UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 20-F

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from            to            

Commission file number 001-15266

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Shares of common stock: 101,017,081,114

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☒ Yes ☐ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒ No

Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes ☐ No

TABLE OF CONTENTS

SUMMARY OF RISK FACTORS

An investment in our ADSs is subject to a number of risks, including risks relating to the nature of our business as a financial institution in Chile. The following list summarizes some, but not all, of these risks. Please read the information in the section entitled “Risk Factors” for a more thorough description of these and other risks.

Risks Relating to our Operations and the Chilean Banking Industry

Risks Relating to Chile

Risks Relating to our American Depositary Shares (“ADSs”)

FORWARD-LOOKING STATEMENTS

This annual report on Form 20-F contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although we have based these forward-looking statements on our expectations and projections about future events, it is possible that actual results may differ materially from our expectations. In many cases, we include a discussion of the factors that are most likely to cause forward-looking statements to differ from actual results together with the forward-looking statements themselves. These statements appear throughout this annual report, including, without limitation, under “Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects.” Examples of such forward-looking statements include:

Words such as “believe,” “anticipate,” “plan,” “aims,” “seeks,” “expect,” “intend,” “target,” “objective,” “estimate,” “project,” “potential,” “predict,” “forecast,” “guideline,” “could,” “may,” “will,” “should” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. These statements may relate to (i) our asset growth and financing plans, (ii) trends affecting our financial condition or results of operations and (iii) the impact of competition and regulations but are not limited to such topics. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those described in such forward-looking statements included in this annual report as a result of various factors (including, without limitation, the actions of competitors, future global economic conditions, market conditions, foreign exchange rates and operating and financial risks), many of which are beyond our control. The occurrence of any such factors not currently expected by us could significantly alter the results set forth in these statements.

Factors that could cause actual results to differ materially and adversely include, but are not limited to:

You should not place undue reliance on forward-looking statements, which speak only as of the date that they were made. This cautionary statement should be considered in connection with any written or oral forward-looking statements that we may issue in the future. We do not undertake any obligation to publicly release any revisions to such forward-looking statements after the filing of this annual report to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

PRESENTATION OF FINANCIAL INFORMATION

We prepare our audited consolidated financial statements in Chilean pesos and in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

Unless otherwise indicated, the financial information included in this annual report with respect to 2022, 2023 and 2024 has been derived from financial statements that have been prepared in accordance with IFRS. See Note 2(a) to our audited consolidated financial statements as of and for the year ended December 31, 2024, included elsewhere in this annual report. IFRS differs in certain significant respects from Chilean Generally Accepted Accounting Principles (the “Chilean GAAP”) as issued by the Comisión para el Mercado Financiero (“Financial Market Commission” or “CMF”). As a result, our financial information presented under IFRS is not directly comparable to any of our financial information presented under Chilean GAAP. Accordingly, readers should avoid such comparison.

In this annual report, references to “$,” “U.S.$,” “U.S. dollars” and “dollars” are to United States dollars, references to “pesos” or “Ch$” are to Chilean pesos (see Note 2(f) to our audited consolidated financial statements as of and for the year ended December 31, 2024, included elsewhere in this annual report), and references to “UF” are to “Unidades de Fomento.” The UF is an inflation indexed Chilean monetary unit of account with a value in Chilean pesos that is linked to and adjusted daily to reflect changes in the Consumer Price Index (“CPI”) of the Instituto Nacional de Estadísticas (the “Chilean National Statistics Institute”). As of December 31, 2024, and April 17, 2025, one UF equaled Ch$38,416.69 and Ch$38,991.04, respectively.

This annual report contains translations of certain Chilean peso amounts into U.S. dollars at specified rates. These translations should not be construed as representations that the Chilean peso amounts actually represent such U.S. dollar amounts, were converted from U.S. dollars at the rate indicated in our audited consolidated financial statements as of and for the year ended December 31, 2024, or could be converted into U.S. dollars at the rate indicated. Banco de Chile utilizes the exchange rate of accounting representation, or spot exchange rate, for such matters. Thus, unless otherwise indicated, the U.S. dollar amounts have been translated from Chilean pesos based on the exchange rate of accounting representation as of December 31, 2024 (last trading date), as determined by our Treasury on a daily basis, based on the average of the daily closing bid and offer rates reported by Bloomberg for the Santiago Stock Exchange. As of December 31, 2024 and April 17, 2025, the exchange rates of accounting representation were Ch$994.74 = U.S.$1.00 and Ch$966.44= U.S.$1.00, respectively. As of the same dates, the observed exchange rates, as published by Banco Central de Chile (the “Central Bank”), were Ch$992.12 = U.S.$1.00 and Ch$969.23= U.S.$1.00, respectively.

The Federal Reserve Bank of New York does not report a noon buying rate for Chilean pesos.

Unless otherwise specified, all references in this annual report to total loans are to loans to customers before deducting allowances for loan losses, and they do not include loans to banks or contingent loans. In addition, all market share data and financial indicators for the Chilean banking system as compared to Banco de Chile’s financial information presented in this annual report are based on information published periodically by the CMF which is published under Chilean GAAP and prepared on a consolidated basis, unless otherwise indicated. For more information see “Item 4. Information on the Company—Business Overview—Competition.”

In this annual report, “past-due loans” are any loans for which the counterparty has failed to make a payment when contractually due, including installments that are overdue, plus the remaining balance of principal and interest on such loans. In order to distinguish between different overdue time periods, the corresponding time period is included after the term “Past-due Loans” (for example, “Past-due Loans—90 days or more”). For more information, please see “Item 4. Information on the Company—Selected Statistical Information—Analysis of Substandard and Past-Due Loans.”

According to Chilean regulations, as of the filing date and for the purposes of this annual report, regulatory capital (“Total Capital” or “Regulatory Capital”) consists of:

These definitions for Total Capital or Regulatory Capital took effect on December 1, 2021. For more information, see “Item 3. Key Information—Risk Factors—Risks Relating to our Operations and the Chilean Banking Industry— Stricter banking regulations and changes in law may constrain our operations and thereby adversely affect our financial condition and results” and “Item 4. Information on the Company—Regulation and Supervision—Modifications to the General Banking Act.”

Certain figures included in this annual report and in our audited consolidated financial statements as of and for the year ended December 31, 2024, have been rounded for ease of presentation. Percentage figures included in this annual report have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this annual report may vary slightly from those obtained by performing the same calculations using the figures in our audited consolidated financial statements as of and for the year ended December 31, 2024. Certain other amounts that appear in this annual report may similarly not sum due to rounding.

Inflation figures are those reported by the Chilean National Statistics Institute, unless otherwise stated herein or required by the context.

MACRO-ECONOMIC AND MARKET DATA

In this annual report, most of macro-economic data relating to the Chilean economy is based on information published by the Central Bank, except for inflation statistics that are based on data published by the Chilean National Institute of Statistics. Most of market share data, financial indicators and other data relating to the Chilean financial system are based on information published periodically by the CMF, which is published under Chilean GAAP and prepared on a consolidated basis. Information regarding the mutual funds industry is based on statistics published by the National Association of Mutual Funds.

MANAGEMENT INFORMATION SYSTEM

Banco de Chile records information associated with the normal course of the business in order to measure performance and carry out business analysis, among other activities. This information includes the number and the amount of transactions executed through diverse commercial platforms by the Bank or its customers or counterparties, as well as financial information that consists of non-GAAP metrics related to the bank’s or business segment’s performance. All this information is referred as “Bank’s Management Information System” throughout the document.

Part I

Item 1 Identity of Directors, Senior Management and Advisers

Not Applicable.

Item 2 Offer Statistics and Expected Timetable

Not Applicable.

Item 3 Key Information

RISK FACTORS

The risks and uncertainties described below are not the only ones that we face. Additional risks and uncertainties that we do not know about or that we currently think are immaterial may also impair our business operations in the future. Any of the following risks, if they actually occur, could materially and adversely affect our business, results of operations, prospects and financial condition.

We are also subject to market risks that are presented both in this subsection and in Note 44 to our audited consolidated financial statements as of and for the year ended December 31, 2024, included elsewhere in this annual report.

Risks Relating to our Operations and the Chilean Banking Industry

The growth of our loan portfolio in riskier segments may expose us to increased loan losses.

During the last five years, our total loan portfolio has grown at a compounded average growth rate (“CAGR”) of 5.3% per year. This expansion has been composed of CAGR of 7.5% in residential mortgage loans, 4.3% in commercial loans, and 4.2% in consumer loans, all in nominal terms. Over this period, nominal average growth in residential mortgage loans has clearly decoupled from macroeconomic fundamentals, being driven by a demand that has grown steadily on the grounds of recent demographic trends in Chile, yet at a slower pace than in the past due to the increase in long-term interest rates and inflation that remained above the two-year target inflation range set by the Chilean Central Bank for most of the period. On the other hand, nominal average expansion in commercial loans has steadily decelerated over the last five years, particularly due to weakened demand from the wholesale banking segment, firstly, due to the economic consequences of the COVID-19 pandemic on the overall economic activity and, later on, due to the political and economic uncertainty experienced in Chile over the last five years as a result of diverse factors, including: (i) two consecutive failed attempts to change the constitution, (ii) the government’s intention to introduce reforms in key economic sectors, such as pension funds, the healthcare system and the tax system, and (iii) economic perspectives revised downwards in the long-term as reflected by a decrease in the potential growth of the economy. These drivers have also adversely affected the expansion of commercial loans granted to small and medium enterprises (“SMEs”), although the launch of successive state-guaranteed loan programs by the government has partially mitigated the impact. Nevertheless, given the prevailing economic outlook, loans to SMEs have slowed down significantly since 2022, as evidenced by nominal annual expansions of 1.8% and 2.6% in 2023 and 2024, respectively, both below inflation rates for those periods. In the case of consumer loans, this lending product began to show positive growth once the liquidity surplus generated by financial support deployed by the Chilean government and congress during the pandemic seemed to decrease in 2021, effect that coupled with our efforts to improve value offerings for targeted segments. Accordingly, the demand for consumer loans reactivated, which resulted in loan growth of 17.6% in 2022, when we recovered pre-pandemic levels of consumer loan balances in nominal terms. However, in 2023 and 2024 our consumer loans evidenced a slowdown by growing 6.3% and 4.6%, respectively, on an annual basis. These trends in consumer loans have resulted from the combination of a deceleration in installment loans and increased balances of loans related to credit cards, although the latter also evidenced a deceleration in 2024 on the grounds of overall economic activity. In this regard, the slowdown in consumer loans has been linked to the evolution of the economic situation, characterized by moderate GDP growth, higher-than-normal interest rates and unemployment rate above medium-term figures. For the year ended December 31, 2024, our loan portfolio was Ch$38,936,296 million, which represented a 3.4% annual increase as compared to the Ch$37,651,274 million we recorded as of December 31, 2023. Instead, our allowances for loans losses decreased 2.4% on an annual basis from Ch$710,187 million in 2023 to Ch$693,434 million in 2024. In 2024, we recorded an increase in provisions for expected credit losses from Ch$322,099 million in 2023 to Ch$420,651 million in 2024. This increase aligns with past-due loan ratios that have remained above historical average levels for longer than expected, as well as macroeconomic factors such as inflation and interest rates, which are expected to remain volatile over the next twelve months. These factors have a direct effect on forward-looking provisioning models. This phenomenon has affected the entire banking industry, impacting both the retail and the wholesale banking segments due to the deterioration of credit quality in specific customers clusters. In the wholesale banking segment, certain industries have experienced financial difficulties associated with specific business dynamics, including the real estate and construction sector, the transport industry, and the health services sector. These challenges have been driven by various economic factors such as increased borrowing costs, subdued economic growth, and uncertainties regarding the potential outcome of certain economic reforms. In the retail banking segment, unemployment rates have remained above pre-pandemic levels, while short-term interest rates and inflation have reduced the payment capacity of individual customers. Nevertheless, in 2024 we incurred charge-offs amounting to Ch$445,198 million, which were slightly above the Ch$434,427 million incurred in 2023. All these factors contributed to the decline in credit risk allowances that, in turn, resulted in a decrease in our risk-index ratio (allowances for loan losses to total loans) from 1.89% in 2023 to 1.78% in 2024.

We recognize that the expansion experienced by our retail banking segment over the last years may expose us to higher levels of charge-offs and may require us to establish higher levels of allowances for loan losses in the future. This is because the average retail customer is riskier than the wholesale banking counterparties, since they are more exposed to the economic cycle than wholesale customers as evidenced during former economic and financial crises. For example, individuals are impacted by economic factors such as unemployment and SMEs are impacted by economic conditions affecting domestic demand. For this reason, we are constantly striving to develop and utilize improved scoring and approval models, while strengthening our collection procedures in order to mitigate the risks associated with this business growth.

Our loan portfolio may not continue to grow at the same or similar rates as it has in the past.

Our results of operations depend on our ability to grow our loan portfolio in a credit-sustainable way. For the past decade, loan growth has been less stable by reflecting increased volatility in the Chilean economy and diverse reforms on general matters, including both banking and non-banking rules. Since the banking business is highly correlated with the economic cycle, the evolution of both the Chilean and global economy impact the growth of the local industry’s loan portfolio and ours.

In 2022, the industry’s loan portfolio grew 10.1% in nominal terms, which represented an annual real contraction of 2.8% when adjusted for inflation, due to: (i) a real contraction of 5.7% in commercial loans, in line with the deceleration evidenced in private investment (gross fixed capital formation), (ii) a steady slowdown in residential mortgage loans that grew 0.9% in real terms in 2022, because of higher long-term interest rates, inflation expectations that remained above the Central Bank’s target range and stricter credit requirements, and (iii) consumer loans that increased only 0.4%, in real terms, due to lower demand caused by the monetary policy tightening deployed by the Chilean Central Bank, which raised the monetary policy interest rate from 4.00% in December 2021 to 11.25% in December 2022, together with prudent credit risk practices undertaken by banks. In a similar fashion, our loan portfolio declined 5.4% in real terms in 2022, which was composed of real contractions of 8.9% and 2.6% in commercial and residential mortgage loans, respectively, and real growth of 3.7% in consumer loans.

In 2023, lending activity continued to decelerate, as demonstrated by a nominal annual growth of only 3.2% in the industry’s loan portfolio, which translated into a 1.5% real contraction that was well aligned with the slowdown evidenced by the Chilean economy that recorded a GDP expansion of 0.5%. This performance was the result of: (i) a 3.7% real contraction in commercial loans, primarily explained by a decline of 0.1% in private investment that was in turn driven by uncertainties associated with two consecutive constitutional processes carried out in 2022 and 2023, reforms sponsored by the government aimed at introducing material changes to crucial economic areas and lengthy approval processes for large-scale investment projects, (ii) a real annual decline of 2.3% in consumer loans, primarily associated with the 4.9% decrease in household consumption due to a longer-than-expected monetary contractionary policy that resulted in a reference interest rate that remained at 11.25% until July 2023, which translated into increased borrowing costs, and the adverse impact of economic slowdown on the labor market, leading to an increase on the average unemployment rate that went from 7.9% in 2022 to 8.7% in 2023. These trends were offset by a 2.4% real expansion in the residential mortgage loan portfolio managed by the industry, which has continued to grow steadily, though at a slower pace than in the past, given the prevailing scenario of long-term term interest rates that continue to be above the levels seen in the past decade. Within this scenario, our loan portfolio grew 2.5% in 2023 in nominal terms, which means a 2.2% annual contraction when adjusting for inflation. This slowdown was primarily attributable to a nominal annual decrease of 1.4% in commercial loans, or 5.9% contraction in real terms, which was mainly concentrated in lower demand from the wholesale banking segment and moderate growth among SMEs, due to the factors mentioned above. On personal banking, instead, our residential mortgage loans grew 7.8% and our consumer loans increased 6.3%, both in nominal terms, evidencing slight real growth when adjusting by inflation. Whereas residential mortgage loans continued to be decoupled from the overall economic environment due to the dynamics in the housing market, the increase in consumer loans was principally driven by higher growth in credit card related loans, due to both lower liquidity among individuals and enhanced commercial strategies we implemented throughout the year in order to promote the use of credit cards among targeted segments. Within this scenario, our loan portfolio grew 2.5% in 2023 in nominal terms, which resulted in a 2.2% real annual contraction that was the consequence of a nominal annual decrease of 1.4% in commercial loans (5.9% contraction in real terms), which was mainly concentrated in lower demand from the wholesale banking segment, residential mortgage loans that grew 7.8% and consumer loans that increased 6.3%, both in nominal terms, evidencing slight real growth.

During 2024, the loan book of the industry grew 4.0% in nominal terms, which denotes a real annual contraction of 0.4%, once adjusted for inflation. This figure reflects the impact of subdued economic activity that resulted in GDP growth of 2.6% in 2024, which is slightly above the economy´s growth potential, characterized by reduced private investment and moderate household consumption. The evolution of the industry’s loan portfolio was primarily conducted by the trend followed by commercial loans, which recorded a real annual contraction for third year in a row by decreasing 1.9% on an annual basis (2.4% nominal growth) that was principally caused by: (i) an annual contraction of 1.4% in private investment that was the consequence of diverse factors including the business sentiment that remained weak on the grounds of uncertainty regarding the economic and political outlook, and (ii) credit granting conditions that remained tightened during the year, particularly for companies belonging to certain industries, such as real estate, construction and health services. The change in commercial loans was to some extent offset by bounded real annual expansions of 1.7% in residential mortgage loans (6.2% in nominal terms) and 0.2% in consumer loans (4.6% in nominal terms). The drivers conducting growth in residential mortgage loans continued to be associated with demand for housing prompted by recent demographic trends linked to immigration. The prevailing financial scenario, characterized by both long-term interest rates that remain above the average seen in the 2010 decade and an inflation rate that continued to hover above the target range set by the Central Bank, has contributed to slow down loan growth in this lending product. In the case of consumer loans, the subdued annual expansion was the reflection of a moderate 1.0% increase in household consumption, marked by borrowing costs that remained higher than in the past due to a monetary policy interest rate that stayed above neutral levels, and strict credit granting conditions in a context of increased delinquency and higher unemployment rate. In line with the above, our loan portfolio recorded a nominal annual expansion of 3.4%, which represents a 1.0% real contraction when adjusting for inflation. Similar to the performance observed in 2023, the behavior of our loan book in 2024 was primarily caused by a real annual contraction of 3.7% in commercial loans (0.6% increase in nominal terms), associated with the aforementioned drivers affecting the whole banking industry, particularly the evolution of lending activity in our wholesale banking segment, which evidenced a flat trend in loans. This was partially offset by moderate nominal annual expansion in commercial loans granted to the SME subsegment, which managed to overcome the scheduled amortization of guarantee funds for small and medium-sized entrepreneurs (“FOGAPE”) loans granted over the last three years. Personal banking continued to be the main source of loan growth for us in 2024, as evidenced by residential mortgage loans and consumer loans that grew 2.9% and 0.2% in real terms (4.6% and 7.5% in nominal terms), respectively. As mentioned earlier, over the last years, we have reinforced our business intelligence skills as we seek profitable growth in personal banking loans by targeting specific customer clusters of higher income segments through enhanced value offerings.

Going forward, several factors could adversely affect the growth rate of the industry and, therefore, the expansion of our loan portfolio. This includes, but is not limited to: (i) a slowdown or negative GDP growth in the Chilean economy, (ii) deceleration or contraction in household consumption or private investment spending, (iii) changes in banking customers’ payment behavior, (iv) changes in banking regulation, (v) deterioration of consumer confidence and business sentiment as a consequence of increased uncertainty regarding the economic activity or the social and political environments, (vi) economic reforms to be introduced by the current administration, including the pension, tax and healthcare systems, among others, (vii) increasing barriers or failures to streamline current approval processes for high-impact investment projects, (viii) any new attempt to change core constitutional principles, and (ix) any effect related to social trends, social unrest, pandemics or any event affecting the growth potential of the Chilean economy. Similarly, this could affect our credit quality indicators causing us to establish higher allowances for loan losses.

For more information, see “Item 4. Information on the Company—Regulation and Supervision” and “Item 4. Information on the Company—Selected Statistical Information.”

Stricter banking regulations and changes in law may constrain our operations and thereby adversely affect our financial condition and results of operations.

The CMF is the entity that oversees and regulates the Chilean financial market, which is comprised of publicly traded companies, insurance companies, insurance brokers, mutual funds, fintech companies and investment funds as well as the Chilean banking industry as a whole and some non-bank lenders. In addition to being subject to regulation by the CMF, in certain matters, we are also subject to regulations issued by the Central Bank. See “Item 4. Information on the Company—Regulation and Supervision.”

Pursuant to the Ley General de Bancos (the “General Banking Act”) all Chilean banks may, subject to the approval of the CMF, engage in certain non-banking businesses approved by the law. The CMF’s approval will depend on the risk of the activity and the strength of the bank. Furthermore, the General Banking Act currently imposes on the Chilean banking system the Basel III capital adequacy guidelines issued by the Basel Committee on Banking Regulation and Supervisory Practices (the “Basel Committee”) and limits the discretion of the CMF to deny new banking licenses.

Basel III Implementation

On January 12, 2019, Law No. 21,130 was enacted, addressing four main topics with the aim of modernizing the Chilean banking framework by: (i) adopting the Basel III guidelines, considering a phased-in transition, (ii) introducing changes to the local regulator’s corporate governance by transferring powers formerly vested in the Superintendencia de Bancos e Instituciones Financieras de Chile (the “Superintendency of Banks and Financial Institutions” or “SBIF”) (the former banking supervisor) to the CMF in June 2019, (iii) reforming the resolution regime for Chilean banks in the case of insolvency, and (iv) introducing changes in relation to confidential information of banks’ customers, among others topics. For more information, see “Item 4. Information on the Company—Regulation and Supervision— Modifications to the General Banking Act.”

Regarding capital requirements, since December 1, 2021, new regulatory thresholds have been imposed on local banks, based on the specific regulations issued by the CMF, as follows: (i) CET1 ≥ 4.5% of risk-weighted assets (CET1 ratio); (ii) CET1 ≥ 3.0% of total risk assets (Leverage ratio); (iii) Tier 1 = CET1 + AT1 ≥ 6.0% of risk-weighted assets (Tier 1 ratio); (iv) Tier 1 + Tier 2 ≥ 8.0% of risk-weighted assets (Total Capital ratio); (v) Conservation Buffer = 2.5% of risk-weighted assets; (vi) Countercyclical Buffer of up to 2.5% of risk-weighted assets, if any; (vii) Systemically-Important Banks (“D-SIB”) Buffer (“systemic buffer”) in the range of 1.0% to 3.5% of risk-weighted assets, if any; and (viii) Pillar 2 Buffer of up to 4.0% of risk-weighted assets, if any.

On March 31, 2021, the CMF announced that based on the information provided by local banks for the year ended December 31, 2020, there were six domestic systemically important banks, including us, which would be subject to systemic buffers to be determined by means of the CMF’s methodology. On March 30, 2022, the CMF announced the systemic buffers for the six previously-determined systemically important banks, including a systemic charge equivalent to 1.25% of risk-weighted assets assigned to us, which was set to be gradually introduced over a four-year period starting December 1, 2022, at an annual and cumulative rate of 25% every year, and expected to be completed on December 1, 2025, if unchanged. The 1.25% systemic charge assigned to us was successively reaffirmed by the CMF on March 31, 2023, and on April 1, 2024. On April 1, 2025, the CMF announced the systemic charges for domestic systemically important banks and confirmed the 1.25% systemic requirement on us to be completed on December 1^st, 2025.

In addition, on May 23, 2023, the Chilean Central Bank activated a countercyclical buffer for the local banking system amounting to 0.5% of the banks’ risk-weighted assets, starting May 2024. According to the Central Bank’s Board, the countercyclical buffer was set as a prudential measure in view of the increased uncertainty regarding the likelihood of a severe external shock. In November 2024, the Central Bank maintained the countercyclical buffer unchanged while noticing that it could converge to a neutral level of 1.0% in the medium-term, which is expected to be determined by the Central Bank’s Board in May 2026. If increased, the new capital requirement is expected to become effective in May 2027.

On January 13, 2023, we received communication from CMF stating that, based on the overhaul of our Internal Capital Adequacy Assessment Process for the year ended December 31, 2022, as defined by RAN 21-13, we are subject to a Pillar 2 capital requirement equivalent to 0.5% of our risk-weighted assets, to be completed in a four-year period starting June 30, 2024, at an annual rate of 25%. On January 16, 2025, the CMF informed us that it decided to set the additional Pillar 2 capital requirement at the level of 0.13% of the risk-weighted assets, net of required provisions. This level is equivalent to the Pillar 2 requirement we already fulfilled starting June 2024 and, therefore, represents a reduction from the 0.5% charge previously assigned to us.

On December 12, 2023, the CMF published for public comment a proposal of modifications to RAN 21-13 related to: (i) removing the 15% threshold of the CET1 Capital which currently determines a potential capital requirement for an amount equivalent to the excess of long-term interest rate risk in the banking book (∆EVE) over such threshold, as to allow the CMF to impose capital requirements for the full amount of long-term (∆EVE) and short-term (∆NII) interest rate risk in the banking book together, (ii) clarifying the way by which banks should incorporate Pillar 2 capital requirements when determining their internal capital objectives, and (iii) determining that the Internal Capital Adequacy Assessment Process (“ICAAP”) Report should not exceed 50 pages, among other topics. On October 11, 2024, the CMF published a revised version of modifications to RAN 21-13 for public comment, which incorporated part of the insights received during for the first proposal, while including additional topics in relation to diverse matters associated with the ICAAP. The new proposal included the following modifications, among others: (i) maintained the removal of the 15% threshold of the CET1 to determine additional capital requirements based on ∆EVE metric and the possibility to impose capital requirements for the full amount of interest rate risk in the banking book, (ii) established a revised framework to determine outlier banks by maintaining the 15% threshold of the CET1 Capital based on ∆EVE while adding new thresholds for ∆NII amounting to 5% of CET Capital and 18% of Net Financial Margin, conditions that - if individually met - will determine an outlier bank, (iii) introduced some technical modifications to the standardized model for computing interest rate risk in the banking book (∆EVE and ∆NII) by allowing the netting for some specific currencies while differentiating interest rate shock for short- and long-term risk, (iv) allowed banks to use internal models in order to determine potential internal capital buffers associated with interest rate risk in the banking book, (v) introduced precisions on the framework the banks should follow in order to assess their risk profile and measure material risks, (vi) incorporated new guidelines for banks for the definition of internal capital targets by adopting the Pillar 2 Requirement and Pillar 2 Guidance concepts, (vii) defined a maximum extension of 70 pages for the ICAAP Report, and (viii) established new disclosure requirements for Pillar 2 requirements. As of the date of this annual report, no final rules have been published.

Although based on these buffers we continue to be in full compliance with the minimum requirements, we cannot be certain about any further potential capital buffers the regulator could impose to us and, therefore, we cannot assure you that our profitability will not be impacted by actions we may take in order to fulfill new regulatory thresholds. For more detailed information on specific regulations currently in effect, capital thresholds and compliance, see “Item 4. Information on the Company—Regulation and Supervision—Modifications to the General Banking Act.”

Regarding banking resolution, on January 31, 2023, the CMF published a white paper “Guidelines for a new banking resolution framework and deposit insurance in Chile” for comment until July 31, 2023. The white paper proposed the creation of a new agency, with financial and operating independence, in charge of both the administration and resolution of deposit insurance. In business-as-usual times, this entity should develop contingency and resolution plans for systemically-important banks. In times of crisis, this agency would be responsible for the resolution process. Systemically-important banks should have to comply with a loss absorption capital requirement of at least 1.0% of total assets to ensure an equity level that facilitates the stabilization scheme, including a bail-in mechanism amount that would not be computed as Total or Regulatory Capital for capital adequacy purposes. However, if not fulfilled, restrictions on dividend distribution would apply for banks. Likewise, the white paper discusses the key topics of an insurance deposit scheme, which should be funded by banks that apply for its use. As of the date of this annual report, the CMF has not yet proposed specific changes to the banking regulation on the key topics addressed by the white paper and, therefore, we cannot assure you that the implementation of a new resolution framework and/or a deposit insurance scheme will not have an impact on our profitability, since as a systemically-important bank we could be subject to further capital requirements if this or another framework is adopted by the Chilean regulator in the future.

Liquidity Requirements

Since 2016 banks have been required to report and monitor liquidity ratios, such as Liquidity Coverage Ratio (“LCR”) and Net Stable Funding Ratio (“NSFR”), for information purposes only. Through amendments to Chapter III.B.2.1 of the Compendio de Normas Financieras (the Compendium of Financial Norms) on May 4, 2018, and March 8, 2022, the Central Bank set minimum requirements for both the LCR and the NSFR. Accordingly, the regulatory limit for LCR became 100% in June 2022 while the threshold for NSFR was also set at 100% although being phased-in over a four-year period starting in June 2022 at 60% and increasing 10% on January 1 of each year until reaching 100% on January 1, 2026. Likewise, in the last amendment to the Chapter III.B.2.1 of the Compendio de Normas Financieras the Central Bank also: (i) removed the regulatory limit for 30-day and 90-day cash flows mismatches in local currency as measured by C46 index while maintaining the limit for 30-day cash flows mismatches in foreign currency as measured by the C46 index, and (ii) introduced specifications on the treatment of securities pledged as technical reserve (arising from demand deposits levels) in order to take them into account as high quality liquid assets. As part of the same amendment, the Central Bank established that banks are required to carry out an annual Internal Liquidity Adequacy Assessment Process (“ILAAP”). The final rules associated with ILAAP were published on January 16, 2023. The possibility of imposing additional High Quality Liquid Assets (“HQLA”) requirements based on the information disclosed in the ILAAP is in effect as of April 2025. As of December 31, 2024, our LCR and NSFR were 214% and 120%, respectively, and we were in full compliance with the prevailing regulatory requirements. Regardless of the current levels of these ratios, we cannot assure you that we will remain in compliance with regulatory requirements if, based on the ILAAP results, the regulator requires us to maintain greater amounts of HQLA. This could also lead us to acquire lower-margin financial instruments, which could have an adverse effect on our results of operations and profitability.

Changes in Credit Risk Methodologies

Since 2010, the CMF has developed and required banks to adopt diverse standardized methodologies for the determination of probabilities of default (“PD”) and loss given default (“LGD”) parameters used to calculate expected credit losses under Chilean GAAP. Thus, in 2011 the CMF introduced a new standardized provisioning method for the individually assessed portfolio. Later, in 2014, a new standardized provisioning model for residential mortgage loans was established. In 2018, the standardized approach was extended to the commercial loans in the group-based evaluated portfolio, which was supplemented in 2021 with a more precise treatment for certain sub-segments of this portfolio to achieve further alignment to Basel III. None of these rules had any impact on our results of operations under IFRS or material impact on our results of operations under Chilean GAAP. More recently, in November 2022 and October 2023, the CMF published for comment a standardized methodology to compute expected credit losses for consumer loans with matrices for PD and LGD based on certain risk drivers. On March 8, 2024, the CMF issued Circular No. 2,346 with final rules on this matter, which became effective on January 1, 2025. This new methodology does not have any impact on our operational results or financial condition under IFRS. However, based on the information available as of the date herein, we expect this new standardized provisioning method to have an impact of approximately Ch$69,000 million on our operational results before income tax, under Chilean GAAP during 2025. To address this effect, the Bank resolved to release additional provisions when the new method became effective. Based on the diverse changes introduced to the provisioning rules in the past, we cannot assure you that future changes, especially in the provisioning rules or related definitions, will not affect our results under IFRS or Chilean GAAP, as applicable. For more detailed information on the changes in credit risk methodologies introduced by the CMF see “Item 4. Information on the Company—Regulation and Supervision—Credit Risk Provisioning.”

New Legislation, Other Bills and Regulatory Guidelines affecting the Banking Business

Additionally, during the last years, several legal and administrative regulations have been enacted and amended to strengthen consumer protection and the relationship between financial institutions and their customers.

For instance, in May 2020, the Chilean Congress passed the Law No. 20,009 that increases liabilities of payment service providers (such as banks) in cases of fraudulent transactions in credit and debit cards, and in electronic funds transfers. This legislation resulted in a sharp increase in our liabilities towards customers due to digital fraud during recent years, which also resulted in increased operational write-offs. For the year ended December 31, 2024, we incurred net operational write-offs (gross operational losses less recoveries) due to external fraud of Ch$13,447 million, which compares to Ch$18,051 million and Ch$10,392 million in 2023 and 2022, respectively. The breakpoint in the upward trend observed in the last two years was primarily caused by changes introduced to Law No. 20,009 through Law 21,673 that became effective in May 2024. Notwithstanding such amendments, and although we have implemented measures and campaigns with our customers and have been able to adequately mitigate the impact of this legislation so far, we cannot assure you that we will not continue to see an increase in our liabilities or operational write-offs as a result of this legislation, particularly given the widespread use of credit and debit cards in Chile over the recent years. For further information on the obligations and liabilities imposed by, and characteristics of, this legislation, see “Item 4. Information on the Company—Regulation and Supervision—Consumer-Oriented Regulation.”

Law No. 21,365 was enacted in July 2021, regulating interchange fees in the payment cards market in Chile. An autonomous and technical committee was created to determine, on a periodic basis, the fees or rates to be charged by payment card issuers such as banks (“Interchange Rates”) to the operating companies (acquirers). The technical committee is comprised of four members, each one appointed by: the Central Bank; the CMF; the Office of National Economic Prosecution (Fiscalía Nacional Económica); and the Ministry of Finance. This committee had six months to announce the first transitory limits and, afterwards, Interchange Rates will be reset every three years. On February 5, 2022, the committee announced new preliminary maximum fees of 0.6% for debit cards, 1.48% for credit cards and 1.04% for prepaid cards. On February 22, 2023, the technical committee determined the definitive scheme that will be applicable in Chile by defining a maximum interchange fee of 0.35% for debit cards and 0.80% for credit and prepaid cards. These limits went into effect in October 2023, and from that date current limits will converge to the new ones during a phase-in period that will take 18 months. On September 30, 2024, the technical committee postponed the second phase of the interchange rates reduction that was aimed to initially go effective on October 1, 2024 as a result of questioning from market participants to the interchange rates set by the technical committee, given the significant changes evidenced in the credit and debit card market in recent years that could result in revised limits to the interchange rates. Although we believe the prevailing or new limits – as currently known – will not have a material impact on our results of operations, given the uncertainty on the limits that could be determined by the technical committee in the future, we cannot currently assure you whether this new regulation will have a negative impact on the banking industry and on our results of operations in the long term or not.

Law No. 21,389, which creates an alimony debtor registry, came into effect in November 2022. This law requires banks and other financial service providers to retain amounts of credits granted to debtors that are registered in such registry, for the purpose of paying overdue alimonies. It further imposes fines on banks and financial institutions that do not consult the registry and do not withhold the amount specified. These fines amount to twice the money the bank should have withheld. For the year ended December 31, 2023, four Chilean banks, excluding us, were fined for not complying with the provisions of this law. For the year ended December 31, 2024, we were fined, along with five other Chilean banks, for non-compliance with the provisions established in Law No. 21,389. The fine imposed on us was informed to us on May 3, 2024, and amounted to UF111.48 (Ch$4.3 million as of December 31, 2024). Although we had to adequate our management information systems and procedures to address such requirements and we have been able to comply with it so far, we cannot assure you that we will be able to comply with the provisions if we do not have access to timely and adequate information or our management information systems do not suitably discriminate customers’ information.

In December 2021, Law No. 21,398 was enacted. Among other measures to enhance consumer protection, this law introduced rules, such as: (i) requiring a competent court to construe certain provisions in favor of the consumer in court procedures, (ii) imposing new obligations applicable to financial service providers in connection with certain products, (iii) introducing new minimum requirements for pre-payments in credit transactions, and (iv) obligation to carry out an economic solvency analysis before contracting a credit product and inform the consumer of the result of said analysis, among other measures. On April 21, 2022, the Ministry of Economy, Development and Tourism published the Regulation on Analysis of Economic Solvency and Information to Consumers. This regulation, which came into force on May 4, 2024, establishes the requirements that such economic solvency analysis must contain. These new measures may increase our due diligence, operating and legal costs, affect the growth of our customer base and increase the costs associated with the management of our consumer loan portfolio. However, as of the date of this annual report, we cannot currently ascertain its impact, if any, on our results of operations in the future.

On May 30, 2024, Law No. 21,673 was published to avoid overborrowing by Chilean individuals and companies, among other purposes. This Law No. 21,673 also amended Law No. 18,010, among others, by empowering the CMF to determine the calculation algorithm or the variables to be used in the calculation of the minimum monthly payment required from credit card holders as a result of billed purchases or cash withdrawals. As of the date of this annual report, the CMF has not issued a regulation on this matter and, accordingly, we are not able to assure you that this law and related regulation will not have an impact on our future results of operations.

On July 3, 2024, Law No. 21,680 was published and will become effective on April 1, 2026. Law No. 21,680 aims to create an official information register that consolidates information on debtors’ obligations to improve credit assessment while providing more information to the Financial Market Commission for regulatory purposes. This debt register incorporates new market participants, other than banking lenders, as reporting entities thus allowing a more comprehensive and accurate view of the credit outlook. This information will be managed exclusively by the CMF and will allow market participants to access debtors’ credit information commercial and credit risk assessment. Debtors, including both individuals and companies, will have the right to access their information and may request updates, rectifications or deletions if found to be incorrect. Although banks see this law favorably from the commercial and credit risk perspectives by permitting a more accurate assessment of current and future borrowers, such law may also result in both a one-time impact on expected credit losses for some specific borrowers clusters and increased operating expenses due to further information requests in the long run, which we are not currently able to predict.

In addition, Law No. 21,719 regulating the protection and processing of personal data was published on December 13, 2024. This law aims to improve the rules relating to the processing of personal data of individuals, so that it is carried out with the consent of the owner of such data or in cases authorized by law, ensuring standards of quality, information, transparency, and security. Likewise, the Personal Data Protection Agency was created under this law and is in charge of ensuring personal data protection. For companies in charge of managing personal data from their customers or counterparties as part of their normal course of business, starting in December 2026, the sanctions for non-compliance with the law may range from written warnings to fines of up to 4% of the company’s revenues depending on the severity of the violation and potential backsliding of large companies. This new framework could require changes in our current procedures to duly comply with these standards of data privacy protection. If we fail to comply with these requirements or in case of breach of our systems and platforms through which we manage third-party data, we may be fined by the Personal Data Protection Agency, which could adversely affect our reputation and results of operations. For more information, see “Item 4. Information on the Company—Regulation and Supervision—Personal Data Protection Law.”

There are several bills introduced in recent years that would modify matters related to loans and credit products, such as interest rate ceilings, prepayment fees and the possibility of capitalizing interests. Some of them also aim to ease the financial burden of certain banking borrowers, such as SMEs and individuals. These bills introduced during recent years, if enacted, may increase the costs of our consumer loan and mortgage products by setting higher mandatory protections for customers.

Another pending bill introduces additional requirements to judicially exercise rights attained to mortgage loan collaterals. Yet another bill related to insolvency law, would limit a bank’s ability to deny providing certain banking products to personal banking customers (individuals) on the grounds that they have been debtors in an insolvency procedure in the past. Further, a bill introduced at the end of 2022 proposes to eliminate information on debtors’ behavior that occurred before the last five years, thereby limiting the available information to properly assess and evaluate the credit risks of a broad customer base. In addition, a bill proposed in March 2023 would preclude certain service providers from charging and indexing installments and bills to UF (inflation indexed), which in the case of banks would relate to mortgage loans granted to personal and SME banking customers. Likewise, in June 2024, a new bill was introduced in the lower house, which aims to provide individual debtors with a timeframe of 13 years to repay both commercial and consumer loans granted by local banks while cancelling any type of interests previously agreed on such loans and prohibiting interest compounding over time. If enacted, such laws may limit the effectiveness of our credit evaluation process and the due diligence we perform over potential customers, may generate mismatches between assets and liabilities denominated in UF or deteriorate our asset quality and require us to increase provisions for expected credit losses while affecting our result of operations.

Some of these bills are currently in the early or middle stages in the Chilean Congress, and some of them have been under discussion for several years, and there is no certainty whether any or all of them will be further discussed or not, and as to when or how these bills could change the current regulatory framework if approved. Therefore, we cannot determine or assure you whether they will materially affect our business and, in turn, our financial condition and results of operations in the future.

In September 2023, a Chilean private consumer body requested to the Chilean Antitrust Court (Tribunal de Defensa de la Libre Competencia) to initiate a regulatory recommendation process in order to propose to the President of Chile the draft of a bill to be discussed in the Chilean Congress, to regulate the participation of conglomerates in the Chilean economy. As of the date of this annual report this process is in course.

Future changes in regulations may also cause us to face increased compliance costs and limitations on our ability to pursue certain business opportunities and provide certain products and services. As some banking laws and regulations have been recently adopted, the way they are applied to the operations of financial institutions is still evolving. We cannot generally assure you that laws or regulations will be adopted, enforced or interpreted in a manner that will not have a material adverse effect on our business and results of operations. Lastly, we cannot assure you that regulators will not impose more restrictive limitations in the future on the activities of banks, including us, than those that are currently in effect. Any such change in terms of capital and liquidity adequacy, credit risk provisioning, and consumer protection, among other matters, could have a material adverse effect on our results of operations or financial condition in a fashion that we cannot determine in advance. For more information, see “Item 4. Information on the Company—Regulation and Supervision.”

Enhanced ESG and climate change disclosure may impose additional costs on our bank.

In recent years, various guidelines and regulations have been issued recommending or requiring companies to adopt policies and procedures with the purpose of enhancing the approach to environmental, governance and social (ESG) matters. On October 4, 2022, the CMF published guidelines for the implementation and supervision of sustainability standards by means of section 8.2 of Norma de Carácter General N°461, which is aimed at improving the quality of information released by Chilean companies on sustainability and corporate governance matters on their annual report, which are in accordance with the guidelines of the Sustainable Accounting Standards Board. On October 29, 2024, Norma de Carácter General N° 461 was amended by Norma de Carácter General N° 519 making these new rules effective and mandatory for local banks as of the fiscal year ending on December 31, 2025.

Similarly, in March 2024, the SEC adopted rules aimed at enhancing and standardizing climate-related disclosures. The rules require registrants to include certain climate-related information in their registration statements and annual reports, including data regarding greenhouse gas emissions and information regarding climate-related risks and opportunities and related financial impacts, governance, and strategy. However, in April 2024, the SEC issued an order staying implementation of these rules pending the resolution of certain legal challenges. The final rules, to the extent they survive any ongoing or forthcoming legal challenges, may require us to provide certain climate-related information in the future. Thus, as of the date of this annual report, the final disclosure requirements and reporting timeline and compliance costs are unknown.

We cannot rule out that the adoption of new guidelines and regulations on ESG and climate change matters could limit our lending business, restrict our ability to recruit new customers, increase compliance requirements or result in higher operating or funding costs, among other effects in the future that we cannot predict now, given the still-developing and evolving regulatory environment related to ESG and climate change matters.

Modifications to reserve requirements may affect our growth capacity and margins.

According to the Chilean banking regulation, demand deposits and time deposits are subject to reserve requirements of 9.0% and 3.6% (with terms of less than one year), respectively. However, the Central Bank is entitled to require banks to maintain reserves of up to 40.0% for demand deposits and up to 20.0% for time deposits, to the extent needed for monetary policy purposes. In addition, if the aggregate balance of demand deposits and other demand accounts (e.g., deposits in current accounts, other demand deposits or obligations payable on demand and incurred in the ordinary course of business, saving deposits that allow unconditional withdrawals that bear a stated maturity, and other deposits payable immediately unconditionally) held by a bank exceeds 2.5 times its Total or Regulatory Capital (including CET1, additional Tier 1 capital and Tier 2 capital) the bank is required to set aside a technical reserve equivalent to the full amount of that excess. In addition, under Basel III, banks denominated as D-SIB could be subject to stricter technical reserve requirements by which the threshold of 2.5 times the Total or Regulatory Capital could be reduced to 1.5 times. The imposition of this additional requirement depends on the assessment of the CMF, although the decision must be agreed with the Central Bank. The CMF announced the D-SIB local banks for first time in March 2021 by defining that six local banks (including us) were designated as systemically important banks. This designation was sequentially reaffirmed in March 2022, March 2023, April 2024, and April 2025, which has translated into the imposition of a systemic buffer on us. However, as of the date of this annual report, we have not received notice of additional requirements, such as stricter technical reserve thresholds. Nonetheless, we cannot assure you that we will not be subject to such additional requirements in the future, to the extent we continue to be qualified as D-SIB, which in turn could impact our capacity to sustain balance sheet growth or lead us to raise funding from alternative sources if a greater amount of demand deposits must be set aside, which could have a material adverse effect on our net interest margin and results of operations. For more information on the implementation of the systemic buffer, see “Item 3. Key Information—Risk Factors—Stricter banking regulations and changes in law may constrain our operations and thereby adversely affect our financial condition and results of operations.”

Changes in accounting standards could impact our results.

The IASB, or other regulatory bodies, periodically introduce modifications to financial accounting and reporting standards under which we prepare our consolidated financial statements. These changes can materially impact on how we report financial information, affecting our results of operations. Also, we could be required to apply new or revised standards retroactively.

Currently, we cannot assure you that future changes in financial accounting and reporting standards will not substantially affect our results of operations or performance indicators, as we do not know the extent of future standards.

Increased competition and industry consolidation may adversely affect our operations.

The Chilean market for financial services is highly competitive. We compete with Chilean and foreign banks, with Banco del Estado de Chile, which is state-owned, and with other providers of financial services new to the banking industry and the traditional financial system. In addition, the retail segment (which encompasses individuals and small and medium-sized companies) has become the target market of several banks, since banking penetration is still in progress in Chile, particularly in this segment. Accordingly, competition within this market is increasing as banks are frequently incorporating new and tailored products and services, while striving to improve service quality and to accelerate digital transformation.

We also face increasingly significant competition from non-banking competitors in some of our credit products, especially credit cards and installment loans, including large department stores, pharmacy chains, supermarkets and private compensation funds, as well as saving and credit cooperatives. In addition, we face competition from other types of lenders, such as non-banking leasing, crowdfunding, factoring and automobile financing companies, especially in credit products, as well as mutual fund managers, pension fund managers and insurance companies within the market for savings and investment products and insurance companies in the market for mortgage loans. Likewise, new providers of financial services have emerged over the last years, such as e-commerce, local and foreign fintech companies, Telecom companies, like internet and mobile phone providers, and more recently several alternative marketplaces that are allowed to provide temporary financing directly to their customers or providers.

These new ways of doing business are based on the disintermediation of traditional banking service providers. Some of these companies may have more resources than us, including larger customer bases, stronger brand recognition and more effective marketing tools to approach banking current or potential customers. They may also adopt more aggressive pricing, while devoting significant resources to technology, infrastructure and marketing as it is part of their core business. Some of these non-banking competitors have recently commenced to be regulated by the CMF for purposes of banking supervision through Law No. 21,521, which regulates fintechs and open banking by establishing a general framework for financial services provided through technological means (including banks) in order to protect financial customers and data privacy while preserving financial stability and strengthening anti money-laundering. Although this law introduced specific requirements for fintechs, they are not currently subject to the same solvency, liquidity or reserve requirements imposed by the banking regulator, among other requisites, if any, as banks generally are. Therefore, these providers represent a challenge for the traditional banking industry that may result in lower margins in the future. Nevertheless, banks continue to be the main suppliers of loans, leasing, factoring and mutual fund management, directly or indirectly through subsidiaries, while growing quickly in insurance brokerage services. However, we cannot assure you that this trend will continue in the future.

Likewise, we are aware that new competitors may enter the market, or existing competitors may innovate their services and strategies to improve the quality of services rendered to their customers. If we fail to effectively anticipate or adapt to new trends in the financial services industry, including changes in the way of delivering financial products and services, introduction of emerging technologies, changes in customer behavior or adaption of the kinds of services offered to or needed by them, our business may be adversely affected.

In addition, the introduction and application of new technologies, including artificial intelligence, cryptocurrencies and digital payment or savings systems, may result in substantial expenditures to adapt and update our existing products and services as we continue to grow our internet and mobile banking capabilities. In this context, competitors could adapt faster than us to these new trends, which could lead to a temporary competitive disadvantage that could translate into lower revenues or a reduced ability to raise funding from retail depositors. Since we are aware of these new trends, we have devoted efforts to adapt our organization in pursuit of enhanced flexibility while looking for business and technological partnerships in order to take advantage of business opportunities arising in the market while keeping our value offerings adapted to new customers’ needs. As such, we have continued to deploy our digital strategy to offer tailored services and products to customers from different segments by leveraging our strategic capabilities, entering into alliances with other banking and non-banking providers, developing innovative digital solutions, and reinforcing benefits from using our payment and savings systems. We cannot assure that present or future competitors will not copy our strategy to launch new digital products or enter into digital alliances or that they will not develop better solutions by acquiring more modern technology or designing more innovative solutions.

Also, in the past, increasing competition within the Chilean banking industry has been accompanied by a consolidation wave and the entry of international players into the system through multiple mergers and acquisitions. These trends have continued and resulted in the creation of larger and stronger banking conglomerates, offering a wide range of products and services and targeting most of the segments in the Chilean banking market. These dynamics may adversely impact our results of operations as they may translate into higher interest rates paid on deposits and lower interest rates earned on loans, resulting in decreased net interest margins.

Further, following the new rules issued in recent years by the Chilean regulator, the processing and merchant acquiring services for payment cards (particularly related to new acquirers) may now be accomplished through a four-party mechanism, as done in some developed economies. This model facilitates the entry of new market players. As of the date of this annual report, a significant part of transaction processing services continued to be provided in Chile by Transbank S.A., a company owned by us and ten other banks (of which we held a 26.16% direct ownership as of December 31, 2024). However, some of the main Chilean banking players, including us, have already begun to implement the new four-party model for their own business. In this regard, on July 29, 2024, we created a dedicated acquiring and processing credit and debit card subsidiary named “Operadora de Tarjetas B-Pago S.A.” (“B-Pago”), which is owned by Banco de Chile (99.9% share ownership) and Banchile Asesoría Financiera S.A. (0.01% share ownership). This subsidiary aims to participate in the new four-party model with other banking and non-banking competitors. When creating this new subsidiary, we granted a mandate to an independent third party to exercise all our voting rights in Transbank S.A. without receiving instructions from, nor sharing information with, us. Also, given the new four-party model, on January 23, 2023, the Chilean Association of Banks and Financial Institutions (“ABIF”) announced the willingness of banks participating in the ownership of Transbank S.A. to relinquish part or total control of the company, process that, as of the date of this annual report, is still open. In addition, as previously mentioned, a technical committee is responsible for determining the maximum interchange fees that may be charged by credit card issuers (including us) to companies that provide merchant acquiring services.

Based on these dynamics, net interest margins (once deducted provisions for loan losses) or fee-based income in certain sub-segments on targeted markets could decline over time.

For more information regarding past and recent changes in the Chilean banking industry see “Item 4. Information on the Company—Business Overview—Competition.”

Our exposure to certain segments of the retail market could lead to higher levels of total past-due loans and subsequent charge-offs.

Although we have historically been focused on wholesale banking, over the last years we have continued to reorient our commercial strategy to increase penetration of the retail banking segment. In fact, according to our management information systems, the share of the retail banking segment in our total loan book has increased from 63.8% in 2019 to 65.3% in 2024. Although this trend has been primarily associated with an expansion in middle- and higher-income personal banking, our retail banking segment is also composed of small and medium-sized companies (approximately 13.3% of our total loan book as of December 31, 2024, which consists of companies with annual sales of up to approximately UF 70,000 million (approximately Ch$2,689 million). Since these customers are likely to be more severely affected by adverse developments in the Chilean economy than large corporations and higher-income individuals, we may be exposed to higher levels of delinquency and subsequent charge-offs in the future, which could result in materially higher allowances for loan losses that could adversely affect our results of operations.

As of December 31, 2024, our past-due loans (loans 90-days or more past due) amounted to Ch$622,440 million, which represented a 5.2% annual increase when compared to the Ch$591,953 million recorded in 2023. These figures translated into an increase past-due ratio (loans 90-days or more past due over total loans) from 1.57% in 2023 to 1.60% in 2024. According to our management information systems, as of December 31, 2024, our past-due loans (loans 90-days or more past due) were composed of 91.1% retail banking 90-days or more past-due loans (consumer and residential mortgage loans to individuals, as well as commercial loans to small and medium sized companies) and 8.9% wholesale banking 90 days or more past-due loans (commercial loans to large companies and corporations). During the prior fiscal year, our past-due loans (90 days or more) portfolio was composed of 81.7% retail banking past-due loans (90 days or more) and 18.3% wholesale banking past-due loans (90 days or more).

Diverse financial and economic dynamics contributed to the increase in both the amount of total past-due loans and our total past-due loans ratio in 2024 to 2023. However, at a business segment level, trends were uneven. According to our management information systems, the increase in past-due loans was largely driven by an annual increment of Ch$73,826 million in retail banking past-due loans (loans 90 days or more past due). This change was caused by various dynamics that negatively affected the entire industry, resulting in increased delinquency for both consumer and residential mortgage loans. Factors such as higher-than-normal interest rates, an inflation rate that has remained above the two-year target range set by the Chilean Central Bank, and higher unemployment rates than in the past, have affected the customers’ payment capacity in personal banking. The SME segment was also negatively impacted by the economic and financial scenario, which resulted in increased borrowing costs. This, coupled with the end of former state-guaranteed programs previously allowed SMEs to apply for credits bearing lower interest rates, contributed to the increase in past-due loans. Consequently, past-due loans in personal banking (comprising both consumer and residential mortgage past-due loans) increased by Ch$54,865 million in 2024 compared to 2023, while past-due loans associated with SME banking rose by Ch$18,961 million during the same period.

Conversely, according to our management information systems, the wholesale banking segment recorded a decrease of Ch$43,339 million in past-due loans (loans 90 days or more past due). This improvement was driven by a net improvement in payment behavior, prompted by a more positive evolution in the dynamics of certain industries throughout 2024, such as the health services sector and specific cases in the real estate and construction sector, as well as the transportation sector, which resulted in improved risk profiles of some customers. As a result, past-due ratios (90 days or more past-due loans over total loans) increased from 1.68% in 2023 to 1.81% in 2024 in the retail banking segment, while declining from 0.90% in 2023 to 0.51% in 2024 in the wholesale banking segment, according to our management information systems.

Since the unpredictability of certain social developments, the effects of political and social events in Chile affecting consumer confidence and business sentiment, international health events such as pandemics or epidemics, market fluctuations, changes to macroeconomic indicators, effects of global armed conflicts on the worldwide and the local economy and delayed effects of these developments, may affect our diverse customer segments, we cannot assure you that we will be able to maintain a balanced risk-return equation if some or all these developments materialize in the future. In this regard, economic recessions, social turmoil or market volatility could adversely affect the financial condition of our borrowers, which could translate into an increase in our non-performing loans, impair our loan portfolio and result in lower demand for our loans. Any of these trends could have a material adverse effect on our business, financial condition and results of operations.

For more information on past-due loans, see “Item 3. Key Information—Risk Factors—Risks Relating to our ADSs— Developments in international financial markets may adversely affect the market price of the ADSs and shares,” “Item 3. Key Information—Risk Factors—Risks Relating to Chile—Pandemics, epidemics and other health events will affect both the global and the Chilean economy, our business or results of operations and could affect our financial condition” and “Item 4. Information on the Company—Selected Statistical Information—Analysis of Substandard and Past-due loans.”

Our results of operations are affected by interest rate volatility and inflation.

Our results of operations depend greatly on our net interest income (including both net interest income and net inflation-indexation income), which represented 70.5% of our total operating revenues as of December 31, 2024. Changes in nominal interest rates and inflation could affect the interest rates earned on our interest-earning assets differently from the interest rates paid on our interest-bearing liabilities, resulting in net interest income reduction. Inflation and interest rates are sensitive to several factors beyond our control, including the Central Bank’s monetary policy, deregulation of the Chilean financial sector, local and international economic developments and political conditions, among other factors. In addition, changes in interest rates affect the fair value of tradable securities and other investments or assets and are therefore exposed to potential negative value adjustments. Any volatility in interest rates could have a material adverse effect on our financial condition and results of operations. Also, real negative interest rates could negatively impact our ability to raise funding for our operations, particularly for short-term maturities, which could result in higher funding costs and lower net interest margin.

The average annual short-term nominal interest rate in Chile for 90 to 360 day deposits received by Chilean financial institutions was 9.25% in 2022, 9.83% in 2023 and 5.74% in 2024, following the trend seen in the monetary policy interest rate, which averaged 8.25% in 2022, 10.5% in 2023 and 6.2% in 2024. The evolution of the reference rate has been associated with the attempts of the Chilean Central Bank to control inflation over the recent years. As inflation began to decrease over the second half of 2023, the Central Bank began to reduce the monetary policy rate, which continued in 2024 by taking the reference rate from 8.25% on December 31, 2023 to 5.0% on December 31, 2024. For 2025, the Chilean Central Bank has anticipated that the path followed by the monetary policy interest rate will depend on the evolution of inflationary pressures coming from both local and external fronts. Consequently, although the reference rate is expected to converge to the neutral level as long as inflation continues to converge towards the midpoint of the Central Bank target range, there still is no certainty as to when this could happen. As of April 17, 2025, the monetary policy interest rate was at 5.0%. Similarly, the average interest rate paid by Chilean financial institutions for 90 to 360 days Chilean peso denominated deposits was 4.98% in the three-month period ended on March 31, 2025. The average long-term nominal interest rate based on the interest rate of the ten-year bonds traded in the secondary market, issued by both the Central Bank and the Chilean Government, was 6.26% in 2022, 5.66% in 2023 and 5.79% in 2024. In 2024, long-term nominal interest rates showed mixed trends by increasing in the first half of the year, decreasing during the third quarter and going up again in the fourth quarter. The main factors driving the evolution of long-term interest rates in 2024, included: (i) market agents’ expectations on the convergence of medium-term inflation to the Central Bank’s target midpoint, (ii) the evolution of fiscal spending and diverse reforms that put pressure on the future fiscal balance, (iii) the external environment characterized by higher long-term interest rates than in the past, and (iv) the discussion of diverse reforms affecting crucial economic areas. Accordingly, the interest rate of ten-year Chilean peso denominated bonds, issued by both the Central Bank and the Chilean Government, increased from 5.48% in December 2023 to 5.76% in December 2024, reaching 5.79% in March 2025. In the three-month period ended on March 31, 2025, the interest rate for the same Central Bank and Chilean Government bonds averaged 5.93%.

Prior to 2021, inflation in Chile had been moderate, especially in comparison with periods of high inflation experienced in the 1980s and 1990s. High levels of inflation in Chile could adversely affect the Chilean economy, consumer purchasing power, household consumption and investment in machinery and equipment and, therefore, the demand for financing and our business. The annual inflation rate (as measured by annual changes in the CPI and as reported by the Chilean National Institute of Statistics) during the last five years and the first three months of 2025 was:

Source: Chilean National Institute of Statistics

In 2024, the inflation rate, measured as CPI variation, was 4.5%. This CPI variation was above the medium-term inflation target range of 2.0% to 4.0% as set by the Chilean Central Bank and unfavorably compares to the level of 3.9% registered in 2023. The annual increase in the inflation rate was the consequence of non-recurrent factors affecting the level of internal prices in Chile, which were particularly focused on both the effect of revised electricity prices that became effective by mid-2024, after the postponement of pricing revision during the COVID-19 pandemic, and the impact of the 13.8% depreciation of the Chilean peso against the U.S. Dollar in 2024, which had a favorable pass-through effect to local prices and coupled with lower inflationary pressures from external prices associated with imported goods. These factors were to some degree contained by a less-aggressive-than-expected monetary easing by the Chilean Central Bank. In fact, after taking the reference rate from 11.25% in December 2022 to 8.25% in December 2023, the Central Bank took the overnight rate to 5.0% in December 2024, which was above market expectations given the information available at the beginning of 2024. This approach resulted in a flat CLP yield curve, particularly during the second half of 2024, while maintaining short-term interest rates above normal levels. The prevailing interest rate scenario continued to adversely affect the lending activity by keeping borrowing costs above expectations. Consequently, household consumption increased by only 1.0% while private investment decreased by 1.4% in 2024. On the other hand, fiscal spending maintained an upward trend by increasing 3.0% compared to 2023. These factors resulted in higher pressures on local prices. Although we benefit from a higher-than-expected inflation rate in Chile in the short term, due to the structure of our assets and liabilities (we have a net asset position indexed to the inflation, which is composed of both an economic hedge of our shareholder’s equity against the effect of inflation on the loss in purchasing power and directional positions taken by our treasury as part of our asset and liability management strategies and risk appetite), significant and persistent increases or decreases in inflation with respect to current levels or the target set by the Central Bank could adversely affect our net interest income, results of operations and, therefore, the value of our securities and profitability in the long term.

Additionally, measures being taken by the Central Bank to control inflation may adversely affect the Chilean economy, the banking business and our results of operations and financial condition. In this regard, the measures adopted by the Central Bank in the past to control inflation have included monetary policy interest rate hikes, which had restricted the demand for loans while negatively affecting economic growth through constrained household spending and capital expenditures. As mentioned earlier, in 2024, the Central Bank kept the monetary policy rate above neutral levels, which had a direct adverse effect on the household spending while leading to a slowdown of the lending activity during 2024 as reflected by a 0.4% real annual contraction in the loan portfolio managed by the local banking industry. Although during 2024 the Central Bank continued to deploy a monetary easing cycle, the monetary policy interest rate remained above expectations. Although a downward correction for the monetary policy in 2025 is expected towards neutral levels in the range of 4.0% to 4.5%, the magnitude and timing of coming interest rates cuts will depend on the evolution of macroeconomic factors and their impact on the trajectory followed by inflation, as stated by the Central Bank through the monetary policy report. As of the date of this annual report, the monetary policy interest rate was at 5.0%, as the Central Bank has not carried out any adjustment to the reference rate since December 2024.

For more information, see “Item 3. Key Information—Risk Factors—Risks Relating to our ADSs—Developments in international financial markets may adversely affect the market price of the ADSs and shares,” “Item 3. Key Information—Risk Factors—Risks Relating to Chile—Pandemics, epidemics and other health events will affect both the global and the Chilean economy, our business or results of operations and could affect our financial condition” “Item 5. Operating and Financial Review and Prospects—Operating Results—Overview—Inflation” and “Item 5. Operating and Financial Review and Prospects—Operating Results—Overview—Interest Rates.”

Our loan portfolio is subject to prepayment risk, which could have an adverse effect on our results of operations.

Most of our loan portfolio is subject to prepayment risk, which is associated with the borrowers’ or issuers’ ability to pay off an obligation prior to its maturity. Prepayment risk increases when interest rates decline, which could result in unexpected repricing of our assets that may have a material adverse effect on us if we are not able to reprice our liabilities. In the past, prepayment risk has had an adverse impact on credit card loans and residential mortgage loans by reducing the average repricing tenor of these assets, which may result in mismatches with liabilities used to finance them that could be just partly offset by investment choices at lower interest rates or prepayment fees charged to borrowers that only represent a portion of the incurred financial loss. Over the last five years, short- and long-term interest rates have increased significantly from the levels seen after the subprime crisis due to the attempts of central banks to control the inflationary wave observed after the COVID-19 pandemic by raising short-term reference rates, together with greater fiscal deficits in developed and developing economies and concerns on the convergence of inflation rates to target levels in the medium-term given economic growth expectations. Notwithstanding these trends, lower-than-forecasted economic dynamism or a decrease in inflationary pressures may result in lower interest rates in the future. Also, in the past, there have existed diverse initiatives sponsored by the Chilean government or members of the congress intended to limiting prepayment fees, which could have a negative effect on our results if implemented, in an amount that we are not able to estimate. Accordingly, we cannot assure you that any future changes related to prepayment fees or a decline in interest rates to the levels seen prior to 2019 will not have a material impact on our business.

Part of the information included in our financial statements considers assumptions, estimates and modeling which, if inaccurate, could have a material impact on our results of operations and financial position.

The preparation of our financial statements requires management to make judgments and estimates that affect the amounts of assets, liabilities, income and expenses reported in our financial statements. Estimates and assumptions are based on historical experience, expert judgment and other factors, including expectations of future developments under certain alternative scenarios. Although assumptions and estimates are assessed and revised on an ongoing basis, we cannot rule out that projected scenarios could dramatically change in the short term, causing a severe impact on fundamentals and estimates.

We are also subject to model risk since the valuation of financial instruments relies on models (such as cash flows valuation models for fixed-income securities, valuation models for derivatives including technical approximations, value adjustments models for derivatives, models for determining the impairment of financial assets and IFRS 9 forward-looking provisioning models, among others) and inputs, which, in some cases, are not observable. Accordingly, computed values for securities and financial instruments may be inaccurate or subject to change, since the inputs used for specific models may be unavailable, particularly for illiquid assets or under scenarios of financial turmoil. In these cases, we will make assumptions and judgments in order to establish the fair value of certain instruments, which involves uncertainty and may translate into inaccurate estimates of actual results. In this regard, the main accounting items subject to risk of incorrect valuation include impairment of loans to customers and advances to banks, valuation of fixed-income securities and financial derivatives held for trading and hedge accounting, valuation and impairment of financial assets measured at fair value through other comprehensive income, and deferred tax assets and provisions for liabilities, among others. If our judgment, assumptions or models used in valuing these items are inaccurate, there could be a material effect on our results, funding requirements and capital ratios.

Likewise, in the normal course of business, we develop and utilize diverse models for risk management purposes, which rely on assumptions, judgement and statistical simulations, which could lead us to inaccurate conclusions and inadequate decision making. For these purposes, we also rely on inputs and information provided by third parties. For example, we assess the credit quality of our borrowers based on the information that is available in Chile regarding their indebtedness with the financial system. This includes information provided by the CMF, the local credit bureaus, databases we have created through the years and other public sources. However, as mentioned in this annual report, a consolidated debtor registry that includes banking and non-banking loan providers in the form of credit card loans, leasing loans, factoring loans, and others is expected to be in place just in 2026, particularly for individuals. Therefore, information on the indebtedness of our customers and non-customers with these lenders is not publicly available or consolidated with borrowings from banks as of the date of this annual report. As such, our assessment of customers for the scoring and provisioning processes may be based on partial, inaccurate or unreliable information on the borrowers’ creditworthiness, which could lead us to increase our expected credit losses in the future once complete information is fully available through the consolidation of customers’ indebtedness with all banking and non-banking lenders. In addition, we retrieve financial information, such as interest rates, exchange rates, swap spreads, credit spreads and option volatilities from financial terminals and market data providers that could be inaccurate or could misrepresent actual market conditions that may result in inadequate conclusions about financial exposures.

Moreover, the cessation or replacement of certain rates, market indices or benchmarks extensively used by financial markets and practitioners for valuation purposes, such as interest rates or foreign exchange rates indices, could also impact on the accuracy of the estimates we include in our financial statements. An example of such changes is the replacement of the London Interbank Offer Rate or LIBOR, which officially ceased on July 3, 2023. Although the transition from LIBOR to SOFR did not have a material impact on us, it is important to note that we are not able to predict the future performance of SOFR and other alternative benchmarks that replaced LIBOR. Likewise, we cannot assure you that other similar reforms and changes or the establishment of alternative reference rates or any other reforms to these reference rates that may be enacted will not have a material impact on our results of operations in the future.

Market turmoil could result in negative adjustments to the fair value of our financial assets, which could translate into a material effect on our results or financial condition.

Over the last decade worldwide financial markets have been subject to stress coming from diverse fronts that has resulted in sharp temporary changes in interest rates and credit spreads, including those related to the effects of the COVID-19 pandemic, to the banking crisis in the United States and Europe during the spring of 2023, and more recently, to the impact of geopolitical issues arising in eastern Europe and the Middle East, all of which have also affected the Chilean financial market. We have material exposures to debt securities issued by the Chilean Government and the Chilean Central Bank and to other fixed-income securities issued by local and foreign banking and corporate issuers. Most of these securities are measured at fair value with direct impact either on our income statement (trading securities) or through other comprehensive income, while a remaining minor portion is measured at amortized cost. Therefore, these positions expose us to potential negative fair value adjustments in the short- or medium-term and to impairments in the long-term, if dramatic and unexpected changes in short- or long-term local and foreign interest rates and credit spreads take place. Any of these factors could have a material adverse effect on our results of operations and financial condition.

In 2024, the Chilean financial market continued to be characterized by an inverted yield curve during the first half of the year while converging to a flattened yield curve over the second half of the year to the extent the short-term interest rates began to follow the easing cycle carried out by the Chilean Central Bank as inflation continued to decline. In this regard, the monetary policy interest rate declined from 8.25% as of December 31, 2023 to 5.00% on December 31, 2024. Based on these drivers, the average interest rates paid by Chilean banks on 90 to 360-day deposits decreased from 7.90% in December 2023 to 5.0% in December 2024. It is important to note that the easing policy undertaken by the Central Bank was less aggressive than expected, since 12-month inflation remained above the Central Bank’s two-year target range of 2% to 4% set for inflation. On the other hand, interest rates of five-year and ten-year Central Bank bonds denominated in Chilean peso increased from around 5.5% in December 2023 to around 6.0% in December 2024, while five-year and ten-year Central Bank bonds denominated in UF declined from around 2.4% in December 2023 to approximately 2.0% in December 2024. However, the evolution of longer-term interest rates was mixed during 2024, demonstrating the volatility that has characterized the local market over the last five years. In fact, interest rates denominated in both Ch$ and UF for five-year and ten-year bonds peaked at around 6.0% and 2.8% by mid-2024, respectively and decreased sharply in the third quarter of the year to the levels of 5.5% and 2.0%, respectively. In the fourth quarter, instead, nominal interest rates returned to the 6.0% threshold while real interest rates remained at approximately 2.0%, given the expectations on mid-term inflation mentioned earlier. The overall upward trend in longer terms of the Ch$ yield curve denotes the more positive expectations on economic growth for the coming years while the decline in UF long-term interest rates indicates the doubts of market agents regarding the Central Bank’s ability to return inflation to the target range, given the evolution of 12-month CPI variation in 2024, together with internal and external inflationary pressures that remained present for the Chilean economy.

In the external front, after a period of tightening monetary policies deployed across the globe to control inflationary pressures in both developed and developing economies, central banks began to take easing measures in order to reactivate economic growth and avoid unemployment. As an example, the Federal Reserve of the United States decreased the reference interest rate from 5.5% in December 2023 to 4.5% in December 2024, while the European Central Bank took the monetary policy interest rate from 4.0% in December 2023 to 3.0% in December 2024. For longer terms, interest rates of U.S. ten-year bonds displayed an average upward trend in 2024 by increasing from 3.8% in December 2023 to approximately 4.5% in December 2024.

These factors had mixed impacts on the market value of financial assets for the entire industry and us, including financial instruments measured at fair value with direct impact on the income statement and those measured at fair value through other comprehensive income.

As of December 31, 2024, our fixed-income portfolio was composed of securities measured at fair value through profit or loss (including debt securities and other trading positions while excluding derivatives) amounting to Ch$2,126,070 million (approximately U.S.$2,137 million), financial instruments measured at fair value through other comprehensive income (including equity instruments held by our subsidiaries) amounting to Ch$2,097,837 million (approximately U.S.$2,109 million), and financial instruments measured at amortized cost (so not affected by changes in market factors in terms of fair value adjustments) for an amount of Ch$944,074 million (approximately U.S.$949 million), which are mostly concentrated in bonds and notes issued by the Central Bank and the Chilean Government. Likewise, as of the same date we maintained asset and liability balances in trading and hedge accounting derivatives measured at fair value of Ch$2,377,312 million (approximately U.S.$2,390 million) and Ch$2,585,761 million (approximately U.S.$2,599 million), respectively.

The approval of additional pension fund withdrawals by the Congress, the introduction of further changes to the pension fund system, increased uncertainty regarding economic and social reforms to be implemented by Chile’s current of future administrations, increased and persistent fiscal deficit in Chile, the escalation or the persistence of armed conflicts in eastern Europe and the Middle East including the involvement of additional countries leading to a global conflict, significant changes in global trade as a result of the new tariffs foreign policy adopted by the current U.S. administration and potential retaliation of other countries in response to revised tariffs, market turmoil associated with the financial distress of local or global banking players and internal or external forces sustaining persistent inflation, among other factors, could cause further increases in short- and long-term local interest rates, which could have additional impacts on the market value of our fixed-income portfolio measured at fair value.

See also “Item 3. Key Information—Risk Factors—Risks Relating to our ADSs—Developments in international financial markets may adversely affect the market price of the ADSs and shares” and “Item 3. Key Information—Risk Factors—Risks Relating to Chile—Pandemics, epidemics and other health events will affect both the global and the Chilean economy, our business or results of operations and could affect our financial condition.”

Operational problems, errors, criminal events or terrorism or other events relating to force majeure may have a material adverse impact on our business, financial condition, and results of operations.

As all large financial institutions, we are exposed to many operational risks, including the risk of fraud by employees and outsiders, failure to obtain suitable internal authorizations, failure to properly document in-person and online transactions, equipment failures, new technologies (such as generative artificial intelligence), mistakes made by employees and natural disasters, such as earthquakes, tsunamis, wildfires, and floods.

Chile is located in one of the most seismically active regions in the world– the Nazca tectonic plate. Our results of operations can be materially affected by natural disasters, particularly in locations where a significant portion of our loan portfolio is composed of real estate loans. These force majeure events related to nature include, but are not limited to, earthquakes, tsunamis, floods, extreme heat, droughts, increase in the sea level and storms may cause thorough damage which could impair the asset quality of our loan portfolio and our collateral as well as a material adverse impact on the economy of the affected region and therefore on our bank.

We could also be affected by operational disruptions associated with intentional or unintentional mass employee absence due to social unrest, demonstrations, street riots (such as the ones witnessed in October and November 2019), transportation or energy services interruptions, massive strikes or strikes at an industry level, massive epidemic or pandemic outbreaks, among others.

In addition, given recent changes in the way we provide services to our customers, which have resulted in a wide array of digital solutions ranging from refurbished websites to improved mobile applications for smartphones and tables, we are increasingly dependent on the stability of on-site servers, remote servers or cloud servers in order to provide timely and high standard services. Disruptions or interruption in connectivity or operational disruptions could lead to a deterioration in our service quality indicators and, more specifically, customers’ complaints, legal actions, and reputational damage. Similarly, as the use of artificial intelligence becomes common, we may be increasingly exposed to risks related to flawed or poor algorithms, false inferences or outputs, heightened legal and regulatory challenges and inadvertent disclosure of proprietary or confidential information. Although we strive to continually improve the stability of our remote services while reinforcing protocols to overcome new technological challenges that may impact our operations, we cannot assure you that specific events that could affect our results of operations, financial conditions, or the value of our shares and ADSs, will not take place in the future.

Furthermore, we may be exposed to criminal events, terrorist attacks or rioting that could result in physical damage to our buildings (including our headquarters, offices and automatic teller machines (“ATMs”)) and/or injury to customers, employees, providers and others. Likewise, we are exposed to internal and external fraud actions that may produce an increase in operational losses. Although we maintain an operational control model that relies on a comprehensive operational risk policy, trained staff and world-class technological resources that have been enhanced over the last years, as well as comprehensive contingency plans and security procedures, there can be no assurances that operational problems, errors, criminal events or terrorist attacks will not occur and that their occurrence will not have a material adverse impact on our results of operations, financial condition and the value of our shares and ADSs.

Despite our policies and procedures to detect or prevent money laundering and other financial crime activities, we may not be able to fully detect them or on a timely basis.

We are subject to many anti-money laundering (“AML”), anti-terrorism, anti-bribery and corruption laws and regulations. Furthermore, due to our relationship with Citigroup, we have implemented similar AML policies that such bank has implemented which, in cases, are stricter than those applicable to Chilean banks.

We constantly update our policies and procedures for the purpose of timely detection and the prevention of the use of our banking network for money laundering and other criminal activities. Nevertheless, we are aware that new technologies, such as cryptocurrencies and innovative payment methods, could limit our ability to track the movement of funds.

Many threats can never be fully eliminated, and there will be instances where we may be used by other parties to engage in money laundering and other illegal or improper activities. Moreover, we rely on our employees to assist us by spotting such activities and reporting them, and our employees have varying degrees of experience in recognizing criminal tactics and understanding the level of sophistication of criminal organizations. Also, we conduct AML training programs for our employees on a regular basis to enable them to adequately detect and report suspicious transactions to our AML team, to allow conduct subsequent proper investigation from law enforcement agencies. If we are unable to apply the necessary scrutiny and oversight, or to fully comply with applicable laws, regulations and expectations, our regulators and relevant law enforcement agencies have the ability and authority to impose significant sanctions, fines and harsh penalties on us.

There are laws, regulations and policies that require us to, among other things, conduct full customer due diligence (including, but not limited to, sanctions and politically-exposed person screening), keep our customer, account and transaction information updated and, at the same time, implement and develop an array of policies and procedures to prevent the facilitation of financial crime. In addition, we have policies and procedures to reasonably assure compliance with legal requirements and policies; however, our ability to comply thereto depends on improving detection and reporting capabilities and reducing variation in control processes and oversight accountability. The latter requires us to implement and enhance our business with effective controls and monitoring. We are also aware that financial crime is permanently evolving and is subject to increasingly stringent regulatory oversight and focus. This requires proactive and adaptable responses from us to deter threats and criminality effectively and in a timely fashion. On September 1, 2024, certain provisions of Law No. 21,595 regarding criminal liability for legal entities became effective, which widened the list of potential crimes that may subject companies to liability. For more information on this matter see “Item 4. Information on the Company—Regulation and Supervision—Economic Crimes Law.” In 2024, to address the challenges associated with Law No. 21,595, we added the wide arrays of new crimes we could be subject to pursuant to such law into our crime prevention model, taking into consideration our business activities, risk assessment, and dedicated control procedures.

The reputational damage to our business and brand could be severe if we were found to have breached AML, anti-bribery and corruption or sanctions requirements. Our reputation could also suffer if we are unable to protect our customers’ bank products and services from being used by criminals for illegal or improper purposes. Any such risks could have a material adverse effect on our results of operation, financial condition and prospects.

Cybersecurity events could negatively affect our reputation or results of operations and may result in litigation.

We have access to large amounts of confidential financial information and hold substantial financial assets belonging to our customers as well as to us. In addition, we provide our customers with online access to their accounts. Customers can transfer substantial financial assets in Chile and abroad through electronic channels, while purchasing goods or withdrawing funds with credit and debit cards issued by us in Chile and abroad. Among the most significant cyber-attack risks that we are constantly facing are internet fraud and loss of sensitive information, both from our customers and ourselves. Loss from internet fraud occurs when cyber criminals extract funds directly from customers’ or our accounts using fraudulent schemes that may include internet-based fund transfers or fraudulent charges in credit and debit cards. We are also exposed to cyber-attacks, hacking and other cybersecurity incidents in the normal course of business. More recently, given the fast development and spreading of artificial intelligence tools, new and increasingly sophisticated and effective cybersecurity threats are constantly arising, which poses a challenging environment for the development of new digital-based solutions for customers and the introduction of new technologies for middle- and back-office tasks. Thus, as a financial institution, we are under a constant threat of suffering losses due to these reasons. In addition, our risk and exposure to these matters remains heightened because of the evolving nature and complexity of these threats from cybercriminals and hackers, the increased reliance on new technologies (including generative artificial intelligence), our plans to continue to provide and enhance our internet banking and mobile banking channels, and our plans to develop additional remote connectivity solutions to serve our customers. Accordingly, cybersecurity is a material risk for us.

There has been an increased level of attention focused on cyber-attacks against large corporations and financial services providers like us, that include, but are not limited to, obtaining unauthorized access to digital systems for purposes of misappropriating cash, other assets or sensitive information, corrupting data or causing operational disruptions. Cybersecurity incidents, such as computer break-ins, phishing, identity theft and other disruptions, could negatively affect the security of information stored in and transmitted through our computer systems and network infrastructure. Subsequently, this may result in significant liability to us in excess of insurance coverage, which may carry low coverage limits, and may cause existing and potential customers to refrain from doing business with us. Additionally, cyber-attacks on our network or other systems could have a material adverse effect on our business and results of operations due to financial losses, losses of sensitive information, interruption or delays in our business and operations, regulatory fines, reimbursement or other compensation costs, compliance costs and reputational damage, among other things.

Since we suffered a cyber-attack in 2018, we have continued to enhance our data security and IT infrastructure and have consistently enhanced our cybersecurity protocols, infrastructure, and access-control to our networks, while simultaneously improving our technological capabilities and human resources on the detection and management of high-risk threats. As a result, we have been able to timely detect and block phishing attempts targeting customers and non-customers and have focused on three main initiatives: (i) a corporate program to share the best practices to face cybersecurity threats, (ii) improved cybersecurity guidelines for selection of providers, and (iii) the enhancement of information channels by which cybersecurity threats are reported internally. In 2022, we made advances in cybersecurity standards for both our datacenters and the clouds used by the bank to secure the migration process of data to the cloud. Likewise, we implemented Advanced Analytics & Data Science Unit, which is responsible for keeping the bank updated with the latest information regarding the cybersecurity intelligence threat landscape. In addition, during 2022 we did not receive or identified any complaints in relation to customers’ data leaks associated with cybersecurity events. During 2023, we continued to reinforce the corporate culture on cybersecurity while enhancing human and technological capabilities to detect and prevent cybersecurity issues, including the cybersecurity framework for suppliers. In addition, we continued to deploy and enhance measures and means to enhance confidentiality of our customers’ private information, such as communications encryption, user access control, permission profiling, and data leak prevention tools, among others. Furthermore, in 2023, we deployed the “Awareness Program” for employees, customers, suppliers and the overall community. In 2024, we continued to deploy the main pillars of our cybersecurity strategy, which become increasingly important in the context of our digital strategy and the raising of artificial intelligence. From the cybersecurity culture perspective, in 2024, we enhanced staff participation across our organization by promoting channels available to report any suspicious cybersecurity threats through our corporate Awareness Program, which resulted in a 42% increase in the number of threats reported in 2024 compared to 2023. Even though we have not experienced any material losses in this matter and we have been working to prevent them, we cannot assure you that we will not suffer additional losses in the future related to these kinds of events.

The occurrence of any cyber-attack or information security breach could result in material adverse consequences to us, including damage to our reputation and the loss of confidence from customers. We could also face litigation or additional regulatory and public scrutiny. Litigation or regulatory actions in turn could lead to significant liability or other sanctions, including fines and penalties or fund reimbursements to customers adversely affected by any security breach. As mentioned above, successful attacks or systems failures at our bank or at other financial institutions could lead to a general loss of customer confidence in financial institutions, including us. In addition, we depend on a variety of internet-based data processing, communication, and information exchange platforms and networks, including the use of both on-premises and cloud servers. We cannot assure you that all of our systems are entirely free from vulnerability. Additionally, we enter into contracts with several third parties to provide our customers with data processing and communication services. Therefore, if information security is breached, or if one of our employees or external service providers’ breaches compliance procedures, information could be lost or misappropriated, which may affect our results of operations, damage others or result in potential litigation. Further, in light of the high volume of transactions we process, the large number of customers, partners and counterparties, and the increasing sophistication of malicious actors, a cyber-attack could occur and persist for an extended period of time without detection. We expect that any investigation of a cyber-attack would take substantial amounts of time, and that there may be extensive delays before we obtain full and reliable information. Although we have substantially increased measures to address cybersecurity during the last years and, with the help of service providers, intend to implement security technology devices and establish operational procedures to prevent such damage from time to time, we cannot assure you that these security measures will be successful.

On April 8, 2024, Law No. 21,663 (Cybersecurity Framework Law), which establishes the general regulatory environment and guidelines for private and public entities, was published in the Chilean Official Gazette. For further information, see “Item 4. Information on the Company—Regulation and Supervision—Reporting of Operational and Cybersecurity Incidents and Cybersecurity Framework Law.”

As a financial institution, we are subject to reputational risk that could materially affect our results of operations or financial condition.

Corporate reputation is a crucial competitive advantage for us, as it allows us to attract and retain customers, appeal to investors, and avoid employee attrition. Also, reputation is a key element in banking since access to funding is driven by the confidence of depositors and the opinion of ratings agencies on the value of our franchise. Therefore, any disreputable event, including employee misconduct, legal proceedings, regulatory sanctions, failure to deliver minimum standards of service quality, failure to comply with regulatory requirements, unethical behavior by our staff or involvement in political issues or public scandals (or gossip related thereto), complaints filed by customers or non-customers and fake news or alleged issues about us or our operations in social media could damage our reputation and produce significant harm to our results of operations or financial condition. Furthermore, our reputation is highly aligned with the reputation of the banking industry in which we participate and, therefore, actions by other providers of financial services or the banking industry could also harm our own reputation.

Similarly, the ability to manage potential conflicts of interest has become an increasingly important factor for our business given our widespread operations in many economic sectors with diverse third parties. Accordingly, the failure to address –or even the perceived failure to address– conflicts of interest could affect the willingness of customers and investors to work with us or could lead to legal actions against us. To address and avoid these potential events, we strive to improve our corporate governance standards by detecting potential failures and adopting world-class principles and procedures. Nevertheless, we cannot assure you that we will not face reputational events in the future that could harm our prospects or the value of our franchise. For more information on corporate governance, see “Item 6. Directors, Senior Management and Employees—Board Practices.”

Risks Relating to Chile

Our growth and profitability depend on the level of economic activity in Chile.

Our core business and transactions are with customers doing business in Chile. Accordingly, our ability to grow our business volumes and results of operations, as well as enhance our financial condition, in general, depends on the dynamics of the Chilean economy or the effects of economic developments in other countries affecting Chile, and specific macroeconomic variables such as inflation, unemployment, interest rates, consumption and private investment. In the past, global events, such as the 2008 subprime crisis and the COVID-19 pandemic, have dramatically affected economic growth in developed countries, as well as in Chile where a subsequent slowdown in the local banking industry was observed due to lower levels of consumption and deteriorated asset quality prompted by unemployment and financial stress experienced by certain industries. After experiencing the shaking effects of the COVID-19 pandemic, the Chilean economy showed a strong recovery in 2021. In 2022, the Chilean economy followed similar trends when compared to the global economy, characterized by a moderation in GDP growth, higher inflation, and fiscal and monetary policy adjustments. According to statistics published by the Central Bank, the Chilean economy grew 2.2% in 2022, as a result of a slowdown in all GDP items as reflected by an annual growth of 1.6% in household consumption due to a sharp decline in the liquidity surplus held by individuals, an annual expansion of 4.6% in private investment fostered by the uncertainty surrounding the economic and political outlook and an increase of 6.3% in fiscal spending due to lagged expenses related to COVID-19 and social support. Despite lower GDP growth, inflation rose significantly during 2022, as depicted by an annual increase of 12.8% in the CPI, which is the highest level in three decades while being significantly above the monetary policy target of 3.0% defined by the Central Bank. Soaring inflation was the consequence of many factors including increased prices of volatile components of the CPI basket, as well as the depreciation of the exchange rate during most of the year. The inflation increase was crucial for the Central Bank to deploy an aggressive monetary policy adjustment by raising the reference interest rate from 4.00% in December 2021 to 11.25% in December 2022.

In 2023, the Chilean economy continued to slow down steadily and experienced a 0.5% GDP growth as compared to 2022. This performance was primarily driven by annual contractions of 4.9% and 0.1% in household consumption and private investment expenditures, respectively, following the adjustment process of the economy after a period of significant growth in 2021. The decrease in household spending was primarily produced by: (i) tightening monetary policy deployed by the Central Bank to control inflation that resulted in higher-than-normal interest rates throughout the year, as evidenced by a monetary policy interest rate that evolved from 11.25% in December 2022 to 8.25% in December 2023, and (ii) the extinction of the liquidity excess seen in the economy in previous years, as a result of pension fund withdrawals during the COVID-19 crisis, which mostly affected individuals. In a similar fashion, the contraction in private investment was primarily prompted by a business sentiment that remained in negative territory all through 2023, as a result of uncertainties generated by: (i) the second constitutional process that concluded with a national referendum held on December 17, 2023 by which the Chilean population rejected the new constitution draft, (ii) diverse reforms sponsored by the current administration that pursue to introduce material changes in key economic fields, such as the pension system, the healthcare system and the tax system, (iii) lengthy approval processes for large-scale investment projects, and (iv) interest rates that remained high, which increased financing costs for projects and capital expenditures. On the other hand, fiscal spending recorded a moderate annual increase of 2.2% in 2023, as a result of the government attempts to improve the fiscal balance after periods of higher-than-expected spending intended to cover social needs. All of these factors were coupled with an improved balance of trade (exports minus imports).

In 2024, the Chilean economy performed in line with its growth potential (as measured by the Finance Ministry) by recording a 2.6% GDP expansion, driven by a recovery in household consumption that increased by 1.0% on an annual basis, an annual expansion of 3.0% in fiscal spending, and an improved trade balance due to a 6.6% increase in exports in 2024 compared to a 5.3% increase in imports. Annual consumption improvement is consistent with: (i) an inflation rate that is gradually returning to the Central Bank’s two-year target range, though staying slightly above the upper limit, as reflected by a 12-month CPI variation of 4.5% in 2024, (ii) lower short-term borrowing costs associated with the easing cycle the Central Bank continued to deploy during the year by lowering the reference interest rate from 8.25% in December 2023 to 5.0% in December 2024, and (iii) an improved labor market as evidenced by an unemployment rate that averaged 8.5% in 2024 compared to 8.7% in 2023. These positive figures were to some degree offset by an annual contraction of 1.4% in private investment, which was particularly caused by a marked decline in capital expenditures in machinery and equipment, due to: (i) a business sentiment that remained pessimistic in relation to the local economic outlook, as a result of the uncertain outcome of pending reforms, such as in the pension fund system and the tax system, (ii) the deteriorating financial condition of some companies in the real estate and construction sectors, given particular dynamics affecting these industries, such as long-term interest rates that remained above the levels seen in the 2010 decade and restricted credit access for individuals, the end of certain tax benefits for residential construction and soaring costs due to impact of cumulative inflation.

Additionally, social and political developments occurring in Chile could affect both consumer confidence and business sentiment, which may in turn result in lower economic growth potential in the long-term, as well as subdued economic activity in medium-term and lowered demand for loans and banking services. For example, the inability to reach political consensus on addressing diverse issues, including: (i) key reforms affecting crucial economic and social fields, (ii) an effective control on immigration and criminality, and (iii) an adequate balance between environmental care and economic growth that permits clearer and swifter approval processes for high-impact investment projects, among others, may result in increased uncertainty that could translate into higher long-term interest rates, higher inflation, economic slowdown and increased unemployment, which could affect our cost of funds, labor costs, net interest margins, results of operations, business volumes and financial condition. Likewise, as the Chilean economy is one of the most open economies in the world, potential disruptions in global trade as a result of the current foreign policy adopted by the recently appointed administration in the United States that has increased tariffs on imported goods and expected wave retaliation by affected countries may result in lower economic growth in Chile that may adversely impact the dynamism of the banking industry, our business growth and results of operations.

Therefore, we cannot assure you that the local economy will grow in the coming years, as it has in the past, or that developments affecting the Chilean economy and the local banking industry will not materially affect our business, financial condition or results of operations. For more information, see “Item 5. Operating and Financial Review and Prospects—Trend Information,” “Item 3. Key Information—Risk Factors—Pandemics, epidemics and other health events will affect both the global and the Chilean economy, our business or results of operations and could affect our financial condition” and “Item 3. Key Information—Risk Factors— Developments in international financial markets may adversely affect the market price of the ADSs and shares.”

Any downgrade in Chile’s or our credit rating could increase our cost of funding, affecting our interest margins, results of operations and profitability.

Our current credit ratings determine the cost and the terms upon which we are able to obtain funding in the ordinary course of business. Rating agencies regularly evaluate us by considering diverse factors, including our financial strength, the business environment and the economic backdrop in which we operate. Thus, methodologies used by rating agencies evaluate Chile’s sovereign debt ratings when determining our ratings. In addition, from time to time, rating agencies review their methodologies, which in some cases could result in adjustments to Chile’s sovereign debt prevailing credit ratings or those of our debt. On March 24, 2021, Standard & Poor’s Ratings Service (“S&P”) downgraded Chile’s sovereign credit rating from “A+” to “A” while modifying the credit outlook from negative to stable. The credit action taken by S&P was founded in the expected negative effects due to the COVID-19 pandemic and the effects of increasing social pressures that may lead the prevailing government to incur further social spending and increase in Chile’s fiscal deficit in the long-run. Given the credit action taken by S&P on Chile’s sovereign credit rating, this agency also downgraded four local banks (excluding us) by one notch, while maintaining the negative outlook for the whole banking industry (including us), except for Banco Estado (a state-owned bank) that received a stable outlook. In June 2021, S&P improved the outlook for two banks from negative to stable, excluding us. Moreover, on September 15, 2022, Moody’s downgraded Chile’s sovereign credit rating from “A1” to “A2.” Consequently, on September 20, 2022, Moody’s downgraded the credit rating of three local banks (including us) by one notch from “A1” to “A2”, though improving our intrinsic (BCA) rating from “Baa1” to “a3.” On October 19, 2023, S&P kept the Chile’s sovereign credit rating at “A”, but revised the outlook from stable to negative, on the grounds of weaker political consensus on the country’s political and economic agenda, which may result in subdued economic activity and slower improvement in social condition, all of which could damage growth potential while pressuring fiscal and external balances. Following this rating action, on October 20, 2023, S&P revised the outlooks for us and another Chilean banks from stable to negative while maintaining credit ratings. On the other hand, during 2023 and 2024, Moody’s maintained credit ratings and outlooks unchanged for both the Chile’s sovereign debt and local banks. On October 15, 2024, S&P maintained the credit rating for Chile’s sovereign debt while improving the outlook from negative to stable, which consequently resulted in an improved outlook to us and another local bank. Subsequently, on October 28, 2024, S&P revised the outlook on us and four other local banks from negative to stable while reaffirming ratings. While Chile’s current long-term debt credit ratings remain investment grade, these credit ratings may deteriorate further and adversely affect our credit rating.

Any downgrade in our debt credit ratings could result in higher borrowing costs for us, while requiring us to post additional collateral or take other actions under some of our derivative and other contracts and limit our access to debt and capital markets. All of these factors could adversely impact our commercial business by affecting our ability to: (i) sell or market our products, (ii) issue long-term debt in Chile or abroad, (iii) retain customers who need minimum ratings thresholds to operate with us, (iv) maintain derivative contracts that require us to have a minimum credit ratings, and (v) enter into new derivative or other contracts, which could impact our market risk profile, among other effects. Any of these factors could have an adverse effect on our liquidity, capital adequacy, results of operations and financial condition.

Due to: (i) the volatility in the financial markets and concerns about the soundness of developed and emerging economies, (ii) potential changes to be introduced in the fiscal policy or long-term government spending by the current or future government administrations in Chile, (iii) further social demands leading to increasing fiscal spending, (iv) unwillingness or inability to reach political consensus on economic and social reforms in a timely and effective manner, (v) deterioration in Chile’s terms of trade following the evolution of energy and commodity prices, (vi) reforms to be proposed or introduced by the current or future administrations to modify the characteristics of the current economic and financial system, and (vii) the effects that current or potential geopolitical worldwide conflicts may have on the local economy, we cannot assure you that rating agencies will maintain our and Chile’s sovereign debt current ratings and outlooks.

Changes in tax law could adversely affect our net income and could also result in higher taxes on distributions to our foreign shareholders.

Over the last decade, there have been various changes in, and attempts to modify, the Chilean tax regime, which resulted in reforms enacted in 2014, 2016, 2020, and 2022 which were aimed at increasing tax collection to address social demands. Among other things, these reforms have: (i) changed the local tax system from an integrated to semi-integrated one, (ii) increased the statutory corporate tax rate for companies to 27%, (iii) risen taxes for higher income individuals through new tax brackets and additional property taxes, (iv) reduced taxes for SMEs, (v) levied VAT on services that were not formerly taxed, such as those provided online, and (vi) removed or limited tax exemptions. Some of these elements also affected the taxes paid on dividend distributions by local and foreign investors. For more information on the main topics addressed by these reforms see “Item 4. Information on the Company—Regulation and Supervision— Modifications to Tax Legislation” and “Item 10—Additional Information—Taxation—Chilean Tax Considerations.”

In August 2023, after a lengthy dialogue process with diverse economic and political sectors, the government announced a new proposal to reform the tax system, called “Tax Deal for Development”, which aims to finance the government’s social agenda on diverse matters, including minimum guaranteed pensions, improved health services for lower- and middle-income population, reinforcement of public security and social protection through a National Care System, among other elements. In order to do that, the Tax Deal for Development is expected to be comprised of several bills, including the one submitted on December 14, 2023, which is expected to create a Registry of Final Beneficiaries, containing the information of the final taxpayer of companies, nonprofit organization, investment funds, and other entities. Those final beneficiaries are expected to be Chilean or foreign physical individuals with or without tax domicile in Chile, who meet the legal criteria established in the bill.

Law No. 21,713, which is primarily focused on compliance and improving tax enforcement under the prevailing tax system, was enacted and published on October 24, 2024. The Finance Ministry, after the approval of Law No. 21,713, held meetings with political parties, announcing the government’s intention to introduce changes to income tax, tax exemptions, and credits while increasing taxes for higher-income individuals, and to reduce the statutory corporate tax rate for companies from 27% to 25%. However, no bill has been submitted on this matter as of the date of this annual report. According to press reports, the new proposal would consider: (i) amendments to the General Corporate Income Tax Regime including tax disintegration, a decrease in the statutory corporate tax rate from the current 27% to 25%, a fixed tax rate of 16% levied on capital gains and dividends, and the introduction of a “first distribution tax” of 4%; (ii) a reform to tax regime for small and medium-sized companies by means of establishing a transitory “single-tax” system, which would replace both income and sales tax with a monthly fixed tax amounting to UTM 1 (Unidades Tributarias Mensuales, approximately Ch$67,294 or U.S.$68 as of December 31, 2024), while also establishing a transparency tax regime by default and maintaining an alternate regime similar to the current one; (iii) increased tax rates for the top three income tax brackets of personal income tax regime. As of the date of this annual report, the Chilean Finance Ministry has informed that the current administration will postpone the submission of this bill to Congress due to the uncertain effects of the U.S. foreign trade policy on both the global and local economies. Should the Chilean government decide to submit the bill to Congress in the future, we cannot predict yet whether its enactment would adversely affect our results.

Lastly, on January 6, 2025, the Finance Ministry presented a “Miscellaneous Bill for simplifying and promoting economic activity”, which includes a transitory Corporate Income Tax decrease to 12.5% for small and medium-sized companies. As of the date of this annual report, this bill is in the first legislative stage and, as such, we cannot determine yet whether this bill, if enacted, would have an adverse effect on our results.

Climate change presents various financial and non-financial risks to us and our customers that are not directly observable and, therefore, are difficult to mitigate in advance.

Climate change presents various financial and non-financial risks to us, our customers, business counterparties and suppliers. It poses both immediate and long-term risks, which are expected to increase over time. Climate risks may be of two types: (i) physical risks (related to the direct physical effects of climate change), and (ii) transition risks (related to regulatory, market, technological, stakeholder and legal changes from a transition to a low-carbon economy).

Physical risks from climate change include acute risks, such as more intense storms and floods, as well as consequences of chronic changes in climate, like rising sea levels, prolonged droughts, unexpected floods, wildfires, systemic changes to geographies and any other resulting in population migration. Such physical risks could have adverse financial, operational, and other impacts on us, both directly on our infrastructure, business activity and operations, and indirectly as a result of impacts to our customers, suppliers and other counterparties. These impacts may include destruction, damage or impairment of properties, infrastructure and other fixed-assets, business continuity breaches, massive staff absence due to inability to reach their workplace, disruptions to supply chains, reduced availability of goods or increased cost of insurance policies. Physical risks can also impact the credit risk of our loan portfolio due to damage to customers’ assets pledged as collateral to us, adverse effects on the credit condition of our investment portfolio’s counterparties or increased liquidity risk if physical destruction produces liquidity shortage in capital markets due to disruptions in communication networks, among other sources of financial risks.

Transition risks may arise from changes in regulations or market preferences toward low-carbon industries or sectors, which in turn could have negative impacts on asset valuation, results of operations or our customers’ reputation that may negatively affect their financial condition and payment capacity while affecting our own reputation for doing business with them. Failure to adequately recognize transition risks in developing and executing our business strategy could lead to market share loss, decreased revenues and higher expected credit losses and increased cost of funds. Moreover, banking regulators and others are increasingly focusing on the issue of climate risk at financial institutions, both directly and in relation to their customers, which could translate in increased regulatory requirements on diverse matters. Legislative and regulatory changes and uncertainties regarding climate-related risk management and disclosures are likely to result in higher risks and costs for us from the regulatory, compliance, reputational and other perspectives.

As an example, in March 2024, the SEC adopted rules aimed at enhancing and standardizing climate-related disclosures. The rules require registrants to include certain climate-related information in their registration statements and annual reports, including data regarding greenhouse gas emissions and information regarding climate-related risks and opportunities and related financial impacts, governance, and strategy. However, in April 2024, the SEC issued an order staying implementation of these rules pending the resolution of certain legal challenges. The final rules, to the extent they survive any ongoing or forthcoming legal challenges, may require us to provide certain climate-related information in the future. Thus, as of the date of this annual report, the final disclosure requirements and reporting timeline and compliance costs are unknown.

Even as some regulators seek to require disclosure of climate-related information, our ability to comply with such requirements and conduct more robust climate-related risk analyses may be hampered by lack of information and reliable data. Data on climate-related risks is still limited in availability, often based on unverified figures or sources, collected and reported on a lag, and variable in quality. Likewise, since modeling capabilities to analyze climate-related risks and their impacts to financial institutions are in first stages of development, and to date those tools are still under continuing improvement and revision, the severity of the impacts of climate change on banking business may not be predictable and, therefore, may challenge the effectiveness of our risk management strategies to mitigate our climate risk exposure. Thus, our failure to detect the aforementioned conditions or to identify other risks related to climate change could materially affect our financial condition, business and results of operations.

Currency fluctuations could adversely affect our results of operations, the value of our ADSs and any distributions on the ADSs.

The Chilean Government’s economic policies and any future changes in the value of the Chilean peso with respect to the U.S. dollar could affect the dollar value of our common stock and our ADSs. Given the floating exchange rate regime that exists in Chile, the Chilean peso has been subject to large fluctuations in the past and this trend could occur again in the future. According to information published by the Central Bank (“Dólar Observado”, which differs from exchange rate of accounting representation or market exchange rate), between December 31, 2023, and December 31, 2024, the value of the U.S. dollar relative to the Chilean peso increased by approximately 12.2%, as compared to the increase of 2.9% recorded in the period from December 31, 2022 to December 31, 2023. Chilean trading in the shares underlying our ADSs is conducted in Chilean pesos. Cash dividends associated with our shares of common stock are received in Chilean pesos by the depositary, which then converts such amounts to U.S. dollars at the then-prevailing exchange rate for making payments in respect of our ADSs. If the value of the U.S. dollar increases relative to the Chilean peso, the dollar value of our ADSs, and any distributions to be received from the depositary, will decrease. In addition, the depositary will incur customary currency conversion costs (to be borne by the holders of our ADSs) in connection with the conversion and subsequent distribution of dividends or other payments. For more information, see “Item 10. Additional Information—Exchange Controls.”

Since we manage assets and liabilities denominated in foreign currency, our results of operations may be affected by fluctuations in the exchange rates between the Chilean peso and the U.S. dollar, or the Chilean peso in relation to other currencies, despite our policy and Chilean regulations related to the general avoidance of material exchange rate mismatches. In order to reduce the effect of exchange rate mismatches, we enter into foreign exchange derivative transactions, including both hedge accounting derivatives and trading derivatives not classified as hedge accounting, that hedge most of our exposure to foreign currency. As of December 31, 2024, our foreign currency-denominated liabilities and Chilean peso-denominated liabilities, which contain repayment terms linked to changes in foreign currency exchange rates, exceeded our foreign currency-denominated assets and Chilean peso denominated assets, which contain repayment terms linked to changes in foreign currency exchange rates, by an amount of Ch$1,677 million (amounting to approximately U.S.$1.7 million as of December 31, 2024), or 0.04% of our paid-in capital and reserves.

We may decide to change our policy regarding exchange rate mismatches. Regulations that limit such mismatches may also be amended or eliminated by regulatory institutions. Higher exchange rate mismatches will increase our exposure to the depreciation of the Chilean peso, and any such depreciation may impair our capacity to service foreign-currency obligations and may, therefore, materially, and adversely affect us, our financial condition and results of operations. Additionally, the economic policies of the Chilean Government and any future fluctuations of the Chilean peso, with respect to the U.S. dollar, could adversely affect our financial condition and results of operations.

Chile has corporate disclosure standards different from those you may be familiar with in the United States.

Chilean disclosure requirements for publicly listed companies differ from those in the United States in some significant respects. In addition, although Chilean law imposes restrictions on insider trading and price manipulation, the Chilean securities markets are not as highly regulated and closely supervised as the U.S. securities markets. Accordingly, the information available to you regarding our corporation will not be the same as the information available to shareholders of a U.S. company. For more information, see “Item 16G. Corporate Governance.”

Chilean law may provide shareholders with fewer and less well-defined rights.

Our corporate affairs are governed by our bylaws (estatutos) and the laws of Chile. Under such laws, our shareholders may have fewer or less well-defined rights than they might have as shareholders of a corporation incorporated in a U.S. jurisdiction. For example, our shareholders would not be entitled to appraisal rights in the event of a merger or other business combination undertaken by us.

Our business growth, asset quality and profitability may be affected by political, legal and economic uncertainty, as well as social developments in Chile.

Our operations are highly dependent on the Chilean political and social environment, as most of our customers and borrowers do business in Chile. Thus, our results of operations could be negatively impacted by unfavorable political and diplomatic developments, social instability or unrest, as well as dramatic changes in public policies, including expropriation, nationalization, international ownership legislation, interest rate caps and tax policy.

The social unrest occurred at the end of 2019 led to increased volatility in the Chilean stock market, with a significant correction of stock prices and a sharp depreciation of the Chilean peso against the U.S. dollar, both of which were further affected by the COVID-19 outbreak in March 2020. Furthermore, share prices of local banks, including ours, suffered significant declines in the market due to both events, while bond spreads of local banks increased.

In response to the social unrest, the Chilean Government announced a social agenda intended to increase basic pensions, expand social health coverage, and reduce and stabilize the price of some public services. To fund these initiatives, the Chilean Government and the opposition at that time agreed on amendments to certain tax legislation that was passed by the Chilean Congress and enacted on January 29, 2020. See “Item 5. Operating and Financial Review and Prospects—Operating Results—Income Tax and Item 10. Additional Information—Taxation—Chilean Tax Considerations.”

Another measure agreed by the government and the Congress to tackle the political crisis of October 2019 was a process to draft a new constitution to replace the one dating from 1980. This process lasted approximately two years and the first project of new constitution was rejected by a relevant majority of 61.86% of the Chilean voters in a national referendum held on September 4, 2022. Following this outcome, the Chilean congress agreed to start over a second constitutional process by setting certain basic principles and standards that the new constitution must incorporate. The new draft was voted and once again rejected by a majority of 55.79% in a national referendum held on December 17, 2023. Notwithstanding this evidence, we cannot rule out that new attempts to change the prevailing constitution will not take place in the future. Accordingly, we cannot assure you that economic growth, asset quality, profitability and investment in Chile, and consequently our results of operations or financial condition, may not be adversely affected by political, legal and economic uncertainty.

Furthermore, we cannot assure you that the social unrest will not reappear in Chile and that violent crimes and insecurity will not further increase in the future and, therefore, we can offer no assurance that it will not have a negative impact on economic growth, the overall Chilean business environment and our results of operations and financial condition. In this regard, in recent years we have seen a surge in certain violent crimes and insecurity in Chile, some of them related to drug trafficking and organized crime, which have raised concerns among the population and the Chilean Government. Accordingly, the Congress has approved new legal bodies and the current administration is implementing focused plans to reinforce public security both at Chilean borders and in specific cities with high criminality indices.

Further, there can be no assurance as to the policies and reforms that the current and future governments and the Congress may propose or take in order to address both social demands or criminality, while their impact on Chile’s economic and fiscal situation, growth, stability, outlook are still uncertain. Likewise, we cannot assure you that the coming presidential primary elections scheduled for June 2025 and the presidential elections to be held in November 2025 will result in reasonable economic and social policies. In this regard, given the emergence of more radical political stances in Chile and abroad over the last decade, we cannot rule out that potential candidates representing such ideas will be elected in Chile and, if that happens, we cannot assure that there will be consistent and adequate political counterweights in Congress. Therefore, we are not able to currently predict the effects that any future policies or reforms in other economic and social fields may have on the Chilean economy, the banking activity and our business, financial condition and results of operations.

Reforms to labor laws, the pension system and the healthcare system as well as labor strikes or slowdowns could adversely affect our results of operations.

We are a party to collective bargaining agreements with various labor unions to which most of our employees belong. Therefore, disputes regarding the terms of these agreements, or our potential inability to negotiate acceptable contracts with these unions, could result in strikes, work stoppages, or other slowdowns by the affected workers, among other things. If unionized workers were to engage in a strike, work stoppage, or other slowdown, or other employees were to become unionized, we could experience disruption of our operations or higher ongoing labor costs, either of which could have a material adverse effect on our results of operations. See “Item 6. Directors, Senior Management and Employees—Employees.”

Current labor legislation defines a company’s minimum services and emergency teams by the applicable labor regulator after negotiations between a company and each labor union. As such, minimum services refer to those functions of a company which must continue to be provided during a strike because they have been determined to be essential to protect assets and facilities, to prevent accidents, guarantee public utility services, meet the basic needs of the population and prevent environmental damage or harm to health. A company’s emergency teams are made up of workers assigned by each union to fulfill such minimum services. Therefore, in the event of futures strikes, we could face operational disruptions due to an inadequate number of minimum services and insufficient staff for the emergency teams.

Over the last years, diverse laws related to the labor market have been enacted. In 2023, for instance, a new framework for the treatment of working hours reduced the workweek from 45 to 40 hours over a three-year period starting in 2024. During 2023, based on the experience of diverse pilot projects, we adopted the new framework, with no material effects on our labor costs or the quality of services delivered to our customers. Another law enacted in 2023 increased the monthly statutory gross minimum wage (before social security contributions and taxes), under which the minimum wage was set to Ch$500,000 starting on July 1, 2024 (approximately U.S.$503 per month as of December 31, 2024). Also, in January 2024, a new law went into effect setting forth certain teleworking rights for workers who care for children and disabled or dependent people regardless of their age, among other matters. From the perspective of workplace harassment, in August 2024, a new legal framework went into effect, which aims to prevent workplace harassment, sexual harassment and violence at the workplace. Given the wide array of changes introduced in labor matters, we cannot assure you that they will not have an adverse impact on us by translating into increased labor costs, lowered service quality or productivity in case of disruption of internet connection for the staff allowed to work remotely, increased expenses to address non-monetary requirements set by the laws or changes in the organizational climate, all of which could negatively impact our results of operations and profitability. For more information, see Item 4. Information on the Company—Regulation and Supervision—Labor-related Laws.”

Likewise, another bill seeks to modify Chilean labor laws by increasing the participation of employees in companies’ profits and the way in which this participation is calculated. These laws could translate into higher ongoing labor costs, which could have an adverse effect on our results of operations and future financial condition. As of December 31, 2024 and as of the date of this annual report, this bill has had no significant progress.

In recent years, the Chilean Government has presented several bills with the purpose of improving the Chilean pension system. The government presented a bill in November 2022, which was modified in December 2023, in order to reach an agreement with the opposition. After several negotiations, the Government and the center right coalition reached an agreement to reform the current pension system. On March 26, 2025, Law No. 21,735 was enacted, which considers, among other changes: (i) an increase of 4.5 percentage points in the contribution to individual pension fund accounts to be financed by employers, from the current 10% contributed by each worker, to be managed by the current pension fund administrators (“AFP”) with the establishment of the generational funds, (ii) a further 1.5 percentage points of contribution charged to the monthly salary to be financed by the employer, which will contribute to a new fund managed by a special purpose vehicle that will reimburse funds to the contributor after 20 years and is intended to increase pensions for current pensioners, (iii) one percentage point to be financed by the employer, which is intended to improve current and future pensions for women by addressing gender disparities in the contribution to the pension fund system, and (iv) the possibility of carrying out public bidding processes from time to time for part of the pension funds (about 10% each time) in order reduce fees and commissions charged to contributors and pensioners by pension fund managers. Although the reform was enacted, the implementation of the diverse provisions contained therein is still in progress. Based on this reform, labor costs are expected to increase for companies in the medium term, though we do not expect a direct material impact on our results of operations or financial condition due to this change. From the funding perspective, the funds available in the pension fund system should increase due to this reform in the long-term. However, the new framework for the pension fund industry could result in our inability to raise funds from pension fund managers as we have in the past if profitability for pension fund managers declines significantly due to the introduction of the bidding process. As a result, there could be further restrictions to our access to long-term financing, compelling us to seek alternative funding sources in Chile and abroad, which may bear higher interest rates and include higher transactional costs, and, therefore, may have an adverse effect on our net interest margin, results of operations and financial condition in the long-term.

In addition, in 2024 the Chilean executive power and Congress agreed on certain changes to the Chilean healthcare system in order to address the deteriorated financial condition of private health institutions (instituciones de salud previsional, “ISAPRES”) with the aim of preventing an overall collapse of the Chilean private health system. Therefore, in 2024, the new pricing scheme was set for ISAPRES in order to deal with the decision of the Supreme Court that resolved ISAPRES should reimburse users for unilateral price increases in the past. Although the application of these changes to the private health system resulted in a more alleviated financial condition for ISAPRES, it is not currently clear whether it is a final solution. Although we do not have material exposure to the Chilean private health system, we cannot rule out that the credit quality of some of our debtors belonging to the health sector, or debtors participating in other sectors, whose activity depends on business with the latter, could deteriorate in the future.

Pandemics, epidemics and other health events will affect both the global and the Chilean economy, our business or results of operations and could affect our financial condition.

The spread of illnesses, epidemics, or pandemics such as the COVID-19 has caused, and could in the future cause, quarantines, shutdowns, reduction in business activity and financial transactions, labor shortages, supply chain interruptions and overall economic and financial market instability in many countries, including Chile, with subsequent adverse effects on our business growth, results of operations or financial condition. If new variants of viruses appear to be resistant to the currently existing vaccines or other kind of viruses with similar adverse effects spread, the health authority could impose restrictions, such as country-wide lockdowns, which could result in a shutdown involving the Bank, our subsidiaries and some or all of our customers operations or the services provided by our suppliers, such that we would be unable to meet the needs of our customers for an unknown period of time, which could adversely affect our results of operations by reducing revenues, decreasing our collection capabilities and increasing operating expenses.

The spread of new variants of viruses or the appearance of other kinds of diseases or viruses that threaten to become a pandemic continues to result, from time to time, in increased volatility in both the local and the international financial markets and economic indicators, such as exchange rates, interest rates, credit spreads and commodity prices. Any shocks or unexpected movements in these market factors could result in financial losses associated with our fixed-income trading portfolio, trading derivatives or financial assets measured at fair value through other comprehensive income, which could then cause deterioration of our financial condition or limitations to meet our liabilities. Furthermore, market fears could translate into liquidity constraints and reduced access to funding in both the local and the international markets, negatively affecting our net interest margin and net income. Adverse changes in the economy may also have a negative effect on the ability of our borrowers to make timely repayments of their loans, which could have an adverse impact on our earnings. Even though the Chilean financial authorities made various decisions in order to ensure liquidity within the Chilean financial system to overcome the impact of the COVID-19 pandemic on the local economy, we cannot assure you that these measures will be replicated if a new pandemic or the spread of other illnesses occur in the future, which could translate into liquidity constraints for the whole banking system, including us. Lastly, contingency plans in order to address health emergency, including remote working arrangements, implementation of alternative offsite locations and so on, could have a negative impact on us in terms of operating expenses, service quality delivered to our customers and lowered net income.

Risks Relating to our American Depositary Shares (“ADSs”)

Our principal shareholders may have interests that differ from those of our other shareholders and their significant share ownership may have an adverse effect on the future market price of our ADSs and shares.

As of April 17, 2025, LQ Inversiones Financieras S.A. (“LQIF”), a holding company beneficially owned by Quiñenco S.A. and Citigroup Chile S.A., holds directly and indirectly approximately 51.15% of the voting rights of our shares. Subject to our bylaws and applicable law, such principal shareholders are in a position to elect a majority of the members of our board of directors and control all matters decided by a shareholder vote, including the approval of fundamental corporate transactions.

Actions taken by our principal shareholders regarding the disposition of the shares or ADSs they beneficially own, or the perception that such actions may occur, may adversely affect the trading price of our shares on the various stock exchanges on which they are listed and, consequently, the market price of the ADSs.

There may be a lack of liquidity and a limited market for our shares and ADSs.

While our ADSs have been listed on the New York Stock Exchange (the “NYSE”) since the first quarter of 2002, there can be no assurance that an active trading market for our ADSs will be sustained. For the year ended December 31, 2024, a daily average volume of approximately 199,160 of our American Depositary Receipts (“ADRs”) and a daily average turnover of approximately U.S.$4.7 million were traded on the NYSE, according to data provided by Bloomberg. Although our shares are traded on the Santiago Stock Exchange and the Chilean Electronic Stock Exchange, the Chilean market for our shares in Chile is small and somewhat illiquid. As of April 17, 2025, approximately 48.85% of our outstanding shares were held by shareholders other than our principal shareholders.

If an ADS holder withdraws the underlying shares from the ADR facility, the small size of the market, its limited liquidity, as well as our concentrated ownership, may impair the ability of the ADS holder to sell the shares in the Chilean market in the amount and at the price and time such holder desires, and could increase the volatility of the price of our ADSs.

ADS holders may be unable to exercise voting rights at shareholders’ meetings and preemptive rights.

ADS holders may exercise voting rights associated with common stock only in accordance with the deposit agreement governing our ADSs. Accordingly, ADS holders will face practical limitations when exercising their voting rights because ADS holders must first receive notice of a shareholders’ meeting from the Depositary and may then exercise their voting rights by instructing the Depositary, on a timely basis, on how they wish to vote. This voting process will necessarily take longer for ADS holders than for direct common stockholders, who are able to exercise their vote by attending our shareholders’ meetings. Therefore, if the Depositary fails to receive timely voting instructions from some or all ADS holders, the Depositary will assume that ADS holders agree to give a discretionary proxy to a person designated by us to vote their ADSs on their behalf. Furthermore, ADS holders may not receive voting materials in time to instruct the Depositary to vote. Accordingly, ADS holders may not be able to properly exercise their voting rights.

Furthermore, the Ley Sobre Sociedades Anónimas No. 18,046 (the “Chilean Corporations Law”) and the Reglamento de Sociedades Anónimas (the “Chilean Corporations Regulation”) require that whenever we issue new common stock for cash, we grant preemptive rights to all of our shareholders (including holders of ADSs) to purchase a sufficient number of shares to maintain their existing ownership percentage. Such an offering would not be possible unless a registration statement under the Securities Act were effective with respect to such rights and common stock, or an exemption from the registration requirements thereunder were available.

We may choose not to make a registration statement available with respect to the preemptive rights and the common stock, in which case you may be unable to exercise your preemptive rights. If a registration statement is not filed, the depositary will sell such holders’ preemptive rights and distribute the proceeds thereof if a premium can be recognized over the cost of any such sale.

Developments in international financial markets may adversely affect the market price of the ADSs and shares.

The market price of our ADSs and shares may be adversely affected by volatility in international financial markets and unfavorable developments in global economic conditions. The market for Chilean securities and the Chilean economy as a whole are influenced by: (i) economic and market conditions in Chile’s main commercial partners such as the United States, Europe and certain emerging economies, especially Asian countries, (ii) economic as well as political developments in Latin American countries, and (iii) armed conflicts in which some of the Chile’s main trade partners participate or by which they could be affected. Although economic conditions are different in each country, investors’ reactions to specific issues in one country may affect the financial markets in others, including Chile.

After a long period of turbulence and volatility, which began in 2007 with the subprime mortgage crisis, when many U.S. banks and financial institutions disclosed significant write-downs related to their exposure to mortgage-backed securities and other similar financial instruments, the world’s economy began to show a gradual recovery thanks to significant government intervention for important banks worldwide, in order to maintain investors’ and customers’ confidence and to prevent bank runs. At the same time, stricter capital requirements were established for banks around the world, namely the Basel III framework or more recently the Basel IV framework.

During 2020, the COVID-19 pandemic was a principal source of instability for global financial markets, leading to lower valuations in the stock market and decreased liquidity in fixed income markets. In 2021, most of the developed and developing economies recovered from the contraction displayed in 2020, due to both a low comparison base and the positive impact of aggressive monetary and fiscal packages, resulting in a 6.2% expansion in global GDP. In 2022, however, global GDP grew by 3.5%, which illustrated a deceleration after a period of significant growth due to external factors. These economic performances were influenced by rising inflation, increased monetary policy interest rates and the direct and indirect impacts of geopolitical issues between Russia and Ukraine. Global inflation reached 8.7% in 2022, well above the targets set by central banks, because of the overall increase in fiscal spending during the COVID-19 pandemic, increased liquidity that fostered consumption and the disruption in the supply chain due to global geopolitical conflicts. In this context, central banks deployed aggressive monetary contractionary policies that resulted in a sharp increase in short-term interest rates to control inflation, which had a direct effect on economic performance. In 2023, the global economy was characterized by the continuation of the adjustment process, which resulted in overall deceleration in economic activity. In fact, according to the International Monetary Fund (“IMF”), global GDP growth decreased to 3.0% in 2023, due to diverse factors, including: (i) disruptions generated by armed conflicts in Eastern Europe and in the Middle East, (ii) the loss of purchasing power due to persistent inflation, and (iii) short-term interest rates that remained above neutral levels for longer-than-expected to control inflation. As a result, according to the IMF, inflation fell from 8.7% in 2022 to 6.9% in 2023, due to contractionary monetary policies deployed in many countries that raised interest rates to the highest levels seen in decades. In turn, the tightening monetary cycles carried out by central banks in developed economies were the main cause for currency strengthening in these countries and currency weakening in developing economies.

In 2024, according to the IMF, the global economy continued to grow steadily, which resulted in a 3.2% annual GDP expansion. This performance was marked by mixed forces, including: (i) lower than expected growth in emerging economies, such as China and India, due to deceleration in consumption and industrial activity that resulted in GDP expansions of 4.8% and 6.5%, respectively, (ii) subdued growth in the Euro Zone, as evidenced by -0.8% GDP growth due to weakened growth in manufacturing and exports that was partially offset by enhanced consumption, and (iii) robust economic growth of 2.7% in the United States, supported by steadily increasing consumption. Although most economies managed to reduce inflation during the year, it continued to be a major challenge for most central banks that had to maintain a monetary contractionary stance for longer-than-expected with the adverse effects this approach has on both consumption and overall economic activity. For that reason, central banks in developed economies started to gradually ease their monetary strategies only during the second half of the year as other-than-monetary factors continued to put pressure on prices, including fiscal spending and geopolitical conflicts that continued to generate disruption in the global supply chain. Nevertheless, inflation receded overall. Thus, even though this resulted in enhanced household income, consumption remained subdued in many economies, particularly due to the effect of weak consumer confidence.

Also, political and social instability in some Latin American countries like Colombia, Venezuela, Ecuador, Argentina and even Chile, as well as some Caribbean countries, has produced migration issues in more stable countries within the region. Moreover, the armed conflict between Russia and Ukraine in Eastern Europe, and the conflict between Israel and Hamas, where future developments remain uncertain, along with the ongoing tensions between the U.S. and different countries including Iran, China and Russia, the global migration crisis and waves of populism looming in different countries, as well as terrorism, illustrate volatile social and political environments. These factors could harm foreign trade and economic growth for both developed and developing countries while generating significant volatility in international markets and commodity prices. As of December 31, 2024, and as of the date of this annual report, we do not have any exposure to customers or financial counterparties in Ukraine or Russia, whereas we have immaterial exposures (contingent loans) to Israeli financial institutions.

Furthermore, the slowdown of the Chinese economy has led to increasing volatility in the financial markets in the past, affecting international commodity prices, including copper, which is Chile’s main export. Due to the importance of copper exports and overall mining activity to Chilean economic growth, a prolonged slowdown in the Chinese economy, a Chinese-U.S. trade war or other developments may drive copper prices down and adversely affect the Chilean economy, and consequently negatively affect us. Likewise, the foreign trade war or other developments may drive copper prices down and adversely affect the Chilean economy, and consequently negatively affect us. Similarly, the foreign trade policy adopted by the recently appointed administration in the United States, which includes an increase in tariffs for imported goods is expected to adversely affect international trade and potentially cause disruption in international prices of commodities, including those exported by Chile, in a manner that is not possible to predict yet, although Chile and the U.S. have a free trade agreement in place.

The effect of all these trends on market volatility and the economic outlook of developed countries, emerging economies and Chile’s commercial partners could adversely impact the local economy, the local banking industry and, ultimately, our results of operations, financial condition and the price of our shares and ADS.

In the past, Chile has imposed controls on foreign investment and repatriation of investments that affected investments in, and earnings from, our ADSs.

Equity investments held in Chile by non-Chilean residents have historically been subject to various exchange control regulations that restrict the repatriation of investments and earnings from Chile. In April 2001, the Central Bank eliminated most of the regulations affecting foreign investors. However, foreign investors still must provide the Central Bank with information related to equity investments and must conduct such operations within the Formal Exchange Market. Additional Chilean restrictions applicable to holders of our ADSs, the disposition of the shares underlying them, the repatriation of the proceeds from such disposition or the payment of dividends may be imposed in the future, and we can neither determine in advance nor advise you as to when or how those restrictions could impact you, if imposed.

If for any reason, including changes in Chilean law, the depositary for our ADSs were unable to convert Chilean pesos to U.S. dollars, investors would receive dividends and other distributions, if any, in Chilean pesos.

Item 4 Information on the Company

History and Development of the Bank

Overview

We were founded in 1893, and we have been, for much of our history, among the largest and most profitable Chilean banks in terms of return on average assets and average equity in Chile. Our core business is commercial banking in Chile, providing traditional banking products and specialized financial services to our large and diversified customer base of individuals and companies.

Our legal name is Banco de Chile and we are organized as a banking corporation under the laws of Chile and were licensed by the CMF to operate as a commercial bank on September 17, 1996. Our main executive offices are located at Paseo Ahumada 251, Santiago, Chile, our telephone number is +56 (2) 2637-1111 and our website is www.bancochile.cl. Our representative in the United States is Puglisi & Associates, with offices at 850 Library Avenue, Suite 204, Newark, Delaware 19711.

We are a full-service financial institution that provides, directly and indirectly through our subsidiaries, a wide variety of lending and non-lending products and services to all segments of the Chilean financial market, providing our customers with powerful, differentiated, and comprehensive value offerings. In addition to our traditional banking operations, our subsidiaries and affiliates permit us to offer a variety of non-banking but specialized financial services including securities brokerage, mutual funds management, investment banking, insurance brokerage, collection services as well as acquiring and processing services for credit and debit cards.

Our business is not materially affected by seasonality.

We organize our operations and deliver our services to our customers through the following four principal business segments:

Through our retail banking segment, we provide our individual customers with credit cards, installment loans and residential mortgage loans, as well as traditional deposit services, such as current accounts, demand deposits, demand accounts, savings accounts, and time deposits. We and our subsidiaries also offer financial solutions such as insurance brokerage, securities brokerage, mutual funds management, among others. In addition to personal banking, our retail segment comprises micro, small and medium sized companies that we serve by providing them with short- and long-term financing, deposit and cash management solutions, in addition to an array of financial services, such as insurance brokerage. Our banking services for wholesale customers include commercial loans (including factoring and leasing), trade finance, capital markets services, cash management and non-lending services, such as payroll, payment and collection services, as well as a wide range of treasury, financial advisory and risk management products.

In 2008, we enhanced our value offerings by entering into a strategic partnership with Citigroup Inc., as a result of our merger with Citibank Chile. We also offer international banking services through our representative office in Beijing and a worldwide network of correspondent banks.

The year ended December 31, 2022 was very successful for us. Under Chilean GAAP, as reported by the CMF, we led the industry by far in both net income and profitability by achieving a 26.1% market share in net income attributable to equity holders, based on a 77.8% increase in net income (under Chilean GAAP) and a return on average equity (ROAE) of 31.5% (attributable to equity holders). Our performance in results was primarily the consequence of increased operating revenues that benefited from both temporary positive impacts that arose from higher-than-expected inflation, increasing interest rates and still high levels of liquidity in the banking system, as well as a successful management of our Treasury business including both the administration of balance sheets gaps, the management of our trading and investment portfolios and also in the sales and structuring business. In addition, we were able to maintain a solid position in total loans by ranking second in the industry in total loans. In this regard, worth noting was the gain we achieved in market share in consumer by increasing from 17.4% in December 2021 to 18.0% in December 2022, which demonstrated the effectiveness of new commercial strategies and specific plans aimed at improving efficiency and productivity in loan origination by means of new ways to contact customers. In addition, we continued to deploy our digital transformation strategy by developing new digital-based products and services while improving existing functionalities, including: (i) the introduction of a digital current accounts and credit card for individuals, (ii) the release of FAN Emprende, a digital demand account for SMEs, start-ups and entrepreneurs, (iii) the launch of FAN Clan a digital onboarding demand account for teenagers, which aims to promote long-term relationships, and (iv) new functionalities for our wide array of tailored applications and websites. Likewise, we managed to consolidate Fan Account as one of the market-leading digital accounts in the market that achieved one million users by adding approximately 350,000 new FAN users in 2022. Together with these efforts, in 2022 we were able to improve value offerings in many lending products and services like consumer loans, trade finance loans, leasing loans and insurance by leveraging on improved CRM tools and advanced commercial analytics. Similarly, through the development of more adaptable and flexible current account plans we managed to attract approximately 118,000 new current account holders in 2022, which permitted us both to continue ranking first in current accounts held by individuals with a market share of 23.9% and ranking second in demand deposits by achieving a 19.9% market share in December 2022. Our excellent financial results also enabled us to enhance our capital base as reflected by a Total Capital or Regulatory Capital and CET1 ratios of 17.9% and 13.6%, respectively, as of December 31, 2022, which placed us as the leading local bank in terms of capital adequacy as of the same date.

The year ended December 31, 2023 was of significant importance for Banco de Chile, as we celebrated 130 years of history and maintained leadership in the Chilean Banking industry. In fact, under Chilean GAAP, as reported by the CMF, we led in both net income and profitability, achieving a 27.7% market share in net income attributable to shareholders and a return on average equity (ROAE) of 26.3% (attributable to shareholders), which reflects a successful and prudent business and risk management, consistent with a long-term strategic vision that permanently seeks the creation of sustainable value for all our stakeholders. In terms of operating income, we were able to largely mitigate the impact of lower inflation, as compared to 2022, through the expansion of customer income by more than 11%, mainly due to a higher margin from deposits, a boost in income from consumer loans based on attractive value offerings, as well as higher fees from transactional services and insurance brokerage. We also highlight the contribution of our Treasury, in the operating income generation by means of offering sophisticated financial products and services adjusted to the customers’ needs. The lending activity was constrained at the industry level, which translated into limited growth in our loan portfolio. In commercial loans, we recorded a 16.2% market share, 39 basis points below what was achieved at the end of 2022, in a context characterized by the negative impact of lower economic activity on the dynamism of companies. However, in consumer loans, we achieved 6.3% annual growth and increased our market share from 18.0% in 2022 to 18.7% in 2023, mainly due to attractive offers enhanced through a distinctive digital experience with the highest service quality standards. Finally, our residential mortgage loan portfolio expanded by 7.8%, in line with limited but sustained market growth despite higher interest rates that prevailed during the year, reaching a market share of 15.3%, slightly higher than the stake achieved in 2022. In 2023, we also achieved important advances in each of our strategic pillars: (i) regarding the pillar “customer at the center”, we extended the ongoing advance of digital solutions by expanding the capabilities of our remote service channels, implementing technology and advanced analytics to enhance the value offer, enabling new payment functionalities and expanding the scope of digital onboarding tools for both people and companies, while promoting financial inclusion through our Fan Account and cluster of products, (ii) in terms of our pillar “efficiency and productivity”, we managed to reengineer processes in the branches, reduce waiting and service times, reinforce the use of self-service ATMs, consolidate the digital sale of insurance, promote adoption of a new corporate purchasing model, and implement 100% digital granting of loans for SMEs, among many other initiatives and (iii) for the strategic pillar of “commitment to sustainability and Chile” we issued bonds abroad in the amount of approximately U.S.$85 million under our ESG Financing Framework. The resources obtained through such issuance will be entirely allocated to initiatives promoting the country’s sustainable development and inclusive economic growth, in line with the Sustainable Development Goals (SDG) of the United Nations and Global Compact Chile. Finally, our financial results allowed us to improve our capital base as reflected by a Total Capital or Regulatory Capital and CET1 ratio of 17.4% and 13.7%, respectively, as of December 31, 2023, both under Basel III framework.

As of December 31, 2024, according to the CMF, under Chilean GAAP, we ranked first in the Chilean banking industry in terms of net income attributable to equity holders with a market share of 24.6%. As of the same date and excluding operations of subsidiaries abroad, we were the second largest bank in Chile in terms of total loans with a market share of 16.1%, the second largest provider of commercial loans with a market share of 15.9%, the second largest provider of consumer loans with a market share of 18.6% and the fourth largest private sector bank in terms of residential mortgage loans with a market share of 15.5%. As for liabilities, excluding operations of subsidiaries abroad, we were the largest private bank in Chile in terms of current accounts and demand deposit balances (net of clearance) denominated in local currency with a market share of 20.1% and, more importantly, we ranked first in current account balances held by individuals with a market share of 23.8%, both as reported by the CMF and as of December 31, 2024. Lastly, according to the Chilean Association of Mutual Funds, as of December 31, 2024, we were the largest provider of mutual funds management services in Chile with a market share of 23.6%.

As of December 31, 2024, we had:

As of December 31, 2024, we had 11,614 employees and delivered financial products and services through a nationwide distribution network of 226 branches and 1,839 ATMs. Our ATMs are part of a larger network of 7,625 ATMs operating in Chile, of which 4,700 ATMs operate under a network managed by Redbanc S.A., a company we partly own along with eight other private sector banks.

Regarding the execution of our business strategy, we made significant progress in our strategic pillar “Customer at the Center” in 2024 through diverse improvements in our digital banking value offering through new tools that we believe resulted in improved customer experience across all business segments. In Retail Banking, for instance, we highlight: (i) the launch of the “Fan Ahorro” account, which is a 100% digital savings account for individual customers, (ii) the creation of Pago Fácil, which is a payment solution focused on the SME subsegment, and (iii) the implementation of a new subsidiary (B-Pago) that is focused on acquiring and processing services for credit and debit cards and on strengthening the value offering service kit for SMEs and medium-sized companies by offering innovative payment and cash management solutions. In wholesale banking, the enhancement of the Banconexión 2.0 website with diverse functionalities to increase our customers’ productivity when managing their transactions and making timely decisions. Regarding our “Efficiency and Productivity” pillar, we highlight: (i) the transformation of our service model through diverse functionalities in remote channels and self-service platforms, (ii) the progress made in our new ERP platform which pursue to automate and centralize purchase and payment activities, and (iii) the enhancement of our technological infrastructure through the upgrade of our data center networks and the modernization of IT infrastructure in our Securities Brokerage and Mutual Funds Management subsidiaries. Finally, regarding “Commitment to Sustainability initiatives and Chile”, we managed to successfully accomplish several initiatives focused on communities’ education, emergency response, inclusion and non-discrimination, and environmental care.

History

We were founded in 1893 as a result of the merger of Banco Nacional de Chile, Banco Agrícola and Banco de Valparaíso, which created the largest private sector bank in Chile. We have played an important role in the economic history of Chile. Before the creation of the Central Bank in 1926 and prior to the enactment of the General Banking Act, we were the main stabilization agent of the Chilean banking system, a role that is now performed by the Central Bank. Beginning in the early 1970s, the Chilean Government assumed control of a majority of Chilean banks, and all but one of the foreign banks that were operating at that time closed their branches and offices within the country. Throughout this era, we remained as a private sector bank, except for a portion of our shares owned by the Chilean Government that were sold to private investors in 1975. Throughout our history we have developed a well-recognized brand name in Chile and expanded our operations in foreign markets, where we developed an extensive network of correspondent banks. In 1987 and 1988, we established four subsidiaries to provide a full range of specialized financial products and services as permitted by the General Banking Act. In 1999, we widened our scope of specialized financial services by creating our insurance brokerage and factoring subsidiaries. During the early 2000s, the Chilean banking industry witnessed intense merger and acquisition activity. In 2002, we merged with Banco de A. Edwards, which allowed us to expand our business to new customer segments. In 2008, we merged our operations with Citibank Chile. As a result of these consolidations, we currently operate a distribution network that is composed of two brand names, namely, “Banco de Chile” (which operates throughout Chile) and “Banco Edwards-Citi” (which is primarily oriented to higher income segments).

The 1982-1983 Economic Crisis

During the 1982-1983 economic crisis, the Chilean banking system experienced significant instability that required the Central Bank and the Chilean Government to provide assistance to most Chilean private sector banks, including us. Subsequent to the crisis, like most major Chilean banks, we sold certain of our non-performing loans to the Central Bank at face value on terms that included a repurchase obligation. In 1989, banks were permitted to repurchase the portfolio of non-performing loans in exchange for assuming a subordinated debt equal to the difference between the face and economic value of such loans, which we did in November 1989.

In November 1996, pursuant to Law No. 19,396, our shareholders approved a reorganization by which Banco de Chile was converted into a holding company named SM-Chile S.A. (“SM-Chile”). In turn, SM-Chile organized a new wholly-owned banking subsidiary named Banco de Chile, to which the former contributed all its assets and liabilities, other than the Central Bank subordinated debt. In addition, SM-Chile created a second wholly-owned subsidiary named SAOS that assumed a new obligation in favor of the Central Bank that fully replaced the Central Bank’s subordinated debt. In exchange, the Central Bank received 63.6% of our shares from SM-Chile. Thus, SAOS would repay the new obligation by means of the proceeds of the dividends it would receive from us. Pursuant to SM-Chile’s bylaws, that company would remain in existence until the Central Bank subordinated debt was completely paid off by SAOS, which occurred on April 30, 2019. Since that date, SM-Chile has been in the process of liquidation while SAOS was dissolved immediately. As of the date of this annual report, the liquidation process of SM-Chile is in progress and is expected to end by May 2025. For more information on the Central Bank Subordinated Debt and the liquidation process of SM-Chile, see “Item 4. Information on the Company—History and Development of the Bank–History—The 1982-1983 Economic Crisis and the Central Bank Subordinated Debt” and “Item 7. Major Shareholders and Related Party Transactions—Ownership Structure” in the Form 20-F for the year ended December 31, 2020, filed with the SEC on April 30, 2021.

Merger with Banco de A. Edwards

On December 6, 2001, our shareholders approved our merger with Banco de A. Edwards, which became effective on January 1, 2002. Banco de A. Edwards had been listed on the NYSE since 1995, and since January 2002, we have been listed on the NYSE under the symbol BCH. We concluded the merger process with the consolidation of a new corporate structure and the integration of our technological platforms.

Merger with Citibank Chile

On December 27, 2007, our shareholders approved our merger with Citibank Chile, which became effective on January 1, 2008. During 2008, we integrated Citibank Chile’s technological platforms with ours and established a new organizational structure in order to satisfy the needs of our customers and to achieve important synergies. We concluded the merger process with the integration of Corporación Financiera Atlas S.A. (Citibank Chile’s consumer area) into our Consumer Finance Area (CrediChile formerly), which allowed us to nearly double our customer base and market share in consumer finance. As result of this merger and integration process, we entered into the following agreements with Citigroup Inc. to provide a framework for our relationship with Citigroup Inc., its services and trademarks in Chile: (i) the Global Connectivity Agreement, (ii) the Cooperation Agreement, (iii) the Trademark License Agreement and, (iv) the Master Services Agreement. On October 22, 2015, we entered into a new Global Connectivity Agreement, a new Cooperation Agreement and a new Trademark License Agreement with Citigroup Inc. All of these new agreements replaced the original agreements we entered into on December 27, 2008. In addition, on January 26, 2017, we entered into a new Master Services Agreement with Citigroup Inc. All of these agreements have continued to be extended, amended and/or restated successively. For more information, see “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions.”

Technological Projects

In 2022, we continued to enhance our technological infrastructure, improve the stability of our systems while supporting the deployment of our digital transformation strategy through the development of new products, services and applications. In terms of new products and services, we developed and launched the first digital current account for individuals, which may be fully opened online, while also introducing a new digital account for SMEs and entrepreneurs (FAN Emprende) that permits full access to digital channels. Likewise, we developed FAN Clan, a 100% digital demand account for teenagers, whose digital functionalities allow the users to customize the account by choosing different avatars to interact with. In addition, we launched a renewed MiInversión application for smartphones, which allows investors to check their balances, amounts invested, and profitability earned during the period while taking new investment and savings products. Similarly, we improved functionalities in both MiBanco and MiPago applications, including a QR code for cash withdrawals and taking products online, which coupled with the Paga2 application that permits our and Banco Scotiabank’s customers to perform money transfers with no charges by using their mobile phone numbers. Furthermore, we enhanced the functionalities of the MiBanconexion application for companies including the electronic payment of bills, multiproduct remote authorization, online credit payment and a dashboard for the management of electronic money transfers. We also introduced improvements to our customer websites for individuals and companies by allowing customers to perform a wider bundle of operations online. Given our purpose of improving contact channels, during 2022 we also worked in conjunction with local communities to expand our network of ATMs in non-covered sectors across the country. From the infrastructure and cybersecurity point of view, in 2022 we renovated the whole telecommunication network in order to make it compatible with new technological requirements of other platforms, consolidated a 99.9% uptime in both web login and electronic money transfers, decreased the response time to address critical events by 50% while reinforcing the monitoring system of fraud and anti-money laundering. Also, we implemented Data Decoupling architecture that provides real-time access to information through cloud data warehouse, which also challenged us to deploy new cybersecurity infrastructure oriented to our multi-cloud strategy.

During 2023, we maintained the focus on providing individuals and companies with excellent services and products as well as timely and effective solutions, through proactive and agile service in order to build relationships of trust with our customers. In this process, we launched innovative products, as well as renewed and updated various services, functionalities and digital tools that seek to deliver a more flexible and accessible experience, with high security standards and availability to customers and users. In this context, we became the first bank in Chile in the “Decentraland,” a decentralized metaverse platform where we launched “Dimension B”, a new virtual space of Banco de Chile, which represents an open space where the user can roam freely and access information on financial products and services. Moreover, we successfully released the Apple Pay digital wallet, which allows customers to pay in on-site stores without the need for a physical card. In the retail segment, different functionalities were incorporated into MiBanco, MiPago, MiSeguro y MiInversión mobile applications. In MiBanco, the renewal of the information on the home page and the creation of widgets or tools that allow viewing the benefits of the day, using the MiPago App to add funds to (and pay for purchases using) the bracelet used to attend the Lollapalooza music festival in Chile, among others, stand out. On the online banking website, we were able to implement the digitization of the entire digital income situation statement and digital onboarding for current accounts in U.S. dollars. In the wholesale segment, improvements and new functionalities were added to the MiBanconexión application, such as enabling digital onboarding for current accounts in U.S. dollars, allowing online repayment and review of leasing products, permitting review of bank warranty bills, enabling digital ordering of mass payments, incorporating multi-company authorization for electronic funds transfer, applying for credits digitally, among others.

In 2024, we made significant progress in our digital transformation strategy, which has allowed us to launch innovative products and update our services, functionalities and digital tools, in order to deliver a simpler, more accessible and flexible experience to customers and users while ensuring high standards of cybersecurity and availability. These advances have resulted in a high degree of digital adoption by customers, such as the current account onboarding that has leveraged improvements in credit monitoring and electronic signature. In this regard, in 2024, we consolidated a digital marketing strategy for digital products fully based on digital onboarding through personalized actions and active presence on the main digital platforms. In the Retail Segment, we updated and incorporated several functionalities on the website and applications, including the integration of MiSeguro into the MiBanco application, allowing customers to take and manage their insurance policies in one place. Additionally, we incorporated new functionalities in MiBanco to allow customers to open digital checking accounts, make payments through QR code and receive daily notifications with offers and promotions of our loyalty program. Also, at the beginning of 2024, we launched “FAN Ahorro”, a savings account with no maintenance costs or minimum opening amount, which may be opened 100% digitally and only requires having a valid Fan Account and an identification card. This product earns monthly interest and allows the customer to make up to two withdrawals without losing the interest earned. Meanwhile, in the Wholesale Banking segment, we updated the Banconexión 2.0 platform with a new design focused on simplicity and ease of use, seeking to increase customers’ productivity when managing their transactions. In addition, we renovated investment tools by incorporating the possibility of investing in mutual funds while introducing an investment summary dashboard. Also, we launched Pago Fácil, a payment solution that allows companies to pay us and other banks fully online at any time.

Likewise, in 2024, we made significant IT developments intended to reinforce and increase productivity of our back and middle office operations, such as: (i) robotic process automation, development of AI use cases, and digitization of transactions, (ii) our new ERP platform for the automation and centralization of purchasing and payment activities, along with new processes to optimize capital expenditures in infrastructure, (iii) the strengthening of the technological architecture and high service standards through the update of our data center networks and the implementation of a multicloud strategy, and (iv) transformation and modernization of our mutual funds and stock brokerage subsidiaries. Also, during 2024, we continued to incorporate Artificial Intelligence (“AI”) tools as part of our digital transformation process through the exploration and integration of Generative AI in various areas of our operations. In this regard, we managed to: (i) provide more than 300 software developers with AI assistance, (ii) launch a customer service chat for FAN Clan account holders, and (iii) make an assistance chat available to our account officers. In addition, our advanced analytics area developed models and systems that provide our customers with accurate recommendations by considering their areas of interest while maintaining strict information security standards. Furthermore, we have integrated AI to streamline our processes, which has allowed us to improve the efficiency of manual procedures with advanced data processing technologies, increasing verification and accuracy, and improving our service quality.

Through these efforts we have maintained our commitment to anticipating changes and minimizing risks related to technological advances, including cybersecurity risks, as mentioned in “Item 3. Key Information—Risk Factors—Risks Relating to our Operations and the Chilean Banking Industry.”

Capital Expenditures

The following table sets forth our capital expenditures in each of the three years ended December 31, 2022, 2023 and 2024:

Our budget for capital expenditures for 2025 amounts to approximately Ch$96,596 million, of which expenditures in information technology investments represent 79.4%, while infrastructure projects represent the remaining 20.6%. The budget for capital expenditures is in line with our mid-term strategic priorities of improving our efficiency and enhancing our customer service capabilities with a firm focus on digitalization. These capital expenditures will be principally financed by cash on hand and long-term debt financing.

Among the budgeted expenditures for information technology, 41.8% corresponds to new and ongoing IT projects intended to provide us with business solutions for customers, technological stability, productivity improvements, enhancements in our communication network and cloud servers as well as reinforced cybersecurity infrastructure and systems. In addition, a 23.1% budgeted amount for IT projects consists of investments in technological equipment and system improvements to be carried out by some of our subsidiaries, of which approximately half of the expenditures are expected to be incurred in the new acquiring services subsidiary. Of the remaining 35.2% budgeted amount, 16.3% relates to the development of applications in order to provide us with digital alternatives to meet customers’ needs, another 16.3% is intended for the update of our technological infrastructure, which includes further optimization and enhancement of security standards of our nationwide ATM network, while 2.5% is aimed at supporting regulatory compliance requirements.

Our 2025 infrastructure expenditures budget includes disbursements associated with the refurbishment of our branch network (34.3%), efficiency initiatives related to closure and relocation of certain branches (19.5%), renovation and restoration of corporate buildings (11.5%), general maintenance investments (11.4%), initiatives intended to enhancing support infrastructure in accordance with regulatory compliance requirements (7.7%), capital expenditures to reinforce security standards (7.2%), improvements to recreational facilities (5.6%) and modernization of certain subsidiaries’ buildings (2.8%).

All the aforementioned investments have been or are intended to be made in Chile.

BUSINESS OVERVIEW

Our Competitive Strengths

Building on our knowledge of the Chilean financial market, we have historically been able to develop significant competitive advantages based on our strong brand recognition, our widespread branch network, the diversity and relative size of our customer base, our highly competitive funding structure, the superior asset quality of our loan portfolio as compared to our peers in Chile, an attractive risk-return relationship and our market leadership in a diverse range of financial products and services.

Our main competitive strengths are:

Brand Recognition and Strong Corporate Image

We have operated in the Chilean financial industry for 131 years under the “Banco de Chile” brand name. In order to provide our customers with specialized value offerings and a wider range of financial products and services, we have also developed the “Banco Edwards-Citi” and “Banchile” brand names. We believe our long-standing history in the Chilean market is recognized by our customers and the general public, who associate our brands with value, quality, reliability and social responsibility within the Chilean financial industry, as demonstrated in various polls conducted by well-known market research companies. We believe that our long history in the Chilean banking industry is a key element that differentiates us from our competitors.

Additionally, we believe that our merger with Citibank Chile reinforced our corporate image as a leading financial institution in Chile and allowed us to gain recognition among customers and investors all over the world.

We also believe that our strong corporate image is further strengthened by our commitment to social responsibility, which includes supporting the Teleton Foundation (a non-governmental organization dedicated to assisting and treating disabled Chilean children), our partnership with institutions dedicated to improving the quality of Chilean education, our participation in campaigns intended to improve the quality of life of needy people, our commitment to supporting and sponsoring diverse monetary and non-monetary campaigns for recovery efforts from natural disasters in Chile, including wildfires, earthquakes, floods and tsunamis, and the development of other initiatives intended to strengthen our role in, and contribution to, Chilean society. Furthermore, over the last years we have devoted efforts to improving our commitment to the environment by carrying out numerous initiatives.

In 2024, we received several distinctions due to our strong brand recognition within the banking industry. Once again, we were recognized by Merco (a corporate reputation monitor) as the second Chilean company with the best corporate reputation across all industries. Likewise, Global Finance and The European magazines recognized us as the “Best Bank” and the “Bank of the Year” in Chile, respectively. Lastly, The Banker magazine recognized us as the “Best performing Bank and most profitable Bank” in Chile.

Business Scale and Leading Market Position

We are one of the largest financial institutions in Chile and a market leader in a broad range of financial products and services within the Chilean financial system, as listed in the following table:

Source: Chilean Association of Mutual Funds and the CMF.

Through our history, we have been able to maintain a leading position in the wholesale banking segment, which characterized us in the past, by improving our products and services and supplementing them with comprehensive and tailored service models that allow us to successfully meet our customers’ needs while maintaining long-term relationships with major local and multinational companies that operate in Chile. We have also added value to our service offerings by including treasury products for hedging purposes, together with investment banking, insurance brokerage and other specialized financial services provided by our subsidiaries.

In the last decade we have also achieved significant market share in the retail banking segment through diverse value offerings intended to cover our target demographics and enterprises. Therefore, we have prioritized the expansion of our residential mortgage portfolio and our presence in transactional services such as credit cards, current accounts and demand accounts, as we believe they are effective means to build long-term relationships and customer loyalty, while increasing cross-selling opportunities. For this reason, through our Individual and SME Banking Area, we aim to lead the market in services offered to high and medium-income individuals for whom we have developed an attractive and complete portfolio of financial services, including a full range of wealth management services through one of our subsidiaries. We supplement these value offerings with specific proposals for SMEs, which in recent years has coupled with value offerings satisfying small scale entrepreneurs’ financial needs and individual customers in outlying districts seeking deposit and transactional solutions. This broad variety of services has also enabled us to lead the Chilean market in terms of income from fees and commissions.

We believe our financial strength, prestige and brand recognition among Chilean customers have allowed us to become the market leader in many banking products and services, such as commercial loans, fees and commissions and demand deposits held by individuals, among others.

Broad and Diversified Customer Base

We believe that we have one of the largest customer bases among financial institutions in Chile. In recent years, we have been able to expand our customer base by providing attractive and tailored value offerings based on improving segmentation and by applying sophisticated business intelligence tools. As of December 31, 2024, according to our management information system, we had 1,461,137 core customers, which had at least a current account or a loan outstanding with us. In addition, with respect to our main banking products, as of December 31, 2024, we had 1,260,161 current accounts holders; 249,599 time deposit holders; and 181,403 saving account holders. Similarly, as of December 31, 2024, we were the second largest privately-owned bank in terms of number of borrowers with a 16.9% market share associated with 1,196,169 debtors, according to data published by the CMF. As of the same date, according to the CMF, we had 1,784,749 credit card account holders.

We believe that our broad customer base is both an essential driver of our business and a valuable asset that enables us to cross-sell our traditional lending products and services along with non-lending services provided primarily through our subsidiaries, including our securities brokerage, mutual funds management, financial advisory, insurance brokerage and collection services.

Multichannel Distribution Approach

In order to better serve our customers, we offer a distribution approach composed of both physical and non-physical channels.

We are present in all regions of Chile and strive to be accessible to every Chilean customer through our large branch network as well as non-physical contact channels. As of December 31, 2024, we had a nationwide branch network of 226 branches, the second largest in Chile among private sector banks, according to information published by the CMF. This network is composed of 195 branches under our “Banco de Chile” brand name and 31 branches under our “Banco Edwards Citi” brand name. We believe that our branch network enables us to develop close relationships with our customers and therefore we are constantly assessing new branch locations throughout Chile.

We have also complemented our branch network with non-physical remote channels, such as ATMs, internet-based online platforms and mobile banking applications. As of December 31, 2024, we had 1,839 ATMs throughout Chile and we provided our customers with specialized internet websites for each of the segments we target, coupled with diverse mobile banking applications, including MiBanco, MiBanconexion, MiBeneficio, MiCuenta, MiPago, MiPass, MiInversion and MiSeguro. During 2024, monetary transactions carried out by customers and non-customers through mobile applications or internet-based platforms jointly increased 16.4%, which compares to a 23.0% decrease in transactions performed in branches and ATMs.

Proven Digital Banking and Business Intelligence Capabilities

Over the last years, digital transformation has been steadily increasing its importance within the Chilean banking industry, a trend that was accelerated during 2020 as a result of the COVID-19 pandemic’s mobility restrictions. In order to be aligned with our customers’ needs during such a challenging period, we made several cultural changes within our organization, which include the introduction of new financial products, services and technologies. By doing so, we expect to achieve sustainable growth in the coming years and to improve both our processes’ efficiency and the consumer experience with the Bank.

As a result, in recent years we have implemented several advances in both the back and front office aimed at improving customer experience by expanding digital channels while adding new products and functionalities. We have also continued increasing sales through these points of contact by working with advanced analytics to improve cross-selling. Additionally, digital transformation has become a crucial goal across the Bank, which has led us to focus on a talent and digital culture in order to bolster our capabilities while emboldening innovation in all aspects of the banking business with a front-to-end approach by adopting new work methodologies such as agile.

One of the key pillars of our digital banking strategy has been the development of cutting-edge mobile applications and customized websites. Over the last years, we have devoted efforts to enhance our mobile banking platforms by developing and launching diverse applications, including MiBanco, Mi Pago, MiSeguro, MiInversion, MiPass and MiBeneficio. We are continually improving the functionalities and robustness of applications that enable our customers to perform most of the transactions they can execute on our websites, such as: (i) accessing their account balances, (ii) executing electronic money transfers, (iii) generating secure passwords to make such transfers, (iv) making cash advances from credit cards to checking accounts, (v) making bill payments, (vi) requesting for reimbursements from other Banco de Chile’s customers by scanning a QR code, (vii) managing their personal investment portfolio by investing or disinvesting in equity, fixed-income and mutual funds, and (viii) contracting insurance policies while managing their stock of policies, among others.

In 2024, in the retail banking segment we renewed and added functionalities to our website and mobile applications. Regarding mobile applications, we integrated MiSeguro into MiBanco application, which allows customers to take and manage their insurance policies in one place. Additionally, we implemented diverse functionalities into MiBanco application including the possibility of opening a digital checking account, making payments through QR code, and receiving daily notifications with offers and promotions of our loyalty program. As for the website, we enhanced “Banco en Línea” by incorporating new saving possibilities that may be contracted online and offering a new module of Banchile Inversiones on the bank’s website. In the Wholesale Banking segment, we updated Banconexión 2.0 website, with a new design focused on simplicity and ease of use, as we strive to increase customers’ productivity when managing their transactions. In addition, we renovated the investment tools for customers by incorporating the possibility of investing in mutual funds and introducing an investment summary dashboard. Also, we launched Pago Fácil, a payment solution that allows companies to pay us and other banks fully online at any time.

The FAN Account, which is a fully digital onboarding demand account, has been another cornerstone of our digital strategy in recent years. Since its launch in 2020, FAN Account has aimed to improve customer experience and promote loyalty through the ongoing enhancement of available functionalities. In 2022, we reinforced the scope of the Fan Account by widening the array of tailored offerings to target specific segments. In this regard, we launched “FAN Emprende”, a full digital demand account oriented to SMEs, start-ups and entrepreneurs that provide these customers with full access to our digital channels and segment’s benefits. Likewise, we introduced FAN Clan, a 100% digital onboarding demand account for teenagers ranging from 14 to 17 years, which customizes the interaction with the customer through various avatars while permitting them to access benefits and discounts included in our loyalty program. In 2024, we launched “FAN Ahorro”, a savings account with no maintenance costs or minimum opening amounts, which is opened 100% digitally and only requires having a valid Fan Account and an identification card. This product earns monthly interest and allows customers to carry out up to two withdrawals without losing the interest earned. As of December 31, 2024, the Fan Account has reached 1.7 million customers, most of them with no previous relationship with us. In 2024, we launched the Digital Student Plan for higher education students between 18 and 27 years old, which includes a costless checking account and the possibility of applying for a credit card.

We believe these and other similar initiatives have allowed us to continue improving our online channel usage rates, as illustrated in the table below, which sets forth information regarding the evolution of the numbers of transactions (monetary and non-monetary) carried out by customers and non-customers through our diverse distribution channels were performed through non-physical remote channels.

Competitive Funding Structure

We believe that we have a cost-effective and highly competitive funding structure based on our leading market position in current accounts and demand deposits, especially among individuals. According to the CMF, as of December 31, 2024, with a 23.8% market share, we ranked first within the Chilean banking industry in current account and demand deposits held by individuals. As of that same date and excluding operations of subsidiaries abroad, we were the first private bank in Chile in terms of total balances of non-interest bearing current accounts and demand deposits denominated in local currency, representing 20.1% of the industry (net of clearing), as reported by the CMF. Our total balances of current accounts and demand deposits represented 30.7% of our funding structure (excluding equity) as of December 31, 2024 (under Chilean GAAP), as compared to the 17.4% reported by the Chilean banking industry, excluding Banco de Chile. In addition, we have a solid base of funding from retail banking customers, who held demand deposits and time deposits that jointly represented 38.5% of our total liabilities (excluding equity) as of December 31, 2024. This provides us with a stable source of funding that is reflected by a 30-day moving average renewal rate of retail time deposits which reached approximately 74.1% as of December 31, 2024.

We strive to diversify our liability structure in terms of sources, types of instruments and markets with the aim of maintaining a competitive cost of funding and improving our liquidity. In 2024, we were more active in our long-term debt placements, particularly in the local market, and we continued to actively monitor market opportunities abroad, based on a funding strategy that aims to diversify our liability structure to finance loan growth at the most convenient cost of funds. In 2024, we carried out the following debt placements: (i) Ch$932,204 million in the local market with an average maturity of 10.8 years, and (ii) Ch$52,385 million in Hong-Kong with a ten-year year maturity.

We believe that our funding structure provides us with a cost advantage over many of our competitors (which use a higher proportion of interest-bearing liabilities), as current accounts and demand deposits are non-interest bearing in Chile. We also believe that our solid market position in demand deposits, together with our high international credit ratings, translated into one of the lowest costs of funding from liabilities associated with interest bearing deposits and long-term debt, among the five largest banks in Chile.

Prudent Risk Management & Superior Asset Quality

Of the Chilean financial institutions, we have among the highest credit quality and the healthiest loan portfolio in Chile. We believe this asset quality is the result of our well-known prudent risk management approach and accurate credit risk models that are updated from time to time and have enabled us to maintain relatively low levels of past-due loans (loans 90 days or more past due) and high coverage indicators over the last few years. According to the CMF, and under our internal reporting policies, as of December 31, 2024, we had a delinquency ratio (loans 90 days or more past due as a percentage of total loans) of 1.44% which was well below the industry average delinquency ratio of 2.54% posted by the Chilean banking industry (excluding Banco de Chile) as of the same date. Additionally, according to data published by the CMF, as of December 31, 2024, we had a coverage ratio (allowances for loan losses over loans 90 days or more past due) of 140.1%, which was well above the industry average coverage ratio of 102.5% as of the same date (excluding Banco de Chile). Over the last few years, the utilization of business intelligence tools has also contributed to an improvement in our credit risk management. In 2021, we continued to improve our provisioning models while reinforcing our credit risk monitoring in order to reflect accurately the effects of the dynamics of the local economy on the payment behavior of our borrowers while being prepared to respond to lagging indicators of the effects of the pandemic on asset quality. During 2024, we kept a constant monitoring of risk conditions, particularly in those sectors most sensitive to economic contraction and in a scenario of progressive normalization of excess liquidity derived from the pandemic. Likewise, we focused on the analysis of the financial condition of economic sectors adversely affected by specific dynamics, such as the Real Estate & Construction industry and the Health Services Industry, which led us to reinforce monitoring while taking precise measures to keep a suitable asset quality. In terms of additional provisions, under Chilean-GAAP only, the board decided to keep the amount of Ch$700,252 million set in 2022 unchanged during 2023 and 2024. Nevertheless, in January 2025, our board of directors decided to release approximately Ch$69,000 million of additional provisions, in response to the expected impact of a new standardized model for consumer loan provisioning under Chilean-GAAP.

International Coverage

In 2008, we enhanced our value offerings by entering into a strategic partnership with Citigroup Inc., as a result of our merger with Citibank Chile, effective on January 1, 2008. As result of the merger and integration process, we entered into various agreements with Citigroup Inc. to establish a framework for our relationship with Citigroup Inc., including the services to be rendered by each party and the use of trademarks in Chile. For more information, see “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions.”

This strategic alliance, backed by a Global Connectivity Agreement with Citigroup Inc., has allowed us to broaden our service offerings by adding a comprehensive portfolio of international financial services that previously we could only partially provide. Based on this relationship, we are able to provide our local customers with world-class financial services and participate with them in their international ventures. Furthermore, we provide a reliable business platform for Citibank’s customers who aim to operate in Chile.

Our Business Strategy

Mission

‘We are a leading and globally-connected corporation with a prestigious business tradition. We provide excellent financial services to all of our customer segments by offering creative and effective solutions while at the same time ensuring that we add value for our shareholders, employees and community as a whole.’

To accomplish this mission, we believe it is essential to attain industry leadership in all businesses and financial areas in which we operate, namely, profitability, efficiency, business scale, customer base, human resources development and corporate social responsibility.

Vision

‘We aspire to be, in all things we do, the best bank for our customers, the best place to work and the best investment for our shareholders. In order to accomplish this vision, we are committed to the development of our employees and the community as a whole.’

Our mission and vision commit us to all of the diverse stakeholders related to our business, including customers, employees, investors and the community. Thus, our vision is shared and internalized by all areas across the corporation, senior management and the board of directors while also constituting the basis for our strategic objectives. This vision requires initiatives to achieve comprehensive excellence in management, with customer satisfaction as our major goal. For this reason, we apply high industry standards in information technology, business models and service quality, all of which are summarized by the value creation cycle below:

Source: Banco de Chile.

Corporate Values

Our way of thinking is reflected by a set of values that are shared by our employees and shareholders, which are aimed at providing our customers with world-class financial solutions and quality standards:

Purpose

‘We are a company that contributes to the economic development of the country by generating favorable conditions for the development of individuals and enterprises, providing them with financial solutions that fit their needs at every stage of their lifetime.’

In order to accomplish this, we have made commitments to all of our stakeholders, since we are convinced that we will achieve excellence in all of our businesses and projects as long as we are able to satisfy stakeholders in their interactions with us.

Commitments

We aim to satisfy the expectations of the following stakeholders by:

Strategic Priorities

Our long-term strategy is intended to maintain profitable growth by placing the customer at the center of all of our decisions and to improve efficiency and productivity in all of our processes and procedures while maintaining a strong commitment to sustainability and the country. These are our strategic priorities and we aspire to attain them through collaboration and teamwork.

Source: Banco de Chile.

We aim to support our customers and meet their needs throughout their lives. In order to achieve this goal, we strive to promote customer proximity and reliability, while providing our customers with the best service quality within the local market.

In our retail banking segment, our aim is to lead the market by providing differentiated and comprehensive value offerings based on a deep and focused ongoing improvement of our segmentation, which allows us to engage in profitable and high-growth potential business opportunities. Thus, we expect to expand our business and customer base by developing tailored service models, optimizing our branch network, enhancing our presence in the small and medium-size company market and reinforcing certain lending products that should enable us to consolidate long-term relationships with the upper and middle-income individual customers, particularly through payment channel usage (such as credit cards), digital banking, installment loans and residential mortgage loans. Similarly, we aspire to target middle-income individuals and microbusinesses by promoting payroll-deduction lending and attracting customers previously unattached to any bank through a basic array of services.

We firmly believe that there continues to be room to grow in retail banking. Although Chile’s per capita GDP has increased fourfold over the last 30 years, banking penetration is still below that in developed countries, particularly in relation to residential mortgage and consumer loans. In fact, as of December 31, 2024, the loan book of the Chilean banking industry (excluding operations of subsidiaries abroad) represented 78% of Chilean GDP. As of the same date, mortgage and consumer loans represented 29% and 8%, respectively. On the other hand, according to the CMF, as of December 31, 2024, we had market shares of 15.5% and 18.6% in residential mortgage loans and consumer loans, respectively. Given the fierce competition in the Chilean banking industry, in order to take advantage of these opportunities, we are frequently seeking to develop innovative products and services to diversify our revenue sources. Accordingly, we have strived to build comprehensive value offerings for our retail segment in order to continue enhancing our fee-based income by promoting the digitalization of products and services provided to these customers while improving benefits related to our customer loyalty programs.

Similarly, in our wholesale banking segment, we aim to maintain a market-leading position in loans while growing profitably in a market that is characterized by low margins and fierce competition. We intend to accomplish these goals by increasing our cross-selling of non-lending products and services. For this reason, we are focused on improving our cash management services, enhancing our internet-based and mobile services, increasing the penetration of products designed by our treasury and money market operations segment, strengthening our presence in certain lending products such as leasing and factoring and promoting international businesses by taking advantage of the Global Connectivity Agreement we maintain with Citigroup and the specialized array of financial services offered by our subsidiaries, such as securities brokerage, mutual funds management and financial advisory in order to meet the needs of certain niches within this business segment. The success of our wholesale banking segment is critical to our ability to maintain sustainable growth in revenues, particularly in fee-based income. Thus, cross-selling is one of our main priorities in this segment.

In our treasury and money market operations segment, we intend to take advantage of our specialized knowledge in order to increase the penetration of widely-used products in our current customer base while offering innovative products to potential customers. Also, we frequently seek newer and more convenient funding choices, locally and internationally, in order to support our long-term business strategy by promoting an adequate diversification of our funding structure.

In the second half of 2020, we launched “FAN Account”, our full digital onboarding account designed for all type of individual customers. This account may be digitally opened without visiting our branches, with no paperwork but still subject to our strict account approval processes. Additionally, the Fan Account permits holders to perform local and international purchases with no entrance or maintenance fees, which pursues to promote financial inclusion. Also, the FAN Account users have access to all the benefits and platforms offered by the Bank to its customers. During 2021, we enhanced the value offering behind the Fan Account by implementing services, such as: (i) a new customer service channel with a chatbot called FANi, (ii) full access to digital Banco de Chile’s ecosystem and (iii) cardless cash withdrawal. In 2022, we widened the scope of Fan Account by creating tailored solutions for SMEs and young people. Thus, we created: (i) FAN Emprende, which is a full digital account for SMEs, start-ups and entrepreneurs that allows access to our digital channels and benefits by enabling customers to perform transactions online while having no requisites for opening, and (ii) FAN Clan that targets teenagers from 14 to 17 years and promotes financial inclusion by offering benefits that are part of our loyalty program through a customized digital environment. In 2024, we launched “FAN Ahorro”, a savings account with no maintenance cost or minimum opening amount, which is opened 100% digitally and only requires having a valid Fan Account and an identification card. This product earns monthly interest and allows customers to carry out up to two withdrawals without losing earned interest.

Through Fan Account, we had been able to attract 300,000 new customers in 2024 while achieving a total amount of 1.7 million users as of December 31, 2024.

In 2024, we continued to deploy our ambitious digital strategy in order to deliver improved and tailored banking solutions for our customers by generating a simpler, more accessible, and flexible experience. Through the digital transformation process, we have focused on the launch of innovative products and the ongoing modernization of our services, functionalities, and digital tools.

In this regard, in the retail banking segment, we highlight the integration of the MiSeguro App into MiBanco App, which provides customers with a single tool to manage and contract their insurance policies and main banking operations. Additionally, in MiBanco App we incorporated the possibility of opening a digital checking account, making payments via QR code, and receiving daily notifications with offers and promotions of our loyalty program. Regarding our “Banco en Línea” website, we developed new functionalities such as the option to take time deposits up to 365 days and denominated in UF while incorporating both the digital signature functionality for the personal checking account welcome kit and a new mortgage simulator on the public website. Furthermore, at the end of 2024, we launched the Digital Student Plan for higher education students between 18 and 27 years old, which includes a costless checking account and the possibility of applying for a credit card. In relation to developments for the SME segment, during 2024 we launched Pago Fácil, our payment solution for businesses that allows users to directly pay into accounts managed by us and other banks, totally online and at any time.

In the Wholesale Banking segment, we renewed Banconexión 2.0 website with a new design focused on simplicity and ease of use, aimed at improving customers’ productivity when managing their banking transactions. Furthermore, we refurbished the investments webpage by incorporating both the possibility of investing and disinvesting in mutual funds and a new investment summary dashboard to allow customers to perform new queries.

As a result of these efforts, in 2024 we were once again recognized as the most Innovative Digital Bank of the Year in Chile by The European magazine.

We are convinced that in a highly competitive industry such as the Chilean banking system, a customer-centric focus is critical to generating loyalty and creating long-term profitable relationships. We believe that our high service quality is a competitive strength that differentiates us from competitors and supports our long-term strategy by responding to the preferences of our current and potential customers. Accordingly, we strive to improve our relationships with customers by developing commercial strategies and value offerings aligned with their needs, as well as improving our response time and customer satisfaction indicators. Consistent with this view, during 2024 we continued enhancing our commitment to service quality, improving existing and developing new online channels and new functionalities for mobile applications, while implementing organizational changes to provide our customers with a more comprehensive approach and customized solutions.

We believe that our effort in developing comprehensive and customized value offerings for customers has contributed to improving customer experience over time, and that the solutions we have launched have allowed us to lead the industry in terms of customer satisfaction as reflected by a net promoter score of 71% as of December 31, 2024, according to a syndicated study conducted by Procalidad. This has also been supported by an average voluntary attrition rate of 2.5% for the year ended December 31, 2024, which compares to the 2.4% average voluntary attrition rate posted sequentially between 2020 and 2023, according to our management information system.

Over the past few years, especially since the end of 2020, cash payments for goods and services in Chile have declined while being substituted by credit and debit cards as the most used payment method. In addition, the significant increase in online transactions has further driven the growth and use of digital payment methods both locally and internationally. As part of the transformation of the payment ecosystem, since March 2020, Chile has been operating under the “four-party model,” which has allowed the incorporation of new players in the acquiring market. This has resulted in greater competition, reduced fees for customers, and increased financial inclusion, together with multiple benefits for customers and small and medium-sized companies by enabling quick and simple tracking of sales, deposits, charges, and various types of reports that facilitate business management.

In this context, in July 2024, we incorporated a new subsidiary, B-Pago, which aims to become a new acquiring and processing service company that seeks to compete in the four-party model ecosystem while improving the value proposition offered to our customers, with a special focus on SMEs and middle market companies, through innovative payment and cash management solutions.

As of the date of this annual report, B-Pago is in the start-up phase and operations are expected to commence by the end of 2025.

We believe that efficiency and productivity are key competitive strengths that we have to maintain in order to sustain profitable growth in a changing business environment that is under increasing regulatory focus. Accordingly, we aim to become a productive and efficiency-oriented organization in all business aspects by developing simple, effective, secure and low-cost processes while maintaining the tightest cost control in the industry. To accomplish these goals, we have invested in information technology and the development of simpler, more manageable, secure and modern business processes and platforms to attain faster response times and higher productivity. We also continue to enhance our strategic development capabilities, increase our business scale, develop economies of scope by incorporating new financially related products and services, optimize our branch network, enhance our remote transactional channels, improve our credit processes, develop a higher level of automation in our internal processes and consolidate our cost control policy and monitoring procedures.

We are dedicated to developing and optimizing internal processes to reduce and manage our expenses. Throughout 2024, we continued to enhance our IT infrastructure in order to increase stability and efficiency for all of our customers. Likewise, we continued to disburse financial resources to reinforce our IT infrastructure in respect of cybersecurity matters. We believe this is the best way to improve our operating efficiency and enhance security standards while properly meeting our customers’ needs, which are increasingly linked to digital channels, fast response and timely service. For more information see “Item 4. Information on the Company—Capital Expenditures”

In 2024, we continued to promote our focus on efficiency and productivity in all aspects of the banking business. In this line, we have continued to reinforce the work of the specialized area that is implementing a cross-enterprise cost management program by seeking incremental savings gains in all the activities we carry out. Based on this, for instance, during 2024 we managed to increase the margin of our deposits and credit card business by means of both deploying selective pricing initiatives and designing tailored commercial incentives. In terms of cost control, which is one of our key efficiency pillars, during 2024 we enhanced our internal and centralized purchase model, which is based on standardized requirements for providers and selection of bids through a real-time auctioned process, by: (i) incorporating new control procedures into the negotiation phase and the results of the purchasing process, by including the advice of the tax management area to identify the appropriate tax treatment depending on the type of supplier and service, or in the case of foreign suppliers, to request additional information when evaluating the economic offer, (ii) adding new control protocols when the service involves outsourcing to ensure proper control of external personnel, and (iii) reinforcing control procedures of the global control area for critical services to ensure contracts contain all the required clauses.

Additionally, during 2024, we focused on identifying areas of improvement in internal processes that resulted in diverse actions, including: (i) the transformation of the service model through the expansion of functionalities in remote and self-service channels, proper change management in the early digital adoption of customers, and the reduction of face-to-face service times, (ii) the optimization of the in-person service network, organizational restructuring, centralization of functions, and contract renegotiation, and (iii) the implementation of a new commercial agreement for location of our ATM network.

We promote the progressive evolution of our technological infrastructure and capabilities to keep them modern, flexible, scalable, and aligned with market-leading practices. As part of these guidelines, we aim to develop highly automated processes and specialized software that allow us to accelerate our knowledge to address digital transformation. In this regard, during 2024, we made significant progress, including: (i) productivity improvements based on robotic process automation, development of AI use cases, and digitization of transactions, (ii) advancements in the new ERP platform for the automation and centralization of purchasing and payment activities, along with new processes to optimize capital expenditures in infrastructure, (iii) the strengthening of the technological architecture and high service standards through the updating of our data center networks and the implementation of a multicloud strategy, and (iv) progress in the technological transformation and modernization of our mutual funds and stock brokerage subsidiaries.

We believe that remote channels are key to the future of banking, particularly amid new regulatory requirements, intensified competition, the entry of new banking players, and higher reputational exposure, all of which translates into higher costs. Similarly, customers are increasingly demanding new and innovative distribution channels and visiting branches less, given lack of time, but mostly due to the massive use of internet and the fast adoption of smartphones. In 2018, these trends led us to undertake financial and strategic analyses aimed at revising our entire branch network in terms of profitability, location, layout and services offered through these channels. In 2024, we continued to deploy this analysis by considering demographic change, physical coverage, and customers’ profiles, among other topics. In this regard, our current service model strategy includes the integration of the former CrediChile network into the Banco de Chile’s network. Through these means, we believe that we are able to provide superior and tailored local solutions, as well as reduce operational costs.

As a result, we have reduced our branch network from 334 locations as of December 31, 2020, to 226 branches as of December 31, 2024. Most of this decrease was related to our efficiency and branch optimization program and the adoption of new technologies that have allowed us to streamline internal processes with a front-to-back view.

Likewise, the deployment of our efficiency program has enabled us to streamline several internal processes with a front-to-back approach that, along with organizational restructuring we have carried out in order to both imprint an efficiency-focused culture across the corporation and due to the branch network optimization, has translated into a steady optimization in headcount from 12,284 employees in 2020 to 11,614 employees in December 2024, which represents a 5.5% decrease.

Banco de Chile is devoted to focus on the progress of its customers by means of providing them with a wide array of services while supporting their funding needs. As an extension of this view, Banco de Chile is committed to the development of Chile and its individuals and companies by providing innovative tools that contribute to improve their quality of life. In this regard, we firmly believe that modern companies need to create effective mechanisms to build positive connections with all of their stakeholders and the society in which they carry out their business activities. This has become increasingly important in the midst of societal changes in Chile and worldwide.

This view is shared by the Bank and its employees, who support the development of Chile through diverse methods such as promoting social progress, contributing to environmental protection, decreasing extreme poverty, providing high-quality education to needy people, assisting disabled young people, fostering cultural development and embracing campaigns intended to overcome the effects of specific adverse events such as natural disasters.

Over the years, in line with its commitment to Sustainability and Chile, we have promoted different initiatives focused mainly on the areas of: (i) training and education for communities, (ii) entrepreneurship support, (iii) inclusion, and (iv) environment commitment. Our sustainability strategy is aligned with the Sustainable Development Goals (SDGs) and therefore seeks to promote inclusive economic development, promote environmental sustainability, stimulate innovation and partnerships, in addition to strengthening the relationship with the communities in which the Bank operates.

In recent years, we have successfully deployed diverse initiatives, in which we also achieved significant accomplishments in 2024, as follows:

Banco de Chile is aware that education is a key factor in the country’s economic and social development. In order to provide more and better opportunities for people to improve their quality of life through education, we promote initiatives that contribute to access and equity in education, which have materialized through diverse initiatives. The “Cuentas con el Chile” program is a financial education and wellness program, which aims to contribute to financial education and inclusion through the implementation of various activities, including digital financial education, face-to-face financial education, and financial education mentoring. In 2024, this initiative trained 4,586 people from all regions of the country, with special emphasis on young middle and high school students, elderly people, people with disabilities, and women. As a result, 22 schools benefited from these actions that enabled the training of 2,408 students in diverse matters related to informed behavior, financial responsibility and recommendations for savings practices. As part of this program, 60 volunteers from Banco de Chile provided mentorship to entrepreneurs covering topics such as financial education and welfare knowledge through interactive workshops that promote an informed, responsible and secure behavior on financial matters.

In addition, we carried out the “Compromiso TP” (TP Commitment) program, an initiative that aims to promote work opportunities for technical school students through an alliance with Fundación Chile. In the first stage, this program focuses on management and information technology skills through integration and curricular strengthening. Compromiso TP also uses a new educational approach in relation to lecturer skills and provides students with the opportunity to use diverse tools and practices that allow them to pursue better employment opportunities upon graduation. In 2024, through this program, more than 600 students received certification in diverse matters including accounting, networks and connectivity, programming and telecommunication.

Also, to promote community training, with special emphasis on women in technology, during 2024, a total of 255 women and young people took bootcamps ranging from 60 to 350 training hours, which allowed them to be certified in web development, cloud support practitioner, full-stack Java web development with Spring & SpringBoot, data analysis and visualization techniques, among other topics.

Throughout our history, we have demonstrated our commitment to the development and success of entrepreneurs, for which we have implemented different gathering and supporting instances in order to promote their advancement in their business goals. During 2024, the main initiatives we carried out in this area were:

(3)        Inclusion

In 2024, we continued to promote Inclusion, Non-Discrimination and Respect to Diversity across the corporation. Through this pillar, we aim to improve our knowledge of physical disability, discrimination, and diversity while developing higher sensitivity on these matters.

Our commitment to disabled people is permanent. In 2024, we worked once again with Teleton in the annual fund-raising campaign by putting our nationwide distribution network, internet-based platforms, and mobile applications for smartphones, in addition to other technological resources, at Teleton’s disposal. Also, more than 7,000 of our employees participated as volunteers in the annual campaign. We have been supporting the Teleton Foundation since its establishment in 1978.

Likewise, we sponsor paralympic sportsmen and sportswomen while organizing sporting events for disabled people like the Chilean Open Wheelchair Tennis Tournament. Due to our commitment to inclusion, especially through sports, we received the “Special Olympics Inclusive Seal” from Special Olympics, the world’s largest sports organization for disabled people.

Additionally, in 2024, we held the seventh version of “Navidad con Sentido” (Christmas with Sense), an initiative that allows volunteers teams from Banco de Chile to design and implement sustainable impact projects that benefit social organizations across the country. In 2024, this activity involved more than 1,200 volunteers, benefiting around 10,000 children, teenagers, disabled people and elderly people from 98 institutions.

We prioritize sustainable development along with responsible environmental and social management, recognizing the role that financial entities play in driving the economic system. Through diverse initiatives, we focus on enhancing community engagement through competitive funds, partnerships, and volunteer programs, strengthening strategic collaborations with foundations, universities, and organizations aligned with the pillars of sustainability—entrepreneurship and education, contribution to environmental care, emergency support, and inclusion—placing a strong emphasis on local relevance.

“Emergency Response”

As part of our commitment to respond to the emergency, during 2023 and 2024, we worked in alliance with “Desafío Levantemos Chile” in the reconstruction of a rural school in Colico Alto, in the Biobío Region, that was completely devastated by wildfires occurred in February 2023. We fully financed the reconstruction of the school, the replacement of furniture, the purchase of teaching materials and the provision of technological equipment. The new school has high standards of construction, accessibility and sustainability.

Additionally, in order to support entrepreneurs affected by the wildfires that occurred in the early 2024 in Villa Independencia and El Olivar sectors in Viña del Mar city, we deployed volunteer teams that assisted 500 entrepreneurs with the delivery of various work tools aimed at boosting and recovering their activities as soon as possible.

“Blue Commitment” Program

In May 2022, we launched the “Compromiso Azul” (Blue Commitment) Program, which is a roadmap on environmental and climate change matters. This program is composed of diverse initiatives that seek to contribute to the environment care through different initiatives, such as operational eco-efficiency, community relations, recycling and the offer of products and services for people and SMEs. In 2024, we carried out several volunteer programs called “Cuadrilla Azul” (Blue Crew) focused on environmental care. Through this initiative, during the last year we primarily focused on cleaning beaches, rivers, and wetlands. In two days, 340 volunteers of Banco de Chile managed to cover 10 locations nationwide, were more than 985,000 square meters were cleaned, and around 17 tons of waste were collected and taken to recycling plants and official landfills. During 2024, our insurance brokerage subsidiary, in collaboration with the international organization Parley for The Oceans, carried out a campaign aimed at cleaning 75 beaches nationwide. This exceeded the 100 beach and wetland cleaning actions projected for the year. This project involved more than 100 local organizations and had the participation of 4,125 volunteers, who collected 65 tons of waste, including more than 20 tons of plastic, preventing it from entering the sea.

“Operational Eco-efficiency”

As part of our Environmental Sustainability Policy, we have defined intervention areas to minimize the impact of our operations in terms of energy and emissions, paper and water consumption, as well as waste generation and recycling.

Throughout 2024, our energy consumption was entirely sourced from renewable energy, allowing us to maintain our energy consumption at approximately 29.8 GWh, consistent with the level achieved in the previous year. Regarding paper consumption, we reduced our usage from 288 tons in 2023 to 222 tons in 2024. This decrease reflects our efforts to prioritize digitalization, enhance operational efficiency, and promote sustainability across the entire Bank. Additionally, water consumption increased from 259 thousand m³ in 2023 to 270 thousand m³ in 2024. Although the impact of the Bank's operations on water usage is not as significant as in other industries, the efficient management of this resource remains a key component of the Bank’s commitment.

Likewise, during 2024 we focused on waste management with a recycling nationwide network implemented in 2023. The project is carried out alongside grassroots recyclers who collect, sort, recover, transform, and reuse waste. Additionally, we support them in the process of formalizing their employment status, achieving a social and environmental impact in the regions and communities where this network operates. Thanks to these efforts, 66.2 tons of waste were recovered in 2024. Moreover, we have implemented an initiative to give a second life to credit and debit cards that do not reach their customers, thus preventing them from ending up in landfills. In 2024, in collaboration with Reco Boards company, we recycled 55,000 cards to create sports equipment to be installed in the playground of Colico Alto School in Santa Juana. In addition to the plastic cards, we managed to recover more than 21,000 Tetra Pak containers, which were used in the construction of equipment. This project helped prevent the emission of approximately 120 kilograms of CO₂ into the environment, save more than 2,300 cubic meters of water, and avoid the cutting of about ten trees.

Principal Business Activities

We are a full-service financial institution that provides, directly and indirectly through our subsidiaries and affiliates, a wide variety of lending and non-lending products and services to all segments of the Chilean financial market. Accordingly, for management purposes we organize our operations in the following four business segments:

Source: Banco de Chile.

The information related to our business segments presented in this section has been prepared in accordance with our internal reporting policies. See “Item 5. Operating and Financial Review and Prospects—Operating Results—Results of Operations for the Years Ended December 31, 2022, 2023 and 2024—Business Segments” and “Item 5. Operating and Financial Review and Prospects—Operating Results—Results of Operations for the Years Ended December 31, 2022, 2023 and 2024—Summary of Differences between Internal Reporting Policies and IFRS” for a description of the most significant differences between our internal reporting policies and IFRS.

The following table sets forth information on the composition of our loan portfolio and our consolidated income before income tax in accordance with our internal reporting policies for the year ended December 31, 2024, allocated among our principal business segments:

The following table sets forth our consolidated operating revenues (composed of total operating income before expected credit losses) in accordance with our internal reporting policies, allocated among our principal business segments, for the years indicated:

The following table sets forth a geographic market breakdown of our operating revenues (composed of total operating income before expected credit losses) in accordance with our internal reporting policies, for the years indicated:

The following table sets forth a breakdown of our loan portfolio by customer and business segments, in accordance with our internal reporting policies for the year ended December 31, 2024:

Retail Banking Segment

Our retail banking segment serves the financial needs of individuals and small and medium sized companies through our branch network. As of December 31, 2024, our retail banking segment managed 226 branches operating under the “Banco de Chile” and “Banco Edwards-Citi” brand names. As of December 31, 2024, loans granted by our retail banking segment amounted to Ch$25,399,116 million and represented 65.3% of our total loans as of the same date.

In terms of composition, as set forth in the following table, as of December 31, 2024, our retail segment’s loan portfolio was principally focused on residential mortgage loans, which represented 52.0% of the segment’s loan book. The remaining loans were distributed between commercial loans (26.2%) and consumer (21.8%).

We serve the retail market through our Retail Banking Segment, which is responsible for offering financial services to individuals and microentrepreneurs, as well as small and medium-sized companies with annual sales of up to UF 70,000 (approximately Ch$2,703.4 million as of December 31, 2024). This segment manages our branch network operating under the brand names “Banco de Chile” and “Banco Edwards Citi” and had 226 branches as of December 31, 2024. For purposes of personal banking, the Individuals and SME Area maintains a segmentation to provide customers of middle- and high-income segments with tailored value propositions.

The strategy followed by our Retail Banking Segment is mainly focused on sub-segmentation, multi-brand positioning, cross-selling of lending and non-lending products and service quality based on customized service models for specific customer needs. Also, loyalty programs have been increasingly incorporated into our commercial targets for each sub-segment and they have enabled us to increase the use of our credit cards and our fee-based income. In addition, the area’s operations count on the support of specialized call centers, mobile and internet banking services, along with a wide range of management tools that allow us to measure returns, the performance of cross sold products and the effectiveness of marketing campaigns. Similarly, over the last years the area has strengthened value offering for SMEs by promoting a close relationship, while accompanying entrepreneurs in the diverse stages of their life cycle.

We complement the services offered by our other business segments, especially our wholesale market segment, by offering services to employers, such as direct deposit capabilities for payroll payment purposes, which in turn enable employees to use our deposit services.

In 2024, the Retail Banking Segment focused on targeted growth opportunities while developing new business solutions and benefits to improve our customers’ experience. Based on these pillars, in 2024, this business segment recorded a 4.5% growth in personal banking customers (number of individuals), which was prompted by the upgrade in targeted value propositions that were split into two customer clusters composed of transactional (retail, young and traditional) and relational (preferential and private) customers. Likewise, we introduced tailored value offerings for both digitally-oriented customers and customers who prefer traditional channels. We also launched the FAN Ahorro account, a digital saving account designed for both current and new customers that simplifies the saving process and earns monthly interest. As a result, this business segment recorded a 63.3% growth in saving accounts. Moreover, this business segment achieved a 5.0% increase in checking account customers in 2024, which was in part the consequence of revised current account plans that became simpler, more flexible and more connected to the benefits of the loyalty program.

Also, during 2024, this segment managed to achieve significant advances in payment channels, including: (i) a 8.6% increase in credit card-related loans, which allowed us to gain market share in this lending product, (ii) an annual increase in transactions made through payment channels, as reflected by a 10.9% and 14.5% rise in purchases with both credit and debit cards, respectively, which was coupled with increases of 5.3% and 14.6% in the total stock of credit and debit cards issued in 2024 when compared to 2023, (iii) an increase of 2.3% in consumer installment loans that enabled us to achieve a market share of 20.5%, and (iv) the consolidation of the Fan Account ecosystem, which reached more than 1.7 million customers in 2024 on the grounds of improved service quality and strengthened relationships with customers. In 2024, the Retail Banking Segment also achieved significant increases in lending and saving products. In this regard, throughout the year the segment’s customer base grew by approximately 58,850 new current account holders.

During 2024, the SME banking unit managed to implement digital solutions for customers to provide timely and efficient services while expanding the range of digital products. This resulted in a significant increase in the use of digital channels by SME customers. In this regard, during 2024, approximately 75.3% of transactions made by SME customers were conducted digitally (including loan applications and payment orders). Aligned with the same strategy, current accounts opened by SME banking increased 44.6% compared to 2023, reaching approximately 23,600 clients. This growth was primarily driven by the introduction of new commercial plans, which leveraged technological capabilities. From the lending business perspective, we have become the leader in supporting SMEs and entrepreneurs nationwide by positioning first in commercial loans granted under the FOGAPE Chile Apoya program over the past year, reaching a 28.1% share of the total amount provided by local financial institutions. More recently, we enhanced our value offering for SMEs by creating B-Pago, a new acquiring and processing credit and debit card company aimed at improving our customers’ experience, with a special focus on SMEs and middle-market companies, through innovative payment and cash management solutions.

As of December 31, 2024, the Retail Banking Segment served 1,427,372 core customers (those holding a current account or a loan outstanding) of whom 1,257,407 were individuals and 169,965 were small and medium sized Chilean companies. This customer base resulted jointly in total loans granted to 1,139,874 borrowers, which included 145,495 residential mortgage loans debtors, 133,747 commercial loan debtors, 544,010 utilized lines of credit, and 316,622 installment loans.

As of December 31, 2024, 79.6% of our loans managed by this area were granted to individuals, which represents Ch$20,215,739 million. As of the same date, Ch$5,183,371 million (20.4% of loans granted to retail banking customers) were granted to SMEs.

We offer a variety of financial services to individuals, SMEs and microbusinesses, directly through the Individuals and SME Area or indirectly through our subsidiaries, such as current accounts, automatic bill payment, debit cards, credit cards, revolving credit lines, residential mortgage loans, consumer loans, commercial loans, mortgage loans for general purposes, leasing agreements, factoring services, mutual funds management and stock brokerage, trade finance, payments and collections, insurance brokerage (which includes life and casualty insurance), savings instruments and foreign currency services.

Installment Loans

Our consumer installment loans are generally granted, up to a customer’s approved credit limit, to afford purchases of goods and/or services, such as cars, travels, household furnishings and education, among others. Consumer loans may be denominated in both pesos and UF, bear fixed or variable interest rates and are generally repayable in installments over a period of up to 46 months.

As of December 31, 2024, we had Ch$3,253,647 million in installment loans granted by the Bank as a whole, which accounted for 58.6% of our total consumer loans. Most of these installment loans are denominated in Chilean pesos and are payable on a monthly basis.

Residential Mortgage Loans

As of December 31, 2024, we had outstanding residential mortgage loans of Ch$13,218,586 million (under internal reporting policies considering the Bank as a whole), which represented 34.0% of our total loan book as of the same date. According to information published by the CMF, as of December 31, 2024, we were Chile’s fourth largest private sector bank in terms of year-end mortgage loans balances, accounting for approximately 15.5% of mortgage loans granted by the Chilean banking industry, excluding operations of banks’ subsidiaries operating abroad.

Our residential mortgage loans are generally denominated in UF and have maturities ranging from five to 30 years. As of December 31, 2024, the average residual maturity of our residential mortgage loan portfolio was 16.5 years. Originally, we funded our residential mortgage loans through the issuance of mortgage finance bonds, which are recourse obligations only to us with payment terms that are matched to the residential loans. Also, the mortgage finance bonds bear real market interest rates plus a fixed spread over the variable rate of the UF, which permits us to partially reduce our exposure to interest rate fluctuations and inflation. Chilean banking regulations allow us to finance up to 100% of a residential mortgage loan with mortgage finance bonds, based on the purchase price of the property securing the loan or the appraised value of such property. In addition, we generally require that the monthly payments on a residential mortgage loan do not exceed 25% of the borrower’s household after tax monthly income. However, that limit may be adjusted for the middle- and high-income population segments.

Over the last two decades, we have promoted the expansion of Mutuos Hipotecarios, a mortgage lending product, which is not financed by mortgage finance bonds, but instead through our general funds. As of December 31, 2024, our residential mortgage loan portfolio was principally composed of Mutuos Hipotecarios, as customers have preferred them due to their flexibility and simplicity (for instance the interest rate is known in advance by the customer, which is not the case for mortgage finance bonds that are traded in the secondary market and, therefore, subject to discounts and variations), as they are easier to prepay and permit financing of up to 100% of the purchase price (as stated by the applicable local regulation), although banks limit such maximum financing portion based on internal credit policies, capital requirements, and economic cycles, among others.

The following table sets forth the composition of our residential mortgage loan portfolio by product type:

As shown above, as of December 31, 2024, residential mortgage loans related to Mutuos Hipotecarios represented 99.99% of our total residential mortgage loan portfolio, while the remaining 0.01% corresponded to mortgage loans financed with Mortgage Bonds. As of the same date, the Mutuos Hipotecarios portfolio had an average origination period of 16.5 years (the period from the date when the loans were granted to the specified date). In terms of credit risk, in 2024, loans related to Mutuos Hipotecarios had a gross (before recoveries) credit risk ratio of 0.08%. It is important to mention that currently the residential mortgage loan portfolio financed with Mortgage Bonds is composed of old loans and the instrument is no longer offered by us.

Credit–Granting Requirements

For those loans that finance a higher portion of the property appraised value, we demand that customers comply with stricter requirements, which are verified during the credit assessment stage. These requirements are related to: (i) the history of the relationship between the Bank and the customer (new or current customer), (ii) credit risk scores, (iii) monthly income, (iv) type of job (employed or self-employed) and (v) years employed. In order to illustrate the above mentioned, the table below sets forth an example of requirements for residential mortgage loans that finance up to 80% and more than 80% of the property value, with a common term and granted to employed as well as self-employed new customers.

During 2024, 25.7% of the residential mortgage loans granted to our customers financed between 90% and 100% of the property value. Similarly, during 2024, loans financing between 75% and 90% of the property appraised value represented 42.3% of these loans, loans financing between 50% and 75% of the property value represented 26.7% of these loans, and loans financing less than 50% of the property value represented 5.4% of these loans. According to our prudent risk approach, we have been tightening our credit granting policy for residential mortgage loans by restricting the loan financing limit as a percentage of the property’s value, although higher financing may be granted to longstanding customers within specific segments.

An additional feature of our mortgage loans is that mortgaged property sometimes, and under certain conditions, secures some of the mortgagor’s other credits with us, including installment loans and due balances associated with credit cards and credit lines. Our total amount of loans secured by real estate guarantees, their loan–to–value (LTV) ratio and their relative share in our total loan portfolio, as of December 31, 2024, are depicted in the table below:

The LTV ratios provided above are based on estimated property values that we update monthly with the collateral valuation models managed by our Corporate Risk Division. These models determine a rate of depreciation that provides an updated collateral value, based on variables such as geographic location, last appraisal date, type of property and type of customer. Accordingly, the LTV ratios set forth above take into account the most recent available data regarding collateral values.

In addition, the following table sets forth the composition of the other-than-mortgage loans secured by real estate guarantees:

Unlike in other countries, in addition to the specific legal rights afforded by the mortgage loan (including foreclosure rights), the Bank may collect the pending balance of the mortgage loan over other assets of the mortgage debtor based on certain legal liens provided by law (derecho de prenda general). Regarding the foreclosure processes, as permitted by Chilean regulations we may write-off secured loans (such as residential mortgage loans) the earlier of 48 months from the date the loans become overdue and once we have made all efforts for recovering the past-due loans without success. This applies to residential mortgage loans financed with mortgage finance bonds as well as for Mutuos Hipotecarios. Our foreclosure processes comply with the procedures specified by Chilean regulation. However, as we strive to improve our collection processes, we have achieved average terms of 13 months for foreclosures associated with residential mortgage loans.

As for our historical loss rates, we periodically review our collateral pricing models by adjusting the parameters that support them, such as appreciation and depreciation rates, as well as updated recovery and loss rates, based on historical and empirical data. Thus, we normally revise our collateral pricing models by incorporating updated information from re-appraised assets or foreclosure processes that have been completed by the Bank in the past.

In addition, the valuation of guarantees is based on a prudent approach, which aims to anticipate and cover unexpected reductions in their market price as a result of changes in market variables, such as an unforeseen slowdown in the global or local economy, lack of liquidity of real estate assets or decrease in real salaries. Accordingly, our collateral pricing models depreciate the value of the guarantee regarding the market value determined by an independent appraiser. This approach has allowed us to minimize the loss rates, as the value obtained from auctions (if foreclosure applies) generally exceeds the value assigned to the asset as guarantee.

Credit Cards

As of December 31, 2024, we issued both individual and corporate Visa and MasterCard credit cards. In addition to traditional credit cards, our portfolio also includes co-branded cards. As of December 31, 2024, we had two loyalty programs or cobranding agreements, namely “Travel Club” and “Entel Visa.” Credit cards issued under these cobranding agreements supplemented the credit cards that we issued under the brand names Banco de Chile and Banco Edwards-Citi. In addition, as of December 31, 2024, we offered 19 types of credit cards, targeting diverse types of segments and encompassing different benefits, including: Visa Corporate, Visa Corporate Signature, Visa Dorada, Visa Infinite, Visa Infinite Plus, Visa Internacional, Visa Platinum, Visa Platinum Pyme, Visa Pyme/Empresarial, Visa Signature, Visa Signature VIP, Visa Signature Entel, Visa FAN Internacional, MasterCard Black, MasterCard Dorada, MasterCard Internacional, MasterCard Platinum, MasterCard Corporate and MasterCard Corporate Executive.

Our affiliate, Transbank S.A., provides us with services related to payment transactions support. As of December 31, 2024, Transbank S.A. had 11 shareholders (including us) and as of the same date, our equity ownership in Transbank S.A. was 26.16%.

As of December 31, 2024, we had 1,544,382 valid credit card accounts, with 1,784,749 credit cards issued to individuals and small and medium sized companies (according to the CMF), held by 1,531,925 customers. Total charges on our credit cards during 2024 amounted to approximately Ch$8,548,473 million, with Ch$7,858,686 million corresponding to purchases in Chile and abroad and Ch$689,787 million corresponding to cash withdrawals both within Chile and abroad. The amount of purchases made by our customers accounted for 17.9% of the total purchase volume of banks’ credit cards in 2024, according to statistics provided by the CMF. Similarly, our market share in terms of cash withdrawals and automatic bill charges were 18.3% and 15.0% as of the same date, according to the CMF.

As of December 31, 2024, our credit card loans to individuals and small and medium sized companies amounted to Ch$2,008,297 million and represented 36.2% of our retail market business segment’s consumer loans.

We believe that the Chilean market for credit cards has attractive growth potential, especially in the middle-income customer segment, where banking penetration is still low. Likewise, fees associated with credit cards should continue to decline due to increasing competition from traditional banks operating in Chile and non-banking players, such as large department stores and other companies, from diverse industries, involved in the issuance of credit cards. As a result, we strive to develop customized commercial strategies to reinforce this payment channel by applying business intelligence tools that enable us to satisfy the needs of our diverse customer base. Also, based on the new rules issued in the last years by our regulator in relation to the four-party model and its implications for the processing and merchant acquiring services market for credit and debit cards, in 2024, we created B-Pago subsidiary, which is a new acquiring network that is due to start operations by the end of 2025.

Regarding the four-party new model, a technical committee is responsible for determining the maximum interchange fees that may be charged by credit card issuers (such as banks, including us) to companies that provide merchant acquiring services. Since its inception functioning the technical committee has reduced the maximum interchange fees twice, which resulted in lower fee income for banks. Although fees were expected to be redefined in October 2024 once again, the process was postponed on the grounds of diverse comments the technical committee received from market agents. For more information see Item 3. Key Information–Risk Factors–Risks Relating to our Operations and the Chilean Banking Industry–Stricter banking regulations and changes in law may constrain our operations and thereby adversely affect our financial condition and results of operations–Other Legal and Regulatory Requirements.

As of the date of this annual report, B-Pago is implementing the necessary technological architecture for operation and is projected to launch during the last quarter of 2025, when the productive pilot begins and once all necessary certifications from the various brands associated with the operation, the local IRS, and the CMF are received.

Commercial Credits

Commercial credits granted by our Retail Banking Segment mainly consist of project financing, long-term financing and working capital loans granted to small and medium sized companies, which are denominated in Chilean pesos, UF and U.S. dollars and may bear fixed or variable rates of interest with average maturities of approximately four years (excluding non-residential mortgage loans). As of December 31, 2024, our Retail Banking Segment had outstanding commercial loans of Ch$5,810,270 million, representing 22.9% of the retail banking segment’s total loans and 14.9% of our total loans as of the same date.

Leasing Contracts

Leasing contracts are financial leases for capital equipment and property. Leasing contracts may bear fixed or variable interest rates and they generally have terms that range from one to five years for equipment and from five to 20 years for properties. Most of these contracts are denominated in UF. As of December 31, 2024, our Retail Banking Segment had outstanding leasing contracts of Ch$578,014 million, representing 2.3% of the retail banking segment’s total loans and 1.5% of our total loans as of the same date.

Lines of Credit

As of December 31, 2024, the Retail Banking Segment had approximately 1,099,108 approved lines of credit to individual customers and small and medium sized companies. Also, the unit had outstanding advances to 544,010 individual customers and small and medium sized companies that totaled Ch$283,205 million, or 1.1% of the retail banking segment’s total loans and 0.7% of our total loans.

Our lines of credit for individual customers are generally available on a revolving basis, up to an approved credit limit, and may be used for any purpose. Advances under lines of credit are denominated in Chilean pesos and bear an interest rate that is set monthly.

Debit Cards

We offer different types of debit cards to our customers. Depending on their specifications, these cards can be used for banking transactions at ATMs that operate on the local network provided by Redbanc and the local network of merchants participating in the local Redcompra debit program. Also, our debit cards can be used internationally through the Visa International PLUS network or the international network of merchants associated with the Electron program. We name these debit cards depending on the card’s specific features and the link between the brand and target market which they serve. During 2024, we offered the following debit cards: Visa Infinite, Visa Estándar, Visa Estandar FAN, Visa Signature, Visa Platinum, Visa Debit Business and debit cards for companies. As of December 31, 2024, according to the CMF, we held a 11.2% market share of debit card transactions, which corresponds to approximately 467 million transactions throughout the year, according to the CMF.

Deposit Products

We strategically offer deposit products to increase our deposit-taking activities as a means of diversifying our sources of funding. We believe that the deposits of our individual customers provide us with a relatively low-cost, stable source of funding, as well as an opportunity to cross-market our other products and services. In this regard, we offer current accounts, time deposits and savings accounts to our individual customers. Current accounts are Chilean peso-denominated and the majority bear no interest (approximately 0.04% or 535 of our total current accounts are interest-bearing), and savings accounts are denominated in UF and bear a fixed-interest rate. Time deposits may be denominated in Chilean pesos, UF and U.S. dollars and most of them bear interest at a fixed rate with terms that range between seven to 360 days.

While demand has historically been focused on UF-denominated deposits during periods of high inflation, demand for Chilean peso-denominated deposits has increased in recent years as a consequence of lower and more stable inflation rates in Chile.

In 2020 and 2021, due to the COVID-19 pandemic, we experienced a significant increase in demand deposit balances, which was aligned with historically low interest rates and reflected Central Bank decisions to promote liquidity in the banking system and the whole economy by keeping the reference rate at 0.5% during 15 months starting April 2020, leading depositors to prefer liquidity over profitability and, therefore, moving from time deposits to demand deposits. As a result of the inflationary pressure due to the boost in household spending caused by a liquidity surplus in the economy in 2021 and 2022, the Central Bank then adopted an aggressive monetary policy, which increased form 0.5% in July 2021 to 4.00% in December 2021 and to 11.25% in December 2022. Since inflation took longer-than-expected to decline, the Central Bank kept the monetary policy interest rate at 11.25% until July 2023, after the 12-month CPI variation began to show signs of retreat. Based on that, the Central Bank reduced the monetary policy interest rate gradually until such rate reached 8.25% in December 2023. Due to both the higher opportunity cost of funds and the loss in purchasing power due to inflation, depositors began to move from demand deposits to short-term time deposits, which resulted in annual declines of 27.8% and 0.5% in year-end total demand deposit balances for us in 2022 and 2023, respectively. In 2024, even though inflation registered a moderate rebound by ending the year at 4.5%, measured as CPI variation, the Central Bank continued to have an easing monetary stance by decreasing the reference interest rate to 5.0% in December 2024. As a result, given the downward trend in interest rates, the annual average balances of time deposits managed by our Retail Banking Segment decreased by 1.8% in 2023 and by 8.1% in 2024. Also, given the lower opportunity cost once inflation began to decrease, average demand deposits managed by the Retail Banking increased by 3.8% in 2024, which compares to the 19.9% decrease recorded in 2023 given the prevailing level of interest rates at that point.

Wholesale Banking Segment

Our wholesale banking segment serves the needs of corporate customers. In 2024, this business segment recorded annual operating revenues of approximately Ch$896,222 million, which represented 29.4% of our total operating revenues. Also, for the year ended December 31, 2024, this segment recorded an income before income tax of Ch$666,217 million, which represented 43.7% of our consolidated income before income tax. As of December 31, 2024, loans granted by this business segment amounted to Ch$13,476,004 million and represented 34.7% of our total loan portfolio.

The following table sets forth the composition of our portfolio of loans to the wholesale market in accordance with our internal reporting policies, as of December 31, 2024:

As of December 31, 2024, we had 10,947 debtors out of a total of 28,477 core customers (those holding either a loan or a current account with us). Our wholesale customers are engaged in a wide range of economic sectors. As of December 31, 2024, loans granted by our wholesale banking segment were mainly related to:

In line with our strategy of identifying and differentiating market segments in order to provide improved value propositions for a diversified customer base, three of our areas provide our wholesale customer base with banking and financial products and services: (i) the Corporate Area, (ii) the Special Business Area and (iii) the Large Companies Area.

Corporate Area

The Corporate Area provides banking products and services to corporations with annual sales exceeding UF 3.0 million (approximately Ch$115,859.5 million as of December 31, 2024). This area’s customers consist of a large proportion of Chile’s publicly-traded and non-listed companies, subsidiaries of multinational companies and conglomerates operating in Chile (including those operating in the financial, commercial, manufacturing, industrial and infrastructure sectors), as well as projects and concessions. Thus, in addition to traditional lending products, this area offers a wide range of non-lending services related to project finance, deal structuring associated with business acquisitions, cash management, deposits and funds administration, financial advisory, among others. Also, this area is in charge of coordinating and overseeing both our Leasing Business and our International Private Banking Unit.

As of December 31, 2024, the Corporate Area had approximately 505 debtors out of a total of approximately 2,226 core customers (those holding either a current account or a loan with us). Also, this area managed total outstanding loans of Ch$5,486,529 million, which represented 14.1% of our total loan book as of the same date.

The following table sets forth the composition of our Corporate Area’s loan portfolio in accordance with our internal reporting policies, as of December 31, 2024:

We offer a wide range of products to large corporations that include short- and long-term financing, working capital loans, mortgage loans, leasing, long-term syndicated loans and factoring, as well as investment banking services offered by our subsidiary Banchile Asesoría Financiera S.A. We also offer cash management, including payment services (payrolls, suppliers, pensions, dividends, etc.), collection services and connections to international funds transfer networks, as well as traditional deposit products, in particular current accounts.

In cash management, as of December 31, 2024, we were party to approximately 12,228 payment service contracts and approximately 874 collection service agreements with corporations. We believe that cash management and payment service contracts, in particular, provide us with a source of low-cost deposits and the opportunity to cross sell our products and fees to payees, many of whom maintain accounts with us. Under our collection contracts, we act as a collection agent for our corporate customers, providing centralized collection services for their accounts receivable and other similar payments. For the year ended December 31, 2024, joint volumes associated with collection and payment agreements increased by approximately 15.6% when compared to 2023.

In order to provide highly competitive and differentiated services, in conjunction with our Treasury and Money Market Operations segment, our Corporate Area offers to its customer diverse solutions to over their liquidity, short-term loans and hedging needs. Similarly, we offer derivative products, which we believe have become increasingly important, especially those associated with Chilean peso-U.S. dollar and UF-U.S. dollar forward contracts, cross currency swaps, interest rate swaps and options, among other derivative products.

In recent years, the market for loans to corporations in Chile has reduced margins due to increasing competition and moderate expansion in terms of borrowing. For this reason, we have focused on optimizing the profitability in this segment by enhancing our cross selling through the generation and enhancement of fee-based services, such as payroll processing, dividend payments and billing services, as well as computer banking services. This strategy has enabled us to maintain profitable and long-term relationships with our corporate customers while preserving the ability to grant loans when appropriate business opportunities arise.

In 2024, this business area was focused on the digitalization and update of diverse products and services with the aim of delivering a more flexible and accessible experience to customers. Amid a challenging business environment, our Corporate Unit posted a 2.3% annual decrease in total loans, resulting from a decrease in commercial credits to corporations given the contraction in capital expenditures, and a deteriorated business sentiment and uncertainty regarding the evolution of economic activity, which has affected corporate lending over the last years.

In addition, the Corporate Area offers specialized services of assets custody and financial advisory in diverse matters such as capital increases, purchase and sale of shares, private equity placements, public share offerings, mergers and acquisitions, capital markets, initial public offerings and bond placements.

Special Businesses Area

The Special Business Area provides tailored financial products and services to the real estate and construction industries, as well as family offices. Thus, in addition to traditional lending products, this area offers a wide range of non-lending services related to project finance, deal structuring associated with business acquisitions, cash management, custody services, deposits and funds administration, investment banking, derivative instruments, among others.

As of December 31, 2024, our Special Businesses Area had approximately 727 borrowers out of a total of 5,250 core customers (those holding either a current account or a loan with us). In addition, as of the same date, loans granted by this area accounted for Ch$2,576,625 million, which represented 6.6% of our total loans.

The following table displays the loan portfolio composition of the Special Businesses Area, in accordance with our internal reporting policies, as of December 31, 2024:

In 2024, the Special Businesses Area continued to deploy a differentiation strategy focused on the family office sub-segment. In this group of customers, relationships are crucial and, therefore, this area has concentrated on reinforcing the team’s capabilities while establishing a collaborative work relationship with our subsidiaries Banchile Administradora General de Fondos (mutual funds management) and Banchile Corredores de Bolsa (securities brokerage) in order to offer a wide array of wealth management services and products based on our knowledge of our customers. The Special Businesses Area recorded an annual increase of 5.0% in total loans during 2024, particularly concentrated in commercial credits and, to a lesser degree, in leasing loans.

Large Companies Area

Our Large Companies Area provides companies, with annual sales that range from UF 70,000 (approximately Ch$2,703.4 million as of December 31, 2024) to UF 3.0 million (approximately Ch$115,859.5 million as of December 31, 2024), with a broad range of financial products and services. Customers served by this area are those related to the commercial, manufacturing, agricultural, forestry, fishing and infrastructure sectors, among others.

As of December 31, 2024, we had 9,177 large company debtors out of a total of 19,404 core customers (those holding either a current account or a loan with us). Loans granted by the Large Companies Area amounted to Ch$5,412,850 million as of the same date, which represented 13.9% of our total loans.

The following table sets forth the loan portfolio composition of the Large Companies Area, in accordance with our internal reporting policies, as of December 31, 2024:

Products and services offered by this area are mainly related to commercial loans, lines of credit, trade finance and foreign currency transactions, factoring services, leasing, non-residential mortgage loans, syndicated loans, investment banking and financial advisory services for mergers and acquisitions, debt restructuring assistance, payments and collections services, current accounts and related saving services, corporate credit cards, cash and investment management, derivative contracts to hedge against currency or interest rate fluctuations, insurance brokerage, among other traditional and tailored services.

The Large Companies Area aims to provide its customers with excellent service based on proactive financial support that enhances long-term relationships with customers. Over time, the area has developed service models intended to take advantage of synergies arising from the interaction of account and specialized support executives responsible for ensuring comprehensive customer service. These models have enabled the Large Companies Area to strengthen customer relationships and product offerings.

In 2024, the Large Companies Area continued to prioritize a customer-centric approach by means of improving value offerings in order to provide more diverse lending products to customers in the context of an economic slowdown. Notwithstanding these initiatives, the Area experienced an increase of 0.1% in total loans, which was mainly driven by the expansion evidenced in commercial credits, which increased for the same amount.

In this context, we may highlight the expansion in some particular lending products for which we have dedicated efforts over the last years to revise and enhance the value offerings in order to recover market positioning. This is the case of the factoring, leasing and trade finance businesses that are managed by our Large Companies Area. In this regard, during 2024, we posted expansions of 9.3% and 16.9% in year-end balances of leasing and trade finance loans, respectively, for the Bank as a whole.

Treasury and Money Market Operations

Our Treasury and Money Market Operations business segment provides a wide range of financial services to our customers, including currency intermediation, forward contracts, interest rate swaps, transactions under repurchase agreements and investment products based on bonds, mortgage finance bonds and deposits.

In addition, our Treasury and Money Market Operations business segment is focused on managing our currency, interest rate and maturity gaps, ensuring adequate liquidity levels, managing our investment portfolio and performing the intermediation of fixed-income instruments, currencies and derivatives. Interest rate gap management is aimed at generating an adequate funding structure, prioritizing our capitalization and asset and liability cost structure and funding source diversification.

The Treasury and Money Market Operations business segment is also responsible for: (i) the issuance of short- and long-term senior bonds, as well as long-term subordinated bonds, in Chile or abroad, (ii) monitoring compliance with regulatory deposit limits, technical reserves and maturity and rate matches/mismatches, (iii) monitoring our adherence to the security margins defined by regulatory limits, and risk limits for interest rate, currency and investment gaps. This segment continually monitors the Bank’s cost of funding by benchmarking with the rest of the local financial system and financing alternatives in Chile or abroad.

In 2024, we continued to develop a funding diversification strategy by conducting important transactions, principally in Chile. This strategy is aimed at maintaining a competitive cost of funding that supports the value offerings we provide to our wide customer base and improving our liquidity by issuing debt of longer maturities that match long-term assets. For that reason, we are continually seeking alternative sources, types of instruments and markets. We generally conduct international bond issuances only if the cost (including costs of interest rate swaps and other transactional expenses) is below the cost of raising funds locally and the currency or interest rate exposure is fully hedged via cross currency swaps.

We are constantly striving to diversify our liability structure in terms of sources, types of instruments and markets with the aim of maintaining a competitive cost of funding and improving our liquidity. In 2024, we carried out the following debt placements:

The funding functions carried out by our Treasury area are complemented by our international area, namely International Financial Institutions (“IFI”), which manages relations with correspondent banks worldwide, facilitating international payments and obtaining foreign currency financing for us. As of December 31, 2024, we have established a network of approximately 600 foreign banks, among which we maintained credit relationships with approximately 136 correspondent banks, from which we maintained 15 account relationships. IFI played an important role in structuring international transactions aimed at diversifying our funding.

From the business perspective, our Treasury and Money Market segment recorded operating revenues of Ch$60,830 million in 2024, which was Ch$38,538 million higher than the amount recorded in 2023. This performance had to do with: (i) higher income from the management of our debt securities desk, mostly attributable to a comparison base effect due to the steady surge in local interest rates in the second half of 2023, that resulted in negative fair value adjustments, coupled with both positive marking-to-market in fixed-income securities denominated in local currency, given favorable changes in market factors and proactive management of our offshore fixed-income portfolio in 2024, and (ii) higher income from the management of our trading desk, driven by the effect of favorable changes in the nominal short-term interest rates on both derivatives and the funding cost of fixed-income positions, particularly during the first half of 2024. These effects were partly offset by an annual increase in the impairment of financial assets due to higher probabilities of default in 2024 for some counterparties belonging to the local financial sector.

Regarding the management of our securities portfolio, as of December 31, 2024, our total investment portfolio amounted to Ch$5,167,981 million and was composed of financial instruments measured at fair value through other comprehensive income that totaled Ch$2,097,837 million, securities held for trading measured at fair value through profit or loss amounting to Ch$2,126,070 million, and financial instruments measured at amortized cost totaling Ch$944,074 million. As for the type of instruments included in our securities portfolio, as of December 31, 2024, 60.0% consisted of securities issued by the Central Bank and the Chilean Government, 29.8% consisted of securities issued by local financial institutions, and 10.2% consisted of securities issued by non-financial Chilean corporate issuers, foreign issuers, and other securities. Our investment strategy is designed to supplement our expected profitability, risks and projections of economic variables while adhering to the regulatory guidelines and internal limits defined by our finance, international and market risk committee. In this regard, neither proprietary trading nor speculation on equity holdings are business goals for us and, therefore, equity instruments only represented 0.2% of our total investment portfolio as of December 31, 2024.

Operations through Subsidiaries

We have made several strategic long-term investments in financial services companies that are engaged in activities complementary to our commercial banking activities. In making these investments our goal is to develop a comprehensive financial group capable of meeting the diverse financial needs of our current and potential customers by offering traditional banking products and specialized financial services through our different subsidiaries.

The following table sets forth information with respect to our financial services subsidiaries in accordance with their statutory financial statements as of December 31, 2024:

The following table sets forth information with respect to our ownership interest in our financial services subsidiaries as of December 31, 2024:

Securities Brokerage Services

We provide securities brokerage services through Banchile Corredores de Bolsa S.A. is registered as a securities broker with the CMF, the regulator of Chilean publicly listed companies, and is a member of the Santiago Stock Exchange and the Chilean Electronic Stock Exchange. Since it was founded in 1989, Banchile Corredores de Bolsa S.A. has provided stock brokerage services, fixed income investments and foreign exchange products to individuals and companies through our branch network. In early 2009, Citibank Agencia de Valores S.A. merged with Banchile Corredores de Bolsa S.A.

During the year ended December 31, 2024, Banchile Corredores de Bolsa S.A. recorded an aggregate stock trading turnover on the Santiago Stock Exchange and the Chilean Electronic Stock Exchange that amounted to approximately Ch$7,692,369 million, which represented a 11.6% market share within the Chilean stock market.

Also, as of December 31, 2024, Banchile Corredores de Bolsa S.A. had equity amounting to Ch$167,028 million and, for the year ended December 31, 2024, recorded net income of Ch$34,571 million, which represented 2.8% of our consolidated net income for that period (under our internal reporting policies).

Mutual and Investment Fund Management

Since 1980, we have provided mutual fund management services through Banchile Administradora General de Fondos S.A. (formerly Banchile Administradora de Fondos Mutuos S.A.). As of December 31, 2024, according to data published by the Chilean Association of Mutual Funds, Banchile Administradora General de Fondos S.A. was the largest mutual fund manager in Chile, managing approximately 23.6% of all Chilean mutual funds’ assets. Also, as of December 31, 2024, Banchile Administradora General de Fondos S.A. operated 41 mutual funds and had Ch$14,872,546 million in assets under management owned by 426,183 corporate and individual investors. As of the same date, Banchile Administradora General de Fondos S.A. operated 42 public investment funds. Banchile Administradora General de Fondos S.A. managed Ch$1,727,298 million in net assets associated with these public investment funds on behalf of 2,037 participants. As of December 31, 2024, Banchile Administradora General de Fondos S.A. managed five private investment funds of Ch$56,030 million in net assets associated with these private investment funds on behalf of 53 participants. During 2024, Banchile Administradora General de Fondos S.A. created two new mutual funds and two new public investment funds.

The mutual and investment funds mentioned above are managed by Banchile Administradora General de Fondos S.A., but neither the Bank nor Banchile Administradora General de Fondos S.A. have ownership of these funds and, accordingly, they are not booked in our audited consolidated financial statements.

The following table sets forth information regarding the various mutual funds managed by Banchile Administradora General de Fondos S.A. as of December 31, 2024:

The following table sets forth information regarding the investment funds managed by Banchile Administradora General de Fondos S.A. as of December 31, 2024:

As of December 31, 2024, Banchile Administradora General de Fondos S.A. had equity of Ch$67,326 million and, for the year ended December 31, 2024, net income of Ch$33,418 million, which represented 2.7% of our 2024 consolidated net income (under our internal reporting policies).

Insurance Brokerage

We provide insurance brokerage services to our customers through Banchile Corredores de Seguros Limitada (Banchile Corredores de Seguros LTDA.). In 2000, we began to offer life insurance policies associated with consumer loans and non-credit related insurance to our individual customers and the general public. As of December 31, 2024, Banchile Corredores de Seguros Limitada had equity of Ch$27,769 million and, for the year ended December 31, 2024, it recorded net income of Ch$6,616 million, which represented 0.5% of our 2024 consolidated net income (under the bank’s internal reporting policies). According to data published by the CMF, as of December 31, 2024, Banchile Corredores de Seguros Limitada had a 2.8% market share in the total amount of life and casualty insurance policies (in Chilean pesos) sold by insurance brokerage companies in Chile, including life annuities.

Since 2019 we have partnered with Chubb Seguros Chile S.A. and Chubb Seguros de Vida Chile S.A., local subsidiaries of Chubb Limited, as our exclusive provider of life and non-life insurances to be distributed by our insurance brokerage subsidiary. For non-life products, the partnership became effective in June 2019, and for life products, it became effective in January 2020. The partnership does not include life and non-life insurance products that in accordance with local regulation must be publicly auctioned.

Financial Advisory Services

We provide financial advisory and other investment banking services to our customers through Banchile Asesoría Financiera S.A. The services offered by Banchile Asesoría Financiera S.A. are primarily targeted to our corporate customers and include advisory services concerning mergers and acquisitions, restructuring, project finance and strategic alliances. As of December 31, 2024, Banchile Asesoría Financiera S.A. had equity of Ch$4,822 million and, for the year ended December 31, 2024, recorded net income of Ch$225 million, which represented 0.02% of our 2024 consolidated net income (under our internal reporting policies).

Collection Services