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.		Third Quarter Earnings Report

2.		September 2012 Financial Statements in English

IMPORTANT NOTICE

Santander-Chile is a Chilean bank and maintains its financial books and records in Chilean pesos. The consolidated interim unaudited financial statements included in this report have been prepared in accordance with Chilean accounting principles issued by the Superintendency of Banks and Financial Institutions "Chilean Bank GAAP" and the "SBIF," respectively). The accounting principles issued by the SBIF are substantially similar to IFRS but there are some exceptions. Therefore, the unaudited financial statements included in this 6K have some differences compared to the financial statements filed in our Annual Report on Form 20-F for the year ended December 31, 2011 (the "Annual Report"). For further details and a discussion on main differences between Chilean Bank GAAP and IFRS refer to "Item 5. Operating and Financial Review and Prospects. —A. Accounting Standards Applied in 2011" of our Annual Report.

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/ Cristian Florence
	Name:	Cristian Florence
	Title:	General Counsel

Date: November 9, 2012

BANCO SANTANDER CHILE

THIRD QUARTER 2012

EARNINGS REPORT

INDEX

SECTION		PAGE

SECTION 1: SUMMARY OF RESULTS		2

SECTION 2: BALANCE SHEET ANALYSIS		5

SECTION 3: ANALYSIS OF QUARTERLY INCOME STATEMENT		9

SECTION 4: CREDIT RISK RATINGS		18

SECTION 5: SHARE PERFORMANCE		19

ANNEX 1: BALANCE SHEET		20

ANNEX 2: YTD INCOME STATEMENTS		21

ANNEX 3: QUARTERLY INCOME STATEMENTS		22

ANNEX 3: 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

SECTION 1: SUMMARY OF RESULTS

3Q12: Net income affected by deflation and one-time provision expense

Net income in the nine-month period ended September 30, 2012 totaled Ch$274,565 million (Ch$1.46 per share and US$1.24/ADR¹). 3Q12 Net income attributable to shareholders totaled Ch$50,563 million (Ch$0.27 per share and US$0.23¹1/ADR). Compared to 2Q12 (from now on QoQ), net income decreased 52.2%. Compared to 3Q12 (from now on YoY), net income decreased 32.7%. This decline was mainly due to the lower inflation rate in the quarter that negatively affected net interest margins and a one-time provision expense.

Positive evolution of client margins offset by deflation in the quarter

In 3Q12, Net interest income decreased 6.4% QoQ and increased 2.9% YoY. The Net interest margin (NIM) in 3Q12 reached 4.7% compared to 5.0% in 2Q12 and 4.6% in 3Q11. In the quarter, the Bank’s margins were negatively affected by deflation. The Bank has more assets than liabilities linked to inflation and, consequently, margins have a positive sensitivity to variations in inflation. In 3Q12, the variation of the Unidad de Fomento (an inflation indexed currency unit), was -0.16% compared to inflation of +0.42% in 2Q12 and +0.56% in 3Q11. This reduction signified a QoQ decrease of net interest income of approximately US$40 million or Ch$19,000 million. This was partially offset by higher client spreads and an improved funding mix. In 4Q12 UF inflation is expected to be greater than 1%, which should drive NIMs back to levels greater than 5%.

Provision expense includes a one-time expense of Ch$24.7 billion in the quarter

Net provision for loan losses in the quarter totaled Ch$119,459 million an increase of 52% QoQ and 32.2% YoY. As previously mentioned in the 2Q12 Earnings Report, in the current quarter, the Bank recalibrated the consumer loan-provisioning model. This resulted in an increase in the minimum provision set aside for consumer loans at origination given the higher risks observed in this portfolio. As a result, gross provision expenses in 3Q12 includes a non-recurring provision expense of Ch$24,753 million.

1 Earnings per ADR was calculated using the Observed Exchange Rate Ch$470.48 per US$ as of Sept. 30, 2012. The ratio of ordinary shares per ADR was modified form 1,039 share per ADR to 400 shares per ADR.

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

Solid growth of core deposits

Core deposits (demand deposits + time deposits from non-institutional sources), increased 2.1% QoQ and 12.3% YoY. Core deposits as a percentage of total deposits reached 77.2% compared to 73.3% as of June 2012 and 69.7% as of September 2011. This improved the Bank’s funding mix, as non-institutional deposits tend to be cheaper and more stable than other sources of funding. Total deposits decreased 3.1% QoQ as the Bank, given its high structural liquidity, proactively reduced relatively more expensive institutional short-term deposits, which are not considered as structural funding by the Bank. YTD (as of August, 31^st), the Bank’s market share in terms of total deposits has increased 36 basis points.

* Demand deposits + time deposits from non-institutional sources

Selective loan growth

In 3Q12, total loans increased 0.7% QoQ and 4.7% YoY. Loan growth was driven by the favorable evolution of the Chilean economy and was mainly focused in the high-end of the retail market, SMEs and the middle-market. The Bank continued with its prudent approach to loan growth in the lower end of the consumer loan segment. Loans to individuals increased 0.8% QoQ in 3Q12 and 4.6% YoY. Loans to high-income individuals increased 2.0% QoQ in comparison to a decrease of 1.6% in the mass consumer market. Lending to SMEs (defined as companies that sell less than Ch$1,200 million per year) expanded 3.3% QoQ (8.8% YoY), reflecting the Bank’s consistent focus on this growing segment. YTD (as of August 31), the Bank’s market share in terms of total loans has decreased 19 basis points.

Solid levels of capital: Core capital at 10.6%, BIS at 13.9%

ROAE as of September 2012 reached 18.1%. Core capital reached 10.6% as of September 30, 2012 and the Bank’s BIS ratio reached 13.9% at the same date. Voting common shareholders’ equity is the sole component of our Tier I capital. Santander Chile has not issued new shares in more than 10 years.

Cost growth moderates as key project advance

Operating expenses in 3Q12 decreased 1.5% QoQ led by a 3.6% QoQ decrease in personnel expenses. The Bank continued with its projects of investing in a new Client Relationship Management system and the Transformation Initiatives aimed at enhancing productivity in retail banking. The installment of the new CRM and other initiatives should further limit cost growth in coming quarters.

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

Banco Santander Chile: Summary of Quarterly Results

	Quarter									Change %
										3Q12 /			3Q 12 /
(Ch$ million)	3Q12			2Q12			3Q11			3Q11			2Q12
Net interest income		238,731			254,940			232,057			2.9	%		(6.4	)%
Fee income		67,037			68,007			65,991			1.6	%		(1.4	)%
Core revenues		305,768			322,947			298,048			2.6	%		(5.3	)%
Financial transactions, net		19,222			25,640			23,001			(16.4	)%		(25.0	)%
Provision expense		(119,459	)		(78,575	)		(90,372	)		32.2	%		52.0	%
Operating expenses		(135,665			(137,742	)		(128,356	)		5.7	%		(1.5	)%
Operating income, net of provisions and costs		69,866			132,270			102,321			(31.7	)%		(47.2	)%
Other operating & Non-op. Income		(19,303	)		(26,575	)		(27,168	)		(28.9	)%		(27.4	)%
Net income attributable to shareholders		50,563			105,695			75,153			(32.7	)%		(52.2	)%
Net income/share (Ch$)		0.27			0.56			0.40			(32.7	)%		(52.2	)%
Net income/ADR (US$)¹		0.23			0.44			0.31			(26.3	)%		(48.2	)%
Total loans		18,503,174			18,374,472			17,680,356			4.7	%		0.7	%
Deposits		14,088,770			14,537,663			13,892,003			1.4	%		(3.1	)%
Shareholders’ equity		2,058,231			2,028,611			1,927,498			6.8	%		1.5	%
Net interest margin		4.7	%		5.0	%		4.6	%
Efficiency ratio		42.4	%		41.0	%		41.3	%
YTD return on average equity²		18.1	%		22.2	%		23.8	%
NPL / Total loans³		3.04	%		2.88	%		2.81	%
Coverage NPLs		98.3	%		97.8	%		104.8	%
Risk index⁵		2.98	%		2.82	%		2.94	%
Core capital ratio		10.6	%		10.4	%		10.2	%
BIS ratio		13.9	%		13.7	%		13.9	%
Branches		496			499			494
ATMs		1,966			1,966			1,892
Employees		11,692			11,621			11,706

The change in earnings per ADR may differ from the change in earnings per share due to exchange rate movements. Earnings per ADR was calculated using the Observed Exchange Rate Ch$470.48 per US$ as of Sept. 30, 2012.

Annualized YTD Net income attributable to shareholders / Average equity attributable to shareholders.

NPLs: Non-performing loans: full balance of loans with one installment 90 days or more overdue.

PDLs: Past due loans; all loan installments that are more than 90 days overdue.

Risk Index: Loan loss allowances / Total loans: measures the percentage of loans the banks must provision for given their internal models and the Superintendency of Banks guidelines.

Investor Relations Department	4
Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

SECTION 2: BALANCE SHEET ANALYSIS

LOANS

Selective loan growth

Loans	Quarter ended,						% Change
										Sep. 12 /
(Ch$ million)	Sep-12		Jun-12		Sep-11		Sep. 12 / 11			Jun. 12
Total loans to individuals¹		9,613,857		9,534,018		9,187,526		4.6	%		0.8	%
Consumer loans		3,039,998		2,987,880		2,925,659		3.9	%		1.7	%
Residential mortgage loans		5,208,217		5,221,914		5,016,420		3.8	%		(0.3	)%
SMEs		2,745,928		2,658,077		2,522,698		8.8	%		3.3	%
Total retail lending		12,359,785		12,192,095		11,710,224		5.5	%		1.4	%
Institutional lending		355,119		366,862		351,644		1.0	%		(3.2	)%
Middle-Market & Real estate		3,918,324		3,848,479		3,731,980		5.0	%		1.8	%
Corporate		1,874,749		2,006,270		1,905,005		(1.6	)%		(6.6	)%
Total loans ²		18,503,174		18,374,472		17,680,356		4.7	%		0.7	%

1. Includes consumer loans, residential mortgage loans and other commercial loans to individuals.

2. Total loans gross of loan loss allowances. Total loans include other non-segmented loans and excludes interbank loans.

Loans to individuals, which include consumer, mortgage and commercial loans to individuals, increased of 0.8% QoQ in 3Q12 and 4.6% YoY. By product, consumer loans increased 1.7% QoQ (3.9% YoY) and residential mortgage loans decreased 0.3% QoQ (3.8% YoY). In the quarter, the Bank focused on expanding its loan portfolio in the mid-upper income segments, while remaining more selective in the mass consumer market. Loans to high-income individuals increased 2.0% QoQ in comparison to a decrease of 1.5% in the low-income segment. In the middle-income segment, loans decreased 1.5% QoQ. This was mainly due to a fall in mortgage loans. The mortgage market has been affected by aggressive pricing on the behalf of competitors. Santander Chile on the other hand has implemented stricter admission policies for residential mortgage loans. Lending to SMEs (defined as companies that sell less than Ch$1,200 million per year) expanded 3.3% QoQ (8.8% YoY), reflecting the Bank’s consistent focus on this expanding segment.

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

In the quarter, the Bank also focused its loan growth in the middle-market segment (companies with annual sales between Ch$1,200 million and Ch$10,000 million per year), which increased 1.8% QoQ and 5.0% YoY. This segment continues to show healthy loan demand given the high level of investment expected this year in the Chilean economy, which is expected to reach approximately 28% of GDP.

In the large corporate segment (companies with sale over Ch$10,000 million per year or that are part of a large foreign or local economic group), loans decreased 6.6% QoQ. The sharp turn-around in the cost of external funding for companies in 3Q12 resulted in lower local loan demand from these clients and pre-payment of some large corporate loans. The Bank’s non-lending businesses with these clients, especially cash management services continue to thrive.

YTD (as of August 31), the Bank’s market share in terms of total loans has decreased 19 basis points.

FUNDING

Core deposits grow 2.1% QoQ and 12.3% YoY

Funding	Quarter ended,									% Change
													Sep. 12 /
(Ch$ million)	Sep-12			Jun-12			Sep-11			Sep. 12 / 11			Jun. 12
Demand deposits		4,601,160			4,624,570			4,496,757			2.3	%		(0.5	)%
Time deposits		9,487,610			9,913,093			9,395,246			1.0	%		(4.3	)%
Total deposits		14,088,770			14,537,663			13,892,003			1.4	%		(3.1	)%
Mutual funds (off-balance sheet)		3,080,130			2,944,482			2,852,379			8.0	%		4.6	%
Total customer funds		17,168,900			17,482,145			16,744,382			2.5	%		(1.8	)%
Loans to deposits¹		98.7	%		96.5	%		94.8	%

1. (Loans - marketable securities that fund mortgage loans) / (Time deposits + demand deposits).

Customer funds (deposits + mutual funds) expanded 2.5% YoY and decreased 1.8% QoQ. Total deposits grew 1.4% YoY and decreased 3.1% QoQ as the Bank, given its high structural liquidity, proactively reduced more expensive institutional short-term deposits, which are not considered as structural funding by the Bank. Core deposits (demand deposits and time deposits from non-institutional sources), on the other hand, increased 12.3% YoY and 2.1% QoQ. Core deposits as a percentage of total deposits reached 77.2% compared to 73.3% as of June 2012 and 69.7% as of September 2011. This improved the Bank’s funding mix, as non-institutional deposits tend to be cheaper and more stable than other sources of funding. YTD (as of August 31), the Bank’s market share in terms of total deposits has increased 36 basis points.

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

It is important to note that the Bank follows Grupo Santander’s policy of independent subsidiaries and intergroup funding represented less than 0.2% of our funding as of September 30, 2012.

* Demand deposits plus time deposits from non-institutional sources

Assets under management also improved as markets strengthened in 3Q12. Total assets under management increased 8.0% YoY and 4.6% QoQ. We expect this business to continue to be volatile in line with general market trends.

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

SHAREHOLDERS’ EQUITY AND REGULATORY CAPITAL

Core capital ratio at 10.6%

Shareholders' Equity	Quarter ended,									Change %
													Sep. 12 /
(Ch$ million)	Sep-12			Jun-12			Sep-11			Sep. 12 / 11			Jun. 12
Capital		891,303			891,303			891,303			0.0	%		0.0	%
Reserves		976,561			51,539			51,538			1794.8	%		1794.8	%
Valuation adjustment		(1,828	)		3,946			594			—	%		—	%
Retained Earnings:		192,195			1,081,823			984,063			(80.5	)%		(82.2	)%
Retained earnings prior periods		-			925,022			750,989			—	%		—	%
Income for the period		274,565			224,002			332,963			(17.5	)%		22.6	%
Provision for mandatory dividend		(82,370	)		(67,201	)		(99,889	)		(17.5	)%		22.6	%
Equity attributable to shareholders		2,058,231			2,028,611			1,927,498			6.8	%		1.5	%
Non-controlling interest		33,485			31,272			32,293			3.7	%		7.1	%
Total Equity		2,091,716			2,059,883			1,959,791			6.7	%		1.5	%
YTD ROAE		18.1	%		22.2	%		23.8	%

Shareholders’ equity totaled Ch$2,058,231 million (US$4.2 billion) as of September 30, 2012. During 3Q12, the Bank reclassified all retained earnings from prior periods to reserves as part of its conservative capital policies. The prudent management of the Bank’s capital ratios has led to strong capital ratios. Core capital reached 10.6% as of September 30, 2012 and the Bank’s BIS ratio reached 13.9% at the same date. Voting common shareholders’ equity is the sole component of our Tier I capital. Santander Chile has not issued new shares in more than 10 years.

Capital Adequacy	Quarter ended,									Change %
													Sep. 12 /
(Ch$ million)	Sep-12			Jun-12			Sep-11			Sep. 12 / 11			Jun. 12
Tier I (Core Capital)		2,058,231			2,028,612			1,927,498			6.8	%		1.5	%
Tier II		642,650			659,788			715,184			(10.1	)%		(2.6	)%
Regulatory capital		2,700,881			2,688,400			2,642,682			2.2	%		0.5	%
Risk weighted assets		19,479,092			19,572,225			18,954,147			2.8	%		(0.5	)%
Tier I (Core capital) ratio		10.6	%		10.4	%		10.2	%
BIS ratio		13.9	%		13.7	%		13.9	%

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

SECTION 3: ANALYSIS OF QUARTERLY INCOME STATEMENT

NET INTEREST INCOME

Positive evolution of client margins offset by deflation in the quarter

Net Interest Income / Margin	Quarter									Change %
										3Q12 /			3Q 12 /
(Ch$ million)	3Q12			2Q12			3Q11			3Q11			2Q12
Client net interest income¹		274,076			274,517			248,850			10.1	%		(0.2	)%
Non-client net interest income²		(35,345	)		(19,577	)		(16,793	)		110.5	%		80.5	%
Net interest income		238,731			254,940			232,057			2.9	%		(6.4	)%
Average interest-earning assets		20,410,407			20,362,279			20,068,323			1.7	%		0.2	%
Average loans		18,546,119			18,127,164			17,460,992			6.2	%		2.3	%
Interest earning asset yield³		8.0	%		9.0	%		8.4	%
Cost of funds⁴		3.3	%		3.9	%		3.8	%
Client net interest margin⁵		5.9	%		6.1	%		5.7	%
Net interest margin (NIM)⁶		4.7	%		5.0	%		4.6	%
Avg. equity + non-interest bearing demand deposits / Avg. interest earning assets		32.5	%		33.2	%		31.3	%
Quarterly inflation rate⁷		(0.16	)%		0.42	%		0.56	%
Central Bank reference rate		5.00	%		5.00	%		5.25	%
Avg. 10 year Central Bank yield (real)		2.42	%		2.49	%		2.63	%

1. Client net interest income is mainly net interest income from the Bank’s loan portfolio. See footnote 2 at the end of this page.

2. Non-client interest income is net interest income mainly from the Bank’s ALCO positions and treasury. See footnote 2 at the end of this page.

3. Interest income divided by interest earning assets.

4. Interest expense divided by interest bearing liabilities + demand deposits.

5. Client net interest income annualized divided by average loans

6. Net interest income divided by average interest earning assets annualized.

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

In 3Q12, Net interest income decreased 6.4% QoQ and increased 2.9% YoY. The Net interest margin (NIM) in 3Q12 reached 4.7% compared to 5.0% in 2Q12 and 4.6% in 3Q11. In order to improve the explanation of margins we have divided the analysis of net interest income between client interest income² and non-client net interest income.

2 In order to explain better the evolution of net interest income, we have divided net interest income between client net interest income and non-client net interest income. Client net interest income is net interest income from all client activities such as loans and deposits minus the internal transfer rate. Non-client interest income is net interest income from Bank’s inflation gap, the financial cost of hedging, the financial cost of the Bank’s structural liquidity position, net interest income from treasury positions and the interest expense of the Bank’s financial investments classified as trading, since interest income from this portfolio is recognized as financial transactions net.

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

Client net interest incomein 3Q12 was flat QoQ and increased 10.1% YoY. Client net interest margin (defined as client net interest income divided by average loans) reached 5.9% in 3Q12 compared to 6.1% in 2Q12 and 5.7% in 3Q11. Since the second half of 2011, the Bank has been implementing a stricter spread policy in light of the increase in credit risk, especially in the mass consumer market. For this reason, client net interest income has increased at twice the pace of average loan growth in the last twelve-month period. The growth of core deposits (See Funding) improved the funding mix and has also helped to sustain client margins.

This positive trend was offset by the deflation registered during the quarter. It is important to point out that the Bank has more assets than liabilities linked to inflation and, as a result, margins have a positive sensitivity to variations in inflation. In 3Q12, the variation of the Unidad de Fomento (an inflation indexed currency unit), was -0.16% compared to inflation of +0.42% in 2Q12 and +0.56% in 3Q11. The gap between assets and liabilities indexed to the UF averaged US$6.7 billion in 3Q12. Therefore, the reduction in inflation signified a QoQ decrease in net interest income of approximately US$40 million or Ch$19,000 million.

For the remainder of 2012, the evolution of margins should improve as inflation trends normalize. In 4Q12 inflation is expected to exceed 1% is expected which should drive NIMs back to levels greater than 5%. In 2013, the negative effects of possible regulations regarding maximum rates may have a negative impact on margins. The final law regulating this change is still being discussed in Congress. To counterbalance this affect we expect: (1) healthier loan growth both in terms of volumes and in terms of margins, post provision expense and, (2) an improved funding mix via healthy growth of core deposits.

Investor Relations Department	10
Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

PROVISION FOR LOAN LOSSES AND ASSET QUALITY

Non-recurring Ch$24.7 billion provision expenses recognized in 3Q12

Provision for loan losses	Quarter									Change %
										3Q12 /			3Q 12 /
(Ch$ million)	3Q12			2Q12			3Q11			3Q11			2Q12
Gross provisions		(32,952	)		1,891			(18,628	)		76.9	%		(1842.6	)%
Charge-offs		(96,256	)		(88,009	)		(77,466	)		24.3	%		9.4	%
Gross provisions and charge-offs		(129,208	)		(86,118	)		(96,094	)		34.5	%		50.0	%
Loan loss recoveries		9,749			7,543			5,722			70.4	%		29.2	%
Net provisions for loan losses		(119,459	)		(78,575	)		(90,372	)		32.2	%		52.0	%
Total loans¹		18,503,174			18,374,472			17,680,356			4.7	%		0.7	%
Total reserves (RLL)		552,138			518,331			520,566			6.1	%		6.5	%
Non-performing loans² (NPLs)		561,730			529,869			496,786			13.1	%		6.0	%
NPLs commercial loans		307,658			277,742			244,209			26.0	%		10.8	%
NPLs residential mortgage loans		149,936			150,505			140,273			6.9	%		(0.4	)%
NPLs consumer loans		104,136			101,622			112,304			(7.3	)%		2.5	%
Risk index³ (RLL / Total loans)		2.98	%		2.82	%		2.94	%
NPL / Total loans		3.04	%		2.88	%		2.81	%
NPL / Commercial loans		3.00	%		2.73	%		2.51	%
NPL / Residential mortgage loans		2.88	%		2.88	%		2.80	%
NPL / consumer loans		3.43	%		3.40	%		3.84	%
Coverage of NPLs⁴		98.3	%		97.8	%		104.8	%
Coverage of commercial NPLs		80.0	%		84.9	%		98.3	%
Coverage of residential mortgage NPLs		24.5	%		24.1	%		25.7	%
Coverage of consumer NPLs		258.6	%		242.4	%		217.6	%

Excludes interbank loans.

NPLs: Non-performing loans: full balance of loans with one installment 90 days or more overdue.

Risk Index: Loan loss allowances / Total loans; measures the percentage of loans the banks must provision for given their internal models and the Superintendency of Banks guidelines.

Loan loss allowances / NPLs.

Net provision for loan losses in the quarter totaled Ch$119,459 million, an increase of 52% QoQ and 32.2% YoY. The net provision expense by loan product was as follows:

Net provisions for loan losses
by segment	Quarter									Change %
										3Q12 /			3Q 12 /
(Ch$ million)	3Q12			2Q12			3Q11			3Q11			2Q12
Commercial loans		(30,791	)		(16,024	)		(19,079	)		61.4	%		92.2	%
Residential mortgage loans		(4,488	)		(3,855	)		(14,444	)		(68.9	)%		16.4	%
Consumer loans		(84,180	)		(58,696	)		(56,849	)		48.1	%		43.4	%
Net provisions for loan losses		(119,459	)		(78,575	)		(90,372	)		32.2	%		52.0	%

Investor Relations Department	11
Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

Net provision expense in consumer loans increased 43.4% QoQ and 48.1% YoY. Since 3Q11, the Bank has been implementing more prudent credit risk policies in consumer lending as asset quality has deteriorated above our expectations despite positive economic trends. This has been due to:

(i)

Following the La Polar case, affecting Chile’s 4^th largest retailer in May 2011, the default rates in the mass consumer loan industry increased as banks and non-bank lenders tightened credit policies resulting in greater charge-offs as credit became less available;

(ii)

In February 2012, the Ley de DICOM was passed which, among other provisions, eliminated from the negative credit bureau debtors with a negative credit history in an amount of Ch$2,400,000 (US$4,800) or less. This temporarily reduced the effectiveness of this negative credit bureau, a key component of our credit scoring systems. Before the law was passed 4.1 million people were listed in Dicom and after its implementation 2.9 million persons were removed from the list;

(iii)

The Bank has a 24% market share in consumer banking and, therefore, these events, together with the strong growth in consumer lending in 2010 and the first half of 2011, resulted in a larger impact for the Bank compared to our main bank competitors.

To respond to this the Bank has:

(i)

Recalibrated the consumer loan-provisioning model that increased the minimum provision set aside for consumer loans at origination given the higher risks observed in this portfolio. As a result, gross provision expenses in 3Q12 includes a non-recurring provision expense of Ch$24,753 million.

(ii)

Tightened admission and approval policies in consumer lending. This mainly consisted of lowering the debt servicing levels for loan approvals and focusing loan growth in less riskier segments. This resulted in lower consumer loan growth and a fall in market share in 2012 (See Loans).

(iii)

Restricted renegotiation policies and strengthened collection efforts. This resulted in an increase in charge-offs. Charge-offs increased 9.4% QoQ and 24.3% YoY. At the same time, loan loss recoveries increased 29.2% QoQ and 70.4% YoY in 3Q12.

It is important to point out that these efforts have led to a stabilization of non-performing loan (NPLs) in consumer banking and to an increase in the coverage. As of September 2012, the NPL ratio of consumer loans reached 3.43% compared to 3.40% as of June 2012 and 3.84% in September 2011. The coverage ratio of consumer loans reached 258.6% as of September 2012 compared to 242.2% as of June 2012 and 217.6% as of September 2011.

Investor Relations Department	12
Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

The 92.2% QoQ and the 61.4% QoQ increase in commercial loan provision expense was driven by an increase in provisions in the SME loan segment. The NPL ratio for commercial loans increased to 3.0% in September 2012 from 2.73% in June 2012 and 2.51% in September 2011. It is important to note that loans entering NPLs have a high level of collateral and this explains the lower level of NPL coverage. As of September 2012, the coverage ratio of commercial loans NPLs reached 129.8%.

Provision expense for mortgage residential loans increased 16.4% QoQ and decreased 68.9% YoY. Mortgage loan NPLS were stable at 2.88% and coverage of mortgage NPLs increased slightly to 24.5% as of September 2012. Including collateral, the coverage of residential mortgage NPLs reached 114.8%. The 63.9% YoY decrease of provisions in 3Q12 was mainly due to the Ch$10,000 million non-recurring provision recognized in 3Q11 as a consequence of the improvements made in the provisioning model for residential mortgage lending in that quarter (See 3Q11 Earnings Report-Annex 1 for more details).

Investor Relations Department	13
Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

NET FEE INCOME

Lower business activity in retail banking lowers fee income

Fee Income	Quarter						Change %
(Ch$ million)	3Q12		2Q12		3Q11		3Q12 / 3Q11			3Q 12 / 2Q12
Collection fees		14,819		16,449		14,683		0.9	%		(9.9	)%
Credit, debit & ATM card fees		13,104		13,639		14,384		(8.9	)%		(3.9	)%
Asset management		8,270		8,488		8,796		(6.0	)%		(2.6	)%
Insurance brokerage		8,138		8,015		7,955		2.3	%		1.5	%
Contingent operations		7,223		6,909		6,334		14.0	%		4.5	%
Checking accounts		7,144		7,350		7,256		(1.5	)%		(2.8	)%
Fees from brokerage		2,353		3,303		2,469		(4.7	)%		(28.8	)%
Lines of credit		2,228		2,418		2,763		(19.4	)%		(7.9	)%
Other Fees		3,758		1,436		1,351		178.2	%		161.7	%
Total fees		67,037		68,006		65,991		1.6	%		(1.4	)%

Net fee income decreased 1.4% QoQ and increased 1.6% YoY in 2Q12. The Bank continued to increase its client base and cross-selling indicators, especially in the middle-upper income segments while limiting client growth in the mass consumer segment. The Bank’s total client base has increased 3.7% in the past twelve-months and the amount of cross-sold clients in all segments, excluding Banefe, has risen 11.3% YoY. This was offset by a decline in Banefe clients, as the Bank reduced its exposure to clients with unhealthy financial behavior. This also had a short-term impact on certain fess in the quarter, specifically credit card, checking account and line of credit fees. This was partially offset by positive fee growth from our corporate banking unit.

Cross-sold: For clients in Banefe cross-sold clients are clients with at least two products, one of which is a loan product plus direct deposit. In the Bank, excluding Banefe, a cross-sold client uses at least 4 products. The definition of cross-sold clients was changed in the quarter and the historical figures were restated.

The Bank’s Transformation Plan continues to be implemented. This is the largest overhaul and reorganization of the Bank’s middle and lower income business segments in the last decade. The installation of the new CRM, a corner-piece of this initiative, is starting to improve the Bank’s client service indicators as reflected in the descending market share of client complaints to the Superintendency of Banks, SBIF, the industry’s main regulator.

Investor Relations Department	14
Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

NET RESULTS FROM FINANCIAL TRANSACTIONS

Lower client treasury gains from Santander Global Connect

Results from Financial Transactions*	Quarter								Change %
												3Q 12 /
(Ch$ million)	3Q12			2Q12		3Q11			3Q12 / 3Q11			2Q12
Net income from financial operations		(19,161	)		20,416		102,133			—%			—%
Foreign exchange profit (loss), net		38,383			5,224		(79,132	)		—%			634.7	%
Net results from financial transactions		19,222			25,640		23,001			(16.4	)%		(25.0	)%

* 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 Foreign exchange profits (loss), net mainly includes the translation gains or losses of assets and a liability denominated in foreign currency.

Net results from financial transactions totaled a gain of Ch$19,222 million in 3Q12, a 25.0% QoQ and a 16.4% YoY decrease. In order to understand more clearly these line items, we present them by business area in the table below.

Results from Financial Transactions	Quarter						Change %
(Ch$ million)	3Q12		2Q12		3Q11		3Q12 / 3Q11			3Q 12 / 2Q12
Santander Global Connect¹		9,467		14,610		16,259		(41.8	)%		(35.2	)%
Market-making		8,659		7,430		4,958		74.6	%		16.5	%
Client treasury services		18,126		22,040		21,217		(14.6	)%		(17.8	)%
Non-client treasury income		1,096		3,600		1,784		(38.6	)%		(69.5	)%
Net results from financial transactions		19,222		25,640		23,001		(16.4	)%		(25.0	)%

1. Santander Global Connect is the Bank’s commercial platform for selling treasury products to our clients.

Client treasury services totaled Ch$18,126 million in 3Q12 and decreased 14.6% QoQ and 17.8% YoY mainly due to lower gains from Santander Global Connect, our platform for selling treasury products to our clients. In addition to lower volatility in some key macro indicators, we have been more conservative in our approval process for the sale of treasury products to smaller corporate clients. In addition, the Bank recognized a Ch$1,096 million gain from Non-client treasury services, reflecting that the bulk of our treasury income is client related.

Investor Relations Department	15
Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

OPERATING EXPENSES AND EFFICIENCY

Cost growth moderates as key project begin to have an impact on efficiency

Operating Expenses	Quarter									Change %
										3Q12 /			3Q 12 /
(Ch$ million)	3Q12			2Q12			3Q11			3Q11			2Q12
Personnel expenses		(75,561	)		(78,395	)		(73,884	)		2.3	%		(3.6	)%
Administrative expenses		(46,053	)		(45,115	)		(41,041	)		12.2	%		2.1	%
Depreciation, amortization and impairment		(14,051	)		(14,232	)		(13,431	)		4.6	%		(1.3	)%
Operating expenses		(135,665	)		(137,742	)		(128,356	)		5.7	%		(1.5	)%
Efficiency ratio¹		42.4	%		41.0	%		41.3	%

Operating expenses / Operating income. Operating income = Net interest income + Net fee income+ Net results from Financial transactions + Other operating income and expenses.

Operating expenses in 3Q12 decreased 1.5% QoQ and increased 5.7% YoY. The 3.6% QoQ decrease in personnel expenses reflects lower variable incentives paid to personnel. At the same time, headcount was flat QoQ with the exception of our collection areas that continued to be strengthened. The 2.3% YoY increase in personnel expenses also reflects the relatively stable YoY evolution of headcount. As of September 2012, headcount totaled 11,629 employees. Going forward personnel expense should grow at a slower pace than those observed in previous quarters as headcount remain stable and the different technologic tools being implemented should increase employee’s productivity.

Administrative expenses increased 2.1% QoQ and 12.2% YoY in 3Q12, as the Bank continued with its projects of investing in a new Client Relationship Management system and the Transformation Initiatives aimed at enhancing productivity in retail banking.

Investor Relations Department	16
Bandera 140 19^th 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 %
													3Q 12 /
(Ch$ million)	3Q12			2Q12			3Q11			3Q12 / 3Q11			2Q12
Other operating income		8,074			3,072			2,194			268.0	%		162.8	%
Other operating expenses		(13,008	)		(15,464	)		(12,156	)		7.0	%		(15.9	)%
Other operating income, net		(4,934	)		(12,392	)		(9,962	)		(50.5	)%		(60.2	)%
Income from investments in other companies		143			660			546			(73.8	)%		(78.3	)%
Income tax expense		(12,276	)		(14,027	)		(16,629	)		(26.2	)%		(12.5	)%
Income tax rate		18.9	%		11.6	%		17.9	%

Other operating income, net, totaled Ch$ -4,934 million in 3Q12. The lower loss compared to 2Q12 and 3Q11 was mainly due to a Ch$5,591 million from the sale of 11 branches. Branches are risk weighted at 100% and so, from a capital perspective, it is more efficient to rent them than to own them and the gains realized from these sales boost core capital levels.

The higher income tax rate in 3Q12 was mainly due to the deflation, which eliminated in the quarter any tax gains from the revaluation of capital due to CPI. For tax purposes, the Bank must revaluate its capital by the consumer price index. Since CPI inflation is usually positive, this results in a tax loss that lowers the Bank’s effective tax rate. When there is deflation or very low inflation this does not occur.

Congress approved a law that raised the statutory corporate tax rate to 20% next year.

Investor Relations Department	17
Bandera 140 19^th 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.

Moody’s (Outlook negative)		Rating
Foreign currency bank deposits		Aa3
Senior bonds		Aa3
Subordinated debt		A1
Bank Deposits in Local Currency		Aa3
Bank financial strength		C+
Short-term deposits		P-1

Standard and Poor’s (Outlook negative)		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 (Outlook negative)		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
Viability rating		a+

Local ratings:

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

	Fitch	Feller
Local ratings	Ratings	Rate
Shares	1CN1	1CN1
Short-term deposits	N1+	N1+
Long-term deposits	AAA	AAA
Mortgage finance bonds	AAA	AAA
Senior bonds	AAA	AAA
Subordinated bonds	AA	AA+
Outlook	Negative	Stable

Investor Relations Department	18
Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

SECTION 5: SHARE PERFORMANCE

As of September 2012

ADR price³ (US$) 9M12
09/30/12:			28.20
Maximum (9M12):			34.00
Minimum (9M12):			27.23

Market Capitalization:	US$13,268 million
P/E 12 month trailing*:	16.8
P/BV (09/30/12)**:	3.07
Dividend yield***:	3.5	%

Price as of Sept. 30, 2012 / 12mth. earnings

Price as of Sept. 30, 2012 / Book value as of 09/30/12

***

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

Local share price (Ch$) 9M12
09/30/12:			33.55
Maximum (9M12):			41.00
Minimum (9M12):			32.47

Dividends:
			% of previous year
Year paid	Ch$/share		earnings
2008:		1.06		65	%
2009:		1.13		65	%
2010:		1.37		60	%
2011:		1.52		60	%
2012:		1.39		60	%

3 On Oct. 22, 2012, the ratio of common share per ADR was changed from 1,039 shares per ADR to 400 shares per ADR.

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

ANNEX 1: BALANCE SHEET

Unaudited Balance Sheet	Sep-12			Sep-12			Dec-11			Sept. 12 / Dec. 11
		US$ths			Ch$ million						% Chg.
Assets
Cash and balances from Central Bank		3,339,115			1,585,078			2,793,701			(43.3	)%
Funds to be cleared		1,262,564			599,339			276,454			116.8	%
Financial assets held for trading		437,346			207,608			409,763			(49.3	)%
Investment collateral under agreements to repurchase		320,249			152,022			12,928			1075.9	%
Derivatives		3,109,772			1,476,209			1,612,869			(8.5	)%
Interbank loans		232,239			110,244			87,541			25.9	%
Loans, net of loan loss allowances		37,815,538			17,951,036			16,823,407			6.7	%
Available-for-sale financial assets		3,643,737			1,729,682			1,661,311			4.1	%
Held-to-maturity investments		-			-			-			—	%
Investments in other companies		18,193			8,636			8,728			(1.1	)%
Intangible assets		158,201			75,098			80,739			(7.0	)%
Fixed assets		316,467			150,227			153,059			(1.9	)%
Current tax assets		2,694			1,279			37,253			(96.6	)%
Deferred tax assets		382,956			181,789			147,754			23.0	%
Other assets		1,499,505			711,815			546,470			30.3	%
Total Assets		52,538,576			24,940,062			24,651,977			1.2	%

Liabilities and Equity
Demand deposits		9,692,774			4,601,160			4,413,815			4.2	%
Funds to be cleared		849,282			403,154			89,486			350.5	%
Investments sold under agreements to repurchase		250,358			118,845			544,381			(78.2	)%
Time deposits and savings accounts		19,986,539			9,487,610			8,921,114			6.4	%
Derivatives		2,842,368			1,349,272			1,292,148			4.4	%
Deposits from credit institutions		3,110,225			1,476,424			1,920,092			(23.1	)%
Marketable debt securities		9,680,118			4,595,152			4,623,239			(0.6	)%
Other obligations		399,467			189,627			176,599			7.4	%
Current tax liabilities		17,139			8,136			1,498			443.1	%
Deferred tax liability		22,361			10,615			5,315			99.7	%
Provisions		366,427			173,943			230,290			(24.5	)%
Other liabilities		915,121			434,408			398,977			8.9	%
Total Liabilities		48,132,180			22,848,346			22,616,954			1.0	%

Equity
Capital		1,877,613			891,303			891,303			0.0	%
Reserves		2,057,217			976,561			51,539			1794.8	%
Unrealized gain (loss) Available-for-sale financial assets		(3,851	)		(1,828	)		2,832			(164.5	)%
Retained Earnings:		404,877			192,195			1,055,548			(81.8	)%
Retained earnings previous periods		0			0			750,989			(100.0	)%
Net income		578,397			274,565			435,084			(36.9	)%
Provision for mandatory dividend		(173,520	)		(82,370	)		(130,525	)		(36.9	)%
Total Shareholders' Equity		4,335,855			2,058,231			2,001,222			2.8	%
Minority Interest		70,539			33,485			33,801			(0.9	)%
Total Equity		4,406,396			2,091,716			2,035,023			2.8	%
Total Liabilities and Equity		52,538,576			24,940,062			24,651,977			1.2	%

Figures in US$ have been translated at the exchange rate of Ch$474.70

Investor Relations Department	20
Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

ANNEX 2: YEAR-TO-DATE INCOME STATEMENTS

YTD Income Statement Unaudited	Sep-12			Sep-12			Sep-11			Sept. 12 / Sept. 11
	US$ths.			Ch$ million						% Chg.

Interest income		2,877,681			1,366,035			1,271,278			7.5	%
Interest expense		(1,277,211	)		(606,292	)		(563,124	)		7.7	%
Net interest income		1,600,470			759,743			708,154			7.3	%
Fee and commission income		570,238			270,692			271,541			(0.3	)%
Fee and commission expense		(141,051	)		(66,957	)		(62,111	)		7.8	%
Net fee and commission income		429,187			203,735			209,430			(2.7	)%
Net income from financial operations		(69,393	)		(32,941	)		153,535			—	%
Foreign exchange profit (loss), net		204,563			97,106			(75,265	)		—	%
Total financial transactions, net		135,170			64,165			78,270			(18.0	)%
Other operating income		31,869			15,128			8,053			87.9	%
Net operating profit before loan losses		2,196,695			1,042,771			1,003,907			3.9	%
Provision for loan losses		(582,083	)		(276,315	)		(195,920	)		41.0	%
Net operating profit		1,614,611			766,456			807,987			(5.1	)%
Personnel salaries and expenses		(470,647	)		(223,416	)		(207,380	)		7.7	%
Administrative expenses		(284,921	)		(135,252	)		(122,078	)		10.8	%
Depreciation and amortization		(84,940	)		(40,321	)		(39,638	)		1.7	%
Impairment		(185	)		(88	)		(109	)		(19.3	)%
Operating expenses		(840,693	)		(399,077	)		(369,205	)		8.1	%
Other operating expenses		(94,453	)		(44,837	)		(41,569	)		7.9	%
Total operating expenses		(935,146	)		(443,914	)		(410,774	)		8.1	%
Operating income		679,465			322,542			397,213			(18.8	)%
Income from investments in other companies		2,633			1,250			1,673			(25.3	)%
Income before taxes		682,098			323,792			398,886			(18.8	)%
Income tax expense		(95,606	)		(45,384	)		(62,546	)		(27.4	)%
Net income from ordinary activities		586,493			278,408			336,340			(17.2	)%
Net income discontinued operations		-			-			-			—	%
Net income attributable to:
Minority interest		8,096			3,843			3,377			13.8	%
Net income attributable to shareholders		578,397			274,565			332,963			(17.5	)%

Figures in US$ have been translated at the exchange rate of Ch$474.70

Investor Relations Department	21
Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

ANNEX 3: QUARTERLY INCOME STATEMENTS

Unaudited Quarterly Income Statement	3Q12			3Q12			2Q12			3Q11			3Q12 / 3Q11			3Q 12 / 2.Q12
	US$ths.			Ch$mn									% Chg.
Interest income		857,851			407,222			455,980			420,729			(3.2	)%		(10.7	)%
Interest expense		(354,942	)		(168,491	)		(201,040	)		(188,672	)		(10.7	)%		(16.2	)%
Net interest income		502,909			238,731			254,940			232,057			2.9	%		(6.4	)%
Fee and commission income		187,101			88,817			90,940			87,651			1.3	%		(2.3	)%
Fee and commission expense		(45,882	)		(21,780	)		(22,933	)		(21,660	)		0.6	%		(5.0	)%
Net fee and commission income		141,220			67,037			68,007			65,991			1.6	%		(1.4	)%
Net income from financial operations		(40,364	)		(19,161	)		20,416			102,133			—%			—%
Foreign exchange profit (loss), net		80,857			38,383			5,224			(79,132	)		—%			634.7	%
Total financial transactions, net		40,493			19,222			25,640			23,001			(16.4	)%		(25.0	)%
Other operating income		17,009			8,074			3,072			2,194			268.0	%		162.8	%
Net operating profit before loan losses		701,631			333,064			351,659			323,243			3.0	%		(5.3	)%
Provision for loan losses		(251,652	)		(119,459	)		(78,575	)		(90,372	)		32.2	%		52.0	%
Net operating profit		449,979			213,605			273,084			232,871			(8.3	)%		(21.8	)%
Personnel salaries and expenses		(159,176	)		(75,561	)		(78,395	)		(73,884	)		2.3	%		(3.6	)%
Administrative expenses		(97,015	)		(46,053	)		(45,115	)		(41,041	)		12.2	%		2.1	%
Depreciation and amortization		(29,600	)		(14,051	)		(14,198	)		(13,354	)		5.2	%		(1.0	)%
Impairment		0			0			(34	)		(77	)		—%			—%
Operating expenses		(285,791	)		(135,665	)		(137,742	)		(128,356	)		5.7	%		(1.5	)%
Other operating expenses		(27,403	)		(13,008	)		(15,464	)		(12,156	)		7.0	%		(15.9	)%
Total operating expenses		(313,194	)		(148,673	)		(153,206	)		(140,512	)		5.8	%		(3.0	)%
Operating income		136,785			64,932			119,878			92,359			(29.7	)%		(45.8	)%
Income from investments in other companies		301			143			660			546			(73.8	)%		(78.3	)%
Income before taxes		137,087			65,075			120,538			92,905			(30.0	)%		(46.0	)%
Income tax expense		(25,861	)		(12,276	)		(14,027	)		(16,629	)		(26.2	)%		(12.5	)%
Net income from ordinary activities		111,226			52,799			106,511			76,276			(30.8	)%		(50.4	)%
Net income discontinued operations		-			-			-			-			—%			—%
Net income attributable to:
Minority interest		4,710			2,236			816			1,123			99.1	%		174.0	%
Net income attributable to shareholders		106,516			50,563			105,695			75,153			(32.7	)%		(52.2	)%

Figures in US$ have been translated at the exchange rate of Ch$474.70

Investor Relations Department	22
Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

ANNEX 4: QUARTERLY EVOLUTION OF MAIN RATIOS AND OTHER INFORMATION

	Sep-11			Dec-11			Mar-12			Jun-12			Sep-12
(Ch$ millions)
Loans
Consumer loans		2,925,659			2,943,846			2,963,104			2,987,880			3,039,998
Residential mortgage loans		5,016,420			5,115,663			5,162,473			5,221,914			5,208,217
Commercial loans		9,738,277			9,287,585			9,666,504			10,164,678			10,254,959
Total loans		17,680,356			17,347,094			17,792,081			18,374,472			18,503,174
Allowance for loan losses		(520,566	)		(523,687	)		(522,728	)		(518,331	)		(552,138	)
Total loans, net of allowances		17,159,790			16,823,407			17,269,353			17,856,141			17,951,034

Loans by segment
Individuals		9,187,526			9,289,345			9,376,934			9,534,018			9,613,857
SMEs		2,522,698			2,560,736			2,604,565			2,658,077			2,745,928
Total retail lending		11,710,224			11,850,081			11,981,499			12,192,095			12,359,785
Institutional lending		351,644			355,199			347,818			366,862			355,119
Middle-Market & Real estate		3,731,980			3,650,709			3,692,576			3,848,479			3,918,324
Corporate		1,905,005			1,494,752			1,881,429			2,006,270			1,874,749

Customer funds
Demand deposits		4,496,757			4,413,815			4,566,890			4,624,570			4,601,160
Time deposits		9,395,246			8,921,114			8,825,599			9,913,093			9,487,610
Total deposits		13,892,003			13,334,929			13,392,489			14,537,663			14,088,770
Mutual funds (Off balance sheet)		2,852,379			2,941,773			2,995,292			2,944,482			3,080,130
Total customer funds		16,744,382			16,276,702			16,387,781			17,482,145			17,168,900
Loans / Deposits1		94.8	%		95.4	%		98.4	%		96.5	%		98.7	%

Average balances
Avg. interest earning assets		20,068,323			19,836,214			20,119,312			20,362,279			20,410,407
Avg. loans		17,460,992			17,494,801			17,537,743			18,127,164			18,546,119
Avg. assets		24,961,680			25,245,472			24,918,317			24,957,219			25,106,995
Avg. demand deposits		4,372,511			4,374,397			4,527,917			4,749,885			4,598,283
Avg equity		1,901,447			1,964,850			2,035,332			2,014,260			2,042,929
Avg. free funds		6,273,958			6,339,246			6,563,249			6,764,145			6,641,212

Capitalization
Risk weighted assets		18,954,147			18,243,142			18,509,191			19,572,225			19,479,092
Tier I (Shareholders' equity)		1,927,498			2,001,222			2,065,994			2,028,612			2,058,231
Tier II		715,184			686,171			673,110			659,788			642,650
Regulatory capital		2,642,682			2,687,393			2,739,104			2,688,401			2,700,881
Tier I ratio		10.2	%		11.0	%		11.2	%		10.4	%		10.6	%
BIS ratio		13.9	%		14.7	%		14.8	%		13.7	%		13.9	%

Profitability & Efficiency
Net interest margin		4.6	%		5.3	%		5.3	%		5.0	%		4.7	%
Efficiency ratio		41.3	%		38.5	%		36.8	%		41.0	%		42.4	%
Avg. Free funds / interest earning assets		31.3	%		32.0	%		32.6	%		33.2	%		32.5	%
Return on avg. equity		15.8	%		20.8	%		23.3	%		21.0	%		9.9	%
Return on avg. assets		1.2	%		1.6	%		1.9	%		1.7	%		0.8	%

Investor Relations Department	23
Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

	Sep-11			Dec-11			Mar-12			Jun-12			Sep-12
Asset quality
Non-performing loans (NPLs)2		496,786			511,357			519,283			529,869			561,730
Past due loans3		223,948			237,573			255,417			284,716			301,250
Risk index4		520,566			523,687			522,728			518,331			552,138
NPLs / total loans		2.81	%		2.95	%		2.92	%		2.88	%		3.04	%
PDL / total loans		1.27	%		1.37	%		1.44	%		1.55	%		1.63	%
Coverage of NPLs (Loan loss allowance / NPLs)		104.79	%		102.41	%		100.66	%		97.82	%		98.29	%
Coverage of PDLs (Loan loss allowance / PDLs)		232.4	%		220.4	%		204.7	%		182.1	%		183.3	%
Risk index (Loan loss allowances / Loans)		2.94	%		3.02	%		2.94	%		2.82	%		2.98	%
Cost of credit (prov. expense / loans)		2.04	%		2.00	%		1.76	%		1.71	%		2.58	%

Network
Branches		494			499			499			499			496
ATMs		1,892			1,920			1,949			1,966			1,966
Employees		11,706			11,566			11,572			11,621			11,692

Market information (period-end)
Net income per share (Ch$)		0.40			0.54			0.63			0.56			0.27
Net income per ADR (US$)		0.31			0.42			0.51			0.44			0.23
Stock price		37.5			37.4			40.5			37.3			33.55
ADR price		28.3			29.1			33.1			29.8			28.2
Market capitalization (US$mn)		13,328			13,728			15,613			14,053			13,285
Shares outstanding		188,446.1			188,446.1			188,446.1			188,446.1			188,446.1
ADRs (1 ADR = 1,039 shares)		471.1			471.1			471.1			471.1			471.1

Other Data
Quarterly inflation rate5		0.56	%		1.28	%		1.07	%		0.42	%		-0.16	%
Central Bank monetary policy reference rate (nominal)		5.25	%		5.25	%		5.00	%		5.00	%		5.00	%
Avg. 10 year Central Bank yield (real)		2.63	%		2.61	%		2.45	%		2.49	%		2.42	%
Avg. 10 year Central Bank yield (nominal)		5.64	%		5.21	%		5.40	%		5.58	%		5.31	%
Observed Exchange rate (Ch$/US$) (period-end)		515.14			521.46			489.76			509.73			470.48

1 Ratio = Loans - marketable securities / Time deposits + demand deposits

2 Capital + future interest of all loans with one installment 90 days or more overdue.

3 Total installments plus lines of credit more than 90 days overdue

4 Based on internal credit models and SBIF guidelines. Banks must have a 100% coverage of risk index

5 Calculated using the variation of the Unidad de Fomento (UF) in the period

Investor Relations Department	24
Bandera 140 19^th Floor, Santiago, Chile, Tel: 562-320-8284, fax: 562-671-6554,
email: rmorenoh@santander.cl

CONTENT

Consolidated Interim Financial Statements
CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION	2
CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME	4
CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY	5
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW	6

Notes to the Consolidated Interim Financial Statements

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES	8
NOTE 2 – ACCOUNTING CHANGES:	33
NOTE 3 - SIGNIFICANT EVENTS:	34
NOTE 4 - BUSINESS SEGMENTS:	36
NOTE 5 - CASH AND CASH EQUIVALENTS	42
NOTE 6 - TRADING INVESTMENTS:	43
NOTE 7 - DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING:	44
NOTE 8 - INTERBANK LOANS	50
NOTE 9 - LOANS AND ACCOUNTS RECEIVABLE FROM CUSTOMERS:	51
NOTE 10 - AVAILABLE FOR SALE INVESTMENTS:	56
NOTE 11 - INTANGIBLE ASSETS:	57
NOTE 12 - PROPERTY, PLANT, AND EQUIPMENT	59
NOTE 13 - CURRENT AND DEFERRED TAXES:	63
NOTE 14 – OTHER ASSETS:	66
NOTE 15 - TIME DEPOSITS AND OTHER TIME LIABILITIES:	67
NOTE 16 - ISSUED DEBT INSTRUMENTS AND OTHER OBLIGATIONS:	68
NOTE 17 - MATURITIES OF ASSETS AND LIABILITIES:	74
NOTE 18 - OTHER LIABILITIES	76
NOTE 19 -CONTINGENCIES AND COMMITMENTS:	77
NOTE 20 – EQUITY:	79
NOTE 21 - CAPITAL REQUIREMENTS (BASEL):	82
NOTE 22 – NON CONTROLLING INTEREST	84
NOTE 23 -INTEREST INCOME AND EXPENSE	86
NOTE 24 – FEES AND COMMISSIONS	89
NOTE 25 - NET INCOME FROM FINANCIAL OPERATIONS	90
NOTE 26 – NET FOREIGN EXCHANGE PROFIT	90
NOTE 27 - PROVISION FOR LOAN LOSSES	91
NOTE 28 - PERSONNEL SALARIES AND EXPENSES	93
NOTE 29 - ADMINISTRATIVE EXPENSES	94
NOTE 30 – DEPRECIATION, AMORTIZATION AND IMPAIRMENT	95
NOTE 31 - OTHER OPERATING INCOME AND EXPENSES	96
NOTE 32 - TRANSACTIONS WITH RELATED PARTIES:	98
NOTE 33 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES:	103
NOTE 34 – SUBSEQUENT EVENTS	106

BANCO SANTANDER CHILE AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

For periods ending

			As of September 30,			As of December 31,
			2012			2011
	NOTE		MCh$			MCh$

ASSETS
Cash and deposits in banks		5		1,585,078			2,793,701
Cash items in process of collection		5		599,339			276,454
Trading investments		6		207,608			409,763
Investments under repurchase agreements				152,022			12,928
Financial derivative contracts		7		1,476,209			1,612,869
Interbank loans, net		8		110,244			87,541
Loans and accounts receivable from customers, net		9		17,951,036			16,823,407
Available for sale investments		10		1,729,682			1,661,311
Held to maturity investments		10		-			-
Investments in other companies				8,636			8,728
Intangible assets		11		75,098			80,739
Property, plant, and equipment		12		150,227			153,059
Current taxes		13		1,279			37,253
Deferred taxes		13		181,789			147,754
Other assets		14		711,815			546,470
TOTAL ASSETS				24,940,062			24,651,977

LIABILITIES
Deposits and other demand liabilities		15		4,601,160			4,413,815
Cash items in process of being cleared		5		403,154			89,486
Obligations under repurchase agreements				118,845			544,381
Time deposits and other time liabilities		15		9,487,610			8,921,114
Financial derivative contracts		7		1,349,272			1,292,148
Interbank borrowings				1,476,424			1,920,092
Issued debt instruments		16		4,595,152			4,623,239
Other financial liabilities		16		189,627			176,599
Current taxes		13		8,136			1,498
Deferred taxes		13		10,615			5,315
Provisions				173,943			230,290
Other liabilities		18		434,408			398,977

TOTAL LIABILITIES				22,848,346			22,616,954

EQUITY

Attributable to Bank shareholders:				2,058,231			2,001,222
Capital				891,303			891,303
Reserves				976,561			51,539
Valuation adjustments		20		(1,828	)		2,832
Retained Earnings				192,195			1,055,548
Retained earnings of prior years				-			750.989
Income for the period				274,565			435.084
Minus: Provision for mandatory dividends				(82,370	)		(130,525	)
Non-controlling interest		22		33,485			33,801

TOTAL EQUITY				2,091,716			2,035,023

TOTAL LIABILITIES AND EQUITY				24,940,062			24,651,977

BANCO SANTANDER CHILE AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF INCOME

For periods ending as of

			For the quarter ending as of September 30,						For the 9-month period ending on September 30,
			2012			2011			2012			2011
	NOTE		MCh$			MCh$			MCh$			MCh$

OPERATING INCOME

Interest income		23		407,222			420,729			1,366,035			1,271,278
Interest expense		23		(168,491	)		(188,672	)		(606,292	)		(563,124	)

Net interest income				238,731			232,057			759,743			708,154

Fee and commission income		24		88,817			87,651			270,692			271,541
Fee and commission expense		24		(21,780	)		(21,660	)		(66,957	)		(62,111	)

Net fee and commission income				67,037			65,991			203,735			209,430

Net income from financial operations (net trading income)		25		(19,161	)		102,133			(32,941	)		153,535
Foreign exchange profit (loss), net		26		38,383			(79,132	)		97,106			(75,265	)
Other operating income		31		8,074			2,194			15,128			8,053

Net operating profit before loan losses				333,064			323,243			1,042,771			1,003,907

Provision for loan losses		27		(119,459	)		(90,372	)		(276,315	)		(195,920	)

NET OPERATING PROFIT				213,605			232,871			766,456			807,987

Personnel salaries and expenses		28		(75,561	)		(73,884	)		(223,416	)		(207,380	)
Administrative expenses		29		(46,053	)		(41,041	)		(135,252	)		(122,078	)
Depreciation and amortization		30		(14,051	)		(13,354	)		(40,321	)		(39,638	)
Impairment		12		-			(77	)		(88	)		(109	)
Other operating expenses		31		(13,008	)		(12,156	)		(44,837	)		(41,569	)

Total operating expenses				(148,673	)		(140,512	)		(443,914	)		(410,774	)

OPERATING INCOME				64,932			92,359			322,542			397,213

Income from investments in other companies				143			546			1,250			1,673

Income before tax				65,075			92,905			323,792			398,886

Income tax		13		(12,276	)		(16,629	)		(45,384	)		(62,546	)

NET INCOME FOR THE PERIOD				52,799			76,276			278,408			336,340

Attributable to:
Bank shareholders (Equity holders of the Bank)				50,563			75,153			274,565			332,963
Non-controlling interest		22		2,236			1,123			3,843			3,377

Earnings per share attributable to Bank shareholders:
(expressed in Chilean pesos)
Basic earnings				0,268			0,399			1,457			1,767
Diluted earnings				0,268			0,399			1,457			1,767

BANCO SANTANDER CHILE AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

For the following periods:

			For the quarter ended as of September 30,						For the 9-month period ending on September 30,
			2012			2011			2012			2011
	NOTE		MCh$			MCh$			MCh$			MCh$

CONSOLIDATE INCOME FOR THE PERIOD				52,799			76,276			278,408			336,340

OTHER COMPREHENSIVE INCOME

Available for sale investments		20		(4,869	)		22,561			(7,049	)		21,486
Cash flow hedge		20		(2,234	)		(12,051	)		1,374			(14,074	)

Other comprehensive income before income tax				(7,103	)		10,510			(5,675	)		7,412

Income tax related to other comprehensive income				1,307			(2,058	)		1,070			(1,401	)

Total other comprehensive income				(5,796	)		8,452			(4,605	)		6,011

CONSOLIDATE COMPREHENSIVE INCOME FOR THE PERIOD				47,003			84,728			273,803			342,351

Attributable to:
Bank shareholders (Equity holders of the Bank)				44,789			83,577			269,905			338,736
Non-controlling interest		22		2,214			1,151			3,898			3,615

BANCO SANTANDER CHILE AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

For periods ending as of September 30, 2012 and 2011 and December 31, 2011

			RESERVES					VALUATION ADJUSTMENTS									RETAINED EARNINGS
	Capital		Reserves and other retained earnings		Merger of companies under common control			Available for sale investments			Cash flow hedge			Income tax			Retained earnings of prior years			Income for the period			Provision for mandatory dividends			Total attributable to Bank shareholders			Non-controlling interest			Total Equity
	MCh$		MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Equity as of December 31, 2010		891,303		53,763		(2,224	)		(18,341	)		11,958			1,203			560,128			477,155			(143,147	)		1,831,798			31,809			1,863,607
Distribution of income from previous period		-		-		-			-			-			-			477,155			(477,155	)		-			-			-			-
Equity as of January 1, 2011		891,303		53,763		(2,224	)		(18,341	)		11,958			1,203			1,037,283			-			(143,147	)		1,831,798			31,809			1,863,607
Increase or decrease of capital and reserves		-		-		-			-			-			-			-			-			-			-			-			-
Dividends distributions / Withdrawals made		-		-		-			-			-			-			(286,294	)		-			143,147			(143,147	)		(3,122	)		(146,269	)
Other changes in equity		-		-		-			-			-			-			-			-			-			-			(9	)		(9	)
Provisions for mandatory dividends		-		-		-			-			-			-			-			-			(99,889	)		(99,889	)		-			(99,889	)
Subtotals		-		-		-			-			-			-			(286,294	)		-			43,258			(243,036	)		(3,131	)		(246,167	)
Other comprehensive income		-		-		-			21,197			(14,074	)		(1,350	)		-			-			-			5,773			238			6,011
Income for the period		-		-		-			-			-			-			-			332,963			-			332,963			3,377			336,340
Subtotals		-		-		-			21,197			(14,074	)		(1,350	)		-			332,963			-			338,736			3,615			342,351
Equity as of September 30, 2011		891,303		53,763		(2,224	)		2,856			(2,116	)		(147	)		750,989			332,963			(99,889	)		1,927,498			32,293			1,959,791

Equity as of December 31, 2011		891,303		53,763		(2,224	)		3,077			394			(639	)		750,989			435,084			(130,525	)		2,001,222			33,801			2,035,023
Distribution of income from previous period		-		-		-			-			-			-			435,084			(435,084	)		-			-			-			-
Opening balances as of January 1,2012		891,303		53,763		(2,224	)		3,077			394			(639	)		1,186,073			-			(130,525	)		2,001,222			33,801			2,035,023
Increase or decrease of capital and reserves		-		-		-			-			-			-			-			-			-			-			-			-
Dividends distributions / Withdrawals made		-		-		-			-			-			-			(261,051	)		-			130,525			(130,526	)		(4,211	)		(134,737	)
Other changes in equity		-		925,022		-			-			-			-			(925,022	)		-			-			-			(3	)		(3	)
Provision for mandatory dividends		-		-		-			-			-			-			-			-			(82,370	)		(82,370	)		-			(82,370	)
Subtotals		-		925,022		-			-			-			-			(1,186,073	)		-			48,155			(212,896	)		(4,214	)		(217,110	)
Other comprehensive income		-		-		-			(7,118	)		1,374			1,084			-			-			-			(4,660	)		55			(4,605	)
Income for the period		-		-		-			-			-			-			-			274,565			-			274,565			3,843			278,408
Subtotals		-		-		-			(7,118	)		1,374			1,084			-			274,565			-			269,905			3,898			273,803

Balances as of September 30, 2012		891,303		978,785		(2,224	)		(4,041	)		1,768			445			-			274,565			(82,370	)		2,058,231			33,485			2,091,716

	Total attributable to Bank shareholders		Allocated to reserves or retained earnings		Allocated to dividends		Percentage distributed		Number of		Dividend per share
Period	MCh$		MCh$		MCh$		%		shares		(in pesos)

Year 2011 (Shareholders Meeting April 2012)		435,084		174,033		261,051		60		188,446,126,794		1,385

Year 2010 (Shareholders Meeting April 2011)		477,155		190,861		286,294		60		188,446,126,794		1,519

BANCO SANTANDER CHILE AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW

For periods ending:

			As of September 30
			2012			2011
	NOTE		MCh$			MCh$

A - CASH FLOWS FROM OPERATING ACTIVITIES
CONSOLIDATED INCOME BEFORE TAX				323,792			398,886
Debits (credits) to income that do not represent cash flows				(661,309	)		(675,799	)
Depreciation and amortization		30		40,321			39,638
Impairment of property, plant, and equipment		12		88			109
Provision for loan losses		27		298,555			211,939
Mark to market of trading investments				(10,228	)		(7,848	)
Income from investments in other companies				(1,250	)		(1,673	)
Net gain on sale of assets received in lieu of payment		31		(7,767	)		(6,654	)
Provisions for assets received in lieu of payment		31		3,586			2,135
Net gain on sale of investments in other companies		31		(599	)		-
Net gain on sale of property, plant and equipment		31		(6,208	)		(830	)
Charge off of assets received in lieu of payment		31		6,250			7,118
Net interest income		23		(759,743	)		(708,154	)
Net fee and commission income		24		(203,735	)		(209,430	)
Debits (credits) to income that do not represent cash flows				7,522			18,078
Changes in assets and liabilities due to deferred taxes		13		(28,101	)		(20,227	)
Increase/decrease in operating assets and liabilities				(530,443	)		903,088
Decrease (increase) of loans and accounts receivables from customers, net				(955,220	)		(1,892,335	)
Decrease (increase) of financial investments				133,784			(801,170	)
Decrease (increase) due to repurchase agreements (assets)				(139,094	)		158,828
Decrease (increase) of interbank loans				(22,702	)		(18,222	)
Decrease of assets received or awarded in lieu of payment				33,443			33,020
Increase of debits in checking accounts				65,944			44,856
Increase (decrease) of time deposits and other time liabilities				421,846			2,133,646
Increase (decrease) of obligations with domestic banks				-			-
Increase of other demand liabilities or time obligations				121,431			162,403
Increase (decrease) of obligations with foreign banks				(443,304	)		441,478
Decrease of obligations with Central Bank of Chile				(364	)		(397	)
Increase (decrease) due to repurchase agreements (liabilities)				(425,536	)		(67,682	)
Increase (decrease) of other short-term liabilities				13,028			(690	)
Net increase of other assets and liabilities				(345,644	)		(315,359	)
Issuance of letters of credit				-			-
Redemption of letters of credit				(39,587	)		(42,129	)
Senior bond issuances				581,088			489,133
Redemption of senior bonds and payments of interest				(446,516	)		(278,094	)
Interest received				1,382,224			1,277,893
Interest paid				(624,425	)		(569,670	)
Dividends received from investments in other companies				810			696
Fees and commissions received		24		270,692			271,541
Fees and commissions paid		24		(66,957	)		(62,112	)
Income tax paid		13		(45,384	)		(62,546	)
Net cash flows from (used in) operating activities				(867,960	)		626,175

BANCO SANTANDER CHILE AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW

For periods ending:

			As of September 30
			2012			2011
	NOTE		MCh$			MCh$

B - CASH FLOWS FROM INVESTMENT ACTIVITIES:
Purchases of property, plant, and equipment		12		(17,474	)		(13,261	)
Sales of property, plant, and equipment		12		5,152			167
Purchases of investments in other companies				(61	)		-
Sales of investments in other companies				401			5,705
Purchases of intangible assets		11		(19,452	)		(24,118	)
Net cash used in investment activities				(31,434	)		(31,507	)

C - CASH FLOW FROM FINANCING ACTIVITIES:
From shareholders’ financing activities				(286,089	)		(198,515	)
Increase of other obligations				116			-
Issuance of subordinated bonds				-			114,978
Redemption of subordinated bonds and payments of interest				(25,155	)		(27,199	)
Dividends paid				(261,050	)		(286,294	)
From non-controlling interest financing activities				(4,211	)		(3,122	)
Increases of capital				-			-
Dividends and/or withdrawals paid				(4,211	)		(3,122	)
Net cash flows used in financing activities				(290,300	)		(201,637	)

D – NET DECREASE IN CASH AND CASH EQUIVALENTS DURING THE PERIOD				(1,189,694	)		393,031

E – EFFECTS OF FOREIGN EXCHANGE RATE FLUCTUATIONS				(9,712	)		(66,149	)

F - INITIAL BALANCE OF CASH AND CASH EQUIVALENTS				2,980,669			1,836,441

FINAL BALANCE OF CASH AND CASH EQUIVALENTS		5		1,781,263			2,163,323

	As of September 30
Reconciliation of provisions for Consolidated Interim Statements of Cash Flow	2012			2011
	MCh$			MCh$

Provisions for loan losses for cash flow		298,555			211,939
Recovery of loans previously charged off		(22,240	)		(16,019	)
Expenses on allowances for loan losses		276,315			195,920

	BANCO SANTANDER CHILE AND SUBSIDIARIES
	NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
	As of September 30, 2012 and 2011 and December 31, 2011

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

Corporate Information

Banco Santander Chile (formerly Banco Santiago) is a corporation (sociedad anónima bancaria) organized under the laws of the Republic of Chile, addressed at #140 Bandera St., first floor, and that provides a broad range of general banking services to its customers, from individuals to major corporations. Banco Santander Chile and its affiliates (collectively referred to herein as the “Bank” or “Banco Santander Chile”) offer commercial and consumer banking services, besides other services, including factoring, collection, leasing, securities and insurance brokerage, mutual and investment fund management, and investment banking.

A Special Meeting of Shareholders of Banco Santiago was held on July 18, 2002, the minutes of which were notarized as a public deed on July 19, 2002 at the Notarial Office of Santiago before Notary Nancy de la Fuente Hernández, and it was agreed to merge Banco Santander Chile with Banco Santiago by merging the former into the latter, which acquired the former’s assets and liabilities. It was likewise agreed to dissolve Banco Santander Chile in advance and change the name of Banco Santiago to Banco Santander Chile. This change was authorized by Resolution No.79 of the Superintendency of Banks and Financial Institutions, adopted on July 26, 2002, published in the Official Journal on August 1, 2002 and registered on page 19,992 under number 16,346 for the year 2002 in the Registry of Commerce of the Curator of Real Estate of Santiago.

In addition to the amendments to the bylaws discussed above, the bylaws have been amended on multiple occasions, the last time at the Special Shareholders Meeting of April 24, 2007, the minutes of which were notarized as a public deed on May 24, 2007 at the Notarial Office of Nancy de la Fuente Hernández. This amendment was approved pursuant to Resolution No.61 of June 6, 2007 of the Superintendency of Banks and Financial Institutions. An extract thereof and the resolution were published in the Official Journal of June 23, 2007 and registered in the Registry of Commerce for 2007 on page 24,064 under number 17,563 of the aforementioned Curator.

By means of this last amendment, Banco Santander Chile, pursuant to its bylaws and as approved by the Superintendence of Banks and Financial Institutions, may also use the names Banco Santander Santiago or Santander Santiago or Banco Santander or Santander.

Banco Santander España controls Banco Santander-Chile through its share in Teatinos Siglo XXI Inversiones Ltda. and Santander-Chile Holding S.A., which are subsidiaries controlled by Banco Santander España. As of September 30, 2011 Banco Santander España owns or controls directly and indirectly 99.5% of the Santander-Chile Holding S.A. and 100% of Teatinos Siglo XXI Inversiones Ltda. This grants Banco Santander España control over 67.18% of the Bank’s shares.

a) Basis of preparation

These Consolidated Interim Financial Statements have been prepared in accordance with the Compendium of Accounting Standards issued by the Superintendency of Banks and Financial Institutions (SBIF), a regulatory agency. Article 15 of the General Banking Law states that, in accordance with the laws, banks must abide by the accounting criteria issued by the Superintendency and that, in any situation not provided for therein—if it is not contrary to its instructions—must abide by the generally accepted accounting principles, which correspond with the technical standards issued by the Colegio de Contadores de Chile AG (Association of Chilean Accountants), which coincide with the International Financial Reporting Standards(IFRS) adopted by the International Accounting Standard Board (IASB). In the event of discrepancies between the accounting principles and the accounting criteria issued by the SBIF (Compendium of Accounting Standard), the latter will prevail. In the event of discrepancies between the accounting principles and the accounting criteria issued by the SBIF (Compendium of Accounting Standard), the latter will prevail. The notes to these Consolidated Interim Financial Statements include additional information to the one presented on the Consolidated Interim Statements of Financial Position, on the Consolidated Interim Statements of Income, the Consolidated Interim Statements of Comprehensive Income, the Consolidated Interim Statements of Changes in Equity and the Consolidated Interim Statements of Cash Flows. The notes provide narrative descriptions of those statements in a clear, relevant, reliable and comparable manner. The notes provide narrative descriptions of those statements in a clear, relevant, reliable and comparable manner.

b) Basis of preparation for the Consolidated Interim Financial Statements

The Consolidated Interim Financial Statements include the preparation of separate (individual) financial statements of the Bank and the companies that participate in the consolidation as of September 30, 2012 and 2011 and December 31, 2011, and they include the adjustments and reclassifications needed to make the accounting policies and valuation criteria applied by Bank to abide by the Compendium of Accounting Regulations issued by the SBIF.

Subsidiaries

“Subsidiaries” are defined as entities over which the Bank has the ability to exercise control, which is generally but not exclusively reflected by the direct or indirect ownership of at least 50% of the investee’s voting rights, or even if this percentage is lower or zero when the Bank is granted control pursuant to agreements with the investee’s shareholders. Control is the power to govern the financial and operating policies of an entity, so as to benefit from its activities

	BANCO SANTANDER CHILE AND SUBSIDIARIES
	NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
	As of September 30, 2012 and 2011 and December 31, 2011

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES, continued:

Financial Statements of subsidiaries are consolidated together with those of the Bank. Accordingly, all the balances and transactions between the consolidated companies are eliminated through the consolidation process.

In addition, third parties’ shares in the Consolidated Bank’s equity are presented as “Non-controlling interests” in the Consolidated Interim Statement of Income. Their shares in the year’s income are presented under “Non-controlling interests” in the Consolidated Interim Statement of Income.

The following companies are considered “Subsidiaries” in which the Bank has the ability to exercise control and are therefore within the scope of consolidation:

Subsidiaries	Percentage share
	As of September 30,						As of December 31,						As of September 30,
	2012						2011						2011
	Direct %		Indirect %		Total %		Direct %		Indirect %		Total %		Direct %		Indirect %		Total %

Santander Corredora de Seguros Limitada		99.75		0.01		99.76		99.75		0.01		99.76		99.75		0.01		99.76
Santander S.A. Corredores de Bolsa		50.59		0.41		51.00		50.59		0.41		51.00		50.59		0.41		51.00
Santander Asset Management S.A. Administradora General de Fondos		99.96		0.02		99.98		99.96		0.02		99.98		99.96		0.02		99.98
Santander Agente de Valores Limitada		99.03		-		99.03		99.03		-		99.03		99.03		-		99.03
Santander S.A. Sociedad Securitizadora		99.64		-		99.64		99.64		-		99.64		99.64		-		99.64
Santander Servicios de Recaudación y Pagos Limitada		99.90		0.10		100.00		99.90		0.10		100.00		99.90		0.10		100.00

Special Purpose Entities

According to IFRS, the Bank must continuously analyze its perimeter of consolidation. The key criterion for such analysis is the degree of control held by the Bank over a given entity, not the percentage of holding in such entity’s equity.

In particular, as set forth by International Accounting Standard 27 “Consolidated and Separate Financial Statements” (IAS 27) and by the Standard Interpretations Committee 12 “Consolidation – Special Purpose Entities” (SIC 12), issued by the IASB, the Bank must determine the existence of Special Purpose Entities (SPEs), which must be included in its scope of consolidation. The following are the main criteria for SPEs that should be included in the scope of consolidation:

The SPEs’ activities have essentially been conducted on behalf of the company that presents the Consolidated Financial Statements and in response to its specific business needs.

The necessary decision making authority is held to obtain most of the benefits from these entities’ activities, as well as the rights to obtain most of the benefits or other advantages from such entities.

The entity essentially retains most of the risks inherent to the ownership or residuals of the SPEs or its assets, for the purpose of obtaining the benefits from its activities.

This assessment is based on methods and procedures which consider the risks and profits retained by the Bank, for which all the relevant factors, including the guarantees furnished or the losses associated with collection of the related assets retained by the Bank, are taken into account. As a consequence of this assessment, the Bank concluded that it exercised control over the following entities, which therefore are included within the scope of consolidation:

Santander Gestión de Recaudación y Cobranza Limitada (collection services).

Multinegocios S.A. (management of sales force).

Servicios Administrativos y Financieros Limitada (management of sales force).

Fiscalex Limitada (collection services).

Multiservicios de Negocios Limitada (call center).

Bansa Santander S.A. (management of repossessed assets and leasing of properties)

Associates

Associated entities are those entities over which the Bank exercises significant influence but not control or joint control; usually because it holds 20% or more of the entity’s voting power. Investments in associated entities are accounted for using the “equity method.”

	BANCO SANTANDER CHILE AND SUBSIDIARIES
	NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
	As of September 30, 2012 and 2011 and December 31, 2011

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES, continued:

The following companies are considered “Associates” in which the Bank accounts for its participation using the equity method:

Associates	Percentage share
	As of September 30,		As of December 31,		As of September 30,
	2012		2011		2011
	%		%		%
Redbanc S.A.		33.43		33.43		33.43
Transbank S.A.		25.00		32.71		32.71
Centro de Compensación Automatizado		33.33		33.33		33.33
Sociedad Interbancaria de Depósito de Valores S.A.		29.28		29.28		29.28
Cámara Compensación de Alto Valor S.A.		14.44		12.65		12.65
Administrador Financiero del Transantiago S.A.		20.00		20.00		20.00
Sociedad Nexus S.A.		12.90		12.90		12.90

In the case of Nexus S.A. and Cámara Compensación de Alto Valor S.A. the Bank has a representative on the Board of Directors. According to this, the Bank has concluded that it exerts significant influence over these entities.

Share or rights in other companies

Entities in which the Bank has no control or significant influence are presented in this category. These holdings are shown at purchase value (historical cost).

Non-controlling interest

Non-controlling interest represents the portion of gains and losses and net assets which the Bank does not own, either directly or indirectly. It is presented separately in the Consolidated Interim Statement of Income, and separately from shareholders equity in the Consolidated Interim Statement of Financial Position.

In the case of Special Purpose Entities (SPEs), 100% of their Income and Equity is presented in Non-controlling interest, since the Bank only has control but not actual ownership thereof.

Operating segments

has been identified;

ii.

exceeds the quantitative thresholds stipulated for a segment.

Operating segments with similar economic characteristics often have a similar long-term financial performance. Two or more segments can be combined only if aggregation is consistent with the basic principles of the International Financial Reporting Standards 8 “Operating Segments” (IFRS 8) and the segments have similar economic characteristics and are similar in each of the following respects:

nature of the products and services;

ii.

nature of the production processes;

iii.

the type or class of customers that use their products and services;

iv.

the methods used to distribute their products or services; and

if applicable, the nature of the regulatory environment, for example, banking, insurance, or public utilities.

	BANCO SANTANDER CHILE AND SUBSIDIARIES
	NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
	As of September 30, 2012 and 2011 and December 31, 2011

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES, continued:

The Bank reports separately on each operating segment that exceeds any of the following quantitative thresholds

Its reported revenue, from both external customers and intersegment sales or transfers, is 10% or more of the combined internal and external revenue of all the operating segments.

ii.

The absolute amount of its reported profit or loss is 10% or more of the greater in absolute amount of: (i) the combined reported profit of all the operating segments that did not report a loss; (ii) the combined reported loss of all the operating segments that reported a loss.

iii.

Its assets represent 10% or more of the combined assets of all the operating segments.

Operating segments that do not meet any of the quantitative thresholds may be treated as segments to be reported, in which case the information must be disclosed separately if management believes it could be useful for the users of the financial statements.

Information about other business activities of the operating segments not separately reported is combined and disclosed in the “Other segments” category.

According to the information presented, the Bank’s segments were determined under the following definitions:

It engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses from transactions with other components of the same entity);

ii. Its operating results are regularly reviewed by the entity’s chief executive officer, who makes decisions about resources allocated to the segment and assess its performance; and

iii. Discrete financial information is available for it.

Functional and presentation currency

According to International Accounting Standard No.21 “The Effects of Changes in Foreign Exchange Rates” (IAS 21), the Chilean peso, which is the currency of the primary economic environment in which the Bank operates and the currency which influences its costs and revenues structure, has been defined as the Bank’s functional and presentation currency.

Accordingly, all balances and transactions denominated in currencies other than the Chilean Peso are treated as “foreign currency.”

Foreign currency transactions

The Bank grants loans and accepts deposits in amounts denominated in foreign currencies, mainly the U.S. dollar. Assets and liabilities denominated in foreign currencies and only held by the Bank are translated to Chilean pesos based on the market rate published by Reuters at 1:30 p.m. on the last business day of every month. The rate used was Ch$474.70 per US$1 as of September 30, 2012 (Ch$519.65 for Banks and Ch$515.14 informed by the Chilean Central Bank for subsidiaries as of September, 2011). The Subsidiaries record their foreign currency positions at the exchange rate reported by the Central Bank of Chile at the close of operations on the last business day of the month, amounting to Ch$520.35 per US$1 for Banks and Ch$521.46 informed by the Chilean Central Bank for subsidiaries), as of December 31, 2011.

The amounts of net foreign exchange profits and losses includes recognition of the effects that exchange rate variations have on assets and liabilities denominated in foreign currencies and the profits and losses on foreign exchange spot and forward transactions undertaken by the Bank

Definitions and classification of financial instruments

Definitions

A “financial instrument” is any contract that gives rise to a financial asset of one entity, and a financial liability or equity instrument of another entity. An “equity instrument” is a legal transaction that evidences a residual interest in the assets of an entity deducting all of its liabilities.

	BANCO SANTANDER CHILE AND SUBSIDIARIES
	NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
	As of September 30, 2012 and 2011 and December 31, 2011

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES, continued:

A “financial derivative” is a financial instrument whose value changes in response to the changes in an observable market variable (such as an interest rate, a foreign exchange rate, a financial instrument’s price, or a market index, including credit ratings), which initial investment is very small compared to other financial instruments having a similar response to changes in market factors, and which is generally settled at a future date.

“Hybrid financial instruments” are contracts that simultaneously include a non-derivative host contract together with a financial derivative, known as an embedded derivative, which is not separately transferable and has the effect that some of the cash flows of the hybrid contract vary in a way similar to a stand-alone derivative.

ii.

Classification of financial assets for measurement purposes

The financial assets are initially classified into the various categories used for management and measurement purposes.

Financial assets are included for measurement purposes in one of the following categories:

Portfolio of trading investments (at fair value through profit and loss): This category includes the financial assets acquired for the purpose of generating a profit in the short term from fluctuations in their prices. This category includes the portfolio of trading investments and financial derivative contracts not designated as hedging instruments.

Available for sale investment portfolio: Debt instruments not classified as a) “held-to-maturity investments,” b) “Credit investments” (loans and accounts receivable from customers or interbank loans) or c) “Financial assets at fair value through profit or loss.” Available for sale (AFS) investments are initially recorded at cost, which includes transaction costs. AFS instruments are subsequently measured at fair value, or based on appraisals made with the use of internal models when appropriate. Unrealized gains or losses stemming from changes in fair value are recorded as a debit or credit to Other Comprehensive Income under the heading “Valuation Adjustments” within equity. When these investments are disposed of or become impaired, the cumulative gains or losses previously recognized in Other Comprehensive Income are transferred to the Consolidated Interim Statement of Income under “Net income from financial operations.”

Held to maturity instruments portfolio: this category includes debt securities traded on an active market, with a fixed maturity, and with fixed or determinable payments, for which the Bank has both the intent and a proven ability to hold to maturity. Held to maturity investments are recorded at their amortized cost plus interest earned, minus any impairment losses established when their carrying amount exceeds the present value of estimated future cash flows.

Credit investments (loans and accounts receivable from customers or interbank loans): this category includes financing granted to third parties, based on their nature, regardless of the type of borrower and the form of financing. It includes loans and accounts receivable from customers, interbank loans, and financial lease transactions in which the consolidated entities act as lessor.

iii.

Classification of financial assets for presentation purposes

Financial assets are classified by their nature into the following line items in the Consolidated Interim financial statements:

Cash and deposits in banks: This line includes cash balances, checking accounts and on-demand deposits with the Central Bank of Chile and other domestic and foreign financial institutions. Amounts placed in overnight transactions will continue to be reported in this line item and in the lines or items to which they correspond. If there is no special item for these transactions, they will be included with the related account as indicated above.

Cash items in process of collection: This item includes the values of executed transactions which contractually defer the payment of purchase-sale transactions or the delivery of the foreign currency acquired.

Trading investments: This item includes financial instruments held-for-trading and investments in mutual funds which must be adjusted to their fair value in the same way as instruments acquired for trading.

Financial derivative contracts: Financial derivative contracts with positive fair values are presented in this item. It includes both independent contracts as well as derivatives that should and can be separated from a host contract, whether they are for trading or hedging, as shown in Note 7 to the Consolidated Interim Financial Statements.

Trading derivatives: Includes the fair value of derivatives which do not qualify for hedge accounting, including embedded derivatives separated from hybrid financial instruments.

	BANCO SANTANDER CHILE AND SUBSIDIARIES
	NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
	As of September 30, 2012 and 2011 and December 31, 2011

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES, continued:

Hedging derivatives: Includes the fair value of derivatives designated as hedging instruments in hedge accounting, including the embedded derivatives separated from the hybrid financial instruments designated as hedging instruments in hedge accounting.

Interbank loans: This item includes the balances of transactions with domestic and foreign banks, including the Central Bank of Chile, other than those reflected in the preceding items.

Loans and accounts receivables from customers: These loans are non-derivative financial assets for which fixed or determined amounts are charged, that are not listed on an active market and which the Bank does not intend to sell immediately or in the short term. When the Bank is the lessor in a lease, and it substantially transfers the risks and benefits incidental to the leased asset, the transaction is presented in loans and accounts receivable from customers.

Investment instruments: These are classified into two categories; held-to-maturity investments, and available-for-sale investments. The held-to-maturity investment category includes only those instruments for which the Bank has the ability and intent to hold them until their maturity. The remaining investments are treated as available for sale.

iv.

Classification of financial liabilities for measurement purposes

Financial liabilities are initially classified into the various categories used for management and measurement purposes.

Financial liabilities held for trading (at fair value through profit or loss): financial liabilities issued to generate a short-term profit from fluctuations in their prices, financial derivatives not deemed to qualify for hedge accounting and financial liabilities arising from firm commitment of financial assets purchased under repurchase agreements or borrowed (“short positions”).

Financial liabilities at amortized cost: financial liabilities, regardless of their type and maturity, not included in any of the aforementioned categories which arise from the borrowing activities of financial institutions.

Classification of financial liabilities for presentation purposes

Financial liabilities are classified by their nature into the following line items in the Consolidated Interim financial statements:

Deposits and other demand liabilities this item includes all on-demand obligations except for term savings accounts, which are not considered on-demand instruments in view of their special characteristics. Obligations whose payment may be required during the period are deemed to be on-demand obligations. Operations which become callable the day after the closing date are not treated as on-demand obligations.

Cash items in process of being cleared: This item includes the balances of asset purchases that are not settled on the same day and for sales of foreign currencies not delivered.

Obligations under repurchase agreements: This item includes the balances of sales of financial instruments under securities repurchase and loan agreements. Pursuant to the current regulations, the Bank does not record instruments acquired under repurchase agreements as its own portfolio.

Time deposits and other demand liabilities: This item shows the balances