Corporate Presentation As of September 30, 2015 Banco de Chile
Chile: Macro Environment and Financial System
Economic Highlights Solid economic fundamentals B- B B+ BB BB+ BBB BBB+ A- A A+ BB- BBB- AA- AA AA+ AAA GDP per capita USD Thousands, PPP 2014 Net Fiscal Assets %, GDP 21.9 15.5 24.2 14.2 18.7 12.6 10.5 7.0 8.6 6.8 5.7 4.4 ARG BRA CHL COL MEX PER Global Competitive Index Ranking World Economic Forum 2014 2009 2010 2011 2012 2013 2014 Standard & Poor s Long Term Debt Ranking COL PER MEX BRA 66 65 61 57 CHL BRA COL CHL 33 PER ARG 138 150 100 50 0 3
Economic Highlights Solid economic fundamentals LATAM 5Y CDS Spreads- Bps 600 500 400 300 200 100 0 nov-12 nov-13 nov-14 nov-15 Sovereign Funds and International Reserves USD Bn 100 80 60 40 20 BRA CHL COL MEX PER Sovereign Funds International Reserves 0 sep-10 sep-11 sep-12 sep-13 sep-14 sep-15 Inflation % 12 10 8 6 4 2 0-2 CPI -4 oct-01 oct-03 oct-05 oct-07 oct-09 oct-11 oct-13 oct-15 Current Account Balance % of GDP 3 2 1 0-1 -2-3 -4 CPI ex food & energy 2010 2011 2012 2013 2014 2015e 4
Substantial Growth Potential Low penetration in SME s and personal banking Assets in the Chilean Financial System % of GDP 1, as of December 2014 Banking System Loan Penetration % of GDP Total Loans Assets Under Management 171% 202% 235% Consumer 84% 13% 60% 122% 130% 114% Mortgage Commercial 21% 50% 15% 17% 28% 35% 56% 82% GDP per Capita (US$ Thousands) 2 Banks Pension Funds Mutual Funds 11 6 8 12 14 28 55 30 50 48 46 Source: Banco Central, SBIF, SAFP, AAFM, and SVS. 1.- Percentage of 2014 nominal GDP Source: The Economist Intelligence Unit as of December 20, 2013, central banks and regulators. 1.- Source: Central Bank of Chile and SBIF. 2.- As of December 2014 5
sep-14 Solid and Profitable Banking Industry With sustained growth in loans of 2x 4 GDP Growth dic-14 mar-15 jun-15 sep-15 Loan Growth Nominal growth, YoY Net Income 1 and ROAE 2 Chilean Banking System, USD millions, % Commercial Consumer Mortgage 16.7% 15.2% 15.0% 15.1% Total 15.9% Net Income ROAE 3,398 10.0% 9.9% 7.8% 10.6% 9.1% 8.6% 11.2% 9.4% 9.8% 9.9% 7.8% 8.1% 7.5% 7.7% 7.9% 1,759 16% 2,275 2,458 19% 19% 2,266 2,670 16% 16% 18% 2,408 15% 2009 2010 2011 2012 2013 2014 Sep-15 90-Day Past-Due Loans / Total Loans: 3.0% 2.7% 2.6% 2.2% 2.2% 2.1% 2.0% BIS Ratio: 14.3% 14.1% 13.9% 13.3% 13.2% 13.4% Source: SBIF, information in Chilean GAAP. CLP/US$ = 696.38 as of September 30, 2015. 1.- Excludes subsidiaries outside Chile. 2.- ROAE: Return on average equity. 3.- Compounded annual growth rate. 4.- Linear regression between real GDP growth and real loans growth in the banking system, for years in which there was real positive change in GDP, from 1996 to 2014. 5.- As of August, 2015. 12.7% 5 6
Introduction to Banco de Chile
Snapshot of Banco de Chile A leading financial institution in profitability and soundness As of September 2015 US$44 billion in Assets US$25 billion in Total Deposits Most Profitable and Strongest Bank Institution in LatAm 1 ROAE 2014 1 24.5% Rating S&P, Feb-15 A+ US$4 billion in Equity Itau 23.9% BBB- S&P: A+ Moody s: Aa3 (Strongest Private Bank in Latam) Santander CL 22.3% A Listed locally and internationally Bradesco 19.8% BBB- Credicorp 18.5% n/a 1.- Source: Bloomberg as of February 27, 2015. Five most profitable private and listed banks in LATAM 8
Ownership Structure Attractive free float of 25.4% Free Float Evolution Simplified Ownership Structure As of September 2015 Pre Capital Increase 2011 12.1% 50.0% 50.0% Pre Capital Increase 2012 15.7% 26.2% 58.2% LQIF s Direct and Indirect Stake in Banco de Chile 51.1% Pre LQIF Secondary Offering 2013 17.6% Free Float SM-Chile 12.6% 100% SAOS Ergas Group Current 25.4% 25.4% 29.7% 6.0% Free Float 9
Diversified Business Model Focused on profitability in every segment we serve Total Loans As of September 30, 2015 Income Before Taxes Nine month period ending September 30, 2015 3% 7% 18% 28% 51% US$34.5 bn 39% US$671 mn 22% 18% 6% 8% 1 Subsidiaries Individuals and SMEs Consumer Finance Large Companies Corporate Treasury Note: CLP/US$ = 696.38 as of September 30, 2015. Information in Chilean GAAP. 1.- Subsidiaries include Banchile Corredores de Bolsa S.A., Banchile Administradora General de Fondos S.A., Banchile Corredores de Seguros Ltda., Banchile Asesoría Financiera S.A., Banchile Securitizadora S.A., Promarket S.A., Socofin S.A. 10
Corporate Strategy Consistent and focused long term objectives Lead the Wholesale Business Lead the Retail Business Operational Excellence Service Quality Aligning People/ Culture/Strategy Building Social Reputation 11
Lead the Retail and Wholesale Business Greater dynamism in middle-upper retail banking Type 3Q15 (Bn. of CLP) YoY (%) QoQ (%) Retail 12,923 14.0% 4.7% Mortgage 6,099 17.1% 5.2% SMEs 3,305 14.0% 5.3% Consumer: Middle/ Upper Income Consumer: Credichile 2,836 12.1% 4.1% 683-1.3% 0.2% Wholesale 11,095 10.4% 7.6% Corporate 4,354 1.5% 2.2% Large Companies 6,741 17.0% 11.4% Total Loans 24,018 12.3% 6.0% Nominal Loan Growth %, QoQ 3.8% 2.4% 2.3% 3.7% 2.0% 1.4% 2.0% 0.7% 3.4% 1.2% 7.1% 5.1% 5.2% 3.3% -0.9% sep-14 dic-14 mar-15 jun-15 sep-15 Commercial Consumer Mortgage 12
Service Quality & Aligning People/Culture/Strategy Customer service is Banco de Chile s first priority Service Quality Net Promoter Score, % Aligning People/Culture/Strategy Workplace Climate Survey 60.0 66.6 67.9 69.3 69.9 71.4 Organizational Climate Organizational Commitment Workplace Satisfaction 87% Employee Development Workshops & Continual Training Courses 2012 2013 2014 1Q15 2Q15 3Q15 41 Country-wide events 80 Courses 6,585 Participants 1,800 Participants 13
Operational Excellence Continuous improvements for better customer experience Fast and secure online service for foreign currency operations is introduced for retail customers who want to buy or sell currencies New and innovative service uses cutting edge technology to improve delivery logistics of credit cards: Same day delivery and activation Field executives use an innovative online platform to collect necessary documentation Exclusive Banco de Chile service More than 2,600 Caja Chile service centers in the country allow customers to carry out basic transactions even in remote areas These service points provide high coverage (78% of districts) throughout the country This project was created to complement Banco de Chile s ATM network and facilitate cash withdrawal for customers 14
Solid Competitive Position 15
Solid Competitive Position: Brand Strong brand recognition translates into high client attraction and retention Santander BCI Itau CorpBanca Santander BCI Itau CorpBanca Santander BCI Itau CorpBanca First Mention by Attribute % of Total Mentions, March 2015 Top of Mind Bank You Would Change to Security and Solvency 30% 26% 30% 19% 14% 4% 2% 10% 14% 6% 1% 11% 9% 3% 2% Source: Adimark GFK. Includes all brands from each institution. 16
Solid Competitive Position: Products and Services Leading market position in the products and services offered Total Loans Market Share, as of Sept. 2015 1 Ranking 1,2 Product Mkt Share 1 st Commercial 18.4% 2 nd Consumer 20.7% 2 nd Mortgage 17.4% Commercial Loans Market Share, as of Sept. 2015 1 19.4% 18.5% 13.0% 7.2% 5.0% 18.4% 17.6% 14.1% 9.1% 5.6% Santander BCI CorpBanca Itau Santander BCI CorpBanca Itau Net Fees and Commissions Market Share, as of Sept. 2015 Assets Under Management Market Share, as of Sept. 2015 20.2% 16.2% 15.3% 10.1% 4.8% 20.4% 15.3% 13.4% 6.0% 5.9% Santander BCI CorpBanca Itau Santander BCI Security Bice Source: SBIF, AAFM. 1.- Excludes subsidiaries outside Chile. 2.- Mortgage loan ranking excludes Banco Estado 17
Solid Competitive Position: Funding Diversified and stable funding base Liability Structure % Over Total Assets, as of September 2015 Demand Deposits Market Share %, as of September 2015 Financial Institutions 5% Equity 9% Debt Issued 19% Other 10% Savings Accounts and Time Deposits 33% Current Accounts and Demand Deposits 24% Wholesale 51% Wholesale 60% Retail 49% Retail 40% 23.2% 21.1% Cost of Funding 1 %, YTD September 2015 2.7% 2.8% 15.2% 3.1% 4.0% 3.1% Santander BCI CorpBanca Itau 3.8% 4.1% BCI Santander CorpBanca Itau Source: SBIF. Information in Chilean GAAP, as of June 30, 2015. 1.- Cost of funding is defined as the quotient between interest paid and the sum of interest bearing liabilities and non interest bearing deposits, excluding derivatives, annualized 18
Solid Competitive Position: Risk Prudent and effective credit risk management Delinquency Ratio %, Past Due Loans 1 / Total Loans Loan Loss Provisions Ratio Provisions for Loan Losses/ Average Loans Coverage Ratio Allowances for Loan Losses / Past-Due Loans 1 2.95% 3.17% 2.93% 2.81% 2.66% 2.53% 2.30% 2.34% 2.39% 2.29% 2.07% 1.92% 1.20% 1.03% 1.14% 1.25% 1.29% 0.97% 2.01% 1.86% 1.84% 1.66% 1.71% 1.46% 1.26% 1.23% 1.34% 1.18% 1.12% 1.35% 1.23% 1.17% 1.31% 1.12% 1.04% 0.79% 2.06 2.14 1.06 1.02 1.10 1.04 2.34 1.11 0.92 2.03 1.94 1.84 0.99 1.09 1.14 0.97 0.95 1.04 2010 2011 2012 2013 2014 Sep-15 2010 2011 2012 2013 2014 Sep-15 2010 2011 2012 2013 2014 Sep-15 Santander BCI Renowned risk management based on: Proven capacity for origination and structuring Solid follow-up and collection processes Senior management deeply involved Source: SBIF. Information in Chilean GAAP. 1.- Loans overdue 90 days or more, including overdue installments, as well as outstanding capital and interests. 19
Solid Competitive Position: Corporate Governance The foundation of our success Solid Corporate Governance Practices Successful Partnership with Citi Active Board involvement 11 board members (2 are independent) 5 risk committees, including weekly sessions of Loan Portfolio Committee 6 monthly business committees Best Practices in pursuant to NYSE and SEC standards Three active board members Growth of existing businesses Transactional and Multinational Banking, Treasury, Investment Banking, Consumer Finance International Connectivity provide us with significant growth potential to develop: International business opportunities Regional and multinational client development Best practices in internal management processes 20
Consistent and Profitable Track Record 21
Consistent and Profitable Track Record Continued strong net income despite additional provisions Quarterly Net Income and ROAE In billions of CLP, % Adjusted Net Income and ROAE excluding additional provisions 121 122 137 133 151 154 159 128 117 168 158 134 23% 23% 25% 24% 25% 26% 26% 24% 18% 26% 24% 20% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2013 2014 QoQ 1Q 2Q 3Q 4Q UF 0.12% -0.07% 1.04% 0.95% 1Q 2Q 3Q 4Q 1.28% 1.76% 0.60% 1.90% 2015 1Q 2Q 3Q -0.02% 1.46% 1.46% 22
Consistent and Profitable Track Record High inflation boosts Q3 income while customer income grows in line with economic cycle Quarterly Operating Income (In billions of CLP) Operating Margin Breakdown (Operating Income / Avg. Daily Loans) 386 89 440 141 381 84 419 432 119 127 7.3% 8.1% 7.0% 7.6% 7.4% 4.4% 4.2% 4.1% 4.1% 3.9% 297 300 297 300 305 1.7% 2.6% 1.5% 2.1% 2.2% 3Q14 4Q14 1Q15 2Q15 3Q15 Customer income Non-customer income* QoQ 3Q14 4Q14 1Q15 2Q15 3Q15 UF 0.60% 1.90% -0.02% 1.46% 1.46% *Includes income from the contribution UF GAP position and treasury activities 1.3% 1.3% 1.3% 1.3% 1.3% 3Q14 4Q14 1Q15 2Q15 3Q15 Total Operating Income Interest Income from Customers Fees Non-customer income* 23
Proven Value Creation Capabilities Distinguished in the local market Highest Profitability in the Local Industry Based on Superior Risk Management and Efficiency Operating Margin % Over Average Loans, YTD September 2015 ROAE YTD September 2015 7.3% 6.9% 6.9% 6.8% 21.6% 5.3% 18.9% 17.5% Santander BCI CorpBanca Itau 14.2% 11.8% Loan Loss Provisions Ratio %, Provisions for Loan Losses / Average Loans, YTD September 2015 1.4% 1.5% 1.1% 1.1% 0.8% Santander BCI CorpBanca Itau Santander BCI CorpBanca Itau ROAA: 1.9% 1.5% 1.4% 1.2% 1.1% Source: SBIF Efficiency Ratio Operating Expenses / Operating Revenues, YTD September 2015 43.7% 43.1% 47.8% 47.7% 52.7% Santander BCI CorpBanca Itau 24
Consistent Higher Profitability Generated by a unique and consistent business strategy Return On Average Equity (ROAE) %, based on SBIF data and monthly average volumes 27.8% 26.9% 24.5% 21.7% 25.7% 23.5% 17.9% 17.5% 24.7% 18.7% 18.4% 13.8% 26.2% 18.7% 20.3% 15.7% YTD 21.6% 16.6% 2010 2011 2012 2013 2014 1Q15 2Q15 3Q15 Local Peers 1 1.- Santander, BCI, CorpBanca, and Itau. 25
Year-end Summarized Financial Statements 26
Yearly Financial Performance Summary Chilean GAAP Variation 2011 2012 2013 2014 2014 / 2013 Statement of Income (in billions of CLP) % Net Interest Income 871 953 1,059 1,245 17.6% Total Operating Revenue 1,224 1,342 1,456 1,646 13.1% Provisions for Loan Losses -125-188 -242-284 17.5% Total Operating Expenses -614-634 -623-715 14.7% Net income 429 466 514 591 15.1% Balance Sheet (in billions of CLP) Total Loans 17,378 18,762 20,870 21.877 4.8% Total Assets 21,741 23,261 25,934 27.646 6.6% Total Equity 1,739 2,007 2,284 2,535 11.0% Profitability Indicators Bps Net Interest Margin 1 4.77% 4.62% 4.71% 5.15% 44 Operating Margin 1 6.70% 6.41% 6.47% 6.81% 34 ROAE - Return on Average Equity 2 24.03% 23.31% 21.30% 24.43% 313 ROAA - Return on Average Assets 3 2.12% 2.09% 2.13% 2.25% 12 Credit Quality Provisions for Loan Losses/ Average Loans 0.79% 1.04% 1.23% 1.34% 11 Non-Performing Loans / Total Loans 1.03% 0.97% 1.13% 1.25% 12 Allowances for Loan Losses / Non-Performing Loans 2.1x 2.4x 2.0x 1.9x -0.1x Operational Efficiency Operating Expenses / Operating Revenues 50.16% 46.26% 42.78% 43.41% 63 Capital Ratios Total Regulatory Capital / Risk-weighted Assets 12.91% 13.22% 13.05% 13.32% 27 Tier 1 Capital / Risk-weighted Assets 8.88% 9.69% 9.94% 10.39% 45 Source: Banco de Chile, based on historical Financial Statements submitted to the SBIF and not including reclassifications. Information in Chilean GAAP. 1.- Annualized net interest income divided by average interest earning assets. The average balances for interest earning assets, including interest and readjustments, have been calculated on the basis of our daily balances and on the basis of monthly balances for our subsidiaries. 2.- Annualized net income (loss) divided by average equity. The average balances for equity have been calculated on the basis of our daily average balances. 3.- Annualized net income (loss) divided by average total assets. The average balances for total assets have been calculated on the basis of our daily balances and on the basis of monthly balances for our subsidiaries. 27
Forward-looking Information The information contained herein incorporates by reference statements which constitute forward-looking statements, in that they include statements regarding the intent, belief or current expectations of our directors and officers with respect to our future operating performance. Such statements include any forecasts, projections and descriptions of anticipated cost savings or other synergies. You should be aware that any such forward-looking statements are not guarantees of future performance and may involve risks and uncertainties, and that actual results may differ from those set forth in the forward-looking statements as a result of various factors (including, without limitations, the actions of competitors, future global economic conditions, market conditions, foreign exchange rates, and operating and financial risks related to managing growth and integrating acquired businesses), many of which are beyond our control. The occurrence of any such factors not currently expected by us would significantly alter the results set forth in these statements. Factors that could cause actual results to differ materially and adversely include, but are not limited to: changes in general economic, business or political or other conditions in Chile or changes in general economic or business conditions in Latin America; changes in capital markets in general that may affect policies or attitudes toward lending to Chile or Chilean companies; unexpected developments in certain existing litigation; increased costs; and unanticipated increases in financing and other costs or the inability to obtain additional debt or equity financing on attractive terms. You should not place undue reliance on such statements, which speak only as of the date that they were made. Our independent public accountants have not examined or compiled the forward-looking statements and, accordingly, do not provide any assurance with respect to such statements. These cautionary statements should be considered in connection with any written or oral forward-looking statements that we may issue in the future. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect later events or circumstances or to reflect the occurrence of unanticipated events. 28