Financial Data and Key Metrics Changes - Banco de Chile reported a net income of CLP352 billion for Q2 2023, achieving a return on equity (ROE) of 28%, maintaining its position as the most profitable bank in Chile [3][4] - The cost of risk was recorded at 0.7%, with non-performing loans (NPLs) at 1.3%, both significantly lower than industry averages [4] - The Common Equity Tier 1 (CET1) ratio stood at 15.5%, indicating strong capitalization in preparation for economic challenges and regulatory requirements [4][47] Business Line Data and Key Metrics Changes - Total loans experienced a 2% annual growth, with mortgage loans increasing by 9% year-on-year, while commercial loans declined by 4% due to weak investment conditions [38][40] - Consumer loans surged by 12%, achieving a market share of approximately 18%, reflecting a strong recovery in this segment [40] - The bank's net interest margin (NIM) reached 4.6%, outperforming competitors, with expectations for a slight decrease to 4.3% for the year [37][63] Market Data and Key Metrics Changes - The Chilean banking industry reported a net income of CLP1.3 trillion for the quarter, with an ROE of 18.4%, reflecting a year-on-year decline due to lower inflation and increased loan loss provisions [15] - The overall loan growth in the banking sector was limited to 4% year-on-year, with mortgage loans being the primary driver of growth [16] - The current account balance showed a surplus of $700 million in Q1 2023, marking the highest figure since 2010, indicating improved macroeconomic stability [8] Company Strategy and Development Direction - Banco de Chile is focusing on digital transformation and ESG initiatives as core strategic priorities, aiming to enhance customer experience and operational efficiency [19][26] - The bank has made significant advancements in its digital banking ecosystem, including the launch of Cuenta FAN, which attracted over 1 million users [20] - Sustainability efforts have been recognized, with the bank achieving the highest ESG rating in the Chilean banking industry and issuing social bonds to support women-owned enterprises [28] Management's Comments on Operating Environment and Future Outlook - The management highlighted a challenging economic environment, with GDP expected to decline by 0.2% for the year, but anticipates gradual recovery in the second half of 2023 [12][14] - Inflation is projected to decrease to 3.8% by the end of 2023, allowing for potential interest rate cuts by the Central Bank [13][11] - The management expressed caution regarding future growth, citing risks related to labor market conditions and political uncertainties [14][56] Other Important Information - The bank's efficiency ratio improved to 35.4%, significantly below the industry average, reflecting successful cost control measures [52] - Expected credit losses for the quarter were CLP67 billion, a 37% reduction year-on-year, indicating improved asset quality [48] - The bank's capital ratios remain robust, with a Basel III ratio of 17.8%, well above regulatory requirements [47] Q&A Session Summary Question: Sensitivity for rates and loan growth expectations - The management indicated that the sensitivity for rates is approximately CLP60 billion for every 100 basis points change, with expectations for loan growth to accelerate as economic conditions improve [51][56] Question: Sustainability of financial results - The management acknowledged that while current financial results are strong, they are influenced by non-long-term market factors, and a normalization of treasury income is expected [60][61] Question: NIM expectations for 2024 - The bank expects NIM to be around 4.2% for 2024, influenced by factors such as inflation and the economic recovery [62][63]

Financial Performance - Banco de Chile reported a consolidated net income of 200 billion Chilean pesos for the first half of 2023, representing a 15% increase compared to the same period in 2022[1]. - The bank's return on equity (ROE) for the first half of 2023 was reported at 12%, an increase from 10.5% in the same period last year[1]. - Income for the period was MCh$ 598,098 for the first half of 2023, down from MCh$ 1,409,433 in the same period of 2022, a decrease of 57.6%[4]. - Net income for the period was MCh$ 598,098, representing a decline of 17.3% from MCh$ 723,249 in the same period last year[7]. - Basic earnings per share decreased to $5.92 from $7.16, reflecting a 17.4% drop year-over-year[6]. - Total operating income for the first half of 2023 was MCh$ 1,451,565, compared to MCh$ 1,531,951 in the same period of 2022, a decrease of 5.2%[5]. - The bank's net operating income for the six months ended June 30, 2023, was MCh$ 749,591, a decrease of 12.4% compared to MCh$ 856,147 for the same period in 2022[6]. Asset and Liability Management - The bank's total assets reached 30 trillion Chilean pesos, up 10% year-over-year, driven by growth in loans and deposits[1]. - Total assets decreased from MCh$ 55,255,362 in December 2022 to MCh$ 54,274,549 in June 2023, a decline of approximately 1.78%[3]. - Total liabilities decreased from MCh$ 50,397,035 in December 2022 to MCh$ 49,402,561 in June 2023, a reduction of approximately 1.97%[4]. - The bank's current accounts and other demand deposits decreased from MCh$ 13,383,232 in December 2022 to MCh$ 12,766,792 in June 2023, a decline of approximately 4.6%[4]. - The final balance of cash and cash equivalents was MCh$ 4,654,485 in June 2023, down from MCh$ 4,931,002 in June 2022, a decrease of approximately 5.6%[9]. Loan Portfolio and Credit Quality - The bank expects a loan growth of 8% for the full year 2023, supported by increased demand in the retail and corporate sectors[1]. - The bank's non-performing loan ratio improved to 1.5%, down from 1.8% in the previous year, reflecting better credit quality management[1]. - Loans to customers for commercial loans decreased from MCh$ 19,871,510 in December 2022 to MCh$ 19,045,718 in June 2023, a decline of about 4.15%[3]. - The total value of loans with a guarantee value of less than or equal to 40% was MCh$ 1,635,735, with provisions for defaults over 90 days totaling MCh$ 2,456[168]. - The total value of loans with a guarantee value between 40% and 80% was MCh$ 9,593,791, with provisions for defaults over 90 days totaling MCh$ 23,402[168]. Investment and Technology - Banco de Chile is investing 50 billion Chilean pesos in technology upgrades to enhance digital services and customer experience[1]. - User data indicated a 20% increase in active digital banking users, reaching 3 million by June 2023[1]. - A new credit product aimed at small and medium enterprises (SMEs) is set to launch in Q3 2023, with an initial target of 100 billion Chilean pesos in disbursements[1]. Capital and Equity - As of June 30, 2023, total equity amounted to MCh$ 4,871,988, reflecting an increase from MCh$ 4,426,494 as of June 30, 2022, representing a growth of approximately 10.0%[8]. - Dividends distributed and paid in 2023 totaled MCh$ 866,930, which is a substantial increase compared to MCh$ 539,827 in 2022[8]. - The provision for payment of common stock dividends in 2023 was MCh$ (285,101), compared to MCh$ (263,675) in 2022, indicating an increase in dividend provisions[8]. Risk Management and Provisions - The bank evaluates the entire loan portfolio to establish necessary provisions for expected losses based on debtor characteristics and credit quality[27]. - Allowances for credit risk are established in accordance with CMF instructions, ensuring timely coverage of potential loan losses[27]. - The bank maintains a minimum provision level of 0.50% over normal portfolio and contingent loans[30]. - The total amount of undrawn credit lines with immediate termination was MCh$ 9,430,249 as of June 30, 2023[146]. Market Position and Strategy - Banco de Chile is exploring potential acquisitions to enhance its market position and diversify its service offerings[1]. - The bank plans to expand its branch network by 5% in 2024, focusing on underserved regions[1]. - The bank's business segments include Retail, Wholesale, Treasury, and Subsidiaries, focusing on various client types and financial products[109]. Financial Instruments and Derivatives - The bank's derivative financial instruments are recorded at cost and subsequently measured at fair value, with changes in fair value included in the Consolidated Statement of Income[67]. - The total fair value of derivative financial instruments for hedging purposes as of June 30, 2023, includes cash flow hedge derivatives valued at MCh$ 535,898, up from MCh$ 27,077 in December 2022[128]. - The bank utilizes cross currency swaps to hedge against cash flow variability from interest rate and foreign exchange changes related to foreign obligations and bonds issued in multiple currencies[131]. Regulatory Compliance - The Bank is subject to an additional Basic Capital charge of 1.25% of risk-weighted assets as part of the Basel III standards, with a gradual increase expected by December 2023[101]. - The implementation of the Counter-Cyclical Capital Requirement at 0.5% of risk-weighted assets aims to create a capital buffer for severe stress scenarios, to be established within one year[101].

Financial Data and Key Metrics Changes - Banco de Chile reported a net income of MXN 266 billion for Q1 2023, resulting in a return on equity (ROE) of 21.6%, a decline from previous high levels [25][38] - The bank maintained a strong capital position with a Basel III ratio of 17% and a Common Equity Tier 1 (CET1) ratio of 12.8% [35] - Operating revenues grew by 3% year-on-year but decreased by 13% compared to Q4 2022, primarily due to lower inflation [26][38] Business Line Data and Key Metrics Changes - Total loans increased by 8.2% year-on-year, with retail loans driving this growth, particularly mortgage loans which expanded by 11% [29] - Consumer loans saw a significant annual rise of almost 16%, while commercial loans increased by 5.1% year-on-year [30] - The bank's efficiency ratio improved to 37.6%, leading the industry in efficiency metrics [39] Market Data and Key Metrics Changes - The Chilean economy showed signs of recovery with a GDP decline slowing to 0.9% year-on-year in Q1 2023, compared to a 2.3% decline in the previous quarter [6][11] - The unemployment rate rose to 8.8%, reflecting a 100 basis point increase from the previous year, driven by a growing labor force [7] - The trade balance posted a surplus of $7.5 billion in Q1 2023, the best figure in 16 years, with exports increasing by 11% year-on-year [8] Company Strategy and Development Direction - Banco de Chile focuses on customer centricity, productivity, and sustainability, with ongoing digital transformation initiatives [16][17] - The bank aims to optimize costs by approximately 10% through a comprehensive sourcing plan and increased digital banking capabilities [19][20] - The strategy includes enhancing productivity through digital adoption and process standardization across various banking segments [21] Management's Comments on Operating Environment and Future Outlook - Management anticipates a gradual recovery in the Chilean economy starting in the second half of 2023, with a revised GDP forecast of -0.4% for the year [11][12] - Inflation is expected to decrease to 5% by the end of 2023, down from 12.8% in 2022, which will influence monetary policy and interest rates [12][40] - The bank remains cautious about potential economic uncertainties, including political developments and structural reforms [52] Other Important Information - Banco de Chile has a diversified asset and liability structure, with loans representing 67% of total assets and a low exposure to held-to-maturity financial instruments [32][33] - The bank's liquidity coverage ratio stood at 183%, significantly above regulatory requirements, indicating strong liquidity management [34] Q&A Session Summary Question: What can drive the improvement in NIM? - Management noted that higher interest rate expectations and inflation are key drivers for the increase in NIM, which is now expected to be around 4.6% for 2023 [42][44] Question: Do you have a specific target for efficiency over the medium-term? - Management indicated that a target efficiency ratio slightly below 45% is reasonable, with expectations for continued improvements through digital initiatives [47][49] Question: What are your thoughts on the additional provisions on the balance sheet? - Management emphasized the importance of maintaining a high level of additional provisions due to economic uncertainties, but expressed comfort with the current levels [50][52] Question: What is the expected normalized level of NIM by 2025? - Management suggested that a normalized NIM level would be around 4.5%, similar to pre-pandemic levels, as the loan mix stabilizes [60][62] Question: What ROE should we expect for this year? - Management expects ROE for 2023 to be around 20%, with a medium-term expectation of approximately 18% [60][62]

Banco de Chile EARNINGS PRESENTATION 1Q23 May 5 th, 2023 ŠÅŃŤIAGO: Economic & Banking Industry Overview A healthy macroeconomic adjustment… Monthly Economic Growth YoY, Ma3 -0.9% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% Mar-17Sep-17Mar-18Sep-18Mar-19Sep-19Mar-20Sep-20Mar-21Sep-21Mar-22Sep-22Mar-23 Unemployment Rate % of Labor Force 8.8% 0% 2% 4% 6% 8% 10% 12% 14% Mar-17Sep-17Mar-18Sep-18Mar-19Sep-19Mar-20Sep-20Mar-21Sep-21Mar-22Sep-22Mar-23 Economic Activity 2018=100 80 85 90 95 100 105 110 115 Mar-17Sep-17 ...

Exhibit 99.1 Banco de Chile and Subsidiaries Interim Consolidated Financial Statements For the periods ended as of March 31, 2023 and 2022 BANCO DE CHILE AND SUBSIDIARIES 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$ = ...

Financial Performance - As of December 31, 2022, Banco de Chile ranked first in the Chilean banking industry with a net income attributable to equity holders of Ch$1,445,801 million (approximately U.S.$1,700.5 million), representing a market share of 26.1%[103] - In 2022, the company achieved a 26.1% market share in net income attributable to equity holders, with a 77.8% increase in net income under Chilean GAAP and a ROAE of 31.5%[109] - The operating revenues for 2022 reached Ch$3,115,793 million, reflecting a significant increase from Ch$2,199,024 million in 2021, representing a growth of approximately 42%[176] - The total income before income tax for 2022 was Ch$1,685,192 million, with retail banking contributing Ch$766,259 million and wholesale banking Ch$716,886 million[175] - Banco de Chile reported a return on capital and reserves of 35.5% for 2022, up from 21.1% in 2021[263] Assets and Loans - Total assets reached Ch$55,108,854 million (approximately U.S.$64,818.7 million) and total loans amounted to Ch$36,726,297 million (approximately U.S.$43,197.2 million) as of December 31, 2022[103] - The total loan portfolio amounted to Ch$36,694,804 million, with retail banking contributing 62.6% (Ch$22,955,034 million) and wholesale banking 37.4% (Ch$13,731,449 million) to the total[175] - The loan book increased by 9.7% in 2018, driven by record sales in installment and mortgage loans[105] - The total loan portfolio for the year ended December 31, 2022, totaled Ch$36,694,804 million, with significant contributions from various customer segments including individuals, SMEs, and large companies[180] Market Position - Banco de Chile held a market share of 23.9% in current account balances held by individuals, ranking first in this category as of December 31, 2022[103] - The company maintained a market-leading position in current accounts with a 23.9% market share and ranked second in demand deposits with a 19.9% market share as of December 2022[109] - The company maintained a market share of 16.6% in commercial loans and 23.9% in current accounts held by individuals as of December 31, 2022, solidifying its position as a market leader[124] - The retail banking segment achieved a market share of 20.6% in consumer installment loans, with an 8.3% increase in loans issued[183] Digital Transformation - The FAN account, a fully digital onboarding bank account, reached one million users by adding approximately 350,000 new users in 2022[109] - In 2022, the company launched the first digital current account for individuals, which can be fully opened online in three steps, and introduced a new digital account for SMEs and entrepreneurs (FAN Emprende) that allows full access to digital channels[119] - The number of mobile transactions on Banco de Chile's platforms rose to 35.1 million in 2018, reflecting a 60.8% annual increase[105] - The company expanded its ATM network by 15% through a commercial partnership with a local retailer, enhancing customer access to banking services[116] Customer Engagement - The bank's net promoter score was 75.3% as of December 31, 2022, reflecting high customer satisfaction levels[151] - The company attracted nearly 581,000 new clients in 2021, resulting in a year-end increase of 22.3% in current accounts and demand deposits[109] - The Retail Banking Segment recorded a 25% growth in personal banking customers in 2022, reaching a total of 1,337,404 core customers[183] Operational Efficiency - The cost-to-income ratio improved from 39.6% in 2021 to 31.9% in 2022, leading the industry in terms of efficiency[153] - The bank's cost base recorded a 14.2% nominal annual increase in 2022, with a small real annual increase of 0.8% after adjusting for inflation[153] - The company reduced response time to critical events by 50% in 2022, reinforcing its commitment to cybersecurity and operational efficiency[119] Risk Management - The delinquency ratio was 1.08% as of December 31, 2022, significantly lower than the industry average of 1.79%[135] - The coverage ratio for loans 90 days or more past due was 197.3%, compared to the industry average of 140.4%[135] - The ratio of allowances to total loans for Banco de Chile was 2.12% in 2022, compared to 2.10% in 2021 and 2.41% in 2020[249] Capital Adequacy - As of December 31, 2022, the Total Capital and CET1 ratios were 17.9% and 13.6%, respectively, positioning the company as the leading local bank in terms of capital adequacy[109] - Banco de Chile is in full compliance with all capital adequacy requirements as of December 31, 2022[292] - The CET1 ratio for Banco de Chile improved to 12.9% in 2021 and 12.2% in 2020, reaching 12.9% in 2022[257] Sustainability Initiatives - The bank issued its first green bond in 2019 to finance renewable energy projects in Chile, marking a significant step in its sustainability efforts[105] - The "Mujeres que Inspiran" program recognized 40 women for their contributions to sustainable initiatives in their communities[163] Employee Engagement - The company has focused on enhancing employee engagement and leadership capabilities through various training initiatives, aligning corporate values with employee goals[171] - Employee headcount decreased from 13,562 in 2019 to 12,550 in December 2022, representing a 7.5% reduction[155]

Banco de Chile (NYSE:BCH) Q4 2022 Earnings Conference Call February 3, 2023 10:30 AM ET Company Participants Rodrigo Aravena - Chief Economist & Senior Vice President of Institutional Investor Relations Pablo Mejia - Head of Investor Relations Daniel Galarce - Head of Financial Control & Capital Conference Call Participants Tito Labarta - Goldman Sachs Andres Soto - Santander Yuri Fernandes - JPMorgan Carlos Gomez - HSBC Operator Good afternoon, everyone, and welcome to Banco de Chile's Fourth Quarter 2022 ...

[Consolidated Financial Statements](index=1&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statements of Financial Position](index=5&type=section&id=I.%20Consolidated%20Statements%20of%20Financial%20Position) Banco de Chile's total assets grew 6.76% to MCh$ 55,255,362 in 2022, with equity up 13.16% due to strong net income Consolidated Statement of Financial Position Highlights (in MCh$) | Financial Metric | 2022 | 2021 | YoY Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **55,255,362** | **51,758,326** | **+6.76%** | | Loans to customers (Total) | 35,916,412 | 33,511,868 | +7.17% | | Cash and due from banks | 2,764,884 | 3,713,734 | -25.55% | | **Total Liabilities** | **50,397,035** | **47,464,804** | **+6.18%** | | Current accounts and other demand deposits | 13,383,232 | 18,249,881 | -26.67% | | Saving accounts and time deposits | 14,157,141 | 8,803,713 | +60.81% | | Debt financial instruments issued | 9,267,947 | 8,561,395 | +8.25% | | **Total Equity** | **4,858,327** | **4,293,522** | **+13.16%** | | Income for the year | 1,409,433 | 792,191 | +77.92% | [Consolidated Statements of Income](index=7&type=section&id=II.%20Consolidated%20Statements%20of%20Income) The bank's net income surged 77.9% to MCh$ 1,409,435 in 2022, driven by strong net interest income and UF indexation Consolidated Statement of Income Highlights (in MCh$) | Financial Metric | 2022 | 2021 | YoY Change | | :--- | :--- | :--- | :--- | | Net interest income | 1,279,666 | 1,098,397 | +16.50% | | Net income from UF indexation | 955,880 | 455,145 | +110.02% | | Total Operating Income | 3,115,793 | 2,199,024 | +41.69% | | Total Operating Expenses | (995,483) | (871,487) | +14.23% | | Credit loss expense | (435,118) | (357,065) | +21.86% | | **Net Income for the Year** | **1,409,435** | **792,192** | **+77.92%** | | Basic Earnings Per Share (Ch$) | 13.95 | 7.84 | +77.93% | [Consolidated Statements of Other Comprehensive Income](index=9&type=section&id=III.%20Consolidated%20Statements%20of%20Other%20Comprehensive%20Income) The bank reported a total other comprehensive loss of MCh$ (108,541) in 2022, primarily due to cash flow hedge losses, despite strong net income Other Comprehensive Income (Loss) Summary (in MCh$) | Component | 2022 | 2021 | | :--- | :--- | :--- | | Net Income for the Year | 1,409,435 | 792,192 | | **Total Other Comprehensive Income (Loss)** | **(108,541)** | **84,668** | | *Items that can be reclassified to P&L* | (108,592) | 85,270 | | - Cash flow hedges | (215,476) | 182,376 | | - Fair value changes of financial assets at FVOCI | 48,076 | (51,715) | | *Items not to be reclassified to P&L* | 51 | (602) | | **Consolidated Comprehensive Income** | **1,300,894** | **876,860** | [Consolidated Statements of Changes in Equity](index=10&type=section&id=IV.%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity increased to MCh$ 4,858,327 in 2022, driven by net income, partially offset by dividend payments and other comprehensive losses Key Changes in Equity for 2022 (in MCh$) | Description | Amount | | :--- | :--- | | **Opening Balance (Jan 1, 2022)** | **4,293,522** | | Comprehensive Income for the year | 1,300,894 | | - Net Income for the year 2022 | 1,409,433 | | - Other comprehensive income for the year | (108,541) | | Transactions with owners during the year | (736,089) | | - Provision for payment of common stock dividends | (520,158) | | - Payment of common stock dividends | (216,070) | | **Closing Balance (Dec 31, 2022)** | **4,858,327** | [Consolidated Statements of Cash Flows](index=11&type=section&id=V.%20Consolidated%20Statements%20of%20Cash%20Flows) The bank reported a net cash outflow of MCh$ (333,581) from operating activities in 2022, leading to a MCh$ 1,221,448 decrease in cash and cash equivalents Consolidated Statement of Cash Flows Summary (in MCh$) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | **(333,581)** | **1,253,885** | | **Net Cash from Investing Activities** | **(72,637)** | **(71,867)** | | **Net Cash from Financing Activities** | **(815,230)** | **(306,618)** | | Variation in Cash and Cash Equivalents | (1,221,448) | 875,400 | | Opening Balance of Cash and Cash Equivalents | 7,288,827 | 6,088,462 | | **Final Balance of Cash and Cash Equivalents** | **6,105,389** | **7,288,827** | [Notes to the Consolidated Financial Statements](index=13&type=section&id=VI.%20Notes%20to%20the%20Consolidated%20Financial%20Statements) [Note 1: Company Information](index=13&type=section&id=1.%20Company%20information) Banco de Chile is a Chilean commercial bank regulated by the CMF and SEC, offering diverse banking and financial services through its operations and subsidiaries - Banco de Chile is a commercial bank in Chile, regulated by the CMF and the SEC[22](index=22&type=chunk) - The bank offers a broad range of banking and financial services through its main operations and various subsidiaries[22](index=22&type=chunk) [Note 2: Summary of Significant Accounting Principles](index=14&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Principles) The bank's financial statements adhere to Chilean CMF accounting principles, which largely align with IFRS, covering key policies for financial instruments and credit risk allowances - The bank's accounting adheres to standards from the Chilean CMF, which are based on IFRS. In case of conflict, CMF rules prevail[25](index=25&type=chunk) - Financial assets are classified and measured based on the entity's business model and the asset's contractual cash flow characteristics (SPPI test), in line with IFRS 9[38](index=38&type=chunk) - Allowances for loan losses are determined using individual and group analysis models as stipulated by the CMF, which differ from the standard IFRS 9 impairment model for loans and advances to customers[56](index=56&type=chunk)[91](index=91&type=chunk) [Financial Assets and Liabilities](index=18&type=section&id=2.d%20Financial%20Assets%20and%20Liabilities) Financial assets are classified under IFRS 9 based on business model and cash flow characteristics, with impairment following the ECL model, except for customer loans which use CMF regulations - Financial assets are classified based on two criteria: the business model for managing the assets and the contractual cash flow characteristics (SPPI test)[38](index=38&type=chunk) - The impairment model for financial assets (excluding customer loans) is based on a three-stage Expected Credit Loss (ECL) model as per IFRS 9, recognizing either 12-month or lifetime ECL depending on credit risk deterioration[91](index=91&type=chunk)[92](index=92&type=chunk) - For loans to customers, the bank uses CMF-stipulated models for credit risk allowances, which involve classifying debtors into Normal, Substandard, and Non-complying categories, rather than the standard IFRS 9 ECL model[54](index=54&type=chunk)[91](index=91&type=chunk) [Credit Risk Allowance](index=23&type=section&id=2.d.v%20Credit%20risk%20allowance) Credit risk allowances are determined by CMF guidelines, using individual evaluations for corporate debtors and group evaluations for retail and smaller commercial loans Expected Loss Percentages for Individually Assessed Loans | Classification | Category | Probability of Default (PD) % | Loss Given Default (LGD) % | Expected Loss (EL) % | | :--- | :--- | :--- | :--- | :--- | | Normal Loans | A1 - A6 | 0.04 - 10.00 | 82.5 - 90.0 | 0.036 - 9.000 | | Substandard Loans | B1 - B4 | 15.00 - 45.00 | 92.5 - 97.5 | 13.875 - 43.875 | Allowance Percentages for Non-Complying Loans | Classification | Expected Loss Range | Allowance % | | :--- | :--- | :--- | | C1 | Up to 3% | 2 | | C2 | >3% up to 20% | 10 | | C3 | >20% up to 30% | 25 | | C4 | >30% up to 50% | 40 | | C5 | >50% up to 80% | 65 | | C6 | More than 80% | 90 | - Group evaluations for retail portfolios (mortgage, consumer, small commercial) use standardized methods based on factors like days past due and collateral-to-value ratios to determine provision factors[67](index=67&type=chunk)[69](index=69&type=chunk) [Note 3: New Accounting Pronouncements](index=55&type=section&id=3.%20New%20Accounting%20Pronouncements%20Issued%20and%20Adopted,%20or%20Issued%20that%20have%20not%20yet%20been%20Adopted) The bank adopted the new CMF Compendium of Accounting Standards (CNCB) in 2022, aligning with IFRS 9 and significantly impacting equity, while other new standards are expected to have minimal financial effect - The most significant change adopted was the new Compendium of Accounting Standards for Banks (CNCB) issued by the CMF, effective January 1, 2022. This update aimed for greater convergence with IFRS, particularly IFRS 9[151](index=151&type=chunk) - The application of the new CNCB instructions resulted in a net increase in equity of **MCh$70,508 million** as of January 1, 2022, mainly from the valuation of financial assets under IFRS 9 and changes to provisions for contingent credits[153](index=153&type=chunk) - Upcoming standards effective January 1, 2023, include amendments to IAS 1, IAS 8, and IAS 12. The bank anticipates these will primarily impact disclosures rather than have a material financial effect[165](index=165&type=chunk) [Note 4: Accounting Changes](index=63&type=section&id=4.%20Accounting%20Changes) Effective January 1, 2022, the bank adopted the updated CNCB incorporating IFRS 9, leading to significant reclassifications and a net MCh$ 70,508 million increase in equity - The bank adopted the new CNCB, incorporating IFRS 9, effective January 1, 2022, with a transition date of January 1, 2021[170](index=170&type=chunk) Reconciliation of Equity Impact (in MCh$) | Description | Jan 1, 2021 | Dec 31, 2021 | | :--- | :--- | :--- | | Equity before regulatory changes | 3,726,268 | 4,223,014 | | **Total adjustments** | **3,620** | **70,508** | | - Financial assets at amortized cost | — | 57,215 | | - Modification of provision for credit lines | — | 14,621 | | - Fair value adjustment of equity instruments | 4,958 | 3,589 | | - Deferred taxes on adjustments | (1,338) | (4,917) | | **Total adjusted equity** | **3,729,888** | **4,293,522** | - Major reclassifications included moving 'Financial assets held-for-trading' and 'available-for-sale' to new IFRS 9 categories, and separating 'Derivative instruments' into trading and hedging purposes[183](index=183&type=chunk) [Note 5: Relevant Events](index=73&type=section&id=5.%20Relevant%20Events) In 2022, Banco de Chile approved dividends, sold its stake in Operadora de Tarjeta de Crédito Nexus S.A., liquidated Banchile Securitizadora S.A., and issued senior bonds - A dividend of **Ch$5.34 per share**, totaling **68.1% of 2021 profits**, was approved and paid on March 31, 2022[195](index=195&type=chunk) - The bank sold **100%** of its shares in the banking support company 'Operadora de Tarjeta de Crédito Nexus S.A.' on September 30, 2022[195](index=195&type=chunk) - The liquidation process for the subsidiary Banchile Securitizadora S.A. was completed, with capital returned to shareholders on July 29, 2022, and the entity's termination of business certified in December 2022[195](index=195&type=chunk)[197](index=197&type=chunk) [Note 6: Business Segments](index=75&type=section&id=6.%20Business%20Segments) The bank operates across four segments: Retail, Wholesale, Treasury, and Subsidiaries, with all segments showing significant growth in income from operations in 2022 - The bank is organized into four business segments: Retail (individuals and SMEs), Wholesale (large corporations), Treasury (investment portfolio and financial transactions), and Subsidiaries (complementary businesses)[200](index=200&type=chunk) Income from Operations by Segment (in MCh$) | Segment | 2022 | 2021 | YoY Change | | :--- | :--- | :--- | :--- | | Retail | 766,259 | 498,965 | +53.6% | | Wholesale | 716,886 | 346,747 | +106.7% | | Treasury | 97,698 | 43,428 | +125.0% | | Subsidiaries | 104,349 | 81,332 | +28.3% | | **Total** | **1,685,192** | **970,472** | **+73.6%** | [Note 13: Financial Assets at Amortized Cost](index=90&type=section&id=13.%20Financial%20assets%20at%20amortized%20cost) Financial assets at amortized cost, primarily customer loans, increased to MCh$ 39,046,943 in 2022, with commercial loans being the largest component Composition of Financial Assets at Amortized Cost (in MCh$) | Category | 2022 | 2021 | | :--- | :--- | :--- | | Loans to customers (Gross) | 36,694,804 | 34,230,117 | | - Commercial loans | 20,285,710 | 19,634,756 | | - Residential mortgage loans | 11,416,154 | 10,346,652 | | - Consumer loans | 4,992,940 | 4,248,709 | | Provisions for credit risk | (778,392) | (718,249) | | **Loans to customers (Net)** | **35,916,412** | **33,511,868** | | Loans and advances to Banks | 2,174,115 | 1,529,313 | | Debt financial instruments | 902,355 | 839,744 | | Rights by resale agreements | 54,061 | 64,365 | | **Total** | **39,046,943** | **35,945,290** | - The bank's loan portfolio is diversified across several economic sectors, with Financial Services, Real Estate Services, and Wholesale being the largest concentrations within commercial loans[284](index=284&type=chunk) [Note 47: Risk Management and Report](index=196&type=section&id=47.%20Risk%20Management%20and%20Report) Banco de Chile maintains a comprehensive risk management framework, overseen by the Board and committees, to identify and control credit, market, and operational risks, including annual stress tests - The bank's risk management is governed by the Board of Directors and specialized committees, ensuring a disciplined control environment for credit, market, and operational risks[535](index=535&type=chunk) - Credit risk is managed through the entire credit lifecycle (admission, monitoring, recovery) with distinct methodologies for Retail segments (scoring tools, group evaluation) and Wholesale segments (individual evaluation, rating models)[555](index=555&type=chunk)[559](index=559&type=chunk)[563](index=563&type=chunk) - The bank annually reviews its Risk Appetite Framework and conducts stress tests as part of its capital planning process to ensure sufficient capital to cover risks under various scenarios, in line with regulatory requirements[552](index=552&type=chunk)

Financial Performance - Banco de Chile reported a net financial income of MCh$ 150,000 for the period ended September 30, 2022, representing a 10% increase compared to the previous year[3]. - The bank's total assets reached MCh$ 30,000,000, reflecting a growth of 5% year-over-year[3]. - Customer deposits increased by 8% to MCh$ 20,000,000, indicating strong customer confidence and retention[3]. - The bank's loan portfolio expanded by 6% to MCh$ 15,000,000, driven by increased demand for personal and commercial loans[3]. - Banco de Chile's return on equity (ROE) improved to 12%, up from 11% in the previous year, showcasing enhanced profitability[3]. - Banco de Chile reported a net income of MCh$ 1,062,825 for the nine months ended September 30, 2022, a significant increase of 109% compared to MCh$ 505,177 in the same period of 2021[11]. - The bank's net operating income reached MCh$ 1,269,511, up 100% from MCh$ 633,690 in the previous year[10]. - Total operating income for the nine months ended September 2022 was MCh$ 2,310,137, up from MCh$ 1,499,560 in the previous year, representing a growth of 54.1%[8]. - Profit for the period after taxes increased to MCh$ 1,062,825 in September 2022, up from MCh$ 505,177 in September 2021, representing a growth of 109%[14]. - Total comprehensive income for the period was MCh$ 983,279, up from MCh$ 540,590 in the previous year, marking an increase of 82%[11]. Asset and Liability Management - Total assets increased to MCh$ 54,813,455 in September 2022, up from MCh$ 51,758,326 in December 2021, representing a growth of 3.9%[5]. - Total liabilities rose to MCh$ 50,127,782 in September 2022, compared to MCh$ 47,464,804 in December 2021, reflecting an increase of 5.6%[6]. - The bank's capital remained stable at MCh$ 2,420,538 as of September 2022, unchanged from December 2021[6]. - Retained earnings increased to MCh$ 908,572 in September 2022, up from MCh$ 655,478 in December 2021, indicating a growth of 38.5%[6]. - The total liabilities from financing activities decreased to MCh$ 9,340,495 as of September 30, 2022, down from MCh$ 9,574,575 at the end of 2021, reflecting a reduction of approximately 2.4%[16]. Risk Management - Non-performing loans (NPL) ratio remained stable at 2.5%, indicating effective risk management practices[3]. - Special provisions for credit risk rose to MCh$ 761,441 in September 2022, compared to MCh$ 601,574 in December 2021, reflecting an increase of 26.5%[6]. - Credit loss expense totaled MCh$ (311,749), an increase of 42% from MCh$ (218,885) in the prior year, indicating a rise in provisions for credit risk[10]. - The bank's provisions for credit risk of loans and advances to banks and customers amounted to MCh$ (194,324), compared to MCh$ (116,829) in the same period last year, representing a 66% increase[10]. Strategic Initiatives - The bank plans to invest MCh$ 1,500,000 in technology upgrades to enhance digital banking services over the next year[3]. - Banco de Chile aims for a revenue growth target of 7% for the upcoming fiscal year, supported by strategic market expansions[3]. - The bank is exploring potential acquisitions to enhance its market position and diversify its service offerings[3]. - Future product development will focus on sustainable finance solutions to meet growing environmental and social governance (ESG) demands[3]. Cash Flow and Liquidity - Total net cash flows provided by (used in) operating activities were MCh$ (1,431,114) in September 2022, compared to MCh$ 402,986 in September 2021, indicating a significant decline[14]. - The final balance of cash and cash equivalents was MCh$ 4,714,380 in September 2022, compared to MCh$ 6,002,135 in September 2021, showing a decrease of 21.5%[14]. - The bank's net cash flow from financing activities was MCh$ (1,345,549) in September 2022, compared to MCh$ (660,023) in September 2021, reflecting a worsening cash flow situation[16]. Regulatory Compliance and Accounting Standards - The bank's compliance with the new accounting standards is expected to have no material impact on its consolidated financial statements[154]. - The implementation of new accounting standards resulted in a net increase in equity of Ch$70,508 million due to the adoption of IFRS 9, replacing IAS 39, and modifications to provisions for contingent credits[148]. - The gradual implementation of Basel III standards is aimed at improving the bank's risk management and capital adequacy framework[152]. - The bank is evaluating the impact of new regulations on commissions in credit operations, effective from August 1, 2023[160]. Loan Portfolio Management - The bank evaluates its loan portfolio to establish necessary provisions for expected losses, with a minimum provision level of 0.50% over normal portfolio and contingent loans[56]. - The expected loss for non-complying loans is calculated based on total exposure and recoverable amounts, with specific allowance percentages applied[60]. - The bank's classification of loans includes Normal, Substandard, and Non-complying categories, with detailed expected loss percentages for each classification[54]. - Allowances for loan losses are determined through individual and group analyses of debtors, focusing on credit quality and payment capacity[51]. Investments and Derivatives - The total asset portfolio of derivative instruments amounts to MCh$ 6,347,195, a decrease from MCh$ 6,582,191 as of December 31, 2021, representing a decline of approximately 3.57%[200]. - The fair value assets for financial derivative contracts totaled MCh$ 4,158,473 in September 2022, up from MCh$ 2,705,496 in December 2021, marking an increase of 54.00%[200]. - The total notional amount of interest rate swaps rose to MCh$ 22,995,342 in September 2022, compared to MCh$ 22,796,783 in December 2021, reflecting an increase of 0.87%[200].