26 October 2017 CHILE. January - September 2017

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1 26 October 2017 CHILE January - September 2017

2 Disclaimer Banco Santander, S.A. ("Santander") and Banco Santander Chile caution that this presentation contains statements that constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of Forward-looking statements may be identified by words such as expect, project, anticipate, should, intend, probability, risk, VaR, RORAC, RoRWA, TNAV, target, goal, objective, estimate, future and similar expressions. These forward-looking statements are found in various places throughout this presentation and include, without limitation, statements concerning our future business development and economic performance and our shareholder remuneration policy. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) general market, macro-economic, industry, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. Numerous factors, including those reflected in the Santander Annual Report on Form 20-F filed with the Securities and Exchange Commission of the United States of America (the SEC ) under Key Information-Risk Factors - and in the Santander Documento de Registro de Acciones filed with the Spanish Securities Market Commission (the CNMV ) under Factores de Riesgo - could affect the future results of Santander and could result in other results deviating materially from those anticipated in the forward-looking statements. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements speak only as of the date of this presentation and are based on the knowledge, information available and views taken on such date; such knowledge, information and views may change at any time. Santander does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure document published by Santander or Santander Chile. Any person at any time acquiring securities must do so only on the basis of such person's own judgment as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such public information having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained in the presentation. No investment activity should be undertaken on the basis of the information contained in this presentation. In making this presentation available, Santander and Banco Santander Chile give no advice and make no recommendation to buy, sell or otherwise deal in shares in Santander or Banco Santander Chile or in any other securities or investments whatsoever. Neither this presentation nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities. No offering of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. Nothing contained in this presentation is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotion in the U.K. Financial Services and Markets Act Note: Statements as to historical performance or financial accretion are not intended to mean that future performance, share price or future earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in this presentation should be construed as a profit forecast. The businesses included in each of our geographic segments and the accounting principles under which their results are presented here may differ from the included businesses and local applicable accounting principles of our public subsidiaries in such geographies. Accordingly, the results of operations and trends shown for our geographic segments may differ materially from those of such subsidiaries. In addition to the financial information prepared under International Financial Reporting Standards ( IFRS ), this presentation includes certain alternative performance measures as defined in the Guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority on 5 October 2015 (ESMA/2015/1415es) as well as Non-IFRS measures. The APMs and Non-IFRS Measures are performance measures that have been calculated using the financial information from the Santander Group but that are not defined or detailed in the applicable financial information framework and therefore have neither been audited nor are capable of being completely audited. These APMs and Non-IFRS Measures are been used to allow for a better understanding of the financial performance of the Santander Group but should be considered only as additional information and in no case as a replacement of the financial information prepared under IFRS. Moreover, the way the Santander Group defines and calculates these APMs and Non-IFRS Measures may differ to the way these are calculated by other companies that use similar measures, and therefore they may not be comparable. Please refer to the quarterly financial Report for further details of the APMs and Non-IFRS Measures used, including its definition or a reconciliation between any applicable management indicators and the financial data presented in the consolidated financial statements prepared under IFR, see Section 26 of the Documento de Registro de Acciones for Banco Santander filed with the CNMV on July 4, 2017 (available on the Web page of the CNMV - and at Banco Santander - and Item 3A of the Annual Report on Form 20-F for the year ended December 31, 2016, filed with the U.S. Securities and Exchange Commission on March 31, 2017 (the Form 20-F ). For a discussion of the accounting principles used in translation of foreign currency-denominated assets and liabilities to euros, see note 2(a) to our consolidated financial statements on Form 20-F and to our consolidated financial statements available on the CNMV s website ( and on Banco Santander s website ( 2

3 Content Macroeconomic environment and financial system Strategy and business Results Appendix

4 Macro-economic environment Increasing GDP growth expectations for 2018 and 2019 Annual GDP Growth (%, real) Central Bank monetary policy (%, end of year) (e) 2018 (e) 2019 (e) (e) 2018 (e) 2019 (e) Inflation (%, annual change) Average exchange rate (CLP/USD) (e) 2018 (e) 2019 (e) (e) 2018 (e) 2019 (e) 4 (e) Estimates Santander Chile

5 Macro-economic environment Growth of internal demand and exports is improving Internal Demand (YoY growth, %) Growth by sectors (YoY growth, %) Sector e 2018e Communications Agro / Fishing (e) 2018 (e) 2019 (e) Exports (YoY growth, %) Public adm Transportation Services Construction % 10.7% 5.3% 6.1% 5.4% Manufacturing Commerce % -17.2% % Total Non Copper Exports Utilities Mining GDP (e) Estimates Santander Chile

6 Financial system: Loan and deposit evolution Loan growth should pick-up as the economy strengthens Total loans (Constant, bn.) YoY (%) 4.2% 5.7% 5.5% 5.2% 4.1% Growth of consumer loans offset by slower commercial loan growth due to weaker macroeconomic environment Mortgage lending leading deceleration after extraordinary growth in 2015 and 2016 Stable asset quality Sep'16 Dec'16 Mar'17 Jun'17 Aug'17 Total funding 1 (Constant, bn.) YoY (%) % 5.3% 4.6% 4.1% 1.6% Sep'16 Dec'16 Mar'17 Jun'17 Aug'17 High liquidity in the system to fund business growth Deceleration of customer fund growth due to shift of investment flows away from deposits to bonds given low interest rates Source: SBIF as of August 2017 (last available) (1) Includes demand deposits, time deposits and mutual funds 6

7 Content Macroeconomic environment and financial system Strategy and business Results Appendix

8 Our Franchise Santander Chile is the nation s leading bank STRATEGIC PRIORITIES Consolidate commercial transformation via the new branch network model and digital banking Continue to improve the quality of customer attention and experience for individuals and SMEs KEY DATA 9M 17 Var. YoY* Gross loans 1 37, % Customer funds 1 33, % Attributable profit % RoTE 18.01% 83 bps Efficiency ratio 41.1% -15 bps Loans market share % -63bps Strengthen business with large and medium sized companies through non-lending services Deposits market share % -143bps Loyal customers % Digital customers % Focus on fee income and on long-term profitability Branches % Employees % (1) Million euros; (2) As of August 2017 (last available); (3) Thousands. (*) Constant euros 8

9 Commercial strategy and business transformation In 3Q17, we continued to expand our digital capabilities with the launch of Digital On-Boarding Digital On Boarding First 100% digital platform for non-clients to become clients With Touch-ID (digital fingerprint) it is possible to buy a bank product in seconds Easy and simple to use with no human interaction Automatic credit scoring and data check 9

10 Commercial strategy and business transformation In 3Q17, we also continued to improve the functionality of our APP Corporate APP Push Notifications Insurance Specialized APP for corporate clients Instant communication of customer events Easy contracting and insurance management 10

11 Commercial strategy and business transformation In 3Q17, we accelerated the opening plans for our Work Café network Combining a high-end experience with networking in an innovate platform Hi-tech / Hi touch branches. Improvement of client and non client attraction, service and advice. New commercial systematic, new CRM and new incentive model aimed to improve profitability and productivity. Lower costs due to fusion of branches and redefinition of cashiers. Centralized operative process and post sale support 11

12 Customers Client loyalty continues to expand driven by better quality of service and digital offer Loyal individuals % Customer satisfaction continues to improve Mobile APPs reach number 1 ranking in customer satisfaction WorkCafe helping to attract new clients Sep'16 Sep'17 Loyal companies % Strength in non-lending businesses is leading to greater loyalty Digital services also drive greater product usage and sales Sep'16 Sep'17 Digital customers % Sep'16 Sep'17 Improvements in APP features & design drive digital customer growth New insurance APP New notification and On/Off functions Click 123 & Multioferta drive demand of online consumer loans Thousands of customers

13 Total loans performance YoY loan growth: maintaining focus on profitability Total gross loans (Constant, bn.) Constant, bn. Sep 17 YoY (%) QoQ (%) Total Individual % 0.9% Mortgage 10.3 (14.4%) 3.9% Consumer credit % 0.7% Total Corporates % 3.6% SMEs % 1.5% Middle Market % 2.2% GCB 2.8 (6.2%) 12.1% Total Loans % 2.1% S'16 D'16 M'17 J'17 S'17 13 (1) Loans to individuals includes consumer, mortgage and commercial loans to individuals (2) Total loans amount includes non-segmented loans

14 Total funds performance Total funding increased 4% YoY driven by fee generating mutual funds and demand deposits Total funding (Constant, bn. 1 ) Constant, bn. Sep 17 YoY (%) QoQ (%) Demand % 0.9% Time % 2.4% Total deposits % 1.9% Mutual funds % -0.8% Total funding % 1.2% S'16 D'16 M'17 J'17 S'17 14 (1) Includes demand deposits, time deposits and mutual funds

15 Content Macroeconomic environment and financial system Strategy and business Results Appendix

16 Net interest income 9M17 NII increases 1.1% YoY. Temporary reduction of inflation lower NII in the quarter Net Interest Income ( MM constant euros 1 ) Yield on loans (%) Q16 4Q16 1Q17 2Q17 3Q17 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 NIM 2 (%) UF Inflation rate (%) Central Bank interest rate (%) Cost of deposits (%) Q16 4Q16 1Q17 2Q17 3Q17 (1) Average exchange rate as of 9M 17 (2) Group criteria; (3) Quarter average. 16

17 Net fees Strong fee growth driven by increased number of products from greater customer loyalty Net fees ( MM constant euros 1 ) 9M 17 9M 16 YoY(%) QoQ(%) Cards % (19.7%) Bancassurance % (8.8%) Cash Management (5.5%) 10.2% Mutual funds % 4.4% Foreign trade % 9.5% Checking accts 9 9 (7.2%) 4.8% Others % 3.5% 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Total % (3.2%) 17 (1) Average exchange rate as of 9M 17

18 Gross income Gross operating income up 3.7% YoY in 9M17 Gross income ( MM constant euros 1 ) M 17 9M 16 YoY(%) QoQ(%) Net Interest Income 1,415 1, % (6.8%) Net Fees % (3.2%) Subtotal 1,715 1, % (6.2%) Other % 33.1% 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Gross income 1,893 1, % (2.9%) (1) Average exchange rate as of 9M 17 (2) Other includes Gains (losses) on financial transactions and Other operating income 18

19 Operating expenses Improvement in efficiency driven by strong revenue generation and cost control, despite costs from strategic initiatives Operating expenses ( MM constant euros 1 ) 9M 17 9M 16 YoY(%) QoQ(%) General admin % 0.6% expenses Depreciation and % 1.1% amortization Operating expenses % 0.6% 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Efficiency ratio (with amortizations) 41.1% 41.2% Number of branches Number of employees 11,673 12, (1) Average exchange rate as of 9M 17

20 Net operating income after loan-loss provisions (LLPs) Net op. income after LLPs grows 13.3% YoY. Healthy asset quality: NPL ratio and cost of credit continue improving LLPs and Cost of credit ( MM constant euros 1 ; %) Cost of credit 1.55% 1.43% 1.42% 1.37% 1.27% 9M 17 9M 16 YoY(%) QoQ(%) Net Operating Income 1,116 1, % (5.2%) Net LLPs LLPs (352) (399) (11.7%) (8.8%) Net op. income after LLPs % (3.5%) NPL ratio 4.95% 5.12% NPL Coverage ratio 59% 58% 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 20 (1) Average exchange rate as of 9M 17

21 Attributable profit Solid performance: 11.9% underlying attributable profit YoY growth in 9M17 Attributable profit ( MM constant euros 1 ) 9M 17 9M 16 YoY(%) QoQ(%) Profit before taxes % (1.6%) Tax on profit (142) (118) 21.0% (5.7%) Consolidated profit % (0.6%) Underlying att. Profit % (1.0%) Non-recurring Attributable profit % (1.0%) 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 Effective tax rate 18.2% 17.3% 21 (1) Average exchange rate as of 9M 17

22 Final remarks Market Environment & Financial System GDP should grow 1.5% in 2017 and 2.5% in 2018 (lower than expected at the start of the year) Inflation expectations have fallen to 1.9% in Central Bank cuts rate by 50bps in 1Q17, and then a further 25bp in 2Q17 to 2.5%. We expect rates to remain stable until 3Q18. Loan growth in the banking system is slow due to macroeconomic environment. Strategy & Business Loans increase 3.8% YoY. Growth focused on high income segments, larger SMEs and the Middle- Market of corporates. Total customer funds grow 4.0% YoY. Mutual funds under management rise 4.5% YoY and demand deposits increase 4.3% YoY First 100% digital platform for non-customers to become customers launched in the quarter. Loyal customers growing at a healthy pace driven by significant improvements in customer service and digital offer 11.9% attributable profit growth driven by net interest income and fees leveraged on lower LLPs and controlled cost growth Results Efficiency improves to 41.1% Improvement of all credit quality ratios 22

23 Content Macroeconomic environment and financial system Strategy and business Results Appendix

24 Balance sheet Constant EUR million* Variation 30-Sep Sep-16 Amount % Customer loans 36,257 34,888 1, Cash, central banks and credit institutions 3,990 5,179 (1,190) (23.0) Debt securities 3,352 4,081 (728) (17.9) o/w: available for sale 2,717 3,762 (1,044) (27.8) Other financial assets 2,247 2,509 (262) (10.4) Other assets 1,850 1,898 (48) (2.5) Total assets 47,695 48,555 (860) (1.8) Customer deposits 25,819 24,754 1, Central banks and credit institutions 4,239 6,595 (2,356) (35.7) Debt securities issued 8,490 8,911 (421) (4.7) Other financial liabilities 3,300 2, Other liabilities 1,138 1, Total liabilities 42,986 44,193 (1,207) (2.7) Total equity 4,709 4, Other managed and marketed customer funds 10,199 9, Mutual funds 7,565 7, Pension funds Managed portfolios 2,634 2, (*) End of period exchange rate, as of 09/30/

25 Income statement Constant EUR million* Variation 9M17 9M16 Amount % Net interest income 1,415 1, Net fees Gains (losses) on financial transactions Other operating income Gross income 1,893 1, Operating expenses (777) (752) (25) 3.4 General administrative expenses (700) (685) (15) 2.2 Personnel (430) (427) (3) 0.7 Other general administrative expenses (270) (258) (12) 4.5 Depreciation and amortisation (78) (67) (11) 15.9 Net operating income 1,116 1, Net loan-loss provisions (352) (399) 47 (11.7) Other income Underlying profit before taxes Tax on profit (142) (118) (25) 21.0 Underlying profit from continuing operations Net profit from discontinued operations Underlying consolidated profit Minority interests Underlying attributable profit to the Group Net capital gains and provisions Attributable profit to the Group (*) Average exchange rate as of 9M 17 25

26 Income statement Constant EUR million* 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Net interest income Net fees Gains (losses) on financial transactions Other operating income (0) 1 3 (3) Gross income Operating expenses (250) (250) (253) (262) (253) (261) (263) General administrative expenses (229) (227) (229) (235) (228) (235) (236) Personnel (136) (147) (144) (146) (135) (147) (148) Other general administrative expenses (93) (80) (84) (89) (94) (88) (88) Depreciation and amortisation (21) (23) (24) (27) (25) (26) (27) Net operating income Net loan-loss provisions (116) (134) (148) (129) (117) (123) (112) Other income 2 (1) 7 (36) Underlying profit before taxes Tax on profit (43) (32) (43) (46) (45) (50) (47) Underlying profit from continuing operations Net profit from discontinued operations Underlying consolidated profit Minority interests Underlying attributable profit to the Group Net capital gains and provisions Attributable profit to the Group (*) Average exchange rate as of 9M 17 26

27 Thank you Our purpose is to help people and businesses prosper. Our culture is based on the belief that everything we do should be