2008 ANNUAL REPORT “I HAVE BEEN A LOYAL CUSTOMER FOR OVER 40 YEARS” “TODAY OUR CLINIC GROWS WITH THE SUPPORT OF A “WITH CORPBANCA’S SUPPORT WE BANK THAT WILL BE ABLE TO ACTIVELY TRUSTS ITS PARTICIPATE IN OUR COUNTRY’S CUSTOMERS” DEVELOPMENT” “A RELATIONSHIP BUILT ON TRUST WILL ACHIEVE SUCCESS” “CORPBANCA HAS BEEN A GUIDING FORCE BEHIND MY COMPANY’S DEVELOPMENT” “THE CONTINUED SUPPORT OF THE BANK HAS PERMITTED US TO MOVE FORWARD WITH MAJOR COMMITMENTS IN CHILE “WITH CORPBANCA’S AND ABROAD” CONTINUED SUPPORT WE HAVE OPENED NEW PATHS GOING FORWARD” “I CAN NOW PROUDLY CALL MYSELF A HOMEOWNER” 2008 ANNUAL REPORT INDEX 6 LETTER FROM THE CHAIRMAN 10 HISTORY 14 2008 HIGHLIGHTS 18 COMPANY VALUES 20 COMMITMENTS 22 CORPORATE SOCIAL RESPONSIBILITY 26 PLAN FOR A HEALTHY LIFE 28 COMMUNICATIONS STRATEGY 30 FLIGHT TO 2011 QUALITY TALENT CULTURE 32 COMPANY INFORMATION 34 BOARD OF DIRECTORS 36 SHAREHOLDERS 38 CORPORATE GOVERNANCE 68 RISK MANAGEMENT DIRECTORS COMMITTEE COMPANIES CREDIT RISK AUDIT COMMITTEE COMMERCIAL RISK ANTI-MONEY LAUNDERING AND ANTI- FINANCIAL RISK TERRORISM FINANCE PREVENTION COMMITTEE OPERATIONAL RISK COMPLIANCE COMMITTEE COMPTROLLER 76 DISTRIBUTION OF EARNINGS AND DIVIDEND POLICY OFFICE OF THE COMPTROLLER CODE OF CONDUCT AND MARKET INFORMATION MANUAL 78 INVESTMENT AND FINANCING POLICIES 82 NEW YORK BRANCH AND INTERNATIONAL CONDITIONS 42 MANAGEMENT MANAGEMENT STRUCTURE AND 86 PRINCIPAL ASSETS PERSONNEL COMPENSATION 92 RELATED COMPANIES 46 FINANCIAL SUMMARY CORPCAPITAL CORREDORES DE BOLSA S.A. CORPBANCA CORREDORES DE SEGUROS S.A. 48 ECONOMIC CONDITIONS CORPCAPITAL ADMINISTRADORA GENERAL DE FONDOS S.A. CORPCAPITAL ASESORÍAS FINANCIERAS S.A. 50 RECENT DEVELOPMENTS IN THE BANKING INDUSTRY CORPLEGAL S.A. 56 FINANCIAL SERVICES 96 SHARE TRANSACTIONS 58 BUSINESS STRATEGY 100 MATERIAL FACTS 62 MANAGEMENT’S DISCUSSION AND ANALYSIS 102 AUDITOR´S REPORT BUSINESS LINE RESULTS FINANCIAL RESULTS 104 FINANCIAL STATEMENTS SOLVENCY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 140 STATEMENT OF RESPONSIBILITY CorpBanca 2008 Annual Report CORPBANCA CONTINUED TO MAKE A PROGRESS TOWARD ITS GOAL OF POSITIONING ITSELF AS A 6 LEADER IN THE CHILEAN BANKING INDUSTRY, DEFINING SERVICE QUALITY AS A FUNDAMENTAL FEATURE IN OUR DIFFERENTIATION STRATEGY. LETTER FROM THE CHAIRMAN DEAR SHAREHOLDERS In 2008, Corpbanca continued to make progress toward benefits such as discounts on gas purchases and the its goal of positioning itself as a leader in the Chilean opportunity to pay with our credit cards in up to 24 non- banking industry. We have developed a series of strategic interest bearing instalments. We led the mortgage market initiatives for the coming years while maintaining a in innovation by introducing “7 Day Mortgages”, allowing strong interest in matters beyond banking. The Bank’s clients to process mortgage loans within 7 days and, in the figures continue to reflect activity levels and results that second half of 2008, giving clients the option to “freeze” keep us at the top of the industry. their dividends in pesos to decrease the risk of inflation that at that point was growing at extraordinary rates. In terms of initiatives, in 2008 we defined service quality as a fundamental feature in our differentiation strategy by Another initiative, in line with our goal of becoming a launching the Commitment Campaign. This campaign first-rate bank in the retail market, entailed the re-launching consists of eight product-related commitments to our clients of SME Banking in the second half of the year, leading regarding standards of service. In the event of our failure to us to, among other things, receive awards for “Business deliver on these promises, we are required to compensate Management” and “Operating Growth” from FOGAPE our clients. One of these commitments provides mortgage (Government SME Guaranty Program). refinancing support for those who lose their jobs. The campaign, initially launched only in Retail Banking, will be Our efforts have not been any less in wholesale banking. expanded and enhanced year after year. In this way, we hope to We have shown consistent progress in providing “cash make tangible our commitment to and passion for our clients. management” services to our clients. Also, our Wholesale Banking Division has participated in important financing Also, in Retail Banking we continued our policy of offering operations in key industry sectors such as electricity, ports, first-class differentiated products. We have maintained utilities, and others. The Real Estate Banking Division Letter from the Chairman 7 “wE wANT TO MAkE OuR COMMITMENT AND PASSION TANgIbLE FOR OuR CusTOMERs” Carlos Abumohor Touma Chairman has maintained its market leadership, while the Treasury Santiago Film Festival (SANFIC) for the third consecutive Division has developed successful derivative products, year and the Outdoor Film Festival in Araucano Park for expanding its range of products and allowing our customers the second time. CorpBanca also provided support for the to reduce their exchange rate and interest rate risks. Catholic University’s program, “La Cuidad y Las Palabras”, an event we plan to sponsor again in 2009. Special mention goes to the authorization we received from the Office for the Comptroller of Currency (OCC) We have been very clear in our commitment to protect the and the Federal Reserve Bank of New York to open environment and, in this regard, the Bank is the first to a branch in New York City. The fact that approval take the initiative in the industry. While in 2007 we were was granted at the height of the global financial crisis the first Chilean bank to adopt the Equator Principles, demonstrates the confidence U.S. authorities place in becoming part of an international group of Banks that CorpBanca’s solvency and management. defined common guidelines for preventing social and environmental risk, this year we won the Energy Efficiency As the Bank’s growth rendered its capital insufficient, it Award, given by the Production and Trade Confederation successfully completed an offer of subordinated bonds offer to recognize companies for their concern and concrete for 3 million UF. However, we still have an important efforts in this area. margin for issuing subordinated bonds since our degree of utilization is much lower than that of our competition. A quantitative assessment of our performance reveals that the Bank’s loan portfolio helped us attain 7,04% market share, However, the Bank’s initiatives have transcended even which exceeds 2007 figures by 17 basis points. Current beyond the scope of business. On the cultural aspect, the account deposits grew 17.2% during the year, placing us core of our corporate social responsibility, we sponsored the among the 3 fastest growing banks. CorpBanca 2008 Annual Report 8 “In 2008, we defined service quality as a fundamental feature in our differentiation strategy.” Earnings reached Ch$56,310 million, 1.3% higher than in We have also enhanced corporate governance, essential in 2007, and return on equity increased from 11.8% to 12.4%. any organization for optimal performance and to protect the With these results, the Bank continues to stand out in interests of minority Shareholders, by doing the following: efficiency, with an cost to income ratio of 48.3% for the year, securing active participation from the Directors Committee, giving the Bank a 2nd place ranking within the system. Audit Committee and Anti-Money Laundering Committee; improving the Code of Conduct and creating a Market It is important to highlight the notable advances in Information Manual. workplace life quality that we take pride in. Through joint efforts across diverse areas, led by our Human Resources Our associates were a key factor in our progress during the Division, we have carried out numerous social, sporting, year and we could not have done it without such a strong recreational, family, and cultural events for our associates and commitment from them. To each and every one of them, I their families, demonstrating that our commitment extends offer our sincerest gratitude. beyond the Bank’s daily operations. CARLOS ABUMOHOR TOUMA Chairman 01 “In the event of unjustified charges, we will return twice the amount charged” If we charge unjustified commission or interest to your current account or credit card, we will return twice the amount charged (up to a limit of Ch$100,000). PASSION FOR OUR CUSTOMERS LED US TO CREATE CORPBANCA COMMITMENTS CorpBanca 2008 Annual Report THE BANK, ESTABLISHED IN 1871 AS BANCO DE CONCEPCIÓN, WAS A PIONEER IN A FINANCIAL 10 SYSTEM THAT WAS NOT YET FULLY DEFINED. FINALLY IN 1997, THE BANK CHANGED ITS NAME TO CORPBANCA, A BANK WICH TODAY PREPARES TO LAUNCH OPERATIONS ABROAD. HISTORY HISTORY The Bank’s history dates back to the second half of the Interestingly enough, in 1871 regulators gave the Bank nineteenth century, also the beginning of the Chilean authorization to issue its own bills. financial system, with the creation of Banco de Concepción by a group of prominent individuals that included the Mayor Banco de Concepción granted its first loans to mining of Concepción and future President of Chile, Mr. Aníbal and textile companies, municipal public works, urban Pinto Garmendia. The Bank began operating on October 6, railways and the fire department. Towards the end of the 1871 and has continued uninterrupted since then, making nineteenth century, more than thirty years since its founding, CorpBanca Chile’s oldest currently operating private bank. with contributions from no more than a small group of neighbours, Banco de Concepción remained faithful to one We are proud to say that since its inception the Bank has been of its founding principles: to form a regional bank that both a witness to the evolution of Chilean financial history and provided loans to industry, commerce, agriculture and an active participant in the country’s economic development, other activities within the surrounding area, so that these beginning as an exclusively regional entity and over time businesses did not have to depend exclusively on banks from becoming a major figure in the national banking market.