Edgar Filing: BANCO SANTANDER CHILE

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

Commission File Number: 001-14554

Banco Santander Chile

Santander Chile Bank

(Translation of Registrant’s Name into English)

Bandera 140

Santiago, Chile

(Address of principal executive office)

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

Form 20-F

Form 40-F

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

Yes

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):

Yes

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

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

Table of Contents

Item

1.	Fourth Quarter Earnings Report 2008 (English)

2.	Auditor Opinion 2008 Financials (Spanish)

3.	2008 Financial Statements ( Spanish)

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.

BANCO SANTANDER-CHILE

By:	/s/
Name:	Gonzalo Romero A.
Title:	General Counsel

Date: March 3, 2009

INDEX

SECTION		PAGE

SECTION 1: SUMMARY OF RESULTS AND STRATEGY		2

SECTION 2: BALANCE SHEET		5

SECTION 3: ANALYSIS OF QUARTERLY INCOME STATEMENT		9

SECTION 4: CREDIT RISK RATINGS		16

SECTION 5: SHARE PERFORMANCE		17

SECTION 6: INSTITUTIONAL BACKGROUND		18

ANNEX 1: BALANCE SHEET		19

ANNEX 2: YTD INCOME STATEMENT		20

ANNEX 3: QUARTERLY INCOME STATEMENT		21

ANNEX 4: QUARTERLY EVOLUTION OF MAIN RATIOS AND OTHER INFORMATION		22

ANNEX 5: QUARTERLY EVOLUTION OF BALANCE SHEET		23

ANNEX 6: QUARTERLY EVOLUTION OF INCOME STATEMENT		24

CONTACT INFORMATION	Santiago, Chile
Robert Moreno	Tel: (562) 320-8284
Manager, Investor Relations Department	Fax: (562) 671-6554
Banco Santander Chile	Email: rmorenoh@santander.cl
Bandera 140 Piso 19,	Website: www.santander.cl

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

SECTION 1: SUMMARY OF RESULTS AND STRATEGY

Positive profitability trends

*	Core revenue: Net interest income + fee income

**	Net operating income: Core revenue + provision expense + operating expenses + market related income + other operating income, net

In 4Q08, net income attributable to shareholders totaled Ch$77,566 million (Ch$0.41 per share and US$0.68/ADR), increasing 9.6% compared to 4Q07 (from now on YoY). The YoY growth of net income was mainly driven by core revenues, that is, net interest income plus fee income. Core revenue increased 16.0% YoY, led by a 17.7% increase in net interest revenue and a 9.7% rise in fee income. Return on average equity attributable to shareholders reached 20.2% in 4Q08 compared to 19.9% in 4Q07.

In 4Q08, total loans increased 5.9% compared to 3Q08 (from now on QoQ) and 19.1% YoY. During the quarter, loan growth was mainly driven by the corporate segment, in line with our strategy of continuing to expand the loan book, but with a conservative approach to credit risk. Corporate lending increased a record 24.5% QoQ and 26.0% YoY. Total commercial loans increased 8.8% QoQ and 22.6% YoY in 4Q08.

The Bank’s selective approach to lending was also apparent in loan growth to individuals in the quarter. Total loans to individuals increased 2.7% QoQ and 16.9% YoY. Residential mortgage lending increased 3.3% QoQ and 19.0% YoY. Consumer loans expanded 0.3% QoQ and 8.0% YoY. By segment, during 2008 loan growth to high income individuals was up 35.6% YoY compared to 4.4% YoY to middle income individuals and a decrease of 11.9% YoY to lower income segments.

The Bank also experienced a favorable evolution of deposit growth in the quarter. In 4Q08, Santander Chile’s deposit base increased by a record 10.1% QoQ and 18.1% YoY, outpacing loan growth and reflecting our focus on liquidity and improving the funding mix. The Bank’s market share of deposits increased from 20.4% as of September 2008 to 20.8% at year-end 2008. The growth of deposits was led by a 16.0% QoQ increase in time deposits. As of December 31, 2008, Santander Chile’s loan to deposit ratio reached a healthy 94.1% improving from 100.2% as of September 2008 (excluding the portion of mortgage loans funded with long-term bonds).

As mentioned in previous earning releases, since 2007 the Bank has been focusing on spreads in order to sustain profitability in a period of lower economic growth and to compensate for higher funding costs and provisioning levels. Loan spreads to companies and individuals have been increasing as liquidity abroad has become scarcer and more expensive. Spreads earned over commercial loans reached 2.63% in 4Q08 and were up 30 basis points QoQ and 45 basis points YoY. Consumer loan spreads reached 18.78% in 4Q08 and increased 18 basis points QoQ and 75 basis points YoY in 4Q08. Deposit spreads have also benefited from the Bank’s higher credit risk ratings.

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

Despite this positive evolution of spreads, the Bank’s net interest margin reached 5.8% in the quarter compared to 6.2% in 4Q07 and 6.9% in 3Q08. This lower net interest margin was mainly due to the lower quarterly inflation in 4Q08 compared to 3Q08 and 4Q07.

Expanding client spreads

Spread = Interest earned on loan minus cost of funds

The impact of lower net interest margins were offset by the Bank’s proactive management of the asset and funding mix, coupled with loan growth and rising spreads. As a result, in 4Q08 net interest income was up 17.7% YoY.

Capitalization ratios continued to improve in 4Q08. The Bank’s BIS ratio as of December 31, 2008 reached a solid 13.8% with a Tier I ratio of 10.0%. The Bank has one of the highest BIS ratios among the major players in the Chilean financial system. During the quarter, the Bank issued US$40 million in subordinated bonds in the local market in order to further improve capitalization ratios.

In 4Q08, the Bank’s net provision expense increased 14.4% QoQ and 50.6% YoY. As mentioned in previous earning reports, this rise was driven by higher charge-offs in consumer loans due to the economic slowdown, as well as an increase in provisions in the middle-market following negligible levels in the past three years. This rise in risk has been offset by a more selective loan growth towards less risky segments and higher spreads. As a result, net interest income after net provision expense increased 5.1% YoY in 4Q08 and 20.7% YoY in the twelve-month period ended December 31, 2008.

Net fee income increased 3.2% QoQ and 9.7% YoY in 4Q08 in line with the expansion of cross-selling and product usage. Santander Chile has the largest client base (excluding the state owned bank) in Chile. The total number of cross-sold clients increased 7.9% YoY. Fees from credit, debit and ATM cards increased 13.1% QoQ and 11.0% YoY.

The growth rate of operating expenses was curbed in the quarter as the Bank focused in cost control and limited the opening of new branches in order to maximize the profitability of the existing network. Operating expenses decreased 1.7% QoQ and increased 6.1% YoY in 4Q08. Administrative expenses in 4Q08 decreased 7.5% QoQ and increased 1.7% YoY. In 4Q08, the efficiency ratio reached 38.8% compared to 42.4% in 4Q07. We have the highest level of efficiency among the larger banks in Chile and among the best in emerging markets.

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

Banco Santander Chile: Summary of Quarterly Results

	Quarter							Change %
(Ch$ million)		4Q08		3Q08		4Q07			4Q08 / 4Q07		4Q08 / 3Q08
Net interest income		233,455		253,221		198,403			17.7	%	(7.8	)%
Fee income		57,924		56,139		52,816			9.7	%	3.2	%
Core revenues		291,379		309,360		251,219			16.0	%	(5.8	)%
Market related income		16,802		33,933		9,280			81.1	%	(50.5	)%
Other operating income		3,309		(1,094	)	7,751			(57.3	)%	(402.5	)%
Total operating income		311,490		342,199		268,250			16.1	%	(9.0	)%
Operating expenses		(120,830	)	(122,967	)	(113,839	)		6.1	%	(1.7	)%
Provision expense		(82,522	)	(72,128	)	(54,788	)		50.6	%	14.4	%
Net operating income		108,138		147,104		99,623			8.5	%	(26.5	)%
Net income		78,465		96,457		71,119			10.3	%	(18.7	)%
Minority interest		899		(39	)	344			161.3	%	(2405.1	)%
Net income attributable to shareholders		77,566		96,496		70,775			9.6	%	(19.6	)%
Net income/share (Ch$)		0.41		0.51		0.38			9.6	%	(19.6	)%
Net income/ADR (US$)1		0.68		0.96		0.79			(13.6	)%	(29.4	)%
Total loans		14,604,840		13,791,128		12,258,457			19.1	%	5.9	%
Customer funds		14,905,245		14,074,217		13,391,127			11.3	%	5.9	%
Shareholders’ equity		1,602,610		1,500,504		1,458,089			9.9	%	6.8	%
Net interest margin		5.8	%	6.9	%	6.2	%
Efficiency ratio		38.8	%	35.9	%	42.4	%
Return on average equity2		20.2	%	27.5	%	19.9	%
PDL / Total loans		1.1	%	1.1	%	1.0	%
Coverage ratio of PDLs		177.5	%	181.0	%	199.5	%
Expected loss3		2.0	%	2.0	%	1.9	%
BIS ratio		13.8	%	13.1	%	12.2	%
Branches4		477		472		464
ATMs		1,958		1,997		2,004
Employees		9,169		9,331		9,174

1.	The change in earnings per ADR may differ from the change in earnings per share due to the exchange rate.

2.	Annualized Quarterly Earnings / Average Equity.

3.	Allowance for loan losses / Total loans.

4.	Includes SuperCaja and mini payment centers.

2007 figures have been re-categorized under the new format in order to make them more comparable, but the modification regarding minimum dividends has not been made to historical shareholders’ equity.

Please note that this information is provided for comparative purposes only and that this re-categorization of line items may undergo further changes during the year and, therefore, historical figures, including financial ratios, presented in this report may not be entirely comparable to future figures presented by the Bank. Re-classified historical figures have not been audited.

In this earnings report, quarterly 2007 figures have suffered minor reclassifications between line items compared to figures for these periods presented in previous earnings reports, especially between other operating income, other operating expenses and net gains from financial transactions. This did no affected total net income.

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

12M08 RESULTS SUMMARY

In the twelve-month period ended December 31, 2008 (12M08), net income attributable to shareholders increased 6.3% YoY and totaled Ch$328,146 million (Ch$1.74/share and US$2.82/ADR). Growth was led by a 22.8% increase in core revenues. Net interest income increased 25.9% and fee income 11.8% YoY. The net interest margin in 12M08 reached a record level of 6.1% compared to 5.8% in 12M07. The efficiency ratio reached 38.0% in 12M08 compared to 39.4% in 12M07. Net operating income increased 11.4% in the same period. These higher operating results were partially offset by a 33.9% rise in non-operating losses, net which were negatively affected by higher losses from price level restatement. ROAE reached 23.0% in 12M08 compared to 23.7% in 12M07.

SECTION 2: BALANCE SHEET

LOANS

Selective loan growth with a focus on companies and upper and middle income individuals

Loans	Quarter ended,						% Change
(Ch$ million)	Dec-08		Sep-08		Dec-07 (reclassified)		Dec. 08 / 07			Dec. 08 / Sept. 08
Total loans to individuals1		6,833,098		6,654,210		5,846,856		16.9	%		2.7	%
Consumer loans		2,248,996		2,241,163		2,082,579		8.0	%		0.3	%
Residential mortgage loans		3,981,347		3,853,088		3,345,493		19.0	%		3.3	%
SMEs		2,466,147		2,418,645		2,126,067		16.0	%		2.0	%
Institutional lending		227,464		216,212		210,357		8.1	%		5.2	%
Total retail lending		9,526,709		9,289,066		8,183,281		16.4	%		2.6	%
Middle-Market & Real estate		2,882,484		2,831,381		2,470,934		16.7	%		1.8	%
Corporate		2,052,089		1,648,671		1,628,192		26.0	%		24.5	%
Total loans 2,3		14,604,840		13,791,128		12,258,457		19.1	%		5.9	%

1	Includes consumer and mortgage lending and other loan products to individuals

2	Includes past due loans in each category.

3 Excludes allowance for loan losses and interbank loans

The Bank’s solid liquidity position and the higher spreads seen in the market helped to boost lending in the quarter. Total loans increased 5.9% QoQ In 4Q08 and 19.1% YoY. Corporate lending increased 24.5% QoQ and 26.0% YoY. During the quarter, the Bank, in line with its strategic objectives, focused its loan growth in Corporate lending as spreads have been rising and this segment better risk profile should help to control credit risk indicators going forward. Growth in the corporate segments was also driven by the 13.9% depreciation of the peso against the US$ dollar in the quarter, which resulted in a translation gain in dollar denominated loans. This partially explains the 26.3% QoQ rise in foreign trade lending in the quarter.

Lending to the middle market increased 1.8% QoQ and 16.7% YoY, mainly due to the 6.2% QoQ increase in foreign trade volumes in this segment. This was in part due to the translation gains produced by the depreciation of the peso in the quarter against the US$ dollar. The Bank’s healthy dollar liquidity also improved its competitive advantage in foreign trade financing in the quarter. Commercial loans in the middle market segment grew 2.0% QoQ. Loan volume growth in 4Q08 in this segment was affected by the economic slowdown, but this was compensated by higher spreads.

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

Lending to SMEs increased 2.0% QoQ and 16.0% YoY. Commercial loans to this segment grew 2.0% QoQ, which was a somewhat slower pace than previous periods, but at higher spreads. Foreign trade loans rose 16.0% QoQ in this segment driven by translation gains.

Total Commercial lending	Ch$ mn		% Change Dec. / Sept. 08
Commercial loans		5,345,941		7.3	%
Foreign trade loans		1,396,596		26.3	%
Lines of credit to companies		271,896		(1.3	)%
Factoring		323,136		0.5	%
Leasing		965,119		2.0	%
Other commercial loans		71,811		10.1	%
Total commercial lending		8,374,498		8.8	%

Total loans to individuals increased 2.7% QoQ and 16.9% YoY. Residential mortgage lending increased 3.3% QoQ and 19.0% YoY. Consumer loans expanded 0.3% QoQ and 8.0% YoY. As mentioned in the previous earnings report, loan growth to individuals continues to be centered in middle and upper income segments for credit risk reasons. During 2008, loan growth to higher income individuals was up 35.6%, to the middle income segment loan growth increased 4.4% and to lower income segments loan growth decreased 11.9%.

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

FUNDING

Strong deposit growth in the quarter

Customer funds	Quarter ended,									Change %
(Ch$ million)	Dec-08			Sep-08			Dec-07 (reclassified)			Dec. 08 / 07			Dec. 08 / Sept. 08
Non-interest bearing deposits		2,949,757			3,132,432			2,868,769			2.8	%		(5.8	)%
Time deposits		9,756,266			8,408,557			7,887,897			23.7	%		16.0	%
Total customer deposits		12,706,023			11,540,989			10,756,666			18.1	%		10.1	%
Mutual funds		2,199,222			2,533,228			2,634,461			(16.5	)%		(13.2	)%
Total customer funds		14,905,245			14,074,217			13,391,127			11.3	%		5.9	%

Quarterly inflation rate		2.21	%		3.63	%		2.31	%
Avg. overnight interbank rate (nominal)		8.24	%		7.58	%		5.81	%
Avg. yield on 10 year Central Bank bonds (real)		3.22	%		3.39	%		2.97	%
Avg. yield on 10 year Central Bank bonds (nominal)		6.50	%		7.74	%		6.31	%

In 4Q08, Santander Chile’s deposit base increased by 10.1% QoQ and 18.1% YoY outpacing loan growth and reflecting our focus on liquidity and improving the funding mix. The Bank’s market share of deposits increased from 20.4% as of September 2008 to 20.8% at year-end 2008. The growth of deposits was led by a 16.0% QoQ increase in time deposits. The spread earned over time deposits also increased from 30 basis points in 4Q07 and 55 basis points in 3Q08 to 66 basis points in 4Q08. Non-interest bearing demand deposits decreased 5.8% QoQ and increased 2.8% YoY. The average balance of non-interest bearing checking accounts decreased 0.4% QoQ and increased 12.7% YoY. The higher inflation rate registered in the second half of 2008 resulted in lower growth of non-interesting bearing deposit.

As of December 31, 2008, Santander Chile’s loan to deposit ratio reached a healthy 94.1% improving from 100.2% as of September 2008 (excluding portion of mortgage loan funded through bonds).

Assets under management decreased 13.2% QoQ and 16.5% YoY due to the fall in stock markets worldwide and the substitution of money market funds to time deposits.

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL

Solid capitalization ratios. Year-end BIS ratio reached 13.8%

Shareholders' Equity	Quarter									Change %
(Ch$ million)	Dec-08			Sep-08			Dec-07 (reclassified)			Dec. 08 / 07			Dec. 08 / Sept. 08
Capital		891,303			818,535			818,535			8.9	%		8.9	%
Reserves		51,539			133,429			47,331			8.9	%		(61.4	)%
Unrealized gain (loss) Available-for-sale financial assets		(7,552	)		(31,204	)		(9,475	)		(20.3	)%		(75.8	)%
Retained Earnings:
Retained earnings previous periods		413,053			381,030			273,004			51.3	%		8.4	%
Net income		328,146			250,580			308,647			6.3	%		31.0	%
Provision for mandatory dividend		(98,444	)		(75,174	)		0
Minority Interest		24,565			23,308			20,047			22.5	%		5.4	%
Total Equity		1,602,610			1,500,504			1,458,089			9.9	%		6.8	%
Equity attributable to shareholders		1,578,045			1,477,196			1,438,042			9.7	%		6.8	%
ROE		20.2	%		27.5	%		20.1	%

* Starting in 2008, the Bank must provision for the minimum mandatory dividend of 30% of net income.

Shareholders’ equity totaled Ch$1,602,610 million (US$2.5 billion) as of December 31, 2008. ROAE in 4Q08 reached 20.2%. The Bank’s BIS ratio as of December 31, 2008 reached 13.8% with a Tier I ratio of 10.0%. During the quarter, the Bank issued US$40 million in subordinated bonds in the local market in order to further improve capitalization ratios. This is in line with our strategic objectives of focusing on liquidity, funding and capital.

Capital Adequacy	Quarter ended									Change %
(Ch$ million)	Dec-08			Sep-08			Dec-07			Dec. 08 / 07			Dec. 08 / Sept. 08
Tier I		1,578,043			1,477,245			1,129,395			39.7	%		6.8	%
Tier II		588,657			514,005			473,037			24.4	%		14.5	%
Regulatory capital		2,166,700			1,991,250			1,602,432			35.2	%		8.8	%
Risk weighted assets		15,710,202			15,170,215			13,087,642			20.0	%		3.6	%
Tier I ratio		10.0	%		9.7	%		8.6	%
BIS ratio		13.8	%		13.1	%		12.2	%

* Tier I includes year-to-date net income in 2008, but not in 2007.

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

IFRS note: In 2009, and in line with IFRS standards being adopted by Chilean banks, the Bank’s year-end 2008 Equity will be modified. The main changes will be: (i) the restatement for 2008 earnings, in which the main impact will be the reversal of 2008 price level restatement and (ii) the revaluation of fixed assets which were previously stated in Unidades de Fomento and are now valued at market prices.

SECTION 3: ANALYSIS OF QUARTERLY INCOME STATEMENT

NET INTEREST INCOME

Positive evolution of net interest income and spreads, but NIM driven down by lower inflation

Net Interest Income / Margin	Quarter								Change %
(Ch$ million)		4Q08		3Q08		4Q07 (reclassified)				4Q08 / 4Q07		4Q08 / 3Q08
Net interest income		233,455		253,221			198,403			17.7	%	(7.8	)%
Average interest-earning assets		15,975,392		14,693,715			12,840,100			24.4	%	8.7	%
Average loans		14,311,395		13,456,903			11,908,379			20.2	%	6.3	%
Net interest margin (NIM)		5.8	%	6.9	%		6.2	%
Avg. equity + non-interest bearing demand deposits / Avg. interest earning assets		28.3	%	31.4	%		33.5	%
Quarterly inflation rate		2.21	%	3.63	%		2.31	%
Avg. overnight interbank rate (nominal)		8.24	%	7.58	%		5.81	%
Avg. yield on 10 year Central Bank bonds (real)		3.22	%	3.39	%		2.97	%

1.	Annualized.

2.	Inflation measured as the variation of the Unidad de Fomento in the quarter.

In 4Q08, net interest income was up 17.7% YoY. The main driver of the increase in net interest revenue was the 24.4% and 20.2% YoY rise in average interest earning assets and loans, respectively. At the same time, the rise in client spreads also helped to drive net interest income. A key part of the Bank’s strategy has been to focus strongly on spreads in order to sustain profitability in a period of lower economic growth and to compensate for higher funding costs, lower inflation and higher credit risks. Loan spreads to companies and individuals have been increasing as liquidity abroad has become scarcer and more expensive. Spreads earned over commercial loans reached 2.63% in 4Q08 and were up 30 basis points QoQ and 45 basis points YoY. Consumer loan spreads reached 18.78% in 4Q08 and increased 18 basis points QoQ and 75 basis points YoY in 4Q08. Deposit spreads have also benefited from the Bank’s higher credit risk ratings.

This rise in lending spreads was partially offset by lower inflation levels that affected net interest margins in the quarter, albeit remaining at high levels. The Bank’s net interest margin reached 5.8% in the quarter compared to 6.2% in 4Q07 and 6.9% in 3Q08. The Bank maintains long-term assets (mainly medium and long-term financial investments and mortgage loans) that are denominated in Unidades de Fomento (UFs), an inflation indexed unit, which are partially funded with nominal or non-interest bearing peso short-term deposits. As the Bank maintains a positive gap between assets and liabilities indexed to inflation, a rise in inflation has a positive effect on net interest income and margins and vice-versa. The lower net interest margin in the quarter was partially offset by the lower loss from price level restatement.

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

Net interest income in 4Q08 decreased 7.8% QoQ and the NIM increased 110bp. This QoQ decline in margins was mainly due to the lower quarterly inflation rates. The lower margin was also due, in part, to higher loan growth in lower yielding, but less riskier corporate loans.

Going forward margins are expected to descend as inflation moderates and the asset mix shifts towards lower yielding and less risky loans. As mentioned above, this is being confronted by increasing spreads and actively managing the asset and liability mix.

PROVISION FOR LOAN LOSSES

Net provision expense rises as economic growth descends

Provision for loan losses	Quarter								Change %
(Ch$ million)		4Q08		3Q08		4Q07 (reclassified)				4Q08 / 4Q07		4Q08 / 3Q08
Gross provisions		(16,260	)	(13,054	)		(11,766	)		38.2	%	24.6	%
Charge-offs		(75,984	)	(68,325	)		(54,784	)		38.7	%	11.2	%
Gross provisions and charge-offs		(92,244	)	(81,379	)		(66,551	)		38.6	%	13.4	%
Loan loss recoveries		9,722		9,251			11,763			(17.4	)%	5.1	%
Net provisions for loan losses		(82,522	)	(72,128	)		(54,788	)		50.6	%	14.4	%
Total loans		14,604,840		13,791,128			12,258,457			19.1	%	5.9	%
Total reserves (RLL)		(285,470	)	(269,167	)		(232,766	)		22.6	%	6.1	%
Past due loans* (PDL)		160,824		148,709			116,654			37.9	%	8.1	%
Gross provision expense / Loans		2.53	%	2.36	%		2.17	%
Cost of credit**		2.26	%	2.09	%		1.79	%
PDL / Total loans		1.10	%	1.08	%		0.95	%
Expected loss (RLL / Total loans)		1.95	%	1.95	%		1.90	%
Coverage of past due loans***		177.5	%	181.0	%		199.5	%

*	Past due loans: installments or credit lines more than 90 days overdue.

**	Net provision expense / loans annualized.

***	RLL / Past due loans.

In 4Q08, the Bank’s net provision expense increased 14.4% QoQ and 50.6% YoY. As mentioned in previous earning reports, this rise was driven by the growth in retail banking activities, higher charge-offs in consumer loans due to the economic slowdown and higher inflation and an increase in provisions in the middle-market segment following negligible levels in the past three years.

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

Net provisions for loan losses by segment	Quarter					Change %
(Ch$ million)		4Q08	3Q08	4Q07 (reclassified)			4Q08 / 4Q07		4Q08 / Q08
Retail banking*		76,185	67,089		54,100		40.8	%	13.6	%
Middle-market		3,471	4,800		663		423.5	%	(27.7	)%
Corporate banking		566	65		55		929.1	%	770.8	%
Total net provisions for loan losses**		80,222	71,954		54,818		46.3	%	11.5	%

*	Includes individuals, institutional lending and SMEs. Excludes subsidiaries.

In 4Q08, the Bank continued to focus loan growth in lower risk segments in order to reduce the growth of this expense. Spreads have also been increased to cover for this higher requirement. As a result of these measures, net interest income after net provision expense increased 5.1% YoY in 4Q08 and 20.7% YoY in the twelve-month period ended December 31, 2008.

The past due loan ratio (Past due installment >90 days / Total loans) as of December 2008 reached 1.10% compared to 1.08% in 3Q08 and 0.95% in 4Q07. Coverage of past due loans (Loan loss allowance / Past due loans) reached 177.5% as of December 2008 compared to 181% at September 2008 and 199.5% as of December 2007.

The expected loan loss ratio (Loan loss allowances / Total loans), which is a ratio that measures how much of the Bank’s loan portfolio is at risk, remained steady QoQ and YoY at 1.95% due to the Bank’s conservative charge-off policies. Going forward, the expected loan loss ratio and the cost of credit should rise given the expected lower economic growth.

IFRS note: In 2009, and in line with IFRS standards being adopted by Chilean banks, non-performing loans will include the entire balance of loans, including the performing portions. As a result, the PDL ratio will be more in line with the expected loan loss levels and coverage ratios will fall. This does not affect the Bank’s provisioning models, which still require the Bank to have 100% coverage over the expected loan loss level.

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

NET FEE INCOME

Focus on cross-selling

Fee Income	Quarter					Change %
(Ch$ million)		4Q08	3Q08	4Q07 (reclassified)			4Q08 / 4Q07		4Q08 / 3Q08
Checking accounts & lines of credit		17,558	15,865		15,720		11.7	%	10.7	%
Credit, debit & ATM card fees		11,676	10,326		10,522		11.0	%	13.1	%
Collection fees		10,787	10,915		9,687		11.4	%	(1.2	)%
Asset management		5,853	7,622		8,296		(29.4	)%	(23.2	)%
Guarantees, pledges and other contingent operations		5,084	4,237		3,554		43.1	%	20.0	%
Insurance brokerage		3,619	3,879		3,464		4.5	%	(6.7	)%
Fees from brokerage and custody of securities		916	1,953		1,624		(43.6	)%	(53.1	)%
Other Fees		2,431	1,344		-50		—	%	80.9	%
Total fees		57,924	56,139		52,816		9.7	%	3.2	%

Net fee income increased 3.2% QoQ and 9.7% YoY in 4Q08 in line with the expansion of cross-selling and product usage. Santander Chile has the largest client base (excluding the state owned bank) in Chile. The total number of clients increased 8.8% YoY to 3.0 million in 4Q08 and the amount of cross-sold clients increased 7.9% in the same period. Going forward, the Bank is focusing on expanding cross-selling as a cost-efficient way to continue expanding fee income in a lower economic growth period.

Fees from checking accounts and lines of credit increased 10.7% QoQ and 11.7% YoY. Fee income from checking and lines of credit is expected to decline throughout 2009.

Fees from credit, debit and ATM cards increased 13.1% QoQ and 11.0% YoY. The usage of electronic means of payments continues to steadily grow in Chile, especially the usage of credit cards and ATMS. In the banking credit card business, Santander, with 33.9% of the credit card accounts, generated 33.7% of all transactions in 2008 and 35.2% of all purchases in the same period. In the ATM market, Santander, with approximately 30% of the ATMs installed in the country, generated 41% of the total transactions in 2008.

Collection fees were flat QoQ and increased 11.4% YoY. The main driver of fee growth in this line item is the collection of loan insurance policies on behalf of third parties which evolves with overall commercial activity.

Asset management fees were down 23.2% QoQ and 29.4% YoY. Assets under management decreased 13.2% QoQ and 16.5% due to unfavorable market conditions, especially in equity markets that affected valuations and asset management fees.

Fees from guarantees, pledges and other contingent operations increased 43.1% QoQ and 20.0% YoY, in line with higher commercial activity in the corporate segment and also driven by the depreciation of the peso in the quarter that positively impacted fees from stand-by letters of credit.

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

Insurance brokerage fees decreased 6.7% QoQ and increased 4.5% YoY in 4Q08. The Bank’s strength in cross-selling the client base by offering attractive insurance products through the Internet has been a key driver in this line item, but a slowdown of business volumes in line with decelerating economic growth is expected going forward.

Fees securities brokerage and custody decreased 53.1% QoQ and 43.6% YoY. The fall in stock market prices and volumes is the main factor behind this decline.

Other fees, that totaled Ch$2,431 million, were positively affected by higher gains from the Bank’s foreign exchange business and financial advisory fees.

OPERATING EXPENSES AND EFFICIENCY

The Bank continues to tighten cost control

Operating Expenses	Quarter								Change %
(Ch$ million)		4Q08		3Q08		4Q07 (reclassified)				4Q08 / 4Q07		4Q08 / 3Q08
Personnel expenses		(59,106	)	(53,889	)		(49,571	)		19.2	%	9.7	%
Administrative expenses		(39,072	)	(42,238	)		(38,408	)		1.7	%	(7.5	)%
Depreciation and amortization		(13,354	)	(14,038	)		(11,600	)		15.1	%	(4.9	)%
Other operating expenses*		(9,298	)	(12,802	)		(14,260	)		(34.8	)%	(27.4	)%
Operating expenses		(120,830	)	(122,967	)		(113,839	)		6.1	%	(1.7	)%
Efficiency ratio**		38.8	%	35.9	%		42.4	%

*	Certain items of other operating income and expenses were reclassified for 2007 in 4Q08. Therefore, these figures vary on a quarterly basis compared to previous earning reports, but the net result from other operating income and expenses remains the same.

**	Operating expenses / Operating income. Operating income = Net interest income + Net fee income+ Market related income + Other operating income.

The growth rate of operating expenses was curbed in the quarter. Operating expenses decreased 1.7% QoQ and increased 6.1% YoY in 4Q08. Administrative expenses in 4Q08 decreased 7.5% QoQ and increased 1.7% YoY. In 4Q08, the efficiency ratio reached 38.8% compared to 42.4% in 4Q07.

Personnel expenses increased 9.7% QoQ and 19.2% YoY in 4Q08. This was mainly due to higher inflation and higher average headcount in 2008 compared to 2007. Going forward, and depending on the evolution of inflation, we expect a further moderation in the growth rate of personnel expenses.

The growth rate of administrative expenses was also controlled in the quarter, as the Bank has been limiting the opening of new branches. Since approximately 1/3 of the Bank’s branches have been opened in the past three years, there is still ample room to sustain growth and improve efficiency by maximizing profitability of the existing network. Administrative expenses in 4Q08 decreased 7.5% QoQ and increased 1.7% YoY. As of December 2008, the Bank’s distribution network totaled 477 offices. The 5 branches the Bank opened in 4Q08 were Banca Prime branches for upper income individuals where the Bank is rapidly expanding. The ATM network decreased 1.5% QoQ, totaling 1,958 ATMs.

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

Stable distribution capabilities

The 4.9% QoQ decrease in depreciation expenses was also due to the optimization plan of the Bank’s branch network in the second half of 2008. The 15.1% YoY rise in depreciation was mainly due to the 12 month growth of the Bank’s distribution network.

Other operating expenses are mainly expense primarily relating to the Bank’s call center, credit card related expenses, expenses related to repossessed assets and provisions for non-credit contingencies. The QoQ and YoY decrease in other operating expenses was mainly driven by lower provisions for non-credit contingencies.

OTHER OPERATING INCOME AND NET RESULTS FROM FINANCIAL TRANSACTIONS AND OPERATING INCOME

Positive results from client related treasury income despite market turmoil

Other Operating Income and Net Results from Financial Transactions	Quarter							Change %
(Ch$ million)		4Q08		3Q08		4Q07			4Q08 / 4Q07		4Q08 / 3Q08
Other operating income*		3,309		(1,094	)	7,751			(57.3	)%	—	%

Net gains from mark-to-market and trading		102,073		96,512		(50,685	)		—	%	5.8	%
Exchange differences, net		(85,271	)	(62,579	)	59,965			—	%	36.3	%
Net results from financial transactions		16,802		33,933		9,280			81.1	%	(50.5	)%

*	Certain items of other operating income and expenses were reclassified for 2007 in 4Q08. Therefore, these figures vary on a quarterly basis compared to previous earning reports, but the net result from other operating income and expenses remains the same.

Other operating income, which mainly includes the results from the sale and maintenance of repossessed assets, provisions released for non-credit contingencies and other results, totaled a gain of Ch$3,309 million in 4Q08. The QoQ rise was mainly due to the release of provisions for non-credit contingencies. The 57.3% YoY decrease in other operating income in 4Q08 compared to 4Q07 was mainly due to lower gain from the reversal of provisions for non-credit contingencies.

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

The net gains from mark-to-market and trading mainly includes the mark-to-market of financial investments held for trading, the interest revenue generated by this portfolio, any gain or loss from the sale of charged-off loans and the mark-to-market of derivatives. The results recorded as exchange differences, net mainly includes the translation gains or losses of assets and a liability denominated in foreign currency. In order to better understand these line items, we present the net results from financial transactions by business area in the table below.

Net result from financial transactions	Quarter							Change %
(Ch$ million)		4Q08		3Q08	4Q07 (reclassified)				4Q08 / 4Q07			4Q08 / 3Q08
Treasury products for clients*		21,263		30,649		14,356			48.1	%		(30.6	)%
ALCO & Proprietary trading		(4,461	)	3,285		(5,076	)		(12.1	)%	NM
Net results from financial transactions		16,802		33,933		9,280			81.1	%		(50.5	)%

* Santander Global Connect, market making & results from the sale of charged-off loans.

The 50.5% QoQ decrease in the net results from financial transactions was mainly due to a lower gain from our market-making business in 4Q08 compared to 3Q08, a loss in proprietary trading in the quarter of Ch$1,394 million and losses produced by the hedging of the Bank’s US$ dollar liquidity position. The latter is partially offset by the net interest income produced by this liquidity cushion. This position has also become a competitive advantage for the Bank in a moment in which foreign funding has become more expensive. Compared to 4Q07, the net results from financial transactions rose 81.1% mainly due to the higher sales of treasury products for clients, which is a recurring and growing source of income for the Bank.

OTHER INCOME AND EXPENSES

Other Income and Expenses	Quarter								Change %
(Ch$ million)		4Q08		3Q08		4Q07 (Reclassified)				4Q08 / 4Q07		4Q08 / 3Q08
Income attributable to investments in other companies		(206	)	139			(92	)		123.9	%	—	%
Price level restatement		(15,451	)	(31,157	)		(16,641	)		(7.2	)%	(50.4	)%
Quarterly inflation rate*		2.21	%	3.63	%		2.31	%
Income tax		(14,016	)	(19,629	)		(11,771	)		19.1	%	(28.6	)%

* Measured as the variation of the Unidad de Fomento in the quarter.

Price level restatement in the quarter totaled a loss of Ch$15,451 million. The Bank must adjust its capital and fixed assets for the variations in price levels. When inflation is positive, the Bank records a loss from price restatement, since the Bank's capital is larger than fixed assets. The inflation rate was 2.21% in 4Q08 compared to 3.63% in 3Q08 and 2.31% in 4Q07. The lower inflation rate compared to previous periods explains the lower loss from price level restatement.

IFRS note: In 2009, price level restatement will no longer be recognized. Capital will no longer be restated to reflect changes in CPI and fixed and other non-financial assets will not be adjusted for variation of the UF. Therefore, in a period of positive inflation results will be positively affected by this change, but in periods of deflation results under IFRS, all other factors equal, results would be lower.

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

SECTION 4: CREDIT RISK RATINGS

International ratings:

The Bank has credit ratings from three leading international agencies. We have the highest risk rating in Latin America.

Moody’s		Rating
Long-term bank deposits		A2
Senior bonds		Aa3
Subordinated debt		Aa3
Bank Deposits in Local Currency		Aa2
Bank financial strength		B-
Short-term deposits		P-1

Standard and Poor’s		Rating
Long-term Foreign Issuer Credit		A+
Long-term Local Issuer Credit		A+
Short-term Foreign Issuer Credit		A-1
Short-term Local Issuer Credit		A-1

Fitch		Rating
Foreign Currency Long-term Debt		A+
Local Currency Long-term Debt		A+
Foreign Currency Short-term Debt		F1
Local Currency Short-term Debt		F1
Individual rating		B

Local ratings:

Our local ratings, the highest in Chile, are the following:

Local ratings	Fitch Ratings	Feller Rate

Shares	Level 2	1CN1

Short-term deposits	N1+	Level 1+

Long-term deposits	AAA	AAA

Mortgage finance bonds	AAA	AAA

Senior bonds	AAA	AAA

Subordinated bonds	AA+	AA+

Outlook	Stable	Stable

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

SECTION 5: SHARE PERFORMANCE

As of December 2008

Ownership Structure:

ADR Price Evolution

Santander ADR vs. Global 1200 Financial Index

(Base 100 = 12/31/2003)

ADR price (US$) 2008

Year-end 2008:			35.03
Maximum (2008):			54.60
Minimum (2008):			28.16

Market Capitalization: US$6,353 million

P/E 12 month trailing:	11.8
P/BV (24/10/08):	2.45
Dividend yield*:	4.5	%

*	Based on closing price on record date of last dividend payment.

Daily traded volumes 4Q 2008

Local Share Price Evolution

Santander vs IPSA Index

(Base 100 = 12/31/2003)

Local share price (Ch$) 2008

Year-end 2008:			20.49
Maximum (2008):			24.86
Minimum (2008):			16.51

Dividends:

Year paid	Ch$/share		% of previous year earnings
2005:		1.05		100	%
2006:		0.83		65	%
2007:		0.99		65	%
2008:		1.06		65	%

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

SECTION 6: INSTITUTIONAL BACKGROUND

Institutional Background

As per the latest public records published by the Superintendency of Banks of Chile for December 2008, Banco Santander Chile was the largest bank in terms of loans and deposits. The Bank has the highest credit ratings among all Latin American companies, with an A+ rating from Standard and Poor’s, A+ by Fitch and A2 by Moody’s, which are the same ratings assigned to the Republic of Chile. The stock is traded on the New York Stock Exchange (NYSE: SAN) and the Santiago Stock Exchange (SSE: Bsantander). The Bank’s main shareholder is Santander, which controls 76.91% of Banco Santander Chile.

Banco Santander, S.A., (SAN.MC, STD.N), headquartered in Madrid, engages primarily in commercial banking with complementary activities in global wholesale banking, cards, asset management and insurance. Santander had over EUR 1.168 trillion in funds under management at the close of 2008, from more than 80 million customers served through 13,390 offices – more branches than any other international bank. Founded in 1857, Santander is the largest financial group in Spain and Latin America and has a significant presence in Western Europe and in the United Kingdom. In 2008, Santander registered €8,876 million in attributable net profit, an increase of 9% from 2007, excluding capital gains.

In Latin America, Santander manages over US$200 billion in business volumes (loans, deposits, mutual funds, pension funds and managed funds) through 6,089 branches. In 2008, Santander reported EUR 2,945 million in net attributable income in Latin America, up 10% from the previous year.

For more information, see www.santander.com.

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

ANNEX 1: BALANCE SHEET

													Dec. 2008 /			Dec. / Sept.
Unaudited Balance Sheet	Dec-08			Dec-08			Sep-08			Dec-07			2007			2008
	US$ths												% Chg.
										(Reclassified)
Assets
Cash and balances from Central Bank		1,333,081			854,838			854,097			1,108,444			(22.9	)%		0.1	%
Funds to be cleared		523,049			335,405			513,843			316,240			6.1	%		(34.7	)%
Financial assets held for trading		1,811,510			1,161,631			891,070			1,090,004			6.6	%		30.4	%
Investment collateral under agreements to repurchase		-			-			8,805			33,999			(100.0	)%		(100.0	)%
Derivatives		2,879,546			1,846,509			1,296,402			780,775			136.5	%		42.4	%
Interbank loans		148,926			95,499			76,015			45,961			107.8	%		25.6	%
Loans, net of reserves for loan losses		22,330,402			14,319,370			13,521,962			12,028,054			19.0	%		5.9	%
Available-for-sale financial assets		2,464,312			1,580,240			1,316,741			779,635			102.7	%		20.0	%
Held-to-maturity investments		-			-			-			-
Investments in other companies		10,901			6,990			7,186			6,795			2.9	%		(2.7	)%
Intangible assets		113,979			73,089			69,534			56,187			30.1	%		5.1	%
Fixed assets		405,622			260,105			253,918			245,619			5.9	%		2.4	%
Current tax assets		28,521			18,289			12,275			1,933			846.1	%		49.0	%
Deferred tax assets		101,085			64,821			101,876			61,261			5.8	%		(36.4	)%
Other assets		811,459			520,348			668,294			474,091			9.8	%		(22.1	)%
Total Assets		32,962,392			21,137,134			19,592,018			17,028,998			24.1	%		7.9	%

Liabilities and Equity
Total non-interest bearing deposits		4,600,011			2,949,757			3,132,432			2,868,769			2.8	%		(5.8	)%
Funds to be cleared		222,303			142,552			308,345			135,219			5.4	%		(53.8	)%
Investments sold under agreements to repurchase		878,338			563,234			741,043			308,651			82.5	%		(24.0	)%
Time deposits and savings accounts		15,214,450			9,756,266			8,408,557			7,887,897			23.7	%		16.0	%
Derivatives		2,291,967			1,469,724			1,122,579			778,217			88.9	%		30.9	%
Deposits from credit institutions		2,222,324			1,425,065			1,495,606			1,099,443			29.6	%		(4.7	)%
Marketable debt securities		4,134,693			2,651,372			2,372,389			2,154,996			23.0	%		11.8	%
Other obligations		161,057			103,278			101,998			147,868			(30.2	)%		1.3	%
Current tax liabilities		254			163			423			15,897
Deferred tax liability		29,265			18,766			56,892			10,877			72.5	%		(67.0	)%
Provisions		252,889			162,165			132,216			46,376			249.7	%		22.7	%
Other liabilities		455,644			292,182			219,034			116,699			150.4	%		33.4	%
Total Liabilities		30,463,195			19,534,524			18,091,514			15,570,909			25.5	%		8.0	%

Equity
Capital		1,389,946			891,303			818,535			818,535			8.9	%		8.9	%
Reserves		80,373			51,539			133,429			47,331			8.9	%		(61.4	)%
Unrealized gain (loss) Available-for-sale financial assets		(11,777	)		(7,552	)		(31,204	)		(9,475	)		(20.3	)%		(75.8	)%
Retained Earnings:		0			0			0			0
Retained earnings previous periods		644,137			413,053			381,030			273,004			51.3	%		8.4	%
Net income		511,729			328,146			250,580			308,647			6.3	%		31.0	%
Provision for mandatory dividend		(153,519	)		(98,444	)		(75,174	)		0						31.0	%
Minority Interest		38,308			24,565			23,308			20,047			22.5	%		5.4	%
Total Equity		2,499,197			1,602,610			1,500,504			1,458,089			9.9	%		6.8	%
Total Liabilities and Equity		32,962,392			21,137,134			19,592,018			17,028,998			24.1	%		7.9	%

In this earnings report, 2007 figures have suffered minor reclassifications between line items compared to figures for these periods presented in previous earnings reports. This affected mainly net gains from financial transactions, other operating income and other operating expenses.

Investor Relations Department

Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,

email: rmorenoh@santander.cl

ANNEX 2 : YTD INCOME STATEMENT

YTD Income Statement Unaudited	Dec-08			Dec-08			Dec-07			Dec. 2008 / 2007
	US$ths.			Ch$ million nominal						% Chg.
							(reclassified)
Interest revenue		3,214,210			2,061,112			1,589,303			29.7	%
Interest expense		(1,815,315	)		(1,164,071	)		(876,879	)		32.8	%
Net interest revenue		1,398,894			897,041			712,424			25.9	%
Fee income		431,085