Banco De Chile's Stock, After the Bank's Bear in Mind the Important Structural Aspects for the Countercyclical Buffer, Among Others

2019 Annual Report Financial - Sustainability Committed to Chile WorldReginfo - 9d1ee4d3-a00b-42e6-b5dc-03f571951aef 3 4 5 6 Customers Employees Environment Community Customer-Centricity 76 Management Strategy 98 Corporate Eco-efficiency 124 Evaluations 136 Retail Market 77 Employee Health Climate Strategy 131 Inclusion of People Wholesale Market 80 and Safety 117 with Disabilities 139 Treasury 82 Labor Relations 121 Entrepreneurship and Education 142 Subsidiaries 83 Strategic Partnerships 144 Quality Services 85 Corporate Volunteering 146 Cybersecurity and Protecting Information 87 Programs that Contribute to the Community 148 Transparent Customer Communications and Information 87 Sustainable Finance 88 1 7 8 9 Consolidated Financial About this Report / GRI Suppliers Statements Content Index Relationship with Suppliers 150 Independent Auditors' About this Report 318 Selection and Report 155 GRI and Global Compact Evaluation Processes 151 Consolidated Statements of Content Index 323 Financial Position 156 Consolidated Statements of Income 158 Consolidated Statements of Other Comprehensive Income 159 Consolidated Statements of Changes in Equity 160 Consolidated Statements of Cash Flows 162 Notes 164 Contents WorldReginfo - 9d1ee4d3-a00b-42e6-b5dc-03f571951aef Letter from the Chairman Dear Shareholders: I am proud to present our annual report and 27% to 44% and boosted the bank's weight in the more present than ever in current discussions of financial statements for 2019. This year Banco main benchmark indexes, thus further increasing political, social and economic transformations de Chile once again reported strong earnings and its visibility and liquidity in Chile and abroad. for our country. made significant strides in numerous areas. We are certainly pleased with our results, especially The year 2019 ended in stark contrast as a series Special attention must be paid to the announced considering the particularly challenging year of social protests, accompanied by damage to rise in fiscal spending since it will boost debt we had in 2019 because of both external and public and private infrastructure, interrupted to around 40% of GDP in upcoming years, internal factors. the country’s normal functioning. In just a few far above the 5% observed in 2007. The new months, the country's growth expectations for social agenda involves a series of permanent 2 From a financial perspective, the bank achieved this two-year period fell around a point and a expenditures that need to be financed with net income of Ch$ 593 billion, equivalent to a half per year, equivalent to a loss in production structural revenue. Evidence categorically shows return on average capital of 18%, well above the of practically US$9.0 billion, which is not a trivial that economic growth is the main source of fiscal local industry average of 12.8%. These figures are sum. This shift occurred in a context of growing revenue. Without investment and growth, we the result of our consistent, long-term strategy. I external risk and uncertainty, marked by emerging cannot aspire to a more ambitious social agenda. firmly believe that responsible, cautious growth trade tensions in several parts of the world, which Therefore, the foundations of our economy is one of the main foundations of the bank’s affected global growth and commodity prices. must be safeguarded. Not only is growth for future sustainability. There is no doubt that conditions like these the year at stake, but the wellbeing of current reduce the external momentum that reaches and future generations. In 2019, SAOS S.A., a subsidiary of SM-Chile our economy. S.A., completely repaid the subordinated debt In 2019, the country took a very important step it had with the Chilean Central Bank, marking Should the current growth forecasts of around by making substantial changes to the General an important development for the corporation. 1% for 2019 and 2020 materialize, GDP per capita Banking Law, converging towards more modern This obligation was extinguished 17 years would remain practically stagnant, a situation regulation that is more consistent with leading before originally scheduled, thanks to the bank’s that obviously concerns us. In response, we economies and global best practices. However, solid, consistent results. In addition to leaving must redouble efforts to resume growth, with as I have mentioned before, implementation of behind the last vestige of the worst financial active participation and contribution from all Basel III must consider the local reality, especially crisis in Chile's history, this milestone led to members of society. In addition to moving for aspects that have not yet been defined, such an important increase in the market presence forward to rebuild infrastructure, we must as risk weighting of assets and determining factors of Banco de Chile's stock, after the bank's bear in mind the important structural aspects for the countercyclical buffer, among others. securities were distributed to shareholders of that have set Chile apart, such as legal certainty When modifying regulations, it is very important SM-Chile S.A., which expanded its free float from and strong institutions, elements that should be to avoid undesired effects that unintentionally 2019 Annual Report WorldReginfo - 9d1ee4d3-a00b-42e6-b5dc-03f571951aef affect the wellbeing of people. We have the including financial support, assistance from our opportunity to learn from prior experiences, corporate volunteer program and donations in such as amendments to the Maximum Interest conjunction with Desafío Levantemos Chile, Rate or the elimination of negative information reaffirming our commitment to entrepreneurship. on customers, which were partly responsible More details on these and other actions are for a drop in bank penetration rates and the presented in this Annual Report which, for the proliferation of informal loans. This situation first time, combines our economic results and our has been exacerbated by the absence of a non-financial performance into one document. consolidated debt system. I would like to close by thanking the more than 3 Without a doubt, changes in the economy will 13 thousand employees of Banco de Chile, place pressure on the capacity to generate results who, in an especially challenging and complex in the future. However, I am firmly convinced year, were always committed to do their best. that the bank’s sound fundamentals, its long- They, and everyone that has worked for the term strategy and the ongoing transformation bank throughout its 125 years of history, have of our customer service models and processes played a key role in building this institution that towards an increasingly digital bank, give us the has accompanied Chile as it developed. Lastly, foundations necessary to successfully face the I would like to thank the shareholders for the changes in the business environment. I deeply confidence they have placed in the Board that believe that we have the conditions to continue I so proudly chair. to be a model for the local industry. In addition, we have further strengthened our foundations of sustainability through a series of environmental, social and governance initiatives. This year we took important steps, including PABLO GRANIFO LAVÍN issuing the first green bond in foreign markets, Chairman of the Board sending a tangible signal of our commitment Banco de Chile to the environment. In social matters, we implemented a series of measures as part of a National Support Plan for SMEs and Entrepreneurs, Letter from the Chairman WorldReginfo - 9d1ee4d3-a00b-42e6-b5dc-03f571951aef A Word from Our CEO Dear Shareholders: I am pleased to present Banco de Chile's annual increasingly dynamic, demanding and competitive report and financial statements for the third year in context, while maintaining the corporation's a row. This document highlights the corporation's status as a model for the Chilean and regional commitment to making a significant contribution banking industries. to the development of Chile and its people, through sustainable corporate management. In One of the major challenges we took on in 2019 we led the industry in several areas, despite 2019 was the digital transformation and its the complex, uncertain political, economic and contribution to the bank’s operations. We have social environment during the last quarter. made progress on a new customer service model that aims to add value for our customers. This Based on international standards from the process involves integrating some branches in Global Reporting Initiative (GRI), this report order to maximize efficiency, improving how 4 concentrates our main strategic and financial we serve customers, broadening offerings and 102-14 achievements during the year and, for the first facilitating access to a healthy mix of products time, provides a comprehensive outlook for based on the specific needs of our customers. our corporation, including both financial and non-financial variables. As a benchmark, we In this spirit, motivated by the desire to make used the assessment performed by Dow Jones important contributions in areas beyond banking, Sustainability Index Chile (DJSI), which enables this year we promoted a series of initiatives us to understand and meet the expectations that reinforce the foundations of the bank's of the capital market and society. This report sustainable development and bring to life our also represents our third Communication of Commitment to Chile. Progress (CoP) and highlights our achievements in

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