- Chilean pesos - Thousands of Chilean pesos - Millions of Chilean pesos - United States dollars - Thousands of US dollars - Unidades de Fomento (an

Transcription

1 Ch$ ThCh$ US$ ThUS$ UF - Chilean pesos - Thousands of Chilean pesos - Millions of Chilean pesos - United States dollars - Thousands of US dollars - Unidades de Fomento (an official inflation- indexed monetary unit)

2 Report of the independent accountants Balance sheet Statement of income Statement of cash flows Notes to the financial statements INDIVIDUAL FINANCIAL STATEMENTS 31 december, 2002 and 2001 ANNUAL REPORT 2002 BCI The complete consolidated and individual financial statements of Bci and its subsidiaries and the corresponding report of the independent auditors is available to those interested on the web-site or at the institution s offices

3 Individual Financial Statements 2002 BALANCE SHEET ASSETS CASH AND BANKS At 31 december , ,320.3 LOANS Commercial loans 1,359, ,153,379.4 Foreign trade financing 371, ,227.0 Consumer loans 209, ,196.9 Mortgage loans 451, ,259.3 Leasing contracts 90, ,656.0 Contingent assets 299, ,497.1 Other current loans 427, ,253.7 Overdue loans 35, ,012.0 Total loans 3,246, ,759,481.4 Provision for doubtful loans (54,807.8) (50,060.3) Total net loans 3,192, ,709,421.1 OTHER CREDIT OPERATIONS Loans to financial institutions 35, ,665.9 Securities acquired under resale agreements 33, ,704.8 Total other credit operations 68, ,370.7 INVESTMENTS Documents of Central Bank of Chile & Treasury 507, ,600.6 Other financial investments 226, ,297.4 Traded securities 69, ,058.0 Assets for leasing 10, ,178.9 Assets received in lieu of payment 5, ,298.2 Other non-financial investments 1, Total investments 819, ,288.7 OTHER ASSETS 83, ,204.0 FIXED ASSETS Premises & equipment 88, ,959.9 Investments in other companies 34, ,354.1 Total fixed assets 123, ,314.0 TOTAL ASSETS 4,720, ,978,918.8

4 LIABILITIES AND SHAREHOLDERS`EQUITY At 31 december DEPOSITS AND OTHER OBLIGATIONS Current accounts 711, ,028.2 Term deposits & borrowings 1,772, ,549,680.0 Other sight & term obligations 390, ,037.9 Liabilities under repurchase agreements 68, ,438.8 Mortgage-funding notes 402, ,004.3 Contingent liabilities 300, ,990.5 Total deposits & other obligations 3,646, ,204,179.7 BONDS ISSUED Straight bonds 43, ,867.7 Subordinated bonds 102, ,766.3 Total bonds issued 146, ,634.0 BORROWINGS FROM FINANCIAL INSTITUTION AND CENTRAL BANK FROM CHILE Central Bank of Chile restructuring credit lines 3, ,956.4 Other obligations to Central Bank of Chile 88, ,635.7 Borrowings from other financial institutions in Chile 58, ,002.7 Borrowings from abroad 340, ,636.5 Other obligations 29, ,478.5 Total borrowings from financial institutions 521, ,709.8 OTHER LIABILITIES 87, ,710.2 TOTAL LIABILITIES 4,400, ,690,233.7 VOLUNTARY PROVISIONS SHAREHOLDERS EQUITY 8, ,240.0 Capital & reserves 252, ,595.8 Other equity accounts 1, ,972.8 Net income for the year 57, ,876.5 Total shareholders equity 312, ,445.1 TOTAL LIABILITIES & SHAREHOLDERS`EQUITY 4,720, ,978,918.8 ANNUAL REPORT 2002 BCI

5 Individual Financial Statements 2002 STATEMENT OF INCOME For the years ended 31 december OPERATING INCOME Income from interest & inflation adjustments 306, ,102.3 Gain from securities trading 14, ,953.8 Fee income 48, ,883.5 Other operating income 3, ,335.8 Total operating revenue 373, ,275.4 Interest & inflation-adjustment expense (155,077.5) (167,838.0) Losses on securities trading (6,118.3) (2,531.1) Fees incurred (12,136.4) (8,508.3) Net exchange loss (474.4) (1,546.4) Other operating expenses (622.7) (487.1) Gross margin 198, ,364.5 Staff remuneration & expenses (56,900.6) (56,477.8) Administration & other expenses (39,955.8) (36,248.5) Depreciation & amortization (11,973.0) (11,419.0) Net margin 89, ,219.2 Provisions for doubtful assets (33,047.5) (27,011.6) Recovery of loans written off 6, ,682.7 Operating income 63, ,890.3 NON-OPERATING RESULTS Non-operating income 1, ,902.0 Non-operating expenses (7,811.9) (4,094.5) Result of foreign branch 1,516.3 (551.8) Result of investments in companies 10, ,210.8 Price-level restatements (2,406.6) (2,182.9) Income before income tax 67, ,173.9 Income tax (9,572.3) (8,117.4) Surplus 57, ,056.5 Voluntary provisions - (6,180.0) NET INCOME FOR THE YEAR 57, ,876.5

6 Individual Financial Statements 2002 STATEMENT OF CASH FLOWS For the years ended 31 december CASH FLOWS FROM OPERATING ACTIVITIES Net income for the year 57, ,876.5 Charges (credits) to income not representing cash movements: Depreciation & amortization 12, ,419.0 Provisions for doubtful assets 33, ,011.6 Voluntary provisions - 6,180.0 Provision for adjustment to market value of investments (1,052.4) (37.7) Income on investments in companies & foreign branch (12,160.6) (8,659.0) Net gain on sale of assets received in lieu of payment (3,345.4) (1,725.9) Loss on sale of fixed assets Write-off of assets received in lieu of payment 3, ,034.6 Price-level restatements 2, ,182.9 Income tax & deferred tax 9, ,117.4 Other charges (credits) not representing cash flows 68.8 (634.4) Net change in interest, inflation-adjustment and commissions accrued on assets & liabilities 12, ,297.3 Total operating cash flows 114, ,139.8 CASH FLOWS FROM INVESTMENT ACTIVITIES Net increase in loans (531,217.0) (383,610.6) Net (increase) decrease in investments (191,188.9) 24,532.1 Purchases of fixed assets (6,450.6) (3,629.5) Sales of fixed assets Investments in companies and foreign branches (2,325.5) (2,096.8) Dividends receives on investments in companies 7, ,344.9 Sale of assets received in lieu of payment 10, ,074.6 Net increase in other assets & liabilities 51, ,228.8 Total investment cash flows (662,232.2) (277,949.2) CASH FLOWS FROM FINANCING ACTIVITIES Increase in current accounts 84, ,458.6 Increase in term deposits & borrowings 205, ,822.7 Increase (decrease) in other sight & term obligations 107,452.7 (56,171.9) Decrease in liabilities under repurchase agreements (2,012.7) (78,196.4) Increase in short-term borrowings from abroad 26, ,535.5 Issue of mortgage-funding notes 140, ,756.0 Redemption of mortgage-funding notes (158,082.6) (73,622.9) Increase (decrease) in other short-term liabilities 4,654.3 (5,693.2) Borrowings from Central Bank of Chile (long term) 3, ,116.0 Repayment of borrowings from Central Bank of Chile (long term) (4,126.1) (5,964.0) Bonds placement 19, Redemption of bonds (6,636.3) (4,807.7) Long-term borrowings from abroad 371, ,347.5 Repayment of long-term borrowings from abroad (204,713.0) (45,611.0) Other long-term loans drawn 1, ,565.0 Repayment of other long-term loans (4,003.7) (1,147.3) Share issue ,351.9 Dividends paid (26,291.8) (18,225.9) Total financing cash flows 560, ,512.9 Net total cash flow 12, ,703.5 EFFECT OF INFLATION ON CASH AND CASH EQUIVALENTS (741.0) (1,147.0) CHANGE IN CASH AND CASH EQUIVALENTS DURING THE YEAR 12, ,556.5 OPENING BALANCE OF CASH AND CASH EQUIVALENTS 422, ,763.8 CLOSING BALANCE OF CASH AND CASH EQUIVALENTS 434, ,320.3 The accompanying Notes 1 to 15 form an integral part of these financial statements ANNUAL REPORT 2002 BCI

7 Individual Financial Statements 2002 BALANCE SHEET NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS At 31 december 2002 and 2001 NOTE 1: SIGNIFICANT ACCOUNTING PRINCIPLES APPLIED a) General These financial statements have been prepared in accordance with the accounting standards of the Superintendencia de Bancos y Instituciones Financieras (the Chilean Banking Superintendency), which in the case of the present financial statements, conform with accounting principles generally accepted in Chile, except for investments in subsidiaries which are shown on just one line in the balance sheet at their equity value and are not therefore consolidated line by line. This treatment does not alter the net income for the year nor shareholders' equity. These financial statements have been issued only for the purpose of making an individual analysis of the Bank and should therefore be read together with the consolidated financial statements which are required by generally accepted accounting principles in Chile. b) Interest and Indexation Adjustments Loans, investments, and liabilities include their respective interest and indexation adjustments accrued to the year-end. However, the Bank has followed a conservative policy of suspending the accrual of interest and monetary adjustments on past-due and doubtful current loans. c) Price-Level Restatements Capital, fixed assets and other non-monetary assets and liabilities have been restated based on variations in the consumer price index. These restatements resulted in a net charge to income of 2,406.6 (2,182.9 in 2001). Items in the Statement of income have not been restated. The figures for 2001 have been restated by 3%. d) Foreign Currency Foreign currency assets and liabilities are shown at their equivalent values in Chilean pesos calculated at the exchange rate advised by the Banking Superintendency of $ per US$1 at 31 December 2002 (Ch$ in 2001). The net exchange loss of ( 1,546.4 in 2001) shown in the Statement of income includes both the results of foreign exchange trading and the effects of the exchange rate on foreign currency assets and liabilities. e) Derivative contracts Derivative Products The Bank operates in derivative products for its own account for hedging and trading purposes and on behalf of customers (in trading activities). The nominal amount of these contracts is excluded from the balance sheet. Currency forward and futures contracts The Bank values currency forward and futures contracts at the daily observed exchange rate and the resultant gains or losses are shown in the Statement of income on an accrued basis. In accordance with the instructions of the Banking Superintendency, initial differences arising from these transactions (discount or premium) are amortized against income on a straight-line basis over the term of the respective contract. Interest rate swap contracts The Bank values interest rate swaps according to the maturity of the agreed interest rates, recording the difference in favor or against as a credit or charge to income respectively.

8 f) Financial Investments Financial investments with a secondary market are shown at their market value and are adjusted against income for the year, in accordance with the specific instructions of the Banking Superintendency. These require that such adjustments are shown against income for the year except with respect to investments of a permanent nature in which case, subject to certain limits, such adjustments may be made against the equity account Fluctuations in the value of financial investments. The application of this adjustment represented a net credit to income ( 37.7 in 2001) for the year, which is included in Operating income under Income from securities trading. The adjustment of the permanent portfolio of Miami branch generated a charge to Fluctuations in the value of financial investments of 81.4 (credit of 89.0 in 2001). The remaining financial investments are shown at cost plus accrued interest and monetary adjustments. g) Leasing contracts These are shown at the nominal value of all outstanding lease contracts net of non-accrued interest and Value Added Tax. The provisions are shown separately under Provisions for doubtful assets. Assets acquired for leasing operations are shown at restated cost under Assets for leasing. h) Premises and equipment These are shown at restated cost and net of depreciation. Depreciation is calculated by the straight-line method over the es-timated useful lives of the respective assets. i) Investments in companies Shares and holdings in companies in which the Bank owns at least 10% of the capital or in which it has the right to elect or appoint a director or manager, are valued using the equity method. Investments abroad have been valued as indicated in Technical Bulletin No.64 of the Chilean Institute of Accountants, generating a credit for the difference on translation amounting to which has been absorbed by the exchange difference on the liabilities contracted during the year and assigned to hedge the exchange exposure of these investments. At 31 December 2001, the credit amounted to 923.4, shown in Other equity accounts. The increased and decreased investment values are amortized over ten years. j) Provisions for Doubtful Assets The Bank has set up provisions to cover eventual losses on doubtful assets as required by the Banking Superintendency (Note 5). Provisions for loans are shown separately deducted from the respective balances, while provisions for other assets are shown deducted from the respective asset account. k) Voluntary Provisions In accordance with the General Banking Law, banks may make voluntary provisions computable as effective equity for compliance with various requirements under that law. The amount held at each year-end and the effects on results are shown in the balance sheet and statement of income. l) Deferred taxes The effects of deferred taxes due to timing differences between the tax and financial accounts are shown on an accrual basis in accordance with Technical Bulletin No. 60 of the Chilean Institute of Accountants. In calculating the effect of deferred taxes for the year 2002, recognition has been given to the effects of the change in tax rate which increases progressively to 16.5% in 2003 and 17% in 2004, using the rate corresponding to the year when it is estimated that the respective reversal of the difference will occur. ANNUAL REPORT 2002 BCI

9 Individual Financial Statements 2002 BALANCE SHEET m) Staff vacations The annual cost of staff vacations and benefits is shown on an accrual basis. n) Statement of cash flow In accordance with the specific regulations applicable to financial institutions, only the item Cash and banks is considered as Cash and cash equivalents. NOTE 2 - ACCOUNTING CHANGES By Circular of 7 October 2002, the Banking Superintendency set a method for the accounting treatment of financial investments in a bank s own mortgage-funding notes. The Bank s balance sheet therefore does not show the corresponding liability nor the asset for such own-issued notes, being recorded only in the memorandum accounts and not affecting the results or equity significantly. NOTE 3 TRANSACTIONS WITH RELATED PARTIES Under current regulations, persons or entities are considered to be related if related to the ownership or management of the Bank and subsidiaries either directly or through third parties. a) Loans granted to related parties Loans granted to related parties at 31 December each year were: Current portfolio Overdue portfolio Total Collateral* To productive companies 16, , , , To investment companies 3, , , , To individuals (**) 1, , , Total 21, , , , , ,127.9 (*) Includes only collateral that is valid for calculating individual credit limits as defined by Clause 84 of the general Banking Law and valued in accordance with the instructions of the Banking Superintendency. (**) Credits to individuals include only debts that the equivalent of UF 3,000 or more.

10 b) Other transactions with related parties The Bank has carried out the following transactions (in amounts of over UF 1,000) during the year with related parties: Effect on results Name Transaction Amount Charge Credit 2002 BCI Administradora de Fondos Mutuos S.A. Office rental Computer services BCI Corredor de Seguros S.A. Promotional services Office rental BCI Factoring S.A. Office rental Computer services Trading current account 7, Compañía de Normalización de Créditos - Normaliza S.A. Collection services fees Computer services BCI Servicios de Personal S.A. Services received 1, , Análisis y Servicios S.A. Services received 3, , Computer services Empresas Jordan S.A. Form printing 2, , Editora e Impresora Cabo de Hornos S.A. Form printing Galería de Arte Patricia Ready S.A. Consultancies Redbanc S.A. Automatic teller machine operation 1, , Vigamil S.A.C. Form printing Bci Seguros Generales S.A. Insurance broking fees Bci Seguros de Vida S.A. Insurance broking fees Bci Administradora de Fondos Mutuos S.A. Office rental Computer services Bci Corredor de Seguros S.A. Promotional services Office rental Bci Factoring S.A. Office rental Computer services Compañía de Normalización de Créditos - Normaliza S.A. Fee for recovery of write-offs Computer services Bci Servicios de Personal S.A. Services received 1, , Análisis y Servicios S.A. Services received 3, , Empresas Jordan S.A. Form printing 1, , Editora e Impresora Cabo de Hornos S.A. Form printing Galería de Arte Patricia Ready S.A. Consultancies Redbanc S.A. Automatic teller machine operation 1, , Teleductos S.A. Data transmission line rental Vigamil S.A.C. Form printing Bci Seguros Generales S.A. Insurance broking fees Bci Seguros de Vida S.A. Insurance broking fees All these transactions were carried out on market conditions prevailing at the time they were made. ANNUAL REPORT 2002 BCI

11 Individual Financial Statements 2002 BALANCE SHEET NOTE 4 INVESTMENT IN COMPANIES Holdings in companies The balance sheet shows investments in companies for 34,651.9 ( 30,354.1 in 2001) comprised as follows: Investment Equity of the Value of the Accrued Holding of the Bank company investment results Company % % Análisis y Servicios S.A (110.4) 1.5 Bci Administradora de Fondos Mutuos S.A , , , , , ,425.8 Bci Asesoría Financiera S.A Bci Corredor de Bolsa S.A , , , , , ,802.7 Bci Corredores de Seguros S.A Bci Factoring S.A , , , , , ,925.6 Bci Servicios de Personal S.A Bci Securitizadora S.A Compañía de Normalización de Créditos Normaliza S.A Centro de Compensación Automático ACH Chile Redbanc S.A , , Servipag S.A , , Solución Financiera de Crédito del Perú , , , , , ,450.5 Artikos Chile S.A (136.5) 1,332.1 (68.3) (1,243.8) (98.3) Nexus S.A , , (217.5) Empresas de Tarjetas Inteligentes S.A (72.1) (21.9) Sub total 33, , , ,107.0 Shares or rights in other companies Total 34, , , ,210.8 On 4 March 2002, the Bank participated in the capital increase of Empresa de Tarjetas Inteligentes S.A, acquiring initially 39,501 shares for 63.9, and, on 28 May 2002, it acquired 8,230 shares for 13.4, maintaining its same percentage holding in that company. On 28 March 2002, the Bank completed the subscribed capital of Artikos Chile S.A., acquiring 2,000 shares for On 7 August 2002, the Bank acquired 48 shares in BCI Corredores de Seguros S.A. for 2,392.4, paying a premium of 2, This increased its shareholding in this company to 99.00%.

12 NOTE 5 - PROVISIONS a) Provisions for doubtful assets At 31 December 2002, the Bank holds provisions for a total of 54,996.0 ( 50,210.0 in 2001), being the minimum provisions required by the Banking Superintendency to cover eventual losses. Movement during the two years of the provisions referred to in a) above are as follows: Provisions for Loans Assets recovered Other (leasing) assets Total Balances at 1 January , ,009.2 Application of provisions (29,357.9) (128.6) - (29,486.5) Provisions made 42, ,565.3 Release of provisions (16,336.1) (4.3) - (16,340.4) Balances at 31 December , ,747.6 Balances restated for comparison purposes 50, ,210.0 Balances at 1 January , ,747.6 Application of provisions (26,350.0) (449.1) - (26,799.1) Provisions made 52, ,576.3 Release of provisions (19,528.8) - - (19,528.8) Balances at 31 December , ,996.0 In the management s opinion, the provisions made cover all potential losses arising from not recovering assets, according to the information examined by the Bank. b) Voluntary provisions Apart from the provisions for doubtful assets mentioned in a) of this Note, voluntary provisions are held for a total of 8,000 ( 8,240 in 2001). The constitution of these provisions has not affected the results for At 31 december 2001, 6,180 was charged to income. ANNUAL REPORT 2002 BCI

13 Individual Financial Statements 2002 BALANCE SHEET NOTE 6 SHAREHOLDERS EQUITY a) Shareholders equity The following shows the movement in the equity accounts in both years: Paid Legal Other Net income capital reserve reserves for the year Total Balances at 1 January , , , ,816.9 Retained earnings - 36, (36,744.6) - Capitalization of reserves 155,554.7 (155,554.7) Dividends paid - (17,280.0) - - (17,280.0) Subscription & payment for shares 9, ,900.7 Restatement of equity 6, ,549.0 Fluctuation in value of investments of Miami branch Adjustment for conversion differences Net income for the year , ,307.3 Balances at 31 December , , , ,276.8 Balances restated for comparison purposes 224, , , ,445.1 Balances at 1 January , , , ,276.8 Retained earnings - 52, (52,307.3) - Dividends paid - (25,575.7) - - (25,575.7) Subscription & payment for shares Restatement of equity 6, ,464.6 Fluctuation in value of investments of Miami branch - - (81.4) - (81.4) Conversion difference adjustment Net income for the year , ,477.1 Balances at 31 December , , , , ,141.2 On 9 April 2002, the ordinary shareholders meeting agreed to distribute a dividend for 25,575.7 ( 17,280 in 2001), equivalent to Ch$260 per share (Ch$180 in 2001) to a total of 98,368,129 shares issued (96,000,000 in 2001), thus leaving a sum of 26,731.6 in reserves ( 20,048.5 in 2001). On 17 April 2001, an extraordinary shareholders meeting approved the capitalization of 155,554.7 of reserves and a capital increase of 12,000 divided into 2,860,310 shares. At 31 December 2001, 2,329,106 shares of this increase were subscribed and paid and at 31 december 2002 a further 133,869 shares were subscribed and paid, leaving the Bank s capital divided into 98,462,975 shares (98,329,106 in 2001). b) Basic capital and effective equity of the Bank In accordance with the General Banking Law, a bank s minimum basic capital may not be less than 3% of its total assets, while its effective equity may not be less than 8% of its risk-weighted assets. The Bank s position sat the end of each ear was as follows:

14 At 31 december 2002 (***) 2001 Basic capital (*) 254, ,568.6 Total computable assets 5,026, ,910,417.9 Percentages 5.07% 5.79% Effective equity (**) 348, ,249.7 Risk-weighted assets 3,364, ,670,958.5 Percentages 10.35% 10.42% (*) Equivalent for these purposes to paid capital and reserves. (**) According to the new clause 66 of the Banking Law, in order to calculate effective equity for 2002, only investments in support companies have to be deducted and subordinated bonds and voluntary provisions may be considered, within certain limits, as equity. (***) In accordance with Banking Superintendency Circulars 3,178 and 3,179 of 7 and 26 June 2002 respectively, the information at 31 December 2002 is based on the consolidated position of the Bank and its subsidiaries, whereas these were shown as individual balances in NOTE 7 - INVESTMENTS a) Financial investments Kind of portfolio Market adjustment Permanent Non permanent Sub total Against results Against equity Total Instruments Banco Central de Chile , , , ,993.2 (37.5) , ,019.0 Treasury or other state entities , , , , , ,639.9 Financial institutions in Chile , , , , , ,708.0 Investments abroad , , , ,443.1 (184.9) , ,649.1 Own-issued mortgage-funding notes , , ,825.3 Other investments in Chile 1, , , , , , ,114.7 Total 1, , , , , , ,956.0 Instruments are shown by issuer and payment obligation. The totals include 69,024.8 ( 69,058.0 in 2001) with respect to securities sold under repurchase agreements. The Bank s permanent portfolio showed no significant differences to its market value in either year and no adjustment against equity has been made, as per the criteria described in Note 1. b) Other investments Assets for leasing 10, ,178.9 Assets received in lieu of payment 5, ,298.2 Other investments 1, Total 16, ,332.7 Recovered leased assets, shown in Assets for Leasing, are net of provisions of (149.7 in 2001). The amount shown in the balance sheet corresponds to the estimated combined realization value of these assets. Apart from assets received in lieu of payment shown under assets, there are also others that have been fully or partially written off but have not yet been disposed of. It is estimated that all these assets could realize an approximate sum of 6,437.9 ( 17,038.9 in 2001). The book value of the assets fully or partially written off at 31 December 2002 is 2,232.7 ( 2,954.8 in 2001). ANNUAL REPORT 2002 BCI

15 Individual Financial Statements 2002 BALANCE SHEET NOTE 8 MATURITIES OF ASSETS AND LIABILITIES a) Maturities of loans and financial investments The following shows loans and financial investments at 31 december 2002 by their remaining term to maturity. The figures include accrued interest to the end of the year. Up to 1 to 3 3 to 6 Over one year years years six year Total LOANS (1) Commercial & other loans 1,282, , , , ,399,985.9 Housing mortgage loans 7, , , , ,188.2 Consumer loans 110, , , ,680.9 Leasing contracts 31, , , , ,865.9 OTHER CREDIT OPERATIONS Loans to other financial institutions 35, ,002.9 Securities acquired resale agreements 28, , ,368.5 FINANCIAL INVESTMENTS Permanent portfolio (2) , ,006.1 Non permanent portfolio (3) 559, , , , ,028.7 (1) Only those credits outstanding at the year-end with maturities falling within the periods indicated are shown. Excluded therefore are contingent assets and credits passed to the past-due portfolio, as well as overdue credits not passed to the past-due category, amounting to 12,053.1 of which 9,272.0 were overdue less than 30 days. (2) Includes instruments comprising the permanent portfolio as described in Note 1 f), ignoring marking to market values. (3) Includes the rest of the financial investments portfolio with their respective marking to market values. b) Maturities of deposits, borrowings and other funding operations The following shows deposits, borrowings and other obligations at 31 december 2002 by their remaining term to maturity. The figures include interest accrued to the end of the year. Up to 1 to 3 3 to 6 Over one year years years 6 years Total DEPOSITS AND OTHER OBLIGATIONS (*) Deposits & borrowings 1,504, , , ,704,476.0 Other term obligations 11, ,458.4 Liabilities under repurchase agreements 68, ,379.2 Mortgage-funding notes 34, , , , ,115.1 BOND ISSUES 6, , , , ,504.7 BORROWINGS FROM FINANCIAL INSTITUTIONS AND CENTRAL BANK OF CHILE Restructuring lines of credit , , ,860.5 Other obligations with the Central Bank 88, ,452.3 Borrowings from financial institutions in Chile 58, ,436.7 Borrowings from abroad 340, ,487.8 Other obligations 27, , ,822.8 (*)Excludes all sight obligations, term savings accounts and contingent liabilities.

16 NOTE 9 FOREIGN CURRENCY BALANCES The consolidated balance sheet includes assets and liabilities in foreign currency or adjustable to changes in the exchange rate, for the following amounts: Payable in Foreign currency Chilean currency * Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Assets Available funds 81, , , ,010.1 Loans 661, , , , , ,215.4 Contingent liabilities 215, , , ,982.8 Financial investments: In Chile , , , ,443.4 Abroad 31, , , ,928.8 Other assets 31, , , ,794.0 Total assets 1,021, , , , ,223, ,168,374.5 Liabilities Deposits & borrowings 345, , , ,781.7 Contingent liabilities 217, , , ,728.6 Obligations with Central Bank of Chile Obligation with banks abroad 477, , , ,949.9 Other liabilities 129, , , , ,657.9 Total liabilities 1,170, ,182, , ,170, ,183,119.0 (*) Relate to operations denominated in foreign currency and payable in Chilean pesos or those adjustable to the exchange rate. ANNUAL REPORT 2002 BCI

17 Individual Financial Statements 2002 BALANCE SHEET NOTE 10 DERIVATIVE PRODUCTS The following shows the derivative product positions at the end of each year: a) Currency and interest rate contracts Amount of contracts Number of transactions Up to three months Over three months Type for future operation ThUS$ ThUS$ ThUS$ ThUS$ Local market: Foreign currency forwards ,917 26,932 29,026 Currency futures bought , , , ,450 Currency futures sold , , , ,020 Interest rate forwards or other contracts ,890 80,545 External markets: Foreign exchange forwards ,961 26,958 20,123 Currency futures bought 13-80, Currency futures sold 10-65,000-20,000 - Interest rate futures ,000 - Interest rate forwards or other contracts , ,000 The amount refers to dollars bought or sold or the equivalent in dollars of the foreign currency bought or sold forward, or the amount in dollars upon which the interest rate contracts are agreed, as the case may be. The terms relate to the life of the contracts as from the transaction date. b) Contracts on the value of some system of authorized adjustability (SAA) and on Chilean peso interest rates: Amount of contracts Number of transactions Up to three months Over three month Types of future transaction UF UF UF UF SRA forwards bought ,350 -

18 NOTE 11 - CONTINGENCIES, COMMITMENTS AND RESPONSIBILITIES a) Commitments and responsibilities recorded in memorandum accounts. The Bank records in its memorandum accounts the following balances related to its business commitments or responsibilities: Valuables in custody 1,396, ,310,673.8 Documents for collection in Chile 53, ,330.0 Collections abroad 50, ,198.6 Loans approved but not drawn 662, ,219.8 Leasing contracts signed whose assets have not been delivered 14, ,882.3 The above includes only the more important amounts. Loans and contingent liabilities are shown in the Balance sheet. NOTE 12 - FEES The amount of fees received and paid arose as follows. Income Expenses Current accounts 11, , Lines of credit 9, , Automatic teller machine cards 6, , , ,813.8 Credit cards 5, , , ,973.2 Documents for collection 2, , , ,308.1 Savings accounts 2, , Loan restructuring 2, , Letters of credit, guarantees & other contingent operations 2, , Insurance 1, , Bank drafts & funds transfers Custody and trust services Customer evaluations - - 3, ,142.8 Others 3, , Total 48, , , ,508.3 Commissions earned from mortgage loan transactions are shown in the consolidated Statement of income under Interest & inflation adjustment income. ANNUAL REPORT 2002 BCI

19 Individual Financial Statements 2002 BALANCE SHEET NOTE 13 NON-OPERATING INCOME AND EXPENSES The detail of these is as follows: Non-operating income: IIndemnities received Income from sale of assets written off ,186.4 Rentals Leasing expense recoveries Other Total 1, ,902.0 Non-operating expenses: Write-offs of assets received in lieu of payment 3, ,034.6 Extraordinary staff bonus 1, Severance payments Amortization of premium on share purchase Loss on sale of fixed asses Donations Consultancies Write-offs Provision for leasing receivables Tax demand settlement Other Total 7, ,094.5 NOTE 14 DIRECTORS EXPENSES AND REMUNERATION The following amounts have been paid or provisioned during each year: Profit sharing 1, ,616.3 Fees Allowances Others Total 1, ,880.0 The directors remuneration for 2002 was agreed by the shareholders meeting held on 9 April 2002.

20 NOTA 15 INCOME TAX a) Income tax The provision for income tax was calculated in accordance with current legislation and the respective liability is shown for 11,084.2 ( 11,859.5 in 2001) under Other liabilities net of prepayments made of 9,526.8 ( 5,012.8 in 2001). b) Deferred taxes These are comprised of the following: Balances at 31 december Timing difference ASSETS Provisions for doubtful assets 7, ,742.7 Provision for staff vacations & bonuses 1, ,076.1 Future contracts Voluntary provisions 1, ,328.7 Securities trading Commissions received in advance Other 1, ,054.1 Net assets 11, ,211.4 LIABILITIES Accelerated depreciation of fixed assets 3, ,659.5 Assets leased (net) Deferred expenses 1,85.2 1,498.8 Straight bonds Subordinated bonds Other Net liabilities 7, ,018.2 Net balance of deferred taxes booked 4, ,193.2 ANNUAL REPORT 2002 BCI

21 Individual Financial Statements 2002 BALANCE SHEET c) Effect on results Provision for income tax (11,084.2) (11,859.5) Other adjustments to results Effect of deferred taxes for the year 1, ,942.5 Amortization of complementary accounts for deferred tax effects accumulated at the start Total (9,572.3) (8,117.4) Fernando Vallejos Vásquez Manager, Accounting Lionel Olavarría Leyton General Manager

22 REPORT OF THE INDEPENDENT ACCOUNTANTS Santiago, 20 january 2003 To the Shareholders and Directors Banco de Crédito e Inversiones 1 We have audited the balance sheets of the Banco de Credito e Inversiones at 31 December 2002 and 2001 and the related statements of income and cash flows for the years then ended. The preparation of these financial statements (including their respective notes) is the responsibility of the management of Banco de Credito e Inversiones. Our responsibility is to express an opinion on these financial statements based on our audits. 2 Our audits were conducted in accordance with generally accepted auditing standards. These standards require that we plan and perform the audit to obtain reasonable assurance about whether these financial standards are free from material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial state-ments. An audit also includes assessing the accounting principles used and significant estimates made by the Bank's management as well as evaluating the overall statements presentation. We believe that our audits provide a reasonable basis for our opinion. 3 The financial statements for the years 2002 and 2001 have been prepared to show the individual financial position of Banco de Credito e Inversiones based on the criteria described in Note 1, before proceeding to the line-by-line consolidation of the financial statements of the subsidiaries listed in Note 4. For their proper interpretation, these individual financial statements should therefore be read and analyzed together with the consolidated financial statements of Banco de Credito e Inversiones and its subsidiaries, which are required by accounting principles generally accepted in Chile. 4 In our opinion, these individual financial statements present fairly, in all material aspects, the financial position of Banco de Credito e Inversiones at 31 December 2002 and 2001 and the results of its operations and cash flows for the years then ended, in accordance with the accounting principles described in Note 1. Guido Licci P. ANNUAL REPORT 2002 BCI

23 Direction and Preparation Humberto Béjares Jara Design and Diagrams Oxígeno Printing Trineo Photography Ana María López S. Jorge Rodríguez Pérez