
(a)Macro-economic Risks;
(b)Competitive Risks;
(c)Operational Risks;
(d)Financial Risks; and
(e)Legal and Regulatory Risks.
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Summary of Key Risks
Our business is subject to numerous risks and uncertainties, discussed in more detail below. These risks include, among others, the following key risks:
•The growth rate of our loan portfolio may be affected by economic turmoil, which could also lead to a contraction in our loan portfolio.
•Inflation, government efforts to control inflation, and changes in interest rates may hinder the growth of the Chilean economy and could have an adverse effect on us.
•Geopolitical conflicts and related uncertainties, such as the continuance or escalation of the war in Ukraine and the uncertainties following the ceasefire agreement in the Middle East, could materially affect our financial position and increase our operational risk.
•We are vulnerable to disruptions and volatility in the global financial markets.
•Our operations and results may be negatively affected by earthquakes due to the location of Chile in a highly seismic area.
•Climate change can create transition risks, physical risks, and other risks that could adversely affect us.
•Increased competition, including from non-traditional providers of banking services such as financial technology providers, and industry consolidation may adversely affect our results of operations.
•Our ability to maintain our competitive position depends, in part, on the success of new products and services we offer our customers.
•The growth of our loan portfolio may expose us to increased loan losses. Our exposure to individuals and small and mid-sized businesses could lead to higher levels of past due loans, allowances for loan losses and charge-offs.
•Failure to successfully implement and continue to improve our risk management policies, procedures and methods, including our credit risk management system, could materially and adversely affect us, and we may be exposed to unidentified or unanticipated risks.
•We rely on models for many of our decisions. Their inaccurate or incorrect use could have a material adverse effect on us.
•Our loan and investment portfolios are subject to risk of prepayment, which could have a material adverse effect on us.
•Risks relating to cybersecurity, data collection, processing and storage systems and security are inherent in our business.
•Disclosure controls and procedures over financial and non-financial reporting may not prevent or detect all errors or acts of fraud.
•Market conditions have resulted, and could result, in material changes to the estimated fair values of our financial assets. Negative fair value adjustments could have a material adverse effect on our operating results, financial condition and prospects.
•Our financial results are constantly exposed to market risk. We are subject to fluctuations in inflation, interest rates and other market variables, which may materially and adversely affect us and our profitability.
•We are subject to counterparty risk in our banking business.
•Liquidity and funding risks are inherent in our business and could have a material adverse effect on our results, our costs of funds and our credit ratings.
•We are subject to regulatory capital and liquidity requirements that could limit our operations, and changes to these requirements may further limit and adversely affect our operating results, financial condition and prospects.
•We are subject to extensive regulatory risk, or the risk of not being able to meet all of the applicable regulatory requirements and guidelines.
•Changes to the pension fund system may affect our funding mix.
•We may not be able to detect or prevent money laundering and other financial crime activities fully or on a timely basis, which could expose us to additional liability and could have a material adverse effect on us.
•We are exposed to risk of loss from legal and regulatory proceedings.
•Political, legal, regulatory and economic uncertainty arising from social unrest and the resulting social reforms, as well as the potential enactment of a new constitution could adversely impact the Bank’s business.
•Our growth, asset quality and profitability may be adversely affected by volatile macroeconomic and political conditions in Chile.
•Currency fluctuations could adversely affect our financial condition and results of operations and the value of our securities.
•Our controlling shareholder has a great deal of influence over our business and its interests could conflict with yours.
•Our status as a controlled company and a foreign private issuer exempts us from certain of the corporate governance standards of the New York Stock Exchange (“NYSE”), limiting the protections afforded to investors.
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•As a holder of ADSs you will have different shareholders’ rights than in the United States and certain other jurisdictions. Holders of ADSs may find it difficult to exercise voting rights at our shareholders’ meetings.
RISK FACTORS IN RESPECT OF SANTANDER-CHILE
Macro-Economic Risks
Our growth, asset quality and profitability, among others, may be adversely affected by a slowdown in the global and Chilean economy, volatile macroeconomic and political conditions.
A slowdown or recession in the global economy could lead major financial institutions, including some of the world’s largest global commercial banks, investment banks, mortgage lenders, mortgage guarantors and insurance companies to experience significant difficulties, including runs on deposits, the need for government aid or assistance or the need to reduce or cease providing funding to borrowers (including to other financial institutions).
Volatile conditions in the global financial markets could also have a material adverse effect on us, including on our ability to access capital and liquidity on acceptable financial terms, if at all. If capital markets financing becomes unavailable excessively expensive, we may be forced to raise the rates we pay on deposits to attract more customers and may be unable to maintain certain liability maturities. Any such adverse impact in capital markets funding availability or costs or in deposit rates could have a material adverse effect on our interest margins and liquidity.
In particular, we face, among others, the following risks related to economic downturns and volatile conditions:
•A reduction in demand for our products and services.
•An increase or change in regulation of our industry. Compliance with such regulation would likely continue to increase our costs and may affect the pricing for our products and services, increase our conduct and regulatory risks related to non-compliance and limit our ability to pursue business opportunities.
•An inability of our customers to timely or fully comply with their existing obligations. Macroeconomic shocks may negatively impact the income of our retail and corporate customers and may adversely affect the recoverability of our loans, resulting in increased loan losses.
•The process we use to estimate losses inherent in our credit exposure requires complex judgements, including forecasts of economic conditions and how these economic conditions might impair the ability of our borrowers to repay their loans. The degree of uncertainty concerning economic conditions may adversely affect the accuracy of our estimates, which may, in turn, impact the reliability of the process and the sufficiency of our loan loss allowances.
•The value and liquidity of the portfolio of investment securities that we hold may be adversely affected.
In particular, in 2025 Chile experienced a moderate increase in economic activity as lower interest rates, both in Chile and globally, drove growth. In 2025, Chile’s economy is expected to grow 2.4% compared to 2.6% in 2024 and 0.5% in 2023. In 2025, inflation based on the Chilean consumer price index, was 3.4% compared to 4.5% in 2024 and 3.9% in 2023. The Central Bank's reference rate, which is used to set monetary policy, closed 2025 at 4.50% compared to 5.00% in 2024 and 8.25% in 2023. Currently, the Central Bank expects GDP to increase in a range between 2%-3% in 2026.
Any changes to the current macroeconomic conditions which could cause market turmoil or economic recession in the future could have a material adverse effect on our financing availability and terms and, more generally, on our results, financial condition and prospects.
The growth rate of our loan portfolio may be affected by economic turmoil, which could also lead to a contraction in our loan portfolio.
There can be no assurance that our loan portfolio will continue to grow at similar rates to historical growth rates. A reversal of the rate of growth of the Chilean economy, a slowdown in the growth of customer demand, an increase in market competition or changes in governmental regulations could adversely affect the rate of growth of our loan portfolio
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and our risk index and, accordingly, increase our required allowances for loan losses. Economic turmoil could materially adversely affect the liquidity, businesses and financial condition of our customers as well as lead to a general decline in consumer spending and a rise in unemployment. All this could in turn lead to decreased demand for borrowings in general.
Climate change can create transition risks, physical risks, and other risks that could adversely affect us.
There is an increasing focus over the risks of climate change and related environmental sustainability matters. Climate change may imply two primary drivers of financial risk that could adversely affect us:
•Transition risks associated with the move to a low-carbon economy, both at idiosyncratic and systemic levels, such as through policy, regulatory and technological changes and business consumer preferences, which could increase our exposure and impact our strategies.
•Physical risks related to discrete events, such as flooding and wildfires, and extreme weather impacts and longer term shifts in climate patterns, such as extreme heat, sea level rise and more frequent and prolonged drought, which could result in financial losses that could impair asset values and the creditworthiness of our customers. Such events could disrupt our operations or those of our customers or third parties on which we rely and do business with, including through direct damage to assets and indirect impacts from supply chain disruption and market volatility.
These primary drivers could materialize, among others, in the following financial risks:
•Credit risks: Physical climate change could lower corporate revenues, increase operating costs and lead to increased credit exposure. Severe weather could also affect the value of collateral. Additionally, companies with business models not aligned with the transition to a low-carbon economy may face a higher risk of reduced corporate earnings and business disruption due to new regulations or market shifts.
•Market risks: Market changes in the most carbon-intensive sectors could affect energy and commodity prices, corporate bonds, equities and certain derivatives contracts. Increasing frequency of severe weather events could affect macroeconomic conditions, weakening fundamental factors such as economic growth, employment and inflation and lead to higher volatility.
•Liquidity risks: Companies could face liquidity risks derived from cash outflows to improve their reputation in the market or solve climate-related problems. Extreme weather events could also affect the value of our high-quality liquid assets or cause sovereign debt to rise limiting our access to capital markets.
•Operational risks: Severe weather events could directly damage assets and impact business continuity, both of our customers and our own. Climate-related financial risks could also cause operational risk losses from litigation if, for example, we are perceived to misrepresent sustainability-related practices, achievements, metrics goals or targets.
•Regulatory compliance risks: Increased regulatory compliance risk may result from the increasing pace, breadth and depth of regulatory expectations requiring implementation in short timeframes across multiple jurisdictions and from changes in public policy, laws and regulations in connection with climate change and related environmental sustainability matters.
•Reputational risks: Our reputation and client relationships may be damaged as a result of our practices, disclosures and decisions related to climate change and the environment, or to the practices or involvement of our clients, vendors or suppliers in certain industries or projects being associated with causing or exacerbating climate change. Furthermore, parties who may suffer losses from the effects of climate change may seek compensation from those they hold responsible such as state entities, regulators, investors and lenders. We could face conduct risks derived from misrepresentations in our sustainability-related disclosures, including our practices, achievements, metrics,
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goals and targets or the sustainability characteristics of our products or of our customers, investors or other stakeholders (greenwashing).
•Strategic risks: Our strategy could be affected if we fail to achieve our net-zero or other targets, including those related to the activities that we finance and those concerning our own operations.
As climate risk is interconnected with all key risk types, we have developed and continue to enhance processes to embed climate risk considerations into our core processes and risk management cycle; however, because the timing and severity of climate change may not be predictable and is rapidly evolving, our risk management strategies may not be effective in mitigating climate risk exposure. Additionally, we may become subject to new or heightened regulatory requirements relating to climate change, which may result in increased regulatory, compliance or other costs. As the risks, perspective and focus of regulators, shareholders, employees, and other stakeholders regarding climate change are evolving rapidly, it can be difficult to assess the ultimate impact on us of climate change-related risks, compliance risks, and uncertainties.
We periodically disclose information such as emissions and other climate-related performance data, statistics, metrics and/or targets. If we lack robust and high-quality climate-related procedures, controls and data, we may not be able to disclose reliable climate-related information. In addition, because the climate-related information is based on current expectations and future estimates about Santander Chile’s and third-parties’ operations and businesses and addresses matters that are uncertain to varying degrees, we may not be able to meet our estimates and targets or we may not be able to achieve them within the timelines we announce. Actual or perceived shortcomings with respect to these emissions and other climate-related initiatives and reporting could result in litigation or regulatory enforcement and impact our ability to hire and retain employees, increase our customer base, and attract and retain certain types of investors.
The exposures in the sectors potentially most affected by climate factors (according to market consensus and the Bank’s materiality analysis) mainly correspond to corporate and investment banking portfolios. The management of these clients, in these sectors includes, where appropriate and permissible, the consideration of climate aspects in their initial analysis, in the granting of credit, and in the preparation and review of their credit ratings. These ratings influence the parameters that are used to calculate their credit losses (typically via probability of default, PD). Accordingly, when climate factors are relevant, they impact, along with other elements of analysis, on the credit loss calculations that support capital and provisions. We have recently participated in regulatory climate stress exercises, which indicate that our current overall coverage of potential losses is adequate over the maturity horizons of our portfolios.
According to the FMC’s loan classification system (See Note 37—Risk Management—Analysis of risk concentration), sectors with very high climate risk (oil and gas and mining and metals), mainly due to transition risk, accounted for 1.0% of the total loan portfolio, mainly direct exposure to copper production. For these and other sectors we have decarbonization objectives and action plans.
Initiatives and business practices of financial institutions with respect to climate matters and other matters of public policy, including environmental, social and governance (ESG) matters, have recently become the subject of significant scrutiny by regulatory agencies and government officials. Views on sustainability or ESG practices, particularly those related to climate issues, have become ideological issues and both opponents and proponents of various ESG-related matters have increasingly engaged in a range of activism to advocate their positions. In particular, there are a growing number of initiatives in certain jurisdictions aimed at discouraging or limiting the consideration of ESG factors by financial institutions that may conflict with certain regulatory requirements to which we are subject or the expectations of our clients, shareholders and other stakeholders. Such differing, sometimes conflicting, views and regulations on sustainability and ESG-related matters increase the risk that certain of our actions, or lack of action, on such matters will be perceived negatively. Additionally, the overall expectations of regulators and our clients, shareholders and other stakeholders in certain jurisdictions, particularly in Europe, with respect to certain of these issues may differ significantly from those in other jurisdictions, such as the United States. Furthermore, our relationships or ability to transact with clients and customers, and with governmental or regulatory bodies in certain jurisdictions could be adversely affected if our decisions with respect to doing business with companies in certain sensitive industries are perceived to harm those companies, result in violations of law and breaches of fiduciary duty or to align with particular ideological, political or social views. We are also exposed to associated risks of non-compliance with relevant legal requirements, including fines, penalties, litigation, regulatory sanctions, difficulties in obtaining governmental approvals, restrictions on our business activities or reputational damage, any of which could be material. Additionally, our participation in, or association with, certain groups or initiatives
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and our business practices or positions with respect to matters of public policy, including ESG matters, could be criticized by activists, governmental authorities and our clients, shareholders and other stakeholders.
Any of the conditions described above, or our failure to identify other climate-related risks, could have a material adverse effect on our business, financial condition and results of operations.
The outbreak of public health emergencies materially impacted, and may in the future materially impact, our financial condition, liquidity and results of operations.
The outbreak of public health emergencies may force countries to adopt measures, similar to those adopted in response to the Covid-19 pandemic, that restrict economic activity, may deteriorate the macroeconomic environment and may adversely impact our business and results of operations, including, among others (i) decreased demand for our products and services; (ii) further material impairment of our loans and other assets including goodwill; (iii) decline in the value of collateral; (iv) constraints on our liquidity due to market conditions, exchange rates and customer withdrawal of deposits and continued draws on lines of credit; (v) downgrades of our credit ratings; and (vi) operational disruptions, technology infrastructure failures, increased cybersecurity risks or governmental restrictions affecting our operations. Any such events could materially and adversely affect our business, financial condition, liquidity and results of operations.
Competitive Risks
Increased competition, including from non-traditional providers of banking services such as financial technology providers, and industry consolidation may adversely affect our results of operations.
We face substantial competition in all parts of our business, including in payments, in originating loans and in attracting deposits. The competition in originating loans comes principally from other domestic and foreign banks, mortgage banking companies, consumer finance companies, insurance companies and other lenders and purchasers of loans.
The Chilean market for financial services is highly competitive. We compete with other private sector Chilean and non-Chilean banks, with Banco del Estado de Chile, the principal government-owned sector bank, with department stores, private lenders (principally department stores and auto-lenders) and with credit unions and cooperatives that make consumer loans and sell other financial products to a large portion of the Chilean population. In addition, we face competition from non-bank finance competitors, such as leasing and factoring companies, security brokers, mutual fund administrators, pension fund management companies and insurance companies. The lower to middle-income segments of the Chilean population and the small- and mid-sized corporate segments have become the target markets of several banks and competition in these segments may increase. In addition, there has been a trend towards consolidation in the Chilean banking industry in recent years, which has created larger banks with which we must now compete. There can be no assurance that this increased competition will not adversely affect our growth prospects, and therefore our operations.
Non-traditional providers of banking services, such as fintechs, Internet-based e-commerce providers, mobile telephone companies and Internet search engines may offer and/or increase their offerings of financial products and services directly to customers. These non-traditional providers of banking services currently have an advantage over traditional providers because they are not subject to banking regulation. Several of these competitors may have long operating histories, large customer bases, strong brand recognition and significant financial, marketing and other resources. They may adopt more aggressive pricing and rates and devote more resources to technology, infrastructure and marketing.
For example, in December 2025, the Central Bank of Chile approved the operational regulations for a new payment clearinghouse for low value transactions, which is expected to commence operations subject to further regulatory approvals. The entry of new payment infrastructures and participants may increase competition especially in the checking account and debit card markets, alter transaction flows, and/or require additional technological adaptations. As the Chilean payments ecosystem continues to evolve, new clearing participants may influence transaction routing, fee structures, or require incremental technological adaptations. While we continuously monitor regulatory and market developments and adjust our systems and strategy accordingly, the extent to which this new infrastructure could affect our revenues, operating costs, or operating performance cannot presently be quantified.
New competitors may enter the market or existing competitors may adjust their services with unique product or service offerings or approaches to providing banking services. If we are unable to successfully compete with current and new competitors, or if we are unable to anticipate and adapt our offerings to changing banking industry trends, including
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technological changes, our business may be adversely affected. In addition, our failure to effectively anticipate or adapt to emerging technologies or changes in customer behavior, including among younger customers, could delay or prevent our access to new digital-based markets, which would in turn have an adverse effect on our competitive position and business. Furthermore, the widespread adoption of new technologies, including distributed ledger, artificial intelligence (“AI”) and/or biometrics, to provide services such as cryptocurrencies and payments, could require substantial expenditures to modify or adapt our existing products and services as we continue to grow our Internet and mobile banking capabilities and could entail new direct risks (including financial and non-financial risks) and indirect risks related to loss of business opportunities. Our customers may choose to conduct business or offer products in areas that may be considered speculative or risky. Such new technologies and mobile banking platforms in recent years could negatively impact the value of our investments in bank premises, equipment and personnel for our branch network.
The persistence or acceleration of this shift in demand towards Internet and mobile banking may necessitate further changes to our retail distribution strategy, which may include closing and/or selling certain branches (as we have been doing in recent years) and restructuring our remaining branches and work force. These actions could lead to losses on these assets and may lead to increased expenditures to renovate, reconfigure or close a number of our remaining branches or to otherwise reform our retail distribution channel. Furthermore, our failure to implement such changes to our distribution strategy swiftly and effectively could have an adverse effect our competitive position.
In particular, we face the challenge to compete in an ecosystem where the relationship with the consumer is based on access to digital data. This access is increasingly dominated by digital platforms and fintechs who are already eroding our results in very relevant markets such as payments. This privileged access to data can be used as a leverage to compete with us in other adjacent markets and may reduce our operations and margins in core businesses such as lending or wealth management. The alliances that our competitors are starting to build with large technology firms can make it more difficult for us to successfully compete with them and could adversely affect us.
In January 2023 the law on Fintech and Open Finance System was published and in July 2024, the FMC published the regulations governing the Open Finance System (or the “SFA” pursuant to its Spanish acronym) under the Fintech Law, which is expected to enter into force in July 2026. The SFA regulations establish that institutions subject to financial regulation (such as banks, payment card issuers and acquirers, insurance companies, fund managers, savings and credit cooperatives supervised by the FMC) must become a part of the SFA and facilitate the sharing of user data with other institutions that are a part of the SFA, after users have given their consent. In addition, the FMC established certain rules for institutions that voluntarily decide to register with the SFA and offer financial services to users. This mandatory data sharing will be done through application programming interfaces (“APIs”) that reporting entities will have to activate on websites set up for this purpose. The regulations published by the FMC do not cover the technical requirements and the design of the cost compensation model for the SFA, which are still being drafted. To address these issues, the FMC established a working group with various affected industries that will be working on the proposals throughout 2025. There is regulatory uncertainty in relation to the final content of such regulations, and whether these will contemplate adequate regulatory symmetry between all affected parties.
The implementation period of the SFA will be gradual and will vary depending on the type of institution. The first stage of the implementation has a 24-month phase-in period, which will be used by each of the participating institutions to adapt their systems. During this period, the FMC will also develop the technical manuals containing the relevant specifications for the operational implementation of the SFA.
In November 2025, the FMC launched a new public consultation proposing amendments to the SFA framework. For banks and payment card issuers, the regulations provide an implementation schedule that begins with the phased delivery of information to be exchanged through the SFA: (i) APIs containing general terms and conditions and awareness channels for the products and services offered by the reporting entities (within the first 6 months); (ii) APIs containing user information (onboarding, financial position, transaction records and current products) that banks and payment card issuers must share with other participants in the SFA (within the first 18 months); and (iii) APIs containing payment initiation information (within the first 18 months). The consultation sought to incorporate feedback from banks, fintech companies, insurers, cooperatives, and other market participants. The main objectives of the proposed changes are to make its implementation more gradual, improve operational feasibility, and ensure an adequate balance between innovation, competition, and financial stability. The key proposed adjustments include: extension of effectiveness deadlines and a more realistic rollout schedule, introduction of intermediate milestones and a pilot or testing phase before full enforcement, simplification of participation requirements for certain types of entities, refinements to user consent management, data traceability, and interoperability rules, adjustments to governance and operational responsibilities among SFA participants, and further development of technical requirements for APIs and testing environments.
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Despite progress, some regulatory uncertainty remains, particularly regarding: the final content of the technical standards, the structure and fairness of the cost compensation model, the degree of regulatory symmetry between traditional regulated institutions and new fintech entrants, and the operational burden and liability allocation among participants. The FMC has acknowledged that the success of the SFA depends heavily on robust technical standards and fair economic incentives. Therefore, detailed API specifications, cybersecurity standards, performance metrics, and interoperability rules are still under development. A cost compensation model, to define whether and how data providers may be compensated by data users, has not yet been finalized. To address these issues, the FMC established a working group with representatives from affected industries which is currently engaged in ongoing discussions. The group’s work is expected to feed into future technical annexes or complementary regulations.
Implementation of the SFA regulations may reduce barriers to entry and increase competition in our industry, which could reduce our market share or require us to reduce prices for the services we provide, which could have a material adverse effect on our results of operations, financial condition and prospects.
Increasing competition could also require that we increase our rates offered on deposits or lower the rates we charge on loans, which could also have a material adverse effect on us, including our profitability. It may also negatively affect our business results and prospects by, among other things, limiting our ability to increase our customer base and expand our operations and increasing competition for investment opportunities.
If our customer service levels were perceived by the market to be materially below those of our competitor financial institutions, we could lose existing and potential business. If we are not successful in retaining and strengthening customer relationships, we may lose market share, incur losses on some or all of our activities or fail to attract new deposits or retain existing deposits, which could have a material adverse effect on our operating results, financial condition and prospects.
Our ability to maintain our competitive position depends, in part, on the success of new products and services we offer our customers and on our ability to offer products and services that meet the customers’ needs during the whole life cycle of the products or services. Our failure to manage various risks we face as we develop new products and services that could have a material adverse effect on us.
The success of our operations and our profitability depends, in part, on the success of new products and services we offer our customers and our ability to offer products and services that meet their needs during their entire life cycle. However, our customers’ needs, or desires may change over time, and such changes may render our products and services obsolete, outdated or unattractive and we may not be able to develop new products that meet our customers’ changing needs. Our success is also dependent on our ability to anticipate and leverage new and existing technologies that may have an impact on products and services in the banking industry. Technological changes may further intensify and complicate the competitive landscape and influence customer behavior. If we cannot respond in a timely fashion to the changing needs of our customers, including as a result of an aging population, we may lose existing or potential customers, which could in turn materially and adversely affect us. In addition, the cost of developing products is likely to affect our results of operations.
We face the challenge of simplifying the range of our products and services, and, at the same time, being able to satisfy the needs of our clients by offering new products and services. The development of these new products and services exposes us to new and potentially increasingly complex risks, such as the conduct risk in the relationship with customers, and development expenses. Our employees and our risk management systems, as well as our experience and that of our partners may not be sufficient to enable us to properly manage such risks. Any or all of these factors, individually or collectively, could have a material adverse effect on us.
Our strong position in the credit card market is significantly dependent on our co-branding agreement with LATAM Airlines, which was renewed in August 2025 for a five-year term. Once the current term expires, there can be no assurance that the agreement will be renewed, extended, or maintained on terms comparable to those currently in effect, or at all. A failure to renew, or renewal on less favorable terms, could materially reduce the attractiveness of our credit card offering, result in the loss of customers and transaction activity, which could in turn materially and adversely affect our results of operations, competitive position, and financial condition in this business.
In addition, in response to the evolving regulatory environment affecting interchange fees, we implemented adjustments to our loyalty program under the Santander Rewards framework to encourage broader use of our banking products beyond credit cards. These changes may not achieve their intended objectives and could lead to customer
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dissatisfaction, reduced engagement, or lower credit card usage. Any such outcomes could negatively affect customer relationships, competitive positioning, and revenue generation in our credit card segment.
While we have successfully increased our customer service levels in recent years, should these levels ever be perceived by the market to be materially below those of our competitor financial institutions, we could lose existing and potential new business. If we are not successful in retaining and strengthening customer relationships, we may lose market share, incur losses on some or all of our activities or fail to attract new deposits or retain existing deposits, which could have a material adverse effect on our operating results, financial condition and prospects.
Operational Risks
The financial problems faced by our customers could adversely affect us.
Potential market turmoil and economic recession could materially and adversely affect the liquidity, credit ratings, businesses and/or financial conditions of our customers.
While inflationary pressures experienced in recent years (both in Chile and globally) have abated, there is no guarantee that such inflationary pressures will not resurface, which would lead to increases in interest rates and a slowdown of the world economy.
In addition, global trade tensions could intensify and negatively impact our customers. The U.S. government has introduced significant changes in trade policies, including the imposition of a 10% baseline "reciprocal" tariffs on most imports and nations (including Chile) and higher country-specific tariffs for certain nations with which it has significant trade imbalances. Additionally, the U.S. has threatened to impose higher sanctions on certain nations in certain circumstances. This has led to certain U.S. trading partners announcing reciprocal tariffs (and other actions) in response, leading to increased protectionism and trade tensions across the world, as well as to a depreciation of the U.S. dollar.
The continuation, pause or escalation of tariffs and other trade restrictions, the continued depreciation of the U.S. dollar and other non-trade-related actions or policies of the U.S. government, could further impact international trade relations, investment flows and supply chains significantly, resulting in continued market volatility and a reduction in global growth, intensifying concerns over the global macroeconomic environment, inflation and the potential for a recession. Any of the foregoing could have a material adverse effect on our business, results of operations, financial condition and prospects.
These or other conditions causing market turmoil or economic recession in the future could increase our non-performing loan ratios, impair our loan and other financial assets and result in decreased demand for borrowings and deposits in general. A worsening of macroeconomic conditions may also lead to significant volatility in financial markets. As a result, our customers may in the future decrease their risk tolerance to non-deposit investments such as stocks, bonds and mutual funds, which would adversely affect our fee and commission income. Any of the conditions described above could have a material adverse effect on our business, financial condition and results of operations.
We may generate lower revenues from fee and commission-based businesses.
The fees and commissions that we earn from the different banking and other financial services that we provide represent a significant source of our revenues. A slowdown of economic activity, higher unemployment or a market downturn could result in significantly lower fee income.
Regulatory changes that modify the fees we may charge could also adversely affect our fee and commission income. In April 2023, the Committee for the Setting of Interchange Fee Caps (an ad hoc, autonomous and technical committee) established new interchange fee caps for credit and debit cards, reducing the fees which banks may charge from acquirers. Initially the Committee proposed the following gradual implementation of rate caps, as detailed in the table below:
| Card type | Initial rate | First cut (Oct-23) | Second cut (Oct-24) (Suspended) | ||||||||
| Debit | 0.6% | 0.5% | 0.35% | ||||||||
| Credit | 1.48% | 1.14% | 0.80% | ||||||||
| Prepaid | 1.04% | 0.94% | 0.80% | ||||||||
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In order to assess the effects of the gradual implementation of the imposition limits on interchange rates, the Committee agreed to carry out an impact study on: (i) the application of the preliminary rates; (ii) the first reduction established; (iii) the evaluation of the potential, or reasonably foreseeable, effects of the second reduction; and (iv) all aspects of the market that are relevant to the fulfillment of the Committee's objectives established in Law No. 21,365 of 2021. This report has not yet been published.
On September 30, 2024, the Committee indicated that it would begin a review process of the caps imposed on interchange fees, and that it would maintain the caps in force at such time (effectively suspending the reduction planned for October 2024 until further notice). If the suspension is lifted, and the cap on interchanged fees is lowered as originally planned, we anticipate a significant negative impact on our revenue from card fees estimated at Ch$22 billion in the twelve month period starting from when the change is implemented.
Banco Santander Chile currently acts as a broker of Santander Asset Management S.A. Administradora General de Fondos S.A. Therefore, even in the absence of a market downturn, below-market performance by the mutual funds of the firm we broker for may result in a reduction in revenue we receive from selling asset management funds and adversely affect our results of operations.
In addition, the Chilean Congress is currently analyzing an initiative to reduce or limit prepayment fees payable by our customers. As of the date of this Annual Report, the Bank does not yet have an estimate of the potential impact of such initiatives.
The growth of our loan portfolio may expose us to increased loan losses. Our exposure to individuals and small and mid-sized businesses could lead to higher levels of past due loans, allowances for loan losses and charge-offs.
The further expansion of our loan portfolio (particularly in the consumer, small- and mid-sized companies and real estate segments) can be expected to expose us to a higher level of loan losses and require us to establish higher levels of provisions for loan losses. See “Note 8—Financial Assets at Amortized Cost” and “Note 6—Financial Assets At Fair Value Through Other Comprehensive Income” in our Audited Consolidated Financial Statements for a description and presentation of our loan portfolio as well as “Item 5. Operating and Financial Review and Prospects—C. Selected Statistical Information—Loan Portfolio.”
Retail customers represent 76.3% of the value of the total loan portfolio at amortized cost as of December 31, 2025. As part of our business strategy, we seek to increase lending and other services to retail clients, which are more likely to be adversely affected by downturns in the Chilean economy and other economic conditions, including high inflation. In addition, as of December 31, 2025, our residential mortgage loan portfolio totaled Ch$17,443,563 million, representing 42.6% of our total loans at amortized cost. See “Note 8—Financial Assets at Amortized Cost” in our Audited Consolidated Financial Statements for a description and presentation of our residential mortgage loan portfolio. If the economy and real estate market in Chile experience a significant downturn, this could materially adversely affect the liquidity, businesses and financial conditions of our customers, which may in turn cause us to experience higher levels of past-due loans, thereby resulting in higher provisions for loan losses and subsequent charge-offs. This may materially and adversely affect our asset quality, results of operations and financial condition.
Failure to successfully implement and continue to improve our risk management policies, procedures and methods, including our credit risk management systems, could materially and adversely affect us, and we may be exposed to unidentified or unanticipated risks.
Risk management is a central part of our activities. We seek to manage and control our risk exposure through forward-looking management model, based on robust governance and advanced risk management tools, supported by a risk culture that permeates the organization. While our management model uses a broad and diversified set of risk monitoring, control and mitigation techniques, such management model may not be fully effective at mitigating our risk exposure in all economic market environments or against all types of risk, including risks that we may fail to identify or anticipate.
Some of our tools and metrics for managing risk are based on our use of observed historical market behavior. We apply statistical and other tools to these observations to arrive at quantification of our risk exposures. These tools and metrics may fail to predict future risk exposures. These risk exposures could, for example, arise from factors we did not anticipate or correctly evaluate in our statistical models. This would limit our ability to manage our risks. Our losses thus could be significantly greater than the historical measures indicate. In addition, our statistical models may not take all risks into account or measure emerging risks correctly.
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Our approach to managing risks could prove insufficient, exposing us to material unanticipated losses. We could face adverse consequences as a result of decisions, which may lead to actions by management, based on models that are poorly developed, implemented or used, or as a result of the modelled outcome being misunderstood or the use of such information for purposes for which it was not designed or if the data and inputs of the models were incorrect or insufficient. If existing or potential customers or counterparties believe our risk management is inadequate, they could take their business elsewhere or seek to limit their transactions with us. Any of these factors could have a material adverse effect on our reputation, operating results, financial condition and prospects.
As a retail bank, one of the main types of risks inherent in our business is credit risk. For example, an important feature of our credit risk management system is to employ an internal credit rating to assess the particular risk profile of individual customers and SMEs. As this process involves detailed analyses of the customer, taking into account both quantitative and qualitative factors, it is subject to human or information technology systems errors. In exercising their judgment on our customers’ current or future credit risk behavior, our management models may not always be able to assign an accurate credit rating, which may result in a higher exposure to credit risks than indicated by our risk rating system.
Some of the models and other analytical and judgment-based estimations we use in managing risks are subject to review by, and require the approval of, our regulators. If models do not comply with all their expectations, our regulators may require us to make changes to such models, may approve them with additional capital requirements or we may be precluded from using them. Any of these possible situations could limit our ability to expand our businesses or have a material impact on our financial results.
Failure to effectively implement, consistently monitor or continuously improve our credit risk management system may result in an increase in the level of non-performing loans and a higher risk exposure for us, which could have a material adverse effect on us.
In addition, failure to successfully execute any of our decisions and actions affecting or changing our practices, operations, priorities, strategies, policies, procedures, or frameworks, could have a material adverse effect on us.
The effectiveness of our credit risk management is affected by the quality and scope of information available in Chile.
In assessing customers’ creditworthiness, we rely largely on the credit information available from our own internal databases, the FMC, the Directorio de Información Comercial (Dicom), a Chilean nationwide credit bureau, and other sources. In June 2024, the Chilean Congress passed a law creating a public consolidated debt registry (the “Redec,” pursuant to its Spanish acronym), which will be administered by the FMC and which begun operating in November 2025. The law establishing the Redec requires that entities that were not previously required to report outstanding loans to individuals to report such loans to the FMC, including entities such as servicers of endorsable mortgage loans, family allowance compensation funds, credit card issuers, securitization companies, credit advisory entities regulated by the Chilean Fintec Law, and any other entity supervised by the FMC, as determined by the FMC through a General Regulation. Individuals are explicitly recognized as the owners of their data in Redec and are guaranteed the right to access, update, rectify, and request the cancellation or deletion of their personal data, subject to applicable legal and regulatory limitations. Severe penalties have also been defined for negligent or malicious access or use of information in the Redec. Reporting entities must implement an information system compatible the Redec, which will entail higher costs for entities such as the Bank.
Due to limitations in the availability of information and the developing information infrastructure in Chile, our assessment of credit risk associated with a particular customer may not be based on complete, accurate or reliable information. In addition, although we have been improving our credit scoring systems to better assess borrowers’ credit risk profiles, we cannot assure you that our credit scoring systems will collect complete or accurate information reflecting the actual behavior of customers or that their credit risk can be assessed correctly. Without complete, accurate and reliable information, we will have to rely on other publicly available resources and our internal resources, which may not be effective. As a result, our ability to effectively manage our credit risk and subsequently our loan loss allowances may be materially adversely affected.
We rely on models for many of our decisions. Their inaccurate or incorrect use could have a material adverse effect on us.
We use models for admission (scoring and rating), and behavioral credit processes, for the definition of credit limits, for the calculation of capital, provisions, market and structural risk, operational, compliance and liquidity risk. A model is a system, approach or quantitative method that applies statistical, economic, financial or mathematical theories, techniques or
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hypotheses to transform input data into quantitative estimates and forecasts. It involves simplified representations of real-world relationships between characteristics, values and observed assumptions that allows us to focus on specific aspects.
Model risk is the negative consequence of decisions based on inaccurate, improper or incorrect use of models. Sources of model risk include (i) incorrect or incomplete data in the model itself or the modelling method used in systems; and (ii) incorrect use or implementation of the model.
Model risk can cause financial loss, erroneous commercial and strategic decision-making or damage to our transactions any of which could have a material adverse effect on our operating results, financial condition and prospects. In addition, our regulatory models and the underlying methodologies are subject to scrutiny from our regulators and supervisory bodies, who could identify potential weaknesses or deficiencies that may result in enforcement actions, including sanctions, fines and/or the imposition of stricter capital requirements, as well as mandates and recommendations with respect to the methodologies underlying our models, which could also lead us to more onerous or inefficient capital consumption.
Unprecedented movement in economic and market drivers related to external events requires monitoring and adjusting of financial models (including credit loss models, capital models, traded risk models and models used in the asset/liability management process) to comply with the guidance and recommendations of standard setters, regulators and supervisors, particularly for credit loss and provision models. It also results in the use of mitigants for model limitations, such as adjustments to model outputs to reflect consideration of management judgment. The performance and usage of models was and may continue to be impacted by the consequences of external events. In addition, data obtained during these external events may not be representative and may distort the calibration of the models in the future, which could have a material adverse effect on us.
In addition, the fair value of our financial assets, determined using financial valuation models, may be inaccurate or subject to change and, as a consequence, we may have to register impairments or write-downs that could have a material adverse effect on our operating results, financial condition and prospects. See more information in “—Market conditions have resulted and could result in material changes to the estimated fair values of our financial assets. Negative fair value adjustments could have a material adverse effect on our operating results, financial condition and prospects.”
Our loan and investment portfolios are subject to risk of prepayment, which could have a material adverse effect on us.
Our fixed rate loan and investment portfolios are subject to prepayment risk, which results from the ability of a borrower or issuer to pay a debt obligation prior to maturity. Generally, in a declining interest rate environment, prepayment activity increases, which reduces the weighted average lives of our earning assets and could have a material adverse effect on us. If short-term rates continue to fall in 2026, which could increase prepayment risk of our loan book could increase, which would also require us to amortize net premiums into income over a shorter period of time, thereby reducing the corresponding asset yield and net interest income. Prepayment risk also has a significant adverse impact on credit card and collateralized mortgage loans, since prepayments could shorten the weighted average life of these assets, which may result in a mismatch in our funding obligations and reinvestment at lower yields. Prepayment risk is inherent to our commercial activity and an increase in prepayments or a reduction in prepayment fees could have a material adverse effect on us. We cannot assure you that this change or any future regulatory changes related to prepayment fees will not have a material impact on our business.
If we are unable to manage the growth of our operations or to integrate successfully our inorganic growth, this could have an adverse impact on our profitability.
We allocate management and planning resources to develop strategic plans, priorities, policies and targets, including for organic growth, and to identify potential acquisitions, divestitures and areas for restructuring our businesses. The execution of these initiatives is subject not only to external factors but also to our own decisions, including those that alter or redefine our business practices, operational frameworks, strategic objectives, corporate priorities, internal policies, and procedural guidelines.
We cannot provide assurance that we will, in all cases, be able to deliver our strategic plans, priorities, policies and targets. Furthermore, in order to grow and remain competitive, we will need to adapt to changes to meet the demands and expectations of regulators, our clients, shareholders and other stakeholders, including in relation to matters of public policy, regardless of whether there is a legal requirement to do so. We cannot guarantee that we will be able to implement changes to any of our strategic plans, priorities, policies and targets, in a timely and appropriate manner, or that we will be able to
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accurately predict trends, initiatives and business practices of financial institutions. It is also possible that regulators, our clients, shareholders and other stakeholders might not be satisfied or even disagree with our strategic plans, priorities, policies and targets, or the speed of their adoption, implementation, evolution and consequences.
From time to time, we evaluate acquisition and partnership opportunities that we believe offer additional value to our shareholders and are consistent with our business strategy. However, we may not be able to identify suitable acquisition or partnership candidates, and our ability to benefit from any such acquisitions and partnerships will depend in part on our successful integration of those businesses. Any such integration entails significant risks such as unforeseen difficulties in integrating operations and systems, unexpected liabilities or contingencies relating to the acquired businesses, including legal claims and delivery and execution risks. We can give no assurances that our expectations with regards to integration and synergies will materialize. In addition, any acquisition or venture could result in inconsistencies in standards, controls, procedures and policies. Moreover, the success of any acquisition or venture will, at least in part, be subject to a number of political, economic and other factors that are beyond our control. Any of these factors, individually or collectively, could have a material adverse effect on us. The challenges that may arise from our decisions include:
•managing efficiently the operations and employees of expanding businesses;
•maintaining or growing our existing customer base;
•assessing the value, strengths and weaknesses of investment or acquisition candidates, including local regulation that can reduce or eliminate expected synergies;
•financing strategic investments or acquisitions;
•aligning our current information technology systems adequately with those of an enlarged group;
•applying our risk management policy effectively to an enlarged group;
•managing growing number of entities without over-committing management or losing key personnel
•meeting the expectations of regulators and our clients, shareholders and other stakeholders with respect to matters of public policy; and
•meeting the expectations of regulators and our clients, shareholders and other stakeholders.
Any failure to manage growth effectively, an inability to successfully adapt to changing conditions or to execute successfully any of our strategic actions, or any changes in our business practices, operational framework, strategic objectives, corporate priorities, internal policies and procedural guidelines could have a material adverse effect on our operating results, financial condition and prospects.
Any failure to improve or upgrade our information technology infrastructure and information management systems and networks in an effective, timely and cost-effective manner, including in response emerging technologies and to new or modified privacy, data protection and cybersecurity laws, rules and regulations could have a material adverse effect on us.
Our ability to remain competitive depends in part on our ability to improve or upgrade our information technology in an effective, timely and cost-effective manner. We must continually make significant investments in and improvements to our information technology infrastructure and information management systems and networks in order to meet the needs of our customers and to comply with evolving regulatory requirements, and operational and resilience expectations. While we expect to continue investing, there is no assurance we will achieve or sustain the level of capital expenditures necessary to support the continuous improvement and upgrading of our information technology infrastructure and information management systems and networks. There is also no assurance that our investment strategy will be successful. To the extent we are dependent on any particular technology or technological solution, we may face adverse consequences if such technology or technological solution becomes non-compliant with existing industry standards or applicable laws, rules or regulations, fails to meet or exceed the capabilities of our competitors’ equivalent technologies or technological solutions, becomes increasingly expensive to service, retain and update, becomes subject to third-party claims of intellectual property infringement, misappropriation or other violation, has security vulnerabilities or malfunctions or functions in a way we did not anticipate or are unable to rectify. Additionally, new technologies and technological solutions, such as AI, distributed ledger technology (DLT) and quantum computing, are continually being released. As such, it is difficult to predict the
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problems we may encounter in improving our technologies’ functionality. There is no assurance that we will be able to successfully adopt new technology as critical systems and applications become obsolete and better ones become available. Large scale programs to modernize technology, data and reporting — including compliance with evolving prudential reporting frameworks — are complex and time-consuming (often requiring many years to execute). Delays in execution, data-quality issues, or control weaknesses may lead to supervisory actions, fines, remediation costs or constraints on strategic initiatives.
DLT, including blockchain and related infrastructures, is increasingly being explored and adopted across financial markets and payment systems. While these technologies may offer greater efficiency, transparency and traceability, they also introduce specific technological and operational risks and challenges that may affect the integrity and resilience of financial systems. DLT relies on cryptographic consensus mechanisms, distributed governance and, in some cases, open-source protocols, all of which may be vulnerable to design flaws, governance disputes and security vulnerabilities. Limitations in scalability, latency and interoperability across networks may also hinder performance and reliability. Moreover, divergent regulatory approaches across jurisdictions and potential fragmentation of market infrastructures and compliance tools could amplify operational and compliance risks. A growing reliance on DLT-based platforms could disrupt traditional payment, custody and settlement processes, creating dependencies on new technological frameworks and third-party providers. Financial institutions that fail to adapt to such developments may face increased competitive and operational risks. As legacy systems migrate toward hybrid or fully distributed environments, we may encounter transitional, technological and integration challenges affecting system resilience, data integrity and cybersecurity. These factors, individually or in combination, could adversely affect our ability to deliver critical services without disruption, to comply with evolving regulatory and supervisory expectations, and to maintain secure and continuous operations.
Any failure to effectively improve or upgrade our information technology infrastructure and information management systems and networks, or to timely adapt to emerging technologies, evolving cybersecurity threats or changing regulatory standards, could have a material adverse effect on us.
Any failure or disruption of our operational processes or systems, or any cyberattack, data breach, data loss or other security incident affecting our systems or those of our third-party vendors could adversely affect our business, financial condition or reputation, and could result in significant legal or regulatory exposure.
Like other financial institutions, in conducting our banking operations, we receive, manage, hold, transmit and otherwise process certain proprietary, confidential, sensitive and personal data including personal data of customers and employees, as well as a large number of assets. Accordingly, our business relies on our ability to process a large number of transactions efficiently and accurately, and on our ability to rely on our digital technologies, computer and email services, software and networks, as well as on the secure storage, transmission, and other processing of proprietary confidential, sensitive and personal data and other information using our computer systems and networks or those of our third-party vendors, including cloud-based platforms and software-as-a-service (SaaS) solutions. Our operations must also comply with complex and evolving laws and regulations in the countries in which we operate. The proper and secure functioning of our financial controls, accounting and other data collection and processing systems is critical to our business and to our ability to compete effectively.
Cyberattacks, data breaches, data losses and other security incidents, including fraudulent withdrawal of money, can result from, among other things, inadequate personnel, inadequate or failed internal control processes and systems, or external events or actors that interrupt normal business operations and may include disruptions, failures, service outages, unauthorized access or misuse, software bugs, server malfunctions, software and hardware failure, defective software or hardware updates, malware and ransomware, social engineering and phishing attacks, denial-of-service attacks, misconduct, fraud, and other events that could have a serious impact on us.
We also face the risk that the design of our or our third-party vendors’ cybersecurity controls and procedures prove to be inadequate or are circumvented such that our data or client records are incomplete, not recoverable or not securely stored. Moreover, it is not always possible to deter or prevent employee errors or misconduct, and the precautions we take to detect and prevent this activity may not always be effective. Any material disruption or slowdown of our systems could cause information, including data related to customer requests, to be lost or to be delivered to our clients with delays or errors, which could reduce demand for our services and products, produce customer claims and materially and adversely affect us.
We prioritize early identification, monitoring and mitigation of risks (including those resulting from our interactions with third parties) in our goal to provide a resilient and secure operational environment. In this regard, although (i) we have policies, procedures and controls in place designed to safeguard proprietary, confidential, sensitive and personal data, (ii)
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we take protective technical measures and monitor and develop our systems and networks to protect our technology infrastructure, data and information from misappropriation or corruption, and (iii) we work with our clients, vendors, service providers, counterparties and other third parties to develop secure data and information processing, collection, authentication, management, usage, storage and transmission capabilities and to ensure the eventual destruction of proprietary, confidential, sensitive and personal data, we, our third-party vendors or other third parties with which we do business have been and may continue to be subject to cyberattacks, data breaches, data losses and other security incidents. For example, on May 14, 2024, Grupo Santander announced that it had learned of unauthorized access to a Santander database hosted by an external provider, which included certain customer and employee information pertaining to Chile, among other countries. Numerous measures were immediately implemented to manage the incident, such as blocking access to the database, reinforcing fraud prevention, taking preventive actions to avoid the recurrence of a similar incident and maintaining direct contact with regulatory bodies.
The implementation of our cybersecurity policies, procedures, controls and technical measures is designed to reduce the risk of such cyberattacks, data breaches, data losses and other security incidents but does not guarantee full protection or a risk-free environment. This is especially applicable in the current global environment, with the wars in Ukraine and the Middle East resulting in an increased risk of cyberattacks, data breaches, data losses and other security incidents and other disruptions in response to, or retaliation for, the sanctions and costs imposed on Russia and certain other countries directly or indirectly involved in the wars. Additionally, the shift to remote work policies for a significant portion of our workforce, as they access our secure systems and networks remotely, and our customers’ increased reliance on digital banking products and other digital services, including mobile payment products, has also increased the risk of cyberattacks, data breaches, data losses and other security incidents.
While we generally perform cybersecurity due diligence on our key vendors, because we do not control our vendors and our ability to monitor their cybersecurity is limited, we cannot ensure the cybersecurity measures they take will be sufficient to protect any information we share with them. Due to applicable laws and regulations or contractual obligations, we may be held responsible for cyberattacks, data breaches, data losses and other security incidents attributed to our vendors as they relate to the information we share with them.
In addition, we may also be impacted by cyberattacks against national critical infrastructures of Chile, such as telecommunications networks. Our information technology systems are dependent on such critical infrastructure and any cyberattack against such critical infrastructure could negatively affect our ability to service our customers. As we do not operate such critical infrastructure, we have limited ability to protect our information technology systems from the adverse effects of a cyberattack. For further information, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk—2. Non-financial risks—Cyber-security and data security plans.”
We have seen in recent years the information technology systems and networks of companies and organizations being increasingly targeted, and the techniques used to obtain unauthorized, improper or illegal access to such information technology systems and networks have become increasingly complex and sophisticated, including through the use of AI. Furthermore, such techniques change frequently and are often not recognized or detected until after they have been launched and can originate from a wide variety of sources, including organized crime, hackers, activists, terrorists, nation-states, nation state-supported actors and others, any of which may see their effectiveness enhanced by the use of AI. As attempted attacks continue to evolve in scope and sophistication, we may incur significant costs in order to modify, adapt or enhance our protective measures against such attacks, or to investigate or remediate any vulnerability or resulting breach, or in communicating cyberattacks, data breaches, data losses or other security incidents to our customers, affected individuals or regulators, as applicable.
If we cannot maintain effective and secure proprietary, confidential, sensitive and personal data, or if we or our third-party vendors fall victim to successful cyberattacks, penetrations, compromises, breaches or circumventions of our information technology systems or networks or experience other data breaches, data losses or other security incidents in the future, we may incur substantial costs and suffer other negative consequences, such as disruption to our operations, misappropriation of proprietary, confidential, sensitive or personal data, remediation costs (including liabilities for stolen assets or information, repairs of system damage, among others), increased cybersecurity protection costs, lost revenues arising from the unauthorized use of proprietary, confidential, sensitive or personal data or the failure to retain or attract our customers following an operational or security incident, litigation and legal risks (including claims from customers, employees or other third parties, regulatory action, reporting obligations, investigation, fines and penalties), increased insurance premiums, reputational damage affecting our customers’ and the investors’ confidence, as well as damages to our competitiveness, stock price and long-term shareholder value. In addition, our remediation efforts may not be successful, and we may not have adequate insurance to cover these losses. While we maintain insurance coverage, we cannot assure
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you that such coverage will be adequate or otherwise protect us from liabilities or damages with respect to claims alleging compromises of proprietary, confidential, sensitive or personal data or otherwise relating to privacy, data protection and cybersecurity matters. In addition, we cannot be sure that our existing insurance coverage will continue to be available on acceptable terms or at all, or that our insurers will not deny coverage to any future claim. Moreover, even when a failure of or interruption in our or our third-party vendors’ systems or facilities is resolved in a timely manner or an attempted cyberattack, data breach, data loss or other security incident is successfully avoided or thwarted, substantial resources and management attention are expended in doing so, and to successfully avoid or resolve any such incidents, we may be required to take actions that could adversely affect customer satisfaction or retention, as well as harm our reputation.
Any of the cyberattacks, data breaches, data losses and other security incidents described above could have a material adverse effect on our business, financial condition and results of operations.
Users and credit card issuers such as us also have obligations when a client’s cards and/or online payment or transfer user information are lost, stolen or fraudulently used (including through hacking and cloning). Cardholders are obligated to notify the bank through an easily accessible channel when their cards have been lost, stolen, or fraudulently used. For those transactions realized prior to the notice of loss or theft of a credit card, the cardholder must also notify the issuer of all of the unauthorized transactions in the same notice or up to five business days following the original notification. In cases of fraud, the user will not be responsible for the transactions that they did not authorize, and which were made prior to the fraud notification within the 30 calendar days following the issuance of said notice. In these cases, issuers are responsible for assuming these costs or must demonstrate that the transaction was in fact authorized by the owner or user of the credit card. The law also considers increasing fines and jail time for those committing theft or fraud with credit cards, which must be legally pursued by the card issuer.
In light of these developments, we are trying to limit the exposure of our clients to credit card fraud through education, insurance coverage, marketing campaigns, daily transfer amount limits, chip technology, improved ATM software, and other technological improvements, but we cannot assure that this law will not increase the financial costs related to cybercrime and credit card fraud.
We utilize artificial intelligence, which could expose us to liability or adversely affect our business.
We utilize, and continue to explore additional uses of AI in connection with our business, products and services, including AI designed to enhance transaction monitoring and sanctions screening, improve customer experience and reduce operational risk.
However, there are significant risks involved in utilizing AI and no assurance can be provided that our use will enhance our products or services or produce the intended results. For example, AI models may be flawed, trained on insufficient or poor-quality data, reflect unwanted forms of bias or contain other errors or inadequacies, any of which may not be easily detectable. AI solutions (including those supplied by third parties) may produce false, inaccurate, misleading, biased or otherwise deficient inferences or outputs, rely on data, technology or intellectual property to which we or any of our contractors, vendors or service providers lack rights, or be subject to new documentation, transparency, governance and validation expectations. Strengthening controls to address these risks—such as human oversight, testing and independent model validation—may increase costs and affect time-to-market, and any errors or inadequacies in AI systems used for control functions (such as transaction monitoring or sanctions screening) could lead to operational disruptions, compliance failures, regulatory scrutiny, reputational harm, fines or penalties. AI may subject us to new or heightened legal, regulatory, ethical, operational, reputational or other challenges; AI may involve inappropriate or controversial data practices by developers and end-users, or other factors adversely affecting public opinion of AI, any of which could impair the acceptance of AI solutions, including those incorporated into our products and services. We also depend on third-party models, datasets and infrastructure; outages, changes in functionality or terms, or concentration in a limited number of providers could disrupt our operations or increase costs.
If the AI solutions that we create or use are deficient, inaccurate or controversial, we could incur operational inefficiencies, competitive harm, legal liability, brand or reputational harm, or other adverse impacts on our business and financial results. There can be no assurance that our use of AI will be successful in reducing our operational risk or increasing our operational efficiencies or otherwise result in our intended outcomes.
Additionally, the use of AI solutions by companies has resulted in and may continue to result in, cyberattacks, data breaches, data losses and other security incidents that implicate the proprietary, confidential, sensitive and personal data of AI users. For example, if any of our employees, contractors, vendors, service providers or other third parties with which we
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do business use any third-party AI-powered solutions in connection with our business, it may lead to the inadvertent disclosure or incorporation of our proprietary, confidential, sensitive or personal data into third-party systems or publicly available or third-party training sets (including so-called 'data leakage') which may impact our ability to realize the benefit of our intellectual property or proprietary, confidential, sensitive or personal data, harming our competitive position and business. If we do not have sufficient rights to use the data or other material or content on which our AI solutions or other AI tools we use rely, we also may incur liability through the violation of applicable laws and regulations, third-party intellectual property, privacy or other rights, or contracts to which we are a party (including third-party claims of intellectual property infringement, misappropriation or other violation or other misuse of data, content or technology, regulatory enforcement actions and contractual remedies). Further, the use of AI solutions within products or services that we use or that are used by our contractors, vendors, service providers or other third parties with which we do business may pose similar risks, and we have limited ability to control the manner in which third-party products are developed or maintained or the manner in which third-party services are provided.
We rely on third parties and affiliates for important products and services.
Third party vendors and certain affiliated companies provide key components of our business infrastructure such as loan and deposit servicing systems, back office and business process support, information technology production and support, Internet connections and network access including cloud-based services and software-as-a-service (SaaS) solutions, as well as those of our service providers. Relying on these third parties and affiliated companies can be a source of operational and regulatory risk to us, including with respect to security breaches, service outages and other disruptions or failures affecting such parties. We are also subject to risk with respect to security breaches, service outages and other disruptions or failures affecting the vendors and other parties that interact with these service providers. As our interconnectivity with these third parties and affiliated companies increases, we increasingly face the risk of operational failure with respect to their systems. We may be required to take steps to protect the integrity of our operational systems, thereby increasing our operational costs and potentially decreasing customer satisfaction.
In addition, any problems caused by these third parties or affiliated companies, including as a result of them not providing us their services for any reason, or performing their services poorly, could adversely affect our ability to deliver products and services to customers and otherwise conduct our business, which could lead to reputational damage and regulatory investigations and intervention. Replacing these third-party vendors could also entail significant delays and expense. Further, the operational and regulatory risk we face as a result of these arrangements may be increased to the extent that we restructure such arrangements. Any restructuring could involve significant expense to us and entail significant delivery and execution risks, which could have a material adverse effect on our business, operations and financial condition.
Damage to our reputation could cause harm to our business prospects.
Maintaining a robust risk management framework based on sound ethical principles and corporate values is critical to protect our reputation and our brand, attract and retain customers, investors and employees and conduct business transactions with counterparties. Damage to our reputation could materially and adversely affect how we are perceived by current and potential clients, investors, vendors, partners, regulators and other third parties, which in turn could have a material adverse effect on our operating results, financial condition, and prospects as well as damage our customers’ and investors’ confidence and the market price of our securities. Harm to our reputation could arise from numerous sources, including, among others, employee misconduct (such as fraud or unethical behavior), litigation or regulatory enforcement, failure to deliver minimum standards of service and quality, negative perceptions regarding our ability to maintain the security of our technology systems and protect customer data (including as a result of a cyberattack, data breach, data loss or other security incident), dealing with sectors that are not well perceived by the public (such as weapons industries or embargoed countries), dealing with customers in sanctions lists, rating downgrades, significant variations in our share price over time, compliance failures, unethical behavior, actual or alleged improper conduct in areas such as lending, sales, marketing, corporate governance or culture, and the activities of customers and counterparties, including activities that negatively affect the environment. Our reputation could also suffer if we are the subject of negative coverage in the media, whether it has merit or not.
Actions by the financial services industry generally or by certain members of, or individuals in, the industry can also affect our reputation. For example, the role played by financial services firms in the financial crisis and the resulting shift toward increasing regulatory supervision and enforcement have led to a decline in public perception of us and others in the financial services industry to decline.
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Additionally, we could suffer significant reputational harm from negative perceptions regarding our approach to environmental, social and corporate governance policies. There has been increased focus by customers, shareholders, investor advocacy groups, employees, regulators and other stakeholders on these topics, and our policies, practices and disclosures in these areas could come under scrutiny. Governments may implement new or additional regulations and standards, or investors, customers and other stakeholders may impose new expectations or focus investments in ways that cause significant shifts in disclosure, consumption and behaviors that may have negative impacts on our business. If regulators or stakeholders consider our efforts ineffective, inadequate or unsatisfactory, whether real or perceived, it could harm our reputation, business and prospects and we could be subject to enforcement or other supervisory actions.
We could also suffer significant reputational harm if we fail to identify and manage potential conflicts of interest properly. The failure, or perceived failure, to adequately address conflicts of interest could affect the willingness of clients to deal with us or could result in litigation or enforcement actions against us which could have an adverse effect on our operating results, financial condition and prospects.
We may be the subject of misinformation and misrepresentations deliberately propagated to harm our reputation or for other deceitful purposes, including by short sellers seeking to profit by spreading false or misleading information about us. There can be no assurance that we will effectively neutralize and contain any false information that may be propagated regarding the business, which could have an adverse effect on our operating results, financial condition and prospects.
Financial Risks
Credit, market and liquidity risk may have an adverse effect on our credit ratings and our cost of funds. Any downgrade in Chile’s, our controlling shareholders or our credit rating would likely increase our cost of funding, require us to post additional collateral or take other actions under some of our derivative and other contracts and adversely affect our interest margins and results of operations.
Credit ratings affect the cost and other terms upon which we can obtain funding. Rating agencies regularly evaluate us, and their ratings of our debt are based on internal methodologies dependent on several factors, including our financial strength and conditions affecting the financial services industry. In addition, due to the methodology of the main rating agencies, our credit rating is affected by the rating of Chile’s sovereign debt. In 2025, Moody’s maintained its A2 credit rating and S&P maintained its A rating for the Republic of Chile. If Chile’s sovereign debt is downgraded, our credit rating would also likely be downgraded by an equivalent amount. In addition, our ratings may be adversely affected by any downgrade in the ratings of our parent company, Santander Spain.
Downgrades in our debt credit ratings have in the past, and would likely in the future, increase our borrowing costs and require us to post additional collateral or take other actions under some of our derivative and other contracts, and could limit our access to capital markets and adversely affect our commercial business. For example, a ratings downgrade could adversely affect our ability to sell or market some of our products, engage in certain longer-term and derivatives transactions and retain our customers, particularly customers who need a minimum rating threshold in order to invest. In addition, under the terms of certain of our derivative contracts and other financial commitments, we may be required to maintain a minimum credit rating or terminate such contracts or require the posting of collateral. Any of these results of a ratings downgrade could reduce our liquidity and have an adverse effect on us, including our operating results and financial condition.
While certain potential impacts of these downgrades are contractual and quantifiable, the full consequences of a credit rating downgrade are inherently uncertain, as they depend on numerous dynamic, complex and inter-related factors and assumptions, including market conditions at the time of any downgrade, whether any downgrade of our long-term credit rating precipitates downgrades to our short-term credit rating, and assumptions about the potential behaviors of various customers, investors and counterparties. Actual outflows could be higher or lower than the preceding hypothetical examples, depending upon certain factors including which credit rating agency downgrades our credit rating, any management or restructuring actions that could be taken to reduce cash outflows and the potential liquidity impact from loss of unsecured funding (such as from money market funds) or loss of secured funding capacity. Although unsecured and secured funding stresses are included in our stress testing scenarios and a portion of our total liquid assets is held against these risks, a credit rating downgrade could still have a material adverse effect on us.
In addition, if we were required to cancel our derivatives contracts with certain counterparties and were unable to replace such contracts, our market risk profile could be altered.
There can be no assurance that the rating agencies will maintain the current ratings or outlooks. In general, the future evolution of our ratings will be linked, to a large extent, to the impact of the general global macroeconomic outlook
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(including as a result of the continuance or escalation of the war in Ukraine and the uncertainties following the ceasefire agreement in the Middle East, the local macroeconomic outlook, the evolution of Chile’s political environment, especially in relation to potential projects to amend Chile’s constitution, the Chilean government’s fiscal policy and the outlook of our asset quality, profitability and capital. Failure to maintain favorable ratings and outlooks could increase our cost of funding and adversely affect interest margins, which could have a material adverse effect on us.
Market conditions have resulted and could result in material changes to the estimated fair values of our financial assets. Negative fair value adjustments could have a material adverse effect on our operating results, financial condition and prospects.
In the past, financial markets have been subject to significant stress resulting in steep falls in perceived or actual financial asset values, particularly due to volatility in global financial markets and the resulting widening of credit spreads, including as a result of local political issues, a higher interest rate environment and the wars in Ukraine and the Middle East. We hold significant exposures to securities, loans and other investments recorded at fair value which exposes us to potential negative fair value adjustments. Asset valuations in future periods, reflecting then-prevailing market conditions, may result in negative changes in the fair values of our financial assets and these may also translate into increased impairments including as a result of more stringent regulatory or reputational requirements. In addition, the value ultimately realized by us on disposal may be lower than the current fair value. Any of these factors could require us to record negative fair value adjustments, which may have a material adverse effect on our operating results, financial condition or prospects. As of December 31, 2025, the value of our debt instruments at fair value through other comprehensive income includes an unrealized net loss of Ch$77,905 million recognized as “Valuation accounts” in equity.
In addition, to the extent that fair values are determined using financial valuation models, such values may be inaccurate or subject to change, as the data used by such models may not be available or may become unavailable due to changes in market conditions, particularly for illiquid assets, and particularly in times of economic instability.In such circumstances, our valuation methodologies require us to make assumptions, judgments and estimates in order to establish fair value. Reliable assumptions are difficult to make and are inherently uncertain while valuation models are inherently complex and imperfect predictors of actual results. Any consequential impairments or write-downs could have a material adverse effect on our operating results, financial condition and prospects.
The value of the collateral securing our loans may decline and not be sufficient, and we may be unable to realize the full value of the collateral securing our loan portfolio.
The value of the collateral securing our loan portfolio may fluctuate or decline due to factors beyond our control, including macroeconomic or political factors affecting Chile’s economy, the continuance or escalation of the war in Ukraine and the uncertainties following the ceasefire agreement in the Middle East. The value of the collateral securing our loan portfolio may be adversely affected by force majeure events, such as natural disasters (including as a result of climate change), particularly in locations where a significant portion of our loan portfolio is composed of real estate loans. Natural disasters such as earthquakes and floods may cause widespread damage, which could impair the asset quality of our loan portfolio and could have an adverse impact on Chile’s economy. The real estate market is particularly vulnerable in the current economic climate and this may affect us, as real estate represents a significant portion of the collateral securing our residential mortgage loan portfolio. We may also lack sufficiently recent information on collateral values, which may result in an inaccurate assessment for impairment losses of our loans secured by such collateral. If any of the above were to occur, we may need to make additional provisions to cover actual impairment losses, which could materially and adversely affect our results of operations and financial condition.
Technological changes in the auto industry, accelerated by environmental regulations, could affect our auto consumer business in Chile, particularly residual values of leased vehicles. This transformation could impact our auto finance business as a result of (i) the transition from fuel to electric engines, environmental aspects related to emissions and transition risks derived from political and regulatory decisions (e.g., traffic restrictions in city centers for certain cars based on emissions criteria); (ii) growing customer preferences for car leasing, subscription, car sharing and other services instead of vehicle ownership; (iii) increased market concentration in certain manufacturers, distributors and other agents; and (iv) the expansion of online sales channels.
In addition, the auto industry could face supply chain disruption and shortages of batteries, semi-conductors and other components linked to geopolitical tensions, conflicts and macroeconomic uncertainty, affecting guarantees, residual used car value and loan delinquencies. Although we monitor the auto portfolios and dealers and we have launched specific action plans to address particular issues, these structural changes and disruptions could have a material adverse effect on our operating results, financial condition and prospects.
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As of December 31, 2025, 69.0% of our loans and advances to customers at amortized cost are collateralized, which includes 8.8% of our consumer loans, 98.4% of our mortgage loans and 58.6% of our commercial loans.
The credit quality of our loan portfolio may deteriorate, and our loan loss reserves could be insufficient to cover our loan losses, which could have a material adverse effect on us.
Risks arising from changes in credit quality and the recoverability of loans and amounts due from counterparties are inherent to a wide range of our businesses. Non-performing or low credit quality loans have in the past negatively impacted our results of operations and could do so in the future. In particular, the amount of our reported credit impaired loans may increase in the future as a result of growth in our total loan portfolio, including as a result of loan portfolios that we may acquire in the future (the credit quality of which may turn out to be worse than we had anticipated), or factors beyond our control, such as adverse changes in the credit quality of our borrowers and counterparties or a general deterioration in economic conditions in Chile or in global economic and political conditions, including as a result of inflationary pressures, supply chain issues, labor shortages and increases in commodity prices (including as a result of increased tariffs or the continuance or escalation of the war in Ukraine and the uncertainties following the ceasefire agreement in the Middle East). In certain markets, the combined pressure of economic downturn, high inflation and high interest rates may impact the ability of our customers to repay their debt. If we are unable to control the level of our credit impaired or poor credit quality loans, this could have a material adverse effect on us.
As of December 31, 2025, our non-performing loans were Ch$1,332,660 million, and the ratio of our non-performing loans to total loans at amortized cost was 3.26% compared to 3.17% as of December 31, 2024. The increase in this ratio was mainly due to increased risk in consumer and residential mortgage loans offset by a decline in the non-performing commercial loan ratio, which was mainly due to initiatives undertaken in 2025 to improve the asset quality of the commercial portfolio, including write-offs, after a deterioration in commercial loans in 2024, mainly concentrated in the real estate and agricultural sectors, after the high interest rate environment of previous years and climate-related events that affected the agricultural sector in Chile. In consumer and mortgage loans, the increase in credit risk is mainly due to the persistently high level of unemployment in the economy. As of December 31, 2025, our allowance for expected credit losses for loans classified as financial assets at amortized costs was Ch$1,222,458 million, and the ratio of these allowances for expected loan losses to total loans at amortized cost was 2.99%. For additional information on our asset quality, see “Item 5. Operating and Financial Review and Prospects—C. Selected Statistical Information—Analysis and Classification of Loan Portfolio Based on the Borrower’s Payment Performance.”
Our loan loss reserves are based on our current assessment of and expectations concerning various factors affecting the quality of our loan portfolio. These factors include, among other things, our borrowers’ financial condition, repayment abilities and repayment intentions, the realizable value of any collateral, the prospects for support from any guarantor, Chile’s economy, government macroeconomic policies, interest rates and the legal and regulatory environment. Because many of these factors are beyond our control and there is no infallible method for predicting loan and credit losses, we cannot assure you that our current or future loan loss and reserves will be sufficient to cover actual losses. If our assessment of and expectations concerning the above-mentioned factors differ from actual developments, if the quality of our total loan portfolio deteriorates, for any reason, or if the future actual losses exceed our estimates of expected losses, we may be required to increase our loan loss reserves, which may adversely affect us. Additionally, in calculating our loan loss reserves, we employ qualitative and quantitative criteria and statistical models which may not be reliable in all circumstances and which are dependent upon data that may not be complete.
Our financial results are constantly exposed to market risk. We are subject to fluctuations in interest rates and other market variables, which may materially and adversely affect us and our profitability.
Our financial results are constantly exposed to market risk. Economic activities exposed to market risk include (i) transactions where risk is assumed as a consequence of potential changes in interest rates, inflation rates, exchange rates, stock prices, credit spreads, commodity prices, volatility and other market factors; (ii) the liquidity risk from our products and markets; and (iii) balance sheet-related liquidity risk.
Interest rate risk arises from movements in interest rates that reduce the value of a financial instrument, a portfolio or the Bank. It can affect loans, deposits, debt securities, most assets and liabilities held for trading, and derivatives.
Interest rates are sensitive to many factors beyond our control, including monetary policies, regulatory actions affecting the financial sector and domestic and international economic and political conditions. Variations in interest rates could affect the interest earned on our assets and the interest paid on our borrowings, thereby affecting our interest income / (charges), which constitutes the majority of our revenue, and could reduce our growth rate or result in losses. In addition,
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costs we incur as we implement strategies to reduce interest rate exposure could increase in the future, which could in turn affect our results.
A low-interest rate environment, such as that experienced in Chile in 2020 and 2021, could result in rates on our interest earning assets being priced at continuously lower rates but as interest bearing time deposits in Chile are not allowed to offer rates below zero, this limits our ability to reduce time deposit rates, thereby, potentially negatively impacting our margins and our results of operations.
Throughout 2022 and 2023, central banks globally, including the Central Bank of Chile, considerably increased interest rates to contain inflation. From 2023 onwards, inflation gradually converged towards central bank's objectives, enabling interest rate cuts in the second half of 2024 and throughout 2025.
Increases in interest rates may reduce the volume of loans we originate. Sustained high interest rates have historically discouraged customers from borrowing and have resulted in increased in delinquencies in outstanding loans and deterioration in the quality of assets. Increases in interest rates may reduce the value of our financial assets and may reduce gains or require us to record losses on sales of our loans or securities. Additionally, a flattening or inversion of the yield curve, combined with persistent inflationary pressures, could adversely affect our business and results of operations.
High levels of inflation in Chile could adversely affect the Chilean economy and our business, financial condition and results of operations (“—Inflation, government efforts to control inflation, and changes in interest rates may hinder the growth of the Chilean economy and could have an adverse effect on us.”). Any change in the methodology of how the CPI index or the UF are calculated could also adversely affect our business, financial condition and results of operations. Extended periods of deflation could also have an adverse effect on our business, financial condition and results of operations. The UF is revalued in monthly cycles. On each day in the period beginning on the tenth day of any given month through the ninth day of the succeeding month, the nominal peso value of the UF is indexed up (or down in the event of deflation) in order to reflect a proportionate amount of the change in the Chilean Consumer Price Index during the prior calendar month. For more information regarding the UF, see “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Impact of Inflation.” Although we benefit from inflation in Chile due to the current structure of our assets and liabilities (i.e., a significant portion of our loans are indexed to the inflation rate, but there are no corresponding features in deposits, or other funding sources that would increase the size of our funding base), there can be no assurance that our business, financial condition and result of operations in the future will not be adversely affected by changing levels of inflation, including from extended periods of inflation that adversely affect economic growth or periods of deflation. “See Item 11. Quantitative and Qualitative Disclosure About Market Risks—Market Risk: Quantitative Disclosure—Impact of Inflation.”
We are also exposed to foreign exchange rate risk as a result of mismatches between assets and liabilities denominated in different currencies. Fluctuations in the exchange rate between currencies may negatively affect our earnings and value of our assets and securities. Therefore, while the Bank seeks to avoid significant mismatches between assets and liabilities due to foreign currency exposure, from time to time, we may have mismatches. The Chilean peso has been subject to large devaluations and appreciations in the past and could be subject to significant fluctuations in the future. Our results of operations may be affected by fluctuations in the exchange rates between the peso and the dollar despite our policy and Chilean regulations relating to the general avoidance of material exchange rate exposure. In order to avoid material exchange rate exposure, we enter into forward exchange transactions. We may decide to change our policy regarding exchange rate exposure. Regulations that limit such exposures may also be amended or eliminated. Greater exchange rate risk will increase our exposure to the devaluation of the peso, and any such devaluation may impair our capacity to service foreign currency obligations and may, therefore, materially and adversely affect our financial condition and results of operations. Notwithstanding the existence of general policies and regulations that limit material exchange rate exposures, the economic policies of the Chilean government, new foreign currency regulations by the Central Bank and any future fluctuations of the peso against the dollar could affect our financial condition and results of operations. “See Item 11. Quantitative and Qualitative Disclosure About Market Risks—Market Risk: Quantitative Disclosure—Foreign exchange fluctuations.”
Global events (such as the continuance or escalation of the war in Ukraine and the uncertainties following the ceasefire agreement in the Middle East) and the recent imposition and threat of tariffs by the elected U.S. government have caused
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and could continue to cause high market volatility, which could materially and adversely affect us and our trading and banking book.
Equity risk is the possibility of loss from open positions in securities if their market price or expected future dividends fall. It affects shares, stock market indices, convertible bonds and derivatives with shares as the underlying asset (put, call, equity swaps, etc.).
The performance of financial markets may cause changes in the value of our investment and trading portfolios. Prolonged volatility in global equity and fixed-income markets—driven by geopolitical uncertainty, monetary tightening cycles, and investor risk aversion—has had a significant impact on the financial sector. Continued volatility may affect the value of our investments in equity securities and, depending on their fair value and future recovery expectations, could result in a permanent impairment requiring write-offs against our results.
Other market risks include inflation rate risk, credit spread risk, commodity price risk and volatility risk.
Additionally, we are also exposed to more complex market risks such as correlation risk, market liquidity risk, prepayment or cancellation risk and subscription risk. In addition, balance sheet liquidity risk (unlike market liquidity risk) is the possibility of loss caused by forced disposal of assets or cash flow imbalance if the bank meets its payment obligations late or at excessive cost. Such situations may cause losses through forced asset sales or margin compression resulting from mismatches between expected inflows and outflows.
Market risk affects (i) our interest income / (charges); (ii) the market value of our assets and liabilities, in particular of our securities holdings, loans and deposits and derivatives transactions; and (iii) other areas of our business such as the volume of loans originated or credit spreads.
Market risk could also include unforeseen risks arising during periods of market disruption or when market prices do not reflect fundamental values.
If any of these risks were to materialize, our operating results or the market value of our assets and liabilities could suffer a material adverse impact.
We are subject to market, operational and other related risks associated with our derivative transactions that could have a material adverse effect on us.
We enter into derivative transactions for trading purposes as well as for hedging purposes. We are subject to market, credit and operational risks associated with these transactions, including basis risk (the risk of loss associated with variations in the spread between the asset yield and the funding and/or hedge cost) and credit or default risk (the risk of insolvency or other inability of the counterparty to a particular transaction to perform its obligations thereunder, including providing sufficient collateral).
Market practices and documentation for derivative transactions in Chile may differ from those in other countries. For example, documentation may not incorporate terms and conditions of derivatives transactions as commonly understood in other countries. In addition, the execution and performance of these transactions depend on our ability to maintain adequate control and administration systems. Moreover, our ability to adequately monitor, analyze and report derivative transactions continues to depend, largely, on our information technology systems. Any deficiencies in these controls or systems could heighten the risks associated with derivative transactions and could have a material adverse effect on us.
The use of derivative instruments may also give rise to other risks, including valuation risk, model risk and market liquidity risk, particularly during periods of volatility or market stress. In such circumstances, the fair value of derivative positions may fluctuate significantly, affecting our results and regulatory capital.
As of December 31, 2025, the fair value of the trading derivatives in our assets amounted to Ch$10,879,777 million with a notional value of Ch$306,629,511 million. Additionally, as of December 31, 2025, the fair value of trading derivatives in our liabilities totaled Ch$10,587,308 million with a notional value of Ch$288,862,589 million.
As of December 31, 2025, the nominal value of the hedging derivatives in our books held within our financial risk management strategy and designed to reduce asymmetries in the accounting treatment of our operations amounted to Ch$27,741,554 million (with market value of Ch$261,192 million in assets and Ch$912,716 million in liabilities).
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We are subject to counterparty risk in our banking business.
We are exposed to counterparty risk in addition to credit risks associated with lending activities. Counterparty risk may arise from, for example, investing in securities of third parties, entering into derivative contracts under which counterparties have obligations to make payments to us or executing securities, futures, currency or commodity trades from proprietary trading activities that fail to settle at the required time due to non-delivery by the counterparty or systems failure by clearing agents, clearing houses or other financial intermediaries.
We routinely transact with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual funds, hedge funds and other institutional clients. Defaults by, and even rumors or questions about the solvency of, certain financial institutions and the financial services industry generally have led to market-wide liquidity problems and could lead to losses or defaults by other institutions. Many of the routine transactions we enter into expose us to significant credit risk in the event of default by one of our major counterparties.
Liquidity and funding risks are inherent in our business and could have a material adverse effect on us.
Liquidity risk is the risk that we either do not have sufficient financial resources available to meet our obligations as they are due, or we can only secure them at excessive cost. This risk is inherent in any banking business and can be heightened by a number of enterprise-specific factors, including over-reliance on a particular source of funding, changes in credit ratings or market-wide phenomena such as market dislocation, including as a result of the continuance or escalation of the war in Ukraine and the uncertainties following the ceasefire agreement in the Middle East.While we have in place liquidity management processes to mitigate and control these risks, systemic market factors make it difficult to eliminate these risks completely. Constraints in the supply of liquidity, including in inter-bank lending, could materially and adversely affect the cost of funding of our business, and extreme liquidity constraints may affect our current operations and our ability to fulfill regulatory liquidity requirements, as well as limit growth possibilities.
Our cost of obtaining funding is directly related to prevailing interest rates and to our credit spreads. The high interest rate environment currently prevalent in Chile and globally significantly increased the cost of our funding. Variations in credit spreads are market-driven and may be influenced by perceptions of our creditworthiness and general market conditions.Changes to interest rates and our credit spreads may occur frequently and could be unpredictable and highly volatile.
We rely, and will continue to rely, primarily on retail deposits to fund lending activities. The ongoing availability of this type of funding is directly related to our solvency and to the success of our policies, and it is also sensitive to a variety of factors beyond our control, such as general economic conditions and the confidence of retail depositors in the economy and in the financial services industry, and the availability and extent of deposit guarantees, as well as competition for deposits with other banks or with other products, such as mutual funds. Any of these factors could increase the amount of retail deposit withdrawals in a short period of time, thereby reducing our ability to access retail deposit funding on appropriate terms, or at all, in the future. If these circumstances were to arise, this could have a material adverse effect on our operating results, financial condition and prospects.
We anticipate that our customers will continue, in the near future, to make short-term deposits (particularly demand deposits and short-term time deposits), and we intend to maintain our emphasis on the use of banking deposits as a source of funds. As of December 31, 2025, 98.5% of our customer deposits had remaining maturities of one year or less or were payable on demand. A significant portion of our assets have longer maturities, resulting in a mismatch between the maturities of liabilities and the maturities of assets. Historically, one of our principal sources of funds has been time deposits. Time deposits represented 24.2% and 25.0% of our total liabilities and equity as of December 31, 2025 and 2024, respectively. The Chilean time deposit market is concentrated given the importance in size of various large institutional investors such as pension funds and corporations relative to the total size of the economy. As of December 31, 2025, the Bank’s top 20 time deposits represented 20.0% of total time deposits, or 4.8% of total liabilities and equity. No assurance can be given that future economic instability in the Chilean market will not negatively affect our ability to continue funding our business or to maintain our current levels of funding without incurring increased funding costs, a reduction in the term of funding instruments or the liquidation of certain assets. If this were to happen, we could be materially adversely affected.
The short-term nature of this funding source could cause liquidity problems for us in the future if deposits are not made in the volumes we expect or are not renewed. If a substantial number of our depositors withdraw their demand deposits or do not roll over their time deposits upon maturity, we may be materially and adversely affected. Additionally, our activities could be adversely impacted by liquidity tensions arising from generalized drawdown of committed credit lines to our customers.
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We cannot assure that in the event of a sudden or unexpected shortage of funds in the banking system, we will be able to maintain levels of funding without incurring high funding costs, a reduction in the term of funding instruments or the liquidation of certain assets. If this were to happen, we could be materially adversely affected.
Changes to the pension fund system may affect our liquidity levels and/or funding costs
The current pension fund system dates back to the 1980s, when pensions were converted from a state-funded system to a privately-funded system. Before 2025, employees were required by law to set aside 10% of their wages in a private pension fund. The demographics of Chilean society have changed in recent decades, led the government to enact a general reform of the system in January 2025 pursuant to Law No. 15480-13. In addition to the 10% of wages set aside by employees, employers are now required to contribute 7% of their employees’ taxable income. This contribution will be phased in over a period of 9 years, in addition to the existing 1.5% employer contribution to the Disability and Survivors Insurance (“SIS”). This reform brings the total employer contribution to 8.5% of an employee's salary.
Between 2020 and 2021, in the context of the COVID-19 pandemic, Chilean Congress enacted several laws which allowed Chileans to withdraw certain pre-established amounts from their pension funds without any penalties, which resulted in approximately U.S.$49 billion of liquidity being withdrawn from pension funds and injected into the Chilean economy. Withdrawals had an immediate impact on local fixed income capital markets and inflation. In 2025, there were no additional pension fund withdrawals approved but no assurances can be made as to whether there will be additional withdrawals in the future or whether the withdrawals will have a material adverse effect on our financial condition, liquidity levels, and our ability to obtain funding from the AFPs.
Chilean regulations also impose a series of restrictions on how Chilean pension fund administrators (Administradora de Fondos de Pensión, or “AFPs”) may allocate their assets. In the particular case of financial issuers’ there are three restrictions, each involving different assets and different limits determined by the amount of assets in each fund and the market and book value of the issuer’s equity. Overall, AFPs cannot invest more than 6.5% of the total funds managed in a single Chilean bank issuer. As of September 30, 2025, the most recent date for which information is available, the Chilean pension fund administrators (Administradora de Fondos de Pensión, or “AFPs”) had U.S.$$3.54 billion invested in the Bank via equity, deposits and fixed income securities. According to our estimates, as of September 2025, the AFPs still had the possibility of being able to invest another U.S.$10.9 billion in the Bank via equity, deposits and fixed income. As a result, any changes in the pension system, including any changes in the way the system invests in Chilean assets, could affect our liquidity levels and/or funding costs. If the exposure of any AFP to Santander-Chile exceeds the regulatory limits, if the regulatory limits are reduced or the amount of funds available in the pension funds falls significantly, we would need to seek alternative sources of funding, which could be more expensive and, as a consequence, may have a material adverse effect on our financial condition and results of operations.
Legal and Regulatory Risks
We are subject to regulatory capital requirements that could limit our operations, and changes to these requirements may further limit and adversely affect our operating results, financial condition and prospects.
On October 9, 2020, the FMC published the regulations on regulatory capital to comply with effective net worth rules in accordance with Basel III and the General Banking Law. The new regulation became effective on December 1, 2021 and was gradually implemented to be fully effective by December 1, 2025. For further details of capital requirements, please see “Item 4 Information on the Company—B. Business Overview-Regulation and Supervision—Minimum Capital.”
The General Banking Law also incorporates Pillar II capital requirements to ensure adequate risk management,which are currently still being updated and phased-in. This pillar’s objective is to ensure that banks maintain capital levels consistent with their risk profile and business model and encourage the development and use of appropriate processes to monitor and manage their risks. Pillar II also granted regulators the power to impose greater capital requirements because of deficient evaluations of a bank’s internal capital adequacy assessment process (ICAAP), which should consider a bank’s risk profile and a strategy to sustain adequate levels of capital, even under stress scenarios. The FMC, with at least four votes from the Council of the FMC, will have the power to impose additional regulatory capital demands of up to 4% of risk-weighted assets, either Tier I or Tier II, if it determines that the previous capital levels and buffers are not enough for a particular financial institution. On April 11, 2025, the FMC set a 0.25% Pillar II requirement was for the Bank. 50% of this Pilar 2 capital requirement (0.125% of risk weighted assets) was constituted by June 30, 2025 as mandated by the FMC. On January 16, 2026 and following the completion of the FMC's annual supervisory process, the FMC determined that the 0.125% Pilar II requirement for Santander Chile was sufficient. Every year the FMC will perform an annual capital
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adequacy assessments analysis as part of its supervisory process, which could result in a higher Pilar II capital requirement and, therefore, we cannot rule out having to raise additional capital in the future in order to maintain our capital adequacy ratios above the minimum required by the FMC.
On December 12, 2023, the FMC published for public comment a proposal to amend the regulations addressing the framework for the Internal Capital Adequacy Assessment Process (“ICAAP”) carried out by banks, the measurement of the Interest Rate Risk in the Banking Book (“IRRBB”) and the definition of outlier banks, among other topics. On July 8, 2025, the FMC published Circular No. 2,365 containing the final amendments to this regulation, including: (i) the possibility to impose capital requirements for the full amount of the IRRBB, based on either short-term or long-term exposures, (ii) establishment of a revised framework to determine outlier banks by maintaining the 15% threshold of the Tier 1 Capital based on the variation in the economic value of equity (ΔEVE) while adding new thresholds for sensitivity of Net Interest Income (“ΔNII”) amounting to 5% of Tier 1 Capital and 18% of 12-month rolling Net Interest Income, conditions that, if individually met, will determine an outlier bank, (iii) introduction of certain technical modifications to the standardized model for computing interest rate risk in the banking book (ΔEVE and ΔNII) by allowing the netting for local currencies (CLP and UF) while differentiating interest rate shocks for short- and long -term risk for inflation linked positions (UF), (iv) the allowance for banks to use internal models in order to determine potential internal capital buffers associated with IRRBB, (v) the introduction of parameters on the framework the banks should follow in order to assess their risk profile and measure material risks, (vi) the incorporation of new guidelines for banks regarding the definition of internal capital targets by adopting the Pillar II Requirement and Pillar II Guidance concepts, and (vii) the establishment of new disclosure requirements for Pillar II requirements. According to the schedule provided by the FMC, except for the new computation guidelines for IRRBB through ΔEVE and ΔNII, most of the changes will be in place for the 2026 ICAAP, to be delivered to the FMC in April 2027. Given the changes in the measurement of ΔEVE and ΔNII metrics, the definition of new thresholds for determining outlier banks and the revision made to the supervisory framework, we cannot rule out the imposition of further capital requirements to the Chilean banking industry in the future, including us. Therefore, we cannot guarantee that our profitability will not be impacted by actions we may be required to take in order to fulfill new regulatory capital requirements which may be established by the FMC in the future.
We believe our current capital levels are adequate, but we cannot rule out having to raise additional capital in the future in order to maintain our capital adequacy ratios above the minimum required by the FMC. Our ability to raise additional capital may be limited by numerous factors, including: our future financial condition, results of operations and cash flows; any necessary government regulatory approvals; our credit ratings; general market conditions for capital raising activities by commercial banks and other financial institutions; and domestic and international economic, political and other conditions. If we require additional capital in the future, we cannot assure you that we will be able to obtain such capital on favorable terms, in a timely manner or at all. Furthermore, the FMC may increase the minimum capital adequacy requirements applicable to us. Accordingly, although we currently meet the applicable capital adequacy requirements, we may face difficulties in meeting these requirements in the future. If we fail to meet the capital adequacy requirements, we may be required to take corrective actions. These measures could materially and adversely affect our business reputation, financial condition and results of operations. In addition, if we are unable to raise enough capital in a timely manner, the growth of our loan portfolio and other risk-weighted assets may be restricted, and we may face significant challenges in implementing our business strategy. As a result, our prospects, results of operations and financial condition could be materially and adversely affected. For further details of capital requirements, please see “Item 4 Information on the Company—B. Business Overview-Regulation and Supervision—Minimum Capital.”
We are subject to liquidity requirements that could limit our operations, and changes to these requirements may further limit and adversely affect our operating results, financial condition and prospects.
The FMC and the Central Bank require Chilean banks to maintain liquidity levels that are in line with those established in Basel III. The most important liquidity ratios are:
•Liquidity coverage ratio (LCR), which measures the percentage of liquid assets over net cash outflows. The new guidelines also define liquid assets and the formulas for calculating net cash outflows.
•Net Stable Funding Ratio (NSFR) which will measure a bank’s available stable funding relative to its required stable funding. Both concepts are also defined in the new regulations.
The implementation of internationally accepted liquidity ratios might require changes in business practices that affect our profitability. The LCR is a liquidity standard that measures if banks have enough high-quality liquid assets to cover expected net cash outflows over a 30-day liquidity stress period. The net stable funding ratio (NSFR) provides a sustainable maturity structure of assets and liabilities such that banks maintain a stable funding profile in relation to their activities. As
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of December 31, 2025 our LCR and NSFR were 188% and 115%, respectively. While we are in compliance of regulatory requirements, no assurance can be made as to whether we will remain in compliance in the future. Moreover, there can be no assurance that the application of the existing regulatory requirements, standards or recommendations will not require us to issue additional securities that qualify as own funds or eligible liabilities, to maintain a greater proportion of its assets in highly-liquid but lower-yielding financial instruments, to liquidate assets, to curtail business or to take any other actions, any of which may have a material adverse effect on the our business, results of operations and/or financial position.
We are subject to extensive regulation and regulatory and governmental oversight which could adversely affect our business, operations and financial condition.
As a financial institution, we are subject to extensive regulation, inspections, examinations, inquiries, audits and other regulatory requirements by Chilean regulatory authorities, which materially affect our businesses. The FMC oversees and regulates the Chilean financial market, which is comprised of publicly traded companies, insurance companies, insurance brokers, mutual funds, fintech companies and investment funds as well as the Chilean banking industry as a whole and some non-bank lenders. In addition to being subject to regulation by the FMC, in certain matters, we are also subject to regulations issued by the Central Bank. We cannot assure you that we will be able to meet all of the applicable regulatory requirements and guidelines, or that we will not be subject to sanctions, fines, restrictions on our business or other penalties in the future as a result of noncompliance. If sanctions, fines, restrictions on our business, higher capital requirements or other penalties are imposed on us for failure to comply with applicable requirements, guidelines or regulations, our business, financial condition, results of operations and our reputation and ability to engage in business may be materially and adversely affected.
Pursuant to the Chilean General Banking Act (Ley General de Bancos) Chilean banks may, subject to the approval of the FMC, engage in certain non-banking businesses approved by the law. The FMC’s approval will depend on the risk associated with the activity and the bank’s financial strength.
In August 2021, Law No. 21,365 was enacted, regulating interchange fees in the credit card payment market in Chile. An autonomous and technical committee was formed to determine the interchange fee limits, conformed by 4 members designated by the Central Bank, the FMC, the National Economic Prosecutor (Fiscalía Nacional Económica) and the Ministry of Finance. Interchange fee limits will be determined every three years. In February 2023, the Committee for the Setting of Interchange Fee Caps proposed new interchange rate caps for credit and debit cards, reducing fees which banks may charge on acquirers. Implementation of the second phase of this change is currently on hold. If resumed, we expect that this reduction will have a significant impact on our revenue from card fees and is estimated to have an negative impact of approximately Ch$22 billion in the twelve month period starting from when the change is implemented. (see “Item 3. Key Information—D. Risk Factors—Risks in Respect of Santander-Chile—We may generate lower revenues from fee and commission-based businesses.”)
In addition, on January 28, 2025, the Chilean government submitted a bill aimed at mitigating the impact of high
interest rates on mortgage loans by reducing these rates, benefitting buyers by lowering their monthly payments. This bill
also proposes the implementation of a state subsidy designed to facilitate home purchases for middle-income families and
reactivate the construction and real estate sectors. The benefit consists of a subsidy of up to 60 basis points on the interest
rate for mortgage loans and applies to homes valued at no more than UF 4,000 (approximately U.S.$133,000).
Additionally, the subsidy is complemented by a state guarantee denominated “Garantías Apoyo a la Vivienda Nueva”,
which will be available to individuals or legal entities that meet all the following eligibility criteria: (i) the credit must be
for financing new housing, (ii) the property's value must not exceed UF 4,000 and (iii) it must comply with the additional
requirements established in the relevant decrees. Furthermore, the fund cannot guarantee more than 60% of the property's
value. The goal is to support families who, while not in a vulnerable situation, face difficulties in saving for the down
payment required to purchase a home. The bill was approved by the Congress and was finally published as Law No. 21,748
on May 29, 2025.
In June 2024, the Chilean Congress passed a law creating a public consolidated debt registry (the “Redec,” pursuant to its Spanish acronym), which will be administered by the FMC and which begun operating in November 2025. (See “Item 3. Key Information—D. Risk Factors—Competitve Risks- The effectiveness of our credit risk management is affected by the quality and scope of information available in Chile).
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In January 2023 the law on Fintech and Open Finance System was published and in July 2024, the FMC published the regulations governing the Open Finance System (or the “SFA” pursuant to its Spanish acronym) under the Fintech Law, which is expected to enter into force in July 2026. (See “Item 3. Key Information—D. Risk Factors—Competitve Risks- The effectiveness of our credit risk management is affected by the quality and scope of information available in Chile).
In their supervisory roles, the regulators seek to maintain the safety and soundness of financial institutions with the aim of strengthening the protection of customers and the financial system. The supervisors’ continuing supervision of financial institutions is conducted through a variety of regulatory tools, including the collection of information by way of prudential returns, reports obtained from skilled persons, visits to firms and regular meetings with management to discuss issues such as performance, risk management and strategy. In general, these regulators have a more outcome-focused regulatory approach that involves more proactive enforcement and more punitive penalties for infringement. As a result, we face increased supervisory scrutiny (resulting in increasing internal compliance costs and supervision fees), and in the event of a breach of our regulatory obligations we are likely to face more stringent regulatory fines.
Changes in regulations may also cause us to face increased compliance costs and limitations on our ability to pursue certain business opportunities and provide certain products and services. As some of the banking laws and regulations have been recently adopted, the manner in which those laws and related regulations are applied to the operations of financial institutions is continuously evolving. Moreover, to the extent these recently adopted regulations are implemented inconsistently in the various jurisdictions in which we operate, we may face higher compliance costs. No assurance can be given generally that laws or regulations will be adopted, enforced or interpreted in a manner that will not have a material adverse effect on our business and results of operations.
Chilean authorities and legislators periodically consider initiatives aimed at strengthening consumer protections, debtor rights, and addressing household over-indebtedness. Legislative proposals currently under discussion in the National Congress include measures intended to facilitate refinancing for highly indebted consumers, regulate aspects of credit card payment practices, impose greater restrictions on certain prepayment charges, enhance disclosure standards, and expand supervisory powers over elements of consumer credit activity. For example, Proposed Bill No. 16.408-05, introduced in 2023 and still under discussion before the Chilean Congress, seeks to reduce and prevent over-indebtedness through refinancing mechanisms, regulation of credit card payment practices, and related consumer protection reforms under Law No. 19.496, as amended. Since 2019, there has been continuous discussion in Congress on proposals to amend laws and regulations regarding consumer credit protections, including provisions relating to prepayment rules, acceleration clauses, and related credit charges. These initiatives remain subject to legislative debate and modification, and their final scope and outcome are uncertain. Any such changes, if enacted, could affect our interest income, fee generation, or credit management practices, which in turn could have a material adverse effect on our operating results, financial condition, and prospects.
We are subject to regulation by the FMC and by the Central Bank with regard to certain matters, including reserve requirements, interest rates, foreign exchange mismatches and market risks (see more details on “Item 4. Information on the Company—B. Business Overview—Regulation and Supervision”). Chilean laws, regulations, policies and interpretations of laws relating to the banking sector and financial institutions are continually evolving and changing. Any new reforms could result in increased competition in the industry and thus may have a material adverse effect on our financial condition and results of operations.
Pursuant to the General Banking Law, all Chilean banks may, subject to the approval of the FMC, engage in certain businesses other than commercial banking depending on the risk associated with such business and their financial strength. Such additional businesses include securities brokerage, mutual fund management, securitization, insurance brokerage, leasing, factoring, financial advisory, custody and transportation of securities, loan collection and financial services. The General Banking Law also applies to the Chilean banking system a modified version of the capital adequacy guidelines issued by the Basel Committee on Banking Regulation and Supervisory Practices and limits the discretion of the FMC to deny new banking licenses. There can be no assurance that regulators will not in the future impose more restrictive limitations on the activities of banks, including us. Any such change could have a material adverse effect on our financial condition or results of operations.
Historically, Chilean banks have not paid interest on amounts deposited in checking accounts. We have begun to pay interest on some checking accounts under certain conditions. If competition or other factors lead us to pay higher interest rates on checking accounts, to relax the conditions under which we pay interest or to increase the number of checking accounts on which we pay interest, any such change could have a material adverse effect on our financial condition or results of operations.
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Modifications to reserve requirements may affect our business.
Deposits are subject to a reserve requirement of 9.0% for demand deposits and 3.6% for time deposits (with terms of less than one year). The Central Bank has statutory authority to require banks to maintain reserves of up to an average of 40.0% for demand deposits and up to 20.0% for time deposits (irrespective, in each case, of the currency in which these deposits are denominated) to implement monetary policy. In addition, to the extent that the aggregate amount of the following types of liabilities exceeds 2.5 times the amount of a bank’s regulatory capital, a bank must maintain a 100% reserve against them: demand deposits, deposits in checking accounts, obligations payable on sight incurred in the ordinary course of business and, in general, all deposits unconditionally payable immediately. The General Banking Law also states that the FMC, with the approval from the Central Bank, may lower this threshold from 2.5 times to 1.5 times a bank’s regulatory capital for a bank considered to be a SIB. This could lead to lower loan growth and have a negative effect on our business. As of December 31, 2024 and 2025, the Bank was not required to, and did not constitute, a corresponding technical reserve.
We may not be able to detect or prevent money laundering and other financial crime activities fully or on a timely basis, which could expose us to additional liability and could have a material adverse effect on us.
We are required to comply with applicable anti-money laundering anti-terrorism (“AML/CFT”), anti-bribery and corruption, sanctions and other laws and regulations (collectively, financial crime compliance (“FCC”) regulations). These laws and regulations require us, among other things, to conduct full customer due diligence (including sanctions and politically exposed person screening), keep our customer, account and transaction information up to date and have implemented FCC policies and procedures detailing what is required from those responsible. We are also required to conduct FCC training for our employees and to report suspicious transactions and activity to appropriate law enforcement following full investigation by our FCC team.
Financial crime continues to be the subject of enhanced regulatory scrutiny and supervision by regulators globally. AML/CFT, anti-bribery and corruption and sanctions laws and regulations are increasingly complex and detailed. The Basel Committee has introduced guidelines to strengthen the interaction and cooperation between prudential and AML/CFT supervisors. Compliance with these laws and regulations requires automated systems, sophisticated monitoring and skilled compliance personnel.
We maintain updated policies and procedures aimed at detecting and preventing the use of our banking network for money laundering and other financial crime related activities. However, emerging technologies, such as cryptocurrencies and innovative payment methods, could limit our ability to track the movement of funds. Our ability to comply with the legal requirements depends on our ability to improve detection and reporting capabilities and reduce variation in control processes and oversight accountability. These require implementation and embedding within our business effective controls and monitoring, which in turn requires on-going changes to systems and operational activities. Financial crime is continually evolving and is subject to increasingly stringent regulatory oversight and focus. This requires proactive and adaptable responses from us so that we are able to deter threats and criminality effectively. Even known threats can never be fully eliminated, and there will be instances where we may be used by other parties to engage in money laundering and other illegal or improper activities. In addition, we rely heavily on our employees to assist us by spotting such activities and reporting them, and our employees have varying degrees of experience in recognizing criminal tactics and understanding the level of sophistication of criminal organizations. Where we outsource any of our customer due diligence, customer screening or anti financial crime operations, we remain responsible and accountable for full compliance and any breaches. If we are unable to apply the necessary scrutiny and oversight of third parties to whom we outsource certain tasks and processes, there remains a risk of regulatory breach.
If we are unable to comply fully with applicable laws, regulations and expectations, our regulators and relevant law enforcement agencies have the ability and authority to impose significant fines and other penalties on us, including requiring a complete review of our business systems, day-to-day supervision by external consultants and ultimately the revocation of our banking license.
We have been, and may in the future be, subject to negative coverage in the media about us or our clients, including with respect to alleged conduct such as failure to detect and/or prevent any financial crime activities or comply with FCC regulations. Negative media coverage of this type about us, whether it has merit or not, could materially and adversely affect our reputation and perception among current and potential clients, investors, vendors, partners, regulators and other third parties, which in turn could have a material adverse effect on our operating results, financial condition and prospects as well as damage our customers’ and investors’ confidence and the market price of our securities.
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The reputational damage to our business and global brand could be severe if we were found to have breached AML/CFT, anti-bribery and corruption or sanctions requirements. Our reputation could also suffer if we are unable to protect our customers’ bank products and services from being used by criminals for illegal or improper purposes.
In addition, while we review our relevant counterparties’ internal policies and procedures with respect to such matters, we expect our relevant counterparties to maintain and properly apply their own appropriate compliance procedures and internal policies. Such measures, procedures and internal policies may not be completely effective in preventing third parties from using our (and our relevant counterparties’) services as a conduit for illicit purposes (including illegal cash transactions) without our (and our relevant counterparties’) knowledge. If we are associated with, or even accused of being associated with, breaches of AML/CFT, anti-bribery and corruption or sanctions requirements, our reputation could suffer and/or we could become subject to fines, sanctions and/or legal enforcement (including being added to “watch lists” that would prohibit certain parties from engaging in transactions with us), any one of which could have a material adverse effect on our operating results, financial condition and prospects.
Any such risks could have a material adverse effect on our operating results, financial condition and prospects.
We are exposed to risk of loss from legal and regulatory proceedings.
We face risk of loss from legal and regulatory proceedings, including tax proceedings, that could subject us to monetary judgments, regulatory enforcement actions, fines and penalties. The current regulatory and tax enforcement environment in the jurisdictions in which we operate reflects an increased supervisory focus on enforcement. Combined with uncertainty about the evolution of the regulatory regime, this may lead to material operational and compliance costs.
We are from time to time subject to regulatory investigations and civil and tax claims, and party to certain legal proceedings incidental to the normal course of our business, including, among others, in connection with conflicts of interest, lending and derivatives activities, relationships with our employees and other commercial, privacy, data protection, cybersecurity, tax or climate related matters. In view of the inherent difficulty of predicting the outcome of legal matters, particularly where the claimants seek very large or indeterminate damages, or where the cases present novel legal theories, involve a large number of parties, are in the early stages of investigation or discovery, or have common elements but require assessment of circumstances on a case-by-case basis, we cannot state with certainty what the eventual outcome of these pending matters will be or what the eventual loss, fines or penalties related to each pending matter may be.
The amount of our reserves in respect of these matters, which considers the likelihood of future cash flows associated with each of such claims, is substantially less than the total amount of the claims asserted against us, and, in light of the uncertainties involved in such claims and proceedings, there is no assurance that the ultimate resolution of these matters will not significantly exceed the reserves currently accrued by us. As a result, the outcome of a particular matter may be material to our operating results for a particular period. As of December 31, 2025, we had provisions for legal contingencies of Ch$3,933 million.
RISK FACTORS IN RESPECT OF CHILE
Political, legal, regulatory and economic uncertainty arising from social unrest and the resulting social reforms, as well as the potential enactment of a new constitution could adversely impact the Bank’s business.
During October 2019, growing public concern over perceived social inequality led to a rise in social unrest. The social unrest caused commercial disruptions throughout the country. After three weeks of nationwide protests, the Chilean government announced in November 2019 that it would initiate a process to draft a new Constitution for Chile. When the government announced the process of enacting a new constitution, there was increased volatility in the Chilean stock market and exchange rate fluctuations that resulted in a weakening of the Chilean peso against the U.S. dollar. The share prices of local banks and bond spreads, including those of Santander Chile, suffered significant deterioration in the market. After a prolonged process, two plebiscites to approve two proposed draft of the constitution were rejected. As a result, the constitution drafted in 1980 during the Pinochet regime remains in force. There can be no assurance as to whether a renewal of social unrest, a new constitutional reform process, or any amendments to the Chilean Constitution implemented as a consequence of such a process, will not have a material adverse effect on our business, financial condition or results of operations.
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Our growth, asset quality and profitability may be adversely affected by macroeconomic and political conditions in Chile.
A substantial number of our loans are to borrowers doing business in Chile. Chile’s economy has experienced significant volatility in recent decades, characterized, in some cases, by slow or regressive growth and declining investment. For example, the Chilean economy contracted 6.1% in 2020 as a result of the COVID-19 pandemic, rebounded 11.3% in 2021 and slowed to 0.3% in 2023 as a result of deteriorating economic conditions in Chile and globally, including high inflation and high interest rates. In 2025, GDP growth is expected to be 2.4% as investment levels in Chile increased among a lower interest rate environment. While the Chilean economy seems to have stabilized, the volatility experienced between 2020 and 2023 resulted in fluctuations in the levels of deposits and in the relative economic strength of various segments of the economies to which we lend. The Chilean economy may not continue to grow at similar rates as in the past or future developments may negatively affect Chile’s overall levels of economic activity.
Negative and fluctuating economic conditions, such as slowing or negative growth and a changing interest rate and inflationary environment, impact our profitability by causing lending margins to decrease and credit quality to decline and leading to decreased demand for higher margin products and services. Even though Chile’s sovereign rating remains at an investment grade level, negative and fluctuating economic conditions in Chile could also result in government defaults on public debt. This could affect us in two ways: directly, through portfolio losses, and indirectly, through instabilities that a default in public debt could cause to the banking system, particularly since commercial banks’ exposure to government debt is high in Chile.
Our revenues are also subject to deterioration due to unfavorable political and diplomatic developments, social instability, international conflicts, and changes in governmental policies, including expropriation, nationalization, international ownership legislation, sanctions and trade restrictions, interest-rate caps and tax policies.
Any future fluctuation in oil prices may give rise to volatility in the global financial markets and further economic instability in oil-importing countries, such as Chile. In addition, the ability of borrowers in or exposed to the oil sector has been and may be further adversely affected by such price fluctuations.
Any future fall in commodity prices, such as copper, cellulose, fruit, wine, lithium and salmon prices, could have a material adverse effect on the Chilean economy, which could in turn have a material adverse effect on our financial condition and operations.
Our growth, asset quality and profitability may be adversely affected by volatile macroeconomic and political conditions in Chile.
Any material change to United States trade policy with respect to Chile could have a material adverse effect on the economy, which could in turn materially harm our financial condition and results of operations.
Portions of our loan portfolio are subject to risks relating to force majeure events and any such event could materially adversely affect our operating results.
Chile lies on the Nazca tectonic plate, making it one of the world’s most seismically active regions. Our financial and operating performance may be adversely affected by force majeure events, such as natural disasters, particularly in locations where a significant portion of our loan portfolio is composed of residential mortgage and real estate loans. Natural disasters such as earthquakes and floods may cause widespread damage which could impair the asset quality of our loan portfolio and could have an adverse impact on the economy of the affected region.
Changes in taxes, including the corporate income tax rate, in Chile may have an adverse effect on us and our clients.
The Chilean government enacted several tax reforms in 2014, 2016 and 2020 in order to finance increased social spending. The most significant change was the increase in the corporate income tax rate to 27% in 2018. As of the date hereof, we cannot predict whether other tax reforms will be enacted in the future, which could have a material adverse effect on our results of operations. Please see “Item 10—Additional information—E. Taxation” for further information regarding the impact of these tax reforms on ADR holders.
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Developments in other countries may affect us, including the prices for our securities.
The prices of securities issued by Chilean companies, including banks, are influenced to varying degrees by economic and market considerations in other countries. We cannot assure you that future developments in or affecting the Chilean economy, including consequences of economic difficulties in other markets, will not materially and adversely affect our business, financial condition or results of operations.
A deterioration of the global economic, political, social and financial environment could have a material adverse impact on the financial sector, affecting our operating results, financial position and prospects. We are exposed to risks related to the weakness and volatility of the economic and political situation in Asia, the United States, Europe (including Spain, where Santander Spain, our controlling shareholder, is based), Brazil, Argentina and other nations. Although economic conditions in Europe and the United States may differ significantly from economic conditions in Chile, investors’ reactions to developments in these other countries may have an adverse effect on the market value of securities of Chilean issuers. In particular, investor perceptions of the risks associated with our securities may be affected by perception of risk conditions in Spain.
In addition, growing protectionism and trade tensions could intensify and negatively impact our customers. The U.S. government has introduced significant changes in trade policies, including the imposition of a 10% baseline "reciprocal" tariffs on most imports and nations (including Chile) and higher country-specific tariffs for certain nations with which it has significant trade imbalances. Additionally, the U.S. has threatened to impose higher sanctions on certain nations in certain circumstances. This has led to certain U.S. trading partners announcing reciprocal tariffs (and other actions) in response, leading to increased protectionism and trade tensions across the world, as well as to a depreciation of the U.S. dollar.
The continuation, pause or escalation of tariffs and other trade restrictions, the continued depreciation of the U.S. dollar and other non-trade-related measures or policies of the U.S. government, could further impact international trade relations, investment flows and supply chains significantly, resulting in continued market volatility and a reduction in global growth, intensifying concerns over the global macroeconomic environment, inflation and the potential for a recession. Any of the foregoing could have a material adverse effect on our business, results of operations, financial condition and prospects and any restrictions or limitations to Chilean exports to the United States as a consequence of the factors described above could have a material adverse effect on our business, results of operations, financial condition and prospects.
Lastly, recent events in Venezuela, which ultimately led to the removal and arrest of President Nicolas Maduro by the U.S. government, could have significant political and economic consequences in the region. The U.S.’s intervention in Venezuela has faced a lot of criticism worldwide, including from many countries in Latin America, and it is uncertain whether such intervention could lead to the deterioration of the U.S.’s relations with other countries in the region, including Chile.
Scenarios of political tensions and instability throughout the world stemming from a variety of factors, such as heightened polarization and political interference, fragmentation and scandals, may lead to shifting and unpredictable outcomes in political elections, legislative and policy-making efforts, social conditions, government stability and the global economy and to a progressive erosion of the rule of law in certain long-standing democracies. Furthermore, increasing public debt levels together with high interest costs may not be sustainable and could lead certain countries to face higher sovereign risk premium and sovereign debt crises.
Chile also has considerable economic ties with China and Europe. In 2025, approximately 35.8% of Chile’s exports went to China, mainly copper. A slowdown in economic activity in China may affect Chile’s GDP and export growth as well as the price of copper, which is Chile’s main export. Chile exported approximately 12.7% of total exports to Europe in 2025. Crises and political uncertainties in these economies could also have an adverse effect on Chile, the price of our securities or our business. Approximately 13.5% of Chile’s exports in 2025 went to other Latin American nations. We cannot assure you that crises and political uncertainty in other Latin American countries will not have an adverse effect on Chile, the price of our securities or our business.
If these, or other nations’ economic conditions deteriorate, the economy in Chile, as both a neighboring country and a trading partner, could also be affected and could experience slower growth than in recent years, with possible adverse impact on our borrowers and counterparties. If this were to occur, we would potentially need to increase our allowances for loan losses, thus affecting our financial results, our results of operations and the price of our securities. As of December 31, 2025, the Bank’s foreign exposure, including counterparty risk in the derivative instruments’ portfolio, was U.S.$1720.00
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billion or 2,273.3% of our total assets. There can be no assurance that the effects of a global recession will not negatively impact growth, consumption, unemployment, investment and the price of exports in Chile.
A change in labor laws in Chile or a worsening of labor relations in the Bank could impact our business.
As of December 31, 2025, on a consolidated basis, we had 8,526 employees, of which 74% were unionized. In December 2023, a new collective bargaining agreement was signed with the main unions, which became effective in September 2024 and will expire in December 2027. We generally apply the terms of our collective bargaining agreements to both union and non-union employees. While we have historically enjoyed good relations with our employees and their unions, we cannot assure you that a future strengthening of cross-industry labor movements will not have a material adverse effect on our business, financial condition or results of operations.
A new labor reform was passed by Congress in April 2023, which, among others, reduced the work week from 45 hours to 40 hours and established an automatic adjustment of the minimum monthly income according to changes in the Consumer Price Index (CPI) which as of January 1, 2026 was set at Ch$539,000 per month (U.S.$598 per month). At Santander Chile, the weekly working hours agreed under the new collective bargaining agreement were set at 40 hours and the monthly minimum wage at the Bank is set at Ch$1,030,000 (U.S.$1,144 per month). However, we cannot assure you that the new labor reform, or any further minimum wage increases, will not have a material impact on our expenses.
On May 7, 2025, a bill was introduced in the Chilean Congress seeking to eliminate the maximum limit of 11 years of service used to calculate severance pay in cases of termination of an employment contract on the grounds of “company’s needs” and “at the employer’s will.” The bill is currently being discussed by the lower house of the Chilean Congress. While the Bank's current collective bargaining agreement takes into account the 11 year limit to calculate severance payments, we cannot guarantee that if such law passes, our potential future obligation to make severance payments will not increase significantly, which may have a material impact on our expenses.
In addition, a law has been introduced in the lower house of Congress to modify the terms of the “gratificación legal,” which consists of an annual participation of workers in the profits of the company. The new law under discussion seeks to amend the Labor Code with respect to workers’ participation in company profits. The new law proposes to amend the Labor Code to increase the “gratificación legal” distributed to workers and to change the way it is calculated. This law has been approved by the Chamber of Deputies of the Chilean Congress and is currently in the Senate with no date set for consideration. No assurances can be given as to whether the proposed law will be approved and, if approved, whether it will have a material impact on our financial condition.
Finally, with the entry into force in December 2026 of the amendments introduced by Law No. 21,719 to Law No. 19,628 on Data Protection, the requirements governing the processing of personal data including employees’ personal information will become significantly more stringent. These amendments introduce substantial changes regarding the legal bases for processing personal data, the rules applicable to international data transfers, the regulation of data processing mandate agreements, and the creation of the Personal Data Agency, which will be empowered to impose administrative fines, depending on the severity of the infringement.
These and any additional legislative or regulatory actions in Chile, Spain, the European Union, the United States or other countries, and any required changes to our business operations as a result of such laws and regulations, could result in reduced capital availability, significant loss of revenue, limit our ability to continue organic growth (including increased lending), pursue business opportunities in which we might otherwise consider engaging, provide certain products and services, affect the value of assets that we hold, require us to increase our prices and thereby reduce demand for our products, impose additional costs on us or otherwise adversely affect our business. Accordingly, we cannot assure you that such new laws or regulations will not adversely affect on our business, results of operations or financial condition in the future.
Our corporate disclosure may differ from disclosure regularly published by issuers of securities in other countries, including the United States.
Issuers of securities in Chile are required to make public disclosures that are different from, and that may be reported under presentations that are not consistent with, disclosures required in other countries, including the United States. In particular, as a Chilean regulated financial institution, we are required to submit to the FMC on a monthly basis unaudited consolidated balance sheets and income statements, excluding any note disclosure, prepared in accordance with Chilean Bank GAAP as issued by the FMC. This disclosure differs in a number of significant respects from generally accepted accounting principles in the United States and information generally available in the United States with respect to U.S.
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financial institutions or IFRS. In addition, as a foreign private issuer, we are not subject to the same disclosure requirements in the United States as a domestic U.S. registrant under the Exchange Act, including the requirements to prepare and issue quarterly reports, the proxy rules applicable to domestic U.S. registrants under Section 14 of the Exchange Act or the insider reporting and short-swing profit rules under Section 16 of the Exchange Act. Accordingly, the information about us available to you will not be the same as the information available to shareholders of a U.S. company and may be reported in a manner that you are not familiar with.
Risks Factors In Respect Of Our Controlling Shareholder and our ADSs
Investors may find it difficult to enforce civil liabilities against us or our directors, officers and controlling persons.
We are a Chilean corporation. None of our directors are residents of the United States and most of our executive officers reside outside of the United States. In addition, all or a substantial portion of our assets and the assets of our directors and executive officers are located outside of the United States. Although we have appointed an agent for service of process in any action against us in the United States, none of our directors, officers or controlling persons has consented to service of process in the United States or to the jurisdiction of any United States court. As a result, it may be difficult for investors to effect service of process within the United States on such persons.
It may also be difficult for ADS holders to enforce in the United States or in Chilean courts money judgments obtained in United States courts against us or our directors and executive officers based on civil liability provisions of the U.S. federal securities laws. If a U.S. court grants a final money judgment in an action based on the civil liability provisions of the federal securities laws of the United States, enforceability of this money judgment in Chile will be subject to the obtaining of the relevant “exequatur” (i.e., recognition and enforcement of the foreign judgment) according to Chilean civil procedure law currently in force, and consequently, subject to the satisfaction of certain factors. The most important of these factors are the existence of reciprocity, the absence of a conflicting judgment by a Chilean court relating to the same parties and arising from the same facts and circumstances and the Chilean courts’ determination that the U.S. courts had jurisdiction, that process was appropriately served on the defendant and that enforcement would not violate Chilean public policy. Failure to satisfy any of such requirements may result in non-enforcement of your rights.
Our controlling shareholder has a great deal of influence over our business and its interests could conflict with yours.
Santander Spain controls Santander-Chile through its holdings in Teatinos Siglo XXI Inversiones S.A. and Santander Chile Holding S.A., which are controlled subsidiaries. Santander Spain has control over 67.18% of our shares.
Due to its share ownership, our controlling shareholder has the ability to control us and our subsidiaries, including the ability to:
•elect the majority of the directors and exercise control over our company and subsidiaries;
•cause the appointment of our principal officers;
•declare the payment of any dividends;
•agree to sell or otherwise transfer its controlling stake in us; and
•determine the outcome of substantially all actions requiring shareholder approval, including amendments of our by-laws, transactions with related parties, corporate reorganizations, acquisitions and disposals of assets and issuance of additional equity securities, if any.
We operate as a stand-alone subsidiary within the Santander Group. Our controlling shareholder has no liability for our banking operations, except for the amount of its holdings of our capital stock and AT1 bond. The interests of Santander Spain may differ from the interests of our other shareholders, and the concentration of control in Santander Spain may differ from the interests of our other shareholders, and the concentration of control in Santander Spain will limit other shareholders’ ability to influence corporate matters. As a result, we may take actions that our other shareholders do not view as beneficial.
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Our status as a controlled company and a foreign private issuer exempts us from certain of the corporate governance standards of the New York Stock Exchange (“NYSE”), limiting the protections afforded to investors.
We are a “controlled company” and a “foreign private issuer” within the meaning of the NYSE corporate governance standards. Under the NYSE rules, a controlled company is exempt from certain NYSE corporate governance requirements. In addition, a foreign private issuer may elect to comply with the practice of its home country and not to comply with certain NYSE corporate governance requirements, including the requirements that (1) a majority of the board of directors consist of independent directors, (2) a nominating and corporate governance committee be established that is composed entirely of independent directors and has a written charter addressing the committee’s purpose and responsibilities, (3) a compensation committee be established that is composed entirely of independent directors and has a written charter addressing the committee’s purpose and responsibilities and (4) an annual performance evaluation of the nominating and corporate governance and compensation committees be undertaken. Although we have similar practices, they do not entirely conform to the NYSE requirements for U.S. issuers; therefore, we currently use these exemptions and intend to continue using them. Accordingly, you will not have the same protections afforded to shareholders of companies that are subject to all NYSE corporate governance requirements.
There may be a lack of liquidity and market for our shares and ADSs.
Our ADSs are listed and traded on the NYSE (under the ticker “BSAC”). Our common stock is listed and traded on the Santiago Stock Exchange (under the ticker “BSANTANDER”), which we refer to as the Chilean Stock Exchange, although the trading market for the common stock is small by international standards. As of December 31, 2025, we had 188,446,126,794 shares of common stock outstanding. The Chilean securities markets are substantially smaller, less liquid and more volatile than major securities markets in the United States. According to Article 14 of the Ley de Mercado de Valores, Ley No. 18,045, or the Chilean Securities Market Law, the FMC may suspend the offer, quotation or trading of shares of any company listed on one or more Chilean stock exchanges for up to 30 days if, in its opinion, such suspension is necessary to protect investors or is justified for reasons of public interest. Such suspension may be extended for up to 120 days. If, at the expiration of the extension, the circumstances giving rise to the original suspension have not changed, the FMC will then cancel the relevant listing in the registry of securities. In addition, the Santiago Stock Exchange may inquire as to any movement in the price of any securities in excess of 10% and suspend trading in such securities for a day if it is deemed necessary.
Although our common stock is traded on the Chilean Stock Exchange, there can be no assurance that a liquid trading market for our common stock will continue to exist. Approximately 32.8% of our outstanding common stock is held by the public (i.e., shareholders other than Santander Spain and its affiliates), including our shares that are represented by ADSs trading on the NYSE. A limited trading market in general and our concentrated ownership in particular may impair the ability of an ADS holder to sell in the Chilean market shares of common stock obtained upon withdrawal of such shares from the ADR facility in the amount and at the price and time such holder desires and could increase the volatility of the price of the ADSs.
Chile imposes controls on foreign investment and repatriation of investments that may affect your investment in, and earnings from, our ADSs.
Equity investments in Chile by persons who are not Chilean residents have been subject to exchange control regulations which may restrict the repatriation of the investments and earnings therefrom. In April 2001, the Central Bank eliminated the regulations that affected foreign investors, except that investors are still required to provide the Central Bank with information relating to equity investments and conduct such operations within Chile’s Formal Exchange Market. We cannot assure you that exchange control restrictions will not be imposed again in the future, nor can we advise you as to the duration or impact of such restrictions if imposed.
Holders of ADSs are entitled to receive dividends on the underlying shares to the same extent as the holders of shares. Dividends received by holders of ADSs will be paid net of foreign currency exchange fees and expenses of the Depositary and will be subject to the Chilean withholding tax, currently imposed at a rate of 35.0% (subject to credits in certain cases). If for any reason, including changes in Chilean law, the Depositary was unable to convert Chilean pesos to U.S. dollars, investors would receive dividends and other distributions, if any, in Chilean pesos.
As per the current Depositary Agreement, the foreign exchange rate applied be either (i) a published benchmark rate, or (ii) a rate determined by a third-party local liquidity provider, in each case plus or minus a spread, as applicable. The Depositary will disclose which foreign exchange rate and spread, if any, apply to such currency on the "Disclosures" page (or successor page) of ADR.com.
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We cannot assure you that additional Chilean restrictions applicable to holders of our ADSs, the disposition of the shares underlying them or the repatriation of the proceeds from such disposition or the payment of dividends will not be imposed in the future, nor can we advise you as to the duration or impact of such restrictions if imposed.
You may be unable to exercise preemptive rights.
The Ley Sobre Sociedades Anónimas, Ley No. 18,046 and the Reglamento de Sociedades Anónimas, which we refer to collectively as the Chilean Companies Law, and applicable regulations require that whenever we issue new common stock for cash, we grant preemptive rights to all of our shareholders (including holders of ADSs), giving them the right to purchase a sufficient number of shares to maintain their existing ownership percentage. Such an offering would not be possible in the United States unless a registration statement under the U.S. Securities Act of 1933 (“Securities Act”), as amended, was effective with respect to such rights and common stock or an exemption from the registration requirements thereunder were available.
Since we are not obligated to make a registration statement available with respect to such rights and the common stock, you may not be able to exercise your preemptive rights in the United States. If a registration statement is not filed or an applicable exemption is not available under U.S. securities law, the Depositary will sell such holders’ preemptive rights and distribute the proceeds thereof if a premium can be recognized over the cost of any such sale.
As a holder of ADSs you will have different shareholders’ rights than in the United States and certain other jurisdictions.
Our corporate affairs are governed by our bylaws, and the laws of Chile, which may differ from the legal principles that would apply if we were incorporated in a jurisdiction in the United States or in certain other jurisdictions outside Chile. Under Chilean corporate law, you may have fewer and less well-defined rights to protect your interests than under the laws of other jurisdictions outside Chile. For example, under legislation applicable to Chilean banks, our shareholders would not be entitled to appraisal rights in the event of a merger or other business combination undertaken by us.
Although Chilean corporate law imposes restrictions on insider trading and price manipulation, the form of these regulations and the manner of their enforcement may differ from that in the U.S. securities markets or markets in certain other jurisdictions. In addition, in Chile, self-dealing and the preservation of shareholder interests may be regulated differently, which could potentially disadvantage you as a holder of the shares underlying ADSs.
Holders of ADSs may find it difficult to exercise voting rights at our shareholders’ meetings.
Holders of ADSs will not be our direct shareholders and will be unable to enforce directly the rights of shareholders under our by-laws and the laws of Chile. Holders of ADSs may exercise voting rights with respect to the common stock represented by ADSs only in accordance with the deposit agreement governing the ADSs. Holders of ADSs will face practical limitations in exercising their voting rights because of the additional steps involved in our communications with ADS holders. Holders of our common stock will be able to exercise their voting rights by attending a shareholders’ meeting in person or voting by proxy. By contrast, holders of ADSs will receive notice of a shareholders’ meeting by mail from the Depositary following our notice to the Depositary requesting the Depository to do so. To exercise their voting rights, holders of ADSs must instruct the Depositary on a timely basis on how they wish to vote. This voting process necessarily will take longer for holders of ADSs than for holders of our common stock. If the Depositary fails to receive timely voting instructions for all or part of the ADSs, the Depositary will assume that the holders of those ADSs are instructing it to give a discretionary proxy to a person designated by us to vote their ADSs, except in limited circumstances.
Holders of ADSs also may not receive the voting materials in time to instruct the Depositary to vote on the common stock underlying their ADSs. In addition, the Depositary and its agents are not responsible for failing to carry out voting instructions of the holders of ADSs or for the manner of carrying out those voting instructions. Accordingly, holders of ADSs may not be able to exercise voting rights, and they will have little, if any, recourse if the common stocks underlying their ADSs are not voted as requested.
ADS holders may be subject to additional risks related to holding ADSs rather than shares.
Because ADS holders do not hold their shares directly, they are subject to the following additional risks, among others:
•as an ADS holder, you may not be able to exercise the same shareholder rights as a direct holder of ordinary shares;
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•we and the Depositary may amend or terminate the deposit agreement without the ADS holders’ consent in a manner that could prejudice ADS holders or that could affect the ability of ADS holders to transfer ADSs; and
•the Depositary may take or be required to take actions under the Deposit Agreement that may have adverse consequences for some ADS holders in their particular circumstances.
GENERAL RISK FACTORS
Disclosure controls and procedures over financial and non-financial reporting may not prevent or detect all errors or acts of fraud.
Disclosure controls and procedures, including internal controls, over financial and non-financial reporting (including climate-related reporting) are designed to provide reasonable assurance that information required to be disclosed by the company in reports filed or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the SEC’s U.S. Securities and Exchange Commission’s rules and forms.
These disclosure controls and procedures have inherent limitations, which include the possibility that judgments in decision-making can be faulty and that breakdowns can occur because of errors or mistakes. Additionally, controls can be circumvented by any unauthorized override of the controls. Consequently, our businesses are exposed to risk from potential non-compliance with policies, employee misconduct or negligence and fraud, which could result in regulatory sanctions, civil claims and serious reputational or financial harm. In recent years, several multinational financial institutions have suffered material losses due to the actions of ‘rogue traders’ or other employees. It is not always possible to deter employee misconduct and the precautions we take to prevent and detect this activity may not always be effective. Accordingly, because of the inherent limitations in the control system, misstatements due to error or fraud may occur and not be detected.
Our financial statements are based in part on assumptions and estimates which, if inaccurate, could cause material misstatement of the results of our operations and financial position.
The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Due to the inherent uncertainty in making estimates, actual results reported in future periods may be based upon amounts which differ from those estimates. Estimates, judgments and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. The accounting policies deemed critical to our results and financial position, based upon materiality and significant judgments and estimates, include impairment of loans and advances, good will impairment, valuation of financial instruments, deferred tax assets –provisions and pension obligations for liabilities.
If the judgment, estimates and assumptions we use in preparing our consolidated financial statements are subsequently found to be incorrect, there could be a material effect on our results of operations and a corresponding effect on our funding requirements and capital ratios.
Changes in accounting standards could impact reported earnings.
The accounting standard setters and other regulatory bodies periodically change the financial accounting and reporting standards that govern the preparation of our consolidated financial statements. Changes made to accounting standards can materially impact how we record and report our financial condition and results of operations, as well as affect the calculation of our capital ratios. In some cases, we could be required to apply a new or revised standard retroactively, resulting in the restatement of prior period financial statements. Various amendments were made to financial and accounting standards in 2023, 2024 and 2025. For more information about current and future developments in financial accounting and reporting standards, see Note 1(y) “Application of new and revised International Financial Reporting Standards” to our Audited Consolidated Financial Statements.
We rely on recruiting, retaining and developing appropriate senior management and skilled personnel.
Our continued success depends in part on the continued service of key members of our senior executive team and other key employees. The ability to continue to attract, train, motivate and retain highly qualified and talented professionals is a
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key element of our strategy. The successful implementation of our strategy and culture depends on the availability of skilled and appropriate management, both at our head office and in each of our business units. If we or one of our business units or other functions fails to staff its operations appropriately or loses one or more of its key senior executives or other key employees and fails to replace them in a satisfactory and timely manner, our business, financial condition and results of operations, including control and operational risks, may be adversely affected.
Our ability to attract and retain qualified employees is affected by perceptions of our culture, social and corporate governance policies and management, our profile in the markets in which we operate and the professional opportunities we offer.
In addition, the financial industry has and may continue to experience more stringent regulation of employee compensation, which could have an adverse effect on our ability to hire or retain the most qualified employees. If we fail or are unable to attract and appropriately train, motivate and retain qualified professionals, our business may also be adversely affected.
Our business could be affected if its capital is not managed effectively or if changes limiting our ability to manage our capital position are adopted.
Effective management of our capital position is important to our ability to operate our business, to continue to grow organically and to pursue our business strategy. However, in response to the global financial crisis, several changes to the regulatory capital framework have been adopted. As these and other changes are implemented or future changes are considered or adopted that limit our ability to manage our balance sheet and capital resources effectively or to access funding on commercially acceptable terms, we may experience a material adverse effect on our financial condition and regulatory capital position.
We are subject to review by tax authorities, and an incorrect interpretation by us of tax laws and regulations may have a material adverse effect on us.
Preparing our tax returns requires the use of estimates and interpretations of complex tax laws and regulations and is subject to review by tax authorities.
We are subject to the income tax laws of Chile and certain foreign countries. These tax laws are complex and subject to different interpretations by the taxpayer and relevant governmental tax authorities, which are sometimes subject to prolonged evaluation periods until a final resolution is reached. In establishing a provision for income tax expense and filing returns, we must make judgments and interpretations about the application of these inherently complex tax laws.
If the judgment, estimates and assumptions we use in preparing our tax returns are subsequently found to be incorrect, there could be a material adverse effect on our results of operations. In some jurisdictions, the interpretations of the tax authorities are unpredictable and frequently involve litigation, which introduces further uncertainty and risk as to tax expense.
We engage in transactions with related parties that others may not consider to be on an arm’s-length basis.
We and our affiliates have entered into several services agreements pursuant to which we render services, such as administrative, accounting, finance, treasury, legal services and others.
Chilean law applicable to public companies and financial groups and institutions and our by-laws provide for several procedures designed to ensure that the transactions entered into with or among our financial subsidiaries and/or affiliates do not deviate from prevailing market conditions for those types of transactions, including the requirement that our board of directors approve such transactions. Furthermore, all significant related party transactions must be approved by the Audit Committee and the Board. These significant transactions are also reported in our annual shareholders’ meeting. Please see Note 34 to our Audited Consolidated Financial Statements and “Item 7. Major Shareholders and Related Party Transactions.”
We are likely to continue to engage in transactions with our affiliates. Future conflicts of interests between us and any of our affiliates, or among our affiliates, may arise, which conflicts are not required to be and may not be resolved in our favor.
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ITEM 4. INFORMATION ON THE COMPANY
A.History and Development of the Company
Overview
We are the largest bank in the Chilean market in terms of loans (excluding loans held by subsidiaries of Chilean banks abroad) and the second largest bank in terms of total deposits (excluding deposits held by subsidiaries of Chilean banks aboard). As of December 31, 2025, we had total assets of Ch$68,147,280 million (U.S.$68.7 billion), outstanding loans at amortized cost, net of allowances for loan losses and including interbank loans of Ch$40,932,880 million (U.S.$41.3 billion), total deposits of Ch$30,569,373 million (U.S.$30.8 billion) and shareholders’ equity of Ch$5,616,359 million (U.S.$5.7 billion). As of December 31, 2025, we employed 8,526 people. We have a leading presence in all the major business segments in Chile, and a large distribution network with national coverage spanning across all the country and a leading digital onboarding platform for new clients. We offer unique transaction capabilities to clients through our 229 branches and 2,055 ATMs. Our headquarters are in Santiago, and we operate in every major region of Chile.
We provide a broad range of commercial and retail banking services to our customers, including Chilean peso and foreign currency denominated loans to finance a variety of commercial transactions, trade, foreign currency forward contracts and credit lines and a variety of retail banking services, including mortgage financing. We seek to offer our customers a wide range of products while providing high levels of service. In addition to our traditional banking operations, we offer a variety of financial services, including financial leasing, financial advisory services, mutual fund management, securities brokerage, insurance brokerage and investment management.
The legal predecessor of Santander-Chile was Banco Santiago (“Santiago”). Old Santander-Chile was established as a subsidiary of Santander Spain in 1978. On August 1, 2002, Santiago and Old Santander Chile merged, whereby the latter ceased to exist and Santander-Chile (formerly known as Santiago) being the surviving entity.
Our principal executive offices are located at Bandera 140, 20th floor, Santiago, Chile. Our telephone number is +562-320-2000 and our website is www.santander.cl. None of the information contained on our website is incorporated by reference into, or forms part of, this Annual Report. Our agent for service of process in the United States is Cogency Global Inc., 122 East 42nd Street, 18th Floor, New York, NY 10168. The SEC maintains a website on the Internet at https://www.sec.gov that contains reports and information statements and other information about us. The reports (including this annual report) and information statements and other information about us can be downloaded from the SEC’s website www.sec.gov website or our investor relations website www.ir.santander.cl. None of the information contained on our website, or any website referred to in this Annual Report, is incorporated by reference into, or forms part of, this Annual Report.
Relationship with Grupo Santander
We believe that our relationship with our controlling shareholder, Grupo Santander, offers us a significant competitive advantage over our peer Chilean banks. Grupo Santander, our parent company, is one of the largest financial groups in Brazil and the rest of Latin America, in terms of total assets measured on a regional basis. It is the largest financial group in Spain and is a major player elsewhere in Europe, including the United Kingdom, Poland and Portugal. Through Santander Consumer, it also operates a leading consumer finance franchise in the United States, as well as in Germany, Italy, Spain, and several other European countries. Openbank, a digital banking subsidiary of Grupo Santander, operates in Spain, Germany, Portugal, Netherlands, United States and Mexico:
Our relationship with Grupo Santander provides us with access to the group’s client base, while its multinational focus allows us to offer international solutions to our clients’ financial needs. We also have the benefit of selectively borrowing from Santander Spain’s product offerings in other countries, as well as of its know-how in systems management. We believe that our relationship with Santander Spain will also enhance our ability to manage credit and market risks by adopting policies and knowledge developed by Grupo Santander. In addition, our internal auditing function has been strengthened as a result of the addition of an internal auditing department that concurrently reports directly to our Audit Committee and the audit committee of Santander Spain. We believe that this structure leads to improved monitoring and control of our exposure to operational risks.
Grupo Santander’s support of Santander-Chile includes the assignment of managerial personnel to key supervisory areas of Santander-Chile, such as risks, auditing, accounting and financial control. Santander-Chile does not pay any management fees to Santander Spain in connection with these support services.
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B.Business Overview
We have 229 branches of which: (i) 126 are traditional full product and transactional branches operated under the Santander brand name; (ii) 94 are WorkCafé or WorkCafé Espresso branches, which are high-tech digital branches; (iii) and the remaining 9 branches are Select branches for affluent customers.
We divide our clients into the following groups: (i) Retail banking, (ii) Wealth Management, (iii) Middle-market, (iv) Corporate Investment Banking and (v) Corporate Activities (“Other”).
The Bank has the reportable segments noted below see “Segmentation Criteria” for further information.
Retail Banking
This segment consists of individuals, excluding high-net worth clients, and small to medium-sized entities (SMEs) with annual sales less than UF400,000 (U.S.$17.6 million). 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, securities brokerage, and insurance brokerage. Additionally, the SME clients are offered government-guaranteed loans, foreign trade services, leasing, factoring, and transactional services.
Wealth Management
This segment comprises the Asset Management, Insurance and Private Banking businesses. The Santander Insurance business offers both personal and corporate protection products, health insurance, life insurance, travel insurance, savings products, personal protection, automobile insurance, leasing, guarantees, unemployment insurance, among others. For high net worth clients, Santander Private Banking offers everything from transactional products and services (credits, cards, foreign trade, brokerage) to sophisticated products and services such as international investment accounts, structured funds, alternative investment funds, wealth management and open architecture.
Middle-market
This segment includes companies with annual sales exceeding UF400,000 (US$17.6 million) without a cap (for specialized industries in the Santiago Metropolitan Region, annual sales exceeding 100,000 UF (US$4.4 million) without a cap). This segment also encompasses institutional organizations such as universities, government agencies, municipalities, regional governments, and real estate companies undertaking projects for third-party sales, as well as all construction companies with annual sales exceeding UF 100,000 (US$4.4 million) without a cap. A wide variety of products are offered to this segment, including commercial loans, leasing, factoring, foreign trade, credit cards, mortgage loans, current accounts, transactional services, treasury services, financial consulting, savings products, mutual funds and insurance. In addition companies in the real estate sector are offered specialized services for the financing of mainly residential projects, with the intention of increasing the sale of mortgage loans.
Corporate Investment Banking (“CIB”)
This segment services multinational firms with annual sales exceeding EUR 500 million (USD 585 million), EBITDA over EUR 150 million (USD 175.5 million), and assets exceeding EUR 1 billion (USD 1.17 billion). For financial institutions, the requirement is assets greater than Ch$10 trillion (US$11.1 billion) This segment offers a wide variety of products, including commercial loans, leasing, factoring, foreign trade, credit cards, mortgage loans, current accounts, transactional services, treasury services, financial consulting, investment banking, savings products, mutual funds and insurance. This segment includes the Treasury Division, which provides sophisticated financial products mainly to companies in the Retail Banking and Middle-market areas. Products include short-term financing and deposits, brokerage services, derivatives, securitization and other products tailored to the needs of clients. The Treasury area also handles the intermediation of positions, as well as the company's own investment portfolio.
Corporate Activities (“Other”)
This segment mainly includes our Financial Management Division, which develops global management functions, including managing inflation rate risk, foreign currency gaps, interest rate risk and liquidity risk. Liquidity risk is managed mainly through wholesale deposits, debt issuances and the Bank’s available-for-sale portfolio. This segment also manages capital allocation by unit. These activities, with the exception of our inflation gap, usually result in a negative contribution to income.
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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 or her assessment on the segment’s interest income, fee and commission income, and expenses.
The tables below show the Bank’s results by reporting segment for the year ended December 31, 2025, in addition to the corresponding balances of loans and accounts receivable from customers:
| For the year ended December 31 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and accounts receivable at amortized cost(1) | Deposits and other demand liabilities | Net interest income | Net fee and commission income | Net income from financial operations | Provision for loan losses | Support expenses(2) | Other op.income and expenses (5) | Net income before taxes | Income tax | Net income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (In millions of Ch$) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retail | 31,225,378 | 13,094,059 | 1,642,104 | 503,186 | 64,292 | (498,572) | (744,059) | (77,593) | 889,358 | (211,987) | 677,371 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wealth Management & insurance | 924,692 | 3,177,991 | 59,789 | 30,019 | 4,236 | (2,870) | (32,037) | (1,976) | 57,161 | (13,963) | 43,198 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle-Market | 6,178,983 | 4,262,866 | 334,660 | 52,921 | 22,154 | (74,190) | (45,074) | (3,856) | 286,615 | (78,709) | 207,906 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CIB | 2,139,201 | 7,313,098 | 211,915 | 47,404 | 143,503 | 4,269 | (103,287) | (2,654) | 301,150 | (83,216) | 217,934 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate Activity & others | 464,626 | 2,721,359 | (261,785) | (37,699) | 21,597 | (3,950) | (14,956) | 7,924 | (288,869) | 180,513 | (108,356) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 40,932,880 | 30,569,373 | 1,986,683 | 595,831 | 255,782 | (575,313) | (939,413) | (78,155) | 1,245,415 | (207,362) | 1,038,053 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Corresponds to loans and accounts receivable at amortized cost under IFRS 9, without deducting their allowances for loan losses.
(2)Corresponds to the sum of personnel salaries and expenses, administrative expenses, depreciation and amortization.
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Operations through Subsidiaries
In Chile, banks may only establish or acquire subsidiaries that are strictly complementary to banking activities, pursuant to the General Banking Law and FMC guidelines. Permitted subsidiaries include leasing and factoring companies, payment and card processors, brokerage firms, fund managers, custodial and other financial service entities, as well as operational support companies such as IT or back-office services. Chilean banks are not allowed to own insurance companies and may only own insurance brokerage subsidiaries, which must operate with full functional and governance separation. All subsidiaries require prior FMC authorization, are subject to consolidated supervision and Basel III capital rules, and banks are expressly prohibited from owning commercial, industrial, or other non-financial businesses. For the twelve–month period ended December 31, 2025, our subsidiaries collectively accounted for 2.1% of our total consolidated assets.
The following companies are considered entities controlled by the Bank and are therefore within the scope of consolidation:
| Percent ownership share | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name of the Subsidiary | Main Activity | Place of incorporation and operation | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct | Indirect | Total | Direct | Indirect | Total | Direct | Indirect | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| % | % | % | % | % | % | % | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 Corredores de Bolsa Limitada | Financial instruments brokerage | Santiago, Chile | 50.59 | 0.41 | 51.00 | 50.59 | 0.41 | 51.00 | 50.59 | 0.41 | 51.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Asesorias Financieras 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Klare Corredora de Seguros S.A. | Insurance brokerage | Santiago, Chile | - | - | - | - | - | - | 50.10 | - | 50.10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Consumer Chile S.A. | Financing | Santiago, Chile | 51.00 | - | 51.00 | 51.00 | - | 51.00 | 51.00 | - | 51.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sociedad operadora de Tarjetas de Pago Santander Getnet Chile S.A. | Card operator | Santiago, Chile | 99.99 | 0.01 | 100.00 | 99.99 | 0.01 | 100.00 | 99.99 | 0.01 | 100.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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” (IFRS 10):
•Santander Gestión de Recaudación y Cobranza Limitada: its exclusive activity is administering and collecting loans.
•Multiplica SpA: its primary purpose is the development of incentive programs that encourage the use of payment cards.
The company Bansa Santander S.A. was included in the consolidation perimeter until May 2024. The Bank did not have an ownership percentage of Bansa Santander S.A., which was consolidated as a consequence of being controlled by the management of Santander Consumer Chile S.A. During the months of April and May of 2024, Bansa Santander S.A. and Santander Investments Chile Limitada made a series of modifications to the financing agreements existing between them, as a result of which the shareholders of Bansa Santander S.A. also granted Santander Investments Chile Limitada the power to appoint one of the three members of its Board of Directors. Therefore, as of May 2024, Santander Consumer Finance Limitada lost control of Bansa Santander S.A., having to exclude this company from its consolidation scope.
Pagonxt Payments Chile SpA was included in the consolidation perimeter until December 2024. The Bank did not have an ownership percentage in Pagonxt Payments Chile SpA, which was consolidated based on the fact that it was controlled by the management of the Bank. The company PagoNxt Payments Chile SpA in January 2025 signed an agreement with the related entity Santander Global Technology and Operations Chile Limitada to transfer its assets, contracts, and employees. As a result, the Bank no longer controlled this entity and PagoNxt Payments Chile SpA is no longer consolidated.
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Sale of 49.99% of Getnet Chile S.A.
On December 23, 2025, the Board of Directors announced an extraordinary meeting of our shareholders scheduled for January 27, 2026 in order for the Bank’s shareholders to vote in connection with (i) the offer made by Getnet Payments, S.L., a company of the Santander Group, to acquire 49.99% of the shares of Sociedad Operadora de Tarjetas de Pago Santander Getnet Chile S.A. (“Getnet”) in exchange for a lump sum payment of Ch$68,000 million, and (ii) the execution of an agreement between us and Getnet, with a value that ranges from Ch$55,465 million and Ch$79,999 million by means of which we will share and use our personnel, branches, equipment and data to promote Getnet’s products and services for a term of seven years, in exchange for 10% of the DIAO (defined as the discount fee minus interchange fees minus assessment fees plus other revenues) received by Getnet as a result of such services. On January 27, 2026, an Extraordinary Shareholders’ Meeting of Banco Santander-Chile was held, at which the shareholders resolved to approve the acceptance of the offer made by Getnet Payments, S.L. to Banco Santander-Chile and Santander Asesorías Financieras Limitada for the purchase of 49.99% of the shares of the subsidiary Sociedad Operadora de Tarjetas de Pago Santander Getnet Chile S.A., in the terms previously stated.
The Bank also has significant influence over the following entities:
| Place of Incorporation and operation | Percentage of ownership share as of December 31, | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Associates | Main activity | (in %) | |||||||||||||||||||||||||||||||||
| Redbanc S.A. | ATM services | 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 S.A. | 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 | 29.29 | 29.29 | 29.29 | ||||||||||||||||||||||||||||||
| Cámara Compensación de Pagos de Alto Valor S.A. | Payments clearing | Santiago, Chile | 13.72 | 13.72 | 15.00 | ||||||||||||||||||||||||||||||
| Administrador Financiero del Transantiago S.A. | Administration of boarding passes for public transportation | Santiago, Chile | 20.00 | 20.00 | 20.00 | ||||||||||||||||||||||||||||||
| Servicios de Infraestructura de Mercado OTC S.A. | Administration of the infrastructure for the financial market of derivative instruments | Santiago, Chile | 12.48 | 12.48 | 12.48 | ||||||||||||||||||||||||||||||
In 2018, the Bank announced it was selling its share participation on Redbanc S.A. and Transbank S.A. Accordingly, we classified those investments in accordance to IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” as investments available for sale. Since no potential buyers were identified, the Bank has reclassified those investments as investments in associates and accounted using the equity method. The Bank continues to be committed to the sale plan for these assets, actively seeking potential buyers and continuing its plans to develop its own acquiring network, as evidenced by the recent creation of a payment card operating company.
In the case of Cámara Compensación de Pagos Alto Valor S.A., Banco Santander-Chile has a representative on the Board of Directors. As per the definition of associates, the Bank has concluded that it exerts significant influence over this entity. In 2024, the Bank sold a stake of 1.28% and reduced its participation to 13.72% in this company.
In the case of Servicios de Infraestructura de Mercado OTC S.A., the Bank actively participates, through its executives, in the administration and in the process of organization, which is why the Administration has concluded that it exerts significant influence over it.
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Competition
Overview
The Chilean financial services market consists of a variety of largely distinct sectors. The most important sector, commercial banking, includes a number of privately-owned banks and one public-sector bank, Banco del Estado de Chile (which operates within the same legal and regulatory framework as the private sector banks). The private-sector banks include local banks and a number of foreign-owned banks operating in Chile. The Chilean banking system is comprised of 17 banks, including one public-sector bank. The six largest banks accounted for 85.4% of all outstanding loans by Chilean financial institutions as of December 31, 2025 (excluding assets held abroad by Chilean banks).
The Chilean banking system has experienced increased competition in recent years, largely due to consolidation in the industry and new legislation. In 2025, the merger between Banco BICE and Banco Security was completed, creating the 7th largest bank in Chile in terms of loan portfolio. In 2025 Tanner Digital Bank began its operations as a new bank in Chile servicing SMEs and Tenpo, a digital consumer bank, is expected to begin operating in 2026. We also face competition from non-bank and non-finance competitors, principally department stores, credit unions and cajas de compensación (private, non-profitable corporations whose aim is to administer social welfare benefits, including payroll loans, to their members) with respect to some of our credit products, such as credit cards, consumer loans and insurance brokerage. In addition, we face competition from non-bank finance competitors, such as leasing, factoring and automobile finance companies, with respect to credit products, and mutual funds, pension funds and insurance companies, with respect to savings products. Our subsidiary, Getnet, also competes against non-banks, such as MercadoPago, in the acquiring market. Currently, banks continue to be the main suppliers of leasing, factoring and mutual funds, and the insurance sales business has grown rapidly.
All the competition data in the following sections is based on Chilean Bank GAAP.
The following tables set out certain statistics comparing our market position to that of our peer group, defined as the six largest banks in Chile in terms of total loans as of December 31, 2025 or the latest date available (excluding assets held by Chilean banks abroad).
| As of December 31 2025, unless otherwise noted | |||||||||||||||||
| Market Share | Rank | ||||||||||||||||
| Commercial loans | 13.8 | % | 4 | ||||||||||||||
| Consumer loans | 19.1 | % | 1 | ||||||||||||||
| Residential mortgage loans | 19.7 | % | 2 | ||||||||||||||
| Total loans | 16.7 | % | 1 | ||||||||||||||
| Deposits | 17.0 | % | 2 | ||||||||||||||
| Checking accounts(1) | 21.9 | % | 1 | ||||||||||||||
| Branches(1) | 15.9 | % | 2 | ||||||||||||||
Source: FMC
(1)As of November 2025, according to the latest publicly available information.
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Loans
As of December 31, 2025, our loan portfolio was the largest among Chilean banks. Our loan portfolio, including interbank loans, represented 16.7% of the market for loans in the Chilean financial system as of such date. The following table sets forth our and our peer group’s market shares in terms of loans (excluding assets held by Chilean banks abroad).
| As of December 31 2025, (Chilean Bank GAAP) | |||||||||||||||||||||||
| Loans | Ch$ bn | U.S.$ bn | Market Share | ||||||||||||||||||||
| Santander-Chile | 41,224 | 45.8 | 16.7 | % | |||||||||||||||||||
| Banco de Chile | 39,592 | 44.0 | 16.1 | % | |||||||||||||||||||
| Banco del Estado de Chile | 39,215 | 43.5 | 15.9 | % | |||||||||||||||||||
| Banco de Crédito e Inversiones | 35,224 | 39.1 | 14.3 | % | |||||||||||||||||||
| Scotiabank Chile | 32,533 | 36.1 | 13.2 | % | |||||||||||||||||||
| Itaú Chile | 22,784 | 25.3 | 9.2 | % | |||||||||||||||||||
| Others | 35,939 | 39.9 | 14.6 | % | |||||||||||||||||||
| Chilean financial system | 246,511 | 273.7 | |||||||||||||||||||||
Source: FMC. Market share over total loans including those accounted for under amortized cost and fair value.
Deposits
We had a 17.0% market share in deposits, ranking second among banks in Chile as of December 31, 2025. Deposit market share is based on total time and demand deposits as of the respective dates. The following table sets forth our and our peer group’s market shares in terms of deposits (excluding assets held by Chilean banks abroad).
| As of December 31 2025, (Chilean Bank GAAP) | |||||||||||||||||||||||
| Deposits | Ch$ bn | U.S.$ bn | Market Share | ||||||||||||||||||||
| Banco del Estado de Chile | 35,517 | 39.4 | 19.8 | % | |||||||||||||||||||
| Santander-Chile | 30,569 | 33.9 | 17.0 | % | |||||||||||||||||||
| Banco de Chile | 28,470 | 31.6 | 15.9 | % | |||||||||||||||||||
| Banco de Crédito e Inversiones | 22,515 | 25.0 | 12.6 | % | |||||||||||||||||||
| Scotiabank Chile | 18,471 | 20.5 | 10.3 | % | |||||||||||||||||||
| Itaú Chile | 14,587 | 16.2 | 8.1 | % | |||||||||||||||||||
| Others | 29,255 | 32.5 | 16.3 | % | |||||||||||||||||||
| Chilean financial system | 179,384 | 199.1 | |||||||||||||||||||||
Source: FMC.
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Total Equity
As of December 31, 2025, we were the third largest bank in Chile in terms of total equity. The following table sets forth our and our peer group’s total equity.
| As of December 31 2025, (Chilean Bank GAAP) | |||||||||||||||||||||||
| Total Equity | Ch$ bn | U.S.$ bn | Market Share | ||||||||||||||||||||
| Banco de Crédito e Inversiones | 7,446 | 8.3 | 20.1 | % | |||||||||||||||||||
| Banco de Chile | 5,800 | 6.4 | 15.7 | % | |||||||||||||||||||
| Santander-Chile | 4,840 | 5.4 | 13.1 | % | |||||||||||||||||||
| Itaú Chile | 4,309 | 4.8 | 11.7 | % | |||||||||||||||||||
| Banco del Estado de Chile | 4,204 | 4.7 | 11.4 | % | |||||||||||||||||||
| Scotiabank Chile | 4,029 | 4.5 | 10.9 | % | |||||||||||||||||||
| Others | 6,347 | 7.0 | 17.2 | % | |||||||||||||||||||
| Chilean financial system | 36,975 | 41.1 | |||||||||||||||||||||
Source: FMC.
Efficiency
As of December 31, 2025, we were the first most efficient bank in our peer group. The following table sets forth our and our peer group’s efficiency ratio (defined as operating expenses as a percentage of operating revenue, which is the aggregate of net interest income, fees and income from services (net), net gains from mark-to-market and trading, exchange differences (net) and other operating income (net)) in each case under Chilean Bank GAAP.
| Efficiency ratio as defined by the FMC | As of December 31 2025, (Chilean Bank GAAP) | ||||||||||
| Santander-Chile | 36.0 | % | |||||||||
Banco de Chile | 37.4 | % | |||||||||
Scotiabank Chile | 39.7 | % | |||||||||
| Banco del Estado de Chile | 50.1 | % | |||||||||
| Banco de Crédito e Inversiones | 51.7 | % | |||||||||
| Itaú Chile | 55.0 | % | |||||||||
| Chilean financial system | 45.1 | % | |||||||||
Source: FMC.
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Net Income for the Period Attributable to Equity Holders
In 2025, we were the second largest bank in Chile in terms of net income attributable to shareholders measured under Chilean Bank GAAP. The following table sets forth our and our peer group’s net income.
| As of December 31 2025, (Chilean Bank GAAP) | |||||||||||||||||||||||
| Net income attributable to equity holders | Ch$ bn | U.S.$ bn | Market Share | ||||||||||||||||||||
Banco de Chile | 1,192 | 1.32 | 22.6 | % | |||||||||||||||||||
Santander-Chile | 1,053 | 1.17 | 20.0 | % | |||||||||||||||||||
Banco de Crédito e Inversiones | 996 | 1.11 | 18.9 | % | |||||||||||||||||||
Banco del Estado de Chile | 492 | 0.55 | 9.3 | % | |||||||||||||||||||
Scotiabank Chile | 434 | 0.48 | 8.2 | % | |||||||||||||||||||
Itaú Chile | 428 | 0.48 | 8.1 | % | |||||||||||||||||||
Others | 669 | 0.74 | 12.7 | % | |||||||||||||||||||
Chilean financial system | 5,264 | 5.85 | — | ||||||||||||||||||||
Source: FMC.
Return on equity
We were the most profitable bank in our peer group (as measured by return on period-end equity under Chilean Bank GAAP) and the fourth most capitalized bank as measured by the Chilean BIS ratio as of December 31, 2025 and November 30, 2025 (the last industry available data), respectively. The following table sets forth our and our peer group’s return on average equity and BIS ratio.
| Return on period-end equity as of December 31 2025, (Chilean Bank GAAP) | BIS ratio as of Nov. 2025 (Chilean GAAP) | |||||||||||||
Santander-Chile | 23.3 | % | 16.6 | % | ||||||||||
Banco de Chile | 21.2 | % | 18.3 | % | ||||||||||
| Banco de Crédito e Inversiones | 13.8 | % | 15.8 | % | ||||||||||
| Banco del Estado de Chile | 12.2 | % | 16.6 | % | ||||||||||
Scotiabank | 10.8 | % | 17.5 | % | ||||||||||
Itaú Chile | 10.4 | % | 17.8 | % | ||||||||||
Source: FMC.
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Asset Quality
As of December 31, 2025, we were ranked fifth in our peer group by the non-performing loan to total loan ratio. The following table sets forth our and our peer group’s non-performing loan ratio of loans accounted for using the amortized cost method as defined by the FMC as of December 31, 2025.
| Non-performing loans / total loans as of December 31 2025, (Chilean Bank GAAP) | ||||||||
Banco de Chile | 1.66 | % | ||||||
Banco de Crédito e Inversiones | 2.14 | % | ||||||
| Itaú Chile | 2.16 | % | ||||||
Scotiabank Chile | 2.36 | % | ||||||
Santander-Chile | 3.20 | % | ||||||
| Banco del Estado de Chile | 4.14 | % | ||||||
| Chilean financial system | 2.53 | % | ||||||
Source: FMC
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Regulation and Supervision
General
In Chile, only banks may maintain checking accounts for their customers, engage in foreign trade operations, and, together with non-bank financial institutions, accept time deposits. The main authorities that regulate financial institutions in Chile are the FMC and the Central Bank. Chilean banks are primarily subject to the General Banking Law, and to the extent inconsistent with this law, secondarily to the provisions of the Chilean Companies Law applicable to public corporations, with the exception of certain provisions that expressly are excluded.
The modern Chilean banking system dates back to 1925 and has been characterized by periods of extensive regulation and government intervention, as well as periods of deregulation. The most recent period of deregulation began in 1975 and culminated in the adoption of a series of amendments to the General Banking Law. This law was amended in 2001 to grant additional powers to banks, including general underwriting powers for new issues of certain debt and equity securities and the power to establish subsidiaries to engage in activities related to banking, such as brokerage, investment advisory and mutual fund services, investment fund management, factoring, securitization products and financial leasing services. In January 2019, amendments to the General Banking Law were introduced by Law 21,130, which modernized Chile’s banking legislation by adopting capital and resolution standards in line with Basel Committee requirements. More recently, the Fintech Law, in addition to introducing regulations related to the SFA, introduced relevant amendments to the General Banking Law, granting the FMC authority to establish rules of attention to customers of the banking industry and regulations applicable to banking subsidiaries. Finally, Law 21,694, published in September 2024, establishes certain additional exceptions to banking secrecy, stipulating that entities that have a legitimate interest under the law may also access information subject to banking secrecy.
The Central Bank
The Central Bank is an autonomous legal entity created by the Chilean Constitution. It is subject to the Chilean Constitution and its own ley orgánica constitucional, or organic constitutional law. To the extent not inconsistent with the Chilean Constitution or the Central Bank’s organic constitutional law, the Central Bank is also subject to private sector laws (but in no event is it subject to the laws applicable to the public sector). It is directed and administered by a Board of Directors composed of five members designated by the President of Chile, subject to the approval of the Chilean Senate.
The legal purpose of the Central Bank is to maintain the stability of the Chilean peso, that is, to keep inflation low and stable over time. The Central Bank is also responsible for the orderly functioning of Chile’s internal and external payment systems. The Central Bank’s powers include setting reserve requirements, regulating the amount of money and credit in circulation, establishing regulations and guidelines regarding finance companies, foreign exchange (including the Formal Exchange Market) and banks’ deposit-taking activities.
According to Article 132 of the General Banking Law, demand deposits and other obligations with unconditional withdrawal rights are 100% guaranteed by the Central Bank of Chile in the event of forced liquidation of a bank, regardless of whether the depositors are natural or legal persons.
Financial Market Commission
The Comisión para el Mercado Financiero or Financial Market Commission (FMC) is the sole supervisor for the Chilean financial system overseeing insurance companies, companies with publicly traded securities, credit unions, credit card and prepaid card issuers, and, as of June 1, 2019, banks. This commission is responsible for ensuring the proper functioning, development and stability of the financial market, facilitating market agents' participation and defending public faith in the financial markets. To do so, it must maintain a general and systemic vision of the market, considering the interests of investors and policyholders. Likewise, it shall be responsible for ensuring that the persons or entities audited, from their initiation until the end of their liquidation, comply with the laws, regulations, statutes and other provisions that govern them.
The Commission oversees a Council, which is composed of five members, who are appointed and are subject to the following rules:
•A commissioner appointed by the President of Chile, of recognized professional or academic prestige in matters related to the financial system, which will have the character of president of the FMC.
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•Four commissioners appointed by the President of Chile, from among persons of recognized professional or academic prestige in matters related to the financial system, by supreme decree issued through the Ministry of Finance, after ratification of the Senate by the four sevenths of its members in exercise, in session specially convened for that purpose.
The Council’s responsibilities include regulation, sanctioning and the definition of general supervision policies. In addition, there will be a prosecutor in charge of investigations and the Chairman will be responsible for supervision. The FMC will act in coordination with the Central Bank.
In January 2019, Law 21,130, which modernized the banking legislation contained in the General Banking Law and amended Law 21,000 (among others), was published in the Official Gazette. The law modernizes Chilean banking regulation in order to comply with Basel III practices and provisions. The law provides for stronger banking capital and reserves requirements in accordance with Basel III guidelines. The FMC now has the faculty to determine the risk weighting of assets through a standardized model to be approved by the FMC or banks can implement their own methodology, subject to approval by the FMC. The law also imposes limitations on dividend distributions and puts in place intervention mechanisms in the event of insolvency.
The regulator examines all banks from time to time, generally at least once a year. Banks are also required to submit their financial statements monthly to the FMC, and the banks’ financial statements are published at least four times a year in a newspaper with countrywide coverage. In addition, banks must provide extensive information about their operations at various periodic intervals to the FMC. A bank’s annual financial statements and the opinion of its independent auditors must also be submitted to the FMC.
Any person wishing to acquire, directly or indirectly, 10.0% or more of the share capital of a bank must obtain the prior approval of the FMC. Absent such approval, the acquirer of shares so acquired will not have the right to vote. The FMC may only refuse to grant its approval, based on specific grounds set forth in the General Banking Law.
According to Article 35 bis of the General Banking Law, the prior authorization of the regulator is required for:
•the merger of two or more banks;
•the acquisition of all or a substantial portion of a bank’s assets and liabilities by another bank;
•the control by the same person, or controlling group, of two or more banks; or
•a substantial increase in the existing control of a bank by a controlling shareholder of that bank.
The intended purchase, merger or expansion may be denied by the regulator with an accompanying resolution recording the specific reasons for denial and with the agreement of a majority of the Board of Directors of the Central Bank.
Pursuant to the regulations of the FMC, the following ownership disclosures are required:
•a bank is required to inform the FMC of the identity of any person owning, directly or indirectly, 5.0% or more of such banks’ shares;
•holders of ADSs must disclose to the Depositary the identity of beneficial owners of ADSs registered under such holders’ names;
•the Depositary is required to notify the bank as to the identity of beneficial owners of ADSs which such Depositary has registered and the bank, in turn, is required to notify the FMC as to the identity of the beneficial owners of the ADSs representing 5.0% or more of such banks’ shares; and
•bank shareholders who individually hold 10.0% or more of a bank’s capital stock and who are controlling shareholders must periodically inform the FMC of their financial condition.
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Limitations on Types of Activities
Chilean banks can only conduct those activities allowed by the General Banking Law: making loans, accepting deposits and, subject to limitations, making investments and performing financial services. Investments are restricted to real estate for the bank’s own use, gold, foreign exchange and debt securities. Through subsidiaries, banks may also engage in other specific financial service activities such as securities brokerage services, equity investments, securities, mutual fund management, investment fund management, financial advisory and leasing activities. Subject to specific limitations and the prior approval of the FMC and the Central Bank, Chilean banks may own majority or non-controlling interests in foreign banks.
Deposit Insurance
The General Banking Law protects certain depositors by providing government deposit insurance. The guarantee only extends to certain time deposits and savings accounts held by natural persons with a maximum value of UF400 per person (Ch$15.9 million or U.S.$17,643 as of December 31, 2025) per calendar year in the entire financial system and a maximum of UF200 per person per bank (Ch$7.9 million or U.S.$8,822 as of December 31, 2025. Governmental deposit insurance does not cover time deposits or savings account balances for legal entities (including for-profit and non-profit institutions or companies).
Demand deposits and other obligations with unconditional withdrawal rights are 100% guaranteed by the Central Bank of Chile in the event of forced liquidation of a bank, regardless of whether the depositors are natural or legal persons.
Reserve Requirements
Deposits are subject to a reserve requirement of 9.0% for demand deposits and 3.6% for time deposits (with terms of less than one year). For purposes of calculating the reserve obligation, banks are authorized to deduct daily from their foreign currency denominated liabilities, the balance in foreign currency of certain loans and financial investments held outside of Chile, the most relevant of which include:
•cash clearance account, which should be deducted from demand deposit for calculating reserve requirement;
•certain payment orders issued by pension providers; and
•the amount set aside for “technical reserve” (as described below), which can be deducted from reserve requirement.
The Central Bank has statutory authority to require banks to maintain reserves of up to an average of 40.0% for demand deposits and up to 20.0% for time deposits (irrespective, in each case, of the currency in which they are denominated) to implement monetary policy.
In addition, to the extent that the aggregate amount of the following types of liabilities exceeds 2.5 times the amount of a bank’s regulatory capital, a bank must maintain a 100% “technical reserve” against them: demand deposits, deposits in checking accounts, or obligations payable on sight incurred in the ordinary course of business, and in general all deposits unconditionally payable immediately, but excluding interbank demand deposits. As of December 31, 2025, the Bank was not required to maintain this reserve.
Minimum Capital
On October 9, 2020, the FMC published the regulations on regulatory capital to comply with regulatory capital regulation in accordance with Basel III and General Banking Law. The new regulation became effective on December 1, 2021 and is being gradually implemented and adjusted to be fully in place by December 1, 2025. Pursuant to the proposed regulation, there are three levels of capital: core capital level 1 or CET1 (core capital), additional tier I capital or AT1 (perpetual bonds and preferred stock) and Tier 2 or T2 capital (subordinated bonds and voluntary provisions). Regulatory capital is composed of the sum of CET1, AT and T2 after making some deductions, mainly for intangible assets, hybrid securities issued by foreign subsidiaries, partial deduction for deferred taxes and some reserve and profit accounts. The minimum total regulatory capital is 8% of risk-weighted assets, which includes credit, market, and operational risk. This minimum increases in line with the size, complexity and solvency of a bank and the FMC’s assessment of a bank’s management.
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According to Chilean regulations regulatory core capital must be as a minimum 4.5% of risk weighted assets (RWA) of a Bank. In addition, and to avoid restrictions on dividend payments, a bank must have an additional conservation buffer of 2.5% of RWA. The conservation buffer will be gradually phased in by 2025 and must be comprised of core capital. The Central Bank may set an additional CCyB of up to 2.5% of risk-weighted assets in agreement with the FMC, also comprised of core capital. At the Central Bank’s Financial Policy Meeting, held in the first half of 2023, the Board of the Central Bank of Chile agreed to activate the CCyB for banks, setting it at 0.5% of risk-weighted assets, which must be implemented by May 2024.
In November 2024, the Central Bank further updated the framework for determining the CCyB with the objective of moving towards what the Central Bank defined as the "neutral level" for this buffer, which was set at 1% of risk-weighted assets. The Central Bank's Financial Policy Committee will define the transition process towards this neutral level, which will be achieved gradually, only once convergence to Basel III standards is completed in December 2025. In particular, the initiation of the convergence toward the "neutral level" will be evaluated during the first Financial Policy Meeting of the year 2026. This decision will be adopted as macro-financial conditions allow, taking into account a timeframe of at least one year for its gradual implementation. This framework also sets the steps for loosening the CCyB if credit conditions warrant it.
| Risk scenario | CCyB Level | Elements to Consider | ||||||
| Standard Risk | CCyB at its Neutral level | - Bank balance sheets show activity and results within normal ranges. | ||||||
| - Credit markets functioning normally. | ||||||||
| - Asset price dynamics aligned with fundamentals. | ||||||||
| Significant Increase in Systemic Risk | CCyB increases exceptionally above Neutral | - Credit growth significantly detached from fundamentals. | ||||||
| - Household and corporate leverage at very high levels. | ||||||||
| - Asset overvaluation. | ||||||||
| - External risks far exceeding usual levels. | ||||||||
| - Bank balance sheets showing unusually high activity and results. | ||||||||
| Materialization of Systemic Risk or Unexpected Shock | CCyB is fully or partially reduced to a level below Neutral | - Adverse shock to the economy from internal or external sources. | ||||||
| - Significant reduction in financial asset prices. | ||||||||
| - Difficulties in access to financing for households and businesses. | ||||||||
| - Banking sector shows weaknesses, including expectations of significant losses and increased cost of capital. | ||||||||
| Recovery | CCyB remains reduced below Neutral level or at zero | - Beginning of recovery in the economy and banking sector. | ||||||
| - Balance sheets, risk indicators, and bank profitability in the process of recovery. | ||||||||
| - Credit supply showing signs of recovery. | ||||||||
| - Asset prices starting to align with fundamentals. | ||||||||
| Reconstruction of CCyB | CCyB gradually increases toward Neutral level as recovery consolidates | - Signs of consolidated economic recovery. | ||||||
| - Bank balance sheets, risk indicators, and profitability recovered. | ||||||||
| - Banks able to absorb capital impacts without relevant systemic risks. | ||||||||
On November 2, 2020, the FMC published updated guidelines regarding the identification and core capital charge for banks considered Systemically Important Banks (“SIBs”). The FMC, in agreement with the Central Bank, also imposed additional capital requirements for SIBs of between 1-3.5% of risk-weighted assets. This additional capital was gradually phased in by 25% beginning in December 2021 until December 2025.
There are a total of four factors that are weighted to reach a market share:
1.Size (weighted at 30%): Includes total assets consolidated in the domestic market.
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2.Domestic interconnection (weighted at 30%): Includes assets and liabilities with financial institutions (banks and non-banks) and assets in circulation in the Chilean financial market (equity and fixed income).
3.Domestic substitution (weighted at 20%): Includes the share in local payments, assets in custody, deposits and loans.
4.Complexity (weighted at 20%): Includes factors that could lead to greater difficulties regarding costs and/ or time for the orderly resolution of the Bank. These include the notional amount of OTC derivatives, inter-jurisdictional assets and liabilities and available-for-sale assets.
The minimum amount of the sum of the factors to be considered systemic is 1000 bp, equivalent to a weighted participation of 10% of all four factors. The core capital additional charge depends on the size of the total factor, as set out in the table below:
| Systemic Level | Range (bp) | Core capital additional charge (% of risk-weighted assets) | |||||||||||||||
| I | 1000-1300 | 1.0%-1.25% | |||||||||||||||
| II | 1300-1800 | 1.25%-1.75% | |||||||||||||||
| III | 1800-2000 | 1.75%-2.5% | |||||||||||||||
| IV | >=2000 | 2.5%-3.5% | |||||||||||||||
The Central Bank may also require for a SIB: (1) the addition of up to 2% to the core capital to a bank’s total assets ratios; (2) a reduction in the technical reserve requirement trigger from 2.5 times regulatory capital to 1.5 times regulatory capital; and/or (3) a reduction in the interbank loan limit to 20% of regulatory capital of any SIB. Under this framework, we are classified as a Level II SIB with a requirement of maintaining 1.5% of RWA as core capital to fulfill this requirement.
Banks must also have at least 1.5% of RWA in Additional Tier 1 capital (AT1), either in the form of preferred shares or perpetual bonds, both of which may be convertible to common equity. The maximum amount of AT1 is set at 1/3 of core capital. As a temporary measure, the FMC permits banks to fulfill their minimum AT1 requirement with Tier II instruments. In October 2021, the Bank issued an AT1 perpetual bond for U.S.$700 million with no fixed maturity and not redeemable before five years from the date of issuance. The bond is convertible to shares if the banks CET1 ratio falls below 5.125% in line with the FMC conditions and requirements for the issuance of perpetual bonds and preferred equity.
Tier 2 capital is now set at a minimum of 2% of RWA. Tier 2 includes subordinated bonds and up to the equivalent of 50% of core capital can be considered Tier 2. Additional provision in accordance with the rules of General Banking Law can also be considered Tier 2 in amount up to 1.25% of RWA.
The General Banking Law also incorporates Pillar II capital requirements to ensure adequate risk management. This pillar's objective is to ensure that banks maintain capital levels consistent with their risk profile and business model and encourages the development and use of appropriate processes to monitor and manage their risks. Pillar II also granted the regulators the power to impose greater capital requirements because of deficient evaluations of a bank’s internal capital adequacy assessment process (ICAAP), which should consider a bank’s risk profile and a strategy to sustain adequate levels of capital, even under stress scenarios. ICAAP is a process through which a bank evaluates its capital needs in relation to its risk profile, strategic objectives, and operating environment and is required by the FMC. Pillar II also focuses on risks not considered in Pillar I such as reputational risks, concentration risks, liquidity risks and interest rate risks. The FMC, with at least four votes from the Council of the FMC, will have the power to impose additional regulatory capital demands of up to 4% of risk-weighted assets, either Tier I or Tier II, if it determines that the previous capital levels and buffers are not enough for a particular financial institution. On April 11 2025, the FMC resolved to establish a Pilar II requirement of 25 basis points of total capital for Banco Santander Chile with an initial tranche of 12.5 basis points constituted by June 30, 2025. On January 16, 2026 and following the completion of the FMC's annual supervisory process, the FMC determined that the 0.125% Pilar II requirement for Santander Chile was sufficient. Every year the FMC will perform an annual capital adequacy assessments analysis as part of its supervisory process, which could result in a higher Pilar II capital requirement. Therefore, we cannot assure you that our minimum capital requirements will not be impacted by new regulatory Pilar II thresholds in the future.
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On December 12, 2023, the FMC published for public comment on proposals addressing the framework for the Internal Capital Adequacy Assessment Process (“ICAAP”) carried out by banks, the measurement of the Interest Rate Risk in the Banking Book (“IRRBB”) and the definition of outlier banks, among other topics. On January 17, 2024, the FMC stated that banks that had a level of market risk of the banking book greater than 15% of CET1 would have to meet an additional capital requirement under Pillar II guidelines. On July 8, 2025, the FMC published Circular No. 2,365 containing the final amendments to this regulation, including: (i) the removal of the 15% threshold of the CET1 to determine additional capital requirements based on the metric of changes in the Economic Value of Equity (“ΔEVE”) and the possibility to impose capital requirements for the full amount of interest rate risk in the banking book, based on either short-term or long-term exposures, (ii) establishment of a revised framework to determine outlier banks by maintaining the 15% threshold of the Tier 1 Capital based on ΔEVE while adding new thresholds for changes in Net Interest Income (“ΔNII”) amounting to 5% of Tier 1 Capital and 18% of 12-month rolling Net Interest Income, conditions that, if individually met, will determine an outlier bank, (iii) introduction of certain technical modifications to the standardized model for computing interest rate risk in the banking book (ΔEVE and ΔNII) by allowing the netting for local currencies (CLP and CLF) while differentiating interest rate shocks for short- and long -term risk for CLF currency, (iv) the allowance for banks to use internal models in order to determine potential internal capital buffers associated with IRRBB, (v) the introduction of parameters on the framework the banks should follow in order to assess their risk profile and measure material risks, (vi) the incorporation of new guidelines for banks regarding the definition of internal capital targets by adopting the Pillar II Requirement and Pillar II Guidance concepts, (vii) the limitation of a maximum extension of 70 pages for the ICAAP Report, and (viii) the establishment of new disclosure requirements for Pillar II requirements. According to the schedule provided by the FMC, except for the new computation guidelines for IRRBB through ΔEVE and ΔNII, most of the changes will be in place for the 2026 ICAAP, to be delivered to the FMC in April 2027. Given the changes in the measurement of ΔEVE and ΔNII metrics, the definition of new thresholds for determining outlier banks and the revision made to the supervisory framework, we cannot rule out the imposition of further capital requirements to the Chilean banking industry in the future, including us. Therefore, we cannot guarantee that our profitability will not be impacted by actions we may be required to take in order to fulfill new regulatory capital requirements which may be established by the FMC in the future.
In 2023, the FMC introduced Pillar III requirements for Chilean banks. The objective of the Pillar III standard is to give the public more transparency to better evaluate the capital situation of each entity. To do this, banking institutions must publish an independent document, referring exclusively to this pillar, which must offer readers a source of prudential parameters, updated according to the periodicity indicated, with all the information disclosure requirements indicated by the regulator.
The following table sets forth the regulatory capital demands under the General Banking Law:
| Minimum capital requirements: Basel III, previous GBL and new requirements | ||||||||
| Capital categories | General Banking Law | |||||||
| (% over risk weighted assets) | ||||||||
| (1) Core capital | 4.5% | |||||||
| (2) Additional Tier 1 Capital (AT1) | Minimum 1.5% up to 1/3 of core capital | |||||||
| (3) Total Tier 1 Capital (1+2) | 6.0% | |||||||
| (4) Tier 2 Capital | Minimum 2.0% with subordinated bonds up to 50% of core capital and additional provisions up to 1.25% of RWAs | |||||||
| (5) Total Regulatory Capital (3+4) | 8.0% | |||||||
| (6) Conservation Buffer | 2.5% CET1 | |||||||
| (7) Total Equity Requirement (5+6) | 10.5% | |||||||
| (8) Counter Cyclical Buffer | up to 2.5% CET1. Currently set at 0.5% | |||||||
| (9) SIB Requirement | Between 1 – 3.5% CET1 | |||||||
| (10) Pillar II | Up to 4% CET1 or Tier 2 | |||||||
Risk Weightings
The Basel Committee on Banking Supervision (BCBS) defines credit risk (CR) as the risk that a debtor or bank counterparty does not meet its obligations in accordance with the agreed terms. Credit risk is the most relevant in the
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Chilean banking industry. The prior mechanism estimated Risk Weighted Assets by Credit Risk (RWCR) using a methodology based on the Basel I standard. The standard method with Basel III standards is more advanced, since it has categories that depend on the type of counterparty and different risk factors. These categories are not based on accounting criteria, but rather on the underlying risk. Thus, all exposures that have mortgage guarantees, for example mortgage loans for housing, have a different treatment from those exposures not guaranteed by a mortgage. Additionally, in the case of mortgage-backed exposures, there are different types of treatment depending on the type of real estate and whether the obligations are paid with income generated by the property itself. The new framework also allows the use of internal methodologies, subject to compliance with minimum requirements. The new standards for weighing credit risk include the possibility of reducing RWCR when considering credit risk mitigators, such as compensation agreements, guarantees and other compensations.
The Basel Committee on Banking Supervision (BCBS) defines operational risk (OR) as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk but excludes strategic and reputational that a debtor or bank counterparty does not meet its obligations in accordance with the agreed terms. In order to estimate the operational risk coefficient, two factors are considered:
1.The business indicator component (BIC): A component that considers interest income, interest earning assets, dividend income, financial transactions, fees, and other operational income and expenses. These are then multiplied by a marginal coefficient.
2.Internal Loss Multiplier (ILM): This component is based on 10 years of historical operational losses, or at least five years in some special cases.
BCBS defines market risk (MR) as the risk of losses arising from movements in market prices. The risks subject to market risk capital requirements mainly includes: interest rate risk, credit spread risk, equity risk, foreign exchange (FX) risk and commodities risk for trading book instruments; and FX risk and commodities risk for banking book instruments. The FMC does not permit banks to use internal models for calculating MRWA and instead only permits the usage of simple standardized models.
The following table sets forth our RWA and regulatory capital as of December 31, 2025 under Basel III as required by the Chilean regulator as of this reporting date.
| Risk-weighted assets | December 31 2025 | ||||||||||
| Ch$ million | |||||||||||
| Market risk | 7,143,966 | ||||||||||
| Operational risk | 5,019,913 | ||||||||||
| Credit risk | 29,551,588 | ||||||||||
| Total RWA | 41,715,467 | ||||||||||
| Ratio | ||||||||||||||
| December 31 2025 | December 31 2025 | |||||||||||||
| (Ch$ million) | (% of RWA) | |||||||||||||
| Common Equity Tier 1 (CET1) | 4,601,923 | 11.0 | % | |||||||||||
| Additional Tier I | 629,468 | 1.5 | % | |||||||||||
| Tier I | 5,231,391 | 12.5 | % | |||||||||||
| Tier II | 1,815,930 | 4.4 | % | |||||||||||
| Regulatory capital | 7,047,321 | 16.9 | % | |||||||||||
We believe our capital levels are adequate, but we cannot rule out having to raise additional capital in the future to maintain our capital adequacy ratios above the minimum required by the FMC.
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Lending Limits
Under the General Banking Law, Chilean banks are subject to certain lending limits, including the following material limits:
•A bank may not extend to any entity or individual (or any one group of related entities), except for another financial institution, directly or indirectly, unsecured credit in an amount that exceeds 10.0% of the bank’s regulatory capital, or in an amount that exceeds 30.0% of its regulatory capital if the excess over 10.0% is secured by certain assets with a value equal to or higher than such excess. In the case of financing infrastructure projects built by government concession, the 10.0% ceiling for unsecured credits is raised to 15.0% if secured by a pledge over the concession, or if granted by two or more banks or finance companies which have executed a credit agreement with the builder or holder of the concession in the case of export loans in foreign currency the ceiling is raised to 30%;
•a bank may not extend loans to another financial institution subject to the General Banking Law in an aggregate amount exceeding 30.0% of its regulatory capital;
•a bank may not grant loans to a single business group, as defined in Title XV of Law 18,045, that exceeds 30% of the Bank’s regulatory capital, provided that such limit excludes interbank loans;
•if a bank originates a loan in excess of these limits, a fine equivalent to 10% of the excess will be applied to the bank;
•a bank may not directly or indirectly grant a loan whose purpose is to allow an individual or entity to acquire shares of the lender bank;
•a bank may not lend, directly or indirectly, to a director or any other person who has the power to act on behalf of the bank; and
•a bank may not grant loans to related parties (including holders of more than 1.0% of its shares) on more favorable terms than those generally offered to non-related parties. Loans granted to related parties are subject to the limitations described in the first bullet point above. In addition, the aggregate amount of loans to related parties may not exceed a bank’s regulatory capital.
In addition, the General Banking Law limits the aggregate amount of loans that a bank may grant to its employees to 1.5% of its regulatory capital and provides that no individual employee may receive loans in excess of 10.0% of this 1.5% limit. Notwithstanding these limitations, a bank may grant each of its employees a single residential mortgage loan for personal use during such an employee’s term of employment.
Allowance for Loan Losses under Chilean Bank GAAP
Chilean banks are required to provide to the FMC detailed information regarding their loan portfolio on a monthly basis. The FMC examines and evaluates each financial institution’s credit management process, including its compliance with the loan classification guidelines. Banks are classified into four categories: 1, 2, 3 and 4. Each bank’s category depends on the models and methods used by the bank to classify its loan portfolio, as determined by the FMC. Category 1 banks are those banks whose methods and models are satisfactory to the FMC. Category 1 banks will be entitled to continue using the same methods and models they currently have in place. A bank classified as a category 2 bank will have to maintain the minimum levels of reserves established by the FMC while its Board of Directors will be made aware of the problems detected by the FMC and required to take steps to correct them. Banks classified as categories 3 and 4 will have to maintain the minimum levels of reserves established by the FMC until they are authorized by the FMC to do otherwise.
Differences between IFRS and Chilean Bank GAAP
Chilean Bank GAAP, as prescribed by the Compendium of Accounting Standards (the “Compendium”), differs in certain respects from IFRS. The main differences that should be considered by an investor are the following:
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Suspension of Income Recognition on Accrual Basis
In accordance with the Compendium, financial institutions must suspend recognition of income on an accrual basis in their statements of income for certain loans included in the impaired portfolio. IFRS 9 does not allow the suspension of accrual of interest on financial assets for which an impairment loss has been determined. Under IFRS 9, interest income is calculated by applying the effective interest rate to the gross carrying amount of financial assets, except for financial assets that have subsequently become credit-impaired (or “Stage 3”), for which interest revenue is calculated by applying the effective interest rate to their amortized cost (i.e., net of ECL provision). Off-balance interests are recorded as interest income only if related payments are received. This difference does not materially impact our Audited Consolidated Financial Statements.
Charge-offs and Accounts Receivable
The Compendium requires companies to establish deadlines for the charge-off of loans and accounts receivable. IFRS does not require any such deadline for charge-offs. A charge-off due to impairment would be recorded, if and only if, all efforts at collection of the loan or account receivable had been exhausted. Accordingly, this difference does not materially impact our Audited Consolidated Financial Statements.
Assets Received in Lieu of Payment
The Compendium requires that the initial value of assets received in lieu of payment be the value agreed upon with a debtor as a result of the loan settlement or the value awarded in an auction, as applicable. These assets are required to be written off one year after their acquisition, if the assets have not been previously disposed of. IFRS requires that assets received in lieu of payment be initially accounted for at fair value. Subsequently, asset valuation depends on the classification provided by the entity for that type of asset. No deadline is established for charging-off an asset. The Bank has adjusted the Audited Consolidated Financial Statements accordingly.
Loan Loss Allowances
According to both Chilean Bank GAAP and IFRS, loan loss allowances are calculated using expected loss models. The main difference between Chilean Bank GAAP and IFRS 9 regarding loan loss allowances is that loan loss allowances under Chilean GAAP are calculated using expected loss models based on specific guidelines set by the FMC. The models adopted with IFRS 9 use an expected loss approach, however these are not in accordance with specific guidelines under Chilean Bank GAAP given by the FMC. The FMC has not adopted the IFRS 9 Impairment chapter and therefore the Bank has adjusted the Audited Consolidated Financial Statements to fully comply with IFRS standards.
Provisions for Country Risk and for Contingent Loan Risk
Under Chilean Bank GAAP, the Bank provisions 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 established by the FMC and therefore are not in accordance with IFRS. Our provisions for country risk as of December 31, 2025 were not material.
Under Chilean Bank GAAP, the Bank has established allowances related to the undrawn available credit lines and contingent loans in accordance with the FMC. Under IFRS 9, provisions for contingent loans are calculated based on expected credit loss. The Bank has adjusted the Audited Consolidated Financial Statements accordingly.
These differences do not have a material impact on our financial statements.
Perpetual bonds
The Bank has classified the perpetual bonds it has issued as other equity instruments issued other than capital in accordance with IFRS, with interest being recognized in interest expense in the consolidated statement of income. Under Chilean Bank GAAP these instruments are recognized as liabilities under the line item issued regulatory capital financial instruments, with interest recognized in equity.
Additional Provisions
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According to FMC regulation, with Board approval, a bank would be allowed to establish additional provisions over the provision limits already described, to protect themselves from the risk of non- predictable economical fluctuations that could affect the macro-economic environment or a specific economic sector. According to No. 10 of Chapter B-1 from the FMC Compendium of Accounting Standards (Compendio de Normas Contables), these provisions will be recorded in liabilities, like provisions for contingent loans.
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. Due to the adjustments made to our consolidated financial statements for the differences between Chilean Bank GAAP and IFRS, we adjust deferred taxes accordingly.
Provision for Mandatory Dividends
This provision is made in accordance with the Bank’s internal policy and Article 79 of the Chilean Companies Law, 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. While the Bank uses the same policy under Chilean Bank GAAP and IFRS, the net income used to calculate the provision is adjusted in accordance with IFRS principles. However, for the distribution of dividends, the Bank uses the net income according to Chilean Bank GAAP.
Exchange rate of provisions for credit risk
In accordance with FMC regulations and Chilean GAAP, the Bank recognizes the gain or loss incurred by the exchange rate difference arising from provision of credit risk for loans in foreign currency. As the credit risk provision is adjusted under IFRS 9, the exchange rate difference is also adjusted.
Capital Markets
Under the General Banking Law, banks in Chile may purchase, sell, place, underwrite and act as paying agents with respect to certain debt securities. Likewise, banks in Chile may place and underwrite certain equity securities. Bank subsidiaries may also engage in debt placement and dealing, equity issuance advice and securities brokerage, as well as in financial leasing, mutual fund and investment fund administration, investment advisory services and merger and acquisition services. These subsidiaries are regulated by the FMC.
Legal Provisions Regarding Banking Institutions with Economic Difficulties
Article 112 of the General Banking Law provides that if specified adverse economic circumstances exist at any bank, its Board of Directors must approve a financing plan to correct the situation and present it to the FMC. In its proposal, the bank must state the scheduled time within which the plan will be completed, which may not exceed 6 months. If one of the measures contained in the financing plan is to increase the capital of the bank by the amount necessary to return the bank to financial stability, the Board of Directors must call a special shareholders’ meeting to the capital increase. If the shareholders reject the capital increase, the FMC may apply one or more of the restrictions stated in Article 116 of the General Banking Law for a period not exceeding 6 months, which may be renewed once for the same period. These restrictions include limiting the bank’s ability to grant loans to any person or legal entity linked (directly or through third parties) to the property or management of the bank, limiting loan renewals for more than 180 days, limiting security documents governing existing loans, among others.
If the approval of shareholders is required for a different measure included in the plan, the Board of Directors must call the shareholders’ meeting within 15 days. The General Banking Law provides that the bank may receive a three-year term loan from one or more banking institutions. The terms and conditions of such a loan must be approved by the directors of both banks, as well as by the FMC, but need not be submitted to any institution’s shareholders for their approval. In any event, a creditor bank cannot grant interbank loans to an insolvent bank in an amount exceeding 25.0% of the creditor bank’s regulatory capital. If the bank is unable to pay the loan to its creditors, article 115 of the General Banking Law provides that a bank’s unpaid debt may be: (i) capitalized in a merger between the bank and creditor bank, where the creditor bank may establish the terms and conditions of the merger provided such terms and conditions are approved by the FMC; (ii) used to complete a capital increase agreed by the bank, provided that the shares are issued by a third party; and
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(iii) to subscribe and pay a capital increase. The shares acquired by the creditor bank must be sold within a period of 180 days, which can be extended by the FMC for a further 180 days.
Dissolution and Liquidation of Banks
The FMC may establish that a bank should be liquidated for the benefit of its depositors or other creditors when such bank does not have the necessary solvency to continue its operations. In such case, the FMC must revoke a bank’s authorization to exist and order its mandatory liquidation, subject to agreement by the Central Bank. The FMC must also revoke a bank’s authorization if the reorganization plan of such bank has been rejected twice. The resolution by the FMC must state the reason for ordering the liquidation and must name a liquidator, unless the FMC assumes this responsibility. When a liquidation is declared, all checking accounts and other demand deposits received in the ordinary course of business are required to be paid by using existing funds of the bank, its deposits with the Central Bank or its investments in instruments that represent its reserves. If these funds are insufficient to pay these obligations, the liquidator may seize the rest of the bank’s assets, as needed. If necessary and in specified circumstances, the Central Bank will lend the bank the funds necessary to pay these obligations. Any such loans are preferential to any claims of other creditors of the liquidated bank.
On January 12, 2019, Law No. 21,130 was published in the Official Gazette of Chile. The law modernizes banking legislation including the General Banking Law by, among other things, transferring the supervisory powers of the Superintendency of Banks and Financial Institutions (SBIF) to the FMC, updating the capital and risk management requirements applicable to banking companies in accordance with the Basel III standards, and introducing measures for the early regularization and intervention of banking companies that are at risk of insolvency.
With respect to measures for early regularization, Law No. 21,130 establishes an obligation on banks to inform the FMC if any of the regulatory non-compliance situations listed in Article 112 of the General Banking Law arise or if it has detected any event indicative of financial instability or deficient administration. Within five days of notifying the FMC, the bank must present a regularization plan approved by its board of directors containing concrete measures that shall remedy the relevant situation and ensure the bank’s normal performance. The bank must comply with the regularization plan within 6 months of the resolution approving it. During the implementation of the plan, the bank must also submit periodic reports on its progress to the FMC, and the FMC may require the implementation of additional measures and/or prohibitions it deems necessary for the plan’s success.
Article 161 of the General Banking Law provides that directors, managers, administrators and attorneys-in-fact who, without written authorization from the FMC, agree to, perform or cause the execution of any of the acts prohibited under Article 116 of the General Banking Law shall be imprisoned for a term within the medium to maximum range. If a bank fails to submit the regularization plan, the plan is rejected by the FMC, the bank fails to comply with any of the measures set out in the plan, the bank repeatedly breaches the plan’s terms or is subject to fines, or if any serious event occurs that raises concerns for the bank’s financial stability, the FMC may appoint a delegated inspector, who shall have powers to, among other things, suspend any agreement of the board of directors or act of the attorneys-in-fact of the institution, and/or a provisional administrator, who shall have all the ordinary faculties that the law and the by-laws provide for the board of directors, or whoever acts in its place, and for the general manager.
Other amendments incorporated by Law No. 21,130 include the elimination of creditors’ agreements as a mechanism for regularizing a bank’s financial situation, the incorporation of modifications to financial system capitalization and preventive capitalization, and the incorporation of further requirements for bank directors.
Obligations Denominated in Foreign Currencies
Santander-Chile must also comply with various regulatory and internal limits regarding exposure to movements in foreign exchange rates (See “Item 11. Quantitative and Qualitative Disclosures About Market Risk”).
Foreign Loans and Investments in Foreign Securities
Under current Chilean banking regulations, banks in Chile may grant loans to foreign individuals and entities and invest in certain securities of foreign issuers. Chapter 3 Section B.5-3 and Section B.5-4 of the Central Bank’s Financial Norms regulate a bank’s investment in foreign loans and investment in foreign securities. Banks in Chile may invest in debt securities traded in formal secondary markets. Such debt securities must be (1) securities issued or guaranteed by foreign sovereign states or their central banks or other foreign or international financial entities, and (2) bonds issued by
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foreign companies. If the sum of investment in foreign securities and loans granted outside of Chile surpasses 70.0% of regulatory capital, the amount that exceeds 70.0% is subject to a mandatory loan loss reserve of 100%.
Table 1
| Rating Agency | Short Term | Long Term | ||||||||||||
| Moody’s | P2 | Baa3 | ||||||||||||
| Standard and Poor’s | A3 | BBB- | ||||||||||||
| Fitch | F2 | BBB- | ||||||||||||
| Dominion Bond Rating (DBRS) | R-2 | BBB (low) | ||||||||||||
In the event that the sum of: (a) loans granted abroad that are not to subsidiaries of Chilean companies, and that have a rating of BB- or less and do not trade on a foreign stock exchange, and (b) the investments in foreign securities which have a rating that is below that indicated in Table 1 above, but is equal to or exceeds the ratings mentioned in the Table 2 below and exceeds 20.0% (and 30.0% for banks with a BIS ratio equal or exceeding 10% of the regulatory capital of such bank), the excess is subject to a mandatory loan loss reserve of 100%.
Table 2
| Rating Agency | Short Term | Long Term | ||||||||||||
| Moody’s | P2 | Ba3 | ||||||||||||
| Standard and Poor’s | A-2 | BB- | ||||||||||||
| Fitch | F2 | BB- | ||||||||||||
| DBRS | R-2 | BB (low) | ||||||||||||
In addition, banks may invest in foreign securities whose ratings are equal to or exceed those mentioned in Table 3 below for an additional amount equal to 70% of their regulatory capital. This limit constitutes an additional margin and is not subject to the 100% mandatory reserve.
Additionally, a Chilean bank may invest in foreign securities whose rating is equal to or exceeds those mentioned in Table 3 below in: (i) demand deposits with foreign banks, including overnight deposits in a single entity; and (ii) securities issued or guaranteed by sovereign states or their central banks or securities issued or guaranteed by foreign entities within the Chilean State, though investment will be subject to the limits by issuer up to 30.0% and 50.0%, respectively, of the regulatory capital of the Chilean bank that makes the investment. If these foreign securities do not have a rating, the individual limit will be 10.0% of regulatory capital.
Table 3
| Rating Agency | Short Term | Long Term | ||||||||||||
| Moody’s | P1 | Aa3 | ||||||||||||
| Standard and Poor’s | A1+ | AA- | ||||||||||||
| Fitch | F1+ | AA- | ||||||||||||
| DBRS | R-1 (high) | AA(low) | ||||||||||||
Moreover, the sum of all demand deposits with foreign banks, including overnight deposits to related parties, as defined by the Central Bank and the FMC cannot surpass 25.0% of a bank’s regulatory capital. This limit excludes foreign branches of Chilean banks or their subsidiaries but must include amounts deposited by these entities in related parties abroad. Banks may grant commercial loans and foreign trade loans and can buy loans granted by banks abroad. Chilean banks may only invest in equity securities of foreign banks and certain other foreign companies which may be affiliates of the bank or which would be complementary to the bank’s business if such companies were incorporated in Chile.
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United States Supervision and Regulation
Financial Regulatory Reform
Santander-Chile is a subsidiary of Santander Spain, a foreign banking organization (“FBO”) with operations in the United States. As a subsidiary of Santander Spain, Santander-Chile is subject to certain U.S. financial regulatory laws and rules. In addition to regulations, the U.S. financial regulatory agencies may issue policy statements, interpretive letters and similar written guidance.
Financial regulatory statutes and rules are continually under review by the U.S. Congress and U.S. financial regulatory agencies. Changes in key personnel at the U.S. financial regulatory agencies may result in differing interpretations of existing rules and guidelines and potentially more stringent enforcement and more severe penalties than previously. The full spectrum of risks that result from pending or future U.S. financial services legislation or regulations cannot be fully known; however, such risks could be material and we could be materially and adversely affected by them.
Volcker Rule
Owing to its status as a subsidiary of an FBO, Santander-Chile is subject to Section 13 of the U.S. Bank Holding Company Act and its implementing rules (collectively, the “Volcker Rule”). The Volcker Rule prohibits “banking entities” from engaging in certain forms of proprietary trading or from sponsoring or investing in “covered funds,” in each case subject to certain exceptions. The Volcker Rule also limits the ability of banking entities and their affiliates to enter into certain transactions with covered funds with which they or their affiliates have certain relationships. The Group has adopted processes to establish, maintain, enforce, review and test the compliance program designed to achieve and maintain compliance with the Volcker Rule. The Volcker Rule contains exclusions and certain exemptions for, among others, market-making, hedging, underwriting, trading in U.S. government and agency obligations and certain foreign government obligations, and trading solely outside the United States, and also permits certain ownership interests in certain types of funds to be retained. Santander Spain’s non-U.S. banking organization subsidiaries, including Santander-Chile, are largely able to continue their activities outside the United States in reliance on the “solely outside the U.S.” exemptions from the Volcker Rule. Those exemptions generally exempt proprietary trading, and sponsoring or investing in covered funds if, among other restrictions, the essential actions take place outside the United States.
Santander Spain will continue to monitor Volcker Rule-related developments and assess their impact on its operations, including those of Santander-Chile, as necessary.
Other U.S. Financial Regulations
Santander Spain is subject to other U.S. financial regulatory regimes that do not directly apply to Santander-Chile based on the current scope of its operations. For example, Santander Spain, as a Category IV FBO, and Santander Holdings USA, Santander Spain’s U.S. intermediate holding company (“IHC”), as a Category IV IHC, are subject to enhanced prudential standards imposed by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) on large banking organizations that exceed certain asset thresholds. Enhanced prudential standards include risk-based and leverage capital requirements, liquidity requirements, risk management and governance requirements, capital planning and stress testing requirements, resolution planning requirements, and risk management requirements. Category IV institutions are subject to the least exacting level of enhanced prudential standards.
In addition, Santander Spain is registered as a non-US swap dealer with the CFTC and is registered as a non-US security-based swap dealer with the SEC. As such, Santander Spain is subject to certain clearing, exchange trading, uncleared swap margin, business conduct, reporting and other requirements.
Foreign Corrupt Practices Act Regulations
Santander-Chile, as a foreign private issuer whose securities are registered under the U.S. Securities Exchange Act of 1934, is subject to the U.S. Foreign Corrupt Practices Act (the “FCPA”). The FCPA generally prohibits such issuers and
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their directors, officers, employees and agents from using any means or instrumentality of U.S. interstate commerce in furtherance of any offer or payment of money to any foreign official or political party for the purpose of influencing a decision of such person in order to obtain or retain business. It also requires that the issuer maintain books and records and a system of internal accounting controls sufficient to provide reasonable assurance that accountability of assets is maintained, and accurate financial statements can be prepared. Penalties, fines and imprisonment of Santander-Chile’s officers and/or directors can be imposed for violations of the FCPA.
Disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act
Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13(r) to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), an issuer is required to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with individuals or entities designated pursuant to certain Executive Orders. Disclosure is generally required even where the activities, transactions or dealings were conducted in compliance with applicable law.
The following activities are disclosed in response to Section 13(r) with respect to the Group and its affiliates. During the period covered by this report:
•Frozen accounts and transactions: A limited number of accounts for customers subsequently designated over time by the US under the Specially Designated Global Terrorist (SDGT) sanctions program, were or are maintained with certain non-US affiliates of Santander. All accounts have been frozen or cancelled to comply with applicable legal requirements.
•Legacy contractual obligations related to guarantees: The Group also has certain legacy performance guarantees for the benefit of an Iranian bank that is currently designated by the US under the Specially Designated Global Terrorist (SDGT) sanctions program (stand-by letters of credit to guarantee the obligations – either under tender documents or under contracting agreements – of contractors who participated in public bids in Iran) that were in place prior to 27 April 2007. The Group is not contractually permitted to cancel these arrangements without paying the guaranteed amount. As such, the Group intends to continue to provide the guarantees in accordance with company policy and applicable laws.
In the aggregate, all the transactions described above resulted in gross revenues and net profits in the year ended December 31, 2025, which were negligible relative to the overall revenues and profits of Santander. The Group has undertaken significant steps to withdraw from the Iranian market such as closing its representative office in Iran and ceasing all banking activities therein, including correspondent relationships, deposit taking from Iranian entities and issuing export letters of credit, except for the legacy transactions described above.
C.Organizational Structure
Grupo Santander controls Santander-Chile through its holdings in Teatinos Siglo XXI Inversiones S.A. and Santander Chile Holding S.A. which are controlled subsidiaries. Grupo Santander has control over 67.18% of our shares.
| Shareholder | Number of Shares | Percentage | |||||||||||||||
| Santander Chile Holding S.A. | 66,822,519,695 | 35.46 | |||||||||||||||
| Teatinos Siglo XXI Inversiones S.A. | 59,770,481,573 | 31.72 | |||||||||||||||
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The chart below sets forth the names and areas of responsibility of our senior managers as of the date of the filing of this annual report:
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D.Property, plants and equipment
We are domiciled in Chile and own our principal executive offices located at Bandera 140, 20th floor, Santiago, Chile. As of December 31, 2025, we owned the locations at which 28.9% of our branches were located. The remaining branches operate at rented locations. We believe that our existing physical facilities are adequate for our needs.
| Main Properties as of December 31 2025 | Number | ||||||||||
| Central Offices | |||||||||||
| Owned | 3 | ||||||||||
| Rented | 4 | ||||||||||
| Total | 7 | ||||||||||
| Branches | |||||||||||
| Owned | 66 | ||||||||||
| Rented | 162 | ||||||||||
| Total | 228 | ||||||||||
| Other property(1) | |||||||||||
| Owned | 21 | ||||||||||
| Rented | 7 | ||||||||||
| Total | 28 | ||||||||||
(1)Consists mainly of parking lots, mini-branches and property owned by our subsidiaries.
ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Accounting Standards Applied in 2025
Santander-Chile is a Chilean bank and maintains its financial books and records in Chilean pesos and prepares its consolidated financial statements in accordance with IFRS as issued by the IASB in order to comply with requirements of the SEC. As required by the General Banking Law, which subjects Chilean banks to the regulatory supervision of the FMC, and which mandates that Chilean banks abide by the accounting standards stipulated by the FMC, our locally filed consolidated financial statements have been prepared in accordance with Chilean Bank GAAP as issued by the FMC. The accounting principles issued by the FMC are substantially similar to IFRS but there are some exceptions, as described in “Item 4. Information on the Company—Differences between IFRS and Chilean Bank GAAP.” Therefore, our locally filed consolidated financial statements have been adjusted according to IFRS as issued by the IASB.
Critical Accounting Policies
Our consolidated financial statements include various estimates and assumptions, including but not limited to the adequacy of the allowance for loan losses, estimates of the fair value of certain financial instruments and the selection of useful lives of certain assets.
We evaluate these estimates and assumptions on an ongoing basis. Management bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances. Actual results in future periods could differ from those estimates and assumptions, and if these differences were significant enough, our reported results of operations would be affected materially. We believe that the following are the most critical judgment areas or involve a higher degree of complexity in the application of the accounting policies that currently affect our financial condition and results of operations.
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Allowance for Loan Losses under IFRS 9
The impairment model applies to all financial assets measured at amortized cost and fair value through other comprehensive income (“FVOCI”), including loan commitments and contingent loans. The Bank accounted the expected credit losses (“ECL”) related to financial assets measured at amortized cost and FVOCI as a loss allowance in the statement of financial position and the carrying amount of these assets is stated net of the loss allowance. The ECL related to contingent loans are accounted as a provision in the statement of financial position. For financial assets that are measured at fair value through other comprehensive income, the loss allowance is recognized in other comprehensive income and does not reduce the carrying amount of the financial asset in the statement of financial position. The new model uses a dual measurement approach, under which the loss allowance is measured as either: (a) 12-month expected credit losses or (b) lifetime expected credit losses.
Based on changes in credit quality since initial recognition, IFRS 9 outlines a “three-stage” impairment model as illustrated by the following chart:
 Change in credit quality since initial recognition | ||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | ||||||||||||
| Initial recognition | Significant increase in credit risk since initial recognition | Credit impaired assets | ||||||||||||
| 12-month expected credit losses | Lifetime expected credit losses | Lifetime expected credit losses | ||||||||||||
The Bank, at the end of each reporting period, evaluates whether a financial instrument’s credit risk has increased since initial recognition, and consequently classifies the financial instrument in the relevant stage:
•Stage 1: At initial recognition of a loan or when there has been an improved credit risk following a significant increase or impairment of assets, the Bank recognizes an allowance based on 12 months ECL.
•Stage 2: When a loan has shown a significant increase in credit risk since origination, the Bank records an allowance for the lifetime ECL. Stage 2 loans also include loans where the credit risk has improved following a Stage 3 classification.
•Stage 3: Loans considered credit impaired. The Bank records an allowance for the lifetime ECL, setting the probability of default at 100%.
The Bank considers reasonable and verifiable information available without undue cost or effort to it that may affect the credit risk on a financial instrument, including forward-looking information to determine whether there is or has been a significant increase in credit risk since initial recognition of a loan. Forward-looking information includes past events that affect future performance, current conditions and forecasts of future economic conditions.
Expected credit loss measurement
The ECL is the probability-weighted estimate of credit losses, i.e., the present value of all cash shortfalls. A cash shortfall is the difference between the cash flows that are due to an entity in accordance with the contract and the cash flows that the entity expects to receive. The three main components in measuring ECL are:
•PD: The probability of default is an estimate of the likelihood of default over a given time period. A default may only happen at a certain time over the assessed period, if the facility has not been previously de-recognized and is still in the portfolio.
•LGD: The loss given default is an estimate of the loss arising after a specific default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, including from the realization of any collateral.
•EAD: The exposure at default is an estimate of the exposure at a future default date, taking into account expected changes in the exposure after the reporting date, including repayments of principal and interest, whether scheduled by contract or otherwise, expected drawdown on committed facilities and accrued interest from missed payments.
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For measuring 12-month and lifetime expected credit losses, cash shortfalls are identified as follows:
•12-month expected credit losses: the portion of lifetime expected credit losses that represents the expected credit losses that result from default events on the financial instruments that are possible within the 12 months after the reporting date.
•Lifetime expected credit losses: the expected credit losses that result from all possible default events over the expected life of the financial instrument.
Forward-looking information
The ECL model includes a broad range of forward-looking information as economic inputs, such as:
•GDP growth;
•Unemployment rates;
•Central Bank interest rates; and
•Real estate prices.
Interbank loans
According to the balance presentation required under IFRS 9, the Bank has grouped interbank loans with loans and accounts receivable since both are measured at amortized cost and are evaluated together for impairment purposes.
Contingent loans
The Bank enters into various irrevocable loan commitments and contingent liabilities. Even though these obligations may not be recognized on the statement of financial position, they contain credit risk and, therefore, form part of the overall risk of the Bank. When the Bank estimates the ECL for contingent loan commitments and letters of credit, it estimates the expected portion of the loan commitment that will be drawn down over its expected life.
Loans and account receivable measured at fair value through other comprehensive income
When the Bank enters into arrangements with its major customers for project finance and syndicated loans, the amount requested sometimes exceeds the Bank’s limit for single client exposure under credit risk policy, so these operations are approved under the condition that a portion of the loans be sold in the near term. The Bank also has loans that it expects to sell if market conditions are favorable to the Bank. These loans are measured at fair value through other comprehensive income and are subject to impairment requirements.
Valuation of Financial Instruments
Fair value is the price that would be received to sell an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. IFRS 13 provides a hierarchy that 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 hierarchy gives the highest priority to (unadjusted) quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The Bank uses valuation techniques appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
For financial instruments with no available market prices, fair values are estimated 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.
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These techniques are significantly influenced by the assumptions used, including the discount rate, the estimates of future cash flows and prepayment expectations. See “Note 36—Fair Value of Financial Assets and Liabilities” in our Audited Consolidated Financial Statements.
Derivative Activities
Derivatives are measured at fair value on the statement of financial position and the net unrealized gain (loss) on derivatives is classified as a separate line item within the income statement. Under IFRS, banks must mark-to-market derivatives. Within the fair value of derivatives are included Credit Valuation Adjustment (“CVA”) and Debit Valuation Adjustment (“DVA”), all with the objective that the fair value of each instrument includes the credit risk of its counterparty and the Bank’s own risk. The CVA is a valuation adjustment to OTC derivatives as a result of the risk associated with the credit exposure assumed by each counterparty in each future period. The DVA is a valuation adjustment similar to the CVA but, in this case, it arises as a result of the Bank’s own risk assumed by its counterparties. The following inputs are used to calculate the CVA and DVA:
•Expected exposure: Including for each transaction the mark-to-market (MtM) value plus an add-on for the potential future exposure for each period. Mitigating factors such as collateral and netting agreements are taken into account, as well as a temporary impairment factor for derivatives with interim payments.
•LGD: percentage of final loss assumed in a counterparty credit event/default.
•Probability of default: for cases where there is no market information, proxies based on comparable companies in the same industry and with the same external rating as the counterparty, are used.
•Discount factor curve.
Deferred Tax Assets and Liabilities
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. See “Note 13—Current and Deferred Taxes” of our Audited Consolidated Financial Statements.
Provisions – Contingent Liabilities
Provisions related to contingencies associated to pending signature of contracts, potential clients and other administrative claims, operational risk arise from financial transactions, potential property tax associated to leasing contracts are quantified using the best available information of uncertain future events that are not wholly within control of the Bank. These are reviewed and adjusted at each reporting date. See “Note 19—Provisions and Contingent Provisions” of our Audited Consolidated Financial Statements.
A.Operating Results
Chilean Economy
All of our operations and substantially all of our customers are located in Chile. Accordingly, our financial condition and results of operations are substantially dependent upon economic conditions prevailing in Chile. In 2025, Chile experienced a moderate increase in economic activity compared to the previous year as lower interest rates in Chile and globally drove growth. In 2025, Chile’s economy is expected to grow 2.4% as compared to 2.6% in 2024 and 0.5% in 2023. The Central Bank's reference rate, which is used to set monetary policy, finished 2025 at 4.50% compared to 5.00% in 2024 and 8.25% in 2023. The unemployment rate for 2025 remained elevated at 8.5%. The observed exchange rate appreciated 9.4% in 2025, depreciated 13.7% in 2024 and depreciated 2.9% in 2023. The appreciation of the Chilean peso in 2025 was mainly due to a weaker U.S. dollar globally. Currently, the Central Bank expects GDP to increase in a range between 1.5%-2.5% in 2025.
Total loans as of December 31, 2025, in the Chilean financial system, excluding loans held abroad by Chilean banks, grew 2.6% year-over-year. Total customer deposits (defined as time deposits plus checking accounts), excluding amounts
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held by Chilean banks abroad, increased 5.8% year-over-year as of December 31, 2025. The non-performing loans (defined as loans with an installment that is at least 90 days past-due) to total loans ratio increased from 2.1% as of December 31, 2024 to 2.5% as of December 31, 2025. This was mainly driven by asset quality weakness caused by the sluggish economic growth and high unemployment rates.
The Unidad de Fomento (UF) and the Impact of Inflation
Our assets and liabilities are denominated in Chilean pesos, Unidades de Fomento (UF) and foreign currencies. Inflation impacts our results of operations as some loan and deposit products are contracted in UF. The UF is revalued in monthly cycles. Each day in the period beginning on the tenth day of the current month through the ninth day of the succeeding month, the nominal peso value of the UF is indexed up (or down in the event of deflation) in order to reflect a proportionate amount of the change in the Chilean Consumer Price Index during the prior calendar month. One UF equaled Ch$39,727.96 as of December 31, 2025, Ch$38,416.69 as of December 31, 2024, Ch$36,789.36, and as of December 31, 2023. High levels of inflation in Chile could adversely affect the Chilean economy and could have an adverse effect on our business, financial condition, and results of operations. Negative inflation rates also negatively impact on our results. Inflation measured as the annual variation of the UF was 3.4% in 2025, 4.4% in 2024, and 4.8% in 2023. There can be no assurance that Chilean inflation will not change significantly from the current level. Due to the current structure of our assets and liabilities (i.e., a significant portion of our loans are indexed to the inflation rate compared to our deposits and other funding sources), there can be no assurance that our business, financial condition and result of operations in the future will not be adversely affected by changing levels of inflation. In summary:
•UF-denominated assets and liabilities. The effect of any changes in the nominal peso value of our UF-denominated interest earning assets and interest-bearing liabilities is reflected in our results of operations as an increase (or decrease, in the event of deflation) in interest income and expense, respectively. Our net interest income will be positively affected by an inflationary environment to the extent that our average UF-denominated interest earning assets exceed our average UF-denominated interest-bearing liabilities. Our net interest income will be positively affected by deflation in any period in which our average UF-denominated interest-bearing liabilities exceed our average UF-denominated interest earning assets. Our net interest income will be negatively affected in a deflationary environment if our average UF-denominated interest-earning assets exceed our average UF-denominated interest-bearing liabilities.
•Inflation and interest rate hedge. A key component of our asset and liability policy is the management of interest rate risk. The Bank’s assets generally have a longer maturity than our liabilities. As the Bank’s mortgage portfolio grows, the maturity gap tends to rise as these loans, which are contracted in UF, have a longer maturity than the average maturity of our funding base. As most of our long-term financial instruments and mortgage loans are contracted in UF and most of our deposits are in nominal pesos, the rise in mortgage lending increases the Bank’s exposure to inflation and to interest rate risk. This gap's size is limited by internal and regulatory guidelines to avoid excessive potential losses due to strong shifts in interest rates or inflation. To keep this duration gap below internal and regulatory limits, the Bank issues long term bonds denominated in UF or interest rate swaps. The financial cost of the bonds and the efficient part of these hedges is recorded as net interest income. The loss from the swaps taken to hedge mainly for inflation and interest rate risk, and included in net interest income, totaled a loss of Ch$236,523 in 2025, a loss of Ch$535,558 million in 2024, and a loss of Ch$1,147,193 million in 2023. The lower losses in 2025 were mainly due to lower short-term interest rates and inflation in 2025 compared to 2024. The average gap between our interest earnings assets and total liabilities linked to the inflation, including hedging, was Ch$7,403,454 million in 2025, Ch$7,518,560 million in 2024 and, Ch$6,875,280 million in 2023. Therefore, our sensitivity to a 100-basis point shift in UF inflation considering our average gap in 2025 would be approximately Ch$74 billion.
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The financial impact of the gap between our interest earning assets and liabilities denominated in UFs including hedges was as follows:
| As of December 31, | % Change | ||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025/2024 | 2024/2023 | |||||||||||||||||||||||||
| (in millions of Ch$) | |||||||||||||||||||||||||||||
| Impact of inflation on net interest income | |||||||||||||||||||||||||||||
| Results from UF GAP(1) | 253,849 | 323,751 | 321,698 | (21.6 | %) | 0.6 | % | ||||||||||||||||||||||
| Annual UF inflation | 3.4 | % | 4.4 | % | 4.8 | % | |||||||||||||||||||||||
(1)UF GAP is net interest income from asset and liabilities denominated in UFs and include the results from hedging the size of this gap via interest rate swaps.
•Peso-denominated assets and liabilities. Interest rates prevailing in Chile during any period primarily reflect the inflation rate during the period and the expectations of future inflation. The sensitivity of our peso-denominated interest earning assets and interest-bearing liabilities to changes to such prevailing rates varies. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Interest Rates.” We maintain a substantial amount of non-interest-bearing peso-denominated demand deposits. Because such deposits are not sensitive to inflation, any decline in the rate of inflation would adversely affect our net interest margin on assets funded with such deposits, and any increase in the rate of inflation would increase the net interest margin on such assets. The ratio of the average of such demand deposits and average shareholder’s equity to average interest-earning assets was 31.3%, 30.7%, and 29.0% for the years ended December 31, 2025, 2024 and 2023, respectively.
Interest Rates
Interest rates earned and paid on our assets and liabilities reflect, to a certain degree, inflation, expectations regarding inflation, changes in the short-term interest rates set by the Central Bank and movements in the long-term real rates. The Central Bank manages short-term interest rates based on its objectives of balancing low inflation and economic growth. Because our liabilities are generally re-priced sooner than our assets, changes in the rate of inflation or short-term rates in the economy are reflected in the rates of interest paid by us on our liabilities before such changes are reflected in the rates of interest earned by us on our assets. Our Financial Management Division usually seeks to maintain liabilities with an average duration that is shorter than that of our assets, including through the use of derivatives, in order to hedge against sudden or rapid falls in the inflation rate, which in general triggers a reduction in short-term rates. Therefore, when short-term interest rates fall, our net interest margin is positively impacted, but when short-term rates increase, our interest margin is negatively affected. An increase in long-term rates has a positive effect on our net interest margin, because our interest-earning assets generally have longer terms than our interest-bearing liabilities. A flattening of the yield curve (i.e. long-term rates falling quicker than short-term rates) negatively affects our margins by lowering loan yields at a greater pace than deposits costs. In addition, because our peso-denominated liabilities have relatively short re-pricing periods, they are generally more responsive to changes in inflation or short-term rates than our UF-denominated liabilities. As a result, during periods when expected inflation exceeds the previous period’s inflation, customers often switch funds from UF-denominated deposits to peso-denominated deposits, which generally bear higher interest rates, thereby adversely affecting our net interest margin.
Foreign Exchange Fluctuations
The Chilean government’s economic policies and any future changes in the value of the Chilean peso against the U.S. dollar could adversely affect our financial condition and results of operations. The Chilean peso has been subject to significant devaluation in the past and may be subject to significant fluctuations in the future. The exchange rate appreciated 9.4% in 2025, depreciated 13.7% in 2024 and depreciated 2.9% in 2023. A significant portion of our assets and liabilities are denominated in foreign currencies, principally the U.S. dollar, and we historically have maintained and may continue to maintain material gaps between the balances of such assets and liabilities. Our current strategy is not to maintain a significant difference between the balances of our assets and liabilities in foreign currencies. In either case, any differences are usually hedged using forwards and cross-currency swaps. Including derivatives, the Bank seeks to run minimal foreign currency risk in its non-trading balance sheet. Because such assets and liabilities, as well as interest earned or paid on such assets and liabilities, and gains and losses realized upon the sale of such assets, are translated to Chilean pesos in preparing our financial statements, our reported income is affected by changes in the value of the Chilean peso
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relative to foreign currencies (principally the U.S. dollar). The translation gain or loss over assets and liabilities (excluding derivatives held for trading) and derivatives accounted under hedge accounting standards are included as foreign exchange transactions in the income statement. The translation and mark-to-market of foreign currency derivatives held for trading is recognized as a gain or loss in the net results from mark-to-market and trading. The Bank also uses a sensitivity analysis with both internal limits and regulatory limits to seek to manage the potential loss in net interest income resulting from fluctuations of interest rates on U.S. dollar denominated assets and liabilities and a VaR model to limit foreign currency trading risk.
See “Item 11. Quantitative and Qualitative Disclosures About Market Risk—E. Market Risks—Foreign exchange fluctuations” for more detail on the Bank’s exposure to foreign currency.
Consolidated Ratios
We use certain consolidated ratios to measure profitability and efficiency when planning, monitoring and evaluating our performance. The following tables set forth our consolidated ratios for each of the periods indicated.
| 2025 | 2024 | ||||||||||
| CONSOLIDATED RATIOS | |||||||||||
| (IFRS) | |||||||||||
| Profitability and performance: | |||||||||||
| Net interest margin(1) | 3.8 | % | 3.4 | % | |||||||
| Return on average total assets(2) | 1.5 | % | 1.2 | % | |||||||
| Return on average equity(3) | 18.3 | % | 17.0 | % | |||||||
| Return on average adjusted equity(4) | 20.8 | % | 19.5 | % | |||||||
| Capital: | |||||||||||
| Average shareholders’ equity as a percentage of average total assets(5) | 8.2 | % | 7.3 | % | |||||||
| Total liabilities as a multiple of equity(6) | 10.9 | 11.8 | |||||||||
| Credit Quality: | |||||||||||
| Non-performing loans as a percentage of total loans(7) | 3.3 | % | 3.2 | % | |||||||
| Allowance for loan losses as percentage of total loans(8) | 3.0 | % | 2.9 | % | |||||||
| Operating Ratios: | |||||||||||
| Operating expenses /operating revenue(9) | 36.4 | % | 39.2 | % | |||||||
| Operating expenses /average total assets | 1.5 | % | 1.5 | % | |||||||
| OTHER DATA | |||||||||||
| CPI Inflation Rate | 3.4 | % | 4.5 | % | |||||||
| Revaluation (devaluation) rate (Ch$/U.S.$) at year end(10) | 9.4 | % | (13.7 | %) | |||||||
| Number of employees at period end | 8,526 | 8,757 | |||||||||
| Number of branches and offices at period end | 229 | 236 | |||||||||
(1)Net interest income divided by average interest earning assets (as presented in “Item 5. Operating and Financial Review and Prospects—C. Selected Statistical Information”).
(2)Net income for the year divided by average total assets (as presented in “Item 5. Operating and Financial Review and Prospects—C. Selected Statistical Information”).
(3)Net income for the year attributable to shareholders divided by average equity (as presented in “Item 5. Operating and Financial Review and Prospects—C. Selected Statistical Information”).
(4)Net income for the year attributable to shareholders divided by average adjusted equity. Average adjusted equity is the average equity (as presented in “Item 5. Operating and Financial Review and Prospects—C. Selected Statistical Information”) adjusted to exclude the average balance of the additional tier 1 perpetual bond.
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(5)Total average shareholders’ equity (as presented in “Item 5. Operating and Financial Review and Prospects—C. Selected Statistical Information”) divided by average total assets (as presented in “Item 5. Operating and Financial Review and Prospects—C. Selected Statistical Information”).
(6)Liabilities divided by equity including non-controlling interest.
(7)Non-performing loans include the aggregate unpaid principal and accrued but unpaid interest on all loans with at least one installment over 90 days past-due. Total loans in 2025 and 2024 correspond to loans at amortized cost.
(8)Allowance for loan losses as of December 31, 2025 and 2024 corresponds to allowances for loans at amortized cost according to IFRS 9.
(9)The efficiency ratio is equal to operating expenses over operating income. Operating expenses includes personnel salaries and expenses, administrative expenses, depreciation and amortization, impairment and other operating expenses. Operating income includes net interest income, net fee and commission income, net income from financial operations (net trading income), foreign exchange gain, net and other operating income.
(10)Based on the interbank market rate published by Reuters at 1:30 pm on the last business day of the period.
Segmentation Criteria
The accounting policies used to determine the Bank’s income and expenses by reporting segment are the same as those described in the summary of accounting policies in “Note 1—Summary of Significant Accounting Policies” of the Bank’s Consolidated Financial Statements and are customized to meet the needs of the Bank’s management. 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 or her assessment on the segment’s interest income, fee and commission income, and expenses. The Bank’s reporting segments have three Chief Operating Decision Makers: (i) the Director of Retail banking, (ii) the Director of the Middle-market segment and (iii) the Director of Corporate Investment Banking, each of which report to our Chief Executive Officer. All reporting segment information is presented following this structure.
Under IFRS 8, the Bank has aggregated operating segments with similar economic characteristics according to the aggregation criteria specified in the standard. A reporting segment consists of clients that are offered differentiated but, considering how their performance is measured, homogenous services based on IFRS 8 aggregation criteria. The clients included in each business segment are constantly revised and reclassified if a client no longer meets the criteria for the segment they are in and transferred to a different CODM. Therefore, variations of loan volumes and profit and loss items reflect business trends as well as client migration effects. Overall, this aggregation has no significant impact on the understanding of the nature and effects of the Bank’s business activities and the economic environment.
The Bank’s reportable segments are (i) Retail banking, (ii) Middle-market, (iii) Corporate Investment Banking and (iv) Corporate Activities (“Other”). See “Note 3—Reporting Segments” of our Audited Consolidated Financial Statements for more information.
Results of Operations for the Years Ended December 31, 2025 and 2024
In this section, we discuss the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. For a discussion of the results of our operations for the year ended December 31, 2024 compared to the year ended December 31, 2023, please refer to “Item 5. – A. Operating Results – Results of Operations for the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023” in our Annual Report on Form 20-F for the year ended December 31, 2024.
The following discussion is based on and should be read together with the Audited Consolidated Financial Statements. The Audited Consolidated Financial Statements have been prepared in accordance with IFRS as issued by the IASB. The following table sets forth the principal components of our net income for the years ended December 31, 2025 and 2024.
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Consolidated Income Statement Data IFRS
| 2025 | 2025 | 2024 | % Change 2025/2024 | |||||||||||||||||||||||
| (U.S.$ thousands)(1) | (Ch$ million) | |||||||||||||||||||||||||
| Interest income and inflation | 4,214,113 | 3,795,609 | 4,094,817 | (7.3 | %) | |||||||||||||||||||||
| Interest expense and inflation | (2,008,378) | (1,808,926) | (2,308,031) | (21.6 | %) | |||||||||||||||||||||
| Net interest income | 2,205,734 | 1,986,683 | 1,786,786 | 11.2 | % | |||||||||||||||||||||
| Fees and commission income | 1,155,385 | 1,040,644 | 960,168 | 8.4 | % | |||||||||||||||||||||
| Fees and commission expense | (493,858) | (444,813) | (413,102) | 7.7 | % | |||||||||||||||||||||
| Total net fees and commission income | 661,527 | 595,831 | 547,066 | 8.9 | % | |||||||||||||||||||||
| Net income/(expense) from financial assets and liabilities for trading | (48,358) | (43,556) | 85,013 | (151.2 | %) | |||||||||||||||||||||
| Net income from derecognizing financial assets and liabilities at amortized cost and financial assets at fair value through other comprehensive income | 3,262 | 2,938 | (37,068) | (107.9 | %) | |||||||||||||||||||||
| Net income from exchange, adjustment and hedge accounting of foreign exchange | 329,081 | 296,400 | 202,574 | 46.3 | % | |||||||||||||||||||||
| Net income from financial operations | 283,985 | 255,782 | 250,519 | 2.1 | % | |||||||||||||||||||||
| Income from investments in associates and other companies | 10,313 | 9,289 | 10,436 | (11.0) | % | |||||||||||||||||||||
| Net income from non-current assets and groups available for sale not admissible as discontinued operations | 8,042 | 7,243 | 4,049 | 78.9 | % | |||||||||||||||||||||
| Other operating income | 7,790 | 7,016 | 8,048 | (12.8) | % | |||||||||||||||||||||
| Total operating income | 3,177,391 | 2,861,844 | 2,606,904 | 9.8 | % | |||||||||||||||||||||
| Personnel salaries and expenses | (458,429) | (412,902) | (398,819) | 3.5 | % | |||||||||||||||||||||
| Administrative expenses | (430,342) | (387,605) | (366,431) | 5.8 | % | |||||||||||||||||||||
| Depreciation and amortization | (150,062) | (135,159) | (141,435) | (4.4 | %) | |||||||||||||||||||||
| Impairment of property, plant and equipment | (4,160) | (3,747) | (1,295) | 189.3 | % | |||||||||||||||||||||
| Other operating expenses | (112,917) | (101,703) | (114,739) | (11.4) | % | |||||||||||||||||||||
| Total operating expenses | (1,155,909) | (1,041,116) | (1,022,719) | 1.8 | % | |||||||||||||||||||||
| Net operating income before credit losses | 2,021,481 | 1,820,728 | 1,584,185 | 14.9 | % | |||||||||||||||||||||
| Provisions for loan losses for interbank loans and account receivable from customers | (833,291) | (750,537) | (660,814) | 13.6 | % | |||||||||||||||||||||
| Provisions for loan losses for contingent loans and others | (14,951) | (13,466) | 2,902 | (564.0 | %) | |||||||||||||||||||||
| Recovery of loans previously charged-off | 213,880 | 192,640 | 153,944 | 25.1 | % | |||||||||||||||||||||
| Provision for loan losses for other financial assets at amortized cost and financial assets at fair value through OCI | (4,387) | (3,950) | (622) | 535.0 | % | |||||||||||||||||||||
| Provision for loan losses | (638,747) | (575,313) | (504,590) | 14.0 | % | |||||||||||||||||||||
| Net operating income before income tax | 1,382,734 | 1,245,415 | 1,079,595 | 15.4 | % | |||||||||||||||||||||
| Income tax expense | (230,226) | (207,362) | (219,745) | (5.6 | %) | |||||||||||||||||||||
| Result of discontinued operations | — | — | — | — | % | |||||||||||||||||||||
| Net income for the year | 1,152,509 | 1,038,053 | 859,850 | 20.7 | % | |||||||||||||||||||||
| Net income for the year attributable to: | ||||||||||||||||||||||||||
| Shareholders of the Bank | 1,134,297 | 1,021,650 | 852,964 | 19.8 | % | |||||||||||||||||||||
| Non-controlling interests | 18,212 | 16,403 | 6,886 | 138.2 | % | |||||||||||||||||||||
(1)Amounts stated in U.S. dollars at and for the year ended December 31, 2025 have been translated from Chilean pesos at the exchange rate of Ch$900.69= U.S.$1.00 as of December 31, 2025.
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Results of Operations for the Years Ended December 31, 2025 and 2024
Net income for the year attributable to shareholders of the Bank increased 19.8% in 2025 compared to 2024 and totaled Ch$1,021,650 million. Our return on annualized average equity (adjusted to exclude the AT1 perpetual bond) was 20.8% in 2025 compared to 19.5% in 2024.
Our net interest income increased 11.2% in 2025 compared to 2024. Net interest income from our reporting segments totaled Ch$2,248,468 million in 2025 and increased 3.8% compared to 2024. This rise was mainly due to a higher-yield asset mix and lower funding costs that benefited from the lower interest rate environment in Chile in 2025. Our interest-bearing liabilities have a shorter maturity than our interest-earning assets and, therefore, incorporate rate cuts more quickly. The increase in net interest income was also due to a decrease in the loss in “other” net interest income, which totaled a loss of Ch$261,785 million in 2025 compared to a loss of Ch$379,913 million in 2024. Overall, our net interest margin increased from 3.36% in 2024 to 3.79% in 2025.
Net fees and commission income increased 8.9% to Ch$595,831 million in 2025 compared to the same period in 2024. Fee growth in 2025 was driven by client growth and cross-selling indicators driven by greater availability and usage of our digital platforms. This resulted in a 12.8% increase in fees from debit and credit cards, a 38.8% increase in fees generated by our acquiring subsidiary Getnet, a 21.7% rise in commission income from brokerage of mutual funds, a 10.5% increase in account management fees, among other items.
Total net income from financial operations reached Ch$255,782 million and increased 2.1% in 2025 compared to 2024. Income from client treasury services totaled Ch$249,648 million, a decrease of 8.7% compared to 2024. In 2025, demand for interest rate and foreign exchange treasury products on behalf of corporate clients declined as volatility decreased in the year in both the interest rate and foreign exchange markets. The results from non-client treasury income totaled Ch$6,134 million in 2025 compared to a loss of Ch$22,845 million in 2024. Non-client treasury results include the income from sale of loans, including charged-off loans, CVA adjustments and most importantly, the treasury results from our Financial Management Division. In 2025, long-term interest rates fell producing higher realized gains from the sale of fixed income instruments and better results from the repurchase of bonds issued by the Bank.
Operating expenses in the year ended December 31, 2025 increased 1.8% compared to the corresponding period in 2024. The efficiency ratio was 36.4% in 2025 and 39.2% in 2024. Personnel salaries and expenses in the year ended December 31, 2025 increased 3.5% compared to the corresponding period in 2024, mainly due to the increase in inflation, as most of the wages paid by the bank pursuant to collective bargaining agreements are indexed to the Chilean CPI, as well as higher variable pay, which was, partially offset by the decrease in headcount. Administrative expenses increased 5.8% in the year ended December 31, 2025 compared to the corresponding period in 2024 primarily due to investments in core systems, cloud computing and technology-related initiatives supporting the modernization of our commercial platforms. Depreciation and amortization expense decreased 4.4% in 2025 compared to 2024, mainly due to lower depreciation of right of use assets and intangible assets, in line with the reduction of the number of branches. Other operating expenses fell 11.4% in 2025 compared to 2024. This decline mainly corresponds to a lower restructuring charges which decreased from Ch$43,156 million in 2024 to Ch$34,164 million in 2025.
Operating income increased 9.8% in 2025 compared to an increase of only 1.8% in operating expenses, which drove the 14.9% increase in net operating income before credit losses.
For the year ended December 31, 2025, provisions for loan losses totaled Ch$638,747 million and increased 14.0% compared to 2024. This increase was mainly due to a Ch$76,823 million increase in the provision expense for mortgage and consumer loans and a Ch$20,495 million increase in loan loss provisions in the Middle Market segment. This was mainly due to the sluggish growth of the economy and persistently high unemployment rates that led to higher loan losses and write-offs. This was partially offset by the 25.1% rise in recovery of loans previously written-off.
Total income tax expense by the Bank in 2025 was Ch$207,362 million and decreased 5.6% compared to 2024. The decrease in income tax expenses in 2025 compared to 2024 mainly reflects the lower growth of the CPI in 2025 compared to 2024 due to the fact that our capital in our Chilean tax books is recast each year based on the variation in the CPI, which causes a tax loss, as well as timing differences between accounting and tax treatment of certain bonds. See “Note 13—Current and Deferred Taxes” of the Audited Consolidated Financial Statements for more detail on income tax expense.
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Therefore while, the statutory corporate tax rate in Chile in 2024 and 2025 was 27%, the Bank recognized an effective tax rate of 16.7% in 2025 compared to 20.4% in 2024.
Net Interest Income
| Year ended December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| (in millions of Ch$, except percentages) | |||||||||||||||||
| Retail banking | 1,642,104 | 1,559,556 | 5.3 | % | |||||||||||||
| Wealth Management & Insurance | 59,789 | 57,773 | 3.5 | % | |||||||||||||
| Middle-market | 334,660 | 314,230 | 6.5 | % | |||||||||||||
| Corporate Investment banking | 211,915 | 235,140 | (9.9 | %) | |||||||||||||
| Total reporting segments | 2,248,468 | 2,166,699 | 3.8 | % | |||||||||||||
| Other(1) | (261,785) | (379,913) | 31.1 | % | |||||||||||||
| Net interest income | 1,986,683 | 1,786,786 | 11.2 | % | |||||||||||||
| Average interest-earning assets | 52,430,092 | 53,180,232 | (1.4 | %) | |||||||||||||
| Average non-interest-bearing demand deposits | 10,837,345 | 11,317,733 | (4.2 | %) | |||||||||||||
| Net interest margin(2) | 3.79 | % | 3.36 | % | |||||||||||||
| Average shareholders’ equity and average non-interest-bearing demand deposits to total average interest-earning assets | 31.32 | % | 30.74 | % | |||||||||||||
(1)Consists mainly of net interest income from the Financial Management Division, including the result of the Bank’s inflation gap as well as the net impact of derivatives used to hedge our exposure to inflation or shifts on interest rates and the cost of funding our financial assets held for trading. Each segment obtains funding from its clients. Any surplus deposits are transferred to the Financial Management Division, which in turn makes such excess available to other areas that need funding. The Financial Management Division also sells the funds it obtains in the institutional funding market at a transfer price equal to the market price of the funds. This segment also includes intra-segment income and activities not assigned to a given segment or product line.
(2)Net interest margin is net interest income divided by average interest-earning assets.
For the year ended December 31, 2025, our net interest income totaled Ch$1,986,683 million and increased 11.2% compared to 2024. Average interest earning assets decreased 1.4% in the same period. During 2025, the loan portfolio decreased 0.9% due to the decrease in commercial loans in CIB and a fall in residential mortgage loans.
The average nominal interest rate earned on interest earning assets decreased from 7.7% in 2024 to 7.2% in 2025. This was mainly due to: (i) lower yields earned over interest earning assets denominated in UF due to the lower UF inflation rate in 2025 compared to 2024. The average interest rate earned over UF denominated interest earning assets reached 6.6% in 2025 compared to 7.4% in 2024; and (ii) lower yields earned over foreign currency interest earning assets, mainly due to lower rates in U.S. dollar-denominated interest earning assets. This fall in asset yields was partially offset by an increase in the yield earned over interest earning assets denominated in Chilean pesos. The average rate earned over interest earning assets denominated in Chilean pesos increased from 9.2% in 2024 to 9.5% in 2024. Despite a lower rate environment locally, the shift of the loan mix away from lending in CIB to consumer loans drove this rise in Ch$ denominated interest earning assets.
| Average nominal interest rate earned on interest earning assets | 2025 | 2024 | ||||||||||||
| Ch$ | 9.5 | % | 9.2 | % | ||||||||||
| UF | 6.6 | % | 7.4 | % | ||||||||||
| Foreign currencies | 3.7 | % | 4.7 | % | ||||||||||
| Total | 7.2 | % | 7.7 | % | ||||||||||
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The fall in short-term interest rates and the lower UF inflation also lowered funding costs in 2025 compared to 2024. The average rate paid on our interest-bearing liabilities decreased from 6.3% in 2024 to 4.9% in 2025. Our interest-bearing liabilities have a shorter maturity than our interest-earning assets and, therefore, incorporate rate cuts more quickly. The most important reduction in funding costs came from the lower rate paid on interest bearing time deposits, the Bank's main source of funding, which fell from 5.0% in 2024 to 4.6% in 2025. The lower UF inflation rate in 2025 compared to 2024 also lowered funding costs of interest bearing liabilities denominated in this currency from 8.3% in 2024 to 5.9% in 2025. The funding mix also improved in 2025 as the ratio of average equity and non-interest bearing demand deposits to total average interest earning assets improved from 30.7% in 2024 to 31.3% in 2025, mainly driven by the rise in the Bank's average equity.
| Average nominal interest rate paid on interest bearing liabilities | 2025 | 2024 | ||||||||||||
| Ch$ | 5.9 | % | 8.7 | % | ||||||||||
| UF | 5.9 | % | 8.3 | % | ||||||||||
| Foreign currencies | 1.7 | % | 1.7 | % | ||||||||||
| Total | 4.9 | % | 6.3 | % | ||||||||||
In summary, the improved asset mix and the impact of lower rates on funding costs more than offset the impact of lower inflation and rates on interest earning assets, which drove our net interest margin to increase from 3.36% in 2024 to 3.79% in 2025.
Net interest income from our reporting segments in 2025 totaled Ch$2,248,468 million and increased 3.8% compared to 2024. This rise was mainly due to asset growth in higher yielding loan products and lower funding costs. The quicker repricing of deposits in our business segments more than offset low loan growth and the declining yields earned on loans.
•Net interest income from Retail banking increased 5.3% in 2025 compared to 2024. Total loans in the retail segment decreased 2.2% led by a 0.7% decrease in residential mortgage loans. This was partially offset by a 2.5% increase in consumer loans in the year. This fall in loan volumes was also offset by lower interest paid on time deposits as a result of the lower interest rate environment.
•Net interest income from Wealth Management increased 3.5% in 2025 compared to 2024, mainly driven by the 13.0% growth in loan volumes in this segment and lower funding costs. This was partially offset by the lower yield earned over loans in this segment due to the lower rate environment.
•Net interest income from the Middle-market segment increased 6.5% in 2025 mainly due to lower funding costs driven by a lower interest rate environment and the 2.2% increase in loans in this segment during the year.
•Net interest income from the Corporate Investment Banking segment decreased 9.9% in 2025 compared to 2024 mainly due to the 7.1% reduction of this segment's loan portfolio in the year. In 2025, CIB continued to follow a generate-to-distribute model that implies originating and then selling loans in this segment, while focusing on the higher profitability products and services such as transactional services and treasury products in order to optimize capital usage levels.
•The loss in Other net interest income improved 31.1% in 2025 compared to 2024. Other net interest income consists mainly of net interest income from the Bank’s Asset & Liability Management ("ALM") and is managed by the Banks Financial Management Division. This includes net interest income from the Bank’s debt instruments recorded at fair value through other comprehensive income, deposits in the Central Bank, and the financial cost of supporting our cash position and financial investments held for trading (the interest income from which is recognized as net income from financial operations and not interest income). The result of the Bank’s inflation gap is also included in this line as well as the net impact of derivatives used to hedge our inflation gap or views on interest rates.
The result of corporate activities and ALM shows an improvement compared to the previous year, with the loss decreasing by 31.1% to Ch$261,785 million mainly due to an improvement in the cost of funding managed by this division in line with lower short-term rates, which improved the results from fair value hedges of interest rate risk on liabilities (micro hedges), mainly interest rate swaps. This shortened the duration of our liabilities and resulted in a lower rate paid over Central Bank and other borrowings.
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The following table shows our balances of loans and accounts receivable from customers and interbank loans by segment at the dates indicated.
| At December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| (in millions of Ch) | |||||||||||||||||
| Retail banking | 31,225,378 | 31,942,515 | (2.2 | %) | |||||||||||||
| Wealth Management & Insurance | 924,692 | 818,155 | 13.0 | % | |||||||||||||
| Middle-market | 6,178,983 | 6,044,799 | 2.2 | % | |||||||||||||
| Corporate Investment banking | 2,139,201 | 2,301,491 | (7.1 | %) | |||||||||||||
| Other(1) | 464,626 | 216,884 | 114.2 | % | |||||||||||||
| Total loans | 40,932,880 | 41,323,844 | (0.9) | % | |||||||||||||
(1)Includes interbank loans.
The following table shows interest income of financial assets by valuation as of December 31, 2025 and 2024. The 8.6% decrease is mainly due to the lower variation of the UF and the lower interest rate environment, which had a Ch$352,166 million negative impact on interest earning asset yields.
| At December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| (in millions of Ch) | |||||||||||||||||
| Financial assets measured at amortized cost(1) | 3,793,625 | 4,160,400 | (8.8 | %) | |||||||||||||
| Financial assets measured at FVOCI(2) | 155,275 | 162,086 | (4.2 | %) | |||||||||||||
| Interest income not including income from hedge accounting | 3,948,900 | 4,322,486 | (8.6 | %) | |||||||||||||
(1)Financial assets measured at amortized cost include loans measured at amortized cost as described above and investments under resale agreements. The effective interest method is used in the calculation of the amortized cost of the financial asset and in the allocation and recognition of the interest revenue over the relevant period.
(2)Financial assets measured at fair value through other comprehensive income include the interest income from debt instruments. These mainly consisted of securities and bonds of the Central Bank that contain contractual terms that give rise on specific dates to cash flows that are solely payments of principal and interest (SPPI), and are measured at FVOCI.
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Fee and Commission Income
Net fees and commission income increased 8.9% to Ch$595,831 million in the twelve-month period ended December 31, 2025 compared to the same period in 2024. Fee growth in 2025 continued to be driven by client growth, improved cross-selling indicators, and greater availability and usage of our digital platforms. This was partially offset by lower fees from financial advisory services following a record year in 2024 and lower prepayment fees in line with the lower interest environment that reduced demand for the prepayment of loans.
| Year ended December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| Total clients(1) | 4,608,182 | 4,311,488 | 6.9 | % | |||||||||||||
| Active clients(2) | 2,693,441 | 2,556,462 | 5.4 | % | |||||||||||||
| Loyal clients(3) | 1,378,876 | 1,305,953 | 5.6 | % | |||||||||||||
| Digital clients(4) | 2,291,971 | 2,238,774 | 2.4 | % | |||||||||||||
(1)Number of clients registered for at least one product.
(2)Number of clients that have used at least one product at least one time in the past month.
(3)Clients with four or more products plus a minimum profitability level and a minimum usage indicator, all differentiated by segment. SME and Middle-market cross-selling is differentiated by client size using a point system that depends on the number of products, usage of products and income net of risk.
(4)Number of clients that used at least one digital channel with password during the last month.
The following table sets forth certain components of our income from services (net of fees paid to third parties directly connected to providing those services, principally fees relating to credit card processing and ATM network administration) in the years ended December 31, 2025 and 2024.
| Year ended December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| (in millions of Ch$) | |||||||||||||||||
| Card services (credit, debit and ATM cards) | 146,490 | 129,836 | 12.8 | % | |||||||||||||
| Getnet (acquirer) | 109,102 | 78,623 | 38.8 | % | |||||||||||||
| Brokerage of mutual funds | 92,406 | 75,932 | 21.7 | % | |||||||||||||
| Management of accounts (checking and debit) | 80,774 | 73,076 | 10.5 | % | |||||||||||||
| Collection and payments | 61,556 | 65,187 | (5.6 | %) | |||||||||||||
| Insurance brokerage | 55,039 | 60,528 | (9.1 | %) | |||||||||||||
| Guarantees and Letters of credit | 42,340 | 34,893 | 21.3 | % | |||||||||||||
| Financial advisory | 21,068 | 28,378 | (25.8 | %) | |||||||||||||
| Office banking | 20,606 | 19,958 | 3.2 | % | |||||||||||||
| Prepayments | 15,595 | 17,108 | (8.8 | %) | |||||||||||||
| Others | (49,145) | (36,453) | 34.8 | % | |||||||||||||
| Total fees and commission income, net | 595,831 | 547,066 | 8.9 | % | |||||||||||||
Fees from card services increased 12.8% in 2025. This rise was mainly due to greater usage of our cards. According to the latest information published by the CMF, Santander Chile's credit cardholders that actively use their cards increased by 5.0% to 1,405,294 in the twelve month period ended November 2025 compared to a 2.7% for banking industry. In the same period, monetary purchases with Santander Chile's credit cards increased 10.7% and market share in terms of total purchases reached 25.9%.
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Fees from Getnet, the Bank's subsidiary in the acquiring business, increased 38.8% in 2025 compared to 2024. This was driven by strong growth in the number of SME and large retail customers of Getnet and greater usage of cards for payments in Chile. The amount of POS terminals in operation increased 11.9% in 2025 compared to 2024.
Fees from the brokerage of mutual funds increased 21.7% in 2025 compared to 2024 driven by a rise in sales of funds to our clients driven by positive returns in both the equity and fixed income funds.
Fees from management of accounts increased 10.5% in 2025 compared to 2024 driven by continued strong account opening growth as a result of our client friendly digital platforms, such as Más Lucas and Santander Life, and positive evolution of client satisfaction and cross-selling indicators.
Fees from collections and payments decreased 5.6% in 2025 compared to 2024 due to lower collection fees related to credit and insurance.
Insurance brokerage fees decreased 9.1% due to lower commissions generated by insurance policies associated with mortgage loans driven by lower commercial activity in this product, in line with the decrease in volume in mortgage loans.
Fees from guarantees and letters of credit increased 21.3% in 2025 compared to 2024 due to higher commissions from our corporate and middle-market clients, particularly related to Stand-by Letters driven by healthy growth trends in foreign trade and exports in 2025.
Fees from financial advisory decreased 25.8% in 2025 due to a decrease in financial advisory services. The record year in financial advisory services in 2024 was not repeated in 2025, especially in the CIB segment.
Fees from office banking, the Bank's online digital banking platform for companies, increased 3.2% in 2025 compared to 2024, mainly due to more and better functionalities that has driven higher usage of this banking platform by our corporate, middle-market and SME customers.
Fees from the prepayment of loans decreased 8.8% in 2025 compared to 2024. As interest rates rates declined in the year the level of prepayment of loans also decreased.
The 34.8% increase in the loss recorded in other fee income in 2025 compared to 2024 was mainly due higher fees paid for credit insurance.
The following table sets forth, for the periods indicated our fee income broken down by segment for the periods indicated (See “Note 26—Fees and Commission” of our Audited Consolidated Financial Statements for more detail on fees by segment):
| Year ended December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| (in millions of Ch$) | |||||||||||||||||
| Retail banking | 503,186 | 454,194 | 10.8 | % | |||||||||||||
| Wealth Management & Insurance | 30,019 | 23,183 | 29.5 | % | |||||||||||||
| Middle-market | 52,921 | 43,954 | 20.4 | % | |||||||||||||
| Corporate Investment banking | 47,404 | 54,901 | (13.7 | %) | |||||||||||||
| Other | (37,699) | (29,166) | 29.3 | % | |||||||||||||
| Total fees and commission income, net | 595,831 | 547,066 | 8.9 | % | |||||||||||||
Fees from Retail banking increased 10.8% in 2025 compared to 2024 mainly driven by a 10.2% increase in fees from management of accounts, a 9.9% increase in card service income and the 38.8% increase in fees from Getnet, our acquiring business mainly geared toward SME clients. The greater availability and usage of our digital platforms, better cross-selling indicators and positive trends of our Net Promoter Score also drove product usage and fees in this segment.
Fees from Wealth Management increased 29.5% in 2025 compared to 2024 due to the 15.7% increase in card service income and the 182.7% increase in fees from securities intermediation in this segment. These growth rates were mainly due
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to an increase in sales of investment funds and greater brokerage of securities to our clients in this segment, driven by positive returns in both the equity and fixed income markets.
The 20.4% increase in fees from the Middle-market segment in 2025 compared to 2024 was mainly due to a 24.7% increase in fees from guarantees and letters of credit particularly related to Stand-by Letters in line with healthy growth trends in foreign trade and exports in 2025. This was partially offset a 36.5% decrease in financial advisory fees.
Fees from the Corporate Investment Banking segment decreased 13.7% in 2025 compared to 2024, mainly due a 15.9% decrease in financial advisory fees in 2025 compared to 2024.
The loss in Other fees increased 29.3% mainly due to was mainly due higher fees paid for credit insurance.
Net Income from Financial Operations
Net income from financial operations amounted to Ch$255,782 million for the year ended December 31, 2025, an increase of 2.1% compared to the year ended December 31, 2024. These results include the results of our Treasury Division’s trading business and financial transactions with customers, as well as the results of our Financial Management Division. The higher result was mainly due to a Ch$29,180 million increase in the results in our Financial Management Division partially offset by a Ch$23,716 million decrease in the results from our client treasury division.
The following table sets forth information regarding our income (loss) from financial transactions for the years ended December 31, 2025 and 2024.
| Year ended December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| (in millions of Ch$) | |||||||||||||||||
| Net income/(expense) from financial assets and liabilities for trading | (43,556) | 85,013 | (151.2 | %) | |||||||||||||
| Net income from derecognising financial assets and liabilities at amortised cost and financial assets at fair value through other comprehensive income | 2,938 | (37,068) | (107.9 | %) | |||||||||||||
| Net income from exchange, adjustment and hedge accounting of foreign exchange | 296,400 | 202,574 | 46.3 | % | |||||||||||||
| Net income from financial operations | 255,782 | 250,519 | 2.1 | % | |||||||||||||
The net loss from financial assets and liabilities for trading at fair value through the profit and loss statement totaled Ch$43,556 million in the year ended December 31, 2025 and decreased 151.2% compared to 2024. This decrease was mainly due to a Ch$218,033 million loss from foreign currency forwards classified at fair value through profit and loss partially offset by a rise of Ch$89,464 million from other assets and liabilities classified at fair through profit and loss. The loss from foreign currency forwards classified at fair value through profit and loss was mainly due to the appreciation of the Chilean peso against the U.S. dollar in the last quarter of 2025. This was also partially offset by better results from Net income from exchange, adjustment and hedge accounting of foreign exchange which improved by Ch$117,843 million compared to 2024.
Net income from derecognizing financial assets and liabilities at amortized cost and financial assets at fair value through other comprehensive income totaled a gain of Ch$2,938 million in the year ended December 31, 2025 compared to a loss of Ch$37,068 million in the same period in 2024. The higher result was mainly due to a Ch$29,180 million increase in the results in our Financial Management Division. In 2024 this division derecognized fixed income instruments in its portfolio, which is mainly comprised of Chilean Central Bank bonds. Since long-term rates remain above purchase yields, this derecognition resulted in a loss in this line item in 2024, which was previously recorded as a loss in OCI in equity. Since long-term rates have fallen from previous levels and have moved closer to purchase yields, this derecognition has resulted in a gain in this line item during 2025.
Net income from exchange, adjustment and hedge accounting of foreign exchange totaled Ch$296,400 million in the year ended December 31, 2025, an increase of 46.3% compared to the gain obtained in 2024. This higher result was mainly due to the appreciation of the Chilean peso against the U.S. dollar, especially in the last quarter of 2025. The Chilean peso appreciated 9.4% in 2025 and depreciated 13.7% in 2024 against the U.S. dollar. Internal Bank policy does not allow
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significant foreign currency mismatches and requires that the results registered in Net income from financial operations include not only the market-to-market of our foreign currency spot position, but also the results of the derivatives used to hedge currency risk and currency exchange services. The mark-to-market of our spot position and the derivatives used to hedge foreign currency risk are classified in the line item: Net income from exchange, adjustment and hedge accounting of foreign exchange. For more details regarding our management and exposure to foreign currency risk, see “Item 11. Quantitative and Qualitative Disclosures About Market Risk—E. Market Risks—Market risk management—Market risk – local and foreign financial management.”
In order to more easily compare the results from net income from financial operations, we present the following table that separates the results by lines of business for 2025 and 2024.
| Year ended December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| (in millions of Ch$) | |||||||||||||||||
| Client treasury products | 189,868 | 193,469 | (1.9 | %) | |||||||||||||
| Market-making with clients | 59,780 | 79,895 | (25.2 | %) | |||||||||||||
| Client treasury services | 249,648 | 273,364 | (8.7 | %) | |||||||||||||
| Sale of loans and charged-off loans | 3,395 | 1,874 | 81.2 | % | |||||||||||||
| CVA adjustments | (648) | 1,074 | (160.3) | % | |||||||||||||
| Financial Management Division and others(1) | 3,387 | (25,793) | 113.1 | % | |||||||||||||
| Non-client treasury income (loss) | 6,134 | (22,845) | (126.9 | %) | |||||||||||||
| Total financial transactions, net | 255,782 | 250,519 | 2.1 | % | |||||||||||||
(1)The Financial Management Division manages the structural interest rate risk, the structural position in inflation-indexed assets and liabilities, capital requirements and liquidity levels. The aim of the Financial Management Division is to provide stability and continuity in our net interest income from commercial activities, and to ensure that we comply with internal and regulatory limits regarding liquidity, regulatory capital, reserve requirements and market risk.
Income from client treasury services totaled Ch$249,648 million, a decrease of 8.7% compared to 2024. The results from client treasury products and market-making mainly include the results from the sale of derivatives, foreign exchange and fixed income instruments to our client base. In 2025, demand for these types of products on behalf of corporate clients fell as a result of reduced volatility in local and global markets. The results from client treasury, which includes the results from the sale of foreign exchange and interest rate products to clients, mainly in the Middle Market and CIB segments, decreased Ch$3,601 million in 2025 compared to 2024. The results from our market making area decreased Ch$20,115 million in 2025 compared to 2024. Market making involves providing continuous bid and offer prices in selected financial instruments, such as foreign exchange, fixed income securities, and derivatives to support client transactions and maintain market liquidity. These results may vary year-to-year as some large operations with corporate clients may not be repeated in subsequent years and market condition vary each year.
The results from non-client treasury income totaled a gain of Ch$6,134 million in 2025. These results include the income from sale of loans, including charged-off loans, CVA adjustments and most importantly, the treasury results from our Financial Management Division. The results of the Bank’s Financial Management Division totaled a gain of Ch$3,387 million in 2025 compared to a loss of Ch$25,793 million in 2024. In 2025, long-term interest rates fell producing higher realized gains from the sale of fixed income instruments. In 2024, as long-term interest rates remained high, the Bank carried out various liability management exercises including the unwinding of rate and currency hedges and the repurchase of its bonds. These operations help to sustain margins going forward, but in the short-term produced the aforementioned loss.
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Other Operating Income, Income from investments in associates and other companies and Net income form non-current assets and non-continued operations
| Year ended December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| (in millions of Ch$) | |||||||||||||||||
| Income from investments in associates and other companies | 9,289 | 10,436 | (11.0 | %) | |||||||||||||
| Net income from non-current assets and non-continued operations | 7,243 | 4,049 | 78.9 | % | |||||||||||||
| Other operating income | 7,016 | 8,048 | (12.8) | % | |||||||||||||
| Total | 23,548 | 22,533 | 4.5 | % | |||||||||||||
Other Operating Income, Income from investments in associates and other companies and Net income from non-current assets and non-continued operations increased by 4.5% in 2025 compared to 2024. Income from investments in associates and other companies decreased 11.0% in 2025 due to a one-time gain recognized in 2024 of Ch$1,903 million from the sale of a 1.28% stake in Cámara de Compensación de Alto Valor S.A.with no corresponding gain in 2025. Net income from non-current assets and non-continued operations increased 78.9% in 2025 compared to 2024, mainly due to higher results from the sale of fixed assets and assets received in lieu of payment. Other operating income decreased 12.8% in 2025 compared to 2024 mainly due to lower interest gained on pension plans and lower recovery of expenses compared to 2024.
Operating Expenses
The following table sets forth information regarding our operating expenses in the years ended December 31, 2025 and 2024.
| Year ended December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| (in millions of Ch$) | |||||||||||||||||
| Personnel salaries and expenses | (412,902) | (398,819) | 3.5 | % | |||||||||||||
| Administrative expenses | (387,605) | (366,431) | 5.8 | % | |||||||||||||
| Depreciation and amortization | (135,159) | (141,435) | (4.4 | %) | |||||||||||||
| Impairment of property, plant and equipment | (3,747) | (1,295) | 189.3 | % | |||||||||||||
| Other operating expenses | (101,703) | (114,739) | (11.4 | %) | |||||||||||||
| Total operating expenses | (1,041,116) | (1,022,719) | 1.8 | % | |||||||||||||
Efficiency ratio(1) | 36.4 | % | 39.2 | % | |||||||||||||
(1)The efficiency ratio is the ratio of total operating expenses to total operating income. Total operating income consists of net interest income, fee income, net income from financial operations, and other operating income.
Operating expenses in the year ended December 31, 2025 increased 1.8% compared to the corresponding period in 2024 mainly due to an increase in personnel salaries and administrative expenses. The efficiency ratio improved to 36.4% in 2025 compared to 39.2% in 2024.
Personnel salaries and expenses in the year ended December 31, 2025 increased 3.5% compared to the corresponding period in 2024, mainly due to the increase in inflation, as most of the wages paid by the bank pursuant to collective bargaining agreements are indexed to the Chilean CPI, and higher performance bonuses in line with better operating results. This was partially offset by the 2.6% decrease in headcount in 2025 compared to 2024.
Administrative expenses increased 5.8% in the year ended December 31, 2025 compared to the corresponding period in 2024. This rise was mainly due to ongoing investments in IT, the digitalization of our banking services and data processing costs. In early 2025, the Bank transitioned most of its data processing functions to a new cloud-based server as
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part of the Santander Group-wide Gravity project. This resulted in higher expenses related to the changeover and write-downs and impairment recognition related to legacy systems. The growth in the client base and product usage also partially drove the rise in administrative expenses.
This increase was partially offset by reductions in the Bank’s branch network. As of December 31, 2025, the Bank had a total of 229 branches which decreased 3.0% in 2025 compared to 2024. The table below provides a breakdown of the Bank’s branch network during the periods indicated.
| Year ended December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| (in millions of Ch$) | |||||||||||||||||
| Traditional branches | 126 | 133 | (5.3 | %) | |||||||||||||
| WorkCafés | 94 | 89 | 5.6 | % | |||||||||||||
| Select | 9 | 14 | (35.7 | %) | |||||||||||||
| Total branches | 229 | 236 | (3.0 | %) | |||||||||||||
| Total ATMs (including depositary ATMs) | 2,055 | 2,059 | (0.2 | %) | |||||||||||||
Depreciation and amortization expense decreased 4.4% in 2025 compared to 2024 mainly due to the lower depreciation of right of use assets in line with the reduction in our branch network and lower amortization of intangible assets that mainly include internally generated software used for the development of our digital platforms.
The impairment expense increased 189.3% in 2025 compared to 2024 due to impairment of intangible assets mainly obsolete internally developed software.
Other operating expenses decreased 11.4% in 2025 compared to 2024. This fall mainly corresponds to the 20.8% decrease in restructuring charges incurred in 2025 compared to 2024, which totaled Ch$34,164 million. These restructuring charges are mainly due to the on-going restructuring of our branch network and other digital transformations. This was offset by higher operating risk charge-offs and provisions that totaled Ch$48,808 million in 2025. See “Note 29—Other Operating Income and Expenses” to our Audited Consolidated Financial Statements for more detail on Other operating expenses.
The following table sets forth, for the periods indicated, our personnel salaries, administrative and depreciation and amortization expenses broken down by business segment. These amounts exclude impairment and other operating expenses.
| Year ended December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| (in millions of Ch$) | |||||||||||||||||
| Retail banking | (744,059) | (715,845) | 3.9 | % | |||||||||||||
| Wealth Management & Insurance | (32,037) | (33,494) | (4.4 | %) | |||||||||||||
| Middle-market | (45,074) | (43,343) | 4.0 | % | |||||||||||||
| Corporate Investment Banking | (103,287) | (97,420) | 6.0 | % | |||||||||||||
| Other | (14,956) | (17,878) | (16.3) | % | |||||||||||||
| Total personnel, administrative expenses, depreciation and amortization (1) | (939,413) | (907,980) | 3.5 | % | |||||||||||||
(1)Excludes impairment and other operating expenses.
The 3.5% increase in total costs recognized by our business segments was mainly due to greater business activity, IT investments and higher product usage. In Retail Banking, the increase was mainly due to the rise in the client base and accounts, partially offset by the positive impact on costs of less branches. Costs in the Wealth Management and Insurance segment decreased 4.4% due to efficiency driven by digital platforms. Costs in the Middle-market and CIB segments increased 4.0% and 6.0%, respectively driven by the growth of as transactional services, wages and IT investments.
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Provision for loan losses (P&L)
The following table sets forth certain information relating to the P&L impacts of our provision for expected credit losses for the year ended December 31, 2025.
| For the year ended | Stage 1 | Stage 2 | Stage 3 | |||||||||||||||||||||||||||||||||||||||||
| December 31 2025 | Corporate | Other (2) | Corporate | Other (2) | Corporate | Other (2) | TOTAL (1) | |||||||||||||||||||||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | 2,831 | 8,750 | (13,573) | 84 | (67,015) | (193,570) | (262,493) | |||||||||||||||||||||||||||||||||||||
| Mortgage loans | — | (6,316) | — | (3,546) | — | (75,487) | (85,349) | |||||||||||||||||||||||||||||||||||||
| Consumer loans | — | (7,463) | — | (13,620) | — | (381,612) | (402,695) | |||||||||||||||||||||||||||||||||||||
| Contingent loans | 1,181 | (10,730) | (159) | (5,223) | 2,529 | (1,064) | (13,466) | |||||||||||||||||||||||||||||||||||||
| Loans and account receivable at FVOCI | (154) | — | 312 | — | (3,657) | — | (3,499) | |||||||||||||||||||||||||||||||||||||
| Debt at FVOCI | (214) | — | — | — | — | — | (214) | |||||||||||||||||||||||||||||||||||||
| Debt at amortised cost | (122) | — | — | — | — | — | (122) | |||||||||||||||||||||||||||||||||||||
| Subtotal | 3,522 | (15,759) | (13,420) | (22,305) | (68,143) | (651,733) | (767,838) | |||||||||||||||||||||||||||||||||||||
| Recovery of loans previously charged-off | 192,640 | |||||||||||||||||||||||||||||||||||||||||||
| TOTAL | (575,198) | |||||||||||||||||||||||||||||||||||||||||||
(1)Includes overlays for an amount of Ch$119,776 million. See Note 37, Risk management to our Audited Consolidated Financial Statements
(2)Includes Mortgages, Consumer and Other Commercial loans.
For the year ended December 31, 2025, the P&L impact of provisions for expected credit loss totaled Ch$575,198 million and increased 14.0% compared to 2024. This increase was mainly due to a rise driven by sluggish economic growth and high unemployment rates. This trend was partially offset by a 25.1% rise in recoveries of loans previously charged-off. The table below breaks down these results by main product item:
| Year ended December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| (in millions of Ch$) | |||||||||||||||||
| Commercial loans | (262,493) | (249,593) | 5.2 | % | |||||||||||||
| Mortgage loans | (85,349) | (53,574) | 59.3 | % | |||||||||||||
| Consumer loans | (402,695) | (357,647) | 12.6 | % | |||||||||||||
| Contingent loans | (13,466) | 2,902 | 564.0 | % | |||||||||||||
| Loans and account receivable at FVOCI | (3,499) | (1,040) | 236.4 | % | |||||||||||||
| Debt at FVOCI | (214) | (188) | 13.8 | % | |||||||||||||
| Debt at amortised cost | (122) | 606 | 120.1 | % | |||||||||||||
| Subtotal | (767,838) | (658,534) | 16.6 | % | |||||||||||||
| Recovery of loans previously charged-off | 192,640 | 153,944 | 25.1 | % | |||||||||||||
| Total Provision for Loan Losses | (575,198) | (504,590) | 14.0 | % | |||||||||||||
Provisions for expected credit losses of our commercial loans totaled Ch$262,493 million for the year ended December 31, 2025 and increased 5.2% compared to 2024. In commercial loans, the rise in provision for loan losses was mainly due to: (i) the sluggish growth of the economy which negatively affected specific clients in various sectors, mainly in the Middle Market segment and (ii) weakness in the agriculture sector due to negative impacts of destructive floods in
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certain fruit producing regions in 2023 and 2024. This drove an increase in commercial loans transferred from Stage 1 to Stage 2 and from Stage 2 to Stage 3. For the same reasons, there was a 26.4% increase in write-offs of commercial loans that totaled Ch$299,933 million representing 1.7% of total average commercial loans in 2025 compared to 1.4% in 2024.
Provisions for expected credit losses for mortgage loans totaled Ch$85,349 million for the year ended December 31, 2025, and increased 59.3% compared to 2024. Total mortgage loans in 2025 decreased 0.7% in 2025 compared to 2024 as the Bank adopted a more conservative stance in terms of loan growth in this product. Persistent high unemployment levels have led to a rise in mortgage loans classified in Stage 3 by 19.5% in 2025 totaling Ch$1,018,317 million. For the same reasons, the write-off of mortgage loans increased by 41.8% to Ch$62,123 million in 2025 compared to 2024. The ratio of write-offs to average mortgage loans was 0.4% in 2025 compared to 0.3% in 2024.
The provisions for expected credit losses for consumer loans totaled Ch$402,695 million and increased 12.6% in 2025. During 2025, the consumer loan book increased 2.5%, mainly driven by a rise in auto and credit card loans. This, together with persistently high levels of unemployment led to an increase of 10.3% of consumer loans classified in Stage 3. Regardless of other factors, if contractual payments are more than 30 days past due, the credit risk is deemed to have increased significantly since initial recognition and consumer loans are written off after 6 months. In 2025, write-off for this loan book decreased 1.0% and totaled Ch$349,805 million. The ratio of write-offs of consumer loans to average consumer loans reached 6.0% in 2025 compared to 6.4% in 2024.
Provisions for contingent loans totaled Ch$13,466 million for the year ended December 31, 2025 compared to a provision reversal of Ch$2,902 million in 2024. Total contingent loans reached Ch$13,508,433 million in 2025 and increased 0.6% compared to 2024. This rise in contingent loans led to an increase of these loans classified in Stage 1 which resulted in a provision loss of Ch$9,549 million compared to a provision reversal of Ch$2,456 million in 2024. See “Note 24b—Contingent Loans” of the Audited Consolidated Financial Statements for more detail on contingent loans.
Generally, charge-offs should be done when all collection efforts are exhausted. These charge-offs consist of derecognition from the Consolidated Statements of Financial Position of the corresponding loans operations in its entirety, and, therefore, include portions not past-due of a loan in the case of installments loans or leasing operations (no partial charge-offs exists). Subsequent payments obtained from charged-off loans will be recognized in the Consolidated Statement of Income as a recovery of loans previously charged-off.
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. In general, legal collection proceedings begin with respect to consumer loans once they are past-due for at least 90 days and, with respect to mortgage loans, once they are past-due for at least 120 days. Legal collection proceedings always commence within one year of such loans becoming past-due, unless we determine that the size of the past-due amount does not warrant such proceedings. In addition, the majority of our commercial loans are short-term, with single payments at maturity. Past-due loans are required to be covered by individual loan loss reserves equivalent to 100% of any unsecured portion thereof.
Recoveries on loans previously charged-off increased 25.1% in 2025 compared to 2024 as greater amounts of write-offs led to higher recoveries. There was a 26.4% increase in write-offs of commercial loans in 2025 representing 1.7% of total average commercial loans in 2025 compared to 1.4% in 2024. This increase was mainly due to (i) the sluggish growth of the economy which negatively affected specific clients in various sectors, mainly in the Middle Market segment and (ii) weakness in the agricultural sector due to the negative impacts of destructive floods in certain fruit producing regions in 2023 and 2024. Additionally, persistently high unemployment levels have led to a 41.8% rise in the write-off of mortgage loans in 2025 compared to 2024, representing 0.4% of the average mortgage loans outstanding in 2025 compared to 0.3% in 2024. In response, the Bank strengthened recovery efforts during the year, which included the relocation and restructuring of the collections department to the Risk Division. The following table shows recoveries of loans previously charged-off by type of loan.
| Year ended December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| (in millions of Ch$) | |||||||||||||||||
| Recovery of loans previously charged-off | |||||||||||||||||
| Consumer loans | 45,587 | 35,748 | 27.5 | % | |||||||||||||
| Residential mortgage loans | 59,271 | 45,486 | 30.3 | % | |||||||||||||
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| Commercial loans | 87,782 | 72,710 | 20.7 | % | |||||||||||||
| Total recoveries | 192,640 | 153,944 | 25.1 | % | |||||||||||||
In some instances, we will sell a portfolio of charged-off loans to a third party. Gain (loss) on these charged-off loans is recognized as net income from financial transactions as disclosed in “Note 27—Net Income (Expense) from Financial Operations” of our Audited Consolidated Financial Statements. The following table sets forth information about our sale of charged-off loans for the years ended December 31, 2025 and 2024.
| Year ended December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| (in millions of Ch$) | |||||||||||||||||
| Gains (losses) on sale of loans previously charged off | 3,395 | 1,874 | 81.2 | % | |||||||||||||
The following table sets forth, for the periods indicated, our net provision expense broken down by business segment:
| Year ended December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| (in millions of Ch$) | |||||||||||||||||
| Retail banking | (498,572) | (446,842) | 11.6 | % | |||||||||||||
| Wealth Management & Insurance | (2,870) | (2,430) | 18.1 | % | |||||||||||||
| Middle-market | (74,190) | (53,695) | 38.2 | % | |||||||||||||
| Corporate Investment banking | 4,269 | (2,995) | (242.5 | %) | |||||||||||||
| Other | (3,950) | 1,372 | 387.9 | % | |||||||||||||
| Total provisions, net | (575,313) | (504,590) | 14.0 | % | |||||||||||||
Net provision expense in retail banking increased 11.6% in 2025 compared to 2024. This increase was mainly due to the negative impact of elevated unemployment rates in the economy which has affected the consumer, mortgage and SME loan portfolios.
Net provisions expense from Wealth Management increased 18.1% in 2025 compared to 2024 due to strong business growth in this segment. Loans in this segment grew 13.0% in the year .
Net provision expense from the Middle-market segment increased 38.2% in 2025. This increase was mainly due to: (i) the sluggish growth of the economy which negatively affected specific clients in various sectors and (ii) weakness in the agriculture sector due to negative impacts of destructive floods in certain fruit and wine producing regions in 2023 and 2024.
Net provision expense from CIB totaled a reversal of Ch$4,269 million driven by the 7.1% decrease in this segment's loan book.
As of December 31, 2025, the Bank maintains post-model adjustments (overlays) totaling Ch$119,776 million to cover certain defaulted loans from mortgage and other commercial portfolios. We believe that our loan loss allowances are currently adequate for all known and expected credit losses.
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Income tax
| Year ended December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| (in millions of Ch$) | |||||||||||||||||
| Net operating income before income tax | 1,245,415 | 1,079,595 | 15.4 | % | |||||||||||||
| Income tax expense | (207,362) | (219,745) | (5.6 | %) | |||||||||||||
| Effective tax rate(1) | 16.7 | % | 20.4 | % | |||||||||||||
(1)The effective tax rate is the income tax expense divided by net operating income before income tax.
Total income tax expense by the Bank in 2025 was Ch$207,362 million, a decrease of 5.6% compared to 2024. The decrease in income tax expenses in 2025 compared to 2024 mainly reflects the lower CPI in 2025 compared to 2024, due to the fact that our capital in our Chilean tax books is recast each year based on the variation in the CPI, which causes a tax loss, as well as timing differences between accounting and tax treatment of certain bonds. See “Note 13—Current and Deferred Taxes” of the Audited Consolidated Financial Statements for more detail on income tax expense.
Therefore while, the statutory corporate tax rate in Chile in 2024 and 2025 was 27%, the Bank recognized an effective tax rate of 16.7% in 2025 compared to 20.4% in 2024.
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B.Liquidity and Capital Resources
Sources of Liquidity
The following table sets forth Santander-Chile’s contractual obligations and commercial commitments by time remaining to maturity. As of the date of the filing of this Annual Report, the Bank does not have significant purchase obligations. As of December 31, 2025, the scheduled maturities of our contractual obligations and of other commercial commitments, including accrued interest, were as follows:
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Subtotal up to 1 year | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Subtotal after 1 year | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Obligations under repurchase agreements | — | 2,180,874 | 574,369 | — | 2,755,243 | — | — | — | — | 2,755,243 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Checking accounts, time deposits and other time liabilities(1) | 15,143,806 | 7,731,868 | 3,692,751 | 4,601,006 | 31,169,431 | 435,105 | 322 | 32,731 | 468,158 | 31,637,589 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial derivatives contracts | — | 789,194 | 1,274,609 | 2,113,806 | 4,177,609 | 2,414,508 | 1,745,432 | 3,162,475 | 7,322,415 | 11,500,024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interbank borrowings | 28,266 | 289,677 | 275,757 | 1,949,788 | 2,543,488 | 659,092 | 223,890 | 7,767 | 890,749 | 3,434,237 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issued debt instruments | — | 45,980 | 676,736 | 1,642,349 | 2,365,065 | 1,995,136 | 1,205,230 | 2,133,669 | 5,334,035 | 7,699,100 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lease liabilities | — | — | — | 6,629 | 6,629 | 14,751 | 11,276 | 7,993 | 34,020 | 40,649 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other financial liabilities(2) | — | 224,321 | — | — | 224,321 | — | — | — | — | 224,321 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | 15,172,072 | 11,261,914 | 6,494,222 | 10,313,578 | 43,241,786 | 5,518,592 | 3,186,150 | 5,344,635 | 14,049,377 | 57,291,163 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contractual interest payments(3) | — | 2,180,874 | 574,369 | — | 2,755,243 | — | — | — | — | 2,755,243 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 15,172,072 | 13,442,788 | 7,068,591 | 10,313,578 | 45,997,029 | 5,518,592 | 3,186,150 | 5,344,635 | 14,049,377 | 60,046,406 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Includes demand deposits and other demand liabilities, cash items in process of being cleared and time deposits and other time liabilities.
(2)Mainly includes amounts owed to credit card processors and to the Chilean Production Development Corporation (Corporación de Fomento de la Producción de Chile), the state development agency.
(3)The table above includes future cash interest payments. For variable rate obligations, we assume the same rate as the last rate known. Various of the payment obligations in the table above are variable debt instruments, since they are denominated in UF, for which we have estimated a long-term inflation rate equal to 3%, which is at the center of the Central Bank’s long-term inflation target. No exclusions requiring further explanation have been made in this table.
The Bank has checking accounts, time deposits and other time liabilities maturing within one year amounting to Ch$31,169,431 million as of December 31, 2025. Santander-Chile’s liquidity depends upon its (i) capital, (ii) reserves, and (iii) financial investments, including cash and investments in government securities. To cover any liquidity shortfalls and to augment its liquidity position, Santander-Chile has established lines of credit with foreign and domestic banks and also has access to Central Bank borrowings. The Bank has a liquidity portfolio of Ch$8,136,013 million as of December 31, 2025, including cash and liquid assets defined by the Bank’s Asset and Liability Committee (ALCO) in line with BIS III guidelines.
For further discussion of the maturities of our liquid assets, see “Analysis of Investments”. Our general policy is to maintain adequate liquidity to ensure our ability to honor withdrawals of deposits, make repayments of other liabilities at maturity, extend loans and meet our own working capital needs. Our minimum amount of liquidity is determined by the statutory reserve requirements of the Central Bank.
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Most instruments maturing after one year are financial derivative contracts and issued debt instruments. Our current funding strategy is to continue to utilize all sources of funding in accordance with their costs, their availability and our general asset and liability management strategy. Special emphasis is placed on retail deposits, lengthening the maturities of funding with institutional clients, and diversifying our bondholder and deposit base. Overall, the management of our liquidity and funding has led to an LCR ratio of 187.7% and a NSFR of 115.1% as of December 31, 2025. Furthermore, the Bank also has regulatory capital of Ch$7,047,321 million, representing 16.9% of our risk-weighted assets as of December 31, 2025.
Lease liabilities
Certain bank premises and equipment are leased and the scheduled maturities of obligations for lease agreements as of December 31, 2025 were as follows:
| As of December 31 2025 | ||||||||
| (in millions of Ch$) | ||||||||
| Due within 1 year | 6,629 | |||||||
| Due after 1 year but within 2 years | 8,004 | |||||||
| Due after 2 years but within 3 years | 6,747 | |||||||
| Due after 3 years but within 4 years | 6,082 | |||||||
| Due after 4 years but within 5 years | 5,194 | |||||||
| Due after 5 years | 7,993 | |||||||
| Total | 40,649 | |||||||
Other Commercial Commitments
As of December 31, 2025, the scheduled maturities of other commercial commitments, including accrued interest, were as follows:
| Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | ||||||||||||||||||||||||||||||||||||||
| Other Commercial Commitments | (in millions of Ch$) | |||||||||||||||||||||||||||||||||||||||||||
| Guarantees | 180,829 | 232,050 | 874,566 | 530,122 | 53,397 | 838 | 1,871,802 | |||||||||||||||||||||||||||||||||||||
| Confirmed foreign letters of credit | 79,588 | 101,207 | 62,112 | 6,233 | - | - | 249,140 | |||||||||||||||||||||||||||||||||||||
| Pledges and other commercial commitments | 36,280 | 65,812 | 397,018 | 56,494 | 592 | - | 556,196 | |||||||||||||||||||||||||||||||||||||
| Total other commercial commitments | 296,697 | 399,069 | 1,333,696 | 592,849 | 53,989 | 838 | 2,677,138 | |||||||||||||||||||||||||||||||||||||
Other equity instruments
On October 2021, the Bank issued a perpetual bond for U.S.$700 million at an annual rate of 4.63% with no fixed maturity and that is not redeemable before five years from the date of issuance. The trigger (going concern) was set at 5.125% and the bond considers an expiration absorption mechanism. The amount outstanding in Ch$ million at year-end was as follows:
| As of December 31, 2025 | ||||||||||||||||||||
| Current | Non-current | Total | ||||||||||||||||||
| Ch$ million | ||||||||||||||||||||
| Other equity instruments issued other than capital (Perpetual bond) | — | 629,468 | 629,468 | |||||||||||||||||
| Total | — | 629,468 | 629,468 | |||||||||||||||||
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Financial Investments
On initial recognition, financial assets and financial liabilities are measured at the transaction price, i.e. the fair value of the consideration given or received (IFRS 13). In the case of financial instruments not at fair value through profit or loss, transaction costs are directly attributable to the acquisition or issue of the financial asset or financial liability. After initial recognition, an entity shall measure a financial liability at amortized cost and an entity shall measure a financial asset at:
(a)Amortized Cost
Financial assets that are held in a business model to collect the contractual cash flows and contain contractual terms that give rise on specific dates to cash flows that are SPPI, are measured at amortized cost.
The effective interest method is used in the calculation of the amortized cost of a financial asset or a financial liability and in the allocation and recognition of the interest revenue or interest expense in profit or loss over the relevant period. The effective interest rate (“EIR”) is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset or to the amortized cost of a financial liability.
Debt financial instruments at amortized cost
These instruments include high rated Chilean Central Bank bonds and treasury notes issued locally and abroad.
| As of December 31, 2025 | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||
| Chilean Central Bank and Government securities | 5,098,597 | 4,852,552 | 8,178,624 | |||||||||||||||||
| Other Chilean Securities | — | — | — | |||||||||||||||||
| Foreign securities | 427,790 | 324,527 | — | |||||||||||||||||
| Investment in mutual funds | — | — | — | |||||||||||||||||
| Total (gross carrying amount) | 5,526,387 | 5,177,079 | 8,178,624 | |||||||||||||||||
(b)Fair Value through Other Comprehensive Income (FVOCI)
Financial assets that are debt instruments held in a business model that is achieved by both collecting contractual cash flow and selling, and that contain contractual terms that give rise on specific dates to cash flows that are SPPI, are measured at FVOCI. They are subsequently remeasured at fair value and changes therein (except for those relating to impairment, interest income and foreign currency exchange gains and losses) are recognized in other comprehensive income, until the assets are sold. Upon disposal, the cumulative gain and losses in OCI are recognized in the income statement.
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Debt financial instruments at fair value through other comprehensive income (FVOCI) – under IFRS 9
As of December 31, 2025, 2024 and 2023, the debt instruments at fair value through other comprehensive income (FVOCI) in accordance with IFRS 9 are as follows:
| As of December 31 2025 | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||
| Chilean Central Bank and government securities | ||||||||||||||||||||
| Chilean Central Bank financial instruments | — | 199,903 | 2,286,541 | |||||||||||||||||
| Chilean Treasury bonds and notes | 2,825,238 | 1,273,701 | 737,705 | |||||||||||||||||
| Other Chilean government financial instruments | — | — | 454 | |||||||||||||||||
| Subtotal | 2,825,238 | 1,473,604 | 3,024,700 | |||||||||||||||||
| of which sold under repurchase agreement | 1,789,703 | 397,334 | 207,280 | |||||||||||||||||
| Other Chilean debt financial securities | ||||||||||||||||||||
| Chilean Bank debt financial instruments | 3,484 | 5,006 | 6,656 | |||||||||||||||||
| Other Chilean financial instruments | — | — | — | |||||||||||||||||
| Subtotal | 3,484 | 5,006 | 6,656 | |||||||||||||||||
| of which sold under repurchase agreement | — | — | 91 | |||||||||||||||||
| Foreign financial securities | ||||||||||||||||||||
| Foreign Central Banks debt financial instruments | 769,644 | 1,001,105 | 1,238,866 | |||||||||||||||||
| Other foreign financial instruments | — | 207,770 | 265,803 | |||||||||||||||||
| Subtotal | 769,644 | 1,208,875 | 1,504,669 | |||||||||||||||||
| of which sold under repurchase agreement | — | — | 127,752 | |||||||||||||||||
| Total | 3,598,366 | 2,687,485 | 4,536,025 | |||||||||||||||||
(c)Fair Value through Profit or Loss (FVTPL)
Financial assets that do not contain contractual terms that give rise on specified dates to cash flows that are SPPI, or if the financial assets, or if the financial asset is not held in a business model that is either (i) a business model to collect the contractual cash flows or (ii) a business model that is achieved by both collecting contractual cash flows and selling.
Financial assets held for trading are recognized at fair value through profit or loss, likewise derivatives contracts for trading purposes.
Financial Instruments Held For Trading
| As of December 31 2025 | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||
| Central Bank and Government Securities | 714,628 | 324,982 | 98,308 | |||||||||||||||||
| Other Chilean Securities | — | 4,345 | — | |||||||||||||||||
| Foreign financial debt securities | — | — | — | |||||||||||||||||
| Investments in mutual funds | — | — | — | |||||||||||||||||
| Total | 714,628 | 329,327 | 98,308 | |||||||||||||||||
In 2025, the Bank increased its investment in Chilean Central Bank and government securities in view of the rates offered in relation to their expected risk.
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(d)Equity Instruments
For certain equity instruments, the Bank may make an irrevocable election to present subsequent changes in the fair value of the instrument in other comprehensive income, except for dividend income which is recognized in profit or loss. Gains or losses on derecognition of these equity instruments are not transferred to profit or loss.
Analysis of investments
The following table sets forth an analysis of our investments as of December 31, 2025 by remaining maturity and the weighted average nominal rates of such investments.
Financial Instruments Held For Trading
| Within one year | Weighted average Nominal Rate | After one year but within five years | Weighted average Nominal Rate | After five years but within ten years | Weighted average Nominal Rate | After ten years | Weighted average Nominal Rate | Total | Weighted average Nominal Rate | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions of Ch$, except rates) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31 2025 Financial Assets Held for Trading at fair value Central Bank and Government Securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Central Bank financial instruments | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Treasury bonds and notes | — | — | — | — | — | — | 714,628 | 4.5 | 714,628 | 4.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Chilean government financial instruments | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | — | — | — | — | — | — | 714,628 | — | 714,628 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Chilean debt financial securities | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Bank debt financial instruments | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean bonds and commercial papers | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Chilean financial instruments | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign financial debt securities | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign Central Banks debt financial instruments | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other foreign financial instruments | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments in mutual funds | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Funds managed by related entities | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | — | — | — | — | — | — | 714,628 | — | 714,628 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt financial instruments at amortized cost and Debt financial instruments at FVOCI
| Within one year | Weighted average Nominal Rate | After one year but within five years | Weighted average Nominal Rate | After five years but within ten years | Weighted average Nominal Rate | After ten years | Weighted average Nominal Rate | Total | Weighted average Nominal Rate | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions of Ch$, except rates) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31 2025 Debt instruments at amortized cost | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Central Bank debt financial instruments | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Treasury bonds and notes | — | — | — | — | — | — | 5,098,597 | 3.9 | 5,098,597 | 3.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | — | — | — | — | — | 5,098,597 | — | 5,098,597 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign debt financial securities | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other foreign debt financial instruments | — | — | — | — | — | — | 427,790 | 4.9 | 427,790 | 4.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | — | — | — | — | — | — | 427,790 | — | 427,790 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | — | — | — | — | — | — | 5,526,387 | — | 5,526,387 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt instruments at FVOCI | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Central Bank financial instruments | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Treasury bonds and notes | — | — | 10,207 | 4.73 | — | — | 2,815,031 | 3.4 | 2,825,238 | 3.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Chilean government financial instruments | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | — | — | 10,207 | — | — | — | 2,815,031 | — | 2,825,238 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Chilean Securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Bank debt financial instruments | — | — | — | — | — | — | 3,484 | 3.7 | 3,484 | 3.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean bonds and commercial papers | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Chilean financial instruments | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | — | — | — | — | — | — | 3,484 | — | 3,484 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Financial Securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign Central Banks debt financial instruments | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign government and state debt financial instruments | — | — | — | — | — | — | 769,644 | 3.6 | 769,644 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other foreign debt financial instruments | — | — | — | — | — | — | — | — | — | 5.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | — | — | — | — | — | — | 769,644 | — | 769,644 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | — | — | 10,207 | — | — | — | 3,588,159 | — | 3,598,366 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Working Capital
As a bank, we satisfy our working capital needs through general funding, the majority of which derives from deposits and other borrowings from the public. (See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Deposits and Other Borrowings”). In our opinion, our working capital is sufficient for our present needs.
Liquidity Management
Liquidity management seeks to ensure that, even under adverse conditions, we have access to the funds necessary to cover client needs, maturing liabilities and capital requirements. Liquidity risk arises in the general funding for our financing, trading and investment activities. It includes the risk of unexpected increases in the cost of funding the portfolio of assets at appropriate maturities and rates, the risk of being unable to liquidate a position in a timely manner at a reasonable price and the risk that we will be required to repay liabilities earlier than anticipated.
The following table sets forth the balance of our liquidity portfolio managed by our Financial Management Division in the manner in which it is presented to the Asset and Liability Committee (ALCO) and the Board. The ALCO uses as its
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liquidity portfolio those defined by the FMC and the Central Bank, which are in line with those established in BIS III. As of December 31, 2025 and 2024, the breakdown of the Bank’s liquid assets by levels was the following:
| December 31, 2025 | December 31, 2024 | |||||||||||||
| (Ch$ million) | (Ch$ million) | |||||||||||||
| Balance as of: | ||||||||||||||
| Cash and cash equivalent | 1,904,994 | 2,416,812 | ||||||||||||
| Level 1 liquid assets (1) | 6,227,856 | 7,241,318 | ||||||||||||
| Level 2 liquid assets (2) | 3,163 | 4,517 | ||||||||||||
| Total liquid assets | 8,136,013 | 9,662,647 | ||||||||||||
(1)Includes available balances held in the Central Bank of Chile, financial instruments issued by the Chilean Treasury or Central Bank and other financial instruments issued or guaranteed by states, multilateral development banks or foreign central banks that have a first class rating, in accordance with international rating agencies.
(2)Includes instruments issued by governments, central banks and development banks of foreign countries with a risk rating of A- to AA+ and mortgage bonds issued by Chilean banks that are acceptable at the Central Bank’s repo window.
| December 31, 2025 | December 31, 2024 | |||||||||||||
| (Ch$ million) | (Ch$ million) | |||||||||||||
| Average balance as of: | ||||||||||||||
| Cash and cash equivalent | 1,828,528 | 1,732,701 | ||||||||||||
| Level 1 liquid assets (1) | 6,476,798 | 6,236,963 | ||||||||||||
| Level 2 liquid assets (2) | 3,660 | 5,217 | ||||||||||||
| Total liquid assets | 8,308,986 | 7,974,881 | ||||||||||||
(1)Includes available balances held in the Central Bank of Chile, financial instruments issued by the Chilean Treasury or Central Bank and other financial instruments issued or guaranteed by states, multilateral development banks or foreign central banks that have a first class rating, in accordance with international rating agencies.
(2)Includes instruments issued by governments, central banks and development banks of foreign countries with a risk rating of A- to AA+ and mortgage bonds issued by Chilean banks that are acceptable at the Central Bank’s repo window.
Our general policy is to maintain liquidity adequate to ensure our ability to honor withdrawals of deposits, make repayments of other liabilities at maturity, extend loans and meet our own working capital needs. Our minimum amount of liquidity is determined by the statutory reserve requirements of the Central Bank. Deposits are subject to a statutory reserve requirement of 9.0% for demand deposits and 3.6% for Chilean peso-, UF- and foreign currency denominated time deposits with a term of less than a year. See “Item 4. Information on the Company—B. Business Overview—Competition—Regulation and Supervision.” The Central Bank has statutory authority to increase these percentages to up to 40.0% for demand deposits and up to 20.0% for time deposits. In addition, a 100% special reserve (reserva técnica) applies to demand deposits, deposits in checking accounts, other demand deposits received or obligations payable on sight and incurred in the ordinary course of business, other than deposits unconditionally payable immediately. This special reserve requirement applies to the amount by which the total of such deposits exceeds 2.5 times the amount of a bank’s regulatory capital. Interbank loans are deemed to have a maturity of more than 30 days, even if payable within the following 10 days. The Central Bank has also set other liquidity limits and ratios that minimize liquidity risk. See “Item 11. Quantitative and Qualitative Disclosures About Market Risk.”
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Cash Flow
The tables below set forth our main sources of cash. The subsidiaries are not an important source of cash flow for us and therefore have no impact on our ability to meet our cash obligations. No legal or economic restrictions exist on the ability of subsidiaries to transfer funds to us in the form of loans or cash dividends as long as these subsidiaries abide by the regulations of the Ley General de Bancos and the Ley de Sociedad Anónimas regarding loans to related parties and minimum dividend payments. See our Consolidated Statements of Cash Flows in our Audited Consolidated Financial Statements for a detailed breakdown of the Bank’s cash flow.
| Year ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Millions of Ch$ | ||||||||||||||||||||
| Net cash flow (used in) provided by operating activities | 55,407 | 482,388 | 1,315,758 | |||||||||||||||||
Our operating activities provided cash in an amount of Ch$55,407 million in 2025, mainly due to the cash flow provided by profits and the decrease in loans, deposits, and other funding sources, mainly bonds partially offset by the funds used in purchasing financial investments and bond repurchases. Our operating activities provided cash for Ch$482,388 million in 2024, mainly due an increase in profits, deposits, and other funding sources partially offset by the repayment of the Bank’s FCIC obligation with the Central Bank of Chile. Our operating activities provided cash for Ch$1,315,758 million in 2023, mainly derived from an increase in time deposits and obligations with foreign banks, partially offset by cash used in the growth of the loan portfolio.
| Year ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Millions of Ch$ | ||||||||||||||||||||
| Net cash (used in) provided by investment activities | (104,945) | (106,580) | (117,850) | |||||||||||||||||
In 2025, the Bank’s investment activities consumed cash in an amount of Ch$104,945 million, mainly due to the purchase of property, plant and equipment, which was mainly related to investments in the WorkCafé branch network. Cash was also consumed by investments in intangible assets, related to the Bank’s digital strategy and cloud computing investments. In 2024, the Bank’s investment activities consumed cash in an amount of Ch$106,580 million in 2024 mainly due to the purchase of property, plant and equipment, which was mainly related to investments in the Workcafé branch network. Cash was also consumed by investments in intangible assets, mainly related to the Bank’s digital strategy. due to the purchase of intangible assets, mainly related to the digital strategy. In 2023, the Bank’s investment activities consumed cash in an amount of Ch$117,850 million, mainly due to the purchase of intangible assets, mainly related to the Bank’s digital strategy.
| Year ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Millions of Ch$ | ||||||||||||||||||||
| Net cash provided by (used in) financing activities | (621,098) | (372,847) | (515,292) | |||||||||||||||||
In 2025, net cash used in financing activities was Ch$621,098 million and was mainly due to the payment of the annual dividend paid to shareholders in April 2025, which was higher than the dividend paid in 2024. In 2024, net cash used in financing activities was Ch$372,847 million due to the annual dividend payment. In 2023, net cash used by financing activities was Ch$515,292 million due to the annual dividend payment.
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Deposits and Other Borrowings
The following table sets forth our average balance of liabilities for the years ended December 31, 2025, 2024, and 2023, in each case together with the related average nominal interest rates paid thereon.
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | % of Total Average Liabilities | Average Nominal Rate | Average Balance | % of Total Average Liabilities | Average Nominal Rate | Average Balance | % of Total Average Liabilities | Average Nominal Rate | |||||||||||||||||||||||||||||||||||||||||||||
| (in millions of Ch$, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Savings accounts | 246,969 | 0.4 | % | 3.2 | % | 204,486 | 0.3 | % | 4.5 | % | 190,469 | 0.3 | % | 3.6 | % | ||||||||||||||||||||||||||||||||||||||
| Time deposits | 16,819,761 | 24.7 | % | 4.6 | % | 18,333,279 | 26.6 | % | 7.4 | % | 16,392,793 | 23.6 | % | 7.4 | % | ||||||||||||||||||||||||||||||||||||||
| Central Bank borrowings | — | 0.0 | % | 0.0 | % | 2,227,144 | 3.2 | % | 5.1 | % | 5,773,345 | 8.3 | % | 12.2 | % | ||||||||||||||||||||||||||||||||||||||
| Repurchase agreements | 2,189,070 | 3.2 | % | 4.9 | % | 567,006 | 0.8 | % | 9.1 | % | 779,214 | 1.1 | % | 7.2 | % | ||||||||||||||||||||||||||||||||||||||
| Mortgage finance bonds | 71 | 0.0 | % | 5.6 | % | 455 | 0.0 | % | 11.4 | % | 2,063 | 0.0 | % | 9.3 | % | ||||||||||||||||||||||||||||||||||||||
| Commercial paper | 837,704 | 1.2 | % | 4.9 | % | 639,541 | 0.9 | % | 6.0 | % | 613,212 | 0.9 | % | 5.8 | % | ||||||||||||||||||||||||||||||||||||||
| Other interest bearing liabilities | 17,155,876 | 25.2 | % | 5.1 | % | 14,707,545 | 21.3 | % | 8.0 | % | 14,920,208 | 21.5 | % | 8.7 | % | ||||||||||||||||||||||||||||||||||||||
| Subtotal interest-bearing liabilities | 37,249,451 | 54.6 | % | 4.9 | % | 36,679,456 | 53.2 | % | 6.3 | % | 38,671,304 | 55.6 | % | 8.6 | % | ||||||||||||||||||||||||||||||||||||||
| Non-interest bearing liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest bearing deposits | 10,837,345 | 15.9 | % | 11,317,733 | 16.4 | % | 11,099,866 | 16.0 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Derivatives | 11,497,964 | 16.9 | % | 11,710,435 | 17.0 | % | 10,937,411 | 15.7 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Other non-interest bearing liabilities | 3,011,037 | 4.4 | % | 4,162,306 | 6.0 | % | 4,108,850 | 5.9 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Equity | 5,584,350 | 8.2 | % | 5,028,887 | 7.3 | % | 4,720,294 | 6.8 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Subtotal non-interest bearing liabilities | 30,930,696 | 45.4 | % | 32,219,361 | 46.8 | % | 30,866,421 | 44.4 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 68,180,147 | 100.0 | % | 68,898,817 | 100.0 | % | 69,537,725 | 100.0 | % | ||||||||||||||||||||||||||||||||||||||||||||
Our most important source of funding is our deposits. Average time deposits plus non-interest bearing demand deposits represented 40.6% of our average total liabilities and shareholders’ equity in 2025. As of December 31, 2025, the Bank’s top 20 time deposits represented 20.0% of total time deposits, or 4.8% of total liabilities and equity. Our current funding strategy is to continue to utilize all sources of funding in accordance with their costs, their availability and our general asset and liability management strategy. Special emphasis is being placed on lengthening the maturities of funding with institutional clients, diversifying our bond holder base and broadening our core deposit funding. We believe that broadening our deposit base by increasing the number of account holders has created a more stable funding source. The liquidity coverage ratio (“LCR”), which measures the short-term resistance of Banks’ liquidity risk profile to ensure that organizations have an adequate pool of unencumbered, high-quality liquid assets, which can be readily and immediately converted to cash in private markets, in order to meet short-term liquidity needs. As of December 31, 2025, our LCR was 187.7%. The net stable funding ratio (“NSFR”) which measures a bank’s stable funding sources over required stable needs was 115.1% as of December 31, 2025.
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Composition of Deposits
The following table sets forth the composition of our deposits and similar commitments at December 31, 2025, 2024, 2023, 2022, and 2021.
| 2025 | 2024 | 2023 | 2022 | 2021 | ||||||||||||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||||||||||||||
| Demand deposits and other demand obligations | ||||||||||||||||||||||||||||||||
| Current accounts | 11,674,317 | 11,898,457 | 11,014,748 | 11,711,969 | 14,385,633 | |||||||||||||||||||||||||||
| Other deposits and demand accounts | 966,621 | 915,917 | 854,595 | 1,016,896 | 1,773,233 | |||||||||||||||||||||||||||
| Other demand obligations | 1,434,652 | 1,446,235 | 1,668,483 | 1,357,361 | 1,742,072 | |||||||||||||||||||||||||||
| Subtotals | 14,075,590 | 14,260,609 | 13,537,826 | 14,086,226 | 17,900,938 | |||||||||||||||||||||||||||
| Time deposits and other time deposits | ||||||||||||||||||||||||||||||||
| Time deposits | 16,216,079 | 16,867,607 | 15,939,325 | 12,779,206 | 9,926,507 | |||||||||||||||||||||||||||
| Time saving accounts | 269,821 | 221,973 | 189,757 | 191,257 | 195,570 | |||||||||||||||||||||||||||
| Other time deposits | 7,883 | 9,045 | 8,860 | 8,327 | 8,978 | |||||||||||||||||||||||||||
| Subtotals | 16,493,783 | 17,098,625 | 16,137,942 | 12,978,790 | 10,131,055 | |||||||||||||||||||||||||||
| Total deposits and other commitments | 30,569,373 | 31,359,234 | 29,675,768 | 27,065,016 | 28,031,993 | |||||||||||||||||||||||||||
Maturity of Interest Bearing Deposits
The following table sets forth information regarding the currency and maturity of our interest bearing deposits as of December 31, 2025, expressed in percentages of our total deposits in each currency category. UF-denominated deposits are similar to peso-denominated deposits in all respects, except that the principal is readjusted periodically based on variations in the Chilean consumer price index.
| Ch$ | UF | Foreign Currencies | Total | |||||||||||||||||||||||
| Demand deposits | 0.0 | % | 0.6 | % | 0.0 | % | 0.1 | % | ||||||||||||||||||
| Savings accounts | 0.8 | % | 22.9 | % | 0.0 | % | 1.6 | % | ||||||||||||||||||
| Time deposits: | ||||||||||||||||||||||||||
| Maturing within 3 months | 66.3 | % | 43.8 | % | 78.2 | % | 67.6 | % | ||||||||||||||||||
| Maturing after 3 but within 6 months | 12.9 | % | 17.6 | % | 12.5 | % | 13.0 | % | ||||||||||||||||||
| Maturing after 6 but within 12 months | 16.7 | % | 9.3 | % | 9.0 | % | 14.9 | % | ||||||||||||||||||
| Maturing after 12 months | 3.3 | % | 5.8 | % | 0.3 | % | 2.8 | % | ||||||||||||||||||
| Total time deposits | 99.2 | % | 76.5 | % | 100.0 | % | 98.3 | % | ||||||||||||||||||
| Total deposits | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||
The following table sets forth information regarding the maturity of our outstanding time deposits (excluding savings accounts and other time deposits) as of December 31, 2025.
| Ch$ | UF | Foreign Currencies | Total | |||||||||||||||||||||||
| Time deposits: | ||||||||||||||||||||||||||
| Maturing within 3 months | 8,270,306 | 322,846 | 2,559,840 | 11,152,992 | ||||||||||||||||||||||
| Maturing after 3 but within 6 months | 1,607,868 | 129,558 | 407,302 | 2,144,728 | ||||||||||||||||||||||
| Maturing after 6 but within 12 months | 2,090,389 | 68,217 | 294,603 | 2,453,209 | ||||||||||||||||||||||
| Maturing after 12 months | 411,999 | 42,955 | 10,196 | 465,150 | ||||||||||||||||||||||
| Total deposits | 12,380,562 | 563,576 | 3,271,941 | 16,216,079 | ||||||||||||||||||||||
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Short-term Borrowings
The following table shows the average balance and the average nominal rate for each short-term borrowing category for the years indicated.
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| Average Balance | Average Nominal Interest Rate | Average Balance | Average Nominal Interest Rate | Average Balance | Average Nominal Interest Rate | |||||||||||||||||||||||||||||||||
| (in millions of Ch$, except percentages) | ||||||||||||||||||||||||||||||||||||||
| Obligations under repurchase agreements | 2,189,070 | 4.9 | % | 567,006 | 9.1 | % | 779,214 | 7.2 | % | |||||||||||||||||||||||||||||
| Obligations with the Central Bank | — | 0.0 | % | 2,227,144 | 5.1 | % | 5,773,345 | 12.2 | % | |||||||||||||||||||||||||||||
| Loans from domestic financial institutions | 333,388 | 2.4 | % | 1,063,703 | 0.9 | % | 55,839 | 7.0 | % | |||||||||||||||||||||||||||||
| Foreign obligations | 3,814,336 | 6.8 | % | 3,794,062 | 8.0 | % | 3,421,666 | 6.9 | % | |||||||||||||||||||||||||||||
| Total Short-term borrowings | 6,336,794 | 5.9 | % | 7,651,915 | 6.3 | % | 10,030,064 | 10.0 | % | |||||||||||||||||||||||||||||
The following table presents the maximum month-end balances of our principal sources of short-term borrowings during the years indicated.
| Maximum 2025 Month-End Balance | Maximum 2024 Month-End Balance | Maximum 2023 Month-End Balance | ||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||
| Obligations under repurchase agreements | 3,786,251 | 1,886,763 | 1,161,741 | |||||||||||||||||
| Obligations with the Central Bank | — | 6,147,010 | 6,048,867 | |||||||||||||||||
| Loans from domestic financial institutions | 591,535 | 819,596 | 225,604 | |||||||||||||||||
| Foreign obligations | 4,152,873 | 4,355,474 | 4,271,414 | |||||||||||||||||
| Total short-term borrowings | 8,530,659 | 13,208,843 | 11,707,626 | |||||||||||||||||
Total Borrowings
| As of December 31, 2025 | ||||||||||||||||||||
| Long-term | Short-term | Total | ||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||
| Loans from Central Bank | — | — | — | |||||||||||||||||
| Obligations under repurchase agreements | 574,369 | 2,180,874 | 2,755,243 | |||||||||||||||||
| Mortgage finance bonds (a) | — | 55 | 55 | |||||||||||||||||
| Senior bonds (b) | 5,278,740 | 2,365,010 | 7,643,750 | |||||||||||||||||
| Mortgage bonds (c) | 55,295 | — | 55,295 | |||||||||||||||||
| Regulatory capital financial instruments (d) | 1,746,324 | 202,169 | 1,948,493 | |||||||||||||||||
| Borrowings from domestic financial institutions | — | 30,052 | 30,052 | |||||||||||||||||
| Foreign borrowings (e) | 890,749 | 2,513,436 | 3,404,185 | |||||||||||||||||
| Other obligations (f) | — | 224,321 | 224,321 | |||||||||||||||||
| Total borrowings | 8,545,477 | 7,515,917 | 16,061,394 | |||||||||||||||||
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| As of December 31, 2024 | ||||||||||||||||||||
| Long-term | Short-term | Total | ||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||
| Central Bank credit lines for renegotiations of loans | — | — | — | |||||||||||||||||
| Obligations under repurchase agreements | — | 276,588 | 276,588 | |||||||||||||||||
| Mortgage finance bonds | 7 | 213 | 220 | |||||||||||||||||
| Senior bonds | 5,420,980 | 2,646,294 | 8,067,274 | |||||||||||||||||
| Mortgage bonds | 65,781 | — | 65,781 | |||||||||||||||||
| Regulatory capital financial instruments | 1,910,697 | — | 1,910,697 | |||||||||||||||||
| Borrowings from domestic financial institutions | 40,000 | 12,311 | 52,311 | |||||||||||||||||
| Foreign borrowings | 932,481 | 3,353,155 | 4,285,636 | |||||||||||||||||
| Other obligations | — | 200,541 | 200,541 | |||||||||||||||||
| Total borrowings | 8,369,946 | 6,489,102 | 14,859,048 | |||||||||||||||||
| As of December 31, 2023 | ||||||||||||||||||||
| Long-term | Short-term | Total | ||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||
| Central Bank credit lines for renegotiations of loans | 5,584,084 | — | 5,584,084 | |||||||||||||||||
| Obligations under repurchase agreements | — | 315,355 | 315,355 | |||||||||||||||||
| Mortgage finance bonds | 1,206 | 2,592 | 3,798 | |||||||||||||||||
| Senior bonds | 6,597,776 | 482,696 | 7,080,472 | |||||||||||||||||
| Mortgage bonds | 74,515 | 7,108 | 81,623 | |||||||||||||||||
| Regulatory capital financial instruments | 1,733,870 | — | 1,733,870 | |||||||||||||||||
| Borrowings from domestic financial institutions | — | 41,318 | 41,318 | |||||||||||||||||
| Foreign borrowings | — | 3,239,363 | 3,239,363 | |||||||||||||||||
| Other obligations | 239 | 292,756 | 292,995 | |||||||||||||||||
| Total borrowings | 13,991,690 | 4,381,188 | 18,372,878 | |||||||||||||||||
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(a)Mortgage finance bonds
These bonds are used to finance mortgage loans. Their principal amounts are amortized on a quarterly basis. Loans are indexed to UF and pay a yearly interest rate.
| As of December 31, 2025 | ||||||||
| (in millions of Ch$) | ||||||||
| Due within 1 year | 55 | |||||||
| 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 | — | |||||||
| Total mortgage finance bonds | 55 | |||||||
(b)Senior bonds
The following table sets forth, at the dates indicated, our issued senior bonds. The bonds are denominated principally in UFs, Ch$, CHF or U.S. dollars, and are principally used to fund assets with similar durations.
| As of December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||
| Santander bonds in UF | 3,822,554 | 3,830,030 | 3,632,979 | |||||||||||||||||
| Santander bonds in USD | 1,410,129 | 1,971,887 | 2,424,045 | |||||||||||||||||
| Santander bonds in CHF | 917,621 | 866,942 | 637,203 | |||||||||||||||||
| Santander bonds in Ch$ | 1,066,919 | 827,738 | 619,386 | |||||||||||||||||
| Santander bonds in AUD | 91,224 | 93,244 | 116,515 | |||||||||||||||||
| Current bonds in JPY | 177,332 | 296,831 | 323,922 | |||||||||||||||||
| Santander bonds in EUR | 157,971 | 180,602 | 171,335 | |||||||||||||||||
| Total senior bonds | 7,643,750 | 8,067,274 | 7,925,385 | |||||||||||||||||
The maturities of these bonds are as follows:
| As of December 31, 2025 | ||||||||
| (in millions of Ch$) | ||||||||
| Due within 1 year | 2,365,011 | |||||||
| Due after 1 year but within 2 years | 1,215,822 | |||||||
| Due after 2 year but within 3 years | 750,329 | |||||||
| Due after 3 year but within 4 years | 642,855 | |||||||
| Due after 4 year but within 5 years | 562,375 | |||||||
| Due after 5 years | 2,107,358 | |||||||
| Total bonds | 7,643,750 | |||||||
In 2025, the Bank issued bonds for UF 17,540,000, CLP 328,550,000,000, CHF 140,000,000, JPY 14,000 and USD 20, detailed as follows:
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| Series | Currency | Amount | Term (years) | Issuance rate (%) | Issuance date | Placement date | Maturity date | ||||||||||||||||
| BSTD180624 | UF | 1,300,000 | P1Y11M | 2.00% | 1/10/25 | 1/13/25 | 12/1/26 | ||||||||||||||||
| BSTD180624 | UF | 1,700,000 | P1Y10M | 2.00% | 2/3/25 | 2/4/25 | 12/1/26 | ||||||||||||||||
| BSTD230822 | UF | 100,000 | P6Y | 3.00% | 2/4/25 | 2/5/25 | 2/1/31 | ||||||||||||||||
| BSTD230822 | UF | 200,000 | P6Y | 3.00% | 2/5/25 | 2/6/25 | 2/1/31 | ||||||||||||||||
| BSTD120923 | UF | 800,000 | P8Y7M | 3.00% | 2/6/25 | 2/7/25 | 9/1/33 | ||||||||||||||||
| BSTD151023 | UF | 1,385,000 | P2Y7M | 2.00% | 2/17/25 | 2/18/25 | 10/1/27 | ||||||||||||||||
| BSTDA61022 | UF | 600,000 | P12Y6M | 3.00% | 3/28/25 | 3/31/25 | 10/1/37 | ||||||||||||||||
| BSTD120923 | UF | 300,000 | P8Y5M | 3.00% | 3/28/25 | 3/31/25 | 9/1/33 | ||||||||||||||||
| BSTD120923 | UF | 500,000 | P8Y5M | 3.00% | 4/1/25 | 4/2/25 | 9/1/33 | ||||||||||||||||
| BSTD120923 | UF | 100,000 | P8Y5M | 3.00% | 4/2/25 | 4/3/25 | 9/1/33 | ||||||||||||||||
| BSTD120923 | UF | 500,000 | P8Y5M | 3.00% | 4/8/25 | 4/10/25 | 9/1/33 | ||||||||||||||||
| BSTD230822 | UF | 620,000 | P5Y10M | 3.00% | 4/9/25 | 4/10/25 | 2/1/31 | ||||||||||||||||
| BSTD120923 | UF | 20,000 | P8Y5M | 3.00% | 4/9/25 | 4/10/25 | 9/1/33 | ||||||||||||||||
| BSTD211024 | UF | 350,000 | P2Y | 2.00% | 4/9/25 | 4/10/25 | 4/1/27 | ||||||||||||||||
| BSTD211024 | UF | 200,000 | P2Y | 2.00% | 4/10/25 | 4/11/25 | 4/1/27 | ||||||||||||||||
| BSTD120923 | UF | 780,000 | P8Y5M | 3.00% | 4/15/25 | 4/16/25 | 9/1/33 | ||||||||||||||||
| BSTD230822 | UF | 180,000 | P5Y10M | 3.00% | 4/15/25 | 4/16/25 | 2/1/31 | ||||||||||||||||
| BSTDA61022 | UF | 1,365,000 | P12Y6M | 3.00% | 4/16/25 | 4/17/25 | 10/1/37 | ||||||||||||||||
| BSTDA61022 | UF | 350,000 | P12Y5M | 3.00% | 4/23/25 | 4/24/25 | 10/1/37 | ||||||||||||||||
| BSTD211024 | UF | 148,000 | P1Y15M | 2.00% | 4/24/25 | 4/25/25 | 4/1/27 | ||||||||||||||||
| BSTD211024 | UF | 2,000 | P1Y10M | 2.00% | 4/24/25 | 4/25/25 | 4/1/27 | ||||||||||||||||
| BSTDA61022 | UF | 100,000 | P12Y5M | 3.00% | 5/6/25 | 5/7/25 | 10/1/37 | ||||||||||||||||
| BSTD211024 | UF | 200,000 | P1Y11M | 2.00% | 5/12/25 | 5/13/25 | 4/1/27 | ||||||||||||||||
| BSTD230822 | UF | 510,000 | P5Y6M | 2.65% | 8/7/25 | 8/8/25 | 2/1/31 | ||||||||||||||||
| BSTD211024 | UF | 1,200,000 | P1Y7M | 2.30% | 8/20/25 | 8/21/25 | 4/1/27 | ||||||||||||||||
| 6XBSTD230822 | UF | 100,000 | P5Y4M | 2.65% | 10/1/25 | 10/2/25 | 2/1/31 | ||||||||||||||||
| 7XBSTD230822 | UF | 150,000 | P5Y4M | 2.65% | 10/1/25 | 10/3/25 | 2/1/31 | ||||||||||||||||
| 8XBSTD230822 | UF | 300,000 | P5Y4M | 2.65% | 10/1/25 | 10/2/25 | 2/1/31 | ||||||||||||||||
| 9XBSTD230822 | UF | 150,000 | P5Y4M | 2.65% | 10/7/25 | 10/8/25 | 2/1/31 | ||||||||||||||||
| 10BSTD230822 | UF | 400,000 | P5Y4M | 2.65% | 10/8/25 | 10/9/25 | 2/1/31 | ||||||||||||||||
| 11BSTD230822 | UF | 100,000 | P5Y4M | 2.65% | 10/8/25 | 10/10/25 | 2/1/31 | ||||||||||||||||
| 12BSTD230822 | UF | 200,000 | P5Y4M | 2.65% | 10/10/25 | 10/13/25 | 2/1/31 | ||||||||||||||||
| 6XBSTD210622 | UF | 530,000 | P4Y1M | 2.75% | 10/20/25 | 10/21/25 | 12/1/29 | ||||||||||||||||
| 13BSTD230822 | UF | 400,000 | P5Y4M | 2.65% | 10/21/25 | 10/22/25 | 2/1/31 | ||||||||||||||||
| 0XBSTDBA0225 | UF | 400,000 | P6Y10M | 3.00% | 10/23/25 | 10/24/25 | 8/1/32 | ||||||||||||||||
| 14BSTD230822 | UF | 300,000 | P5Y4M | 2.65% | 10/27/25 | 10/28/25 | 2/1/31 | ||||||||||||||||
| 1XBSTD220425 | UF | 800,000 | P14Y5M | 3.00% | 10/28/25 | 10/30/25 | 4/1/40 | ||||||||||||||||
| 2XBSTD220425 | UF | 200,000 | P14Y5M | 3.00% | 10/28/25 | 10/30/25 | 4/1/40 | ||||||||||||||||
| Total UF | 17,540,000 | ||||||||||||||||||||||
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| BSTD110723 | CLP | 50,000,000,000 | P2Y2M | 6.00% | 5/2/25 | 5/3/25 | 7/1/27 | ||||||||||||||||
| BSTDA91122 | CLP | 30,300,000,000 | P5Y6M | 6.00% | 5/14/25 | 5/15/25 | 11/1/30 | ||||||||||||||||
| BSTD170624 | CLP | 3,000,000,000 | P3Y | 6.00% | 5/16/25 | 5/17/25 | 6/1/28 | ||||||||||||||||
| BSTDA21222 | CLP | 77,750,000,000 | P4Y | 6.00% | 5/16/25 | 5/17/25 | 6/1/29 | ||||||||||||||||
| BSTD170624 | CLP | 10,000,000,000 | P3Y | 6.00% | 5/20/25 | 5/22/25 | 6/1/28 | ||||||||||||||||
| BSTD170624 | CLP | 5,000,000,000 | P3Y | 6.00% | 5/22/25 | 5/23/25 | 6/1/28 | ||||||||||||||||
| BSTDA40922 | CLP | 90,000,000,000 | P7Y10M | 6.00% | 5/22/25 | 5/23/25 | 3/1/33 | ||||||||||||||||
| BSTD170624 | CLP | 20,000,000,000 | P3Y | 6.00% | 6/11/25 | 6/13/25 | 6/1/28 | ||||||||||||||||
| 1XBSTDBI0525 | CLP | 40,000,000,000 | P2Y6M | 6.00% | 11/12/25 | 11/13/25 | 5/1/28 | ||||||||||||||||
| 2XBSTDBI0525 | CLP | 2,500,000,000 | P2Y5M | 6.00% | 11/20/25 | 11/21/25 | 5/1/28 | ||||||||||||||||
| Total CLP | 328,550,000,000 | ||||||||||||||||||||||
| Bond CHF BNP & ZKB | CHF | 140,000,000 | P5Y3M | 1.19% | 5/12/25 | 5/30/25 | 8/29/30 | ||||||||||||||||
| Total CHF | 140,000,000 | ||||||||||||||||||||||
| Bond JPY Santander SA | JPY | 4,000,000,000,000,000 | P20Y | 2.80% | 4/24/25 | 4/29/25 | 4/28/45 | ||||||||||||||||
| Bond JPY Daiwa ESG | JPY | 10,000,000,000,000,000 | P3Y | 1.50% | 7/2/25 | 7/10/25 | 7/10/28 | ||||||||||||||||
| Total JPY | 14,000,000,000,000,000 | ||||||||||||||||||||||
| Bond USD SOFR Daiwa | USD | 10,000,000 | P5Y | 5.05% | 6/6/25 | 6/13/25 | 6/13/30 | ||||||||||||||||
| XS3257573298 | USD | 10,000,000 | P5Y | 6.00% | 12/17/25 | 12/29/25 | 12/29/30 | ||||||||||||||||
| Total USD | 20,000,000 | ||||||||||||||||||||||
In 2024, the Bank issued the following bonds:
| Series | Currency | Amount | Term (years) | Issuance rate (% annual) | Issuance date | Placement date | Maturity date | |||||||||||||||||||||||||||||||||||||
| AA13 | UF | 1,795,000 | 7.5 years | 3.40% | 09-01-2023 | 01-03-2024 | 09-01-2029 | |||||||||||||||||||||||||||||||||||||
| AA14 | UF | 4,567,000 | 9 years | 3.30% | 12-01-2023 | 02-07-2024 | 12-01-2028 | |||||||||||||||||||||||||||||||||||||
| W3 | UF | 3,160,000 | 6 years | 1.60% | 12-01-2018 | 01-04-2024 | 06-01-2026 | |||||||||||||||||||||||||||||||||||||
| AA15 | UF | 1,615,000 | 9 years | 3.20% | 10-01-2023 | 05-09-2024 | 11-01-2030 | |||||||||||||||||||||||||||||||||||||
| AA16 | UF | 3,000,000 | 6 years | 3.20% | 04-01-2024 | 07-05-2024 | 10-01-2026 | |||||||||||||||||||||||||||||||||||||
| T21 | UF | 2,165,000 | 9 years | 2.75% | 06-01-2022 | 07-08-2024 | 12-01-2029 | |||||||||||||||||||||||||||||||||||||
| T19 | UF | 5,000,000 | 6 years | 2.65% | 08-01-2022 | 10-17-2024 | 08-01-2033 | |||||||||||||||||||||||||||||||||||||
| Total UF | 21,302,000 | |||||||||||||||||||||||||||||||||||||||||||
| AA7 | CLP | 7,350,000,000 | 5.5 years | 6.80% | 02-24-2023 | 01-04-2024 | 08-01-2026 | |||||||||||||||||||||||||||||||||||||
| AA10 | CLP | 25,000,000,000 | 5.5 years | 7.10% | 03-01-2023 | 03-25-2024 | 03-01-2026 | |||||||||||||||||||||||||||||||||||||
| AA8 | CLP | 67,500,000,000 | 3.5 years | 6.70% | 03-01-2023 | 01-05-2024 | 09-01-2027 | |||||||||||||||||||||||||||||||||||||
| AA2 | CLP | 4,000,000,000 | 6 years | 6.20% | 12-01-2022 | 01-11-2024 | 06-01-2029 | |||||||||||||||||||||||||||||||||||||
| AA9 | CLP | 41,700,000,000 | 8 years | 6.30% | 11-01-2022 | 01-05-2024 | 11-01-2030 | |||||||||||||||||||||||||||||||||||||
| Total CLP | 145,550,000,000 | |||||||||||||||||||||||||||||||||||||||||||
| CHF bond | CHF | 225,000,000 | 1 year | 1.60% | 01-11-2024 | 01-25-2024 | 01-25-2027 | |||||||||||||||||||||||||||||||||||||
| Total CHF | 225,000,000 | |||||||||||||||||||||||||||||||||||||||||||
Mortgage bonds
These bonds are used to finance mortgage loans with certain characteristics such as loan-to-value ratios below 80.0% and a debt servicing ratio of the client lower than 20.0%. All outstanding mortgage bonds are UF denominated. The maturities of our mortgage bonds are as follows:
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| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions of Ch$) | ||||||||||||||
| Due within 1 year | — | — | ||||||||||||
| Due after 1 year but within 2 years | — | — | ||||||||||||
| Due after 2 year but within 3 years | 28,984 | — | ||||||||||||
| Due after 3 year but within 4 years | — | 36,950 | ||||||||||||
| Due after 4 year but within 5 years | — | — | ||||||||||||
| Due after 5 years | 26,311 | 28,831 | ||||||||||||
| Total mortgage bonds | 55,295 | 65,781 | ||||||||||||
During 2025 and 2024, the Bank did not place any mortgage bonds.
(c)Regulatory capital financial instruments
The following table sets forth, at the dates indicated, the balances of our regulatory capital financial instruments, which are entirely comprised of subordinated bonds. The following table sets forth, at the dates indicated, our issued subordinated bonds. The bonds are denominated principally in UFs or U.S. dollars, and are principally used to fund the Bank’s mortgage portfolio and are considered to be a part of our regulatory capital.
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| As of December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||
| Subordinated bonds linked to the U.S.$ | 181,378 | 199,701 | 175,234 | |||||||||||||||||
| Subordinated bonds linked to the UF | 1,767,115 | 1,710,996 | 1,638,705 | |||||||||||||||||
| Total subordinated bonds | 1,948,493 | 1,910,697 | 1,813,939 | |||||||||||||||||
The maturities of these bonds, which are considered long-term, are as follows.
| As of December 31, 2025 | ||||||||
| (in millions of Ch$) | ||||||||
| Due within 1 year | 202,169 | |||||||
| Due after 1 year but within 2 years | — | |||||||
| Due after 2 years but within 3 years | 124,099 | |||||||
| Due after 3 years but within 4 years | — | |||||||
| Due after 4 years but within 5 years | 181,378 | |||||||
| Due after 5 years | 1,440,847 | |||||||
| Total subordinated bonds | 1,948,493 | |||||||
During 2025 and 2024, the Bank did not issue subordinated bonds.
(d)Foreign borrowings
These are short-term and long-term borrowings from foreign banks mainly used to fund our foreign trade business. The maturities of these borrowings are as follows.
| As of December 31, 2025 | |||||
| (in millions of Ch$) | |||||
| Due within 1 year | 2,513,436 | ||||
| Due within 1 and 2 year | 369,126 | ||||
| Due within 2 and 3 year | 289,966 | ||||
| Due within 3 and 4 year | — | ||||
| Due after 4 to 5 years | 223,890 | ||||
| Due after 5 years | 7,767 | ||||
| Total loans from foreign financial institutions | 3,404,185 | ||||
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(e)Other obligations
Other obligations are summarized as follows:
| As of December 31, 2025 | ||||||||
| Ch$ million | ||||||||
| Long term obligations: | ||||||||
| Due after 1 years 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 | — | |||||||
| Long-term financial obligations subtotals | — | |||||||
| Short term obligations: | ||||||||
| Amounts due to credit card operators | 192,107 | |||||||
| Acceptance of letters of credit | 30,628 | |||||||
| Other long-term financial obligations, short-term portion | 1,586 | |||||||
| Short-term financial obligations subtotals | 224,321 | |||||||
| Other financial obligations totals | 224,321 | |||||||
Other Off-Balance Sheet Arrangements and Commitments
In the normal course of our business, we are party to transactions with off-balance sheet risk. These transactions expose us to credit risk in addition to amounts recognized in the consolidated financial statements. The most important off-balance sheet item is contingent loans. Contingent loans consist of guarantees granted by us in Ch$, UF and foreign currencies (principally U.S.$), unused letters of credit and commitments to extend credit such as overdraft protection and credit card lines of credit. Such commitments are agreements to lend to a customer at a future date, subject to the customer compliance with the contractual terms. Since a substantial portion of these commitments is expected to expire without being drawn upon, the total amount of commitments does not necessarily represent our actual future cash requirements. We use the same credit policies in making commitments to extend credit as we do for granting loans, therefore, in the opinion of our management, our outstanding commitments represent normal credit risk.
The following table presents the Bank’s outstanding contingent loans as of December 31, 2025, 2024 and 2023:
| As of December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||
| Personal guarantees | 556,196 | 365,932 | 494,104 | |||||||||||||||||
| Letter of credits of merchandise traffic operations | 249,140 | 308,407 | 262,496 | |||||||||||||||||
| Transactions related to contingent events | 1,871,802 | 2,208,507 | 1,641,510 | |||||||||||||||||
| Unrestricted prompt cancel credit lines | 10,584,496 | 10,352,459 | 9,490,141 | |||||||||||||||||
| Other credit commitments | 246,799 | 195,207 | 314,318 | |||||||||||||||||
| Total | 13,508,433 | 13,430,512 | 12,202,569 | |||||||||||||||||
Asset and Liability Management
Please refer to “Item 11. Quantitative and Qualitative Disclosures about Market Risk” for information regarding our policies with respect to asset and liability management.
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Capital Expenditures
The following table reflects capital expenditures in each of the three years ended December 31, 2025, 2024 and 2023:
| As of December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||
| Land and Buildings | 29,820 | 26,515 | 31,574 | |||||||||||||||||
| Machinery, Systems and Equipment | 42,722 | 29,404 | 25,697 | |||||||||||||||||
| Furniture, Vehicles, Other(1) | 18,706 | 15,749 | 28,875 | |||||||||||||||||
| Software development | 52,868 | 44,559 | 45,067 | |||||||||||||||||
| Total | 144,116 | 116,227 | 131,213 | |||||||||||||||||
(1)Includes assets ceded under operating leases.
During 2025, the Bank focused its investments in the ongoing investments in IT and the digitalization of our banking services and expanding the WorkCafé network. In early 2025, the Bank transitioned most of its data processing functions to a new cloud-based server as part of the Group-wide Gravity project.
C.Selected Statistical Information
The following information is included for analytical purposes and should be read in conjunction with our Audited Consolidated Financial Statements, as well as the discussion in this “Item 5. Operating and Financial Review and Prospects.” The UF is linked to, and is adjusted daily to reflect changes in, the previous month’s Chilean consumer price index. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Impact of Inflation.”
Average Balances, Income Earned from Interest-Earning Assets and Interest Paid on Interest-Bearing Liabilities
The average balances for interest-earning assets and interest-bearing liabilities, including interest and readjustments received and paid, have been calculated on the basis of daily balances for us on an unconsolidated basis. Such average balances are presented in Chilean pesos, UFs and in foreign currencies (principally U.S. dollars). Figures from our subsidiaries have been calculated on the basis of monthly balances. The average balances of our subsidiaries, except Sociedad Operadora de Tarjetas de Pago Santander Getnet Chile S.A., have not been categorized by currency. As such it is not possible to calculate average balances by currency for such subsidiaries on the basis of daily, weekly or monthly balances.
The nominal interest rate has been calculated by dividing the amount of interest and principal changes in the UF index (gain or loss) during the period by the related average balance, both amounts expressed in constant Chilean pesos.
The Bank has also distributed the financial cost or gain of hedges to the corresponding item being hedged to more clearly reflect the impact of these hedging strategies on yields earned or paid over assets and liabilities. For this reason, total interest earned over interest earning assets and interest paid over interest bearing liabilities can be different form the amounts recorded in the income statement, but the net interest income is equivalent to the amount recorded in the income statement. Foreign exchange gains or losses on foreign currency-denominated assets and liabilities are not included in interest income or expense. When a financial asset becomes credit-impaired and is, therefore, regarded as “Stage 3”, the Bank suspends the interest income recognition in the income statement. Similarly, trading and mark-to-market gains or losses on investments are not included in interest income or expense. Interest is not recognized on non-performing loans. Non-performing loans that are past-due for 90 days or less have been included in each of the various categories of loans, and therefore affect the various averages. Non-performing loans consist of loans as to which either principal or interest is past-due (i.e., non-accrual loans) and restructured loans earning no interest.
Included in interbank deposits are checking accounts maintained in the Central Bank and foreign banks. Such assets have a distorting effect on the average interest rate earned on total interest-earning assets because currently balances maintained in Chilean peso amounts do not earn interest, and the only balances held in a foreign currency that earn interest are those maintained in U.S. dollars, but those only earn interest on the amounts that are legally required to be held for liquidity purposes. Additionally, this account includes interest earned by overnight investments. Consequently, the average interest earned on such assets is comparatively low. We maintain these deposits in these accounts to comply with statutory
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requirements and to facilitate international business, rather than to earn income. See Note 1—Summary of Significant Accounting Policies—(k) Recognizing Income and Expenses to our Audited Consolidated Financial Statements.
The following tables show, by currency of denomination, average balances and, where applicable, interest amounts and real rates for our assets and liabilities for the years ended December 31, 2025, 2024 and 2023.
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| As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Interest Earned | Average Nominal Rate | Average Balance | Interest Earned | Average Nominal Rate | Average Balance | Interest Earned | Average Nominal Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest earning assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deposits in Central Bank | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 438,299 | 42,759 | 9.8 | % | 1,798,219 | 103,775 | 5.8 | % | 1,151,196 | 11,367 | 1.0 | % | ||||||||||||||||||||||||||||||||||||||||||||
| UF | — | — | — | % | — | — | — | % | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 209,895 | 2,633 | 1.3 | % | — | — | — | % | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 648,194 | 45,392 | 7.0 | % | 1,798,219 | 103,775 | 5.8 | % | 1,151,196 | 11,367 | 1.0 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Financial investments (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 5,107,625 | 115,755 | 2.3 | % | 4,632,133 | 79,396 | 1.7 | % | 6,870,255 | 312,529 | 4.5 | % | ||||||||||||||||||||||||||||||||||||||||||||
| UF | 2,535,450 | 107,951 | 4.3 | % | 2,050,990 | 40,394 | 2.0 | % | 1,948,039 | 15,401 | 0.8 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 1,054,423 | 48,967 | 4.6 | % | 1,775,767 | 6,683 | 0.4 | % | 2,032,147 | 23,155 | 1.1 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 8,697,498 | 272,673 | 3.1 | % | 8,458,890 | 126,473 | 1.5 | % | 10,850,441 | 351,085 | 3.2 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 7,408,955 | 802,995 | 10.8 | % | 7,217,886 | 790,642 | 11.0 | % | 7,514,142 | 990,169 | 13.2 | % | ||||||||||||||||||||||||||||||||||||||||||||
| UF | 6,241,929 | 441,683 | 7.1 | % | 6,425,726 | 535,782 | 8.3 | % | 6,404,622 | 630,575 | 9.8 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 3,816,340 | 144,608 | 3.8 | % | 3,801,056 | 257,793 | 6.8 | % | 3,605,705 | 221,816 | 6.2 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 17,467,224 | 1,389,286 | 8.0 | % | 17,444,668 | 1,584,217 | 9.1 | % | 17,524,469 | 1,842,560 | 10.5 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Consumer loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 5,773,162 | 832,561 | 14.4 | % | 5,452,160 | 836,949 | 15.4 | % | 5,141,105 | 786,598 | 15.3 | % | ||||||||||||||||||||||||||||||||||||||||||||
| UF | 2,670 | 301 | 11.3 | % | 6,457 | 404 | 6.3 | % | 10,513 | 507 | 4.8 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 75,331 | 1 | — | % | 83,610 | 5 | — | % | 72,816 | 5 | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 5,851,163 | 832,863 | 14.2 | % | 5,542,227 | 837,358 | 15.1 | % | 5,224,434 | 787,110 | 15.1 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Mortgage loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 19,588 | 14 | 0.1 | % | 11,352 | 14 | 0.1 | % | 7,660 | 17 | 0.2 | % | ||||||||||||||||||||||||||||||||||||||||||||
| UF | 17,447,106 | 1,172,414 | 6.7 | % | 17,333,470 | 1,343,237 | 7.7 | % | 16,306,409 | 1,287,251 | 7.9 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | — | — | — | % | — | — | — | % | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 17,466,694 | 1,172,428 | 6.7 | % | 17,344,822 | 1,343,251 | 7.7 | % | 16,314,069 | 1,287,268 | 7.9 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Interbank loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 9,519 | 480 | 5.0 | % | 13,862 | 909 | 6.6 | % | 5,541 | 579 | 10.4 | % | ||||||||||||||||||||||||||||||||||||||||||||
| UF | — | — | — | % | — | — | — | % | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 21,391 | 51 | 0.2 | % | — | — | — | % | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 30,910 | 531 | 1.7 | % | 13,862 | 909 | 6.6 | % | 5,541 | 579 | 10.4 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Investment agreements to resell | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 81,134 | 2,977 | 3.7 | % | 52,655 | — | — | % | 21,952 | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| UF | 61,083 | 4,295 | 7.0 | % | — | — | — | % | — | 71 | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 112,664 | 5,120 | 4.5 | % | — | — | — | % | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 254,881 | 12,392 | 4.9 | % | 52,655 | — | — | % | 21,952 | 71 | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| Threshold (2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 138,389 | 9,280 | 6.7 | % | 628,904 | 9,646 | 1.5 | % | 984,360 | 9,564 | 1.0 | % | ||||||||||||||||||||||||||||||||||||||||||||
| UF | — | — | — | % | — | — | — | % | 2 | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 1,875,139 | 60,765 | 3.2 | % | 1,895,985 | 89,188 | 4.7 | % | 2,515,723 | 114,388 | 4.5 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 2,013,528 | 70,045 | 3.5 | % | 2,524,889 | 98,834 | 3.9 | % | 3,500,085 | 123,952 | 3.5 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total interest earning assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 18,976,671 | 1,806,821 | 9.5 | % | 19,807,171 | 1,821,331 | 9.2 | % | 21,696,211 | 2,110,823 | 9.7 | % | ||||||||||||||||||||||||||||||||||||||||||||
| UF | 26,288,238 | 1,726,644 | 6.6 | % | 25,816,643 | 1,919,817 | 7.4 | % | 24,669,585 | 1,933,805 | 7.8 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 7,165,183 | 262,145 | 3.7 | % | 7,556,418 | 353,669 | 4.7 | % | 8,226,391 | 359,364 | 4.4 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 52,430,092 | 3,795,610 | 7.2 | % | 53,180,232 | 4,094,817 | 7.7 | % | 54,592,187 | 4,403,992 | 8.1 | % | ||||||||||||||||||||||||||||||||||||||||||||
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| As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Interest Earned | Average Nominal Rate | Average Balance | Interest Earned | Average Nominal Rate | Average Balance | Interest Earned | Average Nominal Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
| Cash | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 1,651,291 | 1,212,988 | 1,147,881 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| UF | — | 1,962 | 1,190 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 2,087,520 | 184,097 | 149,615 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 3,738,811 | 1,399,047 | 1,298,686 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for loan losses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | (1,040,362) | (1,068,928) | (1,285,860) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| UF | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | (194,370) | (168,607) | (125,624) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | (1,234,732) | (1,237,535) | (1,411,484) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 237,911 | 116,798 | 109,720 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| UF | — | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | — | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 237,911 | 116,798 | 109,720 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 11,348,109 | 12,519,562 | 11,915,184 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| UF | — | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 9 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 11,348,118 | 12,519,562 | 11,915,184 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Investment (Trading) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 319,041 | 183,671 | 78,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| UF | 88,600 | 47,861 | 85,377 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 257 | 411,019 | 695,497 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 407,898 | 642,551 | 859,374 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 1,073,672 | 1,132,808 | 1,433,356 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| UF | 11,713 | 81,117 | 78,050 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 166,664 | 1,064,237 | 662,652 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 1,252,049 | 2,278,162 | 2,174,058 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-interest earning assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 13,589,662 | 14,096,899 | 13,398,781 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| UF | 100,313 | 130,940 | 164,617 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 2,060,080 | 1,490,746 | 1,382,140 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 15,750,055 | 15,718,585 | 14,945,538 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 32,566,333 | 1,806,821 | 33,904,070 | 1,821,331 | 36,284,649 | 1,597,540 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| UF | 26,388,551 | 1,726,644 | 25,947,583 | 1,919,817 | 23,513,065 | 2,372,149 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 9,225,263 | 262,145 | 9,047,164 | 353,669 | 9,588,794 | 137,341 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 68,180,147 | 3,795,610 | 68,898,817 | 4,094,817 | 69,386,508 | 4,107,030 | ||||||||||||||||||||||||||||||||||||||||||||||||||
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| As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Interest Earned | Average Nominal Rate | Average Balance | Interest Earned | Average Nominal Rate | Average Balance | Interest Earned | Average Nominal Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities And Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Savings accounts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 76,222 | 2,292 | 3.0 | % | 35,256 | 999 | 2.8 | % | 10,798 | 281 | 2.6 | % | ||||||||||||||||||||||||||||||||||||||||||||
| UF | 170,747 | 5,495 | 3.2 | % | 169,230 | 8,146 | 4.8 | % | 179,671 | 6,562 | 3.7 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | — | — | — | % | — | — | — | % | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 246,969 | 7,787 | 3.2 | % | 204,486 | 9,145 | 4.5 | % | 190,469 | 6,843 | 3.6 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 16,230,898 | 739,566 | 4.6 | % | 12,400,925 | 698,611 | 5.6 | % | 11,007,900 | 1,005,077 | 9.1 | % | ||||||||||||||||||||||||||||||||||||||||||||
| UF | 569,752 | 28,498 | 5.0 | % | 752,746 | 55,696 | 7.4 | % | 1,125,964 | 95,029 | 8.4 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 19,111 | 865 | 4.5 | % | 5,179,608 | 160,559 | 3.1 | % | 4,258,929 | 110,776 | 2.6 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 16,819,761 | 768,929 | 4.6 | % | 18,333,279 | 914,866 | 5.0 | % | 16,392,793 | 1,210,882 | 7.4 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Central bank borrowings | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | — | — | — | % | 2,227,144 | 113,806 | 5.1 | % | 5,773,345 | 703,113 | 12.2 | % | ||||||||||||||||||||||||||||||||||||||||||||
| UF | — | — | — | % | — | — | — | % | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | — | — | — | % | — | — | — | % | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | — | — | — | % | 2,227,144 | 113,806 | 5.1 | % | 5,773,345 | 703,113 | 12.2 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Repurchase Agreements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 1,666,977 | 74,197 | 4.5 | % | 525,525 | 49,471 | 9.4 | % | 397,017 | 35,597 | 9.0 | % | ||||||||||||||||||||||||||||||||||||||||||||
| UF | 38,492 | 200 | 0.5 | % | — | — | — | % | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 483,601 | 33,079 | 6.8 | % | 41,481 | 2,280 | 5.5 | % | 382,197 | 20,184 | 5.3 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 2,189,070 | 107,476 | 4.9 | % | 567,006 | 51,751 | 9.1 | % | 779,214 | 55,781 | 7.2 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Mortgage finance bonds | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | — | — | — | % | — | — | — | % | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| UF | 71 | 4 | 5.6 | % | 455 | 52 | 11.4 | % | 2,063 | 192 | 9.3 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | — | — | — | % | — | — | — | % | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 71 | 4 | 5.6 | % | 455 | 52 | 11.4 | % | 2,063 | 192 | 9.3 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial paper | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | — | — | — | % | — | — | — | % | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| UF | — | — | — | % | — | — | — | % | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 837,704 | 41,429 | 4.9 | % | 639,541 | 38,471 | 6.0 | % | 613,212 | 35,772 | 5.8 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 837,704 | 41,429 | 4.9 | % | 639,541 | 38,471 | 6.0 | % | 613,212 | 35,772 | 5.8 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Other interest bearing liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 3,235,403 | 436,285 | 13.5 | % | 2,913,211 | 711,266 | 24.4 | % | 3,859,742 | 819,756 | 21.2 | % | ||||||||||||||||||||||||||||||||||||||||||||
| UF | 5,996,119 | 368,349 | 6.1 | % | 5,413,433 | 459,098 | 8.5 | % | 5,184,297 | 463,172 | 8.9 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 7,924,354 | 78,667 | 1.0 | % | 6,380,901 | 9,576 | 0.2 | % | 5,876,169 | 15,432 | 0.3 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 17,155,876 | 883,301 | 5.1 | % | 14,707,545 | 1,179,940 | 8.0 | % | 14,920,208 | 1,298,360 | 8.7 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total interest bearing liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 21,209,500 | 1,252,340 | 5.9 | % | 18,102,061 | 1,574,153 | 8.7 | % | 21,048,802 | 2,563,824 | 12.2 | % | ||||||||||||||||||||||||||||||||||||||||||||
| UF | 6,775,181 | 402,546 | 5.9 | % | 6,335,864 | 522,992 | 8.3 | % | 6,491,995 | 564,955 | 8.7 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 9,264,770 | 154,040 | 1.7 | % | 12,241,531 | 210,886 | 1.7 | % | 11,130,507 | 182,164 | 1.6 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 37,249,451 | 1,808,926 | 4.9 | % | 36,679,456 | 2,308,031 | 6.3 | % | 38,671,304 | 3,310,943 | 8.6 | % | ||||||||||||||||||||||||||||||||||||||||||||
108
Table of contents
| As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Interest Earned | Average Nominal Rate | Average Balance | Interest Earned | Average Nominal Rate | Average Balance | Interest Earned | Average Nominal Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest bearing liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest bearing demand deposits | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 9,094,698 | 10,998,237 | 10,754,656 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| UF | — | 94,183 | 89,127 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 1,742,647 | 225,313 | 256,083 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 10,837,345 | 11,317,733 | 11,099,866 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 11,497,940 | 11,710,435 | 10,937,254 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| UF | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 24 | — | 157 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 11,497,964 | 11,710,435 | 10,937,411 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other non-interest bearing liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 1,985,243 | 1,844,366 | 1,768,888 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| UF | 36,824 | 104,979 | 445,842 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 988,970 | 2,212,961 | 1,894,120 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 3,011,037 | 4,162,306 | 4,108,850 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders’ equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 4,912,332 | 5,028,887 | 4,720,294 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| UF | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 672,018 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 5,584,350 | 5,028,887 | 4,720,294 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total non-interest bearing liabilities and shareholders’ equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 27,490,213 | 29,581,925 | 28,181,092 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| UF | 36,824 | 199,162 | 534,969 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 3,403,659 | 2,438,274 | 2,150,360 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 30,930,696 | 32,219,361 | 30,866,421 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Liabilities and Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$ | 48,699,713 | 1,252,340 | 47,683,986 | 1,574,153 | 49,229,894 | 2,563,824 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| UF | 6,812,005 | 402,546 | 6,535,026 | 522,992 | 7,026,964 | 564,955 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency | 12,668,429 | 154,040 | 14,679,805 | 210,886 | 13,280,867 | 182,164 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 68,180,147 | 1,808,926 | 68,898,817 | 2,308,031 | 69,537,725 | 3,310,943 | ||||||||||||||||||||||||||||||||||||||||||||||||||
(1)This line item includes debt instruments at fair value through other comprehensive income according to IFRS 9.
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Table of contents
Changes in Net Interest Revenue and Interest Expense: Volume and Rate Analysis
The following table allocates, by currency of denomination, changes in our net interest revenue and interest expense between changes in the average volume of interest-earning assets and interest-bearing liabilities and changes in their respective nominal interest rates for 2025 compared to 2024 and 2024 compared to 2023. Volume and rate variances have been calculated based on movements in average balances over the period and changes in nominal interest rates on average interest-earning assets and average interest-bearing liabilities.
| Increase (Decrease) from 2024 to 2025 Due to Changes in | Increase (Decrease) from 2023 to 2024 Due to Changes in | |||||||||||||||||||||||||||||||||||||
| Volume | Rate | Net Change from 2024 to 2025 | Volume | Rate | Net Change from 2023 to 2024 | |||||||||||||||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||||||||||||||||
| Interest earning assets | ||||||||||||||||||||||||||||||||||||||
| Deposits in Central Bank | ||||||||||||||||||||||||||||||||||||||
| Ch$ | 5,193 | (66,209) | (61,016) | (25,110) | 117,518 | 92,408 | ||||||||||||||||||||||||||||||||
| UF | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Foreign currency | — | 2,633 | 2,633 | — | — | — | ||||||||||||||||||||||||||||||||
| Subtotal | 5,193 | (63,576) | (58,383) | (25,110) | 117,518 | 92,408 | ||||||||||||||||||||||||||||||||
| Financial investments | ||||||||||||||||||||||||||||||||||||||
| Ch$ | (56,447) | 92,806 | 36,359 | (21,167) | (211,966) | (233,133) | ||||||||||||||||||||||||||||||||
| UF | (28,434) | 95,991 | 67,557 | (3,702) | 28,695 | 24,993 | ||||||||||||||||||||||||||||||||
| Foreign currency | 188,306 | (146,022) | 42,284 | (474) | (15,998) | (16,472) | ||||||||||||||||||||||||||||||||
| Subtotal | 103,425 | 42,775 | 146,200 | (25,343) | (199,269) | (224,612) | ||||||||||||||||||||||||||||||||
| Commercial loans | ||||||||||||||||||||||||||||||||||||||
| Ch$ | (3,062) | 6,039 | 2,977 | (28,120) | (171,407) | (199,527) | ||||||||||||||||||||||||||||||||
| UF | — | 4,295 | 4,295 | 1,188 | (95,981) | (94,793) | ||||||||||||||||||||||||||||||||
| Foreign currency | — | 5,120 | 5,120 | 10,596 | 25,381 | 35,977 | ||||||||||||||||||||||||||||||||
| Subtotal | (3,062) | 15,454 | 12,392 | (16,336) | (242,007) | (258,343) | ||||||||||||||||||||||||||||||||
| Consumer loans | ||||||||||||||||||||||||||||||||||||||
| Ch$ | (90) | (339) | (429) | 46,571 | 3,780 | 50,351 | ||||||||||||||||||||||||||||||||
| UF | — | — | — | 61 | (164) | (103) | ||||||||||||||||||||||||||||||||
| Foreign currency | — | 51 | 51 | — | — | — | ||||||||||||||||||||||||||||||||
| Subtotal | (90) | (288) | (378) | 46,632 | 3,616 | 50,248 | ||||||||||||||||||||||||||||||||
| Mortgage loans | ||||||||||||||||||||||||||||||||||||||
| Ch$ | (53,606) | 65,959 | 12,353 | (3) | — | (3) | ||||||||||||||||||||||||||||||||
| UF | (5,539) | (88,560) | (94,099) | 156,468 | (100,482) | 55,986 | ||||||||||||||||||||||||||||||||
| Foreign currency | 2,289 | (115,474) | (113,185) | — | — | — | ||||||||||||||||||||||||||||||||
| Subtotal | (56,856) | (138,075) | (194,931) | 156,465 | (100,482) | 55,983 | ||||||||||||||||||||||||||||||||
| Interbank loans | ||||||||||||||||||||||||||||||||||||||
| Ch$ | 4,804 | (9,192) | (4,388) | (9,366) | 9,696 | 330 | ||||||||||||||||||||||||||||||||
| UF | 21 | (124) | (103) | — | — | — | ||||||||||||||||||||||||||||||||
| Foreign currency | (4) | — | (4) | — | — | — | ||||||||||||||||||||||||||||||||
| Subtotal | 4,821 | (9,316) | (4,495) | (9,366) | 9,696 | 330 | ||||||||||||||||||||||||||||||||
| Investment under agreements to resell | ||||||||||||||||||||||||||||||||||||||
| Ch$ | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| UF | 2,301 | (173,124) | (170,823) | — | — | — | ||||||||||||||||||||||||||||||||
| Foreign currency | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Subtotal | 2,301 | (173,124) | (170,823) | — | — | — | ||||||||||||||||||||||||||||||||
| Threshold | ||||||||||||||||||||||||||||||||||||||
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Table of contents
| Ch$ | (266) | (100) | (366) | 61 | 21 | 82 | ||||||||||||||||||||||||||||||||
| UF | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Foreign currency | (2,507) | (25,916) | (28,423) | (29,171) | 3,971 | (25,200) | ||||||||||||||||||||||||||||||||
| Subtotal | (2,773) | (26,016) | (28,789) | (29,110) | 3,992 | (25,118) | ||||||||||||||||||||||||||||||||
| Total interest earning assets | ||||||||||||||||||||||||||||||||||||||
| Ch$ | (103,474) | 88,964 | (14,510) | (37,134) | (252,358) | (289,492) | ||||||||||||||||||||||||||||||||
| UF | (31,651) | (161,522) | (193,173) | 154,015 | (167,932) | (13,917) | ||||||||||||||||||||||||||||||||
| Foreign currency | 188,084 | (279,608) | (91,524) | (19,049) | 13,354 | (5,695) | ||||||||||||||||||||||||||||||||
| Total | 52,959 | (352,166) | (299,207) | 97,832 | (406,936) | (309,104) | ||||||||||||||||||||||||||||||||
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Table of contents
| Increase (Decrease) from 2024 to 2025 Due to Changes in | Increase (Decrease) from 2023 to 2024 Due to Changes in | |||||||||||||||||||||||||||||||||||||
| Volume | Rate | Net Change from 2024 to 2025 | Volume | Rate | Net Change from 2023 to 2024 | |||||||||||||||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||||||||||||||
| Interest bearing liabilities | ||||||||||||||||||||||||||||||||||||||
| Savings accounts | ||||||||||||||||||||||||||||||||||||||
| Ch$ | 1,518 | (225) | 1,293 | 969 | (251) | 718 | ||||||||||||||||||||||||||||||||
| UF | (12) | (2,639) | (2,651) | 23 | 1,561 | 1,584 | ||||||||||||||||||||||||||||||||
| Foreign currency | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Subtotal | 1,506 | (2,864) | (1,358) | 992 | 1,310 | 2,302 | ||||||||||||||||||||||||||||||||
| Time deposits | ||||||||||||||||||||||||||||||||||||||
| Ch$ | — | 40,955 | 40,955 | 127,190 | (433,656) | (306,466) | ||||||||||||||||||||||||||||||||
| UF | (5,044) | (22,154) | (27,198) | (26,489) | (12,844) | (39,333) | ||||||||||||||||||||||||||||||||
| Foreign currency | (159,771) | 77 | (159,694) | 18,106 | 31,677 | 49,783 | ||||||||||||||||||||||||||||||||
| Subtotal | (164,815) | 18,878 | (145,937) | 118,807 | (414,823) | (296,016) | ||||||||||||||||||||||||||||||||
| Central Bank borrowings | ||||||||||||||||||||||||||||||||||||||
| Ch$ | (113,806) | — | (113,806) | (377,741) | (211,566) | (589,307) | ||||||||||||||||||||||||||||||||
| UF | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Foreign currency | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Subtotal | (113,806) | — | (113,806) | (377,741) | (211,566) | (589,307) | ||||||||||||||||||||||||||||||||
| Repurchase agreements | ||||||||||||||||||||||||||||||||||||||
| Ch$ | (24,538) | 49,264 | 24,726 | 10,065 | 3,809 | 13,874 | ||||||||||||||||||||||||||||||||
| UF | — | 200 | 200 | — | — | — | ||||||||||||||||||||||||||||||||
| Foreign currency | 27,782 | 3,017 | 30,799 | (18,015) | 111 | (17,904) | ||||||||||||||||||||||||||||||||
| Subtotal | 3,244 | 52,481 | 55,725 | (7,950) | 3,920 | (4,030) | ||||||||||||||||||||||||||||||||
| Mortgage finance bonds | ||||||||||||||||||||||||||||||||||||||
| Ch$ | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| UF | (40) | (8) | (48) | (158) | 18 | (140) | ||||||||||||||||||||||||||||||||
| Foreign currency | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Subtotal | (40) | (8) | (48) | (158) | 18 | (140) | ||||||||||||||||||||||||||||||||
| Commercial papers | ||||||||||||||||||||||||||||||||||||||
| Ch$ | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| UF | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Foreign currency | 4,325 | (8,833) | (4,508) | 1,406 | 1,293 | 2,699 | ||||||||||||||||||||||||||||||||
| Subtotal | 4,325 | (8,833) | (4,508) | 1,406 | 1,293 | 2,699 | ||||||||||||||||||||||||||||||||
| Other interest bearing liabilities | ||||||||||||||||||||||||||||||||||||||
| Ch$ | 53,313 | (353,153) | (299,840) | (262,970) | 154,480 | (108,490) | ||||||||||||||||||||||||||||||||
| UF | 11,368 | (141,321) | (129,953) | 3,314 | (7,388) | (4,074) | ||||||||||||||||||||||||||||||||
| Foreign currency | 45,401 | 62,818 | 108,219 | (1,952) | (3,904) | (5,856) | ||||||||||||||||||||||||||||||||
| Subtotal | 110,082 | (431,656) | (321,574) | (261,608) | 143,188 | (118,420) | ||||||||||||||||||||||||||||||||
| Total interest bearing liabilities | ||||||||||||||||||||||||||||||||||||||
| Ch$ | (83,513) | (263,159) | (346,672) | (502,488) | (487,183) | (989,671) | ||||||||||||||||||||||||||||||||
| UF | 6,272 | (165,922) | (159,650) | (23,311) | (18,652) | (41,963) | ||||||||||||||||||||||||||||||||
| Foreign currency | (82,263) | 57,079 | (25,184) | (1,861) | 27,884 | 26,023 | ||||||||||||||||||||||||||||||||
| Total | (159,504) | (372,002) | (531,506) | (527,660) | (477,951) | (1,005,611) | ||||||||||||||||||||||||||||||||
112
Table of contents
Interest-Earning Assets: Net Interest Margin
The following table analyzes, by currency of denomination, the levels of average interest-earning assets and net interest earned by Santander-Chile, and illustrates the comparative net interest margins obtained, for each of the years indicated in the table.
| As of December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||
| Total average interest-earning assets | ||||||||||||||||||||
| Ch$ | 18,976,671 | 19,807,171 | 21,696,211 | |||||||||||||||||
| UF | 26,288,238 | 25,816,643 | 24,669,585 | |||||||||||||||||
| Foreign currencies | 7,165,183 | 7,556,418 | 8,226,391 | |||||||||||||||||
| Total | 52,430,092 | 53,180,232 | 54,592,187 | |||||||||||||||||
| Net interest earned(1) | ||||||||||||||||||||
| Ch$ | 554,481 | 247,178 | (453,001) | |||||||||||||||||
| UF | 1,324,098 | 1,396,825 | 1,368,850 | |||||||||||||||||
| Foreign currencies | 108,105 | 142,783 | 177,200 | |||||||||||||||||
| Total | 1,986,684 | 1,786,786 | 1,093,049 | |||||||||||||||||
| Net interest margin(2) | ||||||||||||||||||||
| Ch$ | 2.92% | 1.25% | (2.09%) | |||||||||||||||||
| UF | 5.04% | 5.41% | 5.55% | |||||||||||||||||
| Foreign currencies | 1.51% | 1.89% | 2.15% | |||||||||||||||||
| Total | 3.79 | % | 3.36 | % | 2.00 | % | ||||||||||||||
(1)Net interest earned is defined as interest revenue earned less interest expense incurred.
(2)Net interest margin is defined as net interest earned divided by total average interest-earning assets.
Loan Portfolio
Loan Categories
Our loan categories are as follows:
Interbank loans
Interbank loans are long-term and short-term loans made to other local or international banks, granted in Chilean pesos or foreign currencies, usually at a variable rate linked to Chilean interbank rates, SOFR or other interbank rates.
Commercial loans
Commercial loans are long-term and short-term loans, including checking overdraft lines for companies, granted in Chilean pesos, inflation linked, U.S.$ linked or denominated in U.S.$. The interest on these loans is fixed or variable and is used primarily to finance working capital or investments. General commercial loans also include factoring operations.
Foreign trade loans are fixed rate, short-term loans made in foreign currencies (principally U.S.$) to finance imports and exports.
Checking account debtors are checking overdraft lines granted to companies, in Chilean pesos or U.S.$, generally on a fixed rate nominal basis and linked to a company’s checking account.
Credit card debtors includes credit card balances from businesses subject to nominal fixed rate interest charges.
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Factoring transactions mainly include short-term loans to companies with a fixed monthly nominal rate backed by a company invoice.
Leasing transactions are agreements for the financial leasing of capital equipment and other property.
Student loans mainly include long-term loans made to finance tertiary education mainly in fixed real rates (UF) some of which some are guaranteed by the state. These loans, per Chilean regulations, must be classified as commercial loans since they are guaranteed by the Chilean State under Law 20.027 through CORFO, the government’s development agency.
Other loans and accounts receivable loans include other commercial loans and accounts payable not included in any of the categories above.
Mortgage loans
Loans with mortgage finance bonds are inflation-indexed, fixed or variable rate, long-term loans with monthly payments of principal and interest secured by a real property mortgage that are financed with mortgage finance bonds as defined in Chapter 9-1 of Chilean banking regulations. At the time of approval, these types of mortgage loans cannot be more than 75.0% of the lower of the purchase price or the appraised value of the mortgaged property or such loan will be classified as a commercial loan. Mortgage bonds are our general obligations, and we are liable for all principal and accrued interest on such bonds. In addition, if the issuer of a mortgage finance bond becomes insolvent, the General Banking Law’s liquidation procedures provide that these types of mortgage loans with their corresponding mortgage bonds shall be auctioned as a unit and the acquirer must continue paying the mortgage finance bonds under the same conditions as the original issuer.
Endorsable mortgage mutual loans are inflation-indexed fixed rate or variable rate, long-term loans with monthly payment of principal and interest secured by a real property mortgage that are financed through general funding. These kinds of loans are supported by a contract deed, which can be sold in the market through an endorsement.
Mortgage mutual financed with mortgage bond includes mortgage loans (fixed and variable rate) that are inflation-indexed long-term loans with monthly payments of principal and interest secured by a real property mortgage. These are financed by issuing mortgage bonds as defined in Chapter 9-2 of Chilean banking regulations.
Other mortgage mutual loans mainly include mortgage loans (fixed and variable rate) that are inflation-indexed long-term loans with monthly payments of principal and interest secured by a real property mortgage. These are financed by our general borrowings.
Other loans and accounts receivable loans include other mortgage loans and accounts payable not included in any of the categories above.
Consumer loans
Installment consumer loans are loans to individuals, granted in Chilean pesos, generally on a fixed rate nominal basis, to finance the purchase of consumer goods or to pay for services. This includes auto loans originated through Santander Consumer Chile.
Checking account debtors are checking overdraft lines to individuals, granted in Chilean pesos, generally on a fixed rate nominal basis and linked to an individual’s checking account.
Credit card debtors include credit card balances subject to nominal fixed rate interest charges.
Leasing transactions are agreements for the financial leasing of automobiles and other property to individuals.
Other consumer loans are other loans to individuals that are not classified in any of the other categories shown above.
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Maturity and Interest Rate Sensitivity of Loans
The following table sets forth an analysis by type and time remaining to maturity of our loans at amortized cost as of December 31, 2025.
| Due in 1 year or less | Due after 1 year through 5 years | Due after 5 years through 15 years | Due after 15 years | Total balance as of December 31, 2025 | ||||||||||||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||||||||||||||
| Interbank loans | 68,178 | — | — | — | 68,178 | |||||||||||||||||||||||||||
| Commercial loans | 6,262,564 | 4,754,358 | 1,924,290 | 349,413 | 13,290,625 | |||||||||||||||||||||||||||
| Foreign trade loans | 1,737,235 | 44,657 | 4,421 | — | 1,786,313 | |||||||||||||||||||||||||||
| Checking accounts debtors | 107,088 | 1,120 | — | — | 108,208 | |||||||||||||||||||||||||||
| Credit card debtors | 64,540 | 89,623 | 48 | — | 154,211 | |||||||||||||||||||||||||||
| Factoring transactions | 937,645 | — | — | — | 937,645 | |||||||||||||||||||||||||||
| Leasing transactions | 311,458 | 560,653 | 103,626 | 9 | 975,746 | |||||||||||||||||||||||||||
| Student loans | 5,188 | 13,463 | 10,643 | 476 | 29,770 | |||||||||||||||||||||||||||
| Other loans and account receivable | 41,283 | 39,547 | 390 | 97 | 81,317 | |||||||||||||||||||||||||||
| SUBTOTAL Commercial loans | 9,467,001 | 5,503,421 | 2,043,418 | 349,995 | 17,363,835 | |||||||||||||||||||||||||||
| Loans with mortgage finance bonds | 14 | — | — | — | 14 | |||||||||||||||||||||||||||
| Endorsable mortgage mutual loans | 97 | 149 | 4 | — | 250 | |||||||||||||||||||||||||||
| Mortgage mutual financed with mortgage bonds | 7,089 | 27,006 | 38,240 | 4,873 | 77,208 | |||||||||||||||||||||||||||
| Other mortgage mutual loans | 1,060,875 | 4,181,763 | 8,017,299 | 4,002,582 | 17,262,519 | |||||||||||||||||||||||||||
| Other credit and account receivable | 4,532 | 18,058 | 43,626 | 37,356 | 103,572 | |||||||||||||||||||||||||||
| SUBTOTAL Mortgage loans | 1,072,607 | 4,226,976 | 8,099,169 | 4,044,811 | 17,443,563 | |||||||||||||||||||||||||||
| Installment consumer loans | 1,364,813 | 2,429,956 | 61,592 | 7 | 3,856,368 | |||||||||||||||||||||||||||
| Checking accounts debtors | 137,325 | 8 | 5 | — | 137,338 | |||||||||||||||||||||||||||
| Credit card debtors | 840,521 | 1,220,458 | 712 | — | 2,061,691 | |||||||||||||||||||||||||||
| Leasing transactions | 859 | 717 | — | — | 1,576 | |||||||||||||||||||||||||||
| Other consumer loans | 328 | 2 | 1 | — | 331 | |||||||||||||||||||||||||||
| SUBTOTAL Consumer loans | 2,343,846 | 3,651,141 | 62,310 | 7 | 6,057,304 | |||||||||||||||||||||||||||
| Total | 12,951,632 | 13,381,538 | 10,204,897 | 4,394,813 | 40,932,880 | |||||||||||||||||||||||||||
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The following tables present the total amount of loans that have fixed and variable interest rates as of December 31, 2025 for each category of loans required to be disclosed under IFRS financial statements. See also “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Interest Rates.
| As of December 31, 2025 | ||||||||||||||
| (in millions of Ch$) | ||||||||||||||
| Variable Interest Rates | Fixed Interest Rates | |||||||||||||
| Interbank | — | 68,178 | ||||||||||||
| Commercial loans | 2,824,080 | 10,466,545 | ||||||||||||
| Foreign trade loans | 116,354 | 1,669,959 | ||||||||||||
| Checking accounts debtors | 95,343 | 12,865 | ||||||||||||
| Credit card debtors | — | 154,211 | ||||||||||||
| Factoring transactions | — | 937,645 | ||||||||||||
| Leasing transactions | 15,282 | 960,465 | ||||||||||||
| Student loans | — | 29,770 | ||||||||||||
| Other loans and account receivable | 193 | 81,124 | ||||||||||||
| Subtotals | 3,051,252 | 14,312,584 | ||||||||||||
| Loans with mortgage finance bonds | — | 14 | ||||||||||||
| Endorsable mortgage mutual loans | — | 250 | ||||||||||||
| Mortgage mutual financed with mortgage bonds | — | 77,208 | ||||||||||||
| Other mortgage mutual loans | 4,612,008 | 12,650,511 | ||||||||||||
| Other credit and account receivable | 11,321 | 92,250 | ||||||||||||
| Subtotals | 4,623,329 | 12,820,234 | ||||||||||||
| Installment consumer loans | 5 | 3,856,363 | ||||||||||||
| Checking accounts debtors | 128,959 | 8,380 | ||||||||||||
| Credit card debtors | — | 2,061,691 | ||||||||||||
| Leasing transactions | — | 1,576 | ||||||||||||
| Other consumer loans | — | 331 | ||||||||||||
| Subtotals | 128,964 | 5,928,340 | ||||||||||||
| Totals loans to clients | 7,803,545 | 33,129,336 | ||||||||||||
Analysis and Classification of Loan Portfolio Based on the Borrower’s Payment Performance
The following table analyzes our non-performing and impaired loans. Non-performing loans include the aggregate principal and accrued but unpaid interest of any loan with one installment that is at least 90 days past-due, and do not accrue interest. Loan information corresponds to loans at amortized cost in accordance with IFRS 9. See “Note 8—Financial Assets at Amortized Cost” of the Audited Consolidated Financial Statements.
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| 2025 | 2024 | ||||||||||
| (Ch$ million) | |||||||||||
| Total loans | 40,932,880 | 41,323,844 | |||||||||
| Allowance for loan losses | 1,222,458 | 1,192,690 | |||||||||
| Impaired loans | 2,615,378 | 2,404,820 | |||||||||
| Impaired loans as a percentage of total loans | 6.39 | % | 5.82 | % | |||||||
| Amounts non-performing | 1,332,660 | 1,311,374 | |||||||||
| To the extent secured(1) | 752,352 | 786,824 | |||||||||
| To the extent unsecured | 580,308 | 524,550 | |||||||||
| Amounts non-performing as a percentage of total loans | 3.26 | % | 3.17 | % | |||||||
| To the extent secured(1) | 1.84 | % | 1.90 | % | |||||||
| To the extent unsecured | 1.42 | % | 1.27 | % | |||||||
| Loans loss allowances as a percentage of: | |||||||||||
| Total loans | 2.99 | % | 2.89 | % | |||||||
| Total amounts non-performing | 91.73 | % | 90.95 | % | |||||||
| Total amounts non-performing – unsecured | 162.48 | % | 151.58 | % | |||||||
(1)Security generally consists of mortgages on real estate, pledges of marketable securities, letters of credit or cash.
Credit Ratios
The following sets forth our credit ratios as of and for the years ended December 2025, 2024 and 2023 by loan category.
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Allowance for credit losses to total loans outstanding | 2.99 | % | 2.89 | % | 2.81 | % | ||||||||||||||
| Allowance for credit losses | 1,222,458 | 1,192,690 | 1,148,780 | |||||||||||||||||
| Total loans outstanding | 40,932,880 | 41,323,844 | 40,811,886 | |||||||||||||||||
| Net write-offs during the period to average loans outstanding: | ||||||||||||||||||||
| Commercial | ||||||||||||||||||||
| Interbank Loans | ||||||||||||||||||||
| Net charge-off during the period | — | — | — | |||||||||||||||||
| Average amount outstanding | 30,886 | 13,862 | 34,163 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | — | % | — | % | — | % | ||||||||||||||
| Commercial Loans | ||||||||||||||||||||
| Net charge-off during the period | 224,398 | 162,483 | 123,544 | |||||||||||||||||
| Average amount outstanding | 13,329,553 | 13,142,288 | 13,794,651 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | 1.7 | % | 1.2 | % | 0.9 | % | ||||||||||||||
| Foreign Trade Loans | ||||||||||||||||||||
| Net charge-off during the period | — | — | — | |||||||||||||||||
| Average amount outstanding | 1,927,226 | 1,867,465 | 1,828,177 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | — | % | — | % | — | % | ||||||||||||||
| Checking Account Debtors | ||||||||||||||||||||
| Net charge-off during the period | 6,201 | 4,754 | 3,462 | |||||||||||||||||
| Average amount outstanding | 118,610 | 134,335 | 137,208 | |||||||||||||||||
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| Ratio of net charge-off/average amount outstanding | 5.2 | % | 3.5 | % | 2.5 | % | ||||||||||||||
| Credit Cards Debtors | ||||||||||||||||||||
| Net charge-off during the period | 7,367 | 5,745 | 3,211 | |||||||||||||||||
| Average amount outstanding | 145,335 | 132,904 | 130,806 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | 5.1 | % | 4.3 | % | 2.5 | % | ||||||||||||||
| Factoring Transactions | ||||||||||||||||||||
| Net charge-off during the period | 6,722 | 6,142 | 889 | |||||||||||||||||
| Average amount outstanding | 797,792 | 860,734 | 831,437 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | 0.8 | % | 0.7 | % | 0.1 | % | ||||||||||||||
| Leasing Transactions | ||||||||||||||||||||
| Net charge-off during the period | 6,733 | 11,205 | 7,468 | |||||||||||||||||
| Average amount outstanding | 1,032,553 | 1,160,926 | 1,287,533 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | 0.7 | % | 1.0 | % | 0.6 | % | ||||||||||||||
| Student Loans | ||||||||||||||||||||
| Net charge-off during the period | 4,517 | 5,069 | 2,267 | |||||||||||||||||
| Average amount outstanding | 34,232 | 42,702 | 50,103 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | 13.2 | % | 11.9 | % | 4.5 | % | ||||||||||||||
| Other Loans and Accounts Receivable | ||||||||||||||||||||
| Net charge-off during the period | 43,995 | 42,266 | 14,670 | |||||||||||||||||
| Average amount outstanding | 81,923 | 89,452 | 222,999 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | 53.7 | % | 47.2 | % | 6.6 | % | ||||||||||||||
| Total Commercial | ||||||||||||||||||||
| Net charge-off during the period | 299,933 | 237,664 | 155,511 | |||||||||||||||||
| Average amount outstanding | 17,498,110 | 17,444,668 | 18,317,077 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | 1.7 | % | 1.4 | % | 0.8 | % | ||||||||||||||
| Residential | ||||||||||||||||||||
| Loans with Mortgage Finance Bonds | ||||||||||||||||||||
| Net charge-off during the period | 10 | 7 | 24 | |||||||||||||||||
| Average amount outstanding | 21 | 231 | 1,089 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | 47.6 | % | 3.0 | % | 2.2 | % | ||||||||||||||
| Mortgage Mutual Loans financed with mortgage bonds | ||||||||||||||||||||
| Net charge-off during the period | — | 15 | 7 | |||||||||||||||||
| Average amount outstanding | 147,925 | 156,112 | 95,701 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | — | % | — | % | — | % | ||||||||||||||
| Other Mortgage Loans | ||||||||||||||||||||
| Net charge-off during the period | 62,113 | 43,777 | 27,243 | |||||||||||||||||
| Average amount outstanding | 17,318,748 | 17,188,479 | 16,217,279 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | 0.4 | % | 0.3 | % | 0.2 | % | ||||||||||||||
| Total Residential | ||||||||||||||||||||
| Net charge-off during the period | 62,123 | 43,799 | 27,274 | |||||||||||||||||
| Average amount outstanding | 17,466,694 | 17,344,822 | 16,314,069 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | 0.4 | % | 0.3 | % | 0.2 | % | ||||||||||||||
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| 2025 | 2024 | 2023 | ||||||||||||||||||
| Consumer Loans | ||||||||||||||||||||
| Installment Consumer Loans | ||||||||||||||||||||
| Net charge-off during the period | 261,938 | 263,450 | 205,066 | |||||||||||||||||
| Average amount outstanding | 3,923,312 | 3,847,535 | 3,817,414 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | 6.7 | % | 6.8 | % | 5.4 | % | ||||||||||||||
| Credit Card Balances | ||||||||||||||||||||
| Net charge-off during the period | 85,035 | 86,612 | 65,912 | |||||||||||||||||
| Average amount outstanding | 1,925,812 | 1,692,456 | 1,541,871 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | 4.4 | % | 5.1 | % | 4.3 | % | ||||||||||||||
| Consumer Leasing Contracts | ||||||||||||||||||||
| Net charge-off during the period | 12 | 59 | 45 | |||||||||||||||||
| Average amount outstanding | 1,601 | 1,788 | 2,309 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | 0.7 | % | 3.3 | 1.9 | % | |||||||||||||||
| Other Consumer Loans | ||||||||||||||||||||
| Net charge-off during the period | 2,820 | 3,293 | 3,139 | |||||||||||||||||
| Average amount outstanding | 438 | 448 | 857 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | 643.8 | % | 735.0 | % | 366.3 | % | ||||||||||||||
| Total Consumer | ||||||||||||||||||||
| Net charge-off during the period | 349,805 | 353,414 | 274,162 | |||||||||||||||||
| Average amount outstanding | 5,851,163 | 5,542,227 | 5,362,451 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | 6.0 | % | 6.4 | % | 5.1 | % | ||||||||||||||
| Total Loans | ||||||||||||||||||||
| Net charge-off during the period | 711,861 | 634,877 | 456,947 | |||||||||||||||||
| Average amount outstanding | 40,815,967 | 40,331,717 | 39,993,597 | |||||||||||||||||
| Ratio of net charge-off/average amount outstanding | 1.7 | % | 1.6 | % | 1.1 | % | ||||||||||||||
Deposits
The principal components of our deposits are savings accounts and time deposits and non-interest bearing demand deposits. For an analysis of average deposits for 2025 and 2024, see “—Average Balances, Income Earned from Interest-Earning Assets and Interest Paid on Interest-Bearing Liabilities.” The following table uses an estimate of uninsured time deposits which are not covered by the Chilean government guarantees as outlined in Item 4. Information on the Company – Deposit insurance.
| For the year ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions of Ch$) | ||||||||||||||
| Insured deposits | 698,698 | 719,804 | ||||||||||||
| Uninsured deposits | 15,517,381 | 16,147,803 | ||||||||||||
| Of which: | ||||||||||||||
| Excess over guaranteed limit | 3,136,574 | 3,118,264 | ||||||||||||
| Otherwise uninsured | 12,380,807 | 13,029,539 | ||||||||||||
| Total | 16,216,079 | 16,867,607 | ||||||||||||
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| For the year ended December 31, | ||||||||||||||||||||
| Ch$ | Foreign currency | Total | ||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||
| Time deposits otherwise uninsured with a maturity of: | ||||||||||||||||||||
| 3 months or less | 7,967,364 | 2,512,422 | 10,479,786 | |||||||||||||||||
| Over 3 months through 6 months | 1,717,636 | 405,165 | 2,122,801 | |||||||||||||||||
| Over 6 months through 12 months | 2,149,743 | 293,766 | 2,443,509 | |||||||||||||||||
| Over 12 months | 457,659 | 13,626 | 471,285 | |||||||||||||||||
| Total | 12,292,402 | 3,224,979 | 15,517,381 | |||||||||||||||||
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A.Directors and Senior Management Directors
We are managed by our Board of Directors, which, in accordance with our by-laws, consists of 9 directors and two alternates who are elected at our ordinary shareholders’ meetings. The current members of the Board of Directors were elected by the shareholders in the ordinary shareholders’ meeting held on April 30, 2023. Members of the Board of Directors are elected for three-year terms. The term of the current Board members expires in April of 2026.
Cumulative voting is permitted for the election of directors. The Board of Directors may appoint replacements to fill any vacancies that occur during periods between elections. If any member of the Board of Directors resigns before his or her term has ended, and no other alternate director is available to take the position at the next annual ordinary shareholders’ meeting a new replacing member will be elected. Our executive officers are appointed by the Board of Directors and hold office at its discretion. Scheduled meetings of the Board of Directors are held monthly. Extraordinary meetings can be held when called in one of three ways: by the Chairman of the Board of Directors, by three directors with the consent of the Chairman of the Board of Directors or by the majority of directors. None of the members of our Board of Directors has a service contract which entitles any Director to any benefits upon termination of employment with Santander-Chile.
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Our current directors are as follows:
| Directors | Position | Committees | Term Expires | |||||||||||||||||
| Claudio Melandri Hinojosa | Chairman | Asset and Liability Committee Remuneration Committee Management Appointment Committee | Apr-26 | |||||||||||||||||
| Rodrigo Vergara Montes | First Vice Chairman | Audit Committee (Financial Expert) Asset and Liability Committee (President) Management Appointment Committee | Apr-26 | |||||||||||||||||
| Orlando Poblete Iturrate | Second Vice Chairman | Remuneration Committee Audit Committee (President) | Apr-26 | |||||||||||||||||
| María Olivia Recart | Director | Integral Risk Committee Asset and Liability Committee | Apr-26 | |||||||||||||||||
| Felix de Vicente Mingo | Director | Asset and Liability Committee Audit Committee (Financial Expert) Integral Risk Committee | Apr-26 | |||||||||||||||||
| Ana Dorrego de Carlos | Director | — | Apr-26 | |||||||||||||||||
| José Francisco Doncel Razola | Director | — | Apr-26 | |||||||||||||||||
| Lucia Santa Cruz Sutil | Director | Integral Risk Committee | Apr-26 | |||||||||||||||||
| Blanca Bustamante Bravo | Director | Integral Risk Committee Management Appointment Committee (President) | Apr-26 | |||||||||||||||||
| Alfonso Gómez Morales | Alternate Director | Integral Risk Committee (President) Remuneration Committee (President) Asset and Liability Committee | Apr-26 | |||||||||||||||||
Juan Pedro Santa María Pérez | Alternate Director | Audit Committee (Secretary) Integral Risk Committee | Apr-26 | |||||||||||||||||
Claudio Melandri Hinojosa became the Executive Chairman of Grupo Santander in Chile on February 27, 2018 and non-executive Chairman since May 2022. He is also President of Santander Chile Holding S.A. and Vice President of Universia Chile S.A. He has more than 30 years of experience in the financial industry and was Chief Executive Officer of Santander Chile from January 2010 to March 2018 and was also Country Head until July 2022. He started his career in Banco Concepción and joined Grupo Santander in 1990, where he has held various positions of responsibility, including Regional Manager, Manager of the branch network, Human Resources Manager and Manager of Commercial Banking. He was also a Vice President at Banco Santander Venezuela for three years in the commercial area of this country. Mr. Melandri has degrees in Business and Accounting and holds a Master of Business Administration from Universidad Adolfo Ibáñez.
Rodrigo Vergara became a director and First Vice Chairman of the Board on July 12, 2018. He is a professor of Economics at Pontificia Universidad Católica de Chile and an economic consultant and board member for various companies. He graduated with an Economics Degree from the Pontificia Universidad Católica de Chile in 1985 and earned a Doctorate Degree in Economics from Harvard University in 1991. He is a researcher at the Center for Public Studies (CEP) and an associate researcher at the Harvard University School of Government (Kennedy School). He is the author of numerous articles published in specialized professional journals and has edited several books. Along with this, he is a professor of Economics at the Catholic University of Chile and is an economic consultant and member of the board of directors of several companies. He went to work at the Central Bank of Chile in 1985. Then he was at the Center for Public Studies and at the Catholic University of Chile. In 2009 he joined the Council of the Central Bank of Chile, assuming his position as president between 2011 and 2016. In addition, he has been an economic advisor to the central banks and governments of several countries and has been an external consultant to the World Bank, the International Monetary Fund, the Inter-American Bank Development and the United Nations.
Orlando Poblete Iturrate is the Second Vice Chairman and has served on the Board since April 22, 2014. Since 1991, Mr. Poblete has been a professor at Universidad de los Andes. Between 1997 and 2004, he was Dean of the Law School at Universidad de los Andes and until 2014 he served as Chancellor. He is also a partner at the law firm Orlando Poblete & Company. He is a member of the Counsel of the Arbitration and Mediation of Santiago of the Chamber of Commerce of
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Santiago. Previously, between 1979 and 1991, he was a professor of Procedural Law at Universidad de Chile. Mr. Poblete is a lawyer from Universidad de Chile and has a Masters in Law from the same university. He is also a graduate of the Directive Management of Companies Program (PADE) of ESE Business School of Universidad de los Andes.
María Olivia Recart joined the Board in March 2023 as an alternate director and was voted to the Board in April 2023. She has a degree in Business Administration with a major in Economics from the University of Concepción and a Master of Arts in Economics from Georgetown. She has more than 25 years of experience in public policy, R&D, senior management of companies and non-profit organizations. She spent 16 years at Fundación Chile, and then served as undersecretary in the Ministry of Finance (2006-2010). At the end of 2010, she assumed as VP of Corporate Affairs for the Region of the Americas of the Australian mining company BHP. Between 2019 and 2023 she was National Chancellor of the Santo Tomás University (UST). She is president of the board of directors of Comunidad Mujer, director of Esval, Essbio, Lundin Mining and Aclara.
Félix de Vicente Mingo became a director on March 27, 2018. He has a Business degree with a specialization in Economics from Universidad de Chile. Between 2013 and 2014, he was Minister of Economy, Development and Tourism of Chile. Before this, he was a Trade Commissioner of ProChile, an institution of the Ministry of Foreign Affairs dedicated to promoting Chilean products abroad. In his career he has been president and partner of several companies both in Chile and abroad.
Ana Dorrego became a director on March 15, 2015. She joined Grupo Santander in 2000 and, since then, she has held various functions, mainly in the areas of Financial Planning and Corporate Development, coordinating the entity's M&A and planning processes and monitoring the different units and projects. She was Director of E-Business Development at Santander and has experience as a relationship manager with corporate clients and as commercial director of transactional banking at Bankinter. Currently, she is also director of Caceis. She holds a degree in Business Administration from the Universidad Pontificia de Comillas ICAI - ICADE, and an International MBA from the University of Deusto-Bilbao, Spain, and Adolfo Ibáñez, Miami-Chile.
José Francisco Doncel Razola became a director in July 2025. He has more than 40 years of experience in auditing, financial accounting, management control, and leadership in banking institutions. He began his career at Arthur Andersen Auditores, where he participated in audits and consulting for financial institutions, in addition to being part of teams specializing in IT auditing and training. In 1989, he joined Banco Santander, serving as a director in the Financial Accounting Division and leading key teams. Subsequently, at Banesto, he held senior management positions, including accounting management, financial control, and profitability strategy. Since 2013, he has held strategic roles at Banco Santander, including serving as General Manager of Internal Audit and, currently, as leader of the Financial Accounting and Management Control Division, reporting directly to the CEO and the Group President. He has also served on numerous boards of directors in Spain, the United States, and Mexico. Currently he serves as a member of the boards of Santander Spain and also as Chairman of Banco de Albacete, S.A., Grupo Empresarial Santander, S.L., Ablasa Participaciones, S.L., and Finsantusa, S.L.U., and as a member of the boards of Santander Holding Internacional, S.A., Santusa Holding, S.L., Santander Global Technology and Operations, S.L., and Santander Group Properties, S. L. U..
Lucía Santa Cruz Sutil became a director on August 19, 2003. She is a Member of the Board of Universidad Adolfo Ibañez. She is director of Compañía de Seguros Generales y de Vida La Chilena Consolidada (Zurich) and is a member of the Advisory Board of Nestle Chile. She was the designer of modern European history at the Pontificia Universidad Católica and Dean of Liberal Arts at the Universidad Adolfo Ibáñez. She is a member of the Self-Regulation Committee for Insurance Companies in Chile. Ms. Santa Cruz is a historian and holds a Master in Philosophy in History from Oxford University and a Bachelor of Arts in History from King's College, University of London.
Blanca Bustamante Bravo became an alternate director on April 28, 2015 and was voted to the Board in April 2023. She holds a commercial engineering degree with mention in economics from Universidad Católica de Chile. Her professional experience includes the role of economic analyst for the Central Bank of Chile and research analyst for Oppenheimer & Co. in New York and IM Trust. In 1998, she joined Viña Concha y Toro as Head of Investor Relations, a position held until 2010. In 2001, she also became deputy manager of Corporate Communications and in 2017 was named Director of Corporative Affairs. Since 2013, she has been a director in the Center for Research & Innovation for Viña Concha y Toro. In 2023, she left her managerial position in Viña Concha y Toro and assumed as a board member.
Alfonso Gómez became a director on March 27, 2018 and an alternate director in April 2023. He has been a director and advisor to companies and institutions including the National Innovation Council, the National Council of Culture and the Arts, the Digital Country Foundation, Sonda, Derco, Port of Valparaíso, Corporación 3xi, Conecta Logística and Boma Chile. He began his career as an academic in the Department of Industrial and Systems Engineering of the Pontificia
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Universidad Católica de Chile. He was the first executive president of the UC Anacleto Angelini Innovation Center, dean of the Faculty of Engineering and Sciences and, later, of the Business School of the Adolfo Ibáñez University. Founding partner of companies such as Apple Chile, Unlimited and Virtualia, the first social network developed in Latin America. Mr. Gomez is a Civil Engineer from the Catholic University of Chile and Master of Design and Ph.D. from the Royal College of Art in London.
Juan Pedro Santa María Pérez became an alternate director in April 2023 after serving as a full Board member since July 24, 2012. He previously served as Corporate Legal Director for Grupo Santander in Chile, Legal Counsel for Santander-Chile, Banco O’Higgins and Banco Santiago. He was President of the Legal Committee of the Asociación de Bancos e Instituciones Financieras de Chile for over 20 years and President Pro-Tempore of the Financial Law Committee of the Federación Latinoamericana de Bancos (FELABAN). He is a member of the Counsel of Arbitrage and Mediation of the Chamber of Commerce of Santiago. Mr. Santa María holds a degree in Law from the Pontificia Universidad Católica de Chile.
Senior Management
Our senior managers are as follows:
Senior Manager | Position | Date | ||||||
Appointed | ||||||||
Andrés Trautmann Buc | Chief Executive Officer | July-25 | ||||||
Carlos Ruiz de Gamboa Riquelme | Executive Vice-President of Corporate and Investment Banking | Aug-25 | ||||||
Pedro Orellana Piñeiro | Executive Vice-President of Retail Banking | Apr-21 | ||||||
Patricia Pérez Pallacán | Chief Financial Officer | Nov-24 | ||||||
Guillermo Sabater Maroto | Financial & Cost Controller | Nov-15 | ||||||
Jorge Palacios Goddard | Executive Vice-President of Risk | Aug-25 | ||||||
Eduardo Herrera Barros | Executive Vice-President of Technology and Operations | Jul-24 | ||||||
Paula Meléndez Cubillos | Executive Vice-President of Human Resources | Jun-23 | ||||||
Cristián Florence Kauer | General Counsel | Sep-12 | ||||||
Mey Lin Hernández Chiang | Executive Vice President of Internal Audit | Sep-23 | ||||||
Fernando Larraín Aninat | Executive Vice-President of Communications, Marketing and Research | Jun-23 | ||||||
Matías Martino Tamm | Executive Vice-President of Strategy and Data & IA | Aug-25 | ||||||
Fernando Benito Olivares | CEO of Getnet Chile | Apr-23 | ||||||
Ángel García Valdés | Manager of Payments | Feb-22 | ||||||
Jonathan Covarrubias Hernández | Chief Accounting Officer | May-19 | ||||||
Andrés Trautmann Buc became CEO in July 2025. Previously he was the Executive Vice-President of Santander Corporate and Investment Banking since May 2021. He joined Grupo Santander in 2007, serving as Treasurer of Santander Chile between 2018 and 2021. Between 2013 and 2018 he was in charge of sales for the Andean region for Goldman Sachs in New York, and prior to that he was Head of Institutional and Corporate Sales at Santander Chile. He was also in charge of sales of structured products in London for Santander UK between 2010 and 2012. Between 2002 and 2006, he worked at Econsult as investment manager for investment funds and financial analyst for studies, and previously he was a financial analyst in the planning and development department of Enersis S.A. Mr. Trautmann has a business degree from Universidad de Chile.
Carlos Ruiz de Gamboa Riquelme was appointed Executive Vice President of Corporate and Investment Banking of Santander Chile on August 1, 2025. He has over 30 years of experience in investment banking, global markets, fixed income, corporate finance and risk management. He has had various leadership roles in Latin America and the United States, including 25 years at J.P. Morgan in New York and Santiago, culminating as Managing Director and Head of Latin America Debt Capital Markets and Latin America Derivatives Marketing, Structuring and Sales, and later as Managing Director and General Manager of J.P. Morgan’s Chilean broker-dealer. Throughout his more than 30 year career and before joining Santander, he was part of Tyndall Group, a local financial boutique focused on bespoke strategic services to clients in the region. He was also Director of the Center of Financial Innovation from Escuela de Negocios, Universidad Adolfo
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Ibañez. He holds a Bachelor's degree in Economics from Universidad Nacional Pedro Henríquez Ureña (Dominican Republic) and a post graduate degree in business administration (DPA) from Universidad Adolfo Ibáñez (Santiago, Chile).
Ángel García Valdés has served as Manager of Payments since 2022. He is a commercial engineer from the Adolfo Ibáñez University and received a Master’s in Business Administration from the Instituto de Empresa in Madrid (IE). Ángel García has been the Payment Methods Manager since March 2022. He has been part of Grupo Santander for 17 years, beginning his career at the Bank in 2007, where for 10 years he was at Santander CIB in the areas of Equities and Financial Solutions and Advisory. Subsequently, he made a transition to Commercial Banking where he has held different positions such as Head of the Life Product and Segment Manager.
Patricia Pérez became Chief Financial Officer of Banco Santander Chile in November 2024. Throughout her 18-year career at the Santander Group, she has held different roles within the organization, starting her career in Operations and Management Control and then joining the Finance Division, where she has remained for the last 14 years, which has allowed her to have a solid knowledge of financial and capital management. Previously, she held the position of Head of Asset & Liability Management (ALM) at Banco Santander and has participated in different development initiatives, both locally and at the corporate level, including being a member of the SW50 Leadership Program taught by the London School of Economics and Political Science (LSE) and promoted by the Group. She has a degree in Information and Management Control from Universidad de Chile and a Master in Finance from the Universidad Adolfo Ibáñez.
Guillermo Sabater is the Financial and Cost Controller of Santander-Chile and has been working for Santander Group and its affiliates for 28 years. Between 2009 and 2015, he was Senior Executive Vice President of Santander in the U.S. and CFO and Controller of Sovereign Bank and Santander Holdings USA. Before that, he was the financial controller of Banco Santander Chile between 2006 and 2009. He also served for three years, between 2003 and 2006, as Financial Controller of the Consumer Finance Division in Madrid, Spain. Mr. Sabater also served as an internal auditor during his first ten years at the company. He has a degree in Economics and Business Administration from University College of Financial Studies at Universidad Complutense de Madrid and completed a Program in Executive Development at the Institute of Business and has completed various courses at institutions such as Babson College and Boston University.
Jorge Palacios Goddard became Executive Vice President of Risk Solutions of Santander-Chile in August 2025. He holds a degree in Business Administration with a specialization in Finance from the Universidad Iberoamericana in Mexico (ITAM) and a Master’s degree in Finance from the Instituto Tecnológico Autónomo de México. In 2017, he joined Santander Mexico as Head of Integrated Risk Management (EWRM) and later as Deputy Chief Risk Officer. His professional career has been linked to financial markets and banking.
Eduardo Herrera became Executive Vice-President of Technology and Operations at Santander Chile in July 2024. Initially he worked at Apple Chile and later joined Chilquinta, where he was CFO until 2001. He then became CIO of Banco Security, where he remained until 2006. His career continued at Walmart where he stood out in various positions, including CIO for Chile, VP and CIO for Mexico and Central America and VP of Digital & Technology International in the United States. From 2019 to 2024 he was SMU's Digital and Technology corporate manager. Eduardo Herrera is an industrial civil engineer from the Pontifica Universidad Católica de Chile.
Paula Meléndez became the Executive Vice-President of Human Resources in June 2023. She has extensive experience in the financial sector, both in financial operational areas and in human resources. She has been part of Grupo Santander since 2004 leading, among others, the People and Culture Management, Organizational Development, Change Management and Financial Operations Control teams. She is an auditor/accountant and engineer in Information and Management Control from the University of Chile and has a Master’s degree in Financial Management from the Adolfo Ibáñez University.
Cristian Florence is our General Counsel, a position he has held since September 2012. Prior to that he served as Chief Lawyer at Santander-Chile. Mr. Florence joined Santander-Chile in 2002 when Santander-Chile merged with Banco Santiago. He started working in the banking industry in 1991, when he joined Centrobanco, a predecessor of Banco O’Higgins and Banco Santiago serving at several positions in the law departments. Mr. Florence is also a Director of Zurich Santander Seguros Generales Chile S.A., Zurich Santander Seguros de Vida Chile S.A. and Santander Asset Management S.A. Administradora General de Fondos. He has a degree in Law from Universidad Gabriela Mistral and a Master of Laws (LLM) from the same university and is a professor of Civil Law.
Mey Lin Hernandez is our Internal Auditor, a position she has held since September 2023. She has been working in internal auditing in Grupo Santander since October 2003. In March 2020 she joined Banco Santander Chile as head internal
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auditor for Market Risk. Ms. Hernández has a Business Degree from the Universidad Complutense de Madrid and is certified by COSO.
Fernando Larraín became Executive Vice-President of Communications, Marketing and Research in June 2023. During his career he has served as a government advisor in different ministries and countries and has been a consultant to multilateral organizations, a business advisor, an academic, and a manager at universities and trade associations. Between 2016 and 2020 he was general manager of the Association of Pension Fund Administrators. Subsequently, he served as a consultant to the World Bank, non-resident senior fellow of the Atlantic Council, Director of the International Center for Pension Administration and member of the board of various foundations. He is a business engineer with a major in economics from the Pontificia Universidad Católica de Chile and a Master's in Public Affairs from Princeton University.
Matías Martino Tamm became Executive Vice President of Strategy and Data & AI in August 2025. With more than six years with the Group, Matías Martino has held various leadership positions within Commercial Banking, including segment strategy director and Clients (individuals) Business Manager. He also previously worked at leading companies associated with investment management (Megeve Investments) and strategic consulting (McKinsey and Co). Matías Martino holds a degree in Business Administration from the Pontifical Catholic University of Chile and a Master of Business Administration (MBA) from the University of California, Berkeley, Haas School of Business.
Fernando Benito Olivares became CEO of Getnet Chile in 2023. He joined Banco Banesto in Alicante in 2004, serving as head of the SME sector in the same city and directing commercial teams in different territories of Spain. In 2018, he arrived in Chile to assume management of the SME business at Santander, strengthening this segment and achieving, for the first time in its history, that Santander was named the Best SME Bank in the country, according to Global Finance magazine. Fernando Benito has a law degree from Universidad de Salamanca (Spain) and holds a Master’s in Business Administration from Universidad Alfonso X El Sabio.
Jonathan Covarrubias was named Chief Accounting Officer of Santander-Chile in May 2019. He has over 21 years of experience in the banking industry, having started at Santander Chile in 2001. Previously, he has held managerial positions related to the Consolidation and Reporting Departments, overseeing our Chilean, U.S. and Spanish GAAP reporting requirements. Mr. Covarrubias is a public accountant from Universidad de Santiago. He has a Master in Business Administration (MBA) from Pontificia Universidad Católica de Chile and a Masters in International Business Management from Universidad de Zaragoza. He is also certified by the Comité de Acreditación de Conocimientos en el Mercado de Valores (CAMV) in Chile.
B.Compensation
For the year ended December 31, 2025, the aggregate amount of compensation paid by us to all of our directors, executive officers and management members was Ch$47,241 million (U.S.$52.4 million). For the year ended December 31, 2025, the aggregate amount of compensation paid by us to all of our directors was Ch$ 1,796 million (U.S.$ 2.0 million), in monthly stipends.
At our annual shareholder meeting held on April 22, 2025, shareholders agreed to maintain the monthly fee of each director of the Bank at UF 250 (US$11,207). For the Chairman of the Board, the fee was maintained at UF 500 (US$22,054). For the Vice Chairmans, fees were kept at UF 375 (U.S.$16,541). Likewise, the fees for serving on one or more committees, other than the Audit Committee, were set at UF 30 (U.S.$1,323) per session attended be paid. For the Chairman of each committee, the fee payable will be UF 60 (U.S.$2,646) and the for the Vice-Chairman of each committee the fee payable will be UF 45 (U.S.$1,984.5).
With respect to the members of the Integral Risk Committee, which meets twice per month, their compensation was established at UF 15 (US$662) for each session attended. The Chairman of this Committee shall receive double the aforementioned amount. The maximum fee shall be limited to two sessions per month.
With respect to the compensation of the members of the Audit Committee, Article 50 bis of the Corporations Law provides that, for the performance of such duties, they shall be entitled to additional remuneration of not less than one third of the fees to which they are entitled as regular directors. In light of the foregoing, it is proposed to maintain in the case of the Chairman of the Audit Committee, shall be entitled to a fee of UF 230 (US$10,145), and the remaining directors who serve on the Audit Committee will be entitled to a fee of UF 115 (US$5,072) for the other directors who serve on it, per attendance at each session, subject to a maximum of one session per month.
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The provisions set forth above are without prejudice to any amounts that may be paid to directors for specific advisory services in matters within their respective areas of expertise. For the year ended December 31, 2025, we did not make any such payments to our directors.
Santander-Chile and its affiliates have designed variable-compensation plans for their employees, based on performance targets and objectives, the achievement of which are evaluated and paid on a quarterly and/or annual basis.
Share-based compensation (settled in cash)
In accordance with IFRS 2, equity instruments settled in cash are allocated to executives of the Bank and its Subsidiaries as a form of compensation for their services. The Bank measures the services received and the cash obligation at fair value at the end of each reporting period and on the settlement date, recognizing any change in fair value in the income statement for the period. For the years ended December 31, 2025, 2024 and 2023 share-based compensation amounted to Ch$1,805, a reversal of Ch$825 million and Ch$2,119 million, respectively. Some of the executives that qualified for this benefit left the bank, without complying with the requirements to receive the benefit, therefore the obligation amount decreased, which generated the reversal of provisions in 2024.
Pension Plans
The Bank has an additional benefit available to its principal executives, consisting of a pension plan. The purpose of the pension plan is to endow the executives with funds for a better supplementary pension upon their retirement. For this purpose, the Bank will match the voluntary contributions made by the beneficiaries for their future pensions with an equivalent contribution. The executives will be entitled to receive this benefit subject to the following terms:
a.The general requisite to apply for this benefit is that the employee must be carrying out his/her duties when turning 60 years old.
b.The Bank will create a pension fund, with life insurance, for each beneficiary in the plan. Periodic contributions into this fund are made by the manager and matched by the Bank.
c.The Bank will be responsible for granting the benefits directly.
If the working relationship between the executive and the company ends, before she fulfills the above mentioned requirements, she will have no rights under this benefit plan. In the event of the executive’s death or total or partial disability, the executive or her family will be entitled to receive this benefit. The Bank will make contributions to this benefit plan on the basis of mixed collective insurance policies whose beneficiary is the Bank. The life insurance company with whom such policies are executed is not an entity linked or related to the Bank or any other Santander Group company. Plan Assets owned by the Bank at the end of 2025 totaled Ch$ 3,462 million, (Ch$4,107 million in 2024). The amount of the defined benefit plans has been quantified by the Bank, based on the following criteria:
Calculation method
We use the projected unit credit method, which considers each working year as generating an additional amount of rights over benefits and values each unit separately. It is calculated based primarily on fund contributions, as well as other factors such as the legal annual pension limit, seniority, age and yearly income for each unit valued individually.
Actuarial hypothesis assumptions
Actuarial assumptions with respect to demographic and financial variables are non-biased and mutually compatible with each other. The most significant actuarial hypotheses considered in the calculations were:
| Plans post-employment 2025 | Plans post-employment 2024 | |||||||||||||
Mortality chart | RV-2014 | RV-2014 | ||||||||||||
| Termination of contract rates | 5.0 | % | 5.0 | % | ||||||||||
| Impairment chart | PDT 1985 | PDT 1985 | ||||||||||||
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Assets related to the pension fund contributed by the Bank into the Zurich insurance company with respect to defined benefit plans are presented as net of associated commitments. Activity for post-employment benefits is as follows:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions of Ch$) | ||||||||||||||
| Plan assets | 3,462 | 4,107 | ||||||||||||
| Commitments for defined-benefit plans: | ||||||||||||||
| For active personnel | (2,769) | (3,138) | ||||||||||||
| Incurred by inactive personnel | — | |||||||||||||
| Minus: | ||||||||||||||
| Unrealized actuarial (gain) losses | — | |||||||||||||
| Balances at year end | 693 | 969 | ||||||||||||
Year’s cash flow for post-employment benefits is as follows:
| For the years ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||
| a) Fair value of plan assets | ||||||||||||||||||||
| Opening balance | 4,107 | 5,260 | 8,224 | |||||||||||||||||
| Expected yield of insurance contracts | 151 | 574 | 640 | |||||||||||||||||
| Employer contributions | 1,277 | 1,308 | 995 | |||||||||||||||||
| Benefits paid | (2,073) | (3,035) | (2,659) | |||||||||||||||||
| Fair value of plan assets at year end | 3,462 | 4,107 | 7,200 | |||||||||||||||||
| b) Present value of obligations | ||||||||||||||||||||
| Opening balance | (3,138) | (5,027) | (7,551) | |||||||||||||||||
| Service cost | 283 | 1,889 | 873 | |||||||||||||||||
| Present value of obligations at year end | (2,855) | (3,138) | (6,678) | |||||||||||||||||
| Net balance at year end | 607 | 969 | 522 | |||||||||||||||||
Plan expected profit:
| As of December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Type of expected yield from the plan’s assets | UF + 2.50% annually | UF + 2.50% annually | UF + 2.50% annually | ||||||||||||||
Type of yield expected from the reimbursement rights | UF + 2.50% annually | UF + 2.50% annually | UF + 2.50% annually | ||||||||||||||
Plan associated expenses:
| For the years ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||
Current period service expenses | 283 | 1,889 | 1,250 | |||||||||||||||||
Expected yield from plan’s assets | 151 | 574 | 539 | |||||||||||||||||
Total | 434 | 2,463 | 1,789 | |||||||||||||||||
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C.Board Practices
Audit Committee
The Audit Committee (Comité de Directores y Auditoría) is comprised of three independent members of the Board of Directors and the Committee Secretary is Orlando Poblete. The Chief Executive Officer, General Counsel, Financial Controller, General Auditor and other Executive Vice Presidents and managers of the Bank can be invited to the meetings if necessary and are present when discussing specific matters. This Committee’s primary responsibility is to support the Board of Directors in the continuous improvement of our system of internal controls, which includes reviewing the work of both the independent registered public accounting firm and the Internal Audit Department. The committee is also responsible for analyzing observations made by regulatory entities of the Chilean financial system about us and for recommending measures to be taken by our management in response. The external auditors are recommended by this committee to our Board of Directors and appointed by our shareholders at the annual shareholders’ meeting.
This committee is also responsible for:
•Presenting to the Board of Directors a list of candidates for the selection of an external auditor to be proposed at the Annual Shareholders’ Meeting.
•Presenting to the Board of Directors a list of candidates for the selection of rating agencies.
•Overseeing and analyzing the results of the external audit and the internal reviews.
•Overseeing and coordinating the Bank’s operational risk policies.
•Analyzing the interim and year-end financial statements and reporting the results to the Board of Directors.
•Analyzing the external auditors’ reports and their content, procedures and scope.
•Obtaining information regarding the effectiveness and reliability of the internal control systems and procedures.
•Analyzing the information systems performance, and its sufficiency, reliability and use in connection with decision-making processes.
•Obtaining information regarding compliance with the company’s policies regarding the due observance of laws, regulations and internal rules to which the company is subject.
•Investigating suspicious and fraudulent activities (including conflicts).
•Analyzing the reports of the inspection visits, instructions and presentations of the FMC.
•Obtaining information, analyzing and verifying the company’s compliance with the annual audit program prepared by the internal audit department.
•Informing the Board of Directors of accounting changes and their effects.
The Board members of this committee are:
| Board member | Position in Committee | |||||||
| Rodrigo Vergara | Chairman | |||||||
| Felix de Vicente | Member | |||||||
| Orlando Poblete | Member | |||||||
| Juan Pedro Santa | Secretary | |||||||
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Integral Risk Committee
The Integral Risk Committee of the Board is responsible for reviewing and monitoring all risks that may affect us, allowing for integral risk management. This committee serves as the governing body through which the Board supervises risk in general. It also evaluates the reasonability of the systems for measurement and control of the following risks: Credit risk, Market risk, Operational risk, Cybersecurity, Solvency risk (BIS), Legal risks, Compliance risks and Reputational risks.
This Committee includes six Board members. This committee also includes the Chief Executive Officer, the Director of Risk and other senior level executives from the risk and commercial side of our business. The Board members of this committee are:
| Board member | Position in Committee | |||||||
| Felix de Vicente | Chairman | |||||||
| Claudio Melandri | Member | |||||||
| Félix de Vicente | Member | |||||||
| Blanca Bustamante | Member | |||||||
| María Olivia Recart | Member | |||||||
| Juan Pedro Santa María | Member | |||||||
Asset and Liability Committee (ALCO)
The ALCO includes the Chairman and Vice-Chairman of the Board and three additional members of the Board, the Chief Executive Officer, the Chief Financial Officer, the Corporate Financial Controller, the Manager of the Financial Management Division, the Manager of Market Risk, the Manager of the Treasury Division, and other senior members of management. The ALCO meets monthly. All limits reviewed by the ALCO are measured and prepared by the Market Risk Department. The non-Board members of the ALCO meet weekly to review liquidity, funding, capital and market risk related matters. The members of this committee are the following:
| Board member | Position in Committee | |||||||
| Rodrigo Vergara Montes | Chairman | |||||||
| Claudio Melandri | Member | |||||||
| María Olivia Recart | Member | |||||||
| Félix de Vicente | Member | |||||||
| Alfonso Gomez Morales | Member | |||||||
The main functions of the ALCO are:
•Making the most important decisions, approving the risk appetite and limits regarding our exposure to inflation, interest rate risk, inflation risk, funding, capital and liquidity levels.
•Review of the evolution of the most relevant local and international markets and monetary policies.
•Analyzing the main economic and risk factors that directly impact the results of the trading portfolios.
•Establishing the Bank’s policies, procedures and limits with respect to its trading portfolio. The Bank’s Market Risk Department measures all risks and limits and reports these to the Market Committee.
•Reviewing the net foreign exchange exposure and limit.
•Reviewing the results of the Bank’s client treasury business.
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The main limits set and monitored by the ALCO (and measured by the Market Risk Department) are the following:
| Risk | Measure | |||||||
| Interest rates | Sensitivity Capital | |||||||
| Sensitivity NIM | ||||||||
| Regulatory limit (30 Days) | ||||||||
| Regulatory limit (90 Days) | ||||||||
| Inflation GAP | ||||||||
| Liquidity | Liquidity coverage ratio | |||||||
| Net stable funding ratio | ||||||||
| Stress tests | ||||||||
| Structural liquidity limit | ||||||||
| Wholesale funding limits | ||||||||
| Deposit concentration | ||||||||
| Asset encumbrance | ||||||||
| Capital | Leverage ratio | |||||||
| Core capital ratio | ||||||||
| BIS ratio | ||||||||
| ROE – COE | ||||||||
| RORAC – COE | ||||||||
| Foreign exposures | Intergroup exposure: Derivatives, deposits, loans Foreign assets: Derivatives, Deposits, Loans | |||||||
Management Appointment Committee
The Management Appointment Committee oversees the revision and application of policies and procedures of roles defined as “key positions” and also the review of other positions within the organization in general. The members of this committee are the following:
| Board member | Position in Committee | |||||||
| Blanca Bustamante | Chairman | |||||||
| Claudio Melandri | Member | |||||||
| Rodrigo Vergara Montes | Member | |||||||
Remuneration Committee
The Remuneration Committee reviews the documentation referring to the evaluation and remuneration of roles defined as “key positions” and other members of the organization in general. The members of this committee are the following:
| Board member | Position in Committee | |||||||
| Alfonso Gómez | Chairman | |||||||
| Orlando Poblete | Member | |||||||
| Claudio Melandri | Member | |||||||
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D.Employees
As of December 31, 2025, on a consolidated basis, we had 8,526 employees: 7,887 of whom were bank employees and 639 of which were employees of our subsidiaries or employees of entities controlled by the Bank through other considerations. We have traditionally enjoyed good relations with our employees and their unions. Of the total headcount of us and our subsidiaries, 6,280 or 73.7% were unionized.
In December 2023, a new collective bargaining agreement was signed with the main unions ahead of schedule, which becomes effective as of September 1, 2024 and which expires on December 31, 2027. We generally apply the terms of our collective bargaining agreement to unionized and non-unionized employees. The following chart summarizes the number of employees employed by the bank.
| Employees | As of December 31, 2025 | ||||||||||
| Executives | 246 | ||||||||||
| Supervisors | 855 | ||||||||||
| Professionals | 5,869 | ||||||||||
| Administrative | 1,556 | ||||||||||
| Total | 8,526 | ||||||||||
E.Share Ownership
No director or executive officer owns more than 1% of the shares of Santander-Chile as of December 31, 2025. Santander-Chile currently does not have any arrangements for involving employees in its capital and there is no systematic arrangement for grant of options or shares or securities of Santander-Chile to them. In accordance with IFRS 2, equity instruments settled in cash are allocated to executives of the Bank and its Subsidiaries as a form of compensation for their services. See “Item 6—Directors, Senior Management and Employees—Compensation” for more details.
F.Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
Not applicable.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A.Major Shareholders
Santander Spain controls Santander-Chile through its holdings in Teatinos Siglo XXI Inversiones S.A. and Santander Chile Holding S.A., which are controlled subsidiaries. Santander Spain has control over 67.18% of our shares.
| Shareholder | Number of Shares | Percentage | |||||||||||||||
| Santander Chile Holding S.A. | 66,822,519,695 | 35.46 | % | ||||||||||||||
| Teatinos Siglo XXI Inversiones S.A. | 59,770,481,573 | 31.72 | % | ||||||||||||||
Santander Spain is in a position to elect of a majority of the members of Santander-Chile’s Board of Directors, to determine its dividend and other policies and to determine substantially all matters to be decided by a vote of shareholders. Santander Spain holds ordinary shares to which no special voting rights are attached. Each share represents one vote and there are no shareholders with different voting rights.
The number of outstanding shares of Santander-Chile (of which there is only one class, being ordinary shares) at December 31, 2025, was 188,446,126,794 shares, without par value. Santander-Chile’s shares are listed for trading on the Chilean Stock Exchange and on the NYSE in connection with the registration of ADRs. The market capitalization of Santander-Chile as of December 31, 2025 on the Chilean Stock Exchange was Ch$13,398,520 million and U.S.$14,656 million on the NYSE. As of December 31, 2025, Santander-Chile had 10,861 holders of its ordinary shares registered in Chile, including The Bank of New York Mellon as Depositary (the “Depositary”) of Santander-Chile’s ADS Program.
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Other than the information disclosed in this section, there are no arrangements to the knowledge of Santander-Chile that can result in a change of control of Santander-Chile. As of December 31, 2025, there were a total of 23 ADR holders on record. Since some of these ADRs are held by nominees, the number of record holders may not be representative of the number of beneficial holders.
B.Related Party Transactions
The Chilean Companies Law requires that our transactions with related parties be on a market basis, that is, on similar terms to those customarily prevailing in the market. We are required to compare the terms of any such transaction to those prevailing in the market at the date the transaction is to be entered into. Directors of companies that violate this provision are liable for losses resulting from such violations.
In addition, under the Chilean Companies Law, a company may not enter into a transaction with related parties unless (i) such transaction has received the prior approval of the company’s Board of Directors and (ii) the terms of such transaction are consistent with the terms of transactions of a similar type prevailing in the market. If it is not possible to make this decision, the board may appoint two independent evaluators. The evaluators’ final conclusions must be made available to shareholders and directors for a period of 20 business days, during which shareholders representing 5% or more of the issued voting shares may request the board to call a shareholders’ meeting to resolve the matter, with the agreement of two thirds of the issued voting shares required for approval. For purposes of this regulation, the law considers the amount of a proposed transaction to be material if (1) it exceeds 1% of the company’s net worth (provided that it also exceeds UF2,000) or (2) it exceeds UF20,000.
All resolutions approving such transactions must be reported to the company’s shareholders at the annual shareholders’ meeting. Violations of this provision may result in administrative or civil liability to the corporation, the shareholders and/or third parties who suffer losses as a result of such violation.
Loans granted to related parties
In addition to subsidiaries and associated entities, the Bank’s “related parties” include the “key personnel” of the Bank’s executive staff (members of the Bank’s Board of Directors and the Senior Managers of Santander-Chile and its subsidiaries, together with their close relatives), as well as the entities over which the key personnel could exert 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., Santander Spain. The table below shows loans and accounts receivable and contingent loans with related parties. For more information, see “Note 34—Transactions with Related Parties” in our Audited Consolidated Financial Statements appearing elsewhere in this Annual Report.
| As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Group entities | Associates entities | Key personnel | Other | Group entities | Associates entities | Key personnel | Other | Group entities | Assoc-iates entities | Key personnel | Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions of Ch$) | (in millions of Ch$) | (in millions of Ch$) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and accounts receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | 954,031 | 7 | 2,360 | 752,827 | 922,232 | 23,570 | 2,557 | 875 | 750,419 | 49,284 | 3,272 | 978 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage loans | — | — | 31,860 | — | — | — | 33,179 | — | — | — | 29,809 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer loans | — | — | 3,471 | — | — | — | 3,729 | — | — | — | 6,388 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and accounts receivable | 954,031 | 7 | 37,691 | 752,827 | 922,232 | 23,570 | 39,465 | 875 | 750,419 | 49,284 | 39,469 | 978 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for loan losses | (917) | — | (361) | (1,539) | (809) | (28) | (498) | — | (1,037) | (50) | (361) | (19) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loans | 953,114 | 7 | 37,330 | 751,288 | 921,423 | 23,542 | 38,967 | 875 | 749,382 | 49,234 | 39,108 | 959 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Guarantees | — | — | — | — | 1,031 | — | 31,489 | 110 | 1,032 | — | 31,489 | 115 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contingent loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Personal guarantees | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Letters of credit | — | — | — | — | 9,787 | — | — | — | 1,960 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Guarantees | 30,295 | — | — | 973 | 20,313 | — | — | 394 | 438 | — | — | 343 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contingent loans | 30,295 | — | — | 973 | 30,100 | — | — | 394 | 2,398 | — | — | 343 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for contingent loans | (25) | — | — | (25) | (21) | — | — | (8) | (4) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net contingent loans | 30,270 | — | — | 948 | 30,079 | — | — | 386 | 2,394 | — | — | 343 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Loans (a) were made in the ordinary course of business, (b) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons, and (c) did not involve more than the normal collection risk.
Under the Chilean General Banking Law, Chilean banks are subject to certain lending limits, including the following:
•a bank may not extend to any person or legal entity (or group of related entities), directly or indirectly, unsecured loans in an amount that exceeds 5.0% of the bank’s regulatory capital, or secured loans in an amount that exceeds 25.0% of its regulatory capital. In the case of foreign export trade finance, this 5.0% ceiling is raised to: 10.0% for unsecured financing, 30.0% for secured financing. This ceiling is raised to 15.0% for loans granted to finance public works under the concessions system contemplated in the Decree with Force of Law 164 of 1991, of the Ministry of Public Works, provided that either the loan is secured on the concession, or the loan is granted as part of a loan syndication;
•a bank may not grant loans bearing more favorable terms than those generally offered by banks in the same community to any entity (or group of related entities) that is directly or indirectly related to its owners or management;
•a bank may not extend loans to another bank in an aggregate amount exceeding 30.0% of its regulatory capital;
•a bank may not directly or indirectly grant a loan, the purpose of which is to allow the borrower to acquire shares in the lending bank;
•a bank may not lend, directly or indirectly, to a Director or any other person who has the power to act on behalf of the bank, or to certain related parties; and
•a bank may not grant loans to individuals or legal entities involved in the ownership or management of the bank, whether directly or indirectly (including holders of 1.0% or more of its shares), on more favorable terms than those generally offered to non-related parties. Loans may not be extended to senior executives and to companies in which such individuals have a participation of 5.0% or more of the equity or net earnings in such companies. The aggregate amount of loans to related parties may not exceed a bank’s regulatory capital.
We are not aware of any loans to any related parties exceeding the above lending limits.
The table below shows all other assets and liabilities with related parties:
| As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Companies of the Group | Associated companies | Key personnel | Other | Companies of the Group | Associated companies | Key personnel | Other | Companies of the Group | Associated companies | Key personnel | Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and deposits in banks | 92,598 | — | — | — | 162,452 | — | — | — | 666,062 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial assets at FVTPL | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial derivative contracts | 960,521 | 20,155 | — | — | 1,120,543 | 11,134 | — | — | 967,020 | 267,679 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other assets | 664,461 | 812,210 | — | — | 885,307 | 686,884 | — | — | 686,950 | 550,400 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial liabilities at FVTPL | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial derivative contracts | 1,282,113 | 16,830 | — | 15,043 | 1,757,184 | 13,143 | — | — | 1,255,740 | 370,314 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial liabilities at amortized cost | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deposits and other demand liabilities | 28,885 | 1,403 | 5,215 | 67,338 | 28,446 | 1,007 | 3,260 | 407 | 54,033 | 1,272 | 3,833 | 502 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Time deposits and other time liabilities | 200,929 | — | 5,139 | 12,760 | 140,475 | — | 4,996 | 69 | 145,649 | — | 9,894 | 1,589 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Obligations under repurchase agreements | 187,074 | — | 196,411 | — | 265,474 | — | — | — | 129,321 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interbank borrowing | 119,089 | — | — | — | 85,325 | — | — | — | 33,693 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issued debt instruments | 876,075 | — | — | — | 941,320 | — | — | — | 1,081,123 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other financial liabilities | 108,084 | 684,448 | — | — | 236,998 | 664,461 | — | — | 257,915 | 435,093 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other transactions with related parties
During the years ended December 31, 2025, 2024 and 2023, the Bank had the following significant income (expenses) from services provided to (by) related parties:
| As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Companies of the Group | Associated companies | Key personnel | Other | Companies of the Group | Associated companies | Key personnel | Other | Companies of the Group | Associated companies | Key personnel | Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income and inflation-indexation adjustments | (21,891) | 119 | 1,854 | 507 | (9,081) | 2,581 | 2,133 | 71 | (45,542) | 1,471 | 1,717 | (41) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fee and commission income and expenses | 208,204 | (40,746) | 181 | 8,623 | 170,996 | (63,150) | 208 | 21 | 176,603 | 87,987 | 250 | 24 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (expense) from financial operations and net foreign exchange gain (loss)(1) | (253,437) | (23,732) | — | — | 329,701 | 134,224 | — | — | 233,651 | (162,980) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other operating income and expenses | 21,210 | (383) | — | — | 3,755 | (588) | — | — | 964 | (734) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Key personnel compensation and expenses | — | — | (47,241) | — | — | — | (41,598) | — | — | — | (43,941) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Administrative and other expenses | (109,924) | (4,837) | — | — | (123,221) | (4,677) | — | — | (95,561) | (1,120) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | (155,838) | (69,579) | (45,206) | 9,130 | 372,150 | 68,390 | (39,257) | 92 | 270,115 | (75,376) | (41,974) | (17) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Primarily relates to derivative contracts used to financially cover exchange risk of assets and liabilities that cover positions of the Bank and its subsidiaries.
Only transactions with related parties equal to or greater than UF5,000 (U.S.$220,542) are included individually in the table above. Transactions with related parties between UF1,000 (U.S.$44,108) and up to UF5,000 are included in other transactions with related parties. All transactions were conducted at arm’s length.
C.Interests of Experts and Counsel
Not applicable.
ITEM 8. FINANCIAL INFORMATION
A.Consolidated Statements and Other Financial Information
Financial Information
See “Item 18. Financial Statements.”
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Legal Proceedings
We are subject to certain claims and are party to certain legal and arbitration proceedings in the normal course of our business, including claims for alleged operational errors. We do not believe that the liabilities related to such claims and proceedings are likely to have, in the aggregate, a material adverse effect on our consolidated financial condition or results of operations. There are no material proceedings in which any of our directors, any members of our senior management, or any of our affiliates is either a party adverse to us or our subsidiaries or has a material interest adverse to us or our subsidiaries.
Upon the recommendation of our legal advisors, we estimate that our aggregate liability if all legal proceedings were determined adversely to us could result in significant losses not estimated by us. As of the date of the Audited Consolidated Financial Statements, the Bank and its affiliates were subject to certain legal actions in the normal course of their business. As of December 31, 2025, the Bank has provisions for these legal actions of Ch$3,933 million (Ch$3,928 million as of December 31, 2024), which are included in “Provisions” in the Audited Consolidated Statements of Financial Position as provisions for contingencies.
Dividends and dividend policy
Dividends
Under the current General Banking Law, a Chilean bank may not distribute provisional dividends. Santander-Chile’s annual dividend is proposed by its Board of Directors and is approved by the shareholders at the annual ordinary shareholders’ meeting held the year following that in which the dividend is generated. For example, the 2023 dividend must be proposed and approved during the first four months of 2024. Following shareholder approval, the proposed dividend is declared and paid. Historically, the dividend for a particular year has been declared and paid no later than one month following the shareholders’ meeting. Dividends are paid to shareholders of record on the fifth day preceding the date set for payment of the dividend. The applicable record dates for the payment of dividends to holders of ADSs will, to the extent practicable, be the same.
Under the General Banking Law, a bank must distribute cash dividends in respect of any fiscal year in an amount equal to at least 30% of its net income for that year, if the dividend does not result in the infringement of minimum capital requirements. The balances of our distributable net income are generally retained for use in our business (including for the maintenance of any required legal reserves). Although our Board of Directors currently intends to pay regular annual dividends, the amount of dividend payments will depend upon, among other factors, our current level of earnings, capital and legal reserve requirements, as well as market conditions, and there can be no assurance as to the amount or timing of future dividends.
Dividends payable to holders of ADSs are net of foreign currency conversion expenses of The Bank of New York Mellon, as depositary (the “Depositary”) and will be subject to the Chilean withholding tax currently at the rate of 35% (subject to credits in certain cases as described in “Item 10. Additional Information—E. Taxation—Material Tax Consequences of Owning Shares of Our Common Stock or ADSs”).
The Depositary, on behalf of ADS holders, may access to the Formal Exchange Market to convert cash dividends from Chilean pesos to U.S. dollars and to pay such U.S. dollars to ADS holders outside Chile, net of taxes, and no separate registration by ADS holders is required. In the past, Chilean law required that holders of shares of Chilean companies who were not residents of Chile to register as foreign investors under one of the foreign investment regimes contemplated by Chilean law in order to have dividends, sale proceeds or other amounts with respect to their shares remitted outside Chile through the Formal Exchange Market. On April 19, 2001, the Central Bank deregulated the Exchange Market and eliminated the need to obtain approval from the Central Bank in order to remit dividends, but at the same time this eliminated the possibility of accessing the Formal Exchange Market.
The following table presents dividends declared and paid by us in nominal terms in the past four years:
| Year | Dividend (Ch$ millions)(1) | Dividend (U.S.$ millions)(2) | Per share (Ch$/share)(3) | Per ADS (U.S.$/ADS)(4) | over earnings(5)% | over earnings(6) | |||||||||||||||||||||||||||||||||||
| 2022 | $ | 464,977 | $ | 548.60 | $2.47 | $1.16 | 60 | 55 | |||||||||||||||||||||||||||||||||
| 2023 | $ | 485,191 | $ | 610.10 | $2.57 | $1.30 | 60 | 61 | |||||||||||||||||||||||||||||||||
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| 2024 | $ | 347,483 | $ | 352.80 | $1.84 | $0.75 | 70 | 60 | |||||||||||||||||||||||||||||||||
| 2025 | $ | 600,336 | $ | 609.45 | $3.19 | $1.29 | 70 | 70 | |||||||||||||||||||||||||||||||||
(1)Millions of nominal pesos.
(2)Millions of U.S.$ using the observed exchange rate of the day the dividend was approved at the annual shareholders’ meeting.
(3)Calculated on the basis of 188,446 million shares.
(4)Dividend in U.S.$ million divided by the number of ADS, which was calculated on the basis of 400 shares per ADS.
(5)Calculated by dividing dividend paid in the year by net income attributable to the equity holders of the Bank for the previous year under Chilean Bank GAAP. This is the payment ratio determined by shareholders.
(6)Calculated by dividing dividend paid in the year by net income attributable to the equity holders of the Bank for the previous year under IFRS.
B.Significant Changes
None.
ITEM 9. THE OFFER AND LISTING
A.Offer and Listing Details
Our common stock is listed and traded on the Santiago Stock Exchange (under the ticker “BSANTANDER”). Our ADSs are listed and traded on the NYSE (under the ticker “BSAC”).
B.Plan of Distribution
Not applicable
C.Markets
Shares of our common stock are traded on the Chilean Stock Exchange. Each ADS represents 400 shares of common stock. ADRs have been issued pursuant to the amended and restated deposit agreement dated as of August 4, 2015. As of December 31, 2025, 24,950,555 ADSs were outstanding equivalent to 9,980,222,071 shares of common stock or 5.30% of the total number of issued shares of common stock.
D.Selling Shareholders
Not applicable.
E.Dilution
Not applicable.
F.Expenses of the Issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
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A.Share Capital
Not applicable.
B.Memorandum and Articles of Association
The legal predecessor of Santander-Chile was Banco Santiago (“Santiago”). Santiago was incorporated by public deed dated September 7, 1977 granted at the Notary Office of Alfredo Astaburuaga Gálvez. Santiago received its permission to incorporate and function as a bank by Resolution No. 118 of the FMC on October 27, 1977. The Bank’s by-laws were approved by Resolution No. 103 of the FMC on September 22, 1977. In January 1997, Santiago merged with Banco O’Higgins, with Santiago as the surviving entity. In 1999, Santiago became a controlled subsidiary of Santander Spain. On January 9, 2017 in an Extraordinary Shareholder Meeting, the shareholders’ approved an amendment of the Bank’s Articles of Incorporation.
Our official name is Banco Santander-Chile and Banco Santander and Santander can also be used (formerly Banco Santander Santiago and Santander Santiago could also be used, but these names were eliminated in the new Articles of Incorporation).
The Bank has a single series of capital stock, which amounts to Ch$891,302,881,691, divided into 188,446,126,794 registered shares with no par value. The capital stock is fully subscribed for, deposited, and paid up. Each share represents one vote and there are no special classes of shares with different rights. Our by-laws do not include any condition that is more significant than required by law to change the right of shareholders.
Shareholder rights in a Chilean bank that is also an open stock (public) corporation are governed by (1) the corporation’s estatutos, which effectively serve the purpose of both the articles or certificate of incorporation and the by-laws of a company incorporated in the United States, (2) the General Banking Law and (3) to the extent not inconsistent with the General Banking Law, by the provisions of Chilean Companies Law applicable to open stock corporations, except for certain provisions that are expressly excluded. Article 137 of the Chilean Companies Law provides that all provisions of the Chilean Companies Law take precedence over any contrary provision in a corporation’s estatutos. Both the Chilean Companies Law and our estatutos provide that legal actions by shareholders against us (or our officers or directors) to enforce their rights as shareholders or by one shareholder against another in their capacity as such are to be brought in Chile in arbitration proceedings.
The Chilean securities markets are principally regulated by the FMC under the Chilean Securities Market Law and the Chilean Companies Law. In the case of banks, compliance with these laws is supervised by the FMC. These two laws provide for disclosure requirements, restrictions on insider trading and price manipulation and protection of non-controlling investors. The Chilean Securities Market Law sets forth requirements relating to public offerings, stock exchanges and brokers, and outlines disclosure requirements for companies that issue publicly offered securities. The Chilean Companies Law sets forth the rules and requirements for establishing open stock corporations while eliminating government supervision of closed (closely-held) corporations. Open stock (public) corporations are those with 500 or more shareholders, or companies in which 100 or more shareholders own at least 10.0% of the subscribed capital (excluding those whose individual holdings exceed 10.0%), and all other companies that are registered in the Securities Registry of the FMC.
Santander-Chile is a bank providing a broad range of commercial and retail banking services, as well as a variety of financial services. Our objects and purposes can be found in Article 4 of our by-laws.
Board of Directors and Managers
Currently, the Board of Directors consists of nine directors and two alternates, elected by shareholder vote at Ordinary Shareholders’ Meetings. The directors may be either shareholders or non-shareholders of the Company. There is no age limit for directors. The directors may be shareholders or persons who are not members of the company.
The directors shall hold office for three years and may be indefinitely re-elected, and their terms of office shall be renewed in their entirety at the conclusion of each term of office. If the Ordinary Shareholders’ Meeting at which periodic elections of directors occur is not held at the stipulated time for any reason, the incumbency of those who have completed their terms shall be understood to be extended until their replacements are appointed, and the Board shall be obligated to summon a Shareholders’ Meeting to make said appointments within thirty days.
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The directors shall be compensated for their service. The amount of their compensation shall be fixed annually at the Ordinary Shareholders’ Meeting. Such compensation shall be in addition to any salaries, fees, travel expenses, representation expenses, payments due as delegates of the Board, or other stipends in money, kind, or royalties of any class, whether assigned to particular directors at the Ordinary Shareholders’ Meeting or by Board approval, for specific functions or work above and beyond their obligations as directors which have been entrusted to them precisely at the Ordinary Shareholders’ Meeting or by the Board. A detailed and separate record of these special compensations must be made in the Annual Report, indicating the full name of each director who has received them.
Without prejudice to other legal disqualifications or conflicts of interest, the following persons cannot serve as directors: (a) a person who has been convicted or is on trial for crimes penalized with a principal or accessory penalty of temporary suspension or permanent disqualification to hold public positions or offices; (b) a debtor subject to a pending insolvency procedure for liquidation, (c) legislators; (d) directors or employees of any other financial institution; (e) employees of the Office of the President of Chile or employees or officials of the Treasury or of the Services, Fiscal or Semi-Fiscal Institutions, Autonomous Agencies, State-Owned Enterprises, and generally all the Public Services created by law, as well as those of companies, partnerships, or public or private entities to which the State or its companies, partnerships, or centralized or decentralized institutions have contributed the majority capital or a proportion equal thereto, or have a similar representation or participation, provided that the limitation prescribed in this letter (e) shall not apply to persons who hold teaching positions; and (f) Bank employees.
In the elections of directors, each shareholder shall have one vote per share held or represented, and may cast all such votes in favor a single candidate or distribute them as deemed convenient; those who receive the largest number of votes in an election shall be proclaimed as elected, until the number of persons to be elected is reached. Elections of principal and alternate directors must be held separately. To proceed to a vote, the Chairman and the Secretary, jointly with the persons who have previously been designated at the Ordinary Shareholders’ Meeting to sign the minutes thereof, must make a documentary record of the votes which are cast through voice vote by the shareholders present, according to the list of attendance. However, any shareholder shall be entitled to vote on a ballot signed by him, stating whether he signs on his own behalf or as a proxy. In any event, to facilitate the casting or speed of a vote, the Chairman of the Bank or the FMC, if applicable, may order an alternative procedure or permit either a voice vote or a ballot vote, or any other procedure stipulated as adequate for the purpose. In counting the results, the Chairman shall read out the votes cast aloud so that all the persons present can count the votes themselves and the truthfulness of the result can be verified. The Secretary shall add up the votes and the Chairman shall announce the candidates that receive the largest majorities and proclaim them thereby elected, until the number of persons to be elected is reached. The Secretary shall place the document reflecting the vote count, signed by the persons responsible for taking note of the votes cast, as well as the ballots delivered by the shareholders who did not vote by voice, in an envelope which shall be closed and sealed with the corporate seal, and shall be kept on file at the Bank for at least two years.
Every election to the Board, or every change to the composition of the Board, must be recorded in a public deed executed before a Notary, published in a Santiago newspaper, and reported to the FMC by sending an authorized copy of the respective public deed. The appointments of the General Manager and Assistant Deputy Manager must likewise be reported and converted into a public deed.
Vacancies that arise when a director ceases to be able to perform his or her duties, either because he becomes subject to any conflict of interest, limitation, or legal disqualification or because he is subject to a pending insolvency procedure for liquidation, or due to impossibility of serving, unjustified absence, death, resignation, or for another legal cause, shall be filled in the following manner: (a) vacancies of principal directors by alternate directors; and (b) in case of vacancies of alternate directors because of the application or circumstances not provided for in letter (a) above, or vacancies of principal directors which could not be filled as provided for in this letter because the alternate directors have become principal directors, the appropriate replacements shall be appointed at the first board of directors meeting to be held. The directors so designated shall remain in office until the next Ordinary Shareholders’ Meeting, at which the definitive appointments shall be made for the time remaining to complete the replaced directors’ terms.
The alternate directors may always take part in a Board meeting and have the right to speak at any such meeting. However, they shall have the right to vote only when they replace a principal director.
The Board shall separately elect a Chairman, a First Vice Chairman, and a Second Vice Chairman from among its members at the first meeting held after the Shareholders’ Meeting has appointed it or at its first meeting held after the persons in question have ceased to hold the position for any reason. In case of a tie vote, the person who chairs the meeting shall have the tie-breaking vote.
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The Board shall appoint a General Manager who is responsible for the management of the Bank’s business and represents the Bank in all its offices. The General Manager has the right to participate in discussions at Board meetings but may not vote at such meetings. The Board shall also appoint one or more Managers who are responsible for the transactions and business of the Bank at the offices, branch offices, divisions and services placed under their management. The Directors, Managers and other employees of the Bank shall be personally responsible for non-compliance with the Bank’s by-laws and other legal or regulatory provisions arising from the performance of their duties, and liable for such infringements which are affected with their knowledge.
The Board meetings shall be held at the company’s domicile unless the directors unanimously resolve to hold a particular session at a different location, or all the directors participate in any such meeting held at a different location. The Board shall meet in ordinary session at least once a month, on the days and at the times the Board designates, and additionally, in extraordinary sessions from time to time when summoned by the Chairman at his or her own initiative or at the request of three or more directors, following the Chairman’s determination of the need for a meeting, unless it is requested by an absolute majority of the incumbent directors, in which case the meeting must necessarily be held without the need for a prior determination. Only the topics specifically stated in the notice of meeting may be addressed at extraordinary meetings, unless all the incumbent directors are present, and they unanimously agree otherwise. Summons to extraordinary meetings shall be made in accordance with and in the form prescribed by law.
The quorum for Board meetings shall be the absolute majority of the number of directors entitled to vote as prescribed in our by-laws. Resolutions shall be adopted by the absolute majority of the directors present who are entitled to vote. In case of a tie vote, the person who chairs the meeting shall have the tie-breaking vote. Directors who, though not present, are in simultaneous and permanent communication through technological means which have been authorized by the FMC shall be understood to participate in the meetings.
Directors who have an interest in a business dealing, legal act, contract, or operation or transaction not specifically of a banking nature, or as representatives of another person, must inform the other directors thereof. The respective resolutions shall be approved by the Board and must be in accordance with conditions of equity similar to those customarily prevailing in the market and they shall be disclosed at the next Ordinary Shareholders’ Meeting by the person who chairs such meeting.
A record of the Board’s deliberations and resolutions shall be made in a special minute book to be kept by the Secretary. The minutes must be consecutively numbered, with one numbering sequence assigned to ordinary meetings and another to extraordinary meetings, and they must be signed by the directors who took part in the meeting and the Secretary or the person who performs his or her functions. A director who believes certain minutes contain inaccuracies or omissions is entitled to record his or her reservations prior to signing them. Resolutions may be carried out without the need to approve the minutes at a subsequent meeting. If any of the persons present dies, refuses to sign the minutes, or is prevented from doing so for any reason, a record of said impediment shall be made at the foot thereof.
The directors shall be personally responsible or liable for all the legal acts they execute in the performance of their functions. A director who wishes to avoid responsibility or liability for any legal act or resolution of the Board must make a record of his or her opposition in the minutes and the Chairman shall be informed thereof at the next Ordinary Shareholders’ Meeting.
The Board shall represent the Bank judicially and extra-judicially and for the pursuit of its corporate purpose, which need not be demonstrated to third parties in any manner; it shall be vested with all the authorities and powers of administration that the law or the by-laws do not define as pertaining exclusively to Shareholders’ Meetings, without the need to confer any special power of attorney whatsoever, even for legal acts or contracts for which the laws so require. The foregoing does not impair the Bank’s judicial representation by the General Manager. The Board may delegate part of its powers to the General Manager, to one or more managers, assistant managers, or attorneys of the Bank, to a director, or to a committee of Directors, as well as to other persons for specific purposes.
The Board shall designate three Directors from among its members to serve on a Comité de Directores (Audit Committee) which shall be governed by the provisions of Article 50bis of the Chilean Companies Law.
The Chairman/President
The Chairman of the Board shall likewise be the president of the company and the chairman of the Shareholders’ Meetings. He shall have the following obligations and authorities, in addition to those prescribed in the pertinent legal and regulatory provisions, in our by-laws, or by the Board: (a) chair the Board and Shareholders’ Meetings; (b) enforce strict
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compliance with the by-laws, the Board’s resolutions, and the resolutions of the Shareholders’ Meetings; (c) summon the Board meetings; and (d) sign the annual reports and the resolutions and communications of the Board and the Shareholders’ Meetings. In the absence or temporary impediment of the Chairman/President, the First Vice Chairman/First Vice President shall act in his or her stead, and in the latter’s absence, the Second Vice Chairman/Second Vice President shall act, or finally, the person designated by the Board from among its members or the shareholder designated at the Shareholders’ Meeting, as the case may be. Replacement is an internal company procedure that shall not require any formality, and it shall not be necessary to demonstrate its validity to third parties in order to assure the validity of the replacement’s actions; the sole fact of its occurrence suffices to make said actions effective.
Meetings and Voting Rights
The shareholders shall meet in Ordinary or Extraordinary Shareholders’ Meetings held in Santiago. The resolutions adopted at a validly summoned and convened Shareholders’ Meeting, in conformity with the by-laws, shall be binding on all of the shareholders.
The Ordinary Shareholders’ Meetings shall be held annually on the dates determined by the Board within the first four months following the date of the annual balance sheet. There shall be an Extraordinary Shareholders’ Meeting whenever the company’s needs so require. The meetings shall be summoned by the Board at its own initiative or at the request of shareholders representing at least 10% of the issued shares having a legal right to vote. If in this circumstance, the Board, and through it the Chairman, refuses to issue a summons, the FMC may be requested to do so.
The summons to a Shareholders’ Meeting shall be given through a prominent notice to be published three times on different days in the Santiago newspaper which has been chosen at the Ordinary Shareholders’ Meeting, and in the absence of agreement or in the event of a suspension or disappearance of the designated newspaper’s circulation, in the Official Journal, at the time, in the form, and under the conditions stipulated by the Regulations of the Chilean Companies Law. Summonses to Extraordinary Shareholders’ Meetings shall state the topics which will be submitted to them. The summons to a meeting shall likewise be announced through a letter sent to the shareholders a minimum of fifteen days in advance of the date set for the meeting, which must contain a reference to the topics to be addressed at it. Failure to send said letter shall not invalidate the summons, without prejudice to legal liabilities. On a date no later than that of the first notice of a summons for an Ordinary Shareholders’ Meeting, each shareholder must be sent a copy of the Bank’s Annual Report and Balance Sheet, including the auditors’ opinion and its respective notes.
Quorum for Shareholders’ Meetings shall be established by the presence of as many shareholders as represent, directly or by proxy, at least an absolute majority of the issued voting shares. If said quorum is not satisfied, a new summons shall be given, for a meeting which must be scheduled to be held in the manner prescribed in Article 37 of our by-laws, indicating that it is a second summons and scheduling the new meeting to be held within the forty five days subsequent to the date scheduled for the meeting that was not held due to a lack of quorum. A meeting called by a second summons shall lawfully convene with the number of issued voting shares present or represented thereat.
In the absence of a special rule, a Shareholders’ Meeting resolution shall be adopted by an absolute majority of the voting shares present or represented.
The Ordinary Shareholders’ Meetings have the following responsibilities: (a) deliberate and resolve on the Annual Report and Balance Sheet which must be submitted by the Board; (b) annually designate an external auditing firm in conformity with the provisions of law to report on the balance sheet and comply with the legal requirements; (c) elect the members of the Board when appropriate pursuant to our by-laws; (d) resolve the distribution of the liquid profits or earnings for each fiscal year, and at the Board’s request, order the distribution of a dividend to the shareholders as of the end of each fiscal year, as prescribed in the by-laws; and (e) in general, deliberate and pass resolutions on any other topic of corporate interest which is not reserved to an Extraordinary Shareholders’ Meeting. The revocation of all the Board members elected by the shareholders and the designation of their replacements may be resolved at an Ordinary or Extraordinary Shareholders’ Meeting, but any individual or collective revocation of one or more Board members would accordingly be invalid.
The Extraordinary Shareholders’ Meetings are reserved for certain topics indicated by law or by our by-laws. Resolutions on the topics indicated in the notice of meeting may be adopted at Extraordinary Shareholders’ Meetings.
The shareholders may have themselves represented at Meetings by another person, whether a shareholder or not, as is stipulated in the Chilean Companies Law.
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A record of the deliberations and resolutions at any Shareholders’ Meeting shall be made in a special minute book to be kept by the Secretary, if any, or in his or her absence by the Bank’s General Manager. The minutes shall be signed by the Chairman or the person who performs his or her functions, by the Secretary and three shareholders elected by the Meeting, or by all the persons present if they number fewer than three. In the event of death, refusal, or impediment to signing the minutes on the part of any of the persons who must do so, a record of the impediment shall be made at the foot thereof. An extract of the minutes shall be made to record what happened at the meeting, and an official copy of the following data shall necessarily be made: the names of the shareholders present and the number of shares owned or represented by each of them (a brief summary of any objections may be omitted if it is attached to the same page or roll of attendance), a list of the proposals submitted for discussion and the results of the votes taken, and the list of the shareholders who voted for or against. Solely by the unanimous consent of the persons present may a record of any event occurring at the meeting that is related to the company’s interests be deleted from the minutes.
The persons present at any Shareholders’ Meetings shall sign a roll of attendance on which they shall indicate the number of shares the signatory holds, the number of shares he represents, and the name of the shareholder he represents.
In general, Chilean law does not require a Chilean open stock corporation to provide the level and type of information that U.S. securities laws require a reporting company to provide to its shareholders in connection with a solicitation of proxies. However, shareholders are entitled to examine the books of the bank within the 15-day period before the ordinary annual meeting. In addition to these requirements, we regularly provide, and management currently intends to continue to provide, together with the notice of shareholders’ meeting, a proposal for the final annual dividend.
Annual Report, Balance Sheet, and Distribution of Profits
A Balance Sheet shall be drawn up as of the thirty-first day of December of each year, to be submitted to the Ordinary Shareholders’ Meeting for its consideration, jointly with the Annual Report. The Balance Sheet and Statement of Income shall be published in conformity with the currently applicable legal and regulatory provisions. The approval or rejection of such financial statements is entirely within our shareholders’ discretion. If our shareholders reject our financial statements, our Board of Directors must submit new financial statements not later than 60 days from the date of such rejection. If our shareholders reject our new financial statements, our entire Board of Directors is deemed removed from office and a new Board of Directors is elected at the same meeting. Directors who individually approved such rejected financial statements are disqualified for re-election for the ensuing period.
The profits attributable to shareholders reflected in the Balance Sheet shall be applied preferentially to absorb prior-year losses. The balance which is earned shall be allocated as may be resolved by the Shareholders’ Meeting, at the Board’s recommendation, to: (a) an increase of the effective capital, the formation of a fund for future capitalizations or dividends, or other special reserve funds; these uses shall receive the amounts the Meeting deems convenient, in conformity with the limits and obligations prescribed by law; and (b) the distribution of dividends to the shareholders in proportion to their shareholdings.
Under the Chilean Corporations Law, Chilean companies are generally required to distribute at least 30.0% of their earnings as dividends. No dividends of a bank above the legal minimum can be distributed if doing so would result in the bank infringing its ratio of regulatory capital to risk-weighted assets and shareholders’ equity to total assets.
Dividends that are declared but not paid by the date set for payment at the time of declaration are adjusted from the date set for payment to the date such dividends are actually paid, and they accrue interest.
We may declare a dividend in cash or in shares. When a share dividend is declared above the legal minimum (which minimum must be paid in cash), our shareholders must be given the option to elect to receive cash. Our ADS holders may, in the absence of an effective registration statement under the Securities Act or an available exemption from the registration requirement thereunder, effectively be required to receive a dividend in cash. See “Item 10.B.—Memorandum and Articles of Association—Preemptive Rights and Increases of Share Capital.” A dividend entitlement lapses after 5 years and the funds go to the Chilean Treasury.
Liquidation and Appraisal Rights
The Bank may be dissolved and liquidated if it is so resolved at an Extraordinary Shareholders’ Meeting, with the favorable vote of at least two thirds of the issued voting shares, and approved by the Superintendent of Banks and Financial Institutions.
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Once the voluntary dissolution to which the preceding article refers has been resolved, the Shareholders’ Meeting at which it is resolved shall appoint a committee of three shareholders to proceed to the company’s liquidation. The liquidating committee so created shall act with the powers and obligations which the by-laws confer on the Board, and it shall keep the shareholders informed of the liquidation’s progress, shall summon Ordinary Shareholders’ Meetings on the dates scheduled for them, being authorized to likewise summon Extraordinary Shareholders’ Meetings. In all other respects the provisions of the Commercial Code, the applicable provisions of the Chilean Companies Law, and the corporate regulations which govern the company shall be followed. In accordance with the General Banking Law, our shareholders do not have appraisal rights.
Arbitration
Any difficulty which may arise between the Bank and any of the shareholders or directors, or between such persons, in connection with the application of the by-laws or the recognition of the existence, nonexistence, validity, nullity, construction, performance or breach, dissolution, liquidation, or any other cause shall be submitted to resolution by two arbitrators at law and in equity, who shall rule without subsequent appeal, one of whom shall be appointed by each party. If they cannot reach agreement, the parties shall appoint a third arbitrator to resolve the discord. If there is no agreement for the third arbitrator’s appointment, the two previously appointed arbitrators shall make the designation. If either party refuses to participate in the appointment of arbitrators or, after they have been appointed, there is no agreement on the ruling and neither the parties nor the arbitrators have designated the third arbitrator to resolve the discord, the designation of said arbitrator, if any, or of the third participant in discord, shall be made by the Ordinary Court of Justice, and the person so designated must necessarily be one who has held or currently holds the position of attorney and member of the Honorable Supreme Court.
Capitalization
Under Chilean law, the shareholders of a company, acting at an extraordinary shareholders’ meeting, have the power to authorize an increase in such company’s capital. When an investor subscribes for issued shares, the shares are registered in such investor’s name, even if not paid for, and the investor is treated as a shareholder for all purposes except with regard to receipt of dividends and the return of capital, provided that the shareholders may, by amending the by-laws, also grant the right to receive dividends or distributions of capital. The investor becomes eligible to receive dividends and returns of capital once it has paid for the shares (if it has paid for only a portion of such shares, it is entitled to reserve a corresponding pro-rata portion of the dividends declared and/or returns of capital with respect to such shares unless the company’s by-laws provide otherwise). If an investor does not pay for shares for which it has subscribed on or prior to the date agreed upon for payment, the company is entitled under Chilean law to auction the shares on the stock exchange and collect the difference, if any, between the subscription price and the auction proceeds. However, until such shares are sold at auction, the subscriber continues to exercise all the rights of a shareholder (except the right to receive dividends and return of capital).
Article 22 of the Chilean Corporations Law states that the purchaser of shares of a company implicitly accepts its by-laws and any agreements adopted at shareholders’ meetings.
Registrations and Transfers
We act as our own registrar and transfer agent, as is customary among Chilean companies. In the case of jointly owned shares, an attorney-in-fact must be appointed to represent the joint owners in dealings with us.
Ownership Restrictions
Under Article 12 of the Chilean Securities Market Law and the regulations of the FMC, shareholders of open stock corporations are required to report the following to the FMC and the Chilean stock exchanges:
•any direct or indirect acquisition or sale of shares that results in the holder’s acquiring or disposing, directly or indirectly, 10.0% or more of an open stock corporation’s share capital; and
•any direct or indirect acquisition or sale of shares or options to buy or sell shares, in any amount, if made by a holder of 10.0% or more of an open stock corporation’s capital or if made by a director, liquidator, main officer, general manager or manager of such corporation.
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In addition, majority shareholders must include in their report whether their purpose is to acquire control of the company or if they are making a financial investment. A beneficial owner of ADSs representing 10.0% or more of our share capital will be subject to these reporting requirements under Chilean law.
Under Article 54 of the Chilean Securities Market Law and the regulations of the FMC, persons or entities intending to acquire control, directly or indirectly, of an open stock corporation, regardless of the acquisition vehicle or procedure, and including acquisitions made through direct subscriptions or private transactions, are also required to inform the public of such acquisition at least 10 business days before the date on which the transaction is to be completed, but in any case, as soon as negotiations regarding the change of control begin (i.e., when information and documents concerning the target are delivered to the potential acquirer) through a filing with the FMC, the stock exchanges and the companies controlled by and that control the target and through a notice published in two Chilean newspapers, which notice must disclose, among other information, the person or entity purchasing or selling and the price and conditions of any negotiations.
Prior to such publication, a written communication to such effect must be sent to the target corporation, to the controlling corporation, to the corporations controlled by the target corporation, to the FMC, and to the Chilean stock exchanges on which the securities are listed.
In addition to the foregoing, Article 54A of the Chilean Securities Market Law requires that within two business days of the completion of the transactions pursuant to which a person has acquired control of a publicly traded company, a notice shall be published in the same newspapers in which the notice referred to above was published and notices shall be sent to the same persons mentioned in the preceding paragraphs.
The provisions of the aforementioned articles do not apply whenever the acquisition is being made through a tender or exchange offer.
Title XXV of the Chilean Securities Market Law on tender offers and the regulations of the FMC provide that the following transactions must be carried out through a tender offer:
•an offer which allows a person to take control of a publicly traded company, unless (i) the shares are being sold by a controlling shareholder of such company at a price in cash which is not substantially higher than the market price and the shares of such company are actively traded on a stock exchange and (ii) those shares are acquired (a) through a capital increase, (b) as a consequence of a merger, (c) by inheritance or (d) through a forced sale; and
•an offer for a controlling percentage of the shares of a listed company if such person intends to take control of the parent company (whether listed or not) of such listed company, to the extent that the listed company represents 75.0% or more of the consolidated net worth of the parent company.
In addition, Article 199 of the Chilean Securities Market Law requires that whenever a controlling shareholder acquires two thirds of the voting shares of a listed company, such controlling shareholder must offer to purchase the remaining shares from the non-controlling shareholders in a tender offer.
Article 200 of the Chilean Securities Market Law prohibits any shareholder that has taken control of a publicly traded company to acquire, for a period of 12 months from the date of the transaction in which it gained control of the publicly traded company, a number of shares equal to or greater than 3.0% of the outstanding issued shares of the target without making a tender offer at a price per share not lower than the price paid at the time of taking control. Should the acquisition from the other shareholders of the company be made on a stock exchange and on a pro rata basis, the controlling shareholder may purchase a higher percentage of shares, if so permitted by the regulations of the stock exchange.
Title XV of the Chilean Securities Market Law sets forth the basis to determine what constitutes a controlling power, a direct holding and a related party. The Chilean Securities Market Law defines control as the power of a person or group of persons acting (either directly or through other entities or persons) pursuant to a joint action agreement, to direct the majority of the votes at the shareholders’ meetings of the corporation, to elect the majority of members of its Board of Directors, or to influence the management of the corporation significantly. Significant influence is deemed to exist in respect of the person or group of persons with an agreement to act jointly that holds, directly or indirectly, at least 25.0% of the voting share capital, unless:
•another person or group of persons acting pursuant to joint action agreement, directly or indirectly, controls a stake equal to or greater than the percentage controlled by such person or group of persons;
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•the person or group does not control, directly or indirectly, more than 40.0% of the voting share capital and the percentage controlled is lower than the sum of the shares held by other shareholders holding more than 5.0% of the share capital (either directly or pursuant to a joint action agreement); or
•in cases where the Superintendency of Securities and Insurance (now the FMC) has ruled otherwise, based on the distribution or atomization of the overall shareholding.
According to the Chilean Securities Market Law, a joint action agreement is an agreement among two or more parties which, directly or indirectly, own shares in a corporation at the same time and whereby they agree to participate with the same interest in the management of the corporation or in taking control of the same. The law presumes that such an agreement exists between:
•a principal and its agents;
•spouses and relatives within certain degrees of kinship;
•entities within the same business group; and
•an entity and its controller or any of the members of the controller.
Likewise, the FMC may determine that a joint action agreement exists between two or more entities considering, among other things, the number of companies in which they participate and the frequency with which they vote identically in the election of directors, appointment of managers and other resolutions passed at extraordinary shareholders’ meetings.
According to Article 96 of the Chilean Securities Market Law, a business group is a group of entities with such ties in their ownership, management or credit liabilities that it may be assumed that the economic and financial action of such members is directed by, or subordinated to, the joint interests of the group, or that there are common credit risks in the credits granted to, or in the acquisition of securities issued by, them. According to the Chilean Securities Market Law, the following entities are part of the same business group:
•a company and its controller;
•all the companies with a common controller together with that controller;
•all the entities that the FMC declares to be part of the business group due to one or more of the following reasons:
•a substantial part of the assets of the company is involved in the business group, whether as investments in securities, equity rights, loans or guaranties;
•the company has a significant level of indebtedness and the business group has a material participation as a lender or guarantor;
•any member of a group of controlling entities of a company mentioned in the first two bullets above and there are grounds to include it in the business group; or
•the company is controlled by a member of a group of controlling entities and there are grounds to include it in the business group.
Article 36 of the General Banking Law states that as a matter of public policy, no person or company may acquire, directly or indirectly, more than 10.0% of the shares of a bank without the prior authorization of the FMC, which may not be unreasonably withheld. The prohibition would also apply to beneficial owners of ADSs. In the absence of such authorization, any person or group of persons acting in concert would not be permitted to exercise voting rights with respect to the shares of our common stock or ADSs acquired. In determining whether or not to issue such an authorization, the FMC considers a number of factors enumerated in Article 28 of the General Banking Law, including, among others (i) the financial stability of the purchasing party and (ii) the legitimacy of the purchasing party.
According to Article 35bis of the General Banking Law, the prior authorization of the FMC is required for:
•the merger of two or more banks;
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•the acquisition of all or a substantial portion of a banks’ assets and liabilities by another bank;
•the control by the same person, or controlling group, of two or more banks; or
•a substantial increase in the existing control of a bank by a controlling shareholder of that bank.
The FMC may deny its authorization with an accompanying resolution recording the specific reasons for denying the authorization and with the agreement of a majority of the Board of Directors of the Central Bank, provided there is notice of such agreement within 10 banking business days (which may be extended under Law 18,840).
According to the General Banking Law, a bank may not grant loans to related parties on terms more favorable than those generally offered to non-related parties. Article 84 No. 2 of the General Banking Law provides that the FMC will determine, by means of a general rule, who must be considered a related party of the bank. In addition, the FMC will establish rules to determine if certain persons constitute a group of related parties in one or more of the following circumstances: (i) business or administrative relationships that allow a person to exercise relevant and permanent influence over another’s decisions; (ii) an assumption will be made that the loans granted to one person will be used in benefit of the other; and (iii) an assumption will be made that diverse persons maintain relationships that create a unit of economic interests. Finally, according to the regulations of the FMC, Chilean banks that issue ADSs are required to inform the FMC if any person, directly or indirectly, acquires ADSs representing 5.0% or more of the total amount of shares of capital stock issued by such bank.
Article 16bis of the General Banking Law provides that the individuals or legal entities that, individually or with other people, directly control a bank and who individually own more than 10.0% of its shares must send to the FMC reliable information on their financial situation with the content and in the opportunity set forth in a general rule issued by the FMC, which will not exceed the information required for open-stock corporations (sociedad anónima abierta).
There are no limitations for non-resident or foreign shareholders to hold or exercise voting rights on the securities.
Preemptive Rights and Increases of Share Capital
The Chilean Corporations Law provides that whenever a Chilean company issues new shares for cash, it must offer its existing shareholders the right to purchase a number of shares sufficient to maintain their existing ownership percentages in the company. According to our by-laws, options for subscription of capital increases must be offered on a preemptive basis to the shareholders, in proportion to the number of shares each shareholder owns, and the released shares which are issued shall be distributed in the same proportion.
Pursuant to this requirement, preemptive rights in connection with any future issue of shares will be offered by us to the Depositary as the registered owner of the shares underlying the ADRs. However, the Depositary will not be able to make such preemptive rights available to holders of ADSs unless a registration statement under the Securities Act is effective with respect to the underlying shares or an exemption from the registration requirements thereunder is available.
We intend to evaluate, at the time of any preemptive rights offering, the practicality under Chilean law and Central Bank regulations in effect at the time of making such rights available to our ADS holders, as well as the costs and potential liabilities associated with registration of such rights and the related shares of common stock under the Securities Act, and the indirect benefits to us of thereby enabling the exercise by all or certain holders of ADSs of their preemptive rights and any other factors we consider appropriate at the time, and then to make a decision as to whether to file such registration statement. We cannot assure you that any registration statement would be filed. If we do not file a registration statement and no exemption from the registration requirements under the Securities Act is available, the Depositary will sell such holders’ preemptive rights and distribute the proceeds thereof if a premium can be recognized over the cost of such sale. In the event that the Depositary is not able, or determines that it is not feasible, to sell such rights at a premium over the cost of any such sale, all or certain holders of ADSs may receive no value for such rights. Non-U.S. holders of ADSs may be able to exercise their preemptive rights regardless of whether a registration statement is filed. The inability of all or certain holders of ADSs to exercise preemptive rights in respect of shares of common stock underlying such ADSs could result in such holders not maintaining their percentage ownership of the common stock following such preemptive rights offering unless such holder made additional market purchases of ADSs or shares of common stock.
Under Chilean law, preemptive rights are exercisable or freely transferable by shareholders during a period that cannot be less than 30 days following the grant of such rights. During such period, and for an additional 30-day period thereafter, a Chilean corporation is not permitted to offer any unsubscribed shares for sale to third parties on terms which are more
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favorable than those offered to its shareholders. At the end of such additional 30-day period, a Chilean open stock corporation is authorized to sell unsubscribed shares to third parties on any terms, provided they are sold on a Chilean stock exchange. Unsubscribed shares that are not sold on a Chilean stock exchange can be sold to third parties only on terms no more favorable for the purchaser than those offered to shareholders.
C.Material Contracts
During the past two years, we were not a party to any material contract outside the ordinary course of business.
D.Exchange Controls
The Central Bank is responsible for, among other things, monetary policies and exchange controls in Chile. Appropriate registration of a foreign investment in Chile grants the investor access to the Formal Exchange Market. Foreign investments can be registered with the Central Bank under the Central Bank Act. The Central Bank Act is an organic constitutional law requiring a “special majority” vote of the Chilean Congress to be amended. Since April 18, 2001, all exchange controls in Chile have been eliminated.
Law No. 20,848, which was enacted in June 2015 established a framework for foreign direct investment in Chile. Pursuant to this law, foreign investors shall have the right to access the Formal Exchange Market to settle the foreign currency constituting their investment. Similarly, foreign investors shall be allowed access to the Formal Exchange Market to acquire the foreign currency necessary to remit their invested capital or the profits from their investment, subject to prior payment of all their tax obligations in Chile. The exchange rate applicable for the settlement or acquisition of foreign currency in the Formal Exchange Market shall be freely agreed upon by the parties involved.
International exchange transactions arising from investments made in accordance with Law No. 20,848 shall be subject to the jurisdiction of the Central Bank of Chile, in accordance with the provisions of Central Bank Act and other special laws.
E.Taxation
The following discussion summarizes certain Chilean tax and United States federal income tax consequences to beneficial owners arising from the ownership and disposition of our common stock or ADSs. The summary does not purport to be a comprehensive description of all potential Chilean and United States federal income tax considerations that may be relevant to a decision to own or dispose of our common stock or ADSs and is not intended as tax advice to any particular investor. This summary does not describe any tax consequences arising under the laws of any state, locality or other taxing jurisdiction other than Chile and the United States.
Prior to December 19, 2023, there was no income tax treaty effective between the United States and Chile. However, the Convention between the Government of the United States of America and the Government of the Republic of Chile for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital was signed on February 4, 2010, and it, along with the related Protocol (together, the “U.S.-Chile Double Tax Treaty”), entered into force on December 19, 2023. With respect to taxes withheld at source, the U.S.-Chile Double Tax Treaty will have effect for amounts paid or credited on or after February 1, 2024. For all other taxes, the U.S.-Chile Double Tax Treaty will have effect for taxable periods beginning on or after January 1, 2024. U.S. investors should consult their tax advisers as to the applicability of the U.S.-Chile Double Tax Treaty in their particular circumstances.
Material Tax Consequences of Owning Shares of Our Common Stock or ADSs
Chilean Taxation
The following is a summary of certain Chilean tax consequences of the ownership and disposition of shares of our common stock or of ADSs evidenced by ADRs by Foreign Holders (as defined herein). The summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to own or dispose of shares of our common stock or ADSs and does not purport to address the tax consequences applicable to all categories of investors, some of whom may be subject to special rules. Holders of shares of our common stock or ADSs are advised to consult their tax advisers concerning the Chilean and other tax consequences of the ownership and disposition of shares of our common stock or of ADSs evidenced by ADRs.
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The description of Chilean tax laws set forth below is based on Chilean laws in force as of the date of this Annual Report and can be subject to any changes in such laws occurring after the date of this Annual Report. Although it is uncommon, legal changes can be made on a retroactive basis. However, changes in regulations or interpretations held by the Chilean tax authorities may not be used retroactively against taxpayers who acted in good faith relying on such modified regulations or interpretations.
For purposes of this summary, the term “Foreign Holder” means either (1) in the case of an individual, a person who is not resident or domiciled in Chile; or (2) in the case of a legal entity, a legal entity that is not organized under the laws of Chile, unless the shares of our common stock or ADSs are allocated to a branch or a permanent establishment of such entity in Chile. For Chilean tax purposes, (a) an individual holder is a resident in Chile if he or she is present in Chile for more than 183 days in any 12-month period, continuous or otherwise, and (b) an individual is a resident in Chile if he or she is present in Chile with the actual or constructive intent to be present in Chile (such intent to be evidenced primarily by circumstances of an economic nature, such as if Chile is the place where he or she develops the activity that generates most of his or her income, or if it is the country where most of his or her main business interests are located).
The Income Tax Law provides that a Foreign Holder is subject to income tax on its Chilean source income. For these purposes, Chilean-sourced income generally means income derived from activities carried out within the Chilean territory or from sales, dispositions, or other transactions involving assets or goods located in Chile. Indirect transfer rules may also attribute Chilean source income.
Taxation of Dividends
Cash dividends paid by us with respect to shares of our common stock held by a Foreign Holder, including shares represented by ADSs, will be subject to a 35% Chilean Withholding Tax (“WHT”), which is withheld, filed and paid over by us. If we have paid Corporate Income Tax (“CIT”) on the income from which the dividend is paid, a credit for the CIT (reduced, in certain circumstances by a related fiscal debit, as described below) effectively reduces the rate of WHT. When a credit is available, the WHT is computed by applying the 35% rate to the pre-tax amount needed to fund the dividend and then subtracting from the tentative WHT so determined the amount of CIT actually paid on the pre-tax income. For determining the pre-tax amount of the dividend, the CIT credit will depend on the amounts accumulated in the Accumulated Credit Balance (SAC), at the date of withdrawal or distribution. In general, 35% of the CIT paid on the income from which a dividend is paid gives rise to a fiscal debit owed to the Chilean Treasury at the time the dividend distribution is made to a Foreign Holder. Accordingly, a Foreign Holder generally may apply a net credit equal to only 65% of the CIT to reduce WHT.
However, if the Foreign Holder is a resident of a country with which Chile has a tax treaty for the avoidance of double taxation (a “Double Tax Treaty”) in force, the Foreign Holder may be entitled to apply the entire CIT against WHT otherwise due. Moreover, if the Foreign Holder is a resident of a country with a signed Double Tax Treaty that has not entered into force as of January 1, 2020, the Foreign Holder would also be entitled to a 100% CIT credit, without reduction by any related fiscal debit, until December 31, 2026. If by such date the treaty has not entered into force, the Foreign Holder will be subject to the general rules, and hence entitled only to a net credit of 65% of the CIT as described above.
In accordance with the above, upon the distribution of profits to Foreign Holders, a 35% WHT applies, and only 65% of the CIT is creditable against such WHT, with the remaining 35% being paid back to the Chilean Treasury; thus, the combined tax rate on profits earned in Chile amounts to 44.45%. However, if the Foreign Holder resides in a country with which Chile has a Double Tax Treaty in force, the full 27% CIT is creditable, resulting in combined tax rate of 35%.
It is worth mentioning that, on February 24, 2020, the “Modernization Tax Law” was enacted and published in the Chilean Official Gazette and sets forth a single partially integrated tax regime, applicable to companies whose annual sales exceed 75,000 UF (approximately USD 2.8 million). Under this single regime, the CIT remains at 27%, which is partially creditable against the final taxation of Foreign Holders, unless they reside in a country with a Double Tax Treaty, in which case the CIT is fully creditable, as explained above.
To prove residency in a country with which Chile has a Double Tax Treaty, whether signed or in force, a Foreign Holder must produce a government-issued tax residence certificate, recognizing the taxpayer as a tax resident of the corresponding country for the corresponding period. Foreign Holders are urged to consult with their tax advisers regarding all requirements to be entitled to the 100% CIT credit.
The WHT applicable to withdrawals, remittances or distributions abroad must be determined taking into account an interim CIT credit, based on the corporate tax rate in force in the year of the remittance or distribution. Therefore, taxation of the withdrawal, remittance or distribution shall occur at year-end. Any withholding tax difference determined at year-end must: a) be paid in the annual tax return to be declared by the Chilean company in April of the following year or b) be
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requested as a refund by the Foreign Holder through an administrative process or through the annual tax return to be filed in April of the year following the distribution of the dividend.
The example below illustrates the effective Chilean WHT burden on a cash dividend received by a Foreign Holder, assuming a WHT rate of 35.0%, a statutory CIT rate of 27.0% and a distribution of all of the net proceeds available after payment of the CIT.
| 100% Credit available Taxable income | U.S.$100 | ||||||||||
| CIT (27.0% of U.S.$100) | (27.0) | ||||||||||
| Net proceeds available | 73.0 | ||||||||||
| Dividend payment | 73.0 | ||||||||||
| Withholding Tax (35.0% of the sum of the dividend (U.S.$73.0) and the available CIT credit (U.S.$27.0)) | 35.0 | ||||||||||
| CIT credit | (27.0) | ||||||||||
| Payable WHT | 8.0 | ||||||||||
Net dividend received (73.0-8.0) | 65.0 | ||||||||||
Effective dividend withholding tax rate (8.0/73.0) | 11.0 | % | |||||||||
| 65% Credit available Taxable income | U.S.$100 | ||||||||||
| CIT (27.0% of U.S.$100) | (27.0) | ||||||||||
| Net proceeds available | 73.0 | ||||||||||
| Dividend payment | 73.0 | ||||||||||
| Withholding Tax (35.0% of the sum of the dividend (U.S.$73.0) and the available CIT credit (U.S.$27.5)) | 35.0 | ||||||||||
| CIT credit | (27.00) | ||||||||||
| CIT debt | 9.45 | ||||||||||
| Payable WHT | 17.45 | ||||||||||
Net dividend received (73.0-17.45) | 55.55 | ||||||||||
Effective dividend withholding tax rate (17.45/73.0) | 24 | % | |||||||||
Dividend distributions made in kind would be subject to the same Chilean tax rules as cash dividends. The U.S.-Chile Treaty came into force as of January 1, 2024, U.S., therefore we recommend investors should consult their tax advisers as to the applicability of the treaty for their own circumstances.
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Taxation of Capital Gains
Gain realized on the sale, exchange, or other disposition by a Foreign Holder of ADSs will not be subject to Chilean taxation, provided that such sale or disposition occurs outside Chile and the depositor is also a foreign party. The deposit and withdrawal of shares of common stock in exchange for ADSs will not be subject to any Chilean taxes.
Gain recognized on the sale or exchange of shares of common stock (as distinguished from the sale or exchange of ADSs representing such shares of common stock) by a Foreign Holder is subject to a 35% WHT (unless otherwise reduced or exempted by domestic law or an applicable Double Tax Treaty). For tax purposes, the capital gain is the difference between the sale price and the acquisition price of the shares of common stock. This tax must be withheld by the purchaser at an interim rate of 10.0% of the total price without any deduction, unless the taxable gain can be determined, in which case the withholding will be equal to 35.0% of the gain.
Notwithstanding the above, if the seller demonstrates in the form required by Chilean regulations that no capital gain has been realized, the WHT would not apply.
The tax basis of shares of common stock received in exchange for ADSs will be the acquisition value of such shares. The valuation procedure set forth in the deposit agreement states that the highest price at which shares of common stock were exchanged on the Santiago Stock Exchange on the date of the exchange generally will determine the acquisition value for this purpose. Consequently, the conversion of ADSs into shares of common stock and sale of such shares of common stock for the value established under the deposit agreement made on the date of the exchange will not generate a capital gain subject to taxation in Chile. In the case where ADSs were exchanged for shares and the subsequent sale of the shares is made at a valuation which is different from the one on which the exchange is recorded in the shareholders’ registry of the issuer, capital gains subject to taxation in Chile may be generated, depending on the difference between the acquisition value and the sale price.
On October 1, 1999, the Chilean Internal Revenue Service issued Ruling N°3,708 whereby it allowed Chilean issuers of ADSs to amend the Deposit Agreements to which they are parties in order to include a clause that states that, in the case that the exchanged shares are sold by the ADSs’ holder on a Chilean stock exchange, either on the same day on which the exchange is recorded in the shareholders’ registry of the issuer or within the two prior business days to such date, the acquisition price of such exchanged shares shall be the price registered in the invoice issued by the stock broker that participated in the sale transaction.
Consequently, as we have included this clause in the form of ADRs attached to the deposit agreement, the capital gain that might be generated if the shares received in exchange for ADSs were sold within two days prior to the date on which the exchange is recorded in the shareholders’ registry of the issuer, will not be subject to Chilean taxation. Distribution and exercise of preemptive rights relating to the shares of common stock will not be subject to Chilean taxation.
Cash amounts received in exchange for the shares or assignment of preemptive rights relating to the shares will be subject to both the CIT and the WHT (the former being creditable against the latter to the extent described above). In certain cases, and provided certain requirements are met, capital gains realized on the sale of actively traded stock of Chilean public companies may be exempt from Chilean income taxes.
Our stock is currently considered to be an actively traded stock in the Santiago Stock Exchange, and Foreign Holders of the stock who are institutional investors may qualify for an income tax exemption. Foreign Holders are urged to consult with their own tax advisers to determine whether an exemption applies to them.
U.S.-Chile Double Tax Treaty came into force as of January 1, 2024; hence we recommend investors should consult their tax advisers as to the applicability of the treaty in their circumstances.
Other Chilean Taxes
No Chilean inheritance, donation or succession taxes will apply to the transfer or disposition of the ADSs by a Foreign Holder (unless they were purchased or acquired with cash derived from Chilean sources), but such taxes will generally apply to the transfer of shares of our common stock by death or donation by a Foreign Holder. There are no Chilean stamp, issue, registration or similar taxes or duties applicable to Foreign Holders of shares of our common stock or ADSs.
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Withholding Tax Certificates
Upon request, we will provide to Foreign Holders appropriate documentation evidencing the payment of Withholding Taxes. For further information, the investor should contact: Cristian Vicuña, irelations@santander.cl. Dividends payable to holders of ADSs are net of foreign currency conversion expenses of the Depositary and will be subject to the Withholding Tax currently at the rate of 35% (subject to credits in certain cases as described above).
U.S. Federal Income Tax Considerations
The following is a discussion of material U.S. federal income tax consequences of owning and disposing of shares of our common stock or ADSs to U.S. holders described below, but it does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a particular person’s decision to hold such common stock or ADSs. The discussion applies only if you are a U.S. holder holding shares of our common stock or ADSs as capital assets for U.S. federal income tax purposes. It does not address all aspects of U.S. federal income taxation that may be relevant to you in light of your particular circumstances, including the alternative minimum tax and the Medicare contribution tax, nor does it describe all tax consequences that may be relevant to U.S. holders subject to special rules, such as:
•certain financial institutions;
•insurance companies;
•dealers and traders in securities who use a mark-to-market method of tax accounting;
•persons holding shares of our common stock or ADSs as part of a hedge, “straddle,” conversion transaction, integrated transaction or similar transaction;
•persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;
•partnerships or other entities classified as partnerships for U.S. federal income tax purposes;
•tax-exempt entities, including “individual retirement accounts” or “Roth IRAs”;
•persons holding shares of our common stock or ADSs that own or are deemed to own ten percent or more of the voting power or value of our stock;
•persons who acquired shares of our common stock or ADSs pursuant to the exercise of any employee stock option plan or otherwise as compensation; or
•persons whose shares of our common stock or ADSs are held in connection with a trade or business conducted outside the United States.
If an entity that is classified as a partnership for U.S. federal income tax purposes owns shares of our common stock or ADSs, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and upon the activities of the partnership. Partnerships owning shares of our common stock or ADSs and partners in such partnerships should consult their tax advisers as to the particular U.S. federal income tax consequences of owning and disposing of the shares of our common stock or ADSs.
This discussion is based on the Code, the U.S.-Chile Double Tax Treaty, administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations, all as of the date hereof. These laws are subject to change, possibly on a retroactive basis. It is also based in part on representations by the Depositary and assumes that each obligation under the deposit agreement and any related agreement will be performed in accordance with its terms. In addition, this discussion does not address U.S. state, local and non-U.S. tax consequences. Please consult your tax advisers concerning the U.S. federal, state, local and non-U.S. tax consequences of owning and disposing of shares of our common stock or ADSs in your particular circumstances.
As used herein, a “U.S. holder” is a person that for U.S. federal income tax purposes, is a beneficial owner of shares of our common stock or ADSs and is:
•a citizen or individual resident of the United States;
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•a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, a state thereof or the District of Columbia; or
•an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.
In general, if you own ADSs, you will be treated as the owner of the underlying shares of our common stock represented by those ADSs for purposes of the U.S.-Chile Double Tax Treaty and for U.S. federal income tax purposes. Accordingly, no gain or loss will be recognized if you exchange ADSs for the underlying shares of our common stock represented by those ADSs.
This discussion assumes that we are not, and will not become, a passive foreign investment company, as described below.
Taxation of Distributions
Distributions paid on shares of our common stock or ADSs, other than certain pro rata distributions of common shares or rights, will be treated as dividends to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Because we do not maintain calculations of our earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to U.S. holders as dividends. Subject to applicable limitations, certain dividends paid by “qualified foreign corporations” to certain non-corporate U.S. holders may be taxable at rates applicable to long-term capital gains. A foreign corporation is treated as a qualified foreign corporation with respect to dividends paid on stock that is readily tradable on a securities market in the United States, such as the NYSE where our ADSs are traded. A foreign corporation may also qualify as a qualified foreign corporation with respect to dividends if it is eligible for benefits of a comprehensive income tax treaty with the United States that has been determined by the U.S. Secretary of the Treasury to be satisfactory and that includes an exchange of information program. On December 28, 2023, the U.S. Internal Revenue Service (the “IRS”) released a notice adding the U.S.-Chile Double Tax Treaty to the list of current treaties between the U.S. and various countries that meet both of these requirements. You should consult your tax advisers to determine whether favorable rates may apply to dividends you receive and whether you are subject to any special rules that limit your ability to be taxed at such favorable rates. The amount of the dividend will include any amounts withheld by us or our paying agent in respect of Chilean taxes at the effective rate (after credit for CIT) as described above under “—Material Tax Consequences of Owning Shares of Our Common Stock or ADSs—Chilean Taxation— Taxation of Dividends.” The amount of the dividend will be treated as foreign-source dividend income to you and will not be eligible for the dividends-received deduction generally allowed to U.S. corporations under the Code.
Dividends will be included in your income on the date of your (or in the case of ADSs, the Depositary’s) receipt of the dividend. The amount of any dividend income paid in Chilean pesos will be the U.S. dollar amount calculated by reference to the exchange rate in effect on the date of receipt regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, you should not be required to recognize foreign currency gain or loss in respect of the dividend income. You may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt.
Subject to applicable limitations that may vary depending upon your circumstances, Chilean taxes withheld from cash dividends on shares of our common stock or ADSs, reduced by the credit for any CIT, as described above under “—Chilean Taxation—Taxation of Dividends,” might be creditable against your U.S. federal income tax liability. On December 28, 2021, new Treasury Regulations pertaining to foreign tax credits (the “Final Treasury Regulations”) were released that impose significant new limitations on the non-U.S. taxes (including withholding taxes) for which a foreign tax credit can be claimed. Corrections with respect to the Final Treasury Regulations were published on July 27, 2022, and the IRS has released a series of notices, most recently on December 11, 2023, which modify and, in some cases, indefinitely defer the application of certain aspects of the Final Treasury Regulations. We have not determined whether these limitations will prevent a U.S. holder from claiming a foreign tax credit with respect to any withholding tax imposed on dividends on ADSs or shares of our common stock. As discussed above, the U.S.-Chile Double Tax Treaty entered into force on December 19, 2023. During periods of its applicability, Chilean income taxes withheld from dividends on shares of our common stock or ADSs in excess of the rate provided in the U.S.-Chile Double Tax Treaty will not be creditable by a U.S. holder who is eligible for the benefits of the U.S.-Chile Double Tax Treaty. The rules governing foreign tax credits, including the Final Treasury Regulations, are complex and you should consult your tax advisers to determine whether they may limit your ability to make effective use of foreign tax credits. Instead of claiming a credit, you may, at your election, deduct such Chilean taxes in computing your taxable income, subject to generally applicable limitations under U.S. law.
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An election to deduct foreign taxes instead of claiming foreign tax credits must apply to all foreign taxes paid or accrued in the taxable year.
Sale or Other Disposition of Shares of Our Common Stock or ADSs
For U.S. federal income tax purposes, gain or loss you realize on the sale or other disposition of shares of our common stock or ADSs generally will be capital gain or loss, and will be long-term capital gain or loss if you held the shares of our common stock or ADSs for more than one year. The amount of your gain or loss will be equal to the difference between your tax basis in the shares of our common stock or ADSs disposed of and the amount realized on the disposition, in each case as determined in U.S. dollars.
As discussed above under “—Material Tax Consequences of Owning Shares of Our Common Stock or ADSs—Chilean Taxation— Taxation of Capital Gains”, gain realized by a U.S. holder on the sale or other disposition of our ADSs should be exempt from Chilean tax on capital gains provided that certain requirements are met. Similarly, gain realized by a U.S holder that qualifies for the benefits of the U.S.-Chile Double Tax Treaty on the sale or other disposition of our common stock may be exempt from Chilean tax on capital gains under the U.S.-Chile Double Tax Treaty, provided certain conditions are met. If a Chilean tax is withheld on the sale or disposition of the shares of our common stock or ADSs, your amount realized will include the gross amount of the proceeds of such sale or disposition before deduction of the Chilean tax. See “—Chilean Taxation—Taxation of Capital Gains” for a description of when a disposition may be subject to taxation by Chile. Such gain or loss generally will be U.S.-source gain or loss for foreign tax credit purposes. The Final Treasury Regulations generally preclude U.S. persons from claiming a foreign tax credit with respect to any tax imposed on gains from the disposition of shares of our common stock or ADSs by a jurisdiction that does not have in effect an applicable income tax treaty with the United States (which for periods prior to the U.S.-Chile Double Tax Treaty’s entry into force, included Chile), although such taxes may be applied to reduce the amount realized on the disposition. Consequently, if you do not qualify for the benefits of the U.S.-Chile Double Tax Treaty or you disposed of shares of our common stock or ADSs prior to the treaty’s entry into force, you may not be able to credit any Chilean tax imposed on the disposition of shares of our common stock or ADSs against your taxable income unless you have other foreign-source income in the appropriate foreign tax credit category. A U.S. holder who is eligible for the benefits of the U.S.-Chile Double Tax Treaty and whose gain from the sale of shares is not exempt from Chilean tax under the U.S.-Chile Double Tax Treaty may elect to treat disposition gain that is subject to Chilean tax as foreign-source gain and claim a credit in respect of the tax.
Passive Foreign Investment Company Rules
Based on proposed Treasury regulations (the “Proposed Regulations”), including those which are proposed to be effective for taxable years beginning after December 31, 1994 (and on which taxpayers may currently rely pending finalization), we believe that we were not a “passive foreign investment company” (a “PFIC”) for U.S. federal income tax purposes for the year ended December 31, 2025. However, since the Proposed Regulations may not be finalized in their current form and since PFIC status depends upon the composition of a company’s income and assets and the market value of its assets (including, among others, less than 25 percent owned equity investments) from time to time, and, if more recently proposed Treasury regulations are finalized in their current form, the location of activities that produce active banking income and the location of our customers, there can be no assurance that we will not be a PFIC for any taxable year. If we were a PFIC for any taxable year during which you held an ADS or a share of our common stock, certain adverse tax consequences could apply to you.
If we were a PFIC for any taxable year during which you held shares of our common stock or ADSs, gain recognized by you on a sale or other disposition (including certain pledges) of a share of our common stock or an ADS would generally be allocated ratably over your holding period for the share of our common stock or ADS. The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge would be imposed on the resulting tax liability for that taxable year. Similar rules would apply to any distribution in respect of shares of our common stock or ADSs that exceeds 125% of the average of the annual distributions on shares of our common stock or ADSs received by you during the preceding three years or your holding period, whichever is shorter. Certain elections may be available that would result in alternative treatments of the shares of our common stock or ADSs (including, with respect to our ADSs, a mark-to-market election). In addition, if we were a PFIC for a taxable year in which we pay a dividend or the prior taxable year, the favorable rates discussed above with respect to dividends paid to non-corporate holders would not apply.
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If we were to be treated as a PFIC in any taxable year, a U.S. holder may be required to file reports with the IRS containing such information as the Treasury Department may require.
Information Reporting and Backup Withholding
Payment of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally are subject to information reporting and may be subject to backup withholding, unless you are a corporation or other exempt recipient or in the case of backup withholding, you provide a correct taxpayer identification number and certify that you are not subject to backup withholding.
The amount of any backup withholding from a payment to you will be allowed as a credit against your U.S. federal income tax liability and may entitle you to a refund, provided that the required information is timely furnished to the Internal Revenue Service.
Certain U.S. holders may be required to report information relating to stock of a non-U.S. person, subject to certain exceptions (including an exception for stock held in custodial accounts maintained by a U.S. financial institution). You should consult your tax advisers regarding any reporting obligations you may have with respect to shares of our common stock or ADSs.
F.Dividends and Paying Agents
Not applicable.
G.Statement by Experts
Not applicable.
H.Documents on Display
The documents concerning us which are referred to in this Annual Report may be inspected at our offices at Bandera 140, 20th floor, Santiago, Chile. We are subject to the information reporting requirements of the Exchange Act, except that, as a foreign issuer, we are not subject to the proxy rules or the short-swing profit and disclosure rules of the Exchange Act. The SEC maintains a website on the Internet at https://www.sec.gov that contains reports and information statements and other information about us. The reports and information statements and other information about us can be downloaded from the SEC’s website or our investor relations website https://ir.santander.cl. None of the information contained on our website is incorporated by reference into, or forms part of, this Annual Report.
I.Subsidiary Information
Not applicable.
J.Annual Report to Security Holders
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Introduction
The principal types of risk inherent in Santander-Chile’s business are market, liquidity, operational and credit risks. The effectiveness with which we are able to manage the balance between risk and reward is a significant factor in our ability to generate long term, stable earnings growth. Toward that end, our Board and senior management places great emphasis on risk management.
For more information on our Integral Risk Committee, Audit Committee, Asset and Liability Committee and Market Committee, see “Item 6. Directors, Senior Management and Employees.”
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Risk Department
All issues regarding risk in the Bank are the responsibility of the Bank’s Risk Department. The Risk Department reports to the CEO but has full independence, and no risk decisions can be made without its approval. The following diagram illustrates the governance of our risk division including the committees with approval power:
Below is an organizational chart of the Risk Department:
1.Credit Risk
The impairment model applies to all financial assets measured at amortized cost and fair value through other comprehensive income (FVOCI), including commitment and contingent loans. Investments in equity are outside of the scope of the new impairment requirements. For more information, see “Item 5 Operating and financial review and prospects—Critical Accounting Policies.”
The Bank has defined default on the following basis:
•Corporate: when exposure is more than 89 days past due, it has been restructured, it is in judicial collection, pulling effect defined as the entire outstanding amount on any loan which has an installment 90 days or more past due.
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•Other: when exposure is more than 89 days past due, it has been restructured, it is in judicial collection, it has been written off, or has been identified as impaired by an internal risk committee.
An exposure will be considered as defaulted when the past-due amounts of an exposure exceed materiality thresholds for 89 or more consecutive days.
The Bank considers reasonable and supportable information that is available without undue cost or effort and that may affect the credit risk on a financial instrument, including forward looking information to determine a significant increase in credit risk since the initial recognition. Forward looking information includes past events, current conditions and forecasts or future economic conditions (macro-economic data). Credit risk assessment and forward-looking information (including macro-economic factors), includes quantitative and qualitative information based on the Bank’s classification policy:
a.Adverse changes in the financial situation, such as a significant increase in debt levels.
b.Significant drops in turnover or, in recurring cash flows.
c.Significant narrowing of operating margins or recurring income.
d.Significant adverse changes in credit risk cost, due to changes in this risk after initial recognition.
e.Other changes in the transaction’s credit risk that would impact on conditions being significantly different if the transaction were originated or reissued on the reference date.
f.An actual or expected reduction of the integral credit rating of the operation (client’s integral rating) or decrease in the performance score.
g.An actual or expected significant decrease in the price or external credit rating of the mail operation, as well as other external market indicators of the credit risk for similar operations with the same expected life.
The Bank will classify an operation as Stage 2 when the past-due amounts of an exposure exceed materiality thresholds for 90 or more consecutive days.
Expected credit loss measurement
The ECL are the probability-weighted estimate of credit losses, i.e. the present value of all cash shortfalls. A cash shortfall is the difference between the cash flows that are due to an entity in accordance with the contract and the cash flows that the entity expects to receive.The Bank considered a multi-factor analysis to perform credit risk analysis. The Bank conducts a corporate evaluation to assess whether objective evidence of impairment exists for loans that are individually significant, and then conducts a separate evaluation of loans that are not individually significant and loans which are significant but for which there is no objective evidence of impairment available under custom monitoring.
Credit Risk Governance
The Risk Division, our credit analysis and risk management group, is largely independent of our business areas. Risk evaluation teams interact regularly with our clients. For larger transactions, risk teams in our headquarters work directly with clients when evaluating credit risks and preparing credit applications. Various credit approval committees, all of which include Risk Division and Commercial Division personnel, must verify that the appropriate qualitative and quantitative parameters are met by each applicant. Each committee’s powers are defined by our Board of Directors.
Santander-Chile’s governance rules establish an Integral Risk Committee. This committee is responsible for revising and following all risks that may affect us, including reputational risk, allowing for an integral risk management. This committee serves as the governing body through which the Board supervises all risk functions. It also evaluates the reasonability of the systems for measurement and control of risks. This Committee includes the Chairman of the Board and five Board members.
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The Board has delegated the duty of credit risk management to the Risk Committee, as well as to the Bank’s risk departments, whose roles are summarized below:
•Formulate credit policies by consulting with the business units, meeting requirements of guarantees, credit evaluation, risk rating and submitting reports, documentation and legal procedures in compliance with the regulatory, legal and internal requirements of the Bank.
•Establish the structure to approve and renew credit requests. The Bank structures credit risks by assigning limits to the concentration of credit risk in terms of individual debtor, debtor group, industry segment and country. Approval levels are assigned to the corresponding officials of the business unit (commercial, consumer, SMEs) to be exercised by that level of management. In addition, those limits are continually revised. Teams in charge of risk evaluation at the branch level interact on a regular basis with customers; however, for larger credit requests, the risk team from the head office and the Executive Risk Committee works directly with customers to assess credit risks and prepare risk requests.
•Limit concentrations of exposure to customers or counterparties in geographic areas or industries (for accounts receivable or loans), and by issuer, credit rating and liquidity.
•Develop and maintain the Bank’s credit risk classifications for the purpose of classifying risks according to the degree of exposure to financial loss that is exhibited by the respective financial instruments, with the aim of focusing risk management specifically on the associated risks.
•Revise and evaluate credit risk. Management’s risk divisions are largely independent of the Bank’s commercial division and evaluate all credit risks in excess of the specified limits prior to loan approvals for customers or prior to the acquisition of specific investments. Credit renewal and reviews are subject to similar processes.
For more detail on credit risk metrics please see: “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Provision for loan losses”, “Item 5. Operating and Financial Review and Prospects—B. Selected Statistical Information- Loan Portfolio”, “Item 5. Operating and Financial Review and Prospects—B. Selected Statistical Information- Credit Ratios”, “Note 8 – Financial Assets at Amortized Costs” and “Note 37-Risk Management-Credit Risk”.
2.Non-financial risks
Following the Basel framework, the Bank defines operational risk as the risk of losses arising from defects or failures in its internal processes, people, systems or external events, thus covering risk categories such as fraud, technological, cyber, legal and conduct risk.
Operational risk is inherent to all products, activities, processes and systems and is generated in all business and support areas. For this reason, all employees are responsible for managing and controlling the operational risks generated in their sphere of action. The Bank’s goal in terms of operational risk management and control is focused on identifying, evaluating and mitigating sources of risk, regardless of whether they have materialized or not. The analysis of operational risk exposure contributes to the establishment of risk management priorities.
The following table summarizes our net losses from operational risks in 2025 compared to 2024.
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| As of December 31, | % Change | ||||||||||||||||
| 2025 | 2024 | 2025/2024 | |||||||||||||||
| (Ch$ millions) | |||||||||||||||||
| Net losses from operational risks | |||||||||||||||||
| Fraud | 34,929 | 7,633 | 357.6 | % | |||||||||||||
| Labor related | 3,459 | 4,969 | (30.4) | % | |||||||||||||
| Client / product related | 91 | 559 | (83.7 | %) | |||||||||||||
| Damage to fixed assets | 295 | 345 | (14.5 | %) | |||||||||||||
| Business continuity / Systems | 274 | 178 | 53.9 | % | |||||||||||||
| Processing | 2,122 | 4,950 | (57.1 | %) | |||||||||||||
| Total | 41,170 | 18,634 | 120.9 | % | |||||||||||||
In 2025, the 120.9% increase in operational-related losses was mainly due to higher fraud expenses. The adoption of digital banking and recent regulatory changes have led to a relevant increase in fraud expenses. In 2023 gross fraud related expenses amounted to Ch$ 7,202 million, while in 2024 this increased to Ch$ 33,786 million and Ch$ 41,496 million in 2025. The rapid increase in fraud cases in the first half of 2024 led to improvements in the existing Chilean fraud Law in May 2024 pursuant to Law No. 21,637, which addressed some of the imbalances previously caused by changes enacted in 2020. Among other adjustments, the amendment modified the procedures that users must follow to request the reimbursement of funds associated with claims for unauthorized transactions, requiring a sworn statement and the filing of a complaint with the competent authorities. In addition, the timeframes for such reimbursement were extended. The credit card issuer continues to be responsible for both transactions carried out after the customer reports the fraud as well as for unauthorized transactions. Furthermore, the Bank is also liable for other types of fraud, such as financial scams. With these more stringent requirements in place the Bank recognized lower recoveries from fraud claims in 2025 compared to 2024.
In response to the increase in fraud, we have limited the exposure of our clients to credit card fraud through education, insurance coverage, marketing campaigns, daily transfer amount limits, chip technology, improved ATM software, and other technological improvements, Despite these initiatives and investments, the continuous evolution of fraud techniques that affect our clients and subsequently the Bank continues to be a material source of operational loss.
Governance
The risk management program contemplates that all relevant risk issues must be reported to the Board of Directors, the Integral Risk Committee and the Non-Financial Risk Committee.
Risk identification, measurement and assessment model
A series of quantitative and qualitative techniques and tools have been defined by the Bank to identify, measure and assess operational risk. The quantitative analysis of this risk assessment is carried out mainly with tools that record and quantify the level of potential losses associated with operational risk events. The qualitative analysis seeks to assess aspects of exposure and hedging (including the control environment). The most important operational risk tools used by Santander Chile are an internal events database, operational risk control self-assessment, analysis of operational risk scenarios, appetite of corporate and local indicators, and internal audit and regulatory recommendations, among others.
Operational risk management
To accomplish our operational risk objectives, we have established a risk model based on three lines of defense, with the objective of continuously improving and developing our management and control of operational risks. The defense lines consist of: (i) the business and support areas (first line of defense), responsible for managing the risks related to their processes; (ii) the non-financial risk area (second line of defense), in charge of supporting the first line of defense in relation to the fulfillment of its direct responsibilities and; (iii) the internal audit function (third line of defense) responsible for verifying, independently and periodically, the adequacy of the risk identification and management processes and procedures, in accordance with the guidelines established in the Internal Audit Policy and submitting the results of its recommendations for improvement to the Audit Committee. For further information, see “Item 16K. Cybersecurity.”
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Our methodology consists of the evaluation of the risks and controls of a business from a broad perspective and includes a plan to monitor the effectiveness of such controls and the identification of eventual weaknesses. The main objectives of the Bank and its subsidiaries in terms of operational risk management are the following:
•Identify, evaluate, mitigate, inform, manage and monitor the operational risk in connection with activities, products, and processes carried out or commercialized by the Bank and its subsidiaries;
•Build a strong culture of operational risk management and internal controls, with clearly defined and adequately segregated responsibilities between business and support functions, whether these are internally-developed or outsourced to third parties, and promote an advanced culture of operational risk management;
•Generate effective internal reports in connection with issues related to operational risk management, with a clearly defined escalation protocol; and
•Control the design and application of effective plans to deal with contingencies that ensure business continuity and losses control.
Cyber-security and data security plans
The Bank continuously monitors cyber-security risks and has implemented preventative measures to be prepared for any cyber-attack. Likewise, the internal cyber-security model based on best practices and international standards, is periodically evaluated for its maturity level. Through these evaluations, points of improvement have been identified and actions and remediation have been established and incorporated into our cybersecurity plans. For further information, see “Item 16K. Cybersecurity.”
Business Continuity Management: Ensuring the realization of critical process during contingencies
The Bank has a Business Continuity Management System, which covers the entire organization in order to ensure the execution of the activities that may cause significant negative impacts (operational, reputation, consumer services, legal and operational losses) to the organization. The Non-financial Risk Department, through the Operational Resilience Risk Department (BCM specialized area, as part of the second line of defense), leads the control and implementation of the model and policies defining the roles and responsibilities of each line of defense, where the first line of defense has a main role that involves the identification of their process, the business impact analysis of each risk according to the methodology, the preparation of business continuity plans and strategies to respond to each contingency scenario and ensure the realization of the critical processes, the testing and continuous updating of the information to secure the resources needed (at least annually).
The Bank is constantly facing different types of contingencies (mainly natural disasters, pandemics, social movements, protests, among others), which has proven to be effective in order to maintain, social movements, protests, among others), which has proven to be effective in order to maintain and ensure the business continuity of the organization. We are constantly detecting new opportunities to improve the current mitigation actions and contingency plans allowing the critical departments to recover after the events that may occur in the future.
Role of Santander Group’s Global Risk Division: Operational Risk
In matters regarding operational risk, Santander Global Risk Department’s role is to define certain global policies, guidelines and procedures regarding operational risk.. The Risk Control Committee reviews relevant matters from the different Santander units that may impact operational risk.
3.Market Risks
This section describes the market risks that we are exposed to, the tools and methodology used to control these risks, the portfolios over which these market risk methods were applied and quantitative disclosure that demonstrate the level of exposure to market risk that we are assuming. This section also discloses the derivative instruments that we use to hedge exposures and offer to our clients.
Market risk is the risk of losses due to unexpected changes in interest rates, foreign exchange rates, inflation rates and other rates or prices. We are exposed to market risk mainly as a result of the following activities:
•trading in financial instruments, which exposes us to interest rate and foreign exchange rate risk;
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•engaging in banking activities, which subjects us to interest rate risk, since a change in interest rates affected gross interest income, gross interest expense and customer behavior;
•engaging in banking activities, which exposes us to inflation rate risk, since a change in expected inflation affects gross interest income, gross interest expense and customer behavior;
•trading in the local equity market, which subjects us to potential losses caused by fluctuations of the stock market; and
•investing in assets whose returns, or accounts are denominated in currencies other than the Chilean peso, which subjects us to foreign exchange risk between the Chilean peso and such other currencies.
The main decisions that relate to market risk for the Bank and the limits regarding market risk are made in the Asset and Liability Committee. The measurement and oversight of market risks is performed by the Market Risk Department. Santander-Chile’s governance rules have established the Asset and Liability Committee to monitor and control market risks.
Role of Santander Group’s Global Risk Division: Market Risk
In matters regarding Market Risk, the role of Santander Spain’s Global Risk Department is to define certain global policies, guidelines and procedures regarding market risk. The information produced by our local Market Risk Department is standardized for the whole group in order to facilitate a consolidation of risks being taken on a global basis. They review daily the consumption of limits and provide valuable input on the evolution of markets, especially regarding the Eurozone.
4.Market Risk: Quantitative Disclosure
Impact of Inflation
Our assets and liabilities are denominated in Chilean pesos, Unidades de Fomento (UF) and foreign currencies. Inflation impacts our results of operations as some loan and deposit products are contracted in UF. The UF is revalued in monthly cycles. Each day in the period beginning on the tenth day of the current month through the ninth day of the succeeding month, the nominal peso value of the UF is indexed up (or down in the event of deflation) in order to reflect a proportionate amount of the change in the Chilean Consumer Price Index during the prior calendar month. One UF equaled Ch$39,727.96 as of December 31, 2025, Ch$38,416.69 as of December 31, 2024, and Ch$36,789.36 as of December 31, 2023. High levels of inflation in Chile could adversely affect the Chilean economy and could have an adverse effect on our business, financial condition, and results of operations. Negative inflation rates also negatively impact on our results. Inflation measured as the annual variation of the UF was 3.4% in 2025, 4.4% in 2024, and 4.8% in 2023. There can be no assurance that Chilean inflation will not change significantly from the current level.
Due to the current structure of our assets and liabilities (i.e., a significant portion of our loans are indexed to the inflation rate, but there are significantly less features in deposits and other funding sources that would increase the size of our funding base), there can be no assurance that our business, financial condition and result of operations in the future will not be adversely affected by changing levels of inflation. In summary:
•UF-denominated assets and liabilities. The effect of any changes in the nominal peso value of our UF-denominated interest earning assets and interest-bearing liabilities is reflected in our results of operations as an increase (or decrease, in the event of deflation) in interest income and expense, respectively. Our net interest income will be positively affected by an inflationary environment to the extent that our average UF-denominated interest earning assets exceed our average UF-denominated interest-bearing liabilities. Our net interest income will be positively affected by deflation in any period in which our average UF-denominated interest-bearing liabilities exceed our average UF-denominated interest earning assets. Our net interest income will be negatively affected in a deflationary environment if our average UF-denominated interest earning assets exceed our average UF-denominated interest-bearing liabilities.
•Inflation and interest rate hedge. A key component of our asset and liability policy is the management of interest rate risk. The Bank’s assets generally have a longer maturity than our liabilities. As the Bank’s mortgage portfolio grows, the maturity gap tends to rise as these loans, which are contracted in UF, have a longer maturity than the average maturity of our funding base. As most of our long-term financial instruments and mortgage loans are contracted in UF and most of our deposits are in nominal pesos, the rise in mortgage lending increases the Bank’s
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exposure to inflation and to interest rate risk. This gap's size is limited by internal and regulatory guidelines to avoid excessive potential losses due to strong shifts in interest rates or inflation. To keep this duration gap below internal and regulatory limits, the Bank issues long term bonds denominated in UF or interest rate swaps. The financial cost of the bonds and the efficient part of these hedges is recorded as net interest income. The loss from the swaps taken to hedge mainly for inflation and interest rate risk, and included in net interest income, totaled a loss of Ch$236,523 in 2025, a loss of Ch$535,558 million in 2024, and a loss of Ch$1,147,193 million in 2023. The lower losses in 2025 were mainly due to lower short-term interest rates and inflation in 2025 compared to 2024. The average gap between our interest earnings assets and total liabilities linked to the inflation, including hedging, was Ch$7,403,454 million in 2025, Ch$7,518,560 million in 2024 and, Ch$6,875,280 million in 2023. Therefore, our sensitivity to a 100-basis point shift in UF inflation considering our average gap in 2025 would be approximately Ch$74 billion.
The financial impact of the gap between our interest earning assets and liabilities denominated in UFs including hedges was as follows:
| As of December 31, | % Change | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025/2024 | 2024/2023 | ||||||||||||||||||||||||||||
| (in millions of Ch$) | ||||||||||||||||||||||||||||||||
| Impact of inflation on net interest income | ||||||||||||||||||||||||||||||||
Results from UF GAP(1) | 253,849 | 323,751 | 321,698 | (21.6 | %) | 0.6 | % | |||||||||||||||||||||||||
Annual UF inflation | 3.4 | % | 4.4 | % | 4.8 | % | ||||||||||||||||||||||||||
(1)UF GAP is net interest income from asset and liabilities denominated in UFs and includes the results from hedging the size of this gap via interest rate swaps.
The lower result from UF inflation in 2025 when compared to 2024 was mainly due to the lower UF inflation in 2025 compared to 2024.
Interest Rates
Interest rates earned and paid on our assets and liabilities reflect, to a certain degree, inflation, expectations regarding inflation, changes in short term interest rates set by the Central Bank and movements in long term real rates. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Interest Rates.” The Central Bank manages short term interest rates based on its objectives of balancing low inflation and economic growth. Because our liabilities are generally re-priced sooner than our assets, changes in the rate of inflation or short-term rates in the economy are reflected in the rates of interest paid by us on our liabilities before such changes are reflected in the rates of interest earned by us on our assets. Our Financial Management Division usually seeks to maintain liabilities with an average duration that is shorter than that of our assets, including through the use of derivatives, in order to hedge against sudden or rapid falls in the inflation rate, which in general triggers a reduction in short-term rates. Therefore, when short term interest rates fall, our net interest margin is usually positively impacted, but when short term rates increase, our interest margin is negatively affected. At the same time, our net interest margin tends to be adversely affected in the short term by a decrease in inflation rates since generally our UF-denominated assets exceed our UF-denominated liabilities. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Impact of Inflation—Peso-denominated assets and liabilities.” An increase in long term rates has a positive effect on our net interest margin, because our interest earning assets generally have longer terms than our interest-bearing liabilities. A flattening of the yield curve, i.e. long-term rates falling quicker than short-term rates, negatively affects our margins by lowering loan yields at a greater pace than deposits costs. In addition, because our peso-denominated liabilities have relatively short re-pricing periods, they are generally more responsive to changes in inflation or short-term rates than our UF-denominated liabilities. As a result, during periods when or expected inflation exceeds the previous period’s inflation, customers often switch funds from UF-denominated deposits to peso-denominated deposits, which generally bear higher interest rates, thereby adversely affecting our net interest margin.
We also maintain a substantial amount of non-interest-bearing peso-denominated demand deposits. Because such deposits are non-interest bearing and are not indexed to inflation, the higher percentage of our funding that comes from this source positively impacts our net interest margin as interest rates or inflation rises and vice-versa. The ratio of the average
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of such demand deposits and average shareholder’s equity to average interest-earning assets was 31.3%, 30.7% and 29.0% for the years ended December 31, 2025, 2024 and 2023, respectively.
As of December 31, 2025, the detail of the maturities of assets and liabilities is as follows:
| As of December 31, 2025 | Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | |||||||||||||||||||||||||||||||||||||||||||||
| (in millions of Ch$) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and deposits in banks | 1,975,644 | — | — | — | — | — | — | 1,975,644 | |||||||||||||||||||||||||||||||||||||||||||||
Cash items in process of collection | 1,185,633 | — | — | — | — | — | — | 1,185,633 | |||||||||||||||||||||||||||||||||||||||||||||
Financial assets for trading at FVTPL | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial derivative contracts and hedge contracts(1) | — | 725,018 | 1,132,620 | 1,892,284 | 2,207,019 | 2,031,532 | 3,152,496 | 11,140,969 | |||||||||||||||||||||||||||||||||||||||||||||
| Debt financial instruments | — | — | 41,834 | — | 254,684 | 227,280 | 190,830 | 714,628 | |||||||||||||||||||||||||||||||||||||||||||||
Financial assets at FVOCI | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt financial instrument | — | 180,132 | 39,849 | 390,071 | 1,762,028 | 961,933 | 264,353 | 3,598,366 | |||||||||||||||||||||||||||||||||||||||||||||
| Other financial instruments | 1,784 | 8,062 | 16,124 | 36,604 | 55,639 | 16,972 | 161,064 | 296,249 | |||||||||||||||||||||||||||||||||||||||||||||
| Financial assets at amortized cost(2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rights under repurchase agreements | — | 428,146 | — | — | — | — | — | 428,146 | |||||||||||||||||||||||||||||||||||||||||||||
Debt financial instruments | — | — | — | — | 2,594,154 | 2,603,922 | 328,311 | 5,526,387 | |||||||||||||||||||||||||||||||||||||||||||||
| Interbank loans | 68,106 | 36 | 36 | — | — | — | — | 68,178 | |||||||||||||||||||||||||||||||||||||||||||||
Loans and account receivable from customers | 1,447,642 | 2,918,149 | 2,969,942 | 5,546,646 | 8,715,192 | 4,661,794 | 14,605,337 | 40,864,702 | |||||||||||||||||||||||||||||||||||||||||||||
| Guarantee deposits (margin accounts) | 2,075,671 | — | — | — | — | — | — | 2,075,671 | |||||||||||||||||||||||||||||||||||||||||||||
Total financial assets | 6,754,480 | 4,259,543 | 4,200,405 | 7,865,605 | 15,588,716 | 10,503,433 | 18,702,391 | 67,874,573 | |||||||||||||||||||||||||||||||||||||||||||||
| Financial liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash items in process of being cleared | 1,068,216 | — | — | — | — | — | — | 1,068,216 | |||||||||||||||||||||||||||||||||||||||||||||
| Financial liabilities for trading at FVTPL | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial derivative contracts and hedge contracts(1) | — | 789,194 | 1,274,609 | 2,113,806 | 2,414,508 | 1,745,432 | 3,162,475 | 11,500,024 | |||||||||||||||||||||||||||||||||||||||||||||
| Financial liabilities at amortized cost | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deposits and other demand liabilities | 14,075,590 | — | — | — | — | — | — | 14,075,590 | |||||||||||||||||||||||||||||||||||||||||||||
| Time deposits and other time liabilities | — | 7,731,868 | 3,692,751 | 4,601,006 | 435,105 | 322 | 32,731 | 16,493,783 | |||||||||||||||||||||||||||||||||||||||||||||
| Obligations under repurchase agreements | — | 2,180,874 | 574,369 | — | — | — | — | 2,755,243 | |||||||||||||||||||||||||||||||||||||||||||||
| Interbank borrowings | 28,266 | 289,677 | 275,757 | 1,949,788 | 659,092 | 223,890 | 7,767 | 3,434,237 | |||||||||||||||||||||||||||||||||||||||||||||
| Issued debt instruments(3) | — | 45,980 | 676,736 | 1,642,349 | 1,995,136 | 1,205,230 | 2,133,669 | 7,699,100 | |||||||||||||||||||||||||||||||||||||||||||||
| Other financial liabilities | — | 224,321 | — | — | — | — | — | 224,321 | |||||||||||||||||||||||||||||||||||||||||||||
| Lease liabilities | — | — | — | 6,629 | 14,751 | 11,276 | 7,993 | 40,649 | |||||||||||||||||||||||||||||||||||||||||||||
| Regulatory capital instrument | — | — | — | 202,169 | 124,099 | 181,378 | 1,440,847 | 1,948,493 | |||||||||||||||||||||||||||||||||||||||||||||
| Guarantees received (margin accounts) | 1,541,061 | — | — | — | — | — | — | 1,541,061 | |||||||||||||||||||||||||||||||||||||||||||||
| Total financial liabilities | 16,713,133 | 11,261,914 | 6,494,222 | 10,515,747 | 5,642,691 | 3,367,528 | 6,785,482 | 60,780,717 | |||||||||||||||||||||||||||||||||||||||||||||
(1)Includes derivative contracts for trading purposes and hedge derivatives contracts.
(2)Debt financial instruments, Interbank loans and loans and accounts receivable from customer are presented on a gross basis, the related allowance are Ch$1,145 million, Ch$2 million and Ch$1,222,456 million, respectively.
(3)Includes Subordinated bonds for Ch$1,948,493 million which is presented as Regulatory capital financial instruments.
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The following table sets forth our average daily balance of liabilities for the years ended December 31, 2025, 2024 and 2023, in each case together with the related average nominal interest rates paid thereon.
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | % of Total Average Liabilities | Average Nominal Rate | Average Balance | % of Total Average Liabilities | Average Nominal Rate | Average Balance | % of Total Average Liabilities | Average Nominal Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Savings accounts | 246,969 | 0.4 | % | 3.2 | % | 204,486 | 0.3 | % | 4.5 | % | 190,469 | 0.3 | % | 3.6 | % | |||||||||||||||||||||||||||||||||||||||||
| Time deposits | 16,819,761 | 24.7 | % | 4.6 | % | 18,333,279 | 26.6 | % | 7.4 | % | 16,392,793 | 23.6 | % | 7.4 | % | |||||||||||||||||||||||||||||||||||||||||
| Central Bank borrowings | — | — | % | — | % | 2,227,144 | 3.2 | % | 5.1 | % | 5,773,345 | 8.3 | % | 12.2 | % | |||||||||||||||||||||||||||||||||||||||||
| Repurchase agreements | 2,189,070 | 3.2 | % | 4.9 | % | 567,006 | 0.8 | % | 9.1 | % | 779,214 | 1.1 | % | 7.2 | % | |||||||||||||||||||||||||||||||||||||||||
| Mortgage finance bonds | 71 | 0.0 | % | 5.6 | % | 455 | 0.0 | % | 11.4 | % | 2,063 | 0.0 | % | 9.3 | % | |||||||||||||||||||||||||||||||||||||||||
| Commercial paper | 837,704 | 1.2 | % | 4.9 | % | 639,541 | 0.9 | % | 6.0 | % | 613,212 | 0.9 | % | 5.8 | % | |||||||||||||||||||||||||||||||||||||||||
| Other interest bearing liabilities | 17,155,876 | 25.2 | % | 5.1 | % | 14,707,545 | 21.3 | % | 8.0 | % | 14,920,208 | 21.5 | % | 8.7 | % | |||||||||||||||||||||||||||||||||||||||||
| Subtotal interest-bearing liabilities | 37,249,451 | 54.6 | % | 4.9 | % | 36,679,456 | 53.2 | % | 6.3 | % | 38,671,304 | 55.6 | % | 8.6 | % | |||||||||||||||||||||||||||||||||||||||||
| Non-liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest bearing deposits | 10,837,345 | 15.9 | % | 11,317,733 | 16.4 | % | 11,099,866 | 16.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives | 11,497,964 | 16.9 | % | 11,710,435 | 17.0 | % | 10,937,411 | 15.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Other non-interest bearing liabilities | 3,011,037 | 4.4 | % | 4,162,306 | 6.0 | % | 4,108,850 | 5.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders’ equity | 5,584,350 | 8.2 | % | 5,028,887 | 7.3 | % | 4,720,294 | 6.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal non-interest bearing liabilities and equity | 30,930,696 | 45.4 | % | 32,219,361 | 46.8 | % | 30,866,421 | 44.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 68,180,147 | 100.0 | % | 68,898,817 | 100.0 | % | 69,537,725 | 100.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange fluctuations
The Chilean government’s economic policies and any future changes in the value of the Chilean peso against the U.S. dollar could adversely affect our financial condition and results of operations. The Chilean peso has been subject to significant devaluation in the past and may be subject to significant fluctuations in the future. The exchange rate appreciated 9.4% in 2025, depreciated 13.7% in 2024 and depreciated 2.9% in 2023.
A significant portion of our assets and liabilities are denominated in foreign currencies, principally the U.S. dollar, and we historically have maintained, and may continue to maintain, material gaps between the balances of such assets and liabilities. Because such assets and liabilities, as well as interest earned or paid on such assets and liabilities, and gains and losses realized upon the sale of such assets, are translated to Chilean pesos in preparing our financial statements, our reported income is affected by changes in the value of the Chilean peso relative to foreign currencies (principally the U.S. dollar).
In general, the Bank is not permitted, due to guidelines set by the ALCO, to open a meaningful gap in foreign currency. Any significant difference between the spot asset position and the spot liability position in foreign currency is usually hedged using forwards and cross-currency swaps. Any remaining foreign currency risk is included as part of the trading portfolio We set an absolute limit on the size of Santander-Chile’s consolidated net foreign currency trading position, which is equivalent to the maximum differential allowed between assets and liabilities in foreign currencies, including hedging of this gap. The limit on the size of the net foreign currency position is determined by the Market Committee and is calculated and monitored by the Market Risk Department. As of December 31, 2025, this was equal to U.S.$350 million.
This limit in various other currencies is as follows:
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| Currency | Limit | ||||||||||
| (in millions of U.S.$) | |||||||||||
| U.S. dollars | 350 | ||||||||||
| Euros | 110 | ||||||||||
| Yen | 27 | ||||||||||
| British pound | 20 | ||||||||||
| Mexican peso | 30 | ||||||||||
| Brazilian real | 30 | ||||||||||
| Colombian peso | 30 | ||||||||||
| Peruvian sol | 20 | ||||||||||
| Other European currencies | 30 | ||||||||||
| Other Latin American currencies | 30 | ||||||||||
| Other currencies | 47.5 | ||||||||||
| Total Limit | 350 | ||||||||||
Foreign currency risk included in the trading portfolio is also measured and controlled using VaR. The average VAR of our foreign currency position was U.S.$1.04 million in 2025. The translation gains or loss over assets and liabilities (excluding derivatives held for trading) is included as foreign exchange transactions in the income statement. The translation and mark-to-market of foreign currency derivatives held for trading is recognized as a gain or loss in the net results from mark-to-market and trading.
Liquidity risk management
The Financial Management Division receives information from all the business units on the liquidity profile of their financial assets and liabilities, as well as breakdowns of other projected cash flows stemming from future businesses. On the basis of that information, the Financial Management Division maintains a portfolio of liquid short–term assets, comprised mainly of liquid investments, loans and advances to other banks, to make sure the Bank has sufficient liquidity. The business units’ liquidity needs are met through short–term transfers from the Financial Management Division to cover any short–term fluctuations and long–term financing to address all the structural liquidity requirements.
The Bank monitors its liquidity position every day, determining the future flows of its outlays and revenues. In addition, stress tests are performed at the close of each month, for which a variety of scenarios encompassing both normal market conditions and conditions of market fluctuation are used. The liquidity policy and procedures are subject to review and approval by the Bank’s Board. Periodic reports are generated by the Market Risk Department, providing a breakdown of the liquidity position of the Bank and its subsidiaries, including any exceptions and the corrective measures adopted, which are regularly submitted to the ALCO for review.
The Bank relies on demand deposits from Retail, Middle-Market and Corporate clients, obligations to banks, debt instruments, and time deposits as its main sources of funding. Our most important source of funding is our deposits. Average time deposits plus average non-interest bearing demand deposits represented 40.6% of our average total liabilities and shareholders’ equity in 2025. As of December 31, 2025, the Bank’s top 20 time deposits represented 20.0% of total time deposits, or 4.8% of total liabilities and equity. Our current funding strategy is to continue to utilize all sources of funding in accordance with their costs, their availability and our general asset and liability management strategy. Special emphasis is being placed on lengthening the maturities of funding with institutional clients, diversifying our bond holder base and broadening our core deposit funding. We believe that broadening our deposit base by increasing the number of account holders has created a more stable funding source.
Although most obligations to banks and debt instruments mature in over a year, customer (retail) and institutional deposits tend to have shorter maturities and a large proportion of them are payable within 90 days. The short–term nature of these deposits increases the Bank’s liquidity risk, and hence, the Bank actively manages this risk by continual supervision of the market trends and price management. We cannot assure that in the event of a sudden or unexpected shortage of funds in the banking system, we will be able to maintain levels of funding without incurring higher funding
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costs, a reduction in the term of funding instruments or the liquidation of certain assets. If this were to happen, we could be materially adversely affected.
Liquidity risk management seeks to ensure that, even under adverse conditions, we have access to the funds necessary to cover client needs, maturing liabilities and capital requirements. Liquidity risk arises in the general funding for our financing, trading and investment activities. It includes the risk of unexpected increases in the cost of funding the portfolio of assets at appropriate maturities and rates, the risk of being unable to liquidate a position in a timely manner at a reasonable price and the risk that we will be required to repay liabilities earlier than anticipated. The ALCO now uses as its liquidity portfolio those defined by the FMC and the Central Bank, which are in line with those established in BIS III. As of December 31, 2025, and 2024, the breakdown of the Bank’s liquid assets by levels was the following:
| December 31, 2025 | December 31, 2024 | |||||||||||||
| (Ch$ million) | ||||||||||||||
| Balance as of: | ||||||||||||||
| Cash and cash equivalent | 1,904,994 | 2,416,812 | ||||||||||||
| Level 1 liquid assets(1) | 6,227,856 | 7,241,318 | ||||||||||||
| Level 2 liquid assets(2) | 3,163 | 4,517 | ||||||||||||
| Total liquid assets | 8,136,014 | 9,662,647 | ||||||||||||
(1)Includes available balances held in the Central Bank of Chile, financial instruments issued by the Chilean Treasury or Central Bank and other financial instruments issued or guaranteed by States, multilateral development banks or foreign central banks that have a first-class rating, in accordance with international rating agencies. Collateral under the FCIC funding program with the Central Bank of Chile and technical reserves in the Central Bank are not included.
(2)Includes instruments issued by governments, central banks and development banks of foreign countries with a risk rating of A- to AA+ and mortgage bonds issued by Chilean banks that are acceptable at the Central Bank’s repo window.
| December 31, 2025 | December 31, 2024 | |||||||||||||
| (Ch$ million) | (Ch$ million) | |||||||||||||
| Average balance as of: | ||||||||||||||
| Cash and cash equivalent | 1,828,528 | 1,732,701 | ||||||||||||
| Level 1 liquid assets(1) | 6,476,798 | 6,236,963 | ||||||||||||
| Level 2 liquid assets(2) | 3,660 | 5,217 | ||||||||||||
| Total liquid assets | 8,308,986 | 7,974,881 | ||||||||||||
(1)Includes available balances held in the Central Bank of Chile, financial instruments issued by the Chilean Treasury or Central Bank and other financial instruments issued or guaranteed by States, multilateral development banks or foreign central banks that have a first class rating, in accordance with international rating agencies. Collateral under the FCIC funding program with the Central Bank of Chile and technical reserve in the Central Bank are not included.
(2)Includes instruments issued by governments, central banks and development banks of foreign countries with a risk rating of A- to AA+ in accordance with international rating agencies and mortgage bonds issued by Chilean banks that are acceptable at the Central Bank’s repo window.
The Central Bank and our ALCO also requires us to comply with the following liquidity limits:
•Liquidity coverage ratio (LCR), which measures the percentage of Liquid Assets over Net Cash Outflows. This liquidity ratio per Chilean regulations cannot be lower than 100%. As of December 31, 2025, this indicator for Banco Santander Chile was 187.7%
•Net Stable Funding Ratio (NSFR) which measures a bank’s stable funding sources over required stable needs. Beginning in 2022, Chilean banks must have a minimum NSFR ratio of 60% with a gradual phase-in which will
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reach 100% by 2026. As of December 31, 2025, this indicator for Banco Santander Chile was 115.1% in compliance with the local regulatory limit.
•The sum of the liabilities in foreign currency with a maturity of less than 30 days may not exceed the sum of the assets in foreign currency with a maturity of less than 30 days by more than an amount greater than our capital. At December 31, 2025 the liabilities with a maturity of less than 30 days in foreign currency were greater than our assets in foreign currency with a maturity of less than 30 days at a level equivalent to 9% of our capital, thus resulting in our compliance.
Market risk management
The Bank’s internal management of market risk is based chiefly on the procedures and standards of Santander Spain, which are in turn based on analysis of management in three principal components:
•trading portfolio;
•local financial management portfolio; and
•foreign financial management portfolio.
The trading portfolio is comprised chiefly of investments valued at fair market value and free of any restriction on their immediate sale, which are often bought and sold by the Bank with the intention of selling them in the short term to benefit from short–term price fluctuations. The trading portfolio also includes the Bank’s exposure to foreign currency. The financial management portfolios include all the financial investments not considered to be part of trading portfolio.
Market risk – management of trading portfolio
The Bank applies VaR methodologies to measure the market risk of its trading portfolio. The Bank has a consolidated commercial position comprised of fixed–income investments and foreign currency trading. This portfolio is comprised mostly of Central Bank of Chile bonds, mortgage bonds, locally issued, low–risk corporate bonds and foreign currencies, mainly U.S. dollars. At the end of each year, the trading portfolio included no stock portfolio investments.
For the Bank, the VaR estimate is made under the historical simulation methodology, which consists of observing the behavior of the profits and losses that would have occurred in the current portfolio if the market conditions for a given historical period had been in force, in order to infer the maximum loss on the basis of that information, with a given degree of confidence. The methodology has the advantage of precisely reflecting the historical distribution of the market variables and not requiring any assumptions regarding the distribution of specific probabilities. All the VaR measures are intended to determine the distribution function for a change in the value of a given portfolio, and once that distribution is known, to calculate the percentile related to the necessary degree of confidence, which will be equal to the value at risk by virtue of those parameters. As calculated by the Bank, the VaR is an estimate of the maximum expected loss of market value for a given portfolio over a 1–day horizon, with a 99.00% confidence level. It is the maximum 1–day loss that the Bank could expect to experience in a given portfolio, with a 99.00% confidence level. In other words, it is the loss that the Bank would expect to experience only 1.0% of the time. The VaR provides a single estimate of market risk which is not comparable from one market risk to another. Returns are calculated through the use of a 2–year time window or at least 520 data points obtained since the last reference date for calculation of the VaR going backward in time.
We do not calculate three separate VaRs. We calculate a single VaR for the entire trading portfolio, which in addition is segregated by risk type. The VaR software performs a historical simulation and calculates a Profit and Loss Statement (P&L) for 520 data points (days) for each risk factor (fixed income, foreign currency and variable income.) The P&L of each risk factor is added and a consolidated VaR is calculated with 520 points or days of data. At the same time a VaR is calculated for each risk factor based on the individual P&L calculated for each individual risk factor. Furthermore, a weighted VaR is calculated in the manner described above, but which gives a greater weighting to the 30 most recent data points. The larger of the two VaRs is the one that is reported. In 2025, 2024 and 2023 we used the same VaR model and there has been no change in methodology or assumptions for subsequent periods.
The Bank uses the VaR estimates to provide a warning when the statistically estimated incurred losses in its trading portfolio would exceed prudent levels, and hence, there are certain predetermined limits.
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Limitations of the VaR model
When applying a calculation methodology, no assumptions are made regarding the probability distribution of the changes in the risk factors; the historically observed changes are used for the risk factors on which each position in the portfolio will be valued.
It is necessary to define a valuation function fj(xi) for each instrument j, preferably the same one used to calculate the market value and income of the daily position. This valuation function will be applied in each scenario to generate simulated prices for all the instruments in each scenario.
In addition, the VaR methodology is subject to the following limitations:
•Changes in market rates and prices may not be independent and identically distributed random variables, and may not have a normal distribution; in particular, the assumption of normal distribution may underestimate the probability of extreme market movements;
•The historical data used by the Bank may not provide the best estimate of the joint distribution of changes in the risk factors in the future, and any modification of the data may be inadequate; In particular, the use of historical data may fail to capture the risk of potential extreme and adverse market fluctuations, regardless of the time period used;
•A 1–day time horizon may not fully capture the market risk positions which cannot be liquidated or covered in a single day; it would not be possible to liquidate or cover all the positions in a single day;
•The VaR is calculated at the close of business, but trading positions may change substantially in the course of the trading day;
•The use of a 99% degree of confidence does not take account of, or make any statement about, the losses that could occur outside of that degree of confidence; and
•A model such as the VaR does not capture all the complex effects of the risk factors over the value of the positions or portfolios, and accordingly, it could underestimate potential losses.
We perform back-testing daily and generally find that trading losses exceed our VaR estimate approximately one out of every 100 trading days. At the same time, we set a limit to the maximum VaR that we are willing to accept over our trading portfolio. We perform back-testing daily and generally find that trading losses exceed our VaR estimate approximately one out of every 100 trading days. At the same time, we set a limit to the maximum VaR that we are willing to accept over our trading portfolio. Also, a maximum VaR limit was established that can be applied over the trading portfolio. The average VaR as of December 31, 2025 was U.S.$1.67 million, which is below the total limit. The high, low, and average levels for each component and each year below were as follows:
| Consolidated | 2025 | 2024 | 2023 | ||||||||||||||||||||
| (in millions of U.S.$) | |||||||||||||||||||||||
| VaR | |||||||||||||||||||||||
| High | 2.87 | 4.06 | 6.23 | ||||||||||||||||||||
| Low | 1.05 | 1.47 | 2.73 | ||||||||||||||||||||
| Average | 1.67 | 2.40 | 4.41 | ||||||||||||||||||||
| Fixed-income investments | |||||||||||||||||||||||
| High | 2.83 | 3.33 | 5.78 | ||||||||||||||||||||
| Low | 0.96 | 1.41 | 2.75 | ||||||||||||||||||||
| Average | 1.36 | 2.23 | 4.20 | ||||||||||||||||||||
| Variable-income investments | |||||||||||||||||||||||
| High | — | — | — | ||||||||||||||||||||
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| Low | — | — | — | ||||||||||||||||||||
| Average | — | — | — | ||||||||||||||||||||
| Foreign currency investments | |||||||||||||||||||||||
| High | 2.62 | 3.93 | 4.82 | ||||||||||||||||||||
| Low | 0.16 | 0.18 | 0.17 | ||||||||||||||||||||
| Average | 1.04 | 1.55 | 1.14 | ||||||||||||||||||||
Market risk – local and foreign financial management
The Bank’s financial management portfolio includes most of the Bank’s non-trading assets and liabilities, including the credit/loan portfolio. For these portfolios, investment and financing decisions are strongly influenced by the Bank’s commercial strategies.
The Bank uses a sensitivity analysis to measure the market risk of local and foreign currencies (not included in the trading portfolio). The Bank performs a simulation of scenarios, which will be calculated as the difference between the present value of the flows in the chosen scenario and their value in the base scenario. All the positions in local currency, including the one indexed to inflation (UF), and also the positions in foreign currency are added together based on a historical correlation model existing between the currencies. The Bank has also established limits regarding the maximum loss that these types of movements in interest rates may have on capital and net financial income budgeted for the year.
Limitations of the sensitivity models
The most important assumption is using a parallel shift of the nominal yield curve of 100bp in 2025, 2024 and 2023 (57 basis points for real rates (UF)). Santander Spain Global Risk Department has also established comparable limits by country, to be able to compare, monitor and consolidate market risk by country in a realistic and orderly way.
In addition, the sensitivity simulation methodology should be interpreted taking into consideration the following limitations:
•The simulation of scenarios assumes that the volumes remain consistent in the Bank’s Consolidated Statements of Financial Position and are always renewed at maturity, also including certain credit risk and prepayment considerations that may affect the maturity of certain positions.
•This model assumes an identical change along the entire length of the yield curve and does not take into account the different movements for different maturities.
•The model does not take into account the sensitivity of volumes which results from interest rate changes.
•The limits to losses of budgeted financial income are calculated based on the financial income foreseen for the year, which may not be actually earned, meaning that the real percentage of financial income at risk may be higher than the expected one.
Market Risk – Financial management portfolio – December 31, 2025, 2024 and 2023:
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| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| Effect on net interest income | Effect on equity | Effect on net interest income | Effect on equity | Effect on net interest income | Effect on equity | |||||||||||||||||||||||||||||||||
| Financial management portfolio – local currency (in millions of Ch$) | ||||||||||||||||||||||||||||||||||||||
| Loss limit | 175,196 | 370,271 | 138,957 | 373,566 | 124,904 | 353,718 | ||||||||||||||||||||||||||||||||
| High | 9,968 | 186,784 | 49,174 | 170,622 | 79,657 | 173,389 | ||||||||||||||||||||||||||||||||
| Low | 11,605 | 96,459 | 482 | 87,335 | 41,151 | 88,382 | ||||||||||||||||||||||||||||||||
| Average | 703 | 131,800 | 20,482 | 136,617 | 62,740 | 133,464 | ||||||||||||||||||||||||||||||||
| Financial management portfolio – foreign currency (in thousands of U.S.$) | ||||||||||||||||||||||||||||||||||||||
| Loss limit | 40,531 | 180,138 | 178,937 | 198,819 | 157,400 | 174,899 | ||||||||||||||||||||||||||||||||
| High | 9,586 | 68,145 | 13,104 | 61,137 | 17,775 | 91,935 | ||||||||||||||||||||||||||||||||
| Low | — | — | 442 | 47,615 | 227 | 53,436 | ||||||||||||||||||||||||||||||||
| Average | 1,099 | 20,534 | 5,169 | 53,651 | 9,718 | 70,397 | ||||||||||||||||||||||||||||||||
| Financial management portfolio – consolidated (in millions of Ch$) | ||||||||||||||||||||||||||||||||||||||
| Loss limit | 175,196 | 370,271 | 138,957 | 373,566 | 124,904 | 353,718 | ||||||||||||||||||||||||||||||||
| High | 27,182 | 348,027 | 46,970 | 357,867 | 75,816 | 283,550 | ||||||||||||||||||||||||||||||||
| Low | 4,600 | 237,954 | — | 279,293 | 34,663 | 246,664 | ||||||||||||||||||||||||||||||||
| Average | 13,044 | 273,792 | 19,678 | 311,333 | 64,477 | 268,776 | ||||||||||||||||||||||||||||||||
Market risk –Regulatory method
The following table illustrates our market risk exposure according to the Chilean regulatory method, as of December 31, 2025. According to FMC regulation, the short-term exposure to interest rate risk and inflation risk as a percentage of net interest and inflation income and net fee income sensitive to interest rates, accumulated in the last 12 months, should not exceed a limit established by the Bank’s Board. The Board set a limit equal to 55% of net income from interest and inflation and net income from fees sensitive to interest rates. Furthermore, long-term exposure to interest rates for the banking book as a percentage of regulatory capital should not exceed a limit established by the Bank’s Board. The Board set this limit at 35% of the Bank’s regulatory capital. Nonetheless, the FMC can lower limits at their discretion as part of its supervisory authority over the risk management of the Bank.
| As of Dec 31, | ||||||||
| 2025 | ||||||||
| Ch$mn | ||||||||
| Market risk – short-term financial management portfolio | ||||||||
| Short Term Exposure to Interest Rate Risk | 101,913 | |||||||
| Exposure to Inflation Risk | 153,766 | |||||||
| Short-term exposure of financial management portfolio | 255,679 | |||||||
| Limit = 55% net (net income from interest and inflation+ interest rates sensitive commissions) | 1,008,348 | |||||||
| Available margin | 752,669 | |||||||
| Market risk – long-term financial management portfolio | ||||||||
| Long Term Exposure to Interest Rate Risk | 728,870 | |||||||
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| Limit = 35% Regulatory capital | 2,466,563 | |||||||
| Available margin | 1,737,693 | |||||||
| Trading book | ||||||||
| Exposure to interest rate risk | 565,138 | |||||||
| Exposure to currency risk | 4,484 | |||||||
| Interest rate option risk | - | |||||||
| Currency option risk | 1,896 | |||||||
| Total exposure of trading portfolio | 571,518 | |||||||
| Banking book | ||||||||
| Short Term Exposure to Interest Rate Risk | 101,913 | |||||||
| Exposure to Inflation Risk | 153,766 | |||||||
| Long Term Exposure to Interest Rate Risk | 728,870 | |||||||
| Total exposure of banking book | 984,549 | |||||||
Derivative activities
At December 31, 2025, 2024 and 2023, derivatives are valued at market price on the balance sheet and the net unrealized gain (loss) on derivatives is classified as a separate line item on the income statement. Notional amounts are not recorded on the balance sheet. Banks must mark-to-market derivatives. A derivative financial instrument held for trading purposes must be marked to market and the unrealized gain or loss recognized in the income statement. The FMC recognizes three kinds of hedge accounting: (i) cash flow hedges, (ii) fair value hedges and (iii) hedging of foreign investments.
•When a cash flow hedge exists, the fair value movements on the part of the hedging instrument that is effective are recognized in equity. Any ineffective portion of the fair value movement on the hedging instrument is recognized in the income statement.
•When a fair value hedge exists, the fair value movements on the hedging instrument and the corresponding fair value movements on the hedged item are recognized in the income statement. Hedged items in the balance sheet are presented at their market value.
•When a hedge of foreign investment exposure exists (i.e. investment in a foreign branch), the fair value movements on the part of the hedging instrument that is effective are recognized in equity. Any ineffective portion of the fair value movement on the hedging instrument is recognized in the income statement.
In order to reduce the credit risk in its derivative contracts, the Bank has entered into Credit Support Annex (CSA) agreements with the majority of its counterparties, which include obligations to post daily cash collateral. The majority of the agreements include an obligation to post collateral with a threshold amount of zero. In the table below we identify those contracts with CSA and breakdown the fair value of our derivative portfolio by collateral threshold requirements for 2025 and 2024.
| Fair value of derivative contracts | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| Assets | Liabilities | Assets | Liabilities | |||||||||||||||||||||||
| Derivative contracts with zero threshold collateral amount in CSA | 1,985,631 | 1,433,944 | 1,840,673 | 1,594,111 | ||||||||||||||||||||||
| Derivative contracts without CSA agreements | 9,155,338 | 10,066,080 | 11,312,725 | 11,459,307 | ||||||||||||||||||||||
| Total | 11,140,969 | 11,500,024 | 13,153,398 | 13,053,418 | ||||||||||||||||||||||
We classify some of our derivative financial instruments as being financial assets held for trading, due to the guidelines from the FMC. We enter into derivative contracts with some clients who seek hedging instruments. However, substantially all of our derivatives are not actually used for speculative purposes or trading.
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As of December 31, 2025, the Bank held the following portfolios of financial assets and liabilities derivative contracts for trading at fair value through profit and loss:
| As of December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notional amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | Fair value | ||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | ||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency forward | — | 25,231,549 | 17,959,495 | 27,913,502 | 6,971,335 | 2,517,760 | 1,663,646 | 82,257,287 | 2,055,569 | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | — | 13,947,595 | 29,006,667 | 30,995,890 | 20,723,603 | 16,894,592 | 31,276,092 | 142,844,439 | 1,332,806 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | — | 1,434,261 | 5,123,374 | 13,944,592 | 20,763,957 | 15,684,701 | 24,426,683 | 81,377,568 | 7,489,381 | |||||||||||||||||||||||||||||||||||||||||||||||
| Call currency options | — | 22,061 | 23,401 | 56,923 | — | — | — | 102,385 | 1,039 | |||||||||||||||||||||||||||||||||||||||||||||||
| Put currency options | — | 39,178 | 3,415 | 5,239 | — | — | — | 47,832 | 982 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | — | 40,674,644 | 52,116,352 | 72,916,146 | 48,458,895 | 35,097,053 | 57,366,421 | 306,629,511 | 10,879,777 | |||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notional amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| On Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | Fair value | ||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | ||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency forward | — | 23,750,958 | 20,824,030 | 27,092,792 | 5,136,179 | 1,136,565 | 700,706 | 78,641,230 | 2,173,004 | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | — | 16,930,774 | 20,745,410 | 35,069,132 | 21,274,251 | 15,793,974 | 29,527,648 | 139,341,189 | 1,134,840 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | — | 1,172,436 | 4,049,436 | 10,566,265 | 19,536,479 | 12,329,038 | 22,921,210 | 70,574,864 | 7,276,583 | |||||||||||||||||||||||||||||||||||||||||||||||
| Call currency options | — | 27,767 | 47,768 | 25,958 | — | — | — | 101,493 | 491 | |||||||||||||||||||||||||||||||||||||||||||||||
| Put currency options | — | 56,787 | 73,951 | 73,075 | — | — | — | 203,813 | 2,390 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | — | 41,938,722 | 45,740,595 | 72,827,222 | 45,946,909 | 29,259,577 | 53,149,564 | 288,862,589 | 10,587,308 | |||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2024, the Bank holds the following the Bank holds the following portfolios of financial assets and liabilities derivative contracts for trading at fair value through profit and loss:
| As of December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notional amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | Fair value | ||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | ||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency forward | — | 14,227,181 | 9,262,636 | 13,988,163 | 5,818,091 | 576,456 | 993,915 | 44,866,442 | 1,038,292 | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | — | 15,353,818 | 15,394,905 | 16,392,696 | 21,541,572 | 9,219,884 | 17,265,959 | 95,168,834 | 1,907,001 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | — | 1,826,508 | 3,315,310 | 11,052,105 | 27,159,964 | 13,026,424 | 23,665,080 | 80,045,391 | 9,356,353 | |||||||||||||||||||||||||||||||||||||||||||||||
| Call currency options | — | 42,802 | 198,509 | 117,175 | 8,921 | — | — | 367,407 | 6,618 | |||||||||||||||||||||||||||||||||||||||||||||||
| Put currency options | — | 71,468 | 253,669 | 37,950 | — | — | — | 363,087 | 1,506 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | — | 31,521,777 | 28,425,029 | 41,588,089 | 54,528,548 | 22,822,764 | 41,924,954 | 220,811,161 | 12,309,770 | |||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notional amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| On Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | Fair value | ||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | ||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency forward | — | 11,564,755 | 9,439,120 | 14,191,034 | 10,403,238 | 1,680,685 | 1,598,835 | 48,877,667 | 1,151,921 | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | — | 16,536,773 | 12,505,389 | 16,690,413 | 18,464,156 | 9,887,330 | 16,615,159 | 90,699,220 | 1,565,539 | |||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | — | 1,325,472 | 2,195,962 | 8,993,722 | 19,955,223 | 11,501,296 | 19,704,815 | 63,676,490 | 9,430,069 | |||||||||||||||||||||||||||||||||||||||||||||||
| Call currency options | — | 81,510 | 143,946 | 58,826 | — | — | — | 284,282 | 5,530 | |||||||||||||||||||||||||||||||||||||||||||||||
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| Put currency options | — | 248,733 | 106,519 | 138,505 | 8,921 | — | — | 502,678 | 1,965 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | — | 29,757,243 | 24,390,936 | 40,072,500 | 48,831,538 | 23,069,311 | 37,918,809 | 204,040,337 | 12,155,024 | |||||||||||||||||||||||||||||||||||||||||||||||
We also use derivatives to hedge our exposure to foreign exchange, interest rate and inflation risks. The Bank uses derivatives, mainly Ch$/UF swaps, in order to cover its exposure to inflation due to a higher amount of assets linked to inflation as compared to liabilities. Such derivatives are accounted for as cash flow hedges. Our Financial Management Division usually seeks to maintain liabilities with an average duration that is shorter than that of our assets, including through the use of derivatives, in order to hedge against sudden or rapid falls in the inflation rate, which in general triggers a reduction in short-term rates. To maintain this position, the Bank enters into interest rate swaps that are accounted for as fair value hedges.
As of December 31, 2025 and 2024 the Bank holds the following portfolio of derivative instruments for hedging purposes:
| As of December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notional amount | Fair value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | Assets | Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value hedge derivatives | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | — | — | — | 175,000 | 2,075,449 | 752,638 | 180,138 | 3,183,225 | 580 | 103,009 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | — | 208,960 | 836,741 | 3,432,758 | 2,185,078 | 1,142,547 | 2,069,995 | 9,876,079 | 202,632 | 421,620 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | — | 208,960 | 836,741 | 3,607,758 | 4,260,527 | 1,895,185 | 2,250,133 | 13,059,304 | 203,212 | 524,629 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency forwards | — | 272,306 | 311,863 | 1,076,376 | — | — | — | 1,660,545 | 5,843 | 20,706 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | — | 589,136 | 1,673,048 | 3,546,146 | 3,814,876 | 2,844,561 | 553,938 | 13,021,705 | 52,137 | 367,381 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | — | 861,442 | 1,984,911 | 4,622,522 | 3,814,876 | 2,844,561 | 553,938 | 14,682,250 | 57,980 | 388,087 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | — | 1,070,402 | 2,821,652 | 8,230,280 | 8,075,403 | 4,739,746 | 2,804,071 | 27,741,554 | 261,192 | 912,716 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notional amount | Fair value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | Assets | Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | Ch$mn | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value hedge derivatives | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | — | — | — | 2,047,050 | 1,153,300 | 543,000 | 397,640 | 4,140,990 | 40,062 | 78,329 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | — | 841,009 | 224,877 | 2,093,135 | 3,127,813 | 1,177,983 | 1,436,626 | 8,901,443 | 462,924 | 243,723 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | — | 841,009 | 224,877 | 4,140,185 | 4,281,113 | 1,720,983 | 1,834,266 | 13,042,433 | 502,986 | 322,052 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash flow hedge derivatives | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency forwards | — | 149,115 | 160,050 | 1,861,085 | — | — | — | 2,170,250 | 65,196 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | — | 889,661 | 1,989,477 | 3,491,191 | 7,437,766 | 528,886 | 1,153,235 | 15,490,216 | 275,446 | 576,342 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | — | 1,038,776 | 2,149,527 | 5,352,276 | 7,437,766 | 528,886 | 1,153,235 | 17,660,466 | 340,642 | 576,342 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | — | 1,879,785 | 2,374,404 | 9,492,461 | 11,718,879 | 2,249,869 | 2,987,501 | 30,702,899 | 843,628 | 898,394 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A.Debt Securities
Not applicable.
B. Warrants and Right
Not applicable.
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C. Other Securities
Not applicable.
D. American Depositary Shares
Our Depositary as of August 5, 2025 is JP Morgan Chase Bank, NA, with its principal executive office located at 270 Park Avenue, Floor 8, New York, N.Y. 10017.
Each ADS represents the right to receive 400 shares of Common Stock without par value.
Charges of Depositary
The Depositary may charge, and collect from, (i) each person to whom ADSs are issued, including, without limitation, issuances against deposits of Shares, issuances in respect of Share Distributions, Rights and Other Distributions (as such terms are defined in paragraph (10) (Distributions on Deposited Securities)), issuances pursuant to a stock dividend or stock split declared by the Company, or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or the Deposited Securities, and (ii) each person surrendering ADSs for withdrawal of Deposited Securities or whose ADSs are cancelled or reduced for any other reason, a fee of up to U.S.$5.00 for each 100 ADSs (or portion thereof) issued, delivered, reduced, cancelled or surrendered, or upon which a Share Distribution or elective distribution is made or offered (as the case may be). The Depositary may sell (by public or private sale) sufficient securities and property received in respect of Share Distributions, Rights and Other Distributions prior to such deposit to pay such charge.
The following additional fees, charges and expenses shall also be incurred by the Holders, the Beneficial Owners, by any party depositing or withdrawing Shares or by any party surrendering ADSs and/or to whom ADSs are issued (including, without limitation, issuances pursuant to a stock dividend or stock split declared by the Company or an exchange of stock regarding the ADSs or the Deposited Securities or a distribution of ADSs pursuant to paragraph (10) (Distributions on Deposited Securities)), whichever is applicable:
(i) a fee of up to U.S.$0.05 per ADS held for any Cash distribution made, or for any elective cash/stock dividend offered, pursuant to the Deposit Agreement,
(ii) a fee of up to U.S.$0.05 per ADS held for the direct or indirect distribution of securities (other than ADSs or rights to purchase additional ADSs pursuant to paragraph (10) hereof) or the net cash proceeds from the public or private sale of any such securities, regardless of whether any such distribution and/or sale is made by, for, or received from, or (in each case) on behalf of, the Depositary, the Company and/or any third party (which fee may be assessed against Holders as of a record date set by the Depositary),
(iii) an aggregate fee of up to U.S.$0.05 per ADS per calendar year (or portion thereof) for services performed by the Depositary in administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against Holders as of the record date or record dates set by the Depositary during each calendar year and shall be payable at the sole discretion of the Depositary by billing such Holders or by deducting such charge from one or more cash dividends or other cash distributions), and
(iv) an amount for the reimbursement of such charges and expenses as are incurred by the Depositary and/or any of its agents (including, without limitation, the Custodian, as well as charges and expenses incurred on behalf of Holders in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in connection with the servicing of the Shares or other Deposited Securities, the sale of securities (including, without limitation, Deposited Securities), the delivery of Deposited Securities or otherwise in connection with the Depositary's or its Custodian's compliance with applicable law, rule or regulation (which charges and expenses may be assessed on a proportionate basis against Holders as of the record date or dates set by the Depositary and shall be payable at the sole discretion of the Depositary by billing such Holders or by deducting such charge or expense from one or more cash dividends or other cash distributions).
Direct and Indirect Payments
The Depositary has agreed to make payments to us to reimburse us for costs and expenses generally arising out of establishment and maintenance of the ADS program, waive fees and expenses for services provided to us by the Depositary
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or share revenue from the fees collected from ADS holders from time to time. Under certain circumstances, including termination of the program, we are required to repay the Depositary amounts reimbursed in prior periods.
The reimbursements include direct payments (legal and accounting fees incurred in connection with preparation of Form 20-F and ongoing SEC compliance and listing requirements, listing fees, investor relations expenses, advertising and public relations expenses and fees payable to service providers for the distribution of hard copy materials to beneficial ADR holders in the Depositary Trust Company, such as information related to shareholders’ meetings and related voting instruction cards); and indirect payments (third-party expenses paid directly and fees waived).
In 2025, the Depositary made direct payments and reimbursements to us in the gross amount of U.S.$1,235,752 (U.S.$706,486 from Bank of New York and US$529,266 from JP Morgan) for expenses related to investor relations of which 30% was withheld for tax purposes in the U.S.
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PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not applicable.
ITEM 15. CONTROLS AND PROCEDURES
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
As of December 31, 2025, the Bank, under the supervision and with the participation of the Bank’s management, including its Disclosure Committee, the Chief Executive Officer, the Chief Financial Officer and the Chief Accounting Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). There are, as described below, inherent limitations to the effectiveness of any control system, including disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can provide only reasonable assurance of achieving their control objectives.
Based on such evaluation, as of December 31, 2025, the Bank’s Disclosure Committee, the Chief Executive Officer, the Chief Financial Officer and the Chief Accounting Officer concluded that the Bank’s disclosure controls and procedures were effective in ensuring that information relating to the Bank, including its consolidated subsidiaries, required to be disclosed in the reports it files under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to the Bank’s management, including its Disclosure Committee and principal financial officers as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
The Bank’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. The Bank’s internal control over financial reporting is a process designed by, or under the supervision of, the Bank’s principal executive and principal financial officers and effected by the Bank’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS-IASB and includes those policies and procedures that:
•Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Bank;
•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS-IASB, and that our receipts and expenditures are being made only in accordance with authorizations of the Bank’s management and directors; and
•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting, no matter how well designed may not prevent or detect misstatements, due to the possibility that a control can be circumvented or overridden or that misstatements due to error or fraud may occur that are not detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
We have adapted our internal control over financial reporting to international standards and comply with the guidelines set by the Committee of Sponsoring Organizations of the Treadway Commission in its Internal Control—Integrated Framework (2013). The general framework assigns to management specific responsibilities regarding the structure and
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effectiveness of the processes related directly and indirectly with the production of consolidated financial statements, as well as the controls needed to mitigate the risks inherent in these processes.
Under the supervision and with the participation of the Bank’s management, including the Disclosure Committee, the Chief Executive Officer, the Chief Financial Officer and the Chief Accounting Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Based on this assessment, our management concluded that, as of December 31, 2025, our internal control over financial reporting was effective based on those criteria.
Changes in Internal Control Over Financial Reporting
There has been no change in the Bank’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the period covered by this Annual Report that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.
Our internal control over financial reporting as of December 31, 2025 has been audited by an independent registered public accounting firm, as stated in its report, which is referenced below.
Report of Independent Registered Public Accounting Firm
For the report of PricewaterhouseCoopers Consultores, Auditores y Compañía Limitada, independent registered public accounting firm, dated February 27, 2026, on the effectiveness of our internal control over financial reporting as of December 31, 2025, see page F-3 of our Audited Consolidated Financial Statements.
ITEM 16. [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our Board of Directors determined that one of the members of our Audit Committee, Rodrigo Vergara, met the requirements of an “audit committee financial expert” in accordance with SEC rules and regulations, in that he has an understanding of IFRS-IASB and financial statements, the ability to assess the general application of IFRS-IASB in connection with the accounting for estimates, accruals and reserves, experience analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by our consolidated financial statements, an understanding of internal controls over financial reporting, and an understanding of audit committee functions. All three members of our Audit Committee have experience overseeing and assessing the performance of Santander-Chile and its consolidated subsidiaries and our external auditors with respect to the preparation, auditing and evaluation of our consolidated financial statements.
All three members of our Audit Committee are considered to be independent according to applicable NYSE criteria.
ITEM 16B. CODE OF ETHICS
The Bank has adopted a code of ethics that is applicable to all of the Bank’s employees and a copy is included as an exhibit hereto. We will provide to any person without charge, upon request, a copy of our code of ethics. Please email irelations@santander.cl to request a copy. Our code of ethics is available on our website, which does not form part of this Annual Report on Form 20-F, at www.santander.cl under the heading “Información Corporativa.”
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ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Amounts billed by the auditors for statutory audit and other services were as follows:
| 2025 | 2024 | |||||||||||||
| (in millions of Ch$) | ||||||||||||||
| Audit Fees: | ||||||||||||||
| Statutory audit | 915 | 885 | ||||||||||||
| Audit-related regulatory reporting | 383 | 466 | ||||||||||||
| Other audit-related fees | 594 | 397 | ||||||||||||
| Tax Fees: | ||||||||||||||
| Compliance | - | - | ||||||||||||
| Advisory Services | - | - | ||||||||||||
| Total | 1,892 | 1,748 | ||||||||||||
Statutory audit: Consists of fees billed for professional services rendered in connection with the audit of our consolidated financial statements that are provided by PricewaterhouseCoopers Consultores, Auditores y Compañía Limitada (PCAOB ID: 1364) and in connection with statutory and regulatory filings or engagements, and attest services.
Audit-related regulatory reporting: Consists of fees billed for assurance and related services that were specifically related to the performance of the audit and review of our filings under the Securities Act.
Tax fees: Consist of fees billed for related services that were specifically related to tax related matters such as assuring the Bank was in compliance with tax laws and other tax advisory services.
The Audit Committee is required to pre-approve the audit and non-audit services performed by the Bank auditors in order to assure that the provision of such services do not impair the audit firm’s independence.
In the first months of each year the Audit Committee proposes to the Board the appointment of the independent auditor. As a matter of policy, at that time, the Audit Committee pre-approves the audit and audit related services that the appointed auditors will be required to carry out during the year to comply with the applicable regulation. These services will be included in the corresponding audit contracts of the Bank with its principal auditing firm.
In addition, under such policy, non-recurring audit or audit-related services and all non-audit services provided by the Bank principal auditing firm or other auditing firms are subject to case-by-case approval by the Audit Committee.
The Chief Accounting Officer is in charge of managing the process and must report monthly to the Audit Committee detailing all services to be provided by auditors, and others requiring individual approval.
All services provided by the Bank principal auditing firm in 2021 detailed in the table above were approved by the Audit and Compliance Committee.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
In 2025, neither Santander-Chile nor any of its affiliates purchased any of Santander-Chile’s equity securities.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
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ITEM 16G. CORPORATE GOVERNANCE
Summary Comparison of Corporate Governance Standards and NYSE Listed Company Standards
Our corporate governance standards, dictated by Chilean corporate law, differ from the standards followed by U.S. companies under the New York Stock Exchange (NYSE) listing standards in a number of ways. Consequently, you will not have the same protections afforded to shareholders of companies that are subject to all NYSE corporate governance requirements. The following is a non-exhaustive summary of a few key differences:
•Whether a company’s executive officers may serve as its directors – the NYSE standards do not prohibit a U.S. company’s executive officer from also serving as a director, whereas our corporate governance standards prohibit this.
•Whether the shareholders must be given an opportunity to vote on equity-compensation plans – the NYSE standards require that shareholders be allowed to vote on all equity compensation plans of a U.S. company, whereas our corporate governance standards only require that shareholders be allowed to vote on director compensation.
•The adoption and disclosure of corporate governance guidelines – the NYSE standards require all U.S. companies listed on the NYSE to adopt the NYSE corporate governance guidelines, whereas we follow the corporate governance guidelines established under Chilean law.
As more than 50% of our voting power is held by another company, Santander Spain, we would be permitted to elect for certain exemptions under NYSE corporate governance standards if we were a U.S. company. Specifically, as a U.S. company, we could elect to be exempted from the requirements (i) that we have a majority of independent directors (as defined by the NYSE), (ii) that we have a nominating/corporate governance committee meeting certain conditions, and (iii) that we have a compensation committee meeting certain requirements. Because we would not be required to follow these standards if we were a U.S. company, we have not summarized the differences, if any, between these provisions and our own corporate governance procedures.
Summary of Corporate Governance Standards
For a summary of our Board’s corporate governance practices please see “Item 6C—Board Practices” and “Item 10B—Memorandum and Articles of Association” which describe in detail the governing standards of the board committees. Santander-Chile has also adopted diverse measures to promote good corporate governance.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
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ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES
Insider Trading Policies and Procedures
We maintain insider trading policies and procedures governing the purchase, sale, and/or other dispositions of Bank’s securities by directors, officers, and employees that we believe are reasonably designed to promote compliance with insider trading laws, rules, and regulations, as well as NYSE listing standards. A copy of our insider trading policy is filed as Exhibit 19 to this report.
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ITEM 16K. CYBERSECURITY
Cybersecurity Risk Management
Our operational risk management and control model is based on a continuous process of identifying, evaluating, and mitigating sources of risk, regardless of whether they have materialized or not. Throughout the application of this process, risk management priorities are established appropriately, and internal controls are defined and executed to manage and mitigate the risk across the organization. For example, the internal cyber-security model, which is a part of our operational risk management and control model and is based on best practices and international standards, is periodically evaluated for its maturity level.
With respect to operational risk management specifically, we have implemented tools such as Heracles, which is our management and reporting system for operational risk and which supports the operational risk program with a Governance, Risk and Compliance (GRC) approach. Heracles provides information for management and reporting at the Bank and throughout the Santander Group. Heracles also facilitates better operational risk management decisions by using a common set of taxonomies and methodological standards to allow information consolidation, duplication prevention, and reporting simplification.
We have also implemented a qualitative “Risk control self-assessment” (RCSA) process, that allows us to identify, assess and measure, in a dynamic and proactive way, the material operational risks that could prevent the business or support units from achieving their objectives, as well as the effectiveness of the controls linked to their mitigation. Our RCSA integrates specific reviews that allows us to identify cyber, technology, fraud, third party supplier and other risk drivers, that could lead to operational risks as well as the failure to meet regulatory expectations. In addition, RCSA incorporates reviews related to regulatory compliance, conduct and financial crime risk.
Other instruments are used to analyze and manage operational risk, such as the assessment of new products and services, and transformation initiatives; business continuity plans (BCP); review of corporate insurance; review of the management perimeter; recommendations from internal and external auditors, and supervisors; and the quality assurance process.
During 2025, we faced a dynamic and increasingly sophisticated threat landscape in Latin America, affecting Chile. The region experienced a continued rise in ransomware attacks, with critical infrastructure and large enterprises being frequent targets. Supply chain attacks remained a relevant risk, given the interconnected nature of service providers. Additionally, threat actors intensified the use of social engineering techniques and AI-enabled tools to enhance phishing campaigns, credential theft, reflecting trends observed across emerging markets.
To face these challenges, Santander has continued to evolve its defenses in line with the cybersecurity strategy, centered on three pillars: (i) the principles of security by design were strengthened, incorporating risk management and the definition of security architectures from the early stages of each initiative; (ii) we continued to harness the potential of AI and automation to strengthen threat prevention, detection and response; and (iii) we strengthened our capacity to anticipate, resist and recover from potential cyber scenarios, strengthening response preparedness and continuity of essential services. Among the main improvements are the global expansion of the permanently operational Cyber Emergency Response Team (CERT) and the expansion of resilience and recovery tests.
Governance
179
Table of contents
In turn, there is a group of supervisory bodies that include the Cybersecurity and Technology Risk Committee, who are responsible for ensuring adequate management of cybersecurity risks in line with business objectives and risk appetite; the Non-Financial Risk Committee, who is in charge of supervising and controlling the management of non-financial risks in order to prevent and mitigate operational losses. The Bank’s Board is involved in supervising cybersecurity matters in two instances: (i) First, the board of directors, which approves the cybersecurity framework, strategy and policies, and ensures that appropriate priority and resources are allocated to protect systems and information of the Bank, and (ii) the board’s Integral Risk Committee, which proposes the action framework and risk appetite for the Bank, and oversees risk management based on a comprehensive view of risks. Both the board and the board’s Integral Risk Committee discuss these matters on a quarterly basis and the CISO reports to the board on Santander Chile’s cybersecurity management, including the review of strategic indicators and objectives for the year, cyber incidents of the period (if any) and the status of vulnerabilities management. We are strongly aligned with Santander Group’s headquarters, who sets the guidelines and main initiatives to develop in these areas, regarding strategy, best practices, and experience-sharing.
All this architecture has been created with the aim of identifying cyber risks, the development of a culture and education in cybersecurity, the creation of cyber scenarios to anticipate potential threats, and the fulfillment of the regulatory framework set by the authorities.
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Table of contents
PART III
ITEM 17. FINANCIAL STATEMENTS
We have responded to Item 18 in lieu of this Item.
ITEM 18. FINANCIAL STATEMENTS
Reference is made to Item 19 for a list of all financial statements filed as part of this Annual Report.
ITEM 19. EXHIBITS
a)Index to Financial Statements
Report of PricewaterhouseCoopers Consultores, Auditores y Compañía Limitada, independent registered public accounting firm (PCAOB ID: | F-2 | ||||
| Audited Consolidated Financial Statements | |||||
Consolidated Statements of Financial Position as of December 31, 2024 and 2023 | F-5 | ||||
Consolidated Statements of Income for each of the three years in the period ended December 31, 2024, 2023 and 2022 | F-6 | ||||
Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2024, 2023 and 2022 | F-7 | ||||
Consolidated Statements of Changes in Equity for each of the three years in the period ended December 31, 2024, 2023 and 2022 | F-8 | ||||
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2024, 2023 and 2022 | F-10 | ||||
Notes to consolidated financial statements | F-12 | ||||
181
b)Index to Exhibits
| Exhibit Number | Description | |||||||
| 1A.1 | Restated Articles of Incorporation of Santander-Chile (Spanish Version) (incorporated by reference to exhibit 3(a) to our Registration Statement on Form F-4 (Registration No. 333-100975) filed with the Commission on December 9, 2002). | |||||||
| 1A.2 | Restated Articles of Incorporation of Santander-Chile (English Version) (incorporated by reference to exhibit 3(b) to our Registration Statement on Form F-4 (Registration No. 333-100975) filed with the Commission on December 9, 2002). | |||||||
| 1B | Amended and Restated By-Laws (estatutos) of Santander-Chile (English Version) (incorporated by reference to exhibit 99.1 to our Report on Form 6-K (File No. 001-14554) filed with the Commission on March 15, 2017). | |||||||
| 2A.1 | Form of Second Amended and Restated Deposit Agreement (incorporated by reference to our Registration Statement on Form F-6 (Registration No. 333-288835) filed with the Commission on July 22, 2025). | |||||||
| 2D | Description of Securities. | |||||||
| 8.1 | List of Subsidiaries. | |||||||
| 12.1 | Section 302 Certification by the Chief Executive Officer. | |||||||
| 12.2 | Section 302 Certification by the Chief Financial Officer. | |||||||
| 12.3 | Section 302 Certification by the Financial Controller. | |||||||
| 13.1 | Section 906 Certification. | |||||||
| 19.0 | Banco Santander Chile Insider Trading Policy (incorporated by reference to Exhibit 19.0 to our Annual Report on Form 20-F (File No. 001-14554) filed with the Commission on February 28, 2025). | |||||||
| 97.1 | Banco Santander Chile Financial Statement Compensation Recoupment Policy (incorporated by reference to Exhibit 97.1 to our Annual Report on Form 20-F (File No. 001-14554) filed with the Commission on February 22, 2024). | |||||||
| 101.INS | Inline XBRL Instance Document. | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation LinkbaseDocument. | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition LinkbaseDocument. | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation LinkbaseDocument. | |||||||
| 104.0 | Cover Page Interactive Data File (formatted as InlineXBRL and contained in Exhibit 101). | |||||||
We will furnish to the Securities and Exchange Commission, upon request, copies of any unfiled instruments that define the rights of holders of long-term debt of Banco Santander-Chile.
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
| BANCO SANTANDER-CHILE | |||||||||||
| By: | /s/ Cristian Florence | ||||||||||
| Name: | Cristian Florence | ||||||||||
| Title: | General Counsel | ||||||||||
Date: February 27, 2026
182
| CONSOLIDATED FINANCIAL STATEMENTS 2025 | Banco Santander-Chile | ||||
CONTENT
Report of Independent Registered Public Accounting Firm | F-2 | |||||||
| Report of Independent Registered Public Accounting Firm (PCAOB ID 1364) | ||||||||
| Consolidated Financial Statements | ||||||||
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | F-5 | |||||||
CONSOLIDATED STATEMENTS OF INCOME | F-6 | |||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | F-7 | |||||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | F-8 | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | F-10 | |||||||
| Notes to the Consolidated Financial Statements | ||||||||
NOTE 01 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | F-12 | ||||||
NOTE 02 | SIGNIFICANT EVENTS | F-35 | ||||||
NOTE 03 | REPORTING SEGMENTS | F-37 | ||||||
NOTE 04 | CASH AND CASH EQUIVALENTS | F-42 | ||||||
NOTE 05 | FINANCIAL ASSETS FOR TRADING AT FAIR FALUE THROUGH PROFIT AND LOSS | F-43 | ||||||
NOTE 06 | FINANCIAL ASSETS AT FAIR FALUE THROUGH OTHER COMPREHENSIVE INCOME | F-45 | ||||||
NOTE 07 | FINANCIAL DERIVATIVE CONTRACTS FOR HEDGE ACCOUNTING | F-53 | ||||||
NOTE 08 | FINANCIAL ASSETS AT AMORTISED COST | F-62 | ||||||
NOTE 09 | INVESTMENTS IN ASSOCIATES AND OTHER COMPANIES | F-76 | ||||||
NOTE 10 | INTANGIBLE ASSETS | F-78 | ||||||
NOTE 11 | FIXED ASSETS | F-80 | ||||||
NOTE 12 | RIGHT OF USE ASSETS AND OBLIGATION FOR LEASE CONTRACTS | F-82 | ||||||
NOTE 13 | CURRENT AND DEFERRED TAXES | F-85 | ||||||
NOTE 14 | OTHER ASSETS | F-89 | ||||||
NOTE 15 | NON CURRENT ASSETS AND DISPOSAL GROUPS FOR SALE | F-90 | ||||||
NOTE 16 | FINANCIAL LIABILITIES FOR TRADING AT FAIR VALUE THROUGH PROFIT OR LOSS | F-91 | ||||||
NOTE 17 | FINANCIAL LIABILITIES AT AMORTISED COST | F-93 | ||||||
NOTE 18 | REGULATORY CAPITAL FINANCIAL INSTRUMENTS | F-102 | ||||||
NOTE 19 | PROVISIONS AND CONTINGENT PROVISIONS | F-104 | ||||||
NOTE 20 | OTHER LIABILITIES | F-107 | ||||||
NOTE 21 | EQUITY | F-108 | ||||||
NOTE 22 | NON-CONTROLLING INTEREST | F-112 | ||||||
NOTE 23 | MATURITY OF ASSETS AND LIABILITIES | F-114 | ||||||
NOTE 24 | CONTINGENCIES AND COMMITMENTS | F-116 | ||||||
NOTE 25 | INTEREST INCOME AND EXPENSES | F-118 | ||||||
NOTE 26 | FEES AND COMMISSIONS | F-120 | ||||||
NOTE 27 | NET INCOME (EXPENSE) FROM FINANCIAL OPERATIONS | F-124 | ||||||
NOTE 28 | NET INCOME FROM NON-CURRENT ASSETS AND GROUPS AVAILABLE FOR SALE NOT ADMISSIBLE AS DISCONTINUED OPERATIONS | F-125 | ||||||
NOTE 29 | OTHER OPERATING INCOME AND EXPENSES | F-126 | ||||||
NOTE 30 | PERSONNEL SALARIES AND EXPENSES | F-127 | ||||||
NOTE 31 | ADMINISTRATIVE EXPENSES | F-128 | ||||||
NOTE 32 | DEPRECIATION, AMORTISATION, AND IMPAIRMENT | F-129 | ||||||
NOTE 33 | EXPECTED CREDIT LOSSES ALLOWANCE | F-130 | ||||||
NOTE 34 | TRANSACTIONS WITH RELATED PARTIES | F-132 | ||||||
NOTE 35 | PENSION PLANS | F-140 | ||||||
NOTE 36 | FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES | F-143 | ||||||
NOTE 37 | RISK MANAGEMENT | F-152 | ||||||
NOTE 38 | SUBSEQUENT EVENTS | F-187 | ||||||
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Banco Santander - Chile
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial position of Banco Santander-Chile and its Subsidiaries (the “Bank”) as of December 31, 2025 and 2024, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Bank’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Bank as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Bank maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Bank's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Annual Report on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on the Bank’s consolidated financial statements and on the Bank's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Bank in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Oficinas | |||||
Santiago: Av. Isidora Goyenechea 2800, piso 10, Torre Titanium, Las Condes | Viña del Mar: Av. Libertad 1405, of. 1704. Edificio Coraceros | ||||
Concepción: Chacabuco 1085, pisos 8 y 9, Edificio Centro Sur | Puerto Montt: Benavente 550, piso 10, Edificio Campanario | ||||
Oficina de parte: Av. Andrés Bello 2711, piso 1, Torre de la Costanera, Las Condes, Santiago | |||||
Teléfono Central: (56) 9 3861 7940 | |||||
| www.pwc.cl | |||||
F-2
Santiago, February 25, 2026
Banco Santander - Chile
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Expected Credit Loss Allowance for Commercial, Mortgage and Consumer Loans – Collective Basis
As described in Notes 1 and 37 to the consolidated financial statements, management assesses the adequacy of the collective basis expected credit loss allowance for commercial, mortgage and consumer loans using expected credit loss models. As of December 31, 2025, the collective basis expected credit loss allowance was Ch$ 1,070,776 million on total commercial, mortgage and consumer loans of Ch$ 40,502,885 million. As described by management, the estimation of the collective basis expected credit loss allowance considers qualitative and quantitative information that may affect the changes in credit risk and the development of significant assumptions related to the probabilities of default and loss given default, related to forward looking information, multi-factor analysis such as type of portfolio or transaction and macroeconomic factors. Management assesses the adequacy of significant assumptions and the qualitative information used to determine the significant increase in credit risk since initial recognition, the internal rating and scoring policy, and the probabilities of default and loss given default.
F-3
Santiago, February 25, 2026
Banco Santander - Chile
The principal considerations for our determination that performing procedures relating to the collective basis expected credit loss allowance for commercial, mortgage and consumer loans is a critical audit matter are (i) the significant judgment by management in determining the collective basis expected credit loss allowance, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence obtained relating to the significant assumptions used in the determination of the probabilities of default and loss given default, related to forward looking information, multi-factor analysis such as type of portfolio or transaction, the internal rating and scoring policy, and macroeconomic factors; and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the expected credit loss allowance for commercial, mortgage and consumer loans estimation process, which included controls over the significant assumptions used in the estimation of the collective basis expected credit loss allowance, within the qualitative information. These procedures also included, among others, (i) testing management’s process for estimating the collective basis expected credit loss allowance for commercial, mortgage and consumer loans; (ii) testing the completeness, accuracy, and relevance of underlying data provided by management and used in the model and (iii) the involvement of professionals with specialized skill and knowledge to assist in testing management’s process for estimating the collective basis expected credit loss allowance for commercial, mortgage and consumer loans, including evaluating the appropriateness of the methodologies and models, testing data used in the estimate and evaluating the reasonableness of significant assumptions in determining the probabilities of default and loss given default, related to forward looking information, multi-factor analysis such as type of portfolio or transaction, the internal rating and scoring policy, and macroeconomic factors.
February 25, 2026
/s/ PricewaterhouseCoopers Consultores, Auditores y Compañía Limitada
We have served as the Bank’s auditor since 2016.
F-4
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||
| For the years ended, | ||
| As of December 31, | ||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Note | MCh$ | MCh$ | ||||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and deposits in banks | 4 | |||||||||||||||||||
| Cash items in process of collection | 4 | |||||||||||||||||||
| Financial assets for trading at fair value through profit and loss | 5 | |||||||||||||||||||
| Financial derivative contracts | ||||||||||||||||||||
| Debt financial instruments | ||||||||||||||||||||
| Financial assets at fair value through other comprehensive income | 6 | |||||||||||||||||||
| Debt financial instrument | ||||||||||||||||||||
| Other financial instruments | ||||||||||||||||||||
| Financial derivative contracts for hedge accounting | 7 | |||||||||||||||||||
| Financial assets at amortised cost | 8 | |||||||||||||||||||
| Rights under repurchase agreements | ||||||||||||||||||||
| Debt financial instruments | ||||||||||||||||||||
| Interbank loans | ||||||||||||||||||||
| Loans and account receivable from customers | ||||||||||||||||||||
| Investments in associates and other companies | 9 | |||||||||||||||||||
| Intangible assets | 10 | |||||||||||||||||||
| Property, plant, and equipment | 11 | |||||||||||||||||||
| Right of use assets | 12 | |||||||||||||||||||
| Current taxes | 13 | |||||||||||||||||||
| Deferred taxes | 13 | |||||||||||||||||||
| Other assets | 14 | |||||||||||||||||||
| Non-current assets and disposal groups for sale | 15 | |||||||||||||||||||
| TOTAL ASSETS | ||||||||||||||||||||
| LIABILITIES | ||||||||||||||||||||
| Cash items in process of being cleared | 4 | |||||||||||||||||||
| Financial liabilities for trading at fair value through profit and loss | 16 | |||||||||||||||||||
| Financial derivative contracts | ||||||||||||||||||||
| Financial derivative contracts for accounting hedges | 7 | |||||||||||||||||||
| Financial liabilities at amortised cost | 17 | |||||||||||||||||||
| Deposits and other demand liabilities | ||||||||||||||||||||
| Time deposits and other time liabilities | ||||||||||||||||||||
| Obligations under repurchase agreements | ||||||||||||||||||||
| Interbank borrowings | ||||||||||||||||||||
| Issued debt instruments | ||||||||||||||||||||
| Other financial liabilities | ||||||||||||||||||||
| Lease liabilities | 12 | |||||||||||||||||||
| Regulatory capital financial instruments | 18 | |||||||||||||||||||
| Provisions | 19 | |||||||||||||||||||
| Current taxes | 13 | |||||||||||||||||||
| Deferred taxes | 13 | |||||||||||||||||||
| Other liabilities | 20 | |||||||||||||||||||
| TOTAL LIABILITIES | ||||||||||||||||||||
| EQUITY | ||||||||||||||||||||
| Attributable to the shareholders of the Bank: | ||||||||||||||||||||
| Capital | 21 | |||||||||||||||||||
| Reserves | ||||||||||||||||||||
| Valuation adjustments | 21 | ( | ( | |||||||||||||||||
| Others equity instruments issued other than capital | 21 | |||||||||||||||||||
| Retained earnings | ||||||||||||||||||||
| Retained earnings from prior years | ||||||||||||||||||||
| Income for the year | ||||||||||||||||||||
| Minus: Provision for mandatory dividends | 19 | ( | ( | |||||||||||||||||
| Non-controlling interest | 22 | |||||||||||||||||||
| TOTAL EQUITY | ||||||||||||||||||||
| TOTAL LIABILITIES AND EQUITY | ||||||||||||||||||||
The accompanying notes form integral part of these consolidated financial statements.
F-5
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| CONSOLIDATED STATEMENTS OF INCOME | ||
| For the years ended, | ||
| December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| Note | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| OPERATING INCOME | ||||||||||||||||||||||||||
| Interest income and inflation | 25 | |||||||||||||||||||||||||
| Interest expense and inflation | 25 | ( | ( | ( | ||||||||||||||||||||||
| Net interest income | ||||||||||||||||||||||||||
| Fee and commission income | 26 | |||||||||||||||||||||||||
| Fee and commission expense | 26 | ( | ( | ( | ||||||||||||||||||||||
| Net fee and commission income | ||||||||||||||||||||||||||
| Net income from financial operations: | 27 | |||||||||||||||||||||||||
| Net income/(expense) from financial assets and liabilities for trading | ( | |||||||||||||||||||||||||
| Net income from derecognising financial assets and liabilities at amortised cost and financial assets at fair value through other comprehensive income | ( | ( | ||||||||||||||||||||||||
| Net income from exchange, adjustment and hedge accounting of foreign exchange | ||||||||||||||||||||||||||
| Net income from financial operations | ||||||||||||||||||||||||||
| Income from investments in associates and other companies | 9 | |||||||||||||||||||||||||
| Net income from non-current assets and groups available for sale not admissible as discontinued operations | 28 | |||||||||||||||||||||||||
| Other operating income | 29 | |||||||||||||||||||||||||
| TOTAL OPERATING INCOME | ||||||||||||||||||||||||||
| Personnel salaries and expenses | 30 | ( | ( | ( | ||||||||||||||||||||||
| Administrative expenses | 31 | ( | ( | ( | ||||||||||||||||||||||
| Depreciation and amortisation | 32 | ( | ( | ( | ||||||||||||||||||||||
| Impairment of non-financial assets | 32 | ( | ( | ( | ||||||||||||||||||||||
| Other operating expenses | 29 | ( | ( | ( | ||||||||||||||||||||||
| TOTAL OPERATING EXPENSES | ( | ( | ( | |||||||||||||||||||||||
| NET OPERATING INCOME BEFORE CREDIT LOSSES | ||||||||||||||||||||||||||
| Provisions for loan losses for interbank loans and account receivable from customers | 33 | ( | ( | ( | ||||||||||||||||||||||
| Provisions for loan losses for contingent loans and others | 33 | ( | ||||||||||||||||||||||||
| Recovery of loans previously charged-off | 33 | |||||||||||||||||||||||||
| Provision for loan losses for other financial assets at amortised cost and financial assets at fair value through OCI | 33 | ( | ( | ( | ||||||||||||||||||||||
| Provision for loan losses | ( | ( | ( | |||||||||||||||||||||||
| NET OPERATING INCOME BEFORE INCOME TAX | ||||||||||||||||||||||||||
| Income tax expense | 13 | ( | ( | ( | ||||||||||||||||||||||
| Result of continuing operations | ||||||||||||||||||||||||||
| Result of discontinued operations | ||||||||||||||||||||||||||
| NET INCOME FOR THE YEAR | ||||||||||||||||||||||||||
| Attributable to: | ||||||||||||||||||||||||||
| Shareholders of the Bank | ||||||||||||||||||||||||||
| Non-controlling interest | 22 | |||||||||||||||||||||||||
| Earnings per share from continued operations attributable to shareholders of the Bank: | ||||||||||||||||||||||||||
| Basic earnings | 21 | |||||||||||||||||||||||||
| Diluted earnings | 21 | |||||||||||||||||||||||||
| Earnings per share attributable to shareholders of the Bank: | ||||||||||||||||||||||||||
| Basic earnings | 21 | |||||||||||||||||||||||||
| Diluted earnings | 21 | |||||||||||||||||||||||||
The accompanying notes form integral part of these consolidated financial statements.
F-6
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
| For the years ended, | ||
| December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| Note | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| NET INCOME FOR THE YEAR | ||||||||||||||||||||||||||
| Other comprehensive income that will not be reclassified to profit or loss | ||||||||||||||||||||||||||
| Equity instruments at fair value through other comprehensive income | ||||||||||||||||||||||||||
| Income tax related to the above | ( | ( | ( | |||||||||||||||||||||||
| Total items that will not be reclassified to the income statements | ||||||||||||||||||||||||||
| Other comprehensive income that will be reclassified to profit or loss | ||||||||||||||||||||||||||
| Debt instruments at fair value through other comprehensive income | 21 | ( | ||||||||||||||||||||||||
| Cash flow hedge | 21 | ( | ||||||||||||||||||||||||
| Income tax related to the above | ( | ( | ||||||||||||||||||||||||
| Total items that will be reclassified to the income statements | ( | |||||||||||||||||||||||||
| Other comprehensive income for the year, net of tax | ( | |||||||||||||||||||||||||
| TOTAL COMPREHENSIVE INCOME FOR THE YEAR | ||||||||||||||||||||||||||
| Attributable to: | ||||||||||||||||||||||||||
| Shareholders of the Bank | ||||||||||||||||||||||||||
| Non-controlling interests | 22 | |||||||||||||||||||||||||
The accompanying notes form integral part of these consolidated financial statements.
F-7
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||
| For the years ended, | ||
| RESERVES | VALUATION ADJUSTMENTS | RETAINED EARNINGS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Capital | Reserves and other retained earnings | Merger of companies under common control | Fair value reserve | Cash flow hedge | Income tax effects | Other Equity instruments | Retained earnings of prior years | Income for the year | Provision for mandatory dividends | Total attributable to shareholders of the Bank | Non-controlling interest | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity as of December 31, 2022 | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution of income from previous period | - | - | - | - | - | - | - | ( | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity as of January 1, 2023 | ( | ( | ( | - | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issued perpetual bonds and interest | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends distributions / withdrawals made | - | - | - | - | - | - | - | ( | - | - | ( | - | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Transfer of retained earnings to reserves | - | - | - | - | - | ( | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for mandatory dividends | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Others | - | - | - | - | - | - | - | - | - | - | - | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | - | - | - | - | - | ( | - | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | - | - | - | ( | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Result of continuous operations | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Result of discontinuous operations | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | - | - | - | ( | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity as of December 31, 2023 | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution of income from previous period | - | - | - | - | - | - | - | ( | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity as of January 1, 2024 | ( | ( | - | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issued perpetual bonds and interest | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends distributions / withdrawals made | - | - | - | - | - | - | - | ( | - | ( | - | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Transfer of retained earnings to reserves | - | - | - | - | - | ( | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for mandatory dividends | - | - | - | - | - | - | - | - | - | ( | ( | - | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Others | - | - | - | - | - | - | - | - | - | - | - | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | - | - | - | - | - | ( | - | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | - | - | - | ( | - | - | - | - | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Result of continuous operations | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Result of discontinuous operations | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | - | - | - | ( | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity as of December 31, 2024 | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution of income from previous period | - | - | - | - | - | - | - | ( | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity as of January 1, 2025 | ( | ( | ( | - | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issued perpetual bonds and interest | - | - | - | - | - | - | ( | - | - | - | ( | - | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends distributions / withdrawals made | - | - | - | - | - | - | - | ( | - | - | ( | - | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Transfer of retained earnings to reserves | - | - | - | - | - | ( | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for mandatory dividends | - | - | - | - | - | - | - | - | - | ( | ( | - | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Others | - | - | - | - | - | - | - | - | - | - | - | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | - | - | - | - | - | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | - | - | - | ( | ( | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Result of continuous operations | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Result of discontinuous operations | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | - | - | - | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity as of December 31, 2025 | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes form integral part of these consolidated financial statements.
F-8
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||
| For the years ended, | ||
| Period | Total attributable to shareholders of the Bank | Allocated to reserves | Allocated to dividends | Percentage distributed | Number of shares | Dividend per share (in pesos) | ||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | % | |||||||||||||||||||||||||||||||||||
| Year 2024 (Shareholders Meeting April 2025) | ||||||||||||||||||||||||||||||||||||||
| Year 2023 (Shareholders Meeting April 2024) | ||||||||||||||||||||||||||||||||||||||
. The accompanying notes form integral part of these consolidated financial statements.
F-9
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| For the years ended, | ||
| December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| NOTE | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| A - CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||||||||||||||
| NET INCOME FOR THE YEAR | ||||||||||||||||||||||||||
| Adjustments for non-cash items included in net income | ( | ( | ( | |||||||||||||||||||||||
| Depreciation and amortization | 32 | |||||||||||||||||||||||||
| Impairment of property, plant, and equipment | 32 | |||||||||||||||||||||||||
| Provision for loan losses | 33 | |||||||||||||||||||||||||
| Mark to market of trading investments | ( | ( | ( | |||||||||||||||||||||||
| Income from investments in associates and other companies | 9 | ( | ( | ( | ||||||||||||||||||||||
| Net gain on sale of assets received in lieu of payment | 28 | ( | ( | ( | ||||||||||||||||||||||
| Provision on assets received in lieu of payment | 28 | ( | ||||||||||||||||||||||||
| Net sale on sale of investment in associates and other companies | 28 | ( | ||||||||||||||||||||||||
| Net gain on sale of property, plant and equipment | 28 | ( | ( | ( | ||||||||||||||||||||||
| Net interest income | 25 | ( | ( | ( | ||||||||||||||||||||||
| Net fee and commission income | 26 | ( | ( | ( | ||||||||||||||||||||||
| Changes in deferred taxes | 13 | ( | ( | |||||||||||||||||||||||
| Other non-cash items | ( | ( | ||||||||||||||||||||||||
| Increase/decrease in operating assets and liabilities | ||||||||||||||||||||||||||
| (Increase)/decrease of loans and accounts receivables from customers, net | ( | ( | ||||||||||||||||||||||||
| (Increase)/decrease of financial investments | ( | ( | ||||||||||||||||||||||||
| Decrease/ (increase) of interbank loans | ( | ( | ||||||||||||||||||||||||
| Decrease/(increase) of assets received or awarded in lieu of payment | ( | ( | ( | |||||||||||||||||||||||
| Increase/(decrease) of debits in customers checking accounts | ( | ( | ||||||||||||||||||||||||
| (Decrease)/increase of time deposits and other time liabilities | ( | |||||||||||||||||||||||||
| (Decrease)/increase of obligations with domestic banks | ( | |||||||||||||||||||||||||
| Increase/(decrease) of other demand liabilities or time obligations | ( | |||||||||||||||||||||||||
| Increase/(decrease) of obligations with foreign banks | ( | |||||||||||||||||||||||||
| Increase/(decrease) of obligations with Central Bank of Chile | ( | |||||||||||||||||||||||||
| (Decrease)/increase of obligations under repurchase agreements | ( | ( | ||||||||||||||||||||||||
| (Decrease)/increase in other financial liabilities | ( | |||||||||||||||||||||||||
| (Decrease)/increase of other assets and liabilities | ||||||||||||||||||||||||||
| Redemption of letters of credit | ( | ( | ( | |||||||||||||||||||||||
| Senior bond issuances | ||||||||||||||||||||||||||
| Redemption of senior bonds and payments of interest | ( | ( | ( | |||||||||||||||||||||||
| Redemption of mortgage bonds and payments of interest | ( | ( | ( | |||||||||||||||||||||||
| Redemption of perpetual bond and payments of interest | ( | ( | ( | |||||||||||||||||||||||
| Payment of interest on lease obligations | ( | ( | ( | |||||||||||||||||||||||
| Interest received | ||||||||||||||||||||||||||
| Interest paid | ( | ( | ( | |||||||||||||||||||||||
| Dividends received from investments in other companies | 9 | |||||||||||||||||||||||||
| Fees and commissions received | ||||||||||||||||||||||||||
| Fees and commissions paid | ( | ( | ( | |||||||||||||||||||||||
| Total cash flow (used in) provided by operating activities | ||||||||||||||||||||||||||
F-10
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| For the years ended, | ||
| December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| NOTE | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| B - CASH FLOWS FROM INVESTMENT ACTIVITIES: | ||||||||||||||||||||||||||
| Purchases of property, plant, and equipment | 11 | ( | ( | ( | ||||||||||||||||||||||
| Sales of property, plant, and equipment | ||||||||||||||||||||||||||
| Purchases of intangible assets | 10 | ( | ( | ( | ||||||||||||||||||||||
| Total cash flow used in investment activities | ( | ( | ( | |||||||||||||||||||||||
| C - CASH FLOW FROM FINANCING ACTIVITIES: | ||||||||||||||||||||||||||
| Dividends paid | ( | ( | ( | |||||||||||||||||||||||
| Placement of subordinated bond | ||||||||||||||||||||||||||
| Lease obligations paid | ( | ( | ( | |||||||||||||||||||||||
| Total cash flow used in financing activities | ( | ( | ( | |||||||||||||||||||||||
| D – NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS DURING THE YEAR | ( | |||||||||||||||||||||||||
| E – EFFECTS OF FOREIGN EXCHANGE RATE FLUCTUATIONS | ( | ( | ||||||||||||||||||||||||
| F - INITIAL BALANCE OF CASH AND CASH EQUIVALENTS | ||||||||||||||||||||||||||
| FINAL BALANCE OF CASH AND CASH EQUIVALENTS | 4 | |||||||||||||||||||||||||
Reconciliation of provisions for the Consolidated Statements of Cash Flow for the year ended | December 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||
| Provision for loan losses for cash flow purposes | 33 | ( | ( | ( | ||||||||||||||||||||||
| Recovery of loans previously charged off | 33 | |||||||||||||||||||||||||
| Provision for loan losses – net | ( | ( | ( | |||||||||||||||||||||||
| Reconciliation of liabilities that arise from financing activities | Changes not related to cash flows | ||||||||||||||||||||||||||||||||||||||||||||||
| 31-12-2024 | Cash Flow | Fair Value Changes | Foreign currency exchange | UF Inflation effect | Others | 31-12-2025 | |||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||
| Subordinated bonds | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Senior bonds | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Mortgage bonds | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Letters of credit | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Dividend paid | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Lease obligations | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities related to financing activities | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes form integral part of these consolidated financial statements.
F-11
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CORPORATE INFORMATION
Banco Santander-Chile 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 brokering, and investment banking. Banco Santander Spain controls Banco Santander-Chile through its holdings in Teatinos Siglo XXI Inversiones S.A. and Santander Chile Holding S.A., which are controlled subsidiaries of Banco Santander Spain. As of December 31, 2025 Banco Santander Spain owns or controls directly and indirectly 99.8 % of Santander Chile Holding S.A. and 100 % of Teatinos Siglo XXI Inversiones S.A. Banco Santander Spain, through its subsidiaries, has control over 67.18 % of the Bank’s shares.
1.Basis of preparation
These Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) (hereinafter referred to as IFRS).
For purposes of these financial statements we use certain terms and conventions. References to “US$”, “U.S. dollars” and “dollars” are to United States dollars, references to “EUR” are to European Economic Community Euro, references to “CNY” are to Chinese Yuan, reference to “JPY” are to Japanese Yuan, references to “CHF” are to Swiss franc, references to “Chilean pesos”, “pesos” or “Ch$” 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 UF is revalued in monthly cycles. Each day in the period beginning on the tenth day of the current month through the ninth day of the succeeding month, the nominal peso value of the UF is indexed up (or down in the event of deflation) in order to reflect a proportionate amount of the change in the Chilean Consumer Price Index during the prior calendar month. One UF is equaled to Ch$39,727.96 as of December 31, 2025 and Ch$38,416.69 as of December 31, 2024. In 2025, UF inflation was 4.4 % compared to 4.8 % in 2024. The effect of any changes in the nominal peso value of our UF-denominated interest earning assets and interest bearing liabilities is reflected in our results of operations as an increase (or decrease, in the event of deflation) in interest income and expense, respectively.
The Notes to the Consolidated Financial Statements contain additional information to support the figures submitted in the Consolidated Statements of Financial Position, Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Equity and Consolidated Statements of Cash Flows for the period.
2. Basis of preparation for the Consolidated Financial Statements
The Consolidated Financial Statements for the years ended December 31, 2025, 2024 and 2023, incorporate the financial statements of the 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. Control is achieved when the Bank:
i.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;
•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.
F-12
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
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 Statements of Income and 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 a loss of control over the subsidiaries are accounted for as equity transactions. The carrying values of the Bank’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 recognised directly in equity and attributed to owners of the Bank.
In addition, third parties’ shares in the Bank’s consolidated equity are presented as “Non-controlling interests” in the Consolidated Statements of Changes in Equity. Their share in the income for the year is presented as “Attributable to non-controlling interest” in the Consolidated 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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name of the Subsidiary | Main Activity | Place of incorporation and operation | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct | Indirect | Total | Direct | Indirect | Total | Direct | Indirect | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| % | % | % | % | % | % | % | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Corredora de Seguros Limitada | Insurance brokerage | Santiago, Chile | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Corredores de Bolsa Limitada | Financial instruments brokerage | Santiago, Chile | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Asesorias Financieras Limitada | Securities brokerage | Santiago, Chile | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander S.A. Sociedad Securitizadora | Purchase of credits and issuance of debt instruments | Santiago, Chile | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Klare Corredora de Seguros S.A. | Insurance brokerage | Santiago, Chile | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Consumer Chile S.A. | Financing | Santiago, Chile | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sociedad operadora de Tarjetas de Pago Santander Getnet Chile S.A. | Card operator | Santiago, Chile | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The detail of non-controlling participation on all the remaining subsidiaries can be seen in Note 24– Non-controlling interest.
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” (IFRS 10):
-Santander Gestión de Recaudación y Cobranza Limitada (collection services)
-Multiplica SpA (Development card incentive programmes)
The company Bansa Santander S.A. was part of the consolidation perimeter until May 2024. The company Pagonxt Payments Chile SpA was included in the consolidation perimeter until December 2024.
F-13
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
iii.Associates
An associate is an entity over which the Bank has significant influence. Significant influence 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:
| Percentage of ownership share | |||||||||||||||||||||||||||||||||||
| Associates | Main activity | Place of incorporation and operations | As of December 31, | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| % | % | % | |||||||||||||||||||||||||||||||||
| Redbanc S.A. | ATM services | Santiago, Chile | |||||||||||||||||||||||||||||||||
| Transbank S.A. | Debit and credit card services | Santiago, Chile | |||||||||||||||||||||||||||||||||
| Centro de Compensación Automatizado S.A. | Electronic fund transfer and compensation services | Santiago, Chile | |||||||||||||||||||||||||||||||||
| Sociedad Interbancaria de Depósito de Valores S.A. | Delivery of securities on public offer | Santiago, Chile | |||||||||||||||||||||||||||||||||
| Cámara Compensación de Pagos de Alto Valor S.A. | Payments clearing | Santiago, Chile | |||||||||||||||||||||||||||||||||
| Administrador Financiero del Transantiago S.A. | Administration of boarding passes for public transportation | Santiago, Chile | |||||||||||||||||||||||||||||||||
| Servicios de Infraestructura de Mercado OTC S.A. | Administration of the infrastructure for the financial market of derivative instruments | Santiago, Chile | |||||||||||||||||||||||||||||||||
In the case of Cámara Compensación de Alto Valor S.A. and Servicios de Infraestructura de Mercado OTC S.A., Banco Santander-Chile has a representative on the Board of Directors, which is why the Administration has concluded that it exercises significant influence.
3. 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 Statements of Income, and separately from shareholders’ equity in the Consolidated Statements of Financial Position.
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.
4. Reporting segments
The Bank's operating segments are those units whose operating results are reviewed regularly by the highest level of management regarding decision-making. Accordingly, two or more operating segments can be added into one only when the aggregation is consistent with the basic principle under the IFRS 8 'Operating Segments' and if the segments have similar economic characteristics and are alike in each one of the following aspects:
i.The nature of the products and services.
ii. The nature of production processes.
iii. The type of customer category for which its products and services are intended.
iv. The methods used to distribute their products or provide services.
v. If applicable, the nature of the regulatory framework, e.g., banking, insurance, utilities.
The Bank reports separately for each operating segment that meets any of the following quantitative thresholds:
i.Its reported revenues from ordinary activities, including both sales to external clients and inter-segment sales or transactions, equal or exceed 10 % of the combined revenues from all operating segments' ordinary internal and external activities.
F-14
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
ii. The amount of its reported results is, in absolute terms, equal to or greater than 10 % of the greater of (i) the combined profit reported by all operating segments that have not reported a loss; and (ii) the combined loss reported by all operating segments that have reported a loss.
iii. Its assets equal or exceed 10 % of the combined assets of all operating segments.
Operating segments that do not meet any of the quantitative thresholds may be considered reportable segments. The information must be disclosed separately if management believes it would be helpful to Consolidated Financial Statements users.
Information regarding other business activities that do not correspond to reportable segments is combined and disclosed within the Corporate Activities category 'other'.
Concerning the above, the Bank's segments were obtained under the consideration that an operating segment is a component of an entity that:
i.Engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses from transactions with other elements 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 assesses its performance.
iii. For which discrete financial information is available.
5. Functional and presentation currency
According to International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates”, 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 revenue 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”. The Bank maintains its accounting records and prepares its financial statements in Chilean pesos.
6. Foreign currency transactions
The Bank conducts transactions in foreign currencies, mainly in U.S. dollar. Assets and liabilities denominated in foreign currencies, held by the Bank and its subsidiaries are translated to Chilean pesos at the representative market exchange rate of the month for the reported period; the rate used was Ch$900.69 as of December 31, 2025 (Ch$994.10 per US$1 as of December 31, 2024).
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.
7. Cash and cash equivalents
The indirect method is used to prepare the Consolidated Statement of Cash Flows, starting with the Bank's consolidated pre-tax income, and then incorporating non-cash transactions, cash-flow-related income, and expense of activities classified as investments or financing.
The following items are considered:
i.Cash flows: Inflows and outflows of cash and cash equivalents, such as deposits with the Central Bank of Chile, deposits in domestic banks, and deposits in foreign banks.
ii.Operating activities: Principal revenue-producing activities performed by banks and other activities that cannot be classified as investing or financing activities.
The Bank’s activity of granting loans encompasses not only the activities with its debtors but also the related activities that provide the funding to the loans granted. Since the funding for granting such loans is provided by, among other sources, senior bonds, mortgage bonds and subordinated bonds, the Bank presents the related cash flows as operating activities.
iii.Investing activities: The acquisition and disposal of long-term assets and other investments not included in cash and cash equivalents.
iv.Financing Activities: Activities that result in changes in the size and composition of the equity and liabilities that are not operating activities.
F-15
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
8. Classification and measurement of financial instrument
I.Classification of financial instrument
i.Classification of financial assets
Financial assets are classified into a measurement category based on both the Bank’s business model for managing the financial asset and the contractual cash flow characteristics of the financial asset.
Contractual cash flow assessment determines if the cash flows from the financial asset meet the SPPI (solely payment of principal and interest) criterion, i.e., whether the contractual terms of the financial asset give rise, on specific dates, to cash flows that are solely payments of principal and interest. Principal is the fair value of the financial assets at initial recognition, and interest is the consideration for the time value of money, the credit risk associated with the principal outstanding, and also may include liquidity risk, administrative cost and profit margin.
For classification process the Bank perform the SPPI test, which assesses the contractual term to identify whether they meet SPI criterion, i.e., the contract is a basic lending arrangement. The Bank applies judgement and considers relevant factors such as currency in which the financial asset is denominated, and period for which the interest rate is set.
Business model refers to how the Bank manages its financial assets in order to generate cash flows. The Bank determined its business model on initial application of IFRS 9 at the level that best reflects how it manages groups of financial assets to achieve its business objective.
The Banks’s business model is not assessed on an instrument-by- instrument basis, but at a higher level of aggregated portfolio and is based on observable factors such as: performance of the financial assets, the risk that affect the performance, and the expected frequency, value and timing of sales.
In accordance with IFRS 9 the business models are:
•Held to collect business model (HTC) - financial assets that are held within a business model whose objective is to hold assets in order to collect contractual cash flows are managed to realize cash flows by collecting contractual payments over the life of the instrument, under this business model sales made when there is an increase in the credit risk, or to manage credit concentration risk are not inconsistent with a business model whose objective is to hold financial assets to collect contractual cash flows.
•Held to collect and sell (HTC&S) - financial assets under this business model achieve the objective by both collecting contractual cash flows and selling financial assets, then involve a greater frequency and value of sales than HTC business model.
•Other business model - financial assets held in this business has the objective of realizing cash flows through the sale of the assets. The Bank makes decisions based on the assets’ fair values and manages the assets to realize those fair values.
In accordance with the above, the Bank will classify its financial assets based on whether they are subsequently measured at amortized cost, at fair value through other comprehensive income, or at fair value through profit or loss.
Additionally, an irrevocable election may be made at the time of initial recognition of investments in equity instruments to present subsequent changes in fair value in other comprehensive income.
ii.Classification of financial liabilities
An entity shall classify all financial liabilities as subsequently measured at amortized cost, except for derivative liabilities measured at fair value through profit or loss
iii.Reclassification
Reclassification of financial assets is required if, and only if, the objective of the Bank’s business model for managing those financial assets changes. Financial liabilities cannot be reclassified.
F-16
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
II.Measurement of financial instruments
i.Initial measurement
On initial recognition, financial assets and financial liabilities are measured at the transaction price, i.e. the fair value of the consideration given or received (IFRS 13). In the case of financial instruments not at fair value through profit or loss are directly attributable to the acquisition or issue of the financial asset or financial liability.
ii.Subsequent measurement- financial assets
After initial recognition, the Bank shall measure a financial asset at:
(a)Amortised cost
Financial assets that are held in a business model to collect the contractual cash flows and contain contractual terms that give rise on specific dates to cash flows that are SPPI, are measured at amortised cost.
The effective interest method is used in the calculation of the amortised cost of a financial asset or a financial liability and in the allocation and recognition of the interest revenue or interest expense in profit or loss over the relevant period. The effective interest rate (EIR) is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset or to the amortised cost of a financial liability.
(b)Fair value through other comprehensive income (FVOCI)
Financial assets that are debt instruments held in a business model that is achieved by both collecting contractual cash flows and selling, and that contain contractual terms that give rise on specific dates to cash flows that are SPPI, are measured at FVOCI. They are subsequently remeasured at fair value and changes therein (except for those relating to impairment, interestincome and foreign currency exchange gains and losses) are recognised in other comprehensive income, until the assets are sold. Upon disposal, the cumulative gain and losses in OCI are recognised in the income statements.
(c) Fair value through profit or loss (FVTPL)
Financial assets that do not contain contractual terms that give rise on specified dates to cash flows that are SPPI, or if the financial assets, or if the financial asset is not held in a business model that is either (i) a business model to collect the contractual cash flows or (ii) a business model that is achieved by both collecting contractual cash flows and selling.
Financial assets held for trading are recognised at fair value through profit or loss, likewise derivatives contracts for trading purposes.
d.Equity instruments
For certain equity instruments, the Bank may make an irrevocable election to present subsequent changes in the fair value of the instrument in other comprehensive income, except for dividend income which is recognised in profit or loss. Gains or losses on derecognition of these equity instruments are not transferred to profit or loss.
iii.Subsequent measurement- financial liabilities
After initial recognition, the Bank shall measure a financial liability at amortised cost.
III.Derecognition of financial assets and liabilities
Financial assets are derecognised when, and only when:
•the contractual rights to the cash flows from the financial asset expire, or
•the Bank transfers substantially all the risks and rewards of ownership of the financial asset, and therefore the Bank derecognises the financial asset and recognise separately any rights and obligations created or retained in the transfer.
In some cases, the Bank enters into transactions for which it retains the contractual rights to receive the cash flows of the financial asset but assumes a contractual obligation to pay the cash flows in an arrangement that meets all the conditions required, i.e. the Bank only transfers collected amounts from original assets, selling or pledging original assets is prohibited, and the Bank has the obligation to remit cash flows collected without material delay.
F-17
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
When a financial asset is sold and the Bank simultaneously agrees to repurchase it (or an asset that is substantially the same) at a fixed price on a future date, the Bank continues to recognise the financial assets in their entirety in the statements of financial position because it retains substantially all of the risks and rewards of ownership. The cash consideration received is recognised as a financial asset and a financial liability is recognised for the obligation to pay the repurchase price.
Financial liabilities are derecognised when, and only when, they are extinguished, cancelled or expired.
IV.Contingent loan
The Bank issues contingent liabilities (including letters of credit, foreign letters of credit and performance guarantee) and loan commitments.
Contingent liabilities and undrawn loan commitments are commitments under which, over the duration of the commitment, the Bank is required to provide a loan with pre-specified term to the customer.
The nominal contractual loan value, when the loan agreed to be provided is on market terms, is not recorded in the statements of financial position. The related ECL allowances are disclosed in Note 19.
V.Offsetting of financial instruments
Financial asset and liability balances are offset, i.e., reported in the Consolidated 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. As of December 31, 2025 and 2024 the Bank does not have balance offsetting of financial instruments.
9.Derivatives and hedging activities
Derivatives are classified as either trading instruments or hedging instruments. The Bank uses financial derivatives for the following purposes:
1.To provide such instruments to customers who request them to manage their market and credit risks.
2.To use them for the risk management of the proprietary position of the Bank's entities and their assets and liabilities ('hedging derivatives').
3.To benefit from changes in the value of these derivatives (trading derivatives).
Trading derivatives are measured at fair value through profit or loss and are presented as assets/liabilities according to their positive or negative fair value. Derivatives that do not qualify as hedging instruments are accounted for as trading instruments.
Hedge accounting aims to represent in the financial statements the effect of an entity's risk management activities that use financial instruments to manage exposures arising from specific risks that could affect the period's profit or loss or other comprehensive income.
Until the 2024 fiscal year, the Bank elected to continue applying the hedge accounting requirements of IAS 39. In accordance with the standard, a derivative qualifies for hedge accounting if all the following conditions are met:
1.The derivative hedges one of the following three types of exposure:
a.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”);
b.Changes in the estimated cash flows arising from financial assets and liabilities, and highly probable forecasted transactions (“cash flow hedge”);
c.The net investment in a foreign operation (“hedge of a net investment in a foreign operation”).
2.It is effective in offsetting exposure inherent in the hedged item or position throughout the expected term of the hedge, which means that:
a.At the date of arrangement the hedge is expected, under normal conditions, to be highly effective (“prospective effectiveness”).
b.There is sufficient evidence that the hedge was actually effective during the life of the hedged item or position (“retrospective effectiveness”).
F-18
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
The changes in the value of financial instruments qualifying for hedge accounting are recorded as follows:
i.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 (expense) from financial operations” in the Consolidated Statements of Income.
ii.For fair value hedges of interest rate risk on a portfolio of financial instruments (macrohedges), gains or losses that arise in measuring hedging instruments within “Interest income and expense”, 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 Consolidated Statements of Income under “Net income (expense) from financial operations”.
iii.For cash flow hedges, the change in fair value of the hedging instrument is included as “Cash flow hedge” in “Other comprehensive income”.
iv.The differences in valuation of the hedging instrument corresponding to the ineffective portion of the cash flow hedging transactions are recorded directly in the Consolidated Statements of Income under “Net income (expense) 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, hedge accounting treatment is discontinued. When “fair value hedging” is discontinued, the fair value adjustments to the carrying amount of the hedged item arising from the hedged risk are amortised to gain or loss from that date, where applicable.
When cash flow hedges are discontinued, any cumulative gain or loss of the hedging instrument recognised 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 Consolidated Statements of Income, unless the transaction is no longer expected to occur, in which case any cumulative gain or loss is recorded immediately in the Consolidated Statements of Income.
During fiscal year 2025, the Bank began applying the requirements established in IFRS 9 for hedging accounting.The main impacts of this change to IFRS 9 for the accounting of hedging relationships are primarily due to:
•The incorporation of credit risk dominance analysis and economic relationship analysis into the effectiveness assessment;
•the updating of formal documentation for hedging relationships; and
•the accounting for a hypothetical derivative representing the mark-to-market (MTM) portion corresponding to the risk to be hedged in the hedged item for micro cash flow hedges. The hypothetical derivative replaces the previously recorded fictitious derivative.
For a hedge relationship to meet the requirements of IFRS 9, it must meet the following conditions:
•Instruments that can be designated as hedging instruments are all derivative financial instruments or non-derivative financial instruments measured at fair value through profit or loss, or a combination thereof. In the case of foreign exchange hedges, any type of non-derivative financial instrument can also be designated, regardless of its measurement criteria.
•Items that can be designated as hedged items are all recognized assets or liabilities, firm commitments, highly probable forecasted transactions, and net foreign investments.
•Documentation. At the start of the hedge, a formal designation and documentation of the hedging relationship must be carried out. This documentation must include the entity's risk management strategy and objective, identification of the hedging instrument and the hedged item, the nature of the hedged risk, the methodology for measuring effectiveness (including an analysis of the sources of ineffectiveness), and the hedge ratio.
The main sources of ineffectiveness based on the hedged risk are:
•Interest rate risk: mismatches in time horizons, principal, repricing and payment dates, time value of options, and changes in the hedged item or the hedging instrument.
•Foreign exchange rate risk: in addition to the above, the difference between the interest rates of the two currencies represents the net cost or benefit of shifting cash flows between two currencies with different interest rates.
•Effectiveness: the hedging relationship must be effective, for which there must be an economic relationship between the hedged item and the hedging instrument, credit risk must not have a dominant effect on the changes in value of the economic relationship between the hedging instrument and the hedged item, and the hedging ratio must coincide with that used by the entity in its management.
F-19
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
The application of IFRS 9 for hedge accounting has not had a material impact on the Consolidated Statements of Financial Position or the Consolidated Statements of Income.
The Bank assesses these effectiveness requirements through:
•Demonstrating the economic relationship between the hedged item and the hedging instrument using a qualitative test, and in case of non-compliance, using quantitative tests that compare the market value of the hedged items—corresponding to the hedged risk—and the hedging instruments. Likewise, a quantitative analysis of variations in the market values of the hedging instrument and the hedged item is performed prospectively.
•The hedging ratio is calculated as the sum of the amount of hedged instruments that the Bank actually hedges and the amount of hedging instruments that the Bank actually uses.
•The assessment of credit risk is performed through an analysis of the credit exposure of the hedged items and the hedging instruments.
Accounting hedges are classified and recorded according to the type of risk they hedge, based on the following criteria:
Fair value hedges: These are hedges against exposure to changes in the fair value of the hedged item, attributable to a specific risk.
The differences arising from both the hedging instruments and the hedged items (due to the hedged risk) are recognized directly in the Consolidated Statements of Income.
When a fair value hedge is discontinued, the adjustments previously recorded in the hedged item are charged to profit or loss using the effective interest rate method, recalculated at the date the hedge ceases to be used, and must be fully amortized at maturity.
In accordance with paragraph 6.1.3 of IFRS 9, the Bank has decided to record the fair value macro hedges in accordance with IAS 39, and therefore, the gains or losses arising from the valuation of the hedging instruments are recognized directly in the Consolidated Statements of Income, while the gains or losses due to changes in the fair value of the hedged amount (attributable to the hedged risk) are recognized in the Consolidated Statements of Income using as a counterpart the 'Changes in the fair value of hedged items' of a portfolio with interest rate risk hedge (asset or liability), as appropriate.
Cash flow hedges: These are hedges against exposure to changes in cash flows attributable to a specific risk associated with the hedged
The effective portion of the change in the value of the hedging instrument is temporarily recognized in equity, under 'Other consolidated comprehensive income - Items that may be reclassified to profit or loss - Hedging derivatives. Cash flow hedges (effective portion)', until the hedged item is recognized in profit or loss. From that point onward, it will be recognized in the Consolidated Statements of Income for the same period as the hedged item, unless it is included in the cost of the non-financial asset or liability, or the anticipated transactions are ultimately recognized as non-financial assets or liabilities.
When cash flow hedges are discontinued, the accumulated result of the hedging instrument recognized in equity, in 'Other consolidated comprehensive income' (while the hedge was effective) will continue to be recognized in that item until the hedged transaction occurs, at which time it will be recorded in profit or loss, unless it is expected that the transaction will not take place, in which case it is recorded immediately in profit or loss.
The Bank discontinues accounting for hedging relationships when the hedging instrument expires, is sold, or when the hedging relationship becomes ineffective because it is no longer aligned with the risk management objective. In that case, the derivative is then clasified as a trading derivative.
If a hedging relationship ceases to meet the effectiveness requirements, but the risk management objective remains, the Bank will assess rebalancing or adjusting the hedging ratio to meet the effectiveness requirements again without discontinuing the hedging relationship.
A hedging instrument is generally designated in its entirety, as the factors that contribute to its fair value are interdependent. However, IFRS 9 allows certain parts of a hedging instrument to be excluded from its fair value:
1.Separating the intrinsic value and time value of an option and designating only the intrinsic element as the hedging instrument, which is mandatory if the intrinsic value is designated;
2.Separating the forward and spot elements of a forward contract and designating only the spot element as the hedging instrument, which will be determined for each hedging relationship; and
F-20
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
3.Separating the foreign currency basis spread of a currency derivative and excluding it from the designation of the hedging instrument, which will be determined for each hedging relationship.
Separating these components will improve the effectiveness of the hedge and allow for an alternative accounting treatment for the excluded component. This treatment consists of recording changes in value under the 'Other accumulated comprehensive income – Undesignated items' item and recording that component in the Consolidated Statements of Income based on the nature of the hedged item, either over a period of time or at the time the hedged transaction occurs.
Additionally, if the entity manages the credit risk of all or part of a financial instrument using credit derivatives, it has the option of designating the credit exposure at fair value through profit or loss, provided that the derivative matches the name and seniority level of the financial instrument being hedged. This designation can be made at the initial recognition of the designated financial instrument or subsequently, with the designation being documented. From the date of designation, changes in fair value (for all risks, not just credit risk) will be recorded in the Consolidated Statements of Income.
i.Fair value measurement
In general, financial assets and liabilities are initially recognised at fair value which, in the absence of evidence to the contrary, is deemed to be the transaction price. Financial instruments, other than those measured at fair value through profit or loss, are initially recognised at fair value plus transaction costs. Subsequently, and at the end of each reporting period, financial instruments are measured pursuant to the following criteria:
i.Valuation of financial instruments
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 from customers.
“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. 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.
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, 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 Consolidated Statements of Financial Position at the fair value previously described. This value is compared to the valuation as at the trade date. If the fair value is subsequently measured positive, this is recorded as an asset. If the fair value is subsequently measured 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 (expense) from financial operations” in the Consolidated Statements of Income.
Specifically, the fair value of financial derivatives included in the ortfolios 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. Also, within the fair value of derivatives are included Credit Valuation Adjustment (CVA) and Debit Valuation Adjustment (DVA), all with the objective that the fair value of each instrument includes the credit risk of its counterparty and Bank´s own risk. The Credit valuation adjustment (CVA) is a valuation adjustment to OTC derivatives as a result of the risk associated with the credit exposure assumed by each counterparty.
F-21
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
The CVA is calculated taking into account potential exposure to each counterparty in each future period. The debit valuation adjustment (DVA) is a valuation adjustment similar to the CVA but, in this case, it arises as a result of the Bank’s own risk assumed by its counterparties in OTC derivatives.
ii.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 Bank’s 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 usually is the transaction price, however due to lack of availability of market information, the value of the instrument may be derived from other market transactions performed with the same or similar instruments or may 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 December 31, 2025 and 2024 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 Bank’s management considers that its 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.
j.Recognising income and expenses
The most significant criteria used by the Bank to recognise its revenues and expenses are summarised as follows:
i.Interest revenue, interest expense, and similar items
Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial assets, except for financial assets that have subsequently become credit-impaired (or ’stage 3’), for which interest revenue is calculated by applying the effective interest rate to their amortised cost (i.e. net of the ECL provision).
A substantial portion of our loan portfolio is denominated in UF’s, a unit that is daily indexed to reflect inflation recorded in the previous month, with the net gain or loss resulting from such indexation reflected in the interest income and inflation line in the consolidated statement of income.
ii.Commissions, fees, and similar items
Fee and commission income and expenses are recognised in the Consolidated Statements of Income using criteria established in IFRS 15 “Revenue from contracts with customers”.
F-22
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
Under IFRS 15, the Bank recognises revenue when (or as) satisfied a performance obligation by transferring a service (i.e. an asset) to a customer; under this definition an asset is transferred when (or as) the customer obtains control of that asset. The Bank considers the terms of the contract and its customary business practices to determine the transaction price.
The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third-parties.
The Bank transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognises revenue over time, and/or the Bank satisfies the performance obligation at a point in time.
The main revenues arising from commissions, fees and similar items correspond to:
-Fees and commissions for lines of credits and overdrafts: includes accrued fees related to granting lines of credit and overdrafts in checking accounts.
-Fees and commissions for guarantees and letters of credit: includes accrued fees in the period relating to granting of guarantee payment for current and contingent third party obligations.
-Fees and commissions for card services: includes accrued and earned commissions in the period related to use of credit cards, debit cards and other cards
-Fees and commissions for management of accounts: includes accrued commissions for the maintenance of checking, savings and other accounts
-Fees and commissions for collections and payments: includes income arising from collections and payments services provided by the Bank.
-Fees and commissions for intermediation and management of securities: includes income from brokerage, placements, administration and securities’ custody services.
-Fees and commissions for insurance brokerage fees: includes income arising for insurances distribution.
-Other fees and commissions: include income arising from currency changes, financial advisory, cashier check issuance, placement of financial products and online banking services.
The main expenses arising from commissions, fees and similar items correspond to:
-Compensation for card operation: includes commission expenses for credit and debit card operations related to income commissions card services.
-Fees and commissions for securities transactions: includes commissions expense for deposits, securities custody service and securities’ brokerage.
-Other fees and commissions: include mainly expenses generated from online services.
The Bank has incorporated disaggregated revenue and expense disclosures and reportable segment relationship in Note 26.
Additionally, the Bank maintains certain loyalty programmes associated to its credit cards services, for which it has deferred a percentage of the consideration received in the statements of financial position to comply with its related performance obligation or has liquidated on a monthly basis as far they arise.
iii.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 to the Consolidated Statements of Income over the term of the loan.
k.Impairment of non-financial assets
The Bank’s non-financial assets, are reviewed at the 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.
F-23
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
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 recognised 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 amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. Goodwill impairment is not reversed.
l.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:
i.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.
The Bank applies the following useful lives for the tangible assets that comprise its assets:
| ITEM | Useful life (Months) | ||||||||||
| Land | – | ||||||||||
| Paintings and works of art | – | ||||||||||
| Carpets and curtains | |||||||||||
| Computers and hardware | |||||||||||
| Vehicles | |||||||||||
| IT systems and software | |||||||||||
| Machines and general equipment | |||||||||||
| Office furniture | |||||||||||
| Telephone and communication systems | |||||||||||
| Security systems | |||||||||||
| Rights over telephone lines | |||||||||||
| Air conditioning systems | |||||||||||
| ATMs and teleconsultations | |||||||||||
| Other installations | |||||||||||
| Buildings | |||||||||||
The consolidated entities assess at each reporting date whether there is any indication that the carrying amount of any tangible asset 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.
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 Consolidated Statements 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.
F-24
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
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.
m.Leasing
At inception of a contract the Bank assesses whether a contract contains a lease. A contract contains a lease if the contracts conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Bank assesses whether:
•the contract involves the use of an identified asset – this may be specified explicitly or implicitly and should be physically distinct. If the supplier has a substantive substitution right, then the asset is not identified.
•the Bank has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use, and
•the Bank has the right to direct the use of the asset – this is decision-making purpose for which asset is use.
a.As a Lessee
The Bank recognises a right-of-use asset and a lease liability at the lease commencement date in accordance within IFRS 16 “Leases”. The main contracts that the Bank has are offices and branches related, which are necessary to carry out its activities.
At the beginning, the right-of-use asset is equal to the lease liability and is calculated as the present value of the lease payments discounted using the incremental interest rate at the commencement date, considering the lease term of each contract. The average incremental interest rate as of December 31, 2025 is 1.70 %. After initial recognition, the right-of-use is subsequently depreciated using the straight-line method in accordance with the lease term of the contract, and the lease liability is amortised in accordance with the effective interest method. Financial interest is accounted as interest expense, and depreciation as depreciation expense in each
The term of the lease comprises non-cancelable periods established within each contract, while for lease contracts with an indefinite useful life, the Bank has determined to assign a useful life equal to the longer non-cancelable period of its lease agreements. The Bank has elected not to recognise right-of-use assets and lease liabilities for short term leases that have a lease term of 12 months or less and leases of low-value assets. The Bank recognises lease payments associated with these leases as an expense on a straight-line basis over the lease term. Any modification in the terms or lease should be treated as a new measurement.
Initially, the Bank measures the right-of-use asset at cost. The rent of the lease agreements is agreed in UF and paid in pesos. According to that, monthly variation in UF should be treated as a new measurement, and therefore, readjustments should be recognised as a modification to the obligation and the right-of-use asset.
The Bank has not entered into lease agreements with residual value guarantee or variable lease payments.
In applying IFRS 16, the Bank has used the following practical expedients permitted by the standard:
•accounting for operating leases with a remaining lease term of less than 12 months as at January 1, 2019 as short-term leases.
•excluding initial direct costs for the measurement of the right-of-use asset at the date of initial application.
The Bank has also elected not to reassess whether a contract is or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the Bank relied on its assessment made applying IAS 17 and Interpretation 4 Determining whether an Arrangement contains a Lease.
b.As a lessor
When the Bank acts as a lessor, it determines at the beginning if it corresponds to a financial or operating lease. To do this, it evaluates whether it has substantially transferred all the risks and benefits of the asset. In the affirmative case, it corresponds to a financial lease, otherwise it is a financial lease.
The Bank recognises the lease income on a straight-line basis over the lease term.
F-25
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
c.Third party financing
The Bank recognises the loans with third parties within “Loans and accounts receivable from customers” in the Consolidated Statements of Financial Position, 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, when at the inception of the lease it is reasonably certain that the lessee will exercise the option.
The finance income and expenses arising from these contracts are recorded under “Interest income” and “Interest expense” respectively, in Consolidated Statements of Income to achieve constant return rate over the lease term.
n.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 recognises 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 amortisation and any accumulated impairment losses.
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.
Intangible assets are amortised on a straight-line basis using the estimated useful life, which has been defined by default in 36 months, and can be modified to the extent that it is demonstrated that the Bank will benefit from the use of the intangible for a different period mentioned above.
Expenditure on research activities is recorded as an expense in the year in which it is incurred and cannot be subsequently capitalized.
o.Expected credit losses allowance – under IFRS 9
IFRS 9 established a new single impairment model applies to all financial assets measured at amortised cost and fair value through other comprehensive income (FVOCI), including commitment and contingent loans. Investments in equity are outside of the scope of the new impairment requirements.
The Bank accounted ECL related to financial assets measured at amortised cost as a loss allowance in the statements of financial position, but the carrying amount of these assets is stated net of the loss allowance. ECL related to contingent loans is accounted as a provision in the statements of financial position. The Bank recognises in profit or loss, as an impairment gain or loss, the amount of ECL (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised in accordance IFRS 9, for financial assets measured at amortised cost and contingent loans.
The model uses a dual measurement approach, under which the loss allowance is measured as either:
-12-month expected credit losses
-Lifetime expected credit losses
The Bank evaluates the clients within the corporate commercial loan portfolio, by preparing individual credit proposals, verifying debt servicing capacity (projected cash flow), client’s financial history and projections for economic sector. All proposal includes analysis of the client, rating and recommendation. For corporations, the evaluation includes subsidiaries and affiliates. Smaller commercial loans, mortgage loans and consumer loans are grouped into homogeneous portfolios, based on a combination of internal and external characteristics.
According to the Bank’s policy, an exposure will be considered as defaulted when the past-due amounts of an exposure exceed materiality thresholds for 90 or more consecutive days, it has been restructured, it is in judicial collection, it has been writen-off or has been identified as impaired by an internal risk committee. The pulling effect defined as the entire outstanding amount on any loan which has an instalment 90 days or more past due.
The measurement basis depends on whether there has been a significant increase in credit risk since initial recognition. Based on changes in credit quality since initial recognition, IFRS 9 outlines a “three-stage” model impairment in accordance with the following diagram:
F-26
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
 Change in credit quality since initial recognition | ||||||||
| Stage 1 | Stage 2 | Stage 3 | ||||||
| Initial recognition | Significant increase in credit risk since initial recognition | Credit impaired assets | ||||||
| 12-month expected credit losses | Lifetime expected credit losses | Lifetime expected credit losses | ||||||
The Bank, at the end of each reporting period, evaluated whether financial instrument’s credit risk has significantly increased since initial recognition or whether an asset is considered to be credit-impaired, and consequently classified the financial instrument in the respective stage:
•Stage 1: When loans are first recognised, the Bank recognises an allowance based on 12 months ECL. Stage 1 loans also include facilities where the credit risk has improved, and the loan has been returned to Stage 1.
•Stage 2: When a loan has shown a significant increase in credit risk since origination, the Bank records an allowance for the lifetime ECL. Stage loans also include facilities, where the credit risk has improved, and the loan has been returned to stage 2.
•Stage 3: Loans considered credit impaired. The Bank records an allowance for the lifetime ECL, setting the PD at 100 %.
The Bank considers reasonable and supportable information that is available without undue cost or effort and that may affect the credit risk on a financial instrument, including forward looking information to determine a significant increase in credit risk since initial recognition. Forward looking information includes past events, current conditions and forecast or future economic conditions (macro-economic data).
Credit risk assessment and forward-looking information (including macro-economic factors), includes quantitative and qualitative information based on the Bank’s classification policy:
a.Adverse changes in the financial situation, such as a significant increase in debt levels.
b.Significant drops in turnover or in recurring cash flows.
c.Significant narrowing of operating margins or recurring income.
d.Significant adverse changes in credit risk cost, due to changes in this risk after initial recognition.
e.Other changes in the transaction’s credit risk that would impact on conditions being significantly different if the transaction were originated or reissued on the reference date.
f.An actual or expected reduction of the integral credit rating of the operation (client’s integral rating) or decrease in the performance score.
g.An actual or expected significant decrease in the price or external credit rating of the mail operation, as well as other external market indicators of the credit risk for similar operations with the same expected life.
The Bank will classify a loan as stage 2, if contractual payments are 30 or more consecutive days past due, because of the credit risk is deemed to have increased significantly since initial credit recognition, but is not an absolute indicator. The bank did not rebut the backstop presumption of IFRS 9 relating to SICR or default.
Expected credit loss measurement (ECL)
The ECL are the probability-weighted estimate of credit losses, i.e. the present value of all cash shortfalls. A cash shortfall is the difference between the cash flows that are due to an entity in accordance with the contract and the cash flows that the entity expects to receive. The three main components to measure the ECL are:
PD: The Probability of default is an estimate of the likelihood of default over a given time horizon. A default may only happen at a certain time over the assessed period, if the facility has not been previously derecognised and is still in the portfolio.
LGD: The loss given default is an estimate of the loss arising in the case where a default occurs at a given time. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, including from the realization of any collateral.
EAD: The Exposure at default is an estimate of the exposure at a future default date, taking into account expected changes in the exposure after the reporting date, including repayments of principal and interest, whether scheduled by contract or otherwise, expected drawdown on committed facilities, and accrued interest from missed payments.
F-27
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
For measuring 12-month and lifetime ECL, cash shortfalls are identified as follow:
-12-month expected credit losses: the portion of lifetime expected credit losses that represents the expected credit losses that result from default events on the financial instruments that are possible within the 12 months after the reporting date.
-Lifetime expected credit losses: the expected credit losses that result from all possible default events over the expected life of the financial instrument.
The Bank considered a multi-factor analysis to perform credit risk analysis. The type of portfolio or transactions, industry, collaterals and monitoring basis (corporate or Other commercial, which include smaller commercial, mortgage and consumer loans).
The Bank divides its portfolio as:
i.Commercial loans;
ii.Mortgage loans;
iii.Consumer loans; and
iv.Contingent loans.
ECL allowance calculated on an Individual basis:
For financial assets in the corporate portfolio that are (a) credit-impaired at the reporting date (classified in stage 3 with a PD equal to 100 %), and (b) is individually significant, the Bank calculates allowance for expected credit losses on an individual basis by using a “Cash flow discounted Methodology”. In this instance, the Bank measures the expected credit losses as the difference between the asset’s gross carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. Any adjustment is recognised in profit or loss as an impairment gain or loss. The allowances determined under a “Discounted Cash Flow Methodology” must take into account the financial information of the debtor, including available business strategies, as well as collateral associated with that debtor. The recovery analysis includes the following scenarios:
-Recovery of a possible sale of collateral.
-Recovery on the basis of common commercial activities (commercial plan).
ECL allowance calculated on a collective basis:
Commercial loans (except for those described within the “ECL allowance calculated on an Individual basis” description aforementioned), mortgage loans and consumer loans are grouped and assessed on a collective basis by using a credit loss allowance model. The estimation of the collective basis expected credit loss allowance considers qualitative and quantitative information that may affect the changes in credit risk and the development of significant assumptions related to the probabilities of default and loss given default, related to forward looking information, multi-factor analysis such as type of portfolio or transaction and macroeconomic factors. See Note 37 Risk Management - f) Measurement of expected credit losses.
Contingent loans
The Bank has established several irrevocable loan commitments and contingent liabilities. Even though these obligations may not be recognised on the statements of financial position, they contain credit risk and, therefore, form part of the overall risk of the Bank.
When the Bank estimates the ECL for contingent loans, it estimates the expected portion of the loan commitment that will be drawn down over its expected
i.Forward looking information
The ECL model includes a broad range of forward-looking information as economic inputs, such as:
•Chilean Central Bank interest rates
•Unemployment rates
•Housing price growth
•GDP growth
•Consumer price index
See Note 37 Risk management – i) Macro economical forward-looking information.
F-28
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
ii.Modifications of financial assets
When loan measured at amortised cost has been renegotiated or modified but not derecognised, the Bank recognises the resulting gains or losses as the difference between the carrying amount of the original loans and modified contractual cash flows discounted using the EIR before modification.
For ECL estimation purposes on financial assets that have been modified, is required to distinguish between modification that result in derecognition from those that does not result in derecognition. If the modification does not result in derecognition, then the subsequent assessment of whether there is a significant increase in credit risk is made comparing the risk at the reporting date based on the modified contractual term and the risk at initial recognition based on the original, unmodified contractual term. If the modification results in derecognition, then the modified asset is considered to be a new asset, and the modification’s date is origination date for impairment purposes.
According to current definitions, contractual modifications generate new operations.
iii.Collateral
The Banks seeks to use collateral to mitigate its credit risks on financial assets, where possible. Types of collateral are: cash, securities, letters of credit, real estate and inventories. Collateral, unless repossessed, is not recorded on the Bank’s statements of financial position. However, the fair value of collateral affects the calculation of ECLs. The main collateral associated to mortgage loans are real estate, which are valued based on data provided by specialized third parties.
The estimation of ECL reflects the cash flows expected from collateral and other credit enhancement that are part of the contractual terms of the financial instruments.
According to the Bank’s policy when assets are repossessed they are transferred to assets held for sale at their fair value less cost to sell as non-financial assets at the repossession date.
iv.Write-offs
The gross carrying amount of a financial asset is reduced when there is no reasonable expectation of recovery. A write-off constitutes a derecognition event of the corresponding loan transaction in its entirety, and therefore, include portions not past-due for installments loans or leasing operation (no partial write-off).
Subsequent recoveries of amounts previously written-off are credited to the income statements, as recovery of loans previously write-off, as a deduction from provisions for loan losses.
Loan and accounts receivable write-offs are recorded for overdue 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 | |||||||||||
| Other transactions without collateral | |||||||||||
| Commercial loans with collateral | |||||||||||
| Mortgage loans | |||||||||||
| Consumer leasing | |||||||||||
| Other non-mortgage leasing transactions | |||||||||||
| Mortgage leasing (household and business) | |||||||||||
q.Provisions, contingent assets and contingent liabilities
Provisions are liabilities of uncertain timing or amount. Provisions are recognised in the Consolidated Statements of Financial Position when the Bank:
i.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.
F-29
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
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.
The Consolidated 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 where the probability of having to meet the obligation is more likely than not. 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 year. Provisions must specify the liabilities for which they were originally recognised. Partial or total reversals are recognised when such liabilities 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
-Provision for contingent credit risks
-Provisions for contingencies
r.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.
s.Use of estimates
The preparation of the financial statements requires the Bank’s 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, International Financial Reporting Standards (IFRS) 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.
Bank has established allowances to cover credit losses. 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’ ability to pay. Increases in the allowances for loan losses are reflected as “Provision for loan losses” in the Consolidated Statements of Income. Loans are charged-off when the Bank’s management determines that a loan or a portion thereof is impaired. Charge-offs are recorded as a reduction of the allowance for loan losses.
The relevant estimates and assumptions made to calculate provisions are regularly reviewed by the Bank’s Management to quantify certain assets, liabilities, revenues, expenses, and commitments.
These estimates, made on the basis of the best available information, mainly refer to:
-Allowances for loan losses
-Impairment losses of certain assets
-The useful lives of tangible and intangible assets
-The fair value of assets and liabilities
-Commitments and contingencies
-Current and deferred taxes
F-30
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
t.Non-current assets held for sale
The requirements established in IFRS 5 to classify assets (or disposal group) as held for sale are the following:
•the assets are available for immediate sale in its present conditions and its sale must be highly probable.
•for the sale to be highly probable, the appropriate level of management is committed to a plan to sell the asset, and an active programme to locate a buyer and complete the plan.
•additionally, the sale should be expected to qualify for recognition as a completed sale within one year from the date of classification.
An entity shall measure a non-current asset (or disposal group) classified as held for sale at the lower of its carrying amount and fair value less sale cost.
Events or circumstances may extend the period to complete the sale beyond one year. An extension of the period required to complete a sale does not preclude an asset from being classified as held for sale if the delay is caused by events or circumstances beyond the entity’s control and there is sufficient evidence that the entity remains committed to its plan to sell the asset.
As of December 31, 2025, the Bank has fixed assets that meet the definition of non-current assets held for sale, which amount to approximately MM$29,003 .
Assets received or awarded in lieu of payment
Assets received or awarded in lieu of payment of loans and accounts receivable from clients are recognised at their fair value (as determined by an independent appraisal). A price is agreed upon by the parties through negotiation or, when the parties do not reach an agreement, at the amount at which the Bank is awarded those assets at a judicial auction. In the both cases, an independent appraisal is performed. The excess of the outstanding loan balance over the fair value is charged to net income for the period, under “Provision for loan losses”. Any excess of the fair value over the outstanding loan balance, less costs to sell of the collateral, is returned to the client. 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 net income for the period, under “Other operating expenses”. The result obtained in the sale of the asset is subsequently recorded under “Other operating income”.
Independent appraisals are obtained at least every 18 months and fair values are adjusted accordingly. No adjustments have been made between appraisals with respect to the period covered by these financial statements considering the stability of the real estate market in Chile during past years and expected stability of the real estate market in the coming years.
At least once a year, the Bank performs the necessary analysis to update the “cost to sale” of assets received or awarded in lieu of payments. According to the Bank’s survey, as of December 31, 2025 the average cost to sale was estimated at 7.15 % of the appraisal value (5.67 % as of December 31, 2024).
u.Earnings per share
Basic earnings per share are determined by dividing the net income attributable to the shareholders 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 December 31, 2025, 2024 and 2023 the Bank did not have any instruments that generated dilution.
v.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 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”), in Note 7.
Differences between the purchase and sale prices are recorded as financial interest over the term of the contract.
F-31
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
w.Provision for mandatory dividends
The Bank recognizes a liability (provision) for minimum or mandatory dividends based on the provisions of Article 79 of the Chilean Corporations Law, in line with the Bank’s internal dividend policy, which stipulates that at least 30% of the net income for the year shall be distributed, unless a different agreement is reached at the respective Shareholders’ Meeting by unanimous vote of the issued shares.
Since May 2024, the Board of Directors agreed to exercise the authority granted by the most recent Ordinary Shareholders’ Meeting to increase the provision for minimum dividends to 60 % of accumulated earnings. Additionally, in the ordinary session of the Board of Directors in September 2024, it was agreed to increase the provision for minimum dividends to 70 %, following the same approach taken in the May 2024 Board meeting.
For the year 2025, the percentage provisioned for minimum dividends was 60 %. This provision is recorded as a reduction of “Retained Earnings” under the item “Provision for dividends, interest payments, and revaluation of equity instruments” within the Consolidated Statement of Change in Equity.
x.Employee benefits
i.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:
a.Aimed at the Bank’s management.
b.The general requirement to apply for this benefit is that the employee must be carrying out his/her duties when turning 60 years old.
c.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.
d.The Bank will be responsible for granting the benefits directly.
The Bank uses the method of projected unit credit, to determine the present value of the defined benefit obligation and the current service cost.
Components of defined benefit cost include:
i.current service cost and any past service cost, which are recognised in profit or loss for the period;
ii.net interest on the liability (asset) for net defined benefit, which is recognised in profit or loss for the period;
iii.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.
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 recognises the present service cost and the net interest of the Personnel salaries and expenses on the Consolidated Statements of Income.
The post-employment benefits liability, recognised in the Consolidated Statements 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.
F-32
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
When employees leave the plan before meeting the requirements to be eligible for the benefit, contributions made by the Bank are reduced.
ii.Cash-settled share-based compensation
The Bank allocates cash-settled share-based compensation to executives of the Bank and its Subsidiaries in accordance with IFRS 2. The Bank measures the services received and the obligation incurred at fair value. Until the obligation is settled, the Bank determines the fair value at the end of each reporting period, as well as at the date of settlement, recognising any change in fair value in the income statements of the period.
y.Application of new and revised International Financial Reporting Standards
1.New and revised standards effective in current year
The following new and revised IFRS have been adopted in these financial statements:
Amendments to IAS 21 – Lack of exchangeability. Issued on August 15, 2023, the amendments includes:
1.Specify when a currency is exchangeable into another currency and when it is not.
2.Specify how an entity determines the exchange rate to apply when a currency is not exchangeable.
3.Require the disclosure of additional information when a currency is not exchangeable.
The pronouncement also includes a new appendix with application guidance on exchangeability and a new illustrative example. The amendments also extend to conforming amendments to IFRS 1 which previously referred to, but did not define, exchangeability. An entity applies the amendments for annual reporting periods beginning on or after January 1, 2025. Earlier application is permitted. The Bank’s Administration has determined there are not impact of this amendments.
IFRS 1 Practice Statement – Management Commentary. The International Accounting Standards Board (IASB) has issued a revised practice statement on “Management Commentary” to support improvements to management commentary and similar reporting, including greater global alignment of requirements. The revised practice statement sets out requirements for management commentary and explains how those requirements can be met. It is divided into two parts. Part A sets out general requirements and guidance that apply to management commentary as a whole. The information in Part B sets out requirements and guidance for six specific content areas to be included in management commentary.
The revised IFRS 1 Practice Statement, “Management Commentary,” is effective for annual reporting periods beginning on or after June 23, 2025, with early application permitted. This replaces the IFRS 1 Practice Statement “Management Commentary” issued in December 2010. Management is working on the new requirements established in the standard in order to meet the established deadlines.
1.New and revised IFRS issued but not effective
As of the closing date of these financial statements, new International Financial Reporting Standards had been published as well as interpretations of them, which were not mandatory as of December 31, 2025. Although in some cases the early application is permitted by the IASB, the Bank has not taken that option.
IFRS 18 – Presentation and Disclosures in Financial Statements. On April 9, 2024, the IASB issued IFRS 18, which replaces IAS 1: Presentation of Financial Statements. IFRS 18 introduces three sets of new requirements to improve reporting on financial performance and provide a better basis for analyzing and comparing companies:
i.Improved Income Statement Comparability
ii.Greater transparency of management-defined performance measures
iii.More useful grouping of information in financial statements
IFRS 18 is effective for annual accounting periods beginning on or after January 1, 2027, with advance application permitted. The Bank’s Administration is evaluating the potential effects of this modification.
F-33
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. continued
IFRS 19 Non-Publicly Accountable Subsidiaries: Information to be disclosed. This regulation specifies the disclosure requirements that would apply to subsidiaries that are not obligated to publish financial accounts, but whose parent produces publicly available consolidated financial statements that comply with IFRS Standards.
This rule is applicable for periods beginning on or after January 1, 2027, with early application allowed. The Bank’s Administration is evaluating the potential effects of this modification..
Amendment to IFRS9 and IFRS7 - amendment to the Classification and Measurement of Financial Instruments. The amendment was issued on May 30. 2024 and include the following changes:
The Amendments clarify:
- the requirements related to the date of recognition and derecognition of financial assets and financial liabilities, with an exception for derecognition of financial liabilities settled via an electronic transfer.
- the requirements for assessing contractual cash flow characteristics of financial assets, with additional guidance on assessment of contingent features.
- characteristics of non-recourse loans and contractually linked instruments. The Amendments also introduce additional disclosure requirements for equity instruments classified as FVOCI and for financial instruments with contingent features.
The amendments are effective for annual periods beginning on or after January 1, 2026, with earlier application permitted. The Bank is in the process of analyzing this regulation.
Annual Improvements to IFRS Accounting Standards — Volume 11. This standard, issued on July 18, 2024, by the International Accounting Standards Board (IASB), addresses minor but necessary (non-urgent) amendments to the following five standards:
•IFRS 1 – First-time Adoption of International Financial Reporting Standards
•IFRS 7 – Financial Instruments: Disclosures
•IFRS 9 – Financial Instruments
•IFRS 10 – Consolidated Financial Statements
•IAS 7 – Statement of Cash Flows
The amendments are effective for annual periods beginning on or after 1 January 2026, with earlier application permitted. The Bank is in the process of analyzing this regulation.
Amendments to IFRS 9 and IFRS 7 - 'Contracts Referencing Nature-dependent Electricity. The amendment was issued on May 30. 2024 and include;
Amendments to IFRS 9 Financial Instruments
•the own-use requirements in IFRS 9 are amended to include the factors an entity is required to consider when applying IFRS 9:2.4 to contracts to buy and take delivery of renewable electricity for which the source of production of the electricity is nature-dependent; and
•the hedge accounting requirements in IFRS 9 are amended to permit an entity using a contract for nature-dependent renewable electricity with specified characteristics as a hedging instrument:
- to designate a variable volume of forecast electricity transactions as the hedged item if specified criteria are met; and
- to measure the hedged item using the same volume assumptions as those used for the hedging instrument.
Amendments to IFRS 7 Financial Instruments: Disclosures and IFRS 19 Subsidiaries without Public Accountability: Disclosures
The IASB amends IFRS 7 and IFRS 19 to introduce disclosure requirements about contracts for nature-dependent electricity with specified characteristics.
F-34
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 02 - SIGNIFICANT EVENTS
As of December 31, 2025, the following significant events have occurred and affected the Bank’s operation and Consolidated Financial Statements.
a.The Board
On March 25, 2024, at an ordinary meeting of the Board of Director,the Board resolved to convene an Ordinary Shareholders’ Meeting to be held on April 22, 2025, in order to propose the distribution of profits and payment of dividends equivalent to 70 % of the accumulated profits as of December 31, 2024 corresponding to $3.18571574 per share. The Board also proposed that the remaining 30 % of the profits be allocated to increase reserves and/or retained earnings.
On July 17, 2025, Director Rodrigo Echenique Gordillo submitted his resignation from the Bank’s Board of Directors. Subsequently, at the regular meeting held on July 29, 2025, Mr. José Francisco Doncel Razola was appointed as Director, effective as of September 2025.
On November 21, 2025, an Extraordinary Shareholders’ Meeting of Banco Santander-Chile was convened for December 10, 2025, for the purpose of voting on the sale of 49.99 % of the shares of the subsidiary Sociedad Operadora de Tarjetas de Pago Santander Getnet Chile S.A. to Getnet Payments S.L.
On November 25, 2025, the Board of Directors resolved to postpone the Extraordinary Shareholders’ Meeting scheduled for December 10, 2025.
On December 30, 2025, an Extraordinary Shareholders’ Meeting was convened for January 27, 2026, to vote on the sale of 49.99 % of the shares of the subsidiary Sociedad Operadora de Tarjetas de Pago Santander Getnet Chile S.A. to Getnet Payments S.L.
b.Shareholders’ meeting
At the Ordinary Shareholders' Meeting of Banco Santander-Chile held on April 22, 2025, together with the approval of the 2024 Consolidated Financial Statements, the shareholders resolved to distribute 70 % of the net income for the year (net income attributable to the Bank’s shareholders), amounting to $857,623 million. This distribution represents a dividend of $3.18571574 per share,for a total amount of Ch$600,336 million.
It was also approved that the remaining 30 % of net income be allocated, in part, to increase accumulated profits from prior years by the amount necessary to cover the payment of the next three interest coupons on bonds without a fixed maturity date, totaling $29,993 million and to increase the Bank’s reserves and other retained earnings by $227,295 million.
At the aforementioned Ordinary Shareholders’ Meeting, PricewaterhouseCoopers Consultores Auditores was also approved as the Bank’s external auditors for the 2025 fiscal year.
On April 29, 2025, the Bank proceeded with the payment of dividends to its shareholders.
c.Subsidiaries and Associated entities
PagoNxt Payments Chile SpA entered into an agreement with the related entity Santander Global Technology and Operations Chile Limitada to transfer its assets, contracts, and employees, effective as of January 2025. As a result, PagoNxt Payments Chile SpA ceased to be part of the consolidation perimeter as of that date.
On February 6, 2025, the Financial Market Commission approved the request to authorize a capital increase of the subsidiary Santander S.A. Sociedad Securitizadora. As of the end of March 2025, the company had completed the capital increase in the amount of Ch$774 million.
On April 15, 2025, at the Ordinary Shareholders’ Meeting of Operadora de Tarjetas de Pago Santander Getnet Chile S.A., the distribution of dividends equivalent to 40 % of the net income for the 2024 fiscal year was approved. This distribution represented a dividend of Ch$0.58653032 per share, for a total amount of Ch$11,730 million, which was paid on April 22, 2025. The remaining 60 % of net income was allocated to retained earnings.
On September 30, 2025, at a regular meeting of the Board of Directors of Operadora de Tarjetas de Pago Santander Getnet Chile S.A., the directors present unanimously approved the distribution of provisional dividends for fiscal year 2025, in a total amount of Ch$23,582 million, charged against net profits accumulated as of August 31, 2025.
F-35
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 02 - SIGNIFICANT EVENTS
On December 23, 2025, at a regular meeting of the Board of Directors, Operadora de Tarjetas de Pago Santander Getnet Chile S.A. unanimously approved a second distribution of provisional profits corresponding to fiscal year 2025, for a total amount of $14,418 million, charged against net profits accumulated as of November 30, 2025.
On December 24, 2025, Cristian Amar Zapata was appointed as General Manager of the company Santander Asesorías Financiera Limitada S.A.
On December 29, 2025, Operadora de Tarjetas de Pago Santander Getnet Chile S.A. made a provisional dividend payment from its 2025 profits in a total amount of $38,000 million.
d.Bond issuance
During 2025, the Bank issued bonds in the following amounts: UF 17,540,000 , CLP 328,550,000,000 , CHF 140,000,000 , JPY 14,000,000,000 and USD 20,000,000 . Details of the bond issuances carried out during the year are included in Note No. 17.
e.Basel III
On April 1, 2025, the Financial Market Commission (FMC) reported the annual classification of systemically important banks, maintaining for an additional year, the requirement of an extra 1.5% Common Equity Tier 1 (CET1) capital surcharge for the Bank.
On April 11, 2025, the FMC issued additional capital requirements under the Pillar II framework, whereby the FMC Council resolved to apply an additional capital requirement of 0.25%, of which 50 % became applicable to the Bank as of June 2025.
f.Others
On January 10, 2025, the Bank made a payment upon maturity of a Rule 144A bond in the amount of US$704,132,000 .
On January 28, 2025, at a regular meeting of the Bank’s Board of Directors, it was resolved that the Chief Executive Officer and Country Head, Mr. Román Blanco Reinosa, would step down from his position effective July 1, 2025. On such date, Mr. Andrés Trautmann Buc assumed the position of Chief Executive Officer and Country Head of the Bank.
The International Finance Corporation (IFC), a member of the World Bank Group (WBG), committed to providing a US$100 million loan to Banco Santander-Chile to finance green building projects. This represents IFC’s first green loan in Chile dedicated exclusively to environmentally sustainable buildings, as well as the first loan of this nature granted to Grupo Santander worldwide.
On April 23, 2025, the Shareholders’ Meeting of Centro de Compensación Automatizado S.A. was held, at which the distribution of dividends totaling Ch$7,500 million was approved. Based on Banco Santander-Chile’s ownership interest in this company, the Bank was entitled to receive dividends in the amount of Ch$2,500 million, which were paid in early May 2025.
As of July 1, 2025, Andrés Trautman Buc assumed the position of Chief Executive Officer and Country Head of Banco Santander-Chile.
F-36
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 03 - REPORTING SEGMENTS
The Bank manages and measures the performance of its operations by business segments. The reporting is based on the Bank's internal information system for management of the segments established by the Bank.
Inter-segment transactions are conducted under normal commercial terms and conditions. Each segment's assets, liabilities, and results include items directly attributable to the segment on which they can be allocated reasonably. A business segment comprises clients to whom a differentiated product offer is directed while being homogeneous in terms of their performance and measured similarly.
To achieve the strategic objectives established by senior management and adapt to changing market conditions, the Bank periodically makes adjustments to its organization. These adjustments, in turn, have varying degrees of impact on how the Bank is managed or administered. Thus, this disclosure provides information on how the Bank is managed as of December 31, 2025.
The Bank has the reportable segments noted below:
Retail
It includes individuals and small to middle-sized companies (SMEs) with an annual income of less than UF400,000 . This segment offers various services, including consumer loans, credit cards, commercial loans, foreign exchange, mortgage loans, debit cards, current accounts, savings products, and brokerage of mutual fund brokerage, securities and insurance. Additionally, SME clients are offered government-guaranteed loans, leasing and factoring.
Wealth Management & Insurance
This segment comprises the Insurance and Private Banking businesses, also coordinating the distribution of the different investment products and services to the rest of the Santander Group's Divisions in Chile. Santander Insurance's business offers both personal and business insurance products such as, health, life, travel, savings, personal protection, auto, unemployment, among others. Finally, to high-net-worth clients, Santander Private Banking offers everything from transactional products and services (credits, cards, foreign trade, purchase/sale of shares) to sophisticated products and services such as international investment accounts, structured funds, alternative investment funds, wealth management and open architecture.
Middle-market
This segment includes companies with annual sales exceeding 400,000 UF without a cap (for specialized industries in the Metropolitan Region, annual sales exceeding 100,000 UF without a cap). It also encompasses institutional organizations such as universities, government agencies, municipalities, regional governments, and real estate companies undertaking projects for third-party sales, as well as all construction companies with annual sales exceeding 100,000 UF without a cap. A wide range of products is offered to this segment, 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. Additionally, specialized services are provided to real estate companies for financing primarily residential projects, aiming to increase the sale of mortgage loans.
Corporate and Investment Banking (CIB)
This segment offers a wide range of products, including commercial loans, leasing, factoring, foreign trade, credit cards, checking accounts, transactional services, treasury services, financial consulting, investment banking, savings products, mutual funds, and insurance brokerage. This segment services firms with annual sales exceeding EUR 500 million, EBITDA over EUR 150 million, and assets greather than EUR 1,000 million. For financial institutions, the requirement is assets greater than 10 trillion Chilean pesos.
This segment incorporates the Treasury Division, which provides sophisticated financial products primarily to companies in the Wholesale Banking and Corporate Banking areas. It includes products such as short-term financing and funding, brokerage services, derivatives, and other solutions tailored to client needs. The Treasury area also manages position intermediation and the proprietary investment portfolio.
F-37
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 03 - REPORTING SEGMENTS, continued
Corporate Activities and Other
This segment includes Financial Management, which performs the global management of the structural exchange rate position, the structural interest rate risk, and liquidity levels. The latter is managed through the implementation of issuances and other institutional funding mechanisms. Likewise, it also manages capital levels, capital assignment to the different business segments, transfer prices and the cost of financing its own investment portfolio. This usually entails that this segment has a negative contribution to the results.
Furthermore, this segment incorporates all intra-segment results and all activities not allocated to a segment or product with customers.
The accounting policies of the segments are the same as those described in the breakdown of accounting standards and are customized to meet the Bank's management needs. The Bank's earnings stem mostly from income from interest, commissions, and financial transactions. Accordingly, the highest decision-making authority for each segment relies primarily on interest income, fee income and provision expenses to assess segment performance and thus make decisions on the resource allocation to the segments.
F-38
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 03 - REPORTING SEGMENTS, continued
The tables below show the Bank’s balances by reporting segment for the years ended December 31, 2025, 2024 and 2023:
| For the year ended December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and accounts receivable from customers (1) | Deposits and other demand deposits (2) | Net interest income | Net fee and commission income | Net income from financial operations (3) | Provision for loan losses | Support expenses (4) | Other operating income and expenses (5) | Net income before taxes | Income taxes | Net income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retail | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wealth Management & Insurance | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle-market | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CIB | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate activity and others | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Loans receivable from clients at amortized cost plus the balance owed by banks, without deducting their respective provisions
(2)Includes deposits, demand liabilities, and other time deposits.
(3)Includes the sum of net income (loss) from financial operations and net foreign exchange gain (loss).
(4)Includes the sum of personnel salaries and expenses, administrative expenses, depreciation and amortization and impairment of non-financial assets.
(5)Corresponds to the sum of other operating income and expenses, the result of non-current assets and groups that can be disposed of for sale not eligible as discontinued operations and profit or loss on investments in companies.
F-39
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 03 - REPORTING SEGMENTS, continued
| For the year ended December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and accounts receivable from customers (1) | Deposits and other demand deposits (2) | Net interest income | Net fee and commission income | Net income from financial operations | Provision for loan losses | Support expenses (3) | Other operating income and expenses (5) | Net income before taxes | Income taxes | Net income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retail | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wealth Management & insurance | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle-market | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CIB | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate Activity & others | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Loans receivable from clients at amortized cost plus the balance owed by banks, without deducting their respective provisions
(2)Includes deposits, demand liabilities, and other time deposits.
(3)Includes the sum of net income (loss) from financial operations and net foreign exchange gain (loss).
(4)Includes the sum of personnel salaries and expenses, administrative expenses, depreciation and amortization and impairment of non-financial assets.
(5)Corresponds to the sum of other operating income and expenses, the result of non-current assets and groups that can be disposed of for sale not eligible as discontinued operations and profit or loss on investments in companies.
F-40
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 03 - REPORTING SEGMENTS, continued
| For the year ended December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and accounts receivable from customers (1) | Deposits and other demand deposits (2) | Net interest income | Net fee and commission income | Net income from financial operations | Provision for loan losses | Support expenses (3) | Other operating income and expenses (5) | Net income before taxes | Income taxes | Net income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retail | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wealth Management & insurance | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle-market | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CIB | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate Activity & others | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Loans receivable from clients at amortized cost plus the balance owed by banks, without deducting their respective provisions
(2)Includes deposits, demand liabilities, and other time deposits.
(3)Includes the sum of net income (loss) from financial operations and net foreign exchange gain (loss).
(4)Includes the sum of personnel salaries and expenses, administrative expenses, depreciation and amortization and impairment of non-financial assets.
(5)Corresponds to the sum of other operating income and expenses, the result of non-current assets and groups that can be disposed of for sale not eligible as discontinued operations and profit or loss on investments in companies
F-41
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 04 - CASH AND CASH EQUIVALENTS
a.The detail of the balances included under cash and cash equivalents is as follows:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Cash and deposits in banks | ||||||||||||||
| Cash | ||||||||||||||
| Deposits at the Central Bank of Chile | ||||||||||||||
| Deposits in local banks | ||||||||||||||
| Deposits in banks abroad | ||||||||||||||
| Subtotals – Cash and deposits in banks | ||||||||||||||
| Net cash items in process of collection | ||||||||||||||
| Cash and cash equivalents | ||||||||||||||
The balance of funds held in cash and at the Central Bank of Chile reflects the monthly average that the Bank must maintain in accordance with the regulations governing minimum reserves although the balance can be withdrawn on demand.
b.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 December 31, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| MCh$ | MCh$ | ||||||||||||||||
| Assets | |||||||||||||||||
| Documents held by other banks (documents to be cleared) | |||||||||||||||||
| Funds receivable | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Liabilities | |||||||||||||||||
| Funds payable | ( | ( | |||||||||||||||
| Subtotal | ( | ( | |||||||||||||||
| Cash in process of collection, net | |||||||||||||||||
F-42
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 05 - FINANCIAL ASSETS FOR TRADING AT FAIR VALUE THROUGH PROFIT AND LOSS
The detail of financial assets for trading at fair value through profit and loss is as follows:
| As of December 31, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| MCh$ | MCh$ | ||||||||||||||||
| Financial derivative contracts | |||||||||||||||||
| Forwards | |||||||||||||||||
| Swaps | |||||||||||||||||
| Call currency options | |||||||||||||||||
| Put currency options | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Debt financial instruments | |||||||||||||||||
| Chilean Central Bank and Government securities | |||||||||||||||||
| Other Chilean debt financial instruments | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Total | |||||||||||||||||
a.As of December 31, 2025 and 2024 the Bank holds the following portfolio of financial assets derivative contracts:
| As of December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notional amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | Fair value | |||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||||
| Currency forward | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Call currency options | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Put currency options | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notional amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | Fair value | |||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||||
| Currency forward | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Call currency options | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Put currency options | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
F-43
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 05 - FINANCIAL ASSETS FOR TRADING AT FAIR VALUE THROUGH PROFIT AND LOSS, continued
b.As of December 31, 2025 and 2024 the Bank holds the following portfolio of debt financial instruments for trading:
| As of December 31, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| MCh$ | MCh$ | ||||||||||||||||
| Chilean Central Bank and Government securities | |||||||||||||||||
| Chilean Central Bank financial instruments | |||||||||||||||||
| Chilean Treasury bonds and notes | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Other Chilean debt financial securities | |||||||||||||||||
| Chilean bonds and commercial papers | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Foreign financial debt securities | |||||||||||||||||
| Other foreign financial instruments | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Total | |||||||||||||||||
As of December 31, 2025 and 2024, there were no trading investments sold under resell agreements to clients or financial institutions.
F-44
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 06 – FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
The financial assets at fair value through other comprehensive income is as follows:
| As of December 31, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| MCh$ | MCh$ | ||||||||||||||||
| Debt financial instruments | |||||||||||||||||
| Chilean Central Bank and Government financial instruments | |||||||||||||||||
| Other Chilean debt financial instruments | |||||||||||||||||
| Foreign debt financial instruments | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Other financial instruments | |||||||||||||||||
| Commercial loans | |||||||||||||||||
| Mortgage loans | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Total | |||||||||||||||||
a.As of December 31, 2025 and 2024 detail of financial debt instruments is as follows:
| As of December 31, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| MCh$ | MCh$ | ||||||||||||||||
| Chilean Central Bank and Government financial instruments | |||||||||||||||||
| Chilean Central Bank financial instruments | |||||||||||||||||
| Chilean Treasury bonds and notes | |||||||||||||||||
| Other Chilean government financial instruments | |||||||||||||||||
| Subtotal | |||||||||||||||||
| of which sold under repurchase agreement | |||||||||||||||||
| Other Chilean debt financial instruments | |||||||||||||||||
| Other Chilean bank financial instruments | |||||||||||||||||
| Other Chilean financial instruments | |||||||||||||||||
| Subtotal | |||||||||||||||||
| of which sold under repurchase agreement | |||||||||||||||||
| Foreign debt financial instruments | |||||||||||||||||
| Foreign debt financial instruments of governments and fiscal entities | |||||||||||||||||
| Other foreign debt financial instruments | |||||||||||||||||
| Subtotal | |||||||||||||||||
| of which sold under repurchase agreement | |||||||||||||||||
| Total | |||||||||||||||||
The Bank holds instruments, within “Chilean Central Bank and government securities”, which guarantee derivatives transactions through Comder Contraparte Central S.A., in the local market as of December 31, 2025 and 2024 for an amount of Ch$223,000 and Ch$138,000 , respectively, while “Foreign debt financial instruments” guarantee margins for derivatives transactions through London Clearing House (LCH) as of December 31, 2025 and 2024 for an amount of Ch$405,311 and Ch$49,705 , respectively. Additionally, the Bank maintains guarantees with Euroclear as of December 31, 2025 and 2024 for an amount of Ch$497,631 and Ch$484,624 , respectively, to comply with the initial margin required by European EMIR Standard.
F-45
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 06 – FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME, continued
The credit risk provisions associated with debt instruments, commercial placements and housing as of December 31, 2025 and 2024, are:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Debts financial instruments | ||||||||||||||
| Commercial loans | ||||||||||||||
| Mortgage loans | ||||||||||||||
As of December 31, 2024, changes in fair value of financial assets measured at FVOCI included a cumulative net unrealized loss of MCh$67,161 , recorded as “valuation adjustment” in OCI, where MCh$69,012 (loss) are attributable to shareholders equity and MCh$1,851 (profit) to non-controlling interest. As of December 31, 2025, changes in fair value of financial assets measured at FVOCI included a cumulative net unrealized loss of MCh$77,905 , recorded as “valuation adjustment” in OCI, where MCh$80,320 (loss) are attributable to shareholders equity and MCh$2,415 (profit) to non-controlling interest.
The changes in the fair value and the corresponding ECL of debt instruments as of December 31, 2025 is as follows:
| Stage 1 | Stage 2 | Stage 3 | TOTAL | |||||||||||||||||||||||
| Balance at January 1, 2025 | ||||||||||||||||||||||||||
| New financial assets purchased | ||||||||||||||||||||||||||
| Transfers to stage 1 | ||||||||||||||||||||||||||
| Transfers to stage 2 | ||||||||||||||||||||||||||
| Transfers to stage 3 | ||||||||||||||||||||||||||
| Assets derecognised or matured (excluding write-off) | ( | ( | ||||||||||||||||||||||||
| Changes in measument of financial assets | ||||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | TOTAL | |||||||||||||||||||||||
| ECL at January 1, 2025 | ||||||||||||||||||||||||||
| New financial assets purchased | ||||||||||||||||||||||||||
| Transfers to stage 1 | ||||||||||||||||||||||||||
| Transfers to stage 2 | ||||||||||||||||||||||||||
| Transfers to stage 3 | ||||||||||||||||||||||||||
| Assets derecognised or matured (excluding write-off) | ( | ( | ||||||||||||||||||||||||
| Changes due to changes in credit risk | ||||||||||||||||||||||||||
| Write-off | ||||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||
F-46
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 06 – FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME, continued
The changes in the fair value and the corresponding ECL of debt instruments as of December 31, 2024 is as follows:
| Stage 1 | Stage 2 | Stage 3 | TOTAL | |||||||||||||||||||||||
| Balance at January 1, 2024 | ||||||||||||||||||||||||||
| New financial assets purchased | ||||||||||||||||||||||||||
| Transfers to stage 1 | ||||||||||||||||||||||||||
| Transfers to stage 2 | ||||||||||||||||||||||||||
| Transfers to stage 3 | ||||||||||||||||||||||||||
| Assets derecognised or matured (excluding write-off) | ( | ( | ||||||||||||||||||||||||
| Changes in measument of financial assets | ||||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | TOTAL | |||||||||||||||||||||||
| ECL at January 1, 2024 | ||||||||||||||||||||||||||
| New financial assets purchased | ||||||||||||||||||||||||||
| Transfers to stage 1 | ||||||||||||||||||||||||||
| Transfers to stage 2 | ||||||||||||||||||||||||||
| Transfers to stage 3 | ||||||||||||||||||||||||||
| Assets derecognised or matured (excluding write-off) | ( | ( | ||||||||||||||||||||||||
| Changes due to changes in credit risk | ||||||||||||||||||||||||||
| Write-off | ||||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||
Gross profits and losses realized on the sale of available for sale investments as of December 31, 2025, 2024 and 2023 is as follows:
| As of December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| Sale of debt financial instruments at FVOCI generating realized profits | ||||||||||||||||||||
| Realized profits | ||||||||||||||||||||
| Sale of debt financial instruments at FVOCI generating realized losses | ||||||||||||||||||||
| Realized losses | ||||||||||||||||||||
The Bank evaluated those instruments with unrealized losses as of December 31, 2025 and 2024 and concluded they were not impaired. This review consisted of evaluating the economic reasons for any declines, the credit ratings of the securities’ issuers, and the Bank’s intention and ability to hold the securities until the unrealized loss is recovered. Based on this analysis, the Bank believes that there were no significant or prolonged declines nor changes in credit risk which would cause impairment in its investment portfolio, since most of the decline in fair value of these instruments was caused by market conditions which the Bank considers to be temporary. All of the instruments that have unrealized losses as of December 31, 2025 and 2024 were not in a continuing unrealized loss position for more than one year.
b.Other financial instruments
The Bank classifies certain loans and account receivables at fair value through other comprehensive income (FVOCI), when a credit operation exceeds single client exposure under the Bank’s credit risk policy. Initially, the risk committee approves the full operation with the condition to sell a portion of the loan in the medium term.
Additionally, the Bank includes operations that expect to sell, for which an increase of the credit risk has been identified.
This portfolio is measured at fair value, recognising the adjustment in other comprehensive income. The portfolio is assessed for impairment loss under the ECL model, same as loans at amortised cost.
F-47
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 06 – FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME, continued
The changes in the fair value and the corresponding ECL of commercial loans as of December 31, 2025 is as follows:
| Commercial loans | Stage 1 | Stage 2 | Stage 3 | TOTAL | ||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Balance as of January 1, 2025 | ||||||||||||||||||||||||||
| New financial assets originated | ||||||||||||||||||||||||||
| Transfers to stage 1 | ( | |||||||||||||||||||||||||
| Transfers to stage 2 | ||||||||||||||||||||||||||
| Transfers to stage 3 | ( | |||||||||||||||||||||||||
| Assets derecognised or matured (excluding write-off) | ( | ( | ||||||||||||||||||||||||
| Changes in measument of financial assets | ( | ( | ( | |||||||||||||||||||||||
| Write-off | ||||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||
| Commercial loans | Stage 1 | Stage 2 | Stage 3 | TOTAL | ||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| ECL allowance at January 1, 2025 | ||||||||||||||||||||||||||
| New financial assets originated | ||||||||||||||||||||||||||
| Transfers to stage 1 | ( | |||||||||||||||||||||||||
| Transfers to stage 2 | ||||||||||||||||||||||||||
| Transfers to stage 3 | ( | |||||||||||||||||||||||||
| Assets derecognised or matured (excluding write-off) | ||||||||||||||||||||||||||
| Changes due to changes un credit risk | ( | ( | ( | |||||||||||||||||||||||
| Write-off | ||||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||
The changes in the fair value and the corresponding ECL of commercial loans as of December 31, 2024 is as follows:
| Commercial loans | Stage1 | Stage2 | Stage3 | TOTAL | ||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Balance as of January 1, 2024 | ||||||||||||||||||||||||||
| New financial assets originated | ||||||||||||||||||||||||||
| Transfers to stage 1 | ||||||||||||||||||||||||||
| Transfers to stage 2 | ||||||||||||||||||||||||||
| Transfers to stage 3 | ||||||||||||||||||||||||||
| Assets derecognised or matured (excluding write-off) | ( | ( | ||||||||||||||||||||||||
| Changes in measument of financial assets | ||||||||||||||||||||||||||
| Write-off | ||||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||
F-48
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 06 – FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME, continued
| Commercial loans | Stage 1 | Stage 2 | Stage 3 | TOTAL | ||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| ECL allowance at January 1, 2024 | ||||||||||||||||||||||||||
| New financial assets originated | ||||||||||||||||||||||||||
| Transfers to stage 1 | ||||||||||||||||||||||||||
| Transfers to stage 2 | ||||||||||||||||||||||||||
| Transfers to stage 3 | ||||||||||||||||||||||||||
| Assets derecognised or matured (excluding write-off) | ( | ( | ||||||||||||||||||||||||
| Changes due to changes un credit risk | ||||||||||||||||||||||||||
| Write-off | ||||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||
The changes in the fair value and the corresponding ECL of mortgage loans as of December 31, 2025 is as follows:
| Mortgage loans | Stage 1 | Stage 2 | Stage 3 | TOTAL | ||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Balance as of January 1, 2025 | ||||||||||||||||||||||||||
| New financial assets originated | ||||||||||||||||||||||||||
| Transfers to stage 1 | ( | |||||||||||||||||||||||||
| Transfers to stage 2 | ( | |||||||||||||||||||||||||
| Transfers to stage 3 | ||||||||||||||||||||||||||
| Assets derecognised or matured (excluding write-off) | ( | ( | ( | |||||||||||||||||||||||
| Changes in measument of financial assets | ( | ( | ||||||||||||||||||||||||
| Write-off | ||||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||
During 2025, the Bank carried out the sale of 276 housing portfolio transactions at fair value with effects on other comprehensive income, for an amount of approximately $38,548 million, generating an effect on results of approximately $1,469 million.
| Mortgage loans | Stage 1 | Stage 2 | Stage 3 | TOTAL | |||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||
| ECL allowance at January 1, 2025 | |||||||||||||||||||||||
| New financial assets originated | |||||||||||||||||||||||
| Transfers to stage 1 | ( | ( | |||||||||||||||||||||
| Transfers to stage 2 | ( | ||||||||||||||||||||||
| Transfers to stage 3 | |||||||||||||||||||||||
| Assets derecognised or matured (excluding write-off) | ( | ( | ( | ||||||||||||||||||||
| Changes due to changes un credit risk | ( | ||||||||||||||||||||||
| Write-off | ( | ( | ( | ||||||||||||||||||||
| Other adjustments | |||||||||||||||||||||||
| At December 31, 2025 | |||||||||||||||||||||||
F-49
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 06 – FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME, continued
The changes in the fair value and the corresponding ECL of mortgage loans as of December 31, 2024 is as follows:
| Mortgage loans | Stage 1 | Stage 2 | Stage 3 | TOTAL | ||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Balance as of January 1, 2024 | ||||||||||||||||||||||||||
| New financial assets originated | ||||||||||||||||||||||||||
| Transfers to stage 1 | ||||||||||||||||||||||||||
| Transfers to stage 2 | ||||||||||||||||||||||||||
| Transfers to stage 3 | ||||||||||||||||||||||||||
| Assets derecognised or matured (excluding write-off) | ||||||||||||||||||||||||||
| Changes in measument of financial assets | ( | ( | ||||||||||||||||||||||||
| Write-off | ||||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||
| Mortgage loans | Stage 1 | Stage 2 | Stage 3 | TOTAL | |||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||
| ECL allowance at January 1, 2024 | |||||||||||||||||||||||
| New financial assets originated | |||||||||||||||||||||||
| Transfers to stage 1 | |||||||||||||||||||||||
| Transfers to stage 2 | |||||||||||||||||||||||
| Transfers to stage 3 | |||||||||||||||||||||||
| Assets derecognised or matured (excluding write-off) | |||||||||||||||||||||||
| Changes due to changes un credit risk | |||||||||||||||||||||||
| Write-off | |||||||||||||||||||||||
| Other adjustments | |||||||||||||||||||||||
| At December 31, 2024 | |||||||||||||||||||||||
F-50
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 06 – FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME, continued
The following charts show debt instruments at fair value through other comprehensive income cumulative unrealized losses, as of December 31, 2025:
| Less than 12 months | More than 12 months | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | Amortised cost | Fair value | Unrealized profit | Unrealized loss | Amortised cost | Fair value | Unrealized profit | Unrealized loss | Amortised cost | Fair value | Unrealized profit | Unrealized loss | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Central Bank and Government securities | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Central Bank financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Treasury bonds and notes | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Chilean government financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Chilean debt financial securities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Bank debt financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Chilean financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign financial debt securities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign debt financial instruments of governments and fiscal entities | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other foreign debt financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and account receivable from customer | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage loans | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-51
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 06 – FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME, continued
The following charts show debt instruments at fair value through other comprehensive income cumulative unrealized losses, as of December 31, 2024:
| Less than 12 months | More than 12 months | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | Amortised cost | Fair value | Unrealized profit | Unrealized loss | Amortised cost | Fair value | Unrealized profit | Unrealized loss | Amortised cost | Fair value | Unrealized profit | Unrealized loss | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Central Bank and Government instruments | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Central Bank financial instruments | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Treasury bonds and notes | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Chilean government financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Chilean debt financial securities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Bank debt financial instruments | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Chilean financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign financial debt instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt financial instruments of foreign governments and fiscal entities | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other foreign debt financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and account receivable from customer | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage loans | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-52
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 07 - FINANCIAL DERIVATIVES CONTRACTS FOR HEDGE ACCOUNTING
As of December 31, 2025 and 2024 the Bank holds the following portfolio of derivative instruments for hedging purposes:
| As of December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notional amount | Fair value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | Assets | Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value hedge derivatives | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash flow hedge derivatives | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency forwards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notional amount | Fair value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | Assets | Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value hedge derivatives | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash flow hedge derivatives | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency forwards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-53
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 07 - FINANCIAL DERIVATIVES CONTRACTS FOR HEDGE ACCOUNTING, continued
a.Micro-hedge accounting
Fair value micro-hedge
The Bank uses cross-currency swaps and interest rate swaps to hedge its exposure to changes in fair value of hedged items attributable to interest rates. Those 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 December 31, 2025 and 2024, classified by term to maturity:
| As of December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | ||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||||
| Hedged item | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans and receivables from clients | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | |||||||||||||||||||||||||||||||||||||||||||||||
| Investment instruments at AC | |||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Sovereign Bond | |||||||||||||||||||||||||||||||||||||||||||||||
| Debt instruments at FVOCI | |||||||||||||||||||||||||||||||||||||||||||||||
| Chilean sovereign bonds | |||||||||||||||||||||||||||||||||||||||||||||||
| US Treasury bonds | |||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Treasury bonds | |||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits and other time liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | |||||||||||||||||||||||||||||||||||||||||||||||
| Issued debt instruments | |||||||||||||||||||||||||||||||||||||||||||||||
| Senior bonds | |||||||||||||||||||||||||||||||||||||||||||||||
| Subordinated bonds | |||||||||||||||||||||||||||||||||||||||||||||||
| Interbank borrowing | |||||||||||||||||||||||||||||||||||||||||||||||
| Interbank loans | |||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Central Bank loans | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Hedging instrument | |||||||||||||||||||||||||||||||||||||||||||||||
| Cross Currency swaps | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||
F-54
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 07 - FINANCIAL DERIVATIVES CONTRACTS FOR HEDGE ACCOUNTING, continued
| As of December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | ||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||||
| Hedged item | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans and account receivable from clients | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | |||||||||||||||||||||||||||||||||||||||||||||||
| Debt instruments at FVOCI | |||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Sovereign bond | |||||||||||||||||||||||||||||||||||||||||||||||
| US Treasury bonds | |||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Treasury bonds | |||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits and other time liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | |||||||||||||||||||||||||||||||||||||||||||||||
| Issued debt instruments | |||||||||||||||||||||||||||||||||||||||||||||||
| Senior bonds | |||||||||||||||||||||||||||||||||||||||||||||||
| Subordinated bonds | |||||||||||||||||||||||||||||||||||||||||||||||
| Interbank borrowing | |||||||||||||||||||||||||||||||||||||||||||||||
| Interbank loans | |||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Central Bank loans | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Hedging instrument | |||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||
F-55
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 07 - FINANCIAL DERIVATIVES CONTRACTS FOR HEDGE ACCOUNTING, continued
Cash flow micro-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 interest rate. The inflation risk that arises in some items is covered by both forwards as well as cross currency swaps.
Below is the notional amount of the hedged items as of December 31, 2025 and 2024, and the period when the cash flows will be generated:
| As of December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | |||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Hedged item | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and accounts receivable from clients | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt instruments at FVOCI | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Chile Sovereign bond | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Central Bank bonds | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Treasury bonds | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits and other time liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Issued debt instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior bonds | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Subordinated bonds | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interbank borrowings | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interbank loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Hedging instrument | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency forward | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
F-56
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 07 - FINANCIAL DERIVATIVES CONTRACTS FOR HEDGE ACCOUNTING, continued
| As of December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | |||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Hedged item | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and accounts receivable from clients | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt instruments at FVOCI | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Chilean Treasury bonds | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Deposits and other time deposits | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Issued debt instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior bonds | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Subordinated bonds | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interbank borrowings | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interbank loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Hedging instrument | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency forward | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
F-57
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 07 - FINANCIAL DERIVATIVES CONTRACTS FOR HEDGE ACCOUNTING, continued
i.Forecasted cash flows for interest rate risk
Below is an estimate of the periods in which cash flows are expected to be produced:
| As of December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | |||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Hedged item | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Inflows | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Outflows | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net flows | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Hedging instrument | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Inflows | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Outflows (*) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net flows | ||||||||||||||||||||||||||||||||||||||||||||||||||
(*)Only includes cash flow forecast portion of the hedge instruments used to cover interest rate risk.
| As of December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | |||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Hedged item | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Inflows | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Outflows | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net flows | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Hedging instrument | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Inflows | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Outflows (*) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net flows | ||||||||||||||||||||||||||||||||||||||||||||||||||
(*)Only includes cash flow forecast portion of the hedge instruments used to cover interest rate risk.
ii.Forecasted cash flows for inflation risk:
| As of December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | |||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Hedged item | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Inflows | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Outflows | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Net flows | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Hedging instrument | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Inflows | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Outflows | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net flows | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
F-58
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 07 - FINANCIAL DERIVATIVES CONTRACTS FOR HEDGE ACCOUNTING, continued
| As of December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | |||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Hedged item | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Inflows | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Outflows | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Net flows | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Hedging instrument | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Inflows | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Outflows | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net flows | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
iii.Forecasted cash flows for exchange rate risk
| As of December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | |||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Hedged item | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Inflows | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Outflows | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Net flows | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Hedging instrument | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Inflows | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Outflows | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net flows | ||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | |||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Hedged item | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Inflows | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Outflows | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Net flows | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Hedging instrument | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Inflows | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Outflows | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net flows | ||||||||||||||||||||||||||||||||||||||||||||||||||
F-59
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 07 - FINANCIAL DERIVATIVES CONTRACTS FOR HEDGE ACCOUNTING, continued
b.Other comprehensive income effect
The accumulated effect of the mark to market adjustment of cash flow hedges generated by hedge instruments used in hedged cash flow was recorded in the Consolidated Statements of Changes in Equity, within other comprehensive income, as of December 31, 2025 and 2024, is as follows:
| As of December 31, | ||||||||||||||
| Hedged item | 2025 | 2024 | ||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Interbank loans | ( | ( | ||||||||||||
| Time deposits and other time liabilities | ( | |||||||||||||
| Issued debt instruments | ( | |||||||||||||
| Debt instruments at FVOCI | ( | |||||||||||||
| Loans and accounts receivable at amortised cost | ( | |||||||||||||
| Total | ( | ( | ||||||||||||
Since the inflows and outflows for both the hedged element and the hedging instrument mirror each other, the hedges are nearly
During the current year, the Bank did not enter into any cash flow hedges relating to forecasted transactions.
c.P&L effect
The amounts recycling from other comprehensive income to income for the year related to cash flow hedges are as follows:
| For the years ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| Bond hedging derivatives | ||||||||||||||||||||
| Interbank loans hedging derivatives | ( | ( | ||||||||||||||||||
| Mortgage loans hedging derivatives | ( | ( | ( | |||||||||||||||||
| Cash flow hedge net gain (loss) | ( | ( | ( | |||||||||||||||||
See Note 21 - Equity, letter e, for other comprehensive income reconciliation
d.Net investment hedges in foreign operations
As of December 31, 2025, and 2024, the Bank does not have any foreign net investment hedges nor hedge accounting.
F-60
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 07 - FINANCIAL DERIVATIVES CONTRACTS FOR HEDGE ACCOUNTING, continued
e.Fair value macro-hedges
| Notional amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2025 | Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | ||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Hedge item | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and account receivable at amortised cost | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Hedging instrument | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Notional amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2024 | Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | ||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Hedge item | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and account receivable at amortised cost | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Hedging instrument | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2025, and 2024 Other Assets include MCh$119,790 and MCh$155,587 respectively, related to fair value measurement of net assets or liabilities subject to macrohedges. See Note 14.
As of December 31, 2025, and 2024, Other Liabilities include MCh$51,690 and MCh$76,540 respectively, related to fair value measurement of net assets or liabilities subject to macrohedges. See Note 20.
F-61
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 08 - FINANCIAL ASSETS AT AMORTISED COST
As of December 31, 2025 and 2024 the composition and balances are as follows:
| As of December 31, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| MCh$ | MCh$ | ||||||||||||||||
| Rights under repurchase agreements | |||||||||||||||||
| Foreign banks transactions | |||||||||||||||||
| Other Chilean entities transactions | |||||||||||||||||
| Impairment on rights under repurchase agreements | ( | ( | |||||||||||||||
| Subtotal | |||||||||||||||||
| Debt financial instruments | |||||||||||||||||
| Chilean Central Bank and Government instruments | |||||||||||||||||
| Foreign debt financial instruments | |||||||||||||||||
| Impairment on debt financial instruments | ( | ( | |||||||||||||||
| Subtotal | |||||||||||||||||
| Interbank loans | |||||||||||||||||
| Foreign banks | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Loans and account receivable from customers | |||||||||||||||||
| Commercial loans | |||||||||||||||||
| Mortgage loans | |||||||||||||||||
| Consumer loans | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Total | |||||||||||||||||
a.Rights under repurchase agreements
The Bank as of December 31, 2025 and 2024 presents the following balances:
| As of December 31, 2025 | As of December 31, 2024 | |||||||||||||||||||||||||||||||
| On demand | Up to 1 months | Between 1 month and 3 months | Between 3 month and 12 months | Total | On demand | Up to 1 months | Between 1 month and 3 months | Between 3 month and 12 months | Total | |||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Foreign banks transactions | ||||||||||||||||||||||||||||||||
| Other banks transactions | ||||||||||||||||||||||||||||||||
| Foreign Central banks transactions | ||||||||||||||||||||||||||||||||
| Rights under lending agreements | ||||||||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||||||||
| Other local entities transactions | ||||||||||||||||||||||||||||||||
| Repurchase agreements | ||||||||||||||||||||||||||||||||
| Rights under lending agreements | ||||||||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||
The accumulated credit impairment related to securities lending and covenant operations amounts to $163 million and $48 million as of December 31, 2025 and 2024, respectively.
F-62
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 08 - FINANCIAL ASSETS AT AMORTISED COST, continued
The changes in the carrying amount and the corresponding ECL of Rights under repurchase agreements as of December 31, 2025 is as follows:
| Stage1 MCh$ | Stage2 MCh$ | Stage3 MCh$ | TOTAL MCh$ | ||||||||||||||||||||
| Balance as of January 1, 2025 | |||||||||||||||||||||||
| Changes in measurement of financial assets | ( | ( | |||||||||||||||||||||
| Transfers to stage 1 | |||||||||||||||||||||||
| Transfers to stage 2 | |||||||||||||||||||||||
| Transfers to stage 3 | |||||||||||||||||||||||
| New transactions | |||||||||||||||||||||||
| Maturity transactions | ( | ( | |||||||||||||||||||||
| At December 31, 2025 | |||||||||||||||||||||||
| Stage1 MCh$ | Stage2 MCh$ | Stage3 MCh$ | TOTAL MCh$ | ||||||||||||||||||||
| ECL as of January 1, 2025 | |||||||||||||||||||||||
| Changes in measurement of financial assets | |||||||||||||||||||||||
| Transfers to stage 1 | |||||||||||||||||||||||
| Transfers to stage 2 | |||||||||||||||||||||||
| Transfers to stage 3 | |||||||||||||||||||||||
| New transactions | |||||||||||||||||||||||
| Maturity transactions | ( | ( | |||||||||||||||||||||
| At December 31, 2025 | |||||||||||||||||||||||
The changes in the carrying amount and the corresponding ECL of Rights under repurchase agreements as of December 31, 2024 is as follows:
| Stage1 MCh$ | Stage2 MCh$ | Stage3 MCh$ | TOTAL MCh$ | ||||||||||||||||||||
| Balance as of January 1, 2024 | |||||||||||||||||||||||
| Changes in measurement of financial assets | ( | ( | |||||||||||||||||||||
| Transfers to stage 1 | |||||||||||||||||||||||
| Transfers to stage 2 | |||||||||||||||||||||||
| Transfers to stage 3 | |||||||||||||||||||||||
| New transactions | |||||||||||||||||||||||
| Maturity transactions | ( | ( | |||||||||||||||||||||
| At December 31, 2024 | |||||||||||||||||||||||
| Stage1 MCh$ | Stage2 MCh$ | Stage3 MCh$ | TOTAL MCh$ | ||||||||||||||||||||
| ECL as of January 1, 2024 | |||||||||||||||||||||||
| Changes in measurement of financial assets | ( | ( | |||||||||||||||||||||
| Transfers to stage 1 | |||||||||||||||||||||||
| Transfers to stage 2 | |||||||||||||||||||||||
| Transfers to stage 3 | |||||||||||||||||||||||
| New transactions | |||||||||||||||||||||||
| At December 31, 2024 | |||||||||||||||||||||||
F-63
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 08 - FINANCIAL ASSETS AT AMORTISED COST, continued
b.Debt financial instruments
The detail of the instruments classified as Debt instruments at amortised cost is as follows:
| As of December 31, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| MCh$ | MCh$ | ||||||||||||||||
| Chilean Central Bank and Government securities | |||||||||||||||||
| Chilean Central Bank financial instruments | |||||||||||||||||
| Chilean Treasury bonds and notes | |||||||||||||||||
| Other Chilean government financial instruments | |||||||||||||||||
| Subtotal | |||||||||||||||||
| of which sold under repurchase agreement | |||||||||||||||||
| Foreign debt financial instruments | |||||||||||||||||
| Other foreign debt financial instruments | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Expected credit loss allowance | ( | ( | |||||||||||||||
| Total | |||||||||||||||||
In the "Chilean Central Bank and Government securities" category, instruments are maintained that guarantee margins for derivatives transactions through Comder Contraparte Central S.A. in the amounts of $83,830 million and $79,400 million as of December 31, 2025 and 2024, respectively. Additionally, guarantees are maintained for operations through the "Camara de pagos bajo valor" (CPBV) in the amounts of $91,198 million and $179,179 million as of December 31, 2025 and 2024, respectively. In "other foreign debt financial instrument", instruments for derivative operations are maintained for $305,248 million and $133,381 million as of December 31, 2025 and 2024.
The changes in the carrying amount and the corresponding ECL as of December 31, 2025 is as follows:
| Stage1 MCh$ | Stage2 MCh$ | Stage3 MCh$ | TOTAL MCh$ | |||||||||||||||||||||||
| Balance as of January 1, 2025 | ||||||||||||||||||||||||||
| Changes in measurement of financial assets | ||||||||||||||||||||||||||
| Transfers to stage 1 | ||||||||||||||||||||||||||
| Transfers to stage 2 | ||||||||||||||||||||||||||
| Transfers to stage 3 | ||||||||||||||||||||||||||
| New transactions | ||||||||||||||||||||||||||
| Maturity transactions | ||||||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||
| Stage1 MCh$ | Stage2 MCh$ | Stage3 MCh$ | TOTAL MCh$ | |||||||||||||||||||||||
| ECL as of January 1, 2025 | ||||||||||||||||||||||||||
| Changes in measurement of financial assets | ||||||||||||||||||||||||||
| Transfers to stage 1 | ||||||||||||||||||||||||||
| Transfers to stage 2 | ||||||||||||||||||||||||||
| Transfers to stage 3 | ||||||||||||||||||||||||||
| New transactions | ||||||||||||||||||||||||||
| Maturity transactions | ||||||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||
F-64
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 08 - FINANCIAL ASSETS AT AMORTISED COST, continued
The changes in the carrying amount and the corresponding ECL as of December 31, 2024 is as follows:
| Stage1 MCh$ | Stage2 MCh$ | Stage3 MCh$ | TOTAL MCh$ | |||||||||||||||||||||||
| Balance as of January 1, 2024 | ||||||||||||||||||||||||||
| Changes in measurement of financial assets | ( | ( | ||||||||||||||||||||||||
| Transfers to stage 1 | ||||||||||||||||||||||||||
| Transfers to stage 2 | ||||||||||||||||||||||||||
| Transfers to stage 3 | ||||||||||||||||||||||||||
| New transactions | ||||||||||||||||||||||||||
| Maturity transactions | ( | ( | ||||||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||
| Stage1 MCh$ | Stage2 MCh$ | Stage3 MCh$ | TOTAL MCh$ | |||||||||||||||||||||||
| ECL at January 1, 2024 | ||||||||||||||||||||||||||
| Changes in measurement of financial assets | ||||||||||||||||||||||||||
| Transfers to stage 1 | ||||||||||||||||||||||||||
| Transfers to stage 2 | ||||||||||||||||||||||||||
| Transfers to stage 3 | ||||||||||||||||||||||||||
| New transactions | ( | ( | ||||||||||||||||||||||||
| Maturity transactions | ( | ( | ||||||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||
F-65
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 08 - FINANCIAL ASSETS AT AMORTISED COST, continued
c.Interbank Loans and Loans and account receivable from customers
| Assets before allowances | ECL allowance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2025 | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||||||||||||
| Interbank loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign banks | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign trade loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Checking accounts debtors | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit card debtors | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Factoring transactions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leasing transactions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Student loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other loans and accounts receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans with mortgage finance bonds | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Endorsable mortgage mutual loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage mutual financed with mortgage bonds | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other mortgage mutual loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other credit and account receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Installment consumer loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Checking account debtors | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit card debtors | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leasing transactions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other consumer loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
During 2025, the Bank sold commercial loans and leasing loans for $12,867 million and $17,945 million, respectively, to unrelated Chilean financial entities.
F-66
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 08 - FINANCIAL ASSETS AT AMORTISED COST, continued
| Assets before allowances | ECL allowance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2024 | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||||||||||||
| Interbank loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign banks | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign trade loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Checking accounts debtors | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit card debtors | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Factoring transactions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leasing transactions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Student loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other loans and accounts receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans with mortgage finance bonds | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Endorsable mortgage mutual loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage mutual financed with mortgage bonds | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other mortgage mutual loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other credit and account receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Installment consumer loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Checking account debtors | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit card debtors | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leasing transactions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other consumer loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-67
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 08 - FINANCIAL ASSETS AT AMORTISED COST, continued
a.Interbank loans
The changes in the gross carrying amount and the corresponding ECL allowance as of December 31, 2025, is as follows:
| Stage 1 | Stage 2 | Stage 3 | ||||||||||||||||||||||||||||||||||||||||||
| Corporate | Other commercial | Corporate | Other commercial | Corporate | Other commercial | TOTAL | ||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||
| Gross carrying amount at January 1, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers: | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ||||||||||||||||||||||||||||||||||||||||||||
| Net changes of financial assets | ||||||||||||||||||||||||||||||||||||||||||||
| Write-off | ||||||||||||||||||||||||||||||||||||||||||||
| Other adjustments | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | ||||||||||||||||||||||||||||||||||||||||||
| Corporate | Other commercial | Corporate | Other commercial | Corporate | Other commercial | TOTAL | ||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||
| ECL allowance at January 1, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ||||||||||||||||||||||||||||||||||||||||||||
| Net changes of the exposure and modifications in credit risk | ||||||||||||||||||||||||||||||||||||||||||||
| Write-off | ||||||||||||||||||||||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
F-68
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 08 - FINANCIAL ASSETS AT AMORTISED COST, continued
The changes in the gross carrying amount and the corresponding ECL allowance as of December 31, 2024, is as follows:
| Stage 1 | Stage 2 | Stage 3 | ||||||||||||||||||||||||||||||||||||||||||
| Corporate | Other commercial | Corporate | Other commercial | Corporate | Other commercial | TOTAL | ||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||
| Gross carrying amount at January 1, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers: | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ||||||||||||||||||||||||||||||||||||||||||||
| Net changes of financial assets | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Write-off | ||||||||||||||||||||||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | ||||||||||||||||||||||||||||||||||||||||||
| Corporate | Other commercial | Corporate | Other commercial | Corporate | Other commercial | TOTAL | ||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||
| ECL allowance at January 1, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ||||||||||||||||||||||||||||||||||||||||||||
| Net changes of the exposure and modifications in credit risk | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Write-off | ||||||||||||||||||||||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
F-69
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 08 - FINANCIAL ASSETS AT AMORTISED COST, continued
b.Commercial loans
The changes in the gross carrying amount and the corresponding ECL allowance as of December 31, 2025, is as follows:
| Stage 1 | Stage 2 | Stage 3 | ||||||||||||||||||||||||||||||||||||||||||
| Corporate | Other commercial | Corporate | Other commercial | Corporate | Other commercial | TOTAL | ||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||
| Gross carrying amount at January 1, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers: | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net changes of financial assets | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
| Write-off | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Other adjustments | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3* | ||||||||||||||||||||||||||||||||||||||||||
| Corporate | Other commercial | Corporate | Other commercial | Corporate | Other commercial | TOTAL | ||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||
| ECL allowance at January 1, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Net changes of the exposure and modifications in credit risk | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Write-off | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Other adjustments | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
*ECL allowance of corporate loans in stage 3, includes MCh$151,682 from cash flow discounted methodology.
F-70
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 08 - FINANCIAL ASSETS AT AMORTISED COST, continued
The changes in the gross carrying amount and the corresponding ECL allowance as of December 31, 2024, is as follows:
| Stage 1 | Stage 2 | Stage 3 | ||||||||||||||||||||||||||||||||||||||||||
| Corporate | Other commercial | Corporate | Other commercial | Corporate | Other commercial | TOTAL | ||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||
| Gross carrying amount at January 1, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers: | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net changes of financial assets | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Write-off | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Other adjustments | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3* | ||||||||||||||||||||||||||||||||||||||||||
| Corporate | Other commercial | Corporate | Other commercial | Corporate | Other commercial | TOTAL | ||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||
| ECL allowance at January 1, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers | ||||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net changes of the exposure and modifications in credit risk | ( | |||||||||||||||||||||||||||||||||||||||||||
| Write-off | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Other adjustments | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
*ECL allowance of corporate loans in stage 3, includes MCh$165,935 from cash flow discounted methodology.
F-71
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 08 - FINANCIAL ASSETS AT AMORTISED COST, continued
c.Mortgage loans
The changes in the gross carrying amount and the corresponding ECL allowance as of December 31, 2025, is as follows:
| Stage1 | Stage2 | Stage3 | TOTAL | |||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Gross carrying amount at January 1, 2025 | ||||||||||||||||||||||||||
| Transfers: | ||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ( | |||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ( | |||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ( | |||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ( | |||||||||||||||||||||||||
| Net changes of financial assets | ( | ( | ( | |||||||||||||||||||||||
| Write-off | ( | ( | ||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | TOTAL | |||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| ECL allowance at January 1, 2025 | ||||||||||||||||||||||||||
| Transfers | ||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ( | |||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ( | ( | ||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ( | ( | ||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ( | ( | ||||||||||||||||||||||||
| Net changes of the exposure and modifications in credit risk | ||||||||||||||||||||||||||
| Write-off | ( | ( | ||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||
F-72
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 08 - FINANCIAL ASSETS AT AMORTISED COST, continued
The changes in the gross carrying amount and the corresponding ECL allowance as of December 31, 2024, is as follows:
| Stage 1 | Stage 2 | Stage 3 | TOTAL | |||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Gross carrying amount at January 1, 2024 | ||||||||||||||||||||||||||
| Transfers: | ||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ( | |||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ( | |||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ( | |||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ||||||||||||||||||||||||||
| Net changes of financial assets | ( | ( | ||||||||||||||||||||||||
| Write-off | ( | ( | ||||||||||||||||||||||||
| Other adjustments | ( | |||||||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | TOTAL | |||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| ECL allowance at January 1, 2024 | ||||||||||||||||||||||||||
| Transfers | ||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ( | |||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ( | ( | ||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ( | ( | ||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ||||||||||||||||||||||||||
| Net changes of the exposure and modifications in credit risk | ( | |||||||||||||||||||||||||
| Write-off | ( | ( | ||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||
F-73
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 08 - FINANCIAL ASSETS AT AMORTISED COST, continued
d.Consumer loans
The changes in the gross carrying amount and the corresponding ECL allowance as of December 31, 2025, is as follows:
| Stage 1 | Stage 2 | Stage 3 | TOTAL | |||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Gross carrying amount at January 1, 2025 | ||||||||||||||||||||||||||
| Transfers: | ||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ( | |||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ( | |||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ( | |||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ( | |||||||||||||||||||||||||
| Net changes of financial assets | ( | ( | ||||||||||||||||||||||||
| Write-off | ( | ( | ||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | TOTAL | |||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| ECL allowance at January 1, 2025 | ||||||||||||||||||||||||||
| Transfers: | ||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ( | |||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ( | ( | ||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ( | ( | ||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ( | ( | ||||||||||||||||||||||||
| Net changes of the exposure and modifications in the credit risk | ||||||||||||||||||||||||||
| Write-off | ( | ( | ||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||
The changes in the gross carrying amount and the corresponding ECL allowance as of December 31, 2024, is as follows:
| Stage1 | Stage2 | Stage3 | TOTAL | |||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Gross carrying amount at January 1, 2024 | ||||||||||||||||||||||||||
| Transfers: | ||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ( | |||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ( | |||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ( | |||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ( | |||||||||||||||||||||||||
| Net changes of financial assets | ( | ( | ||||||||||||||||||||||||
| Write-off | ( | ( | ||||||||||||||||||||||||
| Other adjustments | ( | ( | ||||||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||
F-74
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 08 - FINANCIAL ASSETS AT AMORTISED COST, continued
| Stage 1 | Stage 2 | Stage 3 | TOTAL | |||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| ECL allowance at January 1, 2024 | ||||||||||||||||||||||||||
| Transfers: | ||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ( | |||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ( | ( | ||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ( | ( | ||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ( | |||||||||||||||||||||||||
| Net changes of the exposure and modifications in the credit risk | ||||||||||||||||||||||||||
| Write-off | ( | ( | ||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||
As of December 31, 2025, the Bank maintains overlays for an amount of MCh$119,776 . These overlays are intended to cover certain defaulted exposures within the mortgage and other commercial loan portfolios, as well as to cover the future expected impact of the recalibration of Macro economical forward-looking information postponed to the first quarter of 2026, which explains the increase in the closing balance for 2025 related to closing 2024 balance.
During 2024 the Bank updated the Significant Increase in Credit Risk (SICR) thresholds, which resulted in a decrease in the expected credit loss (ECL) allowance by MCh$353 . As of December 31, 2024, the Bank maintains residual post-model adjustments (overlays) totaling MCh$89,994 , intended to cover certain defaulted exposures within the mortgage and other commercial loan portfolios. Following a re-evaluation of the required level of overlays, based on recent experience and updated portfolio information, the Bank concluded that the level of coverage required as of December 31, 2024 was lower than that required as of December 31, 2023.
F-75
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 09 - INVESTMENTS IN ASSOCIATES AND OTHER COMPANIES
Investments in associates and other companies are shown in the following table:
| Ownership interest As of December 31, | Carrying value As of December 31, | Profit and loss As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 % | 2024 % | 2023 % | 2025 MCh$ | 2024 MCh$ | 2023 MCh$ | 2025 MCh$ | 2024 MCh$ | 2023 MCh$ | ||||||||||||||||||||||||||||||||||||||||||||||||
| Redbanc S.A. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Transbank S.A. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Centro de Compensación Automatizado S.A. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sociedad Interbancaria de Depósito de Valores S.A. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cámara de Compensación de Alto Valor S.A. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Administrador Financiero del Transantiago S.A. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Servicios de Infraestructura de Mercado OTC S.A. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares or rights in other companies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Exchanges | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Others | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Results from the sale of ownership in investment in companies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Companies in the country | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
a.Equity instruments at fair value through other comprehensive income
As described in Note 1 g), the Bank has elected to measure equity instruments at FVOCI and thus present changes in the fair value in OCI. Those equity investment are considered “strategic investments”, are not held for trading and are not material.
Dividends are recognised in the income statements under “Income from investments in associates and other companies”.
The fair value of these equity investments is as follows:
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Stock exchange | ||||||||||||||
| Others | ||||||||||||||
| Total | ||||||||||||||
F-76
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 09 - INVESTMENTS IN ASSOCIATES AND OTHER COMPANIES, continued
b.Summary of financial information of associates as of and for the years ended December 31, 2025, 2024 and 2023:
| As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | Liabilities | Equity | Net income | Assets | Liabilities | Equity | Net income | Assets | Liabilities | Equity | Net income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redbanc S.A. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Transbank S.A. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Centro de Compensación Automatizado S.A. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sociedad Interbancaria de Depósito de Valores S.A. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cámara de Compensación de Alto Valor S.A. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Administrador Financiero del Transantiago S.A. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Servicios de Infraestructura de Mercado OTC S.A. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
c.Restrictions over the ability of associated companies to transfer funds to investors
There are no significant restrictions regarding the capacity of associates to transfer funds, whether in cash dividends, refund of loans, or advance payments to the Bank.
d.Activity with respect to investments in other companies in 2025, 2025 and 2024 is as follows:
| As of December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| Opening balance as of January 1, | ||||||||||||||||||||
| Acquisition of investments | ||||||||||||||||||||
| Sale of investments | ( | |||||||||||||||||||
| Participation in income | ||||||||||||||||||||
| Dividends received | ( | ( | ( | |||||||||||||||||
| Other adjustments | ( | |||||||||||||||||||
| Closing balances as of December 31, | ||||||||||||||||||||
F-77
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 10 - INTANGIBLE ASSETS
As of December 31, 2025 and 2024, the composition of intangible assets is as follows:
| As of December 31, 2025 | ||||||||||||||||||||||||||||||||
| Average remaining useful life | Net opening balance as of January 1, 2025 | Gross balance | Accumulated amortisation | Net balance | ||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||
| Software development | ( | |||||||||||||||||||||||||||||||
| Total | ( | |||||||||||||||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||||||||||||||
| Average remaining useful life | Net opening balance as of January 1, 2024 | Gross balance | Accumulated amortisation | Net balance | ||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||
| Software development | ( | |||||||||||||||||||||||||||||||
| Total | ( | |||||||||||||||||||||||||||||||
The changes in the value of intangible assets during the periods ended December 31, 2025 and December 31, 2024 is as follows:
i.Gross balance
| Gross balances | Software development | |||||||
| MCh$ | ||||||||
| Balances as of January 1, 2025 | ||||||||
| Acquisitions | ||||||||
| Disposals and impairment | ||||||||
| Impairments (*) | ( | |||||||
| Other | ||||||||
| Balances as of December 31, 2025 | ||||||||
| Balances as of January 1, 2024 | ||||||||
| Acquisitions | ||||||||
| Disposals and impairment | ||||||||
| Impairments | ||||||||
| Other | ||||||||
| Balances as of December 31, 2024 | ||||||||
(*) Corresponds to the book value of intangible assets with obsolescence that were impaired during the period 2025.
F-78
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 10 - INTANGIBLE ASSETS. continued
ii.Accumulated amortisation
| Accumulated amortisation | Software development | |||||||
| MCh$ | ||||||||
| Balances as of January 1, 2025 | ( | |||||||
| Year’s amortisation | ( | |||||||
| Disposals | ||||||||
| Impairment (*) | ||||||||
| Other changes | ||||||||
| Balances as of December 31, 2025 | ( | |||||||
| Balances as of January 1, 2024 | ( | |||||||
| Year’s amortization | ( | |||||||
| Disposal | ||||||||
| Impairment | ||||||||
| Other changes | ( | |||||||
| Balances as of December 31, 2024 | ( | |||||||
(*) Corresponds to the amortization of intangible assets with obsolescence that were impaired during the period 2025.
The Bank has no restriction on intangible assets as of December 31, 2025 and 2024. Additionally, intangible assets have not been pledged as guarantee for fulfillment of financial liabilities, and the Bank has no debt related to Intangible assets as of those dates.
F-79
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 11 - FIXED ASSETS
As of December 31, 2025 and 2024, the composition of property, plant, and equipment balances is as follows:
| As of December 31, 2025 | ||||||||||||||||||||||||||
| Net opening balance as of January 1, 2025 | Gross balance | Accumulated depreciation | Net balance | |||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Buildings | ( | |||||||||||||||||||||||||
| Land | ||||||||||||||||||||||||||
| Equipment | ( | |||||||||||||||||||||||||
| Other | ( | |||||||||||||||||||||||||
| Total | ( | |||||||||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||||||||
| Net opening balance as of January 1, 2024 | Gross balance | Accumulated depreciation | Net balance | |||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Buildings | ( | |||||||||||||||||||||||||
| Land | ||||||||||||||||||||||||||
| Equipment | ( | |||||||||||||||||||||||||
| Other | ( | |||||||||||||||||||||||||
| Total | ( | |||||||||||||||||||||||||
The changes in the value of property, plant, and equipment as of December 31, 2025 and 2024 is as follows:
i.Gross balance
| 2025 | Buildings | Land | Equipment | Other | Total | |||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||
| Balances as of January 1, 2025 | ||||||||||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||||||||||
| Disposals | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||
| Impairment due to damage | ||||||||||||||||||||||||||||||||
| Other | ( | ( | ( | |||||||||||||||||||||||||||||
| Balances as of December 31, 2025 | ||||||||||||||||||||||||||||||||
| 2024 | Buildings | Land | Equipment | Other | Total | |||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||
| Balances as of January 1, 2024 | ||||||||||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||||||||||
| Disposals | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||
| Impairment due to damage | ( | ( | ||||||||||||||||||||||||||||||
| Other | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Balances as of December 31, 2024 | ||||||||||||||||||||||||||||||||
F-80
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 11 - FIXED ASSETS, continued
ii.Accumulated depreciation
| 2025 | Buildings | Land | Equipment | Other | Total | |||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||
| Balances as of January 1, 2025 | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Depreciation charges in the period | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Sales and disposals in the period | ||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||
| Balances as of December 31, 2025 | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| 2024 | Buildings | Land | Equipment | Other | Total | |||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||
| Balances as of January 1, 2024 | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Depreciation charges in the period | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Sales and disposals in the period | ||||||||||||||||||||||||||||||||
| Other | ( | |||||||||||||||||||||||||||||||
| Balances as of December 31, 2024 | ( | ( | ( | ( | ||||||||||||||||||||||||||||
F-81
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 12 - RIGHT OF USE ASSETS AND OBLIGATION FOR LEASE CONTRACTS
The composition of the right of use assets as of December 31, 2025 and 2024 is as follows:
| As of December 31, 2025 | ||||||||||||||||||||||||||
| 2025 | Opening balances as of January 1, 2025 | Gross balance | Accumulated depreciation | Net balance | ||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Land and building | ( | |||||||||||||||||||||||||
| Total | ( | |||||||||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||||||||
| 2024 | Opening balances as of January 1, 2024 | Gross balance | Accumulated depreciation | Net balance | ||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Land and building | ( | |||||||||||||||||||||||||
| Total | ( | |||||||||||||||||||||||||
The movement of the right of use assets under lease during the 2025 and 2024 period, is as follows:
i.Gross balance
| 2025 | Land and building | |||||||
| MCh$ | ||||||||
| Balances as of January 1, 2025 | ||||||||
| Additions | ||||||||
| Disposals | ( | |||||||
| Impairment | ||||||||
| Other | ||||||||
| Balances as of December 31, 2025 | ||||||||
| 2024 | Land and building | |||||||
| MCh$ | ||||||||
| Balances as of January 1, 2024 | ||||||||
| Additions | ||||||||
| Disposals | ( | |||||||
| Impairment | ||||||||
| Other | ||||||||
| Balances as of December 31, 2024 | ||||||||
F-82
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 12 - RIGHT OF USE ASSETS AND OBLIGATION FOR LEASE CONTRACTS, continued
ii.Accumulated amortisation
| 2025 | Land and building | |||||||
| MCh$ | ||||||||
| Balances as of January 1, 2025 | ( | |||||||
| Amortisation for the period | ( | |||||||
| Sales and disposals during the period | ||||||||
| Transfers | ||||||||
| Others | ||||||||
| Balances as of December 31, 2025 | ( | |||||||
| 2024 | Land and building | |||||||
| MCh$ | ||||||||
| Balances as of January 1, 2024 | ( | |||||||
| Amortisation for the period | ( | |||||||
| Sales and disposals during the period | ||||||||
| Transfers | ( | |||||||
| Others | ||||||||
| Balances as of December 31, 2024 | ( | |||||||
a.Lease liability
As of December 31, 2025 and 2024, the composition of lease liability balances are composed as follows:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Lease liability | ||||||||||||||
| Total | ||||||||||||||
b.Expenses associated with assets for the right of use leased assets and lease liability
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Depreciation | ( | ( | ||||||||||||
| Interests | ( | ( | ||||||||||||
| Short term lease | ( | ( | ||||||||||||
| Other expenses for obligations under lease contracts | ( | ( | ||||||||||||
| Total | ( | ( | ||||||||||||
F-83
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 12 - RIGHT OF USE ASSETS AND OBLIGATION FOR LEASE CONTRACTS, continued
c.As of December 31, 2023 and 2022, the maturity level of the lease liability, according to their contractual maturity is as follows:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| 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 | ||||||||||||||
| Total | ||||||||||||||
d.Operational leases – lessor
As of December 31, 2025 and 2024, the future minimum lease cash inflows under non-cancellable operating leases are as follows:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| 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 | ||||||||||||||
| Total | ||||||||||||||
e.As of December 31, 2025 and 2024, the Bank has no financial leases which cannot be unilaterally rescinded.
f.The Bank has no restriction on property, plant and equipment as of December 31, 2025 and 2024. 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.
F-84
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 13 - CURRENT AND DEFERRED TAXES
a.Current taxes
As of December 31, 2025 and 2024, the Bank recognizes taxes payable (recoverable), which is determined based on the currently applicable tax legislation. This amount is recorded net of recoverable taxes, and is shown as follows:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Summary of current tax liabilities (assets) | ||||||||||||||
| Current tax (assets) | ( | ( | ||||||||||||
| Current tax liabilities | ||||||||||||||
| Total tax payable (recoverable) | ||||||||||||||
| (Assets) liabilities current taxes detail (net) | ||||||||||||||
| Income tax, tax rate | ||||||||||||||
| Minus: | ||||||||||||||
| Provisional monthly payments | ( | ( | ||||||||||||
| Credit for training expenses | ( | ( | ||||||||||||
| Grant credits | ( | ( | ||||||||||||
| Other | ( | |||||||||||||
| Total tax payable (recoverable) | ||||||||||||||
b.Effect on income
The effect of income tax expense on income for the years ended December 31, 2025, 2024 and 2023 is comprised of the following items:
| As of December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| Income tax expense | ||||||||||||||||||||
| Current tax | ||||||||||||||||||||
| Credits (debits) for deferred taxes | ||||||||||||||||||||
| Origination and reversal of temporary differences | ( | ( | ||||||||||||||||||
| Valuation provision | ||||||||||||||||||||
| Subtotals | ||||||||||||||||||||
| Tax for rejected expenses (Article No21) | ||||||||||||||||||||
| Other | ( | ( | ( | |||||||||||||||||
| Net charges for income tax expense | ||||||||||||||||||||
F-85
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 13 - 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 December 31, 2025, 2024 and 2023, is as follows:
| For the year ended, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| Tax rate | Amount | Tax rate | Amount | Tax rate | Amount | |||||||||||||||||||||||||||||||||
| % | MCh$ | % | MCh$ | % | MCh$ | |||||||||||||||||||||||||||||||||
| Tax calculated over profit before tax | ||||||||||||||||||||||||||||||||||||||
Price level restatement for tax purposes (1) | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Single penalty tax (rejected expenses) | ||||||||||||||||||||||||||||||||||||||
| Other | ( | ( | ||||||||||||||||||||||||||||||||||||
| Effective tax rates and expenses for income tax | ||||||||||||||||||||||||||||||||||||||
(1)Mainly corresponds to the permanent differences originated from the Tax Capital Monetary Correction and the effect of the bonds received under article 104 of the Tax Law.
d.Effect of deferred taxes on 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 years ended December 31, 2025 and 2024:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Deferred tax assets | ||||||||||||||
| Debt instruments at FVOCI | ||||||||||||||
| Cash flow hedges | ||||||||||||||
| Total deferred tax assets recognised through other comprehensive income | ||||||||||||||
| Deferred tax liabilities | ||||||||||||||
| Debt instruments at FVOCI | ( | ( | ||||||||||||
| Cash flow hedges | ||||||||||||||
| Total deferred tax liabilities recognised through other comprehensive income | ( | ( | ||||||||||||
| Net deferred tax balances in equity | ||||||||||||||
| Deferred taxes in equity attributable to shareholders of the Bank | ||||||||||||||
| Deferred tax in equity attributable to non-controlling interests | ( | ( | ||||||||||||
F-86
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 13 - CURRENT AND DEFERRED TAXES, continued
e.Effect of deferred taxes on income
As of December 31, 2025 and 2024, the Bank has recorded effects for deferred taxes in the financial statements:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Deferred tax assets | ||||||||||||||
| Interests and adjustments | ||||||||||||||
| Extraordinary charge-offs | ||||||||||||||
| Assets received in lieu of payment | ||||||||||||||
| Property, plant and equipment valuation | ||||||||||||||
| Allowance for loan losses | ||||||||||||||
| Provision for expenses | ||||||||||||||
| Derivatives | ||||||||||||||
| Leased assets | ||||||||||||||
| Subsidiaries tax losses | ||||||||||||||
| Right of use assets | ||||||||||||||
| Others | ||||||||||||||
| Total deferred tax assets | ||||||||||||||
| Deferred tax liabilities | ||||||||||||||
| Valuation of investments | ( | ( | ||||||||||||
| Prepaid expenses | ( | ( | ||||||||||||
| Assets received in lieu of payment | ( | |||||||||||||
| Derivatives | ( | ( | ||||||||||||
| Lease obligations | ( | ( | ||||||||||||
| Exchange rate adjustments | ( | ( | ||||||||||||
| Other | ( | ( | ||||||||||||
| Total deferred tax liabilities | ( | ( | ||||||||||||
f.Summary of deferred tax assets and liabilities
Below is a summary of the deferred taxes impact on equity and income:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Deferred tax assets | ||||||||||||||
| Recognised through other comprehensive income | ||||||||||||||
| Recognised through profit or loss | ||||||||||||||
| Total deferred tax assets | ||||||||||||||
| Deferred tax liabilities | ||||||||||||||
| Recognised through other comprehensive income | ( | ( | ||||||||||||
| Recognised through profit or loss | ( | ( | ||||||||||||
| Total deferred tax liabilities | ( | ( | ||||||||||||
F-87
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 13 - CURRENT AND DEFERRED TAXES, continued
g.Tax presentation in financial statements
Below is a summary of the deferred taxes and current taxes in financial statements :
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Deferred taxes | ||||||||||||||
| Deferred tax assets before off-setting | ||||||||||||||
| Off-setting | ( | ( | ||||||||||||
| Deferred tax asset after off-setting | ||||||||||||||
| Deferred tax liabilities before off-setting | ( | ( | ||||||||||||
| Off-setting | ||||||||||||||
| Deferred tax liabilities after off-setting | ( | ( | ||||||||||||
| Current taxes | ||||||||||||||
| Current tax asset before off-setting | ||||||||||||||
| Off-setting | ( | ( | ||||||||||||
| Current tax asset after off-setting | ||||||||||||||
| Current tax liabilities before off-setting | ( | ( | ||||||||||||
| Off-setting | ||||||||||||||
| Current tax liabilities after off-setting | ( | ( | ||||||||||||
F-88
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 14 - OTHER ASSETS
Other Assets includes the following:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Assets available to be granted under the financial leasing agreements | ||||||||||||||
| Guarantee deposits (margin accounts) (1) | ||||||||||||||
| Gold investments | ||||||||||||||
| VAT credit | ||||||||||||||
| Prepaid expenses (2) | ||||||||||||||
| Valuation adjustments by macro hedge (3) | ||||||||||||||
| Pension plan assets | ||||||||||||||
| Accounts and notes receivable | ||||||||||||||
| Brokerage dealer and simultaneous transactions | ||||||||||||||
| Other cash submitted guarantess | ||||||||||||||
| In-progress operation | ||||||||||||||
| Other assets (4) | ||||||||||||||
| Total | ||||||||||||||
(1)Guarantee deposits (margin accounts) correspond to collateral associated to derivative financial contracts to mitigate the counterparty credit risk and are mainly established in cash. These guarantees operate when mark to market of derivative financial instruments exceed the levels of threshold agreed in the contracts, which could result in the Bank delivering or receiving collateral.
(2)Under this item, the Bank has recorded prepaid expense related to the Santander LATAM Pass programme, which is consumed on a monthly basis in accordance with the client use of Bank’s transactional products and therefore the Bank assigned the respective LATAM Pass miles (loyalty program managed by LATAM Airlines Group S.A.).
(3)Net assets and liabilities fair value valuation subject to macro hedges. See Note 7.
(4)Other assets mainly include settlement of derivatives and other financial transactions.
F-89
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 15 - NON CURRENT ASSETS AND DISPOSAL GROUPS FOR SALE
The non-current assets held for sales is as follows:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Assets received or awarded in lieu of payment | ||||||||||||||
| Assets received in lieu of payment | ||||||||||||||
| Assets awarded at judicial sale | ||||||||||||||
| Provision on assets received in lieu of payment or awarded | ( | |||||||||||||
| Subtotal | ||||||||||||||
| Non current assets held for sale | ||||||||||||||
| Fixed assets | ||||||||||||||
| Assets recovered from leasing for sale | ||||||||||||||
| Subtotal | ||||||||||||||
| Total | ||||||||||||||
F-90
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 16 - FINANCIAL LIABILITIES FOR TRADING AT FAIR VALUE THROUGH PROFIT OR LOSS
A financial liability is classified as a financial liability at fair value through profit or loss if is held for trading or it is designated by the entity as at fair value through profit or loss (under specified conditions). The Bank has not designated financial liabilities at FVPL.
A financial liability is held for trading if it is incurred principally for the purpose of repurchasing it in the near term or it is a derivative. The Bank only has derivatives under this classification, whose purpose is to hedge the exchange rate and interest rate risk related to future obligations.
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Financial derivative contracts | ||||||||||||||
| Forwards | ||||||||||||||
| Swaps | ||||||||||||||
| Call Options | ||||||||||||||
| Put Options | ||||||||||||||
| Total | ||||||||||||||
F-91
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 16 - FINANCIAL LIABILITIES FOR TRADING AT FAIR VALUE THROUGH PROFIT OR LOSS, continued
As of December 31, 2025 and 2024 the Bank holds the following portfolio of financial liabilities derivative contracts:
| As of December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notional amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| On Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | Fair value | ||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||||||||||||
| Currency forward | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Call currency options | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Put currency options | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notional amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| On Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | Fair value | ||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||||||||||||
| Currency forward | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cross currency swaps | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Call currency options | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Put currency options | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-92
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 17 - FINANCIAL LIABILITIES AT AMORTISED COST
| As of December 31, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| MCh$ | MCh$ | ||||||||||||||||
| Deposits and other demand liabilities | |||||||||||||||||
| Checking accounts | |||||||||||||||||
| Demand accounts | |||||||||||||||||
| Other demand deposits | |||||||||||||||||
| Obligation related to payments cards provision | |||||||||||||||||
| Other demand liabilities | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Time deposits and other time liabilities | |||||||||||||||||
| Time deposits | |||||||||||||||||
| Time savings account | |||||||||||||||||
| Other time liabilities | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Obligations under repurchase agreements | |||||||||||||||||
| Transactions with domestic banks | |||||||||||||||||
| Transactions with foreign banks | |||||||||||||||||
| Transactions with other Chilean entities | |||||||||||||||||
| Transactions with other foreign entities | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Interbank borrowings | |||||||||||||||||
| Loans from chilean financial institutions | |||||||||||||||||
| Loans from foreign financial institutions | |||||||||||||||||
| Loans from Chilean Central Bank | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Issue debt instruments | |||||||||||||||||
| Mortgage finance bonds | |||||||||||||||||
| Senior bonds | |||||||||||||||||
| Mortgage bond | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Other financial liabilities | |||||||||||||||||
| Other domestic obligations | |||||||||||||||||
| Foreign obligations | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Total | |||||||||||||||||
F-93
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 17 - FINANCIAL LIABILITIES AT AMORTISED COST, continued
a.Obligations under from repurchase agreements
The Bank raises funds by selling financial instruments and committing itself to buy them back at future dates, plus interest at a predetermined rate. As of December 31, 2025 and 2024, obligations related to instruments sold under repurchase agreements are as follows:
| As of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| From 1 day to less than 3 months | More than 3 months and less than 1 year | More than 1 year | Total | From 1 day to less than 3 months | More than 3 months and less than 1 year | More than 1 year | Total | ||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||||||||||
| Transactions with domestic banks | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase agreements with other banks | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Transactions with foreign banks | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase agreements with other banks | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Transactions with other Chilean entities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase agreements | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Transactions with other foreign entities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase agreements | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
F-94
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 17 - FINANCIAL LIABILITIES AT AMORTISED COST, continued
b.Interbank borrowings
As of December 31, 2025 and 2024 the Interbank borrowings are as follows:
| As of December 31, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| MCh$ | MCh$ | ||||||||||||||||
| Loans from Chilean Central Bank | |||||||||||||||||
| Other liabilities with Chilean Central Bank | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Loans from chilean financial institutions | |||||||||||||||||
| Commercial interbank loans | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Loans from foreign financial institutions | |||||||||||||||||
| State Bank Of India | |||||||||||||||||
| International Finance Corporate | |||||||||||||||||
| Hong Kong and Shanghai Banking | |||||||||||||||||
| Wells Fargo Bank NA | |||||||||||||||||
| Citibank N.A. | |||||||||||||||||
| Bank of America | |||||||||||||||||
| Standard Chartered Bank | |||||||||||||||||
| Commerzbank Ag | |||||||||||||||||
| The Bank Of New York Mellon | |||||||||||||||||
| Zurcher Kantonalbank | |||||||||||||||||
| Caixabank Sa | |||||||||||||||||
| JPMorgan Chase Bank | |||||||||||||||||
| Banco de Desarrollo de América Latina y el Caribe | |||||||||||||||||
| Sumitomo Mitsui Banking Corporation | |||||||||||||||||
| Banco Santander | |||||||||||||||||
| Agricultural Bank Of China | |||||||||||||||||
| Instituto De Credito Oficial | |||||||||||||||||
| Banco Bilbao Vizcaya Argentaria | |||||||||||||||||
| Lloyds Bank Plc | |||||||||||||||||
| Banco Santander Singapur | |||||||||||||||||
| Bank Of China | |||||||||||||||||
| Banco Santander Hong Kong | |||||||||||||||||
| Abanca Corporacion Bancaria S.A. | |||||||||||||||||
| CORFO | |||||||||||||||||
| China Merchants Bank | |||||||||||||||||
| Santander Madrid | |||||||||||||||||
| Industrial And Commercial Bank | |||||||||||||||||
| China Construction Bank | |||||||||||||||||
| China CITIC Bank | |||||||||||||||||
| Bnp Paribas Sa | |||||||||||||||||
| Banco Santander Mexico | |||||||||||||||||
| Industrial Bank of Korea | |||||||||||||||||
| Shanghai Pudong Development Bank | |||||||||||||||||
| Banco De Sabadell S.A. | |||||||||||||||||
| Bancomer S.A. | |||||||||||||||||
| Banco Santander Brasil | |||||||||||||||||
F-95
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 17 - FINANCIAL LIABILITIES AT AMORTISED COST, continued
| As of December 31, | |||||||||||||||||
| Continued... | 2025 | 2024 | |||||||||||||||
| MCh$ | MCh$ | ||||||||||||||||
| Loans from foreign financial institutions, continued | |||||||||||||||||
| Santander UK plc | |||||||||||||||||
| Credit Agricole Italia SPA | |||||||||||||||||
| Korea Exchange Bank | |||||||||||||||||
| Kbc Bank Nv | |||||||||||||||||
| Wachovia Bank Na | |||||||||||||||||
| Taiwan Cooperative Bank Ltd | |||||||||||||||||
| Bank Of Communications | |||||||||||||||||
| Bank for Investment and Development | |||||||||||||||||
| Export-Import Bank of Thailand | |||||||||||||||||
| Saudi National Bank | |||||||||||||||||
| Bank Of Baroda | |||||||||||||||||
| DZ Bank AG Deutsche Zentral-Genossenschaftsbank | |||||||||||||||||
| Dresdner Bank Frankfurt | |||||||||||||||||
| Banco De La Provincia De Buenos Aires | |||||||||||||||||
| Mufg Bank, Ltd. | |||||||||||||||||
| Cassa Di Risparmio Di Parma E | |||||||||||||||||
| Itau Unibanco S/A | |||||||||||||||||
| Banco Santander Central Hispano | |||||||||||||||||
| Turkiye Garanti Bankasi | |||||||||||||||||
| The Industrial And Commercial | |||||||||||||||||
| Shinhan Bank | |||||||||||||||||
| Finansbank A.S. | |||||||||||||||||
| Hua Nan Commercial Bank, Ltd. | |||||||||||||||||
| Arab Bank Plc | |||||||||||||||||
| Intesa Sanpaolo Spa | |||||||||||||||||
| Icici Bank Limited | |||||||||||||||||
| National Bank Of Greece S.A. | |||||||||||||||||
| Deutsche Bank Ag | |||||||||||||||||
| Unicredit Bulbank Ad | |||||||||||||||||
| Santander Madrid Rrhh Convenio Social | |||||||||||||||||
| Subtotal | |||||||||||||||||
| Total | |||||||||||||||||
i.Loans from Chilean financial institutions
These obligations’ maturities are as follows:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Due within 1 year | ||||||||||||||
| Due within 1 and 2 year | ||||||||||||||
| Due within 2 and 3 year | ||||||||||||||
| Due within 3 and 4 year | ||||||||||||||
| Due after 5 years | ||||||||||||||
| Total loans from Chilean financial institutions | ||||||||||||||
F-96
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 17 - FINANCIAL LIABILITIES AT AMORTISED COST, continued
ii.Foreign obligations
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Due within 1 year | ||||||||||||||
| Due within 1 and 2 year | ||||||||||||||
| Due within 2 and 3 year | ||||||||||||||
| Due within 3 and 4 year | ||||||||||||||
| Due after 4 to 5 years | ||||||||||||||
| Due after 5 years | ||||||||||||||
| Total loans from foreign financial institutions | ||||||||||||||
c.Issued debt instruments
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 summarised below:
| As of December 31, 2025 | As of December 31, 2024 | |||||||||||||||||||||||||||||||||||||
| Current | Non-current | Total | Current | Non-current | Total | |||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||
| Mortgage finance bonds | ||||||||||||||||||||||||||||||||||||||
| Senior bonds | ||||||||||||||||||||||||||||||||||||||
| Mortgage bond | ||||||||||||||||||||||||||||||||||||||
| Issued debt instruments | ||||||||||||||||||||||||||||||||||||||
| Other financial liabilities | ||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||
i.Mortgage finance bonds
These bonds are used to finance mortgage loans. Their principal amounts are amortised on a quarterly basis. The range of maturities of these bonds is between and twenty years , Loans are indexed to UF and create a yearly interest yield of 5.17 % as of December 31, 2025 (5.18 % as of December 31, 2024).
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Due within 1 year | ||||||||||||||
| Due after 1 year but within 2 years | ||||||||||||||
| Due after 2 year but within 3 years | ||||||||||||||
| Due after 3 year but within 4 years | ||||||||||||||
| Due after 4 year but within 5 years | ||||||||||||||
| Due after 5 years | ||||||||||||||
| Total mortgage finance bonds | ||||||||||||||
F-97
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 17 - FINANCIAL LIABILITIES AT AMORTISED COST, continued
ii.Senior bonds
The following table shows senior bonds by currency:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Santander bonds in UF | ||||||||||||||
| Santander bonds in USD | ||||||||||||||
| Santander bonds in CHF | ||||||||||||||
| Santander bonds in Ch$ | ||||||||||||||
| Santander bonds in AUD | ||||||||||||||
| Current bonds in JPY | ||||||||||||||
| Santander bonds in EUR | ||||||||||||||
| Total senior bonds | ||||||||||||||
1.Placement of senior bonds
In 2025, the Bank issued bonds for UF 17,540,000 , CLP 328,550,000,000 , CHF 140,000,000 , JPY 14,000,000,000 and USD 20,000,000 , detailed as follows:
| Series | Currency | Amount | Term (years) | Issuance rate (% annual) | Issuance date | Placement date | Maturity date | |||||||||||||||||||||||||||||||||||||
| BSTD180624 | UF | 01-10-2025 | 01-13-2025 | 12-01-2026 | ||||||||||||||||||||||||||||||||||||||||
| BSTD180624 | UF | 02-03-2025 | 02-04-2025 | 12-01-2026 | ||||||||||||||||||||||||||||||||||||||||
| BSTD230822 | UF | 02-04-2025 | 02-05-2025 | 02-01-2031 | ||||||||||||||||||||||||||||||||||||||||
| BSTD230822 | UF | 02-05-2025 | 02-06-2025 | 02-01-2031 | ||||||||||||||||||||||||||||||||||||||||
| BSTD120923 | UF | 02-06-2025 | 02-07-2025 | 09-01-2033 | ||||||||||||||||||||||||||||||||||||||||
| BSTD151023 | UF | 02-17-2025 | 02-18-2025 | 10-01-2027 | ||||||||||||||||||||||||||||||||||||||||
| BSTDA61022 | UF | 03-28-2025 | 03-31-2025 | 10-01-2037 | ||||||||||||||||||||||||||||||||||||||||
| BSTD120923 | UF | 03-28-2025 | 03-31-2025 | 09-01-2033 | ||||||||||||||||||||||||||||||||||||||||
| BSTD120923 | UF | 04-01-2025 | 04-02-2025 | 09-01-2033 | ||||||||||||||||||||||||||||||||||||||||
| BSTD120923 | UF | 04-02-2025 | 04-03-2025 | 09-01-2033 | ||||||||||||||||||||||||||||||||||||||||
| BSTD120923 | UF | 04-08-2025 | 04-10-2025 | 09-01-2033 | ||||||||||||||||||||||||||||||||||||||||
| BSTD230822 | UF | 04-09-2025 | 04-10-2025 | 02-01-2031 | ||||||||||||||||||||||||||||||||||||||||
| BSTD120923 | UF | 04-09-2025 | 04-10-2025 | 09-01-2033 | ||||||||||||||||||||||||||||||||||||||||
| BSTD211024 | UF | 04-09-2025 | 04-10-2025 | 04-01-2027 | ||||||||||||||||||||||||||||||||||||||||
| BSTD211024 | UF | 04-10-2025 | 04-11-2025 | 04-01-2027 | ||||||||||||||||||||||||||||||||||||||||
| BSTD120923 | UF | 04-15-2025 | 04-16-2025 | 09-01-2033 | ||||||||||||||||||||||||||||||||||||||||
| BSTD230822 | UF | 04-15-2025 | 04-16-2025 | 02-01-2031 | ||||||||||||||||||||||||||||||||||||||||
| BSTDA61022 | UF | 04-16-2025 | 04-17-2025 | 10-01-2037 | ||||||||||||||||||||||||||||||||||||||||
| BSTDA61022 | UF | 04-23-2025 | 04-24-2025 | 10-01-2037 | ||||||||||||||||||||||||||||||||||||||||
| BSTD211024 | UF | 04-24-2025 | 04-25-2025 | 04-01-2027 | ||||||||||||||||||||||||||||||||||||||||
| BSTD211024 | UF | 04-24-2025 | 04-25-2025 | 04-01-2027 | ||||||||||||||||||||||||||||||||||||||||
| BSTDA61022 | UF | 05-06-2025 | 05-07-2025 | 10-01-2037 | ||||||||||||||||||||||||||||||||||||||||
| BSTD211024 | UF | 05-12-2025 | 05-13-2025 | 04-01-2027 | ||||||||||||||||||||||||||||||||||||||||
| BSTD230822 | UF | 08-07-2025 | 08-08-2025 | 02-01-2031 | ||||||||||||||||||||||||||||||||||||||||
| BSTD211024 | UF | 08-20-2025 | 08-21-2025 | 04-01-2027 | ||||||||||||||||||||||||||||||||||||||||
| 6XBSTD230822 | UF | 10-01-2025 | 10-02-2025 | 02-01-2031 | ||||||||||||||||||||||||||||||||||||||||
continued
F-98
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 17 - FINANCIAL LIABILITIES AT AMORTISED COST, continued
| Series | Currency | Amount | Term (years) | Issuance rate (% annual) | Issuance date | Placement date | Maturity date | |||||||||||||||||||||||||||||||||||||
| 7XBSTD230822 | UF | 10-01-2025 | 10-03-2025 | 02-01-2031 | ||||||||||||||||||||||||||||||||||||||||
| 8XBSTD230822 | UF | 10-01-2025 | 10-02-2025 | 02-01-2031 | ||||||||||||||||||||||||||||||||||||||||
| 9XBSTD230822 | UF | 10-07-2025 | 10-08-2025 | 02-01-2031 | ||||||||||||||||||||||||||||||||||||||||
| 10BSTD230822 | UF | 10-08-2025 | 10-09-2025 | 02-01-2031 | ||||||||||||||||||||||||||||||||||||||||
| 11BSTD230822 | UF | 10-08-2025 | 10-10-2025 | 02-01-2031 | ||||||||||||||||||||||||||||||||||||||||
| 12BSTD230822 | UF | 10-10-2025 | 10-13-2025 | 02-01-2031 | ||||||||||||||||||||||||||||||||||||||||
| 6XBSTD210622 | UF | 10-20-2025 | 10-21-2025 | 12-01-2029 | ||||||||||||||||||||||||||||||||||||||||
| 13BSTD230822 | UF | 10-21-2025 | 10-22-2025 | 02-01-2031 | ||||||||||||||||||||||||||||||||||||||||
| 0XBSTDBA0225 | UF | 10-23-2025 | 10-24-2025 | 08-01-2032 | ||||||||||||||||||||||||||||||||||||||||
| 14BSTD230822 | UF | 10-27-2025 | 10-28-2025 | 02-01-2031 | ||||||||||||||||||||||||||||||||||||||||
| 1XBSTD220425 | UF | 10-28-2025 | 10-30-2025 | 04-01-2040 | ||||||||||||||||||||||||||||||||||||||||
| 2XBSTD220425 | UF | 10-28-2025 | 10-30-2025 | 04-01-2040 | ||||||||||||||||||||||||||||||||||||||||
| Total UF | ||||||||||||||||||||||||||||||||||||||||||||
| BSTD110723 | CLP | 05-02-2025 | 05-03-2025 | 07-01-2027 | ||||||||||||||||||||||||||||||||||||||||
| BSTDA91122 | CLP | 05-14-2025 | 05-15-2025 | 11-01-2030 | ||||||||||||||||||||||||||||||||||||||||
| BSTD170624 | CLP | 05-16-2025 | 05-17-2025 | 06-01-2028 | ||||||||||||||||||||||||||||||||||||||||
| BSTDA21222 | CLP | 05-16-2025 | 05-17-2025 | 06-01-2029 | ||||||||||||||||||||||||||||||||||||||||
| BSTD170624 | CLP | 05-20-2025 | 05-22-2025 | 06-01-2028 | ||||||||||||||||||||||||||||||||||||||||
| BSTD170624 | CLP | 05-22-2025 | 05-23-2025 | 06-01-2028 | ||||||||||||||||||||||||||||||||||||||||
| BSTDA40922 | CLP | 05-22-2025 | 05-23-2025 | 03-01-2033 | ||||||||||||||||||||||||||||||||||||||||
| BSTD170624 | CLP | 06-11-2025 | 06-13-2025 | 06-01-2028 | ||||||||||||||||||||||||||||||||||||||||
| 1XBSTDBI0525 | CLP | 11-12-2025 | 11-13-2025 | 05-01-2028 | ||||||||||||||||||||||||||||||||||||||||
| 2XBSTDBI0525 | CLP | 11-20-2025 | 11-21-2025 | 05-01-2028 | ||||||||||||||||||||||||||||||||||||||||
| Total CLP | ||||||||||||||||||||||||||||||||||||||||||||
| Bono CHF BNP & ZKB | CHF | 05-12-2025 | 05-30-2025 | 08-29-2030 | ||||||||||||||||||||||||||||||||||||||||
| Total CHF | ||||||||||||||||||||||||||||||||||||||||||||
| Bono JPY Santander SA | JPY | 04-24-2025 | 04-29-2025 | 04-28-2045 | ||||||||||||||||||||||||||||||||||||||||
| Bono JPY Daiwa ESG | JPY | 07-02-2025 | 07-10-2025 | 07-10-2028 | ||||||||||||||||||||||||||||||||||||||||
| Total JPY | ||||||||||||||||||||||||||||||||||||||||||||
| Bono USD SOFR Daiwa | USD | 06-06-2025 | 06-13-2025 | 06-13-2030 | ||||||||||||||||||||||||||||||||||||||||
| XS3257573298 | USD | 12-17-2025 | 12-29-2025 | 12-29-2030 | ||||||||||||||||||||||||||||||||||||||||
| Total USD | ||||||||||||||||||||||||||||||||||||||||||||
F-99
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 17 - FINANCIAL LIABILITIES AT AMORTISED COST, continued
In 2024, the Bank issued bonds for UF 21,302,000 , CLP 145,550,000,000 and USD 225,000,000 , detailed as follows:
| Series | Currency | Amount | Term (years) | Issuance rate (% annual) | Issuance date | Placement date | Maturity date | |||||||||||||||||||||||||||||||||||||
| AA13 | UF | 09-01-2023 | 01-03-2024 | 09-01-2029 | ||||||||||||||||||||||||||||||||||||||||
| AA14 | UF | 12-01-2023 | 02-07-2024 | 12-01-2028 | ||||||||||||||||||||||||||||||||||||||||
| W3 | UF | 12-01-2018 | 01-04-2024 | 06-01-2026 | ||||||||||||||||||||||||||||||||||||||||
| AA15 | UF | 10-01-2023 | 05-09-2024 | 11-01-2030 | ||||||||||||||||||||||||||||||||||||||||
| AA16 | UF | 04-01-2024 | 07-05-2024 | 10-01-2026 | ||||||||||||||||||||||||||||||||||||||||
| T21 | UF | 06-01-2022 | 07-08-2024 | 12-01-2029 | ||||||||||||||||||||||||||||||||||||||||
| T19 | UF | 08-01-2022 | 10-17-2024 | 08-01-2033 | ||||||||||||||||||||||||||||||||||||||||
| Total UF | ||||||||||||||||||||||||||||||||||||||||||||
| AA7 | CLP | 02-24-2023 | 01-04-2024 | 08-01-2026 | ||||||||||||||||||||||||||||||||||||||||
| AA10 | CLP | 03-01-2023 | 03-25-2024 | 03-01-2026 | ||||||||||||||||||||||||||||||||||||||||
| AA8 | CLP | 03-01-2023 | 01-05-2024 | 09-01-2027 | ||||||||||||||||||||||||||||||||||||||||
| AA2 | CLP | 12-01-2022 | 01-11-2024 | 06-01-2029 | ||||||||||||||||||||||||||||||||||||||||
| AA9 | CLP | 11-01-2022 | 01-05-2024 | 11-01-2030 | ||||||||||||||||||||||||||||||||||||||||
| Total CLP | ||||||||||||||||||||||||||||||||||||||||||||
| Bonos CHF | CHF | 01-11-2024 | 01-25-2024 | 01-25-2027 | ||||||||||||||||||||||||||||||||||||||||
| Total CHF | ||||||||||||||||||||||||||||||||||||||||||||
2.Repurchase of senior bonds
During 2025, the Bank repurchased the following bonds:
| Date | Type | Currency | Amount | ||||||||||||||||||||
| July 2025 | Senior | UF | |||||||||||||||||||||
| July 2025 | Senior | UF | |||||||||||||||||||||
During 2024, the Bank repurchased the following bonds:
| Date | Type | Currency | Amount | ||||||||||||||||||||
| January 2024 | Senior | CLP | |||||||||||||||||||||
| January 2024 | Senior | UF | |||||||||||||||||||||
| January 2024 | Senior | USD | |||||||||||||||||||||
| March 2024 | Senior | CLP | |||||||||||||||||||||
| March 2024 | Senior | JPY | |||||||||||||||||||||
| March 2024 | Senior | UF | |||||||||||||||||||||
| June 2024 | Senior | UF | |||||||||||||||||||||
| October 2024 | Senior | UF | |||||||||||||||||||||
| November 2024 | Senior | USD | |||||||||||||||||||||
F-100
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 17 - FINANCIAL LIABILITIES AT AMORTISED COST, continued
3.The maturities of senior bonds are as follows:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Due within 1 year | ||||||||||||||
| Due after 1 year but within 2 years | ||||||||||||||
| Due after 2 year but within 3 years | ||||||||||||||
| Due after 3 year but within 4 years | ||||||||||||||
| Due after 4 year but within 5 years | ||||||||||||||
| Due after 5 years | ||||||||||||||
| Total senior bonds | ||||||||||||||
iii.Mortgage bonds
Detail of mortgage bonds per currency is as follows:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Mortgage bonds in UF | ||||||||||||||
| Total mortgage bonds | ||||||||||||||
1.Allocation of mortgage bonds
During 2025 and 2024, the Bank has not placed any mortgage bonds.
2.The maturities of Mortgage bonds are as follows
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Due within 1 year | ||||||||||||||
| Due after 1 year but within 2 years | ||||||||||||||
| Due after 2 year but within 3 years | ||||||||||||||
| Due after 3 year but within 4 years | ||||||||||||||
| Due after 4 year but within 5 years | ||||||||||||||
| Due after 5 years | ||||||||||||||
| Total Mortgage bonds | ||||||||||||||
F-101
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 17 - FINANCIAL LIABILITIES AT AMORTISED COST, continued
d.Other financial liabilities
The composition of other financial obligations, by maturity, is detailed below:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Non-current portion | ||||||||||||||
| Due after 1 year but within 2 years | ||||||||||||||
| Due after 2 year but within 3 years | ||||||||||||||
| Due after 3 year but within 4 years | ||||||||||||||
| Due after 4 year but within 5 years | ||||||||||||||
| Due after 5 years | ||||||||||||||
| Non-current portion subtotal | ||||||||||||||
| Current portion | ||||||||||||||
| Amounts due to credit card operators | ||||||||||||||
| Acceptance of letters of credit | ||||||||||||||
| Other long-term financial obligations, short-term portion | ||||||||||||||
| Current portion subtotal | ||||||||||||||
| Total other financial liabilities | ||||||||||||||
F-102
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 18 - REGULATORY CAPITAL FINANCIAL INSTRUMENTS
As of December 31, 2025 and 2024, the Bank’s subordinated bonds classified as current and non-current are summarised below:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Current portion | ||||||||||||||
| Non- current portion | ||||||||||||||
| Total subordinated bonds | ||||||||||||||
Detail of the subordinated bonds per currency is as follows:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Subordinated bonds denominated in USD | ||||||||||||||
| Subordinated bonds denominated in UF | ||||||||||||||
| Total subordinated bonds | ||||||||||||||
i.Placement of subordinated bonds
During 2025 the Bank has not issued or placed regulatory capital instruments.
ii.The maturities of subordinated bonds
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Due within 1 year | ||||||||||||||
| Due after 1 year but within 2 years | ||||||||||||||
| Due after 2 year but within 3 years | ||||||||||||||
| Due after 3 year but within 4 years | ||||||||||||||
| Due after 4 year but within 5 years | ||||||||||||||
| Due after 5 years | ||||||||||||||
| Total subordinated bonds | ||||||||||||||
iii.Balances of subordinated bonds
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Balances as of January 1, | ||||||||||||||
| New issues/placements | ||||||||||||||
| Accrued interest at effective interés rate | ||||||||||||||
| Interest payments to the holder | ( | ( | ||||||||||||
| Accrued due to UF | ||||||||||||||
| Exchange rate | ( | |||||||||||||
| Others | ( | ( | ||||||||||||
| Balances as of December 31, | ||||||||||||||
F-103
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 19 - PROVISIONS AND CONTINGENT PROVISIONS
As of December 31, 2025 and 2024, the composition is as follows:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Provisions for personnel salaries and expenses | ||||||||||||||
| Provisions for restructuring plans | ||||||||||||||
| Provisions for lawsuits and litigations | ||||||||||||||
| Provision for loyalty programmes | ||||||||||||||
| Provision for operational risks | ||||||||||||||
| Provision for other contingencies | ||||||||||||||
| Provisions for mandatory dividends | ||||||||||||||
| Provision for interest of perpetual bonds | ||||||||||||||
| Provisions for contingent loan | ||||||||||||||
| Total | ||||||||||||||
F-104
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 19 - PROVISIONS AND CONTINGENT PROVISIONS, continued
a.Below is the activity regarding provisions during the years ended December 31, 2025, 2024 and 2023:
| Personnel salaries and expenses | Restructuring plans | Lawsuit and litigations | Loyalty programme | Operational risks | Contingencies | Mandatory Dividend | Interest of perpetual bonds | Contingent loan | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances as of January 1, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provisions established | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Application of provisions | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provisions released | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances as of December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances as of January 1, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provisions established | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Application of provisions | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provisions released | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances as of December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances as of January 1, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provisions established | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Application of provisions | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provisions released | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances as of December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-105
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 19 - PROVISIONS AND CONTINGENT PROVISIONS, continued
b.Provisions for personnel salaries and expenses includes:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Provision for short-term benefits | ||||||||||||||
| Provision for long-term benefits | ||||||||||||||
| Provision for seniority compensation | ||||||||||||||
| Provision for other personnel benefits | ||||||||||||||
| Total | ||||||||||||||
c.Provisions for contingent loan risk
Provision for contingent loan arise from contingent liabilities and loan commitments. ECL allowance related to contingent loan are included in ECL allowance in the income statements for the year. The contingent portfolio is presented in Note 24.
An analysis of changes in the corresponding ECL allowance as of December 31, 2025 and 2024 is as follows:
| December 31, 2025 | ||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | TOTAL | |||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| ECL allowance at January 1, 2025 | ||||||||||||||||||||||||||
| Transfer | ||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ( | |||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ( | ( | ||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ( | ( | ||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ( | ( | ||||||||||||||||||||||||
| Net changes of the exposure and modifications in credit risk | ( | |||||||||||||||||||||||||
| Write-off | ||||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2025 | ||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | TOTAL | |||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| ECL allowance at January 1, 2024 | ||||||||||||||||||||||||||
| Transfer | ||||||||||||||||||||||||||
| Transfers from stage 1 to stage 2 | ( | |||||||||||||||||||||||||
| Transfers from stage 1 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 3 | ( | |||||||||||||||||||||||||
| Transfers from stage 2 to stage 1 | ( | ( | ||||||||||||||||||||||||
| Transfers from stage 3 to stage 2 | ( | |||||||||||||||||||||||||
| Transfers from stage 3 to stage 1 | ||||||||||||||||||||||||||
| Net changes of the exposure and modifications in credit risk | ( | ( | ( | ( | ||||||||||||||||||||||
| Write-off | ||||||||||||||||||||||||||
| Other adjustments | ||||||||||||||||||||||||||
| At December 31, 2024 | ||||||||||||||||||||||||||
F-106
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 20 - OTHER LIABILITIES
The other liabilities line item is as follows:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Accounts and notes payable | ||||||||||||||
| Income received in advance | ||||||||||||||
| Macro-hedge valuation adjustment (1) | ||||||||||||||
| Guarantees received (margin accounts) (2) | ||||||||||||||
| Broker dealer and simultaneous transactions | ||||||||||||||
| Withholding VAT | ||||||||||||||
| Accounts payable insurance companies | ||||||||||||||
| In-progress operations | ||||||||||||||
| Deferred income | ||||||||||||||
| Other liabilities | ||||||||||||||
| Total | ||||||||||||||
(1)Valuation balances of net assets and liabilities at market value subject to macro-hedging
(2)Guarantee deposits (margin accounts) correspond to collateral associated to derivative financial contracts to mitigate the counterparty credit risk and are mainly established in cash. These guarantees operate when mark to market of derivative financial instruments exceed the levels of threshold agreed in the contracts, which could result in the Bank delivering or receiving collateral.
F-107
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 21 - EQUITY
a.Capital
As of December 31, 2025 and 2024 the Bank had 188,446,126,794 891,303
The activity with respect to shares during 2025, 2024 and 2023 was as follows:
| SHARES | ||||||||||||||||||||
| As of December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Issued as of January 1 | ||||||||||||||||||||
| Issuance of paid shares | ||||||||||||||||||||
| Issuance of outstanding shares | ||||||||||||||||||||
| Stock options exercised | ||||||||||||||||||||
| Issued as of December 31, | ||||||||||||||||||||
As of December 31, 2025, 2024 and 2023 the Bank does not have any of its own shares in treasury, nor do any of the consolidated companies.
As of December 31, 2025, the shareholder composition was as follows:
| Corporate Name or Shareholder’s Name | Shares | ADRs (*) | Total | % of equity holding | ||||||||||||||||||||||
| Santander Chile Holding S.A. | % | |||||||||||||||||||||||||
| Teatinos Siglo XXI Inversiones S.A. | % | |||||||||||||||||||||||||
| J P Morgan Chase Bank (ADRs)* | % | |||||||||||||||||||||||||
| Bancos por cuenta de terceros | % | |||||||||||||||||||||||||
| AFP por cuentas de terceros | % | |||||||||||||||||||||||||
| Corredoras de bolsa por cuenta de terceros | % | |||||||||||||||||||||||||
| Otros accionistas minoritarios | % | |||||||||||||||||||||||||
| Total | % | |||||||||||||||||||||||||
(*)American Depository Receipts (ADR) are certificates issued by a U.S. commercial bank to be traded on the U.S. securities markets.
As of December 31, 2024, the shareholder composition was as follows:
| Corporate Name or Shareholder’s Name | Shares | ADRs (*) | Total | % of equity holding | ||||||||||||||||||||||
| Santander Chile Holding S.A. | % | |||||||||||||||||||||||||
| Teatinos Siglo XXI Inversiones S.A. | % | |||||||||||||||||||||||||
| The Bank New York Mellon | % | |||||||||||||||||||||||||
| Banks on behalf of third parties | % | |||||||||||||||||||||||||
| Pension funds (AFP) on behalf of third parties | % | |||||||||||||||||||||||||
| Stock brokers on behalf of third parties | % | |||||||||||||||||||||||||
| Other minority holders | % | |||||||||||||||||||||||||
| Total | % | |||||||||||||||||||||||||
(*)American Depository Receipts (ADR) are certificates issued by a U.S. commercial bank to be traded on the U.S. securities markets.
F-108
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 21 - EQUITY, continued
As of December 31, 2023, the shareholder composition was as follows:
| Corporate Name or Shareholder’s Name | Shares | ADRs (*) | Total | % of equity holding | ||||||||||||||||||||||
| Santander Chile Holding S.A. | % | |||||||||||||||||||||||||
| Teatinos Siglo XXI Inversiones S.A. | % | |||||||||||||||||||||||||
| The Bank New York Mellon | % | |||||||||||||||||||||||||
| Banks on behalf of third parties | % | |||||||||||||||||||||||||
| Pension funds (AFP) on behalf of third parties | % | |||||||||||||||||||||||||
| Stock brokers on behalf of third parties | % | |||||||||||||||||||||||||
| Other minority holders | % | |||||||||||||||||||||||||
| Total | % | |||||||||||||||||||||||||
(*)American Depository Receipts (ADR) are certificates issued by a U.S. commercial bank to be traded on the U.S. securities markets.
b.Dividends
Details of dividend distribution are found in the Consolidated Statement of Changes in Equity. The provision for dividend payments on common stock as of December 31, 2025 and 2024 amounts to $631,925 million and $600,330 million, respectively.
c.As of December 31, 2025, 2024 and 2023 the basic and diluted earnings per share were as follows:
| As of December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| a) Basic earnings per share | ||||||||||||||||||||
| Total attributable to the shareholders of the Bank | ||||||||||||||||||||
| Weighted average number of outstanding shares | ||||||||||||||||||||
| Basic earnings per share (in Ch$) | ||||||||||||||||||||
| Basic earnings per share from continuing operations (in Ch$) | ||||||||||||||||||||
| Basic earnings per share from discontinued operations (in Ch$) | ||||||||||||||||||||
| b) Diluted earnings per share | ||||||||||||||||||||
| Total attributable to the shareholders of the Bank | ||||||||||||||||||||
| Weighted average number of outstanding shares | ||||||||||||||||||||
| Adjusted number of shares | ||||||||||||||||||||
| Diluted earnings per share (in Ch$) | ||||||||||||||||||||
| Diluted earnings per share from continuing operations (in Ch$) | ||||||||||||||||||||
| Diluted earnings per share from discontinued operations (in Ch$) | ||||||||||||||||||||
As of December 31, 2025, 2024 and 2023 the Bank does not own instruments with dilutive effects.
F-109
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 21 - EQUITY, continued
d.Other comprehensive income from available for sale investments and cash flow hedges:
| For the years ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| Debt instruments at FVOCI | ||||||||||||||||||||
| As of January 1, | ( | ( | ( | |||||||||||||||||
| Gain (losses) on the re-measurement of debt instruments at FVOCI, before tax | ( | |||||||||||||||||||
| Recycling from other comprehensive income to income for the year | ||||||||||||||||||||
| Net realized gains | ( | ( | ( | |||||||||||||||||
| Subtotals | ( | |||||||||||||||||||
| Total | ( | ( | ( | |||||||||||||||||
| Cash flow hedges | ||||||||||||||||||||
| As of January 1, | ( | ( | ||||||||||||||||||
| Gains (losses) on the re-measurement of cash flow hedges, before tax | ( | |||||||||||||||||||
| Recycling adjustments on cash flow hedges, before tax | ( | ( | ( | |||||||||||||||||
| Amounts removed from equity and included in carrying amount of non-financial asset (liability) which acquisition or incurrence was hedged as a highly probable transaction | ||||||||||||||||||||
| Subtotals | ( | |||||||||||||||||||
| Total | ( | ( | ||||||||||||||||||
| Other comprehensive income, before taxes | ( | ( | ( | |||||||||||||||||
| Income tax related to other comprehensive income components | ||||||||||||||||||||
| Income tax relating to debt instruments at FVOCI | ||||||||||||||||||||
| Income tax relating to cash flow hedges | ( | |||||||||||||||||||
| Total | ||||||||||||||||||||
| Other comprehensive income, net of tax | ( | ( | ( | |||||||||||||||||
| Attributable to: | ||||||||||||||||||||
| Shareholders of the Bank | ( | ( | ( | |||||||||||||||||
| Non-controlling interest | ||||||||||||||||||||
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.
e.Other equity instruments issued other than capital
As of December 31, 2025 and 2024 the balance of the perpetual bonds was as follow:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Perpetual bond | ||||||||||||||
| Totals | ||||||||||||||
The perpetual bonds were issued on October 2021.
F-110
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 21 - EQUITY, continued
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 summarised below:
| As of December 31, 2025 | As of December 31, 2024 | |||||||||||||||||||||||||||||||||||||
| Current | Non-current | Total | Current | Non-current | Total | |||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||
| Perpetual bonds | ||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||
The detail of perpetual bonds is as follows:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| US$ Bonds | ||||||||||||||
| Total | ||||||||||||||
The terms of the perpetual bonds were as follows:
| Series | Currency | Amount | Terms (years) | Interest Rate (Annual) | Issuance date | Principal Amount USD | Maturity date | ||||||||||||||||||||||||||||||||||||||||
| AT1 Bond | USD | - | 10-21-2021 | - | |||||||||||||||||||||||||||||||||||||||||||
| Total USD | |||||||||||||||||||||||||||||||||||||||||||||||
During 2025 and 2024, no partial bond repurchases have been made.
The movement of the balance of regulatory capital financial instruments issued as of December 31, 2025 and 2024, is as follows:
| 2025 | 2024 | 2023 | ||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| Balances as of January 01, | ||||||||||||||||||||
| New issuances | ||||||||||||||||||||
| Accrued inflation adjustment due to UF | ||||||||||||||||||||
| Other movements (discounts, hedges) | ||||||||||||||||||||
| Balances as of December 31, | ||||||||||||||||||||
F-111
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 22 - NON-CONTROLLING INTEREST
The non-controlling interest included in the equity and the income from the Bank’s subsidiaries is summarised as follows:
| Other comprehensive income | ||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2025 | Non- controlling | Equity | Income | Debt instruments at FVOCI | Deferred tax | Total other comprehensive income | Comprehensive income | |||||||||||||||||||||||||||||||||||||
| % | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||
| Subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||
| Santander Corredora de Seguros Limitada | ||||||||||||||||||||||||||||||||||||||||||||
| Santander Corredores de Bolsa Limitada | ( | |||||||||||||||||||||||||||||||||||||||||||
| Santander Asesorías Financieras Limitada | ||||||||||||||||||||||||||||||||||||||||||||
| Santander S.A. Sociedad Securitizadora | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Klare Corredora de Seguros S.A. | ||||||||||||||||||||||||||||||||||||||||||||
| Santander Consumer Chile S.A. | ||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ( | |||||||||||||||||||||||||||||||||||||||||||
| Santander Gestión de Recaudación y Cobranzas Limitada | ||||||||||||||||||||||||||||||||||||||||||||
| Bansa Santander S.A. | ||||||||||||||||||||||||||||||||||||||||||||
| Multiplica Spa | ||||||||||||||||||||||||||||||||||||||||||||
| PagoNXT Payments Chile SpA | ||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||||||||||||||||||||
| Total | ( | |||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2024 | Non- controlling | Equity | Income | Debt instruments at FVOCI | Deferred tax | Total other comprehensive income | Comprehensive income | |||||||||||||||||||||||||||||||||||||
| % | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||
| Subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||
| Santander Corredora de Seguros Limitada | ||||||||||||||||||||||||||||||||||||||||||||
| Santander Corredores de Bolsa Limitada | ( | |||||||||||||||||||||||||||||||||||||||||||
| Santander Asesorías Financieras Limitada | ||||||||||||||||||||||||||||||||||||||||||||
| Santander S.A. Sociedad Securitizadora | ||||||||||||||||||||||||||||||||||||||||||||
| Klare Corredora de Seguros S.A. | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Santander Consumer Chile S.A. | ||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ( | |||||||||||||||||||||||||||||||||||||||||||
| Santander Gestión de Recaudación y Cobranzas Limitada | ||||||||||||||||||||||||||||||||||||||||||||
| Bansa Santander S.A. | ||||||||||||||||||||||||||||||||||||||||||||
| Multiplica Spa | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| PagoNXT Payments Chile SpA | ||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||||||||||||||||||||
| Total | ( | |||||||||||||||||||||||||||||||||||||||||||
F-112
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 22 - NON-CONTROLLING INTEREST, continued
| Other comprehensive income | ||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2023 | Non-controlling | Equity | Income | Debt instruments at FVOCI | Deferred tax | Total other comprehensive income | Comprehensive income | |||||||||||||||||||||||||||||||||||||
| % | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||
| Subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||
| Santander Corredora de Seguros Limitada | ||||||||||||||||||||||||||||||||||||||||||||
| Santander Corredores de Bolsa Limitada | ( | |||||||||||||||||||||||||||||||||||||||||||
| Santander Asesorías Financieras Limitada | ||||||||||||||||||||||||||||||||||||||||||||
| Santander S.A. Sociedad Securitizadora | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Klare Corredora de Seguros S.A. | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Santander Consumer Chile S.A. | ||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ( | |||||||||||||||||||||||||||||||||||||||||||
| Santander Gestión de Recaudación y Cobranzas Limitada | ||||||||||||||||||||||||||||||||||||||||||||
| Bansa Santander S.A. | ||||||||||||||||||||||||||||||||||||||||||||
| Multiplica Spa | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| PagoNXT Payments Chile SpA | ||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||||||||||||||||||||
| Total | ( | |||||||||||||||||||||||||||||||||||||||||||
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 accounting policy adjustments:
| As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | Liabilities | Capital | Net income | Assets | Liabilities | Capital | Net income | Assets | Liabilities | Capital | Net income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Corredora de Seguros Limitada | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Corredores de Bolsa Limitada | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Asesorias Financieras Limitada | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander S.A. Sociedad Securitizadora | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Klare Corredora de Seguros S.A. | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Consumer Chile S.A. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Gestión de Recaudación y Cobranzas Ltda. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bansa Santander S.A. | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Multiplica Spa | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PagoNXT Payments Chile SpA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-113
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 23 - MATURITY OF FINANCIAL ASSETS AND LIABILITIES
As of December 31, 2025 and 2024, the detail of the maturities of assets and liabilities is as follows:
| As of December 31, 2025 | On Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | |||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||||
| Financial assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and deposits in banks | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash items in process of collection | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial assets for trading at FVTPL | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial derivative contracts and hedge contracts (1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Debt financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial assets at FVOCI | |||||||||||||||||||||||||||||||||||||||||||||||
| Debt financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||
| Other financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial assets at amortised cost (2) | |||||||||||||||||||||||||||||||||||||||||||||||
| Rights under repurchase agreements | |||||||||||||||||||||||||||||||||||||||||||||||
| Debt financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||
| Interbank loans | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans and account receivable from customers | |||||||||||||||||||||||||||||||||||||||||||||||
| Guarantee deposits (margin accounts) | |||||||||||||||||||||||||||||||||||||||||||||||
| Total financial assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash items in process of being cleared | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial liabilities for trading at FVTPL | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Financial derivative contracts and hedge contracts (1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial liabilities at amortised cost | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Deposits and other demand liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits and other time liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Obligations under repurchase agreements | |||||||||||||||||||||||||||||||||||||||||||||||
| Interbank borrowings | |||||||||||||||||||||||||||||||||||||||||||||||
| Issued debt instruments | |||||||||||||||||||||||||||||||||||||||||||||||
| Other financial liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Lease liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Regulatory capital instrument | |||||||||||||||||||||||||||||||||||||||||||||||
| Guarantees received (margin accounts) | |||||||||||||||||||||||||||||||||||||||||||||||
| Total financial liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
(1)Includes derivative contracts for trading purposes and hedge derivatives contracts.
(2)Debt financial instruments, Interbank loans and loans and accounts receivable from customer are presented on a gross basis, the related allowance are Ch$1,145 , Ch$2 and Ch$1,222,456 million, respectively.
(3)Includes Subordinated bonds for MCh$1,948,493 which is presented as Regulatory capital financial instruments.
F-114
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 23 - MATURITY OF FINANCIAL ASSETS AND LIABILITIES, continued
| As of December 31, 2024 | On Demand | Up to 1 month | Between 1 and 3 months | Between 3 and 12 months | Between 1 and 3 years | Between 3 and 5 years | More than 5 years | Total | |||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||||
| Financial assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and deposits in banks | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash items in process of collection | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial assets for trading at FVTPL | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial derivative contracts and hedge contracts (1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Debt financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial assets at FVOCI | |||||||||||||||||||||||||||||||||||||||||||||||
| Debt financial instrument | |||||||||||||||||||||||||||||||||||||||||||||||
| Other financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial assets at amortised cost (2) | |||||||||||||||||||||||||||||||||||||||||||||||
| Rights under repurchase agreements | |||||||||||||||||||||||||||||||||||||||||||||||
| Debt financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||
| Interbank loans | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans and account receivable from customers | |||||||||||||||||||||||||||||||||||||||||||||||
| Guarantee deposits (margin accounts) | |||||||||||||||||||||||||||||||||||||||||||||||
| Total financial assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash items in process of being cleared | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial liabilities for trading at FVTPL | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial derivative contracts and hedge contracts (1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial liabilities at amortised cost | |||||||||||||||||||||||||||||||||||||||||||||||
| Deposits and other demand liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits and other time liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Obligations under repurchase agreements | |||||||||||||||||||||||||||||||||||||||||||||||
| Interbank borrowings | |||||||||||||||||||||||||||||||||||||||||||||||
| Issued debt instruments | |||||||||||||||||||||||||||||||||||||||||||||||
| Other financial liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Lease liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Regulatory capital instrument | |||||||||||||||||||||||||||||||||||||||||||||||
| Guarantees received (margin accounts) | |||||||||||||||||||||||||||||||||||||||||||||||
| Total financial liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
(1)Includes derivative contracts for trading purposes and hedge derivatives contracts.
(2)Debt financial instruments, Interbank loans and loans and accounts receivable from customer are presented on a gross basis, the related allowance are Ch$1,074 , Ch$1 and Ch$1,192,689 million, respectively.
(3)Includes Subordinated bonds for MCh$1,910,697 which is presented as Regulatory capital financial instruments.
F-115
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 24 - 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 December 31, 2025, the Bank and its subsidiaries have provisions for this item of Ch$3,933 million (Ch$3,928 million as of December 31, 2024) which is included in “Provisions” in the Consolidated Statements of Financial Position as provisions for contingencies. In order to cover the costs of legal proceedings in which there are first and second instance judgments adverse to the interests of Banco Santander, or potential alternative dispute resolutions, the Bank has set aside provisions of Ch$3,758 million and Ch$3,780 million as of December 31, 2025 and 2024, respectively. It is important to note that these amounts have been estimated based on quantitative information from the first instance judgments against the Bank and qualitative information from the proceedings, including, among other things, expert opinions from the trial, recommendations from defense attorneys, and experience based on court rulings in similar cases (jurisprudence) issued by different courts.
b.Contingent loans
The following table shows the Bank’s contractual obligations to issue loans:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Personal guarantees | ||||||||||||||
| Personal guarantees in local currency | ||||||||||||||
| Personal guarantees in foreign currency | ||||||||||||||
| Letter of credits of merchandise traffic operations | ||||||||||||||
| Transactions related to contingent events | ||||||||||||||
| Transactions related to contingent events in local currency | ||||||||||||||
| Transactions related to contingent events in foreign currency | ||||||||||||||
| Unrestricted prompt cancel credit lines | ||||||||||||||
| Other credit commitments | ||||||||||||||
| Credit for university studies | ||||||||||||||
| Other irrevocable credit commitments | ||||||||||||||
| Total | ||||||||||||||
c.Held securities
The Bank holds securities in the normal course of its business as follows:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Third party operations | ||||||||||||||
| Collections | ||||||||||||||
| Transferred financial assets managed by the Bank | ||||||||||||||
| Assets from third parties managed by the Bank and its affiliates | ||||||||||||||
| Subtotal | ||||||||||||||
| Custody of securities | ||||||||||||||
| Securities held in custody | ||||||||||||||
| Securities held in custody deposited in other entity | ||||||||||||||
| Issued securities held in custody | ||||||||||||||
| Subtotal | ||||||||||||||
| Total | ||||||||||||||
As of December 31, 2025, the Bank has classified the portfolios managed by private banking into “Assets from third parties managed by the Bank and its affiliates” (memo account), the balance is Ch$2,937,572 million (Ch$1,944,379 million as of December 31, 2024).
F-116
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 24 - CONTINGENCIES AND COMMITMENTS, continued
d.Guarantees
Banco Santander-Chile has an integral bank policy of coverage of Official Loyalty N°0030129 in force with the company Zurich Chile Seguros Generales S.A., coverage for USD50,000,000 per claim with an annual limit of USD100,000,000 , which covers both the Bank and its subsidiaries, with an expiration date of June 30, 2024.
e.Contingent loans and liabilities
The Bank took on several contingent loans and liabilities, to satisfy its clients’ needs, that are not recognised in the Consolidated Financial Statements of Financial Position; these contain loan risks and are, therefore, part of the Bank’s global risk.
F-117
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 25 - INTEREST AND INFLATION INCOME
This item refers to interest earned in the period from the financial assets whose return, whether implicitly or explicitly, is determined by applying the effective interest rate method, regardless of the value at fair value, as well as the effect of hedge accounting.
a.For the years ended December 31, 2025, 2024 and 2023 the income from interest, was attributable to the following items:
| For the years ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest | Inflation adjustments | Total | Interest | Inflation adjustments | Total | Interest | Inflation adjustments | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Items | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial assets at amortised cost | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Resale agreements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interbank loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other interest income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial asset at fair value through other comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other financial instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hedging accounting | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| TOTAL | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-118
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 25 - INTEREST AND INFLATION INCOME, continued
b.For the years ended December 31, 2025, 2024 and 2023, the Bank’s expenses classified as interest expense are as follows:
| For the years ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest | Inflation adjustments | Total | Interest | Inflation adjustments | Total | Interest | Inflation adjustments | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
| Items | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||||||
| Financial liabilities at amortised cost | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand deposits | ( | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits and liabilities | ( | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase agreements | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interbank loans | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issued debt instruments | ( | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Other financial liabilities | ( | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ( | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Lease contracts | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Regulatory capital financial instruments | ( | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Others equity instruments | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Hedging accounting | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| TOTAL | ( | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
F-119
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 26 - FEES AND COMMISSIONS
This item includes the amount of fees earned and paid during the year, except for those which are an integral part of the financial instrument’s effective interest rate:
| For the years ended December 31, | ||||||||||||||||||||
| Fee and commission income | 2025 | 2024 | 2023 | |||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| Fees and commissions for prepayments | ||||||||||||||||||||
| Fees and commissions of loans with credit lines | ||||||||||||||||||||
| Fees and commissions for lines of credits and overdrafts | ||||||||||||||||||||
| Fees and commissions for guarantees and letters of credit | ||||||||||||||||||||
| Fees and commissions for card services | ||||||||||||||||||||
| Fees and commissions for management of accounts | ||||||||||||||||||||
| Fees and commissions for collections and payments | ||||||||||||||||||||
| Fees and commissions for intermediation and management of securities | ||||||||||||||||||||
| Insurance brokerage fees | ||||||||||||||||||||
| Fees and commissions for factoring operations services | ||||||||||||||||||||
| Fees and commissions for securitizations | ||||||||||||||||||||
| Fees and commissions for financial advice | ||||||||||||||||||||
| Office banking | ||||||||||||||||||||
| Fees for other services rendered | ||||||||||||||||||||
| Other fees earned | ||||||||||||||||||||
| Total | ||||||||||||||||||||
| For the years ended December 31, | ||||||||||||||||||||
| Fee and commission expense | 2025 | 2024 | 2023 | |||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| Compensation for card operation | ( | ( | ( | |||||||||||||||||
| Commissions for licence for use brands | ( | ( | ( | |||||||||||||||||
| Commissions for services linked to the credit card and prepaid cards | ( | ( | ( | |||||||||||||||||
| Commissions for obligations of loyalty programmes and merits for card customers | ( | ( | ( | |||||||||||||||||
| Fees and commissions for securities transactions | ( | ( | ( | |||||||||||||||||
| Office banking | ( | ( | ( | |||||||||||||||||
| Interbank services | ( | ( | ( | |||||||||||||||||
| Other fees | ( | ( | ( | |||||||||||||||||
| Total | ( | ( | ( | |||||||||||||||||
| Net fees and commissions income | ||||||||||||||||||||
F-120
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 26 - FEES AND COMMISSIONS, continued
The income and expenses for the commissions of the business segments and the calendar for the recognition of income from ordinary activities as of December 31, 2025 are presented below:
| Segments | Revenue recognition calendar for ordinary activities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2025 | Retail | Wealth Management & Insurance | Middle-market | CIB | Corporate activity and others | Total | Transferred over time | Transferred at a point in time | Accrual model | |||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||||||||||||
| Commission income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for prepayments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions of loans with credit lines | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for lines of credits and overdrafts | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for guarantees and letters of credit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for card services | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for management of accounts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for collections and payments | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for intermediation and management of securities | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Remuneration for insurance brokerage fees | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for factoring operations services | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for securitizations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for financial advice | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Office banking | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fees for other services rendered | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other fees earned | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commission expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for card operation services | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for icense for the use of card brands | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for services related to the credit card system and prepaid cards | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for obligations of loyalty programmes and merits for card customers | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for securities transactions | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Office banking | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Interbank services | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Other fees | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Net commission income and expenses | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-121
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 26 - FEES AND COMMISSIONS, continued
The income and expenses for the commissions of the business segments and the calendar for the recognition of income from ordinary activities as of December 31, 2024 are presented below:
| Segments | Revenue recognition calendar for ordinary activities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2024 | Retail | Wealth Management & Insurance | Middle-market | CIB | Corporate activity and others | Total | Transferred over time | Transferred at a point in time | Accrual model | |||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||||||||||||
| Commission income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for prepayments | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions of loans with credit lines | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for lines of credits and overdrafts | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for guarantees and letters of credit | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for card services | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for management of accounts | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for collections and payments | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for brokerage and management of securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for brokerage of insurance and insurance advisory | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for factoring operations services | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for financial advice | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Office banking | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fees for other services rendered | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other fees earned | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commission expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Compensation for card operation | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for licence for use brands | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for services related to the credit card system and prepaid cards | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for obligations of loyalty programmes and merits for card customers | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Fees and commissions for securities transactions | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Office banking | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interbank services | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Other fees | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total Net commission income and expenses | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-122
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 26 - FEES AND COMMISSIONS, continued
The income and expenses for the commissions of the business segments and the calendar for the recognition of income from ordinary activities as of December 31, 2023 are presented below:
| Segments | Revenue recognition calendar for ordinary activities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2023 | Retail | Wealth Management & Insurance | Middle-market | CIB | Corporate activity and others | Total | Transferred over time | Transferred at a point in time | Accrual model | |||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||||||||||||
| Commission income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for prepayments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions of loans with credit lines | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for lines of credits and overdrafts | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for guarantees and letters of credit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for card services | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for management of accounts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for collections and payments | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for intermediation and management of securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for brokerage of insurance and insurance advisory | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for factoring operations services | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for securitization services | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for financial advice | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Office banking | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fees for other services rendered | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other fees earned | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commission expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Compensation for card operation | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for licence for use brands | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for services related to the credit card system and prepaid cards | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Commissions for obligations of loyalty programmes and merits for card customers | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Fees and commissions for securities transactions | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Office banking | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interbank services | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other fees | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total Net commission income and expenses | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-123
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 27 - NET INCOME (EXPENSE) FROM FINANCIAL OPERATIONS
The detail of income (expense) from financial operations is as follows:
| For the years ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| Net income/(expense) from financial assets for trading at FVTPL | ||||||||||||||||||||
| Financial derivative contracts | ||||||||||||||||||||
| Debt financial instruments | ( | |||||||||||||||||||
| Other financial instrumets | ||||||||||||||||||||
| Subtotal | ||||||||||||||||||||
| Net income from financial liabilities for trading at FVTPL | ||||||||||||||||||||
| Financial derivative contracts | ( | |||||||||||||||||||
| Subtotal | ( | |||||||||||||||||||
| Net income from non-current assets and groups available for sale not admissible as discontinued operations | ||||||||||||||||||||
| Financial assets at amortised cost | ( | |||||||||||||||||||
| Financial assets at fair value through OCI | ( | ( | ( | |||||||||||||||||
| Financial liabilities at amortised cost | ||||||||||||||||||||
| Subtotal | ( | ( | ||||||||||||||||||
| Net income from exchange, adjustment and hedge accounting of foreign currency | ||||||||||||||||||||
| Net income from foreign currency exchange | ( | ( | ||||||||||||||||||
| Net income from readjustment of foreign currency | ||||||||||||||||||||
| Financial assets at FVTPL | ||||||||||||||||||||
| Financial assets at amortised cost | ( | |||||||||||||||||||
| Others assets | ( | |||||||||||||||||||
| Financial liabilities at FVTPL | ||||||||||||||||||||
| Net income from hege accounting of foreign currency risk | ( | |||||||||||||||||||
| Subtotal | ||||||||||||||||||||
| Total income (expense) from financial operations | ||||||||||||||||||||
F-124
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 28 - NET INCOME FROM NON-CURRENT ASSETS AND GROUPS AVAILABLE FOR SALE NOT ADMISSIBLE AS DISCONTINUED OPERATIONS
The detail of net income from assets received in lieu of payment and sale of non-currents assets is as follows:
| For the years ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| Net income from assets received in lieu of payment | ||||||||||||||||||||
| Income from assets received in lieu of payment | ||||||||||||||||||||
| Other income from assets received in lieu of payment | ||||||||||||||||||||
| Provision on assets received in lieu of payment | ( | ( | ||||||||||||||||||
| Expenses for maintenance of assets received in lieu of payment | ( | ( | ( | |||||||||||||||||
| Subtotal | ( | ( | ||||||||||||||||||
| Sale of non-current assets | ||||||||||||||||||||
| Net income from sale of fixed assets | ||||||||||||||||||||
| Subtotal | ||||||||||||||||||||
| TOTAL | ||||||||||||||||||||
F-125
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 29 - OTHER OPERATING INCOME AND EXPENSES
Other operating income is comprised of the following components:
| For the years ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| Pension plan interest | ||||||||||||||||||||
| Compensation from insurance companies due to damages (1) | ||||||||||||||||||||
| Rental income | ||||||||||||||||||||
| Income from recovery tax and expenses | ||||||||||||||||||||
| Income from business alliance | ||||||||||||||||||||
| Other | ||||||||||||||||||||
| Total | ||||||||||||||||||||
(1)Mainly related to recoveries from fraud claims.
Other operating expenses are detailed as follows:
| For the years ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| Credit card expenses | ( | ( | ( | |||||||||||||||||
| Customer services | ( | ( | ( | |||||||||||||||||
| Operating risk charge-offs and provision | ( | ( | ( | |||||||||||||||||
| Recovery of operating expenses | ||||||||||||||||||||
| Life insurance and general product insurance policies (1) | ( | ( | ( | |||||||||||||||||
| Commercial representation expenses | ( | ( | ( | |||||||||||||||||
| Expenses associated leasing operations (2) | ( | ( | ( | |||||||||||||||||
| Expenses associated factoring operations | ( | ( | ( | |||||||||||||||||
| Restructuring expenses (3) | ( | ( | ( | |||||||||||||||||
| Commercial alliance expenses | ( | ( | ( | |||||||||||||||||
| Lawsuits provision | ( | ( | ||||||||||||||||||
| Retail association payment | ( | ( | ||||||||||||||||||
| Bond issuance expenses | ( | |||||||||||||||||||
| Other | ( | ( | ||||||||||||||||||
| Total | ( | ( | ( | |||||||||||||||||
(1)New Fraud Law became effective on 2020, under which the Bank assumes responsibility against card fraud and electronic transactions.
(2)Includes leasing land taxes, which were modified in 2020 (Tax Modernization Law).
(3)The Bank has implemented a formal restructuring plan in accordance with IAS 37 Provisions. This restructuring plan is part of the Bank's digital transformation process, which involves changing the operating model of the branch network along with a transition towards a common global structure (Go To Model).
F-126
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 30 - PERSONNEL SALARIES AND EXPENSES
For the years ended December 31, 2025, 2024 and 2023, the composition of personnel salaries and expenses is as follows:
| For the years ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| Salary compensation | ( | ( | ( | |||||||||||||||||
| Performance bonus | ( | ( | ( | |||||||||||||||||
| Legal compensation | ( | ( | ( | |||||||||||||||||
| Short-term bonuses | ( | ( | ( | |||||||||||||||||
| Long-term bonus | ( | ( | ( | |||||||||||||||||
| Stock-based benefits | ( | ( | ||||||||||||||||||
| Seniority compensation | ( | ( | ( | |||||||||||||||||
| Pension plans | ||||||||||||||||||||
| Training expenses | ( | ( | ( | |||||||||||||||||
| Nursery school and kindergarten expenses | ( | ( | ( | |||||||||||||||||
| Other personnel expenses | ( | ( | ( | |||||||||||||||||
| Total | ( | ( | ( | |||||||||||||||||
F-127
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 31 - ADMINISTRATIVE EXPENSES
For the years ended December 31, 2025, 2025 and 2024, the composition of the item is as follows:
| For the years ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| General administrative expenses | ||||||||||||||||||||
| Maintenance and repair of property, plant and equipment | ( | ( | ( | |||||||||||||||||
| Short term leases contracts | ( | ( | ( | |||||||||||||||||
| Other expenses related to leases contracts | ( | ( | ( | |||||||||||||||||
| Insurance payments | ( | ( | ( | |||||||||||||||||
| Office supplies | ( | ( | ( | |||||||||||||||||
| IT and communication expenses | ( | ( | ( | |||||||||||||||||
| Heating, and other utilities | ( | ( | ( | |||||||||||||||||
| Security and valuables transport services | ( | ( | ( | |||||||||||||||||
| Representation and personnel travel expenses | ( | ( | ( | |||||||||||||||||
| Judicial and notarial expenses | ( | ( | ( | |||||||||||||||||
| Fees for technical reports, assessments and auditing | ( | ( | ( | |||||||||||||||||
| Fines applied by FMC and other agencies | ( | ( | ||||||||||||||||||
| Other general administrative expenses | ( | ( | ( | |||||||||||||||||
| Subtotal | ( | ( | ( | |||||||||||||||||
| Outsourced services | ||||||||||||||||||||
| Data processing | ( | ( | ( | |||||||||||||||||
| Technological development, certification and testing service | ( | ( | ( | |||||||||||||||||
| Administration and supply of external human resources | ( | ( | ||||||||||||||||||
| Call center for sale, marketing and control quality of client’ services | ( | |||||||||||||||||||
| External collection services | ( | ( | ( | |||||||||||||||||
| External ATM administration and maintenance services | ( | ( | ( | |||||||||||||||||
| External cleaning, cafeteria, custody, storage services | ( | ( | ( | |||||||||||||||||
| Product sale and distribution services | ||||||||||||||||||||
| External credit evaluation services | ( | ( | ( | |||||||||||||||||
| Other | ( | ( | ( | |||||||||||||||||
| Subtotal | ( | ( | ( | |||||||||||||||||
| Board expenses | ( | ( | ( | |||||||||||||||||
| Marketing expenses | ( | ( | ( | |||||||||||||||||
| Taxes, payroll taxes, and contributions | ||||||||||||||||||||
| Real estate taxes | ( | ( | ( | |||||||||||||||||
| Patents | ( | ( | ( | |||||||||||||||||
| Other taxes | ( | ( | ( | |||||||||||||||||
| Oversight contributions to the regulator | ( | ( | ( | |||||||||||||||||
| Subtotal | ( | ( | ( | |||||||||||||||||
| Total | ( | ( | ( | |||||||||||||||||
F-128
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 32 - DEPRECIATION, AMORTISATION, AND IMPAIRMENT
Depreciation, amortisation and impairment charges for the years ended December 31, 2025, 2024 and 2023, are detailed below:
| For the years ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| Depreciation and amortisation | ||||||||||||||||||||
| Amortisation of Intangible assets | ( | ( | ( | |||||||||||||||||
| Depreciation of property, plant, and equipment | ( | ( | ( | |||||||||||||||||
| Depreciation right of use assets | ( | ( | ( | |||||||||||||||||
| Total depreciation and amortisation | ( | ( | ( | |||||||||||||||||
| Impairment of property, plant, and equipment | ( | |||||||||||||||||||
| Impairment of right of use assets | ( | |||||||||||||||||||
| Impairment of intangibles | ( | ( | ( | |||||||||||||||||
| Total impairment | ( | ( | ( | |||||||||||||||||
| Total | ( | ( | ( | |||||||||||||||||
F-129
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 33 - EXPECTED CREDIT LOSSES ALLOWANCE
As of December 31, 2025, 2024 and 2023, under the credit risk model established by IFRS 9 the ECL allowance by stage recorded at income statements is as follows:
| For the year ended December 31, 2025 * | ||||||||||||||||||||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | ||||||||||||||||||||||||||||||||||||||||||
| Corporate | Other ** commercial | Corporate | Other ** commercial | Corporate | Other ** commercial | TOTAL | ||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||
| Commercial loans | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Mortgage loans | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Consumer loans | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Contingent loans | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Repurchase agreements | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Loans and account receivable at FVOCI | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Debt at FVOCI | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Debt at amortised cost | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
Recovery of loans previously charged-off | ||||||||||||||||||||||||||||||||||||||||||||
TOTAL | ( | |||||||||||||||||||||||||||||||||||||||||||
*Includes overlays for an amount of MCh$119,776 to cover certain defaulted loans from mortgage and other commercial portfolios. See Note 37, Risk management.
**Includes Other Commercial, Mortgages and Consumer.
| For the year ended December 31, 2024 * | ||||||||||||||||||||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | ||||||||||||||||||||||||||||||||||||||||||
| Corporate | Other ** commercial | Corporate | Other ** commercial | Corporate | Other ** commercial | TOTAL | ||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||
| Commercial loans | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
| Mortgage loans | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Consumer loans | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Contingent loans | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Loans and account receivable at FVOCI | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Debt at FVOCI | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Debt at amortised cost | ||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ( | ( | - | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
| Recovery of loans previously charged-off | ||||||||||||||||||||||||||||||||||||||||||||
| TOTAL | ( | |||||||||||||||||||||||||||||||||||||||||||
*Includes overlays for an amount of MCh$89,994 for future macro-economic information and scenarios updates. See Note 37, Risk management.
**Includes Other Commercial, Mortgages and Consumer
F-130
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 33 - EXPECTED CREDIT LOSSES ALLOWANCE, continued
| For the year ended December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | ||||||||||||||||||||||||||||||||||||||||||
| Corporate | Others ** commercial | Corporate | Others commercial | Corporate | Others** commercial | TOTAL | ||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | ||||||||||||||||||||||||||||||||||||||
| Commercial loans | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Mortgage loans | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Consumer loans | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Contingent loans | ( | |||||||||||||||||||||||||||||||||||||||||||
| Loans and account receivable at FVOCI | ||||||||||||||||||||||||||||||||||||||||||||
| Debt at FVOCI | ||||||||||||||||||||||||||||||||||||||||||||
| Debt at amortised cost | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Total | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Recovery of loans previously charged-off | ||||||||||||||||||||||||||||||||||||||||||||
| TOTAL | ( | |||||||||||||||||||||||||||||||||||||||||||
**Includes Other Commercial, Mortgages and Consumer.
F-131
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 34 - 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 of Directors and 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, since all of them have a common parent, i.e., Banco Santander S.A. (located in Spain).
Transactions between the Bank and its related parties are specified below, facilitate comprehension purposes, we have divided the information into four categories:
Santander Group Companies
This category includes all the companies that are controlled by the Santander Group around the world, and hence, it also includes 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 of Directors and 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.
F-132
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
F-133
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 34 - TRANSACTIONS WITH RELATED PARTIES, continued
a.Loans to related parties
Loans and accounts receivable as well as contingent loans that correspond to related entities are as follows:
| As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Group entities | Associates entities | Key personnel | Other | Group entities | Associates entities | Key personnel | Other | |||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Loans and accounts receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans and accounts receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for loan losses | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Net loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Guarantees | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Contingent loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Personal guarantees | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Letters of credit | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Guarantees | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Contingent loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for contingent loans | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Net contingent loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
Loan activity to related parties during 2025, 2024 and 2023 is shown below:
| As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Group entities | Associates entities | Key Personnel | Other | Group entities (*) | Associates entities | Key Personnel | Other | |||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Opening balances as of January 1, | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans granted | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans payments | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
(*)Loans with non-controlled companies (not-consolidated) amount MCh$234,331 , MCh$209,358 and MCh$3,348 as of December 31, 2025, 2024 and 2023, respectively.
F-134
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 34 - TRANSACTIONS WITH RELATED PARTIES, continued
b.Assets and liabilities with related parties
| As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Group entities | Associates entities | Key personnel | Other | Group entities | Associates entities | Key personnel | Other | |||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and deposits in banks | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase agreements and securities lending | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial assets at FVTPL | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial derivative contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other assets | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial liabilities at FVTPL | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial derivative contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial liabilities at amortised cost | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Deposits and other demand liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits and other time liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Obligations under repurchase agreements | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interbank borrowing | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Issued debt instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other financial liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
F-135
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
| As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 34 - TRANSACTIONS WITH RELATED PARTIES, continue
c.Income (expense) recorded due to transactions with related parties
| For the years ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Group entities | Associates entities | Key personnel | Other | Group entities | Associates entities | Key personnel | Other | Group entities | Associates entities | Key personnel | Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income and inflation-indexation adjustments | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fee and commission income and expenses | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (expense) from financial operations and net foreign exchange gain (loss) (*) | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other operating income and expenses | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Key personnel compensation and expenses | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Administrative and other expenses | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(*)Primarily relates to derivative contracts used to financial hedge of exchange risk of assets and liabilities that cover positions of the Bank and its subsidiaries.
F-136
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 34 - TRANSACTIONS WITH RELATED PARTIES, continued
d.Transactions with related parties
Single transaction in the period with related parties not legal persons, which are not usual business operations of the Bank with their clients, and that exceed UF 2,000 (USD 77,289 )
| As of December 31, 2025 | Description of the transactions | Effect on income statements | Effect on balance sheet | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business name | Country | Nature of relationship with the Bank | Type of service | Term | Renewal | Income MCh$ | Expenses MCh$ | Account receivable MCh$ | Account payable MCh$ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Banco Santander, S.A. | Spain | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Back-Offices Globales Mayoristas, S.A. | Spain | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Chile Holding S.A. | Chile | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Factoring S.A. | Chile | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bansa Santander S.A. | Chile | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gesban Santander Servicios Profesionales Contables Limitada | Chile | Group | Consulting Services | Monthly | Contractual | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Global Services, S.L. | Spain | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Investment Chile Limitada | Chile | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Global Technology and Operations Chile limitada | Chile | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Universia Chile S.A. | Chile | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Aquanima Chile S.A. | Chile | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Asset Management S.A. Administradora General de Fondos | Chile | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Centro de Compensación Automatizado S.A. | Chile | Associated | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sociedad Operadora de la Cámara de Compensación de Pagos de Alto Valor S.A. | Chile | Associated | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Zurich Santander Seguros Generales Chile S.A. | Chile | Associated | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Banca de Inversión Colombia, S.A.S. | Colombia | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| F1rst Tecnologia e Inovação Ltda. | Brazil | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Global Technology and Operations, S.L. Unipersonal | Spain | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PagoNxt Payments Services, S.L. | Spain | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Global Cards & Digital Solutions, S.L. | Spain | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Open Digital Services, S.L. | Spain | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Klare Corredora de Seguros S.A. | Chile | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-137
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 34 - TRANSACTIONS WITH RELATED PARTIES, continued
| As of December 31, 2024 | Description of the transactions | Effect on income statements | Effect on balance sheet | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business name | Country | Nature of relationship with the Bank | Type of service | Term | Renewal | Income MCh$ | Expenses MCh$ | Account receivable MCh$ | Account payable MCh$ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Banco Santander, S.A. | Spain | Group | Consulting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Back-Offices Globales Mayoristas, S.A. | Spain | Group | Back Office services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Chile Holding S.A. | Chile | Group | Leases | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Factoring S.A. | Chile | Group | Leases, Custody and Portal | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bansa Santander S.A. | Chile | Group | Leases and Other | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gesban Santander Servicios Profesionales Contables Limitada | Chile | Group | Accounting Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Global Services, S.L. Unipersonal | Spain | Group | Consulting services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Investment Chile Limitada | Chile | Group | Leases | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Global Technology and Operations Chile limitada | Chile | Group | IT Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Universia Chile S.A. | Chile | Group | Institutional Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Aquanima Chile S.A. | Chile | Group | Procurement Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Asset Management S.A. Administradora General de Fondos | Chile | Group | Leases and Other | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Centro de Compensación Automatizado S.A. | Chile | Associated | Derivatives clearing | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sociedad Operadora de la Cámara de Compensación de Pagos de Alto Valor S.A. | Chile | Associated | Card operator | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Zurich Santander Seguros Generales Chile S.A. | Chile | Associated | Channel Usage Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| F1rst Tecnologia e Inovação Ltda. | Brazil | Group | IT Services and Service Desk | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Global Technology and Operations, S.L. Unipersonal | Spain | Group | IT services and Ops, | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PagoNxt Trade Services, S.L. | Spain | Group | Digital payments | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Klare Corredora de Seguros S.A. | Chile | Group | Leases | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Universia Holding, S.L. | Spain | Group | Institutional Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santander Global Cards & Digital Solutions, S.L. | Spain | Group | Institutional Services | Monthly | Contractual | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
F-138
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 34 - TRANSACTIONS WITH RELATED PARTIES, continued
e.Payments to Board members and key management personnel
The compensation received by key management personnel, including Board members and all the executives holding manager positions shown in the “Personnel salaries and expenses” and/or “Administrative expenses” items of the Consolidated Statements of Income, corresponds to the following categories:
| For the years ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| Personnel compensation | ||||||||||||||||||||
| Board members’ salaries and expenses | ||||||||||||||||||||
| Bonuses or gratifications | ||||||||||||||||||||
| Stock-based benefits (*) | ( | |||||||||||||||||||
| Seniority compensation | ||||||||||||||||||||
| Pension plans | ( | |||||||||||||||||||
| Training expenses | ||||||||||||||||||||
| Health funds | ||||||||||||||||||||
| Other personnel expenses | ( | |||||||||||||||||||
| Total | ||||||||||||||||||||
(*)Some of the executives that qualified for this benefit left the Group for different reasons, without complying with the requirements to receive the benefit, therefore the obligation amount decreased, which generated the reversal of provisions.
f.Composition of key personnel
As of December 31, 2025, 2024 and 2023, the composition of the Bank’s key personnel is as follows:
| N° of executives | ||||||||||||||||||||
| Position | As of December 31, | |||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Director | ||||||||||||||||||||
| Manager | ||||||||||||||||||||
| Total key personnel | ||||||||||||||||||||
F-139
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 35 - PENSION PLANS
The Bank has an additional benefit available to its principal executives, consisting of a pension plan. The purpose of the pension plan is to endow the executives with funds for a better supplementary pension upon their retirement.
The executives will be entitled to receive this benefit only when they fulfill the following conditions:
a.Aimed at the Bank’s management
b.The general requisite to apply for this benefit is that the employee must be carrying out his/her duties when turning 60 years old
c.The Bank take out an individual mixed insurance policy (life and savings), for each beneficiary of the plan, but the beneficiary and contracting party is the Group company for which the executive works.
If the executive's working relationship with the company terminates for any reason attributable to the executive, shall have no rights under this benefit plan.
Exceptionally, in the event of the executive’s death or total or partial disability, the executive or his heirs are entitled to receive this benefit.
The Bank will make contributions to this pension plan based on individual mixed insurance policies where the Bank is the beneficiary. The life insurance company with which these policies are taken out is not an entity affiliated or related to the Bank or any other entity of the Santander Group.
Plan Assets owned by the Bank at the end of 2025 totaled MCh$3,462 (MCh$4,107 in 2024).
The amount of the defined benefit plans has been quantified by the Bank, based on the following criteria:
Calculation method:
Use of the projected unit credit method which considers each working year as generating an additional amount of rights over benefits and values each unit separately. It is calculated based primarily on fund contributions, as well as other factors such as the legal annual pension limit, seniority, age and yearly income for each unit valued individually.
Assets related to the pension fund contributed by the Bank into the Zurich insurance company with respect to defined benefit plans are presented as net of associated commitments.
Actuarial hypothesis assumptions:
Actuarial assumptions with respect to demographic and financial variables are non-biased and mutually compatible with each other. The most significant actuarial hypotheses considered in the calculations were:
| Post-employment plans | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Mortality chart | RV-2014 | RV-2014 | ||||||||||||
| Termination of contract rates | ||||||||||||||
| Impairment chart | PDT 1985 | PDT 1985 | ||||||||||||
F-140
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 35 - PENSION PLANS, continued
Activity for post-employment benefits is as follows:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Plan assets | ||||||||||||||
| Commitments for defined-benefit plans | ||||||||||||||
| For active personnel | ( | ( | ||||||||||||
| Incurred by inactive personnel | ||||||||||||||
| Minus: | ||||||||||||||
| Unrealized actuarial (gain) losses | ||||||||||||||
| Balances at year end | ||||||||||||||
Year’s cash flow for post-employment benefits is as follows:
| For the years ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| a) Fair value of plan assets | ||||||||||||||||||||
| Opening balance | ||||||||||||||||||||
| Expected yield of insurance contracts | ||||||||||||||||||||
| Employer contributions | ||||||||||||||||||||
| Actuarial (gain) losses | ||||||||||||||||||||
| Premiums paid | ||||||||||||||||||||
| Benefits paid | ( | ( | ( | |||||||||||||||||
| Fair value of plan assets at year end | ||||||||||||||||||||
| b) Present value of obligations | ||||||||||||||||||||
| Present value of obligations opening balance | ( | ( | ( | |||||||||||||||||
| Net incorporation of Group companies | ||||||||||||||||||||
| Service cost | ||||||||||||||||||||
| Interest cost | ||||||||||||||||||||
| Curtailment/settlement effect | ||||||||||||||||||||
| Benefits paid | ||||||||||||||||||||
| Past service cost | ||||||||||||||||||||
| Actuarial (gain) losses | ||||||||||||||||||||
| Other | ||||||||||||||||||||
| Present value of obligations at year end | ( | ( | ( | |||||||||||||||||
| Net balance at year end | ||||||||||||||||||||
Plan expected profit:
| As of December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Type of expected yield from the plan’s assets | UF + | UF + | UF + | |||||||||||||||||
| Type of yield expected from the reimbursement rights | UF + | UF + | UF + | |||||||||||||||||
F-141
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 35 - PENSION PLANS, continued
Plan associated expenses:
| For the years ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| MCh$ | MCh$ | MCh$ | ||||||||||||||||||
| Current period service expenses | ||||||||||||||||||||
| Interest cost | ||||||||||||||||||||
| Expected yield from plan’s assets | ||||||||||||||||||||
| Expected yield of insurance contracts linked to the Plan: | ||||||||||||||||||||
| Extraordinary allocations | ||||||||||||||||||||
| Actuarial (gain)/ losses recorded in the period | ||||||||||||||||||||
| Past service cost | ||||||||||||||||||||
| Other | ||||||||||||||||||||
| Total | ||||||||||||||||||||
F-142
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 36 - 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 sale transaction of an 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 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.
Except as detailed in the following table, management considers that the carrying amounts of financial assets and financial liabilities recognised in the consolidated financial statements approximate their fair values.
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 December 31, 2025 and 2024:
| As of December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| Book value | Fair value | Book value | Fair value | |||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Financial assets for trading at FVTPL | ||||||||||||||||||||||||||
| Financial derivative contracts | ||||||||||||||||||||||||||
| Debt financial instruments | ||||||||||||||||||||||||||
| Financial assets at FVOCI | ||||||||||||||||||||||||||
| Debt financial instrument | ||||||||||||||||||||||||||
| Other financial instruments | ||||||||||||||||||||||||||
| Financial derivative contracts for hedge accounting | ||||||||||||||||||||||||||
| Financial assets at amortised cost | ||||||||||||||||||||||||||
| Rights under repurchase agreements | ||||||||||||||||||||||||||
| Debt financial instruments | ||||||||||||||||||||||||||
| Interbank loans | ||||||||||||||||||||||||||
| Loans and account receivable from customers | ||||||||||||||||||||||||||
| Guarantee deposits (margin accounts) | ||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Financial liabilities for trading at FVTPL | ||||||||||||||||||||||||||
| Financial derivative contracts | ||||||||||||||||||||||||||
| Financial derivative contracts for accounting hedges | ||||||||||||||||||||||||||
| Financial liabilities at amortised cost | ||||||||||||||||||||||||||
| Deposits and other demand liabilities | ||||||||||||||||||||||||||
| Time deposits and other time liabilities | ||||||||||||||||||||||||||
| Obligations under repurchase agreements and securities lending | ||||||||||||||||||||||||||
| Interbank borrowings | ||||||||||||||||||||||||||
| Issued debt instruments | ||||||||||||||||||||||||||
| Other financial liabilities | ||||||||||||||||||||||||||
| Regulatory capital financial instruments | ||||||||||||||||||||||||||
| Guarantees received (margin accounts) | ||||||||||||||||||||||||||
F-143
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 36 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES. continued
The fair value approximates the carrying amount of the following line items due to their short-term nature: cash and deposits-banks, cash items in process of collection and investments under resale or repurchase agreements.
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.
a.Financial assets held for trading and Debt instruments at FVOCI
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 are evaluated at recorded value since 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.
b.Loans and accounts receivable at amortised cost and Interbank
Fair value of commercial, mortgage and consumer loans and credit cards are measured through a discounted cash flow (DCF) analysis. 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.
c.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.
d.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.
e.Financial derivative contracts for trading and hedge accounting
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 determines as exit price in accordance with IFRS 13. 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
F-144
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 36 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
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.
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.
Financial instruments at fair value and determined by quotations published in active markets (Level 1) include:
-Chilean Government and Department of Treasury bonds
-Foreign instruments
-Mutual funds
Instruments which cannot be
The following financial instruments are classified under Level 2:
| Type of financial instrument | Model used in valuation | Description of unobservable inputs | ||||||||||||
| ● 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 mnemonic 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. | ||||||||||||
| ● 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 mnemonic, the reported rate is the weighted average amount of the observed rates. In the case there are no valid transactions for a given mnemonic on the valuation day, the reported rate is the IRR base from a reference structure, plus a spread model based on issuer curves. | ||||||||||||
| ● 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. | ||||||||||||
| ● FX Options | Black-Scholes | Formula adjusted by the volatility simile (implicit volatility), Prices (volatility) are provided by BGC Partners, according to this criterion: With published market prices, a volatility parameter is created by interpolation and then these volatilities are used to value options. | ||||||||||||
| ● Guarantee deposits, guarantee received (Threshold) | Present Value of Cash Flows Model | Collateral associated to derivatives financial contracts: Average trading swap (CMS), FX and inflation Forward, Cross Currency Swap (CCS), Interest Rate Swap (IRS) y FX options. | ||||||||||||
In limited occasions significant inputs not observable in market data are used (Level 3). Several techniques are used to perform these estimates, including extrapolation of observable market data or a mix of observable data.
F-145
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 36 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES. continued
The following financial instruments are classified under Level 3:
| Type of financial instrument | Model used in valuation | Description of unobservable inputs | ||||||||||||
| ● Caps/Floors/Swaptions | Black Normal model for Cap/Floors and Swaptions | There is unobservable input of implied volatility. | ||||||||||||
| Black – Scholes | There is unobservable input of implied volatility. | |||||||||||||
| Hull-White | Hybrid HW model for rates and Brownian motion for FX. There is unobservable volatility input | |||||||||||||
| FRA Implicit | Start FW not supported by Murex (platform) due to UF FW estimation | |||||||||||||
| ● CCS, IRS, CMS at TAB rates | Present Value of Cash Flows Model | - Valuation obtained using interest curve interpolating to maturity of flows, however, TAB is not a directly observable variable nor correlated to any market input. - Valuation using prices of instruments with similar characteristics plus a liquidity penalty rate. | ||||||||||||
| ● CCS (maturity> 30 years) | Present Value of Cash Flows Model | The rates are provided by ICAP, GFI, Tradition and Bloomberg according following criteria: Using the published market prices, the valuation curve is constructed using the bootstrapping method and this curve is then used to value the different derivatives. | ||||||||||||
| ● Loans and account receivable at FVOCI | Present Value of Cash Flows Model | Measured by discounting estimated cash flow using the interest rate of new contracts. | ||||||||||||
| ● Mortgage finance bonds | Present Value of Cash Flows Model | The yields (YTM) are provided by RiskAmérica according to the following criteria: If, on the valuation date, there are one or more valid transactions on the Santiago Stock Exchange for a given ticker symbol, the reported rate is the weighted average of the observed rates. If there are no valid transactions for a given ticker symbol on the valuation date, the reported rate is a "base YTM," derived from a reference structure, plus a "Model Spread" based on historical spread data for the same or similar securities. | ||||||||||||
The Bank does not believe that any change in unobservable inputs with respect to level 3 instruments would result in a significantly different fair value measurement.
The following table presents the assets and liabilities that are measured at fair value on a recurrent basis:
| Fair value measurement | ||||||||||||||||||||||||||
| As of December 31, | 2025 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Financial assets for trading at FVTPL | ||||||||||||||||||||||||||
| Financial derivative contracts | ||||||||||||||||||||||||||
| Debt financial instruments | ||||||||||||||||||||||||||
| Financial assets at FVOCI | ||||||||||||||||||||||||||
| Debt financial instrument | ||||||||||||||||||||||||||
| Other financial instruments | ||||||||||||||||||||||||||
| Financial derivative contracts for hedge accounting | ||||||||||||||||||||||||||
| Guarantee deposits (margin accounts) | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Financial liabilities for trading at FVTPL | ||||||||||||||||||||||||||
| Financial derivative contracts | ||||||||||||||||||||||||||
| Financial derivative contracts for accounting hedges | ||||||||||||||||||||||||||
| Guarantees received (margin accounts) | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
F-146
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 36 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES. continued
| Fair value measurement | ||||||||||||||||||||||||||
| As of December 31, | 2024 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Financial assets for trading at FVTPL | ||||||||||||||||||||||||||
| Financial derivative contracts | ||||||||||||||||||||||||||
| Debt financial instruments | ||||||||||||||||||||||||||
| Financial assets at FVOCI | ||||||||||||||||||||||||||
| Debt financial instrument | ||||||||||||||||||||||||||
| Other financial instruments | ||||||||||||||||||||||||||
| Financial derivative contracts for hedge accounting | ||||||||||||||||||||||||||
| Guarantee deposits (margin accounts) | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Financial liabilities for trading at FVTPL | ||||||||||||||||||||||||||
| Financial derivative contracts | ||||||||||||||||||||||||||
| Financial derivative contracts for accounting hedges | ||||||||||||||||||||||||||
| Guarantees received (margin accounts) | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
The following table presents assets or liabilities which are not measured at fair value in the statements of financial position but for which the fair value is disclosed:
| Fair value measurement | ||||||||||||||||||||||||||
| As of December 31, | 2025 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Financial assets at amortised cost | ||||||||||||||||||||||||||
| Rights for repurchase agreements and securities loans | ||||||||||||||||||||||||||
| Debt financial instruments | ||||||||||||||||||||||||||
| Interbank loans | ||||||||||||||||||||||||||
| Loans and account receivable from customers | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Financial liabilities at amortised cost | ||||||||||||||||||||||||||
| Deposits and other demand liabilities | ||||||||||||||||||||||||||
| Time deposits and other time liabilities | ||||||||||||||||||||||||||
| Obligations under repurchase agreements and securities lending | ||||||||||||||||||||||||||
| Interbank borrowings | ||||||||||||||||||||||||||
| Issued debt instruments | ||||||||||||||||||||||||||
| Other financial liabilities | ||||||||||||||||||||||||||
| Regulatory capital financial instruments | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
F-147
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 36 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES. continued
| Fair value measurement | ||||||||||||||||||||||||||
| As of December 31, | 2024 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Financial assets at amortised cost | ||||||||||||||||||||||||||
| Rights for repurchase agreements and securities loans | ||||||||||||||||||||||||||
| Debt financial instruments | ||||||||||||||||||||||||||
| Interbank loans | ||||||||||||||||||||||||||
| Loans and account receivable from customers | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Financial liabilities at amortised cost | ||||||||||||||||||||||||||
| Deposits and other demand liabilities | ||||||||||||||||||||||||||
| Time deposits and other time liabilities | ||||||||||||||||||||||||||
| Obligations under repurchase agreements and securities lending | ||||||||||||||||||||||||||
| Interbank borrowings | ||||||||||||||||||||||||||
| Issued debt instruments | ||||||||||||||||||||||||||
| Other financial liabilities | ||||||||||||||||||||||||||
| Regulatory capital financial instruments | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
The fair values of other assets and other liabilities approximate their carrying values.
The methods and assumptions to estimate the fair value are defined below:
-Loans and amounts due from credit institutions and from customers – Fair value are estimated for groups of loans with similar characteristics. The fair value was measured by discounting estimated cash flow using the interest rate of new contracts. That is, the future cash flow of the current loan portfolio is estimated using the contractual rates, and then the new loans spread over the risk-free interest rate are incorporated to the risk-free yield curve in order to calculate the loan portfolio fair value. In terms of behavior assumptions, it is important to underline that a prepayment rate is applied to the loan portfolio, thus a more realistic future cash flow is achieved.
-Deposits and interbank borrowings – The fair value of deposits was calculated by discounting the difference between the cash flows on a contractual basis and current market rates for instruments with similar maturities. For variable-rate deposits, the carrying amount was considered to approximate fair value.
-Issued debt instruments and other financial liabilities – The fair value of long-term loans was estimated by cash flow discounted at the interest rate offered on the market with similar terms and maturities.
The valuation techniques used to estimate each level are defined in Note 1,i). There were no transfers between levels 1 and 2 for the year ended December 31, 2025 and 2024.
The table below shows the effect, at December 31, 2025 and 2024, on the fair value of the main financial instruments classified as Level 3 of a reasonable change in the assumptions used in the valuation. This effect was determined by a sensitivity analysis under a 1bp scenario, detailed in the following table:
| As of December 31, 2025 | |||||||||||||||||||||||
| Instrument Level 3 | Valuation technique | Main unobservable inputs | Impacts (in MCh$) Sens, -1bp Unfavorable scenario | Impacts (in MCh$) Sens, +1bp Favorable scenario | |||||||||||||||||||
| Financial derivatives contracts - CCS | Discounted Cash Flows | Credit spread | ( | ||||||||||||||||||||
| Debt financial instruments at FVOCI | Discounted Cash Flows | Observability | ( | ||||||||||||||||||||
| Other financial instruments at FVOCI - mortgage loans | Discounted Cash Flows | Observability | ( | ||||||||||||||||||||
| Other financial instruments at FVOCI - commercial loans | Discounted Cash Flows | Interest rate curve | ( | ||||||||||||||||||||
F-148
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 36 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES. continued
| As of December 31, 2024 | |||||||||||||||||||||||
| Instrument Level 3 | Valuation technique | Main unobservable inputs | Impacts (in MCh$) Sens, -1bp Unfavorable scenario | Impacts (in MCh$) Sens, +1bp Favorable scenario | |||||||||||||||||||
| Financial derivatives contracts - FX options | FX option pricing model | Volatility | ( | ||||||||||||||||||||
| Financial derivatives contracts - CCS | Discounted Cash Flows | Credit spread | ( | ||||||||||||||||||||
| Debt financial instruments at FVOCI | Discounted Cash Flows | Observability | ( | ||||||||||||||||||||
| Other financial instruments at FVOCI - mortgage loans | Discounted Cash Flows | Observability | ( | ||||||||||||||||||||
| Other financial instruments at FVOCI - commercial loans | Discounted Cash Flows | Interest rate curve | ( | ||||||||||||||||||||
The following table presents the Bank’s activity for assets and liabilities measured at fair value on a recurrent basis using unobserved significant inputs (Level 3) as of December 31, 2025, 2024 and 2023:
| Assets | Liabilities | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| As of January 1, 2025 | ||||||||||||||
| Total realized and unrealized profits (losses) | ||||||||||||||
| Included in statements of income | ||||||||||||||
| Included in other comprehensive income | ( | |||||||||||||
| Purchases, issuances, and loans (net) | ||||||||||||||
| Level transfer | ||||||||||||||
| As of December 31, 2025 | ||||||||||||||
| Total profits or losses included in comprehensive income for 2024 that are attributable to change in unrealized profit (losses) related to assets or liabilities as of December 31, 2025 | ||||||||||||||
| Assets | Liabilities | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| As of January 1, 2024 | ||||||||||||||
| Total realized and unrealized profits (losses) | ||||||||||||||
| Included in statements of income | ( | |||||||||||||
| Included in other comprehensive income | ||||||||||||||
| Purchases, issuances, and loans (net) | ( | |||||||||||||
| Level transfer | ||||||||||||||
| As of December 31, 2024 | ||||||||||||||
| Total profits or losses included in comprehensive income for 2023 that are attributable to change in unrealized profit (losses) related to assets or liabilities as of December 31, 2024 | ( | |||||||||||||
F-149
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 36 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES. continued
| Assets | Liabilities | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| As of January 1, 2023 | ||||||||||||||
| Total realized and unrealized profits (losses) | ||||||||||||||
| Included in statements of income | ( | |||||||||||||
| Included in other comprehensive income | ||||||||||||||
| Purchases, issuances, and loans (net) | ( | |||||||||||||
| Level transfer | ||||||||||||||
| As of December 31, 2023 | ||||||||||||||
| Total profits or losses included in comprehensive income for 2022 that are attributable to change in unrealized profit (losses) related to assets or liabilities as of December 31, 2023 | ( | |||||||||||||
The Local Risk Factor Committee, which meets quarterly, reviews cases where transfers between different levels are necessary. During 2025, the Bank performed reclassifications.
The realized and unrealized profits (losses) are included in comprehensive income for 2025 and 2024, in the assets and liabilities measured at fair value on a recurrent basis through unobservable market data (Level 3) are recorded in the Statements of Comprehensive Income.
The potential effect as of December 31, 2025 and 2024 on the valuation of assets and liabilities valued at fair value on a recurrent basis through unobservable significant inputs (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 tables show the financial instruments subject to compensation in accordance with IAS 32, for 2025 and 2024:
| As of December 31, 2025 | |||||||||||||||||||||||||||||
| On-balance sheet amounts with netting agreements | Remaining financial instruments not linked, nor subject to neeting agreements | Statements of Financial Position balances | |||||||||||||||||||||||||||
| Compensated in balance | Net amount presented in balance | ||||||||||||||||||||||||||||
| Ch$ Million | Ch$ Million | Ch$ Million | Ch$ Million | ||||||||||||||||||||||||||
| Financial instruments Assets | |||||||||||||||||||||||||||||
| Financial derivative contracts and hedge accounting (1) | |||||||||||||||||||||||||||||
| Repurchase and securities lending contracts | |||||||||||||||||||||||||||||
| Loans and accounts receivable and interbank loans (2) | |||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Financial derivative contracts and hedge accounting | |||||||||||||||||||||||||||||
| Repurchase and securities lending contracts | |||||||||||||||||||||||||||||
| Deposits and interbank borrowings | |||||||||||||||||||||||||||||
| Total | |||||||||||||||||||||||||||||
(1)Derivatives contract have guarantees associated for assets Ch$1,985,631 million million and liabilities Ch$1,433,944 million.
(2)Loans and accounts receivable and interbank loans at amortised cost.
F-150
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 36 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES. continued
| As of December 31, 2024 | ||||||||||||||||||||||||||
| On-balance sheet amounts with netting agreements | Remaining financial instruments not linked, nor subject to neeting agreements | Amount in Statements of Financial Position | ||||||||||||||||||||||||
| Compensated in balance | Net amount presented in balance | |||||||||||||||||||||||||
| Ch$ Million | Ch$ Million | Ch$ Million | Ch$ Million | |||||||||||||||||||||||
| Financial instruments Assets | ||||||||||||||||||||||||||
| Financial derivative contracts and hedge accounting (1) | ||||||||||||||||||||||||||
| Repurchase agreements and securities lending | ||||||||||||||||||||||||||
| Loans and accounts receivable and interbank loans (2) | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Financial derivative contracts and hedge accounting | ||||||||||||||||||||||||||
| Repurchase and securities lending contracts | ||||||||||||||||||||||||||
| Deposits and interbank borrowings (3) | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
(1)Derivatives contract have guarantees associated for assets Ch$1,840,673 million and liabilities Ch$1,594,111 million.
(2)Loans and accounts receivable and interbank loans at amortised cost
(3)Include Deposits and other demand liabilities, Time deposits and other time liabilities and interbank borrowings
The Bank, in order to reduce its credit exposure in its financial derivative operations, has entered into collateral contracts with its counterparties, in which it establishes the terms and conditions under which they operate. In terms collateral (received/delivered) operates when the net of the fair value of the financial instruments held exceed the thresholds defined in the respective contracts.
| As of December 31, 2025 | As of December 31, 2024 | |||||||||||||||||||||||||
| Financial derivative contracts | Assets | Liability | Assets | Liability | ||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||
| Financial derivative contracts with collateral agreement | ||||||||||||||||||||||||||
| Financial derivative contracts without collateral agreement | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
F-151
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT
Introduction and general description
Banco Santander Chile, in its position of leadership in the local banking industry, has placed risk management at the center of its activity to ensure that the entire organisation acts responsibly in the new social context, economic changes, customer demands and the business environment, always aligned with the strong corporate culture and the legal regulations in force. The risk management and control model is underpinned by a set of common principles, a risk culture embedded throughout the Bank, a strong governance structure, and advanced risk management processes and tools.
Banco Santander’s risk management and control principles are mandatory, must always be applied, and comprise the regulatory requirements and best market practices. They are:
1.A strong risk culture (Risk Pro) that all employees follow covers all risks and promotes socially responsible management, contributing to the Bank’s long-term sustainability.
2.All employees are responsible for risk management and must know and understand the risks generated by their daily activities, avoiding taking risks whose impact is unknown or exceeds the limits of the Bank’s risk appetite.
3.Involvement of senior management, by ensuring the consistent risk management and control through their conduct, actions and communications. In addition, promoting a risk culture, evaluating implementation degree and monitoring that the profile remains within the levels defined in the Bank’s risk appetite.
4.Independence of risk management and control functions.
5.Proactive and comprehensive risk management and control approach across all businesses and risk types.
6.Adequate and comprehensive information management enables risks to be identified, assessed, managed and communicated appropriately to the correct levels.
These Santander principles, together with several interrelated tools and processes that are part of its strategic planning, such as the risk appetite statement, risk profile assessment, scenario analysis and risk reporting structure, as well as the annual budget processes, form a holistic control structure for the entire Bank.
Governance structure
Banco Santander’s corporate governance is structured in three levels, each of which is accompanied by support committees:
-Board of Directors, which represents the highest governing body.
-Senior Management, headed by the Chief Executive Officer.
-Shareholders’ Meeting
The Board of Directors comprises 11 directors, with nine acting in the capacity of full directors and two alternate directors and six of them are independent directors. The mail role is to participate in the organisation’s strategic planning and to ensure that the commitments proposed in the short, medium and long term are fulfilled in a timely manner.
Risk committee structure
Banco Santander-Chile has five committees supporting the Board, appointed and modified by them as deemed necessary. The various committees respond and report their activity to the Board systematically, through meetings and based on subrogation schemes, bylaws, formal minutes and follow-up instances. The Bank’s Board support committees are responsible for decision-making on priority issues, including economic, environmental and social issues.
A.Directors and Audit Committee
The main responsibility is to support the Board of Directors in the continuous improvement of internal control, review of the external auditors’ work, the Internal Audit Department and the supervision of the financial statements elaboration, in order to provide adequate information for shareholders, investors and general public. The Committee also monitored Chilean regulatory standards updated and propose external auditors to the Board of Directors, which are subsequently approved at the shareholders meeting.
F-152
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
B.Integral Risk Committee
The Integral Risk Committee is responsible for advising the Board of Directors in defining the risk appetite, risk framework as well as supervising the correct identification, measurement and control of all risks the Bank faces. Also, supervises the risk measurement and control systems.
C.ALCO and Market Committee
The main functions of the ALCO (Asset and liabilities committee) are to monitor and control the structural risks of the balance, such as limits of exposure to inflation, interest rate risk, capital and liquidity funding levels. Also, review the behavior of relevant local and international markets and local monetary policies.
D.Designation Committee
This committee constantly reviews and applies the policies and designation processes of those positions defined as “key positions” in particular, as well as the review of these with respect to the other members of the organization in general.
E.Remuneration Committee
This committee constantly reviews the regulatory documentation concerning the evaluation and remuneration of positions defined as ‘key positions’ and other persons in the organisation in general.
The Risk and Internal Audit functions have the appropriate separation and independence level and direct access to the Board and its committees. The Board delegates the identification, measurement and control of the various risks faced by the Bank to the Risk Division, which is led by the Chief Risk Officer (CRO), and reports directly to the CEO. The Chief Risk Officer (CRO) is responsible for monitoring all risks and reviewing and advising the business lines on managing these risks. This division is responsible for credit, market, non-financial, compliance, and reputational risks. The Director of Internal Audit reports directly to the Chairman of the Board of Directors to ensure independence from Senior Management and thus be an effective third line of defence in risk management and internal control.
Risk management
Banco Santander Chile has a solid risk culture known as Risk Pro, which defines how risks are understood and managed daily based on the principle that all employees are responsible for risk management. Therefore, their classification is fundamental for effective management and control. All identified risks are to be linked to their according risk category to organise their management, control and related information. Banco Santander Chile’s risk classification enables effective risk management, control and communication. Its corporate risk framework includes the following:
•Market risk: rises from holding financial instruments whose value may be affected by fluctuations in market conditions, generally including the following types of risk:
-Foreign exchange risk: this arises as a consequence of exchange rate fluctuations among currencies.
-Interest rate risk: this arises as a consequence of fluctuations in market interest rates.
-Price risk: this arises as a consequence of changes in market prices, either due to factors specific to the instrument itself or due to factors that affect all the instruments negotiated in the market.
-Inflation risk: this arises as a consequence of changes in Chile’s inflation rate, whose effect would be mainly applicable to financial instruments denominated in UFs.
•Credit risk: this is the risk that one of the parties to a financial instrument fails to meet its contractual obligations for reasons of insolvency or inability of the individuals or legal entities in question to continue as a going concern, causing a financial loss to the other party.
•Liquidity risk: is the possibility that an entity may be unable to meet its payment commitments, or that in order to meet them, it may have to raise funds with onerous terms or risk damage to its image and reputation.
•Operational risk: the risk of loss due to inadequate or failed internal processes, people or systems or external events, and have legal, regulatory and reputational effect.
•Capital risk: this is the risk that the Bank may have an insufficient amount and/or quality of capital to meet the minimum regulatory requirement to operate as a bank, respond to market expectations regarding its creditworthiness, and support its business growth and any strategic possibilities that might arise, in accordance with its strategic plan.
F-153
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
Risk governance
The Bank has a robust risk governance structure that pursues effective control of the risk profile, following the appetite defined by the Board and based on the distribution of roles among the three lines of defence and a strong committee structure, which is reinforced by the Risk Pro culture that applies throughout the organisation.
First line
Business and all other functions that create risk are the first line of defence. These functions must ensure that the risks they generate are aligned with the approved risk appetite and the corresponding limits. Any unit that originates risk has primary responsibility for managing that risk.
Second line
The Risk and Compliance and Conduct functions. Their role is to independently monitor and challenge the risk management activities carried out by the first line of defence. These functions ensure risk management in accordance with the appetite defined by the Board of Directors and promote a solid risk culture throughout the organization
Third line
The Internal Audit function periodically evaluates that policies, methodologies and procedures are adequate and are effectively implemented in the management and control of all risks.
Risk governance assessment
Risk governance also has several internal and external assessment processes to verify that the governance and approach are adequate. The FMC shall permanently maintain banks’ management and solvency rating.
Banco Santander Chile is classified under Category 1 as it was graded as Level A in both solvency and management.
MARKET RISK
Market risk arises as a consequence of the market activity, through financial instruments whose value can be affected by changes in market conditions and reflected in financial assets/liabilities and financial risk factors. The risk can be diminished by means of hedging through other products (assets/liabilities or derivative instruments) or terminating the open transaction/position. The objective of market risk management is to manage and control market risk exposure within acceptable parameters.
There are four major risk factors that affect the market prices: type of interest, type of exchange, price, and inflation. In addition and for certain positions, it is necessary to consider other risks as well, such as spread risk, base risk, commodity risk, volatility or correlation risk.
Market risk management
The Market Risk Department is responsible for measurement and control of market risks that are overseen by the Risk Division. Market Committee and the Assets and Liabilities Committee are responsible for the approval of limits. The main market risks are also reviewed in the CIR.
The Finance Division, through the Financial Management Department, is responsible for managing the Bank’s balance sheet, supervised and controlled by the Assets and Liabilities Committee and the Risk Division. Among its functions is the elaboration of detailed policies and their application, as well as the following:
i.Optimization of the liabilities’ cost, searching the most efficient financing strategies, including bonds’ issuance and bank credit lines.
ii.Management of short and long-term liquidity regulatory limits.
iii.Inflation risk management.
iv.Rate risk management in local and foreign currency.
F-154
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
The Bank’s internal management to measure market risk is mainly based on analyzing the three following portfolios:
•trading portfolio
•local financial management portfolio
•foreign financial management portfolio
The Treasury Department is responsible for managing the Bank’s trading portfolios and keeping them within the loss limits, calculated and estimated by the Market Risk Management. The trading portfolio (measured at fair value through profit and loss) is comprised of investments valued at fair market value and free of any restriction on their immediate sale, which are often bought and sold by the Bank with the intention of selling them in the short term to benefit from short–term price fluctuations. The trading portfolio also includes the Bank’s exposure to foreign currency. The financial management portfolios include all the financial investments not considered to be part of trading portfolio.
The main functions in connection with trading portfolio include the following:
i.applies the “Value at Risk” (VaR) techniques to measure interest rate risk,
ii.adjust the trading portfolios to market and measure the daily income and loss from commercial activities,
iii.compare the real VaR with the established limits,
iv.establish procedures to prevent losses in excess of predetermined limits, and
v.furnishes information on the trading activities to the ALCO, other members of the Bank’s management, and the Global Risk Department of Banco Santander Spain.
The main functions in connection with financial management portfolios include the following:
i.performs sensitivity simulations (as explained below) to measure interest rate risk for activities denominated in local currency and the potential losses forecasted by these simulations.
ii.provide daily reports thereon to the ALCO, other members of the Bank’s management, and the Global Risk Department of Banco Santander Spain.
Market risk – management of trading portfolio
The Bank applies VaR methodologies to measure the market risk of its trading portfolio. The Bank has a consolidated commercial position comprised of fixed–income investments and foreign currency trading. This portfolio is comprised mostly of Central Bank of Chile bonds, mortgage bonds, locally issued, low–risk corporate bonds and foreign currencies, mainly U.S. dollars. At the end of each year, the trading portfolio included no stock portfolio investments.
For the Bank, the VaR estimate is made under the historical simulation methodology, which consists of observing the behavior of the profits and losses that would have occurred in the current portfolio if the market conditions for a given historical period had been in force, in order to infer the maximum loss on the basis of that information, with a given degree of confidence. The methodology has the advantage of precisely reflecting the historical distribution of the market variables and not requiring any assumptions regarding the distribution of specific probabilities. All the VaR measures are intended to determine the distribution function for a change in the value of a given portfolio, and once that distribution is known, to calculate the percentile related to the necessary degree of confidence, which will be equal to the value at risk by virtue of those parameters. As calculated by the Bank, the VaR is an estimate of the maximum expected loss of market value for a given portfolio over a 1–day horizon, with a 99.00 % confidence level. It is the maximum 1–day loss that the Bank could expect to experience in a given portfolio, with a 99.00 % confidence level. In other words, it is the loss that the Bank would expect to experience only 1.0% of the time. The VaR provides a single estimate of market risk which is not comparable from one market risk to another. Returns are calculated through the use of a 2 –year time window or at least 520 data points obtained since the last reference date for calculation of the VaR going backward in time.
We do not calculate three separate VaRs. We calculate a single VaR for the entire trading portfolio, which in addition is segregated by risk type. The VaR software performs a historical simulation and calculates a Profit and Loss Statement (P&L) for 520 data points (days) for each risk factor (fixed income, foreign currency and variable income.) The P&L of each risk factor is added together and a consolidated VaR is calculated with 520 points or days of data. At the same time a VaR is calculated for each risk factor based on the individual P&L calculated for each individual risk factor. Furthermore, a weighted VaR is calculated in the manner described above, but which gives a greater weighting to the 30 most recent data points. The larger of the two VaRs is the one that is reported. In 2025, 2024 and 2023, we used the same VaR model and there has been no change in methodology or assumptions for subsequent periods.
F-155
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
The Bank uses the VaR estimates to provide a warning when the statistically estimated incurred losses in its trading portfolio would exceed prudent levels, and hence, there are certain predetermined limits.
Limitations of the VaR model
When applying a calculation methodology, no assumptions are made regarding the probability distribution of the changes in the risk factors; the historically observed changes are used for the risk factors on which each position in the portfolio will be valued.
It is necessary to define a valuation function fj(xi) for each instrument, preferably the same one used to calculate the market value and income of the daily position, This valuation function will be applied in each scenario to generate simulated prices for all the instruments in each scenario.
In addition, the VaR methodology should be interpreted taking into consideration the following limitations:
•Changes in market rates and prices may not be independent and identically distributed random variables and may not have a normal distribution. In particular, the assumption of normal distribution may underestimate the probability of extreme market movements;
•The historical data used by the Bank may not provide the best estimate of the joint distribution of changes in the risk factors in the future, and any modification of the data may be inadequate. In particular, the use of historical data may fail to capture the risk of potential extreme and adverse market fluctuations, regardless of the time period used;
•A 1-day time horizon may not fully capture the market risk positions which cannot be liquidated or covered in a single day, It would not be possible to liquidate or cover all the positions in a single day;
•The VaR is calculated at the close of business, but trading positions may change substantially in the course of the trading day;
•The use of a 99 % level of confidence does not take account of, or make any statement about, the losses that could occur outside of that degree of confidence; and
•A model such as the VaR does not capture all the complex effects of the risk factors over the value of the positions or portfolios, and accordingly, it could underestimate potential losses,
We perform back-testing daily and generally find that trading losses exceed our VaR estimate approximately one out of every 100 trading days. At the same time, we set a limit to the maximum VaR that we are willing to accept over our trading portfolio. In both 2025 and 2024, the Bank has remained within the maximum limit established for the VaR, even in those circumstances in which actual VaR exceed the estimated VaR.
High, low and average levels for each component for 2025 and 2024 were as follows:
| VaR | 2025 USD millions | 2024 USD millions | ||||||||||||
| Consolidated | ||||||||||||||
| High | ||||||||||||||
| Low | ||||||||||||||
| Average | ||||||||||||||
| Fixed-income investments | ||||||||||||||
| High | ||||||||||||||
| Low | ||||||||||||||
| Average | ||||||||||||||
| Variable-income investments | ||||||||||||||
| High | ||||||||||||||
| Low | ||||||||||||||
| Average | ||||||||||||||
| Foreign currency investments | ||||||||||||||
| High | ||||||||||||||
| Low | ||||||||||||||
| Average | ||||||||||||||
F-156
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
Market risk - local and foreign financial management
The Bank’s financial management portfolio includes most of the Bank’s non-trading assets and liabilities, including the credit/loan portfolio. For these portfolios, investment and financing decisions are strongly influenced by the Bank’s commercial strategies.
The Bank uses a sensitivity analysis to measure the market risk of local and foreign currencies (not included in the trading portfolio). The Bank performs a simulation of scenarios, which will be calculated as the difference between the present value of the flows in the chosen scenario (a curve with a parallel movement of 100 bps in all its segments) and their value in the base scenario (current market). All the inflation–indexed local currency (UF) positions are adjusted by a sensitivity factor of 0.57, which represents a 57 -basis, point change in the rate curve for the real rates and a 100 -basis point change for the nominal rates. The same scenario is performed for the net foreign currency positions and the interest rates in U.S. dollars. The Bank has also established limits in regard to the maximum loss which these interest rate movements could impose on the capital and net financial income budgeted for the year.
For the consolidated limit, we add the foreign currency limit to the domestic currency limit and multiple by 2 the sum of the multiplication of them together both for net financial loss limit as well as for the capital and reserves loss limit, using the following formula:
Consolidated limit = square root of a2 + b2 + 2ab
a: domestic currency limit
b: foreign currency limit
Since we assume the correlation is 0; 2ab = 0, 2ab = 0
Limitations of the sensitivity models
The most important assumption is using an exchange rate of 100 bp based on yield curve (57 bp for real rates). The Bank uses a 100 bp exchange since sudden changes of this magnitude are considered realistic. Santander Spain Global Risk Department has also established comparable limits by country, to be able to compare, monitor and consolidate market risk by country in a realistic and orderly way. In addition, the sensitivity simulation methodology should be interpreted taking into consideration the following limitations:
•The simulation of scenarios assumes that the volumes remain consistent in the Bank’s Consolidated Statements of Financial Position and are always renewed at maturity, thereby omitting the fact that certain credit risk and prepayment considerations may affect the maturity of certain positions.
•This model assumes an identical change along the entire length of the yield curve and does not take into account the different movements for different maturities.
•The model does not take into account the sensitivity of volumes which results from interest rate changes.
•The limits to losses of budgeted financial income are calculated based on the financial income foreseen for the year, which may not be actually earned, meaning that the real percentage of financial income at risk may be higher than the expected one.
Market risk – Financial management portfolio – December 31, 2025 and 2024
F-157
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
| 2025 | 2024 | |||||||||||||||||||||||||
| Effect on financial income | Effect on capital | Effect on financial income | Effect on capital | |||||||||||||||||||||||
| Financial management portfolio – local currency (MCh$) | ||||||||||||||||||||||||||
| Loss limit | ||||||||||||||||||||||||||
| High | ||||||||||||||||||||||||||
| Low | ||||||||||||||||||||||||||
| Average | ||||||||||||||||||||||||||
| Financial management portfolio – foreign currency (USD millions) | ||||||||||||||||||||||||||
| Loss limit | ||||||||||||||||||||||||||
| High | ||||||||||||||||||||||||||
| Low | ||||||||||||||||||||||||||
| Average | ||||||||||||||||||||||||||
| Financial management portfolio – consolidated (in MCh$) | ||||||||||||||||||||||||||
| Loss limit | ||||||||||||||||||||||||||
| High | ||||||||||||||||||||||||||
| Low | ||||||||||||||||||||||||||
| Average | ||||||||||||||||||||||||||
Inflation risk
The Bank has readjustable assets and liabilities according to the variation of the Unidad de Fomento (UF). In general, the Bank has more assets than liabilities in UF and, therefore, moderate increases in inflation have a positive effect on income from readjustments, while a fall in the value of the UF negatively affects the Bank’s margin. The Assets and Liabilities Committee establishes a set of limits on the difference between UF-denominated assets and liabilities that cannot exceed 30 % of the Bank’s interest-bearing assets. This mismatch is managed on a daily basis by Financial Management and the limits are calculated and monitored by the Market Risk Division.
Market Risk Position and measurement
Market Risk Exposure is measured and controlled through the difference between the balances of assets and liabilities in foreign currency (net position) and the cash flows payable (liabilities) and cash receivable (asset) in the Trading and Banking Books, for a specific term or time band.
Foreign currency positions and term mismatches are exposed to adjustment factors, sensitivity and rate changes.
The Exposure to Market Risks on a Standardized Base Policy was presented and approved by the Bank’s Board of Directors.
Market Risk Exposure is determined based on the following risks:
•Interest rate risk
•Currency Risk
•Indexation Risk
•Currency Options Risk
The following table illustrates the exposure to market risk. The maximum exposure to long-term interest rate risk is 35 % of the regulatory capital and is approved by the Board of Directors. The maximum exposure to short-term interest rate risk is 55 % of net interest income and readjustments plus interest rate sensitive commissions:
F-158
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
| As of december 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Market risk – trading protfolio | ||||||||||||||
| Exposure to rate risk | ||||||||||||||
| Exposure to currency risk | ||||||||||||||
| Interest rate option risk | ||||||||||||||
| Currency option risk | ||||||||||||||
| Total exposure of trading portfolio | ||||||||||||||
| Subtotal | ||||||||||||||
| Limit = Regulatory capital | ||||||||||||||
| Available margin | ||||||||||||||
| Market risk – short-term financial management portfolio | ||||||||||||||
| Short Term Exposure to Interest Rate Risk | ||||||||||||||
| Exposure to Inflation Risk | ||||||||||||||
| Short-term exposure of financial management portfolio | ||||||||||||||
Limit = | ||||||||||||||
| Available margin | ||||||||||||||
| Market risk – long-term financial management portfolio | ||||||||||||||
| Long Term Exposure to Interest Rate Risk | ||||||||||||||
Limit = | ||||||||||||||
| Available margin | ||||||||||||||
CREDIT RISK
Credit risk is the risk that one of the parties to a financial instrument fails to meet its contractual obligations for reasons of insolvency or inability of the individuals or legal entities in question to continue as a going concern, causing a financial loss to the other party. The Bank consolidates all elements and components of credit risk exposure to manage credit risk (i.e., individual delinquency risk, inherent risk of a business line or segment, and/or geographical risk).
Credit Risk Management
The Bank has established a combined credit approval committees, which includes member from Board of Directors, Risk Division and commercial areas, who overally verify quantitative and qualitative parameters of each client.
The Board of Directors has delegated the responsibility for credit risk management to the Integral Risk Committee, as well as to the Bank’s risk departments, whose roles are summarised below:
•Formulate credit policies by consulting with the business units, meeting requirements of guarantees, credit evaluation, risk rating and submitting reports, documentation and legal procedures in compliance with the regulatory, legal and internal requirements of the Bank.
•Establish the structure to approve and renew credit requests. The Bank structures credit risks by assigning limits to the concentration of credit risk in terms of individual debtor, debtor group, industry segment and country.
•Limit concentrations of exposure to customers or counterparties in geographic areas or industries (for accounts receivable or loans), and by issuer, credit rating and liquidity.
•Approval levels are assigned to the corresponding officials of the business unit (commercial, consumer, SMEs) to be exercised by that level of management. In addition, those limits are continually revised. Risk evaluation team at the branch level interact on a regular basis with customers; however, for larger credit requests, the risk team from the head office and the Executive Risk Committee works directly with customers to assess credit risks and prepare risk requests.
F-159
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
•Develop and maintain the Bank’s credit risk classifications for the purpose of classifying risks according to the degree of exposure to financial loss that is exhibited by the respective financial instruments, with the aim of focusing risk management specifically on the associated risks.
•Revise and evaluate credit risk. Management’s risk divisions are largely independent of the Bank’s commercial division and evaluate all credit risks in excess of the specified limits prior to loan approvals for customers or prior to the acquisition of specific investments. Credit renewal and reviews are subject to similar processes.
Credit Approval: Loans approved on an individual basis
In preparing a credit proposal for a corporate client whose loans are approved on an individual basis, Santander-Chile’s personnel verify such parameters as debt servicing capacity (typically including projected cash flows), the company’s financial history and projections for the economic sector in which it operates. The Risk Division is closely involved in this process and prepares the credit application for the client. All proposals contain an analysis of the client, a rating and a recommendation. Credit limits are determined not on the basis of outstanding balances of individual clients, but on the direct and indirect credit risk of entire financial groups. For example, a corporation will be evaluated together with its subsidiaries and affiliates.
Credit Approval: Loans approved on a group basis
The majority of loans to individuals and small and mid-sized companies are approved by the Standardized Risk Area through an automated credit scoring system. This system is decentralized, automated and based on multiple parameters, including demographic and information regarding credit behavior from external sources and the FMC.
Credit approval: Investment on debt instruments
The Bank considers the probability of default of issuers or counterparties using internal and external information such as independent risk evaluators of the Bank. In addition, the Bank applied a strong governance and conservative policy which ensures that the issuers of investments and counterparties in derivative instrument transactions are of the highest quality.
Credit approval: Contingent loans
The Bank operates with contingent loans that entail exposure to credit risk such as: personal guarantees, letters of credit, performance guarantees, credit lines and credit commitments. Personal guarantees represent an irrevocable payment obligation. When a guaranteed client does not fulfill its obligations to third parties, the Bank will pay, then these operations represent the same exposure to credit risk as a common loan.
Letters of credit are commitments documented by the Bank on behalf of the client that are guaranteed by the shipped goods to which they relate and, therefore, have less risk than direct indebtedness. The Bank guarantee corresponds to contingent commitments that become effective only if the client does not comply with the performance of engaged works.
Loans commitments to grant loans, the Bank is exposed to losses that arise from unused balances. The Bank monitors the maturity of credit lines because generally long-term commitments have a higher credit risk than short-term commitments.
Impairment assessment
a.Definition of default and cure
The Bank considers a financial instrument defaulted and therefore Stage 3 for ECL calculations when the past-due amounts of an exposure exceed materiality thresholds for 90 or more consecutive days.
As a part of a qualitative assessment of whether a customer is in default, the Bank also considers a variety of instances that may indicate unlikeliness to pay. Such events include:
•Restructured operations over 90 days.
•Pulling effect (defined as the entire outstanding amount on any loan which has an instalment 90 days or more past due)
•Operations with claimed’s amounts or its reimbursement has been judicially required by the entity
•The debtor (or any legal entity within the debtor’s group) filing for bankruptcy application/protection
•A material decreases in the underlying collateral value where the recovery of the loan is expected from the sale of the collateral
•Internal rating of the borrower indicating default or near default
•The borrower requesting emergency funding from the Bank
•The borrower having past due liabilities to public creditors or employees
F-160
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
•A material decreases in the borrower’s turnover or the loss of a major customer
•A covenant breach not waived by the Bank
•Debtor’s listed debt or equity has been suspended at the primary exchange because of rumors or facts about financial difficulties
Operations that not meet the conditions of Default must stay in probation period for 92 days, after that will be cured.
b.Internal rating and PD estimation
The Bank’s Credit Risk Department operates its internal rating models. The models incorporate both qualitative and quantitative information and, in addition to information specific to the borrower utilize supplemental external information that could affect the borrower’s behavior. The internal credit grades are assigned based on the internal scoring policy, PDs are then adjusted for IFRS 9 ECL calculations to incorporate forward looking information and the IFRS 9 Stage classification of the exposure.
F-161
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
The following table shows quality assets and its related provision, based on our internal scoring policy as of December 31, 2025 and 2024:
| December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate Portfolio | Stage 1 | Stage 2 | Stage 3 | Total Corporate | Percentage | Stage 1 | Stage 2 | Stage 3 | Total ECL Allowance (*) | Percentage | |||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | % | MCh$ | MCh$ | MCh$ | MCh$ | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| A1 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| A2 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| A3 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| A4 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| A5 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| A6 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| B1 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| B2 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| B3 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| B4 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C1 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C2 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C3 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C4 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C5 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C6 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | Total Other loans | Percentage | Stage 1 | Stage 2 | Stage 3 | Total ECL Allowance | Percentage | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | % | MCh$ | MCh$ | MCh$ | MCh$ | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Commercial | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(*)Include MCh$151,682 of ECL allowance calculated on an Individual basis.
F-162
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
| December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate Portfolio | Stage 1 | Stage 2 | Stage 3 | Total Corporate | Percentage | Stage 1 | Stage 2 | Stage 3 | Total ECL Allowance (*) | Percentage | |||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | % | MCh$ | MCh$ | MCh$ | MCh$ | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| A1 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| A2 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| A3 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| A4 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| A5 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| A6 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| B1 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| B2 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| B3 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| B4 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C1 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C2 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C3 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C4 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C5 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| C6 | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | Total other loans | Percentage | Stage 1 | Stage 2 | Stage 3 | Total ECL Allowance | Percentage | ||||||||||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | % | MCh$ | MCh$ | MCh$ | MCh$ | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Commercial | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | % | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(*)Include MCh$165,935 of ECL allowance calculated on an Individual basis.
F-163
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
In relation to the credit quality of the investment portfolio, local regulations establish that banks are able to hold only local and foreign fixed–income securities except in certain cases. Additionally, Banco Santander-Chile has internal policies to ensure that only securities approved by the Market Risk department, which are stated in the documents “APS” – Products and underlying Approval, are acquired. The Credit Risk Department sets the exposure limits to those approved APS’s. The APS is updated on daily basis. As of December 31, 2025, 99 % our total investment portfolio corresponds to securities issued by the Chilean Central Bank, Chilean Treasury and US Treasury notes.
c.Exposure at default
The exposure at default (EAD) represents the gross carrying amount of the financial instruments subject to the impairment calculation, addressing both the client’s ability to increase its exposure while approaching default and potential early repayments too.
To calculate the EAD for a Stage 1 loan, the Bank assesses the possible default events within 12 months for the calculation of the 12mECL. However, if a Stage 1 loan that is expected to default in the 12 months from the balance sheet date and is also expected to cure and subsequently default again, then all linked default events are taken into account. For Stage 2, Stage 3 the exposure at default is considered for events over the lifetime of the instruments.
d.Loss given default
The credit risk assessment is based on a standardized LGD assessment framework that results in a certain LGD rate. These LGD rates take into account the expected EAD in comparison to the amount expected to be recovered or realized from any collateral held.
The Bank segments its retail lending products into smaller homogeneous portfolios, based on key characteristics that are relevant to the estimation of future cash flows. The applied data is based on historically collected loss data and involves a wider set of transaction characteristics (i.e., product type, wider range of collateral types) as well as borrower characteristics.
Further recent data and forward-looking economic scenarios are used in order to determine the IFRS 9 LGD rate for each group of financial instruments. Under IFRS 9, LGD rates are estimated for the Stage 1, Stage 2, Stage 3 IFRS 9 segment's of each asset class. The inputs for these LGD rates are estimated and, where possible, calibrated through back testing against recent recoveries. These are repeated for each economic scenario as appropriate.
e.Significant increase in credit risk (SICR)
The Bank continuously monitors all assets subject to ECLs. In order to determine whether an instrument or a portfolio of instruments is subject to 12-month ECL or Lifetime ECL, the Bank assesses whether there has been a significant increase in credit risk since initial recognition.
The Bank also applies a secondary qualitative method for triggering a significant increase in credit risk for an asset, such as moving a customer/facility to the watch list (Special vigilance). The Bank may also consider that events explained in letter a) above are a significant increase in credit risk as opposed to a default. Regardless of the change in credit grades, if contractual payments are more than 30 days past due, the credit risk is deemed to have increased significantly since initial recognition.
When estimating ECLs on groups of similar assets, the Bank applies the same principles for assessing whether there has been a significant increase in credit risk since initial recognition.
Quantitative criteria for SICR Stage 2:
The quantitative criteria are used to identify where an exposure has increased in credit risk and it is applied based on whether an increase in the lifetime PD since the recognition date exceeds the threshold set in absolute terms. The following formula is used to determine such threshold:
Threshold = Lifetime PD (at reporting date) – Lifetime PD (at origination)
F-164
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
Since November 2024 until this date, the Bank has applied the following Significant Increase in Credit Risk (SICR) thresholds. This resulted in an decrease in the ECL allowance amounting to MCh$353 in December 2024. Below:
| Other commercial | Corporate loans | |||||||||||||||||||||||||||||||||||||
| Mortgages | Other loans | Revolving (Credit cards) | SME | SME | Middle market | Corporate and Investment Banking | ||||||||||||||||||||||||||||||||
| % | % | % | % | % | % | Santander Group criteria | ||||||||||||||||||||||||||||||||
Since December 2023 to November 2024, the Bank applied the following threshold of significant increase in credit risk (SICR), In December 2023 the Bank accounted an impact of MCh$ 863 a decrease of ECL allowance
| Other commercial | Corporate loans | |||||||||||||||||||||||||||||||||||||
| Mortgages | Other loans | Revolving (Credit cards) | SME | SME | Middle market | Corporate and Investment Banking | ||||||||||||||||||||||||||||||||
| % | % | % | % | % | % | |||||||||||||||||||||||||||||||||
There is also a relative threshold of 100 % of all portfolios with the exception of the Corporate and Investment Banking Portfolio.
Qualitative criteria for SICR Stage 2:
The qualitative criteria are based on the existence of evidence that leads to an automatic classification of financial instruments in stage 2, mainly 30 days overdue and restructured. Thresholds of SICR are calibrated based on the average ECL of exposures that exceed materiality threshold for 30 days or more consecutive days or with a level of credit risk considered to be “significant”.
| Other commercial | Corporate loans | |||||||||||||||||||||||||||||||||||||
| Mortgages | Other loans | Revolving (Credit cards) | SME | SME | Middle market | Corporate and Investment Banking | ||||||||||||||||||||||||||||||||
| Irregular portfolio > 30 days | Irregular portfolio > 30 days | Irregular portfolio > 30 days | Irregular portfolio > 30 days | Irregular portfolio > 30 days | Irregular portfolio > 30 days | Irregular portfolio > 30 days | ||||||||||||||||||||||||||||||||
| Restructured marked for monitoring | Restructured marked for monitoring | Restructured marked for monitoring | Restructured marked for monitoring | Restructured marked for monitoring | Restructured marked for monitoring | Restructured marked for monitoring | ||||||||||||||||||||||||||||||||
| Clients considered to be substandard or in incompliance (pre-legal action) | Clients considered to be substandard or in incompliance (pre-legal action) | Clients considered to be substandard or in incompliance (pre-legal action) | ||||||||||||||||||||||||||||||||||||
These thresholds are defined by the Model Committee and the Integral Risk Committee and are evaluated annually with updates made depending on impacts and definitions of the risk models associated to each portfolio.
f.Expected credit losses measurement
Expected credit losses are a probability-weighted estimate of credit losses over the expected life of the financial instrument. A cash shortfall is the difference between the cash flows that are due to an entity in accordance with the contract and the cash flows that the entity expects to receive. Because expected credit losses consider the amount and timing of payments, a credit loss arises even if the entity expects to be paid in full but later than when contractually due.
ECL allowance calculated on an individual basis
For financial assets, a credit loss is the present value of the difference between: the contractual cash flows that are due under the contract; and the cash flows that the Bank expects to receive. For undrawn loan commitments, a credit loss is the present value of the difference between: the contractual cash flows that are due if the holder of the loan commitment draws down the loan; and the cash flows that the Bank expects to receive if the loan is drawn down.
F-165
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
For financial assets that are credit-impaired at the reporting date, and in accordance with our internal procedures, the Bank calculates allowance for expected credit losses under the “Discounted Cash Flow Methodology” when the financial asset is classified in stage 3, with a PD equal to 100% and is individually significant. In this instance, the Bank measures the expected credit losses as the difference between the asset’s gross carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. Any adjustment is recognised in profit or loss as an impairment gain or loss.
The allowances determined under a “Discounted Cash Flow Methodology” must take into account the financial information of the debtor, including available business strategies, as well as collateral associated with that debtor. The recovery analysis includes the following scenarios:
-Recovery of a possible sale of collateral.
-Recovery on the basis of common commercial activities (commercial plan).
The following table shows the allowance and assets before allowance of the loans that meet the conditions:
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Loans and account receivable | ||||||||||||||
| Allowance for ECL – discounted cash flow methodology | ||||||||||||||
As of December 31, 2024, the expected credit losses related to corporate commercial loans includes MCh$151,682 measured from cash flow discounted methodology (MCh$165,935 in 2023).
ECL allowance calculated on a collective basis
Commercial loans (except for those described within the “ECL allowance calculated on an Individual basis” description aforementioned), mortgage loans and consumer loans are grouped and assessed on a collective basis by using a credit loss allowance model. The estimation of the collective basis expected credit loss allowance considers qualitative and quantitative information that may affect changes in credit risk and the development of significant assumptions related to the probabilities of default and loss given default, related to forward looking information, multi-factor analysis such as type of portfolio or transaction and macroeconomic factors.
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Loans and account receivable (commercial, mortgage and consumer loans) | ||||||||||||||
| Allowance for ECL – collective basis | ||||||||||||||
As of December 31, 2025, the Bank maintains overlays for an amount of MCh$119,776 . These overlays are intended to cover certain defaulted exposures within the mortgage and other commercial loan portfolios, as well as to cover the future expected impact of the recalibration of Macro economical forward-looking information postponed to the first quarter of 2026, which explains the increase in the closing balance for 2025 related to closing 2024 balance.
g.Corporate and other commercial loans
In order to meet the objective of recognising lifetime expected credit losses for significant increases in credit risk since initial recognition, it is necessary to group or sub-group financial instruments, even if evidence of such significant increases in credit risk at the individual instrument level is not yet available.
Considering to the aforementioned, the Bank evaluates on corporate basis, commercial loans for which prepares individual credit proposals, where it verifies debt servicing capacity (projected cash flow), client’s financial history, evidence of impairment and projections for economic sector. All proposals include an analysis of the client, a rating and a recommendation. For corporations, the evaluation includes subsidiaries and affiliates. Other commercial loans are grouped into other homogeneous portfolios (smaller commercial, mortgages and consumer loans), based on a combination of instrument type, credit risk ratings, collateral type, date of initial recognition, remaining term to maturity, industry and others.
During 2025, and as part of the normal review process, the Bank has made minor adjustments to the internal rating models, in order to improve its ability to adequately detect the risk profile of the clients individually evaluated.
F-166
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
h.Modified loans
When a loan measured at amortised cost has been renegotiated or modified but not derecognised, the Bank assesses whether the transaction should be treated as a modified asset or derecognition. If the transaction does not result in derecognition the Bank must recognise the resulting gains or losses as the difference between the carrying amount of the original loans and modified contractual cash flows discounted using the EIR before modification.
If the modification results in derecognition, then the modified asset is a new asset. The following table shows modification that results in deregonition and therefore and new operations:
| As of December 31, 2025 | As of December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Gross carrying amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Modified loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| % | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||
| ECL allowance | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Modified loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| % | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||
i.Macro economical forward-looking information and scenarios
In November 2025 the Bank decided to defer the update of the macroeconomic scenarios to first quarter of 2026.
The annual growth forecasts for the most relevant macroeconomic variables for each of our scenarios mainly used during 2025 are the same used in 2023, and are as follows:
| Average estimates 2025 | |||||||||||||||||||||||||||||||||||
| Unfavorable scenario 2 | Unfavorable scenario 1 | Base scenario | Favorable scenario 1 | Favorable scenario 2 | |||||||||||||||||||||||||||||||
| Chilean Central Bank interest rates | % | % | % | % | % | ||||||||||||||||||||||||||||||
| Unemployment rate | % | % | % | % | % | ||||||||||||||||||||||||||||||
| Housing Price growth | ( | % | % | % | % | ||||||||||||||||||||||||||||||
| GDP growth | ( | % | % | % | % | % | |||||||||||||||||||||||||||||
| Consumer Price Index | % | % | % | % | % | ||||||||||||||||||||||||||||||
The highest probability of occurrence is associated to the base scenario, while the extreme scenarios have a lower probability than the more moderate scenarios.
The methodology used for the generation of the local scenarios is based on the corporate methodology and is applied to the loan portfolio with the exception of loans from the Corporate and Investment Banking segment which uses global scenarios as defined by the Santander Group.The probabilities for the scenarios must total 100 % and be symmetrical.
F-167
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
| Local scenario | Global scenario | |||||||||||||||||||
| Probability weighting | Probability weighting | |||||||||||||||||||
| Favorable scenario 2 | % | Favorable scenario 1 | % | |||||||||||||||||
| Favorable scenario 1 | % | Base scenario | % | |||||||||||||||||
| Base scenario | % | Unfavorable scenario 1 | % | |||||||||||||||||
| Unfavorable scenario 1 | % | |||||||||||||||||||
| Unfavorable scenario 2 | % | |||||||||||||||||||
The ECL allowance sensibility to future macro-economic conditions is as follows:
| As of December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| MCh$ | MCh$ | ||||||||||
| Reported ECL allowance | |||||||||||
| Gross carrying amount | |||||||||||
| Reported ECL Coverage | % | % | |||||||||
| ECL amount by scenarios | |||||||||||
| Favorable scenarios 2 | |||||||||||
| Favorable scenarios 1 | |||||||||||
| Base scenarios | |||||||||||
| Unfavorable scenarios 1 | |||||||||||
| Unfavorable scenarios 2 | |||||||||||
| Coverage ratio by scenarios | |||||||||||
| Favorable scenarios 2 | % | % | |||||||||
| Favorable scenarios 1 | % | % | |||||||||
| Base scenarios | % | % | |||||||||
| Unfavorable scenarios 1 | % | % | |||||||||
| Unfavorable scenarios 2 | % | % | |||||||||
F-168
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
j.Analysis of risk concentration
The following table shows the risk concentration by industry, and by stage before ECL allowance of loans and account receivable from customers and Interbak loans at amortised cost:
| As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Agriculture and livestock | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Fruit cultivation | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Forest | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Fishing | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Mining | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Oil and natural gas | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Manufacturing Industry: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Food, beverages and tobacco | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Textile, leather and footwear | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Wood and furniture | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Cellulose, paper and printing | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Chemicals and petroleum derivatives | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Metallic, non-metallic, machinery, or other | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other manufacturing industries | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Electricity, gas, and wáter | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Home building | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-residential construction | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Wholesale trade | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Retail trade, restaurants and hotels | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Transport and storage | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Telecommunications | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial services | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Real estate services | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Social services and other community services | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
F-169
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
The following table shows past due information related to loans and account receivable from customers and Interbak loans at amortised cost, and related ECL allowance:
| As of December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross carrying amount | ECL allowance | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | TOTAL | Stage 1 | Stage 2 | Stage 3 | TOTAL | |||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Interbank loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 1-29 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 30-89 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Over 90 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 1-29 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 30-89 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Over 90 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 1-29 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 30-89 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Over 90 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross carrying amount | ECL allowance | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stage 1 | Stage 2 | Stage 3 | TOTAL | Stage 1 | Stage 2 | Stage 3 | TOTAL | |||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Interbank loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 1-29 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 31-89 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Over 90 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 1-29 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 31-89 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Over 90 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 1-29 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 31-89 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Over 90 days past due | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
F-170
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
k.Collateral and other credit enhancement
Banco Santander controls the credit risk using collateral in its operations. Each business unit is responsible for credit risk management and formalizes the use of collateral in its lending policies. Guidelines are in place covering the acceptability and valuation of each type of collateral.
Banco Santander uses guarantees in order to increase their resilience in the subject to credit risk operation. The guarantees can be used fiduciary, real, legal structures with power mitigation and compensation agreements. The Bank periodically reviews its policy guarantees by technical parameters, normative and also its historical basis, to determine whether the guarantee is legally valid and enforceable.
Credit limits are continually monitored and changed in customer behavior function. Thus, the potential loss values represent a fraction of the amount available.
Collateral refers to the assets pledged by the customer or a third party to secure the performance of an obligation. The main type of collateral obtained are the following:
•For securities lending and reverse repurchase transactions, cash or securities
•For corporate and small business lending, charges over real estate properties, inventory and trade receivables and, in special circumstances, government guarantees
•For retail lending, mortgages over residential properties
The following table show the maximum exposure to credit risk by class of financial asset, associated collateral and the net exposure to credit risk:
| As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Maximum exposure to credit risk | Collateral | Net exposure | Associated ECL | Maximum exposure to credit risk | Collateral | Net exposure | Associated ECL | |||||||||||||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||||||||||||
| Interbank loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Contingent loans exposure | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
One very important example of financial collateral is the collateral agreement. Collateral agreements comprise a set of highly liquid instruments with a certain economic value that are deposited or transferred by a counterparty in favor of another party in order to guarantee or reduce any counterparty credit risk that might arise from the portfolios of derivative transactions between the parties in which there is exposure to risk.
Collateral agreements vary in nature but, whichever the specific form of collateralization may be, the ultimate aim, as with the netting technique, is to reduce counterparty risk.
Transactions subject to a collateral agreement are assessed periodically (normally on a daily basis). The agreed-upon parameters defined in the agreement are applied to the net balance arising from these assessments, from which the collateral amount (normally cash or securities) payable to or receivable from the counterparty is obtained.
For real estate collateral periodic re-appraisal processes are in place, based on the actual market values for the different types of real estate, which meet all the requirements established by the regulator.
Specifically, mortgage loans are secured by a real property mortgage, and threshold mitigate counterparty credit risk of derivative instruments.
For the ECL allowance calculated on an Individual basis, the collaterals at fair value, are use for mitigating the loan amount and obtain the exposure. While for ECL allowance calculated on a collective basis LTV is used (defined as the Loan amount divided by value of collateral).
F-171
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
Personal guarantees and credit derivatives
Personal guarantees are guarantees that make a third party liable for another party’s obligations to the Bank. Only guarantees provided by third parties that meet the minimum requirements established by the supervisor can be recognised for capital calculation purposes.
Credit derivatives are financial instruments whose main purpose is to hedge credit risk by buying protection from a third party, whereby the Bank transfers the risk of the issuer of the underlying instrument. Credit derivatives are OTC instruments, i.e. they are not traded in organized markets.
Credit derivative hedges, mainly credit default swaps, are entered into with leading financial institutions. According to the Bank’s policy when an asset (real state) is repossessed are transferred to assets held for sale at their fair value less cost to sell as non-financial assets at the repossession date (assets received in lieu of payments).
Assets Received in Lieu of Payment
Assets received or awarded in lieu of payment of loans and accounts receivable from clients are recognised at their fair value (as determined by an independent appraisal). The excess of the outstanding loan balance over the fair value is charged to net income for the period, under “Provision for loan losses”. Any excess of the fair value over the outstanding loan balance, less costs to sell of the collateral, is returned to the client. These assets are subsequently adjusted to their net realizable value less cost to sale (assuming a forced sale).
As of December 31, 2025, assets received or awarded in lieu of payment amounted to Ch$42,463 million (gross amount: Ch$42,489 million; allowance: Ch$26 million). As of December 31, 2024, assets received or awarded in lieu of payment amounted to Ch$35,622 million (gross amount: Ch$36,804 million; allowance: Ch$1,182 million).
l.Maximum exposure to credit risk
Financial assets and off-balance sheet commitments
For financial assets recognised in the Consolidated Statements of Financial Position, maximum credit risk exposure equals their carrying value. Below is the distribution by financial asset and off-balance sheet commitments of the Bank’s maximum exposure to credit risk as of December 31, 2025 and 2024, without deduction of collateral, security interests or credit improvements received:
| As of December 31, | ||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||
| Note | MCh$ | MCh$ | ||||||||||||||||||
| Deposits in banks | 4 | |||||||||||||||||||
| Cash items in process of collection | 4 | |||||||||||||||||||
| Financial assets for trading at FVTPL | 5 | |||||||||||||||||||
| Financial derivative contracts | ||||||||||||||||||||
| Financial assets held for trading | ||||||||||||||||||||
| Financial assets at FVOCI | 6 | |||||||||||||||||||
| Debt financial instruments | ||||||||||||||||||||
| Other financial instruments | ||||||||||||||||||||
| Financial derivative contracts for hedge accounting | 7 | |||||||||||||||||||
| Financial assets at amortised cost | 8 | |||||||||||||||||||
| Rights under repurchase agreements | ||||||||||||||||||||
| Debt financial instruments | ||||||||||||||||||||
| Interbank loans | ||||||||||||||||||||
| Loans and account receivable at amortised cost / | ||||||||||||||||||||
| Off-balance commitments: | ||||||||||||||||||||
| Letters of credit issued | ||||||||||||||||||||
| Foreign letters of credit confirmed | ||||||||||||||||||||
| Performance guarantees | ||||||||||||||||||||
| Available credit lines | ||||||||||||||||||||
| Personal guarantees | ||||||||||||||||||||
| Other irrevocable credit commitments | ||||||||||||||||||||
| Total | ||||||||||||||||||||
F-172
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
Foreign derivative contracts
As of December 31, 2025, the Bank’s foreign exposure -including counterparty risk in the derivative instruments’ portfolio- was USD 1.72 billion or 3 % of its total exposure. In the table below, exposure to derivative instruments is calculated by using the equivalent credit risk; which equals the replacement carrying amount plus the maximum potential value, considering the cash collateral that minimizes exposure.
Below, our foreign exposure for those countries classified above 1 and represents our majority of exposure to categories other than 1. As of December 31, 2025, considering fair value of derivative instruments.
| Country | Classification | Derivative instruments (market adjusted) | Deposits | Loans | Financial Investments | Total Exposure | ||||||||||||||||||||||||||||||||
| USD millions | ||||||||||||||||||||||||||||||||||||||
| Hong Kong | ||||||||||||||||||||||||||||||||||||||
| México | ||||||||||||||||||||||||||||||||||||||
| China | ||||||||||||||||||||||||||||||||||||||
| Italia | ||||||||||||||||||||||||||||||||||||||
| Panama | ||||||||||||||||||||||||||||||||||||||
| Peru | ||||||||||||||||||||||||||||||||||||||
| Indonesia | ||||||||||||||||||||||||||||||||||||||
| OMAN | ||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||
*Includes BSCH SA New York and Santander Investment Securities
Our exposure to Banco Santander Spain is as follows:
| Counterpart | Country | Classification | Derivative instruments (market adjusted) | Deposits | Loans | Financial Investments | Total Exposure | ||||||||||||||||||||||||||||||||||
| Banco Santander España | Spain | ||||||||||||||||||||||||||||||||||||||||
The total amount of the exposure to derivative instruments must be compensated daily with collateral and, therefore, there is no credit exposure.
As of December 31, 2025, we had no applicable sovereign exposure, no unfunded exposure, no credit default protection and no current developments.
Security interests and credit improvements
The maximum exposure to credit risk is reduced in some cases by security interests, credit improvements, and other actions which mitigate the Bank’s exposure. Based on the foregoing, the creation of security interests are a necessary but not a sufficient condition for granting a loan; accordingly, the Bank’s acceptance of risks requires the verification of other variables and parameters, such as the ability to pay or generate funds in order to mitigate the risk being taken on.
The procedures used for the valuation of security interests utilize the prevailing market practices, which provide for the use of appraisals for mortgage securities, market prices for stock securities, fair value of the participating interest for investment funds, etc. All security interests received must be instrumented properly and registered on the relevant register, as well as have the approval of legal divisions of the Bank.
The risk management model includes assessing the existence of adequate and sufficient guarantees that allow recovering the credit when the debtor’s circumstances prevent them from fulfilling their obligations.
F-173
Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
The Bank has classification tools that allow it to group the credit quality of transactions or customers. Additionally, the Bank has historical databases that keep this internally generated information to study how this probability varies. Classification tools vary according to the analyzed customer (commercial, consumer, SMEs, etc.).
Below is the detail of security interests, collateral, or credit improvements provided to the Bank as of December 31, 2025 and 2024:
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Non-impaired financial assets | ||||||||||||||
| Properties/mortgages | ||||||||||||||
| Investments and others | ||||||||||||||
| Impaired financial assets | ||||||||||||||
| Properties/ mortgages | ||||||||||||||
| Investments and others | ||||||||||||||
| Total | ||||||||||||||
Credit risk mitigation techniques
The Bank applies various methods of reducing credit risk, depending on the type of customer and product. As we shall see, some of these methods are specific to a particular type of transaction (i.e., real estate guarantees) while others apply to groups of transactions (i.e., netting and collateral arrangements).
m.PD scaling
The PD scaling applies for the Corporate loans (SME and Middle Market portfolio), which consists of replicating the PD escalation used today in the CIB portfolio, for the SME and Middle Market portfolio in Stage 1 and Stage 2.
PD scaling allows the annual PD of the last period to be weighted by the residual real months, that is, if:
a.If the operation has a residual term of 2 years and is in stage 1, there is no change.
b. If the operation has a residual term of 2.5 years and is in stage 2, there will be a benefit for the last period. (6/12)
c. If the operation has a residual term of 1 month, regardless of the stage, there will be a benefit (1/12)
LIQUIDITY RISK
Liquidity risk is the risk of incurring losses resulting from the inability to meet payment obligations in a timely manner.
Liquidity risk management
The Bank’s approach to liquidity management is to ensure-- whenever possible--to have enough liquidity on hand to fulfill its obligations at maturity, in both normal and stressed conditions, without entering into unacceptable debts or risking the Bank’s reputation.
The Financial Management area manages liquidity risk using a portfolio of liquid assets to ensure that the Bank always maintains enough liquidity to cover short-term fluctuations and long-term financing, complying with internal regulatory liquidity requirements. The Financial Management area is informed by all units of the Bank about the liquidity profile of their financial assets and liabilities, as well as the composition of any other projected cash flows arising from future businesses. Based on this information, Financial Management area maintains a portfolio of short-term liquid assets, composed mainly of liquid investments, loans and advances to other banks, to ensure that the Bank has sufficient liquidity. The liquidity required by the business units are covered by short-term transfers from Financial Management to cover short-term fluctuations and long-term financing to cover structural liquidity needs.
The Board establishes limits on a minimum portion of available funds close to maturity to fulfill payments and on a minimum level of interbank operations and other loan facilities that should be available to cover transfers at unexpected demand levels. This is constantly reviewed by the Assets and liabilities Committee, who has to monitor the strategies for liquidity risk management. Additionally, the Bank must comply with the regulation limits established by the FMC for maturity mismatches.
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| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
The limit establishment is as dynamic process that address the level of acceptable risk appetite defined by the Bank and its entities. The limit system allows knowing at all times the level of exposure of each entity liquidity risks. In addition, the Bank includes alert indicators by concentration of: counterparties, type of products and terms, with the objective of diversifying the sources of financing and its maturity structure.
The Bank monitors liquidity position on a daily basis, determining the future inflows and outflows. Also, at the month-end, stress tests are performed, considering different scenarios in normal market conditions and fluctuation market conditions (stress).
The Bank has a structure of internal liquidity limits that must be met at all times by Financial Management and Treasury. The Market Risk Management calculates and control the consumption of internal limits as well as verifies their compliance and communicates the status to senior management and the Board of Directors.
At the beginning of the year, the limits are proposed by the Market Risk Management, approved in the ALCO Committee and ratified at the highest level.
The liquidity limits and early warning indicators and management measures defined internally can be grouped as follows:
–Limits associated with concentration and mismatches of cash flows and liquidity of the Bank’s operations.
–Liquidity Management Tools, which is a Structural liquidity or Financing Chart, whose objective is to determine the Bank’s structural liquidity position and allow active management, is an essential mechanism to ensure permanently the assets’s financing in optimal conditions.
–Early warning indicators associated with risks concentration and used as detection and anticipation tool of potential liquidity stress situations and, if necessary, the activation of the Liquidity Contingency Plan
The Market Risk Management establishes and updates the Liquidity Management Policy (PAL). The review and update is performed once a year. However, at any time it could be updated upon request, if any of the areas involved by the PAL have identified a required modification. The PAL is approved by the Board of Directors.
The Market Risk Management provides all necessary tools for the statistical analysis required by local liquidity regulations. The validity of the models are reviewed once a year. The conclusions must be approved by the Board of Directors.
In normal liquidity periods, the Financial Management Department applies the policies and perform the actions required to comply with internal and regulatory limits. If a situation is identified, even at low level, the Liquidity Crisis Committee applies the necessary actions to face potential liquidity deficits or restrictions, and contingency plans to control emergency situations, along with reporting situations to senior management and the respective committees.
Measurement and control of liquidity risk
1.Term mismatches subject to regulatory limits
The Regulatory Liquidity Ratio measures the mismatches of the inflows and outflows in relation to regulatory capital. In accordance with current regulations, the 30-day mismatch cannot exceed once the regulatory capital of the Bank, both for national and foreign currency, and the 90-day mismatch cannot exceed it twice.
2.Monitoring indicators and liquidity ratio subject to regulatory limits
An important component for liquidity risk management is High Quality Liquid Assets (ALAC). These are balance sheet assets, mainly financial investments that are not pledged as collateral, with low credit risk, and with a deep secondary market.
These assets are divided into three levels in accordance with Basel III standards, with Level 1 assets being the most liquid and Level 3 assets being the least liquid. Level 1 assets are bonds from Chilean Goverment entities, Central Bank bonds and United States Treasury bonds.
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| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
| As of December 31, | ||||||||||||||
| ALAC | 2025 | 2024 | ||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Level 1: cash and cash equivalent | ||||||||||||||
| Level 2: fixed income | ||||||||||||||
| Level 2: fixed income | ||||||||||||||
| Total | ||||||||||||||
3.Liquidity Coverage Ratio (LCR)
The Liquidity Coverage Ratio (LCR) is a measurement of liquid assets over 30-day net outflows. It is used by banks globally, as part of the Basel III standards. The requirements were gradually implemented, reaching 100 % in 2024.
The objective of the LCR is to promote the short-term resistance of Banks’ liquidity risk profile. The LCR ensures that organizations have an adequate pool of unencumbered, High-Quality Liquid Assets, which can be readily and immediately converted to cash in private markets, in order to meet short-term liquidity needs.
| As of December 31, | ||||||||||||||
| Liquidity Coverage Ratio | 2025 | 2024 | ||||||||||||
| % | % | |||||||||||||
| LCR | ||||||||||||||
Banco Santander Chile’s RCL indicator is above the minimum required. This reflects the conservative liquidity policies imposed by the Board of Directors, through the Assets and Liabilities Committee
4.Net Stable Funding Ratio (NSFR)
The indicator is required by Basel III and provides a sustainable maturity structure for assets and liabilities, thus the banks maintain a stable funding profile in relation to their activities.
The Central Bank and the FMC established a minimum NSFR level of 60% for 2022, increasing to 100% by 2026.
| As of December 31, | ||||||||||||||
| Net Stable Funding Ratio | 2025 | 2024 | ||||||||||||
| % | % | |||||||||||||
| NSFR | ||||||||||||||
5.Information on the liquidity situation according to the requirements of the BCCH
i.Term mismatches
On March 8, 2022, the BCCh published Rules on the Management and measurement of the liquidity position of banking companies that modernize the liquidity regulation, aligning regulatory requirements of the CMF under Basel III implementation process.
In accordance with the provision of the BCCh, the liquidity position is measured and controlled through the difference between the cash outflows, related to liabilities and expense accounts, and cash inflows, which are related to asset and income accounts, for a certain term or time band, which is refered as term mismatch.
The liquidity policy on an Adjusted Base was presented and approved by the Board of Banco Santander Chile. Term mismatches are calculated severally for local currency and foreign currency.
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| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
Term mismatches will be made on the following time bands:
-First time band: up to 7 days, inclusive
-Second time band: from 8 days to 15 days, inclusive
-Third time band: from 16 days to 30 days, inclusive
-Fourth time band: from 31 days to 90 days, inclusive
| As of December 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| Individual | Consolidated | |||||||||||||||||||||||||||||||||||||
| Up to 7 days | Up to 15 days | Up to 30 days | Up to 7 days | Up to 15 days | Up to 30 days | |||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||
| Cash flow receivable (assets) and income | ||||||||||||||||||||||||||||||||||||||
| Cash flow payable (liabilities) and expenses | ||||||||||||||||||||||||||||||||||||||
| Mismatch | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Mismatch affected by limits | ( | ( | ||||||||||||||||||||||||||||||||||||
| Limits: | ||||||||||||||||||||||||||||||||||||||
| 1 time capital | ||||||||||||||||||||||||||||||||||||||
| Margin available | ||||||||||||||||||||||||||||||||||||||
| % used | % | % | ||||||||||||||||||||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||||||||||||||||||||
| Individual | Consolidated | |||||||||||||||||||||||||||||||||||||
| Up to 7 days | Up to 15 days | Up to 30 days | Up to 7 days | Up to 15 days | Up to 30 days | |||||||||||||||||||||||||||||||||
| MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | MCh$ | |||||||||||||||||||||||||||||||||
| Cash flow receivable (assets) and income | ||||||||||||||||||||||||||||||||||||||
| Cash flow payable (liabilities) and expenses | ||||||||||||||||||||||||||||||||||||||
| Mismatch | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Mismatch affected by limits | ( | ( | ||||||||||||||||||||||||||||||||||||
| Limits: | ||||||||||||||||||||||||||||||||||||||
| 1 time capital | ||||||||||||||||||||||||||||||||||||||
| Margin available | ||||||||||||||||||||||||||||||||||||||
| % used | % | % | ||||||||||||||||||||||||||||||||||||
ii.Composition of financing sources
The main sources of financing with third parties are the following:
| As of December 31, | ||||||||||||||
| Main sources of financing | 2025 | 2024 | ||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Deposits and other demand obligations | ||||||||||||||
| Time deposits | ||||||||||||||
| Bank obligations | ||||||||||||||
| Debt instruments issued and regulatory capital | ||||||||||||||
| Total | ||||||||||||||
The BCCh has authority to require banks to maintain reserves of up to 40 % on average for demand deposits and up to 20 % for time deposits to implement monetary measures. Also, if the aggregate amount of demand deposits exceeds 2.5 times the amount of a bank’s regulatory capital, it must maintain a 100 % “technical reserve” in Central Bank bonds and notes.
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| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
As of December 31, 2025 and 2024, the Central Bank has required to the Bank to maintain a technical reserve of $0
The volume and composition of liquid assets are presented above. The liquidity coverage ratio is presented above.
6.Maturity of financial assets and liabilities
The maturity of financial assets and liabilities, and other commercial commitments is disclosed in Note 23.
The inherent liquidity management of derivatives and non-derivatives financial liabilities, employ different levers that allow to keep limited liquidity risk according to the Bank’s defined profile and using the available liquidity efficiently. For this reason, the Bank hold a high level of liquid assets along with a daily monitoring of the short-term expected income and expenses level, avoiding a high concentrations of maturities. Moreover, a solid diversified financing matrix is maintained both among the different types of products and types of clients.
Operational risk
The Bank defines operational risk as the risk of losses arising from defects or failures in its internal processes, people, systems or external events, thus covering risk categories such as operational incidents, cloud computing, cybersecurity, business continuity, outsourcing of strategic and non-strategic services.
Operational risk is inherent to all products, activities, processes and systems and is generated in all business and support areas. For this reason, all employees are responsible for managing and controlling the operational risks generated in their sphere of action. The Bank’s goal in terms of operational risk management and control is focused on identifying, evaluating and mitigating sources of risk, regardless of whether they have materialized or not. The analysis of operational risk exposure contributes to the establishment of risk management priorities.
Operational risk management
The operational risk model regulates the necessary elements for adequate management and control of operational risk, aligned with advanced regulatory standards and best management practices, and includes the following phases:
–strategy and planning.
–identification, assessment and monitoring of risks and internal controls.
–implementation and monitoring of mitigation measures.
–availability of information, adequate reports and escalation of relevant issues.
The main operational risk tools used are:
▪Internal events database. Record of operational risk events with financial impact (all losses are recorded, regardless of their amount) or non-financial (such as regulatory impact on customers and/or services). This information:
–allows root cause analysis.
–increases awareness of risks.
–allows escalation of relevant operational risk events to the senior management of the Risk division with maximum immediacy
–facilitates regulatory reporting.
▪Self-assessment of operational risks and controls. Qualitative process that evaluates the main operational risks associated with each function, the situation of the control environment and its assignment to the different functions within the Bank, through the criteria and experience of a group of experts from each function.
The objective is to identify and assess material operational risks that could prevent business or support units from achieving their objectives. Once the risks and the internal controls that mitigate them have been evaluated, mitigation measures are identified in the event that the risk levels are above the tolerable level.
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| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
This process integrates specific operational risk reviews that allow a cross-sectional identification of risks, especially technological risks, fraud, supplier risk and factors that could lead to other operational risks, as well as specific regulatory non-compliance.
▪External events database. Quantitative and qualitative information on external operational risk events. The database allows a detailed and structured analysis of the relevant events that have occurred in the sector, the comparison of the loss profile, and the adequate preparation of the self-assessment exercises and scenario analysis.
▪Analysis of operational risk scenarios. Its objective is to identify events with a very low probability of occurrence that could generate significant losses for the Bank, as well as to establish adequate mitigation measures, through the evaluation and expert opinion of the business lines and risk managers
▪Recommendations from internal audit, external audit and regulators. They provide relevant independent information on inherent and residual risk and identify areas for improvement in controls and processes.
▪A statement establishing that the Bank has the commitment to control and limit non-financial risk events that lead or may lead to financial losses; fraud events, operational and technological incidents; legal and regulatory violations; conduct problems or damage to reputation. Although a certain volume of losses is expected, unexpected high severity losses as a result of control failure are not acceptable.
▪Capital model: a model that includes the Bank’s risk profile, based mainly on information collected in the internal loss database, external data and scenarios. The main application of the model is to determine the economic capital for operational risk and the estimate of expected and stressed losses, which are used in the operational risk appetite.
▪Other specific instruments that make it possible additionally analyze and manage operational risk, including the evaluation of new products and services, the management of business continuity plans, the review and update of the perimeter and review processes of the quality of the operational risk programme.
The Bank’s operational risk management and reporting system supports operational risk management programmes and tools with a focus on governance, risk, and compliance. It provides information for management and reporting, and contributes to improving decision-making in operational risk management, consolidating information, simplifying the process and avoiding duplication.
Operational continuity plan
The digital transformation is revolutionizing the way banks operate, presenting new business opportunities, but at the same time a wide range of emerging risks, such as technological risks, cyber risks and an increasing dependence on suppliers, which increases exposure to events that may affect the provision of services to our customers.
The Bank is highly committed to guaranteeing a robust control environment in accordance with the best industry standards, which allows us to reinforce our operational resistance against potential disruption events and thus ensure the adequate provision of services to our clients and stability of the system.
A main pillars is a business continuity management system aimed to guaranteeing the continuity of business processes in the event of a disaster or serious incident. This process identifies potential impacts that threaten the entity and its supplies, and provides the correct protocols and governance that ensure effective response capability. Its main objectives are:
-Protect the integrity of people in a contingency situation.
-Guarantee that the main functions are performed and minimize the impact over clients’services in case of contingency.
-Satisfy the Bank’s obligations with its employees, clients, shareholders and other interest groups.
-Comply with regulatory obligations and requirements.
-Minimize the potential economic losses for the entity and its impact on the business.
-Protect the brand image, credibility and trust in the entity.
-Reduce the operational effects by providing effective procedures, priorities and strategy for the recovery and restoration of business operations after a contingency.
-Contribute to stabilizing the financial system.
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| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
The pandemic challenged the frameworks and strategies of the business continuity plans and, although some of the protocols had to be adapted, this crisis showed that the Bank has a robust business continuity management system.
Relevant mitigation measures
The Bank, through internal operational risk management tools and other external sources of information, implements and monitors mitigation measures related to the main sources of risk.
The transformation and digitalization of the business entail new risks and threats, such as the increase in payment fraud and origination fraud (credits). To mitigate these risks, we have improved control mechanisms and designed new products.
The use of reinforced authentication processes in the customer registration process and reinforcement of anti-fraud alerts in origination are increasingly widespread resources to mitigate the risk of fraud.
In the case of cards, the use of chip cards and numeric code in shops and ATMs has become widespread, two-step authentication with one-time passwords (dynamic verification passwords), security reinforcement in ATMs by incorporating physical protection and anti-skimming elements, as well as improvements in the logical security of the devices.
In the case of office banking (online services), verification of online banking transactions with a second security factor of one-time passwords, application of specific protection measures for mobile banking, such as the identification and registration of customer devices, monitoring of the security of the e-banking platform to avoid attacks on the systems, among others.
Cybersecurity
It is expected that cybersecurity threats will increase and the financial sector will be one of the main targets. This, together with the greater dependence on digital systems, makes cybersecurity one of the main non-financial risks of the business. For this reason, our objective is to make the Bank a cyber-resilient organization that can resist, detect and respond quickly to cyber-attacks, with constant evolution and improvement of its defences.
Outsourcing of services
Continuing with our digitization strategy, the Bank’s objetive is offer the best solutions and products on the market to our clients. This means an increase in the services provided by third parties and the intensive use of new technologies such as cloud services. Due to the increase in cyber risks and regulatory requirements, we have updated and strengthened the supplier management framework, the internal control framework and the risk culture to ensure that the risks associated with contracting third parties are adequately assessed and managed.
The Bank has identified those suppliers that could present a higher level of exposure for our operations and for the services provided to our clients and has reinforced monitoring of these suppliers to ensure that:
•They present an adequate control environment, depending on the level of risk of the service they provide.
•There are business continuity plans that guarantee service delivery in case of disruption events.
•They have controls aimed to guaranteeing the protection of sensitive information processed during the provision of the service.
•Contracts and agreements with third parties include the necessary clauses to protect the interests of the Bank and our customers, while providing coverage for current legal obligations.
•There are exit strategies, which include service reversion or migration plans, in the case of services with a strong impact on business continuity and high substitution complexity.
Insurance
In order to respond to the operational risk and other risks generated in the Bank's own operations, material damage insurance, general civil liability, fraud, expenses derived from cybersecurity breaches, third-party claims against executives, among others, have been contracted.
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| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
Exposure to net loss, gross loss and recovery of gross loss due to operational risk event
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| MCh$ | MCh$ | |||||||||||||
| Expenses for the gross loss period due to operational risk events | ||||||||||||||
| Internal fraud | ||||||||||||||
| External fraud | ||||||||||||||
| Labor Practices and Business Safety | ||||||||||||||
| Clients, products and business practices | ||||||||||||||
| Damage to physical assets | ||||||||||||||
| Business interruption and system failures | ||||||||||||||
| Process execution, delivery and management | ||||||||||||||
| Subtotal | ||||||||||||||
| Recoveries of expenses in the period due to operational risk events | ||||||||||||||
| Internal fraud | ( | ( | ||||||||||||
| External fraud | ( | ( | ||||||||||||
| Labor Practices and Business Safety | ( | ( | ||||||||||||
| Clients, products and business practices | ( | ( | ||||||||||||
| Damage to physical assets | ( | ( | ||||||||||||
| Business interruption and system failures | ( | ( | ||||||||||||
| Process execution, delivery and management | ( | ( | ||||||||||||
| Subtotal | ( | ( | ||||||||||||
| Net loss from operational risk events | ||||||||||||||
CAPITAL RISK
General Information
The Bank provides information on the objectives, policies, and processes for managing capital and regulatory capital, respectively, in accordance with paragraphs 134–136 of IAS 1.
Capital Description
The Conceptual Framework establishes a concept of Financial Capital and one of Physical Capital. In this regard, the Bank applies the concept of Financial Capital, which translates into the consideration of invested money or invested purchasing power; capital is synonymous with the entity’s net assets or equity.
Since December 2021, the definition of regulatory capital was changed, and now is defined as follows:
-Paid-in capital of the Bank for subscribed and paid-in ordinary shares;
-Premium paid for instruments included in this capital component;
-Reserves, whether from retained earnings or not, for depreciation of perpetual bonds and for the expiration of perpetual bonds;
-Items of “other accumulated comprehensive income”;
-Retained earnings from prior periods, profit (loss) for the period, net of provisions for minimum dividends, revaluation of perpetual bonds, and payment of interest and/or dividends on issued regulatory capital financial instruments;
-Non-controlling interest in accordance with local banking regulations.
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| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
Objectives
The Bank’s main objectives in Capital Management include:
-Meeting internal capital and capital adequacy goals;
-Complying with regulatory requirements;
-Aligning the Bank’s strategic plan with the capital expectations of external stakeholders (rating agencies, shareholders and investors, clients, supervisors, etc.);
-Supporting business growth and any strategic opportunities that may arise.
Policies
The Bank has ALCO, which is responsible for the supervision, authorization, policy establishment, and assessment of all aspects related to capital and solvency. The Board of Directors has delegated to ALCO the knowledge and evaluation of capital levels and profitability in accordance with the Bank's strategy. The CIR monitors and is responsible for setting the limits for primary and secondary metrics based on risk appetite.
In addition to the above, the Bank has developed the necessary policies to contribute to the management and fulfillment of capital management strategies and objectives, including:
-Capital Adequacy Policy;
-Capital Planning Policy;
-Policy for Managing Capital Deterioration Situations;
-Capital Monitoring Policy;
-Dividend Policy and Basel III Implementation.
Capital Management Processes
Capital is managed in accordance with the risk environment, Chile’s economic performance, and the economic cycle. The relevant Committee may adjust our current capital policies to address changes in the aforementioned risk environment.
Capital management is based on a Capital Framework that aims to ensure that the level of capital, structure and composition are adequate at any time considering the Bank's risk profile and under different scenarios, guaranteeing compliance with both the minimum regulatory requirements and the risk appetite and the Recovery Plan, and are in line with stakeholder's interest and support the growth strategy defined by the Bank.
The capital model defines the functional and governance aspects of capital planning, budget execution and monitoring, capital adequacy analysis, capital measurement, and capital reporting and disclosure. This model covers the main capital management activities:
1.Establishing the Bank's solvency and capital contribution targets, aligned with minimum regulatory requirements and internal policies, to ensure a robust capital base consistent with the Bank's risk profile and efficient capital utilization to maximize shareholder value.
2.Developing a capital plan to meet these targets, consistent with the strategic plan.
3.Assessing capital adequacy to ensure the capital plan is consistent with the Bank's risk profile and risk appetite (including stress scenarios).
4.Developing the capital budget as part of the Bank's budgeting process.
5.Monitoring and controlling budget execution and developing corrective action plans to address any budget deviations.
6.Calculating capital metrics.
7.Preparing internal capital reports, as well as reports for supervisory authorities and the market.
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| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
Compliance with Capital Management Objectives
The Bank continuously assesses its risk-return ratios through its core capital, net worth, economic capital, and return on equity. Regarding capital adequacy, the Bank conducts its internal process based on the local banking regulations, effective since December 1, 2021 (Basel III). Economic capital is the capital required to cover all the risks of business activity at a given solvency level.
The monitoring and tracking of metrics and their limits is performed by ALCO, which also evaluates Capital level and the risk appetite on monthly basis, in addition to controlling the solvency indicator "Effective Equity / Risk Weighted Assets" which is controlled at Fully Loaded levels since December 1, 2025, considering the capital requirements at 100% of the required level.
Quantitative Data on Capital Management
The Bank primarily manages its capital by increasing its effective equity through the accumulation of profits, which allows it to have a minimum regulatory capital to risk-weighted assets ratio of 16.89 %, which is 426.00 higher than the required requirement.
External Requirements
Minimum Required Capital
According to the new General Banking Law (updated through Law N°21,130), a bank must maintain a minimum of UF 800,000 (approximately Ch$31,782 million or US$35 million as of December 31, 2025) in paid-in capital and reserves, calculated in accordance with FMC regulations.
Capital Regulatory Framework and Updates
According to the new General Banking Law, he minimum capital requirements have increased in both quantity and quality. Total regulatory capital remains at 8% of risk-weighted assets, but includes credit, market and operational risk. The minimum Tier 1 capital increased from 4.5% to 6% of risk-weighted assets, of which up to 1.5% may be Additional Tier 1 (AT1), either in the form of preferred shares or perpetual bonds, which may be convertible into shares. Tier 2 capital is now set at 2% of risk-weighted assets.
Additional capital demands have been incorporated through a capital conservation buffer of 2.5% of risk-weighted assets. Furthermore, the Central Bank of Chile, in accordance with local banking regulator (FMC), may establish an additional countercyclical buffer of up to 2.5% of risk-weighted assets. Both buffers must be composed of core capital.
In addition, the FMC, with the favorable agreement of the Board of the Central Bank of Chile (BCCh), has the authority to establish new regulatory methodologies for calculating risk-weighted assets related to: Credit risk, Market risk, and Operational risk. This authority also extends to: conditions for the issuance of hybrid AT1 instruments, capital charges for systemically important banks, prudential deductions to regulatory capital, and additional measures, including increased capital, for banks with deficiencies in the Supervisory Review and Evaluation Process (Pillar II).
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| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
Pillar II aims to ensure that banks maintain a capital level appropriate to their risk profile and encourages the development and use of effective risk monitoring and management processes. for this reason, banks are responsible for developing an Internal Capital Adequacy Assessment Process (ICAAP), while supervisors must examine banks' internal strategies and assessments and intervene early when they are not satisfied with the outcome of this process, Thus, supervisors may required additional capital, above the minimum regulatory, especially to ensure resilience in adverse credit cycles.
At first, the Banks submitted a simplified report with the conclusions of the self-assessment process, only considering credit risk (2021). For 2022 Pillar I risks was added, and since 2023 the full report was required. On April 11, 2025, an additional capital requirements under Pillar II of 0.25% was imposed, which must did comply of 50% by June 2025.
The banks must maintain a regulatory capital of at least 8% of risk-weighted assets, net of credit losses, and a paid-in capital and reserves ("core capital") of at least 3% of total assets, also net of credit losses, as composed as follows:
•The bank’s paid-in capital and reserves, excluding capital attributable to subsidiaries and foreign branches, or core capital;
•Perpetual bonds and preferred shares referred, placed by the bank at placement price, up to one-third of its core capital;
•Subordinated bonds, valued placement price, decreasing by 20.0% for each year during the period beginning six years before maturity, for an amount of up to 50.0% of their core capital; and
•Voluntary provisions for credit losses, up to 1.25% of credit risk-weighted assets.
On April 1, 2025, the annual classification of systemically important banks and established requirement was announced. thus maintaining for another year the requirement of an additional basic capital charge of 1.5% for the bank.
On April 14, 2025, and additional Pillar II capital requirement of 0.25 percent was announced, applicable in 50% no later than June 30, 2025.
On November 19, 2024, the Chilean Central Bank Council, resolved to maintain the Countercyclical Capital Buffer (CCyB) at 0.5% of risk-weighted assets, which had been activated on May 24, 2023, as a precautionary measure against external financial uncertainty. The instruction remains unchanged as of December 2025.
Compliance with external requirements
Regulatory capital and core capital are calculated based on the local Consolidated Financial Statements. As a result of the merger between two predecessor institutions with a significant market share in the Chilean financial market, our current minimum regulatory requirement consists of a minimum regulatory capital-to-risk-weighted assets ratio of 12.63%, As of the reporting date, the Bank maintains a regulatory capital-to-risk-weighted assets ratio of del 16.89 %.
Period-to-period changes
Schedule of changes to minimum capital requirements:
| As of December 31, | |||||||||||
| Capital requirements | 2025 | 2024 | |||||||||
| MCh$ | MCh$ | ||||||||||
| Pillar II charge | % | % | |||||||||
| Systemic Charge | % | % | |||||||||
| Counter-cyclical Capital buffer | % | % | |||||||||
| Capital Conservation buffer | % | % | |||||||||
| Tier T2 | % | % | |||||||||
| AT1 | % | % | |||||||||
| CET1 | % | % | |||||||||
| Total | % | % | |||||||||
As of December 1, 2025, the regulatory adjustments and exclusions increased from 65 % to 100 % deduction according to transitional provisions, thus ending the gradual implementation process of Basel III.
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Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
Additional regulation
Pillar III promotes market discipline and financial transparency through the disclosure of meaningful and timely information, allowing information users to understand the risk profile of local banking institutions along with their capital structure, thereby reducing information asymmetries.
On July 8, 2025, as a result of the supervisory process known as Pillar II of Basel III, additional regulatory capital requirements for banking entities was improved, with the aim of facilitating the supervisory process and clarifying some aspects of the capital assessment process. The adjustments will be incorporated partially, with the first application starting with the reports submitted in December 2025 and ending with the IAPE review to be delivered in April 2027.
Total assets, risk-weighted assets, and components of effective equity
| Total assets, risk-weighted assets and components of effective equity according to Basel III | Consolidated global 31-12-2025 MCh$ | Consolidated global 31-12-2024 MCh$ | |||||||||||||||||||||
| 1 | Total assets according to the statement of financial position | ||||||||||||||||||||||
| 2 | Investment in subsidiaries that are not consolidated | ||||||||||||||||||||||
| 3 | Assets discounted from regulatory capital, other than item 2 | ||||||||||||||||||||||
| 4 | Credit equivalents | ||||||||||||||||||||||
| 5 | Contingent credits | ||||||||||||||||||||||
| 6 | Assets generated by the intermediation of financial instruments | ||||||||||||||||||||||
| 7 | = (1-2-3+4+5-6) Total assets for regulatory purposes | ||||||||||||||||||||||
| 8.a | Assets weighted for credit risk, estimated according to the standard methodology (RAW) | ||||||||||||||||||||||
| 8.b | Assets weighted for credit risk, estimated according to internal methodologies (AWCR) | ||||||||||||||||||||||
| 9 | Market Risk Weighted Assets (MRWA) | ||||||||||||||||||||||
| 10 | Operational Risk Weighted Assets (OPWA) | ||||||||||||||||||||||
| 11.a | = (8.a/8.b+9+10) Risk Weighted Assets (RWA) | ||||||||||||||||||||||
| 11.b | = (8.a/8.b+9+10) Risk-weighted assets, after applying the output floor (RWA) | ||||||||||||||||||||||
| 12 | Shareholders equity | ||||||||||||||||||||||
| 13 | Non-controlling interest | ||||||||||||||||||||||
| 14 | Goodwill | ||||||||||||||||||||||
| 15 | Excess minority investment | ||||||||||||||||||||||
| 16 | = (12+13-14-15) Common Equity Equivalent Tier 1 Capital (CET1) | ||||||||||||||||||||||
| 17 | Additional deductions to common equity tier 1, other than item 2 | ||||||||||||||||||||||
| 18 | = (16-17-2) Common Equity Tier 1 (CET1) | ||||||||||||||||||||||
| 19 | Voluntary (additional) provisions charged as additional capital tier 1 (AT1) | ||||||||||||||||||||||
| 20 | Subordinated bonds imputed as additional capital level 1 (AT1) | ||||||||||||||||||||||
| 21 | Preferred shares attributed to additional capital tier 1 (AT1) | ||||||||||||||||||||||
| 22 | Perpetual bonds attributed to additional capital level 1 (AT1) | ||||||||||||||||||||||
| 23 | Discounts applied to AT1 | ||||||||||||||||||||||
| 24 | = (19+20+21+22-23) Additional Tier 1 Capital (AT1) | ||||||||||||||||||||||
| 25 | = (18+24) Equity Tier 1 | ||||||||||||||||||||||
| 26 | Voluntary (additional) provisions allocated as Tier 2 (T2) capital | ||||||||||||||||||||||
| 27 | Subordinated bonds imputed as Tier 2 capital (T2) | ||||||||||||||||||||||
| 28 | = (26+27) Capital nivel 2 equivalente (T2) | ||||||||||||||||||||||
| 29 | Discounts applied to T2 | ||||||||||||||||||||||
| 30 | = (28-29) Tier 2 Capital (T2) | ||||||||||||||||||||||
| 31 | = (25+30) Effective equity | ||||||||||||||||||||||
| 32 | Additional basic capital required for the constitution of the conservation buffer | ||||||||||||||||||||||
| 33 | Additional basic capital required to set up the countercyclical buffer | ||||||||||||||||||||||
| 34 | Additional core capital required for banks rated as systemic | ||||||||||||||||||||||
| 35 | Additional capital required for the evaluation of the adequacy of effective capital (Pillar 2) | ||||||||||||||||||||||
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Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 37 - RISK MANAGEMENT, continued
Solvency indicators and regulatory compliance indicators according to Basel III
| Solvency indicators and regulatory compliance indicators according to Basel III | Consolidated global 31-12-2025 % | Consolidated global 31-12-2024 % | ||||||||||||||||||
| 1 | Leverage indicator (T1_I18/T1_I7) | % | % | |||||||||||||||||
| 1.a | Leverage indicator that the bank must meet, considering the minimum requirements | % | % | |||||||||||||||||
| 2 | Core Capital indicator (T1_I18/T1_I11,b) | % | % | |||||||||||||||||
| 2.a | Core Capital indicator that the bank must meet, considering the minimum requirements | % | % | |||||||||||||||||
| 2.b | Capital buffer shortfall | |||||||||||||||||||
| 3 | Tier 1 capital indicator (T1_I25/T1_I11,b) | % | % | |||||||||||||||||
| 3.a | Tier 1 capital indicator that the bank must meet, considering the minimum requirements | % | % | |||||||||||||||||
| 4 | Effective equity indicators (T1_I31/T1_I11,b) | % | % | |||||||||||||||||
| 4.a | Effective equity indicator that the bank must meet, considering the minimum requirements | % | % | |||||||||||||||||
| 4.b | Effective equity indicator that the bank must meet, considering the charge for article 35 bis, if applicable | % | % | |||||||||||||||||
| 4.c | Effective equity indicator that the bank must meet, considering the minimum requirements, conservation buffer and anti-cyclical buffer | % | % | |||||||||||||||||
| 5 | Credit rating | A | A | |||||||||||||||||
| Regulatory compliance indicators for solvency | ||||||||||||||||||||
| 6 | Voluntary (additional) provisions allocated to Tier 2 capital (T2) in relation to APRCs (T1_I26/ (T1_I8,a or I8,b) | % | % | |||||||||||||||||
| 7 | Subordinated bonds allocated to Tier 2 (T2) capital in relation to Tier 2 capital | % | % | |||||||||||||||||
| 8 | Additional Tier 1 capital (AT1) in relation to basic capital (T1_I24/T1_I18) | % | % | |||||||||||||||||
| 9 | Voluntary provisions (additional) and subordinated bonds that are charged to additional capital level 1 (AT1) in relation to the RWAs (T1_I19+T1_I20 / T1_I11,b) | % | % | |||||||||||||||||
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Table of Contents
| Banco Santander-Chile and Subsidiaries | ||
| Notes to the Consolidated Financial Statements | ||
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 | ||
NOTE 38 - SUBSEQUENT EVENTS
Bond placement
On January 8, 2026, with settlement on January 15, 2026, a bond in the amount of USD500,000,000 was issued, maturing on November 20, 2030, with a coupon rate of 4.55 % and an issue yield of 4.558 %, representing a spread of 82 basis points over the 5 -year United States Treasury bond. The bond was issued pursuant to Rule 144A and Regulation S under the United States Securities Act.
On February 16, 2026, Series BA Bonds, with the mnemonic BSTDBA0225, were placed for a total amount of 597,000 UF, with a maturity date of August 1, 2032. The average placement rate of the securities was 2.725 %.
On February 18, 2026, Series BA Bonds, with the mnemonic BSTDBA0225, were placed for a total amount of 50,000 UF, with a maturity date of August 1, 2032. The average placement rate of the securities was 2.700 %.
Others
In January 2026, the CMF reported that as a result of the supervisory process that includes the evaluation of the business models of each banking entity, its Council resolved in the case of Banco Santander to maintain the charge already established for this concept from June 2025 of 0.13 %, which is a decrease compared to the previous requirement of 0.25 %.
On January 27, 2026, at an Extraordinary Shareholders’ Meeting of Banco Santander-Chile, it was agreed to accept the offer and conditions presented by Getnet Payments, S.L. to Banco Santander-Chile and Santander Asesorías Financieras Limitada, for the acquisition of 49.99 % of the shares of the subsidiary Sociedad Operadora de Tarjetas de Pago Santander Getnet Chile S.A.
On February 2, 2026, Banco Santander Chile and Santander Asesorías Financieras Limitada signed the purchase agreement whereby they transferred 49.98 % and 0.01 %, respectively, of shares of Sociedad Operadora de Tarjetas de Pago Santander Getnet Chile S.A. to Getnet Payments S.L. Finally, Banco Santander Chile maintains control over the Sociedad Operadora de Tarjetas de Pago Santander Getnet Chile S.A., through own 50.01 % of the shares.
Consolidated Financial Statements issuance
On February 25, 2026, these Consolidated Financial Statements were approved by the Board of Directors.
There are no other subsequent events that need to be disclosed occurred between January 1, 2025 and the date of issuance of these Consolidated Financial Statements (February 25, 2026).
JONATHAN COVARRUBIAS HERNANDEZ Chief Accounting Officer | ANDRES TRAUTMANN BUC Chief Executive Officer | |||||||
F-187
FAQ
What is Banco Santander-Chile (BSAC) reporting in its latest Form 20-F?
Banco Santander-Chile’s Form 20-F provides IFRS consolidated financial statements for 2025, 2024 and 2023, audited by PricewaterhouseCoopers. It also includes detailed risk disclosures on Chilean macroeconomic conditions, competition, climate and ESG factors, cybersecurity, and model and credit risks affecting its banking operations.
How many Banco Santander-Chile shares back each BSAC American Depositary Share?
Each Banco Santander-Chile American Depositary Share represents the right to receive 400 common shares without par value. The ADSs trade on the New York Stock Exchange under the symbol BSAC, while the underlying common shares are registered but not listed for separate trading in the United States.
How many Banco Santander-Chile (BSAC) shares were outstanding at year end 2025?
As of December 31, 2025, Banco Santander-Chile had 188,446,126,794 common shares outstanding. These shares form the capital base underlying its New York–listed ADS program and provide context for evaluating ownership, capital structure and the scale of its retail and mortgage lending activities.
What macroeconomic backdrop does Banco Santander-Chile (BSAC) highlight for 2025?
The bank notes Chile’s GDP grew 2.4% in 2025, after 2.6% in 2024 and 0.5% in 2023. Inflation was 3.4% in 2025, while the Central Bank’s policy rate ended the year at 4.50%, shaping loan demand, funding costs and credit quality dynamics.
How concentrated is Banco Santander-Chile’s (BSAC) loan book in retail and mortgages?
Retail customers accounted for 76.3% of the loan portfolio at amortized cost as of December 31, 2025. Residential mortgages totaled Ch$17,443,563 million, representing 42.6% of total loans, which makes the bank sensitive to household credit conditions and Chile’s housing and interest rate environment.
What climate and ESG-related risks does Banco Santander-Chile (BSAC) describe?
The bank highlights transition and physical climate risks, potential credit, market, liquidity, operational, regulatory and reputational impacts, and the danger of greenwashing. It notes that sectors with very high climate risk, such as oil, gas and mining, represent about 1.0% of its total loan portfolio.
How could interchange fee caps affect Banco Santander-Chile’s (BSAC) card revenues?
An independent committee set lower interchange fee caps for credit, debit and prepaid cards, then suspended a second planned cut pending further review. If the suspension is lifted and caps fall as originally planned, the bank estimates a negative impact of about Ch$22 billion in annual card fee revenue.
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Feb 27, 2026
[IRANNOTICE] BANCO SANTANDER CHILE SEC Filing