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 October, 2022

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 þ 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 þ

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 September 30, 2022.

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: October 27, 2022

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 Statements of Financial Position		1
Interim Consolidated Statements of Income		3
Interim Consolidated Statements of Other Comprehensive Income		5
Interim Consolidated Statements of Change Equity		6
Interim Consolidated Statements of Cash Flows		7
1.	Company information:	9
2.	Summary of Significant Accounting Principles:	10
3.	New Accounting Pronouncements Issued and Adopted, or Issued that have not yet been Adopted:	51
4.	Accounting Changes:	58
5.	Relevant Events:	68
6.	Business Segments:	69
7.	Cash and Cash Equivalents:	72
8.	Financial Assets Held for Trading at Fair Value through Profit or Loss:	73
9.	Non-trading Financial Assets mandatorily measured at Fair Value through Profit or Loss:	75
10.	Financial Assets and Liabilities designated as at Fair Value through Profit or Loss:	75
11.	Financial Assets at Fair Value through Other Comprehensive Income:	76
12.	Derivative Financial Instruments for hedging purposes:	79
13.	Financial assets at amortized cost:	84
14.	Investments in other companies:	110
15.	Intangible Assets:	113
16.	Property and equipment:	114
17.	Right-of-use assets and Lease liabilities:	116
18.	Taxes:	119
19.	Other Assets:	125
20.	Non-current assets and disposal groups held for sale and Liabilities included in disposal groups for sale:	126
21.	Financial liabilities held for trading at fair value through profit or loss:	127
22.	Financial liabilities at amortized cost:	128
23.	Financial instruments of regulatory capital issued:	133
24.	Provisions for contingencies:	137
25.	Provision for dividends, interests and reappraisal of financial instruments of regulatory capital issued:	142
26.	Special provisions for credit risk:	143
27.	Other Liabilities:	144
28.	Equity:	145
29.	Contingencies and Commitments:	150
30.	Interest Revenue and Expenses:	155
31.	UF indexation revenue and expenses:	158
32.	Income and Expeses from commissions:	161
33.	Net Financial income (expense):	162
34.	Income attributable to investments in other companies:	163
35.	Result from non-current assets and disposal groups held for sale not admissible as discontinued operations:	164
36.	Other operating Income and Expenses:	165
37.	Expenses from salaries and employee benefits:	166
38.	Administrative expenses:	166
39.	Depreciation and Amortization:	167
40.	Impairment of non-financial assets:	167
41.	Credit loss expense:	168
42.	Income from discontinued operations:	170
43.	Related Party Disclosures:	170
44.	Fair Value of Financial Assets and Liabilities:	176
45.	Maturity according to their remaining Terms of Financial Assets and Liabilities:	188
46.	Financial and Non-Financial Assets and Liabilities by Currency:	190
47.	Risk Management and Report:	194
48.	Information on Regulatory Capital and Capital Adequacy Ratios:	235
49.	Subsequent Events:	238

i

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

For the periods ended September 30, 2022 and December 31, 2021

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

______________

			September		December
	Notes		2022		2021
			MCh$		MCh$
ASSETS
Cash and due from banks		7		2,857,318		3,713,734
Transactions in the course of collection		7		488,526		486,700
Financial assets held for trading at fair value through profit or loss:
Derivative financial instruments		8		4,158,473		2,705,496
Debt financial instruments		8		2,183,448		3,737,942
Others		8		5,274		138,753
Non-trading financial assets mandatorily measured at fair value through profit or loss		9		—		—
Financial assets at fair value through profit or loss		10		—		—
Financial assets at fair value through other comprehensive income:
Debt financial instruments		11		3,662,443		3,054,809
Others		11		—		—
Derivative financial instruments for hedging purposes		12		168,146		277,802
Financial assets at amortized cost:
Rights by resale agreements and securities lending		13		44,488		64,365
Debt financial instruments		13		885,951		839,744
Loans and advances to Banks		13		3,111,269		1,529,313
Loans to customers - Commercial loans		13		19,786,445		19,217,868
Loans to customers - Residential mortgage loans		13		11,136,919		10,315,921
Loans to customers - Consumer loans		13		4,400,347		3,978,079
Investments in other companies		14		59,732		52,757
Intangible assets		15		86,916		72,532
Property and equipment		16		210,311		222,320
Right-of-use assets		17		100,541		100,188
Current tax assets		18		75,562		846
Deferred tax assets		18		521,337		434,277
Other assets		19		856,833		795,461
Non-current assets and disposal groups held for sale		20		13,176		19,419
TOTAL ASSETS				54,813,455		51,758,326

The accompanying notes 1 to 49 are an integral part of these interim consolidated financial statements

1

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

For the periods ended September 30, 2022 and December 31, 2021

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

______________

			September			December
	Notes		2022			2021
			MCh$			MCh$
LIABILITIES
Transactions in the course of payment		7		402,356			369,980
Financial liabilities held for trading at fair value through profit or loss:
Derivative financial instruments		21		4,321,134			2,772,503
Others		21		2,742			9,610
Financial liabilities designated as at fair value through profit or loss		10		—			—
Derivative Financial Instruments for hedging purposes		12		28,930			696
Financial liabilities at amortized cost:
Current accounts and other demand deposits		22		14,298,698			18,249,881
Saving accounts and time deposits		22		12,992,748			8,803,713
Obligations by repurchase agreements and securities lending		22		201,805			85,399
Borrowings from financial institutions		22		5,360,800			4,861,865
Debt financial instruments issued		22		8,782,813			8,561,395
Other financial obligations		22		234,149			250,005
Lease liabilities		17		95,457			95,670
Financial instruments of regulatory capital issued		23		1,002,053			917,510
Provisions for contingencies		24		151,369			143,858
Provision for dividends, interests and reappraisal of financial instruments of regulatory capital issued		25		375,197			323,897
Special provisions for credit risk		26		761,441			601,574
Currents tax liabilities		18		677			113,129
Deferred tax liabilities		18		—			—
Other liabilities		27		1,115,413			1,304,119
Liabilities included in disposal groups held for sale		20		—			—
TOTAL LIABILITIES				50,127,782			47,464,804
EQUITY
Capital		28		2,420,538			2,420,538
Reserves		28		709,742			710,472
Accumulated other comprehensive income
Elements that are not reclassified in profit and loss		28		2,608			2,469
Elements that can be reclassified in profit and loss		28		(43,415	)		36,270
Retained earnings from previous periods		28		908,572			655,478
Income for the period/year		28		1,062,823			792,191
Less: Provision for dividends, interests and reappraisal of financial instruments of regulatory capital issued		28		(375,197	)		(323,897	)
Shareholders of the Bank		28		4,685,671			4,293,521
Non-controlling interests		28		2			1
TOTAL EQUITY				4,685,673			4,293,522
TOTAL LIABILITIES AND EQUITY				54,813,455			51,758,326

The accompanying notes 1 to 49 are an integral part of these interim consolidated financial statements

2

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF INCOME
for the period between January 1, and September 30,
(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

______________

			For the nine-months period ended September 30,						01.07.2022 to			01.07.2021 to
	Notes		2022			2021			30.09.2022			30.09.2021
			MCh$			MCh$			MCh$			MCh$
Interest revenue		30		1,620,414			985,544			629,903			340,488
Interest expense		30		(683,201	)		(179,728	)		(316,751	)		(63,521	)
Net interest income				937,213			805,816			313,152			276,967
UF indexation revenue		31		1,683,547			518,442			599,991			195,552
UF indexation expenses		31		(911,247	)		(291,179	)		(330,063	)		(105,624	)
Net income from UF indexation				772,300			227,263			269,928			89,928
Income from commissions		32		501,230			438,520			174,285			153,243
Expenses from commissions		32		(106,051	)		(87,154	)		(36,390	)		(32,245	)
Net income from commissions				395,179			351,366			137,895			120,998
Financial income (expense) for:
Financial assets and liabilities held for trading		33		124,876			120,160			74,857			102,381
Non-trading financial assets mandatorily measured at fair value through profit or loss		33		—			—			—			—
Financial assets and liabilities designated as at fair value through profit or loss		33		—			—			—			—
Result from derecognition of financial assets and liabilities at amortized cost and financial assets at fair value through other comprehensive income		33		(57,902	)		9,358			(58,376	)		(50	)
Exchange, indexation and accounting hedging of foreign currency		33		111,449			(29,073	)		29,244			(64,746	)
Reclassification of financial assets for changes in the business model		33		—			—			—			—
Other financial result		33		—			—			—			—
Net Financial income (expense)		33		178,423			100,445			45,725			37,585
Income attributable to investments in other companies		34		8,427			(2,847	)		3,139			(353	)
Result from non-current assets and disposal groups held for sale not admissible as discontinued operations		35		(134	)		3,585			(1,194	)		820
Other operating income		36		18,729			13,932			9,541			5,141
TOTAL OPERATING INCOME				2,310,137			1,499,560			778,186			531,086
Expenses from salaries and employee benefits		37		(382,327	)		(335,929	)		(137,349	)		(111,335	)
Administrative expenses		38		(265,402	)		(239,882	)		(91,978	)		(78,115	)
Depreciation and amortization		39		(62,819	)		(57,003	)		(21,806	)		(19,235	)
Impairment of non-financial assets		40		(60	)		342			(160	)		12
Other operating expenses		36		(18,269	)		(14,513	)		(7,311	)		(6,915	)
TOTAL OPERATING EXPENSES				(728,877	)		(646,985	)		(258,604	)		(215,588	)
OPERATING RESULT BEFORE CREDIT LOSSES				1,581,260			852,575			519,582			315,498

The accompanying notes 1 to 49 are an integral part of these interim consolidated financial statements

3

BANCO DE CHILE AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF INCOME
for the period between January 1, and September 30,
(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

______________

			For the nine-months period ended September 30,						01.07.2022 to			01.07.2021 to
	Notes		2022			2021			30.09.2022			30.09.2021
			MCh$			MCh$			MCh$			MCh$
Credit loss expense for:
Provisions for credit risk of loans and advances to banks and loans to customers		41		(194,324	)		(116,829	)		(74,504	)		(46,441	)
Special provisions for credit risk		41		(158,378	)		(144,081	)		(41,248	)		(52,538	)
Recovery of written-off credits		41		48,606			47,406			16,214			16,406
Impairments for credit risk from other financial assets at amortized cost and financial assets at fair value through other comprehensive income		41		(7,653	)		(5,381	)		(6,680	)		(6,504	)
Credit loss expense		41		(311,749	)		(218,885	)		(106,218	)		(89,077	)
NET OPERATING INCOME				1,269,511			633,690			413,364			226,421
Income from continuing operations before tax
Income tax		18		(206,686	)		(128,513	)		(73,788	)		(46,933	)
Income from continuing operations after tax				1,062,825			505,177			339,576			179,488
Income from discontinued operations before tax
Discontinued operations income tax		18		—			—			—			—
Income from discontinued operations after tax		42		—			—			—			—
NET INCOME FOR THE PERIOD		28		1,062,825			505,177			339,576			179,488
Attributable to:
Shareholders of the Bank		28		1,062,823			505,176			339,574			179,487
Non-controlling interests				2			1			2			1
Earnings per share:			$			$			$			$
Basic earnings		28		10.52			5.00			3.36			1.78
Diluted earnings		28		10.52			5.00			3.36			1.78

The accompanying notes 1 to 49 are an integral part of these interim consolidated financial statements

4

BANCO DE CHILE AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
for the period between January 1, and September 30,
(Free translation of Interim Consolidated Financial Statements originally issued in Spanish)

______________

			For the nine-months period ended September 30,						01.07.2022 to			01.07.2021 to
	Notes		2022			2021			30.09.2022			30.09.2021
			MCh$			MCh$			MCh$			MCh$
NET INCOME FOR THE PERIOD		28		1,062,825			505,177			339,576			179,488
ITEMS NOT TO BE RECLASSIFIED TO PROFIT OR LOSS
Re-measurement of the liability (asset) for net defined benefits and actuarial results for other employee benefit plans		28		(8	)		500			—			130
Fair value changes of equity instruments designated as at fair value through other comprehensive income		28		199			(1,254	)		—			(435	)
Fair value changes of financial liabilities designated as at fair value through profit or loss attributable to changes in the credit risk of the financial liability		28		—			—			—			—
Others		28		—			—			—			—
TOTAL ELEMENTS THAT WILL NOT BE RECLASSIFIED IN PROFIT OR LOSS				191			(754	)		—			(305	)
OTHER COMPREHENSIVE INCOME THAT WILL NOT BE RECLASSIFIED TO PROFIT OR LOSS BEFORE TAX
Income tax on other comprehensive income that will not be reclassified to profit or loss		28		(52	)		204			—			84
TOTAL OTHER COMPREHENSIVE INCOME THAT WILL NOT BE RECLASSIFIED TO INCOME AFTER TAXES		28		139			(550	)		—			(221	)
ELEMENTS THAT CAN BE RECLASSIFIED TO PROFIT OR LOSS
Fair value changes of financial assets at fair value through other comprehensive income		28		5,118			(111,710	)		13,348			(62,318	)
Cash flow hedges		28		(119,933	)		198,321			20,018			115,948
Participation in other comprehensive income of entities registered under the equity method		28		(48	)		(7	)		(48	)		(12	)
OTHER COMPREHENSIVE INCOME THAT WILL BE RECLASSIFIED TO INCOME BEFORE TAXES				(114,863	)		86,604			33,318			53,618
Income tax on other comprehensive income that can be reclassified in profit or loss		28		35,178			(50,641	)		(2,193	)		(41,737	)
TOTAL OTHER COMPREHENSIVE INCOME THAT WILL BE RECLASSIFIED TO PROFIT OR LOSS AFTER TAX		28		(79,685	)		35,963			31,125			11,881
TOTAL OTHER COMPREHENSIVE INCOME FOR THE PERIOD		28		(79,546	)		35,413			31,125			11,660
CONSOLIDATED COMPREHENSIVE INCOME FOR THE PERIOD				983,279			540,590			370,701			191,148
Attributable to:
Shareholders of the Bank				983,277			540,589			370,699			191,147
Non-controlling interests				2			1			2			1

The accompanying notes 1 to 49 are an integral part of these interim consolidated financial statements

5

BANCO DE CHILE AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the period between January 1, 2021 and September 30, 2022 and 2021

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

______________

			Attributable to shareholders of the Bank
	Note		Capital		Reserves			Accumulated other comprehnsive income			Retained earnings from previous periods and income (loss) for the period			Total			Non- controlling interests			Total Equity
			MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Closing balances as of December 31, 2020 before restatement as of January 1, 2021				2,418,833		703,206			(51,250	)		655,478			3,726,267			1			3,726,268
Accounting Policies Changes Effects				1,705		(3,406	)		5,321			—			3,620			—			3,620
Opening balances as of January 1, 2021				2,420,538		699,800			(45,929	)		655,478			3,729,887			1			3,729,888
Common shares subscribed and paid		28		—		—			—			(220,271	)		(220,271	)		—			(220,271	)
Payment of common stock dividends				—		—			—			220,271			220,271			—			220,271
Provision for payment of common stock dividends				—		—			—			(226,135	)		(226,135	)		—			(226,135	)
Subtotal: transactions with owners during the year (period)				—		—			—			(226,135	)		(226,135	)		—			(226,135	)
Income for the period 2021				—		—			—			505,176			505,176			1			505,177
Other comprehensive income for the period		28		—		—			35,413			—			35,413			—			35,413
Subtotal: Comprehensive income for the period				—		—			35,413			505,176			540,589			1			540,590
Closing balance as of 30.09.2021				2,420,538		699,800			(10,516	)		934,519			4,044,341			2			4,044,343
Common shares subscribed and paid				—		—			—			—			—			(1	)		(1	)
Provision for payment of common stock dividends				—		—			—			(97,762	)		(97,762	)		—			(97,762	)
Subtotal: transactions with owners during the period				—		—			—			(97,762	)		(97,762	)		(1	)		(97,763	)
Income for the period 2021				—		—			—			287,015			287,015			—			287,015
Other comprehensive income for the period				—		—			49,255			—			49,255			—			49,255
Subtotal:  Comprehensive income for the period				—		—			49,255			287,015			336,270			—			336,270
Closing balances as of December 31, 2021 before restatement				2,420,538		699,800			38,739			1,123,772			4,282,849			1			4,282,850
Accounting Policies Changes Effects				—		10,672			—			—			10,672			—			10,672
Balances as of December 31, 2021				2,420,538		710,472			38,739			1,123,772			4,293,521			1			4,293,522
Opening balance as of al 01.01.2022				2,420,538		710,472			38,739			1,123,772			4,293,521			1			4,293,522
Common stocks subscribed and paid		28		—		—			—			(539,827	)		(539,827	)		(1	)		(539,828	)
Dividend payment os common stocks		28		—		—			—			323,897			323,897			—			323,897
Earnings reserves from previous year				—		(730	)		—			730			—			—			—
Provision for payment of common stock dividends		28		—		—			—			(375,197	)		(375,197	)		—			(375,197	)
Subtotal: transactions with owners during the year (period)				—		(730	)		—			(590,397	)		(591,127	)		(1	)		(591,128	)
Income for the period 2022				—		—			—			1,062,823			1,062,823			2			1,062,825
Other comprehensive income for the period		28		—		—			(79,546	)		—			(79,546	)		—			(79,546	)
Subtotal: Comprehensive income for the period				—		—			(79,546	)		1,062,823			983,277			2			983,279
Balances as of September 30, 2022				2,420,538		709,742			(40,807	)		1,596,198			4,685,671			2			4,685,673

The accompanying notes 1 to 49 are an integral part of these interim consolidated financial statements

6

BANCO DE CHILE AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
for the periods between January 1 and September 30, 2022 and 2021

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

______________

			September			September
	Notes		2022			2021
			MCh$			MCh$
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit for the period before taxes				1,269,511			633,690
Income tax		18		(206,686	)		(128,513	)
Profit for the period after taxes				1,062,825			505,177
Charges (credits) to income (loss) that do not represent cash flows
Depreciation and amortization		39		62,819			57,003
Impairment of non-financial assets		40		60			(342	)
Provisiones constituted by credit risk				209,994			125,432
Provisions for contingencies		26		5,361			859
Additional provisions		41		145,000			140,000
Fair value of debt financial instruments held for trading at fair value through in profit or loss				(2,844	)		7,824
Change in deferred tax assets and liabilities		18		(84,316	)		(26,577	)
Net (income) loss from investments in companies with significant influence		14		(7,927	)		3,237
Net (income) loss on sale of assets received in payments				(3,070	)		(2,124	)
Net (income) loss on sale of sale of fixed assets				(553	)		(208	)
Write-offs of assets received in payment				5,144			1,557
Other charges (credits) that do not represent cash flows				(1,599	)		20,808
Net change in exchange rates, interest, readjustments and commissions accrued on assets and liabilities				(401,535	)		59,867
Changes due to (increase) decrease in assets and liabilities affecting the operating flow:
Net ( increase ) decrease in accounts receivable from banks				(1,579,147	)		921,370
Net ( increase ) decrease in loans and accounts receivables from customers				(588,685	)		(2,080,457	)
Net ( increase ) decrease of debt financial instruments held for trading at fair value through profit or loss				7,543			85,561
Net ( increase ) decrease in other assets and liabilities				(263,926	)		127,953
Increase ( decrease ) in deposits and other demand obligations				(3,953,440	)		2,307,159
Increase ( decrease ) in repurchase agreements and securities loans				(73,805	)		(163,883	)
Increase ( decrease ) in deposits and other time deposits				4,037,361			(125,188	)
Sale of assets received in lieu of payment				13,029			6,827
Increase ( decrease ) in  obligations with foreign banks				492,410			(92,466	)
Increase ( decrease ) in other financial obligations				(15,755	)		67,614
Increase ( decrease ) in obligations with the Central Bank of Chile				(14	)		1,237,800
Payment of other long-term loans				(91	)		(174	)
Net increase ( decrease ) of debt financial instruments at fair value through other comprehensive income				(502,210	)		(2,482,319	)
Net increase ( decrease)  of investment instruments held-to-maturity				6,257			(299,324	)
Total net cash flows provided by (used in) operating activities				(1,431,114	)		402,986
TOTAL NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Leasedhold improvements				(1,815	)		(1,191	)
Fixed assets purchase		16		(11,811	)		(27,870	)
Fixed assets sale				553			208
Acquisition of intangibles		15		(31,295	)		(20,759	)
Acquisition of investments in companies		14		—			(7,847	)
Dividend received of investments in companies				1,622			1,487
Total net cash flows from (used in) investing activities				(42,746	)		(55,972	)
CASH FLOW FROM FINANCING ACTIVITIES:
Attributable to the interest of the owners:
Redemption and payment of interest of letters of credit				(1,659	)		(1,263	)
Redemption and payment of interest on current bonds				(1,095,904	)		(1,146,515	)
Redemption and payment of interest on subordinated bonds				(34,090	)		(34,720	)
Current bonds issuance		22		350,068			765,735
Subordinated bonds issuance				—			—
Capital increase by issuance of common shares				—			—
Payment of common stock dividends		28		(539,827	)		(220,271	)
Principal and interest payments for obligations under lease contracts		17		(24,136	)		(22,988	)
Attributable to non-controlling interest:
Dividend payment and/or withdrawals of paid-in capital in respect of the subsidiaries corresponding to the non-controlling interest				(1	)		(1	)
Total net cash flows from (used in) financing activities				(1,345,549	)		(660,023	)
VARIATION IN CASH AND CASH EQUIVALENTS DURING THE PERIOD				(2,819,409	)		(313,009	)
Exchange variations effect				244,962			226,682
Opening balance of cash and  cash equivalent		7		7,288,827			6,088,462
Final balance of cash and  cash equivalent		7		4,714,380			6,002,135

	September			September
	2022			2021
	MCh$			MCh$
Interest operating cash flow:
Interest and readjustments received		1,696,141			1,210,855
Interest and readjustments paid		(143,201	)		108,773

The accompanying notes 1 to 49 are an integral part of these interim consolidated financial statements

7

BANCO DE CHILE AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
for the periods between January 1 and September 30, 2022 and 2021

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

______________

Reconciliation of liabilities arising from financing activities:

			Changes other than Cash
	31.12.2021		Net Cash Flow			Acquisition / (Disposals)		Foreign currency		UF Movement		30.09.2022
	MCh$		MCh$			MCh$		MCh$		MCh$		MCh$
Letters of credit		4,114		(1,659	)		—		—		306		2,761
Bonds		9,474,791		(779,926	)		—		204,999		882,241		9,782,105
Dividends paid		—		(539,827	)		—		—		—		(539,827	)
Payments for lease agreements		95,670		(24,136	)		14,332		—		9,591		95,457
Dividend payment and/or withdrawals of paid-in capital in respect of the subsidiaries corresponding to the non-controlling interest		—		(1	)		—		—		—		(1	)
Total liabilities from financing activities		9,574,575		(1,345,549	)		14,332		204,999		892,138		9,340,495

The accompanying notes 1 to 49 are an integral part of these interim consolidated financial statements

8

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.

9

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles:

(a) Legal Dispositions:

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

According to the current legal framework, banks must use the accounting principles provided by the CMF and in everything that is not dealt with by it or in contravention of its instructions, they must adhere to the generally accepted accounting principles, which correspond to the technical standards issued by the College of Accountants of Chile AG, coinciding with the International Financial Reporting Standards (“IFRS”) agreed by the International Accounting Standards Board (“IASB”). If there are discrepancies between these accounting principles of general acceptance and the accounting criteria issued by the CMF, the latter shall prevail.

The notes to the Interim Consolidated Financial Statements contain additional information to that presented in the Consolidated Statement of Financial Position, in the Interim Consolidated Statement of Income, Interim Consolidated Statement of Other Comprehensive Income, Interim Consolidated Statement of Changes in Equity and Interim 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 Consolidation:

The Interim Financial Statements of Banco de Chile as of September 30, 2022 and 2021 have been consolidated with its Chilean subsidiaries and foreign subsidiary, using the global integration method (line-by-line). They include preparation of individual financial statements of the Bank and companies that participate in the consolidation and it include adjustments and reclassifications necessary to homologue accounting policies and valuation criteria applied by the Bank. The Interim Consolidated Financial Statements have been prepared using the same accounting policies for similar transactions and other events, in equivalent circumstances.

Significant intercompany transactions and balances (assets and liabilities, equity, income, expenses and cash flows) originated in operations performed between the Bank and its subsidiaries and between subsidiaries have been eliminated in the consolidation process. The non-controlling interest corresponding to the participation percentage of third parties in subsidiaries, which the Bank does not own directly or indirectly, has been recognized and is shown separately in the consolidated shareholders’ equity of Banco de Chile.

10

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

(i) Controlled companies (Subsidiaries)

Interim Consolidated Financial Statements as of September 30, 2022 and 2021 incorporate Financial Statements of the Bank and the controlled companies (subsidiaries) in accordance with IFRS 10 “Consolidated Financial Statements”. Control is obtained when the Bank has exposure or rights to variable returns and has the ability to affect those returns through power over an investee. Specifically the Bank have power over the investee when has existing rights that give it the ability to direct the relevant activities of the investee.

When the Bank has less than a majority of the voting rights of an investee, but these voting rights are enough to have the ability to direct the relevant activities unilaterally, then conclude the Bank has control. The Bank considers all factors and relevant circumstances to evaluate if their voting rights are enough to obtain the control, which it includes:

● The amount of voting rights that the Bank has, related to the amount of voting rights of the others stakeholders;

● Potential voting rights maintained by the Bank, other holders of voting rights or other parties;

● Rights emanated from other contractual arrangements;

● Any additional circumstance that indicate that the Bank have or have not the ability to manage the relevant activities when that decisions need to be taken, including behavior patterns of vote in previous shareholders meetings.

The Bank reevaluates if it has or has not the control over an investee when the circumstances indicates that exists changes in one or more elements of control listed above.

The entities controlled by the Bank and which form parts of the consolidation are detailed as follows:

				Interest Owned
				Directa				Indirect				Total
			Functional	September		December		September		December			September		December
Rut	Entity	Country	Currency	2022		2021		2022		2021			2022		2021
				%		%		%		%			%		%
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. en Liquidación (*)	Chile	Ch$		—		99.01		—		0.99			—		100.00
96,645,790-2	Socofin S.A.	Chile	Ch$		99.00		99.00		1.00		1.00			100.00		100.00

(*) See Note No. 5, letter (b). 

11

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

(ii) Investments in companies as a joint venture

Associates

An associate is an entity over which the Bank has significant influence on its operating and financial management policy decisions, without having control over the associate. Significant influence is generally presumed when the Bank holds between 20% and 50% of the voting rights. Other factors considered when determining whether the Bank has significant influence over another entity are the representation on the Board of Directors and the existence of material intercompany transactions. The existence of these factors could determine the existence of significant influence over an entity despite the Bank holding a participation of less than 20% of the entity’s voting rights.

Investments in associates where exists significant influence, are accounted for using the equity method. In accordance with the equity method, the Bank’s investments are initially recorded at cost, and subsequently increased or decreased to reflect the proportional participation of the Bank in the net income or loss of the associate and other movements recognized in its shareholders’ equity. Goodwill arising from the acquisition of an associate is included in the net book value, net of any accumulated impairment loss.

Joint Ventures

Joint Ventures are joint arrangements whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Joint control exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

According to IFRS 11 “Joint Arrangements”, an entity will determine the type of joint arrangement in which it is involved, and may classify the agreement as a “Joint operation” or a “Joint venture”.

For investments defined as a “Joint Operation”, the assets, liabilities, income and expenses are recognized by the participation in the joint operation.

Investments defined as a “Joint Venture” will be registered according to the equity method.

Investments in other companies that, for their characteristics, are defined as “Joint Ventures” are as follows:

● Artikos Chile S.A.

● Servipag Ltda.

12

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

(iii) Minority investments in other companies

On initial recognition, the Bank may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading and is not contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies.

(iv) Special purpose entities

According to current regulation, the Bank must be analyzing periodically its consolidation area, considering that the principal criteria are the control that the Bank has in an entity and not its percentage of equity participation.

As of September 30, 2022 and 2021, the Bank does not control and has not created any SPEs.

(v) Fund administration

The Bank and its subsidiaries manage and administer assets held in mutual funds and other investment products on behalf of investors, perceiving a paid according to the service provided and according to market conditions. Managed resources are owned by third parties and, therefore, not included in the Consolidated Statements of Financial Position.

According to established in IFRS 10, for consolidation purposes is necessary to assess the role of the Bank and its subsidiaries with respect to the funds they manage, must determine whether that role is Agent or Principal. This assessment should consider the following:

- The scope of their authority to make decisions about the investee.

- The rights held by third parties.

- The remuneration to which it is entitled in accordance with the remuneration arrangements.

- Exposure, decision maker, the variability of returns from other interests that keeps the investee.

The Bank and its subsidiaries manage on behalf and for the benefit of investors, acting in that relationship only as Agent. Under this category, and as provided in the aforementioned regulation, it does not control such funds when exercise its authority to make decisions. Therefore, as of September 30, 2022 and 2021 act as agent, and therefore do not consolidate any fund, no funds are part of the consolidation.

(b) Non-controlling interest:

Non-controlling interest represents the share of losses, income and net assets of which, directly or indirectly, the Bank does not own. It is presented separately from the equity of the owners of the Bank in the Interim Consolidated Statements of Income and the Consolidated Statements of Financial Position.

13

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

(c) Use of Estimates and Judgment:

Preparing 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. Real results could differ from these estimated amounts. The estimates made refer to:

1.	Impairment of debt instruments (Notes No. 10 and No. 41)
2.	Provision for credit risk (Notes No. 13, No. 26 and No. 41);
3.	Useful life of intangible assets, property and equipment and leased assets and lease liabilities (Notes No. 15, No. 16 and No. 17);
4.	Income taxes and deferred taxes (Note No. 18);
5.	Provisions (Note No. 24);
6.	Contingencies and Commitments (Note No. 29);
7.	Fair value of financial assets and liabilities (Note No. 44).

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 year that the estimate is reviewed.

During the period ended September 30, 2022 there have been no significant changes in the estimates made.

(d) Financial Assets and Liabilities:

The classification, measurement and presentation of financial assets and liabilities has been carried out based on the standards issued by the CMF in the Compendium of Accounting Standards, considering the criteria described below.

Financial Assets:

Classification of financial assets:

On initial recognition, a financial asset is classified within the following categories: Financial assets held for trading at fair value through profit or loss; Financial assets not held for trading mandatorily valued at fair value through profit or loss; Financial assets designated as at fair value through profit or loss; Financial assets at fair value through other comprehensive income and Financial assets at amortized cost.

The criteria for classifying financial assets, which incorporates the standards defined in IFRS 9, depends on the business model with which the entity manages the assets and the contractual characteristics of the cash flows, commonly known as “solely payments of principal and interest” (SPPI) criterion.

The valuation of these assets should reflect how the Bank manages groups of financial assets and does not depend on the intent for an individual instrument.

14

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

A financial assets should be valued at amortized cost if both of the following conditions are met:

− The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and

− The contractual terms of the financial asset give rise to cash flows that are solely payments of principal and interest.

A debt financial instrument must be valued at fair value with changes in “Other comprehensive income” if the following two conditions are met:

− The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and

− The contractual terms of the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt financial instrument will be classified at fair value through profit or loss whenever, due to the business model or the characteristics of its contractual cash flows, it is not appropriate to classify it in any of the other categories described.

In general, equity financial instruments are valued at fair value through profit or loss. However, the Bank may make an irrevocable election at initial recognition to present subsequent changes in fair value in “Other Comprehensive Income”.

Financial assets will only be reclassified when the Bank decides to change the business model. In this case, all the financial assets of said business model will be reclassified. The change in the objective of the business model must be prior to the date of reclassification.

Valuation of financial assets:

Initial recognition:

Financial assets are initially recognized at fair value plus, in the case of a financial asset that is not carried at fair value through profit or loss, the transaction costs that are directly attributable to its purchase or issuance, using the Effective Interest Rate method (EIT). The calculation of the EIT includes all fees and other items paid or received that are part of the EIT. Transaction costs include incremental costs that are directly attributable to the acquisition or issuance of a financial asset.

15

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

Post measurement:

All variations in the value of financial assets due to the accrual of interest and items assimilated to interest are recorded in “Interest income” or “Interest expense” of the Consolidated Income Statement for the year in which the accrual occurred, except for trading derivatives that are not part of accounting hedges.

The changes in the valuations that occur after the initial registration for reasons other than those mentioned in the previous paragraph, are treated as described below, based on the categories in which the financial assets are classified.

Financial assets held for trading at fair value through profit or loss, Financial assets not held for trading mandatorily valued at fair value through profit or loss and Financial assets designated as at fair value through profit or loss:

In “Financial assets held for trading at fair value through profit or loss” will record financial assets whose business model aims to generate profits through purchases and sales or to generate results in the short term.

The financial assets recorded under “Financial assets not held for trading mandatorily valued at fair value through profit or loss” are assigned to a business model whose objective is achieved by obtaining contractual cash flows and/or selling financial assets but where the cash flows contracts have not met the conditions of the SPPI test.

In “Financial assets designated as at fair value through profit or loss” financial assets will be classified only when such designation eliminates or significantly reduces the inconsistency in the valuation or in the recognition that would arise from valuing or recognizing the assets on a different basis.

The assets recorded in these items of the Consolidated Statement of Financial Position are valued after their acquisition at their fair value and changes in their value are recorded, at their net amount, under “Financial assets and liabilities held for trading”, “Financial assets and liabilities financial assets not held for trading mandatorily valued at fair value through profit or loss” and “Financial assets and liabilities designated as at fair value through profit or loss” of the Consolidated Income Statement. Variations originated from exchange differences are recorded under “Foreign currency changes, UF indexation and accounting hedge” in the Consolidated Income Statement.

16

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

Financial assets at fair value through other comprehensive income

Debt financial instruments:

The assets recorded in this item of the Consolidated Statement of Financial Position are valued at their fair value, interest income and UF indexation of these instruments, as well as exchange differences and impairment arising, are recorded in the Consolidated Statement of Income, while subsequent variations in their valuation are temporarily recorded (for its amount net of taxes) in “Changes in the fair value of financial assets at fair value through other comprehensive income” of the Consolidated Statements of Other Comprehensive Income.

The amounts recorded in “Changes in the fair value of financial assets at fair value through other comprehensive income” continue to form part of the Bank’s consolidated equity until the asset is derecognized in the consolidated balance. In the case of selling these assets, the result is recognized in “Financial result for derecognizing financial assets and liabilities at amortized cost and financial assets at fair value with changes in others comprehensive income” of the Consolidated Income Statement.

Net losses due to impairment of financial assets at fair value through other comprehensive income produced in the year are recorded in “Impairment due to credit risk of other financial assets at amortized cost and financial assets at fair value through other comprehensive income” of the Consolidated Income Statement of the period.

Equity financial instruments:

At the time of initial recognition of investments in equity instruments, the Bank may make the irrevocable decision to present subsequent changes in fair value in other comprehensive income. Subsequent variations in this valuation will be recognized in “Changes in the fair value of equity instruments designated as at fair value through other comprehensive income”. The dividends received from these investments are recorded in “Income from investments in companies” of the Consolidated Income Statement. These instruments are not subject to the impairment model of IFRS 9.

Financial assets at amortized cost:

The assets recorded in this item of the Consolidated Statement of Financial Position are valued after their acquisition at their “amortized cost”, in accordance with the “effective interest rate” method.

The financial assets that are included in this item, for presentation purposes, in the Statement of Financial Position are subdivided according to the following:

- Investment under resale agreements and securities loans

- Debt financial instruments

- Due from banks

- Loans and accounts receivable from customers (Commercial, Mortgage and Consumer)

17

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

Losses due to impairment of assets at amortized cost generated in each year are recorded in “Provisions for credit risk and loans and accounts receivable from customers” and “Impairment due to credit risk of other financial assets at amortized cost and financial assets at fair value through other comprehensive income” of the Consolidated Income Statement.

Investment under resale agreements, obligations under repurchase agreements and securities loans:

Resale agreement operations are carried out as a form of investment. Under these agreements, financial instruments are purchased, which are included as assets in “Investment under resale agreements and securities loans”, which are valued according to the interest rate of the agreement through the amortized cost method. In accordance with current regulations, the Bank does not record as its own portfolio those papers purchased under resale agreements.

Repurchase agreement operations are also carried out as a form of financing, which are included as liabilities in “Obligations for repurchase agreements and securities loans”. In this regard, the investments that are sold subject to a repurchase obligation and that serve as collateral for the loan correspond to debt financial instruments. The obligation to repurchase the investment is classified in liabilities as “Obligations under repurchase agreements and securities loans” and is valued according to the interest rate of the agreement.

Debt financial instruments:

Debt financial instruments at amortized cost are recorded at their cost value plus interest and accrued UF indexation, less provisions for impairment constituted when their recorded amount is greater than the estimated amount of recovery.

Interest and UF indexation of debt financial instrument at amortized cost are included in “Interest income and UF indexation”.

The investment instruments that are subject to accounting hedges are adjusted according to the accounting hedge rules as described in Note No. 2 letter (k).

Loans and Advances to Banks:

This item shows the balances of operations with local and abroad banks, including the Central Bank of Chile and foreign Central Banks. See detail in Note No. 13 (c) Financial Assets at Amortized Cost.

Loans and accounts receivable from customers:

Loans to customers include originated and purchased non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and which the Bank does not intend to sell immediately or in the short term.

18

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

(i) Valuation method

Loans and accounts receivable from customers are initially measured at cost plus incremental transaction costs and income, and subsequently measured at amortized cost, using the effective interest rate method minus, less any impairment loss, except when the Bank defined some loans as hedged items, measured at fair value through profit or loss as described in letter (k) of this note.

(ii) Lease contracts

Accounts receivable for leasing contracts, included under the caption “Loans to customers” correspond to periodic rent installments of contracts which meet the definition to be classified as financial leases and are presented at their nominal value net of unearned interest as of each year-end.

(iii) Factoring transactions

They are valued for the amounts disbursed by the Bank in exchange for invoices or other commercial instruments representative of credit, with or without responsibility of the grantor, received in discount. Price differences between the amounts disbursed and the nominal value of the credits are recorded in the result as interest income, through the effective interest method, during the financing period.

In those cases where the transfer of these instruments it was made without responsibility of the grantor, it is the Bank who assumes the insolvency risks of those required to pay.

(iv) Impairment of loans

The impaired loans include the following assets, according to Chapter B-1 of Accounting Standards Compendium of the CMF:

a) In case of debtors subject to individual assessment, includes credits from “Non-complying loans” those that must be classified in categories B3 and B4 of “Substandar loans”.

b) Debtors subject to assessment group evaluation, the impaired portfolio includes all credits of the “Non-complying loans”.

(v) Credit risk allowance

The Bank permanently evaluates the entire portfolio of loans and contingent loans, with the aim of establishing the necessary and sufficient provisions in a timely manner to cover the expected losses associated with the characteristics of the debtors and their credits, based on the payment and subsequent recovery.

19

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

Allowances are required to cover the risk of loan losses have been established in accordance with the instructions issued by the CMF. The loans are presented net of those allowances and, in the case of contingent loans are shown in liabilities under the item “Special provisions for credit risk”.

In accordance with what is stipulated by the CMF, models or methods are used based on an individual and group analysis of debtors, to establish allowance for loan losses. Said models, as well as modifications to their design and application, are approved by the Bank’s Board of Directors.

(v.i) Allowance for individual evaluations:

An individual analysis of debtors is applied to companies that are of such significance with respect to size, complexity or level of exposure to the bank, that they must be analyzed in detail.

Likewise, the analysis of borrowers focuses on its credit quality related to the capacity and willingness to meet their credit obligations, through sufficient and reliable information, and should also be analyzed in terms of guarantees, terms, interest rates, currency and revaluation, etc.

For purposes of establish the allowances, the banks must assess the credit quality, then classify to one of three categories of loans portfolio: Normal, Substandard and Non-complying Loans, it must classify the debtors and their operations related to loans and contingent loans in the categories that apply.

v.i.1 Normal Loans and Substandard Loans:

Normal loans: includes those debtors whose payment capacity allows them to meet their obligations and commitments, and according to the evaluation of their economic-financial situation no change in this condition are displayed. Loans classified in categories A1 through A6.

Substandard loans: includes all borrowers with insufficient payment capacity or significant deterioration of payment capacity that may be reasonably expected not to comply with all principal and interest payments obligations set forth in the credit agreement, showing a low flexibility to meet its financial obligations in the short term.

This category also includes all loans that have been non-performing for more than 30 days. Loans classified in this category are B1 through B4.

20

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

As a result of individual analysis of the debtors, the Bank must classify them in the following categories, assigning, subsequently, the percentage of probability of default and loss given default resulting in the following percentage of expected loss:

Classification	Category of the debtors	Probability of default (%) PD		Loss given default (%) LGD		Expected loss (%) EL
Normal Loans	A1		0.04		90.0		0.03600
	A2		0.10		82.5		0.08250
	A3		0.25		87.5		0.21875
	A4		2.00		87.5		1.75000
	A5		4.75		90.0		4.27500
	A6		10.00		90.0		9.00000
Substandard Loans	B1		15.00		92.5		13.87500
	B2		22.00		92.5		20.35000
	B3		33.00		97.5		32.17500
	B4		45.00		97.5		43.87500

Allowances for Normal and Substandard Loans:

To determine the amount of allowances to be constitute for normal and substandard portfolio, previously should be estimated the exposure to subject to the allowances, which will be applied to respective expected loss (expressed in decimals), which consist of probability of default (PD) and loss given default (LGD) established for the category in which the debtor and/or guarantor belong, as appropriate.

The exposure affects to allowances applicable to loans plus contingent loans minus the amounts to be recovered by way of the foreclosure of financial or real guarantees of the operations. Loans mean the book value of credit of the respective debtor, while for contingent loans, the value resulting from to apply the indicated in No. 3 of Chapter B-3 of Banking Accounting Standards Compendium.

In the case of real guarantees, the Bank must demonstrate that the value assigned to this deduction reasonably reflects the value that it would obtain in the sale of the assets or capital instruments. Also, in qualified cases, the direct debtor’s credit risk may be substituted for the credit quality of the guarantor. In no case may the guaranteed securities be discounted from the amount of the exposure, since this procedure is only applicable when it comes to financial or real guarantees.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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2. Summary of Significant Accounting Principles, continued:

For calculation purposes, the following must be considered:

Provision debtor = (ESA-GE) x (PDdebtor /100)x(LGDdebtor /100)+GE x(PDguarantor/100)x(LGDguarantor/100)

Where:

ESA = Exposure subject to allowances, (Loans + Contingent Loans) – Financial Guarantees

GE = Guaranteed exposure

However, the Bank must maintain a minimum provision level of 0.50% over normal portfolio and contingents loans.

v.i.2 Non-complying Loans:

The non-complying portfolio includes the debtors and their credits for which their recovery is considered remote, as they show an impaired or no payment capacity. This category comprises all debtors who have stopped paying their creditors or with visible evidence that they will stop doing so, as well as those for which a forced restructuring of their debts is necessary, reducing the obligation or postponing the payment of the principal or interest and, in addition, any debtor that has 90 days overdue or more in the payment of interest or principal of any credit. This portfolio is composed of the debtors belonging to categories C1 to C6 of the rating scale and all credits, including 100% of the amount of contingent loans, held by those same debtors.

For purposes to establish the allowances on the non-complying loans, the Bank disposes the use of percentage of allowances to be applied on the amount of exposure, which corresponds to the amount of loans and contingent loans that maintain the same debtor. To apply that percentage, must be estimated a expected loss rate, less the amount of the exposure the recoveries by way of foreclosure of financial or real guarantees that to support the operation and, if there are available specific background, also must be deducting present value of recoveries obtainable exerting collection actions, net of expenses associated with them. This loss percentage must be categorized in one of the six levels defined by the range of expected actual losses by the Bank for all transactions of the same debtor.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

These categories, their range of loss as estimated by the Bank and the percentages of allowance that must be applied on the amount of exposures, are listed in the following table:

Type of Loan	Classification	Expected loss	Allowance (%)
Non-complying loans	C1	Up to 3 %		2
	C2	More than 3% up to 20%		10
	C3	More than 20% up to 30%		25
	C4	More than 30 % up to 50%		40
	C5	More than 50% up to 80%		65
	C6	More than 80%		90

For calculation purposes, the following must be considered:

Expected loss	= (TE – R) / TE
Allowance	= TE x (AP/100)

Where:

TE = Total Exposure

R = Recoverable amount

AP = Allowance Percentage (based on the category in which the expected credit loss should be classified).

All credits of the debtor must be kept in the Default Portfolio until there is a normalization of their ability or payment behavior, without prejudice to punishment of each particular credit that meets the condition indicated in Title II of Chapter B-2 of the Compendium of Accounting Standards. To remove a debtor from the Default Portfolio, once the circumstances that lead to classification in this portfolio according to these regulations have been overcome, at least the following copulative conditions must be met:

- No obligation of the debtor with the bank with more than 30 calendar days overdue.

- No new refinances granted to pay its obligations.

- At least one of the payments includes amortization of capital.

- If the debtor has a credit with partial payment periods less than six months, has already made two payments.

- If the debtor must pay monthly fees for one or more credits, has paid four consecutive dues.

- The debtor does not have direct debts unpaid in the CMF recast information, except in the case of insignificant amounts.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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2. Summary of Significant Accounting Principles, continued:

(v.ii) Allowances for group evaluations

Group evaluations are relevant for residential mortgage and consumer loan exposures, in addition to commercial exposures related to student loans and exposures with debtors that simultaneously meet the following conditions:

i) The Bank has an aggregate exposure to the same counterparty of less than 20,000 UF. The aggregate exposure should require gross provisions or other mitigations. In addition, for its computation, mortgage loans must be excluded. In the case of off-balance sheet items, the gross amount is calculated by applying the credit conversion factors, defined in chapter B-3 of the CNC. To determine the aggregate exposure, the bank must consider the definition of corporate group established in Title II of Chapter 12-16 of the Actualized Standards Compilation.

Banks must carry out a complete and permanent monitoring of all operations with entities belonging to business groups. Considering the costs that may result the conformation of groups for all debtors, the bank must at least keep control and form groups, if applicable, for all debtors who maintain a current exposure greater than a minimum amount established by the banking institution which may not be greater than 1% of its effective equity at the time the definition of the group portfolio is made

ii) Each aggregate exposure to the same counterparty does not exceed 0.2% of the total commercial group portfolio. To avoid circular computation, the criterion will be checked only once.

For the remaining commercial credit exposures, the individual analysis model of the debtors must be applied.

The determination of the type of analysis (group or individual) must be carried out at the global consolidated level, once a year, or after significant adjustments in the Bank’s portfolio, such as mergers, acquisitions, purchases or significant portfolio sales.

To determine the allowances, the group evaluations require the formation of groups of loans with similar characteristics in terms of type of debtors and conditions agreed, to establish technically based estimates by prudential criteria and following both the payment behavior of the group that concerned as recoveries of defaulted loans and consequently provide the necessary provisions to cover the risk of the portfolio.

Banks may use two alternative methods for determining provisions for retail loans that are evaluated as a group.

Under first method, it will be used the experience to explain the payment behavior of each homogeneous group of debtors and recoveries through collateral and of collection process, when it correspond, with objective of to estimate directly a percentage of expected losses that will be apply to the amount of the loans of respective group.

Under second method, the banks will segment to debtors in homogeneous groups, according described above, associating to each group a determined probability of default and a percentage of recovery based in a historic analysis. The amount of provisions to register it will be obtained multiplied the total loans of respective group by the percentages of estimated default and of loss given the default.

24

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

In both methods, estimated loss must be related with type of portfolio and terms of operations.

The Bank to determine its provisions has opted for using second method.

In the case of consumer loans, collateral are not considered for the purpose of estimating the expected loss.

The Bank must discriminate between provisions on the normal portfolio and on the portfolio in default, and those that protect the risks of contingent credits associated with those portfolios.

(v.ii.1) Standard method of provisions for group portfolio

The standard methodologies presented below establish the variables and parameters that determine the provision factor for each type of portfolio that the CMF has defined as representative, according to the common characteristics shared by the operations that comprise them.

- Residential mortgage portfolio

The provision factor applicable, represented by expected loss over the mortgage loans, it will depend to the past due of each credit and the relation, at the end of month, between outstanding capital and the value of the mortgage guarantees (CMG), according the following table:

	Provision factor applicable according to delinquency and PVG
		Past due days at the end-month
CMG section	Concept	0		1-29		30-59		60-89		Non- Complying Loans
CMG ≤ 40%	PD (%)		1.0916		21.3407		46.0536		75.1614		100.0000
	LGD (%)		0.0225		0.0441		0.0482		0.0482		0.0537
	EAD (%)		0.0002		0.0094		0.0222		0.0362		0.0537
40% < CMG ≤ 80%	PD (%)		1.9158		27.4332		52.0824		78.9511		100.0000
	LGD (%)		2.1955		2.8233		2.9192		2.9192		3.0413
	EAD (%)		0.0421		0.7745		1.5204		2.3047		3.0413
80% < CMG ≤ 90%	PD (%)		2.5150		27.9300		52.5800		79.6952		100.0000
	LGD (%)		21.5527		21.6600		21.9200		22.1331		22.2310
	EAD (%)		0.5421		6.0496		11.5255		17.6390		22.2310
CMG > 90%	PD (%)		2.7400		28.4300		53.0800		80.3677		100.0000
	LGD (%)		27.2000		29.0300		29.5900		30.1558		30.2436
	EAD (%)		0.7453		8.2532		15.7064		24.2355		30.2436

Where:

PD : Probability of default

LGD : Loss given default

EAD : Exposure at default

CMG : Outstanding loan capital /Mortgage Guarantee value

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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2. Summary of Significant Accounting Principles, continued:

- Commercial portfolio

To determine the allowances of the commercial portfolio, the Bank must consider the standard methods presented below, as applicable to commercial leasing operations or other types of commercial loans. Then, the applicable provision factor will be assigned considering the parameters defined for each method.

a) Commercial Leasing Operations

The provision factor must be applied to the current value of commercial leasing operations (including the purchase option) and will depend on the default of each operation, the type of leased asset and the relationship between the current value of each operation and the leased asset value (PVB) at each month-end, as indicated in the following tables:

Probability of default (PD) applicable according to default and type of asset (%)
	Type of asset
Days of default of the operation at the month-end	Real estate		Non-real estate
0		0.79		1.61
1-29		7.94		12.02
30-59		28.76		40.88
60-89		58.76		69.38
Portfolio in default		100.00		100.00

Loss given the default (LGD) applicable according to PVB section and type of asset (%)
PVB = Current value of the operation / Value of the leased asset
PVB section	Real estate		Non-real estate
PVB ≤ 40%		0.05		18.2
40% < PVB ≤ 50%		0.05		57.00
50% < PVB ≤ 80%		5.10		68.40
80% < PVB ≤ 90%		23.20		75.10
PVB > 90%		36.20		78.90

The determination of the PVB relationship will be made considering the appraisal value expressed in UF for real estate and in Chilean pesos for non-real estate, recorded at the time of the respective loan granting, taking into account possible situations that may be causing temporary increases in the assets prices at that time.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

b) Generic commercial placements and factoring

In the case of factoring operations and other commercial placements, other than those indicated above, the provision factor, applicable to the amount of the placement and the exposure of the contingent loan risk (as indicated in paragraph 3 of Chapter B-3 of the CNC), will depend on the default of each operation and the relationship that exists at the end of each month, between the obligations that the debtor has with the bank and the value of the collateral that protect them (PTVG), as indicated in the following tables:

Probability of default (PD) applicable according to default and PTVG section (%)
	With collateral				Without
Days of default at the month-end	PTVG≤100%		PTVG>100%		collateral
0		1.86		2.68		4.91
1-29		11.60		13.45		22.93
30-59		25.33		26.92		45.30
60-89		41.31		41.31		61.63
Portfolio in default		100.00		100.00		100.00

Loss given the default (LGD) applicable according to PTVG section (%)
Collateral (with / without)	PTVG section	Generic commercial operations or factoring without the responsibility of the transferor		Factoring with the responsibility of the transferor
With collateral	PTVG ≤ 60%		5.0		3,2
	60% < PTVG≤ 75%		20.3		12,8
	75% < PTVG ≤ 90%		32.2		20,3
	90% < PTVG		43.0		27,1
Without collateral			56.9		35.9

The collaterals used for the purposes of calculating the PTVG relationship of this method may be specific or general, including those that are simultaneously specific and general. Collateral can only be considered if, according to the respective coverage clauses, it was constituted in the first degree of preference in favor of the Bank and only guarantees the debtor’s credits with respect to which it is imputed (not shared with other debtors).

The invoices assigned in the factoring operations will not be considered for purposes of calculating the PTVG. The excess of collateral associated with mortgage loans referred to in numeral 3.1.1 Residential mortgage portfolio in Chapter B-1 of CNC may be considered, computed as the difference between 80% of the property’ commercial value, according to with the conditions set out in that framework, and the mortgage loan that guarantees.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

For the calculation of the PTVG ratio, the following considerations must be taken:

i. Transactions with specific collaterals: when the debtor granted specific collateral for generic commercial loans and factoring, the PTVG ratio is calculated independently for each covered transaction, such as the division between the amount of the loans and the contingent loans exposure and the collateral’s value of the covered product.

ii. Transactions with general collaterals: when the debtor granted general or general and specific collaterals, the Bank calculates the respective PTVG, jointly for all generic commercial loans and factoring and not contemplated in the preceding paragraph i), as the quotient between the sum of the amounts of the loans and exposures of contingent loans and the general, or general and specific collateral that, according to the scope of the remaining coverage clauses, safeguard the loans considered in the numerator aforementioned coverage ratio.

The amounts of the guarantees used in the PTVG ratio of numerals i) and ii), different from those associated with excess guarantees from mortgage loans to which the residential mortgage portfolio refers, must be determined according to:

- The last valuation of the collateral, be it appraisal or fair value, according to the type of real guarantee in question. For the determination of fair value, the criteria indicated in Chapter 7-12 (Fair Value of Financial Instruments) of the Actualized Standards Compilation should be considered.

- Possible situations that could be causing temporary increases in the values of the collaterals.

- Limitations on the amount of coverage established in their respective clauses.

(v.ii.2) Portfolio in default.

The portfolio in default includes all placements and 100% of the amount of the contingent loans, of the debtors that the closing of a month presents a delay equal to or greater than 90 days in the payment of the interest of the capital of any credit. It will also include debtors who are granted a credit to leave an operation that has more than 60 days of delay in their payment, as well as those debtors who were subject to forced restructuring or partial forgiveness of a debt.

They may exclude from the portfolio in default: a) mortgage loans for housing, which delinquent less than 90 days, unless the debtor has another loan of the same type with greater delinquency; and, b) credits for financing higher studies of Law No. 20,027, which do not yet present the non-compliance conditions indicated in Circular No. 3,454 of December 10, 2008.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

All credits of the debtor must be kept in the Default Portfolio until there is a normalization of their ability or payment behavior, without prejudice to punishment of each particular credit that meets the condition indicated in Title II of Chapter B-2 of the Compendium of Accounting Standards. To remove a debtor from the Default Portfolio, once the circumstances that lead to classification in this portfolio according to the present rules have been overcome, at least the following copulative conditions must be met:

- No obligation of the debtor with the bank with more than 30 calendar days overdue.

- No new refinances granted to pay its obligations.

- At least one of the payments includes amortization of capital. This condition does not apply in the case of debtors who only have credits for financing higher education in accordance with Law No. 20,027.

- If the debtor has a credit with partial payment periods less than six months, has already made two payments.

- If the debtor must pay monthly fees for one or more credits, has paid four consecutive dues.

- The debtor does not appear with unpaid debts direct according to the information recast by CMF, except for insignificant amounts.

(v.iii) Provisions related to financing with FOGAPE COVID-19 guarantee.

On July 17, 2020, the CMF requested to determine specific provisions of the credits guaranteed by the FOGAPE COVID-19 guarantee, for which the expected losses were determined estimating the risk of each operation, without considering the substitution of credit quality of the guarantee, according to the corresponding individual or group analysis method, in accordance with the provisions of Chapter B-1 of the CNC. This procedure must be carried out in an aggregate manner, grouping all those operations to which the same deductible percentage is applicable.

The deductible is applied by the Fund Administrator, which must be borne by each financial institution and does not depend on each particular operation, but is determined based on the total of the balances guaranteed by the Fund, for each group of companies that have the same coverage, according to their net sales size.

(v.iv) Provisions related to financing with FOGAPE Reactivation guarantee.

To determine the provisions of the amounts guaranteed by the FOGAPE Reactivation, the Bank considers the substitution of the credit quality of the debtors for that of the FOGAPE, for all the types of financing indicated, up to the amount covered by the aforementioned guarantee. Naturally, the option to consider the risk attributable to FOGAPE may be made while said guarantee remains in force, without considering the capitalized interest, in accordance with the provisions of article 17 of the Fund Regulations.

29

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

Likewise, for the computation of the provisions of the amount not covered by the guarantee, corresponding to the debtors, the treatment must be differentiated according to the level of default of the refinanced credit and the grace period, which must consider the cumulative consecutive months grace period between the refinanced loan and other prior measures.

For this purpose, the following situations should be considered:

- Refinancing with less than 60 days past due and less than 180 days of grace.

When the Bank grants the refinancing and is the current creditor, depending on the methodology used in accounting for provisions (standard or internal method) for the group portfolio, the computation of default and the expected loss parameters remain constant at the time to carry out the refinancing, as long as no payment is due.

In the case of debtors evaluated on an individual basis, their risk category is maintained at the time of rescheduling, which does not prevent them from being reclassified to the category that corresponds to them, in the event of a worsening of their payment capacity.

- Refinancing with greater than 60 days and less than 89 days past due or grace periods greater than 180 days and less than 360 days.

The provisions established in the previous point apply, and at least one of the following conditions must also be met:

i. In its credit granting policies, the Bank considers at least the following aspects:

a. A robust procedure for the categorization of viable debtors, which considers at least the sector and its solvency and liquidity situation.

b. Efficient mechanisms for monitoring the debtor’s situation, with formally defined internal governance.

ii. Interest is charged in the months of grace, in accordance with the guidelines established in article 15 letter a) of the Regulation, or there is a demand for payment in another credit with the bank. In the latter case, if noncompliance is observed, the carry forward rules contained in numerals 2.2 and 3.2 of Chapter B-1 of the CNC must be considered, depending on whether it is a credit subject to individual or group evaluation, respectively.

- Refinancing with grace periods greater than 360 days.

The Bank must apply the provisions established in Chapter B-1 of the CNC, considering the operation as a forced renegotiation and, therefore, apply the provisions that correspond to the portfolio in default.

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____________

2. Summary of Significant Accounting Principles, continued:

(vi) Charge-offs

As a general rule, the charge-offs are produced when the contractual rights on cash flows end. In case of loans, even if the above does not happen, it will proceed to charge-offs the respective asset balances.

The charge-off refers to derecognition of the assets in the Consolidated Statement of Financial Position, related to the respective transaction and, therefore, the part that could not be past-due if a loan is payable in installments, or a lease.

(vi.i) Charge-offs of loans to customers

The charge-off must be to make using credit risk provisions constituted, whatever the cause for which the charge-off was produced.

Charge-off loans to customers, other than leasing operations, shall be made in accordance to the following circumstances occurs:

a) The Bank, based on all available information, concludes that will not obtain any cash flow of the credit recorded as an asset.

b) When the debt without executive title expires 90 days after it was recorded in asset.

c) At the time the term set by the statute of limitations runs out and as result legal actions are precluded in order to request payment through executive trial or upon rejection or abandonment of title execution issued by judicial and non-recourse resolution.

d) When past-due term of a transaction complies with the following:

Type of Loan	Term
Consumer loans - secured and unsecured	6 months
Other transactions - unsecured	24 months
Commercial loans - secured	36 months
Residential mortgage loans	48 months

The term represents the time elapsed since the date on which payment of all or part of the obligation in default became due.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

(vi.ii) Charge-offs of lease operations

Assets for leasing operations must be charge-offs against the following circumstances, whichever occurs first:

a) The Bank concludes that there is no possibility of the rent recoveries and the value of the property cannot be considered for purposes of recovery of the contract, either because the lessee have not the asset, for the property’s conditions, for expenses that involve its recovery, transfer and maintenance, due to technological obsolescence or absence of a history of your location and current situation.

b) When it complies the prescription term of actions to demand the payment through executory or upon rejection or abandonment of executory by court.

c) When past-due term of a transaction complies with the following:

Type of Loan	Term
Consumer leases	6 months
Other non-real estate lease transactions	12 months
Real estate leases (commercial or residential)	36 months

The term represents the time elapsed since the date on which payment of all or part of the obligation in default became due.

(vi.iii) Written-off loans recoveries

Cash recoveries on charge-off loans including loans that were reacquired from the Central Bank of Chile are recorded directly in income in the Consolidated Statement of Income, as a reduction of the “Recoveries of written-off loans” item.

In the event that there are recovery in assets, is recognized in income the revenues for the amount they are incorporated in the asset. The same criteria will be followed if the leased assets are recovered after the charge-off of a lease operation, to incorporate those to the asset.

Any renegotiation of a credit already written off does not give rise to income, as long as the operation remains to have an impaired quality; the actual payments received must be treated as recoveries of credits written off, as indicated above.

Therefore, renegotiated credit can be recorded as an asset only if it has not deteriorated quality; also recognizing revenue from activation must be recorded like recovery of loans.

The same criteria should apply in the case that was give credit to pay a charge-off loan.

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____________

2. Summary of Significant Accounting Principles, continued:

Impairment due to credit risk of Financial assets at amortized cost and Financial assets at fair value through other comprehensive income (FVOCI):

In accordance with the established in Chapter A-2 of the CNC of the CMF, the impairment model of IFRS 9 will not be applied to loans in the category “Financial assets at amortized cost” (“Due from banks” and “Loans and accounts receivable from customers”), nor on “Contingent loans”, since the criteria for these instruments are defined in Chapters B-1 to B-3 of the CNC.

For the rest of the financial assets measured at Amortized Cost or FVOCI, the model on which impairment losses must be calculated corresponds to one of Expected Credit Loss (ECL) as established in IFRS 9.

Debt financial instruments whose subsequent valuation is at amortized cost or at FVOCI will be subject to impairment due to credit risk. On the contrary, those instruments at fair value through profit or loss do not require this measurement.

The measurement of impairment is carried out in accordance with a general impairment model that is based on the existence of 3 possible phases of the financial asset, the existence or not of a significant increase in credit risk and the condition of impairment. The 3 phases determine the amount of impairment that will be recognized as an expected credit loss, as well as the interest income that will be recorded at each reporting date. Each phase is listed below:

1. Phase 1:

a. Incorporates financial assets whose credit risk has not increased significantly since initial recognition.

b. Expected credit losses are recognized to 12-month.

c. Interest is recognized based on the gross amount on the balance sheet.

2. Phase 2:

a. Incorporates financial assets whose credit risk has increased significantly since initial recognition.

b. Expected credit losses are recognized throughout the life of the financial asset.

c. Interest is recognized based on the gross amount on the balance sheet.

3. Phase 3:

a. Incorporates impaired financial assets.

b. Expected credit losses are recognized throughout the life of the financial asset.

c. Interest is recognized based on the net amount (gross amount on the balance sheet less allowance for credit risk).

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

Impairment of debt financial instruments measured at fair value through other comprehensive income

The Bank applies the value impairment requirements for the recognition and measurement of a value correction for losses to financial assets that are measured at fair value through other comprehensive income in accordance with IFRS 9. This value adjustment for losses is recognized in Other Comprehensive Income (OCI) and does not reduce the carrying amount of the financial asset in the Consolidated Statement of Financial Position. The accumulated loss recognized in OCI is recycled in results when derecognizing the financial assets.

Financial liabilities:

Classification of financial liabilities:

Financial liabilities are classified in the following categories:

- Financial liabilities at amortized cost;

- Financial liabilities held for trading at fair value through profit or loss: Financial instruments are recorded in this item when the Bank’s objective is to generate profits through purchases and sales with these instruments. This item includes financial derivative trading contracts that are liabilities, which will be measured subsequently at fair value.

- Financial liabilities designated as at fair value through profit or loss: The Bank has the option to irrevocably designate, at the time of initial recognition, a financial liability as measured at fair value through profit or loss if the application of this criterion eliminates or significantly reduces inconsistencies in the measurement or recognition, or if it is a group of financial liabilities, or a group of financial assets and liabilities, that is managed, and its performance evaluated, based on fair value in line with a risk management or investment strategy.

Valuation of financial liabilities:

Initial valuation:

Financial liabilities are initially recorded at fair value, less transaction costs that are directly attributable to the issuance of the instruments, except for financial instruments that are classified at fair value through profit or loss.

Variations in the value of financial liabilities due to the accrual of interest, UF indexation and similar concepts are recorded under the headings “Interest expenses” of the Consolidated Income Statement for the period in which the accrual occurred (see Note No. 30).

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

Subsequent valuation:

The changes in the valuations that will occur after the initial registration for reasons other than those mentioned in the previous paragraph, are treated as described below, based on the categories in which the financial liabilities are classified.

Financial liabilities at amortized cost:

The liabilities recorded in this item are valued after their acquisition at their amortized cost, which is determined in accordance with the effective interest rate method (EIR).

Financial liabilities held for trading and Financial liabilities designated as at fair value through profit or loss:

The liabilities recorded in these items are valued after their initial recognition at fair value and changes are recorded, at their net amount, under the items “Financial assets and liabilities for trading” and “Designated financial assets and liabilities at fair value through profit or loss” of the Consolidated Income Statement. However, the change in the credit risk of the liabilities designated under the fair value option is presented in “Other comprehensive income”. Nevertheless, the variations originating from exchange differences are recorded in the caption “Foreign currency changes, UF indexation and accounting hedge” of the Consolidated Income Statement.

Derecognition of financial assets and liabilities

The Bank and its subsidiaries derecognize a financial asset from its Statement of Financial Position, when the contractual rights to the cash flows of the financial asset have expired or when the contractual rights to receive the cash flows of the financial asset are transferred during a transaction in which all ownership risks and rewards of the financial asset are transferred. Any portion of transferred financial assets that is created or retained by the Bank is recognized as a separate asset or liability.

When the Bank transfers a financial asset, it assesses to what extent it has retained the risks and rewards of ownership. In this case:

(a) If substantially all risks and rewards of ownership of the financial asset have been transferred, it is derecognized, and any rights or obligations created or retained upon transfer are recognized separately as assets or liabilities.

(b) If substantially all risks and rewards of ownership of the financial asset have been retained, the Bank continues to recognize it.

35

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

(c) If substantially all risks and rewards of ownership of the financial asset are neither transferred nor retained, the Bank will determine if it has retained control of the financial asset. In this case:

(i) If the Bank has not retained control, the financial asset will be derecognized, and any rights or obligations created or retained upon transfer will be recognized separately as assets or liabilities.

(ii) If the Bank has retained control, it will continue to recognize the financial asset in the Consolidated Financial Statement by an amount equal to its exposure to changes in value that can experience and recognize a financial liability associated to the transferred financial asset.

The Bank derecognizes a financial liability (or a portion thereof) from its Consolidated Statement of Financial Position if, and only if, it has extinguished or, in other words, when the obligation specified in the corresponding contract has been paid or settled or has expired.

Compensation

Financial assets and liabilities are subject to compensation, so that their net amount is presented in the Consolidated Statement of Financial Position, when and only when the Bank has the right, legally enforceable, to offset the recognized amounts and intends to settle the net amount, or to realize the asset and settle the liability simultaneously.

Income and expenses are presented net only when permitted by accounting standards, or in the case of gains and losses arising from a group of similar transactions such as the Bank’s trading and foreign exchange activity.

(f) Functional currency:

The items included in the Financial Statements of Banco de Chile and its subsidiaries are valued using the currency of the primary economic environment in which it operates (functional currency). The functional currency of Banco de Chile is the Chilean peso, which is also the currency used to present the entity’s Consolidated Financial Statements, that is the currency of the primary economic environment in which the Bank operates, as well as obeying to the currency that influences in the costs and income structure.

36

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

(g) Transactions in foreign currency:

Transactions in currencies other than the functional currency are considered to be in foreign currency and are initially recorded at the exchange rate of the functional currency on the transaction date. Monetary assets and liabilities denominated in foreign currencies are converted using the exchange rate of the functional currency as of the date of the Consolidated Statement of Financial Position. All differences are recorded as a debit or credit to income.

As of September 30, 2022, the Bank and its subsidiaries applied the exchange rate of accounting representation according to the standards issued by the CMF, where assets expressed in dollars are shown to their equivalent value in Chilean pesos calculated using the following exchange rate of Ch$ 969.66 US$1 (Ch$811.60 US$1 as of September 30, 2021).

The amount of Ch$178,423 million for net foreign exchange transactions, net (Ch$100,445 million as of September 30, 2021) shown in the Consolidated Statements of Income, includes recognition of the effects of exchange rate variations on assets and liabilities in foreign currency or indexed to exchange rates, and the result of foreign exchange transactions conducted by the Bank and its subsidiaries.

(h) Operating Segments:

The Bank discloses information by segment in accordance with IFRS 8. The Bank’s operating segments are determined based on its different business units, considering the following:

(i) That it conducts business activities from which income is obtained and expenses are incurred (including income and expenses relating to transactions with other components of the same entity).

(ii) That its operating results are reviewed regularly by the entity’s highest decision-making authority for operating decisions, to decide about resource allocation for the segment and evaluate its performance; and

(iii) That separate financial information is available.

(i) Statement of cash flows:

The Consolidated Statement of Cash Flows shows the changes in cash and cash equivalents derived from operating activities, investment and financing activities during the year. The indirect method has been used in the preparation of this statement of cash flows.

37

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

For the preparation of Consolidated Financial Statements of Cash Flow it is considered the following concepts:

(i) Cash and cash equivalents: corresponds to the item “Cash and deposits in banks”, plus (minus) the net balance corresponding to operations with liquidation in progress that are shown in the Consolidated Statement of Financial Position, plus other cash equivalents such as investments in short-term debt financial instruments that meet the criteria to be considered “cash equivalents”, for which they must have an original maturity of 90 days or less from the date of acquisition, be highly liquid, easily convertible into amounts known amounts of cash as of the date of the initial investment, and that the financial instruments are exposed to an insignificant risk of changes in value.

(ii) Operating activities: corresponds to normal activities of the Bank, as well as other activities that cannot classify like investing or financing activities.

(iii) Investing activities: correspond to the acquisition, sale or disposition other forms, of long-term assets and other investments that not include in cash and cash equivalent.

(iv) Financing activities: corresponds to the activities that produce changes in the amount and composition of the equity and the liabilities that are not included in the operating or investing activities.

(j) Financial derivative contracts:

A “Financial Derivative” is a financial instrument whose value changes in response to changes in an observable market variable (such as an interest rate, exchange rate, the price of a financial instrument or a market index, including credit ratings), whose initial investment is very small in relation to other financial instruments with a similar response to changes in market conditions and which is generally settled at a future date.

The Bank maintains contracts of Derivative financial instruments, for cover the exposition of risk of foreign currency and interest rate. These contracts are recorded in the Consolidated Statement of Financial Position at their cost (included transactions costs) and subsequently measured at fair value. Derivative instruments are reported as an asset when their fair value is positive and as a liability when negative under the item “Derivative Instruments”.

Changes in fair value of derivative contracts held for trading purpose are included under “Profit (loss) net of financial operations”, in the Consolidated Statement of Income.

In addition, the Bank includes in the valorization of derivatives the “Credit valuation adjustment” (CVA), to reflect the counterparty risk in the determination of fair value and the Bank’s own credit risk, known as “Debit valuation adjustment” (DVA).

Certain embedded derivatives in other financial instruments are treated as separate derivatives when their risk and characteristics are not closely related to those of the main contract and if the contract in its entirety is not recorded at its fair value with its unrealized gains and losses included in income.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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2. Summary of Significant Accounting Principles, continued:

(k) Financial derivative contracts for accounting hedges:

The Bank has chosen to continue applying the hedge accounting requirements of IAS 39 when adopting IFRS 9.

At the moment of subscription of a derivative contract must be designated by the Bank as a derivative instrument for trading or hedging purposes.

If a derivative instrument is classified as a hedging instrument, it can be:

(1) A hedge of the fair value of existing assets or liabilities or firm commitments, or;

(2) A hedge of cash flows related to existing assets or liabilities or forecasted transactions.

A hedge relationship for accounting hedges purposes must comply with all of the following conditions:

(a) at its inception, the hedge relationship has been formally documented;

(b) it is expected that the hedge will be highly effective;

(c) the effectiveness of the hedge can be measured in a reasonable manner; and

(d) the hedge is highly effective with respect to the hedged risk on an ongoing basis and throughout the entire hedge relationship.

The Bank presents and measures individual hedges (where there is a specific identification of hedged item and hedged instruments) by classification, according to the following criteria:

Fair value hedges: Changes in the fair value of a derivative hedging instrument, designated as a fair value hedge, are recognized in income under the lines “Net interest income” and “Net indexation income” and/or “Foreign currency changes, UF indexation and accounting hedge”, depending on the type of risk covered. The hedged item is also presented at fair value in relation to the risk being hedged; gains or losses attributable to the hedged risk are recognized in income under the lines “Net interest income” and “Net income from UF indexation” and adjust the book value of the item subject to the hedge.

Cash flow hedge: Changes in the fair value of financial instruments derivative designated like “cash flow hedge” are recognised in “Cash flow accounting hedge” included in the Consolidated Other Comprehensive Income, to the extent that hedge is effective and hedge is reclassified to income in the item “Net interest income” and “Net income from UF indexation” and/or “Foreign currency changes, UF indexation and accounting hedge”, when hedged item affects the income of the Bank produced for the “interest rate risk” or “foreign exchange risk”, respectively. If the hedge is not effective, the changes in the fair value are recognized directly in the results of the year under the caption “Other financial result”.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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2. Summary of Significant Accounting Principles, continued:

If the hedged instruments does not comply with criteria of cash flow accounting hedges, it expires or is sold, it suspend or executed, this hedge must be discontinued prospectively. Accumulated gains or losses recognised previously in the equity are maintained there until projected transactions occur, in that moment will be registered in Consolidated Statement of Income (in the item “Net interest income” and “Net income from UF indexation” and/or “Foreign currency changes, UF indexation and accounting hedge”, depend of the hedge), lesser than it foresees that the transaction will not execute, in this case it will be registered immediately in Consolidated Statement of Income (in the item “Net interest income” and “Net income from UF indexation” and/or “Foreign currency changes, UF indexation and accounting hedge”, depend of the hedge).

(l) Intangible Assets:

Intangible assets are identified as non-monetary assets (separately identifiable from other assets) without physical substance which arise as a result of a legal transaction or are developed internally by the consolidated entities. They are assets whose cost can be estimated reliably and from which the consolidated entities have control and consider it probable that future economic benefits will be generated. Intangible assets are recorded initially at acquisition cost and are subsequently measured at cost less any accumulated amortization or any accumulated impairment losses.

Software or computer programs purchased by the Bank and its subsidiaries are accounted for at cost less accumulated amortization and impairment losses.

The subsequent expense in software assets is capitalized only when it increases the future economic benefit for the specific asset. All other expenses are recorded as an expense as incurred.

Amortization is recorded in income using the straight-line amortization method based on the estimated useful life of the software, from the date on which it is available for use. The estimated useful life of software is a maximum of 6 years.

(m) Property and equipment:

Property and equipment includes the amount of land, real estate, furniture, computer equipment and other installations owned by the consolidated entities and which are for own use. These assets are stated at historical cost less depreciation and accumulated impairment. This cost includes expenses than have been directly attributed to the asset’s acquisition.

Depreciation is recognized in the Consolidated Statements of Income on a straight-line basis over the estimated useful lives of each part of an item of property and equipment.

The estimated average useful lives for the years 2022 and 2021 are as follows:

-      Buildings	50 years
-      Installations	10 years
-      Equipment	5 years
-      Supplies and accessories	5 years

Maintenance expenses relating to those assets held for own uses are recorded as expenses in the year in which they are incurred.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

(n) Deferred taxes and income taxes:

The income tax provision of the Bank and its subsidiaries has been determined in conformity with current legal regulations.

The Bank and its subsidiaries recognize, when appropriate, deferred tax assets and liabilities for future estimates of tax effects attributable to temporary differences between the book and tax values of assets and liabilities. Deferred tax assets and liabilities are measured based on the tax rate expected to be applied, in accordance with current tax law, in the year that deferred tax assets are realized or liabilities are settled. The effects of future changes in tax legislation or tax rates are recognized in deferred taxes starting on the date of publication of the law approving such changes.

Deferred tax assets are recognized only when it is likely that future tax profits will be sufficient to recover deductions for temporary differences. According to instructions from the CMF, deferred taxes are presented in the Consolidated Statement of Financial Position according with IAS 12 “Income Tax”.

(o) Assets received in lieu of payment:

Assets received or awarded in lieu of payment of loans and accounts receivable from customers are recorded, in the case of assets received in lieu of payment, at the price agreed by the parties, or otherwise, when the parties do not reach an agreement, at the amount at which the Bank is awarded those assets at a judicial auction.

Assets received in lieu of payment are classified under “Non-current assets and disposal groups held for sale” and they are recorded at the lower of its carrying amount or net realizable value, less charge-off and presented net of a portfolio valuation allowance. The CMF requires regulatory charge-offs if the asset is not sold within a one year of foreclosure.

(p) Investment properties:

Investments properties are real estate assets held to earn rental income or for capital appreciation or both, but are not held-for-sale in the ordinary course of business or used for administrative purposes. Investment properties are measured at cost, less accumulated depreciation and impairments and are presented under “Other Assets”.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

(q) Provisions, contingent assets and liabilities:

Provisions are liabilities involving uncertainty about their amount or maturity. They are recorded in the Consolidated Statement of Financial Position when the following requirements are jointly met:

(i) a present obligation has arisen from a past event;

(ii) as of the date of the Financial Statements it is probable that the Bank or its subsidiaries have to disburse resources to settle the obligation; and

(iii) the amount of these resources can be reliably measured.

A contingent asset or liability is any right or obligation arising from past events whose existence will be confirmed by one or more uncertain future events which are not within the control of the Bank.

Contingent credits are understood as operations or commitments in which the Bank assumes a credit risk by committing itself to third parties, in the event of a future event, to make a payment or disbursement that must be recovered from its clients.

The following are classified as contingent credits in off-balance sheet information:

i. Undrawn credit lines: Considers the unused amounts of lines of credit that allow customers to make use of credit without prior decisions by the bank.

ii. Undrawn credit lines with immediate termination: Considers those undrawn credit lines, defined in the previous numeral, that the bank can unconditionally cancel at any time and without prior notice, or for which its automatic cancellation is contemplated in case of deterioration of the debtor’s solvency, as permitted by the current legal framework and the contractual conditions established between the parties.

iii. Contingent credits linked to the CAE: Correspond to credit commitments granted in accordance with Law No. 20,027 (“CAE”).

iv. Letters of credit for goods circulation operations: Considers the commitments that arise, both to the issuing bank and to the confirming bank, from self-settled commercial letters of credit with a maturity period of less than 1 year, arising from merchandise circulation operations (for example, confirmed foreign or documentary letters of credit). Includes documentary letters of credit issued by the Bank, which have not yet been negotiated.

v. Debt purchase commitments in local currency abroad: Note issuance facility (NIF) and revolving underwriting facility (RUF) are considered.

vi. Transactions related to contingent events: Guarantee bonds with promissory notes referred to in Chapter 8-11 of the Actualized Standards Compilation are considered.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

vii. Warranty by endorsement and sureties: Includes warranty by endorsement, sureties and standby letters of credit referred to in Chapter 8-10 of the Actualized Standards Compilation. In addition, it includes the payment guarantees of buyers in factoring operations, as indicated in Chapter 8-38 of that Compilation.

viii. Other credit commitments: It includes the unplaced amounts of committed credits, which must be disbursed on an agreed future date or processed when the contractually foreseen events occur with the client, as occurs in the case of irrevocable credit lines linked to the progress status of projects (in which for provisions purposes, both the gross exposure referred to in No. 3 and future increases in the amount of guarantees associated with committed disbursements must be considered).

Exposure to credit risk on contingent loans:

Until December 31, 2021, to calculate provisions on contingent loans, as indicated in Chapter B-3 of the Accounting Standards Compendium of the CMF, the amount of exposure was determined considering the percentage of the amounts of the contingent credits indicated below:

Type of contingent loan	Exposure
a)  Warranty by endorsement and sureties		100	%
b)  Confirmed foreign letters of credit		20	%
c)  Issued letters of credit		20	%
d)  Guarantee deposits		50	%
e)  Undrawn credit lines		35	%
f)  Other loan commitments:
- College education loans Law No. 20,027		15	%
- Others		100	%
g)  Other contingent loans		100	%

Beginning January 1, 2022, to calculate contingent provisions, the exposure amount that must be equal to the percentage of contingent amounts indicated below:

Type of contingent credit	Credit Conversion Factor
Undrawn credit lines with immediate termination		10	%
Contingent credits linked to the CAE		15	%
Letters of credit for goods circulation operations		20	%
Other undrawn credit lines		40	%
Debt purchase commitments in local currency abroad		50	%
Transactions related to contingent events		50	%
Warranty by endorsement and sureties		100	%
Other credit commitments		100	%
Other contingent loans		100	%

Notwithstanding, when dealing with transactions performed with customers with overdue loans as indicated in Chapter B-1 of the Compendium of Accounting Standards of the CMF, that exposure shall be equivalent to 100% of its contingent loans.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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2. Summary of Significant Accounting Principles, continued:

(r) Provisions for minimum dividends:

According with the Accounting Standards Compendium of the CMF, the Bank records within liabilities the portion of net income for the year that should be distributed to comply with the Corporations Law or its dividend policy. For these purposes, the Bank establishes a provision in a complementary equity account within retained earnings.

For purposes of calculating the provision of minimum dividends, the distributable net income is considered, which is defined as that which results from reducing or adding to the net income for the year, the correction of the value of the paid-in capital and reserves, due to the effects of the variation of the Consumer Price Index.

(s) Employee benefits:

Employee benefits are all forms of consideration granted by an entity in exchange for services provided by employees or severance pay.

Short-term employee benefits are employee benefits (other than termination benefits) that are expected to be settled in full before twelve months after the end of the annual reporting period in which the employees have rendered the related services.

i) Staff vacations

The annual costs of vacations and staff benefits are recognized on an accrual basis.

(ii) Other short-term benefits

The entity contemplates for its employees an annual incentive plan for meeting objectives and individual contribution to the company’s results, which are eventually delivered, consisting of a certain number or portion of monthly salaries and are provisioned based on the estimated amount to be distributed.

Other long-term employee benefits are all employee benefits other than short-term employee benefits, post-employment benefits, and termination benefits.

(iii) Employee benefits for termination of employment contract

The Bank has agreed with part of the staff the payment of compensation to those who have completed 30 or 35 years of permanence, in the event that they retired from the Institution. The proportional part accrued by those employees who will have access to exercise the right to this benefit and who at the end of the year have not yet acquired it has been incorporated into this obligation.

The obligations of this benefit plan are valued according to the projected credit unit method, including as variables the staff turnover rate, the expected salary growth and the probability of using this benefit, discounted at the current rate for long-term operations (6.49% as of September 30, 2022 and 5.70% as of December 31, 2021).

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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2. Summary of Significant Accounting Principles, continued:

The discount rate used corresponds to the rate of 10-year Bonds in pesos of the Central Bank of Chile (BCP).

Gains and losses arising from changes in actuarial variables are recognized in Other Comprehensive Income. There are no other additional costs that should be recognized by the Bank.

(t) Earnings per share:

The basic earnings per share is determined by dividing the net income attributed to the Bank’s owners in a period and the weighted average number of shares outstanding during that period.

Diluted earnings per share are determined similarly to basic earnings, but the weighted average number of outstanding shares is adjusted to take into account the potential dilutive effect of the options on shares, warrants and convertible debt. At the end of the periods ended September 30, 2022 and 2021 there are no concepts to adjust.

(u) Interest revenue and expense and UF indexation:

Interest income and expenses and UF indexation are recognized in the Consolidated Statement of Income using the effective interest rate method. The effective interest rate is the rate which exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument (or a shorter period) where appropriate, to the carrying amount of the financial asset or financial liability. To calculate the effective interest rate, the Bank determines cash flows by taking into account all contractual conditions of the financial instrument, excluding future credit losses.

The effective interest rate calculation includes all fees and other amounts paid or received that form part of the effective interest rate. Transaction costs include incremental costs that are directly attributable to the purchase or issuance of a financial asset or liability.

In the case of the impaired portfolio and current loans with a high risk of irrecoverability of loans and accounts receivable from customers, the Bank has applied a conservative position of discontinuing the accrual of interest and UF indexation on an accrual basis in the Consolidated Statement of Income, when the credit or one of its installments has been 90 days default in its payment.

(v) Commission income and expenses:

Revenue and expenses from fees are recognized in the Consolidated Income Statement using the criteria established in IFRS 15 “Revenue from contracts with customers”.

Under IFRS 15, revenues are recognized considering the terms of the contract with customers. Revenue is recognized when or as the performance obligation is satisfied by transferring the goods or services committed to the customer.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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2. Summary of Significant Accounting Principles, continued:

Under IFRS 15, revenues are recognized using different criteria depending on their nature. The most significant are:

− Those that correspond to a singular act, when the act that originates them takes place.

− Those that originate in transactions or services that are extended over time, during the life of such transactions or services.

− Commissions on loan commitments and other fees related to credit operations are deferred (together with the incremental costs directly related to the placement) and recognized as an adjustment to the effective interest rate of the placement. In the case of loan commitments, when there is no certainty of the date of effective placement, the commissions are recognized in the period of the commitment that originates it on a linear basis.

The fees registered by the Bank correspond mainly to:

− Commissions for credit prepayment: These commissions are accrued at the time the credits are prepaid.

− Commissions for lines of credit and overdrafts: These commissions are accrued in the period related to the granting of lines of credit and overdrafts in checking accounts.

− Commissions for warranty by endorsement and letters of credit: These commissions are accrued in the period related to the granting by the bank of payment guarantees for real or contingent obligations of third parties.

− Commissions for card services: Correspond to commissions accrued for the period, related to the use of credit cards, debit cards and other.

− Commissions for account management: Includes commissions for the maintenance of current accounts and other deposit accounts.

− Commissions for collections and payments: Includes commissions generated by the collection and payment services provided by the Bank.

− Commissions for intermediation and management of securities: correspond to income from brokerage service, placements, administration and custody of securities.

− Remuneration for administration of mutual funds, investment funds or others: corresponds to the commissions from the General Fund Administrator for the administration of third-party funds.

− Remuneration for brokerage and insurance consulting services: Income from brokerage and insurance advice by the Bank or its subsidiaries is included.

− Commissions for factoring operations services: Commissions for factoring operations services performed by the Bank are included.

− Commissions for services of financial leasing operations: Commissions for services of financial leasing operations carried out by the Bank as lessor are included.

− Commissions for financial consulting services: commissions for financial advisory services performed by the Bank and its subsidiary are included.

− Other commissions earned: includes income generated from foreign currency exchange, issuance bank guarantees, issuance of bank check, use of distribution channels, agreement on the use of a brand and placement of financial products and cash transfers, and recognition of payments associated with commercial alliances, among others.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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2. Summary of Significant Accounting Principles, continued:

Commission expenses include:

− Commissions for card operations: commissions paid for credit and debit card operations are included.

− Commissions for licensing the use of card brands

− Expenses for obligations of loyalty and merits programs for card customers.

− Commissions for operations with securities: commissions for deposit and custody of securities and brokerage of securities are included.

− Other commissions for services received: Commissions are included for guarantees and endorsements of Bank obligations, for foreign trade operations, for correspondent banks in the country and abroad, for ATMs and electronic fund transfer services.

− Commissions for compensation of large value payments: corresponds to commissions paid to entities such as ComBanc, CCLV Contraparte Central, etc.

(w) Impairment of non-financial assets

The carrying amounts of the non-financial assets of the Bank and its subsidiaries, are reviewed throughout the year and especially at each reporting date, to determine if any indication of impairment exists. If such indication exists, the recoverable amount of the asset is then estimated.

Impairment losses recognized in prior years are assessed at each reporting date in search of any indication that the loss has decreased or disappeared. An impairment loss is reversed if there has been a change in the estimations used to determine the recoverable amount. An impairment loss is reverted only to the extent that the book value of the asset does not exceed the carrying. Impairment losses related to goodwill cannot be reversed in future years.

The Bank assesses at each reporting date and on an ongoing basis whether there is an indication that an asset may be impaired. If any indication exists, the Bank estimates the asset’s recoverable amount. An asset’s recoverable amount is the major value between fair value (less costs to sell) and its value in use. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated cash flows are discounted to their present value using a discount rate that reflects the current market assessments of the time value of money and risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, share prices and other available fair value indicators.

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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2. Summary of Significant Accounting Principles, continued:

(x) Financial and operating leases:

(i) The Bank acting as lessor

Assets leased to customers under agreements which transfer substantially all the risks and rewards of ownership, with or without ultimate legal title, are classified as finance leases. When assets held are subject to a finance lease, the leased assets are derecognized and a receivable is recognized which is equal to the present value of the minimum lease payments, discounted at the interest rate implicit in the lease. Initial direct costs incurred in negotiating, and arranging a finance lease are incorporated into the receivable through the discount rate applied to the lease. Finance lease income is recognized over the lease term based on a pattern reflecting a constant periodic rate of return on the net investment in the finance lease.

Assets leased to customers under agreements, which do not transfer substantially all the risks, and rewards of ownership are classified as operating leases.

The leased investment properties, under the operating lease modality, are included in the Consolidated Statement of Financial Position as “Other assets” 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 term.

(ii) The Bank acting as lessee

A contract is, or contains a lease, if one party has the right to control the use of an identified asset for a period of time in exchange for a regular payment.

On the start date of a lease, a right-to-use assets leased is determined at cost, which includes 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 rate.

The right-of-use asset is measured using the cost model, less accumulated depreciation and accumulated losses due to impairment of value, depreciation of the right-of-use asset, is recognized in the Consolidated Statements of Income based on the linear depreciation method from the start date and until the end of the lease term.

The monthly variation of the UF for the contracts established in said monetary unit should be treated as a new measurement, therefore the UF readjustment modifies the value of the lease liability, and in parallel, the amount of the right-of-use asset must be adjusted by this effect.

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

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

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

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2. Summary of Significant Accounting Principles, continued:

(y) Fiduciary activities:

The Bank provides trust and other fiduciary services that result in the holding or investing of assets on behalf of the clients. Assets held in a fiduciary capacity are not reported in the Consolidated Financial Statements, as they are not the assets of the Bank. Contingencies and commitments arising from this activity are disclosed in Note No. 29.

(z) Customer loyalty program:

The Bank maintains a loyalty program to provide incentives to its customers, which allows to acquire goods and/or services, based on the exchange of prize points (“Dolares-Premio”), which are granted based on the purchases made with Bank’s credit cards and the compliance of certain conditions established in said program. A third party makes the consideration for the prizes. In accordance with IFRS 15, these associated benefit plans have the necessary provisions to meet the delivery of committed future performance obligations.

(aa) Additional provisions:

In accordance to the CMF regulations, the banks have recorded additional allowances for its individually evaluated loan portfolio, taking into consideration the expected impairment of this portfolio. The calculation of this allowance is performed based on the Bank’s historical experience and considering possible future adverse macroeconomic conditions or circumstances that could affect a specific sector.

The provisions made in order to forestall the risk of macroeconomic fluctuations should anticipate situations reversal of expansionary economic cycles in the future, could translate into a worsening in the conditions of the economic environment and thus, function as a countercyclical mechanism accumulation of additional provisions when the scenario is favorable and release or assignment to specific provisions when environmental conditions deteriorate.

According to the above, additional provisions must always correspond to general provisions on commercial, consumer or mortgage loans, or segments identified, and in no case may be used to offset weaknesses of the models used by the Bank.

As of September 30, 2022, the balance of additional provisions amounts to Ch$685,252 million (Ch$540,252 million in December 2021), which are presented in the caption “Special Provisions for Credit Risk” of liabilities in the Consolidated Statement of Financial Position.

(ab) Fair value measurement

“Fair value” is understood as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between participants in a principal (or more advantageous) market at the measurement date under current market conditions, independent whether that price is directly observable or estimated using another valuation technique. The most objective and usual reference of fair value is the price that would be paid in an active, transparent and deep market (“quoted price” or “market price”).

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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

2. Summary of Significant Accounting Principles, continued:

When available, the Bank estimates the fair value of an instrument using quoted prices in an active market for that instrument. A market is considered active if quoted prices are readily and regularly available and represent actual and regularly occurring market transactions on an arm’s length basis.

If a market for a financial instrument is not active, the Bank establishes fair value using a valuation technique. These valuation techniques include the use of recent market transactions between knowledgeable, willing parties in an arm’s length transaction, if available, as well as references to the fair value of other instruments that are substantially the same, discounted cash flows and options pricing models.

The chosen valuation technique makes maximum use of information obtained in the market, using the least possible amount of data estimated by the Bank, incorporates all the factors that market participants would consider to establish the price, and will be consistent with generally accepted economic methodologies for calculating the price of financial instruments. The variables used by the valuation technique reasonably represent market expectations and reflect the return-risk factors inherent to the financial instrument. Periodically, the Bank calibrates the valuation techniques and tests it for validity using prices from observable current market transaction in the same instrument or based on available observable market information.

The best evidence of the fair value of a financial instrument at initial recognition is the transaction price (i.e. the fair value of the consideration given or received) unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets. However, when transaction price provides the best evidence of fair value at initial recognition, the financial instrument is initially measured at the transaction price and any difference between this price and the value initially obtained from a valuation model is subsequently recognized in incomes.

On the other hand, it should be noted that the Bank has financial assets and liabilities offset each other’s market risks, based on which average market prices are used as a basis for determining their fair value.

Then, the fair value estimates obtained from models are adjusted for any other factors, such as liquidity risk or model uncertainties; to the extent that the Bank believes that a third-party market participant would take them into account in pricing a transaction.

The Bank’s fair value disclosures are included in Note No. 44.

(ac) Reclassifications:

As of September 30, 2022, there have been no significant reclassifications.

50

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

3. New Accounting Pronouncements Issued and Adopted, or Issued that have not yet been Adopted:

Standards approved and/or modified by the International Accounting Standards Board (IASB) and by the 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.

Limited Scope Amendments.

In May 2020, the IASB published a package of amendments of limited scope, 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 must include when evaluating whether a contract will cause losses, these costs include those that are directly related to the contract and may be incremental costs of fulfilling that contract, or an allocation of other costs that relate directly to the fulfillment of contracts.

These amendments are effective as of January 1, 2022. Banco de Chile and its subsidiaries had no impact on the Interim Consolidated Statements of Position as a result of the application of these amendments.

Annual Improvements to the IFRS Standards 2018-2020

On May 2020, the IASB issued the document “Annual Improvements to the IFRS Standards 2018-2020”, which contains amendments to the following International Financial Reporting Standards (IFRS):

IFRS 1 First-time Adoption of International Financial Reporting Standards - Affiliate as first time adopter: The amendment allows a subsidiary that applies paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by its parent, based on the parent’s date of transition to IFRS.

51

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

3. New Accounting Pronouncements Issued and Adopted, or Issued that have not yet been Adopted, continued:

IFRS 9 Financial Instruments - The amendment clarifies what fees an entity includes when applying the “10 per cent” test in paragraph B3.3.6 of IFRS 9 when assessing whether a financial liability should be derecognized. An entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by the entity or the lender on behalf of the other.

IFRS 16 Leases - Leasing incentives: The amendment removes from Illustrative Example 13 the reimbursement of improvements to the lessor to resolve any possible confusion, which may arise, regarding the treatment of lease incentives.

The improvements to IFRS 1 and IFRS 9 are effective as of January 1, 2022, with early application permitted. The amendment to IFRS 16 only refers to an illustrative example, so it does not establish an effective date.

Banco de Chile and its subsidiaries had no impact on the Interim Consolidated Statements of Position as a result of the application of these amendments.

Accounting standards issued by CMF.

Circulars No. 2,243, No. 2,249 and No. 2,295 - 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.

In April 2020, the CMF issued Circular No. 2,249, which postponed the entry into force of the new CNCB to January 1, 2022, with a transition date of January 1, 2021.

Notwithstanding the foregoing, the change of criteria for the suspension of the recognition of interest income and UF indexation on an accrual basis according to the Chapter B-2 had to be adopted no later than January 1, 2022. By virtue of this standard, the Bank’s Management implemented in advance during 2021 the suspension of the recognition of interest and readjustments on an accrual basis after 90 days of delinquency. This implementation did not have a significant impact on the Consolidated Financial Statements, it should be noted that before the change, the suspension of the recognition of interest income and UF indexation occurred after 6 months of default.

52

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

3. New Accounting Pronouncements Issued and Adopted, or Issued that have not yet been Adopted, continued:

On October 7, 2021, the CMF issued Circular No. 2,295, which updates the Compendium of Accounting Standards for Banks (CNCB) that is in force from 2022 and introduces various adjustments to the files of the Information System Manual. In this way, the accounting information necessary to agree the Financial Statements with the full implementation of Basel III was incorporated, in addition to making some clarifications in its instructions, arising both from the internal analysis and from inquiries received from actors of the banking system. Likewise, this Circular added a term to implement the criterion for grouping debtors whose aggregate exposure must be measured jointly, established in literal i) of No. 3 of Chapter B-1, which was considered as of July 1, 2022.

As a result of the application of the new CNC instructions, the main equity effects measured as of January 1, 2022 corresponded to: the valuation of financial assets due to the adoption of IFRS 9 in replacement of IAS 39, provisions for contingent credits as a result of the modification of the Credit Conversion Factor (CCF) and deferred taxes associated with these modifications. The foregoing had an impact of an increase in equity for a net amount of Ch$70,508 million (see note No. 4 Accounting Changes).

Circular No. 2,297. On the control of the limit that banks must observe when granting financing to business groups.

On November 3, 2021, the new Chapter 12-16 “Limit of credits granted to business groups” was incorporated into the Updated Compilation of Regulations for banks (RAN by its Spanish initials), which establishes the scope and exceptions for the control of the credit limit granted to business groups referred to in the seventh subparagraph of article 84 No. 1 of the General Banking Law, together with the manner of making up the payrolls of the business groups and the entities that compose them for that purpose; as well as, the way of computing the credits granted to entities belonging to the same business group was defined, in order to determine their degree of credit concentration and compliance with the aforementioned limit. The new file D60 “Operations with entities belonging to the same business group” was incorporated into the Information System Manual (ISM), whose purpose is that the banks report monthly the information referring to the daily operations carried out with entities belonging to a same business group, in addition to identifying the groups to which they belong and the amounts owed.

The Bank has implemented this Circular, complying with the sending of the new regulatory file.

Circular No. 2,305. Amendment to the annex for the disclosure of Capital Adequacy Ratios of Chapter C-1 of the CNC.

On February 16, 2022, the CMF published this circular that modified Table No. 2 of Annex No. 6 of Chapter C-1 of the CNC, in which it is required to disclose in the quarterly and annual Consolidated Financial Statements a summary of capital adequacy ratios and regulatory compliance ratios according to Basel III.

53

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

3. New Accounting Pronouncements Issued and Adopted, or Issued that have not yet been Adopted, continued:

The amendment introduced by the CMF seeks to provide information to assess whether the bank’s capital adequacy level meets the regulatory requirements at all levels of capital, as it is, for example, to determine the deficit of the capital buffers that defines the percentage of dividends that the bank can distribute by virtue of what is stated in Chapter 21-12 of the Updated Compilation of Regulations for banks. Additionally, the table disclose the level of compliance of the buffers in the Tier 1 Capital.

The adoption of these disclosures is included in these Interim Consolidated Financial Statements (see note No. 48).

Circular No. 2,307. Updates and modifies the administration regulations of the guarantee fund for small and medium-sized entrepreneurs.

On February 24, 2022, this circular was issued that relaxes the requirements and conditions for the delivery of financing with a FOGAPE guarantee and, at the same time, safeguards an adequate management of the credit risk of the institutions that avail themselves of said guarantees.

The new dispositions apply to future bids carried out by the Administrator of the Fund.

The adoption of this circular has no impact on these Interim Consolidated Financial Statements.

Circular No. 2,313. Amends Chapter B-1 “Provisions for credit risk” of the CNC

On April 27, this circular was issued that establishes the modifications to chapter B-1 CNC and Risk System for the implementation of the definition of business group, to be used in the calculation of aggregate exposure for the conformation of the group portfolio. The criterion for grouping debtors came into force on July 1, 2022.

The application of this amendment did not have significant impacts for the Bank.

Circulars issued in the process of implementing the Basel III standards

During the year 2022, the CMF has issued the following regulations related to the implementation of Basel III:

On March 30, 2022, through a press release, the CMF reported that its Board approved resolution No. 2,044 on the rating of systemically important banks and the additional requirements for them, assigning the Bank an additional Basic Capital charge with respect to the assets weighted by 1.25% risk.

The requirements derived from the first application of this standard may be gradually constituted. The initial charge was 0% in December 2021 and will increase by 25% each year until it reaches the regime in December 2025.

Circular No. 2,311. Amends Chapter 21-6 “Determination of assets weighted by credit risk” of the RAN. On April 4, 2022, this circular was issued that establishes the amendments to chapter 21-6 in order to establish the criteria that allow assigning a preferential treatment to the exposure with an international Central Counterparty Entity (CCP).

54

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

3. New Accounting Pronouncements Issued and Adopted, or Issued that have not yet been Adopted, continued:

Circular No. 2,312. On April 27, 2022, the CMF for the purpose of updating the regulations associated with the measurement of market risks, in accordance with the gradual repeal of the provisions established in Chapter III.B.2.2 of the Compendium of Financial Regulations of the Central Bank, modifies Chapters 1-13 “Classification of management and solvency” and 12-21 “Measurement and control of market risks” and defines the validity of the files associated with the measurement of market risk.

Circular No. 2,314. On June 6, 2022, the CMF adjusts the instructions established in Chapter 12-20 of the RAN, Tables 87 and 88 of the MSI and regulatory file C46, in consistency with the amendments made by the Central Bank of Chile to Chapter III.B.2.1 of the Compendium of Financial Regulations, with the aim of reducing the existing gaps with the latest update of the Basel III international standard on liquidity.

Circular No. 2,318. On August 12, 2022, the CMF incorporates the new files R13 and R14, which establish information requirements, with the aim of allowing the supervision of risks not contemplated in Pillar 1, particularly, the market risk of the banking book (MRBB) and credit concentration risk (CCR) and its monitoring in the process of transition to a state in regime.

Circular No. 2,319. On September 8, the CMF issued Circular No. 2,319, which incorporates adjustments to the files “Operational Risk-Weighted Assets” (R08), “Global consolidated supplementary information” (MC1), “Individual supplementary information” (MC2), “Complementary information branch abroad” (MC3) and “Complementary local consolidated information” (MC4), respectively, together with adjustments to Table 121 of the Information System Manual (MSI) related to the measurement and supervision of the loss component used in the computation of Operational Risk-Weighted Assets.

Letter to Management. On July 5, 2022, the CMF sent a Letter to Management in which it requests to review the proper application of IFRS 9 on the recognition of a value adjustment for expected credit losses for debt financial instruments, issued by the Central Bank of Chile and the General Treasury of the Republic, measured at amortized cost and fair value with changes in other comprehensive income. As of the date of issuance of these Consolidated Financial Statements, the Bank is evaluating the model used to determine the expected credit losses for said financial instruments and estimates that, if any modification is required, it will not have a significant impact.

55

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

3. New Accounting Pronouncements Issued and Adopted, or Issued that have not yet been Adopted, continued:

New Standards and interpretations that have been issued but their application date is not yet in force:

The following is a summary of new standards, interpretations and improvements to the International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) and the CMF that are not yet effective as of September 30, 2022:

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 must 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 must 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 Consolidated Financial Statements as a result of the application of this amendment.

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 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 allowed. 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 Consolidated Financial Statements of Banco de Chile and its subsidiaries.

56

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

3. New Accounting Pronouncements Issued and Adopted, or Issued that have not yet been Adopted, continued:

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 allowed.

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

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 differences in reporting deferred tax on leases and decommissioning obligations.

The amendments are effective for the presentation periods of the Financial Statements beginning on January 1, 2023, and early application is allowed.

The implementation of this amendment will not have a material impact on Banco de Chile and its subsidiaries.

57

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

3. New Accounting Pronouncements Issued and Adopted, or Issued that have not yet been Adopted, continued:

Accounting Standards issued by the CMF.

General Regulation (NCG by its Spanish initials) No. 484. Commissions in credit operations Law 18,010 and adjustments to current contracts.

On August 5, the CMF issued this General Regulation, which defines the criteria and conditions that must be met by the collections made to the debtor in a credit operation to be considered commission and not interest. By virtue of the above definitions, the CMF made modifications to RAN Chapters 2-2 on Bank Current Accounts and Checks, Chapter 8-1 on Overdraft in Bank Current Accounts, and NCGs No. 208 and No. 136.

The instructions established in this General Regulation are effective as of August 1, 2023.

The Bank is evaluating the impacts of adopting this new standard.

Other Regulations.

Law 21,420 modifies art. 2 No. 2 of DL 825 of 1974, on Sales and Services Tax (VAT).

On January 1, 2023, the legal modifications incorporated into the basic service taxable event defined in art. 2 No. 2 of DL No. 825 Law on Sales and Services Tax will come into effect. Said legal modification will imply a greater expense or a higher cost, since some contracted services are provided as of January 1, 2023, will go from not being affected to being taxed with VAT.

The Bank is evaluating the impacts of the adoption of this new Law, however, it estimates that it will not have a material impact.

4. Accounting Changes:

The CMF through its Circular No. 2,243 dated December 20, 2019, subsequently supplemented by Circular No. 2,295 dated October 7, 2021, released the rules that update the instructions of the Compendium of Accounting Standards for Banks (CNC) effective as of January 1, 2022.

The main changes introduced to the CNC correspond to:

1) Incorporation of new presentation formats for the Statements of Financial Position, Statements of Income, Statements of Changes in Equity and Statements of Cash Flows, as well as the incorporation and modification of some disclosures, among which stand out: note on financial assets at amortized cost and note on risk management and reporting, in order to better comply with the disclosure criteria contained in IFRS 7. In addition, the disclosures on related parties are aligned according to IAS 24.

2) Incorporation of a Financial Report, prepared in accordance with IASB practice document No. 1, which will complement the information provided by the interim and annual financial statements.

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

58

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

4. Accounting Changes, continued:

4) Changes in the presentation of financial instruments in the Statement of Financial Position and Statement of Income, when adopting IFRS 9 to replace IAS 39.

5) Incorporation of IFRS 9 with the exception of 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 banking institutions must apply to determine the impairment of the credit portfolio.

6) Modification of the criteria for the suspension of the recognition of interest income and UF indexation on an accrual basis, for any credit that presents a delinquency equal to or greater than 90 days.

In accordance with the instructions of the CMF defined in Chapter E of the CNC, the implementation adjustments made in the transition financial statements must be treated as adjustments to a pro forma financial statement.

The reconciliations presented in sections 4.1 to 4.6 below show the quantification of the impacts of the transition to the new standards:

4.1 Reconciliation of equity as of January 1, 2021 and December 31, 2021:

	01/01/2021			31/12/2021
	MCh$			MCh$
Equity before regulatory changes		3,726,268			4,223,014
Financial assets at amortized cost		—			57,215
Modification of provision for automatic cancellation lines of credit		—			14,621
Fair value adjustment of investments in equity instruments		4,958			3,589
Deferred taxes on adjustments		(1,338	)		(4,917	)
Subtotal adjustments		3,620			70,508
Total adjusted equity		3,729,888			4,293,522

59

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

4. Accounting Changes, continued:

4.2 Reconciliation of transition effects in the Consolidated Statement of Financial Position as of January 1, 2021.

Concept	01.01.2021 Previous CNC		Reclassification			Ref.	Adjustment			Ref.	01.01.2021 Current CNC
		MCh$		MCh$				MCh$				MCh$
ASSETS
Cash and due from banks		2,560,216		—				—				2,560,216
Transactions in the course of collection		582,308		(49,541	)	a)		—				532,767
Financial assets held-for-trading		4,666,156		(4,666,156	)	b)		—				—
Investment under resale agreements		76,407		(76,407	)	c)		—				—
Financial assets held for trading at fair value through profit or loss:
Derivative financial instruments		2,618,004		(51,062	)	d)		—				2,566,942
Debt financial instruments		—		4,264,251		b)		—				4,264,251
Others		—		401,905		b)		—				401,905
Financial assets available-for-sale		1,060,523		(1,060,523	)	e)		—				—
Non-trading financial assets mandatorily measured at fair value through profit or loss		—		—				—				—
Financial assets at fair value through profit or loss		—		—				—				—
Financial assets at fair value through other comprehensive income:
Debt financial instruments		—		1,060,523		e)		—				1,060,523
Other financial instruments		—		—				—				—
Derivative financial instruments for hedging purposes		—		51,062		d)		—				51,062
Financial assets held-to-maturity		—		—				—				—
Financial assets at amortized cost:
Rights by resale agreements and securities lending		—		76,407		c)		—				76,407
Debt financial instruments		—		—				—				—
Loans and advances to Banks		2,938,991		—				—				2,938,991
Loans to customers - Commercial loans		17,169,744		(20,705	)	g)		—				17,149,039
Loans to customers - Residential mortgage loans		9,354,890		—				—				9,354,890
Loans to customers - Consumer loans		3,665,424		—				—				3,665,424
Investments in other companies		44,649		—				4,958		d)		49,607
Intangible assets		60,701		—				—				60,701
Property and equipment		217,928		—				—				217,928
Right-of-use assets		118,829		—				—				118,829
Current tax assets		22,949		—				—				22,949
Deferred tax assets		357,945		—				(1,338	)	d)		356,607
Other assets		579,467		63,913		a); g); h)		—				643,380
Non-current assets and disposal groups held for sale		—		6,333		h)		—				6,333
TOTAL ASSETS		46,095,131		—				3,620				46,098,751

60

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

4. Accounting Changes, continued:

Concept	01.01.2021 Previous CNC			Reclassification			Ref.	Adjustment			Ref.	01.01.2021 Current CNC
	MCh$			MCh$				MCh$				MCh$
LIABILITIES
Transactions in the course of payment		1,302,000			(49,888	)	a)		—				1,252,112
Financial liabilities held for trading at fair value through profit or loss:
Derivative financial instruments		2,841,756			(71,690	)	d)		—				2,770,066
Other financial instruments		—			379		i)		—				379
Financial liabilities designated at fair value designated as at fair value through profit or loss		—			—				—				—
Derivative Financial Instruments for hedging purposes		—			71,690		d)		—				71,690
Obligations under repurchase agreements		288,917			(288,917	)	i)		—				—
Financial liabilities at amortized cost:
Current accounts and other demand deposits		15,167,229			(303,668	)	j)		—				14,863,561
Saving accounts and time deposits		8,899,541			(95,073	)	k)		—				8,804,468
Obligations by repurchase agreements and securities lending		—			288,538		i)		—				288,538
Borrowings from financial institutions		3,669,753			—				—				3,669,753
Debt financial instruments issued		8,593,595			(886,407	)	l)		—				7,707,188
Other financial obligations		191,713			(25,122	)	m)		—				166,591
Lease liabilities		115,017			—				—				115,017
Financial instruments of regulatory capital issued		—			886,407		l)		—				886,407
Provisions		733,911			(733,911	)	n)		—				—
Provisions for contingencies		—			141,938		n); o)		—				141,938
Provision for dividends, interests and reappraisal of financial instruments of regulatory capital issued		—			220,271		n)		—				220,271
Special provisions for credit risk		—			401,890		n)						401,890
Currents tax liabilities		311			—				—				311
Deferred tax liabilities		—			—				—				—
Other liabilities		565,120			443,563		a); j); k); m); o)		—				1,008,683
Liabilities included in disposal groups held for sale		—			—				—				—
TOTAL LIABILITIES		42,368,863			—				—				42,368,863
EQUITY
Capital		2,418,833			1,705		p)		—				2,420,538
Reserves		703,206			(1,155	)	p); q)		(2,251	)	a)		699,800
Accumulated other comprehensive income
Elements that are not reclassified in profit and loss		—			(550	)	q)		3,620		d)		3,070
Elements that can be reclassified in profit and loss		(51,250	)		—				2,251		a)		(48,999	)
Retained earnings from previous periods		412,641			—				—				412,641
Income for the year		463,108			—				—				463,108
Less: Provision for dividends, interests and reappraisal of financial instruments of regulatory capital issued		(220,271	)		—				—				(220,271	)
Shareholders of the Bank:		3,726,267			—				3,620				3,729,887
Non-controlling interests		1			—				—				1
TOTAL EQUITY		3,726,268			—				3,620				3,729,888
TOTAL LIABILITIES AND EQUITY		46,095,131			—				3,620				46,098,751

61

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

4. Accounting Changes, continued:

4.3 Reconciliation of transition effects in the Consolidated Statement of Financial Position as of December 31, 2021.

Concept	31.12.2021 Previous CNC		Reclassification			Ref.	Adjustment			Ref.	31.12.2021 Current CNC
	MCh$		MCh$				MCh$				MCh$
ASSETS
Cash and due from banks		3,713,734		—				—				3,713,734
Transactions in the course of collection		576,457		(89,757	)	a)		—				486,700
Financial assets held-for-trading		3,876,695		(3,876,695	)	b)		—				—
Investment under resale agreements		64,365		(64,365	)	c)		—				—
Financial assets held for trading at fair value through profit or loss:
Derivative financial instruments		2,983,298		(277,802	)	d)		—				2,705,496
Debt financial instruments		—		3,737,942		b)		—				3,737,942
Others		—		138,753		b)		—				138,753
Financial assets available-for-sale		3,054,809		(3,054,809	)	e)		—				—
Non-trading financial assets mandatorily measured at fair value through profit or loss		—		—				—				—
Financial assets at fair value through profit or loss		—		—				—				—
Financial assets at fair value through other comprehensive income:
Debt financial instruments		—		3,054,809		e)		—				3,054,809
Other financial instruments		—		—				—				—
Derivative financial instruments for hedging purposes		—		277,802		d)		—				277,802
Financial assets held-to-maturity		782,529		(782,529	)	f)		—				—
Financial assets at amortized cost:
Rights by resale agreements and securities lending		—		64,365		c)		—				64,365
Debt financial instruments		—		782,529		f)		57,215		c)		839,744
Loans and advances to Banks		1,529,313		—				—				1,529,313
Loans to customers - Commercial loans		19,243,758		(25,890	)	g)		—				19,217,868
Loans to customers - Residential mortgage loans		10,315,921		—				—				10,315,921
Loans to customers - Consumer loans		3,978,079		—				—				3,978,079
Investments in other companies		49,168		—				3,589		d)		52,757
Intangible assets		72,532		—				—				72,532
Property and equipment		222,320		—				—				222,320
Right-of-use assets		100,188		—				—				100,188
Current tax assets		846		—				—				846
Deferred tax assets		439,194		—				(4,917	)	a);b);d)		434,277
Other assets		699,233		96,228		a); g); h)		—				795,461
Non-current assets and disposal groups held for sale		—		19,419		h)		—				19,419
TOTAL ASSETS		51,702,439		—				55,887				51,758,326

62

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

4. Accounting Changes, continued:

Concept	31.12.2021 Previous CNC			Reclassification			Ref.	Adjustment			Ref.	31.12.2021 Current CNC
	MCh$			MCh$				MCh$				MCh$
LIABILITIES
Transactions in the course of payment		460,490			(90,510	)	a)		—				369,980
Financial liabilities held for trading at fair value through profit or loss:
Derivative financial instruments		2,773,199			(696	)	d)		—				2,772,503
Other financial instruments		—			9,610		i)		—				9,610
Financial liabilities designated as at fair value through profit or loss		—			—				—				—
Derivative Financial Instruments for hedging purposes		—			696		d)		—				696
Obligations under repurchase agreements		95,009			(95,009	)	i)		—				—
Financial liabilities at amortized cost:
Current accounts and other demand deposits		18,542,791			(292,910	)	j)		—				18,249,881
Saving accounts and time deposits		9,140,006			(336,293	)	k)		—				8,803,713
Obligations by repurchase agreements and securities lending		—			85,399		i)		—				85,399
Borrowings from financial institutions		4,861,865			—				—				4,861,865
Debt financial instruments issued		9,478,905			(917,510	)	l)		—				8,561,395
Other financial obligations		274,618			(24,613	)	m)		—				250,005
Lease liabilities		95,670			—				—				95,670
Financial instruments of regulatory capital issued		—			917,510		l)		—				917,510
Provisions		1,048,013			(1,048,013	)	n)						—
Provisions for contingencies		—			143,858		n); o)		—				143,858
Provision for dividends, interests and reappraisal of financial instruments of regulatory capital issued		—			323,897		n)		—				323,897
Special provisions for credit risk		—			616,195		n)		(14,621	)	b)		601,574
Currents tax liabilities		113,129			—				—				113,129
Deferred tax liabilities		—			—				—				—
Other liabilities		595,730			708,389		a); j); k); m); o)		—				1,304,119
Liabilities included in disposal groups held for sale		—			—				—				—
TOTAL LIABILITIES		47,479,425			—				(14,621	)			47,464,804
EQUITY
Capital		2,418,833			1,705		p)		—				2,420,538
Reserves		703,604			(1,554	)	p); q)		8,422		a); b)		710,472
Accumulated other comprehensive income
Elements that are not reclassified in profit and loss		—			(151	)	q)		2,620		d)		2,469
Elements that can be reclassified in profit and loss		(23,927	)		—				60,197		c)		36,270
Retained earnings from previous periods		655,478			—				—				655,478
Income for the year		792,922			—				(731	)	a)		792,191
Less: Provision for dividends, interests and reappraisal of financial instruments of regulatory capital issued		(323,897	)		—				—				(323,897	)
Shareholders of the Bank:		4,223,013			—				70,508				4,293,521
Non-controlling interests		1			—				—				1
TOTAL EQUITY		4,223,014			—				70,508				4,293,522
TOTAL LIABILITIES AND EQUITY		51,702,439			—				55,887				51,758,326

63

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

4. Accounting Changes, continued:

Reclassifications:

a) From “Transactions in the course of collection” (asset) and “Transactions in the course of payment” (liability) to “Other Assets and Other Liabilities for intermediation of financial instruments”.

b) From “Trading instruments” to “Financial assets to be traded at fair value through profit or loss”.

c) From “Investment under resale agreements” to “Rights by resale agreements and securities lending”.

d) The assets and liabilities “Derivative instruments” are separated into “Derivative financial instruments” and “Derivative Financial Instruments for hedging purposes”.

e) From “Financial assets available-for-sale” to “Financial assets at fair value through other comprehensive income”.

f) From “Financial assets held-to-maturity” to “Financial assets at amortized cost - Debt financial instruments”.

g) Accounts receivable from customers under IFRS 15 were reclassified from “Loans to customers - Commercial loans” to “Other Assets”.

h) Investment in Nexus S.A and assets received in lieu of payment were reclassified from “Other assets” to “Non-current assets and disposal groups held for sale”.

i) Short sales of shares were reclassified from “Obligations under repurchase agreements” to “Obligations by repurchase agreements and securities lending” and to “Financial liabilities held for trading at fair value through profit or loss”.

j) The payments received on loans to be settled were reclassified from “Current accounts and other demand deposits” to “Other liabilities”.

k) Cash guarantees received for derivative financial operations were reclassified from “Saving accounts and time deposits” to “Other Liabilities”.

l) Subordinated bonds were reclassified from “Debt financial instruments issued” to “Financial instruments of regulatory capital issued”.

m) Suppliers of goods for leasing were reclassified from “Other financial obligations” to “Other liabilities”.

n) “Provisions” were opened in “Provisions for contingencies”, “Provision for dividends, interests and reappraisal of financial instruments of regulatory capital issued” and “Special provisions for credit risk”.

o) Loyalty program provision were reclassified from “Other Liabilities” to “Provisions for contingencies”.

p) Share premium account were reclassified from “Reserves” to “Capital”.

q) “Accumulated other comprehensive income” were opened in “Elements that are not reclassified in profit and loss” for employee benefits and “Elements that can be reclassified in profit and loss”.

64

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

4. Accounting Changes, continued:

Adjustment:

a) Net charge in equity for impairment of financial instruments at Fair Value through Other Comprehensive Income (FVOCI) for Ch$2,251 million net of taxes as of January 1, 2021 (Ch$2,982 million as of December 31, 2021), therefore, the impact on income for the year 2021 is Ch$731 million.

b) Credit in equity for modification of the Credit Conversion Factor (FCC) for Ch$10,673 million net of taxes.

c) Credit to equity for Ch$57,215 million due to the application of IFRS 9 when reclassifying financial instruments from “Financial assets at fair value through other comprehensive income” to “Financial assets at amortized cost”, carried out during 2021.

d) Net credit in equity for Ch$3,620 million as of January 1, 2021 (Ch$2,620 million as of December 31, 2021) for adjustment to fair value of investments of the subsidiary Banchile Corredores de Bolsa S.A. in Bolsa de Comercio de Santiago S.A.

4.4 Reconciliation of the Summarized Interim Consolidated Income Statement for the period ended September 30, 2021.

	30/09/2021 Previous CNC			Reclassification			Ref.	Adjustment			Ref.	30/09/2021 Current CNC
	MCh$			MCh$				MCh$				MCh$
Interest and UF indexation revenue		1,044,518			(11,439	)	a)		—				1,033,079
Income from commissions		341,205			10,161		a)		—				351,366
Other operating income		140,283			(25,168	)	b) c) e)		—				115,115
Total operating income		1,526,006			(26,446	)			—				1,499,560
Provisions for loan losses		(223,781	)		223,781		c)		—				—
Credit loss expense		—			(213,504	)	c) d)		(5,381	)	a)		(218,885	)
Operating expenses		(660,306	)		13,321		b) d)		—				(646,985	)
Operating income		641,919			(2,848	)			(5,381	)			633,690
Income attributable to associates		(2,848	)		2,848		e)		—				—
Income before income tax		639,071			—				(5,381	)			633,690
Income tax		(129,966	)		—				1,453		a)		(128,513	)
Net Income for the period		509,105			—				(3,928	)			505,177

65

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued

____________

4. Accounting Changes, continued:

4.5 Reconciliation of the Consolidated Interim Statement of Comprehensive Income (summarized) for the period ended September 30, 2021.

	30/09/2021 Previous CNC		Reclassification		Ref.	Adjustment			Ref.	30/09/2021 Current CNC
	MCh$		MCh$			MCh$				MCh$
Net Income for the period		509,105		—			(3,928	)	a)		505,177
Other comprehensive income that will not be reclassified to income for the period		366		—			(916	)	b)		(550	)
Other comprehensive income that will be reclassified to profit for the period		32,035