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.	Second Quarter 2009 Earnings Report (English)
2.	Second Quarter 2009 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:	Juan Pedro Santa María
Title:	General Counsel

Date: August 4, 2009

INDEX

SECTION		PAGE

SECTION 1: SUMMARY OF RESULTS AND STRATEGY		2

SECTION 2: BALANCE SHEET ANALYSIS		6

SECTION 3: ANALYSIS OF QUARTERLY INCOME STATEMENT		9

SECTION 4: CREDIT RISK RATINGS		17

SECTION 5: SHARE PERFORMANCE		18

SECTION 6: INSTITUTIONAL BACKGROUND		19

ANNEX 1: BALANCE SHEET		20

ANNEX 2: YEAR TO DATE INCOME STATEMENT		21

ANNEX 3: QUARTERLY INCOME STATEMENTS		22

ANNEX 4: QUARTERLY EVOLUTION OF MAIN RATIOS AND OTHER INFORMATION		23

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	1
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

Core revenues: Net interest income + fee income.

Net operating income: Core revenues + financial transactions, net + other operating income, net + operating expenses + provision expense.

Net income up 40.1% QoQ and 4.1% YoY in 2Q09

In 2Q09, net income attributable to shareholders totaled Ch$107,391 million (Ch$0.57 per share and US$1.12/ADR). These results represent an increase of 40.1% compared to 1Q09 (from now on QoQ) and 4.1% compared to restated 2Q08 figures (from now on YoY). Compared to historical figures (not adjusted for the new accounting standards1), net income attributable to shareholders increased 36.9% YoY in 2Q09.

ROAE reached 28.7% in 2Q 09

With these results the Bank’s ROAE in the quarter reached 28.7%. The Bank currently has the highest ROE among the banks operating in Chile. This strong profitability was achieved despite having one of the highest levels of capitalization in the Chilean financial system. As of June 30, 2009, the BIS ratio reached 15.1%. In April 2009, the Bank paid its annual dividend of Ch$1.13/share, equivalent to 65% of 2008 earnings attributable to shareholders (not restated for IFRS). At the record date, in Chile, the dividend yield was 6.3%.

Core revenues increase by a 16.4% QoQ and 2.9% YoY in 2Q09

Core revenues, that is, net interest income plus fee income, was up 16.4% QoQ and 2.9% YoY in 2Q09 despite the challenging operating environment faced by the Bank. Net interest income increased 21.0% QoQ and 2.9% YoY. The Bank’s net interest margin reached 6.0% compared to 4.8% in 1Q09 and 6.2% in 2Q08. Lower deflation in the quarter, lower funding costs and rising spreads boosted this expansion. Net fee income increased 2.5% QoQ and 3.0% YoY in thje same period. The Bank designed different strategies to promote fee growth in the quarter despite lower economic growth and regulatory changes. Notable was the sequential growth of fee income from key products such as: (i) asset management fees which were up 22.0% QoQ, (ii) insurance

1 In 2009, banks in Chile adopted accounting standards in line with international standards (IFRS) and historical figures in the rest of this report have been re-stated to make them comparable. The main difference compared to previous accounting standards was the elimination of price level restatement. All figures and variation presented below are based on 2Q08 and 1H08 figures that have been restated in line with new accounting standards adopted in 2009.

Investor Relations Department	2
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

brokerage 41.8% QoQ and (iii) fees from brokerage which rose 39.8% QoQ. This more than offset the contraction in fees from checking accounts and lines of credit that were negatively affected by recent regulatory changes.

Provision expense up 5.6% QoQ and 36.3% in 2Q09

In 2Q09, the Bank’s net provision expense increased 5.6% QoQ and 36.3% YoY. The evolution of net provision expense is directly related to negative effects of the economic downturn on asset quality. This higher provision expense resulted in an increase in coverage ratios. The coverage of past due loans (PDLs, all installments and lines of credit more than 90 days overdue) reached 172.8% as of June 2009 and improved from 166.2% as of March 2009 and June 2008. As of June 2009, the coverage of non-performing loans (NPLs, all loans with at least one installment over due > 90 days) reached 75.7% compared to 71.6% as of March 2009.

Despite the weakening of asset quality in 2Q09, there have been signs that the velocity of deterioration has subsided. In 2Q09, the Bank continued to focus loan growth in low risk segments in order to contain asset quality. At the same time, commercial executives continued to dedicate an important percentage of their time to asset quality issues and recoveries. As a result of these measures, the growth rate of early non-performance (<90 days) has evolved positively, total charge-offs decreased 6.8% QoQ, loan loss recoveries increased 20.9% QoQ while NPLs have decreased 9.6% since their peak in April 2009.

Efficiency ratio reaches a record low 31.5% in 2Q09

The Bank continued to effectively control costs in the quarter. In 2Q09, the efficiency ratio reached a record low of 31.5% compared to 34.5% in 1Q09 and 37.0% in 2Q08. YoY operating expenses decreased 5.7%, driven by a 6.8% decrease in personnel expenses and a 1.8% fall in administrative expenses. With this positive evolution of costs, the Bank consolidated its position as one of the most efficient banks in the Emerging Markets.

Net operating income increases 36.2% QoQ and 10.8% YoY

In summary, net operating income increased 36.2% QoQ and 10.8% YoY in 2Q09. The strategy of focusing on selective loan growth, improving the funding mix, higher spreads, increasing product usage and controlling costs, offset the negative effects of rising credit risks.

(Ch$ billion)	2Q09	YoY Chg.			QoQ Chg.
Net interest income	227		2.9	%		21.0	%
Fee income	63		3.0	%		2.5	%
Core revenue	290		2.9	%		16.4	%
Financial transactions + Other op. income, net*	40		142.6	%		12.9	%
Provision expense	-96		36.3	%		5.6	%
Operating expenses	-104		-5.7	%		5.9	%
Operating income, net of prov.	130		10.8	%		36.2	%

* Includes Other operating income and Other operating expenses.

Investor Relations Department	3
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

Focus on selective loan growth to minimize credit risk and provision expense

The Bank continued with its approach to selective loan growth, given the more difficult economic environment. On the retail side, total loans to individuals decreased 0.4% QoQ and increased 4.3% YoY. Following our strategy of growing selectively, loan volumes to the mid-upper income segments continued to expand at a rapid pace in the quarter. Lending to middle-upper income segments increased 4.0% QoQ and 19.5% YoY and represented 58.7% of total lending to individuals as of June 09 (compared to 52.2% in June 08). In the rest of the segments loan volumes continued to descend on a QoQ basis mainly due to credit risk reasons and our strict focus on profitability over market share concerns.

The loan to deposit ratio remains healthy at 94.3% in 2Q09

The Bank also continued to focus on maintaining healthy liquidity and a strong funding base in the quarter. In the period, short-term rates fell sharply as the central bank loosened its monetary policy. However, customer funds, that is, demand and time deposits and mutual funds, remained stable QoQ and YoY. The Bank let its more expensive time deposits to expire and funneled those funds to mutual funds, which is a more profitable product. As a consequence, total customer deposits decreased 2.9% QoQ and mutual funds under management increased 8.4% QoQ. The loan to deposit ratio improved to 94.3% from 96.5% in 1Q09 and 93.2% as of 2Q08.

ROAE reaches 24.5% and the efficiency ratio 32.9% in 1H09

In the first half of 2009 (1H09), net income attributable to shareholders totaled Ch$184,043 million (Ch$0.98/share and US$1.90/ADR). The ROAE reached 24.5% and the efficiency ratio reached 32.9% in the period. Core revenues were up 2.0% compared to 1H08, while operating expenses decreased 1.8%. This was partially offset by the 41.7% rise in provision expense. As a consequence, net operating income grew 1.7%. Net income attributable to shareholders decreased 2.7% YoY due to the higher effective tax rate.

Net income attributable to shareholders increased 19.4% in 1H09 compared to non-restated 1H08 net income.

(Ch$ billion)	1H09	YoY Chg.
Net interest income	414		1.4	%
Fee income	125		4.1	%
Core revenue	539		2.0	%
Financial transactions + Other op. income, net*	76		142.6	%
Provision expense	-187		41.7	%
Operating expenses	-202		-1.8	%
Operating income net of prov.	225		1.7	%

* Includes Other operating income and Other operating expenses.

Investor Relations Department	4
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)		2Q09		1Q09		2Q08			2Q09 / 2Q08		2Q / 1Q 09
Net interest income		226,611		187,273		220,249			2.9	%	21.0	%
Fee income		63,145		61,631		61,325			3.0	%	2.5	%
Core revenues		289,756		248,904		281,574			2.9	%	16.4	%
Financial transactions, net		29,656		68,815		22,105			34.2	%	(56.9	)%
Total operating income		322,340		320,217		309,375			4.2	%	0.7	%
Operating expenses		(104,099	)	(98,288	)	(110,422	)		(5.7	)%	5.9	%
Provision expense		(96,037	)	(90,934	)	(70,459	)		36.3	%	5.6	%
Net operating income		130,025		95,464		117,351			10.8	%	36.2	%
Net income attributable to shareholders		107,391		76,652		103,162			4.1	%	40.1	%
Net income/share (Ch$)		0.57		0.41		0.55			4.1	%	40.1	%
Net income/ADR (US$)1		1.12		0.73		1.09			2.3	%	54.1	%
Total loans		13,401,485		13,985,677		13,199,963			1.5	%	(4.2	)%
Customer funds		14,770,605		14,855,094		14,617,944			1.0	%	(0.6	)%
Shareholders’ equity		1,497,019		1,543,040		1,276,028			17.3	%	(3.0	)%
Net interest margin		6.0	%	4.8	%	6.2	%
Efficiency ratio		31.5	%	34.5	%	37.0	%
Return on average shareholders equity2		28.7	%	20.2	%	32.3	%
PDL / Total loans		1.4	%	1.2	%	1.1	%
Coverage ratio of PDLs		172.8	%	166.2	%	166.2	%
Expected loss3		2.3	%	2.0	%	1.9	%
BIS ratio		15.1		15.0	%	12.9	%
Branches		502		501		498
ATMs		1,929		1,929		2,016

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

2.	Annualized Quarterly net income attributable to shareholders / Average Equity attributable to shareholders.

3.	Allowance for loan losses / Total loans. Based on internal credit models and Superintendency of Banks guidelines. Banks must have a 100% coverage of expected loss.

2008 figures have been restated in accordance with the new accounting standards adopted by Chilean banks in 2009. Please note that this information is provided for comparative purposes only and that this restatement 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.

Investor Relations Department	5
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

SECTION 2: BALANCE SHEET

LOANS

Focus on selective loan growth

Loans	Quarter ended,						% Change
(Ch$ million)	Jun-09		Mar-09		Jun-08		June 09 / 08			June 09 / Mar. 09
Total loans to individuals		6,091,508		6,115,175		5,841,984		4.3	%		(0.4	)%
Consumer loans		2,121,046		2,187,832		2,205,135		(3.8	)%		(3.1	)%
Residential mortgage loans		3,970,462		3,927,343		3,636,849		9.2	%		1.1	%
SMEs		2,370,029		2,385,720		2,314,975		2.4	%		(0.7	)%
Institutional lending		262,915		254,565		230,934		13.8	%		3.3	%
Middle-Market & Real Estate		2,472,244		2,727,232		2,703,058		(8.5	)%		(9.3	)%
Corporate		1,566,971		1,776,296		1,573,148		(0.4	)%		(11.8	)%
Total loans 1, 2		13,401,485		13,985,677		13,199,963		1.5	%		(4.2	)%

Includes past due loans in each category and other non-segmented loans.

Excludes allowance for loan losses and interbank loans.

In the quarter, the Bank maintained its strategy of focusing on profitability over market share concerns. In 2Q 09, total loans decreased 4.2% QoQ and have increased 1.5% YoY. This was a result of several factors. First of all, the more difficult economic environment has negatively affected demand for credit in all client segments. This has especially affected lending the SME and Middle-market in which loan volumes decreased 0.7% and 9.3% QoQ, respectively.

Secondly, the Bank, has continued to grow selectively, especially among individuals, in order to control asset quality and to ration capital. Total loans to individuals decreased 0.4% QoQ and increased 4.3% YoY, but lending to middle-upper income segments increased 4.0% QoQ and 19.5% YoY and represented 58.7% of total lending to individuals as of June 09 (compared to 52.2% in June 08). In the mid-income segments volumes decreased 4.3% QoQ and 7.2% YoY. Finally, in the mass consumer market, loan volumes decreased 6.4% QoQ and 14.8% YoY.

Investor Relations Department	6
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

Source: Internal reports of Banco Santander Chile. Data for these reports are obtained from different data bases from the accounting systems and, therefore, growth rates of different sub-segments may not add up to the growth rate of total loans to individuals.

Thirdly, the normalization of cross border liquidity flows and the active local bond market has also resulted in slower loan growth. This is reflected in the 11.8% QoQ fall in loans in the corporate segment. Given our strict focus on profitability, we kept our spread strategy intact, while focusing our commercial efforts in the large corporate market on non-lending activities, which generate a greater pool of revenues from these clients. The Bank’s Global Banking and Markets business has actively participated in some of the largest local M&A, project finance, bond issues and financial advisories in 2009. These results are reflected in gains from financial transactions and fee income.

FUNDING

Stable evolution of customer funds. The loan to deposit ratio improves to 94.3%

Customer funds	Quarter ended,									% Change
(Ch$ million)	Jun-09			Mar-09			Jun-08			June 09 / 08			June 09 / Mar. 09
Non-interest bearing deposits		3,083,814			3,092,010			3,194,423			(3.5	)%		(0.3	)%
Time deposits		8,342,396			8,677,857			8,390,418			(0.6	)%		(3.9	)%
Total customer deposits		11,426,210			11,769,867			11,584,841			(1.4	)%		(2.9	)%
Mutual funds		3,344,395			3,085,227			3,033,103			10.3	%		8.4	%
Total customer funds		14,770,605			14,855,094			14,617,944			1.0	%		(0.6	)%
Loans / Deposits*		94.3	%		96.5	%		93.2	%

* (Loans - marketable securities that fund mortgage portfolio) / (Time deposits + demand deposits)

Customer funds remained stable QoQ and YoY in 2Q09 despite the sharp decline in interest rates, as the Central Bank loosened its monetary policy. As a result, the Bank let its more expensive time deposits to expire and funneled those funds to mutual funds, which is a more profitable product (See

Investor Relations Department	7
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

Fee Income). As a consequence, total customer deposits decreased 2.9% QoQ and mutual funds under management increased 8.4% QoQ.

The loan to deposit ratio (total loans minus long-term bonds that fund long-term mortgage over time deposits plus non-interest bearing deposits) improved to 94.3% from 96.5% in 1Q09. At the same date, core funds (defined as retail deposits, long-term institutional deposits and bonds and equity) represented 89% of total liabilities.

SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL

ROE reaches 28.7% in 2Q09 with a BIS ratio of 15.1% and Tier I of 11.1%

Shareholders' Equity	Quarter ended,									% Change
(Ch$ million)	Jun-09			Mar-09			Jun-08			June 09 / 08			June 09 / Mar. 09
Capital		891,303			891,303			818,535			8.9	%		0.0	%
Reserves		(16,960	)		(16,960	)		(20,571	)		(17.6	)%		0.0	%
Unrealized gain (loss) Available-for-sale financial assets		(14,199	)		(7,856	)		(45,900	)		(69.1	)%		80.7	%
Retained Earnings:		636,875			676,553			523,964			21.5	%		(5.9	)%
Retained earnings previous periods		508,045			721,340			381,030			33.3	%		(29.6	)%
Net income		184,043			76,652			189,159			(2.7	)%		140.1	%
Provision for mandatory dividends		(55,213	)		(121,439	)		(46,225	)
Minority Interest		30,920			28,403			23,689			30.5	%		8.9	%
Total Equity		1,527,939			1,571,443			1,299,717			17.6	%		(2.8	)%
Equity attributable to shareholders		1,497,019			1,543,040			1,276,028			17.3	%		(3.0	)%

Shareholders’ equity totaled Ch$1,497,019 million (US$2.8 billion) as of June 30, 2009. ROAE in 2Q09 reached 28.7% and 24.5% in 1H09. The Bank currently has the highest ROE among the banks operating in Chile. This strong profitability was achieved despite having one of the highest levels of capitalization in the Chilean financial system. Voting common shareholders’ equity is the sole component of our Tier I capital and represented 11.1% of risk weighted assets as of June 2009. The BIS ratio reached 15.1% at the same date. The positive evolution of capitalization ratios was a direct result of the strong income generation capacity of the Bank, as the BIS ratio has increased 129 basis points since year-end 2008. This is noteworthy considering that in April 2009 the Bank paid its annual dividend of Ch$1.13/share, equivalent to 65% of 2008 earnings attributable to shareholders (not restated for IFRS). At the record date, in Chile, the dividend yield was 6.3%.

Investor Relations Department	8
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

Capital Adequacy*	Quarter ended,									% Change
(Ch$ million)	Jun-09			Mar-09			Jun-08*			June 09 / 08			June 09 / Mar. 09
Tier I (Core Capital)		1,497,019			1,543,039			1,350,580			10.8	%		(3.0	)%
Tier II		545,906			560,232			461,436			18.3	%		(2.6	)%
Regulatory capital		2,042,925			2,103,271			1,812,015			12.7	%		(2.9	)%
Risk weighted assets		13,544,319			13,979,591			14,066,367			(3.7	)%		(3.1	)%
Tier I ratio		11.1	%		11.0	%		9.6	%
BIS ratio		15.1	%		15.0	%		12.9	%

* Figures for 2008 are not restated for new accounting standards.

SECTION 3: ANALYSIS OF QUARTERLY INCOME STATEMENT

NET INTEREST INCOME

Net interest margin reached 6.0% in 2Q09

Net Interest Income / Margin	Quarter							Change %
(Ch$ million)		2Q09		1Q09		2Q08			2Q09 / 2Q08		2Q / 1Q 09
Client net interest income 1		235,418		247,889		237,464			(0.9	)%	(5.0	)%
Non-client net interest income 2		(8,807	)	(60,616	)	(17,215	)		(48.8	)%	(85.5	)%
Net interest income		226,611		187,273		220,249			2.9	%	21.0	%
Average interest-earning assets		15,147,554		15,742,285		14,241,705			6.4	%	(3.8	)%
Average loans		13,733,919		14,312,882		12,807,117			7.2	%	(4.0	)%
Net interest margin (NIM) 3		6.0	%	4.8	%	6.2	%
Avg. equity + non-interest bearing demand deposits / Avg. interest earning assets		30.3	%	28.4	%	30.2	%
Quarterly inflation rate 4		-0.13	%	-2.30	%	2.17	%
Avg. overnight interbank rate (nominal)		1.40	%	5.49	%	6.39	%
Avg. 10 year Central Bank yield (real)		2.86	%	2.60	%	3.06	%

1.	Client net interest income and margins, is net interest income (and margins) generated by our commercial areas.

2.	Non-client net interest income is net interest income generated by centralized activities, non-segmented portions of the balance sheet and Financial Management.

3.	Annualized.

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

In 2Q09, net interest income was up 2.9% YoY. The Bank’s net interest margin reached 6.0% in the quarter compared to 4.8% in 1Q09 and 6.2% in 2Q08. In order to understand the underlying trends of our net interest income, we break these revenues between Client net interest income, which is net interest income (and margins) generated by our commercial areas, and Non-client interest income.

Investor Relations Department	9
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

Client net interest income. Client net interest income decreased 5.0% QoQ. This was mainly due to the 4.0% QoQ fall in average loans as seen in Section 2. The strong reduction in interest rates also negatively affected the spread earned over free funds (non-interest bearing liabilities and equity). Compared to 2Q08, client net interest income was flat YoY despite the strong reduction in rates as the Bank partially offset this effect with higher loan spreads as shown in the graph. Compared to our main competitors, the Bank has the highest net interest margin.

Non-Client net interest income. Non-client net interest income, which is net interest income generated by centralized activities, non-segmented portions of the balance sheet and Financial Management, totaled a loss of Ch$8,807 million. This loss was 85.5% lower than the loss in 1Q09. The QoQ reduction of this loss was mainly due to the lower deflation rate in the period being analyzed. The Bank maintains long-term assets (mainly medium and long-term financial investments) 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. In 1Q09, deflation had a negative impact on net interest income and margins due to this gap between assets and liabilities indexed to inflation. This situation partially reversed as UF deflation was -0.13% in the last quarter compared to -2.30% in 1Q09.

Negative non-client margins were reduced by 48.8% YoY in 2Q09. Despite the large difference in inflation rates in those two periods (2.17% in 2Q08 and -0.13% in 2Q09), the Bank’s asset and liability management neutralized this impact. The steeper yield curve had a positive effect on non-client net interest income as the spread earned over the Bank’s held-to-maturity portfolio increased, offsetting the impact of lower inflation. This portfolio is mainly comprised of Chilean Central Bank bonds acquired in 2008 when rates were higher. This is also in line with our focus of increasing profitability and lowering credit risk.

Investor Relations Department

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

email: rmorenoh@santander.cl

PROVISION FOR LOAN LOSSES

Net provision expense rises 5.6% QoQ

Provision for loan losses	Quarter							Change %
(Ch$ million)		2Q09		1Q09		2Q08			2Q09 / 2Q08		2Q / 1Q 09
Gross provisions		(19,402	)	(6,098	)	(12,908	)		50.3	%	218.2	%
Charge-offs		(87,393	)	(93,733	)	(66,251	)		31.9	%	(6.8	)%
Gross provisions and charge-offs		(106,795	)	(99,831	)	(79,159	)		34.9	%	7.0	%
Loan loss recoveries		10,758		8,897		8,700			23.7	%	20.9	%
Net provisions for loan losses		(96,037	)	(90,934	)	(70,459	)		36.3	%	5.6	%
Total loans		13,401,485		13,985,677		13,199,963			1.5	%	(4.2	)%
Total reserves (RLL)		(314,191	)	(281,265	)	(245,823	)		27.8	%	11.7	%
Past due loans1 (PDL)		181,790		169,220		147,874			22.9	%	7.4	%
Non-performing loans (NPLs)2		415,311		392,802		—			—	%	5.7	%
Gross provision expense / Loans		3.19	%	2.86	%	2.40	%
Cost of credit3		2.87	%	2.60	%	2.14	%
PDL / Total loans		1.36	%	1.21	%	1.12	%
Expected loss (RLL / Total loans)		2.34	%	2.01	%	1.86	%
NPL ratio (NPLs/Total loans)		3.10	%	2.81	%	—
Coverage of Expected loss		100.0	%	100.0	%	100.0	%
Coverage of PDLs4		172.8	%	166.2	%	166.2	%
Coverage NPLs5		75.7	%	71.6	%	—

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

2	NPLs: Full balance of loans with one installment 90 days or more overdue.

3	Cost of credit: Net provision expense / loans annualized.

4	Coverage of PDLs: RLL / PDLs

5	Coverage NPLs: RLL / NPLs

In 2Q09, the Bank’s net provision expense increased 5.6% QoQ and 36.3% YoY. The evolution of net provision expense is directly related to negative effects of the economic downturn on asset quality and on the Expected Loan Loss ratio or Risk Index. This ratio, defined as loan loss allowances over total loans, measures how much the Bank expects to loose on its loan book, according to its internal models and the Superintendency of Banks guidelines. The Bank is required to have 100% coverage of its Expected Loan Loss ratio. This indicator increased from 2.01% as of March 2009 to 2.34% as of June 2009. Concerning other risk metrics, the past due loan ratio (Unpaid loans & installments >90 days / Total loans) as of June 2009 reached 1.36% compared to 1.21% in March 2009 and 1.12% in June 2008. As of June 2009, the NPL ratio (unpaid loans included performing portion of capital > 90 days / total loans) reached 3.10% compared to 2.81% in March 2009.

This higher gross provision expense in the quarter resulted in an increase in coverage ratios. The coverage of past due loans reached 172.8% as of June 2009 and improved from 166.2% as of March 2009 and June 2008. As of June 2009, the coverage of NPLs reached 75.7% compared to 71.6% as of March 2009.

Investor Relations Department

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

email: rmorenoh@santander.cl

Despite the weakening of asset quality in 2Q09, there have been signs that the velocity of deterioration has subsided. In 2Q09, the Bank continued to focus loan growth in lower risk segments in order to contain asset quality. At the same time, commercial executives continued to dedicate an important percentage of their time to asset quality issues and recoveries. Commercial officers are now responsible for the performing portion of their loan book and the first 89 days of their non-performing portfolios. Previously, commercial teams were only directly involved in the collection process in the initial 30 days of non-performance and from then on NPLs were managed by the collections department. As a result of these measures, the growth rate of early non-performance (<90 days) has evolved positively, total charge-offs decreased 6.8% QoQ, loan loss recoveries increased 20.9% QoQ while NPLs have decreased 9.6% since their peak in April 2009.

By loan product, provision expense was as follows:

Provision for loan losses by loan product	Quarter							Change %
(Ch$ million)		2Q09		1Q09		2Q08			2Q09 / 2Q08		2Q / 1Q 09
Net provisions commercial loans1		(13,612	)	(12,940	)	(10,057	)		35.3	%	5.2	%
Net provisions res. mortgage loans		(3,096	)	(5,403	)	(701	)		341.7	%	(42.7	)%
Net provisions consumer loans		(79,329	)	(72,591	)	(59,701	)		32.9	%	9.3	%
Net provisions for loan losses		(96,037	)	(90,934	)	(70,459	)		36.3	%	5.6	%

1 Includes net provision expenses for interbank loans and off-balance sheet contingent operations.

NET FEE INCOME

Successful strategies in various products promotes fee growth

Fee Income	Quarter				Change %
(Ch$ million)		2Q09	1Q09	2Q08		2Q09 / 2Q08		2Q / 1Q 09
Collection fees		16,552	15,365	17,577		(5.8	)%	7.7	%
Checking accounts & lines of credit		13,116	15,995	13,519		(3.0	)%	(18.0	)%
Credit, debit & ATM card fees		11,950	12,014	10,525		13.5	%	(0.5	)%
Asset management		7,495	6,144	7,592		(1.3	)%	22.0	%
Guarantees, pledges and contingent operations		5,923	6,216	3,960		49.6	%	(4.7	)%
Insurance brokerage		4,719	3,328	4,286		10.1	%	41.8	%
Fees from brokerage and custody of securities		1,766	1,263	2,161		(18.3	)%	39.8	%
Other Fees		1,624	1,306	1,705		(4.8	)%	24.3	%
Total fees		63,145	61,631	61,325		3.0	%	2.5	%

Net fee income increased 2.5% QoQ and 3.0% YoY in 2Q09. The Bank implemented various strategies to promote fee growth in the quarter despite lower economic growth and regulatory changes.

Fees from checking accounts and lines of credit decreased 18.0 QoQ and 3.0% YoY. As stated in previous earnings reports, fee income from lines of credit is expected to decline throughout 2009

Investor Relations Department

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

email: rmorenoh@santander.cl

due to regulatory changes that prohibits fees charged for unauthorized overdrafts. This measure began in April 2009. This is being offset by the Bank’s strategy to increased product usage and cross-selling as reflected in other fee generating products, such as the card business, asset management and insurance brokerage.

Collection fees in 2Q09 increased 7.7% QoQ and decreased 5.8% YoY. The QoQ rise was mainly due to higher fees from the collection of loan insurance policies on behalf of third parties which rebounded in the second quarter. The ability to pay bills easily online has also driven collection fees. The YoY decline is mainly due to lower fees recognized by our collection company as an important portion of our charged-off loans were sold in 2007 and 2008.

Fees from credit, debit and ATM cards were flat QoQ and increased 13.5% YoY. The YoY rise in fees from this business reflects, among other initiatives, the launch of three new credit card products in 2009. These are: (i) the World Member Card, which is co-branded with Lan Airlines for the mid-upper income segment, (ii) Santander Banefe Lan Pass, which is the first credit card for the mid-lower income segment that is co-branded with an airline and permits the accumulation of mileage with purchases and, (iii) a credit card co-branded with Movistar, that permits the accumulation of cell phone minutes with purchases, lets clients renew their cell phone once a year and other benefits. This card has been very popular among younger individuals and university students. As of June 2009, the Bank, with 33.2% of all bank credit cards, generated 35.9% of monetary purchases. Purchases were up 9.7% in real terms YoY compared to 4.1% for the rest of the market, excluding Santander.

Fees from asset management increased 22.0% QoQ and decreased 1.3% YoY. Total assets under management reached Ch$3,344,395 million (US$6.3 billion) and increased 8.4% QoQ and 10.3% YoY. Compared to June 2008, the lower fees from this business is mainly due to the lower value of stock funds. The QoQ rise, on the other hand, reflects the improvement since year-end 2008 of both money market and stock funds. The Bank’s commercial teams have also proactively funneled customer deposits to mutual funds, which is a more profitable product for the Bank.

Fees from guarantees, pledges and other contingent operations decreased 4.7% QoQ and increased 49.6% YoY. The QoQ decline was mainly due to the appreciation of the peso that affects fees from stand-by letters of credit. The 49.6% YoY increase was mainly driven fees from stand-by letters of credit.

Insurance brokerage fees increased 41.8% QoQ and 10.1% YoY. Despite lower retail activity, the Bank’s has been able to successfully drive insurance brokerage fees by offering simple and cheap insurance products through our website. This also reflects our efforts to increase product usage and cross-selling in order to continue driving fee growth despite lower economic growth.

Fees from securities brokerage and custody increased 39.8% QoQ and decreased 18.3% YoY. The YoY decline reflects the lower volumes in the stock brokerage, but at the same time the QoQ increase reflects the on-going recovery. The Bank also improved its systems for directly selling stock at the branch level in 2Q09 and this has also had a positive impact on brokerage fees compared to 1Q09.

Investor Relations Department

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

email: rmorenoh@santander.cl

Other fees, which totaled Ch$1,624 million, increased 24.3% QoQ and reflect, among other things, higher revenue from financial advisory and investment banking and higher gains from foreign exchange fees.

OPERATING EXPENSES AND EFFICIENCY

Cost down 5.7% YoY and the Efficiency ratio reached a record low of 31.5% in the quarter

Operating Expenses	Quarter							Change %
(Ch$ million)		2Q09		1Q09		2Q08			2Q09 / 2Q08		2Q / 1Q 09
Personnel expenses		(57,701	)	(54,394	)	(61,937	)		(6.8	)%	6.1	%
Administrative expenses		(34,258	)	(33,448	)	(34,873	)		(1.8	)%	2.4	%
Depreciation and amortization		(12,140	)	(10,446	)	(13,612	)		(10.8	)%	16.2	%
Operating expenses		(104,099	)	(98,288	)	(110,422	)		(5.7	)%	5.9	%
Efficiency ratio*		31.5	%	34.5	%	37.0	%

*	Operating expenses / Operating income. Operating income = Net interest income + Net fee income+ Financial transactions net + other operating income and expenses.

The growth rate of operating expenses was curbed in the quarter. In 2Q09, the efficiency ratio reached a record low of 31.5% compared to 34.5% in 1Q09 and 37.0% in 2Q08. Operating expenses increased 5.9% QoQ. This was mainly due to seasonal factors seen in 1Q 09. YoY operating expenses decreased 5.7%. The 6.8% decrease in personnel expenses was mainly due to the deceleration of inflation, lower variable incentives and a 6% reduction in average headcount.

The 1.8% fall in administrative expenses was due to general cost saving measures, our strategy of increasing the profitability of the existing branch network and the increase in usage of alternative channels, especially internet. 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. As of June 2009, the Bank’s distribution network totaled 502 offices and 1,929 ATMs. The usage of the Bank’s remote channels has also been increasing in line with the investment made in 2008 in this area. The Bank has a 28% market share in terms of clients using online banking services. The online banking services, a part from being more convenient for clients, is much more cost effective as shown in the table below and this is contributing to the Bank’s efficiency levels.

Cost per client for granting a consumer loans	Off-line customer		Online customer
Origination	US$	72.00	US$	0.40
Processing	US$	2.00	US$	2.00
Servicing	US$	17.00	US$	2.30

Investor Relations Department

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

email: rmorenoh@santander.cl

NET RESULTS FROM FINANCIAL TRANSACTIONS

Positive results from client and non-client related treasury activities mitigates negative effects of deflation

Net Result from Financial Transactions	Quarter							Change %
(Ch$ million)		2Q09		1Q09		2Q08			2Q09 / 2Q08		2Q / 1Q 09
Net gains from mark-to-market and trading		(18,863	)	19,429		163,277			(111.6	)%	(197.1	)%
Exchange differences, net		48,519		49,386		(141,172	)		(134.4	)%	(1.8	)%
Net results from financial transactions		29,656		68,815		22,105			34.2	%	(56.9	)%
Avg. 10 year Central Bank yield (real)		2.86	%	2.60	%	3.06	%
Avg. 10 year Central Bank yield (nominal)		5.63	%	5.09	%	6.98	%

The net gains from financial transaction, which includes the sum of the net gains from mark-to-market and trading and net exchange differences, net totaled a gain of Ch$29,656 million in 2Q09. These results mainly include the mark-to-market of the available for sale investment portfolio, realized and unrealized gains of financial investments held for trading, the interest revenue generated by the held for trading portfolio, gains or losses 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)		2Q09	1Q09	2Q08			2Q09 / 2Q08		2Q / 1Q 09
Santander Global Connect & Market making*		18,374	39,240	26,687			(31.1	)%	(53.2	)%
ALCO & Proprietary trading		11,282	29,575	(4,582	)		—	%	(61.9	)%
Net results from financial transactions		29,656	68,815	22,105			34.2	%	(56.9	)%

* Includes the sale of charged-off loans.

The 56.9% QoQ decrease in this line item was mainly due to lower gains from the sale of financial investments held to maturity as the dramatic drop in interest rates and inflation strongly impacted these results in 1Q09. The 34.2% YoY increase in the net results from financial transactions was mainly due to higher realized gains from the available for sale fixed income portfolio and better results from our proprietary trading which in 2Q08 had losses.

The results from Santander Global Connect and market-making decreased 53.2% QoQ and 31.1% YoY mainly as a result of lower gains from market making as the increase in long-term rates hurt this business.

Investor Relations Department

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

email: rmorenoh@santander.cl

OTHER INCOME AND EXPENSES

Other Income and Expenses	Quarter							Change %
(Ch$ million)		2Q09		1Q09		2Q08			2Q09 / 2Q08		2Q / 1Q 09
Other operating income		2,928		2,498		5,696			(48.6	)%	17.2	%
Other operating expenses		7,821		(35,531	)	(11,143	)		—	%	—	%
Income attributable to investments in other companies		440		326		1,595			(72.4	)%	35.0	%
Income tax		(21,816	)	(16,259	)	(13,607	)		60.3	%	34.2	%

Other operating income, which mainly includes the results from the sale and maintenance of repossessed assets and other results, totaled a gain of Ch$2,928 million in 2Q09, increasing 17.2% QoQ and decreasing 48.6% YoY.

In Other operating expenses, the Bank recognized an expense reversal of Ch$7,821 million in 2Q09. In 1Q09, the Bank recognized additional provisions for non-specific credit and non-credit contingencies given the difficult economic environment and the potential for further deterioration of the economic downturn. In the quarter, as the Bank assigned specific credit provisions to loans it began to reverse, in part, the non-specific provisions recognized as other expenses in 1Q09.

In 2009, and as a consequence of the Adoption of IFRS standards, the Bank no longer recognizes the results from price level restatement. This were usually negative in a positive inflation environment. Therefore, the absolute level of income tax paid should be higher in 2009 than in previous periods. In 2Q08, the Bank recognized in its historical income statement a Ch$22,546 million loss from price level restatement, which was tax deductible. As the results from price level restatement, under the new accounting standards, are no longer recognized, the absolute amount of tax increases compared to 2Q08. The statutory tax rate in Chile has not changed and is 17% over net income before taxes.

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: Fitch affirms the Bank’s A+ rating

The Bank has credit ratings from three leading international agencies. We have the highest risk rating in Latin America. In 2Q09, Fitch affirmed the Bank’s A+ ratings and removed the Bank from outlook negative. Moody’s in the quarter placed our parent company’s ratings on outlook negative and as a result placed our senior and subordinated debt on outlook negative and kept its foreign currency deposit ratings with outlook positive.

Moody’s		Rating
Long-term bank deposits		A1
Senior bonds		Aa2
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 June 2009

Ownership Structure:		Daily traded volumes 1H 2009


ADR Price Evolution Santander ADR vs. Global 1200 Financial Index (Base 100 = 06/30/2008)		Local Share Price Evolution Santander vs IPSA Index (Base 100 = 06/30/2008)

ADR price (US$) 1H09		Local share price (Ch$) 1H09
06/30/09:	46.69	06/30/09:	23.89
Maximum (1H09):	46.69	Maximum (1H09):	23.90
Minimum (1H09):	31.22	Minimum (1H09):	18.23

		Dividends:
Market Capitalization: US$8,470 million		Year paid	Ch$/share	% of previous year
				earnings
P/E 12 month trailing*:	12.6	2006:	0.83	65%
P/BV (06/30/09)**:	3.2	2007:	0.99	65%
Dividend yield***:	6.3%	2008:	1.06	65%
		2009:	1.13	65%

*	Price as of July 30 / 12mth Earnings (2008 non-restated)
**	Price as of July 30 / Book value as of 06/30/09
***	Based on closing price on record date of last dividend payment.

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 June 2009, 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 A1 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	19
Bandera 140 19th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

ANNEX 1: BALANCE SHEET

Unaudited Balance Sheets	Mar-08		Jun-08		Sep-08		Dec-08		Mar-09		Jun-09		June 09 / 08			June 09 / Mar. 09
Ch$million													% Chg.
Assets
Cash and balances from Central Bank		647,710		1,280,559		854,459		855,411		1,092,151		942,065		-26.4	%		-13.7	%
Funds to be cleared		626,731		487,591		513,843		335,405		374,617		426,647		-12.5	%		13.9	%
Financial assets held for trading		715,729		893,937		891,069		1,166,426		940,357		1,003,448		12.3	%		6.7	%
Investment collateral under agreements to repurchase		4,655		11,697		8,805		-		7,008		13,212		13.0	%		88.5	%
Derivatives		1,427,176		1,233,562		1,296,402		1,846,509		1,598,218		1,502,295		21.8	%		-6.0	%
Interbank loans		116,991		150,406		76,015		95,499		47,809		57,800		-61.6	%		20.9	%
Loans, net of loan loss allowances		12,184,550		12,954,140		13,515,005		14,311,349		13,704,412		13,087,295		1.0	%		-4.5	%
Available-for-sale financial assets		1,457,900		1,080,216		1,316,741		1,580,240		1,276,382		1,444,802		33.8	%		13.2	%
Held-to-maturity investments		-		-		-		-		-		-		—	%		—	%
Investments in other companies		6,859		7,786		6,762		7,277		7,452		7,145		-8.2	%		-4.1	%
Intangible assets		57,727		58,526		65,090		68,232		68,248		69,356		18.5	%		1.6	%
Fixed assets		202,941		201,234		198,133		200,389		196,553		190,997		-5.1	%		-2.8	%
Current tax assets		4,859		18,235		12,654		18,715		8,310		4,826		-73.5	%		-41.9	%
Deferred tax assets		77,063		83,280		124,800		88,825		85,691		94,369		13.3	%		10.1	%
Other assets		648,287		586,289		663,188		508,653		579,639		561,407		-4.2	%		-3.1	%
Total Assets		18,179,178		19,047,458		19,542,966		21,082,930		19,986,847		19,405,664		1.9	%		-2.9	%

Liabilities and Equity
Total non-interest bearing deposits		2,772,568		3,194,423		3,130,913		2,948,162		3,092,010		3,083,814		-3.5	%		-0.3	%
Funds to be cleared		381,921		297,611		308,345		142,552		246,100		195,249		-34.4	%		-20.7	%
Investments sold under agreements to repurchase		91,545		294,438		739,967		562,223		369,905		512,279		74.0	%		38.5	%
Time deposits and savings accounts		8,407,623		8,390,418		8,408,557		9,756,266		8,677,857		8,342,396		-0.6	%		-3.9	%
Derivatives		1,540,408		1,081,784		1,122,579		1,469,724		1,426,565		1,462,558		35.2	%		2.5	%
Deposits from credit institutions		1,013,578		1,505,196		1,495,608		1,425,067		1,423,195		1,140,901		-24.2	%		-19.8	%
Marketable debt securities		2,196,889		2,405,006		2,372,389		2,651,372		2,632,433		2,622,275		9.0	%		-0.4	%
Other obligations		113,873		165,833		130,521		131,318		120,780		149,046		-10.1	%		23.4	%
Current tax liabilities		3,552		1,017		850		791		506		34,786		3320.5	%		6774.7	%
Deferred tax liability		14,651		23,949		57,388		19,437		9,381		9,567		-60.1	%		2.0	%
Provisions		154,570		92,938		137,460		166,719		204,211		122,990		32.3	%		-39.8	%
Other liabilities		138,199		295,128		220,667		293,732		212,461		201,864		-31.6	%		-5.0	%
Total Liabilities		16,829,377		17,747,741		18,125,244		19,567,363		18,415,404		17,877,725		0.7	%		-2.9	%

Equity