BANCO DE CHILE

CHILE
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75.5CLP -1.04%

Banco de Chile : (Free translation of Consolidated Financial Statements originally issued in Spanish)

04/30/2021 | 06:50am

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

INDEX

I. Interim Consolidated Statements of Financial Position
II. Interim Consolidated Statements of Income
III. Interim Consolidated Statements of Other Comprehensive Income
IV. Interim Consolidated Statements of Changes in Equity
V. Interim Consolidated Statements of Cash Flows
VI. Notes to the Interim Consolidated Financial Statements
MCh$ = Millions of Chilean pesos
ThUS$ = Thousands of U.S. dollars
UF or CLF = Unidad de Fomento
(The UF is an inflation-indexed, Chilean peso denominated monetary unit set daily in advance on the basis of the previous month's inflation rate).
Ch$ or CLP = Chilean pesos
US$ or USD = U.S. dollar
JPY = Japanese yen
EUR = Euro
HKD = Hong Kong dollar
CHF = Swiss Franc
PEN = Peruvian sol
AUD = Australian dollar
NOK = Norwegian krone
IFRS = International Financial Reporting Standards
IAS = International Accounting Standards
RAN = Actualized Standards Compilation of the Chilean Commission for Financial Market ('CMF')
IFRIC = International Financial Reporting Interpretations Committee
SIC = Standards Interpretation Committee

BANCO DE CHILE AND SUBSIDIARIES

INDEX

Page
Interim Consolidated Statement of Financial Position 1
Interim Consolidated Statements of Income 2
Interim Consolidated Statements of Other Comprehensive Income 3
Interim Consolidated Statement of Changes in Equity 4
Consolidated Statements of Cash Flows 5
1. Company information: 6
2. Legal regulations, basis of preparation and Other information: 7
3. New Accounting Pronouncements: 10
4. Changes in Accounting Policies and Disclosures: 18
5. Relevant Events: 19
6. Business Segments: 21
7. Cash and Cash Equivalents: 24
8. Financial Assets Held-for-trading: 25
9. Investments under resale agreements and obligations under repurchase agreements: 26
10. Derivative Instruments and Accounting Hedges: 28
11. Loans and Advances to Banks, net: 34
12. Loans to Customers, net: 35
13. Investment Securities: 41
14. Investments in Other Companies: 43
15. Intangible Assets: 45
16. Fixed assets, leased assets and lease liabilities: 47
17. Current Taxes and Deferred Taxes: 52
18. Other Assets: 56
19. Current Accounts and Other Demand Deposits: 57
20. Savings Accounts and Time Deposits: 57
21. Borrowings from Financial Institutions: 58
22. Debt Issued: 59
23. Other Financial Obligations: 62
24. Provisions: 62
25. Other Liabilities: 66
26. Contingencies and Commitments: 67
27. Equity: 72
28. Interest Revenue and Expenses: 75
29. Income and Expenses from Fees and Commissions: 77
30. Net Financial Operating Income: 78
31. Foreign Exchange Transactions, Net: 78
32. Provisions for Loan Losses: 79
33. Personnel Expenses: 80
34. Administrative Expenses: 81
35. Depreciation, Amortization and Impairment: 82
36. Other Operating Income: 83
37. Other Operating Expenses: 84
38. Related Party Transactions: 85
39. Fair Value of Financial Assets and Liabilities: 89
40. Maturity of Assets and Liabilities: 102
41. Subsequent Events: 106

i

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

For the periods ended March 31, 2021 and December 31, 2020

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

(Expressed in million of Chilean pesos)

March December
Notes 2021 2020
MCh$ MCh$
ASSETS
Cash and due from banks 7 2,203,602 2,560,216
Transactions in the course of collection 7 512,295 582,308
Financial assets held-for-trading 8 2,229,153 4,666,156
Investment under resale agreements 9 62,423 76,407
Derivative instruments 10 1,950,321 2,618,004
Loans and advances to banks 11 4,554,592 2,938,991
Loans to customers, net 12 31,047,999 30,190,058
Financial assets available-for-sale 13 1,064,518 1,060,523
Financial assets held-to-maturity 13 - -
Investments in other companies 14 43,980 44,649
Intangible assets 15 62,531 60,701
Property and equipment 16 222,586 217,928
Leased assets 16 117,940 118,829
Current tax assets 17 37,132 22,949
Deferred tax assets 17 353,667 357,945
Other assets 18 522,626 579,467
TOTAL ASSETS 44,985,365 46,095,131
LIABILITIES
Current accounts and other demand deposits 19 15,682,372 15,167,229
Transactions in the course of payment 7 838,056 1,302,000
Obligations under repurchase agreements 9 104,176 288,917
Savings accounts and time deposits 20 8,274,926 8,899,541
Derivative instruments 10 2,119,562 2,841,756
Borrowings from financial institutions 21 3,674,566 3,669,753
Debt issued 22 8,966,980 8,593,595
Other financial obligations 23 257,319 191,713
Lease liabilities 16 114,059 115,017
Current tax liabilities 17 189 311
Deferred tax liabilities 17 - -
Provisions 24 594,979 733,911
Other liabilities 25 538,057 565,120
TOTAL LIABILITIES 41,165,241 42,368,863
EQUITY 27
Attributable to Bank's Owners:
Capital 2,418,833 2,418,833
Reserves 703,373 703,206
Other comprehensive income (49,756 ) (51,250 )
Retained earnings:
Retained earnings from previous years 655,478 412,641
Income for the period 162,492 463,108
Less:
Provision for minimum dividends (70,297 ) (220,271 )
Subtotal 3,820,123 3,726,267
Non-controlling interests 1 1
TOTAL EQUITY 3,820,124 3,726,268
TOTAL LIABILITIES AND EQUITY 44,985,365 46,095,131

The accompanying notes 1 to 41 are an integral part of these interim consolidated financial statements

1

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF INCOME

for the three-month ended March 31, 2021 and 2020

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

(Expressed in million of Chilean pesos)

March March
Notes 2021 2020
MCh$ MCh$
Interest revenue 28 487,481 554,274
Interest expense 28 (152,904 ) (204,577 )
Net interest income 334,577 349,697
Income from fees and commissions 29 136,771 161,671
Expenses from fees and commissions 29 (28,501 ) (36,200 )
Net fees and commission income 108,270 125,471
Net financial operating income 30 5,210 9,154
Foreign exchange transactions, net 31 26,412 19,380
Other operating income 36 7,956 9,391
Total operating revenues 482,425 513,093
Provisions for loan losses 32 (54,067 ) (125,560 )
OPERATING REVENUES, NET OF PROVISIONS FOR LOAN LOSSES 428,358 387,533
Personnel expenses 33 (113,696 ) (107,043 )
Administrative expenses 34 (83,373 ) (82,688 )
Depreciation and amortization 35 (18,619 ) (18,469 )
Impairment 35 (1 ) -
Other operating expenses 37 (8,785 ) (12,093 )
TOTAL OPERATING EXPENSES (224,474 ) (220,293 )
NET OPERATING INCOME 203,884 167,240
Income attributable to associates 14 (657 ) 1,895
Income before income tax 203,227 169,135
Income tax 17 (40,735 ) (32,253 )
NET INCOME FOR THE PERIOD 162,492 136,882
Attributable to:
Bank's Owners 27 162,492 136,882
Non-controlling interests - -
Net income per share attributable to Bank's Owners: Ch$ Ch$
Basic net income per share 27 1.61 1.36
Diluted net income per share 27 1.61 1.36

The accompanying notes 1 to 41 are an integral part of these interim consolidated financial statements

2

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF

OTHER COMPREHENSIVE INCOME

for the three-month ended March 31, 2020 and 2020,

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

(Expressed in million of Chilean pesos)

March March
Notes 2021 2020
MCh$ MCh$
NET INCOME FOR THE PERIOD 162,492 136,882
OTHER COMPREHENSIVE INCOME THAT WILL BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS
Net gains (losses) on available-for-sale instruments valuation 13 507 (9,768 )
Net gains (losses) on derivatives held as cash flow hedges 10 1,539 1,935
Subtotal Other comprehensive income before income taxes 2,046 (7,833 )
Income tax relating to the components of other comprehensive income that are reclassified in income for the period (552 ) 2,107
Total other comprehensive income items that will be reclassified subsequently to profit or loss 1,494 (5,726 )
OTHER COMPREHENSIVE INCOME THAT WILL NOT BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS
Adjustment for defined benefit plans 24 229 81
Subtotal other comprehensive income before income taxes 229 81
Income tax relating to the components of other comprehensive income that will not be reclassified to income for the period 17 (62 ) (22 )
Total other comprehensive income items that will not be reclassified subsequently to profit or loss 167 59
CONSOLIDATED COMPREHENSIVE INCOME FOR THE PERIOD 164,153 131,215
Attributable to:
Bank's Owners 164,153 131,215
Non-controlling interests - -

The accompanying notes 1 to 41 are an integral part of these interim consolidated financial statements

3

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

for the three-month ended March 31, 2021 and 2020

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

(Expressed in millions of Chilean pesos)

Reserves Other comprehensive income Retained earnings
Notes Paid-in
Capital
Other
reserves
Reserves
from
earnings
Unrealized
gains
(losses) on
available-for-sale
Derivatives
cash flow
hedge
Income
Tax
Retained
earnings
from
previous
period
Income
(losses)
for the
period
Provision
for
minimum
dividends
Attributable
to equity
holders of
the parent
Non-
controlling
interest
Total
equity
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Balances as of December 31, 2019 2,418,833 31,780 671,492 3,827 (81,040 ) 20,612 170,171 593,008 (300,461 ) 3,528,222 1 3,528,223
Retention of profits - - - - - - 242,470 (242,470 ) - - - -
Dividends distributions and paid 27 - - - - - - - (350,538 ) 300,461 (50,077 ) - (50,077 )
Other comprehensive income:
Defined benefit plans adjustment, net - 59 - - - - - - - 59 - 59
Derivatives cash flow hedge 27 - - - - 1,935 (521 ) - - - 1,414 - 1,414
Valuation adjustment on available-for-sale instruments 27
- - - (9,768 ) - 2,628 - - - (7,140 ) - (7,140 )
Income for the period 2020 27 - - - - - - - 136,882 - 136,882 - 136,882
Provision for minimum dividends - - - - - - - - (58,469 ) (58,469 ) - (58,469 )
Balances as of March 31, 2020 2,418,833 31,780 671,492 3,827 (81,040 ) 20,612 170,171 593,008 (300,461 ) 3,528,222 1 3,528,223
Other comprehensive income:
Defined benefit plans adjustment, net - (125 ) - - - - - - - (125 ) - (125 )
Derivatives cash flow hedge, net - - - - 8,423 (2,276 ) - - - 6,147 - 6,147
Valuation adjustment on available-for-sale instruments - - - 6,742 - (1,812 ) - - - 4,930 - 4,930
Income for the period 2020 - - - - - - - 326,226 - 326,226 - 326,226
Provision for minimum dividends - - - - - - - - (161,802 ) (161,802 ) - (161,802 )

Balances as of December 31, 2020

2,418,833 31,714 671,492 801 (70,682 ) 18,631 412,641 463,108 (220,271 ) 3,726,267 1 3,726,268
Retention of profits 27 - - - - - - 242,837 (242,837 ) - - - -
Dividends distributions and paid 27 - - - - - - - (220,271 ) 220,271 - - -
Other comprehensive income:
Defined benefit plans adjustment, net - 167 - - - - - - - 167 - 167
Derivatives cash flow hedge, net 27
- - - - 1,539 (415 ) - - - 1,124 - 1,124
Valuation adjustment on available-for-sale instruments 27 - - - 507 - (137 ) - - - 370 - 370
Income for the period 2021 27 - - - - - - - 162,492 - 162,492 - 162,492
Provision for minimum dividends 27 - - - - - - - - (70,297 ) (70,297 ) - (70,297 )

Balances as of March 31, 2021

2,418,833 31,881 671,492 1,308 (69,143 ) 18,079 655,478 162,492 (70,297 ) 3,820,123 1 3,820,124

The accompanying notes 1 to 41 are an integral part of these interim consolidated financial statements

4

BANCO DE CHILE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

for the periods between January 1 and March 31,

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

(Expressed in million of Chilean pesos)

March March
Notes 2021 2020
MCh$ MCh$
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income for the period 162,492 136,882
Charges (credits) to income that do not represent cash flows:
Depreciation and amortization 35 18,619 18,469
Impairment 35 1 -
Provision for loans and accounts receivable from customers and owed by banks 32 32,044 128,356
Provision of contingent loans 32 (3,234 ) 7,007
Additional provisions 32 40,000 -
Fair value adjustment of financial assets held-for-trading 1,705 1,016
Changes in assets and liabilities by deferred taxes 17 4,079 7,197
(Gain) loss attributable to investments in companies with significant influence, net 14 668 (1,876 )
(Gain) loss from sales of assets received in lieu of payment,net (648 ) (1,361 )
(Gain) loss on sales of property and equipment, net 36 (3 ) (18 )
Charge-offs of assets received in lieu of payment 37 472 1,245
Other charges (credits) to income that do not represent cash flows 782 2,695
Net changes in exchange rate, interest and fees accrued on assets and liabilities (39,748 ) 144,753
Changes in assets and liabilities that affect operating cash flows:
(Increase) decrease in loans and advances to banks, net (1,615,290 ) (203,433 )
(Increase) decrease in loans to customers (813,496 ) (866,758 )
(Increase) decrease in financial assets held-for-trading, net 128,291 (69,749 )
(Increase) decrease in other assets and liabilities (64,975 ) (273,963 )
Increase (decrease) in current account and other demand deposits 513,925 543,498
Increase (decrease) in transactions from reverse repurchase agreements (175,531 ) 35,540
Increase (decrease) in savings accounts and time deposits (614,684 ) 630,811
Sale of assets received in lieu of payment or adjudicated 2,362 4,310
Total cash flows from operating activities (2,422,169 ) 244,621
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in financial assets available-for-sale, net (6,803 ) (283,201 )
Payments for lease agreements 16 (7,401 ) (7,509 )
Net changes in leased assets 16 (382 ) (419 )
Purchases of property and equipment 16 (11,878 ) (11,999 )
Sales of property and equipment 301 18
Acquisition of intangible assets 15 (6,018 ) (4,238 )
Acquisition of investments in companies 14 - -
Dividends received from investments in companies 14 11 19
Total cash flows from investing activities (32,170 ) (307,329 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of letters of credit (505 ) (670 )
Issuance of bonds 22 415,543 459,510
Redemption of bonds (99,489 ) (334,388 )
Dividends paid 27 (220,271 ) (350,538 )
Increase (decrease) in borrowings from foreign financial institutions 4,833 142,618
Increase (decrease) in other financial obligations 65,684 (34,421 )
Increase (decrease) in other obligations with Central Bank of Chile - -
Payment of other long-term borrowings (68 ) (147 )
Total cash flows from financing activities 165,727 (118,036 )
TOTAL NET NEGATIVE CASH FLOWS FOR THE PERIOD (2,288,612 ) (180,744 )
Effect of exchange rate changes 14,337 34,299
Cash and cash equivalents at beginning of period 6,088,115 3,931,371
Cash and cash equivalents at end of period 7 3,813,840 3,784,926
March March
2021 2020
Operational Cash flow interest: MCh$ MCh$
Interest received 412,436 466,572
Interest paid (103,270 ) 62,177

The accompanying notes 1 to 41 are an integral part of these interim consolidated financial statements

5

BANCO DE CHILE AND SUBSIDIARIES

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

1. Company information:

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

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

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

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

The Consolidated Financial Statements of Banco de Chile, for the period ended March 31, 2021 were approved by the Directors on April 29, 2021.

6

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

2. Legal regulations, basis of preparation and Other information:
(a) Legal regulations:

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

In accordance with the current legal framework, banks must use the accounting principles established by the CMF and in everything that is not dealt with by it or is contrary to its instructions, they must adhere to the generally accepted accounting principles, which correspond to the regulations techniques issued by the Colegio de Contadores de Chile AG, coinciding with the International Financial Reporting Standards ('IFRS') agreed by the International Accounting Standards Board ('IASB'). In the event of discrepancies between these generally accepted accounting principles and the accounting criteria issued by the CMF, the latter shall prevail.

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

(b) Basis of preparation:
(b.1) These Interim Consolidated Financial Statements are presented according to Chapter C-2 of the Compendium of Accounting Standards, issued by the CMF.
(b.2) The following table details the entities in which the Bank has control and are part of this consolidated financial statements:
Interest Owned
Direct Indirect Total
Functional March December March December March December
RUT Subsidiaries Country Currency 2021 2020 2021 2020 2021 2020
% % % % % %
96,767,630-6 Banchile Administradora General de Fondos S.A. Chile Ch$ 99.98 99.98 0.02 0.02 100.00 100.00
96,543,250-7 Banchile Asesoría Financiera S.A. Chile Ch$ 99.96 99.96 - - 99.96 99.96
77,191,070-K Banchile Corredores de Seguros Ltda. Chile Ch$ 99.83 99.83 0.17 0.17 100.00 100.00
96,571,220-8 Banchile Corredores de Bolsa S.A. Chile Ch$ 99.70 99.70 0.30 0.30 100.00 100.00
96,932,010-K Banchile Securitizadora S.A. (*) Chile Ch$ 99.01 99.01 0.99 0.99 100.00 100.00
96,645,790-2 Socofin S.A. Chile Ch$ 99.00 99.00 1.00 1.00 100.00 100.00
(*) Company in the process of early dissolution. See Note No. 5 b).

7

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

2. Legal regulations, basis of preparation and Other information, continued:
(c) Use of estimates and judgments:

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

1. Provision for loan losses (Notes No. 11, No. 12 and No. 32);
2. Useful life of intangible, property and equipment and leased assets and lease liabilities (Notes No. 15 and No. 16);
3. Income taxes and deferred taxes (Note No. 17);
4. Provisions (Note No. 24);
5. Contingencies and Commitments (Note No. 26);
6. Fair value of financial assets and liabilities (Note No. 39).

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

During the period ended March 31, 2021, there have been no changes in the estimates made.

(d) Seasonality or Cyclical Character of the Transactions of the Intermediate Period:

Given the activities to which the Bank and its subsidiaries are engaged, the transactions of the Bank do not have a cyclical or seasonal nature. For this reason, specific breakdowns in these notes to the Interim Consolidated Financial Statements for the three-month period ended March 31, 2021 are not included.

(e) Relative Importance:

In determining the information to be disclosed on the different items of the financial statements or other matters, the relative importance in relation to the Financial Statements of the period has been taken into account.

(f) Leases:

The Bank acts as a lessor

Assets that are leased to clients under contracts that substantially transfer all risks and property recognition, with or without legal title, are classified as a financial lease. When the retained assets are subject to a financial leasing, the leased assets are no longer recognized and are recorded an account receivable, which is equal to the minimum value of the lease payment, discounted at the interest rate of the lease. The initial negotiation expenses in a financial lease are incorporated into the account receivable through the discount rate applied to the lease. Lease income is recognized on lease terms based on a model that consistently reflects a periodic rate of return on the net investment of the lease.

8

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

2. Legal regulations, basis of preparation and Other information, continued:
(f) Leases, continued:

Assets that are leased to customers under contracts that do not transfer substantially all the risks and benefits of the property are classified as an operating lease.

The leased investment properties, under the operating lease modality, are included in 'Other assets' in the statement of financial position and depreciation is determined on the book value of these assets, applying a proportion of the value in a systematic way on the economic use of the estimated useful life. Lease income is recognized on a straight-line basis over the lease period.

The Bank acts as a lessee

A contract is or contains a lease if it has the right to control the use of an identified asset for a period of time in exchange for a consideration.

At the start date of a lease, an asset is determined by right of use of the leased asset at cost, which comprises the amount of the initial measurement of the lease liability plus other disbursements made.

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

The right-of-use asset is measured using the cost model less accumulated depreciation and accumulated impairment losses. The depreciation of the right-of-use asset is recognized in the Income Statement based on the straight-line method of depreciation from the start date and until the end of the term of the lease.

The monthly variation of the UF for the contracts established in said monetary unit should be treated as a new measurement, therefore the change in the Consumer Price Index (CPI) modifies the value of the lease liability and in parallel, the amount of the asset for the right to use leased assets must be adjusted for this effect.

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

According to IFRS 16 'Leases', the bank does not apply this standard to contracts with duration of 12 months or less and those that contain a low value underlying asset. In these cases, the payments are recognized as a lease expense.

(g) Reclassifications:

There have not been significant reclassifications at the end of this period 2021.

9

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

3. New Accounting Pronouncements:

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

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

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

Accounting standards issued by IASB.

IFRS 9 Financial Instruments, IFRS 7 Financial Instruments: Disclosures and IAS 39 Financial Instruments: Recognition and Measurement IFRS 4 Insurance Contracts and IFRS 16 Leases. Interest Rate Benchmark Reform.

In August 2020, the IASB issued a set of amendments related to phase 2 of the Benchmark Reform of Interbank Offering Rates (IBOR) and other benchmark interest rates amending IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16.

The amendments complement the changes issued during 2019 and focus on the effects on the financial statements when a company replaces the old interest rate benchmark with an alternative benchmark rate. The amendments in phase two refer to changes that affect the contractual cash flows. A company does not need to write off / adjust the book value of financial instruments for changes, but rather update the effective interest rate to reflect the change to an alternative benchmark. In the case of hedge accounting, a company does not need to discontinue hedge accounting because it makes the changes required by the reform if the hedge meets other hedge accounting criteria. Regarding disclosures, the company must disclose information about the new risks arising from the reform and how it manages the transition to the alternative benchmark rates.

The amendments are effective for annual reporting periods beginning on or after January 1, 2021. Early adoption of modifications is also allowed.

Banco de Chile has been working on the transition of reference rates, implementing an action plan that includes, among other aspects, identifying the main exposures and risks related to the LIBOR transition, developing products linked to the new reference rate, reviewing of current contracts and renegotiation with some of our clients, which will allow us to face the challenges imposed by the changes in the reference rates.

New standards and interpretations that have been issued but its date of application have not yet come into force:

The following is a summary of new standards, interpretations and improvements to the International Financial Reporting Standards issued by IASB that are not yet effective as of March 31, 2021, are detailed below:

10

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

3. New Accounting Pronouncements, continued:

Accounting standards issued by IASB.

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

In September 2014, the IASB published this modification, which clarifies the scope of the profits and losses recognized in a transaction that involves an associate or joint venture, and that this depends on whether the asset sold or contribution constitutes a business. Therefore, the IASB concluded that all gains or losses should be recognized against loss of control of a business. Likewise, the gains or losses that result from the sale or contribution of a subsidiary that does not constitute a business (definition of IFRS 3) to an associate or joint venture should be recognized only to the extent of unrelated interests in the associate or joint venture.

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

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

Limited Scope Amendments and Annual Improvements 2018-2020.

In May 2020, the IASB published a package of amendments of limited scope, as well as the 2018-2020 Annual Improvements, whose changes clarify the wording or correct minor consequences, omissions or conflicts between the requirements of the Standards.

Among other modifications, it contains amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets which specify the costs that an entity should include when evaluating whether a contract will cause losses, these costs include those that are directly related to the contract and may be costs incremental performance of that contract (for example, direct labor and materials), or an allocation of other costs that are directly related to the performance of contracts (for example, the allocation of the depreciation charge for an item of property, plant and equipment used to fulfill the contract).

These amendments will be effective as of January 1, 2022 and it is estimated that Banco de Chile and its subsidiaries will not have significant impacts on the Interim Consolidated Financial Statements as a result of the application of these amendments.

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

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

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

The amendments to IAS 1 will be effective for financial statement presentation periods beginning on or after January 1, 2023. Early application is permitted. If an entity applies those amendments to prior periods, it must disclose that fact.

11

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

3. New Accounting Pronouncements, continued:

The application of this amendment will not generate material impacts on the disclosure of accounting policies in the Interim Consolidated Financial Statements of Banco de Chile and its subsidiaries.

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

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

The amendments to IAS 8 will be effective for financial statement presentation periods beginning on or after January 1, 2023. Early application is permitted.

The application of this amendment will not have an impact on the Interim Consolidated Financial Statements of Banco de Chile and its subsidiaries.

IFRS 16 Leases. Extends the one-year term of Covid-19-related lease concessions.

In March 2021, the IASB published modifications to IFRS 16 that allow the accounting of concessions or rental facilities due to the effect of the pandemic declared by Covid-19 to be extended until June 30, 2022. The original amendment to IFRS 16 was issued in May 2020 and applied to lease contract facilities that reduce only lease payments due until June 30, 2021.

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

Accounting standards issued by the CMF.

Circular No. 2,243. Amends Compendium of Accounting Standards for Banks.

On December 20, 2019, the CMF published Circular No. 2,243, which updates the instructions of the Accounting Standards Compendium (CNC) for Banks.

The changes seek greater convergence with IFRS, as well as an improvement in the quality of financial information, to contribute to the financial stability and transparency of the banking system.

The main changes introduced to the CNC correspond to:

1) Incorporation of IFRS 9 with the exception of the Chapter 5.5 on impairment of loans classified as 'financial assets at amortized cost'. This exception is mainly due to prudential criteria set by the CMF. These criteria have given rise, over time, to the establishment of standard models that the banking institutions must apply to determine the impairment of the loan portfolio (Chapter B-1 of the CNC, for provisions).
2) Changes in the presentation formats of the Statement of Financial Position and Income Statement, when adopting IFRS 9 in replacement of IAS 39.

12

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

3. New Accounting Pronouncements, continued:
3) Incorporation of new presentation formats for the Statement of Other Comprehensive Income and the Statement of Changes in Equity and guidelines on financing and investment activities for the Statement of Cash Flows.
4) Incorporation of a financial report 'Management Comments' (according to the IASB Practice Document No. 1), which will complement the information provided by the interim and annual financial statements.
5) Modifications of some notes of the financial statements, among which are: Financial assets at amortized cost and Risk management, in order to better comply with the disclosure criteria contained in the IFRS 7. In addition, disclosures about related parties are aligned according to IAS 24.
6) Changes in the accounting plan of Chapter C-3 of the CNC, both in the accounts coding as well as in their description. The foregoing corresponds to the detailed information of the formats for the Statement of Financial Position, the Income Statement and the Statement of Other Comprehensive Income.
7) Modification of the criteria for the suspension of the recognition of interest income and UF indexation on an accrual basis, for any credit with a default equal to or greater than 90 days (Chapter B-2 of the CNC). Currently, the suspension of the recognition of interests and UF indexation occurs after 180 days.
8) Adaptation of the limitations and precisions to the use of IFRS contained in Chapter A-2 of the CNC.

In accordance with that established under the Circular No. 2,249 dated April 20, 2020, the new standard will be applicable from January 1, 2022, with a transition date of January 1, 2021, for purposes of the comparative Financial Statements that must be published from March 2022.

Nevertheless, the change in criteria for the suspension of the recognition of interest income and UF indexation on an accrual basis as provided in Chapter B-2, shall be adopted no later than January 1, 2022.

The Bank and its subsidiaries have structured an implementation project and have established various Committees to ensure its implementation. All this in order to comply with the new standards required for the preparation and presentation of the Financial Statements. The application of the rule of suspension of the recognition of interest and UF indexation on an accrual basis after 90 days of default will not have a significant impact on the Interim Consolidated Financial Statements.

13

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

3. New Accounting Pronouncements, continued:

Standards related to the implementation of Basel III.

During 2019, the CMF began the regulatory process for the implementation of Basel III standards in Chile, in accordance with the established on Law No. 21,130 that modernizes banking legislation. The new Law adopts the international standards in banking regulation and supervision.

On March 30, 2020, the CMF reported that, in coordination with the Central Bank of Chile, it resolved to postpone the implementation of the Basel III requirements for one year and maintain the general regulatory framework in force for banking capital requirements until December 2021.

On December 1, 2020, the CMF finalized the process of issuing the necessary regulations for the implementation of the new capital framework. The culmination of this regulatory process, which began with the first standard in public consultation in August 2019, represents a relevant step in strengthening the solvency and stability of the financial system. The new capital framework will allow for a more solid and robust banking system, a fundamental condition to face the impacts of the economic downturn with better tools.

The new standards, in addition to increasing the capitalization levels of Chilean banks; facilitate access to new and better sources of financing; harmonize the requirements between subsidiaries of foreign banks and local banks; and they contribute to the internationalization process of Chilean banking.

The new regulatory body issued by the CMF for the full implementation of the new capital requirements corresponds to the following:

- Equity for legal and regulatory purposes.
- Additional Capital Instruments Level 1 for the constitution of effective equity: preferred shares and bonds without fixed maturity term of article 55 bis of the General Banking Act.
- Level 2 capital instruments for the constitution of effective equity: subordinated bonds of article 55 of the General Banking Act.
- Determination of weighted assets by credit risk.
- Determination of weighted assets by market risk.
- Standardized methodology for calculating weighted assets by operational risk.
- Factors and methodology for banks or group of banks rated as systemically important and requirements that may be imposed as a result of this rating.
- Additional Basic Capital, Articles 66 Bis and 66 Ter of the General Banking Act.
- Evaluation of the Sufficiency of the banks' Cash Equity.
- Market discipline and transparency.
- Relation between basic capital and total assets.

14

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

3. New Accounting Pronouncements, continued:

Circular 2,270. Updates Chapter 1-13 'Classification of management and solvency' and introduces to the RAN a new Chapter 21-13 'Evaluation of the adequacy of effective equity of banks'.

On September 11, 2020, the CMF issued the standard that sets the general criteria and guidelines for the determination of additional equity requirements as a result of the supervision process, called Pillar 2. The new Chapter 21-13, which distinguishes 2 processes (1) The capital self-assessment process, in which the banks themselves will determine their internal objective of effective equity, necessary to cover their risks in a horizon of at least three years and (2) The CMF's assessment of the adequacy of banks' effective equity to support their risk profile, as determined in the annual supervisory review process. This regulation will be effective immediately. The effective equity self-assessment report to be submitted by banks during this year will be based only on credit risk, and the one for 2022 will incorporate market and operational risks. Both reports will have a simplified format. As of 2023, the report with all its sections will be required, considering all the material risks of the institution, including those for which there is no measurement standard.

Circular No. 2,272, incorporates Chapter 21-12 'Additional basic capital, articles 66 bis and 66 ter of the general banking law' into the RAN.

On September 25, 2020, the CMF published the regulations that define the operating procedures for the calculation, implementation and supervision of additional capital charges, known as capital buffers (Conservation Buffer and a Countercyclical Buffer). Both buffers must be constituted with Common Equity Tier 1 ('CET1'), and its fulfillment will be a requirement to qualify with note A of solvency.

The Conservation Buffer is a fixed charge equal to 2.5% of the APR net of required provisions. The Cyclical Buffer is a variable charge that ranges between 0% and 2.5% of the RWA net of required provisions.

As of December 1, 2021, the requirement of the Conservation Buffer will be 0.625%, increasing by the same percentage each year, until reaching the regime on December 1, 2024. The same transitory requirement will apply to the maximum value of the Countercyclical Buffer that can be defined by the Chile Central Bank.

Circular No. 2,273. Incorporates Chapter 21-30 'Relationship between basic capital and total assets' in the RAN.

On October 5, 2020, the CMF issued the rule that regulates the calculation of the relationship between basic capital and total assets (leverage ratio). The standard introduces improvements both in the measurement of basic capital (numerator) and of the bank's total assets (denominator). The lower limit of 3% for the leverage ratio was introduced in Chilean banking regulation in the 1997 LGB reform (Article 66). The regulation is effective as of December 1, 2020, without prejudice to the transitory measures for the calculation of regulatory capital, contemplated in Title V of Chapter 21-1 'Equity for legal and regulatory purposes' of the RAN. The first discount must be made on December 1, 2022, corresponding to 15% of the discounts. This amount will increase to 30% on December 1, 2023 and 65% on December 1, 2024, until full implementation is reached as of December 1, 2025.

15

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

3. New Accounting Pronouncements, continued:

Circular No. 2,274. Incorporates Chapter 21-1 'Equity for legal and regulatory purposes' into the RAN, replacing Chapter 12-1 'Equity for legal and regulatory purposes'.

On October 8, 2020, the CMF established the guidelines for calculating equity for legal and regulatory purposes, debugging items of low quality or whose value is uncertain in a settlement scenario and sets prudential rules for concentration, in accordance with the current legal framework. The standard considers the definition of three levels of capital, for which the terminology used by the Basel Committee is used, that is: Common Equity Tier 1 ('CET1'), Additional Tier 1 Capital ('AT1') and Equity Tier 2 capital ('T2'). The first adjustment must be made on December 1, 2022, corresponding to 15% of the discounts. This amount will increase to 30% on December 1, 2023 and 65% on December 1, 2024, until reaching full implementation as of December 1, 2025.

Circular No. 2,276. Incorporates to the RAN Chapter 21-11 'Factors and methodology for banks or group of banks rated as systemically important and requirements that may be imposed as a result of this rating'.

On November 2, 2020, the CMF, with the prior favorable agreement of the Central Bank of Chile, established the dispositions that have as a reference framework the evaluation methodology established by the Basel Committee on Banking Supervision and international practice, considered for the identification and treatment of systemically important banks at the local level. Also, in line with the methodology used to classify systemic banks at the global level and the factors established in the General Banking Act, the identification is based on an index or measure of systemic importance per bank, constructed from variables that reflect the local impact of its financial impairment or eventual insolvency. Depending on the value of this index, a range of additional capital requirements is established.

The requirements derived from the first application may be gradually established. The initial charge in December 2021 will be 0% and will increase by 25% each year until reaching the regime in December 2025.

Circular No. 2,279. Incorporates to the RAN Chapters 21-2 'Additional Capital Instruments Level 1 for the constitution of effective equity: preferred shares and bonds without fixed maturity term of article 55 bis of the General Banking Act' and 21-3 'Level 2 capital instruments for the constitution of effective equity: subordinated bonds of article 55 of the General Banking Act'.

On November 24, 2020, the CMF incorporated Chapter 21-2 into the RAN, which contains the minimum requirements and conditions that preference shares and bonds with no fixed maturity term must satisfy in article 55 bis of the General Banking Act and Chapter 21-3 of the RAN which contains the minimum requirements and conditions that subordinate bonds must satisfy in article 55 of the General Banking Act, this chapter repeals and replaces chapter 9-6 of the RAN.

16

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

3. New Accounting Pronouncements, continued:

These regulations came into effect on December 1, 2020, the date on which banks must determine the level of capital AT1 and T2 that is applicable, in accordance with the provisions of the regulations.

During the first year of application, subordinated bonds and voluntary provisions may be computed as equivalent to AT1 instruments, with a limit of 1.5% of the RWA net of required provisions. From the second year on, the substitution limit will progressively decrease (by 0.5%) to reach 0% in 4 years.

Circular No. 2,280. Standardized methodology for calculating Operational risk weighted assets ('ORWA'). Incorporates to the RAN Chapter 21-8.

On December 1, 2020. The CMF published the definitive norm related to the standardized methodology for computing ORWAs, incorporating chapter 21-8 to the RAN. The dispositions of this new Chapter consider the methodology established by the Basel Committee on Banking Supervision as a reference framework.

For the computation of operational risk, a single standard method is established, in accordance with the recommendations of the aforementioned Committee, not allowing the use of proprietary methodologies referred to in the second paragraph of article 67 for this type of risk.

The regulations entered into force on December 1, 2020. Also, it was established that until December 1, 2021, assets weighted by operational risk are equal to 0.

Circular No. 2,281. Determination of Credit Risk Weighted Assets ('CRWA'). Incorporates to the RAN Chapter 21-6.

On December 1, 2020, the CMF published the definitive regulations related to the determination of CRWAs, incorporating chapter 21-6 to the RAN. As set out in the Article 67 of the General Banking Act, it is up to the CMF to establish standardized methodologies to cover the relevant risks of banking companies, among which is credit risk, with a prior favorable agreement from the Central Bank of Chile.

This new standard includes a transitory provision, which establishes that the computation of assets weighted by credit risk is carried out in accordance with the current dispositions of Title II of Chapter 12-1 of the RAN, until November 30, 2021; The new methodology must be applied as of December 1, 2021.

Circular No. 2,282. Incorporates to the RAN the new Chapter 21-7 on the determination of Market Risk Weighted Assets ('MRWA').

On December 1, 2020, the CMF incorporated the new Chapter 21-7 on the determination of MRWA into the RAN.

For the application of the provisions of this new Chapter, which will be in force as of December 1, 2020, a transitional disposition is contemplated that considers a market risk weight equal to zero until December 1, 2021.

17

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

3. New Accounting Pronouncements, continued:

Circular No. 2,283. Promotion of market discipline and transparency through the disclosure of information requirements from banking entities (Pillar 3). Incorporates Chapter 21-20 into the RAN.

On December 1, 2020, the CMF published the definitive regulation related to the promotion of market discipline and transparency through the disclosure of information requirements from banking entities (Pillar 3) Incorporating Chapter 21-20 into the Updated Compilation of Standards (RAN).

This new chapter contains the dispositions to promote market discipline and financial transparency through the disclosure of meaningful and timely information from banking entities to market agents, based on the international standards proposed by the Basel Committee on Banking Supervision in 2017. The established conditions operate as a complement to the requirements of Pillar 1 and 2 in coherence with the local implementation of each of these standards, in addition to being consistent with the dispositions of the General Banking Act.

The information referred to in this new Chapter is effective as of December 1, 2022 and must be published for the first time in 2023 with information regarding the January-March quarter of said year.

4. Changes in Accounting Policies and Disclosures:

During the period ended March 31, 2021, no significant accounting changes have occurred that affect the presentation of these Interim Consolidated Financial Statements.

18

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

5. Relevant Events:
a) On January 28, 2021, the Board of Directors of Banco de Chile agreed to convene an Ordinary Shareholders Meeting on March 25, 2021 in order to propose, among other matters, the following distribution of profits for the year ended on December 31, 2020:
i. Deduct and withhold from the net income of the year, an amount equivalent to the effect of inflation of the paid capital and reserves according to the variation of the Consumer Price Index that occurred between November 2019 and November 2020, amounting to Ch$95,989,016,547 which will be added to retained earnings from previous periods.
ii. From the resulting balance, distribute in the form of a dividend 60% of the remaining liquid profit, corresponding to a dividend of Ch$2.18053623438 to each of the 101,017,081,114 shares of the Bank, retaining the remaining 40%.

Consequently, it proposed the distribution as a dividend of 47.6% of the profits for the year ended December 31, 2020.

b) On February 4, 2021, the subsidiary Banchile Securitizadora S.A. in an Extraordinary Shareholders' meeting agreed on the early dissolution of this subsidiary, as previously approved by the Financial Market Commission.
c) On March 25, 2021, at the Bank's Ordinary Shareholders' Meeting, the shareholders proceeded to make the definitive appointment of Mr. Raúl Anaya Elizalde as Titular Director of Banco de Chile, a position that he will hold until the next renewal of the Board of Directors.
d) In the context of the COVID-19 pandemic declared in March 2020 by the World Health Organization ('WHO'), this year, on March 13, 2021 the Chilean Government has decided to extend the State of Exception constitutional, thus allowing to maintain a series of sanitary measures, including mobility restrictions and quarantines in the national territory, as well as the beginning of a mass vaccination process carried out by the Ministry of Health, among other measures, with the purpose of to mitigate and control the spread of contagions. As of the date of issuance of these financial statements, the situation derived from the COVID-19 pandemic still affects a large part of the population of the country and the national territory.

The Government and the Central Bank of Chile have maintained countercyclical measures, which have contributed to a gradual recovery in activity. On the fiscal front, the implemented measures have mobilized resources for more than 11% of GDP, including direct transfers and capitalizations to unemployment insurance and Fogape (Fogape COVID-19), among others. On February 3, 2021, Law No. 21,307 was published in the official newspaper, which modifies the Guarantee Fund for Small and Medium-sized Entrepreneurs (Fogape) in order to promote the reactivation and recovery of the economy, which modifies the Decree Law No. 3,472, of 1980, of the Ministry of Finance, which creates the Guarantee Fund for Small Entrepreneurs (Reactive Fogape).

19

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

5. Relevant Events, continued:

For its part, the Central Bank has lowered the Monetary Policy Rate to a minimum of 0.5% and has maintained a series of unconventional measures, among which the establishment of the Loan Increase Conditional Credit Facility program (FCIC by its Spanish initials) a special financial line for banking companies complemented with the activation of a 'Liquidity Credit Line' (LCL) and purchases of bonds in the financial market, among others. As of March 31, 2021, the Bank has made use of these financing facilities for an amount of Ch$3,110,774 million. To access the FCIC, the Bank has established guarantees in favor of the Central Bank of Chile for a total amount of approximately Ch$2,290,381 million, corresponding to commercial placements of the individual portfolio of high credit quality for Ch$2,041,328 million, and securities of fixed income for an approximate amount of Ch$249,053 million. In the case of the LCL, the guarantee provided corresponds to the reserve held by the Bank.

Additionally, the National Congress approved two reforms to the constitution that allowed withdrawals of up to 10% of the resources available in the individual capitalization accounts, which allowed an aggregate withdrawal equivalent to Ch$24,500,000 million, a situation that has brought pressure on prices of goods and financial assets. As of the date of issuance of these financial statements, a third withdrawal has been approved.

Within this context, our Bank adopted several measures, along with executing contingency plans, in order to: (i) safeguard the health of clients and employees, including the temporary suspension of operation of some branches, (ii) ensure the operational continuity of services and mitigate potential operational risks, and (iii) strengthen service remote channels and the implementation of remote working for a large group of employees.

Although as of the date of issuance of these Interim Consolidated Financial Statements, the impact of the pandemic on our operating results is difficult to quantify, it is possible to anticipate certain factors such as: (i) uncertainty in certain economic sectors, (ii) low interest rates for a long period of time, (iii) low level of internal demand, (iv) high levels of unemployment, (v) total or partial quarantines affecting commercial activities, and (vi) mobility restrictions that will have an adverse effect on our operating revenues, loan loss provisions and operating expenses. Although these effects have been significant and will persist even over time, its magnitude will depend on the duration and depth of the effects of the pandemic, as well as the impact on structural variables, including the trend growth of the economy.

20

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

6. Business Segments:

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

Retail: This segment focuses on individuals and small and medium-sized companies (SMEs) with annual sales up to UF 70,000, where the product offering focuses primarily on consumer loans, commercial loans, checking accounts, credit cards, credit lines and mortgage loans.
Wholesale: This segment focused on corporate clients and large companies, whose annual revenue exceed UF 70,000, where the product offering focuses primarily on commercial loans, checking accounts and liquidity management services, debt instruments, foreign trade, derivative contracts and leases.
Treasury: This segment includes the associated revenues to the management of the investment portfolio and the business of financial transactions and currency trading.

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

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

Entity

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

(*) Company in the process of early dissolution. See Note No. 5 b).

21

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

6. Business Segments, continued:

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

The net interest margin of loans and deposits is obtained aggregating the net financial margins of each individual operation of credit and uptake made by the bank. For these purposes, the volume of each operation and its contribution margin are considered, which in turn corresponds to the difference between the effective rate of the customer and the internal transfer price established according to the term and currency of each operation. Additionally, the net margin includes the result of interest and indexation from the accounting hedges.
Provisions for credit risk are determined at the customer level based on the characteristics of each of their operations. In the case of additional provisions, these are assigned to the different business segments based on the credit risk weighted assets that each segment has
The capital and its financial impacts on outcome have been assigned to each segment based on the risk-weighted assets.
Operational expenses are reflected at the level of the different functional areas of the Bank. The allocation of expenses from functional areas to business segments is done using different allocation criteria, at the level of the different concepts and expense items.

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

For the periods ended March 31, 2021 and 2020 there was no income from transactions with a customer or counterparty that accounted for 10% or more of the Bank's total revenues.

22

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

6. Business Segments, continued:

The following table presents the income by segment for the periods ended March 31, 2021 and 2020 for each of the segments defined above:

Retail Wholesale Treasury Subsidiaries Subtotal

Consolidation

adjustment

Total
March March March March March March March March March March March March March March
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Total operating revenue 302,295 349,804 128,848 134,228 12,655 (1,848 ) 42,896 35,215 486,694 517,399 (4,269 ) (4,306 ) 482,425 513,093
Net interest income 233,584 257,921 98,990 95,916 1,997 (3,597 ) (68 ) (1,574 ) 334,503 348,666 74 1,031 334,577 349,697
Net commissions income (loss) 61,232 78,759 14,740 12,913 (441 ) (554 ) 35,788 37,686 111,319 128,804 (3,049 ) (3,333 ) 108,270 125,471
Financial and exchange operations results 1,856 7,681 12,210 21,426 11,099 2,303 6,488 (1,889 ) 31,653 29,521 (31 ) (987 ) 31,622 28,534
Other operating income 5,623 5,443 2,908 3,973 - - 688 992 9,219 10,408 (1,263 ) (1,017 ) 7,956 9,391
Provision for loan losses (37,082 ) (95,334 ) (17,403 ) (30,158 ) - - 418 (68 ) (54,067 ) (125,560 ) - - (54,067 ) (125,560 )
Total operating expenses (156,648 ) (154,488 ) (43,018 ) (46,275 ) (981 ) (792 ) (28,096 ) (23,044 ) (228,743 ) (224,599 ) 4,269 4,306 (224,474 ) (220,293 )
Personnel expenses (72,604 ) (71,773 ) (22,250 ) (20,380 ) (607 ) (470 ) (18,239 ) (14,422 ) (113,700 ) (107,045 ) 4 2 (113,696 ) (107,043 )
Administrative expenses (64,063 ) (64,523 ) (14,946 ) (15,354 ) (82 ) (68 ) (8,547 ) (7,047 ) (87,638 ) (86,992 ) 4,265 4,304 (83,373 ) (82,688 )
Depreciation and amortization (15,256 ) (15,204 ) (1,939 ) (1,740 ) (7 ) (5 ) (1,417 ) (1,520 ) (18,619 ) (18,469 ) - - (18,619 ) (18,469 )
Other operating expenses (4,725 ) (2,988 ) (3,883 ) (8,801 ) (285 ) (249 ) 107 (55 ) (8,786 ) (12,093 ) - - (8,786 ) (12,093 )
Income attributable to associates (951 ) 1,794 270 83 14 14 10 4 (657 ) 1,895 - - (657 ) 1,895
Income before income taxes 107,614 101,776 68,697 57,878 11,688 (2,626 ) 15,228 12,107 203,227 169,135 - - 203,227 169,135
Income taxes (40,735 ) (32,253 )
Income after income taxes 162,492 136,882

The following table presents assets and liabilities of the periods ended March 31, 2021 and December 31, 2020 by each segment defined above:

Retail Wholesale Treasury Subsidiaries Subtotal

Consolidation

adjustment

Total
March December March December March December March December March December March December March December
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Assets 19,372,779 18,800,897 11,179,780 10,811,021 13,467,741 15,400,139 831,499 830,910 44,851,799 45,842,967 (257,233 ) (128,730 ) 44,594,566 45,714,237
Current and deferred taxes 390,799 380,894
Total assets 44,985,365 46,095,131
Liabilities 14,172,509 13,647,952 9,622,020 9,980,003 16,940,417 18,208,458 687,339 660,869 41,422,285 42,497,282 (257,233 ) (128,730 ) 41,165,052 42,368,552
Current and deferred taxes 189 311
Total liabilities 41,165,241 42,368,863

23

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

7. Cash and Cash Equivalents:
(a) The detail of the balances included under cash and cash equivalents and their reconciliation with the Statement of Cash Flows at the end of each period are detailed as follows:
March December
2021 2020
MCh$ MCh$
Cash and due from banks:
Cash (*) 1,027,973 615,842
Deposit in Chilean Central Bank (*) 239,888 641,890
Deposits in other domestic banks 99,786 14,506
Deposits abroad 835,955 1,287,978
Subtotal - Cash and due from banks 2,203,602 2,560,216
Net transactions in the course of collection (325,761 ) (719,692 )
Highly liquid financial instruments (**) 1,905,902 4,212,719
Repurchase agreements (**) 30,097 34,872
Total cash and cash equivalents 3,813,840 6,088,115
(*) Amounts in cash funds and in Central Bank are regulatory reserve deposits that the Bank must maintain as a monthly average.
(**) It corresponds to negotiation instruments and repurchases contracts that meet the definition of cash and cash equivalents.
(b) Transactions in course of settlement:

Transactions in course of settlement are transactions for which the only remaining step is settlement, which will increase or decrease the funds in the Central Bank or in foreign banks, normally occurring within 24 to 48 business hours, and are detailed as follows:

March December
2021 2020
MCh$ MCh$
Assets
Documents drawn on other banks (clearing) 70,852 123,267
Funds receivable 441,443 459,041
Subtotal - assets 512,295 582,308
Liabilities
Funds payable (838,056 ) (1,302,000 )
Subtotal - liabilities (838,056 ) (1,302,000 )
Net transactions in the course of settlement (325,761 ) (719,692 )

24


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

8. Financial Assets Held-for-trading:

The detail of financial instruments classified as held-for-trading is as follows:

March December
2021 2020
MCh$ MCh$
Instruments issued by the Chilean Government and Central Bank of Chile
Central Bank of Chile bonds 1,160 3,186
Central Bank of Chile promissory notes 1,535,902 4,006,490
Other instruments issued by the Chilean Government and Central Bank 128,457 149,616
Other instruments issued in Chile
Bonds from other domestic companies - 5,396
Bonds from domestic banks 13,266 5,494
Deposits in domestic banks 144,926 93,905
Other instruments issued in Chile 1,618 1,003
Instruments issued Abroad
Instruments from foreign governments or central banks - -
Other instruments issued abroad 1,295 164
Mutual fund investments
Funds managed by related companies 402,529 400,902
Funds managed by third-party - -
Total 2,229,153 4,666,156

Under 'Instruments issued by the Chilean Government and Central Bank of Chile' are classified instruments sold under repurchase agreements to customers and financial instruments, by an amount of Ch$217,614 million as of December 31, 2020. Repurchase agreements had a 4 days average expiration at the year 2020. As of March 31, 2021 there is no amount for this concept. Additionally, under this line are maintained instruments to comply with the requirements for the constitution of the technical reserve for an amount equivalent to Ch$1,213,195 million as of March 31, 2021 (Ch$2,986,000 million in December 2020).

'Other instruments issued in Chile' include instruments sold under repurchase agreements with customers and financial instruments amounting to Ch$98,256 million as of March 31, 2021 (Ch$52,809 million as of December 31, 2020). The repurchase agreements have an average expiration of 6 days as of period-end 2021 (9 days in December 2020).

Additionally, the Bank holds financial investments in mortgage finance bonds issued by itself in the amount of Ch$4,650 million as of March 31, 2021 (Ch$5,156 million as of December 31, 2020), which are presented as a reduction of the liability line item 'Debt issued'.

25

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

9. Investments under resale agreements and obligations under repurchase agreements:
(a) Rights arising from resale repurchase agreements: The Bank provides financing to its customers through repurchase agreements and securities lending, in which the financial instrument serves as collateral. As of March 31, 2021 and December 31, 2020, the detail is as follows:
Up to
1 month
Over
1 month
and up to
3 months
Over
3 months
and up to
12 months
Over
1 year
and up to
3 years
Over
3 years
and up to
5 years
Over
5 years
Total
March December March December March December March December March December March December March December
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Instruments issued by the Chilean Governments and Central Bank of Chile
Central Bank bonds - - - - - - - - - - - - -
Central Bank promissory notes - - - - - - - - - - - - - -
Other instruments issued by the Chilean Government and Central Bank of Chile - 10,006 - - - - - - - - - - - 10,006
Subtotal - 10,006 - - - - - - - - - - - 10,006
Other Instruments issued in Chile
Deposit promissory notes from domestic banks - - - - - - - - - - - - - -
Mortgage bonds from domestic banks - - - - - - - - - - - - - -
Bonds from domestic banks - - - - - - - - - - - - - -
Deposits in domestic banks - - - - - - - - - - - - - -
Bonds from other Chilean companies - - - - - - - - - - - - - -
Other instruments issued in Chile 25,921 29,089 18,380 20,591 18,122 16,721 - - - - - - 62,423 66,401
Subtotal 25,921 29,089 18,380 20,591 18,122 16,721 - - - - - - 62,423 66,401
Instruments issued by foreign institutions
Instruments from foreign governments or Central Bank - - - - - - - - - - - - - -
Other instruments - - - - - - - - - - - - - -
Subtotal - - - - - - - - - - - - - -
Mutual fund investments
Funds managed by related companies - - - - - - - - - - - - - -
Funds managed by third-party - - - - - - - - - - - - - -
Subtotal - - - - - - - - - - - - - -
Total 25,921 39,095 18,380 20,591 18,122 16,721 - - - - - - 62,423 76,407

Securities received:

The Bank and its subsidiaries have received financial instruments that they can sell or give as collateral in case the owner of these instruments enters into default or in bankruptcy. As of March 31, 2021, the fair value of the instruments received amounts to Ch$67,387 million (Ch$82,585 million as of December, 2020).

26

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

9. Investments under resale agreements and obligations under repurchase agreements, continued:
(b) Obligations arising from repurchase agreements: The Bank obtains financing by selling financial instruments and agreeing to repurchase them in the future, plus interest at a prefixed rate. As of March 31, 2021 and December 31, 2020, the repurchase agreements are the following:
Up to 1 month Over 1 month and up to 3 months Over 3 months and up to 12 months Over 1 year and up to 3 years Over 3 years and up to 5 years Over 5 years Total
March December March December March December March December March December March December March December
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Instruments issued by the Chilean Governments and Central Bank of Chile
Central Bank bonds - - - - - - - - - - - - - -
Central Bank promissory notes - 183,083 - - - - - - - - - - - 183,083
Other instruments issued by the Chilean Government and Central Bank of Chile 3,305 47,763 - - - - - - - - - - 3,305 47,763
Subtotal 3,305 230,846 - - - - - - - - - - 3,305 230,846
Other Instruments issued in Chile
Deposit promissory notes from domestic banks - - - - - - - - - - - - - -
Mortgage bonds from domestic banks - - - - - - - - - - - - - -
Bonds from domestic banks - - - - - - - - - - - - - -
Deposits in domestic banks 98,367 57,648 43 43 40 - - - - - - - 98,450 57,691
Bonds from other Chilean companies - - - - - - - - - - - - - -
Other instruments issued in Chile 2,418 380 - - 3 - - - - - - - 2,421 380
Subtotal 100,785 58,028 43 43 43 - - - - - - - 100,871 58,071
Instruments issued by foreign institutions
Instruments from foreign governments or central bank - - - - - - - - - - - - - -
Other instruments issued by foreing - - - - - - - - - - - - - -
Subtotal - - - - - - - - - - - - - -
Mutual fund investments
Funds managed by related companies - - - - - - - - - - - - - -
Funds managed by third-party - - - - - - - - - - - - - -
Subtotal - - - - - - - - - - - - - -
Total 104,090 288,874 43 43 43 - - - - - - - 104,176 288,917

Securities sold:

The fair value of the financial instruments delivered as collateral by the Bank and its subsidiaries, in sales transactions with repurchase agreement and securities lending as of March 31, 2021 amounts to Ch$101,829 million (Ch$288,523 million in December 2020). In the event that the Bank and its subsidiaries enter into default or bankruptcy, the counterparty is authorized to sell or deliver these investments as collateral.

27

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

10. Derivative Instruments and Accounting Hedges:
(a) As of March 31, 2021 and December 31, 2020, the Bank's portfolio of derivative instruments is detailed as follows:
Notional amount of contract with final expiration date in Fair Value
As of March 31, 2021 Up to
1 month
Over
1 month
and up to
3 months
Over
3 months
and up to
12 months
Over
1 year
and up to
3 years
Over
3 year
and up to
5 years
Over
5 years
Total Assets Liabilities
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Derivatives held for hedging purposes
Interest rate swap and cross currency swap - - - 5,088 - - 5,088 - 1,685
Interest rate swap - - - - - 11,109 11,109 - 1,481
Total derivatives held for hedging purposes - - - 5,088 - 11,109 16,197 - 3,166
Derivatives held as cash flow hedges
Interest rate swap and cross currency swap - - 166,164 173,844 216,197 674,839 1,231,044 34,386 82,126
Total derivatives held as cash flow hedges - - 166,164 173,844 216,197 674,839 1,231,044 34,386 82,126
Trading derivatives
Currency forward 8,657,497 4,411,830 7,418,502 1,100,294 65,268 26,603 21,679,994 305,212 327,420
Interest rate swap 1,455,772 3,007,717 9,620,932 12,642,453 7,171,995 10,591,785 44,490,654 828,736 818,825
Interest rate swap and cross currency swap 219,139 1,089,071 3,203,557 6,204,270 3,522,460 4,813,560 19,052,057 780,749 886,527
Call currency options 12,107 23,032 24,574 745 - - 60,458 650 257
Put currency options 12,963 15,450 23,960 - - - 52,373 588 1,241
Total trading derivatives 10,357,478 8,547,100 20,291,525 19,947,762 10,759,723 15,431,948 85,335,536 1,915,935 2,034,270
Total 10,357,478 8,547,100 20,457,689 20,126,694 10,975,920 16,117,896 86,582,777 1,950,321 2,119,562

28

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

10. Derivative Instruments and Accounting Hedges, continued:
(a) Portfolio of derivative instruments, continued:
Notional amount of contract with final expiration date in Fair Value
As of December 31, 2020 Up to
1 month
Over
1 month
and up to
3 months
Over
3 months
and up to
12 months
Over
1 year
and up to
3 years
Over
3 year
and up to
5 years
Over
5 years
Total Assets Liabilities
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Derivatives held for hedging purposes
Interest rate swap and cross currency swap - - - 5,031 - - 5,031 - 1,646
Interest rate swap - - - - - 29,508 29,508 - 4,873
Total derivatives held for hedging purposes - - - 5,031 - 29,508 34,539 - 6,519
Derivatives held as cash flow hedges
Interest rate swap and cross currency swap - - 164,330 171,925 213,811 667,391 1,217,457 51,062 65,172
Total derivatives held as cash flow hedges - - 164,330 171,925 213,811 667,391 1,217,457 51,062 65,172
Trading derivatives
Currency forward 7,320,775 5,754,021 7,753,967 823,355 60,193 26,340 21,738,651 551,964 637,186
Interest rate swap 1,516,969 2,797,327 10,330,399 12,705,904 6,658,095 10,180,750 44,189,444 1,167,416 1,189,828
Interest rate swap and cross currency swap 439,244 809,124 3,459,603 5,892,574 3,442,030 4,850,644 18,893,219 845,831 940,646
Call currency options 10,581 25,382 34,294 1,657 - - 71,914 269 306
Put currency options 9,605 20,470 26,893 427 - - 57,395 1,462 2,099
Total trading derivatives 9,297,174 9,406,324 21,605,156 19,423,917 10,160,318 15,057,734 84,950,623 2,566,942 2,770,065
Total 9,297,174 9,406,324 21,769,486 19,600,873 10,374,129 15,754,633 86,202,619 2,618,004 2,841,756

29

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

10. Derivative Instruments and Accounting Hedges, continued:
(b) Fair value Hedges:

The Bank uses cross-currency swaps and interest rate swaps to hedge its exposure to changes in the fair value of the hedged elements attributable to interest rates in financial instruments or loans. The aforementioned hedge instruments change the effective cost of long-term assets from a fixed interest rate to a floating rate, decreasing the duration and modifying the sensitivity to the shortest segments of the curve.

Below is a detail of the hedged elements and instruments under fair value hedges as of March 31, 2021 and December 31, 2020:

March December
2021 2020
MCh$ MCh$
Hedge element
Commercial loans 5,088 5,031
Corporate bonds 11,109 29,508
Hedge instrument
Cross currency swap 5,088 5,031
Interest rate swap 11,109 29,508
(c) Cash flow Hedges:
(c.1) The Bank uses cross currency swaps to hedge the risk from variability of cash flows attributable to changes in the interest rates and foreign exchange of foreign banks obligations and bonds issued abroad in US Dollars, Hong Kong dollars, Swiss Franc, Japanese Yens, Peruvian Sol, Australian Dollars, Euros and Norwegian kroner. The cash flows of the cross currency swaps equal the cash flows of the hedged items, which modify uncertain cash flows to known cash flows derived from a fixed interest rate.

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

30

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

10. Derivative Instruments and Accounting Hedges, continued:
(c) Cash flow Hedges, continued:
(c.2) Below are the cash flows from bonds issued abroad objects of this hedge and the cash flows of the asset part of the derivative instrument:
Up to 1 month Over 1 month and up to
3 months
Over 3 months and up to
12 months
Over 1 year and up to
3 years
Over 3 years and up to
5 years
Over 5 years Total
March December March December March December March December March December March December March December
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Hedge element
Outflows:
Corporate Bond EUR (764 ) - - - (659 ) (1,473 ) (2,846 ) (2,946 ) (42,546 ) (44,037 ) (50,114 ) (51,871 ) (96,929 ) (100,327 )
Corporate Bond HKD (2,091 ) - - - (11,356 ) (13,352 ) (91,635 ) (90,988 ) (78,926 ) (78,369 ) (271,815 ) (269,894 ) (455,823 ) (452,603 )
Corporate Bond PEN - - - (775 ) (1,509 ) (775 ) (3,018 ) (3,098 ) (2,264 ) (3,098 ) (40,410 ) (41,484 ) (47,201 ) (49,230 )
Corporate Bond CHF - - - - (784 ) (829 ) (89,260 ) (94,332 ) (114,667 ) (121,182 ) - - (204,711 ) (216,343 )
Corporate Bond USD (765 ) - - - (765 ) (1,515 ) (3,060 ) (3,030 ) (3,060 ) (3,030 ) (40,540 ) (40,140 ) (48,190 ) (47,715 )
Obligation USD (202 ) (202 ) (77 ) (76 ) (158,746 ) (157,455 ) - - - - - - (159,025 ) (157,733 )
Corporate Bond JPY - - (998 ) - (998 ) (2,115 ) (35,953 ) (38,110 ) (3,276 ) (3,472 ) (180,523 ) (191,351 ) (221,748 ) (235,048 )
Corporate Bond AUD - - - (970 ) (4,906 ) (3,928 ) (9,369 ) (9,100% ) (9,285 ) (9,799 ) (207,313 ) (206,991 ) (230,873 ) (231,484 )
Corporate Bond NOK - - - - (2,305 ) (2,275 ) (4,611 ) (4,550 ) (4,611 ) (4,550 ) (72,450 ) (71,491 ) (83,977 ) (82,866 )
Hedge instrument
Inflows:
Cross Currency Swap EUR 764 - - - 659 1,473 2,846 2,946 42,546 44,037 50,114 51,871 96,929 100,327
Cross Currency Swap HKD 2,091 - - - 11,356 13,352 91,635 90,988 78,926 78,369 271,815 269,894 455,823 452,603
Cross Currency Swap PEN - - - 775 1,509 775 3,018 3,098 2,264 3,098 40,410 41,484 47,201 49,230
Cross Currency Swap CHF - - - - 784 829 89,260 94,332 114,667 121,182 - - 204,711 216,343
Cross Currency Swap USD 765 - - - 765 1,515 3,060 3,030 3,060 3,030 40,540 40,140 48,190 47,715
Cross Currency Swap USD 202 202 77 76 158,746 157,455 - - - - - - 159,025 157,733
Cross Currency Swap JPY - - 998 - 998 2,115 35,953 38,110 3,276 3,472 180,523 191,351 221,748 235,048
Cross Currency Swap AUD - - - 970 4,906 3,928 9,369 9,100% 9,285 9,799 207,313 206,991 230,873 231,484
Cross Currency Swap NOK - - - - 2,305 2,275 4,611 4,550 4,611 4,550 72,450 71,491 83,977 82,866
Net cash flows - - - - - - - - - - - - - -

31

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

10. Derivative Instruments and Accounting Hedges, continued:
(c) Cash flow Hedges, continued:
(c.2) Below are the cash flows from underlying assets and the cash flows of the liability part of the derivative instrument:
Up to
1 month
Over 1 month and up to
3 months
Over 3 months and up to
12 months
Over 1 year and up to
3 years
Over 3 years and up to
5 years
Over 5 years Total
March December March December March December March December March December March December March December
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Hedge element
Inflows:
Cash flows in CLF 3,127 160 4,888 280 180,624 186,116 216,059 213,673 248,990 246,244 749,486 741,654 1,403,174 1,388,127
Hedge instrument
Outflows:
Cross Currency Swap HKD (1,852 ) (160 ) - - (7,445 ) (9,035 ) (73,539 ) (72,728 ) (76,922 ) (76,073 ) (208,656 ) (206,514 ) (368,414 ) (364,510 )
Cross Currency Swap PEN - - - (48 ) (98 ) (49 ) (196 ) (194 ) (196 ) (194 ) (32,273 ) (31,965 ) (32,763 ) (32,450 )
Cross Currency Swap JPY - - (2,107 ) - (2,135 ) (4,195 ) (40,979 ) (40,526 ) (6,670 ) (6,596 ) (204,105 ) (201,852 ) (255,996 ) (253,169 )
Cross Currency Swap USD (894 ) - 230 - (166,820 ) (165,634 ) (1,326 ) (1,311 ) (1,331 ) (1,317 ) (38,004 ) (37,584 ) (208,145 ) (205,846 )
Cross Currency Swap CHF - - (1,981 ) - (1,992 ) (3,929 ) (92,948 ) (91,923 ) (115,686 ) (114,409 ) - - (212,607 ) (210,261 )
Cross Currency Swap EUR (381 ) - (580 ) - (973 ) (1,912 ) (3,848 ) (3,805 ) (44,960 ) (44,464 ) (45,946 ) (45,439 ) (96,688 ) (95,620 )
Cross Currency Swap AUD - - (137 ) (232 ) (843 ) (738 ) (1,962 ) (1,939 ) (1,962 ) (1,942 ) (154,179 ) (152,709 ) (159,083 ) (157,560 )
Cross Currency Swap NOK - - (313 ) - (318 ) (624 ) (1,261 ) (1,247 ) (1,263 ) (1,249 ) (66,323 ) (65,591 ) (69,478 ) (68,711 )
Net cash flows - - - - - - - - - - - - - -

32

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

10. Derivative Instruments and Accounting Hedges, continued:
(c) Cash flow Hedges, continued:

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

(c.3) The unrealized results generated during the period 2021 by those derivative contracts that conform the hedging instruments in this cash flow hedging strategy, have been recorded with credit to equity amounting to Ch$1,539 million (credit to equity of Ch$1,935 million in March 31, 2020). The net effect of taxes credit to equity amounts to Ch$1,124 million (net credit to equity of Ch$1,414 million equity during the period March 2020).

The accumulated balance for this concept as of March 31, 2021 corresponds to a charge in equity amounted to Ch$69,143 million (charge to equity of Ch$70,682 million as of December 2020).

(c.4) The effect of the cash flow hedging derivatives that offset the result of the hedged instruments corresponds to a charge to income of Ch$33,472 million during the period 2021 (credit to results for Ch$135,650 million during the period March 2020).
(c.5) As of March 31, 2021 and 2020, it not exist inefficiency in cash flow hedge, because both, hedge item and hedge instruments, are mirrors of each other, it means that all variation of value attributable to rate and revaluation components are netted totally.
(c.6) As of March 31, 2021 and 2020, the Bank does not have hedges of net investments in foreign business.

33

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

11. Loans and Advances to Banks, net:
(a) At the end of each reporting period, the balances presented in the item 'Loans and advances to Banks' are as follows:
March December
2021 2020
MCh$ MCh$
Domestic Banks
Interbank loans of liquidity 160,000 260,002
Provisions for loans to domestic banks (58 ) (140 )
Subtotal 159,942 259,862
Foreign Banks
Interbank loans commercial 137,473 185,858
Credits with third countries - 167
Chilean exports trade loans 147,602 113,596
Provisions for loans to foreign banks (425 ) (525 )
Subtotal 284,650 299,096
Central Bank of Chile
Central Bank deposits 4,110,000 2,380,033
Other Central Bank credits - -
Subtotal 4,110,000 2,380,033
Total 4,554,592 2,938,991
(b) The changes in provisions of the credits owed by the banks, during the periods 2021 and 2020, are summarized as follows:
Bank's Location
Detail Chile Abroad Total
MCh$ MCh$ MCh$
Balance as of January 1, 2020 54 704 758
Provisions established 4 107 111
Provisions released - - -
Balance as of March 31, 2020 58 811 869
Provisions established 82 - 82
Provisions released - (286 ) (286 )
Balance as of December 31, 2020 140 525 665
Provisions established - - -
Provisions released (82 ) (100 ) (182 )
Balance as of March 31, 2021 58 425 483

34

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

12. Loans to Customers, net:
(a.i) Loans to Customers:

As of March 31, 2020 and December 31, 2020, the portfolio of loans is composed as follows:

As of March 31, 2021
Assets before allowances Allowances established
Normal Portfolio Substandard
Portfolio
Non-Complying
Portfolio
Total Individual
Provisions
Group
Provisions
Total Net assets
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Commercial loans
Commercial loans 14,225,190 129,541 410,437 14,765,168 (195,093 ) (140,134 ) (335,227 ) 14,429,941
Foreign trade loans 1,053,262 8,365 17,099 1,078,726 (36,875 ) (2,217 ) (39,092 ) 1,039,634
Current account debtors 199,259 3,493 4,282 207,034 (4,170 ) (6,825 ) (10,995 ) 196,039
Factoring transactions 389,712 3,814 439 393,965 (8,131 ) (726 ) (8,857 ) 385,108
Student loans 54,936 - 2,414 57,350 - (4,238 ) (4,238 ) 53,112
Commercial lease transactions (1) 1,526,032 44,510 28,552 1,599,094 (7,392 ) (5,489 ) (12,881 ) 1,586,213
Other loans and accounts receivable 75,837 440 15,604 91,881 (7,089 ) (5,426 ) (12,515 ) 79,366
Subtotal 17,524,228 190,163 478,827 18,193,218 (258,750 ) (165,055 ) (423,805 ) 17,769,413
Mortgage loans
Letters of credit 7,942 - 540 8,482 - (37 ) (37 ) 8,445
Endorsable mortgage loans 21,489 - 1,082 22,571 - (77 ) (77 ) 22,494
Other residential lending 9,153,857 - 290,480 9,444,337 - (31,480 ) (31,480 ) 9,412,857
Credit from ANAP 2 - - 2 - - - 2
Residential lease transactions - - - - - - - -
Other loans and accounts receivable 146,112 - 8,651 154,763 - (1,197 ) (1,197 ) 153,566
Subtotal 9,329,402 - 300,753 9,630,155 - (32,791 ) (32,791 ) 9,597,364
Consumer loans
Consumer loans in installments 2,468,794 - 255,290 2,724,084 - (213,910 ) (213,910 ) 2,510,174
Current account debtors 154,196 - 4,342 158,538 - (9,730 ) (9,730 ) 148,808
Credit card debtors 1,039,111 - 21,407 1,060,518 - (38,774 ) (38,774 ) 1,021,744
Consumer lease transactions (1) 291 - - 291 - (3 ) (3 ) 288
Other loans and accounts receivable 10 - 594 604 - (396 ) (396 ) 208
Subtotal 3,662,402 - 281,633 3,944,035 - (262,813 ) (262,813 ) 3,681,222
Total 30,516,032 190,163 1,061,213 31,767,408 (258,750 ) (460,659 ) (719,409 ) 31,047,999
(1) In this item, the Bank finances its clients the acquisition of real estate and chattels through financial lease agreements. As of March 31, 2021 Ch$803,822 million correspond to finance leases on real estate and Ch$795,563 million correspond to finance leases on chattels.

35

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

12. Loans to Customers net, continued:
(a.i) Loans to Customers, continued:
As of December 31, 2020
Assets before allowances Allowances established
Normal Portfolio Substandard
Portfolio
Non-Complying
Portfolio
Total Individual
Provisions
Group
Provisions
Total Net assets
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Commercial loans
Commercial loans 13,818,088 136,072 438,535 14,392,695 (197,777 ) (139,718 ) (337,495 ) 14,055,200
Foreign trade loans 941,825 7,347 17,791 966,963 (33,441 ) (2,374 ) (35,815 ) 931,148
Current account debtors 111,888 3,617 4,973 120,478 (2,789 ) (6,762 ) (9,551 ) 110,927
Factoring transactions 369,656 3,617 601 373,874 (8,512 ) (837 ) (9,349 ) 364,525
Student loans 55,058 - 2,449 57,507 - (4,201 ) (4,201 ) 53,306
Commercial lease transactions (1) 1,513,776 44,968 33,348 1,592,092 (7,504 ) (6,169 ) (13,673 ) 1,578,419
Other loans and accounts receivable 72,769 455 16,206 89,430 (6,892 ) (6,319 ) (13,211 ) 76,219
Subtotal 16,883,060 196,076 513,903 17,593,039 (256,915 ) (166,380 ) (423,295 ) 17,169,744
Mortgage loans
Letters of credit 8,646 - 692 9,338 - (44 ) (44 ) 9,294
Endorsable mortgage loans 22,885 - 1,220 24,105 - (81 ) (81 ) 24,024
Other residential lending 8,894,326 - 305,815 9,200,141 - (32,427 ) (32,427 ) 9,167,714
Credit from ANAP 2 - - 2 - - - 2
Residential lease transactions - - - - - - - -
Other loans and accounts receivable 146,174 - 8,894 155,068 - (1,212 ) (1,212 ) 153,856
Subtotal 9,072,033 - 316,621 9,388,654 - (33,764 ) (33,764 ) 9,354,890
Consumer loans
Consumer loans in installments 2,418,658 - 299,469 2,718,127 - (236,408 ) (236,408 ) 2,481,719
Current account debtors 153,855 - 4,869 158,724 - (10,186 ) (10,186 ) 148,538
Credit card debtors 1,052,342 - 25,103 1,077,445 - (42,789 ) (42,789 ) 1,034,656
Consumer lease transactions (1) 302 - - 302 - (3 ) (3 ) 299
Other loans and accounts receivable 10 - 667 677 - (465 ) (465 ) 212
Subtotal 3,625,167 - 330,108 3,955,275 - (289,851 ) (289,851 ) 3,665,424
Total 29,580,260 196,076 1,160,632 30,936,968 (256,915 ) (489,995 ) (746,910 ) 30,190,058
(1) In this item, the Bank finances its clients the acquisition of real estate and chattels through financial lease agreements. As of December 31, 2020 Ch$802,828 million correspond to finance leases on real estate and Ch$789,566 million correspond to finance leases on chattels.

36

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

12. Loans to Customers, net, continued:
(a.ii) Impaired Portfolio:

As of March 31, 2021 and December 31, 2020, the Bank presents the following details of normal and impaired portfolio:

Assets before Allowances Allowances established
Normal Portfolio Impaired Portfolio Total Individual Provisions Group Provisions Total Net assets
March December March December March December March December March December March December March December
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Commercial loans 17,675,434 17,039,307 517,784 553,732 18,193,218 17,593,039 (258,750 ) (256,915 ) (165,055 ) (166,380 ) (423,805 ) (423,295 ) 17,769,413 17,169,744
Mortgage loans 9,329,402 9,072,033 300,753 316,621 9,630,155 9,388,654 - - (32,791 ) (33,764 ) (32,791 ) (33,764 ) 9,597,364 9,354,890
Consumer loans 3,662,402 3,625,167 281,633 330,108 3,944,035 3,955,275 - - (262,813 ) (289,851 ) (262,813 ) (289,851 ) 3,681,222 3,665,424
Total 30,667,238 29,736,507 1,100,170 1,200,461 31,767,408 30,936,968 (258,750 ) (256,915 ) (460,659 ) (489,995 ) (719,409 ) (746,910 ) 31,047,999 30,190,058

37

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

12. Loans to Customers, continued:
(b) Credit risk provisions:

The changes in credits risk provisions, during the period 2021 and 2020, are summarized as follows:

Commercial Mortgage Consumer
Individual Group Group Group Total
MCh$ MCh$ MCh$ MCh$ MCh$
Balance as of January 1, 2020 176,942 150,831 28,047 329,598 685,418
Charge-offs (4,655 ) (12,835 ) (2,231 ) (88,035 ) (107,756 )
Sales or transfers of credits (41 ) - - - (41 )
Allowances established 29,183 19,435 911 78,716 128,245
Allowances released - - - - -
Balance as of March 31, 2020 201,429 157,431 26,727 320,279 705,866
Charge-offs (6,174 ) (40,482 ) (6,647 ) (155,501 ) (208,804 )
Sales or transfers of credits (290 ) - - - (290 )
Allowances established 61,950 49,431 13,684 125,073 250,138
Allowances released - - - - -
Balance as of December 31, 2020 256,915 166,380 33,764 289,851 746,910
Charge-offs (3,302 ) (15,057 ) (2,957 ) (38,411 ) (59,727 )
Sales or transfers of credits - - - - -
Allowances established 5,137 13,732 1,984 11,373 32,226
Allowances released - - - - -
Balance as of March 31, 2021 258,750 165,055 32,791 262,813 719,409

In addition to these credit risk provisions, also provisions are maintained for country risk to cover foreign operations and additional loan provisions agreed upon by the Board of Directors, which are presented in liabilities under the item Provisions (see Note No. 24).

Other disclosures:

1. As of December 31, 2020, the Bank and its subsidiaries have made sales of loan portfolios. The effect in income is no more than 5% of net income before taxes, as described in Note No. 12 letter (e).
2. As of December 31, 2020, the Bank and its subsidiaries derecognized 100% of its portfolio of loans sold and on which all or substantially all of the risks and benefits associated to these financial assets have been transferred (see Note No. 12 letter (e)).
3. As of March 31, 2021 and December 31, 2020, under the Commercial Loans item, operations are maintained that guarantee obligations maintained with the Central Bank of Chile as part of the Loan Increase Conditional Credit Facility (FCIC by its Spanish initials) program for an approximate amount of Ch$2,041,328 million (Ch$2,021,688 million in December 2020).

38

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

12. Loans to Customers, continued:
(c) Finance lease contracts:

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

Total receivable Unearned income Net balance receivable (*)
March December March December March December
2021 2020 2021 2020 2021 2020
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Within one year 520,799 521,445 (51,455 ) (52,438 ) 469,344 469,007
From 1 to 2 years 373,579 373,304 (37,671 ) (37,958 ) 335,908 335,346
From 2 to 3 years 250,882 245,667 (24,801 ) (25,084 ) 226,081 220,583
From 3 to 4 years 164,140 161,492 (17,147 ) (17,433 ) 146,993 144,059
From 4 to 5 years 114,371 110,743 (12,517 ) (12,841 ) 101,854 97,902
After 5 years 342,619 350,679 (27,297 ) (28,994 ) 315,322 321,685
Total 1,766,390 1,763,330 (170,888 ) (174,748 ) 1,595,502 1,588,582
(*) The net balance receivable does not include past-due portfolio totaling Ch$3,883 million as of March 31, 2021 (Ch$3,812 million as of December 2020).

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

39

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

12. Loans to Customers, continued:
(d) Purchase of loan portfolio:

During the period ended March 31, 2021 and the year ended 2020 no portfolio purchases were made.

(e) Sale or transfer of loans from the loan portfolio:

During the year 2021 no sales or transfers of credit have been made.

During the period ended March 31, 2020 there have been operations of sale or transfer of the loan portfolio according to the following:

As of March 31, 2020
Carrying amount Allowances Sale price

Effect on income

(loss) gain (*)

MCh$ MCh$ MCh$ MCh$
Sale of current loans 30,200 (41 ) 30,200 41
Sale of written - off loans - - - -
Total 30,200 (41 ) 30,200 41
(*) See Note No. 30.
(g) Securitization of own assets:

During the period 2021 and the year 2020, there is no securitization transactions executed involving its own assets.

40

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

13. Investment Securities:

As of March 31, 2021 and December 31, 2020, investment securities classified as available-for-sale and held-to-maturity are detailed as follows:

March 2021 December 2020
Available-
for-sale
Held-to- maturity Total Available-for
-sale
Held-to- maturity Total
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Instruments issued by the Chilean Government and Central Bank of Chile
Bonds issued by the Central Bank of Chile 106 - 106 109 - 109
Promissory notes issued by the Central Bank of Chile - - - - - -
Other instruments of the Chilean Government and the Central Bank of Chile 185,099 - 185,099 163,491 - 163,491
Other instruments issued in Chile
Deposit promissory notes from domestics banks - - - - - -
Mortgage bonds from domestic banks 125,346 - 125,346 128,763 - 128,763
Bonds from domestic banks 5,638 - 5,638 15,887 - 15,887
Deposits from domestic banks 712,465 - 712,465 685,392 - 685,392
Bonds from other Chilean companies 23,453 - 23,453 34,539 - 34,539
Promissory notes issued by other Chilean companies - - - - - -
Other instruments issued in Chile 12,411 - 12,411 32,342 - 32,342
Instruments issued Abroad
Instruments from foreign governments or Central Banks - - - - - -
Other instruments - - - - - -
Total 1,064,518 - 1,064,518 1,060,523 - 1,060,523

41

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

13. Investment Securities, continued:

Instruments of the Government and the Central Bank of Chile include instruments sold under repurchase agreements to clients and financial institutions for an amount of Ch$3,309 million in March 31, 2021 (Ch$13,268 million in December 2020). The repurchase agreements have an average maturity of 6 days in March 2021 (5 days in December 2020)

Under the same item, instruments that guarantee margins for cleared derivatives transactions are classified through Comder Contraparte Central S.A. for an amount of Ch$48,971 million as of March 31, 2021 (Ch$36,146 million as of December 31, 2020).

Under Instruments of Other National Institutions are classified instruments delivered as collateral as part of the Loan Increase Conditional Credit Facility program (FCIC by its Spanish initials) granted by the Central Bank of Chile for an approximate amount of Ch$249,053 as of March 31, 2021 (Ch$350,154 million as of December 31, 2020).

As of March 31, 2021, the portfolio of financial assets available-for-sale includes an accumulated unrealized gain of Ch$1,308 million (accumulated unrealized gain of Ch$801 million in December 2020), recorded as an equity valuation adjustment.

During the periods 2021 and 2020, there is no evidence of impairment of financial assets available-for-sale.

Gross profits and losses realized on the sale of available-for-sale investments as of March 31, 2021 and 2020 are shown in Note No. 30 'Net Financial Operating Income'. The changes on results at the end of each period are as fallow:

March March
2021 2020
MCh$ MCh$
Unrealized gains 3,486 (7,141 )
Realized gains reclassified to income (2,979 ) (2,627 )
Subtotal 507 (9,768 )
Income tax on other comprehensive income (137 ) 2,628
Net effect in equity 370 (7,140 )

42

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

14. Investments in Other Companies:
(a) Investments in other companies include investments of Ch$43,980 million as of March 31, 2021 (Ch$44,649 million as of December 31, 2020), as follows:
Investment
Ownership Interest Equity Assets Income
March December March December March December March March
Company Associates Shareholder 2021 2020 2021 2020 2021 2020 2021 2020
% % MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Transbank S.A. (*) Banco de Chile 26.16 26.16 61,499 67,337 16,086 17,613 (1,528 ) 1,524
Administrador Financiero del Transantiago S.A. Banco de Chile 20.00 20.00 19,338 19,171 3,999 3,951 48 56
Redbanc S.A. Banco de Chile 38.13 38.13 8,831 8,663 3,375 3,307 71 (25 )
Centro de Compensación Automatizado S.A. Banco de Chile 33.33 33.33 8,576 8,182 2,933 2,787 146 38
Soc. Operadora de Tarjetas de Crédito Nexus S.A. Banco de Chile 29.63 29.63 9,639 8,626 2,889 2,556 334 228
Sociedad Interbancaria de Depósitos de Valores S.A. Banco de Chile 26.81 26.81 5,707 5,526 1,613 1,564 49 29
Sociedad Imerc OTC S.A. Banco de Chile 12.33 12.33 12,204 12,248 1,505 1,510 (4 ) 1
Sociedad Operadora de la Cámara de Compensación de Pagos de Alto Valor S.A. Banco de Chile 15.00 15.00 6,465 6,436 989 980 9 10
Subtotal Associates 132,259 136,189 33,389 34,268 (875 ) 1,861
Joint Ventures
Servipag Ltda. Banco de Chile 50.00 50.00 13,451 13,268 6,726 6,631 92 (94 )
Artikos Chile S.A. Banco de Chile 50.00 50.00 2,777 2,547 1,554 1,439 115 109
Subtotal Joint Ventures 16,228 15,815 8,280 8,070 207 15
Subtotal 148,487 152,004 41,669 42,338 (668 ) 1,876
Investments valued at cost (1)
Bolsa de Comercio de Santiago S.A. Banchile Corredores de Bolsa 1,646 1,646 - -
Banco Latinoamericano de Comercio Exterior S.A. (Bladex) Banco de Chile 309 309 11 19
Bolsa Electrónica de Chile S.A. Banchile Corredores de Bolsa 257 257 - -
Sociedad de Telecomunicaciones Financieras Interbancarias Mundiales (Swift) Banco de Chile 91 91 - -
CCLV Contraparte Central S.A. Banchile Corredores de Bolsa 8 8 - -
Subtotal 2,311 2,311 11 19
Total 43,980 44,649 (657 ) 1,895
(1) Income from investments valorized at cost, corresponds to income recognized on cash basis (dividends).
(*) On April 22, 2021, the Extraordinary Shareholders' Meeting of the company unanimously approved a capital increase through the issuance of payment shares for an amount of Ch$30,000 million.

43

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

14. Investments in Other Companies, continued:
(b) The change of investments in companies registered under the equity method in the periods of 2021 and 2020, are as follows:
March March
2021 2020
MCh$ MCh$
Initial book value 42,338 48,442
Acquisition of investments in companies - -
Participation on income in companies with significant influence and joint control (668 ) 1,876
Dividends received - -
Others (1 ) -
Total 41,669 50,318
(c) During the period ended as of March 31, 2021 and 2020 no impairment has incurred in these investments.

44

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

15. Intangible Assets:
(a) As of March 31, 2021 and December 31, 2020 intangible assets are composed as follows:
Useful Life Average remaining amortization Gross balance Accumulated Amortization Net balance
March December March December March December March December March December
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Years Years Years Years MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Other Intangible Assets:
Software or computer programs 6 6 4 4 186,535 180,669 (124,004 ) (119,968 ) 62,531 60,701
Total 186,535 180,669 (124,004 ) (119,968 ) 62,531 60,701

45

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

15. Intangible Assets, continued:
(b) The change of intangible assets as of March 31, 2021 and December 31, 2020 are as follows:
Software or computer programs
March December
2021 2020
MCh$ MCh$
Gross Balance
Balance as of January 1, 180,669 163,485
Acquisition 6,018 18,631
Disposals/ write-downs (352 ) (387 )
Reclassification 200 (16 )
Impairment (*) - (1,044 )
Total 186,535 180,669
Accumulated Amortization
Balance as of January 1, (119,968 ) (105,178 )
Amortization for the period (*) (4,110 ) (15,865 )
Disposals/ write-downs 352 660
Reclassification (278 ) -
Impairment (*) - 415
Total (124,004 ) (119,968 )
Balance Net 62,531 60,701
(*) See Note No. 35 Depreciation, amortization and impairment.
(c) As of March 31, 2021 and December 31, 2020, the Bank maintains the following amounts with technological developments:
Detail Commitment Amount
March December
2021 2020
MCh$ MCh$
Software and licenses 5,053 3,830

46

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

16. Fixed assets, leased assets and lease liabilities:
(a) The properties and equipment as of March 31, 2021 and December 31, 2020 are composed as follows:
Useful Life Average remaining depreciation Gross balance Accumulated Depreciation Net balance
March December March December March December March December March December
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Years Years Years Years MCh$ MCh$ MCh$ MCh$ MCh$ MCh$

Type of property and equipment:

Land and Buildings 26 26 20 20 307,428 304,951 (144,705 ) (142,543 ) 162,723 162,408
Equipment 5 5 4 4 231,055 222,624 (179,138 ) (175,141 ) 51,917 47,483
Others 7 7 4 4 56,229 55,898 (48,283 ) (47,861 ) 7,946 8,037
Total 594,712 583,473 (372,126 ) (365,545 ) 222,586 217,928

47

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

16. Fixed assets, leased assets and lease liabilities, continued:
(b) The changes in properties and equipment as of March 31, 2021 and December 31, 2020 are as follows:
March 2021
Land and Buildings Equipment Others Total
MCh$ MCh$ MCh$ MCh$
Gross Balance
Balance as of January 1, 2021 304,951 222,624 55,898 583,473
Additions 2,485 8,679 714 11,878
Write-downs and sales of the period (8 ) (248 ) (382 ) (638 )
Impairment (*) - - (1 ) (1 )
Total 307,428 231,055 56,229 594,712
Accumulated Depreciation
Balance as of January 1, 2020 (142,543 ) (175,141 ) (47,861 ) (365,545 )
Depreciation charges of the period (*) (**) (2,170 ) (4,245 ) (803 ) (7,218 )
Write-downs and sales of the period 8 248 381 637
Impairment (*) - - - -
Total (144,705 ) (179,138 ) (48,283 ) (372,126 )
Balance as of March 31, 2021 162,723 51,917 7,946 222,586
2020
Land and Buildings Equipment Others Total
MCh$ MCh$ MCh$ MCh$
Gross Balance
Balance as of January 1, 2020 301,619 207,605 55,519 564,743
Additions 6,303 20,658 1,510 28,471
Write-downs and sales of the year (2,903 ) (5,606 ) (1,105 ) (9,614 )
Impairment (***) (68 ) (33 ) (26 ) (127 )
Total 304,951 222,624 55,898 583,473
Accumulated Depreciation
Balance as of January 1, 2020 (136,394 ) (162,560 ) (45,527 ) (344,481 )
Depreciation charges of the year (**) (8,844 ) (17,273 ) (3,371 ) (29,488 )
Write-downs and sales of the year 2,695 4,692 1,025 8,412
Impairment (***) - - 12 12
Total (142,543 ) (175,141 ) (47,861 ) (365,545 )
Balance as of December 31, 2020 162,408 47,483 8,037 217,928
(*) See Note No.35 Depreciation, Amortization and Impairment.
(**) This amount does not include the depreciation of the year of the Investment Properties, amount is included in 'Other Assets' for Ch$89 million (Ch$357 million as of December 2020).
(***) As of December 31, 2020 does not include charge-offs of Property and Equipment of Ch$916 million.

48

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

16. Fixed assets, leased assets and lease liabilities, continued:
(c) The composition of the rights over leased assets as of March 31, 2021 and December 31, 2020 is as follows:

Gross Balance

Accumulated Depreciation

Net Balance

March December March December March December
2021 2020 2021 2020 2021 2020
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Categories
Buildings 126,922 123,215 (37,848 ) (33,560 ) 89,074 89,655
Floor space for ATMs 42,157 40,445 (18,671 ) (16,496 ) 23,486 23,949
Improvements to leased properties 26,889 26,579 (21,509 ) (21,354 ) 5,380 5,225
Total 195,968 190,239 (78,028 ) (71,410 ) 117,940 118,829
(d) The changes of the rights over leased assets as of March 31, 2021 and December 31, 2020 is as follows:
March 2021

Buildings

Floor space for ATMs

Improvements to leased properties

Total

MCh$ MCh$ MCh$ MCh$
Gross Balance
Balance as of January 1, 2021 123,215 40,445 26,579 190,239
Reclassification 25 - - 25
Additions 4,021 2,071 382 6,474
Write-downs (339 ) (180 ) (72 ) (591 )
Remeasurement - (179 ) - (179 )
Total 126,922 42,157 26,889 195,968
Accumulated Depreciation
Balance as of January 1, 2021 (33,560 ) (16,496 ) (21,354 ) (71,410 )
Reclassification (7 ) - - (7 )
Depreciation of the period (*) (4,620 ) (2,355 ) (227 ) (7,202 )
Write-downs 339 180 72 591
Total (37,848 ) (18,671 ) (21,509 ) (78,028 )
Balance as of March 31, 2021 89,074 23,486 5,380 117,940
(*) See Note No.35 Depreciation, Amortization and Impairment.

49

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

16. Fixed assets, leased assets and lease liabilities, continued:
December 2020

Buildings

Floor space for ATMs Improvements to leased properties

Total

MCh$ MCh$ MCh$ MCh$
Gross Balance
Balance as of January 1, 2020 130,853 41,960 27,254 200,067
Additions 7,907 1,319 847 10,073
Write-downs (15,538 ) (1,197 ) (1,522 ) (18,257 )
Remeasurement (7 ) (1,637 ) - (1,644 )
Total 123,215 40,445 26,579 190,239
Accumulated Depreciation
Balance as of January 1, 2020 (18,722 ) (9,091 ) (21,589 ) (49,402 )
Depreciation of the year (*) (18,867 ) (7,774 ) (1,006 ) (27,647 )
Write-downs 4,029 369 1,241 5,639
Total (33,560 ) (16,496 ) (21,354 ) (71,410 )
Balance as of December 31, 2020 89,655 23,949 5,225 118,829
(*) Does not include provision for impairment of Ch$1 million.
(e) The future maturities (including unearned interest) of the lease liabilities as of March 31, 2021 and December 31, 2020 are shown below:
March 2021

Up to
1 month

Over
1 month
and up to
3 months
Over
3 months
and up to
12 months
Over
1 year
and up to
3 years
Over
3 years
and up to
5 years

Over
5 years

Total

MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Lease associated to:
Buildings 1,759 3,493 15,387 29,071 21,764 30,905 102,379
ATMs 885 1,770 7,773 13,286 402 24,563
Total 2,644 5,263 23,160 42,357 22,166 31,352 126,942
December 2020

Up to
1 month

Over
1 month
and up to
3 months
Over
3 months
and up to
12 months
Over
1 year
and up to
3 years
Over
3 years
and up to
5 years

Over 5 years

Total

MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Lease associated to:
Buildings 1,646 3,371 14,501 28,663 20,869 30,865 99,915
ATMs 824 1,644 7,229 14,467 419 483 25,066
Total 2,470 5,015 21,730 43,130 21,288 31,348 124,981

50

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

16. Fixed assets, leased assets and lease liabilities, continued:

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

The changes of the obligations for lease liabilities and the flows for the periods 2021 and 2020 are as follows:

Total cash flow

for the period

MCh$
Lease liability
Balances as of January 1, 2020 146,013
Liabilities for new lease agreements 1,559
Interest expenses 739
Payments of capital and interests (7,509 )
Derecognized contracts (817 )
Others 1,449
Balances as of March 31, 2020 141,434
Liabilities for new lease agreements 4,209
Interest expenses 1,793
Payments of capital and interests (21,196 )
Remeasurement (1,644 )
Derecognized contracts (11,520 )
Others 1,941
Balances as of December 31, 2020 115,017
Liabilities for new lease agreements 4,838
Interest expenses 530
Payments of capital and interests (7,401 )
Remeasurement (179 )
Derecognized contracts -
Others 1,254
Balances as of March 31, 2021 114,059
(f) The future cash flows related to short-term lease agreements in effect as of March 31, 2021 correspond to Ch$5,243 million (Ch$6,814 as of December 31, 2020).

51

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

17. Current Taxes and Deferred Taxes:
(a) Current Taxes:

The Bank and its subsidiaries at the end of each period, have constituted a First Category Income Tax Provision, which was determined based on current tax regulations, and has been reflected in the Statement of Financial Position net of taxes to be recovered or payable, as applicable, as of March 31, 2021 and December 31, 2020, according to the following detail:

March December
2021 2020
MCh$ MCh$
Income tax 35,572 153,084
Tax Previous year (27,205 ) -
Less:
Monthly prepaid taxes (45,626 ) (172,683 )
Credit for training expenses - (1,900 )
Others 316 (1,139 )
Total (36,943 ) (22,638 )
Tax rate 27 % 27 %
March December
2021 2020
MCh$ MCh$
Current tax assets 37,132 22,949
Current tax liabilities (189 ) (311 )
Total tax receivable (payable), net 36,943 22,638
(b) Income Tax:

The effect of the tax expense during the periods between January 1 and March 31, 2021 and 2020, are broken down as follows:

March December
2021 2020
MCh$ MCh$
Income tax expense:
Current year tax 35,157 25,056
Subtotal 35,157 25,056
Charge for deferred taxes:
Origin and reversal of temporary differences 4,079 7,197
Subtotal 4,079 7,197
Others 1,499 -
Net charge to income for income taxes 40,735 32,253

52

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

17. Current and Deferred Taxes, continued:
(c) Reconciliation of effective tax rate:

The following is a reconciliation of the income tax rate to the effective rate applied to determine the Bank's income tax expense as of March 31, 2021 and 2020:

March 2021 March 2020
Tax rate Tax rate
% MCh$ % MCh$
Income tax calculated on net income before tax 27.00 54,871 27.00 45,666
Additions or deductions 0.28 570 0.03 52
Price-level restatement (8.06 ) (16,381 ) (8.54 ) (14,436 )
Others 0.82 1,675 0.57 971
Effective rate and income tax expense 20.04 40,735 19.06 32,253

The effective rate for income tax for the period 2021 is 20.04% (19.06% in March 2020).

53

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

17. Current and Deferred Taxes, continued:
(d) Effect of deferred taxes on income and equity:

The Bank and its subsidiaries have recorded the effects of deferred taxes in their Interim Consolidated Financial Statements. The effects of deferred taxes on assets, liabilities and income accounts as of March 31, 2021 are detailed as follows:

Balances as of December 31, Effect on Balances as of
March 31,

2020

Income Equity

2021

MCh$ MCh$ MCh$ MCh$
Debit Differences:
Allowances for loan losses 268,482 3,402 - 271,884
Personnel provisions 16,233 (8,227 ) - 8,006
Staff vacations provisions 9,164 41 - 9,205
Accrued interests adjustments from impaired loans 4,570 383 - 4,953
Staff severance indemnities provision 537 2,484 (62 ) 2,959
Provision of credit cards expenses 7,959 507 - 8,466
Provision of accrued expenses 14,083 (633 ) - 13,450
Leasing 28,835 8,654 - 37,489
Incomes received in advance 16,088 (941 ) - 15,147
Other adjustments 26,905 548 - 27,453
Total Debit Differences 392,856 6,218 (62 ) 399,012
Credit Differences:
Depreciation and price-level restatement of property and equipment 17,256 227 - 17,483
Adjustment for valuation of financial assets available-for-sale 223 - 137 360
Transitory assets 5,378 2,420 - 7,798
Loans accrued to effective rate 2,779 (126 ) - 2,653
Prepaid expenses 2,234 6,273 - 8,507
Other adjustments 7,041 1,503 - 8,544
Total Credit Differences 34,911 10,297 137 45,345
Deferred, Net 357,945 (4,079 ) (199 ) 353,667

54

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

17. Current and Deferred Taxes, continued:
(d) Effect of deferred taxes on income and equity, continued:

The effects of deferred taxes on assets, liabilities and income accounts as of March 31, 2021 and December 31, 2020 are detailed as follows:

Balance as of
December 31,
Effect on Balance as of
March 30,
Effect on Balance as of
December 31,
2019 Income Equity 2020 Income Equity 2020
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Debit differences:
Allowances for loan losses 221,079 5,708 - 226,787 41,695 - 268,482
Personnel provisions 16,714 (7,157 ) - 9,557 6,676 - 16,233
Staff vacations provisions 7,444 (88 ) - 7,356 1,808 - 9,164
Accrued interest adjustments from impaired loans 3,674 338 - 4,012 558 - 4,570
Staff severance indemnities provision 607 (54 ) (22 ) 531 (41 ) 47 537
Provisions of credit card expenses 8,221 1,053 - 9,274 (1,315 ) - 7,959
Provisions of accrued expenses 10,564 (2,710 ) - 7,854 6,229 - 14,083
Adjustment for valuation financial assets available-for-sale - - 1,589 1,589 - (1,589 ) -
Leasing 41,792 (3,521 ) - 38,271 (9,436 ) - 28,835
Incomes received in advance 32,170 (5,554 ) - 26,616 (10,528 ) - 16,088
Other adjustments 15,485 4,769 - 20,254 6,651 - 26,905
Total Assets, Net 357,750 (7,216 ) 1,567 352,101 42,297 (1,542 ) 392,856
Credit differences:
Depreciation of property and equipment and investment properties 15,524 55 - 15,579 1,677 - 17,256
Adjustment for valuation financial assets available-for-sale 1,039 - (1,039 ) - - 223 223
Transitory assets 7,174 624 - 7,798 (2,420 ) - 5,378
Loans accrued to effective rate 1,386 (448 ) - 938 1,841 - 2,779
Prepaid expenses 3,334 (719 ) - 2,615 (381 ) - 2,234
Other adjustments 8,345 469 - 8,814 (1,773 ) - 7,041
Total Liabilities, Net 36,802 (19 ) (1,039 ) 35,744 (1,056 ) 223 34,911
Total Assets (Liabilities), Net 320,948 (7,197 ) 2,606 316,357 43,353 (1,765 ) 357,945

55

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

18. Other Assets:
(a) Item composition:

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

March December
2021 2020
MCh$ MCh$
Assets held for leasing (*) 80,880 85,626
Assets received or awarded as payment (**)
Assets awarded at judicial sale 4,226 5,571
Assets received in lieu of payment 131 99
Provision for assets received in lieu of payment or awarded (40 ) (52 )
Subtotal 4,317 5,618
Other Assets
Deposits by derivatives margin 166,216 232,732
Trading and brokerage (***) 102,951 84,993
Prepaid expenses 62,251 29,654
Other accounts and notes receivable 30,104 63,100%
Commissions receivable 12,795 11,810
Investment properties 12,744 12,833
VAT receivable 11,029 10,777
Recoverable income taxes 8,142 8,691
Servipag available funds 7,498 11,385
Pending transactions 3,619 1,825
Rental guarantees 2,015 2,014
Accounts receivable for sale of assets received in lieu of payment 1,260 715
Assets recovered from leasing for sale 1,214 2,469
Materials and supplies 736 784
Others 14,855 13,745
Subtotal 437,429 488,223
Total 522,626 579,467
(*) These correspond to property and equipment to be given under finance lease.
(**) Assets received in lieu of payment are assets received as payment of customers' past-due debts. The assets acquired must not exceed the aggregate 20% of the Bank's effective equity. These assets currently represent 0.0026% % (0.0024% as of December 31, 2020) of the Bank's effective equity.
(***) This item mainly includes simultaneous operations carried out by the subsidiary Banchile Corredores de Bolsa S.A.

56

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

18. Other Assets, continued:
(b) The changes of the provision for assets received in lieu of payment during the periods 2021 and 2020 are as follows:
MCh$
Provision for assets received in lieu of payment
Balance as of January 1, 2020 188
Provisions used (342 )
Provisions established 283
Provisions released -
Balance as of March 31, 2020 129
Provisions used (746 )
Provisions established 669
Provisions released -
Balance as of December 31, 2020 52
Provisions used (18 )
Provisions established 6
Provisions released -
Balance as of March 31, 2021 40
19. Current Accounts and Other Demand Deposits:

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

March December
2021 2020
MCh$ MCh$
Current accounts 12,659,901 12,477,719
Other demand deposits 1,703,971 1,431,904
Other deposits and sight accounts 1,318,500 1,257,606
Total 15,682,372 15,167,229
20. Savings Accounts and Time Deposits:

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

March December
2021 2020
MCh$ MCh$
Time deposits 7,795,413 8,442,536
Term savings accounts 371,786 342,550
Other term balances payable 107,727 114,455
Total 8,274,926 8,899,541

57

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

21. Borrowings from Financial Institutions:

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

March December
2021 2020
MCh$ MCh$
Domestic banks
Banco do Brasil 5,850 7,100
Banco Scotiabank 706 1,257
Subtotal domestic banks 6,556 8,357
Foreign banks
Foreign trade financing
Wells Fargo Bank 122,454 85,734
The Bank of Nova Scotia 122,314 121,085
Citibank N.A. United State 54,054 114,525
Zürcher Kantonalbank 39,506 39,116
Bank of New York Mellon 35,985 21,389
Sumitomo Mitsui Banking 35,956 11,394
Bank of America 23,452 20,475
Standard Chartered Bank 12,045 715
Commerzbank AG 1,721 21,687
Others - 40
Borrowings and other obligations
Wells Fargo Bank 108,034 106,965
Bank of America 1,613 -
Deutsche Bank Trust Company Americas - 7,333
Citibank N.A. United Kingdom - 233
Others 102 105
Subtotal foreign banks 557,236 550,100%
Chilean Central Bank (*) 3,110,774 3,110,600
Total 3,674,566 3,669,753
(*) Financing provided by the Central Bank to deliver liquidity to the economy and support the flow of credit to households and companies, among which are the Conditional Credit Facility to Increase Placements (FCIC by its Spanish initials) and the Liquidity Credit Line (LCL).

58

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

22. Debt Issued:

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

March December
2021 2020
MCh$ MCh$
Mortgage bonds 5,923 6,786
Bonds 8,064,632 7,700,402
Subordinated bonds 896,425 886,407
Total 8,966,980 8,593,595

During the period ended as of March 31, 2021, Banco de Chile issued bonds by an amount of Ch$415,543 million, which corresponds to Short-Term Bonds, according to the following details:

Short-term Bonds

Counterparty Currency Amount
MCh$
Annual interest
rate %
Issued
date
Maturity
date
Wells Fargo Bank USD 72,240 0.23 20/01/2021 20/04/2021
Wells Fargo Bank USD 36,736 0.38 09/02/2021 04/02/2022
Citibank N.A. USD 36,736 0.28 09/02/2021 02/08/2021
Wells Fargo Bank USD 35,700 0.26 25/02/2021 24/08/2021
Citibank N.A. USD 71,400 0.23 25/02/2021 01/06/2021
Wells Fargo Bank USD 35,700 0.26 25/02/2021 26/08/2021
Citibank N.A. USD 36,295 0.34 04/03/2021 03/09/2021
Citibank N.A. USD 72,589 0.34 04/03/2021 07/09/2021
Wells Fargo Bank USD 18,147 0.25 04/03/2021 01/06/2021
Total as of March 31, 2021 415,543

Current Bonds Long-Term

During the period ended March 31, 2021, there were no current bonds long-term, issued.

Subordinated bonds

During the period ended March 31, 2021, there were no subordinated bonds, issued.

59

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

22. Debt Issued, continued:

During the year ended as of December 31, 2020, Banco de Chile issued bonds by an amount of Ch$889,135 million, from which corresponds to Short-Term Bonds and Current Bonds by an amount of Ch$634,952 million and Ch$254,183 million respectively, according to the following details:

Short-term Bonds

Counterparty Currency Amount
MCh$
Annual interest
rate %
Issued
date
Maturity
date
Citibank N.A. USD 23,078 2.00 07/01/2020 07/07/2020
Citibank N.A. USD 38,371 1.95 09/01/2020 09/04/2020
Citibank N.A. USD 34,886 1.91 13/01/2020 13/04/2020
Citibank N.A. USD 11,629 1.87 14/01/2020 14/04/2020
Citibank N.A. USD 31,667 1.91 29/01/2020 31/07/2020
Citibank N.A. USD 7,917 1.91 29/01/2020 31/07/2020
Citibank N.A. USD 27,709 1.86 29/01/2020 29/05/2020
Citibank N.A. USD 10,350 1.85 30/01/2020 01/06/2020
Citibank N.A. USD 19,720 1.85 03/02/2020 03/06/2020
Citibank N.A. USD 31,391 1.55 08/04/2020 05/06/2020
Citibank N.A. USD 21,262 1.30 13/04/2020 12/05/2020
Citibank N.A. USD 12,758 1.30 13/04/2020 13/05/2020
Citibank N.A. USD 34,020 1.30 13/04/2020 13/05/2020
Citibank N.A. USD 25,593 1.55 16/04/2020 16/06/2020
Citibank N.A. USD 25,593 1.55 16/04/2020 18/06/2020
Citibank N.A. USD 34,158 1.61 17/04/2020 21/08/2020
Wells Fargo Bank USD 42,697 1.60 17/04/2020 21/08/2020
Wells Fargo Bank USD 42,858 1.50 22/04/2020 14/08/2020
Wells Fargo Bank USD 42,943 1.45 24/04/2020 29/01/2021
Wells Fargo Bank USD 4,175 1.30 29/04/2020 29/10/2020
Citibank N.A. USD 32,834 0.45 18/05/2020 20/07/2020
Citibank N.A. USD 5,089 0.45 18/05/2020 20/07/2020
Wells Fargo Bank USD 74,254 0.45 07/12/2020 06/12/2021
Total as of December 31, 2020 634,952

60

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

22. Debt Issued, continued:

Current Bonds Long-Term

Serie Currency

Amount

MCh$

Terms

Years

Annual
issue
rate %
Issue date Maturity
date
BCHIEM0817 UF 93,096 7 0.80 06/01/2020 06/01/2027
BCHIEL0717 UF 123,957 8 0.72 04/02/2020 04/02/2028
Subtotal UF 217,053
BONO AUD AUD 37,130 15 2.65 02/03/2020 02/03/2035
Subtotal Others currency 37,130
Total as of December 31, 2020 254,183

Subordinated bonds

During the year ended December 31, 2020, there were no subordinated bonds, issued.

During the period, the Bank has not been in default of principal and interest on its debt instruments. Likewise, there have been no breaches of covenants and other commitments associated with the debt instruments issued.

61

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

23. Other Financial Obligations:

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

March December
2021 2020
MCh$ MCh$
Other Chilean obligations 256,942 191,258
Public sector obligations 377 455
Total 257,319 191,713
24. Provisions:
(a) At the end of each period, this item is composed as follows:
March December
2021 2020
MCh$ MCh$
Provisions for minimum dividends (*) 70,297 220,271
Provisions for personnel benefits and payroll expenses 83,464 111,243
Provisions for contingent loan risks 72,957 76,191
Provisions for contingencies:
Additional loan provisions (**) 360,252 320,252
Country risk provisions 7,568 5,446
Other provisions for contingencies 441 508
Total 594,979 733,911
(*) See Note No. 27 letter (c).
(**) As of March 31, 2021, Ch$40,000 million have been established for additional provisions (Ch$107,000 million in December 2020). See Note No. 24 letter (b).

62

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

24. Provisions, continued:
(b) The following table shows the changes in provisions and accrued expenses during the period 2021 and 2020:
Minimum
dividends
Personnel
benefits and
payroll
Contingent
loan Risks
Additional
loan
provisions
Country risk
provisions and
other
contingencies
Total
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Balances as of January 1, 2020 300,461 109,075 57,042 213,252 4,833 684,663
Provisions established 58,469 14,204 7,007 - 6,647 86,327
Provisions used (300,461 ) (51,485 ) - - - (351,946 )
Provisions released - - - - - -
Balances as of March 31, 2020 58,469 71,794 64,049 213,252 11,480 419,044
Provisions established 161,802 68,749 12,142 107,000 (5,526 ) 344,167
Provisions used - (29,300 ) - - - (29,300 )
Provisions released - - - - - -
Balances as of December 31, 2020 220,271 111,243 76,191 320,252 5,954 733,911
Provisions established 70,297 17,664 - 40,000 2,055 130,016
Provisions used (220,271 ) (45,443 ) - - - (265,714 )
Provisions released - - (3,234 ) - - (3,234 )
Balances as of March 31, 2021 70,297 83,464 72,957 360,252 8,009 594,979
(c) Provisions for personnel benefits and payroll:
March December
2021 2020
MCh$ MCh$
Staff accrued vacation provision 34,147 33,993
Provisions for performance bonuses 22,864 43,941
Staff severance indemnities 7,174 7,581
Other personnel benefits provision 19,279 25,728
Total 83,464 111,243

63

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

24. Provisions, continued:
(d) Staff severance indemnities:
(i) Changes in the staff severance indemnities:
March March
2021 2020
MCh$ MCh$
Present value of the obligations at the beginning of the period 7,581 7,566
Increase in provision 54 67
Benefit paid (232 ) (453 )
Effect of change in actuarial factors (229 ) (81 )
Total 7,174 7,099
(ii) Net benefits expenses:
March March
2021 2020
MCh$ MCh$
Increase (Decrease) in provisions (204 ) (159 )
Interest cost of benefits obligations 258 226
Effect of change in actuarial factors (229 ) (81 )
Net benefit expenses (175 ) (14 )
(iii) Factors used in the calculation of the provision:

The main assumptions used in the determination of severance indemnity obligations for the Bank's plan are shown below:

March 31,
2021
December 31,
2020
% %
Discount rate 3.50 2.31
Salary increase rate 3.94 4.04
Payment probability 99.99 99.99

The most recent actuarial valuation of the staff severance indemnities provision was carried out during the first quarter of 2021.

64

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

24. Provisions, continued:
(e) Changes in compliance bonuses provision:
March March
2021 2020
MCh$ MCh$
Balances as of January 1 43,941 51,051
Net provisions established 13,206 4,727
Provisions used (34,283 ) (36,928 )
Total 22,864 18,850
(f) Changes in staff accrued vacation provision:
March March
2021 2020
MCh$ MCh$
Balances as of January 1 33,993 27,609
Net provisions established 2,760 1,825
Provisions used (2,606 ) (2,151 )
Total 34,147 27,283
(g) Employee benefits share-based provision:

As of March 31, 2021 and 2020, the Bank and its subsidiaries do not have a stock-based compensation plan.

(h) Contingent loan provisions:

As of March 31, 2021 the Bank and its subsidiaries maintain contingent loan provisions by an amount of Ch$72,957 million (Ch$76,191 million at December 2020). See Note No. 26 letter (d).

65

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

25. Other Liabilities:

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

March December
2021 2020
MCh$ MCh$
Accounts and notes payable 226,520 273,143
Income received in advance (*) 64,643 68,907
Dividends payable 5,284 4,309
Other liabilities
Documents intermediated (**) 158,759 137,546
Cobranding 31,093 29,213
VAT debit 17,619 16,519
Securities unliquidated 2,312 2,725
Outstanding transactions 882 725
Insurance payments 676 1,802
Others 30,269 30,231
Total 538,057 565,120
(*) In relation to the Strategic Alliance Framework Agreement, on June 4, 2019, Banco de Chile received the payment from the Insurance Companies for an amount of Ch$149,061 million, which was recorded according to IFRS 15. The related income is recognized over time, depending on compliance with the associated performance obligation.
(**) This item mainly includes financing of simultaneous operations performed by subsidiary Banchile Corredores de Bolsa S.A.

66

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

26. Contingencies and Commitments:
(a) Commitments and responsibilities accounted for in off-balance-sheet accounts:

In order to satisfy its customers' needs, the Bank entered into several irrevocable commitments and contingent obligations. Although these obligations are not recognized in the Statement of Financial Position, they entail credit risks and, therefore, form part of the Bank's overall risk.

The Bank and its subsidiaries keep recorded in off-balance sheet accounts the main balances related to commitments or with responsibilities inherent to the course of its normal business:

March December
2021 2020
MCh$ MCh$
Contingent loans
Guarantees and sureties 336,795 224,079
Confirmed foreign letters of credit 109,216 58,299
Issued letters of credit 385,066 343,663
Bank guarantees 2,150,131 2,214,370
Undrawn credit lines 7,669,703 7,650,382
Other credit commitments 87,497 107,707
Transactions on behalf of third parties
Documents in collections 108,966 157,671
Third-party resources managed by the Bank:
Financial assets managed on behalf of third parties 4,452 16,024
Other assets managed on behalf of third parties - -
Financial assets acquired on its own behalf 86,747 80,788
Other assets acquired on its own behalf - -
Custody of securities
Securities held in safe custody in the Bank and subsidiaries 2,364,929 2,023,313
Securities held in safe custody in other entities 18,677,424 18,467,801
Total 31,980,926 31,344,097

67

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

26. Contingencies and Commitments, continued:
(b) Lawsuits and legal proceedings:
(b.1) Normal judicial contingencies in the industry:

At the date of issuance of these Interim Consolidated Financial Statements, there are legal actions filed against the Bank related with the ordinary course operations. As of March 31, 2021 the Bank maintain provisions for judicial contingencies amounting to Ch$177 million (Ch$244 million as of December 2020), which are part of the item 'Provisions' in the Statement of Financial Position.

The estimated end dates of the respective legal contingencies are as follows:

As of March 30, 2021
2021 2022 2023 2024 2025 Total
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Legal contingencies - 39 11 127 - 177
(b.2) Contingencies for significant lawsuits in courts:

As of March 31, 2021 and December 31, 2020 there are not significant lawsuits in court that affect or may affect these Interim Consolidated Financial Statements.

68

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

26. Contingencies and Commitments, continued:
(c) Guarantees granted by operations:
i. In subsidiary Banchile Administradora General de Fondos S.A.:

In compliance with Article No, 12 of Law No. 20,712, Banchile Administradora General de Fondos S.A., has designated Banco de Chile as the representative of the beneficiaries of the guarantees it has established, and in such role the Bank has issued bank guarantees totaling UF 4,049,200, maturing January 7, 2022 (UF 3,778,100, maturing on January 8, 2021 as of December 2020). The subsidiary took a policy with Mapfre Seguros Generales S.A. for the Real State Funds by a guaranteed amount of UF 739,700.

As of March 31, 2021 and December 31, 2020 the Bank has not guaranteed mutual funds.

ii. In subsidiary Banchile Corredores de Bolsa S.A.:

For the purposes of ensuring correct and complete compliance with all of its obligations as broker-dealer entity, in conformity with the provisions from Article 30 and subsequent of Law No. 18,045 on Securities Markets, the subsidiary established a guarantee in an insurance policy for UF 20,000, insured by Mapfre Seguros Generales S.A., that matures April 22, 2022, whereby the Securities Exchange of the Santiago Stock Exchange was appointed as the subsidiary's creditor representative.

March December
2021 2020
Guarantees: MCh$ MCh$
Shares delivered to cover simultaneous forward sales transactions:
Santiago Securities Exchange, Stock Exchange 29,770 47,684
Electronic Chilean Securities Exchange, Stock Exchange 11,012 20,227
Fixed income securities to guarantee CCLV system:
Santiago Securities Exchange, Stock Exchange 10,000 10,000
Shares delivered to guarantee equity lending and short-selling:
Santiago Securities Exchange, Stock Exchange 5,424 2,858
Total 56,206 80,769

69

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

26. Contingencies and Commitments, continued:
(c) Guarantees granted, continued:
ii. In subsidiary Banchile Corredores de Bolsa S.A., continued:

In conformity with the internal regulation of the stock exchange in which this subsidiary participates, and for the purpose of securing the broker's correct performance, the Company established a pledge over 1,000,000 shares of the Santiago Stock Exchange, in favor of that institution, as stated in the Public Deed dated September 13, 1990 before the notary of Santiago Mr. Raul Perry Pefaur, and over 100,000 shares of the Electronic Chilean Stock Exchange, in favor of that Institution, as stated in a contract signed between both entities dated May 16, 1990.

Banchile Corredores de Bolsa S.A. keeps an insurance policy current with Chubb Seguros Chile S.A. that expires April 2, 2021, this considers matters of employee fidelity, physical losses, falsification or adulteration, and currency fraud with a coverage amount equivalent to US$20,000,000.

It also provided a bank guarantee in the amount of UF 286,600 for the benefits of investors in portfolio management contracts. This bank guarantee is revaluated in UF to fixed term, non-endorsable and has a maturity date of January 7, 2022.

It also provided a cash guarantee in the amount of US$122,494.32 for the purpose of complying with the obligations to Pershing, for any operations conducted through that broker.

iii. In subsidiary Banchile Corredores de Seguros Ltda.:

According to established in article 58, letter D of D.F.L. 251, as of March 31, 2021 the entity maintains two insurance policies with effect from April 15, 2020 to April 14, 2021 which protect it against of potential damages caused by infractions of the law, regulations and complementary rules that regulate insurance brokers, especially when the non-compliance comes from acts, errors or omissions of the broker, its representatives, agents or dependents that participate in the intermediation.

The policies contracted are:

Matter insured Amount Insured (UF)
Errors and omissions liability policy 500
Civil liability policy 60,000

70

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

26. Contingencies and Commitments, continued:
(d) Provisions for contingencies loans:

Established provisions for credit risk from contingencies operations are the followings:

March December
2021 2020
MCh$ MCh$
Undrawn credit lines 37,676 40,404
Bank guarantees provision 26,811 27,596
Guarantees and sureties provision 7,134 7,060
Letters of credit provision 1,280 1,074
Other credit commitments 56 57
Total 72,957 76,191
(e) By Exempt Resolution No. 270 dated October 30, 2014, the Superintendency of Securities and Insurance (current Commission for the Financial Market) imposed a fine of UF 50,000 to Banchile Corredores de Bolsa S.A. for violations of the second paragraph of article 53 of the Securities Market Law, said company filed a claim with the competent Civil Court requesting the annulment of the fine. On December 10, 2019, a judgement in the case was issued reducing the fine to the amount of UF 7,500. The judgment indicated has been subject to cassation appeals filed by both parties, which are pending before the Illustrious Court of Appeals of Santiago.

The company has not made provisions considering that the Bank's legal advisors in charge of the procedure estimate that there are solid grounds that the claim filed by Banchile Corredores de Bolsa S.A. can be accepted.

71

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

27. Equity:
(a) Capital:
(i) Authorized, subscribed and paid shares:

As of March 31, 2021, the paid-in capital of Banco de Chile is represented by 101,017,081,114 registered shares (101,017,081,114 shares as of December 31, 2020), with no par value, subscribed and fully paid.

(ii) Shares:
(ii.1) The following table shows the changes in share from December 31, 2019 to March 31, 2021:
Total

Ordinary

Shares

Total shares as of December 31, 2019 101,017,081,114
Total shares as of December 31, 2020 101,017,081,114
Total shares as of March 31, 2021 101,017,081,114
(b) Approval and payment of dividends:

At the Bank Ordinary Shareholders' Meeting held on March 25, 2021 it was approved the distribution and payment of dividend No. 209 of Ch$2.18053623438 per share of the Banco de Chile, with charge to the net distributable income for the year ended as of December 31, 2020. The dividends paid in the period 2021 amounted to Ch$220,271 million.

At the Bank Ordinary Shareholders' Meeting held on March 26, 2020 it was approved the distribution and payment of dividend No. 208 of Ch$3.47008338564 per share of the Banco de Chile, with charge to the net distributable income for the year ended as of December 31, 2019. The dividends paid in the year 2020 amounted to Ch$350,538 million.

72

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

27. Equity, continued:
(c) Provision for minimum dividends:

The Board of Directors of Banco de Chile agreed for the purposes of minimum dividends, to establish a provision of 60% of the net income resulting from reducing or adding to the net income for the corresponding period, the value effect of the monetary unit of paid capital and reserves, as a result of any change in the Consumer Price Index (CPI) between the month prior to the current month and the month of November of the previous year. The amount to be reduced of the liquid income for the period ended as of March 31, 2021 amounted to Ch$45,330 million.

As indicated, as of March 31, 2021, the amount of the net income determined in accordance with the preceding paragraph is equivalent to Ch$117,162 million (Ch$367,119 million as of December 31, 2020). Consequently, the Bank recorded a provision for minimum dividends under 'Provisions' as of March 31, for an amount of Ch$70,297 million (Ch$220,271 million in December 2020), which reflects as a counterpart an equity reduction for the same amount in the item 'Retained earnings'.

(d) Earnings per share:
(i) Basic earnings per share:

Basic earnings per share are determined by dividing the net income attributable to the Bank ordinary equity holders in a period between the weighted average number of shares outstanding during that period, excluding the average number of own shares held throughout the period.

(ii) Diluted earnings per share:

In order to calculate the diluted earnings per share, both the amount of income attributable to common shareholders and the weighted average number of shares outstanding, net of own shares, must be adjusted for all the inherent dilutive effects to the potential common shares (stock options, warrants and convertible debt).

73

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

27. Equity, continued:

Accordingly, the basic and diluted earnings per share as of March 31, 2021 and 2020 were determined as follows:

March March
2021 2020
Basic earnings per share:
Net profits attributable to ordinary equity holders of the bank (in million Chilean pesos) 162,492 136,882
Weighted average number of ordinary shares 101,017,081,114 101,017,081,114
Earning per shares (in Chilean pesos) 1.61 1.36
Diluted earnings per share:
Net profits attributable to ordinary equity holders of the bank (in million Chilean pesos) 162,492 136,882
Weighted average number of ordinary shares 101,017,081,114 101,017,081,114
Assumed conversion of convertible debt - -
Adjusted number of shares 101,017,081,114 101,017,081,114
Diluted earnings per share (in Chilean pesos) 1.61 1.36

As of March 31, 2021 and 2020, the Bank does not have instruments that generate dilutive effects.

(e) Other comprehensive income:

This item includes the following concepts:

The adjustment of cash flow hedge derivatives comprises the portion of income recorded in equity resulting from changes in fair value due to changes in market factors. During the period 2021 it was made a credit to equity for Ch$1,539 million (credit to equity of Ch$1,935 million in 2020). The income tax effect presented a charge to equity of Ch$415 million (charge of Ch$521 million in March 2020).

The valuation adjustment of investments available for sale originates from fluctuations in the fair value of such portfolio, with a charge or credit to equity. During the period 2021, it was made a credit to equity for Ch$507 million (charge of Ch$9,768 million during the year 2020). The deferred tax effect meant a charge to equity of Ch$137 million (credit to equity of Ch$2,628 million in March 2020).

(f) Retained earnings from previous years:

During the year 2021, the Ordinary Shareholders Meeting of Banco de Chile agreed to deduct and withhold from the 2020 liquid income, an amount equivalent to the value effect of the monetary unit of paid capital and reserves according to the variation in the Consumer Price Index, which occurred between November 2019 and November 2020, amounting to Ch$95,989 million. Additionally, the Board determined to withhold 40% of the distributable net income, which was equivalent to Ch$146,848 million.

74

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

28. Interest Revenue and Expenses:
(a) On the closing date of the Interim Consolidated Financial Statement, the interest and indexation income, excluding hedge results, are composed as follows:
March 2021 March 2020
Interest

UF

Indexation

Prepaid fees Total Interest

UF

Indexation

Prepaid fees Total
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Commercial loans 147,015 68,755 1,208 216,978 170,139 62,946 784 233,869
Consumer loans 107,496 804 1,298 109,598 150,519 651 1,756 152,926
Residential mortgage loans 68,371 104,532 804 173,707 68,799 92,265 2,057 163,121
Financial investment 2,583 2,097 - 4,680 8,522 2,717 - 11,239
Repurchase agreements 258 - - 258 545 - - 545
Loans to banks 1,748 - - 1,748 5,087 - - 5,087
Other interest and indexation revenue 1,543 364 - 1,907 5,731 1,378 - 7,109
Total 329,014 176,552 3,310 508,876 409,342 159,957 4,597 573,896

The amount of interest recognized on a received basis for impaired portfolio in the period 2021 amounts to Ch$708 million (Ch$982 million in March 2020).

(b) At the each period end, the stock of interest and UF indexation not recognized in incomes is the following:
March 2021 March 2020
Interest

UF

Indexation

Total Interest

UF

Indexation

Total
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Commercial loans 13,044 1,592 14,636 9,835 1,304 11,139
Residential mortgage loans 1,986 1,684 3,670 2,082 1,603 3,685
Consumer loans 25 - 25 25 - 25
Total 15,055 3,276 18,331 11,942 2,907 14,849

75

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

28. Interest Revenue and Expenses, continued:
(c) At each period end, interest and UF indexation expenses excluding hedge results, are detailed as follows:
March 2021 March 2020
Interest

UF

Indexation

Total Interest

UF

Indexation

Total
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Savings accounts and time deposits 10,012 10,429 20,441 52,665 12,087 64,752
Debt securities issued 50,323 78,831 129,154 55,277 72,947 128,224
Other financial obligations 4 4 8 193 9 202
Repurchase agreements 59 - 59 1,363 - 1,363
Obligations with banks 4,882 - 4,882 8,970 - 8,970
Demand deposits 85 4,748 4,833 144 5,960 6,104
Lease liabilities 530 - 530 739 - 739
Other interest and indexation expenses - 86 86 472 297 769
Total 65,895 94,098 159,993 119,823 91,300 211,123
(d) As of March 31, 2021 and 2020, the Bank uses cross currency and interest rate swaps to hedge its position on movements on the fair value of corporate bonds and commercial loans and cross currency swaps to hedge the risk of variability of obligations flows with foreign banks and bonds issued in foreign currency.
March 2021 March 2020
Income Expense Total Income Expense Total
MCh$ MCh$ MCh$ MCh$ MCh$ MCh$
Gain from fair value accounting hedges 3,481 - 3,481 - - -
Loss from fair value accounting hedges (2,719 ) - (2,719 ) (6,220 ) - (6,220 )
Gain from cash flow accounting hedges 481 8,800 9,281 34,976 45,455 80,431
Loss from cash flow accounting hedges (19,564 ) (1,711 ) (21,275 ) (50,918 ) (38,909 ) (89,827 )
Net gain on hedge items (3,074 ) - (3,074 ) 2,540 - 2,540
Total (21,395 ) 7,089 (14,306 ) (19,622 ) 6,546 (13,076 )
(e) At each period end, the summary of interest is as follows:
March March
2021 2020
MCh$ MCh$
Interest revenue 508,876 573,896
Interest expense (159,993 ) (211,123 )
Subtotal interest income 348,883 362,773
Net gain (loss) from accounting hedges (14,306 ) (13,076 )
Total net interest income 334,577 349,697

76

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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

29. Income and Expenses from Fees and Commissions:

The income and expenses for commissions that are shown in the Interim Consolidated Statement of Income refers to the following items:

March March
2021 2020
MCh$ MCh$
Commission income