6-K

FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

For the month of July, 2021

Commission File Number 001-15266

BANK OF CHILE
(Translation of registrant’s name into English)

Ahumada 251  
Santiago, Chile
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ☑  Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ☐ No ☑

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________

BANCO DE CHILE
REPORT ON FORM 6-K

Attached Banco de Chile’s Consolidated Financial Statements with notes as of June 30, 2021.

1

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 Date: July 29, 2021

Banco de Chile
By:	/S/ Eduardo Ebensperger O.
	Eduardo Ebensperger O. CEO

2

EX-99.1

Exhibit 99.1

 

BANCO DE CHILE AND SUBSIDIARIES

(Free translation of Consolidated Financial Statements originally issued in Spanish)

INDEX

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$	=	Millions of Chilean pesos
ThUS$	=	Thousands of U.S. dollars
UF or CLF	=	Unidad de Fomento
		(The UF is an inflation-indexed, Chilean peso denominated monetary unit set daily in advance on the basis of the previous month’s inflation rate).
Ch$ or CLP	=	Chilean pesos
US$ or USD	=	U.S. dollar
JPY	=	Japanese yen
EUR	=	Euro
HKD	=	Hong Kong dollar
CHF	=	Swiss Franc
PEN	=	Peruvian sol
AUD	=	Australian dollar
NOK	=	Norwegian krone
IFRS	=	International Financial Reporting Standards
IAS	=	International Accounting Standards
RAN	=	Actualized Standards Compilation of the Chilean Commission for Financial Market (“CMF”)
IFRIC	=	International Financial Reporting Interpretations Committee
SIC	=	Standards Interpretation Committee

BANCO DE CHILE AND SUBSIDIARIES

INDEX

	Page
Interim Consolidated Statement of Financial Position	1
Interim Consolidated Statements of Income	2
Interim Consolidated Statements of Other Comprehensive Income	3
Interim Consolidated Statement of Changes in Equity	4
Consolidated Statements of Cash Flows	5
1. Company information:	6
2. Legal regulations, basis of preparation and Other information:	7
3. New Accounting Pronouncements:	10
4. Changes in Accounting Policies and Disclosures:	19
5. Relevant Events:	20
6. Business Segments:	22
7. Cash and Cash Equivalents:	25
8. Financial Assets Held-for-trading:	26
9. Investments under resale agreements and obligations under repurchase agreements:	27
10. Derivative Instruments and Accounting Hedges:	29
11. Loans and Advances to Banks, net:	35
12. Loans to Customers, net:	36
13. Investment Securities:	42
14. Investments in Other Companies:	44
15. Intangible Assets:	46
16. Fixed assets, leased assets and lease liabilities:	48
17. Current Taxes and Deferred Taxes:	53
18. Other Assets:	57
19. Current Accounts and Other Demand Deposits:	58
20. Savings Accounts and Time Deposits:	58
21. Borrowings from Financial Institutions:	59
22. Debt Issued:	60
23. Other Financial Obligations:	63
24. Provisions:	63
25. Other Liabilities:	67
26. Contingencies and Commitments:	68
27. Equity:	73
28. Interest Revenue and Expenses:	76
29. Income and Expenses from Fees and Commissions:	78
30. Net Financial Operating Income:	79
31. Foreign Exchange Transactions, Net:	79
32. Provisions for Loan Losses:	80
33. Personnel Expenses:	81
34. Administrative Expenses:	82
35. Depreciation, Amortization and Impairment:	83
36. Other Operating Income:	84
37. Other Operating Expenses:	85
38. Related Party Transactions:	85
39. Fair Value of Financial Assets and Liabilities:	90
40. Maturity of Assets and Liabilities:	103
41. Subsequent Events:	105

i

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

For the periods ended June 30, 2021 and December 31, 2020

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

(Expressed in million of Chilean pesos)

			June			December
	Notes		2021			2020
			MCh$			MCh$
ASSETS
Cash and due from banks		7		2,407,350			2,560,216
Transactions in the course of collection		7		616,932			582,308
Financial assets held-for-trading		8		3,537,495			4,666,156
Investment under resale agreements		9		92,797			76,407
Derivative instruments		10		1,738,135			2,618,004
Loans and advances to banks		11		3,446,995			2,938,991
Loans to customers, net		12		31,577,277			30,190,058
Financial assets available-for-sale		13		2,364,328			1,060,523
Financial assets held-to-maturity		13		127,770			—
Investments in other companies		14		43,588			44,649
Intangible assets		15		66,798			60,701
Property and equipment		16		221,296			217,928
Leased assets		16		112,167			118,829
Current tax assets		17		1,515			22,949
Deferred tax assets		17		381,804			357,945
Other assets		18		579,999			579,467
TOTAL ASSETS				47,316,246			46,095,131
LIABILITIES
Current accounts and other demand deposits		19		17,408,414			15,167,229
Transactions in the course of payment		7		710,418			1,302,000
Obligations under repurchase agreements		9		150,185			288,917
Savings accounts and time deposits		20		7,869,674			8,899,541
Derivative instruments		10		1,782,856			2,841,756
Borrowings from financial institutions		21		4,968,562			3,669,753
Debt issued		22		8,771,310			8,593,595
Other financial obligations		23		218,703			191,713
Lease liabilities		16		108,185			115,017
Current tax liabilities		17		24,218			311
Deferred tax liabilities		17		—			—
Provisions		24		730,243			733,911
Other liabilities		25		639,961			565,120
TOTAL LIABILITIES				43,382,729			42,368,863
EQUITY		27
Attributable to Bank’s Owners:
Capital				2,418,833			2,418,833
Reserves				703,476			703,206
Other comprehensive income				(26,348	)		(51,250	)
Retained earnings:
Retained earnings from previous years				655,478			412,641
Income for the period				324,869			463,108
Less:
Provision for minimum dividends				(142,792	)		(220,271	)
Subtotal				3,933,516			3,726,267
Non-controlling interests				1			1
TOTAL EQUITY				3,933,517			3,726,268
TOTAL LIABILITIES AND EQUITY				47,316,246			46,095,131

The accompanying notes 1 to 41 are an integral part of these interim consolidated financial statements

1

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF INCOME

for the six-month ended June 30, 2021 and 2020

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

(Expressed in million of Chilean pesos)

			June			June
	Notes		2021			2020
			MCh$			MCh$
Interest revenue		28		976,044			995,051
Interest expense		28		(301,770	)		(321,156	)
Net interest income				674,274			673,895
Income from fees and commissions		29		277,194			298,601
Expenses from fees and commissions		29		(54,013	)		(56,622	)
Net fees and commission income				223,181			241,979
Net financial operating income		30		27,180			19,793
Foreign exchange transactions, net		31		39,080			65,193
Other operating income		36		17,328			16,242
Total operating revenues				981,043			1,017,102
Provisions for loan losses		32		(130,871	)		(264,968	)
OPERATING REVENUES, NET OF PROVISIONS FOR LOAN LOSSES				850,172			752,134
Personnel expenses		33		(224,594	)		(214,007	)
Administrative expenses		34		(162,663	)		(171,920	)
Depreciation and amortization		35		(37,768	)		(36,112	)
Impairment		35		(3	)		(867	)
Other operating expenses		37		(16,812	)		(18,920	)
TOTAL OPERATING EXPENSES				(441,840	)		(441,826	)
NET OPERATING INCOME				408,332			310,308
Income attributable to associates		14		(2,186	)		1,575
Income before income tax				406,146			311,883
Income tax		17		(81,277	)		(63,298	)
NET INCOME FOR THE PERIOD				324,869			248,585
Attributable to:
Bank’s Owners		27		324,869			248,585
Non-controlling interests				—			—
Net income per share attributable to Bank’s Owners:				Ch$			Ch$
Basic net income per share		27		3.22			2.46
Diluted net income per share		27		3.22			2.46

The accompanying notes 1 to 41 are an integral part of these interim consolidated financial statements

2

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF

OTHER COMPREHENSIVE INCOME

for the six-month ended June 30, 2020 and 2020,

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

(Expressed in million of Chilean pesos)

			June			June
	Notes		2021			2020
			MCh$			MCh$
NET INCOME FOR THE PERIOD				324,869			248,585
OTHER COMPREHENSIVE INCOME THAT WILL BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS
Net gains (losses) on available-for-sale instruments valuation		13		(48,264	)		5,862
Net gains (losses) on derivatives held as cash flow hedges		10		82,373			(45,119	)
Subtotal Other comprehensive income before income taxes				34,109			(39,257	)
Income tax relating to the components of other comprehensive income that are reclassified in income for the period				(9,207	)		10,601
Total other comprehensive income items that will be reclassified subsequently to profit or loss				24,902			(28,656	)
OTHER COMPREHENSIVE INCOME THAT WILL NOT BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS
Adjustment for defined benefit plans		24		370			(91	)
Subtotal other comprehensive income before income taxes				370			(91	)
Income tax relating to the components of other comprehensive income that will not be reclassified to income for the period		17		(100	)		25
Total other comprehensive income items that will not be reclassified subsequently to profit or loss				270			(66	)
CONSOLIDATED COMPREHENSIVE INCOME FOR THE PERIOD				350,041			219,863
Attributable to:
Bank’s Owners				350,041			219,863
Non-controlling interests				—			—

The accompanying notes 1 to 41 are an integral part of these interim consolidated financial statements

3

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

for the six-month ended June 30, 2021 and 2020

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

(Expressed in millions of Chilean pesos)

					Reserves					Other comprehensive income									Retained earnings
	Notes		Paid-in Capital		Other reserves			Reserves from earnings		Unrealized gains (losses) on available-for-sale			Derivatives cash flow hedge			Income Tax			Retained earnings from previous period		Income (losses) for the period			Provision for minimum dividends			Attributable to equity holders of the parent			Non- controlling interest		Total equity
			MCh$		MCh$			MCh$		MCh$			MCh$						MCh$		MCh$			MCh$			MCh$			MCh$		MCh$
Balances as of December 31, 2019				2,418,833		31,780			671,492		3,827			(81,040	)		20,612			170,171		593,008			(300,461	)		3,528,222			1		3,528,223
Retention of profits				—		—			—		—			—			—			242,470		(242,470	)		—			—			—		—
Dividends distributions and paid		27		—		—			—		—			—			—			—		(350,538	)		300,461			(50,077	)		—		(50,077	)
Other comprehensive income:
Defined benefit plans adjustment, net				—		(66	)		—		—			—			—			—		—			—			(66	)		—		(66	)
Derivatives cash flow hedge		27		—		—			—		—			(45,119	)		12,182			—		—			—			(32,937	)		—		(32,937	)
Valuation adjustment on available-for-sale instruments		27		—		—			—		5,862			—			(1,581	)		—		—			—			4,281			—		4,281
Income for the period 2020		27		—		—			—		—			—			—			—		248,585			—			248,585			—		248,585
Provision for minimum dividends				—		—			—		—			—			—			—		—			(119,099	)		(119,099	)		—		(119,099	)
Balances as of June 30, 2020				2,418,833		31,714			671,492		9,689			(126,159	)		31,213			412,641		248,585			(119,099	)		3,578,909			1		3,578,910
Other comprehensive income:
Derivatives cash flow hedge, net				—		—			—		—			55,477			(14,979	)		—		—			—			40,498			—		40,498
Valuation adjustment on available-for-sale instruments				—		—			—		(8,888	)		—			2,397			—		—			—			(6,491	)		—		(6,491	)
Income for the period 2020				—		—			—		—			—			—			—		214,523			—			214,523			—		214,523
Provision for minimum dividends				—		—			—		—			—			—			—		—			(101,172	)		(101,172	)		—		(101,172	)
Balances as of December 31, 2020				2,418,833		31,714			671,492		801			(70,682	)		18,631			412,641		463,108			(220,271	)		3,726,267			1		3,726,268
Retention of profits		27		—		—			—		—			—			—			242,837		(242,837	)		—			—			—		—
Dividends distributions and paid		27		—		—			—		—			—			—			—		(220,271	)		220,271			—			—		—
Other comprehensive income:
Defined benefit plans adjustment, net				—		270			—		—			—			—			—		—			—			270			—		270
Derivatives cash flow hedge, net		27		—		—			—		—			82,373			(22,240	)		—		—			—			60,133			—		60,133
Valuation adjustment on available-for-sale instruments		27		—		—			—		(48,264	)		—			13,033			—		—			—			(35,231	)		—		(35,231	)
Income for the period 2021		27		—		—			—		—			—			—			—		324,869			—			324,869			—		324,869
Provision for minimum dividends		27		—		—			—		—			—			—			—		—			(142,792	)		(142,792	)		—		(142,792	)
Balances as of June 30, 2021				2,418,833		31,984			671,492		(47,463	)		11,691			9,424			655,478		324,869			(142,792	)		3,933,516			1		3,933,517

The accompanying notes 1 to 41 are an integral part of these interim consolidated financial statements

4

BANCO DE CHILE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

for the periods between January 1 and June 30,

(Free translation of Consolidated Financial Statements originally issued in Spanish)

(Expressed in million of Chilean pesos)

			June			June
	Notes		2021			2020
			MCh$			MCh$
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income for the period				324,869			248,585
Charges (credits) to income  that do not represent cash flows:
Depreciation and amortization		35		37,768			36,112
Impairment		35		3			867
Provision for loans and accounts receivable from customers and owed by banks		32		73,154			200,387
Provision of contingent loans		32		(1,283	)		11,509
Additional provisions		32		90,000			70,000
Fair value adjustment of financial assets held-for-trading				3,480			(2,129	)
Changes in assets and liabilities by deferred taxes		17		(10,926	)		(4,805	)
(Gain) loss attributable to investments in companies with significant influence, net		14		2,514			(1,253	)
(Gain) loss from sales of assets received in lieu of payment,net				(1,325	)		(3,597	)
(Gain) loss on sales of property and equipment, net		36		(8	)		(19	)
Charge-offs of assets received in lieu of payment		37		933			1,898
Other charges (credits) to income that do not represent cash flows				(6,190	)		15,983
Net changes in exchange rate, interest and fees accrued on assets and liabilities				(91,379	)		43,444
Changes in assets and liabilities that affect operating cash flows:
(Increase) decrease in loans and advances to banks, net				(508,335	)		(802,279	)
(Increase) decrease in loans to customers				(1,308,609	)		(996,736	)
(Increase) decrease in financial assets held-for-trading, net				(351,768	)		239,107
(Increase) decrease in other assets and liabilities				(19,526	)		(111,634	)
Increase (decrease) in current account and other demand deposits				2,239,300			1,805,194
Increase (decrease) in transactions from reverse repurchase agreements				(133,252	)		(72,178	)
Increase (decrease) in savings accounts and time deposits				(1,022,520	)		(1,123,821	)
Sale of assets received in lieu of payment or adjudicated				4,334			9,879
Total cash flows from operating activities				(678,766	)		(435,486	)
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in financial assets available-for-sale, net				(1,338,423	)		(238,226	)
(Increase) decrease in financial assets held-to-maturity				(127,603	)		—
Payments for lease agreements		16		(15,294	)		(13,852	)
Net changes in leased assets		16		(705	)		(559	)
Purchases of property and equipment		16		(17,897	)		(16,547	)
Sales of property and equipment				8			19
Acquisition of intangible assets		15		(14,689	)		(8,938	)
Acquisition of investments in companies		14		(2,616	)		—
Dividends received from investments in companies		14		1,425			1,073
Total cash flows from investing activities				(1,515,794	)		(277,030	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of letters of credit				(897	)		(1,210	)
Issuance of bonds		22		415,543			814,881
Redemption of bonds				(378,135	)		(716,547	)
Dividends paid		27		(220,271	)		(350,538	)
Increase (decrease) in borrowings from foreign financial institutions				61,078			(357,880	)
Increase (decrease) in other financial obligations				27,123			(44,793	)
Increase (decrease) in other obligations with Central Bank of Chile				1,237,800			3,110,600
Payment of other long-term borrowings				(118	)		(11,236	)
Total cash flows from financing activities				1,142,123			2,443,277
TOTAL NET  (NEGATIVE) POSITIVE CASH FLOWS FOR THE PERIOD				(1,052,437	)		1,730,761
Effect of exchange rate changes				70,337			114,463
Cash and cash equivalents at beginning of period				6,088,115			3,931,371
Cash and cash equivalents at end of period		7		5,106,015			5,776,595

	June		June
	2021		2020
	MCh$		MCh$
Operational Cash flow interest:
Interest received	818,462		961,898
Interest paid	(165,230	)	(130,096	)

The accompanying notes 1 to 41 are an integral part of these interim consolidated financial statements

5

BANCO DE CHILE AND SUBSIDIARIES

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

1. Company information:

Banco de Chile is authorized to operate as a commercial bank since September 17, 1996, being, in conformity with the stipulations of article 25 of Law No. 19,396, the legal continuation of Banco de Chile resulting from the merger of the Banco Nacional de Chile, Banco Agrícola and Banco de Valparaiso, which was constituted by public deed dated October 28, 1893, granted before the Notary Public of Santiago, Mr. Eduardo Reyes Lavalle, authorized by Supreme Decree of November 28, 1893.

The Bank is a Corporation organized under the laws of the Republic of Chile, regulated by the Chilean Commission for the Financial Market (“CMF”). Since 2001, it is subject to the supervision of the Securities and Exchange Commission of the United States of America (“SEC”), in consideration of the fact that the Bank is registered on the New York Stock Exchange (“NYSE”), through a program of American Depositary Receipt (“ADR”).

Banco de Chile offers a broad range of banking services to its customers, ranging from individuals to large corporations. Additionally, the Bank offers international as well as treasury banking services, in addition to those offered by subsidiaries that include securities brokerage, mutual fund and investment management, insurance brokerage and financial advisory services.

Banco de Chile’s legal address is Ahumada 251, Santiago, Chile and its website is www.bancochile.cl.

The Consolidated Financial Statements of Banco de Chile, for the period ended June 30, 2021 were approved by the Directors on July 29, 2021.

6

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

2. Legal regulations, basis of preparation and Other information:

(a) Legal regulations:

Decree Law No. 3,538 of 1980, in accordance with the text replaced by the first article of Law No. 21,000 that “Creates the Financial Market Commission”, provides in paragraph 6 of its article 5 that the Market Commission Financiero (“CMF”) may “set the rules for the preparation and presentation of the reports, balance sheets, balance sheets and other financial statements of the audited entities and determine the principles according to which they must keep their accounting”.

In accordance with the current legal framework, banks must use the accounting principles established by the CMF and in everything that is not dealt with by it or is contrary to its instructions, they must adhere to the generally accepted accounting principles, which correspond to the regulations techniques issued by the Colegio de Contadores de Chile AG, coinciding with the International Financial Reporting Standards (“IFRS”) agreed by the International Accounting Standards Board (“IASB”). In the event of discrepancies between these generally accepted accounting principles and the accounting criteria issued by the CMF, the latter shall prevail.

The notes to the Consolidated Financial Statements contain additional information to that presented in the Consolidated Statement of Financial Position, in the Consolidated Statement of Income, Consolidated Statement of Other Comprehensive Income, Consolidated Statement of Changes in Equity and Consolidated Statement of Cash Flows. They provide narrative descriptions or disaggregation of such statements in a clear, relevant, reliable and comparable way.

(b) Basis of preparation:

(b.1) These Interim Consolidated Financial Statements are presented according to Chapter C-2 of the Compendium of Accounting Standards, issued by the CMF.

(b.2) The following table details the entities in which the Bank has control and are part of this consolidated financial statements:

				Interest Owned
				Direct				Indirect				Total
			Functional	June		December		June		December		June		December
RUT	Subsidiaries	Country	Currency	2021		2020		2021		2020		2021		2020
					%		%		%		%		%		%
96,767,630-6	Banchile Administradora General de Fondos S.A.	Chile	Ch$		99.98		99.98		0.02		0.02		100.00		100.00
96,543,250-7	Banchile Asesoría Financiera S.A.	Chile	Ch$		99.96		99.96		—		—		99.96		99.96
77,191,070-K	Banchile Corredores de Seguros Ltda.	Chile	Ch$		99.83		99.83		0.17		0.17		100.00		100.00
96,571,220-8	Banchile Corredores de Bolsa S.A.	Chile	Ch$		99.70		99.70		0.30		0.30		100.00		100.00
96,932,010-K	Banchile Securitizadora S.A. (*)	Chile	Ch$		99.01		99.01		0.99		0.99		100.00		100.00
96,645,790-2	Socofin S.A.	Chile	Ch$		99.00		99.00		1.00		1.00		100.00		100.00

(*) Company in the process of early dissolution. See Note No. 5 b).

7

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

2. Legal regulations, basis of preparation and Other information, continued:

(c) Use of estimates and judgments:

Preparing the Interim Consolidated Financial Statements requires Management to make judgments, estimations and assumptions that affect the application of accounting policies and the valuation of assets, liabilities, income and expenses presented. Actual results could differ from these estimated amounts. The estimates refer to:

1. Provision for loan losses (Notes No. 11, No. 12 and No. 32);

2. Useful life of intangible, property and equipment and leased assets and lease liabilities (Notes No. 15 and No. 16);

3. Income taxes and deferred taxes (Note No. 17);

4. Provisions (Note No. 24);

5. Contingencies and Commitments (Note No. 26);

6. Fair value of financial assets and liabilities (Note No. 39).

Estimates and relevant assumptions are regularly reviewed by the Management, according to quantify certain assets, liabilities, gains, loss and commitments. Estimates reviewed are registered in income in the period that the estimate is reviewed.

During the period ended June 30, 2021, there have been no changes in the estimates made.

(d) Seasonality or Cyclical Character of the Transactions of the Intermediate Period:

Given the activities to which the Bank and its subsidiaries are engaged, the transactions of the Bank do not have a cyclical or seasonal nature. For this reason, specific breakdowns in these notes to the Interim Consolidated Financial Statements for the six-month period ended June 30, 2021 are not included.

(e) Relative Importance:

In determining the information to be disclosed on the different items of the financial statements or other matters, the relative importance in relation to the Financial Statements of the period has been taken into account.

(f) Leases:

The Bank acts as a lessor

Assets that are leased to clients under contracts that substantially transfer all risks and property recognition, with or without legal title, are classified as a financial lease. When the retained assets are subject to a financial leasing, the leased assets are no longer recognized in the accounting and an account receivable is recorded under Loans to Customers, reflected at their present value. The initial negotiation expenses in a financial lease are incorporated into the account receivable through the discount rate applied to the lease. Lease income is recognized on lease terms based on a model that consistently reflects a periodic rate of return on the net investment of the lease.

8

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

2. Legal regulations, basis of preparation and Other information, continued:

(f) Leases, continued:

Assets that are leased to customers under contracts that do not transfer substantially all the risks and benefits of the property are classified as an operating lease.

The leased investment properties, under the operating lease modality, are included in “Other assets” in the statement of financial position and depreciation is determined on the book value of these assets, applying a proportion of the value in a systematic way on the economic use of the estimated useful life. Lease income is recognized on a straight-line basis over the lease period.

The Bank acts as a lessee

A contract is or contains a lease if it has the right to control the use of an identified asset for a period of time in exchange for a consideration.

At the start date of a lease, an asset is determined by right of use of the leased asset at cost, which comprises the amount of the initial measurement of the lease liability plus other disbursements made.

The amount of the lease liability is measured at the present value of future lease payments that have not been paid on that date, which are discounted using the Bank’s incremental financing interest.

The right-of-use asset is measured using the cost model less accumulated depreciation and accumulated impairment losses. The depreciation of the right-of-use asset is recognized in the Income Statement based on the straight-line method of depreciation from the start date and until the end of the term of the lease.

The monthly variation of the UF for the contracts established in said monetary unit should be treated as a new measurement, therefore the change in the Consumer Price Index (CPI) modifies the value of the lease liability and in parallel, the amount of the asset for the right to use leased assets must be adjusted for this effect.

After the start date, the lease liability is measured by reducing the carrying amount to reflect the lease payments made and the lease contract modifications.

According to IFRS 16 “Leases”, the bank does not apply this standard to contracts with duration of 12 months or less and those that contain a low value underlying asset. In these cases, the payments are recognized as a lease expense.

(g) Reclassifications:

There have not been significant reclassifications at the end of this period 2021.

9

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

3. New Accounting Pronouncements:

Standards approved and/or modified by the International Accounting Standards Board (IASB) and by the Chilean Commission for the Financial Market (CMF):

Standards and interpretations that have been adopted in these Interim Consolidated Financial Statements.

As of the date of issuance of these Interim Consolidated Financial Statements, the new accounting pronouncements issued by both the IASB and the CMF, which have been adopted by the Bank and its subsidiaries, are detailed below:

Accounting standards issued by IASB.

IFRS 9 Financial Instruments, IFRS 7 Financial Instruments: Disclosures and IAS 39 Financial Instruments: Recognition and Measurement IFRS 4 Insurance Contracts and IFRS 16 Leases. Interest Rate Benchmark Reform.

In August 2020, the IASB issued a set of amendments related to phase 2 of the Benchmark Reform of Interbank Offering Rates (IBOR) and other benchmark interest rates amending IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16.

The amendments complement the changes issued during 2019 and focus on the effects on the financial statements when a company replaces the old interest rate benchmark with an alternative benchmark rate. The amendments in phase two refer to changes that affect the contractual cash flows. A company does not need to write off / adjust the book value of financial instruments for changes, but rather update the effective interest rate to reflect the change to an alternative benchmark. In the case of hedge accounting, a company does not need to discontinue hedge accounting because it makes the changes required by the reform if the hedge meets other hedge accounting criteria. Regarding disclosures, the company must disclose information about the new risks arising from the reform and how it manages the transition to the alternative benchmark rates.

The amendments are effective for annual reporting periods beginning on or after January 1, 2021. Early adoption of modifications is also allowed.

Banco de Chile has been working on the transition of reference rates, implementing an action plan that includes, among other aspects, identifying the main exposures and risks related to the LIBOR transition, developing products linked to the new reference rate, reviewing of current contracts and renegotiation with some of our clients, which will allow us to face the challenges imposed by the changes in the reference rates.

IFRS 16 Leases. Extends the one-year term of Covid-19-related lease concessions.

In March 2021, the IASB published modifications to IFRS 16 that allow the accounting of concessions or rental facilities due to the effect of the pandemic declared by Covid-19 to be extended until June 30, 2022. The original amendment to IFRS 16 was issued in May 2020 and applied to lease contract facilities that reduce only lease payments due until June 30, 2021.

The implementation of this amendment has no had material impact on Banco de Chile and its subsidiaries.

10

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

3. New Accounting Pronouncements, continued:

Other instructions issued by the CMF - Letters to Management.

By letter to Management dated April 23, 2021, the CMF reported transitory measures for the exceptional treatment of loan allowances in the commercial portfolio, in order to facilitate the implementation of payment alternatives for debtors who meet certain requirements.

The conditions for using the flexibility measures for the treatment of allowances are:

– Fully evaluate the financial and credit condition of the debtors who will be eligible for the granting of the flexibilization conditions. It is not allowed to include debtors in default in accordance with the regulations.

– Debtors who are up to date or have a default of no more than 30 days at the time of rescheduling.

– Grace periods or postponement credits, of this measure or another, may not add up to more than 6 consecutive months.

– Banks must have special consideration with those debtors who have availed themselves of previous postponement measures, and must have demonstrated a good behavior in the payment of their installments during the period between postponements.

In the case of grace periods or postponement credits, and depending on the methodology used in accounting for provisions (standard or internal method) for the group portfolio, the computation of arrears and the expected loss parameters will remain constant until that the payment system is normalized. Once the payment deferral period has elapsed and if the debtor does not pay the next obligation to be due, it must be recognized in the next installment of default to the one found in the standard matrix or in the corresponding provision model at the time of flexibilization in order to recognize their credit risk.

In the case of debtors evaluated on an individual basis, their risk category will be maintained at the time of rescheduling until the payment regime is normalized, which does not prevent that for the grace periods and deferral credit from being reclassified to the corresponding category, in the event of signs of worsening in the debtor’s ability to pay and other variables considered in the internal methods.

Postponements or rescheduling, in its different modalities, including those that allow to lower the financial burden of the debtors, as long as they comply with the indicated conditions, will not be considered forced renegotiations and therefore, will not lead to the classification of said debtors in default.

The validity of the exceptional period for the treatment of provisions is until July 31, 2021.

11

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

3. New Accounting Pronouncements, continued:

Other regulations adopted.

Law No. 21,320

On April 20, 2021, Law No. 21,320 that modifies consumer protection law (Law No. 19,496), prohibiting and limiting certain extrajudicial debt collection actions was enacted. Among other matters, this new law (i) limits the number and type of out-of-court collection measures, (ii) requires keeping detailed records of such actions up to two years after they have been initiated, and (iii) prohibits continuing with out-of-court collection actions once a collection has been initiated in court.

In the Bank’s opinion, this legislation could affect its ability to recover non-performing loans from the loan portfolio granted to individuals and SMEs, affect portfolio expenses, as well as increase collection costs.

Law No. 21,342

On June 1, 2021, Law No. 21,342 was published in the Official Newspaper, which established the obligation to implement an occupational health safety protocol for the gradual and safe return of employees to their workplace within the framework of the health alert decreed on the occasion of the Covid-19 disease. The aforementioned law established, among other matters, the obligation to contract mandatory insurance in favor of employees who carry out their work in-person, to finance or reimburse the costs of hospitalization and rehabilitation of the employees associated with the Covid-19 disease, in the terms and scope indicated in said standard. The implementation of this law has no material impact for Banco de Chile and its subsidiaries.

New standards and interpretations that have been issued but its date of application have not yet come into force:

The following is a summary of new standards, interpretations and improvements to the International Financial Reporting Standards issued by IASB that are not yet effective as of June 30, 2021, are detailed below:

Accounting standards issued by IASB.

IAS 28 — Investments in Associates and Joint Venture, and IFRS 10 — Consolidated Financial Statements.

In September 2014, the IASB published this modification, which clarifies the scope of the profits and losses recognized in a transaction that involves an associate or joint venture, and that this depends on whether the asset sold or contribution constitutes a business. Therefore, the IASB concluded that all gains or losses should be recognized against loss of control of a business. Likewise, the gains or losses that result from the sale or contribution of a subsidiary that does not constitute a business (definition of IFRS 3) to an associate or joint venture should be recognized only to the extent of unrelated interests in the associate or joint venture.

During December 2015, the IASB agreed to set the effective date of this modification in the future, allowing its immediate application.

Banco de Chile and its subsidiaries will have no impact on the Interim Consolidated Financial Statements as a result of the application of this amendment.

12

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

3. New Accounting Pronouncements, continued:

Limited Scope Amendments and Annual Improvements 2018-2020.

In May 2020, the IASB published a package of amendments of limited scope, as well as the 2018-2020 Annual Improvements, whose changes clarify the wording or correct minor consequences, omissions or conflicts between the requirements of the Standards.

Among other modifications, it contains amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets which specify the costs that an entity should include when evaluating whether a contract will cause losses, these costs include those that are directly related to the contract and may be costs incremental performance of that contract (for example, direct labor and materials), or an allocation of other costs that are directly related to the performance of contracts (for example, the allocation of the depreciation charge for an item of property, plant and equipment used to fulfill the contract).

These amendments will be effective as of January 1, 2022 and it is estimated that Banco de Chile and its subsidiaries will not have significant impacts on the Interim Consolidated Financial Statements as a result of the application of these amendments.

IAS 1 Presentation of Financial Statements and IFRS Practice Statement No. 2. Accounting Policy Disclosures.

In February 2021, the IASB published amendments to IAS 1 to require companies to disclose material information on accounting policies, the foregoing in order to improve the disclosures of their accounting policies and provide useful information to investors and other users of financial statements.

To help entities apply the amendments to IAS 1, the Board also amended IFRS Practice Statement No. 2 to illustrate how an entity can judge whether accounting policy information is material to its financial statements.

The amendments to IAS 1 will be effective for Financial Statement presentation periods beginning on or after January 1, 2023. Early application is permitted. If an entity applies those amendments to prior periods, it must disclose that fact.

The application of this amendment will not generate material impacts on the disclosure of accounting policies in the Interim Consolidated Financial Statements of Banco de Chile and its subsidiaries.

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Definition of Accounting Estimate.

In February 2021, the IASB incorporated changes to the definition of accounting estimates contained in IAS 8, the amendments to IAS are intended to help entities distinguish changes in accounting estimates from changes in accounting policies.

The amendments to IAS 8 will be effective for Financial Statement presentation periods beginning on or after January 1, 2023. Early application is permitted.

The application of this amendment will not have an impact on the Interim Consolidated Financial Statements of Banco de Chile and its subsidiaries.

13

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

3. New Accounting Pronouncements, continued:

IAS 12 Income Tax.

In May 2021 the IASB published amendments to IAS 12, to specify how companies should account for deferred taxes on transactions such as leases and decommissioning obligations.

IAS 12 Income Tax specifies how a company accounts for income tax, including deferred tax, which represents tax to be paid or recovered in the future. In certain circumstances, companies are exempt from recognizing deferred taxes when they first recognize assets or liabilities. Prior to the amendment, there was some uncertainty as to whether the exemption applied to transactions such as leases and decommissioning obligations, transactions for which companies recognize both an asset and a liability.

The amendments clarify that the exemption does not apply and that companies are required to recognize deferred taxes on such transactions. The purpose of the amendments is to reduce the diversity in reporting deferred tax on leases and decommissioning obligations.

The modifications are effective for the periods of presentation of the Financial Statements that begin as of January 1, 2023, early application is allowed.

The implementation of this amendment will have no material impact on Banco de Chile and its subsidiaries.

Accounting standards issued by the CMF.

Circular No. 2,243. Amends Compendium of Accounting Standards for Banks.

On December 20, 2019, the CMF published Circular No. 2,243, which updates the instructions of the Accounting Standards Compendium (CNC) for Banks.

The changes seek achieve greater convergence with IFRS, as well as an improvement in the quality of financial information, to contribute to the financial stability and transparency of the banking system.

The main changes introduced to the CNC correspond to:

1) Incorporation of IFRS 9 with the exception of the Chapter 5.5 on impairment of loans classified as “financial assets at amortized cost”. This exception is mainly due to prudential criteria set by the CMF. These criteria have given rise, over time, to the establishment of standard models that the banking institutions must apply to determine the impairment of the loan portfolio (Chapter B-1 of the CNC, for provisions).

2) Changes in the presentation formats of the Statement of Financial Position and Income Statement, when adopting IFRS 9 in replacement of IAS 39.

3) Incorporation of new presentation formats for the Statement of Other Comprehensive Income and the Statement of Changes in Equity and guidelines on financing and investment activities for the Statement of Cash Flows.

14

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

3. New Accounting Pronouncements, continued:

4) Incorporation of a financial report “Management Comments” (according to the IASB Practice Document No. 1), which will complement the information provided by the interim and annual financial statements.

5) Modifications of some notes of the financial statements, among which are: Financial assets at amortized cost and Risk management, in order to better comply with the disclosure criteria contained in the IFRS 7. In addition, disclosures about related parties are aligned according to IAS 24.

6) Changes in the accounting plan of Chapter C-3 of the CNC, both in the accounts coding as well as in their description. The foregoing corresponds to the detailed information of the formats for the Statement of Financial Position, the Income Statement and the Statement of Other Comprehensive Income.

7) Modification of the criteria for the suspension of the recognition of interest income and UF indexation on an accrual basis, for any credit with a default equal to or greater than 90 days (Chapter B-2 of the CNC). Currently, the suspension of the recognition of interests and UF indexation occurs after 180 days.

8) Adaptation of the limitations and precisions to the use of IFRS contained in Chapter A-2 of the CNC.

In accordance with that established under the Circular No. 2,249 dated April 20, 2020, the new standard will be applicable from January 1, 2022, with a transition date of January 1, 2021, for purposes of the comparative Financial Statements that must be published from March 2022.

Nevertheless, the change in criteria for the suspension of the recognition of interest income and UF indexation on an accrual basis as provided in Chapter B-2, shall be adopted no later than January 1, 2022.

The Bank and its subsidiaries have structured an implementation project and have established various Committees to ensure its implementation. All this in order to comply with the new standards required for the preparation and presentation of the Financial Statements. The application of the rule of suspension of the recognition of interest and UF indexation on an accrual basis after 90 days of default will not have a significant impact on the Interim Consolidated Financial Statements.

Standards related to the implementation of Basel III.

During 2019, the CMF began the regulatory process for the implementation of Basel III standards in Chile, in accordance with the established on Law No. 21,130 that modernizes banking legislation. The new Law adopts the international standards in banking regulation and supervision.

On March 30, 2020, the CMF reported that, in coordination with the Central Bank of Chile, it resolved to postpone the implementation of the Basel III requirements for one year and maintain the general regulatory framework in force for banking capital requirements until December 2021.

15

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

3. New Accounting Pronouncements, continued:

On December 1, 2020, the CMF finalized the process of issuing the necessary regulations for the implementation of the new capital framework. The culmination of this regulatory process, which began with the first standard in public consultation in August 2019, represents a relevant step in strengthening the solvency and stability of the financial system. The new capital framework will allow for a more solid and robust banking system, a fundamental condition to face the impacts of the economic downturn with better tools.

The new standards, in addition to increasing the capitalization levels of Chilean banks; facilitate access to new and better sources of financing; harmonize the requirements between subsidiaries of foreign banks and local banks; and they contribute to the internationalization process of Chilean banking.

As of the date of issuance of these Interim Consolidated Financial Statements, the CMF has issued the following circulars related to the Basel III regulations:

Circular 2,270. Issued on September 11, 2020, the CMF issued the standard that sets the general criteria and guidelines for the determination of additional equity requirements as a result of the supervision process, called Pillar 2.

This standard updates Chapter 1-13 “Management and solvency classification” and introduces the new Chapter 21-13 “Evaluation of the adequacy of effective equity of banks” to the RAN.

This standard also establishes that the effective equity self-assessment report to be submitted by banks during this year will be based only on credit risk, and the one for 2022 will additionally incorporate market and operational risks. The first two reports will have a simplified format. As of 2023, the report with all its sections will be required, considering all the material risks of the institution.

Circular No. 2,272. Issued on September 25, 2020, the CMF published the regulations that define the operating procedures for the calculation, implementation and supervision of additional capital charges, known as capital buffers (Conservation Buffer and a Countercyclical Buffer).

This rule incorporates Chapter 21-12 "Additional basic capital, articles 66 bis and 66 ter of the LGB" into the RAN.

This rule also establishes that, as of December 1, 2021, the requirement of the Conservation Buffer will be 0.625%, increasing by the same percentage each year, until reaching the regime on December 1, 2024. The same transitory requirement will apply to the maximum value of the Countercyclical Buffer that can be defined by the Chile Central Bank.

16

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

3. New Accounting Pronouncements, continued:

Circular No. 2,273. Issued on October 5, 2020, the CMF issued the rule that regulates the calculation of the relationship between basic capital and total assets (leverage ratio). The standard introduces improvements both in the measurement of basic capital (numerator) and of the bank's total assets (denominator). Incorporates Chapter 21-30 "Relationship between basic capital and total assets" into the RAN.

This standard is effective as of December 1, 2020, without prejudice to the transitory measures for the calculation of regulatory capital, contemplated in Title V of Chapter 21-1 "Equity for legal and regulatory purposes" of the RAN.

Circular No. 2,274. Issued on October 8, 2020, the CMF established the guidelines for calculating equity for legal and regulatory purposes, debugging items of low quality or whose value is uncertain in a settlement scenario and sets prudential rules for concentration, in accordance with the current legal framework. Incorporates Chapter 21-1 “Equity for legal and regulatory purposes” replacing Chapter 12-1 “Equity for legal and regulatory purposes” into the RAN.

The first adjustment must be made on December 1, 2022, corresponding to 15% of the discounts. This amount will increase to 30% on December 1, 2023 and 65% on December 1, 2024, until reaching full implementation as of December 1, 2025.

Circular No. 2,276. Issued on November 2, 2020, the CMF, with the prior favorable agreement of the Central Bank of Chile, established the dispositions that have as a reference framework the evaluation methodology established by the Basel Committee on Banking Supervision and international practice, considered for the identification and treatment of banks classified as systemically important at the local level. It incorporates into the RAN Chapter 21-11 "Factors and methodology for banks or group of banks rated as systemically important and requirements that may be imposed as a result of this rating".

The requirements derived from the first application may be gradually established. The initial charge in December 2021 will be 0% and will increase by 25% each year until reaching the regime in December 2025.

Circular No. 2,279. Issued on November 24, 2020, the CMF incorporated Chapter 21-2 into the RAN, which contains the minimum requirements and conditions that preference shares and bonds with no fixed maturity term must satisfy in article 55 bis of the General Banking Act and Chapter 21-3 of the RAN which contains the minimum requirements and conditions that subordinate bonds must satisfy in article 55 of the General Banking Act, this chapter repeals and replaces chapter 9-6 of the RAN. These regulations came into effect on December 1, 2020, the date on which banks must determine the level of capital AT1 and T2 that is applicable, in accordance with the provisions of the regulations.

During the first year of application, subordinated bonds and voluntary provisions may be computed as equivalent to AT1 instruments, with a limit of 1.5% of the RWA net of required provisions. From the second year on, the substitution limit will progressively decrease (by 0.5%) to reach 0% in 4 years.

17

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

3. New Accounting Pronouncements, continued:

Circular No. 2,280. Issued on December 1, 2020, corresponds to the definitive norm related to the standardized methodology for computing ORWAs, incorporating chapter 21-8 to the RAN. The dispositions of this new Chapter consider the methodology established by the Basel Committee on Banking Supervision as a reference framework.

For the computation of operational risk, a single standard method is established, in accordance with the recommendations of the aforementioned Committee, not allowing the use of proprietary methodologies referred to in the second paragraph of article 67 for this type of risk.

The regulations entered into force on December 1, 2020. Also, it was established that until December 1, 2021, assets weighted by operational risk are equal to 0.

Circular No. 2,281. Issued on December 1, 2020, it corresponds to the definitive regulations related to the determination of the Credit Risk-Weighted Assets, incorporating chapter 21-6 to the RAN.

As set out in the Article 67 of the LGB, it is up to the CMF to establish standardized methodologies to cover the relevant risks of banking companies, among which is credit risk, with a prior favorable agreement from the Central Bank of Chile.

This new standard includes a transitory provision, which establishes that the computation of assets weighted by credit risk is carried out in accordance with the current dispositions of Title II of Chapter 12-1 of the RAN, until November 30, 2021; The new methodology must be applied as of December 1, 2021.

Circular No. 2,282. Issued on December 1, 2020, this standard incorporated the new Chapter 21-7 on the determination of MRWA into the RAN.

For the application of the provisions of this new Chapter, which will be in force as of December 1, 2020, a transitional disposition is contemplated that considers a market risk weight equal to zero until December 1, 2021.

18

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

3. New Accounting Pronouncements, continued:

Circular No. 2,283. On December 1, 2020, the CMF published the definitive regulation related to the promotion of market discipline and transparency through the disclosure of information requirements from banking entities (Pillar 3), incorporating Chapter 21-20 into the Updated Compilation of Standards (RAN).

The information referred to in this new Chapter is effective as of December 1, 2022 and must be published for the first time in 2023 with information regarding the January-March quarter of said year.

Circular No. 2,284. Issued on December 31, 2020, through this circular the CMF creates a file "Rating of systemically important banks" (R11), related to the measurement of the systemic importance index and dated January 26, 2021, through Circular No. 2,286. The instructions for the preparation of the new R11 file are supplemented.

Circular No. 2,288. Issued on April 27, 2021, through this circular, the CMF creates the files "Solvency limits and effective equity" (R01), "Regulatory capital instruments" (R02), "Credit risk-weighted assets" (R06), “Market risk-weighted assets” (R07) and “Operational risk-weighted assets” (R08).

Circular Letter No. 1,207. Issued on April 28, 2021, the CMF specified that the subordinated bonds and additional provisions that are accounted for as equivalent to preferred shares or bonds without a fixed maturity term according to the third transitory article of Law No. 21,130, must be adapted to the limits established in literals c) and d) of article 66 of the General Banking Law.

Circular N°2,290. Issued on May 28, 2021, through this circular, the CMF specifies the implementation calendar of the new Risk System files incorporated into the Information Systems Manual (MSI by its Spanish initials) and additionally adjusts the size of some fields of the R01, R07 and R08 files.

4. Changes in Accounting Policies and Disclosures:

During the period ended June 30, 2021, no significant accounting changes have occurred that affect the presentation of these Interim Consolidated Financial Statements.

19

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

5. Relevant Events:

a) On January 28, 2021, the Board of Directors of Banco de Chile agreed to convene an Ordinary Shareholders Meeting on March 25, 2021 in order to propose, among other matters, the following distribution of profits for the year ended on December 31, 2020:

i. Deduct and withhold from the net income of the year, an amount equivalent to the effect of inflation of the paid capital and reserves according to the variation of the Consumer Price Index that occurred between November 2019 and November 2020, amounting to Ch$95,989,016,547 which will be added to retained earnings from previous periods.

ii. From the resulting balance, distribute in the form of a dividend 60% of the remaining liquid profit, corresponding to a dividend of Ch$2.18053623438 to each of the 101,017,081,114 shares of the Bank, retaining the remaining 40%.

Consequently, it proposed the distribution as a dividend of 47.6% of the profits for the year ended December 31, 2020.

b) On February 4, 2021, the subsidiary Banchile Securitizadora S.A. in an Extraordinary Shareholders’ meeting agreed on the early dissolution of this subsidiary, as previously approved by the Financial Market Commission.

c) On March 25, 2021, at the Bank’s Ordinary Shareholders’ Meeting, the shareholders proceeded to make the definitive appointment of Mr. Raúl Anaya Elizalde as Titular Director of Banco de Chile, a position that he will hold until the next renewal of the Board of Directors. Additionally, on the same date, the Board approved the distribution of dividend No. 209, corresponding to Ch$2.18053623438 per share, payable against the profit for the year 2020.

d) On April 7, 2021, the subsidiary Banchile Administradora General de Fondos S.A. reported as an essential fact that on that date Mr. Paul Javier Fürst Gwinner, submitted his resignation from the position of Director of the company.

e) In the context of the COVID-19 pandemic declared in March 2020 by the World Health Organization (“WHO”), this year, on March 13, 2021 the Government of Chile decided on June 25, 2021 to extend the State of Constitutional Exception, thus allowing maintaining a series of sanitary measures, including mobility restrictions and quarantines in the national territory. Additionally, a mass vaccination plan has continued to be rapidly implemented in order to mitigate and control the spread of the pandemic. As of the date of issuance of these Financial Statements, more than 78% of the target population has completed their vaccination process.

The Government and the Central Bank of Chile have maintained countercyclical measures, which have contributed to a gradual recovery in activity. At the fiscal level, the government has announced transfers equivalent to 9 points of GDP, which has been complemented by indirect measures (including resources to finance Fogape-Covid credits and the employment protection law, among others) that mobilize resources for a similar amount. On February 3, 2021, Law No. 21,307 was published in the official newspaper, which modifies the Guarantee Fund for Small and Medium-sized Entrepreneurs (Fogape) in order to promote the reactivation and recovery of the economy, which modifies the Decree Law No. 3,472, of 1980, of the

20

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

5. Relevant Events, continued:

Ministry of Finance, which creates the Guarantee Fund for Small Entrepreneurs (Reactive Fogape). Since the beginning of the program and until June 30, 2021, the Bank has carried out 19,870 operations for an aggregate amount of Ch$1,063,951 million.

For its part, the Central Bank of Chile has maintained a series of unconventional measures, among which the establishment of the Loan Increase Conditional Credit Facility program (FCIC by its Spanish initials) a special financial line for banking companies complemented with the activation of a “Liquidity Credit Line” (LCL) and purchases of bonds in the financial market, among others. As of June 30, 2021, the Bank has made use of these financing facilities for an amount of Ch$4,348,677 million. To access the FCIC, the Bank has established guarantees in favor of the Central Bank of Chile for a total amount of approximately Ch$3,622,885 million, corresponding to commercial placements of the individual portfolio of high credit quality for Ch$2,198,879 million, and securities of fixed income for an approximate amount of Ch$1,424,006 million. In the case of the LCL, the guarantee provided corresponds to the reserve held by the Bank.

Additionally, the National Congress approved three reforms to the constitution that allowed withdrawals of up to 10% of the resources available in the individual capitalization accounts, which allowed an aggregate withdrawal equivalent to approximately US$49,322 million, a situation that has brought pressure on prices of goods and services, increased liquidity levels for natural and legal persons, and decreased delinquency levels in the banking industry.

Within this context, our Bank adopted several measures, along with executing contingency plans, in order to: (i) safeguard the health of clients and employees; (ii) ensure the operational continuity of services and mitigate potential operational risks, and (iii) strengthen service remote channels and the implementation of remote working for a large group of employees.

Even though the impact of the pandemic on our operating results has been significant and its effects will persist even over time, its magnitude will depend on the duration and depth of the effects of the pandemic, as well as the impact on structural variables, including the trend growth of the economy, increase in investment and employment levels. Additionally, in accordance with the current policy on the matter, the Bank has established additional incremental provisions for Ch$90,000 million during this fiscal year, thus totaling Ch$410,252 million as of June 30, 2021.

21

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

6. Business Segments:

For management purposes, the Bank is organized into four segments, which are defined based on the types of products and services offered, and the type of client in which focuses as described below:

Retail: This segment focuses on individuals and small and medium-sized companies (SMEs) with annual sales up to UF 70,000, where the product offering focuses primarily on consumer loans, commercial loans, checking accounts, credit cards, credit lines and mortgage loans.

Wholesale: This segment focused on corporate clients and large companies, whose annual revenue exceed UF 70,000, where the product offering focuses primarily on commercial loans, checking accounts and liquidity management services, debt instruments, foreign trade, derivative contracts and leases.

Treasury: This segment includes the associated revenues to the management of the investment portfolio and the business of financial transactions and currency trading.

Transactions with customers carried out by the Treasury are reflected in the respective aforementioned segments. These products are highly transaction-focused and include foreign exchange transactions, derivatives and financial instruments in general, among others.

Subsidiaries: Corresponds to the businesses generated by the companies controlled by the Bank, which carry out activities complementary to the bank business. The companies that comprise this segment are:

Entity
-	Banchile Administradora General de Fondos S.A.

- Banchile Asesoría Financiera S.A.

- Banchile Corredores de Seguros Ltda.

- Banchile Corredores de Bolsa S.A.

- Banchile Securitizadora S.A. (*)

- Socofin S.A.

(*) Company in the process of early dissolution. See Note No. 5 b).

22

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

6. Business Segments, continued:

The financial information used to measure the performance of the Bank’s business segments is not comparable with similar information from other financial institutions because each institution relies on its own definitions. The accounting policies applied to the segments is the same as those described in the summary of accounting principles. The Bank obtains the majority of the results for: interest, indexation and commissions and financial operations and changes, discounting provisions for credit risk and operating expenses. Management is mainly based on these concepts to evaluate the performance of the segments and make decisions about the goals and allocations of resources of each unit. Although the results of the segments reconcile with those of the Bank at the total level, this is not necessarily the case in terms of the different concepts, given that management is measured and controlled individually and not on a consolidated basis, applying the following criteria:

● The net interest margin of loans and deposits is obtained aggregating the net financial margins of each individual operation of credit and uptake made by the bank. For these purposes, the volume of each operation and its contribution margin are considered, which in turn corresponds to the difference between the effective rate of the customer and the internal transfer price established according to the term and currency of each operation. Additionally, the net margin includes the result of interest and indexation from the accounting hedges.

● Provisions for credit risk are determined at the customer level based on the characteristics of each of their operations. In the case of additional provisions, these are assigned to the different business segments based on the credit risk weighted assets that each segment has

● The capital and its financial impacts on outcome have been assigned to each segment based on the risk-weighted assets.

● Operational expenses are reflected at the level of the different functional areas of the Bank. The allocation of expenses from functional areas to business segments is done using different allocation criteria, at the level of the different concepts and expense items.

Taxes are managed at a corporate level and are not allocated to business segments.

For the periods ended June 30, 2021 and 2020 there was no income from transactions with a customer or counterparty that accounted for 10% or more of the Bank's total revenues.

23

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

6. Business Segments, continued:

The following table presents the income by segment for the periods ended June 30, 2021 and 2020 for each of the segments defined above:

	Retail						Wholesale						Treasury						Subsidiaries						Subtotal						Consolidation adjustment						Total
	June			June			June			June			June			June			June			June			June			June			June			June			June			June
	2021			2020			2021			2020			2021			2020			2021			2020			2021			2020			2021			2020			2021			2020
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Net interest income		473,309			491,971			196,294			190,279			4,675			(7,552	)		(117	)		(1,871	)		674,161			672,827			113			1,068			674,274			673,895
Net commissions income (loss)		127,261			150,924			29,988			27,092			(873	)		(1,127	)		73,685			72,794			230,061			249,683			(6,880	)		(7,704	)		223,181			241,979
Financial and exchange operations results		4,542			7,055			30,550			30,061			17,235			31,091			13,965			17,778			66,292			85,985			(32	)		(999	)		66,260			84,986
Other operating income		12,317			9,954			6,338			6,945			—			—			1,197			1,459			19,852			18,358			(2,524	)		(2,116	)		17,328			16,242
Total operating revenue		617,429			659,904			263,170			254,377			21,037			22,412			88,730			90,160			990,366			1,026,853			(9,323	)		(9,751	)		981,043			1,017,102
Provision for loan losses		(89,612	)		(175,227	)		(41,588	)		(89,716	)		—			—			329			(25	)		(130,871	)		(264,968	)		—			—			(130,871	)		(264,968	)
Personnel expenses		(142,191	)		(138,013	)		(43,770	)		(39,551	)		(1,197	)		(987	)		(37,444	)		(35,464	)		(224,602	)		(214,015	)		8			8			(224,594	)		(214,007	)
Administrative expenses		(125,542	)		(133,863	)		(30,179	)		(31,892	)		(165	)		(153	)		(16,092	)		(15,755	)		(171,978	)		(181,663	)		9,315			9,743			(162,663	)		(171,920	)
Depreciation and amortization		(30,976	)		(29,441	)		(4,002	)		(3,628	)		(17	)		(11	)		(2,773	)		(3,032	)		(37,768	)		(36,112	)		—			—			(37,768	)		(36,112	)
Other operating expenses		(9,163	)		(8,075	)		(7,153	)		(10,919	)		(556	)		(595	)		57			(198	)		(16,815	)		(19,787	)		—			—			(16,815	)		(19,787	)
Total operating expenses		(307,872	)		(309,392	)		(85,104	)		(85,990	)		(1,935	)		(1,746	)		(56,252	)		(54,449	)		(451,163	)		(451,577	)		9,323			9,751			(441,840	)		(441,826	)
Income attributable to associates		(3,156	)		893			597			310			32			34			341			338			(2,186	)		1,575			—			—			(2,186	)		1,575
Income before income taxes		216,789			176,178			137,075			78,981			19,134			20,700			33,148			36,024			406,146			311,883			—			—			406,146			311,883
Income taxes																																						(81,277	)		(63,298	)
Income after income taxes																																						324,869			248,585

The following table presents assets and liabilities of the periods ended June 30, 2021 and December 31, 2020 by each segment defined above:

	Retail				Wholesale				Treasury				Subsidiaries				Subtotal				Consolidation adjustment						Total
	June		December		June		December		June		December		June		December		June		December		June			December			June		December
	2021		2020		2021		2020		2021		2020		2021		2020		2021		2020		2021			2020			2021		2020
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$			MCh$			MCh$		MCh$
Assets		19,911,432		18,800,897		11,243,826		10,811,021		15,092,423		15,400,139		784,488		830,910		47,032,169		45,842,967		(99,242	)		(128,730	)		46,932,927		45,714,237
Current and deferred taxes																												383,319		380,894
Total assets																												47,316,246		46,095,131
Liabilities		15,453,970		13,647,952		9,671,960		9,980,003		17,704,553		18,208,458		627,270		660,869		43,457,753		42,497,282		(99,242	)		(128,730	)		43,358,511		42,368,552
Current and deferred taxes																												24,218		311
Total liabilities																												43,382,729		42,368,863

24

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

7. Cash and Cash Equivalents:

(a) The detail of the balances included under cash and cash equivalents and their reconciliation with the Statement of Cash Flows at the end of each period are detailed as follows:

	June			December
	2021			2020
	MCh$			MCh$
Cash and due from banks:
Cash (*)		1,021,825			615,842
Deposit in Chilean Central Bank (*)		210,618			641,890
Deposits in other domestic banks		38,456			14,506
Deposits abroad		1,136,451			1,287,978
Subtotal - Cash and due from banks		2,407,350			2,560,216
Net transactions in the course of collection		(93,486	)		(719,692	)
Highly liquid financial instruments (**)		2,735,408			4,212,719
Repurchase agreements (**)		56,743			34,872
Total cash and cash equivalents		5,106,015			6,088,115

(*) Amounts in cash funds and in Central Bank are regulatory reserve deposits that the Bank must maintain as a monthly average.

(**) It corresponds to negotiation instruments and repurchases contracts that meet the definition of cash and cash equivalents.

(b) Transactions in course of settlement:

Transactions in course of settlement are transactions for which the only remaining step is settlement, which will increase or decrease the funds in the Central Bank or in foreign banks, normally occurring within 24 to 48 business hours, and are detailed as follows:

	June			December
	2021			2020
	MCh$			MCh$
Assets
Documents drawn on other banks (clearing)		122,084			123,267
Funds receivable		494,848			459,041
Subtotal - assets		616,932			582,308
Liabilities
Funds payable		(710,418	)		(1,302,000	)
Subtotal - liabilities		(710,418	)		(1,302,000	)
Net transactions in the course of settlement		(93,486	)		(719,692	)

25

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

8. Financial Assets Held-for-trading:

The detail of financial instruments classified as held-for-trading is as follows:

	June		December
	2021		2020
	MCh$		MCh$
Instruments issued by the Chilean Government and Central Bank of Chile
Central Bank of Chile bonds		1,143		3,186
Central Bank of Chile promissory notes		2,914,982		4,006,490
Other instruments issued by the Chilean Government and Central Bank		65,965		149,616
Other instruments issued in Chile
Bonds from other domestic companies		—		5,396
Bonds from domestic banks		12,817		5,494
Deposits in domestic banks		139,210		93,905
Other instruments issued in Chile		1,328		1,003
Instruments issued Abroad
Instruments from foreign governments or central banks		—		—
Other instruments issued abroad		12		164
Mutual fund investments
Funds managed by related companies		402,038		400,902
Funds managed by third-party		—		—
Total		3,537,495		4,666,156

Under “Instruments issued by the Chilean Government and Central Bank of Chile” are classified instruments sold under repurchase agreements to customers and financial instruments, by an amount of Ch$37,900 million as of June 30, 2021 (Ch$217,614 million as of December 31, 2020). Repurchase agreements have a 1 day average expiration at the end of June 2021 (4 days at the year-end 2020). Additionally, under this line are maintained instruments to comply with the requirements for the constitution of the technical reserve for an amount equivalent to Ch$2,833,000 million as of June 30, 2021 (Ch$2,986,000 million in December 2020).

Under “Other instruments issued in Chile” are included instruments sold under repurchase agreements with customers and financial instruments amounting to Ch$107,657 million as of June 30, 2021 (Ch$52,809 million as of December 31, 2020). The repurchase agreements have an average expiration of 5 days as of period-end 2021 (9 days in December 2020).

Additionally, the Bank holds financial investments in mortgage finance bonds issued by itself in the amount of Ch$4,365 million as of June 30, 2021 (Ch$5,156 million as of December 31, 2020), which are presented as a reduction of the liability line item “Debt issued”.

26

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

9. Investments under resale agreements and obligations under repurchase agreements:

(a) Rights arising from resale repurchase agreements: The Bank provides financing to its customers through repurchase agreements and securities lending, in which the financial instrument serves as collateral. As of June 30, 2021 and December 31, 2020, the detail is as follows:

	Up to 1 month				Over 1 month and up to 3 months		Over 3 months and up to 12 months						Over 1 year and up to 3 years				Over 3 years and up to 5 years				Over 5 years				Total
	June		December		June		December		June		December		June		December		June		December		June		December		June		December
	2021		2020		2021		2020		2021		2020		2021		2020		2021		2020		2021		2020		2021		2020
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Instruments issued by the Chilean Governments and Central Bank of Chile
Central Bank bonds		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Central Bank promissory notes		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Other instruments issued by the Chilean Government and Central Bank of Chile		—		10,006		—		—		—		—		—		—		—		—		—		—		—		10,006
Subtotal		—		10,006		—		—		—		—		—		—		—		—		—		—		—		10,006
Other Instruments issued in Chile
Deposit promissory notes from domestic banks		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Mortgage bonds from domestic banks		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Bonds from domestic banks		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Deposits in domestic banks		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Bonds from other Chilean companies		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Other instruments issued in Chile		45,784		29,089		24,359		20,591		22,654		16,721		—		—		—		—		—		—		92,797		66,401
Subtotal		45,784		29,089		24,359		20,591		22,654		16,721		—		—		—		—		—		—		92,797		66,401
Instruments issued by foreign institutions
Instruments from foreign governments or Central Bank		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Other instruments		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Mutual fund investments
Funds managed by related companies		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Funds managed by third-party		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total		45,784		39,095		24,359		20,591		22,654		16,721		—		—		—		—		—		—		92,797		76,407

Securities received:

The Bank and its subsidiaries have received financial instruments that they can sell or give as collateral in case the owner of these instruments enters into default or in bankruptcy. As of June 30, 2021, the fair value of the instruments received amounts to Ch$87,356 million (Ch$82,585 million as of December, 2020).

27

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

9. Investments under resale agreements and obligations under repurchase agreements, continued:

(b) Obligations arising from repurchase agreements: The Bank obtains financing by selling financial instruments and agreeing to repurchase them in the future, plus interest at a prefixed rate. As of June 30, 2021 and December 31, 2020, the repurchase agreements are the following:

	Up to 1 month				Over 1 month and up to 3 months				Over 3 months and up to 12 months				Over 1 year and up to 3 years				Over 3 years and up to 5 years				Over 5 years				Total
	June		December		June		December		June		December		June		December		June		December		June		December		June		December
	2021		2020		2021		2020		2021		2020		2021		2020		2021		2020		2021		2020		2021		2020
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Instruments issued by the Chilean Governments and Central Bank of Chile
Central Bank bonds		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Central Bank promissory notes		37,899		183,083		—		—		—		—		—		—		—		—		—		—		37,899		183,083
Other instruments issued by the Chilean Government and Central Bank of Chile		3,697		47,763		—		—		—		—		—		—		—		—		—		—		3,697		47,763
Subtotal		41,596		230,846		—		—		—		—		—		—		—		—		—		—		41,596		230,846
Other Instruments issued in Chile
Deposit promissory notes from domestic banks		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Mortgage bonds from domestic banks		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Bonds from domestic banks		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Deposits in domestic banks		107,629		57,648		44		43		—		—		—		—		—		—		—		—		107,673		57,691
Bonds from other Chilean companies		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Other instruments issued in Chile		588		380		—		—		—		—		—		—		—		—		—		—		588		380
Subtotal		108,217		58,028		44		43		—		—		—		—		—		—		—		—		108,261		58,071
Instruments issued by foreign institutions
Instruments from foreign governments or central bank		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Other instruments issued by foreing		—		—		—		—		328		—		—		—		—		—		—		—		328		—
Subtotal		—		—		—		—		328		—		—		—		—		—		—		—		328		—
Mutual fund investments
Funds managed by related companies		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Funds managed by third-party		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total		149,813		288,874		44		43		328		—		—		—		—		—		—		—		150,185		288,917

Securities sold:

The fair value of the financial instruments delivered as collateral by the Bank and its subsidiaries, in sales transactions with repurchase agreement and securities lending as of June 30, 2021 amounts to Ch$149,271 million (Ch$288,523 million in December 2020). In the event that the Bank and its subsidiaries enter into default or bankruptcy, the counterparty is authorized to sell or deliver these investments as collateral.

28

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

10. Derivative Instruments and Accounting Hedges:

(a) As of June 30, 2021 and December 31, 2020, the Bank’s portfolio of derivative instruments is detailed as follows:

	Notional amount of contract with final expiration date in														Fair Value
	Up to 1 month		Over 1 month and up to 3 months		Over 3 months and up to 12 months		Over 1 year and up to 3 years		Over 3 year and up to 5 years		Over 5 years		Total		Assets		Liabilities
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
As of June 30, 2021
Derivatives held for hedging purposes
Interest rate swap and cross currency swap		—		—		3,428		—		—		—		3,428		—		1,119
Interest rate swap		—		—		—		—		—		2,672		2,672		—		595
Total derivatives held for hedging purposes		—		—		3,428		—		—		2,672		6,100		—		1,714
Derivatives held as cash flow hedges
Interest rate swap and cross currency swap		—		—		202,174		141,478		218,514		682,072		1,244,238		86,508		35,638
Total derivatives held as cash flow hedges		—		—		202,174		141,478		218,514		682,072		1,244,238		86,508		35,638
Trading derivatives
Currency forward		6,663,591		3,982,949		6,885,339		999,058		86,006		16,148		18,633,091		241,788		198,692
Interest rate swap		1,482,348		2,385,483		9,377,725		10,085,867		6,314,147		10,255,895		39,901,465		635,703		649,400
Interest rate swap and cross currency swap		311,588		754,894		3,288,590		5,898,694		4,111,682		5,529,380		19,894,828		772,960		896,358
Call currency options		7,371		7,675		31,831		109		—		—		46,986		858		533
Put currency options		5,379		6,993		38,990		—		—		—		51,362		318		521
Total trading derivatives		8,470,277		7,137,994		19,622,475		16,983,728		10,511,835		15,801,423		78,527,732		1,651,627		1,745,504
Total		8,470,277		7,137,994		19,828,077		17,125,206		10,730,349		16,486,167		79,778,070		1,738,135		1,782,856

29

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

10. Derivative Instruments and Accounting Hedges, continued:

(a) Portfolio of derivative instruments, continued:

	Notional amount of contract with final expiration date in														Fair Value
	Up to 1 month		Over 1 month and up to 3 months		Over 3 months and up to 12 months		Over 1 year and up to 3 years		Over 3 year and up to 5 years		Over 5 years		Total		Assets		Liabilities
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
As of December 31, 2020
Derivatives held for hedging purposes
Interest rate swap and cross currency swap		—		—		—		5,031		—		—		5,031		—		1,646
Interest rate swap		—		—		—		—		—		29,508		29,508		—		4,873
Total derivatives held for hedging purposes		—		—		—		5,031		—		29,508		34,539		—		6,519
Derivatives held as cash flow hedges
Interest rate swap and cross currency swap		—		—		164,330		171,925		213,811		667,391		1,217,457		51,062		65,172
Total derivatives held as cash flow hedges		—		—		164,330		171,925		213,811		667,391		1,217,457		51,062		65,172
Trading derivatives
Currency forward		7,320,775		5,754,021		7,753,967		823,355		60,193		26,340		21,738,651		551,964		637,186
Interest rate swap		1,516,969		2,797,327		10,330,399		12,705,904		6,658,095		10,180,750		44,189,444		1,167,416		1,189,828
Interest rate swap and cross currency swap		439,244		809,124		3,459,603		5,892,574		3,442,030		4,850,644		18,893,219		845,831		940,646
Call currency options		10,581		25,382		34,294		1,657		—		—		71,914		269		306
Put currency options		9,605		20,470		26,893		427		—		—		57,395		1,462		2,099
Total trading derivatives		9,297,174		9,406,324		21,605,156		19,423,917		10,160,318		15,057,734		84,950,623		2,566,942		2,770,065
Total		9,297,174		9,406,324		21,769,486		19,600,873		10,374,129		15,754,633		86,202,619		2,618,004		2,841,756

30

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

10. Derivative Instruments and Accounting Hedges, continued:

(b) Fair value Hedges:

The Bank uses cross-currency swaps and interest rate swaps to hedge its exposure to changes in the fair value of the hedged elements attributable to interest rates in financial instruments or loans. The aforementioned hedge instruments change the effective cost of long-term assets from a fixed interest rate to a floating rate, decreasing the duration and modifying the sensitivity to the shortest segments of the curve.

Below is a detail of the hedged elements and instruments under fair value hedges as of June 30, 2021 and December 31, 2020:

	June		December
	2021		2020
	MCh$		MCh$
Hedge element
Commercial loans		3,428		5,031
Corporate bonds		2,672		29,508
Hedge instrument
Cross currency swap		3,428		5,031
Interest rate swap		2,672		29,508

(c) Cash flow Hedges:

(c.1) The Bank uses cross currency swaps to hedge the risk from variability of cash flows attributable to changes in the interest rates and foreign exchange of foreign banks obligations and bonds issued abroad in US Dollars, Hong Kong dollars, Swiss Franc, Japanese Yens, Peruvian Sol, Australian Dollars, Euros and Norwegian kroner. The cash flows of the cross currency swaps equal the cash flows of the hedged items, which modify uncertain cash flows to known cash flows derived from a fixed interest rate.

Additionally, these cross currency swap contracts used to hedge the risk from variability of the Unidad de Fomento (“CLF”) in assets flows denominated in CLF until a nominal amount equal to the portion notional of the hedging instrument CLF, whose readjustment daily impact the item “Interest Revenue” of the Income Financial Statements.

31

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

10. Derivative Instruments and Accounting Hedges, continued:

(c) Cash flow Hedges, continued:

(c.2) Below are the cash flows from bonds issued abroad objects of this hedge and the cash flows of the asset part of the derivative instrument:

	Up to 1 month						Over 1 month and up to 3 months						Over 3 months and up to 12 months						Over 1 year and up to 3 years						Over 3 years and up to 5 years						Over 5 years						Total
	June			December			June			December			June			December			June			December			June			December			June			December			June			December
	2021			2020			2021			2020			2021			2020			2021			2020			2021			2020			2021			2020			2021			2020
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Hedge element
Outflows:
Corporate Bond EUR		—			—			—			—			(1,466	)		(1,473	)		(2,932	)		(2,946	)		(43,826	)		(44,037	)		(50,834	)		(51,871	)		(99,058	)		(100,327	)
Corporate Bond HKD		(1,020	)		—			(4,821	)		—			(7,903	)		(13,352	)		(91,518	)		(90,988	)		(80,666	)		(78,369	)		(277,806	)		(269,894	)		(463,734	)		(452,603	)
Corporate Bond PEN		—			—			(749	)		(775	)		(749	)		(775	)		(2,996	)		(3,098	)		(2,996	)		(3,098	)		(39,360	)		(41,484	)		(46,850	)		(49,230	)
Corporate Bond CHF		—			—			—			—			(815	)		(829	)		(92,816	)		(94,332	)		(119,234	)		(121,182	)		—			—			(212,865	)		(216,343	)
Corporate Bond USD		—			—			—			—			(1,562	)		(1,515	)		(3,124	)		(3,030	)		(3,124	)		(3,030	)		(40,605	)		(40,140	)		(48,415	)		(47,715	)
Obligation USD		(209	)		(202	)		(79	)		(76	)		(161,769	)		(157,455	)		—			—			—			—			—			—			(162,057	)		(157,733	)
Corporate Bond JPY		—			—			—			—			(35,058	)		(2,115	)		(3,329	)		(38,110	)		(3,329	)		(3,472	)		(182,646	)		(191,351	)		(224,362	)		(235,048	)
Corporate Bond AUD		—			—			(2,488	)		(970	)		(2,441	)		(3,928	)		(9,862	)		(9,796	)		(9,860	)		(9,799	)		(207,356	)		(206,991	)		(232,007	)		(231,484	)
Corporate Bond NOK		—			—			—			—			(2,330	)		(2,275	)		(4,659	)		(4,550	)		(4,659	)		(4,550	)		(73,218	)		(71,491	)		(84,866	)		(82,866	)
Hedge instrument
Inflows:
Cross Currency Swap EUR		—			—			—			—			1,466			1,473			2,932			2,946			43,826			44,037			50,834			51,871			99,058			100,327
Cross Currency Swap HKD		1,020			—			4,821			—			7,903			13,352			91,518			90,988			80,666			78,369			277,806			269,894			463,734			452,603
Cross Currency Swap PEN		—			—			749			775			749			775			2,996			3,098			2,996			3,098			39,360			41,484			46,850			49,230
Cross Currency Swap CHF		—			—			—			—			815			829			92,816			94,332			119,234			121,182			—			—			212,865			216,343
Cross Currency Swap USD		—			—			—			—			1,562			1,515			3,124			3,030			3,124			3,030			40,605			40,140			48,415			47,715
Cross Currency Swap USD		209			202			79			76			161,769			157,455			—			—			—			—			—			—			162,057			157,733
Cross Currency Swap JPY		—			—			—			—			35,058			2,115			3,329			38,110			3,329			3,472			182,646			191,351			224,362			235,048
Cross Currency Swap AUD		—			—			2,488			970			2,441			3,928			9,862			9,796			9,860			9,799			207,356			206,991			232,007			231,484
Cross Currency Swap NOK		—			—			—			—			2,330			2,275			4,659			4,550			4,659			4,550			73,218			71,491			84,866			82,866
Net cash flows		—			—			—			—			—			—			—			—			—			—			—			—			—			—

32

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

10. Derivative Instruments and Accounting Hedges, continued:

(c) Cash flow Hedges, continued:

(c.2) Below are the cash flows from underlying assets and the cash flows of the liability part of the derivative instrument:

	Up to 1 month						Over 1 month and up to 3 months						Over 3 months and up to 12 months						Over 1 year and up to 3 years						Over 3 years and up to 5 years						Over 5 years						Total
	June			December			June			December			June			December			June			December			June			December			June			December			June			December
	2021			2020			2021			2020			2021			2020			2021			2020			2021			2020			2021			2020			2021			2020
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Hedge element
Inflows:
Cash flows in CLF		161			160			4,089			280			220,295			186,116			181,178			213,673			249,719			246,244			754,671			741,654			1,410,113			1,388,127
Hedge instrument
Outflows:
Cross Currency Swap HKD		(161	)		(160	)		(3,565	)		—			(5,656	)		(9,035	)		(72,472	)		(72,728	)		(77,746	)		(76,073	)		(210,894	)		(206,514	)		(370,494	)		(364,510	)
Cross Currency Swap PEN		—			—			(50	)		(48	)		(49	)		(49	)		(198	)		(194	)		(198	)		(194	)		(32,619	)		(31,965	)		(33,114	)		(32,450	)
Cross Currency Swap JPY		—			—			—			—			(38,516	)		(4,195	)		(6,741	)		(40,526	)		(6,732	)		(6,596	)		(204,619	)		(201,852	)		(256,608	)		(253,169	)
Cross Currency Swap USD		—			—			—			—			(168,943	)		(165,634	)		(1,342	)		(1,311	)		(1,344	)		(1,317	)		(38,076	)		(37,584	)		(209,705	)		(205,846	)
Cross Currency Swap CHF		—			—			—			—			(4,023	)		(3,929	)		(93,270	)		(91,923	)		(115,590	)		(114,409	)		—			—			(212,883	)		(210,261	)
Cross Currency Swap EUR		—			—			—			—			(1,954	)		(1,912	)		(3,894	)		(3,805	)		(44,851	)		(44,464	)		(46,053	)		(45,439	)		(96,752	)		(95,620	)
Cross Currency Swap AUD		—			—			(474	)		(232	)		(517	)		(738	)		(1,984	)		(1,939	)		(1,983	)		(1,942	)		(155,692	)		(152,709	)		(160,650	)		(157,560	)
Cross Currency Swap NOK		—			—			—			—			(637	)		(624	)		(1,277	)		(1,247	)		(1,275	)		(1,249	)		(66,718	)		(65,591	)		(69,907	)		(68,711	)
Net cash flows		—			—			—			—			—			—			—			—			—			—			—			—			—			—

33

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

10. Derivative Instruments and Accounting Hedges, continued:

(c) Cash flow Hedges, continued:

With respect to CLF assets hedged; these are revalued monthly according to the variation of the UF, which is equivalent to monthly reinvest the assets until maturity of the relationship hedging.

(c.3) The unrealized results generated during the period 2021 by those derivative contracts that conform the hedging instruments in this cash flow hedging strategy, have been recorded with credit to equity amounting to Ch$82,373 million (charge to equity of Ch$45,119 million in June 30, 2020). The net effect of taxes credit to equity amounts to Ch$60,133 million (net charge to equity of Ch$32,937 million equity during the period June 2020).

The accumulated balance for this concept as of June 30, 2021 corresponds to a credit in equity amounted to Ch$11,691 million (charge to equity of Ch$70,682 million as of December 2020).

(c.4) The effect of the cash flow hedging derivatives that offset the result of the hedged instruments corresponds to a charge to income of Ch$18,802 million during the period 2021 (credit to results for Ch$107,463 million during the period June 2020).

(c.5) As of June 30, 2021 and 2020, it not exist inefficiency in cash flow hedge, because both, hedge item and hedge instruments, are mirrors of each other, it means that all variation of value attributable to rate and revaluation components are netted totally.

(c.6) As of June 30, 2021 and 2020, the Bank does not have hedges of net investments in foreign business.

34

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

11. Loans and Advances to Banks, net:

(a) At the end of each reporting period, the balances presented in the item “Loans and advances to Banks” are as follows:

	June			December
	2021			2020
	MCh$			MCh$
Domestic Banks
Interbank loans of liquidity		—			260,002
Provisions for loans to domestic banks		—			(140	)
Subtotal		—			259,862
Foreign Banks
Interbank loans commercial		157,965			185,858
Credits with third countries		—			167
Chilean exports trade loans		89,449			113,596
Provisions for loans to foreign banks		(419	)		(525	)
Subtotal		246,995			299,096
Central Bank of Chile
Central Bank deposits		3,200,000			2,380,033
Other Central Bank credits		—			—
Subtotal		3,200,000			2,380,033
Total		3,446,995			2,938,991

(b) The changes in provisions of the credits owed by the banks, during the periods 2021 and 2020, are summarized as follows:

	Bank’s Location
Detail	Chile			Abroad			Total
	MCh$			MCh$			MCh$
Balance as of January 1, 2020		54			704			758
Provisions established		—			—			—
Provisions released		(54	)		(234	)		(288	)
Balance as of June 30, 2020		—			470			470
Provisions established		140			55			195
Provisions released		—			—			—
Balance as of December 31, 2020		140			525			665
Provisions established		—			—			—
Provisions released		(140	)		(106	)		(246	)
Balance as of June 30, 2021		—			419			419

35

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

12. Loans to Customers, net:

(a.i) Loans to Customers:

As of June 30, 2020 and December 31, 2020, the portfolio of loans is composed as follows:

	As of June 30, 2021
	Assets before allowances								Allowances established
	Normal Portfolio		Substandard Portfolio		Non-Complying Portfolio		Total		Individual Provisions			Group Provisions			Total			Net assets
	MCh$		MCh$		MCh$		MCh$		MCh$			MCh$			MCh$			MCh$
Commercial loans
Commercial loans		14,454,959		131,822		393,711		14,980,492		(182,911	)		(144,197	)		(327,108	)		14,653,384
Foreign trade loans		1,169,329		13,682		19,065		1,202,076		(37,425	)		(2,432	)		(39,857	)		1,162,219
Current account debtors		116,146		3,533		2,403		122,082		(2,395	)		(6,346	)		(8,741	)		113,341
Factoring transactions		447,578		2,531		466		450,575		(9,857	)		(806	)		(10,663	)		439,912
Student loans		54,924		—		2,547		57,471		—			(4,309	)		(4,309	)		53,162
Commercial lease transactions (1)		1,511,013		44,157		26,589		1,581,759		(6,734	)		(5,423	)		(12,157	)		1,569,602
Other loans and accounts receivable		99,354		469		15,231		115,054		(6,863	)		(5,891	)		(12,754	)		102,300
Subtotal		17,853,303		196,194		460,012		18,509,509		(246,185	)		(169,404	)		(415,589	)		18,093,920
Mortgage loans
Letters of credit		7,235		—		435		7,670		—			(35	)		(35	)		7,635
Endorsable mortgage loans		19,763		—		859		20,622		—			(61	)		(61	)		20,561
Other residential lending		9,411,387		—		278,088		9,689,475		—			(30,711	)		(30,711	)		9,658,764
Credit from ANAP		1		—		—		1		—			—			—			1
Residential lease transactions		—		—		—		—		—			—			—			—
Other loans and accounts receivable		144,732		—		9,240		153,972		—			(1,239	)		(1,239	)		152,733
Subtotal		9,583,118		—		288,622		9,871,740		—			(32,046	)		(32,046	)		9,839,694
Consumer loans
Consumer loans in installments		2,479,087		—		229,210		2,708,297		—			(195,029	)		(195,029	)		2,513,268
Current account debtors		139,392		—		4,019		143,411		—			(8,451	)		(8,451	)		134,960
Credit card debtors		1,009,720		—		20,905		1,030,625		—			(35,851	)		(35,851	)		994,774
Consumer lease transactions (1)		441		—		—		441		—			(5	)		(5	)		436
Other loans and accounts receivable		7		—		716		723		—			(498	)		(498	)		225
Subtotal		3,628,647		—		254,850		3,883,497		—			(239,834	)		(239,834	)		3,643,663
Total		31,065,068		196,194		1,003,484		32,264,746		(246,185	)		(441,284	)		(687,469	)		31,577,277

(1) In this item, the Bank finances its clients the acquisition of real estate and chattels through financial lease agreements. As of June 30, 2021 Ch$798,787 million correspond to finance leases on real estate and Ch$783,413 million correspond to finance leases on chattels.

36

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

12. Loans to Customers net, continued:

(a.i) Loans to Customers, continued:

	As of December 31, 2020
	Assets before allowances								Allowances established
	Normal Portfolio		Substandard Portfolio		Non-Complying Portfolio		Total		Individual Provisions			Group Provisions			Total			Net assets
	MCh$		MCh$		MCh$		MCh$		MCh$			MCh$			MCh$			MCh$
Commercial loans
Commercial loans		13,818,088		136,072		438,535		14,392,695		(197,777	)		(139,718	)		(337,495	)		14,055,200
Foreign trade loans		941,825		7,347		17,791		966,963		(33,441	)		(2,374	)		(35,815	)		931,148
Current account debtors		111,888		3,617		4,973		120,478		(2,789	)		(6,762	)		(9,551	)		110,927
Factoring transactions		369,656		3,617		601		373,874		(8,512	)		(837	)		(9,349	)		364,525
Student loans		55,058		—		2,449		57,507		—			(4,201	)		(4,201	)		53,306
Commercial lease transactions (1)		1,513,776		44,968		33,348		1,592,092		(7,504	)		(6,169	)		(13,673	)		1,578,419
Other loans and accounts receivable		72,769		455		16,206		89,430		(6,892	)		(6,319	)		(13,211	)		76,219
Subtotal		16,883,060		196,076		513,903		17,593,039		(256,915	)		(166,380	)		(423,295	)		17,169,744
Mortgage loans
Letters of credit		8,646		—		692		9,338		—			(44	)		(44	)		9,294
Endorsable mortgage loans		22,885		—		1,220		24,105		—			(81	)		(81	)		24,024
Other residential lending		8,894,326		—		305,815		9,200,141		—			(32,427	)		(32,427	)		9,167,714
Credit from ANAP		2		—		—		2		—			—			—			2
Residential lease transactions		—		—		—		—		—			—			—			—
Other loans and accounts receivable		146,174		—		8,894		155,068		—			(1,212	)		(1,212	)		153,856
Subtotal		9,072,033		—		316,621		9,388,654		—			(33,764	)		(33,764	)		9,354,890
Consumer loans
Consumer loans in installments		2,418,658		—		299,469		2,718,127		—			(236,408	)		(236,408	)		2,481,719
Current account debtors		153,855		—		4,869		158,724		—			(10,186	)		(10,186	)		148,538
Credit card debtors		1,052,342		—		25,103		1,077,445		—			(42,789	)		(42,789	)		1,034,656
Consumer lease transactions (1)		302		—		—		302		—			(3	)		(3	)		299
Other loans and accounts receivable		10		—		667		677		—			(465	)		(465	)		212
Subtotal		3,625,167		—		330,108		3,955,275		—			(289,851	)		(289,851	)		3,665,424
Total		29,580,260		196,076		1,160,632		30,936,968		(256,915	)		(489,995	)		(746,910	)		30,190,058

(1) In this item, the Bank finances its clients the acquisition of real estate and chattels through financial lease agreements. As of December 31, 2020 Ch$802,828 million correspond to finance leases on real estate and Ch$789,566 million correspond to finance leases on chattels.

37

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

12. Loans to Customers, net, continued:

(a.ii) Impaired Portfolio:

As of June 30, 2021 and December 31, 2020, the Bank presents the following details of normal and impaired portfolio:

	Assets before Allowances												Allowances established
	Normal Portfolio				Impaired Portfolio				Total				Individual Provisions						Group Provisions						Total						Net assets
	June		December		June		December		June		December		June			December			June			December			June			December			June		December
	2021		2020		2021		2020		2021		2020		2021			2020			2021			2020			2021			2020			2021		2020
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$		MCh$
Commercial loans		18,009,963		17,039,307		499,546		553,732		18,509,509		17,593,039		(246,185	)		(256,915	)		(169,404	)		(166,380	)		(415,589	)		(423,295	)		18,093,920		17,169,744
Mortgage loans		9,583,118		9,072,033		288,622		316,621		9,871,740		9,388,654		—			—			(32,046	)		(33,764	)		(32,046	)		(33,764	)		9,839,694		9,354,890
Consumer loans		3,628,647		3,625,167		254,850		330,108		3,883,497		3,955,275		—			—			(239,834	)		(289,851	)		(239,834	)		(289,851	)		3,643,663		3,665,424
Total		31,221,728		29,736,507		1,043,018		1,200,461		32,264,746		30,936,968		(246,185	)		(256,915	)		(441,284	)		(489,995	)		(687,469	)		(746,910	)		31,577,277		30,190,058

38

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

12. Loans to Customers, continued:

(b) Credit risk provisions:

The changes in credits risk provisions, during the period 2021 and 2020, are summarized as follows:

	Commercial						Mortgage			Consumer
	Individual			Group			Group			Group			Total
	MCh$			MCh$			MCh$			MCh$			MCh$
Balance as of January 1, 2020		176,942			150,831			28,047			329,598			685,418
Charge-offs		(6,243	)		(25,070	)		(3,763	)		(171,557	)		(206,633	)
Sales or transfers of credits		(186	)		—			—			—			(186	)
Allowances established		54,342			26,249			2,307			117,777			200,675
Allowances released		—			—			—			—			—
Balance as of June 30, 2020		224,855			152,010			26,591			275,818			679,274
Charge-offs		(4,586	)		(28,247	)		(5,115	)		(71,979	)		(109,927	)
Sales or transfers of credits		(145	)		—			—			—			(145	)
Allowances established		36,791			42,617			12,288			86,012			177,708
Allowances released		—			—			—			—			—
Balance as of December 31, 2020		256,915			166,380			33,764			289,851			746,910
Charge-offs		(6,105	)		(28,816	)		(5,053	)		(78,410	)		(118,384	)
Sales or transfers of credits		(14,457	)		—			—			—			(14,457	)
Allowances established		9,832			31,840			3,335			28,393			73,400
Allowances released		—			—			—			—			—
Balance as of June 30, 2021		246,185			169,404			32,046			239,834			687,469

In addition to these credit risk provisions, also provisions are maintained for country risk to cover foreign operations and additional loan provisions agreed upon by the Board of Directors, which are presented in liabilities under the item Provisions (see Note No. 24).

Other disclosures:

1. As of June 30, 2021, the Bank and its subsidiaries have made sales of loan portfolios. The effect in income is no more than 5% of net income before taxes, as described in Note No. 12 letter (e).

2. As of June 30, 2021, the Bank and its subsidiaries derecognized 100% of its portfolio of loans sold and on which all or substantially all of the risks and benefits associated to these financial assets have been transferred (see Note No. 12 letter (e)).

3. As of June 30, 2021 and December 31, 2020, under the Commercial Loans item, operations are maintained that guarantee obligations maintained with the Central Bank of Chile as part of the Loan Increase Conditional Credit Facility (FCIC by its Spanish initials) program for an approximate amount of Ch$2,198,879 million (Ch$2,021,688 million in December 2020).

39

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

12. Loans to Customers, continued:

(c) Finance lease contracts:

The cash flows to be received by the Bank from finance lease contracts have the following maturities:

	Total receivable				Unearned income						Net balance receivable (*)
	June		December		June			December			June		December
	2021		2020		2021			2020			2021		2020
	MCh$		MCh$		MCh$			MCh$			MCh$		MCh$
Within one year		511,988		521,445		(50,609	)		(52,438	)		461,379		469,007
From 1 to 2 years		373,074		373,304		(36,649	)		(37,958	)		336,425		335,346
From 2 to 3 years		251,028		245,667		(24,010	)		(25,084	)		227,018		220,583
From 3 to 4 years		161,472		161,492		(16,512	)		(17,433	)		144,960		144,059
From 4 to 5 years		114,350		110,743		(11,989	)		(12,841	)		102,361		97,902
After 5 years		330,761		350,679		(25,578	)		(28,994	)		305,183		321,685
Total		1,742,673		1,763,330		(165,347	)		(174,748	)		1,577,326		1,588,582

(*) The net balance receivable does not include past-due portfolio totaling Ch$4,874 million as of June 30, 2021 (Ch$3,812 million as of December 2020).

The Bank maintains financial lease operations associated with real estate, industrial machinery, vehicles and transportation equipment. These leases contracts have an average term between 2 and 15 years.

40

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

12. Loans to Customers, continued:

(d) Purchase of loan portfolio:

During the period ended June 30, 2021 and the year ended 2020 no portfolio purchases were made.

(e) Sale or transfer of loans from the loan portfolio:

During the period 2021 and 2020 there have been operations of sale or transfer of the loan portfolio according to the following:

	As of June 30, 2021
	Carrying amount		Allowances			Sale price		Effect on income (loss) gain (*)
	MCh$		MCh$			MCh$		MCh$
Sale of current loans		16,327		(14,457	)		6,537		4,667
Sale of written – off loans		—		—			—		—
Total		16,327		(14,457	)		6,537		4,667

	As of June 30, 2020
	Carrying amount		Allowances			Sale price		Effect on income (loss) gain (*)
	MCh$		MCh$			MCh$		MCh$
Sale of current loans		43,804		(186	)		43,804		186
Sale of written – off loans		—		—			—		—
Total		43,804		(186	)		43,804		186

(*) See Note No. 30.

(f) Securitization of own assets:

During the period 2021 and the year 2020, there is no securitization transactions executed involving its own assets.

41

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

13. Investment Securities:

As of June 30, 2021 and December 31, 2020, investment securities classified as available-for-sale and held-to-maturity are detailed as follows:

	June 2021						December 2020
	Available- for-sale		Held-to- maturity		Total		Available- for -sale		Held-to- maturity		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Instruments issued by the Chilean Government and Central Bank of Chile
Bonds issued by the Central Bank of Chile		105		—		105		109		—		109
Promissory notes issued by the Central Bank of Chile		—		—		—		—		—		—
Other instruments of the Chilean Government and the Central Bank of Chile		1,405,893		127,770		1,533,663		163,491		—		163,491
Other instruments issued in Chile
Deposit promissory notes from domestics banks		—		—		—		—		—		—
Mortgage bonds from domestic banks		120,376		—		120,376		128,763		—		128,763
Bonds from domestic banks		4,295		—		4,295		15,887		—		15,887
Deposits from domestic banks		806,734		—		806,734		685,392		—		685,392
Bonds from other Chilean companies		23,514		—		23,514		34,539		—		34,539
Promissory notes issued by other Chilean companies		—		—		—		—		—		—
Other instruments issued in Chile		3,411		—		3,411		32,342		—		32,342
Instruments issued Abroad
Instruments from foreign governments or Central Banks		—		—		—		—		—		—
Other instruments		—		—		—		—		—		—
Total		2,364,328		127,770		2,492,098		1,060,523		—		1,060,523

42

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

13. Investment Securities, continued:

Instruments of the Government and the Central Bank of Chile include instruments sold under repurchase agreements to clients and financial institutions for an amount of Ch$3,713 million in June 30, 2021 (Ch$13,268 million in December 2020). The repurchase agreements have an average maturity of 5 days in June 2021 (5 days in December 2020). Additionally, instruments given as collateral are classified as part of the Loan Increase Conditional Credit Facility program (FCIC by its Spanish initials) granted by the Central Bank of Chile for an approximate amount of Ch$842,646 million as of June 30, 2021.

Under the same item, instruments that guarantee margins for cleared derivatives transactions are classified through Comder Contraparte Central S.A. for an amount of Ch$20,887 million as of June 30, 2021 (Ch$36,146 million as of December 31, 2020).

Under Instruments of Other National Institutions are classified instruments delivered as collateral as part of the Loan Increase Conditional Credit Facility program (FCIC by its Spanish initials) granted by the Central Bank of Chile for an approximate amount of Ch$581,360 as of June 30, 2021 (Ch$350,154 million as of December 31, 2020).

As of June 30, 2021, the portfolio of financial assets available-for-sale includes an accumulated unrealized loss of Ch$47,463 million (accumulated unrealized gain of Ch$801 million in December 2020), recorded as an equity valuation adjustment.

During the periods 2021 and 2020, there is no evidence of impairment of financial assets.

Gross profits and losses realized on the sale of available-for-sale investments as of June 30, 2021 and 2020 are shown in Note No. 30 “Net Financial Operating Income”. The changes on results at the end of each period are as fallow:

	June			June
	2021			2020
	MCh$			MCh$
Unrealized (losses) gains		(44,361	)		18,296
Realized gains reclassified to income		(3,903	)		(12,434	)
Subtotal		(48,264	)		5,862
Income tax on other comprehensive income		13,033			(1,581	)
Net effect in equity		(35,231	)		4,281

43

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

14. Investments in Other Companies:

(a) Investments in other companies include investments of Ch$43,588 million as of June 30, 2021 (Ch$44,649 million as of December 31, 2020), as follows:

										Investment
		Ownership Interest				Equity				Assets				Income
		June		December		June		December		June		December		June			June
Company	Shareholder	2021		2020		2021		2020		2021		2020		2021			2020
		%		%		MCh$		MCh$		MCh$		MCh$		MCh$			MCh$
Associates
Transbank S.A. (*)	Banco de Chile		26.94		26.16		52,971		67,337		15,970		17,613		(4,258	)		638
Administrador Financiero del Transantiago S.A.	Banco de Chile		20.00		20.00		18,382		19,171		3,677		3,951		114			185
Redbanc S.A.	Banco de Chile		38.13		38.13		9,242		8,663		3,525		3,307		221			(288	)
Centro de Compensación Automatizado S.A.	Banco de Chile		33.33		33.33		9,624		8,182		3,208		2,787		421			159
Soc. Operadora de Tarjetas de Crédito Nexus S.A.	Banco de Chile		29.63		29.63		10,660		8,626		3,158		2,556		603			315
Sociedad Interbancaria de Depósitos de Valores S.A.	Banco de Chile		26.81		26.81		6,025		5,526		1,615		1,564		143			115
Sociedad Imerc OTC S.A.	Banco de Chile		12.33		12.33		12,158		12,248		1,499		1,510		(10	)		(10	)
Sociedad Operadora de la Cámara de Compensación de Pagos de Alto Valor S.A.	Banco de Chile		15.00		15.00		6,614		6,436		992		980		23			20
Subtotal Associates							125,676		136,189		33,644		34,268		(2,743	)		1,134
Joint Ventures
Servipag Ltda.	Banco de Chile		50.00		50.00		13,235		13,268		6,618		6,631		(16	)		(122	)
Artikos Chile S.A.	Banco de Chile		50.00		50.00		2,169		2,547		1,085		1,439		245			241
Subtotal Joint Ventures							15,404		15,815		7,703		8,070		229			119
Subtotal							141,080		152,004		41,347		42,338		(2,514	)		1,253
Investments valued at cost (1)
Bolsa de Comercio de Santiago S.A.	Banchile Corredores de Bolsa										1,646		1,646		306			280
Banco Latinoamericano de Comercio Exterior S.A. (Bladex)	Banco de Chile										309		309		21			32
Bolsa Electrónica de Chile S.A.	Banchile Corredores de Bolsa										257		257		—			9
Sociedad de Telecomunicaciones Financieras Interbancarias Mundiales (Swift)	Banco de Chile										21		91		—			—
CCLV Contraparte Central S.A.	Banchile Corredores de Bolsa										8		8		1			1
Subtotal											2,241		2,311		328			322
Total											43,588		44,649		(2,186	)		1,575

(1) Income from investments valorized at cost, corresponds to income recognized on cash basis (dividends).

(*) On April 22, 2021, the Extraordinary Shareholders' Meeting of the company unanimously approved a capital increase in the amount of Ch$30,000 million through the issuance of 152,905,194 payment shares. As of June 30, 2021, Banco de Chile has subscribed and paid 13,331,502 shares equivalent to Ch$2,616 million.

44

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

14. Investments in Other Companies, continued:

(b) The change of investments in companies registered under the equity method in the periods of 2021 and 2020, are as follows:

	June			June
	2021			2020
	MCh$			MCh$
Initial book value		42,338			48,442
Acquisition of investments in companies		2,616			—
Participation on income in companies with significant influence and joint control		(2,514	)		1,253
Dividends received		(1,097	)		(751	)
Others		4			4
Total		41,347			48,948

(c) During the period ended as of June 30, 2021 and 2020 no impairment has incurred in these investments.

45

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

15. Intangible Assets:

(a) As of June 30, 2021 and December 31, 2020 intangible assets are composed as follows:

	Useful Life				Average remaining amortization				Gross balance				Accumulated Amortization						Net balance
	June		December		June		December		June		December		June			December			June		December
	2021		2020		2021		2020		2021		2020		2021			2020			2021		2020
	Years		Years		Years		Years		MCh$		MCh$		MCh$			MCh$			MCh$		MCh$
Other Intangible Assets:
Software or computer programs		6		6		4		4		195,035		180,669		(128,237	)		(119,968	)		66,798		60,701
Total										195,035		180,669		(128,237	)		(119,968	)		66,798		60,701

46

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

15. Intangible Assets, continued:

(b) The change of intangible assets as of June 30, 2021 and December 31, 2020 are as follows:

	Software or computer programs
	June			December
	2021			2020
	MCh$			MCh$
Gross Balance
Balance as of January 1,		180,669			163,485
Acquisition		14,689			18,631
Disposals/ write-downs		(352	)		(387	)
Reclassification		29			(16	)
Impairment		—			(1,044	)
Total		195,035			180,669
Accumulated Amortization
Balance as of January 1,		(119,968	)		(105,178	)
Amortization for the period (*)		(8,343	)		(15,865	)
Disposals/ write-downs		352			660
Reclassification		(278	)		—
Impairment (*)		—			415
Total		(128,237	)		(119,968	)
Balance Net		66,798			60,701

(*) See Note No. 35 Depreciation, amortization and impairment.

(c) As of June 30, 2021 and December 31, 2020, the Bank maintains the following amounts with technological developments:

Detail	Commitment Amount
	June		December
	2021		2020
	MCh$		MCh$
Software and licenses		7,251		3,830

47

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

16. Fixed assets, leased assets and lease liabilities:

(a) The properties and equipment as of June 30, 2021 and December 31, 2020 are composed as follows:

	Useful Life				Average remaining depreciation				Gross balance				Accumulated Depreciation						Net balance
	June		December		June		December		June		December		June			December			June		December
	2021		2020		2021		2020		2021		2020		2021			2020			2021		2020
	Years		Years		Years		Years		MCh$		MCh$		MCh$			MCh$			MCh$		MCh$
Type of property and equipment:
Land and Buildings		26		26		20		20		310,110		304,951		(146,748	)		(142,543	)		163,362		162,408
Equipment		5		5		4		4		233,111		222,624		(183,132	)		(175,141	)		49,979		47,483
Others		7		7		4		4		56,903		55,898		(48,948	)		(47,861	)		7,955		8,037
Total										600,124		583,473		(378,828	)		(365,545	)		221,296		217,928

48

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

16. Fixed assets, leased assets and lease liabilities, continued:

(b) The changes in properties and equipment as of June 30, 2021 and December 31, 2020 are as follows:

	June 2021
	Land and Buildings			Equipment			Others			Total
	MCh$			MCh$			MCh$			MCh$
Gross Balance
Balance as of January 1, 2021		304,951			222,624			55,898			583,473
Additions		5,378			11,009			1,510			17,897
Write-downs and sales of the period		(219	)		(522	)		(502	)		(1,243	)
Impairment (*)		—			—			(3	)		(3	)
Total		310,110			233,111			56,903			600,124
Accumulated Depreciation
Balance as of January 1, 2021		(142,543	)		(175,141	)		(47,861	)		(365,545	)
Depreciation charges of the period (*) (**)		(4,378	)		(8,512	)		(1,587	)		(14,477	)
Write-downs and sales of the period		173			521			500			1,194
Impairment		—			—			—			—
Total		(146,748	)		(183,132	)		(48,948	)		(378,828	)
Balance as of June 30, 2021		163,362			49,979			7,955			221,296

	2020
	Land and Buildings			Equipment			Others			Total
	MCh$			MCh$			MCh$			MCh$
Gross Balance
Balance as of January 1, 2020		301,619			207,605			55,519			564,743
Additions		6,303			20,658			1,510			28,471
Write-downs and sales of the year		(2,903	)		(5,606	)		(1,105	)		(9,614	)
Impairment (***)		(68	)		(33	)		(26	)		(127	)
Total		304,951			222,624			55,898			583,473
Accumulated Depreciation
Balance as of January 1, 2020		(136,394	)		(162,560	)		(45,527	)		(344,481	)
Depreciation charges of the year (**)		(8,844	)		(17,273	)		(3,371	)		(29,488	)
Write-downs and sales of the year		2,695			4,692			1,025			8,412
Impairment (***)		—			—			12			12
Total		(142,543	)		(175,141	)		(47,861	)		(365,545	)
Balance as of December 31, 2020		162,408			47,483			8,037			217,928

(*) See Note No.35 Depreciation, Amortization and Impairment.

(**) This amount does not include the depreciation of the year of the Investment Properties, amount is included in "Other Assets" for Ch$178 million (Ch$357 million as of December 2020).

(***) As of December 31, 2020 does not include charge-offs of Property and Equipment of Ch$916 million.

49

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

16. Fixed assets, leased assets and lease liabilities, continued:

(c) The composition of the rights over leased assets as of June 30, 2021 and December 31, 2020 is as follows:

	Gross Balance				Accumulated Depreciation						Net Balance
	June		December		June			December			June		December
	2021		2020		2021			2020			2021		2020
	MCh$		MCh$		MCh$			MCh$			MCh$		MCh$
Categories
Buildings		127,730		123,215		(42,234	)		(33,560	)		85,496		89,655
Floor space for ATMs		42,549		40,445		(21,365	)		(16,496	)		21,184		23,949
Improvements to leased properties		27,189		26,579		(21,702	)		(21,354	)		5,487		5,225
Total		197,468		190,239		(85,301	)		(71,410	)		112,167		118,829

(d) The changes of the rights over leased assets as of June 30, 2021 and December 31, 2020 is as follows:

	June 2021
	Buildings			Floor space for ATMs			Improvements to leased properties			Total
	MCh$			MCh$			MCh$			MCh$
Gross Balance
Balance as of January 1, 2021		123,215			40,445			26,579			190,239
Additions		5,092			2,318			705			8,115
Write-downs		(577	)		(214	)		(95	)		(886	)
Total		127,730			42,549			27,189			197,468
Accumulated Depreciation
Balance as of January 1, 2021		(33,560	)		(16,496	)		(21,354	)		(71,410	)
Depreciation of the period (*)		(9,251	)		(5,077	)		(442	)		(14,770	)
Write-downs		577			214			94			885
Others		—			(6	)		—			(6	)
Total		(42,234	)		(21,365	)		(21,702	)		(85,301	)
Balance as of  June 30, 2021		85,496			21,184			5,487			112,167

(*) See Note No.35 Depreciation, Amortization and Impairment.

50

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

16. Fixed assets, leased assets and lease liabilities, continued:

	December 2020
	Buildings			Floor space for ATMs			Improvements to leased properties			Total
	MCh$			MCh$			MCh$			MCh$
Gross Balance
Balance as of January 1, 2020		130,853			41,960			27,254			200,067
Additions		7,907			1,319			847			10,073
Write-downs		(15,538	)		(1,197	)		(1,522	)		(18,257	)
Remeasurement		(7	)		(1,637	)		—			(1,644	)
Total		123,215			40,445			26,579			190,239
Accumulated Depreciation
Balance as of January 1, 2020		(18,722	)		(9,091	)		(21,589	)		(49,402	)
Depreciation of the year (*)		(18,867	)		(7,774	)		(1,006	)		(27,647	)
Write-downs		4,029			369			1,241			5,639
Total		(33,560	)		(16,496	)		(21,354	)		(71,410	)
Balance as of  December 31, 2020		89,655			23,949			5,225			118,829

(*) Does not include provision for impairment of Ch$1 million.

(e) The future maturities (including unearned interest) of the lease liabilities as of June 30, 2021 and December 31, 2020 are shown below:

	June 2021
	Up to 1 month		Over 1 month and up to 3 months		Over 3 months and up to 12 months		Over 1 year and up to 3 years		Over 3 years and up to 5 years		Over 5 years		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Lease associated to:
Buildings		1,742		3,478		15,400		27,423		21,046		29,382		98,471
ATMs		892		1,753		7,755		10,906		384		411		22,101
Total		2,634		5,231		23,155		38,329		21,430		29,793		120,572

	December 2020
	Up to 1 month		Over 1 month and up to 3 months		Over 3 months and up to 12 months		Over 1 year and up to 3 years		Over 3 years and up to 5 years		Over 5 years		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Lease associated to:
Buildings		1,646		3,371		14,501		28,663		20,869		30,865		99,915
ATMs		824		1,644		7,229		14,467		419		483		25,066
Total		2,470		5,015		21,730		43,130		21,288		31,348		124,981

51

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

16. Fixed assets, leased assets and lease liabilities, continued:

The Bank and its subsidiaries maintain contracts with certain renewal options and for which there is reasonable certainty that said option shall be carried out. In such cases, the lease period used to measure the liability and assets corresponds to an estimate of future renewals.

The changes of the obligations for lease liabilities and the flows for the periods 2021 and 2020 are as follows:

	Total cash flow for the period
Lease liability	MCh$
Balances as of January 1, 2020		146,013
Liabilities for new lease agreements		1,197
Interest expenses		1,391
Payments of capital and interests		(13,852	)
Remeasurement		(1,274	)
Derecognized contracts		(3,158	)
Others		1,813
Balances as of June 30, 2020		132,130
Liabilities for new lease agreements		4,571
Interest expenses		1,141
Payments of capital and interests		(14,853	)
Remeasurement		(370	)
Derecognized contracts		(9,179	)
Others		1,577
Balances as of December 31, 2020		115,017
Liabilities for new lease agreements		4,946
Interest expenses		1,052
Payments of capital and interests		(15,294	)
Remeasurement		—
Derecognized contracts		—
Others		2,464
Balances as of June 30, 2021		108,185

(f) The future cash flows related to short-term lease agreements in effect as of June 30, 2021 correspond to Ch$5,584 million (Ch$6,814 as of December 31, 2020).

52

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

17. Current Taxes and Deferred Taxes:

(a) Current Taxes:

The Bank and its subsidiaries at the end of each period, have constituted a First Category Income Tax Provision, which was determined based on current tax regulations, and has been reflected in the Statement of Financial Position net of taxes to be recovered or payable, as applicable, as of June 30, 2021 and December 31, 2020, according to the following detail:

	June			December
	2021			2020
	MCh$			MCh$
Income tax		114,293			153,084
Less:
Monthly prepaid taxes		(89,841	)		(172,683	)
Credit for training expenses		(633	)		(1,900	)
Others		(1,116	)		(1,139	)
Total		22,703			(22,638	)
Tax rate		27	%		27	%

	June			December
	2021			2020
	MCh$			MCh$
Current tax assets		1.515			22,949
Current tax liabilities		(24.218	)		(311	)
Total tax receivable (payable), net		(22.703	)		22,638

(b) Income Tax:

The effect of the tax expense during the periods between January 1 and June 30, 2021 and 2020, are broken down as follows:

	June			June
	2021			2020
	MCh$			MCh$
Income tax expense:
Current year tax		92,053			66,939
Tax Previous year		(2,375	)		(1,269	)
Subtotal		89,678			65,670
Charge for deferred taxes:
Origin and reversal of temporary differences		(10,926	)		(4,805	)
Subtotal		(10,926	)		(4,805	)
Others		2,525			2,433
Net charge to income for income taxes		81,277			63,298

53

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

17. Current and Deferred Taxes, continued:

(c) Reconciliation of effective tax rate:

The following is a reconciliation of the income tax rate to the effective rate applied to determine the Bank’s income tax expense as of June 30, 2021 and 2020:

	June 2021						June 2020
	Tax rate						Tax rate
	%			MCh$			%			MCh$
Income tax calculated on net income before tax		27.00			109,659			27.00			84,208
Additions or deductions		0.37			1,491			(1.93	)		(6,023	)
Price-level restatement		(7.54	)		(30,618	)		(5.88	)		(18,344	)
Others		0.18			745			1.11			3,457
Effective rate and income tax expense		20.01			81,277			20.30			63,298

The effective rate for income tax for the period 2021 is 20.01% (20.30% in June 2020).

54

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

17. Current and Deferred Taxes, continued:

(d) Effect of deferred taxes on income and equity:

The Bank and its subsidiaries have recorded the effects of deferred taxes in their Interim Consolidated Financial Statements. The effects of deferred taxes on assets, liabilities and income accounts as of June 30, 2021 are detailed as follows:

	Balances as of December 31,		Effect on						Balances as of June 31,
	2020		Income			Equity			2021
	MCh$		MCh$			MCh$			MCh$
Debit Differences:
Allowances for loan losses		268,482		2,495			—			270,977
Personnel provisions		16,233		(4,071	)		—			12,162
Staff vacations provisions		9,164		396			—			9,560
Accrued interests adjustments from impaired loans		4,570		434			—			5,004
Staff severance indemnities provision		537		(9	)		(100	)		428
Provision of credit cards expenses		7,959		673			—			8,632
Provision of accrued expenses		14,083		(783	)		—			13,300
Adjustment for valuation of financial assets available-for-sale		—		—			12,810			12,810
Leasing		28,835		10,719			—			39,554
Incomes received in advance		16,088		(1,917	)		—			14,171
Other adjustments		26,905		6,746			—			33,651
Total Debit Differences		392,856		14,683			12,710			420,249
Credit Differences:
Depreciation and price-level restatement of property and equipment		17,256		162			—			17,418
Adjustment for valuation of financial assets available-for-sale		223		—			(223	)		—
Transitory assets		5,378		3,465			—			8,843
Loans accrued to effective rate		2,779		(202	)		—			2,577
Prepaid expenses		2,234		5,359			—			7,593
Other adjustments		7,041		(5,027	)		—			2,014
Total Credit Differences		34,911		3,757			(223	)		38,445
Total, Net		357,945		10,926			12,933			381,804

55

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

17. Current and Deferred Taxes, continued:

(d) Effect of deferred taxes on income and equity, continued:

The effects of deferred taxes on assets, liabilities and income accounts as of June 30, 2020 and December 31, 2020 are detailed as follows:

	Balance as of December 31,		Effect on						Balance as of June 30,		Effect on						Balance as of December 31,
	2019		Income			Equity			2020		Income			Equity			2020
	MCh$		MCh$			MCh$			MCh$		MCh$			MCh$			MCh$
Debit differences:
Allowances for loan losses		221,079		19,712			—			240,791		27,691			—			268,482
Personnel provisions		16,714		(5,231	)		—			11,483		4,750			—			16,233
Staff vacations provisions		7,444		304			—			7,748		1,416			—			9,164
Accrued interest adjustments from impaired loans		3,674		522			—			4,196		374			—			4,570
Staff severance indemnities provision		607		(63	)		25			569		(32	)		—			537
Provisions of credit card expenses		8,221		533			—			8,754		(795	)		—			7,959
Provisions of accrued expenses		10,564		1,920			—			12,484		1,599			—			14,083
Leasing		41,792		(2,708	)		—			39,084		(10,249	)		—			28,835
Incomes received in advance		32,170		(10,780	)		—			21,390		(5,302	)		—			16,088
Other adjustments		15,485		666			—			16,151		10,754			—			26,905
Total Debit Differences		357,750		4,875			25			362,650		30,206			—			392,856
Credit differences:
Depreciation of property and equipment and investment properties		15,524		781			—			16,305		951			—			17,256
Adjustment for valuation financial assets available-for-sale		1,039		—			1,581			2,620		—			(2,397	)		223
Transitory assets		7,174		1,201			—			8,375		(2,997	)		—			5,378
Loans accrued to effective rate		1,386		(795	)		—			591		2,188			—			2,779
Prepaid expenses		3,334		(1,354	)		—			1,980		254			—			2,234
Other adjustments		8,345		237			—			8,582		(1,541	)		—			7,041
Total Credit Differences		36,802		70			1,581			38,453		(1,145	)		(2,397	)		34,911
Total, Net		320,948		4,805			(1,556	)		324,197		31,351			2,397			357,945

56

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

18. Other Assets:

(a) Item composition:

At the end of each period, the item is composed as follows:

	June			December
	2021			2020
	MCh$			MCh$
Assets held for leasing (*)		91,923			85,626
Assets received or awarded as payment (**)
Assets awarded at judicial sale		4,794			5,571
Assets received in lieu of payment		995			99
Provision for assets received in lieu of payment or awarded		(59	)		(52	)
Subtotal		5,730			5,618
Other Assets
Deposits by derivatives margin		131,047			232,732
Trading and brokerage (***)		119,343			84,993
Recoverable income taxes		64,906			8,691
Prepaid expenses		60,593			29,654
Other accounts and notes receivable		31,101			63,796
Commissions receivable		12,679			11,810
Investment properties		12,655			12,833
VAT receivable		9,701			10,777
Servipag available funds		9,445			11,385
Pending transactions		4,433			1,825
Rental guarantees		2,018			2,014
Accounts receivable for sale of assets received in lieu of payment		1,510			715
Assets recovered from leasing for sale		1,364			2,469
Materials and supplies		731			784
Others		20,820			13,745
Subtotal		482,346			488,223
Total		579,999			579,467

(*) These correspond to property and equipment to be given under finance lease.

(**) Assets received in lieu of payment are assets received as payment of customers’ past-due debts. The assets acquired must not exceed the aggregate 20% of the Bank’s effective equity. These assets currently represent 0.0193% % (0.0024% as of December 31, 2020) of the Bank’s effective equity.

(***) This item mainly includes simultaneous operations carried out by the subsidiary Banchile Corredores de Bolsa S.A.

57

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

18. Other Assets, continued:

(b) The changes of the provision for assets received in lieu of payment during the periods 2021 and 2020 are as follows:

Provision for assets received in lieu of payment	MCh$
Balance as of January 1, 2020		188
Provisions used		(708	)
Provisions established		613
Provisions released		—
Balance as of June 30, 2020		93
Provisions used		(380	)
Provisions established		339
Provisions released		—
Balance as of December 31, 2020		52
Provisions used		(56	)
Provisions established		63
Provisions released		—
Balance as of June 30, 2021		59

19. Current Accounts and Other Demand Deposits:

At the end of each period, this item is composed as follows:

	June		December
	2021		2020
	MCh$		MCh$
Current accounts		14,128,679		12,477,719
Other demand deposits		1,731,635		1,431,904
Other deposits and sight accounts		1,548,100		1,257,606
Total		17,408,414		15,167,229

20. Savings Accounts and Time Deposits:

At the end of each period, this item is composed as follows:

	June		December
	2021		2020
	MCh$		MCh$
Time deposits		7,307,508		8,442,536
Term savings accounts		410,799		342,550
Other term balances payable		151,367		114,455
Total		7,869,674		8,899,541

58

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

21. Borrowings from Financial Institutions:

At the end of each period, borrowings from financial institutions are detailed as follows:

	June		December
	2021		2020
	MCh$		MCh$
Domestic banks
Banco de Crédito e Inversiones		1,128		—
Banco Santander		296		—
Banco do Brasil		—		7,100
Banco Scotiabank		—		1,257
Subtotal domestic banks		1,424		8,357
Foreign banks
Foreign trade financing
Wells Fargo Bank		124,780		85,734
Citibank N.A. United State		55,061		114,525
Sumitomo Mitsui Banking		36,706		11,394
Bank of America		35,810		20,475
Bank of New York Mellon		14,682		21,389
Standard Chartered Bank		2,115		715
Commerzbank AG		1,067		21,687
JP Morgan Chase Bank		601		—
The Bank of Nova Scotia		—		121,085
Zürcher Kantonalbank		—		39,116
Others		243		40
Borrowings and other obligations
Citibank N.A. United Kingdom		214,028		233
Wells Fargo Bank		110,279		106,965
The Bank of New York		17,876		—
Standard Chartered Bank		4,880		—
Citibank N.A. London Euros		140		—
Citibank N.A. México S.A		3		—
Deutsche Bank Trust Company Americas		—		7,333
Others		190		105
Subtotal foreign banks		618,461		550,796
Chilean Central Bank (*)		4,348,677		3,110,600
Total		4,968,562		3,669,753

(*) Financing provided by the Chilean Central Bank to deliver liquidity to the economy and support the flow of credit to households and companies, among which are the Conditional Credit Facility to Increase Placements (FCIC by its Spanish initials) and the Liquidity Credit Line (LCL).

59

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

22. Debt Issued:

At the end of each period, this item is composed as follows:

	June		December
	2021		2020
	MCh$		MCh$
Mortgage bonds		5,273		6,786
Bonds		7,873,277		7,700,402
Subordinated bonds		892,760		886,407
Total		8,771,310		8,593,595

During the period ended as of June 30, 2021, Banco de Chile issued bonds by an amount of Ch$415,543 million, which corresponds to Short-Term Bonds, according to the following details:

Short-term Bonds

Counterparty	Currency	Amount MCh$		Annual interest rate %		Issued date	Maturity date
Wells Fargo Bank	USD		72,240		0.23	20/01/2021	20/04/2021
Wells Fargo Bank	USD		36,736		0.38	09/02/2021	04/02/2022
Citibank N.A.	USD		36,736		0.28	09/02/2021	02/08/2021
Wells Fargo Bank	USD		35,700		0.26	25/02/2021	24/08/2021
Citibank N.A.	USD		71,400		0.23	25/02/2021	01/06/2021
Wells Fargo Bank	USD		35,700		0.26	25/02/2021	26/08/2021
Citibank N.A.	USD		36,295		0.34	04/03/2021	03/09/2021
Citibank N.A.	USD		72,589		0.34	04/03/2021	07/09/2021
Wells Fargo Bank	USD		18,147		0.25	04/03/2021	01/06/2021
Total as of June 30, 2021			415,543

Current Bonds Long-Term

During the period ended June 30, 2021, there were no current bonds long-term, issued.

Subordinated bonds

During the period ended June 30, 2021, there were no subordinated bonds, issued.

60

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

22. Debt Issued, continued:

During the year ended as of December 31, 2020, Banco de Chile issued bonds by an amount of Ch$889,135 million, from which corresponds to Short-Term Bonds and Current Bonds by an amount of Ch$634,952 million and Ch$254,183 million respectively, according to the following details:

Short-term Bonds

Counterparty	Currency	Amount MCh$		Annual interest rate %		Issued date		Maturity date
Citibank N.A.	USD		23,078		2.00		07/01/2020	07/07/2020
Citibank N.A.	USD		38,371		1.95		09/01/2020	09/04/2020
Citibank N.A.	USD		34,886		1.91		13/01/2020	13/04/2020
Citibank N.A.	USD		11,629		1.87		14/01/2020	14/04/2020
Citibank N.A.	USD		31,667		1.91		29/01/2020	31/07/2020
Citibank N.A.	USD		7,917		1.91		29/01/2020	31/07/2020
Citibank N.A.	USD		27,709		1.86		29/01/2020	29/05/2020
Citibank N.A.	USD		10,350		1.85		30/01/2020	01/06/2020
Citibank N.A.	USD		19,720		1.85		03/02/2020	03/06/2020
Citibank N.A.	USD		31,391		1.55		08/04/2020	05/06/2020
Citibank N.A.	USD		21,262		1.30		13/04/2020	12/05/2020
Citibank N.A.	USD		12,758		1.30		13/04/2020	13/05/2020
Citibank N.A.	USD		34,020		1.30		13/04/2020	13/05/2020
Citibank N.A.	USD		25,593		1.55		16/04/2020	16/06/2020
Citibank N.A.	USD		25,593		1.55		16/04/2020	18/06/2020
Citibank N.A.	USD		34,158		1.61		17/04/2020	21/08/2020
Wells Fargo Bank	USD		42,697		1.60		17/04/2020	21/08/2020
Wells Fargo Bank	USD		42,858		1.50		22/04/2020	14/08/2020
Wells Fargo Bank	USD		42,943		1.45		24/04/2020	29/01/2021
Wells Fargo Bank	USD		4,175		1.30		29/04/2020	29/10/2020
Citibank N.A.	USD		32,834		0.45		18/05/2020	20/07/2020
Citibank N.A.	USD		5,089		0.45		18/05/2020	20/07/2020
Wells Fargo Bank	USD		74,254		0.45		07/12/2020	06/12/2021
Total as of December 31, 2020			634,952

61

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

22. Debt Issued, continued:

Current Bonds Long-Term

Serie	Currency	Amount MCh$		Terms Years		Annual issue rate %		Issue date		Maturity date
BCHIEM0817	UF		93,096		7		0.80		06/01/2020		06/01/2027
BCHIEL0717	UF		123,957		8		0.72		04/02/2020		04/02/2028
Subtotal UF			217,053
BONO AUD	AUD		37,130		15		2.65		02/03/2020		02/03/2035
Subtotal Others currency			37,130
Total as of December 31, 2020			254,183

Subordinated bonds

During the year ended December 31, 2020, there were no subordinated bonds, issued.

As of June 30, 2021 and December 31, 2020, the Bank has had no principal and interest defaults on its debt instruments. Likewise, there have been no breaches of covenants and other commitments associated with the debt instruments issued.

62

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

23. Other Financial Obligations:

At the end of each period, this item is composed as follows:

	June		December
	2021		2020
	MCh$		MCh$
Other Chilean obligations		218,382		191,258
Public sector obligations		321		455
Total		218,703		191,713

24. Provisions:

(a) At the end of each period, this item is composed as follows:

	June		December
	2021		2020
	MCh$		MCh$
Provisions for minimum dividends (*)		142,792		220,271
Provisions for personnel benefits and payroll expenses		93,129		111,243
Provisions for contingent loan risks		74,908		76,191
Provisions for contingencies:
Additional loan provisions (**)		410,252		320,252
Country risk provisions		8,587		5,446
Other provisions for contingencies		575		508
Total		730,243		733,911

(*) See Note No. 27 letter (c).

(**) As of June 30, 2021, Ch$90,000 million have been established for additional provisions (Ch$107,000 million in December 2020). See Note No. 24 letter (b).

63

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

24. Provisions, continued:

(b) The following table shows the changes in provisions and accrued expenses during the period 2021 and 2020:

	Minimum dividends			Personnel benefits and payroll			Contingent loan Risks			Additional loan provisions		Country risk provisions and other contingencies			Total
	MCh$			MCh$			MCh$			MCh$		MCh$			MCh$
Balances as of January 1, 2020		300,461			109,075			57,042			213,252		4,833			684,663
Provisions established		119,099			35,076			11,509			70,000		6,644			242,328
Provisions used		(300,461	)		(59,930	)		—			—		—			(360,391	)
Provisions released		—			—			—			—		(17	)		(17	)
Balances as of June 30, 2020		119,099			84,221			68,551			283,252		11,460			566,583
Provisions established		101,172			47,877			7,640			37,000		(5,523	)		188,166
Provisions used		—			(20,855	)		—			—		—			(20,855	)
Provisions released		—			—			—			—		17			17
Balances as of December 31, 2020		220,271			111,243			76,191			320,252		5,954			733,911
Provisions established		142,792			56,213			—			90,000		3,208			292,213
Provisions used		(220,271	)		(74,327	)		—			—		—			(294,598	)
Provisions released		—			—			(1,283	)		—		—			(1,283	)
Balances as of June 30, 2021		142,792			93,129			74,908			410,252		9,162			730,243

(c) Provisions for personnel benefits and payroll:

	June		December
	2021		2020
	MCh$		MCh$
Staff accrued vacation provision		35,462		33,993
Provisions for performance bonuses		32,320		43,941
Other personnel benefits provision		18,150		25,728
Staff severance indemnities		7,197		7,581
Total		93,129		111,243

64

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

24. Provisions, continued:

(d) Staff severance indemnities:

(i) Changes in the staff severance indemnities:

	June			June
	2021			2020
	MCh$			MCh$
Present value of the obligations at the beginning of the period		7,581			7,566
Increase in provision		219			212
Benefit paid		(233	)		(453	)
Effect of change in actuarial factors		(370	)		91
Total		7,197			7,416

(ii) Net benefits expenses:

	June			June
	2021			2020
	MCh$			MCh$
(Decrease)  Increase in provisions		(110	)		48
Interest cost of benefits obligations		329			164
Effect of change in actuarial factors		(370	)		91
Net benefit expenses		(151	)		303

(iii) Factors used in the calculation of the provision:

The main assumptions used in the determination of severance indemnity obligations for the Bank's plan are shown below:

	June 31, 2021		December 31, 2020
		%		%
Discount rate		4.47		2.31
Salary increase rate		3.94		4.04
Payment probability		99.99		99.99

The most recent actuarial valuation of the staff severance indemnities provision was carried out during the second quarter of 2021.

65

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

24. Provisions, continued:

(e) Changes in compliance bonuses provision:

	June			June
	2021			2020
	MCh$			MCh$
Balances as of January 1		43,941			51,051
Net provisions established		23,631			18,324
Provisions used		(35,252	)		(40,722	)
Total		32,320			28,653

(f) Changes in staff accrued vacation provision:

	June			June
	2021			2020
	MCh$			MCh$
Balances as of January 1		33,993			27,609
Net provisions established		5,718			3,635
Provisions used		(4,249	)		(2,508	)
Total		35,462			28,736

(g) Employee benefits share-based provision:

As of June 30, 2021 and 2020, the Bank and its subsidiaries do not have a stock-based compensation plan.

(h) Contingent loan provisions:

As of June 30, 2021 the Bank and its subsidiaries maintain contingent loan provisions by an amount of Ch$74,908 million (Ch$76,191 million at December 2020). See Note No. 26 letter (d).

66

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

25. Other Liabilities:

At the end of each period, this item is composed as follows:

	June		December
	2021		2020
	MCh$		MCh$
Accounts and notes payable		288,268		273,143
Income received in advance (*)		60,612		68,907
Dividends payable		5,983		4,309
Other liabilities
Documents intermediated (**)		201,711		137,546
Cobranding		31,708		29,213
VAT debit		15,693		16,519
Securities unliquidated		4,634		2,725
Outstanding transactions		1,463		725
Insurance payments		606		1,802
Others		29,283		30,231
Total		639,961		565,120

(*) In relation to the Strategic Alliance Framework Agreement, on June 4, 2019, Banco de Chile received the payment from the Insurance Companies for an amount of Ch$149,061 million, which was recorded according to IFRS 15. The related income is recognized over time, depending on compliance with the associated performance obligation.

(**) This item mainly includes financing of simultaneous operations performed by subsidiary Banchile Corredores de Bolsa S.A.

67

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

26. Contingencies and Commitments:

(a) Commitments and responsibilities accounted for in off-balance-sheet accounts:

In order to satisfy its customers’ needs, the Bank entered into several irrevocable commitments and contingent obligations. Although these obligations are not recognized in the Statement of Financial Position, they entail credit risks and, therefore, form part of the Bank’s overall risk.

The Bank and its subsidiaries keep recorded in off-balance sheet accounts the main balances related to commitments or with responsibilities inherent to the course of its normal business:

	June		December
	2021		2020
	MCh$		MCh$
Contingent loans
Guarantees and sureties		336,782		224,079
Confirmed foreign letters of credit		141,048		58,299
Issued letters of credit		391,295		343,663
Bank guarantees		2,183,091		2,214,370
Undrawn credit lines		7,905,881		7,650,382
Other credit commitments		70,965		107,707
Transactions on behalf of third parties
Documents in collections		101,433		157,671
Third-party resources managed by the Bank:
Financial assets managed on behalf of third parties		4,143		16,024
Other assets managed on behalf of third parties		—		—
Financial assets acquired on its own behalf		88,754		80,788
Other assets acquired on its own behalf		—		—
Custody of securities
Securities held in safe custody in the Bank and subsidiaries		2,409,060		2,023,313
Securities held in safe custody in other entities		18,104,483		18,467,801
Total		31,736,935		31,344,097

68

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

26. Contingencies and Commitments, continued:

(b) Lawsuits and legal proceedings:

(b.1) Normal judicial contingencies in the industry:

At the date of issuance of these Interim Consolidated Financial Statements, there are legal actions filed against the Bank related with the ordinary course operations. As of June 30, 2021 the Bank maintain provisions for judicial contingencies amounting to Ch$311 million (Ch$244 million as of December 2020), which are part of the item “Provisions” in the Statement of Financial Position.

The estimated end dates of the respective legal contingencies are as follows:

	As of June 30, 2021
	2021		2022		2023		2024		2025		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Legal contingencies		—		20		167		124		—		311

(b.2) Contingencies for significant lawsuits in courts:

As of June 30, 2021 and December 31, 2020 there are not significant lawsuits in court that affect or may affect these Interim Consolidated Financial Statements.

69

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

26. Contingencies and Commitments, continued:

(c) Guarantees granted by operations:

i. In subsidiary Banchile Administradora General de Fondos S.A.:

In compliance with Article No, 12 of Law No. 20,712, Banchile Administradora General de Fondos S.A., has designated Banco de Chile as the representative of the beneficiaries of the guarantees it has established, and in such role the Bank has issued bank guarantees totaling UF 4,109,200, maturing January 7, 2022 (UF 3,778,100, maturing on January 8, 2021 as of December 2020). The subsidiary took a policy with Mapfre Seguros Generales S.A. for the Real State Funds by a guaranteed amount of UF 759,700.

As of June 30, 2021 and December 31, 2020 the Bank has not guaranteed mutual funds.

ii. In subsidiary Banchile Corredores de Bolsa S.A.:

For the purposes of ensuring correct and complete compliance with all of its obligations as broker-dealer entity, in conformity with the provisions from Article 30 and subsequent of Law No. 18,045 on Securities Markets, the subsidiary established a guarantee in an insurance policy for UF 20,000, insured by Mapfre Seguros Generales S.A., that matures April 22, 2022, whereby the Securities Exchange of the Santiago Stock Exchange was appointed as the subsidiary’s creditor representative.

	June		December
	2021		2020
Guarantees:	MCh$		MCh$
Shares delivered to cover simultaneous forward sales transactions:
Santiago Securities Exchange, Stock Exchange		59,263		47,684
Electronic Chilean Securities Exchange, Stock Exchange		8,158		20,227
Fixed income securities to guarantee CCLV system:
Santiago Securities Exchange, Stock Exchange		10,000		10,000
Shares delivered to guarantee equity lending and short-selling:
Santiago Securities Exchange, Stock Exchange		4,568		2,858
Total		81,989		80,769

70

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

26. Contingencies and Commitments, continued:

(c) Guarantees granted, continued:

ii. In subsidiary Banchile Corredores de Bolsa S.A., continued:

In conformity with the internal regulation of the stock exchange in which this subsidiary participates, and for the purpose of securing the broker’s correct performance, the Company established a pledge over 1,000,000 shares of the Santiago Stock Exchange, in favor of that institution, as stated in the Public Deed dated September 13, 1990 before the notary of Santiago Mr. Raul Perry Pefaur, and over 100,000 shares of the Electronic Chilean Stock Exchange, in favor of that Institution, as stated in a contract signed between both entities dated May 16, 1990.

Banchile Corredores de Bolsa S.A. keeps an insurance policy current with Chubb Seguros Chile S.A. that expires April 2, 2022, this considers matters of employee fidelity, physical losses, falsification or adulteration, and currency fraud with a coverage amount equivalent to US$20,000,000.

It also provided a bank guarantee in the amount of UF 286,600 for the benefits of investors in portfolio management contracts. This bank guarantee is revaluated in UF to fixed term, non-endorsable and has a maturity date of January 7, 2022.

It also provided a cash guarantee in the amount of US$122,494.32 for the purpose of complying with the obligations to Pershing, for any operations conducted through that broker.

71

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

26. Contingencies and Commitments, continued:

(c) Guarantees granted, continued:

iii. In subsidiary Banchile Corredores de Seguros Ltda.:

According to established in article 58, letter D of D.F.L. 251, as of June 30, 2021 the entity maintains two insurance policies with effect from April 15, 2021 to April 14, 2022 which protect it against of potential damages caused by infractions of the law, regulations and complementary rules that regulate insurance brokers, especially when the non-compliance comes from acts, errors or omissions of the broker, its representatives, agents or dependents that participate in the intermediation.

The policies contracted are:

Matter insured	Amount Insured (UF)
Errors and omissions liability policy	500
Civil liability policy	60,000

(d) Provisions for contingencies loans:

Established provisions for credit risk from contingencies operations are the followings:

	June		December
	2021		2020
	MCh$		MCh$
Undrawn credit lines		38,252		40,404
Bank guarantees provision		28,344		27,596
Guarantees and sureties provision		6,970		7,060
Letters of credit provision		1,289		1,074
Other credit commitments		53		57
Total		74,908		76,191

(e) By Exempt Resolution No. 270 dated October 30, 2014, the Superintendency of Securities and Insurance (current Commission for the Financial Market) imposed a fine of UF 50,000 to Banchile Corredores de Bolsa S.A. for violations of the second paragraph of article 53 of the Securities Market Law, said company filed a claim with the competent Civil Court requesting the annulment of the fine. On December 10, 2019, a judgement in the case was issued reducing the fine to the amount of UF 7,500. The judgment indicated has been subject to cassation appeals filed by both parties, which are pending before the Illustrious Court of Appeals of Santiago.

The company has not made provisions considering that the Bank’s legal advisors in charge of the procedure estimate that there are solid grounds that the claim filed by Banchile Corredores de Bolsa S.A. can be accepted.

72

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

27. Equity:

(a) Capital:

(i) Authorized, subscribed and paid shares:

As of June 30, 2021, the paid-in capital of Banco de Chile is represented by 101,017,081,114 registered shares (101,017,081,114 shares as of December 31, 2020), with no par value, subscribed and fully paid.

(ii) Shares:

The following table shows the changes in share from December 31, 2019 to June 30, 2021:

	Total
	Ordinary Shares
Total shares as of December 31, 2019		101,017,081,114
Total shares as of December 31, 2020		101,017,081,114
Total shares as of June 30, 2021		101,017,081,114

(b) Approval and payment of dividends:

At the Bank Ordinary Shareholders’ Meeting held on March 25, 2021 it was approved the distribution and payment of dividend No. 209 of Ch$2.18053623438 per share of the Banco de Chile, with charge to the net distributable income for the year ended as of December 31, 2020. The dividends paid in the period 2021 amounted to Ch$220,271 million.

At the Bank Ordinary Shareholders’ Meeting held on March 26, 2020 it was approved the distribution and payment of dividend No. 208 of Ch$3.47008338564 per share of the Banco de Chile, with charge to the net distributable income for the year ended as of December 31, 2019. The dividends paid in the year 2020 amounted to Ch$350,538 million.

73

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

27. Equity, continued:

(c) Provision for minimum dividends:

The Board of Directors of Banco de Chile agreed for the purposes of minimum dividends, to establish a provision of 60% of the net income resulting from reducing or adding to the net income for the corresponding period, the value effect of the monetary unit of paid capital and reserves, as a result of any change in the Consumer Price Index (CPI) between the month prior to the current month and the month of November of the previous year. The amount to be reduced of the liquid income for the period ended as of June 30, 2021 amounted to Ch$86,883 million.

As indicated, as of June 30, 2021, the amount of the net income determined in accordance with the preceding paragraph is equivalent to Ch$237,986 million (Ch$367,119 million as of December 31, 2020). Consequently, the Bank recorded a provision for minimum dividends under “Provisions” as of June 30, for an amount of Ch$142,792 million (Ch$220,271 million in December 2020), which reflects as a counterpart an equity reduction for the same amount in the item “Retained earnings”.

(d) Earnings per share:

(i) Basic earnings per share:

Basic earnings per share are determined by dividing the net income attributable to the Bank ordinary equity holders in a period between the weighted average number of shares outstanding during that period, excluding the average number of own shares held throughout the period.

(ii) Diluted earnings per share:

In order to calculate the diluted earnings per share, both the amount of income attributable to common shareholders and the weighted average number of shares outstanding, net of own shares, must be adjusted for all the inherent dilutive effects to the potential common shares (stock options, warrants and convertible debt).

74

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

27. Equity, continued:

Accordingly, the basic and diluted earnings per share as of June 30, 2021 and 2020 were determined as follows:

	June		June
	2021		2020
Basic earnings per share:
Net profits attributable to ordinary equity holders of the bank (in million Chilean pesos)		324,869	248,585
Weighted average number of ordinary shares		101,017,081,114	101,017,081,114
Earning per shares (in Chilean pesos)		3.22	2.46
Diluted earnings per share:
Net profits attributable to ordinary equity holders of the bank (in million Chilean pesos)		324,869	248,585
Weighted average number of ordinary shares		101,017,081,114	101,017,081,114
Assumed conversion of convertible debt		—	—
Adjusted number of shares		101,017,081,114	101,017,081,114
Diluted earnings per share (in Chilean pesos)		3.22	2.46

As of June 30, 2021 and 2020, the Bank does not have instruments that generate dilutive effects.

(e) Other comprehensive income:

This item includes the following concepts:

The adjustment of cash flow hedge derivatives comprises the portion of income recorded in equity resulting from changes in fair value due to changes in market factors. During the period 2021 it was made a credit to equity for Ch$82,373 million (charge to equity of Ch$45,119 million in 2020). The income tax effect presented a charge to equity of Ch$22,240 million (credit of Ch$12,182 million in June 2020).

The valuation adjustment of investments available for sale originates from fluctuations in the fair value of such portfolio, with a charge or credit to equity. During the period 2021, it was made a charge to equity for Ch$48,264 million (credit of Ch$5,862 million during the year 2020). The deferred tax effect meant a credit to equity of Ch$13,033 million (charge to equity of Ch$1,581 million in June 2020).

(f) Retained earnings from previous years:

During the year 2021, the Ordinary Shareholders Meeting of Banco de Chile agreed to deduct and withhold from the 2020 liquid income, an amount equivalent to the value effect of the monetary unit of paid capital and reserves according to the variation in the Consumer Price Index, which occurred between November 2019 and November 2020, amounting to Ch$95,989 million. Additionally, the Board determined to withhold 40% of the distributable net income, which was equivalent to Ch$146,848 million.

75

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

28. Interest Revenue and Expenses:

(a) On the closing date of the Interim Consolidated Financial Statement, the interest and indexation income, excluding hedge results, are composed as follows:

	June 2021								June 2020
	Interest		UF Indexation		Prepaid fees		Total		Interest		UF Indexation		Prepaid fees		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Commercial loans		295,748		134,167		3,462		433,377		344,352		84,488		2,410		431,250
Consumer loans		212,733		1,560		2,897		217,190		289,043		866		3,030		292,939
Residential mortgage loans		137,160		207,531		1,757		346,448		136,837		124,023		3,344		264,204
Financial investment		7,452		5,774		—		13,226		18,239		3,826		—		22,065
Repurchase agreements		663		—		—		663		861		—		—		861
Loans to banks		2,877		—		—		2,877		7,286		—		—		7,286
Other interest and indexation revenue		3,501		652		—		4,153		6,884		1,558		—		8,442
Total		660,134		349,684		8,116		1,017,934		803,502		214,761		8,784		1,027,047

The amount of interest recognized on a received basis for impaired portfolio in the period 2021 amounts to Ch$1,482 million (Ch$1,844 million in June 2020).

(b) At the each period end, the stock of interest and UF indexation not recognized in incomes is the following:

	June 2021						June 2020
	Interest		UF Indexation		Total		Interest		UF Indexation		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Commercial loans		13,174		1,621		14,795		10,550		1,262		11,812
Residential mortgage loans		1,940		1,752		3,692		2,166		1,488		3,654
Consumer loans		25		—		25		69		—		69
Total		15,139		3,373		18,512		12,785		2,750		15,535

76

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

28. Interest Revenue and Expenses, continued:

(c) At each period end, interest and UF indexation expenses excluding hedge results, are detailed as follows:

	June 2021						June 2020
	Interest		UF Indexation		Total		Interest		UF Indexation		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Savings accounts and time deposits		17,447		20,664		38,111		85,259		15,841		101,100
Debt securities issued		101,052		154,520		255,572		110,243		98,074		208,317
Other financial obligations		7		8		15		326		11		337
Repurchase agreements		116		—		116		1,691		—		1,691
Obligations with banks		10,706		—		10,706		16,409		—		16,409
Demand deposits		176		10,041		10,217		208		7,509		7,717
Lease liabilities		1,052		—		1,052		1,391		—		1,391
Other interest and indexation expenses		—		327		327		612		282		894
Total		130,556		185,560		316,116		216,139		121,717		337,856

(d) As of June 30, 2021 and 2020, the Bank uses cross currency and interest rate swaps to hedge its position on movements on the fair value of corporate bonds and commercial loans and cross currency swaps to hedge the risk of variability of obligations flows with foreign banks and bonds issued in foreign currency.

	June 2021									June 2020
	Income			Expense			Total			Income			Expense			Total
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Gain from fair value accounting hedges		4,895			—			4,895			474			—			474
Loss from fair value accounting hedges		(4,244	)		—			(4,244	)		(7,132	)		—			(7,132	)
Gain from cash flow accounting hedges		7,621			20,382			28,003			41,852			60,368			102,220
Loss from cash flow accounting hedges		(45,767	)		(6,036	)		(51,803	)		(69,400	)		(43,668	)		(113,068	)
Net gain on hedge items		(4,395	)		—			(4,395	)		2,210			—			2,210
Total		(41,890	)		14,346			(27,544	)		(31,996	)		16,700			(15,296	)

(e) At each period end, the summary of interest is as follows:

	June			June
	2021			2020
	MCh$			MCh$
Interest revenue		1,017,934			1,027,047
Interest expense		(316,116	)		(337,856	)
Subtotal interest income		701,818			689,191
Net gain (loss) from accounting hedges		(27,544	)		(15,296	)
Total net interest income		674,274			673,895

77

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

29. Income and Expenses from Fees and Commissions:

The income and expenses for commissions that are shown in the Interim Consolidated Statement of Income refers to the following items:

	June			June
	2021			2020
	MCh$			MCh$
Commission income
Debit and credit card services		85,121			84,257
Investments in mutual funds and others		49,499			47,771
Collections and payments		30,351			27,188
Portfolio management		25,765			24,925
Fees for insurance transactions		17,948			16,643
Use of distribution channel and access to customers		16,623			48,633
Guarantees and letters of credit		14,561			13,396
Trading and securities management		12,521			11,047
Brand use agreement		10,698			10,102
Lines of credit and overdrafts		2,205			2,308
Financial advisory services		884			1,814
Other commission earned		11,018			10,517
Total commissions income		277,194			298,601
Commission expenses
Fees for card transactions		(34,558	)		(39,278	)
Interbank transactions		(14,563	)		(11,250	)
Securities transactions		(2,177	)		(2,399	)
Collections and payments		(2,171	)		(2,555	)
Sales force		(39	)		(88	)
Other commission		(505	)		(1,052	)
Total commissions expenses		(54,013	)		(56,622	)

78

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

30. Net Financial Operating Income:

The gains (losses) from trading and brokerage activities are detailed as follows:

	June			June
	2021			2020
	MCh$			MCh$
Trading derivative		19,751			(41,092	)
Sale of available-for-sale instruments		4,744			13,751
Sale of loan portfolios (Note No.12 (e))		4,667			186
Net income on other transactions		292			144
Financial assets held-for-trading		(2,274	)		46,804
Total		27,180			19,793

31. Foreign Exchange Transactions, Net:

Net foreign exchange transactions are detailed as follows:

	June		June
	2021		2020
	MCh$		MCh$
Indexed foreign currency		31,443		(61,931	)
Gain from accounting hedges		4,998		118,311
Exchange difference, net		2,639		8,813
Total		39,080		65,193

79

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

32. Provisions for Loan Losses:

The change registered in income during the periods 2021 and 2020 due to provisions, are summarized as follows:

					Loans to customers
	Loans and advance to banks				Commercial Loans						Mortgage Loans						Consumer Loans						Subtotal						Contingent Loans						Total
	June		June		June			June			June			June			June			June			June			June			June			June			June			June
	2021		2020		2021			2020			2021			2020			2021			2020			2021			2020			2021			2020			2021			2020
	MCh$		MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Provisions established:
- Individual provisions		—		—		(9,832	)		(54,342	)		—			—			—			—			(9,832	)		(54,342	)		(885	)		(10,887	)		(10,717	)		(65,229	)
- Group provisions		—		—		(31,840	)		(26,249	)		(3,335	)		(2,307	)		(28,393	)		(117,777	)		(63,568	)		(146,333	)		—			(622	)		(63,568	)		(146,955	)
Provisions established, net		—		—		(41,672	)		(80,591	)		(3,335	)		(2,307	)		(28,393	)		(117,777	)		(73,400	)		(200,675	)		(885	)		(11,509	)		(74,285	)		(212,184	)
Provisions released:
- Individual provisions		246		288		—			—			—			—			—			—			—			—			—			—			246			288
- Group provisions		—		—		—			—			—			—			—			—			—			—			2,168			—			2,168			—
Provisions realeased, net		246		288		—			—			—			—			—			—			—			—			2,168			—			2,414			288
Provision, net		246		288		(41,672	)		(80,591	)		(3,335	)		(2,307	)		(28,393	)		(117,777	)		(73,400	)		(200,675	)		1,283			(11,509	)		(71,871	)		(211,896	)
Additional provisions		—		—		(90,000	)		(70,000	)		—			—			—			—			(90,000	)		(70,000	)		—			—			(90,000	)		(70,000	)
Recovery of written-off assets		—		—		5,511			4,115			1,860			1,703			23,629			11,110			31,000			16,928			—			—			31,000			16,928
Provision for loan losses, net		246		288		(126,161	)		(146,476	)		(1,475	)		(604	)		(4,764	)		(106,667	)		(132,400	)		(253,747	)		1,283			(11,509	)		(130,871	)		(264,968	)

In the opinion of the Administration, provisions constituting for credit risk cover all possible losses that may arise from the non-recovery of assets, according to the records examined by the Bank.

80

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

33. Personnel Expenses:

Salaries and personnel expenses during the periods 2021 and 2020 are as follows:

	June		June
	2021		2020
	MCh$		MCh$
Remunerations		129,688		129,129
Bonuses and incentives		34,651		24,041
Variable compensation		15,153		16,598
Gratifications		15,046		14,610
Lunch and health benefits		12,625		13,997
Staff severance indemnities		6,529		4,900
Training expenses		945		1,179
Other personnel expenses		9,957		9,553
Total		224,594		214,007

81

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

34. Administrative Expenses:

This item is composed as follows:

	June		June
	2021		2020
	MCh$		MCh$
General administrative expenses
Information technology and communications		52,579		49,808
Maintenance and repair of property and equipment		21,724		26,250
External advisory services and professional services fees		7,027		7,344
Surveillance and securities transport services		6,354		5,410
Insurance premiums		3,660		4,330
External service of financial information		3,204		3,058
Office supplies		3,172		5,946
Expenses for short-term leases and low value		2,361		2,232
Energy, heating and other utilities		2,246		3,039
Legal and notary expenses		2,212		2,053
Postal box, mail, postage and home delivery services		2,119		2,020
Representation and travel expenses		1,460		1,326
External service of custody of documentation		1,457		1,726
Other expenses of obligations for lease agreements		1,427		1,361
Donations		1,122		1,931
Other general administrative expenses		9,066		9,171
Subtotal		121,190		127,005
Outsource services
External technological developments expenses		5,596		5,267
Data processing		4,616		5,485
Certification and technology testing		3,542		3,179
Credit pre-evaluation		2,026		6,555
Other		750		1,635
Subtotal		16,530		22,121
Board expenses
Board of Directors Compensation		1,429		1,342
Other Board expenses		—		18
Subtotal		1,429		1,360
Marketing expenses
Advertising		13,869		13,113
Subtotal		13,869		13,113
Taxes, payroll taxes and contributions
Contribution to the banking regulator		5,968		5,499
Real estate contributions		2,165		1,805
Patents		717		645
Other taxes		795		372
Subtotal		9,645		8,321
Total		162,663		171,920

82

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

35. Depreciation, Amortization and Impairment:

(a) The amounts corresponding to charges to results for depreciation and amortization during the periods 2021 and 2020, are detailed as follows:

	June		June
	2021		2020
	MCh$		MCh$
Depreciation and amortization
Depreciation of leased assets (Note No. 16 (d))		14,770		13,570
Depreciation of property and equipment (Note No. 16 (b))		14,655		14,757
Amortization of intangibles assets (Note No. 15 (b))		8,343		7,785
Total		37,768		36,112

(b) As of June 30, 2021 and 2020 the impairment expenses is composed as follows:

	June		June
	2021		2020
	MCh$		MCh$
Impairment
Impairment of property and equipment (Note No. 16 (b))		3		867
Impairment of intangible assets (Note No. 15 (b))		—		—
Impairment of leased assets (Note No. 16 (d))		—		—
Total		3		867

83

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

36. Other Operating Income:

During the periods 2021 and 2020, the Bank and its subsidiaries present other operating income, according to the following:

	June		June
	2021		2020
	MCh$		MCh$
Income for assets received in lieu of payment
Income from sale of assets received in lieu of payment		3,441		3,597
Other income		145		36
Subtotal		3,586		3,633
Release of provisions for contingencies
Country risk provisions		—		—
Other provisions for contingencies		—		17
Subtotal		—		17
Other income
Release of provisions and expense recovery		4,920		3,322
Rental investment properties		2,756		2,756
Tax management income		2,459		30
Recovery from correspondent banks		1,301		1,499
Revaluation of prepaid monthly payments		475		89
Income from sale leased assets		447		925
Credit/debit card income		346		—
Fiduciary and trustee commissions		110		161
Reimbursements for insurance policies		103		2,804
Gain on sale of fixed assets		8		19
Others		817		987
Subtotal		13,742		12,592
Total		17,328		16,242

84

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

37. Other Operating Expenses:

During the periods 2021 and 2020, the Bank and its subsidiaries present other operating expenses, according to the following:

	June		June
	2021		2020
	MCh$		MCh$
Provisions and expenses for assets received in lieu of payment
Charge-off assets received in lieu of payment		933		1,898
Maintenance expenses of assets received in lieu of payment		218		420
Provisions for assets received in lieu of payment		73		638
Subtotal		1,224		2,956
Provisions for contingencies
Country risk provisions		3,141		6,644
Other provisions		67		—
Subtotal		3,208		6,644
Other expenses
Write-offs for operating risks		4,857		2,832
Leasings operational expenses		2,428		2,957
Card administration		1,898		834
Correspondent banks		1,018		857
Civil lawsuits		149		99
Contribution to other organisms		128		330
Credit life insurance		112		708
Expenses for charge-off leased assets recoveries		73		515
Others		1,717		188
Subtotal		12,380		9,320
Total		16,812		18,920

38. Related Party Transactions:

Related parties are considered to be those natural or legal persons who are in positions to directly or indirectly have significant influence through their ownership or management of the Bank and its subsidiaries, as set out in the Compendium of Accounting Standards and Chapter 12-4 of the current Compilation of Standards issued by the CMF.

According to the above, the Bank has considered as related parties those natural or legal persons who have a direct participation or through third parties on Bank ownership, where such participation exceeds 5% of the shares, and also people who, regardless of ownership, have authority and responsibility for planning, management and control of the activities of the entity or its subsidiaries. There also are considered as related the companies in which the parties related by ownership or management of the Bank have a share which reaches or exceeds 5%, or has the position of director, general manager or equivalent.

85

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

38. Related Party Transactions, continued:

(a) Loans with related parties:

The following are the loans and accounts receivable and contingent loans, corresponding to related entities.

	Productive and Services Companies (*)						Investment and Commercial Companies (**)						Individuals (***)						Total
	June			December			June			December			June			December			June			December
	2021			2020			2021			2020			2021			2020			2021			2020
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Loans and accounts receivable:
Commercial loans		189,710			122,716			134,353			164,213			13,215			12,445			337,278			299,374
Residential mortgage loans		—			—			—			—			63,823			61,131			63,823			61,131
Consumer loans		—			—			—			—			8,959			8,743			8,959			8,743
Gross loans		189,710			122,716			134,353			164,213			85,997			82,319			410,060			369,248
Allowance for loan losses		(1,273	)		(1,264	)		(815	)		(802	)		(329	)		(390	)		(2,417	)		(2,456	)
Net loans		188,437			121,452			133,538			163,411			85,668			81,929			407,643			366,792
Contingent loans:
Guarantees and sureties		7,381			7,277			10,260			9,469			—			—			17,641			16,746
Letters of credits		90			2,885			—			—			—			—			90			2,885
Banks guarantees		24,050			25,129			25,152			35,733			—			—			49,202			60,862
Undrawn credit lines		75,409			46,887			15,664			14,308			20,473			20,306			111,546			81,501
Other contingencies loans		—			—			—			—			—			—			—			—
Total contingent loans		106,930			82,178			51,076			59,510			20,473			20,306			178,479			161,994
Provision for contingencies loans		(191	)		(218	)		(50	)		(55	)		(43	)		(51	)		(284	)		(324	)
Contingent loans, net		106,739			81,960			51,026			59,455			20,430			20,255			178,195			161,670
Amount covered by guarantee:
Mortgage		15,377			15,575			58,834			54,891			82,423			82,777			156,634			153,243
Warrant		—			—			—			—			—			—			—			—
Pledge		—			—			—			—			—			—			—			—
Others (****)		32,166			33,474			15,760			12,117			6,782			6,582			54,708			52,173
Total collateral		47,543			49,049			74,594			67,008			89,205			89,359			211,342			205,416

86

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

38. Related Party Transactions, continued:

(a) Loans with related parties, continued:

(*) For these effects are considered productive companies, those that meet the following conditions:

i) They engage in production activities and generate a separate flow of income.

ii) Less than 50% of their assets are financial assets held-for-trading or investments.

Service companies are considered entities whose main purpose is oriented to rendering services to third parties.

(**) Investment companies and commercial include those legal entities that do not meet the conditions for productive companies or services providers and are profit-oriented.

(***) Individuals include key members of the management and correspond to those who directly or indirectly have authority and responsibility for planning, administrating and controlling the activities of the organization, including directors. This category also includes their family members who influence or are influenced by such individuals in their interactions with the organization.

(****) These guarantees mainly correspond to warranty by endorsement and sureties, state guarantees and other financial guarantees.

(b) Other assets and liabilities with related parties:

	June		December
	2021		2020
	MCh$		MCh$
Assets
Cash and due from banks		564,163		261,386
Transactions in the course of collection		54,353		35,833
Financial assets held-for-trading		234		96
Derivative instruments		114,765		252,748
Investment instruments		9,735		31,548
Other assets		15,523		96,362
Total		758,773		677,973
Liabilities
Demand deposits		195,769		239,139
Transactions in the course of payment		43,116		37,799
Obligations under repurchase agreements		—		24,500
Savings accounts and time deposits		305,998		338,732
Derivative instruments		151,726		355,099
Borrowings with banks		269,232		114,758
Lease liabilities		9,883		10,354
Other liabilities		12,805		14,699
Total		988,529		1,135,080

87

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

38. Related Party Transactions, continued:

(c) Income and expenses from related party transactions (*):

	June 2021				June 2020
	Income		Expense		Income		Expense
	MCh$		MCh$		MCh$		MCh$
Type of income or expense recognized
Interest and revenue expenses		8,383		71		8,688		207
Fees and commissions income		47,504		14,847		56,954		21,034
Net Financial Operating Income
Derivative instruments (**)		8,770		5,163		71,133		90,220
Other financial operations		7		17		33		—
Released or established of provision for credit risk		125		—		—		374
Operating expenses		—		68,062		—		71,972
Other income and expenses		230		1		233		3

(*) This detail does not constitute a Statement of Comprehensive Income for related party transactions since the assets with these parties are not necessarily equal to liabilities and each item reflects total income and expense and not those corresponding to exact transactions.

(**) The outcome of derivative operations is presented net at each related counterparty level. Additionally, this line includes operations with local counterpart banks (unrelated) which have been novated by Comder Contraparte Central S.A. (Related entity) for centralized clearing purposes, which generated a net gain of Ch$3,484 million as of June 30, 2021 (net gain of Ch$66,485 million as of June 30, 2020).

(d) Contracts with related parties:

During the period ended June 30, 2021, the Bank has signed, renewed or amended the contractual terms and conditions of the following contracts with related parties that do not correspond to the ordinary transactions with clients in general, for above UF 1,000:

Company name	Concept or service description
Depósito Central de Valores S.A.	Custodial services
Sistemas Oracle de Chile S.A.	Licensing services, support renewal and implementation of hardware and software.
Universidad del Desarrollo	Entrepreneurship programs
Artikos S.A.	Electronic billing services
Transbank S.A.	Services associated with credit card transactions
Servipag Ltda.	Collection services
Centro de Compensación Automatizado S.A.	Electronic transfer services
Ionix SpA.	Technical assistance service and platform support
Canal 13 S.A.	Advertising service
Nexus S.A.	Credit card operation services
Redbanc S.A.	Electronic Transfer Services (EFT)

88

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

38. Related Party Transactions, continued:

(e) Directors’ remunerations and payments to key management personnel:

	June		June
	2021		2020
	MCh$		MCh$
Personnel remunerations		2,109		1,928
Short-term benefits		3,534		3,642
Severance pay		—		784
Directors’ remunerations and fees (*)		1,429		1,342
Total		7,072		7,696

(*) It includes fees paid to members of the Advisory Committee of Banchile Corredores de Seguros Ltda, of Ch$7 million (Ch$7 million in June 2020).

The travel and other related expenses amount to Ch$18 million in June 2020 (there is no amount for this concept in June 2021).

Composition of key personnel:

	No. of executives
	June		June
	2021		2020
Position
CEO		1		1
CEOs of subsidiaries		6		6
Division Managers		14		13
Directors Bank and subsidiaries		18		19
Total		39		39

89

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

39. Fair Value of Financial Assets and Liabilities:

Banco de Chile and its subsidiaries have defined a corporate framework for valuation and control related with the process to the fair value measurement.

Within the established framework includes the Product Control Unit, which is independent of the business areas and reports to the Financial Management and Control Division Manager. This function befall to the Financial Control, Treasury and Capital Manager, through the Financial Risk Information and Control Section, is responsible for independent verification of price and results of trading (including derivatives) and investment operations and all fair value measurements.

To achieve the appropriate measurements and controls, the Bank and its subsidiaries, take into account at least the following aspects:

(i) Industry standard valuation.

To value financial instruments, Banco de Chile uses industry standard modeling; quota value, share price, discounted cash flows and valuation of options through Black-Scholes-Merton, according to the case. The input parameters for the valuation correspond to rates, prices and levels of volatility for different terms and market factors that are traded in the national and international market and that are provided by the main sources of the market.

(ii) Quoted prices in active markets.

The fair value for instruments with quoted prices in active markets is determined using daily quotes from electronic systems information (such as Bolsa de Comercio de Santiago, Bloomberg, LVA and Risk America, etc). This quote represents the price at which these instruments are regularly traded in the financial markets.

(iii) Valuation techniques.

If no specific quotes are available for the instrument to be valued, valuation techniques will be used to determine the fair value.

Due to, in general, the valuation models require a set of market parameters as inputs, the aim is to maximize information based on observable or price-related quotations for similar instruments in active markets. To the extent there is no information in direct from the markets, data from external suppliers of information, prices of similar instruments and historical information are used to validate the valuation parameters.

90

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

39. Fair Value of Financial Assets and Liabilities, continued:

(iv) Fair value adjustments.

Part of the fair value process considers three adjustments to the market value, calculated based on the market parameters, including; a liquidity adjustment, a Bid/Offer adjustment and an adjustment is made for credit risk of derivatives (CVA and DVA). The calculation of the liquidity adjustment considers the size of the position in each factor, the particular liquidity of each factor, the relative size of Banco de Chile with respect to the market, and the liquidity observed in transactions recently carried out in the market. In turn, the Bid/Offer adjustment, represents the impact on the valuation of an instrument depending on whether the position corresponds to a long (bought) or a short (sold).To calculate this adjustment is used the direct quotes from active markets or indicative prices or derivatives of similar assets depending on the instrument, considering the Bid, Mid and Offer, respectively. Finally, the adjustment made for CVA and DVA for derivatives corresponds to the credit risk recognition of the issuer, either of the counterparty (CVA) or of Banco de Chile (DVA).

Liquidity value adjustments are made to trading instruments (including derivatives) only, while Bid / Offer adjustments are made for trading instruments and available for sale. Adjustments for CVA / DVA are carried out only for derivatives.

(v) Fair value control.

A process of independent verification of prices and interest rates is executed daily, in order to control that the market parameters used by Banco de Chile in the valuation of the financial instruments relating to the current state of the market and from them the best estimate derived of the fair value. The objective of this process is to control that the official market parameters provided by the respective business areas, before being entered into the valuation, are within acceptable ranges of differences when compared to the same set of parameters prepared independently by the Financial Risk Information and Control Section. As a result, value differences are obtained at the level of currency, product and portfolio. In the event significant differences exist, these differences are scaled according to the amount of individual materiality of each market factor and aggregated at the portfolio level, according to the grouping levels within previously defined ranges. These ranges are approved by the Finance, International and Financial Risk Committee.

Complementary and in parallel, the Financial Risk Information and Control Section generates and reports on a daily basis Profit and Loss (“P&L”) and Exposure to Market Risks, which allow for proper control and consistency of the parameters used in the valuation.

91

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

39. Fair Value of Financial Assets and Liabilities, continued:

(vi) Judgmental analysis and information to Management.

In particular cases, where there are no market quotations for the instrument to be valued and there are no prices for similar transactions instruments or indicative parameters, a specific control and a reasoned analysis must be carried out in order to estimate the fair value of the operation. Within the valuation framework described in the Reasonable Value Policy (and its procedure) approved by the Board of Directors of Banco de Chile, a required level of approval is set in order to carry out transactions where market information is not available or it is not possible to infer prices or rates from it.

(a) Hierarchy of instrument valued at Fair value:

Banco de Chile and its subsidiaries, classify all the financial instruments among the following levels:

Level 1: These are financial instruments whose fair value is calculated at quoted prices (unadjusted) in extracted from liquid and deep markets. For these instruments there are quotes or prices (return internal rates, quote value, price) the observable market, so that assumptions are not required to determine the value.

In this level, the following instruments are considered: currency futures, debt instruments issued Chilean Central Bank and Treasury, which belong to benchmarks, mutual fund investments and equity shares.

For the instruments of the Central Bank of Chile and the General Treasury of the Republic, all those mnemonics belonging to a Benchmark, in other words corresponding to one of the following categories published by the Santiago Stock Exchange, will be considered as Level 1: Pesos-02, Pesos-03, Pesos-04, Pesos-05, Pesos-07, Pesos-10, UF-02, UF-04, UF-05, UF-07, UF-10, UF-20, UF-30. A Benchmark corresponds to a group of mnemonics that are similar in duration and are traded in an equivalent way, i.e., the price (return internal rates in this case) obtained is the same for all the instruments that make up a Benchmark. This feature defines a greater depth of market, with daily quotations that allow classifying these instruments as Level 1.

In the case of debt issued by the Chilean Government, the internal rate of return of the market is used to discount all flows to present value. In the case of mutual funds and equity shares, the current market price per share, which multiplied by the number of instruments results in the fair value.

The preceding described valuation methodology is equivalent to the one used by the Bolsa de Comercio de Santiago (Santiago Stock Exchange) and correspond to the standard methodology used in the market.

92

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

39. Fair Value of Financial Assets and Liabilities, continued:

Level 2: They are financial instruments whose fair value is calculated based on prices other than in quoted in Level 1 that are observable for the asset or liability, directly (that is, as prices or internal rates of return) or indirectly (that is, derived from prices or internal rates of return from similar instruments). These categories include:

a) Quoted prices for similar assets or liabilities in active markets.

b) Quoted prices for identical or similar assets or liabilities in markets that are not active.

c) Inputs data other than quoted prices that are observable for the asset or liability.

d) Inputs data corroborated by the market.

At this level there are mainly derivatives instruments, debt issued by banks, debt issues of Chilean and foreign companies, issued in Chile or abroad, mortgage claims, financial brokerage instruments and some issuances by the Central Bank of Chile and the General Treasury of the Republic, which do not belong to benchmarks.

To value derivatives, depends on whether they are impacted by volatility as a relevant market factor in standard valuation methodologies; for options the Black-Scholes-Merton formula is used; for the rest of the derivatives, forwards and swaps, discounted cash flows method is used.

For the remaining instruments at this level, as for debt issues of level 1, the valuation is done through cash flows model by using an internal rate of return that can be derived or estimated from internal rates of return of similar securities as mentioned above.

In the event that there is no observable price for an instrument in a specific term, the price will be inferred from the interpolation between periods that have observable quoted price in active markets. These models incorporate various market variables, including the credit quality of counterparties, exchange rates and interest rate curves.

93

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

39. Fair Value of Financial Assets and Liabilities, continued:

Valuation Techniques and Inputs for Level 2 Instrument:

Type of Financial Instrument	Valuation Method	Description: Inputs and Sources
Local Bank and Corporate Bonds	Discounted cash flows model	Prices (internal rates of return) are provided by third party price providers that are widely used in the Chilean market. Model is based on a Base Yield (Central Bank Bonds) and issuer spread. The model is based on daily prices and risk/maturity similarities between Instruments.
Offshore Bank and Corporate Bonds		Prices are provided by third party price providers that are widely used in the Chilean market. Model is based on daily prices.
Local Central Bank and Treasury Bonds		Prices (internal rates of return) are provided by third party price providers that are widely used in the Chilean market. Model is based on daily prices.
Mortgage Notes		Prices (internal rates of return) are provided by third party price providers that are widely used in the Chilean market. Model is based on a Base Yield (Central Bank Bonds) and issuer spread. The model takes into consideration daily prices and risk/maturity similarities between instruments.
Time Deposits		Prices (internal rates of return) are provided by third party price providers that are widely used in the Chilean market. Model is based on daily prices and considers risk/maturity similarities between instruments.
Cross Currency Swaps, Interest Rate Swaps, FX Forwards, Inflation Forwards		Forward Points, Inflation forecast and local swap rates are provided by market brokers that are widely used in the Chilean market. Offshore rates and spreads are obtained from third party price providers that are widely used in the Chilean market. Zero Coupon rates are calculated by using the bootstrapping method over swap rates.
FX Options	Black-Scholes Model	Prices for volatility surface estimates are obtained from market brokers that are widely used in the Chilean market.

94

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

39. Fair Value of Financial Assets and Liabilities, continued:

Level 3: These are financial instruments whose fair value is determined using non-observable inputs data neither for the assets or liabilities under analysis nor for similar instruments. An adjustment to an input that is significant to the entire measurement can result in a fair value measurement classified within Level 3 of the fair value hierarchy, if the adjustment uses significant non-observable data entry.

The instruments likely to be classified as level 3 are mainly Corporate Debt by Chilean and foreign companies, issued both in Chile and abroad.

Valuation Techniques and Inputs for Level 3 Instrument:

Type of Financial Instrument	Valuation Method	Description: Inputs and Sources
Local Bank and Corporate Bonds	Discounted cash flows model	Since inputs for these types of securities are not observable by the market, we model interest rate of returns for them based on a Base Yield (Central Bank Bonds) and issuer spread. These inputs (base yield and issuer spread) are provided on a daily basis by third party price providers that are widely used in the Chilean market.
Offshore Bank and Corporate Bonds	Discounted cash flows model	Since inputs for these types of securities are not observable by the market, we model interest rate of returns for them based on a Base Yield (US-Libor) and issuer spread. These inputs (base yield and issuer spread) are provided on a weekly basis by third party price providers that are widely used in the Chilean market.

95

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

39. Fair Value of Financial Assets and Liabilities, continued:

(b) Level chart:

The following table shows the classification by levels, for financial instruments registered at fair value.

	Level 1				Level 2				Level 3				Total
	June		December		June		December		June		December		June		December
	2021		2020		2021		2020		2021		2020		2021		2020
Financial Assets	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Financial assets held-for-trading
From the Chilean Government and Central Bank		62,912		75,701		2,919,178		4,083,591		—		—		2,982,090		4,159,292
Other instruments issued in Chile		1,328		1,002		146,541		99,302		5,486		5,494		153,355		105,798
Instruments issued abroad		12		164		—		—		—		—		12		164
Mutual fund investments		402,038		400,902		—		—		—		—		402,038		400,902
Subtotal		466,290		477,769		3,065,719		4,182,893		5,486		5,494		3,537,495		4,666,156
Derivative contracts for trading purposes
Forwards		—		—		241,788		551,964		—		—		241,788		551,964
Swaps		—		—		1,408,663		2,013,247		—		—		1,408,663		2,013,247
Call Options		—		—		858		269		—		—		858		269
Put Options		—		—		318		1,462		—		—		318		1,462
Futures		—		—		—		—		—		—		—		—
Subtotal		—		—		1,651,627		2,566,942		—		—		1,651,627		2,566,942
Hedge derivative contracts
Fair value hedge (Swap)		—		—		—		—		—		—		—		—
Cash flow hedge (Swap)		—		—		86,508		51,062		—		—		86,508		51,062
Subtotal		—		—		86,508		51,062		—		—		86,508		51,062
Financial assets available-for-sale (1)
From the Chilean Government and Central Bank		619,010		—		786,988		163,600		—		—		1,405,998		163,600
Other instruments issued in Chile		—		—		935,746		860,327		22,584		36,596		958,330		896,923
Instruments issued abroad		—		—		—		—		—		—		—		—
Subtotal		619,010		—		1,722,734		1,023,927		22,584		36,596		2,364,328		1,060,523
Total		1,085,300		477,769		6,526,588		7,824,824		28,070		42,090		7,639,958		8,344,683
Financial Liabilities
Derivative contracts for trading purposes
Forwards		—		—		198,692		637,186		—		—		198,692		637,186
Swaps		—		—		1,545,758		2,130,474		—		—		1,545,758		2,130,474
Call Options		—		—		533		306		—		—		533		306
Put Options		—		—		521		2,099		—		—		521		2,099
Futures		—		—		—		—		—		—		—		—
Subtotal		—		—		1,745,504		2,770,065		—		—		1,745,504		2,770,065
Hedge derivative contracts
Fair value hedge (Swap)		—		—		1,714		6,519		—		—		1,714		6,519
Cash flow hedge (Swap)		—		—		35,638		65,172		—		—		35,638		65,172
Subtotal		—		—		37,352		71,691		—		—		37,352		71,691
Total		—		—		1,782,856		2,841,756		—		—		1,782,856		2,841,756

(1) As of June 30, 2021, 100% of instruments of Level 3 have denomination “Investment Grade”. Also, 100% of total of these financial instruments correspond to domestic issuers.

96

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

39. Fair Value of Financial Assets and Liabilities, continued:

(c) Level 3 reconciliation:

The following table shows the reconciliation between the balances at the beginning and at the end of period for those instruments classified in Level 3, whose fair value is reflected in the Interim Consolidated Financial Statements:

	June 2021
	Balance as of January 1, 2021		Gain (Loss) Recognized in Income (1)			Gain (Loss) Recognized in Equity (2)			Purchases		Sales			Transfer from Level 1 and 2		Transfer to Level 1 and 2			Balance as of June 31, 2021
	MCh$		MCh$			MCh$			MCh$		MCh$			MCh$		MCh$			MCh$
Financial Assets
Financial assets held-for-trading:
Other instruments issued in Chile		5,494		(8	)		—			—		—			—		—			5,486
Subtotal		5,494		(8	)		—			—		—			—		—			5,486
Available-for-Sale Instruments:
Other instruments issued in Chile		36,596		460			(1,203	)		4,135		(14,962	)		3,025		(5,467	)		22,584
Subtotal		36,596		460			(1,203	)		4,135		(14,962	)		3,025		(5,467	)		22,584
Total		42,090		452			(1,203	)		4,135		(14,962	)		3,025		(5,467	)		28,070

	December 2020
	Balance as of January 1, 2020		Gain (Loss) Recognized in Income (1)			Gain (Loss) Recognized in Equity (2)			Purchases		Sales			Transfer from Level 1 and 2		Transfer to Level 1 and 2		Balance as of December 31, 2020
	MCh$		MCh$			MCh$			MCh$		MCh$			MCh$		MCh$		MCh$
Financial Assets
Financial assets held-for-trading:
Other instruments issued in Chile		55,094		(708	)		—			49,424		(98,316	)		—		—		5,494
Subtotal		55,094		(708	)		—			49,424		(98,316	)		—		—		5,494
Available-for-Sale Instruments:
Other instruments issued in Chile		7,069		323			(647	)		71,539		(70,897	)		29,209		—		36,596
Subtotal		7,069		323			(647	)		71,539		(70,897	)		29,209		—		36,596
Total		62,163		(385	)		(647	)		120,963		(169,213	)		29,209		—		42,090

(1) Recorded in income under item “Net financial operating income”.

(2) Recorded in equity under item “Other Comprehensive Income”.

97

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

39. Fair Value of Financial Assets and Liabilities, continued:

(d) Sensitivity of instruments classified in Level 3 to changes in key assumptions of models:

The following table shows the sensitivity, by type of instrument, of those instruments classified in Level 3 using alternative in key valuation assumptions:

	As of June 30, 2021					As of December 31, 2020
	Level 3		Sensitivity to changes in key assumptions of models			Level 3		Sensitivity to changes in key assumptions of models
Financial Assets	MCh$		MCh$			MCh$		MCh$
Financial assets held-for-trading
Other instruments issued in Chile		5,486		(5	)		5,494		(8	)
Subtotal		5,486		(5	)		5,494		(8	)
Available-for- Sale Instruments
Other instruments issued in Chile		22,584		(361	)		36,596		(525	)
Subtotal		22,584		(361	)		36,596		(525	)
Total		28,070		(366	)		42,090		(533	)

With the purpose of determining the sensitivity of the financial investments to changes in significant market factors, the Bank has made alternative calculations at fair value, changing those key parameters for the valuation and which are not directly observable in screens. In the case of the financial assets listed in the table above, which correspond to Bank Bonds and Corporate Bonds, it was considered that, since there are no current observables prices, the input prices will be based on brokers' quotes. The prices are usually calculated as a base rate plus a spread. For Local Bonds it was determined to apply a 10% impact on the price, while for the Off Shore Bonds it was determined to apply a 10% impact only on the spread, since the base rate is covered by interest rate swaps instruments in the so-called accounting hedges. The 10% impact is considered reasonable, taking into account the market performance of these instruments and comparing it against the bid / offer adjustment that is provisioned by these instruments.

98

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

39. Fair Value of Financial Assets and Liabilities, continued:

(e) Other assets and liabilities:

The following table summarizes the fair values of the Bank’s main financial assets and liabilities that are not recorded at fair value in the Statement of Financial Position. The values shown in this note are not attempt to estimate the value of the Bank’s income-generating assets, nor forecast their future behavior. The estimated fair value is as follows:

	Book Value				Estimated Fair Value
	June		December		June		December
	2021		2020		2021		2020
	MCh$		MCh$		MCh$		MCh$
Assets
Cash and due from banks		2,407,350		2,560,216		2,407,350		2,560,216
Transactions in the course of collection		616,932		582,308		616,932		582,308
Investments under resale agreements		92,797		76,407		92,797		76,407
Subtotal		3,117,079		3,218,931		3,117,079		3,218,931
Loans and advances to banks
Domestic banks		—		259,862		—		259,862
Central Bank of Chile		3,200,000		2,380,033		3,200,000		2,380,033
Foreign banks		246,995		299,096		245,062		297,778
Subtotal		3,446,995		2,938,991		3,445,062		2,937,673
Loans to customers, net
Commercial loans		18,093,920		17,169,744		17,701,682		16,968,143
Residential mortgage loans		9,839,694		9,354,890		10,093,507		10,075,011
Consumer loans		3,643,663		3,665,424		3,631,568		3,711,582
Subtotal		31,577,277		30,190,058		31,426,757		30,754,736
Financial assets held-to-maturity		127,770		—		125,118		—
Total		38,269,121		36,347,980		38,114,016		36,911,340
Liabilities
Current accounts and other demand deposits		17,408,414		15,167,229		17,408,414		15,167,229
Transactions in the course of payment		710,418		1,302,000		710,418		1,302,000
Obligations under repurchase agreements		150,185		288,917		150,185		288,917
Savings accounts and time deposits		7,869,674		8,899,541		7,851,209		8,885,015
Borrowings from banks		4,968,562		3,669,753		4,584,689		3,415,959
Other financial obligations		218,703		191,713		242,657		217,311
Subtotal		31,325,956		29,519,153		30,947,572		29,276,431
Debt Issued
Letters of credit for residential purposes		5,114		6,532		5,468		7,201
Letters of credit for general purposes		159		254		170		280
Bonds		7,873,277		7,700,402		8,010,538		8,390,594
Subordinate bonds		892,760		886,407		902,347		1,004,196
Subtotal		8,771,310		8,593,595		8,918,523		9,402,271
Total		40,097,266		38,112,748		39,866,095		38,678,702

Other financial assets and liabilities not measured at their fair value, but for which a fair value is estimated, even if not managed based on such value, include assets and liabilities such as placements, deposits and other time deposits, debt issued, and other financial assets and obligations with different maturities and characteristics. The fair value of these assets and liabilities is calculated using the Discounted Cash Flow model and the use of various data sources such as yield curves, credit risk spreads, etc. In addition, due to some of these assets and liabilities are not traded on the market, periodic reviews and analyzes are required to determine the suitability of the inputs and determined fair values.

99

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

39. Fair Value of Financial assets and liabilities, continued:

(f) Levels of other assets and liabilities:

The following table shows the estimated fair value of financial assets and liabilities not valued at their fair value, as of June 30, 2021 and December 31, 2020:

	Level 1 Estimated Fair Value				Level 2 Estimated Fair Value				Level 3 Estimated Fair Value				Total Estimated Fair Value
	June		December		June		December		June		December		June		December
	2021		2020		2021		2020		2021		2020		2021		2020
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Assets
Cash and due from banks		2,407,350		2,560,216		—		—		—		—		2,407,350		2,560,216
Transactions in the course of collection		616,932		582,308		—		—		—		—		616,932		582,308
Investments under resale agreements		92,797		76,407		—		—		—		—		92,797		76,407
Subtotal		3,117,079		3,218,931		—		—		—		—		3,117,079		3,218,931
Loans and advances to banks
Domestic banks		—		259,862		—		—		—		—		—		259,862
Central Bank		3,200,000		2,380,033		—		—		—		—		3,200,000		2,380,033
Foreign banks		—		—		—		—		245,062		297,778		245,062		297,778
Subtotal		3,200,000		2,639,895		—		—		245,062		297,778		3,445,062		2,937,673
Loans to customers, net
Commercial loans		—		—		—		—		17,701,682		16,968,143		17,701,682		16,968,143
Residential mortgage loans		—		—		—		—		10,093,507		10,075,011		10,093,507		10,075,011
Consumer loans		—		—		—		—		3,631,568		3,711,582		3,631,568		3,711,582
Subtotal		—		—		—		—		31,426,757		30,754,736		31,426,757		30,754,736
Financial assets held-to-maturity		125,118		—		—		—		—		—		125,118		—
Total		6,442,197		5,858,826		—		—		31,671,819		31,052,514		38,114,016		36,911,340
Liabilities
Current accounts and other demand deposits		17,408,414		15,167,229		—		—		—		—		17,408,414		15,167,229
Transactions in the course of payment		710,418		1,302,000		—		—		—		—		710,418		1,302,000
Obligations under repurchase agreements		150,185		288,917		—		—		—		—		150,185		288,917
Savings accounts and time deposits		—		—		—		—		7,851,209		8,885,015		7,851,209		8,885,015
Borrowings from banks		—		—		—		—		4,584,689		3,415,959		4,584,689		3,415,959
Other financial obligations		—		—		—		—		242,657		217,311		242,657		217,311
Subtotal		18,269,017		16,758,146		—		—		12,678,555		12,518,285		30,947,572		29,276,431
Debt Issued
Letters of credit for residential purposes		—		—		5,468		7,201		—		—		5,468		7,201
Letters of credit for general purposes		—		—		170		280		—		—		170		280
Bonds		—		—		8,010,538		8,390,594		—		—		8,010,538		8,390,594
Subordinated bonds		—		—		—		—		902,347		1,004,196		902,347		1,004,196
Subtotal		—		—		8,016,176		8,398,075		902,347		1,004,196		8,918,523		9,402,271
Total		18,269,017		16,758,146		8,016,176		8,398,075		13,580,902		13,522,481		39,866,095		38,678,702

100

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

39. Fair Value of Financial Assets and Liabilities, continued:

(f) Levels of other assets and liabilities, continued:

The Bank determines the fair value of these assets and liabilities according to the following:

● Short-term assets and liabilities: For assets and liabilities with short-term maturity, it is assumed that the book values approximate to their fair value. This assumption is applied to the following assets and liabilities:

Assets: Liabilities:

-	Cash and deposits in banks	-	Current accounts and other demand deposits
-	Transactions in the course of collection	-	Transactions in the course of payments
-	Investments under resale agreements	-	Obligations under repurchase agreements
-	Loans and advance to domestic banks

● Loans to Customers and Advance to foreign banks: Fair value is determined by using the discounted cash flow model and internally generated discount rates, based on internal transfer rates derived from our internal transfer price process. Once the present value is determined, we deduct the related loan loss allowances in order to incorporate the credit risk associated with each contract or loan. As we use internally generated parameters for valuation purposes, we categorize these instruments in Level 3.

● Investment Instruments Until Maturity: The fair value is calculated with the methodology of the Stock Exchange, using the market IRR observed in the market. Because the instruments that are in this category correspond to Treasury Bonds that are Benchmark, they are classified in Level 1.

● Letters of Credit and Bonds: In order to determine the present value of contractual cash flows, we apply the discounted cash flow model by using market interest rates that are available in the market, either for the instruments under valuation or instruments with similar features that fit valuation needs in terms of currency, maturities and liquidity. The market interest rates are obtained from third party price providers widely used by the market. As a result of the valuation technique and the quality of inputs (observable) used for valuation, we categorize these financial liabilities in Level 2.

● Saving Accounts, Time Deposits, Borrowings from Financial Institutions, Subordinated Bonds and Other borrowings financial: The discounted cash flow model is used to obtain the present value of committed cash flows by applying a bucket approach and average adjusted discount rates that derived from both market rates for instruments with similar features and our internal transfer price process. As we use internally generated parameters and/or apply significant judgmental analysis for valuation purposes, we categorize these financial liabilities in Level 3.

101

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

39. Fair Value of Financial Assets and Liabilities, continued:

(g) Offsetting of financial assets and liabilities:

The Bank trades financial derivatives with foreign counterparties using ISDA Master Agreement (International Swaps and Derivatives Association, Inc.), under legal jurisdiction of the City of New York – USA or London – United Kingdom. Legal framework in these jurisdictions, along with documentation mentioned, it allows Banco de Chile the right to anticipate the maturity of the transaction and then, offset the net value of those transactions in case of default of counterparty. Additionally, the Bank has negotiated with these counterparties an additional annex (CSA Credit Support Annex), that includes other credit mitigating, such as entering margins on a certain amount of net value of transactions, early termination (optional or mandatory) of transactions at certain dates in the future, coupon adjustment of transaction in exchange for payment of the debtor counterpart over a certain threshold amount, etc.

Below are detail the contracts susceptible to offset: 

	Fair Value				Negative Fair Value of contracts with right to offset						Positive Fair Value of contracts with right to offset						Financial Collateral						Net Fair Value
	June		December		June			December			June			December			June			December			June		December
	2021		2020		2021			2020			2021			2020			2021			2020			2021		2020
	MCh$		MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$		MCh$
Derivative financial assets		1,738,135		2,618,004		(554,761	)		(653,145	)		(875,542	)		(1,605,409	)		(111,022	)		(85,614	)		196,810		273,836
Derivative financial liabilities		1,782,856		2,841,756		(554,761	)		(653,145	)		(875,542	)		(1,605,409	)		(110,770	)		(218,329	)		241,783		364,873

102

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

40. Maturity of Assets and Liabilities:

The table below details the main financial assets and liabilities grouped in accordance with their remaining maturity, including accrued interest as of June 30, 2021 and December 31, 2020, respectively. As these are for trading and available-for-sale instruments are included at their fair value:

	As of June 30, 2021
	Demand		Up to 1 month		Over 1 month and up to 3 months		Over 3 month and up to 12 months		Subtotal up to 1 year		Over 1 year and up to 3 years		Over 3 year and up to 5 years		Over 5 years		Subtotal over 1 year		Total
Assets	MM$		MM$		MM$		MM$		MM$		MM$		MM$		MM$		MM$		MM$
Cash and due from banks		2,407,350		—		—		—		2,407,350		—		—		—		—		2,407,350
Transactions in the course of collection		—		616,932		—		—		616,932		—		—		—		—		616,932
Financial Assets held-for-trading		—		3,537,495		—		—		3,537,495		—		—		—		—		3,537,495
Investments under resale agreements		—		45,784		24,359		22,654		92,797		—		—		—		—		92,797
Derivative instruments		—		86,183		93,950		247,321		427,454		450,943		294,714		565,024		1,310,681		1,738,135
Loans and advances to banks (*)		—		3,231,425		2,974		213,015		3,447,414		—		—		—		—		3,447,414
Loans to customers (*)		—		3,448,633		2,438,899		5,510,184		11,397,716		7,385,857		3,813,982		9,667,191		20,867,030		32,264,746
Financial assets available-for-sale		—		93,860		179,375		1,318,751		1,591,986		12,730		228,595		531,017		772,342		2,364,328
Financial assets held-to-maturity		—		—		—		—		—		—		127,770		—		127,770		127,770
Total financial assets		2,407,350		11,060,312		2,739,557		7,311,925		23,519,144		7,849,530		4,465,061		10,763,232		23,077,823		46,596,967

	As of December 31, 2020
	Demand		Up to 1 month		Over 1 month and up to 3 months		Over 3 month and up to 12 months		Subtotal up to 1 year		Over 1 year and up to 3 years		Over 3 year and up to 5 years		Over 5 years		Subtotal over 1 year		Total
Assets	MM$		MM$		MM$		MM$		MM$		MM$		MM$		MM$		MM$		MM$
Cash and due from banks		2,560,216		—		—		—		2,560,216		—		—		—		—		2,560,216
Transactions in the course of collection		—		582,308		—		—		582,308		—		—		—		—		582,308
Financial Assets held-for-trading		—		4,666,156		—		—		4,666,156		—		—		—		—		4,666,156
Investments under resale agreements		—		39,095		20,591		16,721		76,407		—		—		—		—		76,407
Derivative instruments		—		131,978		211,871		423,431		767,280		593,691		405,153		851,880		1,850,724		2,618,004
Loans and advances to banks (*)		—		2,743,134		71,401		125,121		2,939,656		—		—		—		—		2,939,656
Loans to customers (*)		—		3,135,152		2,173,685		5,791,178		11,100,015		6,876,058		3,711,756		9,249,139		19,836,953		30,936,968
Financial assets available-for-sale		—		78,180		140,367		487,075		705,622		162,683		16,856		175,362		354,901		1,060,523
Financial assets held-to-maturity		—		—		—		—		—		—		—		—		—		—
Total financial assets		2,560,216		11,376,003		2,617,915		6,843,526		23,397,660		7,632,432		4,133,765		10,276,381		22,042,578		45,440,238

(*) These balances are presented without deduction of their respective provisions, which amount to Ch$687,469 million (Ch$746,910 million in December 2020) for loans to customers and Ch$419 million (Ch$665 million in December 2020) for borrowings from financial institutions.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

40. Maturity of Assets and Liabilities, continued:

	As of June 30, 2021
	Demand		Up to 1 month		Over 1 month and up to 3 months		Over 3 month and up to 12 months		Subtotal up to 1 year		Over 1 year and up to 3 years		Over 3 year and up to 5 years		Over 5 years		Subtotal over 1 year		Total
Liabilities	MM$		MM$		MM$		MM$		MM$		MM$		MM$		MM$		MM$		MM$
Current accounts and other demand deposits		17,408,414		—		—		—		17,408,414		—		—		—		—		17,408,414
Transactions in the course of payment		—		710,418		—		—		710,418		—		—		—		—		710,418
Obligations under repurchase agreements		—		149,813		44		328		150,185		—		—		—		—		150,185
Savings accounts and time deposits (**)		—		5,872,903		1,145,512		432,342		7,450,757		6,876		1,012		230		8,118		7,458,875
Derivative instruments		—		70,674		87,287		252,928		410,889		510,031		309,509		552,427		1,371,967		1,782,856
Borrowings from financial institutions		—		249,524		19,476		1,260,785		1,529,785		3,438,777		—		—		3,438,777		4,968,562
Debt issued:
Mortgage bonds		—		564		772		1,238		2,574		1,866		467		366		2,699		5,273
Bonds		—		279,293		453,227		818,785		1,551,305		1,735,623		1,737,836		2,848,513		6,321,972		7,873,277
Subordinate bonds		—		3,848		1,291		113,636		118,775		22,987		17,500		733,498		773,985		892,760
Lease liabilities		—		218,421		30		112		218,563		130		10		—		140		218,703
Other financial obligations		—		2,384		4,667		20,633		27,684		34,407		19,359		26,735		80,501		108,185
Total financial liabilities		17,408,414		7,557,842		1,712,306		2,900,787		29,579,349		5,750,697		2,085,693		4,161,769		11,998,159		41,577,508

	As of December 31, 2020
	Demand		Up to 1 month		Over 1 month and up to 3 months		Over 3 month and up to 12 months		Subtotal up to 1 year		Over 1 year and up to 3 years		Over 3 year and up to 5 years		Over 5 years		Subtotal over 1 year		Total
Pasivos	MM$		MM$		MM$		MM$		MM$		MM$		MM$		MM$		MM$		MM$
Current accounts and other demand deposits		15,167,229		—		—		—		15,167,229		—		—		—		—		15,167,229
Transactions in the course of payment		—		1,302,000		—		—		1,302,000		—		—		—		—		1,302,000
Obligations under repurchase agreements		—		288,874		43		—		288,917		—		—		—		—		288,917
Savings accounts and time deposits (**)		—		5,909,865		1,945,177		642,125		8,497,167		58,441		1,232		151		59,824		8,556,991
Derivative instruments		—		185,196		243,096		442,551		870,843		666,493		427,190		877,230		1,970,913		2,841,756
Borrowings from financial institutions		—		76,018		141,809		341,188		559,015		1,020,138		2,090,600		—		3,110,738		3,669,753
Debt issued:
Mortgage bonds		—		806		793		1,714		3,313		2,321		838		314		3,473		6,786
Bonds		—		220,455		113,448		891,973		1,225,876		1,704,497		1,586,221		3,183,808		6,474,526		7,700,402
Subordinate bonds		—		3,547		1,221		113,397		118,165		29,354		16,688		722,200		768,242		886,407
Lease liabilities		—		191,303		40		163		191,506		189		18		—		207		191,713
Other financial obligations		—		2,271		4,621		20,025		26,917		39,697		19,424		28,979		88,100		115,017
Total financial liabilities		15,167,229		8,180,335		2,450,248		2,453,136		28,250,948		3,521,130		4,142,211		4,812,682		12,476,023		40,726,971

(**) Excludes term saving accounts, which amount to Ch$410,799 million (Ch$342,550 million in December 2020).

104

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

41. Subsequent Events:

In Management’s opinion, there are no significant subsequent events that affect or could affect the Interim Consolidated Financial Statements of Banco de Chile and its subsidiaries between June 30, 2021 and the date of issuance of these Interim Consolidated Financial Statements. 

Héctor Hernández G. General Accounting Manager	Eduardo Ebensperger O. Chief Executive Officer

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