Corporate Presentation As of December 31, 2014 Banco de Chile
I. Introduction to Banco de Chile
Introduction to Banco de Chile: Leading Financial Institution in Profitability and Soundness As of December 2014 Local Ranking Most Profitable and Strongest Bank Institution in LatAm 1 ROAE 2014 1 Rating S&P, Feb-15 US$46 billion in Assets 24.5% A+ US$27 billion in Deposits US$4.2 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 Santiago NYSE LSE 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 3
Attractive Free Float of 25.1%... Free Float Evolution Simplified Ownership Structure Pre Capital Increase 2011 12.1% 50.0% 50.0% Pre Capital Increase 2012 15.7% 25.9% 58.2% LQIF s Direct and Indirect Stake in Banco de Chile 51.2% Pre LQIF Secondary Offering 2013 17.6% Free Float SM-Chile 12.8% 100% SAOS Ergas Group Current 25.1% 25.1% 30.2% 6.0% Free Float 4
With a Diversified Business Model Total Loans As of December 2014 Income Before Taxes As of December 2014 4% 28% 6% 23% 50% US$36.1 Bn 37% US$1.1 Bn 22% 18% 5% 7% 1 Subsidiaries Individuals and SME Consumer Finance Large Companies Corporate Treasury Note: CLP/US$ = 606.09 as of December 31, 2014. 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. 2 5
II. Banco de Chile: An Attractive Investment Opportunity
Why Banco de Chile? 7
feb/06 jun/06 oct/06 feb/07 jun/07 oct/07 feb/08 jun/08 oct/08 feb/09 jun/09 oct/09 feb/10 jun/10 oct/10 dic-11 abr-12 ago-12 dic-12 abr-13 ago-13 dic-13 abr-14 ago-14 dic-14 mar-13 may-13 jul-13 sep-13 nov-13 ene-14 mar-14 may-14 jul-14 sep-14 nov-14 ene-15 mar-11 jul-11 nov-11 mar-12 jul-12 nov-12 mar-13 jul-13 nov-13 mar-14 jul-14 nov-14 4Q14 Economic Highlights 8.0% 4.0% IMACEC QoQ (MA3, SAAR, QoQ, %) Imacec (QoQ, Annualized) 10 9 8 Unemployment (%) unemployment rate 0.0% -4.0% 7 6 5 6% -8.0% 4 20,000 16,000 12,000 8,000 4,000 0-4,000 Trade Balance (USD, Rolling 12m Avg) Trade Balance 14% 12% 10% 8% 6% 4% 2% 0% -2% Retail & Supermarket Sales (MA3, SAAR, %) Retail supermarket 2010 2011 2012 2013 2014 8
Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 4Q14 Economic Highlights 10 8 6 Headline and Core Inflation (Year on Year, %) CPI CPIX CPI ex food energy 7 6 Overnight and Long Term Rates (%) 4 5 2 0-2 -4 4 3 2 BCP 5Y BCP 10 TPM 700 650 600 550 500 450 400 Exchange Rate and Copper Prices (CLP) CLP Copper (inv, right) 100 150 200 250 300 350 400 450 500 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Total Fiscal Assets (USD Bn) Other Assets ESSF PRF 9
Why Banco de Chile? 10
Attractive Financial System in Chile 1 Substantial Growth Potential Assets in the Chilean Financial System % of GDP 1 Total Loans Assets Under Management Banking System Loan Penetration % of GDP 171% 202% 235% Consumer Mortgage Commercial 82% 11% 20% 51% 60% 15% 18% 17% 28% 35% 56% 82% 122% 130% 114% GDP per Capita (US$ Thousands) Banks Pension Funds Mutual Funds Insurance 11 7 8 11 16 23 51 29 51 42 40 Source: Banco Central, SBIF, SAFP, AAFM, and SVS. Source: The Economist Intelligence Unit as of December 20, 2013, central banks and regulators. 1.- Source: Central Bank of Chile and SBIF. 11
Attractive Financial System in Chile 2 Solid and Profitable Banking Industry with Consistent Growth Total Loans 1 and ROAE 2 Chilean Banking System, US$ Billions, % Total Loans ROAE 114 124 145 163 180 199 Chilean Banking System 12 Chilean banks and 11 international banks 5 largest banks hold more than 70% of total loans Sustained growth in loans of 2x 4 GDP growth 16% 19% 19% 16% 16% 18% 2009 2010 2011 2012 2013 2014 > 90-Day Past-Due Loans / Total Loans: 3.0% 2.7% 2.6% 2.2% 2.2% 2.1% BIS Ratio: 14.3% 14.1% 13.9% 13.3% 13.2% 13.2% 5 High credit quality Attractive return on equity Good capitalization Strict regulation with increasing focus on consumer protection Source: SBIF, information in Chilean GAAP. CLP/US$ = 606.09 as of December 31, 2014. 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.- November 2014 12
Why Banco de Chile? 13
Santander BCI Itau CorpBanca Santander BCI Itau CorpBanca Santander BCI Itau CorpBanca Solid Competitive Position 1 Strong Brand Recognition that Translates into High Client Attraction and Retention First Mention by Attribute % of Total Mentions, December 2014 Top of Mind Bank You Would Change to Security and Solvency 30% 25% 30% 20% 13% 4% 2% 9% 14% 7% 2% 10% 11% 4% 1% Source: Adimark GFK. Includes all brands from each institution. 14
Solid Competitive Position 2 Leading Market Position #2 in Total Loans Market Share, as of December 2014 1 19.0% 18.1% 13.1% 7.4% 5.1% #1 in Commercial Loans Market Share, as of December 2014 1 18.0% 16.9% 14.4% 9.1% 5.7% Santander BCI CorpBanca Itau Santander BCI CorpBanca Itau #1 in Net Fees and Commissions Market Share, as of December 2014 19.5% 16.3% 15.2% 11.6% 4.6% #1 in Assets Under Management Market Share, as of December 2014 22.5% 15.4% 13.4% 5.9% 5.6% Santander BCI CorpBanca Itau Santander BCI Larraín Vial BICE Source: SBIF, AAFM. 1.- Excludes subsidiaries outside Chile. 15
Solid Competitive Position 3 Lowest Cost of Funding in the Industry Liability Structure % Over Total Assets, as of December 2014 Demand Deposits Market Share 1 %, as of December 2014 Financial Institutions 4% Equity 9% Other 9% Current Accounts and Demand Deposits 25% Retail 49% 22.5% 21.0% 14.9% 3.5% 2.9% Santander BCI CorpBanca Itau Wholesale 51% Demand Deposits to Total Loans 1 %, as of December 2014 Debt Issued 18% Savings Accounts and Time Deposits 35% Wholesale 60% Retail 40% 31.7% 29.1% 28.3% 14.3% 12.2% BCI Source: SBIF. 1.- Excludes subsidiaries outside Chile. Santander Itau Corpbanca 16
Solid Competitive Position 4 Recognized Credit Risk Management Delinquency Ratio %, Past Due Loans 1 / Total Loans Loan Loss Provisions Ratio Provisions for Loan Losses/ Average Loans 3.0% 2.7% 2.2% 2.3% 1.5% 1.2% 2.9% 2.3% 3.2% 2.1% 1.0% 1.0% 2.9% 2.4% 1.1% 2.8% 2.3% 1.3% 2.4% 1.7% 1.7% 1.9% 1.3% 1.2% 1.7% 0.8% 2.0% 1.0% 1.8% 1.2% 1.7% 1.2% 1.1% 1.2% 1.3% 1.3% 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 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. 17
Why Banco de Chile? 18
Proven Value Creation Capabilities 1 Sustained Growth in Loans and Operating Revenues Total Loans US$ Billions Total Operating Revenues US$ Billions CAGR 2010-2014: 11.1% 2013-2014: 4.8% 21.8 23.7 28.7 31.0 34.4 36.1 CAGR 2010-2014: 8.9% 2013-2014: 13.1% 1.7 1.9 2.0 2.2 2.4 2.7 19.1% 19.2% 19.8% 19.0% 19.1% 18.1% 19.6% 20.6% 20.5% 20.8% 20.0% 19.1% 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 Total Loans Market Share 1 Operational Revenues Market Share Information in Chilean GAAP. Source: SBIF, Banco de Chile. CLP/US$ = 606.09 as of December 31, 2014. 1.- Excludes subsidiaries outside Chile. 19
Proven Value Creation Capabilities 2 Distinguishing Itself in the Local Market Highest Profitability in the Local Industry Based on Superior Risk Management and Efficiency ROAE December 2014 Operating Margin % Over Average Loans, December 2014 7.8% 7.7% 7.5% 7.0% 5.3% 24.7% 22.5% 20.6% Santander BCI CorpBanca Itau 14.4% 12.1% Loan Loss Provisions Ratio %, Provisions for Loan Losses / Average Loans, December 2014 1.3% 1.7% 1.3% 0.9% 0.9% ROAA: Santander BCI CorpBanca Itau 2.2% 1.9% 1.6% 1.3% 1.2% Santander BCI CorpBanca Itau Efficiency Ratio Operating Expenses / Operating Revenues, December 2014 43.4% 42.0% 46.1% 52.1% 53.1% Santander BCI CorpBanca Itau Fuente: SBIF 20
Proven Value Creation Capabilities 3 Consistent Track Record of Profitability Return On Average Equity (ROAE) %, Times over Peers Return On Average Assets (ROAA) %, Times over Peers Banco de Chile s Multiple over Peers 0.8x 1.1x 1.2x 1.4x 1.3x 1.3x 0.9x 1.1x 1.2x 1.4x 1.4x 1.4x 22.6% 19% 28% 24.5% 27% 21.7% 26% 24% 17.9% 17.5% 25% 18.7% 2.2% 2.1% 2.1% 2.1% 1.7% 2.0% 1.7% 1.5% 1.4% 1.5% 2.2% 1.6% 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 Local Peers 1 Source: SBIF. 1.- BCI, CorpBanca, Itau and Santander 21
Why Invest in Banco de Chile? 22
Solid Corporate Governance and Consistent Strategy 1 Solid Corporate Governance 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 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 23
Solid Corporate Governance and Consistent Strategy 2 and a Focused Strategy to Sustain Profitable Growth 24
III. Closing Remarks 25
Final Considerations Banco de Chile: A Unique Investment Opportunity Positive and stable track record Low risk and attractive business environment Solid and profitable industry with consistent growth Growth potential Strong brand recognition Leading market position Lowest cost of funding in the industry Outstanding credit risk management Sustained growth in loans and income Highest profitability in Chile and Latin America Consistently delivering value to its shareholders Successful partnership with Citi Solid practices in corporate governance Focused strategy to sustain profitable growth 26
IV. Recent Results 27
Banco de Chile Quarterly and Yearly Financial Results Quarterly Net Income (In billions of CLP) Annual Net Income (In billions of CLP) Avg. 128 Avg. 148 151 154 159 514 +15% 591 121 122 137 133 128 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013 2014 2013 2014 28
Operating Income Quarterly Operating Income (In billions of CLP) Annual Operating Income (In billions of CLP) 393 408 412 386 440 1,456 1,646 4Q13 1Q14 2Q14 3Q14 4Q14 2013 2014 QoQ 4Q13 1Q14 2Q14 3Q14 4Q14 UF 0.95% 1.28% 1.76% 0.60% 1.90% YoY 2013 2014 UF 2.05% 5.65% 29
Loan Growth Loans (In trillions of CLP) 20.9 21.0 5% (In trillions of CLP, 2% except percentages) 20.9 21.4 21.9 2014 YoY QoQ Retail 11.7 11.6% 3.7% Consumer: Middle/Upper Income 2.6 11.7% 4.2% 49.6% 48.3% 46.9% 47.1% 46.4% Mortgage 5.4 14.5% 3.8% SMEs 3.0 8.9% 3.5% Consumer: Credichile 0.7 2.7% 2.1% 50.4% 51.7% 53.1% 52.9% 53.6% Wholesale 10.1-2.1% 0.7% Large Companies 6.2-3.9% 4.4% 4Q13 1Q14 2Q14 3Q14 4Q14 Wholesale Retail Corporate 4.0 0.8% -4.4% Total Loans 21.9 4.8% 2.3% 30
Solid Funding Structure Liability Structure (% of total liabilities and shareholders equity) Equity 9% Debt Issued 18% Financial Institutions 4% Other 9% Current Accounts and Demand Deposits 25% Savings Accounts and Time Deposits 35% Capital Adequacy 2013 2014 Tier 1 Ratio 9.9% 10.4% Total Equity Ratio 13.1% 13.3% Current Account and Demand Deposits (In Trillions of CLP) 16% 6.0 6.9 2013 2014 Savings Accounts and Time Deposits (In Trillions of CLP) 10.4 Debt Issued (In Trillions of CLP) -7% 9.7 2013 2014 4.4 16% 5.1 2013 2014 31
Operating Income Breakdown Operating Margin Breakdown (Operating Income / Avg. Daily Interest Earning Assets) 6.5% 6.5% 6.8% 3.8% 3.8% 3.7% 1.5% 1.4% 2.0% 1.2% 1.3% 1.1% Concept (bn CLP, except percentages) 2014 Operating Income Var. 2013 ($) Var. 2013 (%) Interest from customers 899 38 4.4% Fees 272-15 -5.2% Non-customer income 475 168 54.6% Total 1.646 190 13.1% 2012 2013 2014 *Includes income from the contribution UF GAP position and treasury activities 32
Loan Loss Provisions Quarterly Loan Loss Provisions (In billions of CLP, except %) 4Q 3Q 2Q 242 68 70 54 +18% 284 74 62 72 Concept (bn CLP, except percentages) Loan Loss Provisions 2014 Var. 2013 ($) Var. 2013 (%) Credit Risk Provisions 247 22 10% Countercyclical 22 12 120% FX effect 15 8 115% Total 284 42 18% 1Q 50 76 2013 2014 33
Operating Expenses Operating Expenses (In billions of CLP, except %) 4Q 3Q 2Q 1Q +21% 715 623 217 169 168 154 151 170 149 160 2013 2014 Concept (bn CLP, except percentages) 2014 Operating Expenses Var. 2013 ($) Var. 2013 (%) Personnel expenses 340 17 5.0% Collective Barg. Agreement 45 45 - Administration + Other 330 30 9.0% Total 715 92 13% Efficiency Ratio 42.8% 43.4% 34
Banco de Chile Main Achievements during 2014 Corporate Climate Successful bargaining agreement with Labor Unions Innovation in IT #1 Corporate Reputation Funding Management Demand Deposits and Current #1 Account Deposits Funding Diversification Business Intelligence Record Sales through Telephone and Online Banking Specialized Financial Services #1 Mutual Funds M&A Record Free Float Increase Service Quality Increase in Recommendation 2013 60% 64% 2014 Stock Market Presence Increase in Trading Volume 18% 25% +86% 35
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. 36
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. 37